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ELECTRONIC TRANSMISSION DISCLAIMER STRICTLY NOT TO BE FORWARDED TO ANY OTHER PERSONS IMPORTANT: You must read the following disclaimer before continuing. This electronic transmission applies to the attached document and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the attached prospectus (the ‘‘Prospectus’’) relating to Poundland Group plc (the ‘‘Company’’) dated 12 March 2014 accessed from this page or otherwise received as a result of such access and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the attached document. In accessing the attached document, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access. You acknowledge that this electronic transmission and the delivery of the attached document is confidential and intended for you only and you agree you will not forward, reproduce or publish this electronic transmission or the attached document to any other person. The Prospectus has been prepared solely in connection with the proposed offer to certain institutional and professional investors (the ‘‘Global Offer’’) of ordinary shares (the ‘‘Ordinary Shares’’) of the Company. The Prospectus has been published in connection with the admission of the Ordinary Shares to the premium listing segment of the Official List of the UK Financial Conduct Authority (the ‘‘Financial Conduct Authority’’) and to trading on London Stock Exchange plc’s main market for listed securities (together, ‘‘Admission’’). The Prospectus has been approved by the Financial Conduct Authority as a prospectus prepared in accordance with the Prospectus Rules made under section 73A of the FSMA. The Prospectus has been published and is available from the Company’s registered office and on the Company’s website at poundlandcorporate.com. Pricing information and other related disclosures have also been published on this website. Prospective investors are advised to access such information prior to making an investment decision. THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT MAY ONLY BE DISTRIBUTED IN ‘‘OFFSHORE TRANSACTIONS’’ AS DEFINED IN, AND IN RELIANCE ON, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933 (THE ‘‘SECURITIES ACT’’) OR WITHIN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS (‘‘QIBs’’) AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (‘‘RULE 144A’’) IN RELIANCE ON RULE 144A OR ANOTHER EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. NOTHING IN THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE ORDINARY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QIB AS DEFINED IN, AND IN RELIANCE ON, RULE 144A, OR ANOTHER EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR TERRITORY OF THE UNITED STATES. This electronic transmission and the attached document and the Global Offer when made are only addressed to and directed at persons in member states of the European Economic Area who are ‘‘qualified investors’’ within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (‘‘Qualified Investors’’). In addition, in the United Kingdom, this electronic transmission and the attached document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘‘Order’’) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as ‘‘relevant persons’’). This electronic transmission and the attached document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this Prospectus relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. This Prospectus and the information contained herein does not constitute a public offer or advertisement of the Ordinary Shares in the Russian Federation and is not an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer any Ordinary Shares to or for the benefit of any persons or entities in the Russian Federation. Neither the Ordinary Shares nor this Prospectus or other documents relating to them have been or are intended to be registered in Russia, with the Central Bank of the Russian Federation or with any other state authorities that may from time to time be responsible for such registration, and the Ordinary Shares are not intended for ‘‘public placement’’ or ‘‘public circulation’’ in the Russian Federation (as defined under Russian law), unless otherwise permitted under Russian law. Any information relating to the Ordinary Shares in this Prospectus is intended for, and addressed only to persons outside of the Russian Federation. The Ordinary Shares are not being offered, sold or delivered in the Russian Federation or to or for the benefit of any persons (including legal entities) resident, incorporated, established or having their usual residence in the Russian Federation or to any person located within the territory of the Russian Federation except as may be permitted by Russian law. Confirmation of Your Representation: This electronic transmission and the attached document is delivered to you on the basis that you are deemed to have represented to the Company, Credit Suisse Securities (Europe) Limited, J.P. Morgan Securities plc which conducts its UK investment banking activities as J.P. Morgan Cazenove, Canaccord Genuity and Shore Capital Stockbrokers Limited (collectively, the ‘‘Banks’’) and N M Rothschild & Sons Limited (‘‘Rothschild’’) that (i) you are (a) a QIB acquiring such securities for its own account or for the account of another QIB or (b) outside the United States; (ii) if you are in the UK, you are a relevant person, and/or a relevant person who is acting on behalf of, relevant persons in the United Kingdom and/or Qualified Investors to the extent you are acting on behalf of persons or entities in the UK or the EEA; (iii) if you are in any member state of the European Economic Area other than the UK, you are a Qualified Investor and/or a Qualified Investor acting on behalf of, Qualified Investors or relevant persons, to the extent you are acting on behalf of persons or entities in the EEA or the UK; and (iv) you are an institutional investor that is eligible to receive this Prospectus and you consent to delivery by electronic transmission. You are reminded that you have received this electronic transmission and the attached document on the basis that you are a person into whose possession this Prospectus may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this Prospectus, electronically or otherwise, to any other person. This Prospectus has been made available to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither the Company, the Banks, Rothschild nor any of their respective affiliates accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version. By accessing the attached document, you consent to receiving it in electronic form. None of the Banks, Rothschild nor any of their respective affiliates accepts any responsibility whatsoever for the contents of the attached document or for any statement made or purported to be made by it, or on its behalf, in connection with the Company or the Ordinary Shares. The Banks, Rothschild and each of their respective affiliates, each accordingly disclaims all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of such document or any such statement. No representation or warranty express or implied, is made by any of the Banks, Rothschild or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information set out in the attached document. The Banks and Rothschild are acting exclusively for the Company and no one else in connection with the Global Offer. They will not regard any other person (whether or not a recipient of this Prospectus) as their client in relation to the Global Offer and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for giving advice in relation to the Global Offer or any transaction or arrangement referred to in the attached document. This Prospectus comprises a prospectus (the ‘‘Prospectus’’) for the purposes of Article 3 of European Union Directive 2003/71/EC, as amended (the ‘‘Prospectus Directive’’) relating to Poundland Group plc (the ‘‘Company’’) prepared in accordance with the Prospectus Rules of the Financial Conduct Authority (the ‘‘FCA’’) made under section 73A of the Financial Services and Markets Act 2000 (the ‘‘FSMA’’). The Prospectus will be made available to the public in accordance with the Prospectus Rules. Application has been made to the FCA for all of the ordinary shares of the Company (the ‘‘Ordinary Shares’’) issued and to be issued in connection with the Global Offer to be admitted to the premium listing segment of the Official List of the FCA and to London Stock Exchange plc (the ‘‘London Stock Exchange’’) for all of the Ordinary Shares to be admitted to trading on London Stock Exchange’s main market for listed securities (the ‘‘Main Market’’) (together, ‘‘Admission’’). Conditional dealings in the Ordinary Shares are expected to commence on the Main Market of the London Stock Exchange at 8.00 a.m. on 12 March 2014. It is expected that Admission will become effective, and that unconditional dealings in the Ordinary Shares will commence at 8.00 a.m. on 17 March 2014. All dealings before the commencement of unconditional dealings will be of no effect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. No application is currently intended to be made for the Ordinary Shares to be admitted to listing or dealt with on any other exchange. The directors of the Company, whose names appear on page 46 of this Prospectus (the ‘‘Directors’’), and the Company accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Directors and the Company (each of whom has taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect the import of such information. Prospective investors should read this Prospectus in its entirety. See ‘‘Risk Factors’’ in Part 1 for a discussion of certain risks and other factors that should be considered prior to any investment in the Ordinary Shares. Poundland Group plc (Incorporated under the Companies Act 2006 and registered in England and Wales with registered number 08861243) Global Offer of 125,000,000 Ordinary Shares of 170 pence each at an Offer Price of 300 pence per Ordinary Share and admission to the premium listing segment of the Official List and to trading on the Main Market of the London Stock Exchange

Joint Global Co-ordinators, Joint Bookrunners and Joint Sponsors Credit Suisse J.P. Morgan Cazenove Co-Lead Managers Canaccord Genuity Shore Capital Financial Adviser to the Company Rothschild

ORDINARY SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION Issued and fully paid Number Nominal Value 250,000,000 170 pence

In connection with the Global Offer, J.P. Morgan Cazenove, as Stabilising Manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Ordinary Shares or effect other stabilisation transactions with a view to supporting the market price of the Ordinary Shares at a higher level than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilisation, if commenced, may be discontinued at any time without prior notice. Except as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Global Offer. In connection with the Global Offer, the Stabilising Manager may, for stabilisation purposes, over-allot Ordinary Shares up to a maximum of 15 per cent. of the total number of Ordinary Shares comprised in the Global Offer. For the purposes of allowing the Stabilising Manager to cover short positions resulting from any such overallotments and/or from sales of Ordinary Shares effected by it during the stabilising period, the Over-allotment Shareholders have granted to the Stabilising Manager the Over-allotment Option, pursuant to which the Stabilising Manager may purchase or procure purchasers for additional Ordinary Shares up to a maximum of 15 per cent. of the total number of Ordinary Shares comprised in the Global Offer. The Over-allotment Option will be exercisable, in whole or in part, upon notice by the Stabilising Manager, at any time on or before the 30th calendar day after the commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange. Any Over-allotment Shares made available pursuant to the Over-allotment Option will rank pari passu in all respects with the Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares, will be purchased on the same terms and conditions as the Ordinary Shares being sold in the Global Offer and will form a single class for all purposes with the other Ordinary Shares. Each of Credit Suisse, J.P. Morgan Cazenove and Rothschild, which are each authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, and each of Canaccord Genuity and Shore Capital, authorised and regulated by the FCA in the United Kingdom, is acting exclusively for the Company and no one else in connection with the Global Offer. None of the Underwriters or Rothschild will regard any other person (whether or not a recipient of this Prospectus) as a client in relation to the Global Offer and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for the giving of advice in relation to the Global Offer or any transaction, matter, or arrangement referred to in this Prospectus. Apart from the responsibilities and liabilities, if any, which may be imposed on the Underwriters or Rothschild by FSMA or the regulatory regime established thereunder or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of the Underwriters or Rothschild nor any of their respective affiliates accepts any responsibility whatsoever for the contents of this Prospectus including its accuracy and completeness or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares or the Global Offer. Each of the Underwriters, Rothschild and each of their respective affiliates accordingly disclaim, to the fullest extent permitted by applicable law, all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise be found to have in respect of this Prospectus or any such statement. No representation or warranty express or implied, is made by any of the Underwriters, Rothschild or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information set out in this Prospectus, and nothing in this Prospectus will be relied upon as a promise or representation in this respect, whether or not to the past or future. This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities other than the securities to which it relates or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances in which such offer or solicitation is unlawful.

Notice to overseas shareholders The Ordinary Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended (the ‘‘Securities Act’’). The Ordinary Shares offered by this Prospectus may not be offered or sold in the United States, except to qualified institutional buyers (‘‘QIBs’’), as defined in, and in reliance on, the exemption from the registration requirements of the Securities Act provided in Rule 144A under the Securities Act (‘‘Rule 144A’’) or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Prospective investors are hereby notified that the sellers of the Ordinary Shares may be relying on the exemption from the provisions of section 5 of the Securities Act provided by Rule 144A. Subject to certain exceptions, the Ordinary Shares may not be offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen of any jurisdiction, including Australia, Canada, Japan or South Africa. This Prospectus does not constitute an offer of, or the solicitation of an offer to subscribe for or purchase any of the Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction. The Ordinary Shares have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan. Subject to certain exceptions, the Ordinary Shares may not be offered or sold in Australia, Canada, Japan or South Africa, or to or for the account or benefit of any national, resident or citizen in Australia, Canada, Japan or South Africa. The Ordinary Shares have not been approved or disapproved by any US federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not passed upon or endorsed the merits of the Global Offer nor confirmed the accuracy or determined the adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States. The distribution of this Prospectus and the offer and sale of the Ordinary Shares in certain jurisdictions may be restricted by law. No action has been or will be taken by the Company, the Selling Shareholders, the Underwriters or Rothschild to permit a public offering of the Ordinary Shares under the applicable securities laws of any jurisdiction. Other than in the United Kingdom, no action has been taken or will be taken to permit the possession or distribution of this Prospectus (or any other offering or publicity materials relating to the Ordinary Shares) in any jurisdiction where action for that purpose may be required or where doing so is restricted by law. Accordingly, neither this Prospectus, nor any advertisement, nor any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.

Notice to investors in the Russian Federation This Prospectus should not be considered as a public offer or advertisement of the Ordinary Shares in the Russian Federation and is not an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer any Ordinary Shares to any persons in the Russian Federation. Neither the Ordinary Shares nor this Prospectus or other documents relating to them have been or are intended to be registered in Russia, with the Central Bank of Russia (the ‘‘CBR’’) or with any other state bodies that may from time to time be responsible for such registration, and the Ordinary Shares are not intended for ‘‘public placement’’ or ‘‘public circulation’’ in the Russian Federation (as defined under Russian law), unless otherwise permitted under Russian law. Any information on the Ordinary Shares in this Prospectus is intended for, and addressed only, to persons outside of the Russian Federation. The Ordinary Shares are not being offered, sold or delivered in the Russian Federation or to or for the benefit of any persons (including legal entities) resident, incorporated, established or having their usual residence in the Russian Federation or to any person located within the territory of the Russian Federation except as may be permitted by Russian law.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (‘‘RSA421-B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

Available information For so long as any of the Ordinary Shares are in issue and are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which it is not subject to section 13 or 15(d) under the US Securities Exchange Act of 1934, as amended (the ‘‘US Exchange Act’’), nor exempt from reporting under the US Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to any holder or beneficial owner of an Ordinary Share, or to any prospective purchaser of an Ordinary Share designated by such holder or beneficial owner, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act. CONTENTS

PART PAGE SUMMARY INFORMATION ...... 1 PART 1 RISK FACTORS ...... 13 PART 2 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... 22 PART 3 DIRECTORS, SECRETARY, REGISTERED AND HEAD OFFICE AND ADVISERS ...... 28 PART 4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND GLOBAL OFFER STATISTICS ...... 29 PART 5 INFORMATION ON THE COMPANY AND ITS GROUP ...... 30 PART 6 DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE . 46 PART 7 SELECTED FINANCIAL INFORMATION ...... 52 PART 8 OPERATING AND FINANCIAL REVIEW ...... 56 PART 9 CAPITALISATION AND INDEBTEDNESS ...... 78 PART 10 HISTORICAL FINANCIAL INFORMATION ...... 80 PART 11 DETAILS OF THE GLOBAL OFFER ...... 136 PART 12 ADDITIONAL INFORMATION ...... 143 PART 13 DEFINITIONS AND GLOSSARY ...... 181 SUMMARY INFORMATION Summaries are made up of disclosure requirements known as ‘‘Elements’’. These Elements are numbered in Sections A—E (A.1—E.7). This summary contains all the Elements required to be included in a summary for this type of security and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of ‘‘not applicable’’.

Section A—Introduction and warnings Element Disclosure Requirement Disclosure A.1 Warning This summary should be read as an introduction to the prospectus (the ‘‘Prospectus’’). Any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, and applied its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Subsequent resale of Not applicable. No consent has been given by the Company or any securities or final person responsible for drawing up this Prospectus to the use of the placement of securities Prospectus for subsequent resale or final placement of securities by through financial financial intermediaries. intermediaries

Section B—Issuer Element Disclosure Requirement Disclosure B.1 Legal and commercial Poundland Group plc (the ‘‘Company’’) name B.2 Domicile and legal form The Company is a public limited company, incorporated on 24 January 2014 as a private company limited by shares in the United Kingdom and re-registered as a public limited company on 14 February 2014 with its registered office situated in England and Wales. The Company operates under the Companies Act 2006. B.3 Current operations and Poundland is the largest single price value general merchandise principal activities retailer in Europe by both sales and by number of stores. Poundland opened its first store in 1990 and has grown to operate a network of over 500 stores across the UK and Ireland. Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks.

1 In September 2011, Poundland successfully entered Ireland under the ‘‘Dealz’’ brand, where it sells the vast majority of products for A1.49. The operations in Ireland became profitable in their first full year of operation. As at 29 December 2013, Poundland operated 33 Dealz stores, of which 31 are in Ireland, one is in the Isle of Man and one is in the Orkney Islands. Poundland has established its market-leading position in the UK by continuously focusing on delivering amazing value to its customers every day. The Directors believe that this is achieved by selling a wide range of great products and top brands, offering many new exciting lines each week, with all products in the UK selling at a price point of £1, offering customers good value for money. The average Poundland store carries approximately 3,000 core range SKUs including over 1,000 third-party branded products from popular brand names such as Cadbury, Mars, Heinz, Nestle´ and Colgate. Third-party branded products represent an important footfall driver and account for the majority of sales (approximately 63 per cent. of total sales in the 2013 financial year). Poundland also has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third-party branded products, including Silk Soft paper products, Sweet Heaven confectionery, Kitchen Corner, Allura (Health & Beauty), Beautiful Garden and Toolbox (DIY). Poundland works closely with suppliers to develop innovative and exclusive products to offer a relevant and attractive value offering. Its sourcing office in Hong Kong is an important part of its buying strategy with particular focus on new product development, logistics and product quality assurance and control. Poundland has generated strong revenue and Underlying EBITDA growth over each of the last three financial years, with revenue having increased from £641.5 million in the 52 weeks ended 27 March 2011 to £880.5 million in the 2013 financial year, and Underlying EBITDA having increased at a faster rate, reflecting the positive operational leverage within the Group, growing from £31.1 million in the 52 weeks ended 27 March 2011 to £45.5 million in the 2013 financial year. This strong growth historically has been driven by: • a consistent track record of successful store openings, having increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and the 2013 financial years, respectively, and by 59 net new stores in the 39 weeks ended 29 December 2013; • maintaining stable gross margins in the 52 weeks ended 27 March 2011, the 52 weeks ended 1 April 2012 and the 2013 financial year, despite cost increases, changes in product mix and other external factors such as an increase in VAT rates. This has been achieved by using a number of initiatives including managing its product range, re-engineering of pack sizes, re-negotiating rates, changing suppliers, increasing the number of direct suppliers and altering product mix; • well-invested systems, supply chain and distribution infrastructure, creating efficiencies and underpinning a scalable business model;

2 • consistently achieving high returns on invested capital with a new store typically recovering all costs associated with its opening, including capital expenditure and all pre-opening costs, in around 12 months of trading. Furthermore, a new Poundland store has a rapid maturity profile, with stores trading approximately 22 per cent. above the long-term average in their first full six weeks; and • an attractive customer proposition with broad appeal resulting in high brand awareness. In a recent survey by YouGov, Poundland scored 95 per cent. prompted brand awareness, significantly above its key competitors in the UK value general merchandise retail market and in line with large UK grocery chains. Poundland has built a strong customer base with the average Poundland store serving over 10,000 customers per week. In addition, the Directors believe that the customer proposition appeals to an increasingly wide range of consumers, with 22 per cent. of Poundland’s UK customers being from the affluent AB socio-demographic group based on a survey conducted in 2013. This historical track record of strong growth and high returns has been delivered by Poundland’s strong and entrepreneurial senior management team who have significant retail experience. Poundland aims to build on this track record for the future by continuing to deliver amazing value every day to its customers through product innovation and range and mix management. The Directors believe that there is potential for more than 1,000 stores in the UK, making it possible to more than double its existing UK portfolio, and plans to open approximately 60 net new stores per year. The Directors believe that, building on the successful entry into Ireland in 2011, continental Europe could be an attractive opportunity providing a platform for longer term growth, and are currently developing plans for a low-cost pilot launch in Spain in the 2015 financial year. B.4a Significant recent trends Poundland operates in an attractive sub-sector of the overall UK affecting the Group and retail market, being the value general merchandise retail market. the industry in which it The total retail market in the UK amounted to approximately operates £310 billion in 2012, with value general merchandise representing approximately £5.2 billion of this. The key trends and features of the UK value general merchandise market are listed below: • One of the fastest growing sectors within UK retail, having grown at a CAGR of approximately 15 per cent. since 2007, predominantly driven by rapid store roll out. • Established sector that continues to benefit from a structural shift in consumer behaviour towards value retailing. • Significant long-term growth potential with the market forecast by PwC to grow at a CAGR of approximately 9.3 per cent. per year between 2012 and 2017, driven by a combination of supply and demand factors, and also supported by evidence in the more mature US value general merchandise market. • While the value general merchandise market has primarily been targeted towards less affluent consumers, there is an increasing penetration in the more affluent customer base. While many new consumers entered the value retail market during difficult economic times, research suggests that the majority of these consumers have indicated they will continue to use value retailers even as the economy improves and they have higher disposable income (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013).

3 B.5 Group description Prior to the Reorganisation and Admission, the Company is a non-trading and wholly-owned subsidiary of WP X, which is a fund managed by Warburg Pincus LLC (‘‘Warburg Pincus’’). Immediately prior to Admission, the Company will become the holding company of the Group. Prior to completion of the Reorganisation, the term ‘‘Group’’ refers to Poundland Group Holdings Limited and each of its consolidated subsidiaries and subsidiary undertakings; thereafter, the term ‘‘Group’’ refers to the Company and its consolidated subsidiaries (including Poundland Group Holdings Limited) and subsidiary undertakings from time to time. The term ‘‘Admission’’ refers to admission of the ordinary shares of the Company of 170 pence each (‘‘Ordinary Shares’’) to the premium listing segment of the Official List of the FCA (the ‘‘Official List’’) and to trading on the London Stock Exchange’s main market for listed securities. B.6 Major shareholders As at the date of this Prospectus, to the extent known by the Company, the Company is owned or controlled by WP X, which holds 100 per cent. of the voting rights attached to the issued share capital of the Company (and 77.0 per cent. upon completion of the Reorganisation). Immediately following the Global Offer and Admission, it is expected that the Warburg Pincus Funds will hold approximately 37.9 per cent. of the voting rights attached to the issued share capital of the Company, assuming no exercise of the Over-allotment Option, and 30.4 per cent., assuming the Over-allotment Option is exercised in full. The Ordinary Shares owned by the Company’s major shareholders rank pari passu with other Ordinary Shares in all respects. On 12 March 2014, the Company and the Warburg Pincus Funds entered into the Relationship Agreement which will, conditional upon Admission, regulate the ongoing relationship between the Company and the Warburg Pincus Funds. The principal purpose of the Relationship Agreement is to ensure that (i) transactions and relationships with the Warburg Pincus Funds (including any transactions and relationships with any member of the Group) are at arm’s length and on normal commercial terms, (ii) the Warburg Pincus Funds or any of their associates do not take any action that would have the effect of preventing the Company from complying with its obligations under the Listing Rules, and (iii) the Warburg Pincus Funds or any of their associates do not propose or procure the proposal of a shareholder resolution which is intended or appears to be intended to circumvent the proper application of the Listing Rules. The Directors believe that the terms of the Relationship Agreement will enable the Group to carry on an independent business as its main activity. Following Admission, the Articles allow the election of independent directors to be conducted in accordance with any requirements of the Listing Rules. In all other circumstances, the Company’s major shareholders have and will have the same voting rights attached to the Ordinary Shares as all other shareholders.

4 B.7 Key financial information The selected financial information set out below has been extracted and narrative description without material adjustment from the Historical Financial of significant changes to Information relating to the Group included in Part 10—’’Historical financial condition and Financial Information’’. operating results of the The audited financial statements for the 2011 financial period Group during or reflect the shorter period of 41 weeks, representing the trading subsequent to the period performance of the Group from the date of the acquisition of the covered by the historical Group by the Warburg Pincus Funds. The 2012 financial year was a key financial information 53 week period and the 2013 financial year was a 52 week period. Consolidated Statement of Profit and Loss 41 weeks 53 weeks 52 weeks 39 weeks ended ended ended ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Revenue ...... 518,372 780,147 880,491 671,100 758,340 Cost of sales ...... (327,613) (492,165) (556,980) (424,540) (479,022) Gross profit ...... 190,759 287,982 323,511 246,560 279,318 Distribution expenses . . . (153,532) (232,086) (263,196) (196,482) (220,579) Administrative expenses . (21,530) (27,712) (30,264) (22,650) (25,658) Operating profit ...... 15,697 28,184 30,051 27,428 33,081 Financial income ..... 52 192 371 268 240 Financial expenses .... (7,200) (5,065) (3,945) (3,001) (2,728) Net financing expense .. (7,148) (4,873) (3,574) (2,733) (2,488) Profit before tax ...... 8,549 23,311 26,477 24,695 30,593 Taxation ...... (3,433) (5,800) (3,092) (6,606) (7,566) Profit for the period ... 5,116 17,511 23,385 18,089 23,027 Non-underlying items . . . (6,547) (575) 1,604 (1,882) (982) Underlying profit for the period(1) ...... 11,663 18,086 21,781 19,971 24,009 EBITDA(2) ...... 24,090 39,457 43,131 36,805 44,025 Non-underlying items . . . (4,154) — (2,319) (1,995) (1,198) Underlying EBITDA(1) .. 28,244 39,457 45,450 38,800 45,223

(1) Underlying profit for the period and Underlying EBITDA exclude the impact of non-underlying items. (2) The Group defines EBITDA as profit for the period before finance costs, finance income, tax and depreciation and amortisation. Balance Sheet As at 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Assets Total non-current assets . 214,949 219,950 223,984 225,592 226,013 Total current assets .... 106,126 125,780 148,811 173,705 192,605 Total assets ...... 321,075 345,730 372,795 399,297 418,618 Liabilities Total current liabilities . . (75,714) (97,667) (101,166) (137,634) (156,665) Total non-current liabilities ...... (75,703) (74,685) (71,046) (71,394) (66,022) Total liabilities ...... (151,417) (172,352) (172,212) (209,028) (222,687) Net assets ...... 169,658 173,378 200,583 190,269 195,931 Total equity ...... 169,658 173,378 200,583 190,269 195,931

5 Cash Flow Statements

41 weeks 53 weeks 52 weeks 39 weeks ended ended ended ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Net cash from operating activities ...... 14,107 42,918 33,417 45,584 58,319 Net cash from investing activities ...... (184,886) (16,253) (16,438) (14,717) (13,232) Net cash from financing activities ...... 201,772 (21,742) (10,034) (7,681) (24,915) Net increase in cash and cash equivalents . 30,993 4,923 6,945 23,186 20,172 Cash and cash equivalents at end of period ...... 30,993 35,916 42,861 59,102 63,033

Certain significant changes to the Group’s financial condition and results of operations occurred during the 2011 financial period and 2012 and 2013 financial years and to the 39 weeks ended 30 December 2012 and 29 December 2013. These changes are set out below. Revenue increased by £362.1 million, or 69.8 per cent., from £518.4 million in the 2011 financial period to £880.5 million in the 2013 financial year, and increased by £87.2 million, or 13.0 per cent., from £671.1 million in the 39 weeks ended 30 December 2012 to £758.3 million in the 39 weeks ended 29 December 2013, primarily driven by new store openings. Profit for the period increased by £18.3 million from £5.1 million in the 2011 financial period to £23.4 million in the 2013 financial year, and increased by £4.9 million, or 27.1 per cent., from £18.1 million in the 39 weeks ended 30 December 2012 to £23.0 million in the 39 weeks ended 29 December 2013. There has been no significant change in the financial position or results of operations of the Group since 29 December 2013, the date to which the last audited consolidated financial information of the Group was prepared.

Key Performance Indicators In addition to the selected financial information set out above, the Board monitors the Group’s performance by regularly reviewing the following key performance indicators (‘‘KPIs’’), as the Group considers these measures to give greater understanding of the drivers of the Group’s performance. Some of the measures described below are not measures of financial performance under generally accepted accounting principles, including IFRS, and should not be considered in isolation or as an alternative to the Group’s IFRS financial statements. The table below represents the KPIs that the Group believes significantly affect the Group’s results of operations and financial condition during the periods under review.

6 52 weeks 52 weeks 52 weeks 39 weeks 39 weeks ended or ended or ended or ended or ended or as at as at as at as at as at 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 Number of stores at end of period ...... 327 389 458 456 517 Number of new stores (net) ...... 64 62 69 67 59 Revenue (£ millions) . . . 641.5(6) 765.4(8) 880.5 671.1 758.3 Gross margin (%) ..... 36.7(6) 36.9(8) 36.7 36.7 36.8 Underlying EBITDA (£ millions)(1) ...... 31.1(6) 38.7(8) 45.5 38.8 45.2 Underlying EBITDA margin (%)(1) ...... 4.8(6) 5.1(8) 5.2 5.8 6.0 Underlying profit for the period (£ millions) . . . 12.0(6) 17.7(8) 21.8 20.0 24.0 Operating cash flow less maintenance capital expenditure (£ millions)(2) ...... —(7) 47.5(8) 37.6 51.6 64.5 Cash conversion (% of Underlying EBITDA)(3) —(7) 120.4(8) 82.7 133.0 142.7 Operating cash flow less maintenance and expansion capital expenditure (£ millions)(4) ...... —(7) 33.5(8) 23.2 38.6 53.6 Net debt/(cash)(5) ...... 29.6 22.5 9.2 (6.2) (14.0)

7 B.10 Description of the nature Not applicable. There are no qualifications to the accountant’s of any qualifications in the report on the historical financial information. audit report on the historical financial information B.11 Insufficient working capital In the opinion of the Company, taking into account the facilities available to the Group, the working capital available to the Group is sufficient for the Group’s present requirements, that is for the next 12 months following the date of this Prospectus.

Section C—Securities Element Disclosure Requirement Disclosure C.1 Type and class of securities Pursuant to the Global Offer, approximately 125,000,000 Ordinary Shares are expected to be sold by the Selling Shareholders (the ‘‘Offer Shares’’). In addition, a further 18,750,000 Ordinary Shares are being made available by the Over-allotment Shareholders (the ‘‘Over-allotment Shares’’) pursuant to the Over-allotment Option. When admitted to trading, the Ordinary Shares will be registered with ISIN number GB00BJ34VB96 and SEDOL number BJ34VB9. C.2 Currency United Kingdom pounds sterling. C.3 Number of securities to be As at the date of this Prospectus, the issued share capital of the issued Company is £50,000.7 comprising 1 Ordinary Share of 170 pence and 49,999 Preference Shares of £1 each (all of which are fully paid or credited as fully paid). Following the Reorganisation and immediately prior to Admission, the issued share capital of the Company is expected to be £425,049,999 comprising 250,000,000 ordinary shares of 170 pence each and 49,999 preference shares of £1 each (the ‘‘Preference Shares’’) (all of which will be fully paid or credited as fully paid). C.4 Description of the rights The rights attaching to the Ordinary Shares will be uniform in all attaching to the securities respects and they will form a single class for all purposes, including with respect to voting and for all dividends and other distributions thereafter declared, made or paid on the ordinary share capital of the Company. Subject to any rights and restrictions attached to any shares, on a show of hands every Shareholder who is present in person shall have one vote and on a poll every Shareholder present in person or by proxy shall have one vote per Ordinary Share. Except as provided by the rights and restrictions attached to any class of shares, Shareholders will under general law be entitled to participate in any surplus assets in a winding up in proportion to their shareholdings. C.5 Restrictions on the free Save as described in the paragraphs below, there are no restrictions transferability of the on the free transferability of the Ordinary Shares. securities Transfer restrictions under the Companies Act 2006 The Company may, under the Companies Act 2006, send out statutory notices to those it knows or has reasonable cause to believe have an interest in its shares, asking for details of those who have an interest and the extent of their interest in a particular holding of shares. When a person receives a statutory notice and fails to provide any information required by the notice within the time specified in it, the Company can apply to the court for an order directing, among other things, that any transfer of shares which are the subject of the statutory notice is void.

8 Transfer restrictions under the Articles The Company’s board of directors (the ‘‘Board’’) can decline to register any transfer of any share which is not a fully paid share. The Board may also decline to register a transfer of a certificated share unless the instrument of transfer: • is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate or such other evidence of the right to transfer as the Board may reasonably require; • is in respect of only one class of share; and • if to joint transferees, is in favour of not more than four such transferees. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in the Articles) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four. C.6 Admission Application has been made to the FCA for all of the Ordinary Shares to be admitted to the premium listing segment of the Official List of the FCA and to London Stock Exchange for such Ordinary Shares to be admitted to trading on London Stock Exchange’s main market for listed securities. C.7 Dividend policy The Directors intend to adopt a dividend policy which reflects the long-term earnings and cash flow potential of the Group targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings. Subject to sufficient distributable reserves being available, the Directors intend that the first dividend to be declared by the Group following Admission will be the interim dividend in respect of the first half of the 2015 financial year, payable in January 2015.

Section D—Risks Element Disclosure Requirement Disclosure D.1 Key information on the The Group operates in a highly competitive environment and faces key risks specific to the competition from a diverse group of retailers. Changes that issuer and its industry continue to affect the high street, including the collapse of high street retailers, may result in an increased supply of available sites which could lead to an increase of store openings by competitors near to Poundland stores. This could lead to decreased sales at the affected stores or across the Group. As a single price retailer, the Group relies on a range of commercial tools aside from price increases to maintain profitability in response to increased costs due to, for example, inflation or changes in laws, or in response to weak sales during peak selling seasons or as a result of adverse events or poor economic conditions. There can be no assurance that such measures, such as managing its product range, re-engineering of pack sizes or renegotiating with suppliers, will be as effective or available in the future, and Poundland may need to change its pricing strategy, which may not gain widespread customer acceptance and may damage its brand. This could have a material adverse effect on its business, results of operations and financial condition.

9 The Group may not be able to grow as planned, such as by not being able to open profitable new stores in the UK and Ireland, increase sales in existing stores or expand into continental Europe. The Group’s failure to grow in line with its planned goals could negatively impact the Group’s ability to achieve its targeted returns. The Group’s business depends on its ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow it to profitably sell such merchandise, and its ability to do so could be adversely affected by, for example, an inability to identify or develop new products or damage to the brands of its merchandise, including third-party and own label brands. If Poundland is unable to select products attractive to customers, obtain such products at costs that allow it to sell such products profitably or distribute and market such products effectively to consumers, Poundland’s sales or profitability could be adversely affected. The Group depends on an uninterrupted supply chain and functional distribution capabilities to source products from suppliers (in the UK and overseas) and to distribute them to stores. If the Group is unable to maintain a functional supply chain process, the Group may suffer inventory shortages or increased costs to obtain such inventory, resulting in reduced profit. D.3 Key information on the There is no existing market for the Ordinary Shares and an active key risks specific to the trading market for the Ordinary Shares may not develop or be securities sustained. Moreover, even if a market develops, the Ordinary Shares could be subject to market price volatility and the market price of the Ordinary Shares may decline in response to developments that are unrelated to the Company’s operating performance, or as a result of sales of substantial amounts of Ordinary Shares, for example, following the expiry of the lock-up period, or the issuance of additional Ordinary Shares in the future, and shareholders could earn a negative or no return on their investment in the Company. Finally, shareholders in the United States or other jurisdictions may not be able to participate in future equity offerings.

Section E—Offer Element Disclosure Requirement Disclosure E.1 Net proceeds and costs of Pursuant to the Global Offer, the Selling Shareholders will receive the offer aggregate proceeds of approximately £364,687,500 from the sale of Offer Shares, net of underwriting commissions and other estimated fees and expenses of approximately £10,312,500. The aggregate expenses of, or incidental to, Admission and the Global Offer incurred and to be borne by the Company are estimated to be approximately £7,600,000 (inclusive of amounts in respect of VAT), which the Company intends to pay out of existing cash resources (to the extent they have not already been paid). No expenses will be charged by the Company or the Selling Shareholders to any investor who purchases Ordinary Shares pursuant to the Global Offer. E.2a Reasons for the offer and The Directors believe that the Global Offer will: use of proceeds • enable the Selling Shareholders to partially monetise their holding, also allowing for a liquid market for their shares going forward;

10 • diversify the shareholder base; • enhance Poundland’s profile with investors, business partners and customers; • further enhance the ability of Poundland to attract and retain key management and employees; and • enable access to capital markets if necessary for future growth. No proceeds will be received by the Company pursuant to the Global Offer. E.3 Terms and conditions of The Global Offer consists of an institutional offer only. In the the offer Global Offer, Ordinary Shares will be offered (i) to certain institutional investors in the United Kingdom and elsewhere outside the United States and (ii) in the United States only to QIBs in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Ordinary Shares allocated under the Global Offer have been underwritten, subject to certain conditions, by the Underwriters. Allocations under the Global Offer will be determined by the Joint Global Co-ordinators following agreement with the Company and the Warburg Pincus Funds. All Ordinary Shares sold pursuant to the Global Offer will be sold, payable in full, at the Offer Price. It is expected that Admission will become effective, and that unconditional dealings in the Ordinary Shares will commence on the London Stock Exchange’s main market for listed securities, at 8.00 a.m. (London time) on 17 March 2014. Settlement of dealings from that date will be on a three-day rolling basis. Prior to Admission, conditional dealings in the Ordinary Shares are expected to commence on London Stock Exchange’s main market for listed securities at 8.00 a.m. on 12 March 2014. The earliest date for such settlement of such dealings will be 17 March 2014. E.4 Material interests There are no interests, including conflicting interests, that are material to the Global Offer, other than those disclosed in B.6 above. E.5 Selling Shareholders and The Selling Shareholders comprise (i) the Warburg Pincus Funds Lock-up and (ii) certain Directors, members of Senior Management, the ESOP Trustee and other individuals. Pursuant to the Underwriting Agreement, the Company and the Warburg Pincus Funds have each agreed, subject to certain customary exceptions, during the period of 180 days from the date of Admission, not, without the prior written consent of the Joint Global Co-ordinators, to issue (in the case of the Company only), offer, lend, sell or contract to sell, grant any option, right or warrant to subscribe or purchase or allow any encumbrance to be created over or otherwise dispose of, directly or indirectly, or announce an offer of any Ordinary Shares (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as, or agree to do, any of such things, or publicly announce any intention to do any of the foregoing.

11 Pursuant to the Underwriting Agreement, the Directors, members of Senior Management and certain other Shareholders have agreed that, subject to certain customary exceptions, during the period of 365 days from the date of Admission, not, without the prior written consent of the Joint Global Co-ordinators, to offer, lend, sell or contract to sell, grant any option, right or warrant to subscribe or purchase or allow any encumbrance to be created over or otherwise dispose of, directly or indirectly, or announce an offer of any Ordinary Shares (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as, or agree to do, any of such things, or publicly announce any intention to do any of the foregoing. E.6 Dilution Not applicable. No new Ordinary Shares are to be issued under the Global Offer. E.7 Expenses charged to the Not applicable. No expenses will be charged by the Company or the investor Selling Shareholders to any investor who purchases Ordinary Shares pursuant to the Global Offer.

12 PART 1 RISK FACTORS Any investment in the Ordinary Shares is subject to a number of risks. Prior to investing in the Ordinary Shares, prospective investors should carefully consider risk factors associated with any investment in the Ordinary Shares, the Group’s business and the industry in which it operates, together with all other information contained in this Prospectus including, in particular, the risk factors described below. Prospective investors should note that the risks relating to the Group, its industry and the Ordinary Shares summarised in the section of this Prospectus headed ‘‘Summary Information’’ are the risks that the Directors and the Company believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Ordinary Shares. However, as the risks which the Group faces relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in the section of this Prospectus headed ‘‘Summary Information’’ but also, among other things, the risks and uncertainties described below. The risk factors described below are not an exhaustive list or explanation of all risks which investors may face when making an investment in the Ordinary Shares and should be used as guidance only. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that the Group currently deems immaterial, may individually or cumulatively also have a material adverse effect on the Group’s business, results of operations and/or financial condition and, if any such risk should occur, the price of the Ordinary Shares may decline and investors could lose all or part of their investment. Investors should consider carefully whether an investment in the Ordinary Shares is suitable for them in the light of the information in this Prospectus and their personal circumstances.

Risks relating to the Group’s business and industry The Group operates in the highly competitive value general merchandise retail market. The retail industry, including the value general merchandise retail market, is highly competitive, particularly with respect to price, product selection and quality, store location and design, inventory, customer service and advertising. Poundland competes at national and local levels with a diverse group of retailers of varying sizes and covering different product categories and geographic markets. These competitors include other single price value general merchandise retailers, multi-price value general merchandise retailers, supermarkets and certain high street retailers in particular categories, such as health and beauty. Some competitors may have greater market presence, name recognition, financial resources and economies of scale or lower cost bases than Poundland and may be able to withstand or respond more swiftly to changes in market conditions, any of which could give them a competitive advantage over Poundland. In addition, like many other retailers, because Poundland does not have exclusive rights to many of the elements that comprise its in-store experience and product offering, competitors may seek to copy or improve on its business strategy, which could significantly harm Poundland’s competitive position. The changes that continue to affect the high street in many towns across the UK, including the collapse of high street retailers, may result in an increased supply of available sites. This could lead to an increase of store openings by competitors near to Poundland stores, including by an existing chain-wide competitor or by a new entrant to a particular market competing on a store-by-store basis, which could lead to decreased sales at the affected stores. This impact may be exacerbated if an existing chain-wide single price competitor were to open new stores near to Poundland stores. Other value general merchandise retailers might also consolidate, therefore achieving significant economies of scale in buying, distribution and logistics. If Poundland cannot respond adequately to these multiple sources and types of competition, including online competition whether from existing retailers or new entrants, it could have a material adverse effect on the Group’s business, results of operations and financial condition.

Inflation or other factors may affect Poundland’s ability to keep pricing at £1 in the UK and F1.49 for the majority of its products in Ireland, which could have a material adverse effect on its business, results of operations or financial condition. Poundland’s current pricing strategy is predicated on providing a wide range of merchandise for profitable resale at a single price point of £1 in the UK or A1.49 for the vast majority of products in Ireland. As such, Poundland currently relies on a range of commercial tools aside from price increases to maintain profitability in response to increasing costs such as inflation, energy rates, wage rates, lease and utility costs, taxation (including VAT increases) and other laws and regulations, such as statutory changes relating

13 to labour laws including minimum wage or pensions. Whilst Poundland has been able to profitably maintain its current UK £1 single price strategy for nearly 24 years by managing its product range (such as by introducing new higher margin branded and own label products or discontinuing low margin products), re-engineering of pack sizes, moving sources of supply to lower cost economies and renegotiating with suppliers, there can be no assurance that such measures will be as effective or available in the future. Consequently, Poundland may in the future change its pricing strategy. Any such change may impact customer acceptance and may damage its brand, which could have a material adverse effect on its business, results of operations and financial condition.

The Group may not be able to open profitable new stores on a timely basis or at all. Part of Poundland’s growth strategy is to open new stores across the UK and Ireland, and Poundland is also developing plans to trial Dealz stores in continental Europe, with a low-cost pilot launch planned for Spain in the 2015 financial year. Poundland’s ability to open profitable new stores in line with its strategy depends on many factors, including its ability to: • identify and secure attractive locations for new stores, including selecting the right store formats; • gain experience and name recognition and identify customer demand in new markets; • successfully compete against localised competition on a store-by-store basis; • maintain or improve sourcing and distribution capacity, information systems and other operational system capabilities; • hire, train and retain qualified store management and other personnel; • achieve sufficient levels of cash flow and obtain financing on favourable terms, if needed, to support its expansion; and • manage additional expenses and costs. The opening of new stores could also result in the diversion of sales away from existing stores. If Poundland does not open new stores on a timely or profitable basis, it may not realise its growth strategy.

The Group’s business requires that it leases substantial amounts of retail space and it may be unable to secure suitable locations or leases on favourable terms or renew its leases. All of Poundland’s stores are leased from third parties and, therefore, Poundland is subject to risks, as is typical for retailers, associated with periodically negotiating or re-negotiating lease terms. Poundland has benefitted from the recent favourable conditions created by changes to the high street, including the collapse of high street retailers, by being able to lease new stores on attractive terms. However, Poundland’s results of operations may be affected in the future by changes in the property rental market, such as a decrease in available sites or increases in market rents. Any inability to renew existing leases may result in, among other things, significant alterations to rental terms, the closure of stores in desirable locations or failure to secure sufficient real estate in attractive locations. The location of Poundland stores, their design (both internally and externally), store surroundings and the other types of retailers adjacent to Poundland’s store locations are among the variety of factors that impact the quality of Poundland’s store portfolio in the eyes of customers and thus their level of sales. In addition, Poundland’s ability to open new stores depends upon the availability of sites that meet its criteria, its ability to negotiate terms that meet its financial targets and its ability to obtain planning consent on satisfactory terms with local planning authorities. Furthermore, if Poundland chooses to close one of its stores prior to the expiry of its lease, it would need to terminate the lease or assign the lease to a third-party if permitted, either of which might take a long time and may require the payment of a financial penalty. Any of these factors could have a material adverse effect on Poundland’s business, results of operations and financial condition.

Poundland may not be able to increase sales in existing stores. Poundland’s growth from existing stores is dependent upon its ability to increase sales, manage costs and improve the efficiencies and effectiveness of its operations. Increases in sales in existing stores are dependent on factors such as competition, merchandise sourcing and selection, store operations and customer satisfaction. Higher store costs or any failure to achieve targeted results associated with the implementation of operational programmes or initiatives could adversely affect Poundland’s operating results. If Poundland fails to realise its goals of successfully managing its store operations and increasing its

14 customer retention and recruitment levels, its sales may not increase and its growth may be impacted adversely.

The Group’s business may be adversely affected by economic conditions and other factors in the UK, Ireland and globally. Poor economic conditions in the UK, Ireland and globally, as well as economic factors such as unemployment levels, consumer debt levels, lack of available credit, fuel costs, inflation, interest and tax rates may adversely affect the disposable income of Poundland’s customers, which could result in lower sales. In particular, in times of economic uncertainty or recession, there may be a decrease in higher margin ‘‘impulse purchases’’ or discretionary purchases generally, which could have a material adverse effect on the Group’s business, results of operations and financial condition. Global economic conditions and uncertainties may also impact Poundland’s suppliers in ways that would adversely affect Poundland’s business and results of operations, including, for example, supplier plant closures or increases in costs of merchandise. Under positive economic conditions, when consumers have more disposable income, the Directors believe (based on consumer surveys and trading performance) that consumers will continue to shop in Poundland’s stores, and may spend more in Poundland’s stores, including on higher margin discretionary products. However, there is a risk that positive economic conditions may not lead to consumers spending more or shopping as frequently in value general merchandise retailers.

The Group’s business is dependent on its ability to identify, obtain, distribute and market merchandise attractive to customers at prices that allow it to profitably sell such merchandise. In addition, the Group’s profitability is affected by the mix of products it sells. Poundland derives a significant amount of its revenue from the sale of products that are subject to rapidly changing consumer demand. Accordingly, the success of its business depends in part on its ability to identify and respond promptly to evolving trends in consumer preferences and demographics, and to translate these trends into appropriate, saleable merchandise. In addition, Poundland seeks to change and refresh its product offering continually in order to drive traffic through its stores. Historically, Poundland generally has been able to obtain sufficient quantities of attractive merchandise at commercially viable prices. However, if Poundland is unable to identify and in some cases develop products attractive to customers, obtain such products at costs that allow it to sell such products profitably, or distribute and market such products effectively to consumers, Poundland’s sales or profitability could be materially adversely affected. In recent years, as part of the Group’s strategy to drive sales growth, the proportion of Poundland’s sales arising from fast-moving consumer goods (‘‘FMCG’’) products has increased. While this shift to high volume products in the mix of sales has had a dilutive impact on gross margins, this has been offset by increased gross margins within most other product categories. As a result, Poundland has achieved stable gross margins over the last three years. If in the future Poundland is unable to continue to balance the impact of changes in sales mix and individual categories’ gross margins, Poundland’s profitability could be materially adversely affected. A failure to adequately manage its product inventory, maintain its level of innovation or anticipate accurately the changes in consumer preferences and spending patterns could have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group’s success is dependent on its logistics and distribution infrastructure. The success of Poundland’s business depends on its ability to transport goods from its three distribution centres to its stores throughout the UK and Ireland in a timely and cost-effective manner. Any unexpected delivery delays, such as due to severe weather or disruptions to the national or international transportation infrastructure, or increases in transportation costs, such as due to increased fuel costs, could materially adversely affect Poundland’s business. Although Poundland delivers the majority of its goods from its distribution centres to its stores, it also relies to a certain extent on third-party transportation providers, such as AM Nexday and DHL. Poundland’s use of third-party delivery services is subject to risks of those third parties, such as labour shortages and work stoppages, and any disruption, unanticipated expense or operational failure related to these services could negatively affect store operations. If Poundland is required to change transportation providers, Poundland may not be able to obtain terms as favourable as its current terms, which could increase its costs. If Poundland changes transportation providers, it could face unanticipated logistical difficulties that could adversely impact deliveries and Poundland could incur

15 costs and expend resources in connection with that change. Any disruption or any increase in costs related to distribution could have a material adverse effect on the Group’s business, results of operations and financial condition. In addition, Poundland needs to ensure that its distribution infrastructure is able to adequately support its anticipated growth and increased number of stores, both in the UK and Ireland and as it expands as currently planned into continental Europe. In late 2014, Poundland plans to replace its Hoddesdon distribution centre with one seven miles away in Harlow. This change to Poundland’s current distribution network adds risk, including the potential for delay in opening and the risk of disruption during the early phases of new warehouse operations. In the future, the cost of any enhanced distribution infrastructure could be significant and any delays to such expansion could materially adversely affect Poundland’s growth strategy.

Poundland relies on third-party suppliers, and if it fails to identify, develop and maintain relationships with a significant number of qualified suppliers, or if there is a significant interruption in its supply chains or increases in the costs of its products, its business, results of operations and financial condition could be adversely affected. Like many retailers, Poundland is dependent on being able to source suitable products from suppliers at a sufficiently low cost and in a timely manner. Poundland may not be able to identify and develop relationships with qualified suppliers who can satisfy its standards for price, quality, safety and its quantity requirements. This risk may increase as Poundland expands, as it will need to source significantly greater quantities from suppliers in order to realise its growth strategy. Although Poundland has long-term relationships with many suppliers, purchasing is done, as is common for retailers, on a purchase-order basis rather than pursuant to a long-term supply arrangement. Therefore, suppliers could seek to end their relationship with Poundland or vary the terms from one purchase order to the next. Poundland’s sales, operating results and inventory levels could suffer if it is unable to promptly replace a supplier who is unwilling or unable to satisfy its price, quality, safety standards or quantity requirements. The loss of, or substantial decrease in the availability of, products from its suppliers, or the loss of a key supplier, could have a material adverse effect on the Group’s business, results of operations and financial condition. Supply interruptions could arise from shortages of raw materials, labour disputes or weather conditions affecting products or shipments, transportation disruptions or other factors beyond Poundland’s control. A disruption in the timely availability of Poundland’s products by key suppliers would result in a decrease in Poundland’s sales and profitability. Like other retailers, Poundland has in the past and may in the future experience product shortages, such as if a supplier fails to deliver on its commitments due to financial or other difficulties, which could lead to lost sales or increased costs if alternative sources must be found.

The Group is exposed to the risk of damage to the brands of its merchandise, including its own label brands, and a decline in customer confidence in the Group or its products. Poundland’s sales are dependent in part on the strength and reputation of the brands it offers, including both third-party brands and own label brands, and are subject to consumers’ perceptions of the Group and its products. For third-party brands, which accounted for approximately 63 per cent. of Poundland’s sales in the 2013 financial year, Poundland is dependent on its suppliers’ investment in marketing and promoting their brands in order for consumers to purchase their products rather than those of the brands’ competitors. The Group has also improved its offering of own label items which are important for future growth prospects as own label items offer a significant means of competitor differentiation and also generally offer more attractive margins. Maintaining broad market acceptance of its own label items depends on many factors, including value, quality and customer perception. The Group may not in the future achieve or maintain its expected sales of its own label products, which could have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group’s business and competitive position is subject to the risk of weak sales during peak selling seasons, which could materially adversely affect its operating profit and results of operations. Poundland’s retail business is subject to seasonal peaks associated with, in particular, Christmas and Halloween in the third quarter of the Group’s financial year. Poundland also has seasonal peaks associated with other annual events, such as Easter, the back-to-school period and the gardening season. These seasonal peaks may pose risks regarding Poundland’s inventory management. Poundland incurs additional expenses in advance of these peaks in anticipation of higher sales during such periods, including the cost of additional inventory, advertising and employees. If revenue during its peak selling seasons is significantly

16 lower than expected, the Group may be unable to adjust its expenses in a timely manner and be left with a substantial amount of unsold inventory, especially in seasonal merchandise, which will generally be stored away to be sold at a later point in time rather than be written off. Similarly, if the Group fails to purchase a sufficient quantity of merchandise in advance of a peak selling season, it may not have an adequate supply of products to meet consumer demand, which could have a negative impact on customer loyalty and cause lost sales. Any adverse events, such as poor economic conditions, higher unemployment, higher fuel prices, public transportation disruptions, prolonged unseasonal or severe weather or civil unrest, which occur during Poundland’s peak trading seasons could have a greater impact on Poundland, which could have a material adverse effect on the Group’s business, results of operations and financial condition.

An increase in the cost or a disruption in the flow of Poundland’s imported goods may significantly affect its sales and profits. Although Poundland sources the majority of its merchandise from UK suppliers, it also purchases products from overseas. Imported goods are generally less expensive than goods sourced in the UK and therefore increase the Group’s profit margins. Any disruption affecting the flow of the Group’s imported merchandise, including delays in delivery or failure to maintain quality standards, or an increase in the cost of importing those goods, such as through changes in foreign exchange rates, the imposition of taxes, custom duties or other charges or costs associated with the transportation and delivery of products, may significantly decrease its profits. Any of these risks could restrict the availability of merchandise or significantly increase the cost of Poundland’s merchandise, which could have a material adverse effect on Poundland’s business, results of operations and financial condition. In addition, imported goods usually have longer lead times (up to nine months) than products sourced from the UK. Therefore, there is a risk that Poundland misjudges future consumer demand, and, as a result, over-orders or under-orders stock, which could lead to lost sales or increased costs.

The Group depends on Senior Management and other highly qualified employees to manage its business and brands and the loss of a material number of any such individuals could adversely affect its business. The success of Poundland’s strategy depends on the continuing services of Senior Management and the Group’s ability to continue to attract, motivate and retain other highly qualified employees. Retention of Senior Management and other highly qualified employees is especially important in the Group’s business due to the limited availability of experienced and talented retail executives. If Poundland were to lose the services of a material number of its Senior Management or other highly qualified employees and were unable to find suitable replacements in a timely manner, or at all, its business, results of operations and financial condition could be materially adversely affected.

Failure to attract and retain qualified employees while controlling labour costs could adversely affect the Group’s business and financial results. The Group’s future growth and performance depends on its ability to attract, retain and motivate qualified employees, many of whom are in positions with historically high rates of turnover such as in retail operations and in distribution centres. The Group’s ability to meet its labour needs, while controlling its labour costs, is subject to many external factors, including competition for and availability of qualified personnel in a given market, unemployment levels within those markets, prevailing wage rates, minimum wage laws, health and other insurance costs, union membership levels and activity among its employees and changes in employment and labour laws or other workplace regulation. Any failure by Poundland to recruit and retain qualified employees could impact its sales performance, increase its wage costs and adversely affect its business, results of operations and financial condition.

Any interruption or failure of the Group’s information technology or communications systems could have a material adverse effect on the Group’s business, results of operations and financial condition. Poundland relies to a significant degree on the uninterrupted operation of its computer and communications systems, as well as the equivalent systems of third parties, for the efficient running of its business, including with respect to inventory, merchandising, finance, human resources, distribution and logistics and store operations. These systems may be vulnerable to damage or interruption from fire, telecommunication failures, floods, physical or electronic break-ins, computer viruses, power outages and other malfunctions or disruptions. Any significant disruption to these systems could have an adverse effect

17 on the proper functioning of its stores, particularly with regard to store replenishment and distribution activities, which can be impacted even by short-term system failures, and on the Group’s ability to manage its operations. In the event of a failure of, or disruption to, one or more of these systems, Poundland’s disaster recovery and contingency procedures may not be adequate or effective, which could have a material adverse effect on the Group’s business, results of operations and financial condition. In addition, Poundland’s inability to upgrade or install technology in a timely manner, train its employees effectively in the use of its technology or obtain the anticipated benefits of its technology could adversely impact Poundland’s operations or profitability.

Poundland’s pilot launch into continental Europe may be unsuccessful. Following the introduction of Dealz in Ireland, Poundland is in the process of developing plans to trial Dealz stores in continental Europe, with a low-cost pilot launch planned for Spain in the 2015 financial year. The Spanish market may have different competitive conditions, market conditions, consumer tastes and discretionary spending patterns than Poundland’s existing markets, which may cause these new stores to fail to achieve expected sales and profit targets and, accordingly, may need to be closed at a cost to the Group.

Compliance with existing laws and regulations or changes in any such laws and regulations could affect Poundland’s business, financial condition and results of operations. The Group is subject to a wide array of laws and regulations and it routinely incurs costs in complying with these regulations. New laws or regulations or changes in existing laws and regulations, particularly those governing the sale of products or in other regulatory areas such as consumer credit, privacy, information security, labour and employment, competition, health and safety or environmental protection, may require extensive system and operating changes that may be difficult to implement and could increase the Group’s cost of doing business. In addition, if it fails to comply with applicable laws and regulations, the Group could be subject to legal risks, including government enforcement action, which could adversely affect its results of operations. Furthermore, changes in tax laws, the interpretation of existing laws, or the Group’s failure to sustain its reporting positions on examination could adversely affect its effective tax rate, which could impact its results of operations.

Poundland relies on its suppliers, agents and distributors to comply with employment, environmental and other laws. Poundland has processes to check that its suppliers, agents and distributors are in compliance with the Group’s terms and conditions, as well as employment, environmental and other relevant laws generally. However, it can give no assurance that these individuals are or will remain in compliance with such terms and conditions or laws. In light of the increased public focus on employment and environmental matters, a violation, or allegations of a violation, of such laws or regulations, or a failure to achieve particular standards, by any of the Group’s suppliers, agents or distributors, could lead to adverse publicity and a decline in public demand for the Group’s products, or require the Group to incur expenditure or make changes to its supply chain and other business arrangements to ensure compliance. Any such events could have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group’s cash flows from operations may be negatively affected if it is not successful in managing its inventory balances or level of inventory shrinkage. To be successful, Poundland must maintain sufficient inventory levels to meet its customers’ demands without allowing those levels to increase to an extent such that the costs to store and hold the goods unduly impacts its financial results. If Poundland is not successful in managing its inventory balances, its cash flows from operations may be negatively affected. In addition, Poundland, like other retailers, experiences inventory shrinkage, and it can give no assurance that incidences of inventory loss and theft will not increase in the future or that the measures it is taking will effectively reduce the problem of inventory shrinkage. Although some level of inventory shrinkage is an unavoidable cost of doing business, if Poundland were to experience higher rates of inventory shrinkage or incur increased security costs to combat inventory theft, its operating profit and financial condition could be materially adversely affected.

18 The Group is subject to the risk of product liability claims and product recalls which could adversely affect its business, reputation and financial performance. Despite Poundland’s efforts to ensure the quality and safety of its products, it may be subject to product liability claims from customers or government penalties, including with respect to food or other products that are recalled, defective or otherwise alleged to be harmful. Although Poundland generally seeks contractual indemnification and insurance coverage from its suppliers, it may not have adequate contractual indemnification and/or insurance available, which in certain cases may require Poundland to respond to claims or complaints from customers as if it were the manufacturer. Even with adequate insurance and indemnification, such claims could significantly damage Poundland’s reputation and consumer confidence in the products it offers. Poundland’s litigation and insurance expenses could also increase, which could have a materially negative impact on its results of operations even if a product liability claim is unsuccessful or is not fully pursued.

The Group may be subject to adverse fluctuations in currency exchange rates. The Group pays certain suppliers overseas in US dollars; however, Poundland’s customers pay for products in sterling in the UK and euros in Ireland. Consequently, Poundland bears the risk of disadvantageous changes in exchange rates, particularly by a strengthening of the US dollar compared to sterling or euros. The Group also has euro translation risk from the contribution of the Dealz business, which will increase as the business grows. If Poundland is successful in expanding its business into continental Europe, then its exposure to euro translation risk may increase, depending upon the scale of the business. Although the Group engages in foreign exchange hedging transactions, these transactions may not in the future be sufficient to adequately protect the Group’s operating results from the effects of exchange rate fluctuations. In addition, the Group’s hedging transactions may reduce any benefit that it might otherwise receive as a result of favourable movements in exchange rates.

The Group’s business and competitive position could be harmed if it is unable to protect and enforce its intellectual property rights. The Group’s trademarks are central to the value of the Group’s brands. Third parties may in the future counterfeit the Group’s brands, otherwise infringe the Group’s intellectual property rights or try to challenge the validity of the Group’s intellectual property. The Group may not always be able to secure protection for, or stop infringements of, its intellectual property, and may need to resort to litigation in the future to enforce its intellectual property rights. In addition, the Group may be subject to claims that it has infringed intellectual property owned by others and may be required to pay damages or face other penalties. Any litigation could result in substantial costs and a diversion of resources.

Any failure to protect customers’ confidential information could harm the Group’s reputation and expose the Group to litigation. The Group must comply with restrictions on the use of customer data and ensure that confidential information (such as credit or debit card numbers) is transmitted in a secure manner over public networks. Despite controls to ensure the confidentiality and integrity of customer data, the Group may breach restrictions or may be subject to attack from computer programmes that attempt to penetrate the network security and misappropriate confidential information. Any such breach or comprise of security could adversely impact the Group’s reputation with current and potential customers, lead to litigation or fines, and as a result, have a material adverse effect on its business, results of operations and financial condition.

Risks relating to the Global Offer and the Ordinary Shares There is no existing market for the Ordinary Shares and an active trading market for the Ordinary Shares may not develop or be sustained. Prior to Admission, there has been no public trading market for the Ordinary Shares. Although Poundland has applied to the UK Listing Authority for admission to the premium listing segment of the Official List and has applied to the London Stock Exchange for admission to trading on its main market for listed securities, Poundland can give no assurance that an active trading market for the Ordinary Shares will develop or, if developed, could be sustained following the closing of the Offer. If an active trading market is not developed or maintained, the liquidity and trading price of the Ordinary Shares could be adversely affected.

19 Ordinary Shares in the Company may be subject to market price volatility and the market price of the Ordinary Shares in the Company may decline disproportionately in response to developments that are unrelated to the Company’s operating performance. The Offer Price is not indicative of the market price of the Ordinary Shares following Admission. The market price of the Ordinary Shares may be volatile and subject to wide fluctuations. The market price of the Ordinary Shares may fluctuate as a result of a variety of factors, including, but not limited to, those referred to in these Risk Factors, as well as period-to-period variations in operating results or changes in revenue or profit estimates by Poundland, industry participants or financial analysts. The market price could also be adversely affected by developments unrelated to Poundland’s operating performance, such as the operating and share price performance of other companies that investors may consider comparable to Poundland, speculation about Poundland in the press or the investment community, unfavourable press, strategic actions by competitors (including acquisitions and restructurings), changes in market conditions and regulatory changes. Any or all of these factors could result in material fluctuations in the price of Ordinary Shares, which could lead to investors getting back less than they invested or a total loss of their investment.

The Warburg Pincus Funds will retain a significant interest in and will continue to exert substantial influence over the Group following the Offer and its interests may differ from or conflict with those of other shareholders. Immediately following Admission, the Warburg Pincus Funds will continue to own beneficially approximately 37.9 per cent. of the issued ordinary share capital of the Company (assuming no exercise of the Over-allotment Option and 30.4 per cent. if the Over-allotment Option is exercised in full). As a result, the Warburg Pincus Funds will possess sufficient voting power to have a significant influence over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. The interests of the Warburg Pincus Funds may not always be aligned with those of other holders of Ordinary Shares. In particular, the Warburg Pincus Funds may hold interests in, or may make acquisitions of or investments in, other businesses that may be, or may become, competitors of the Group.

Shareholders in the United States and other jurisdictions may not be able to participate in future equity offerings. The Articles provide for pre-emption rights to be granted to shareholders in the Company, unless such rights are disapplied by a shareholder resolution. However, securities laws of certain jurisdictions may restrict the Group’s ability to allow participation by shareholders in future offerings. In particular, shareholders in the United States may not be entitled to exercise these rights, unless either the Ordinary Shares and any other securities that are offered and sold are registered under the Securities Act, or the Ordinary Shares and such other securities are offered pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company cannot assure prospective investors that any exemption from such overseas securities law requirements would be available to enable US or other shareholders to exercise their pre-emption rights or, if available, that the Company will utilise any such exemption.

Not all rights available to shareholders under US law will be available to holders of the Ordinary Shares. Rights afforded to shareholders under English law differ in certain respects from the rights of shareholders in typical US companies. The rights of holders of the Ordinary Shares are governed by English law and the Articles. In particular, English law currently limits significantly the circumstances under which the shareholders of English companies may bring derivative actions. Under English law, in most cases, only the Company may be the proper plaintiff for the purposes of maintaining proceedings in respect of wrongful acts committed against it and, generally, neither an individual shareholder, nor any group of shareholders, has any right of action in such circumstances. In addition, English law does not afford appraisal rights to dissenting shareholders in the form typically available to shareholders in a US company.

The market price of the Ordinary Shares could be negatively affected by sales of substantial amounts of such shares in the public markets, including following the expiry of the lock-up period, or the perception that these sales could occur. Following completion of the Global Offer, the Warburg Pincus Funds and the Directors and Senior Management will own beneficially, in aggregate, 48.1 per cent. of the Company’s issued ordinary share capital (assuming no exercise of the Over-allotment Option and 40.6 per cent. if the Over-allotment

20 Option is exercised in full). The Company, the Warburg Pincus Funds, the Directors and Senior Management are subject to restrictions on the sale and/or transfer of their respective holdings in the Company’s issued share capital as described in paragraph 8 of Part 11—‘‘Details of the Global Offer— Lock-up arrangements’’. The issue or sale of a substantial number of Ordinary Shares by the Directors, Senior Management or the Warburg Pincus Funds in the public market after the lock-up restrictions in the Underwriting Agreement expire (or are waived by the Underwriters), or the perception that these sales may occur, may depress the market price of the Ordinary Shares and could impair the Group’s ability to raise capital through the sale of additional equity securities.

The issuance of additional Ordinary Shares in the Company in connection with future acquisitions, any share incentive or share option plan or otherwise may dilute all other shareholdings. The Group may seek to raise financing to fund future acquisitions and other growth opportunities. The Group may, for these and other purposes, such as in connection with share incentive and share option plans, issue additional equity or convertible equity securities. As a result, the Company’s existing Shareholders may suffer dilution in their percentage ownership or the market price of the Ordinary Shares may be adversely affected.

The Company’s ability to pay dividends in the future depends, among other things, on the Group’s financial performance and capital requirements and is therefore not guaranteed. There can be no guarantee that Poundland’s historic performance will be repeated in the future, particularly given the competitive nature of the industry in which it operates, and its sales, profit and cash flow may significantly underperform market expectations. If Poundland’s cash flow underperforms market expectations, then its capacity to pay a dividend will suffer. While the Directors intend to adopt a dividend policy which reflects the long-term earnings and cash flow potential of the Group targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings (see paragraph 8 of Part 8—‘‘Operating and Financial Review—Dividend Policy’’), there can be no assurance that Poundland will pay dividends in the future. Any decision to declare and pay dividends will be made at the discretion of the Directors and will depend on, among other things, applicable law, regulation, restrictions, Poundland’s financial position, regulatory capital requirements, working capital requirements, finance costs, general economic conditions and other factors the Directors deem significant from time to time.

Overseas shareholders may be subject to exchange rate risk. The Ordinary Shares are, and any dividends to be paid in respect of them will be, denominated in pounds sterling. An investment in Ordinary Shares by an investor whose principal currency is not pounds sterling exposes the investor to foreign currency exchange rate risk. Any depreciation of pounds sterling in relation to such foreign currency will reduce the value of the investment in the Ordinary Shares or any dividends in foreign currency terms.

21 PART 2 PRESENTATION OF FINANCIAL AND OTHER INFORMATION General Investors should only rely on the information in this Prospectus. No person has been authorised to give any information or to make any representations in connection with the Global Offer, other than those contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Company, the Directors, the Selling Shareholders, any of the Underwriters or Rothschild. No representation or warranty, express or implied, is made by any of the Underwriters, Rothschild or any selling agent as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by any of the Underwriters, Rothschild or any selling agent as to the past, present or future. Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant to FSMA, neither the delivery of this Prospectus nor any subscription or sale of Ordinary Shares pursuant to the Global Offer shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Group since the date of this Prospectus or that the information contained herein is correct as of any time subsequent to its date. The Company will update the information provided in this Prospectus by means of a supplement hereto if a significant new factor that may affect the evaluation by prospective investors of the Global Offer occurs after the publication of the Prospectus or if this Prospectus contains any mistake or substantial inaccuracy. The Prospectus and any supplement thereto will be subject to approval by the FCA and will be made public in accordance with the Prospectus Rules. If a supplement to the Prospectus is published prior to Admission, investors shall have the right to withdraw their applications for Ordinary Shares made prior to the publication of the supplement. Such withdrawal must be made within the time limits and in the manner set out in any such supplement (which shall not be shorter than two clear business days after publication of the supplement). The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice. In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Global Offer, including the merits and risks involved. This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Directors, the Selling Shareholders, or any of the Underwriters or Rothschild or any of their representatives that any recipient of this Prospectus should purchase the Ordinary Shares. Prior to making any decision as to whether to purchase the Ordinary Shares, prospective investors should read this Prospectus. Investors should ensure that they read the whole of this Prospectus carefully and not just rely on key information or information summarised within it. In making an investment decision, prospective investors must rely upon their own examination of the Company and the terms of this Prospectus, including the risks involved. Investors who purchase Ordinary Shares in the Global Offer will be deemed to have acknowledged that: (i) they have not relied on any of the Underwriters or Rothschild or any person affiliated with any of them in connection with any investigation of the accuracy of any information contained in this Prospectus or their investment decision; and (ii) they have relied on the information contained in this Prospectus, and no person has been authorised to give any information or to make any representation concerning the Group or the Ordinary Shares (other than as contained in this Prospectus) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company, the Directors, the Selling Shareholders, any of the Underwriters or Rothschild. None of the Company, the Directors, the Selling Shareholders, any of the Underwriters or Rothschild or any of their representatives is making any representation to any offeree or purchaser of the Ordinary Shares regarding the legality of an investment by such offeree or purchaser. In connection with the Global Offer, each of the Underwriters and Rothschild and any of their respective affiliates, acting as investors for their own accounts, may purchase Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Global Offer or otherwise. Accordingly, references in this Prospectus to the Ordinary Shares being issued, offered, acquired, placed or otherwise dealt in should be read as including any or issue, offer, acquisition, dealing

22 or placing by, each of the Underwriters and Rothschild and any of their affiliates acting as investors for their own accounts. None of the Underwriters nor Rothschild intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so. In addition, in connection with the Global Offer, certain of the Underwriters may enter into financing arrangements with investors, such as share swap arrangements or lending arrangements where Ordinary Shares are used as collateral, that could result in such Underwriters acquiring shareholdings in the Company.

Presentation of financial information Unless stated otherwise, the financial information in this Prospectus has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘‘IFRS’’). The significant IFRS accounting policies applied in the financial information of the Group are applied consistently in the financial information in this Prospectus. The 2011 financial period is the first period for which IFRS accounting policies have been applied and accordingly IFRS information prior to that date is not available.

Financial information The 2011 financial period constitutes the 41 week period ended 27 March 2011, reflecting the trading performance of the Group from the date of the acquisition of the Group by the Warburg Pincus Funds. The 2012 financial year was a 53 week period and the 2013 financial year was a 52 week period. As a result, the comparability of the 2011 financial period against the 2012 financial year is limited. In addition, the Group’s results for the 2012 financial year include an additional week of trading as compared to the 2013 financial year, which impacts comparability with the 2013 financial year. The financial information included in Part 10—‘‘Historical Financial Information’’ is covered by the respective accountant’s report included on pages 81–82 of this Prospectus, which was conducted in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. To assist prospective investors in comparing the Group’s historical financial performance from period to period, certain KPIs, other operating metrics and store performance indicators have been presented on a 52 week basis for the 2011 financial period, assuming that the acquisition of the Group by the Warburg Pincus Funds had occurred on 29 March 2010, as well as for the 2012 financial year by adjusting for the impact of the 53rd week in that financial year. These KPIs, other operating metrics and store performance indicators have not been prepared under IFRS and have not been audited. The unaudited adjusted financial information relating to revenue, gross margin, Underlying EBITDA, Underlying EBITDA margin and underlying profit for the 52 week period ended 27 March 2011 has been derived from the audited UK GAAP financial information for Poundland Limited, the principal trading company of the Group, for the 52 week period ended 27 March 2011, with UK GAAP-to-IFRS adjustments and adjustments for consolidation of the results of the Company and its non-trading subsidiaries and subsidiary undertakings. A reconciliation of certain KPIs for Poundland Limited (derived from the audited UK GAAP financial information referred to above) to those of Poundland (unaudited, IFRS) for the 52 week period ended 27 March 2011 is set out below:

Poundland Limited (derived from audited UK GAAP financial Poundland information) (Unaudited, IFRS) 52 weeks endedAdjustments 52 weeks ended 27 March 2011 IFRS Consolidation 27 March 2011 (£ millions) Revenue ...... 641.5 — — 641.5 Gross profit ...... 235.4 — — 235.4 Underlying EBITDA ...... 31.6 (0.5) — 31.1 Underlying Profit ...... 15.9 (0.9) (3.0) 12.0 This unaudited 52 week adjusted financial information has been prepared for illustrative purposes only and has not been prepared in accordance with the Prospectus Directive, Regulation S-X of the Securities Act or generally accepted accounting standards. There is no difference between either revenue or gross profit under IFRS and UK GAAP for this period. For certain other KPIs, other operating metrics and store

23 performance indicators, the same methodology has been applied in converting these to IFRS as in the 2011 financial period and 2012 and 2013 financial years. For a comparable 52 week period for the 2012 financial year, for certain KPIs, other operating metrics and store performance indicators, this has been calculated by dividing the 2012 financial year figures by 53 and multiplying by 52 to allow for comparability with the 52 weeks ended 27 March 2011 and the 2013 financial year. None of the financial information used in this Prospectus has been audited in accordance with auditing standards generally accepted in the United States of America (‘‘US GAAS’’) or auditing standards of the Public Company Accounting Oversight Board (United States) (‘‘PCAOB’’). US GAAS and the auditing standards of the PCAOB do not provide for the expression of an opinion on accounting standards which have not been finalised and are still subject to modification, as is the case with accounting standards as adopted for use in the EU and included in Part 10—‘‘Historical Financial Information’’. Accordingly, it would not be possible to express any opinion on the financial information in Part 10—‘‘Historical Financial Information’’ under US GAAS or the auditing standards of the PCAOB. In addition, there could be other differences between the auditing standards issued by the Auditing Practices Board in the United Kingdom and those required by US GAAS or the auditing standards of the PCAOB. Potential investors should consult their own professional advisers to gain an understanding of the ‘‘Historical Financial Information’’ in Part 10—‘‘Historical Financial Information’’ and the implications of differences between the auditing standards noted herein.

Non-IFRS financial information This Prospectus contains certain financial measures that are not defined or recognised under IFRS, including underlying trading measures, EBITDA, Underlying EBITDA, like-for-like revenue and growth, operating cash flow and cash conversion.

EBITDA and Underlying EBITDA EBITDA, as used in this Prospectus, represents profit for the period before finance costs, finance income, tax and depreciation and amortisation. EBITDA is presented to enhance a prospective investor’s understanding of the Group’s results of operations and financial condition and to enhance a prospective investor’s evaluation of the Group’s ability to employ its earnings towards capital expenditures and working capital. Underlying EBITDA, as used in this Prospectus, represents EBITDA excluding exceptional and non-trading items. These exceptional and non-trading items are set out in Note 6 of Part 10—‘‘Historical Financial Information’’. The Directors use Underlying EBITDA as a KPI of the Group’s business. The Group uses Underlying EBITDA in its business to, among other things, evaluate the performance of its operations, develop budgets and measure performance against those budgets. The Directors view Underlying EBITDA as a supplemental tool to assist in evaluating business performance as it excludes items related to taxes, exceptional items and certain non-cash charges. The Directors believe that Underlying EBITDA is a more accurate reflection of the underlying business performance of the Group and believe that this measure provides additional useful information for prospective investors on the Group’s performance, enhances comparability from period to period and with other companies in its industry, and is consistent with how business performance is measured internally. However, EBITDA and Underlying EBITDA are not defined under IFRS and other companies may calculate EBITDA and Underlying EBITDA differently or may use such measures for different purposes than the Group does, limiting the usefulness of such measures as comparative measures. Prospective investors should not consider EBITDA or Underlying EBITDA in isolation, as an alternative to consolidated profit before tax, as an indication of operating performance, as an alternative to cash flows from operations or as a measure of the Company’s profitability or liquidity.

Like-for-like revenue and growth Like-for-like revenue, as used in this Prospectus, represents the revenue attributable to stores which have traded for a minimum of 14 months. Where Poundland opens a second store in the same town, the existing store is removed from the like-for-like pool until the second store qualifies for like-for-like status. Where stores are re-sited in the same town and in the same locations, they remain in the like-for-like pool. If the re-sited store is in a different shopping location, the store is removed from the like-for-like pool.

24 Like-for-like information is unaudited and is presented to enhance comparability of the Group’s results of operations from period to period by disregarding the impact of new store openings. The Directors use like-for-like revenue as a supplemental tool to assist in evaluating business performance, but it is not viewed as a KPI.

Operating cash flow and cash conversion Operating cash flow, as presented in this Prospectus, represents Underlying EBITDA adjusted for certain non-cash accounting charges and exceptional items and non-trading items and after changes in working capital and certain capital expenditure. Changes in working capital is defined as the sum of the changes in trade and other receivables, inventories, trade and other payables and provisions. Operating cash flow is unaudited and is presented to enhance a prospective investor’s understanding of the Group’s cash generation and provide prospective investors with a useful supplemental measure for comparing the Group’s liquidity from period to period without the distortions of exceptional and other non-operating items, as well as certain non-cash accounting measures. The Directors use operating cash flow as a KPI of the Group’s business. Cash conversion, as presented in this Prospectus, is defined as operating cash flow divided by Underlying EBITDA. Operating cash flow is unaudited and is presented to enhance a prospective investor’s understanding of the Group’s cash generation and provide prospective investors with a useful supplemental measure for comparing the Group’s liquidity from period to period and to evaluate the efficiency with which the Group converts Underlying EBITDA into cash. Operating cash flow and cash conversion are not defined under IFRS and other companies may calculate operating cash flow and cash conversion differently or may use such measures for different purposes than the Group does, limiting the usefulness of such measures as comparative measures. Prospective investors should not consider operating cash flow and cash conversion in isolation, as an alternative to profit before tax, as an indication of operating performance, as an alternative to cash flows from operating activities or as a measure of the Company’s profitability or liquidity.

Currency presentation Unless otherwise indicated, all references in this Prospectus to ‘‘sterling’’, ‘‘pounds sterling’’, ‘‘GBP’’, ‘‘£’’, or ‘‘pence’’ are to the lawful currency of the United Kingdom. The Company prepares its financial statements in pounds sterling. All references to the ‘‘euro’’, ‘‘A’’ or ‘‘c’’ are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended. All references to ‘‘US dollars’’ or ‘‘US$’’ are to the lawful currency of the United States. The average exchange rates of the Group’s main trading currencies, other than pounds sterling, are shown relative to pounds sterling below. The rates below may differ from the actual rates used in the preparation of the financial statements and other financial information that appear elsewhere in this Prospectus. The inclusion of these exchange rates is for illustrative purposes only and does not mean that the sterling amounts actually represent such US dollar or euro amounts or that such sterling amounts could have been converted into US dollars or euros at any particular rate, if at all.

Average rate against pounds sterling on US dollar euro 31 March 2009 ...... 1.4299 1.0808 31 March 2010 ...... 1.5191 1.1228 31 March 2011 ...... 1.6064 1.1320 31 March 2012 ...... 1.5991 1.1994 31 March 2013 ...... 1.5195 1.1853

Average rate against pounds sterling for the year ended US dollar euro 31 March 2009 ...... 1.7182 1.2032 31 March 2010 ...... 1.5965 1.1295 31 March 2011 ...... 1.5562 1.1770 31 March 2012 ...... 1.5961 1.1594 31 March 2013 ...... 1.5806 1.2278

25 Average rate against pounds sterling for the month ended US dollar euro 31 August 2013 ...... 1.5506 1.1645 30 September 2013 ...... 1.5848 1.1873 31 October 2013 ...... 1.6090 1.1797 30 November 2013 ...... 1.6104 1.1936 31 December 2013 ...... 1.6451 1.2061 31 January 2014 ...... 1.6383 1.1955 28 February 2014 ...... 1.6566 1.2118

Source: Bloomberg

Roundings Certain data in this Prospectus, including financial, statistical, and operating information, has been rounded. As a result of the rounding, the totals of data presented in this Prospectus may vary slightly from the actual arithmetic totals of such data. Percentages in tables have been rounded and accordingly may not add up to 100 per cent.

Market, economic and industry data Unless the source is otherwise stated, the market, economic and industry data in this Prospectus constitute the Directors’ estimates, using underlying data from independent third parties. The Company obtained market data and certain industry forecasts used in this Prospectus from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications, including publications and data compiled by PwC, Planet Retail and YouGov. The Company confirms that all third-party data contained in this Prospectus has been accurately reproduced and, so far as the Company is aware and able to ascertain, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where third-party information has been used in this Prospectus, the source of such information has been identified.

Service of process and enforcement of civil liabilities The Company has been incorporated under English law. Service of process upon Directors and officers of the Company, all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, since most directly owned assets of the Company are outside the United States, any judgment obtained in the United States against it may not be collectible within the United States. There is doubt as to the enforceability of certain civil liabilities under US federal securities laws in original actions in English courts, and, subject to certain exceptions and time limitations, English courts will treat a final and conclusive judgment of a US court for a liquidated amount as a debt enforceable by fresh proceedings in the English courts.

No incorporation of website information The contents of the Company’s website do not form part of this Prospectus.

Definitions and glossary Certain terms used in this Prospectus, including all capitalised terms and certain technical and other items, are defined and explained in Part 13—‘‘Definitions and Glossary’’.

Information not contained in this Prospectus No person has been authorised to give any information or make any representation other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been so authorised. Neither the delivery of this Prospectus nor any subscription or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Prospectus or that the information in this Prospectus is correct as of any time subsequent to the date hereof.

26 Information regarding forward-looking statements This Prospectus includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Group’s control and all of which are based on the Directors’ current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as ‘‘believe’’, ‘‘expects’’, ‘‘may’’, ‘‘will’’, ‘‘could’’, ‘‘should’’, ‘‘shall’’, ‘‘risk’’, ‘‘intends’’, ‘‘estimates’’, ‘‘aims’’, ‘‘plans’’, ‘‘predicts’’, ‘‘continues’’, ‘‘assumes’’, ‘‘positioned’’ or ‘‘anticipates’’ or the negative thereof, other variations thereon or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Prospectus and include statements regarding the intentions, beliefs or current expectations of the Directors or the Group concerning, among other things, the results of operations, financial condition, prospects, growth, strategies (including continued store roll out plans), and dividend policy of the Group and the industry in which it operates. In particular, the statements under the headings ‘‘Summary Information’’, ‘‘Risk Factors’’, ‘‘Information on the Company and its Group’’ and ‘‘Operating and Financial Review’’ regarding the Company’s strategy and other future events or prospects are forward-looking statements. These forward-looking statements and other statements contained in this Prospectus regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed, or implied in such forward-looking statements. Such forward-looking statements contained in this Prospectus speak only as of the date of this Prospectus. The Company, the Directors, the Selling Shareholders, the Underwriters and Rothschild expressly disclaim any obligation or undertaking to update these forward-looking statements contained in the document to reflect any change in their expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law, the Prospectus Rules, the Listing Rules, or the Disclosure and Transparency Rules of the FCA.

27 PART 3 DIRECTORS, SECRETARY, REGISTERED AND HEAD OFFICE AND ADVISERS

Directors Andrew Thomas Higginson, Independent Non-Executive Chairman James John McCarthy, Chief Executive Officer Nicholas Hateley, Chief Financial Officer Richard Lancaster, Executive Director Paul Best, Non-Executive Director Stephen John Coates, Non-Executive Director Darren Shapland, Independent Non-Executive Director Trevor Bond, Independent Non-Executive Director Teresa Colaianni, Independent Non-Executive Director Grant Hearn, Independent Non-Executive Director Company Secretary Jinder Jhuti Registered and head office of Wellmans Road the Company Willenhall West Midlands WV13 2QT Joint Global Co-ordinators, Credit Suisse Securities J.P. Morgan Securities plc Joint Bookrunners and Joint (Europe) Limited 25 Bank Street Sponsors One Cabot Square London E14 5JP London E14 4QJ Co-Lead Managers Canaccord Genuity Limited Shore Capital Stockbrokers 88 Wood Street Limited London EC2V 7QR Bond Street House 14 Clifford Street London W1S 4JU Financial Adviser to the N M Rothschild & Sons Limited Company New Court St Swithin’s Lane London EC4N 8AL English and US legal advisers Freshfields Bruckhaus Deringer LLP to the Company 65 Fleet Street London EC4Y 1HS English and US legal Allen & Overy LLP advisers to the Joint Global One Bishops Square Co-ordinators, Joint London E1 6AD Bookrunners and Joint Sponsors Reporting Accountants KPMG LLP Arlington Business Park Theale Reading RG7 4SD Auditors KPMG LLP One Snowhill Snowhill Queensway Birmingham B4 6GH Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE

28 PART 4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND GLOBAL OFFER STATISTICS Expected timetable of principal events

Event Time and Date Latest time and date for receipt of indications of interest under the Global Offer ...... 10.00 a.m. on 11 March 2014 Announcement of Offer Price and allocation ...... 7.00 a.m. on 12 March 2014 Commencement of conditional dealings on the London Stock Exchange ...... 8.00 a.m. on 12 March 2014 Admission and commencement of unconditional dealings in the Ordinary Shares on the London Stock Exchange ...... 8.00 a.m. on 17 March 2014 Crediting of Ordinary Shares to CREST accounts ...... 17 March 2014 Despatch of definitive share certificates (where applicable) ...... Week commencing 24 March 2014

It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. All times are London times. Each of the times and dates in the above timetable is subject to change without further notice.

Global Offer statistics(1)

Offer Price (per Ordinary Share) ...... 300 pence Number of Ordinary Shares in issue ...... 250,000,000 Number of Ordinary Shares in the Global Offer to be sold by the Selling Shareholders(2) ...... 125,000,000 Percentage of the issued Ordinary Share capital being offered in the Global Offer(2) . . 50.0 per cent. Number of Ordinary Shares subject to the Over-allotment Option ...... 18,750,000 Market value of the Company at the Offer Price ...... £750,000,000 Estimated net proceeds of the Global Offer receivable by the Selling Shareholders(2)(3) £364.7 million

Notes: (1) Assumes all of the steps set out in paragraph 2 of Part 12—‘‘Additional Information—Reorganisation’’ are completed in full. To the extent that these steps are not completed in full, the Global Offer will not proceed and Admission will not be sought. (2) Does not include any Over-allotment Shares that may be offered pursuant to the Over-allotment Option. (3) The estimated net proceeds receivable by the Selling Shareholders are stated after deduction of the estimated underwriting commissions and other fees and expenses of the Global Offer (including VAT) payable by the Selling Shareholders, which are currently expected to be approximately £10.3 million.

29 PART 5 INFORMATION ON THE COMPANY AND ITS GROUP Investors should read this Part 5—‘‘Information on the Company and its Group’’ in conjunction with the more detailed information contained in this Prospectus including the financial and other information appearing in Part 8—‘‘Operating and Financial Review’’. Where stated, financial information in this section has been extracted from Part 10—‘‘Historical Financial Information’’.

1. BUSINESS OVERVIEW Poundland is the largest single price value general merchandise retailer in Europe by both sales and by number of stores. Since opening its first store in 1990, Poundland has grown to operate a network of over 500 stores across the UK and Ireland. Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks and are all operated on a leasehold basis. Poundland operates under the ‘‘Poundland’’ brand in the UK and its low cost, efficient business model is designed to offer customers amazing value every day at the single price point of £1. Poundland successfully entered Ireland in September 2011 under the ‘‘Dealz’’ brand, where it sells the vast majority of its products for A1.49, and became profitable in its first full year of operation. Poundland is led by a strong and entrepreneurial management team, with significant retail experience and a proven track record of success. Poundland’s retail proposition is robust, with on average approximately 4.9 million customer transactions undertaken across its stores per week in the 39 weeks ended 29 December 2013. Poundland is a price- driven, volume-led business offering an extensive range of products across 17 categories, with the average Poundland store carrying approximately 3,000 core range SKUs including over 1,000 third-party branded products. Third-party branded products account for the majority of sales (approximately 63 per cent. of total sales in the 2013 financial year), with popular brand names such as Cadbury, Mars, Heinz, Nestle and Colgate representing an important footfall driver. Poundland also has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third-party branded products, including Silk Soft paper products, Sweet Heaven confectionery, Kitchen Corner, Allura (Health & Beauty), Beautiful Garden and Toolbox (DIY). Poundland has established strong brand recognition, and in a recent survey conducted by YouGov, Poundland scored 95 per cent. prompted brand awareness, significantly above its key competitors in the UK value general merchandise retail market and in line with large UK grocery chains. In addition, Poundland has built a strong customer base, with the average store serving over 10,000 customers per week. The Directors believe that its brand and product offering appeal to an increasingly wide range of consumers, with approximately 22 per cent. of Poundland’s UK customers being from the affluent AB socio-demographic group based on a survey conducted in 2013. Poundland maintains strong relationships with its suppliers and sourced approximately 80 per cent. of its purchases on a value basis from UK based suppliers in the 2013 financial year, with almost all primary manufacturers of Poundland’s products supplying directly. Poundland works closely with manufacturers to develop innovative and exclusive products to offer a relevant and attractive value offering. It has continued to increase its supplier base and sources and develops products on a global basis. Poundland’s sourcing office in Hong Kong is an important part of its buying strategy, with particular focus on new product development, and general merchandise products in particular, logistics and product quality assurance and control. Poundland is headquartered in Willenhall, West Midlands, and employed on average 11,757 people in the 2013 financial year, of which approximately 70 per cent. were employed on a part-time basis. It operates three distribution centres, two of which are based in the Midlands and the third, currently a temporary facility, is based in the South East of England. A new warehouse is expected to open in late 2014 in Harlow in the South East of England to replace the existing temporary facility. Poundland’s distribution network also includes four cross-docking facilities, located in Scotland, the North East of England, Ireland and Northern Ireland. In the 2013 financial year, Poundland generated revenue of £880.5 million and Underlying EBITDA of £45.5 million with an Underlying EBITDA margin of 5.2 per cent. In the 39 weeks ended 29 December 2013, Poundland generated revenue of £758.3 million and Underlying EBITDA of £45.2 million with an Underlying EBITDA margin of 6.0 per cent.

30 2. HISTORY OF THE GROUP Poundland was founded in 1990 by opening its first store in Burton-upon-Trent. In 1996, the Company opened its Hong Kong office to provide direct support to its sourcing operations. In 2002, Poundland was acquired by funds advised by Advent International plc. At the time of the acquisition, Colin Smith joined the Company as Chairman. Between 2002 and 2010, Poundland continued to open stores across the UK, taking its store portfolio from 73 at the end of the 2001 financial year to 263 at the end of the 2010 financial year. In addition, a second distribution centre was opened in 2005 in Springvale in the West Midlands, bringing combined capacity to approximately 500,000 square feet. Jim McCarthy joined Poundland as its Chief Executive Officer in August 2006 and Nick Hateley joined Poundland as its Chief Financial Officer later the same year. Poundland was acquired by funds advised by Warburg Pincus in June 2010. Since then, Poundland has continued its rapid store opening programme, almost doubling the size of its store portfolio from 263 stores at the end of the 2010 financial year to 517 stores as at 29 December 2013. In September 2011, Poundland successfully entered its first European territory, Ireland, operating under the ‘‘Dealz’’ brand. It began by opening two stores and, after demonstrating the success of the concept by being profitable in its first full year of operation, Poundland increased its portfolio to 33 Dealz stores as at 29 December 2013, of which 31 are in Ireland, one is in the Isle of Man and one is in the Orkney Islands. In 2012, Andrew Higginson was appointed as Chairman, replacing Colin Smith who became a Non-Executive Director. Mr Smith will retire from Poundland immediately before Admission. Mr Higginson has extensive experience having worked with FMCG companies and retailers and, prior to joining Poundland, spent 15 years as an Executive Director at Tesco plc including 11 years as Finance and Strategy Director. Also in 2012, Poundland opened its third distribution centre, currently a temporary facility, taking the total combined capacity to approximately 700,000 square feet. Since inception, Poundland has invested significant management, operational and financial resources in developing its business processes, infrastructure, brand and customer offering, with all investment funded from internal cash flow from operations. In addition to investing in the business, the strong cash generation has allowed for Poundland to de-leverage, reducing its net debt position to £9.2 million as at 31 March 2013 from £29.6 million as at 27 March 2011.

3. MARKET OVERVIEW The total retail market in the UK amounted to approximately £310 billion in 2012 and has grown at a CAGR of approximately 2.8 per cent. since 2007 (source: Planet Retail). Poundland operates within an attractive sub-sector of the overall retail market, being value general merchandise. This sector had sales of approximately £5.2 billion in the UK in 2012 and is one of the fastest-growing sectors within UK retail, having grown at a CAGR of approximately 15 per cent. since 2007, as set out in the chart below.

31 UK value general merchandise market, 2005 – 2012, Net sales (£bn)

5.2

4.6 CAGR: 14.9% 4.0

3.6

3.0 CAGR: 11.5% 2.6 2.3 2.1

2005 2006 2007 2008 2009 2010 2011 201220FEB201418034414

Source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013 Note: Includes the following retailers: Wilkinson, Home Bargains, 99p stores, Poundland, B&M Bargains, Poundstretcher, Poundworld This strong historical growth has been predominantly driven by rapid store roll out, with the total number of stores in the UK growing from 1,058 in 2007 to 2,209 in 2012. Despite this growth, the value general merchandise sector still accounted for only approximately 2.8 per cent. of the addressable general merchandise market in the UK in 2012 (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013). Within the value general merchandise retail market, some companies operate as single price retailers and others as multi-price retailers. There are seven main value general merchandise retailers in the UK, three of which primarily operate a single price model, including Poundland, Poundworld and 99p Stores, and four that operate as multi-price retailers, including B&M Bargains, Home Bargains, Poundstretcher and Wilkinsons. Poundland is the market leader in the single price segment in the UK, both in terms of sales and number of stores, and operates more than twice as many stores as its nearest single price competitor. Poundland is also the most profitable single price value general merchandise retailer in the UK, and furthermore, has sector-leading sales densities when compared to all the seven main value general merchandise retailers in the UK.(1) In addition to these seven retailers, there are a number of independent value general merchandise retailers operating at both single price and multi-price price points. Value general merchandise retailers typically offer an extensive range of products across a wide range of categories. Third-party branded products are an important element of the mix to drive footfall, while own label products broaden the product offering and are typically sold at a higher margin. An increasing number of FMCG companies are recognising the importance of the value sector, ensuring their products are available in store. Value general merchandise has developed into an established sector in its own right, benefitting from a positive structural shift in consumer behaviour towards value. The difficult economic conditions experienced over the last five years and continued pressure on consumers’ disposable income, together with the value proposition offered, resulted in many consumers being attracted by the value general merchandise retail market. While the value general merchandise retail market has historically been targeted primarily towards less affluent consumers, penetration has now increased to a wider demographic and research suggests that the majority of consumers will continue to use value retailers even as the economy improves. The significant improvements in store standards across the sector have also contributed to a more positive perception of the value general merchandise retail sector and have resulted in the sector being able to attract a more affluent customer base (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013).

(1) Calculated using sales data from publicly available statutory accounts and square footage data from Planet Retail.

32 Significant further long-term growth is expected within the value general merchandise market. The UK market is forecast to grow by approximately 9.3 per cent. per year between 2012 and 2017 and to be worth approximately £8.1 billion in 2017, as set out in the chart below.

UK value general merchandise market, 2012 – 2017, Net sales (£bn)

8.1 CAGR: 9.3% 7.4 6.8 6.2 5.7 5.2

2012 2013 2014 2015 2016 2017 25FEB201420481700

Source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013 Note: Includes the following retailers: Wilkinson, Home Bargains, 99p stores, Poundland, B&M Bargains, Poundstretcher, Poundworld The forecast growth in the UK market is expected to be driven by continued roll out of new stores with the total number of UK stores forecast to reach approximately 3,190 in 2017 from 2,209 in 2012. The forecast growth is also expected to be supported by a combination of supply and demand factors, including: • the structural shift in consumer behaviour towards value-for-money offerings, as observed in other sectors, including clothing retail, airline and hotels; • frequency of spend and average spend is expected to increase as consumers become more familiar with the market; • increased attraction to the sector from continued improvement in store standards; and • suppliers becoming increasingly supportive of the value market as they recognise its size and growth potential (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013). The long-term growth potential for the UK value general merchandise retail market is further supported by evidence in the more mature US market, which has grown in times of both economic expansion and contraction indicating structural rather than cyclical growth. The US value general merchandise retail market has grown each year since 1999 and was estimated to be worth approximately $55 billion in 2012, compared to $31 billion in 1999 (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013).

4. STRENGTHS 4.1 UK market leader in an attractive and structurally growing sector Poundland is the largest single price value general merchandise retailer in Europe, operating more than twice as many stores as its nearest single price competitor in the UK. Poundland also has the most comprehensive geographical coverage of any value general merchandise retailer across the UK, with a nationwide coverage of stores in the UK. The Directors believe that Poundland has a competitive advantage over its single price competitors given its size, product offering, well-invested infrastructure, sourcing operation and strong quality control systems. In recent years, Poundland has received various industry awards, including The Grocer Gold Awards, Discounter of the Year, in 2013 and Retail Industry Awards, Discount Retailer of the Year, in 2011.

33 The value general merchandise retail sector in the UK has demonstrated strong growth with the total value of the UK market at approximately £5.2 billion in 2012, reflecting a CAGR of approximately 15 per cent. since 2007. The value general merchandise retail sector represents a small part of the total UK retail market, and accounts for 2.8 per cent. of the addressable general merchandise retail market in the UK in 2012 (source: PwC, ‘‘The UK Value General Merchandising Market’’, November 2013). The historical growth rates have been driven by the rapid roll out of stores as well as increased acceptance by consumers of the value general merchandise retail market, as consumers recognise the value offered by the sector. Whilst the market has benefitted from the difficult economic conditions from 2007 to 2012, the Directors believe that these historical growth rates represent a structural shift in consumer behaviour towards value and that value general merchandise retailers now represent a key part of consumers’ shopping patterns. Research suggests that consumers plan to spend more money, more often, in value general merchandise retail stores in the future, despite prospects for improving economic conditions and growing consumer confidence (Source: Pragma Online Discounter Research, October 2013). Specifically, this research indicated that: • More than 85 per cent. of UK respondents would either always shop in value general merchandise retail stores or intend to increase their frequency of shopping in the future. Of those expecting their spend to increase over the current year, 76 per cent. considered this to be a reallocation of spend as opposed to an increase in income; • 96 per cent. of regular (defined as at least once a month) Poundland shoppers believe that, if their financial situation improved, it would not have a negative impact on their spending patterns in Poundland. The majority of Poundland shoppers say that the strong value offer would keep them coming back; and • 98 per cent. of UK value general merchandise retail shoppers stated that spend in these stores would remain the same or increase over the next 12 months. The UK value general merchandise retail market is forecast to grow by 9.3 per cent. per year between 2012 and 2017 to be worth approximately £8.1 billion in 2017. The Directors believe that Poundland, as the market leader in the single price value general merchandise retail market in the UK, is well placed to take advantage of the expected growth opportunities within this sector and the benefits from the continued structural shift in consumer behaviour towards value, aided by the continued improvement in store standards and merchandising. In 2011, the Directors identified Ireland as an attractive market for a value general merchandise retailer. Difficult economic conditions had created a favourable environment in Ireland as consumers were seeking value, as well as having resulted in an oversupply of retail space and falling retail rents. Following the successful launch of Dealz in September 2011, the Directors continue to believe that the Irish market is attractive and represents a growth opportunity for the Group.

4.2 Trusted retail brand with differentiated value proposition and broad appeal Poundland has established its market-leading position in the UK by continuously focusing on delivering amazing value to its customers every day. The Directors believe that this is achieved by selling a wide range of great products and top brands, offering many new exciting lines each week, at a price point intended to offer customers amazing value for money. In a 2013 study prepared for the Group comparing prices on a range of 106 comparable products to UK grocery chains (Asda, Tesco and Sainsbury), Poundland was the cheapest or joint cheapest 90 per cent. of the time. Poundland sells a wide range of products across 17 product categories including household goods, grocery, impulse and health and beauty, with all products in Poundland stores in the UK selling for £1. Some of the most recognised consumer brands in the world are sold in Poundland stores, including Cadbury, Mars, Heinz, Nestle and Colgate. This branded product offering drives footfall to stores, and of the approximately 3,000 core range SKUs in the average Poundland store, over 1,000 SKUs are third-party branded. Poundland’s own label, typically higher margin brands, provide the customer with even greater choice and better value. The Directors believe that the single price point in the UK provides Poundland with a competitive advantage to other retailers as it sets a clear and consistent base for price comparison. Customers are able to compare prices on identical products across retailers, knowing that at Poundland, that product will be on sale for £1.

34 Poundland’s customer proposition is further strengthened by its strong track record of product innovation and range development. Poundland works closely with suppliers in developing exclusive products and pack sizes. For example, Poundland worked with suppliers in developing a range of four individually branded chocolate bars packed together by Poundland, a new Food to Go range, a box of Cadbury’s Milk Tray and a 600 gram Warburtons loaf of bread. Poundland also has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third-party branded products. Own label products include Silk Soft paper products, Sweet Heaven confectionery, Kitchen Corner, Allura (Health & Beauty), Beautiful Garden and Toolbox (DIY). These new product ranges help drive footfall to stores, increase average transaction value and benefit overall margins. The Directors believe that Poundland’s own label offering in FMCG categories, as well as its strength in developing new product ranges, typically non-consumable, general merchandise products, are key differentiators versus other single price value general merchandise retailers in the UK. Poundland is consistently developing new products, introducing approximately 10,000 new SKUs every year, in order to deliver amazing value to its customers. The Directors believe that, in the UK, Poundland has established strong brand value and recognition as well as customer loyalty. A recent survey conducted by YouGov indicated that Poundland has prompted brand awareness of 95 per cent., which is significantly higher than other value general merchandise retailers in the UK and in line with large UK grocery chains. The Directors believe that Poundland’s brand recognition continues to strengthen as its store roll out continues across the UK, making the brand available to a wider range of customers. The Directors also believe that Poundland’s customer proposition has broad appeal. Based on a survey conducted in 2013, approximately 22 per cent. of Poundland’s UK customers were from the affluent AB socio-demographic group. This is further evidenced by the performance of stores located in more affluent towns such as Cambridge, Stratford-upon-Avon, Guildford and Bath, which generated higher sales per store as well as greater sales densities than the average Poundland store in the 2013 financial year. The Directors believe that the strong brand recognition, compelling customer proposition and broad appeal provide Poundland with a strong platform to grow its store network further.

4.3 High quality, national store estate with consistently strong returns across formats and regions From its first store opening in 1990, Poundland has expanded to become a national retailer in the UK with nearly 500 stores, as well as having expanded internationally, operating 31 stores in Ireland as at 29 December 2013. All Poundland stores are of a high standard, with clean and bright points-of-sales and a strong emphasis on value and brands. Poundland has a strong track record of delivering a successful store opening programme, having almost doubled its store estate under Warburg Pincus ownership from 263 stores at the end of the 2010 financial year to over 500 stores in less than four years. Poundland increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and 2013 financial years, respectively. In the 39 weeks ended 29 December 2013, Poundland increased its store portfolio by 59 net new stores. Poundland has a historical track record of exceeding budgeted store openings each year. Poundland is an attractive tenant and incentives are generally obtained from landlords, through rent-free periods, cash contributions or a combination of both. In some cases, exclusivity arrangements are agreed with landlords. Poundland also benefits from a flexible store estate with the average remaining lease length being seven years. The management team has a proven track record of identifying strongly performing locations and opening stores quickly, with new stores being generally fully operational in two to three weeks following lease completion. Poundland typically seeks to open new stores in the period leading up to Christmas in order to take advantage of the seasonal uplift during this period. Given the rapid store roll out over the last couple of years, the Poundland store estate is a young estate with approximately 40 per cent. of stores having opened in the last three years. A new Poundland store typically has a rapid maturity profile and delivers strong performance from opening. The first full six week’s sales are generally the strongest as customers purchase a larger quantity of non-consumable items. Sales typically stabilise 15 weeks after opening. The average pay-back period for a new Poundland store, including all costs associated with the opening such as capital expenditure and pre-opening costs, is around 12 months. This strong return is achieved from a combination of accurate site appraisal, coupled with favourable rental terms and low capital investment costs.

35 Stores are located across high streets, shopping centres and retail parks throughout the UK and Ireland. Store economics per location indicate consistent profitability performance across formats demonstrating the quality of the portfolio and the strength of the customer proposition. Poundland’s average store size was 5,143 square feet in the 2013 financial year, but stores trade profitably across the full range of store sizes, which are between 1,700 square feet and 12,000 square feet. Poundland has national coverage of the UK and store economics indicate that the customer proposition resonates well with customers across all regions. The South of the UK (comprising South Western England, South Eastern England and London) has slightly higher margins, on average, than the rest of the country, but on average, store profitability is consistent across all regions. The consistency of performance across regions and store formats is further demonstrated by the fact that 98 per cent. of the store estate was profitable on a store contribution basis in the 2013 financial year.(1) The underperforming stores are reviewed regularly to improve performance or where possible re-site or close the store. The Directors believe that there are significant opportunities to continue to add to the existing store estate and that there is potential for more than 1,000 Poundland stores in the UK, making it possible to more than double its existing UK portfolio.

4.4 Well-invested infrastructure underpinning a scalable business model Poundland has a well-invested infrastructure, and the Directors believe that this creates a competitive advantage over other single price value general merchandise retailers. As a result of strong operating cash flow, Poundland has been able to internally fund its growth and investment in headcount, systems and distribution and supply chain infrastructure. Poundland’s business model is set up to be a value retailer, focusing on efficiency and operating at low cost. Significant investment has been made in people and in finance, IT and HR systems, with the current group structure being set up and built for scalability and to manage growth. Significant investment has also been made in the supply chain and distribution infrastructure to support the next phase of anticipated growth. A new distribution centre is scheduled to open in Harlow in late 2014, replacing the nearby temporary facility at Hoddesdon, which will increase total distribution capacity to operate approximately 750 stores in the UK and Ireland. Poundland has developed strong relationships with its major suppliers. Poundland has a professional buying team and significant experience in sourcing globally with strong and long-standing relationships with suppliers through its sourcing office in Hong Kong and exclusive sourcing arrangement in India. Although the majority of FMCG products are sourced directly through its relationships with major suppliers in the UK, Poundland maintains relationships with wholesalers and distributors for bulk buying to ensure that a broad selection of products can be offered. The strengths of Poundland’s supply chain help to maintain its differentiated customer proposition and acts as a long-term mitigant to inflation, through better buying rates and an improved offering of typically higher margin, own label products and other general merchandise lines. The Directors believe that Poundland’s ability to source approximately 10,000 new SKUs per year is a competitive advantage. Poundland closely manages its day-to-day running costs, and head office overheads have consistently declined as a percentage of sales over the last three years. The strengths of its business model and the efficiencies created from its well-invested systems, supply chain and distribution infrastructure and its people have resulted in industry-leading sales densities, with Poundland generating sales of £374 per square foot in the 2013 financial year compared to the average for other value general merchandise retailers in the UK of £245 per square foot during the same period.(2)

4.5 Track record of delivering strong, profitable growth in the UK and Ireland Poundland has generated strong revenue and Underlying EBITDA growth over each of the last three financial years. Revenue consistently increased year-on-year during that period, growing from £641.5 million in the 52 weeks ended 27 March 2011 to £880.5 million in the 2013 financial year. Underlying EBITDA has increased at a faster rate than revenue, reflecting the positive operational leverage in the business and the benefit of scale, growing from £31.1 million in the 52 weeks ended

(1) Based on stores open between April 2012 and March 2013. Calculated under UK GAAP. (2) Calculated using sales data from publicly available statutory accounts and square footage data from Planet Retail.

36 27 March 2011 to £45.5 million in the 2013 financial year. In the 39 weeks ended 29 December 2013, revenue and Underlying EBITDA were £758.3 million and £45.2 million, respectively, representing an increase of 13.0 and 16.6 per cent., respectively, over the 39 weeks ended 30 December 2012. This strong growth in both revenue and Underlying EBITDA was driven by new store openings, with Poundland having increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and the 2013 financial years, respectively. In the 39 weeks ended 29 December 2013, the store portfolio increased by 59 net new stores, taking the number of stores to 517. New store openings during the historical track record period were all funded by internal cash flow from operations. Poundland successfully entered the Irish market with the launch of Dealz in September 2011. Poundland’s expansion into Ireland represented a relatively low cost, low risk expansion strategy with approximately 96 per cent. of products being supplied via Poundland’s UK distribution centres in the 52 weeks ended 10 November 2013. Poundland operated 31 stores in Ireland as at 29 December 2013 across high streets, shopping centres and retail parks. The price point in Ireland is set at A1.49 with some products at other price points, resulting in Dealz having a higher gross margin than Poundland’s gross margin in the UK. Dealz has been profitable since its first full year of operation and generated higher average EBITDA per store in the 2013 financial year compared to Poundland’s UK average during the same period, and an average transaction value of £6.18 in the 2013 financial year which is approximately 40 per cent. higher than Poundland’s overall average transaction value of £4.44 in the same period. The success of Dealz demonstrates that management is capable of planning and executing the expansion of Poundland’s business into a new territory with low capital outlay while quickly generating positive financial returns. Poundland benefits from excellent cash generation given the low capital expenditure needed to maintain the existing store portfolio as well as negative working capital. Poundland’s cash conversion (as defined in footnote (3) on page 61) was 82.7 per cent. for the 2013 financial year. In addition to funding new stores, Poundland has made significant investments in developing its business processes, infrastructure, brand and customer offering, with all investment funded from internal cash flow from operations. Furthermore, the strong cash generation has allowed Poundland to de-leverage, reducing its net debt position to £9.2 million as at 31 March 2013 from £29.6 million as at 27 March 2011.

4.6 Long-standing, experienced Senior Management team, supported by deep and high quality operational management Poundland’s strong growth has been delivered by its experienced Executive Directors and Senior Management team, supported by a large, well-resourced employee base with high quality buying, retail and operational teams. The performance of the wider team is demonstrated by the success of its strategy of organic growth through consistent store openings as well as leveraging its sourcing expertise and strong supplier relationships in seeking to deliver amazing value every day to its customers. Jim McCarthy joined Poundland as its Chief Executive Officer in 2006. His experience extends to over 40 years in retail, including serving as Managing Director of Sainsbury’s Convenience Stores and as a member of the operating, retail and investment boards, as well as Chief Executive of T&S stores plc where he was responsible for the operation of 1,200 stores. Nick Hateley joined Poundland as its Chief Financial Officer in 2006 from J Sainsbury plc where he was the Finance Director of Sainsbury’s Convenience Stores. Mr Hateley has more than 25 years of experience in finance and business improvement. In addition to the Executive Directors, Poundland has an experienced Senior Management team, all with significant expertise within their respective fields, providing management depth and strength to the Group. The key individuals within the Senior Management team include Richard Lancaster (Executive Director) with more than 25 years of retail experience at J Sainsbury plc, Netto FoodStores Limited and Wm Morrison Supermarkets Plc, Tim McDonnell (Retail Operations Director) with more than 20 years of retail experience at Kwik Save and Somerfield Stores Ltd, Craig Bales (Property Director) with 20 years of experience in commercial property, specialising in retail agency, and Andy Monk (Supply Chain Director) with approximately 30 years of experience in distribution having held a wide number of roles both in development and operational roles within own-account and third-party logistics companies. Detailed biographies and details for the full Senior Management team have been presented in Part 6—‘‘Directors, Senior Management and Corporate Governance’’.

37 The Directors believe that the expertise and dedication of Poundland’s Executive Directors and Senior Management team provide the Company with a strong foundation to pursue its strategy.

5. STRATEGY 5.1 Continued focus on delivering amazing value to its customers every day Poundland has, through its long track record of profitable growth, demonstrated its ability to maintain and strengthen its position as the market-leading, single price value general merchandise retailer in the UK. To continue to drive its business performance, Poundland will remain true to its goal of delivering amazing value to its customers every day. The Directors believe that product innovation and exclusive product ranges are key competitive advantages for Poundland, and therefore remain committed to refreshing and developing its product range to meet consumer demands. Poundland will continue to work closely with suppliers, both building on exclusive offers of third-party branded products and further developing its own label brand families, to introduce new products and ranges that appeal to a wider demographic of customers. Seasonal products are an important driver of sales, and this is expected to continue, with further range and product development being undertaken in this category. Poundland will also focus on increasing store marketing with tailored offers and third-party promotions, vouchers, and marketing activity, where appropriate.

5.2 Continued store roll out Poundland has a strong track record of rapid store roll out in the UK with a proven ability to identify strongly performing locations. The Directors believe, supported by external research conducted by the Javelin Group, that there is potential for more than 1,000 Poundland stores in the UK, making it possible to more than double its existing UK portfolio. In addition, the Directors believe that there is potential for more than 70 stores in Ireland. The Directors plan to continue opening stores at similar rates as the last three years, adding approximately 60 net new stores per year, of which approximately 10 per cent. are expected to be in Ireland. The Directors believe that there are opportunities to add stores throughout the UK and in Ireland, as the Poundland business model is robust across a wide variety of store sizes (between 1,700 and 12,000 square feet), formats (high street, shopping centre, retail parks) and market demographics (22 per cent. of Poundland’s UK customers are from the affluent AB socio-demographic group based on a survey conducted in 2013). Poundland is increasingly focused on retail park stores as part of the overall new store mix, as, based on performance in the 2013 financial year, retail park stores tend to be more profitable and have a higher average transaction value than the average Poundland store. Many areas of the UK have relatively low levels of value general merchandise retail store penetration, such as London, the South West and South East of England. For example, for the 11.6 million people living in the South East of England, there are 16 value general merchandise retail stores per one million people, compared to 59 such stores per one million people in the North West of England, which has a smaller population of 6.5 million people (as at November 2013). In addition, the Directors believe, supported by external research conducted by the Javelin Group, that Poundland can generally sustain multiple stores in individual markets and conurbations with relatively little diversion of sales from existing stores.

5.3 Optimisation of existing store portfolio Poundland continuously reviews opportunities to further improve the performance of existing stores through a range of different activities, including product range management, store management and infrastructure and marketing. The Directors believe that there is an opportunity to leverage the strength of the Poundland brand and the attractiveness of the customer proposition into new categories and products, utilising the strong innovation capability within the business to design and develop own label products as well as continue to work with suppliers to develop exclusive new products. In order to enhance the customer experience through increased aisle widths and presentation of a wider range of products, the optimal store size of a Poundland store has increased. There is therefore an opportunity to upsize or relocate some of its older stores with 115 stores as at 31 March 2013 that are 4,000 square feet or less. The Directors believe that approximately half of these stores are undersized for their local catchment area market and have the potential to be either re-sited or extended to reach optimum space.

38 Poundland has a good track record in managing its gross margins, having achieved a stable gross margin of 36.7, 36.9 and 36.7 per cent. in the 52 weeks ended 27 March 2011, the 52 weeks ended 1 April 2012 and the 2013 financial year, respectively, despite cost increases, changes in product mix, and other external factors such as changes in VAT rates. Poundland has managed to maintain margins in the majority of product categories by using a number of initiatives including managing its product range, re-engineering of pack sizes, shifting sourcing to lower cost economies, re-negotiating rates, changing suppliers, increasing the number of direct suppliers and altering product mix. In addition, the development of new product ranges and own label products have positively impacted margins. The recent poor economic conditions in the UK have increased demand for FMCG products, which typically have lower margins. In better economic conditions, the Directors believe that this should reverse with greater demand for general merchandise, and more discretionary products, which typically have higher margins. The Directors believe that this, together with other initiatives currently in place to manage the gross margin, will assist Poundland in maintaining a stable gross margin over time. In addition, the Directors believe that the Group will further benefit from increased rebates from suppliers as a result of increased scale. However, these factors having a potential positive impact on the gross margin need to be balanced against the opportunity to re-invest savings in its product offer to continue to deliver amazing value every day to its customers.

5.4 Planned expansion into continental Europe Poundland’s entry into Ireland under the Dealz brand has demonstrated that management is capable of planning and executing the expansion of Poundland’s business into a new territory with low capital outlay while quickly generating positive financial returns. The Directors believe that continental Europe could be an attractive opportunity providing a platform for longer term growth, in addition to the substantial opportunity presented by the UK and Ireland store roll out. Building on the success of the Dealz format, Poundland is preparing for a pilot launch in Spain under the Dealz brand in the 2015 financial year. The Directors have carried out a detailed assessment of the expansion prospects in continental Europe, including market size, price levels, brand overlap with the UK, supplier considerations, logistics and site availability, and believe that Spain presents a highly attractive opportunity for expansion under the Dealz brand. In addition to favourable market conditions for Dealz in Spain, the Directors have identified high interest in the concept through consumer surveys. Pricing analysis has also illustrated that Dealz pricing is competitive and sustainable, and property research has identified good levels of site availability and favourable property costs, including the absence of property rates. Favourable rental terms are also expected, with typical leases of ten years with short break periods (e.g., two-year break periods). The Directors expect to open up to ten stores up to a two-year period, which will initially be supplied from Poundland’s UK distribution centres. The Spanish operations will be staffed by a core local team with extensive Spanish retail experience and will be supported by a UK-based senior management team. The Directors expect that there will be significant brand and supplier overlap with the Dealz product base in Ireland. The pilot stores’ performance will be assessed carefully ahead of any further roll out in Spain or elsewhere in continental Europe. The cost of this trial will be modest and the Directors believe it represents a low cost and low risk strategy to test market opportunity.

5.5 Format and channel development Poundland will continue to explore new growth opportunities, such as the potential development of a transactional website to access new customers and fulfil different shopping missions, as well as developing new store formats such as a city centre format, which is a smaller store designed to operate in high footfall city centre locations with a focus on offering convenient amazing value. In addition, there may be opportunities within the value general merchandise retail market for further consolidation.

6. BUSINESS DESCRIPTION The following description sets out the Group’s operations, detailing its product offering, retail stores, customers, product sourcing, seasonality, marketing and distribution and information systems.

6.1 Product Offering Poundland offers an extensive product range of third-party branded and own label products across 17 categories, focused on delivering value and popular brands to customers. Its business model is built on a

39 clear value proposition with the single price point of £1 in Poundland stores and A1.49 for the vast majority of products in Dealz stores. Each Poundland store carries approximately 3,000 core range SKUs consisting of a targeted assortment of daily essential items, which drive frequent customer visits, and key items across a broad range of general merchandise. Poundland’s product offering consists of: • FMCG, which include household consumables, such as household products and cleaning supplies, health and beauty care, and confectionery, drinks, snacks and other food products; • General merchandise, which includes entertainment, gardening, clothing, batteries, do-it-yourself, homewares, pet products, toys, stationery, celebrations and baby products; and • Seasonal or ‘‘Event’’ products, which include merchandise for, for example, Christmas, Halloween, Easter, Mother’s Day, Father’s Day, Valentine’s Day and the back-to-school period, along with seasonal summer and winter merchandise. The table below shows a breakdown of Poundland’s gross sales mix by product category for the 2013 financial year.

Percentage of Category Gross Sales Mix Impulse ...... 24% Grocery ...... 16% Health and Beauty ...... 14% Household ...... 9% General Merchandise ...... 32%(1) Seasonal/Events ...... 5%

(1) Includes some overlap with non-general merchandise items. Third-party branded products accounted for approximately 59 per cent., 62 per cent. and 63 per cent. of Poundland’s sales in the 52 weeks ended 27 March 2011, the 52 weeks ended 1 April 2012 and the 2013 financial year, respectively. Poundland’s product offering includes over 1,000 third-party branded SKUs, including popular brands such as Cadbury, Mars, Heinz, Nestle and Colgate. In addition, Poundland has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third-party branded products. Own label products include Silk Soft paper products, Sweet Heaven confectionery, Kitchen Corner, Allura (Health & Beauty), Beautiful Garden and Toolbox (DIY). These new product ranges help drive footfall to stores, increase average transaction value and benefit overall gross margins. Poundland seeks to continually adjust and enhance its product offering, through product innovation and range refreshment, in order to offer the best value to customers and differentiate itself from competitors, as well as to manage its gross margins. Poundland introduces approximately 10,000 new SKUs each year. Recent and planned product launches include hair accessories, indulgent snacking, health foods and jewellery. This constant product rotation keeps Poundland stores looking fresh and exciting for customers, with the aim of increasing traffic through its stores and driving higher customer spend, particularly higher discretionary spend as the UK and Irish economies improve. Poundland has developed direct relationships with global suppliers, and is therefore able to access new ranges, competitive rates, exclusive offers as well as work with product and pack size re-engineering to deliver value to customers at the £1 price point. For example, Poundland worked with suppliers to develop £1 pack formats and new products, including a range of four individually branded chocolate bars packed together by Poundland, a new Food to Go range, a box of Cadbury’s Milk Tray and a 600 gram Warburtons loaf of bread. Poundland also worked with manufacturers to develop differentiated pack sizes, including Whitworth’s sugar and exclusive Weight Watchers packs. The strength and duration of Poundland’s relationships with suppliers, as well as its purchasing scale and direct sourcing capabilities, contribute to Poundland’s ability to offer a wide selection of products at a single price point. The Directors believe there is considerable opportunity to continue to innovate and add new categories of products as Poundland’s buying power increases and its relationships with suppliers deepen.

40 6.2 Retail Stores 6.2.1 Locations and Formats Poundland operates a network of over 500 stores, including 484 Poundland stores throughout the UK and 33 Dealz stores, of which 31 are in Ireland, one is in the Isle of Man and one is in the Orkney Islands, as at 29 December 2013. Poundland’s stores are spread out across various regions, with stores in the Eastern UK, Western UK, Northern UK, Southern UK and Ireland representing approximately 26 per cent., 26 per cent., 22 per cent., 20 per cent., and 6 per cent., respectively, of its total stores as at 29 December 2013. Poundland stores are conveniently located for customers in high-traffic areas on high streets, in shopping centres and in retail park locations. Poundland stores have shown a strong and consistent performance across different formats, regions and demographic settings. Poundland sets high standards for its stores. Each store is attractively merchandised and carefully designed to provide maximum convenience for customers. Poundland continues to trial new store layouts in order to improve the shopping experience and increase sales. Poundland has successfully created and refined its in-store experience, with excellent customer service and clean, well lit stores which are easy to navigate and have a clear point of sale. Poundland aims to deliver a superior customer experience that will attract new customers and generate repeat business. The Directors continually consider ways to optimise the format of stores. For example, Poundland has developed and rolled out a retail park format, which represents a different shopping experience as more of a destination store, meaning customers’ browsing time is generally longer with typically higher spend on discretionary items, which typically have higher margins. Retail park stores tend to be larger, and, based on performance in the 2013 financial year, more profitable and have a higher average transaction value than the average Poundland store. In the future, Poundland may trial other store formats, such as a city centre format, a smaller store designed to operate in high footfall city centre locations with a focus on offering convenient amazing value. The table below presents the Group’s store performance indicators broken down by store format for the 2013 financial year and the 39 weeks ended 29 December 2013.

High Street and Shopping Centre Retail Parks Dealz (Ireland)(2) 52 weeks 39 weeks 52 weeks 39 weeks 52 weeks 39 weeks ended ended ended ended ended ended 31 March 29 December 31 March 29 December 31 March 29 December 2013 2013 2013 2013 2013 2013 Number of stores at end of period ...... 408 436 24 50 26 31 Number of new stores (net) .... 44 28 8 26 17 5 Revenue (£ millions) ...... 795.2 649.2 47.6 66.0 37.6 43.2 Average store size (square feet) . 5,037 5,090 6,157 6,107 6,195 5,929 Average gross sales per store per week (£000)(1) ...... 45.2 46.5 49.3 49.7 46.6 46.5

6.2.2 Property Strategy and New Store Openings Poundland increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and 2013 financial years, respectively, and by 59 net new stores in the 39 weeks ended 29 December 2013. Poundland proactively manages its store portfolio with the goals of maximising profitability and acquiring quality sites in attractive shopping venues, while also maintaining a disciplined, cost-sensitive approach to site selection. Management strategically reviews potential store locations,

(1) Calculated using sales data from publicly available statutory accounts and square footage data from Planet Retail.

41 including through detailed internal analysis and input from consultants, and has a proven track record of identifying attractive opportunities, anticipating site performance and delivering a strong store opening programme. Once sites are selected, well-established and detailed appraisal processes are used to develop and optimise the store roll out strategy. As a result of this strategic planning, Poundland stores have exhibited broadly consistent store economics, with 98 per cent. of its store estate being profitable on a store contribution basis in the 2013 financial year.(2) For most of the underperforming or loss-making stores, Poundland has a property strategy in place. The Directors believe, supported by external research conducted by the Javelin Group, that there is potential to grow the business to more than 1,000 stores in the UK and more than 70 stores in Ireland at a rate of approximately 60 net new stores per year. New stores in Ireland are expected to represent approximately 10 per cent. of new store openings. Location analysis indicates that a significant quantity of high quality sites are still available, as many areas of the UK have low levels of value retail penetration, in particular in Greater London and the South East and South West of England. Poundland is increasingly focused on retail park stores as part of its overall new store mix, as, based on performance in the 2013 financial year, they tend to be more profitable and have a higher average transaction value than the average Poundland store. In addition, Poundland is in the process of developing plans to trial Dealz stores in continental Europe, with a low-cost pilot launch planned for Spain in the 2015 financial year. Poundland’s typical store roll out process takes approximately 10 weeks from site identification to opening. New stores are generally opened and fully operational within two to three weeks following lease completion, and will typically recover all costs associated with their opening, including capital expenditure and all pre-opening costs, in around 12 months of trading. Stores trade approximately 22 per cent. above the long-term average in their first full six weeks as customers purchase a larger quantity of non-consumable items. Sales typically stabilise 15 weeks after opening. Poundland typically seeks to open new stores in the period leading up to Christmas in order to take advantage of the seasonal uplift during this period. The Directors believe that Poundland’s store opening programme presents the business with a significant opportunity for continued future profit growth. In addition to opening new stores, the Directors continually look for opportunities to refurbish existing stores in order to optimise sales space and maximise profit per square foot. In particular, the Directors plan to capitalise on opportunities to upsize and re-site some of the older stores in the property estate.

6.3 Customers Poundland offers its customers value and convenience with its single price point in the UK and carefully chosen store locations. The Directors believe that Poundland has a strong customer base stemming from Poundland’s value proposition. For example, in a 2013 study prepared for the Group comparing prices on a range of 106 comparable products to UK grocery chains (Asda, Tesco and Sainsbury), Poundland was the cheapest or joint cheapest 90 per cent. of the time. In addition, Poundland has high levels of prompted brand awareness at 95 per cent. according to a recent survey conducted by YouGov, which is significantly higher than other value general merchandise retailers in the UK and in line with large UK grocery chains. Poundland has high levels of advocacy with the highest net promoter score of any of its single price value general merchandise retail competitors in the UK. Depending on their economic needs and geographic proximity, customers shop at Poundland to fulfil various shopping missions, including top up shopping, periodic routine trips to stock up on household items and weekly or more frequent trips to meet their essential purchasing needs. Poundland’s product offering also attracts impulse purchases through its continually changing general merchandise ranges. In the 2013 financial year, an average Poundland store served over 10,000 customers per week, and, according to a survey conducted on behalf of the Group in November 2013, approximately 50 per cent. of UK consumers had visited a Poundland store in the last six months. Poundland’s customers come from a wide range of income brackets and age groups. Poundland believes that its value proposition is attracting customers from an increasingly wide demographic of UK shoppers. Based on a survey conducted in 2013, approximately 22 per cent. of Poundland’s UK customers were from the affluent AB socio-demographic group. In the 52 weeks ended 27 March 2011, the 52 weeks ended 1 April 2012, 2013 financial year and the 39 weeks ended 29 December 2013, Poundland had approximately 3.4 million, 4.0 million, 4.4 million and

(2) Based on stores open between April 2012 and March 2013. Calculated under UK GAAP.

42 4.9 million customer transactions per week. In addition, the average transaction value in Poundland’s stores was £4.23, £4.31, £4.44 and £4.58 over the same periods.

6.4 Product Sourcing Poundland aims to source directly from the lowest cost suppliers that meet its quality standards, both from within the UK and from overseas. Approximately 75 per cent., 79 per cent. and 80 per cent. of Poundland’s total purchases on a value basis were from UK suppliers in the 2011 financial period and 2012 and 2013 financial years, respectively, with almost all primary manufacturers of Poundland’s products supplying directly. Typically, products purchased from UK suppliers are FMCG, whereas imported goods typically are general merchandise products. Poundland imports products largely from China, India, Pakistan, Europe and the US. Poundland maintains an office in Hong Kong with 23 staff to facilitate the sourcing of products in the region, manage trading relationships with suppliers overseas and encourage new product development. Poundland also has an exclusive sourcing arrangement in India, and has additional sourcing relationships across a wide range of regions. Although Poundland retains strong relationships with wholesalers and distributors, products sourced from these suppliers are expected to continue to decline as a percentage of the Group’s sales, as Poundland continues to develop its direct relationships with manufacturers. Products sourced from wholesalers represented approximately 17 per cent. of sales in the 2013 financial year, compared with approximately 18 per cent. in the 2011 financial period. Poundland, like other retailers, generally does not enter into long-term purchase contracts with its suppliers. However, Poundland has strong and long-standing relationships with many major brands. No single supplier accounted for a material proportion of Poundland’s business in the last three financial years, with the top 5, top 10, and top 20 suppliers accounting for 15.5 per cent., 26.1 per cent. and 40.9 per cent. of total purchases, respectively, in the 2013 financial year.

6.5 Seasonality The Group’s business is subject to seasonal peaks associated with, in particular, Christmas and Halloween, and, to a lesser extent, Easter, the back-to-school period and the gardening season. Poundland incurs additional expenses in advance of these peaks in anticipation of higher sales during such periods, including the cost of additional inventory, advertising and employees. Due to sales of holiday-related merchandise, sales and profits in Poundland’s third quarter (October, November and December) have historically been higher than sales and profits achieved in each of the other quarters of the fiscal year. In the 2013 financial year, 30.2 per cent. of Poundland’s sales were generated in its third quarter.

6.6 Marketing Poundland has an efficient, low-cost marketing strategy, as the Directors believe its in-store proposition is strong enough to attract new customers and the uniqueness of the single price point has historically generated high levels of consumer interest. Poundland has established strong brand recognition, with a large proportion of regular customers and high levels of customer advocacy. Poundland’s continual refreshment of its products also encourages repeat visits. Poundland employs a number of marketing initiatives, such as using promotional campaigns including customer competitions, offering coupons and vouchers, and utilising social media networks including Twitter and Facebook. Poundland has a continued focus on improved micro-marketing, such as tailored offers and third-party promotions. For example, in January 2014, Poundland successfully launched ‘‘Jan-tastic’’, a third-party promotional campaign in association with Weight Watchers in which customers could book a personal training session for £1 if they purchased £4 worth of Weight Watchers products at a Poundland store. Poundland prides itself on its customer service, achieving high customer satisfaction levels. Poundland plans to continue to introduce similar initiatives in the future.

6.7 Distribution and Information Systems 6.7.1 Distribution Centres Poundland operates from three distribution centres, including two regional distribution centres located in the Midlands and South East England (Springvale and Hoddesdon, respectively), and one national distribution centre located in the Midlands (Willenhall). All products are taken to one of Poundland’s distribution centres before onwards distribution to Poundland’s stores, with the exception of fresh products which are delivered direct to stores by the supplier or a third-party. The Springvale, Hoddesdon and

43 Willenhall distribution centres have capacities of approximately 300,000 square feet, 200,000 square feet and 200,000 square feet, respectively. The regional centres cater mostly for FMCG products and the national centre caters predominantly for other products. In the 2013 financial year, 96 per cent. of product sales in Ireland were supplied via Poundland’s UK distribution centres. The Hoddesdon distribution centre was opened as a temporary facility in 2012 and marked Poundland’s first major expansion outside of the West Midlands. It enabled Poundland to reduce the distance travelled to deliver inventory to Poundland stores. In late 2014, Poundland plans to replace the Hoddesdon distribution centre with a 350,000 square foot purpose-built warehouse in Harlow, which will serve as Poundland’s main depot for South East England and will also provide initial support to the business as it looks to expand into continental Europe. The Harlow distribution centre will increase Poundland’s total distribution capacity to be able to operate approximately 750 stores in the UK and Ireland. By opening the Harlow facility, Poundland expects to achieve gains in efficiency, including enhanced route efficiency, and productivity, including through increased use of double-decker trailers. Poundland also has four cross-docking facilities, located in Scotland (in Coatbridge), the North East of England (in Billingham), Ireland (in Dublin) and Northern Ireland (in Larne). The cross-docking facilities in Scotland and the North East of England are operated by Poundland’s logistics partner, DHL. Northern Ireland and Ireland are serviced by AM Nexday, a transportation services company based in Belfast. Poundland provides its own transportation services for its Hoddesdon, Springvale and Willenhall distribution centres.

6.7.2 Information Systems Poundland uses its computer and communications systems for the efficient running of its business, including with respect to inventory, merchandising, finance, human resources, distribution and logistics and store operations. Its key IT systems include the JDA Merchandise Management System (MMS), Warehouse Management System (WMS) and Advanced Warehouse Replenishment (AWR). These systems run on dual located IBM iSeries servers and provide a strong platform to support warehouse replenishment, store ordering, stock control, promotions and constant warehouse operations. A secure managed network provides connectivity between Poundland’s customer support centre at its head office and the distribution centres. In-store, electronic point of sale and back office systems have been designed for Poundland, facilitating the delivery of low-cost, efficient processes, especially at tills. In 2013, Poundland introduced a new till layout system which has reduced queuing times.

7. PROPERTIES All of Poundland’s stores are located in leased premises. Individual store leases vary as to their terms, rental provisions and expiration dates. On average, the Group’s leases have a ten-year term, with a five-year upwards only rent review. Rent on the majority of Poundland’s store portfolio is paid quarterly in advance; however, Poundland is in the process of moving toward monthly payment cycles for new stores. Historically, Poundland has opened a number of temporary stores with a view to converting them to permanent stores after first testing the market, a strategy which the Directors expect to continue. These temporary leases are frequently extended. As at 31 March 2013, the average unexpired lease length in Poundland’s portfolio was approximately seven years. Poundland has experienced average lease inflation of 0.4 per cent. in total over the period from the 2011 financial period to the 2013 financial year. Poundland is an attractive tenant, and therefore incentives are generally obtained from landlords. These incentives take the form of cash contributions, rent-free periods or a combination of both. In some cases, exclusivity arrangements are agreed with landlords. Poundland leases each of its three distribution centres and will lease its new distribution centre at Harlow. Poundland’s head office is located at its Willenhall distribution centre. Poundland leases its sourcing office located in Hong Kong.

8. INTELLECTUAL PROPERTY Poundland relies on intellectual property laws to protect certain aspects of its business. In particular, Poundland has trademark registrations necessary to operate its business, including trademarks for ‘‘Poundland’’ and ‘‘Dealz’’ which are registered in the UK and Europe. Poundland is not aware of any circumstances that could be expected to have a material adverse affect on its intellectual property.

44 9. INSURANCE Poundland maintains public and employer liability cover as well as general commercial insurance consistent with what is normally maintained by companies similarly situated, based on advice from its insurance broker.

10. REGULATORY MATTERS Poundland is subject to various laws affecting the operation of its business. Poundland is subject to national and local laws and regulations concerning product safety, labour, health, sanitation and safety as well as planning permission requirements for store development and expansion. Difficulties in obtaining, or the failure to obtain, required licenses or approvals can delay or prevent the opening of a new store. Poundland is also subject to laws governing matters such as wages, working conditions, citizenship or eligibility to work requirements and overtime.

11. EMPLOYEES In the 2013 financial year, the Group employed on average 11,757 people, of which approximately 70 per cent. were employed on a part-time basis (defined by Poundland to mean less than 30 hours per week). Of these employees, 335 were in administration and 11,422 were in selling and distribution. The Group employs additional seasonal workers over peak trading periods, such as Christmas. In the 2013 financial year, the number of full-time equivalents was approximately 6,000. The Directors believe that Poundland’s relations with its employees have been and continue to be good. The Directors also believe that relations with its trade unions are good. Poundland is party to a recognition agreement with the Union of Shop, Distributive and Allied Workers, which applies on a company-wide basis across all offices, distribution centres and retail stores. There has been no industrial action that has affected the Group in recent years. As at 17 February 2014, 29.8 per cent. of Poundland’s employees were members of trade unions.

12. CORPORATE SOCIAL RESPONSIBILITY Poundland recognises that it has a responsibility to ensure that its business is conducted in a socially responsible manner, resulting in a high standard of social and environmental behaviour. Over the last few years, Poundland has continued to strengthen its supplier code of conduct and social accountability processes. Since December 2010, Poundland has been a member of Sedex, a not-for-profit membership organisation dedicated to driving improvements in responsible and ethical practices in global supply chains, and has conducted several ethical audits at its global suppliers’ factories using accredited third-party providers. Poundland plans both to deepen its programme of unannounced audits and to increase the number of full ethical audits and audit checks. To ensure ongoing improvement, Poundland commissioned a further independent review of its processes and procedures, which was completed in 2013. Poundland is committed to achieving good environmental practice and frequently investigates and tests new solutions to reduce the environmental impact of its business operations, such as reducing energy consumption. Poundland actively pursues policies that reduce its carbon footprint by focusing on four key areas: using less electricity, maximising recycling opportunities, improving fuel efficiency and reducing packaging waste. As a result of opening Poundland’s third distribution centre at Hoddesdon and investing in double-decker trailers, Poundland has improved fuel efficiency and delivered estimated savings of approximately 20,000 gallons of fuel in the 2013 financial year. In the 2013 financial year, Poundland saved 1,766 tonnes of carbon dioxide, recycled 11,400 tonnes of cardboard (an improvement of 18 per cent. from the 2012 financial year) and recycled 672 tonnes of plastic (a 44 per cent. increase from the 2012 financial year). Poundland has set challenging targets for the 2014 financial year. Macmillan cancer support has been Poundland’s Charity of the Year since May 2009. Poundland customers are able to make donations to the charity in-store, and store and head office colleagues run a number of themed fundraisers throughout the year. Since the partnership began, Poundland has raised over £950,000 for the Charity and expects to shortly reach £1 million, helping to provide better care and support to people affected by cancer.

45 PART 6 DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

1. DIRECTORS The following table lists the names, positions and ages of the Directors:

Name Age Position Andrew Thomas Higginson ...... 56 Independent Non-Executive Chairman James John McCarthy ...... 58 Chief Executive Officer Nicholas Roger Hateley ...... 48 Chief Financial Officer Richard Lancaster ...... 50 Executive Director Paul Best ...... 35 Non-Executive Director Stephen John Coates ...... 48 Non-Executive Director Darren Shapland ...... 47 Independent Non-Executive Director Trevor Bond ...... 52 Independent Non-Executive Director Teresa Colaianni ...... 45 Independent Non-Executive Director Grant Hearn ...... 55 Independent Non-Executive Director

Andrew Thomas Higginson (Independent Non-Executive Chairman) Mr Higginson joined Poundland as Independent Non-Executive Chairman in July 2012. After starting his career in FMCG with Unilever and Guinness, Mr Higginson has spent the last 22 years in retail. His roles have included Group Financial Director of Laura Ashley Holdings, The Burton Group, and 15 years as an Executive Director of Tesco plc including 11 years as Finance and Strategy Director, and four years running their Retail Services Division (Tesco.com, Tesco Bank, Tesco Telecoms and DunnHumby). He retired from Tesco plc and is now Chairman of both N Brown plc and Poundland. He is also a non-executive director of BSkyB, Woolworths (South Africa), McCurrach UK and the Rugby Football Union.

James John McCarthy (Chief Executive Officer) Mr McCarthy joined Poundland as Chief Executive Officer in August 2006. Prior to joining Poundland, Mr McCarthy was Managing Director of Convenience, J Sainsbury plc and was a member of the operating, retail and investment boards. His experience extends to over 40 years in retail including ten years as Chief Executive of T&S Stores plc (operated over 1200 stores and sold to Tesco plc), Managing Director of Neighbourhood Retailing (part of Next plc) and Managing Director of Birmingham Post & Mail Limited’s retail estate. Mr McCarthy is also non-executive chairman at Wynnstay Group plc.

Nicholas Roger Hateley (Chief Financial Officer) Mr Hateley joined Poundland as Chief Financial Officer in October 2006. He joined from J Sainsbury plc where he was the Finance Director of Sainsbury’s Convenience Stores. Mr Hateley has 25 years’ experience in finance and business improvement which he gained at PricewaterhouseCoopers, Accenture and Lucas Industries plc.

Richard Lancaster (Executive Director) Mr Lancaster joined Poundland as Trading Director in July 2012 and is responsible for Trading & Marketing. Mr Lancaster became an Executive Director in 2014. He joined the industry from Cambridge University in 1986 initially building a successful chain of convenience stores. Trading and Marketing Director positions followed with two regional convenience store chains and within the convenience store division of J Sainsbury plc. A two year tenure as Managing Director of Netto FoodStores Limited preceded time at Wm Morrison Supermarkets Plc as Senior Trading Director—Ambient and more latterly Marketing Director.

46 Paul Best (Non-Executive Director) Mr Best joined Poundland as a Non-Executive Director in April 2010. He joined Warburg Pincus in 2002 and is responsible for investments in the European consumer and healthcare sectors. Prior to joining Warburg Pincus, Mr Best worked at Morgan Stanley in the investment banking and fixed income divisions. He has also been involved in cable investing activities in Europe, served as a director of Ziggo N.V. and is currently a director of INEA S.A. He received an M.A. (first class) in mathematics from Cambridge University.

Stephen John Coates (Non-Executive Director) Mr Coates joined Poundland as a Non-Executive Director in April 2010. He joined Warburg Pincus in 2003 and focuses on the firm’s European consumer, industrial and services activities with an emphasis on consumer and industrial markets. Previously, Mr Coates worked at Permira. He is also a director of Survitec (Finance 1) Limited and Clondalkin Group (Holdings) B.V. Mr Coates received an M.A. in politics, philosophy and economics from Oxford University, is a chartered accountant and completed the Advanced Management Program at Harvard Business School.

Darren Shapland (Independent Non-Executive Director) Mr Shapland is the Senior Independent Director. He brings extensive retail knowledge and broad public company experience gained throughout his career, most recently as Chief Executive Officer of Carpetright plc. Prior to this, Mr Shapland spent six years at J Sainsbury plc, initially as Chief Financial Officer and subsequently as the Group Development Director.

Trevor Bond (Independent Non-Executive Director) Mr Bond is President and Chief Customer Officer at Mondelez International (formerly Kraft Foods, Inc.) and chairs the Audit Committee. From 2010 to 2012, Mr Bond was President, Markets and Sales for Kraft Foods Europe, with responsibility for the country commercial units. He has spent most of his career with Cadbury (acquired by Mondelez International in 2010), joining the company in 1986. He built a strong track record as he assumed increasingly senior general management and finance roles across Europe, the Americas and Asia. Prior to his role at Kraft Foods Europe, Mr Bond led the Cadbury business in Britain and Ireland, delivering impressive growth in these mature markets. Mr Bond brings broad international experience and FMCG-supplier insight to the board.

Teresa Colaianni (Independent Non-Executive Director) Ms Colaianni is Group HR Director for Merlin Entertainments plc, which floated on the London Stock Exchange in November 2013. She chairs the Remuneration Committee. Ms Colaianni is Italian and a European Employment lawyer by background. Having begun her legal career in Brussels, advising multinational companies on EU related affairs, she moved into Human Resources and subsequently re-located to London. She has worked across a number of industries, recently heading up the Human Resources function in Europe for Hilton Hotels Corporation. Ms Colaianni brings insight into consumer- facing businesses and international experience.

Grant Hearn (Independent Non-Executive Director) Mr Hearn is the former Chief Executive Officer of Travelodge. During his 10 year career with the hotel business Mr Hearn also served as Executive Chairman. He has a wealth of experience in the hotel and travel industry having previously held senior positions at Hilton Group and Whitbread. He brings significant experience in customer-facing businesses, specifically in the value sector. Grant chairs the Governance and Nominations Committee.

47 2. SENIOR MANAGEMENT The Company’s current Senior Management is as follows:

Name Age Position James John McCarthy ...... 58 Chief Executive Officer Nicholas Roger Hateley ...... 48 Chief Financial Officer Richard Lancaster ...... 50 Executive Director David Coxon ...... 57 International Development Director Tim McDonnell ...... 48 Retail Operations Director Craig Bales ...... 52 Property Director Andy Monk ...... 52 Supply Chain Director Mark Powell ...... 46 Human Resources Director Mike Gray ...... 54 IT Director Jinder Jhuti ...... 50 General Counsel and Company Secretary

James John McCarthy (Chief Executive Officer) See ‘‘—Directors’’ above for James McCarthy’s biography.

Nicholas Roger Hateley (Chief Financial Officer) See ‘‘—Directors’’ above for Nicholas Hateley’s biography.

Richard Lancaster (Executive Director) See ‘‘—Directors’’ above for Richard Lancaster’s biography.

David Coxon (International Development Director) Mr Coxon joined Poundland in October 2005 as Buying & Merchandising Director, and now focuses on international development. Mr Coxon has over 25 years’ commercial retailing experience in buying, marketing, retail operations and supply chain, both UK and International, having worked at Kwik Save, Allied Domecq, Minit Group and more recently Somerfield Stores Ltd. Mr Coxon will be leaving Poundland in July 2014.

Tim McDonnell (Retail Operations Director) Mr McDonnell joined Poundland in August 2006 as Regional Manager with responsibility for Retail Operations in the north of the country. Prior to that, Mr McDonnell worked for Kwik Save and Somerfield Stores Ltd for over 20 years holding a number of roles in both Retail Operations and Human Resources and was a Regional Director prior to joining Poundland.

Craig Bales (Property Director) Mr Bales joined Poundland in December 2004 as Property Director with responsibility for the effective management and development of the Poundland property portfolio. Mr Bales has 20 years’ experience in commercial property specialising in retail agency. He spent ten years as Partner at Johnson Fellows and then created niche retail agency business—Craig Bales & Company, which was subsequently sold to Lambert Smith Hampton. Prior to joining Poundland, he sat on the board of Lambert Smith Hampton.

Andy Monk (Supply Chain Director) Mr Monk joined Poundland in 2009 as Supply Chain Director. Mr Monk now has responsibility for the entire supply chain where his priorities are managing the distribution of stock around the Group, optimising the level of stock holding through the supply chain whilst improving the availability of stock on the shelf in stores. Prior to joining Poundland, Mr Monk was Distribution Director for Somerfield Stores Ltd where he rationalised their network by consolidating the former Kwik Save and Somerfield networks and latterly the sale of Kwik Save. Mr Monk has 30 years’ experience in distribution and has held a wide number of

48 Development and Operational roles within own-account and third-party logistics companies. He also gained international experience whilst working for Tibbett and Britten in North America.

Mark Powell (Human Resources Director) Mr Powell joined Poundland in February 2011 as Human Resources Director and was appointed to the Board of Poundland Limited in March 2012, his responsibilities include looking after the Company’s people and continuous improvement strategies. Mr Powell has over 20 years of Human Resources experience spanning the aerospace, food manufacturing, supply chain and retail sectors. Prior to joining Poundland, Mr Powell was People Director at Fat Face Limited.

Mike Gray (IT Director) Mr Gray joined Poundland in August 2003 as a Senior Controller with responsibility for developing IT capability. Appointed to the Board of Poundland Limited in March 2012 he is responsible for IT Strategy and the ongoing development and management of all aspects of IT. Mr Gray has over 25 years’ IT experience spanning travel and retail sectors. Prior to joining Poundland, Mr Gray was Head of IT Services for TUI UK Limited.

Jinder Jhuti (General Counsel and Company Secretary) Mrs Jhuti joined Poundland in November 2006 as sole counsel and assistant company secretary. Appointed to the Trading Board in January 2012, she is responsible for managing legal risk, corporate compliance, insurance and customer relations. Mrs Jhuti has over 24 years’ experience in the legal sector. Prior to joining Poundland Mrs Jhuti worked in-house at Alliance & Leicester (now Santander Bank) and Barclays Bank plc in addition to working in private practice at Martineau Johnson.

3. CORPORATE GOVERNANCE UK Corporate Governance Code The Board is committed to the highest standards of corporate governance. Other than as set out in this paragraph, from Admission the Company will comply, and intends to continue to comply, with the requirements of the UK Corporate Governance Code. On Admission, the Board will comprise ten members, including three Directors and seven Non-Executive Directors (including the Chairman). For the purposes of the UK Corporate Governance Code, the Board regards Andrew Higginson as independent on his appointment and regards Darren Shapland, Trevor Bond, Teresa Colaianni and Grant Hearn as independent Non-Executive Directors. Darren Shapland is the Company’s senior independent director. Paul Best and Stephen Coates, as Non-Executive Directors nominated by the Warburg Pincus Funds, are not regarded as independent for the purposes of the UK Corporate Governance Code. The UK Corporate Governance Code recommends, in the case of a FTSE 350 company, that at least half the board of directors of a UK-listed company, excluding the chairman, should comprise non-executive directors determined by the board to be independent in character and judgement and free from relationships or circumstances which may affect, or could appear to affect, the director’s judgement. As at the date of the Prospectus, the Company will not comply with this recommendation of the UK Corporate Governance Code. As envisaged by the UK Corporate Governance Code, the Board has established an audit and risk committee, a governance and nomination committee and a remuneration committee. If the need should arise, the Board may set up additional committees as appropriate.

Audit and risk committee The audit and risk committee’s role is to assist the Board with the discharge of its responsibilities in relation to financial reporting, including reviewing the Group’s annual and half year financial statements and accounting policies, internal and external audits and controls, reviewing and monitoring the scope of the annual audit and the extent of the non-audit work undertaken by external auditors, advising on the

49 appointment of external auditors and reviewing the effectiveness of the internal audit, internal controls, whistleblowing and fraud systems in place within the Group. The audit and risk committee will normally meet not less than three times a year. The audit and risk committee is chaired by Trevor Bond and its other members are Darren Shapland, Teresa Colaianni and Grant Hearn. The UK Corporate Governance Code recommends that all members of the audit and risk committee be non-executive directors, independent in character and judgment and free from any relationship or circumstance which may, could or would be likely to, or appear to, affect their judgment and that one such member has recent and relevant financial experience. The Board considers that the Company complies with the requirements of the UK Corporate Governance Code in this respect.

Governance and nomination committee The nomination committee assists the Board in reviewing the structure, size and composition of the Board. It is also responsible for reviewing succession plans for the Directors, including the Chairman and Chief Executive and other senior executives. The governance and nomination committee will normally meet not less than twice a year. The governance and nomination committee is chaired by Grant Hearn and its other members are Darren Shapland, Trevor Bond, Teresa Colaianni and Paul Best. The UK Corporate Governance Code recommends that a majority of the governance and nomination committee be non-executive directors, independent in character and judgment and free from any relationship or circumstance which may, could or would be likely to, or appear to, affect their judgment. The Board considers that the Company complies with the requirements of the UK Corporate Governance Code in this respect.

Remuneration committee The remuneration committee recommends the Group’s policy on executive remuneration, determines the levels of remuneration for Executive Directors and the Chairman and other senior executives and prepares an annual remuneration report for approval by the Shareholders at the annual general meeting. The remuneration committee will normally meet not less than three times a year. The remuneration committee is chaired by Teresa Colaianni and its other members are Andrew Higginson, Darren Shapland, Trevor Bond and Grant Hearn. The UK Corporate Governance Code recommends that all members of the remuneration committee be non-executive directors, independent in character and judgment and free from any relationship or circumstance which may, could or would be likely to, or appear to, affect their judgment. The Board considers that the Group complies with the requirements of the UK Corporate Governance Code in this respect.

Share dealing code The Company has adopted, with effect from Admission, two codes of securities dealings in relation to the Ordinary Shares which are based on, and are at least as rigorous as, the Model Code as published in the Listing Rules. The codes adopted will apply to the Directors and other persons discharging managerial responsibilities and employees of the Group, respectively.

4. RELATIONSHIP WITH PRINCIPAL SHAREHOLDER Following the Reorganisation and immediately prior to Admission, it is expected that the Warburg Pincus Funds will hold approximately 79.5 per cent. of the voting rights attached to the issued share capital of the Company. Immediately following the Global Offer and Admission, it is expected that the Warburg Pincus Funds will hold approximately 37.9 per cent. of the voting rights attached to the issued share capital of the Company, assuming no exercise of the Over-allotment Option, and 30.4 per cent. assuming the Over-allotment Option is exercised in full. On 12 March 2014, the Company and the Warburg Pincus Funds entered into the Relationship Agreement which will, conditional upon Admission, regulate the ongoing relationship between the Company and the Warburg Pincus Funds. The principal purpose of the Relationship Agreement is to ensure that the Company and its subsidiaries are capable of carrying on an independent business as its main activity. The Relationship Agreement will continue for so long as (a) the Ordinary Shares are listed on the premium listing segment of the Official List and traded on London Stock Exchange’s main market for listed securities and (b) the Warburg Pincus Funds, together with their associates are entitled to exercise or to

50 control the exercise of 15 per cent. or more of the votes able to be cast on all or substantially all matters at general meetings of the Company. Under the Relationship Agreement, which is conditional on Admission, the Warburg Pincus Funds undertake, among other things, on behalf of it and its associates: (a) to comply with all applicable provisions of the Listing Rules and the Disclosure and Transparency Rules, the requirements of the London Stock Exchange, the FSMA and the Financial Services Act 2012; (b) not to enter into any transaction or relationship with any member of the Group which is not conducted at arm’s length and on normal commercial terms; (c) not to take any action that would have the effect of preventing the Company from complying with its obligations under the Listing Rules, the Disclosure and Transparency Rules, the requirements of the London Stock Exchange, the FSMA and the Financial Services Act 2012; (d) not to take any action that would be inconsistent with, or breach, any provision of the Relationship Agreement or affect the ability of the Company Group to carry on its business independently of the Warburg Pincus Funds and its associates; (e) not to take any action that would have the effect of preventing the Company from complying with the principles of good governance set out in the UK Corporate Governance Code, save to the extent set out in the Prospectus or in any annual report of the Company; and (f) not to propose or procure the proposal of a shareholder resolution which is intended to or appears to be intended to circumvent the proper application of the Listing Rules. The Warburg Pincus Funds are entitled to appoint two Non-Executive Directors to the Board for so long as they and their associates are entitled to exercise or to control the exercise of 30 per cent. or more of the votes able to be cast on all or substantially all matters at general meetings of the Company. The first such appointees are Paul Best and Stephen Coates. The Warburg Pincus Funds are able to appoint one Non-Executive Director to the Board for so long as it and its associates are entitled to exercise or control the exercise of 15 per cent. or more of the votes able to be cast on all or substantially all matters at general meetings of the Company. Paul Best is also a member of the Board’s governance and nomination committee. The Directors believe that the terms of the Relationship Agreement will enable the Group to carry on its business independently of the Warburg Pincus Funds. Following Admission, the Articles will allow the election of independent directors to be conducted in accordance with any requirements of the Listing Rules.

5. CONFLICTS OF INTEREST Paul Best and Stephen Coates are principals at Warburg Pincus. Warburg Pincus is the manager of the Warburg Pincus Funds which will, immediately following Admission, control 37.9 per cent. of the voting rights in the Company, assuming no exercise of the Over-allotment Option or 30.4 per cent. of the voting rights in the Company, assuming the Over-allotment Option is exercised in full. Trevor Bond is employed by Mondelez International, a significant supplier for the Group. Save as set out in the paragraphs above, there are no potential conflicts of interest between any duties owed by the Directors or Senior Management to the Company and their private interests or other duties.

51 PART 7 SELECTED FINANCIAL INFORMATION The selected financial information set out below has been extracted without material amendment from Part 10—‘‘Historical Financial Information’’ of this Prospectus, where it is shown with important notes describing some of the line items.

Consolidated Statement of Profit and Loss

41 weeks 53 weeks 52 weeks ended ended ended 39 weeks ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Revenue ...... 518,372 780,147 880,491 671,100 758,340 Cost of sales ...... (327,613) (492,165) (556,980) (424,540) (479,022) Gross profit ...... 190,759 287,982 323,511 246,560 279,318 Distribution expenses ...... (153,532) (232,086) (263,196) (196,482) (220,579) Administrative expenses ...... (21,530) (27,712) (30,264) (22,650) (25,658) Operating profit ...... 15,697 28,184 30,051 27,428 33,081 Financial income ...... 52 192 371 268 240 Financial expenses ...... (7,200) (5,065) (3,945) (3,001) (2,728) Net financing expense ...... (7,148) (4,873) (3,574) (2,733) (2,488) Profit before tax ...... 8,549 23,311 26,477 24,695 30,593 Taxation ...... (3,433) (5,800) (3,092) (6,606) (7,566) Profit for the period ...... 5,116 17,511 23,385 18,089 23,027 Non-underlying items ...... (6,547) (575) 1,604 (1,882) (982) Underlying profit for the period(1) ...... 11,663 18,086 21,781 19,971 24,009 EBITDA(2) ...... 24,090 39,457 43,131 36,805 44,025 Non-underlying items ...... (4,154) — (2,319) (1,995) (1,198) Underlying EBITDA(1) ...... 28,244 39,457 45,450 38,800 45,223

(1) Underlying profit for the period and Underlying EBITDA exclude the impact of non-underlying items. A full reconciliation of underlying profit for the period to reported profit for the period is set out in Part 10—‘‘Historical Financial Information’’. (2) The Group defines EBITDA as profit for the period before finance costs, finance income, tax and depreciation and amortisation.

52 Balance Sheet

As at 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Non-current assets Property, plant and equipment ...... 28,379 34,343 38,283 39,962 41,340 Intangible assets and goodwill ...... 186,089 185,088 184,506 184,810 183,738 Trade and other receivables ...... 283 519 792 820 823 Other financial assets ...... 198 — 403 — — Deferred tax asset ...... ——— — 112 Total non-current assets ...... 214,949 219,950 223,984 225,592 226,013 Current assets Inventories ...... 59,662 69,554 81,004 84,671 95,007 Tax receivable ...... — 2 — — — Other financial assets ...... 131 21 4,212 — 362 Trade and other receivables ...... 15,340 20,287 20,734 29,932 34,203 Cash and cash equivalents ...... 30,993 35,916 42,861 59,102 63,033 Total current assets ...... 106,126 125,780 148,811 173,705 192,605 Total assets ...... 321,075 345,730 372,795 399,297 418,618 Current liabilities Other interest-bearing loans and borrowings ...... (2,208) (3,424) (1,532) (1,329) (2,269) Trade and other payables ...... (69,146) (89,030) (94,576) (127,725) (142,581) Tax payable ...... (2,528) (3,349) (4,295) (5,587) (6,088) Provisions ...... (927) (1,231) (366) (753) (848) Other financial liabilities ...... (905) (633) (397) (2,240) (4,879) Total current liabilities ...... (75,714) (97,667) (101,166) (137,634) (156,665) Non-current liabilities Other interest-bearing loans and borrowings ...... (58,421) (54,977) (50,486) (51,578) (46,812) Other payables ...... (11,392) (15,361) (16,931) (17,307) (17,976) Provisions ...... — (226) (138) (125) (138) Other financial liabilities ...... — (23) — (12) (1,096) Deferred tax liabilities ...... (5,890) (4,098) (3,491) (2,372) — Total non-current liabilities ...... (75,703) (74,685) (71,046) (71,394) (66,022) Total liabilities ...... (151,417) (172,352) (172,212) (209,028) (222,687) Net assets ...... 169,658 173,378 200,583 190,269 195,931 Equity attributable to equity holders of the parent Share capital ...... 164,967 152,341 152,474 152,474 138,007 Share premium ...... ——— — 49 Reserves ...... (425) 12,410 16,097 11,079 22,836 Retained earnings ...... 5,116 8,627 32,012 26,716 35,039 Total equity ...... 169,658 173,378 200,583 190,269 195,931

53 Cash Flow Statement

41 weeks 53 weeks 52 weeks ended ended ended 39 weeks ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Cash flows from operating activities Profit for the year ...... 5,116 17,511 23,385 18,089 23,027 Adjustments for: Depreciation and amortisation ...... 8,393 11,273 13,080 9,377 10,943 Financial income ...... (52) (192) (371) (268) (240) Financial expense ...... 7,200 5,065 3,945 3,001 2,728 Loss on disposal of property, plant and equipment ...... 1 17 — — — Taxation ...... 3,433 5,800 3,092 6,606 7,566 Transaction costs relating to acquisition of subsidiary ...... 4,013 — — — — 28,104 39,474 43,131 36,805 44,024 Decrease/(increase) in trade and other receivables ...... 4,336 (5,140) (627) (9,845) (13,374) Increase in inventories ...... (4,776) (9,892) (11,450) (15,117) (14,003) (Decrease)/increase in trade and other payables ...... (9,194) 24,760 7,168 40,020 48,461 Increase/(decrease) in provisions ...... 284 530 (953) (579) 482 18,754 49,732 37,269 51,284 65,590 Tax paid ...... (4,647) (6,814) (3,852) (5,700) (7,271) Net cash from operating activities ...... 14,107 42,918 33,417 45,584 58,319 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired ...... (175,423) — — — — Acquisition of property, plant and equipment ...... (8,960) (15,582) (15,181) (13,631) (12,603) Acquisition of other intangible assets .... (503) (671) (1,257) (1,086) (629) Net cash from investing activities ...... (184,886) (16,253) (16,438) (14,717) (13,232) Cash flows from financing activities Proceeds from the issue of share capital . . 164,768 30 — — — Proceeds from new loan ...... 60,198 — — — — Repayment of borrowings ...... (19,717) (3,121) (7,200) (6,106) (3,553) Redemption of preference shares ...... — (14,000) — — (20,000) Net financial expense paid ...... (3,477) (4,651) (2,834) (1,575) (1,362) Net cash from financing activities ...... 201,772 (21,742) (10,034) (7,681) (24,915) Net increase in cash and cash equivalents 30,993 4,923 6,945 23,186 20,172 Cash and cash equivalents at start of period ...... — 30,993 35,916 35,916 42,861 Cash and cash equivalents at end of period . 30,993 35,916 42,861 59,102 63,033

54 Other Comprehensive Income

41 weeks 53 weeks 52 weeks ended ended ended 39 weeks ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Profit for the period ...... 5,116 17,511 23,385 18,089 23,027 Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences— foreign operations ...... (26) 9 26 (3) (43) Effective portion of changes in fair value of cash flow hedges ...... (603) 1,092 5,182 (1,554) (13,067) Net change in fair value of cash flow hedges recycled to profit or loss ...... 63 (964) (421) (165) 3,181 Income tax on items that are or may be recycled subsequently to profit or loss . . . 141 (41) (1,100) 391 2,104 (425) 96 3,687 (1,331) (7,825) Other comprehensive income for the period, net of income tax ...... (425) 96 3,687 (1,331) (7,825) Total comprehensive income attributable to equity holders of the parent ...... 4,691 17,607 27,072 16,758 15,202

55 PART 8 OPERATING AND FINANCIAL REVIEW This Part 8 ‘‘Operating and Financial Review’’ should be read in conjunction with Part 2—‘‘Presentation of Financial and Other Information’’, Part 5—‘‘Information on the Company and its Group’’ and Part 10— ‘‘Historical Financial Information’’. Prospective investors should read the entire document and not just rely on the summary information set out below. The financial information considered in this Part 8—‘‘Operating and Financial Review’’ is extracted from the financial information set out in Part 10—‘‘Historical Financial Information’’. The following discussion of the Company’s results of operations and financial conditions contains forward- looking statements. The Company’s actual results could differ materially from those that it discusses in these forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Prospectus, particularly under Part 1—‘‘Risk Factors’’ and Part 2—‘‘Presentation of Financial and Other Information—Information regarding forward-looking statements’’. References in this Part 8—‘‘Operating and Financial Review’’ to the ‘‘2011 financial period’’ are to the 41 week period ended 27 March 2011, to the ‘‘2012 financial year’’ are to the 53 week period ended 1 April 2012 and to the ‘‘2013 financial year’’ are to the 52 week period ended 31 March 2013. The 2011 financial period reflects the shorter period of the audited financial statements available for the 41 weeks ended 27 March 2011, representing the trading performance of the Group from the date of the acquisition of the Group by the Warburg Pincus Funds. As discussed below, the shorter 2011 financial period impacts the comparability of the 2011 financial period with other financial periods discussed in this Part 8—‘‘Operating and Financial Review’’. The discussion of the Company’s results of operations and financial condition also reflects the impact of certain non-underlying items resulting from the Group’s acquisition of Poundland Holdings Limited and the subsequent negotiation of bank loans, among other factors. The analysis in this Part 8—‘‘Operating and Financial Review’’ is based on the underlying results where indicated. Reconciliation of the underlying and non-underlying results is presented where relevant.

1. OVERVIEW OF THE GROUP Poundland is the largest single price value general merchandise retailer in Europe by both sales and by number of stores. Since opening its first store in 1990, Poundland has grown to operate a network of over 500 stores across the UK and Ireland. Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks and are all operated on a leasehold basis. Poundland operates under the ‘‘Poundland’’ brand in the UK and its low cost, efficient business model is designed to offer customers amazing value every day at the single price point of £1. Poundland successfully entered Ireland in September 2011 under the ‘‘Dealz’’ brand, where it sells the vast majority of its products for A1.49, and became profitable in its first full year of operation. Poundland is led by a strong and entrepreneurial management team, with significant retail experience and a proven track record of success. Poundland’s retail proposition is robust, with on average approximately 4.9 million customer transactions undertaken across its stores per week in the 39 weeks ended 29 December 2013. Poundland is a price- driven, volume-led business offering an extensive range of products across 17 categories, with the average Poundland store carrying approximately 3,000 core range SKUs including over 1,000 third-party branded products. Third-party branded products account for the majority of sales (approximately 63 per cent. of total sales in the 2013 financial year), with popular brand names such as Cadbury, Mars, Heinz, Nestle and Colgate representing an important footfall driver. Poundland also has strong in-house product development capabilities, offering over 50 own label brand families, which typically have higher margins than third-party branded products, including Silk Soft paper products, Sweet Heaven confectionery, Kitchen Corner, Allura (Health & Beauty), Beautiful Garden and Toolbox (DIY). Poundland has established strong brand recognition, and in a recent survey conducted by YouGov, Poundland scored 95 per cent. prompted brand awareness, significantly above its key competitors in the UK value general merchandise retail market and in line with large UK grocery chains. In addition, Poundland has built a strong customer base, with the average store serving over 10,000 customers per week. The Directors believe that its brand and product offering appeal to an increasingly wide range of consumers, with approximately 22 per cent. of Poundland’s UK customers being from the affluent AB socio-demographic group based on a survey conducted in 2013.

56 Poundland maintains strong relationships with its suppliers and sourced approximately 80 per cent. of its purchases on a value basis from UK based suppliers in the 2013 financial year, with almost all primary manufacturers of Poundland’s products supplying directly. Poundland works closely with manufacturers to develop innovative and exclusive products to offer a relevant and attractive value offering. It has continued to increase its supplier base and sources and develops products on a global basis. Poundland’s sourcing office in Hong Kong is an important part of its buying strategy, with particular focus on new product development, and general merchandise products in particular, logistics and product quality assurance and control. Poundland is headquartered in Willenhall, West Midlands, and employed on average 11,757 people in the 2013 financial year, of which approximately 70 per cent. were employed on a part-time basis. It operates three distribution centres, two of which are based in the Midlands and the third, currently a temporary facility, is based in the South East of England. A new warehouse is expected to open in late 2014 in Harlow in the South East of England to replace the existing temporary facility. Poundland’s distribution network also includes four cross-docking facilities, located in Scotland, the North East of England, Ireland and Northern Ireland. In the 2013 financial year, Poundland generated revenue of £880.5 million and Underlying EBITDA of £45.5 million with an Underlying EBITDA margin of 5.2 per cent. In the 39 weeks ended 29 December 2013, Poundland generated revenue of £758.3 million and Underlying EBITDA of £45.2 million with an Underlying EBITDA margin of 6.0 per cent.

2. CURRENT TRADING AND PROSPECTS The Group’s strong financial performance has continued since 29 December 2013, with results ahead of those of the same period in the prior year. Revenue for the four weeks ended 26 January 2014 was £66.5 million, an increase of £8.4 million, or 14.4 per cent. compared with the same period in the prior year. The EBITDA performance for the four weeks ended 26 January 2014 has continued the trend experienced in the first nine months of the year, with adjusted EBITDA well ahead of the equivalent period in the 2013 financial year. The Group’s store roll out strategy continues to proceed well with 65 to 70 net new stores expected to open in the 2014 financial year.

3. KEY FACTORS AFFECTING THE GROUP’S RESULTS OF OPERATIONS

The results of the Group’s operations have been, and will continue to be, affected by many factors, some of which are beyond the Group’s control. This section sets out certain key factors that the Directors believe have affected the Group’s results of operations in the period under review and could affect its results of operations in the future.

3.1 New store openings New store openings have been the primary driver of the Group’s revenue growth in the period under review and will continue to materially affect the Group’s results of operations going forward. Poundland proactively manages its store portfolio with the goals of maximising profitability and acquiring quality sites in attractive locations, while also maintaining a disciplined, cost-sensitive approach to site selection. Poundland increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and 2013 financial years, respectively, and by 59 net new stores in the 39 weeks ended 29 December 2013. The table below details the Group’s store growth (net of store closures):

52 weeks 53 weeks 52 weeks 39 weeks ended ended ended ended 27 March 1 April 31 March 29 December 2011 2012 2013 2013 Poundland store roll out ...... 64 53 52 54 Dealz (Ireland) store roll out ...... 0 9 17 5 Total (net of store closures) ...... 64 62 69 59

57 The Directors believe that there is scope for significant further store growth and, as is supported by external research conducted by the Javelin Group, that there is potential for more than 1,000 Poundland stores in the UK and more than 70 Dealz stores in Ireland. The Group intends to open approximately 60 net new stores per year across high streets, shopping centres and retail parks, with an increased focus on retail parks as part of the overall store mix as they tend to be more profitable and have a higher average transaction value than the average Poundland store. New store openings are therefore expected to have a significant impact on the Group’s revenue, operating profit and cash flow. New stores are generally opened and fully operational within two to three weeks following lease completion, and will typically recover all costs associated with their opening, including capital expenditure and all pre-opening costs, in around 12 months of trading. In the 2011, 2012 and 2013 financial years, Poundland’s average net capital expenditure for a new store was approximately £149,000, and the average pre-opening costs, which relate to rent, rates, marketing and staff costs, were approximately £39,000. The Directors therefore believe that Poundland has a strong growth opportunity through further store roll out in both the UK and Ireland. In addition, the Group is in the process of developing plans to trial Dealz stores in continental Europe, with a pilot launch planned for Spain in the 2015 financial year. For more information on new store openings, see Part 5—‘‘Information on the Company and its Group— Business Description—Retail Stores’’.

3.2 Gross margin The Group’s gross profit and margin are affected by a number of factors, including movements in cost of sales, the mix of products sold (including with respect to consumables versus non-consumables, third-party branded products versus own label products and UK-sourced versus imported goods), the extent to which the Group can negotiate incentives from suppliers and the mix of stores that it opens. The Group’s strategy is to sell products at the single price point of £1 in Poundland stores and A1.49 for the vast majority of products in Dealz stores, and deliver amazing value to its customers. As a single price retailer, the Group seeks to offset factors which put pressure on the Group’s gross margin. For example, in recent years, the Group’s percentage of sales from lower margin consumable products has increased as consumers have focused their spending on essential items. In addition, the Group’s sales of third-party branded products increased in the 2013 financial year to approximately 63 per cent., from approximately 60 per cent. in the 2012 financial year, which typically has the effect of diluting margins. Despite these pressures, the Group’s gross margins were broadly stable in the 52 weeks ended 27 March 2011, the 52 weeks ended 1 April 2012 and the 2013 financial year as a result of measures taken to manage its gross margin, including managing its product range (product de-listings and new product listings), re-engineering of pack sizes, shifting sourcing to lower cost economies, developing new and stronger supplier relationships (leading to increased purchasing power and higher rebates and other incentives) and altering product mix (including improving the Group’s offering of own label items which generally generate higher margins). In particular, Poundland expects to strengthen its ability to work with suppliers to develop exclusive new products, as suppliers are becoming increasingly supportive of the value general merchandise market as they recognise its size and growth potential. In the future, opening more retail park and Dealz stores should also assist in managing Poundland’s gross margin as these store formats have typically outperformed the average margin of the Group. The Directors believe that, in the medium to longer term, as general economic conditions improve and disposable income increases, there may be scope to increase gross margin, with the Group increasing its sales of discretionary, higher margin products.

3.3 Operating costs Given its single price pricing strategy, Poundland’s management of its fixed and variable cost base is an important driver of its operating margins. Poundland maintains a low-cost operating model, in line with Poundland’s policy to ‘‘treat every £1 as your own’’. Poundland’s operating costs include staff costs and rent costs, both of which have increased in line with Poundland’s store roll out programme. To date, Poundland has incurred costs to put in place infrastructure to support further growth and enable it to substantially increase its store portfolio in the UK and Ireland without requiring significant further investment, such as in its distribution network. The Group has been successful in reducing its operating costs to sales ratio over the period under review, despite cost increases and its substantial investment in infrastructure. In the near term, Poundland’s operating costs will be impacted by costs relating to the opening of Poundland’s new distribution centre in Harlow in late 2014, costs incurred in connection with Poundland’s planned pilot

58 launch in Spain and additional costs associated with becoming a public company. As a result of the new distribution centre, the Directors expect to achieve productivity benefits at a store level, and in logistics in particular, after twelve to eighteen months. The launch into continental Europe is expected to be low cost and low risk, and the Directors anticipate that the launch costs will be relatively immaterial in the context of the Group in the next financial year.

3.4 Seasonality The Group’s business is subject to seasonal peaks associated with, in particular, Christmas and Halloween, and, to a lesser extent, Easter, the back-to-school period and the gardening season, and products for special events are an important part of the Group’s sales mix. Because of sales of holiday-related merchandise, historically, sales and profit in the Group’s third quarter (October, November and December) have been higher than sales and profit achieved in each of the other quarters of the fiscal year, and over 50 per cent. of the Group’s EBITDA has typically been generated in the Group’s third quarter. The Group incurs additional expenses in advance of these seasonal peaks, including the cost of additional inventory and employees. While sales are generally higher at certain times of the year, the Group has not experienced any loss-making months (at an EBITDA level) during the period under review.

3.5 General economic climate Poundland’s performance is affected by the general economic climate, in particular as a result of how the economy impacts consumers’ spending patterns. Poor economic conditions have attracted some consumers to the value general merchandise retail sector. However, the Directors believe that any improvements in the general economic outlook and growth in consumer spending should have a positive impact on the Group’s future performance. Based on consumer surveys and trading performance, the Directors believe that consumers will continue to shop in Poundland’s stores and should increase the proportion of non-consumable, discretionary items they purchase, which are typically higher margin. General economic conditions, such as inflation and minimum wage levels, can also have the effect of increasing the Group’s payroll costs, direct product costs and the cost of goods and services.

4. OPERATING METRICS 4.1 Key Performance Indicators The Board monitors the Group’s performance by regularly reviewing the following metrics, as the Group considers these measures to give greater understanding of the drivers of the Group’s performance. The Directors consider these measures to be the Group’s KPIs. Some of the measures described below are not measures of financial performance under generally accepted accounting principles, including IFRS, and should not be considered in isolation or as an alternative to the IFRS financial statements set out in Part 10—‘‘Historical Financial Information’’. Because some of these measures are not determined in accordance with generally accepted accounting principles and are thus susceptible to varying calculations, they may not be comparable with other similarly titled measures of performance of other companies.

59 The table below represents the KPIs that the Group believes significantly affect the Group’s results of operations and financial condition.

52 weeks 52 weeks 52 weeks 39 weeks 39 weeks ended or ended or ended or ended or ended or as at as at as at as at as at 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 Number of stores at end of period ...... 327 389 458 456 517 Number of new stores (net) ...... 64 62 69 67 59 Revenue (£ millions) ...... 641.5(6) 765.4(8) 880.5 671.1 758.3 Gross margin (%) ...... 36.7(6) 36.9(8) 36.7 36.7 36.8 Underlying EBITDA (£ millions)(1) ...... 31.1(6) 38.7(8) 45.5 38.8 45.2 Underlying EBITDA margin (%)(1) ...... 4.8(6) 5.1(8) 5.2 5.8 6.0 Underlying profit for the period (£ millions) . 12.0(6) 17.7(8) 21.8 20.0 24.0 Operating cash flow less maintenance capital expenditure (£ millions)(2) ...... —(7) 47.5(8) 37.6 51.6 64.5 Cash conversion (% of Underlying EBITDA)(3) ...... —(7) 120.4(8) 82.7 133.0 142.7 Operating cash flow less maintenance and expansion capital expenditure (£ millions)(4) —(7) 33.5(8) 23.2 38.6 53.6 Net debt/(cash)(5) ...... 29.6 22.5 9.2 (6.2) (14.0)

(1) The Group defines Underlying EBITDA as profit for the period before finance costs, finance income, tax, non-underlying items and depreciation and amortisation, and Underlying EBITDA margin as Underlying EBITDA divided by revenue. (2) Operating cash flow less maintenance capital expenditure is defined as Underlying EBITDA plus/minus changes in working capital minus capital expenditure on stores opened in the prior period or earlier. Changes in working capital is defined as the sum of the changes in trade and other receivables, inventories, trade and other payables and provisions. (3) Cash conversion is defined as the operating cash flow metric (defined in footnote (2) above) divided by Underlying EBITDA. (4) Operating cash flow less maintenance and expansion capital expenditure is defined as Underlying EBITDA plus/minus changes in working capital minus all capital expenditure including investment on existing stores, the roll out of new stores and investments in extensions, IT, warehouses and property. Changes in working capital is defined as the sum of the changes in trade and other receivables, inventories, trade and other payables and provisions. (5) Net debt is total debt minus cash and cash equivalents. Net debt as at 1 April 2012 is stated after the redemption of preference shares of £14.0 million and net debt as at 29 December 2013 is stated after the redemption of preference shares of £20.0 million. (6) The unaudited adjusted financial information relating to revenue, gross margin, Underlying EBITDA, Underlying EBITDA margin and underlying profit for the 52 week period ended 27 March 2011 has been derived from the audited UK GAAP financial information for Poundland Limited, the principal trading company of the Group, for the 52 week period ended 27 March 2011, with UK GAAP-to-IFRS adjustments and adjustments for consolidation of the results of the Company and its non-trading subsidiaries and subsidiary undertakings. See Note 4 of Part 10—‘‘Historical Financial Information’’. For a reconciliation of certain KPIs for Poundland Limited (derived from the audited UK GAAP information referred to above) to those of Poundland (unaudited, IFRS) for the 52 week period ended 27 March 2011, see ‘‘Part 2—‘‘Presentation of Financial and Other Information—Presentation of Financial Information’’. This unaudited 52 week adjusted financial information has been prepared for illustrative purposes only and has not been prepared in accordance with Regulation S-X of the Securities Act, the Prospectus Directive or generally accepted accounting standards. (7) Unavailable for the 52 weeks ended 27 March 2011. (8) Figures for the 52 week period ending 1 April 2012 have been calculated by dividing the 2012 financial year figures by 53 and multiplying by 52 to allow for comparability. No such adjustment has been made in respect of the cash flow metrics. Poundland has a strong track record of store openings, having increased its store portfolio by 64, 62 and 69 net new stores in the 52 weeks ended 27 March 2011 and the 2012 and 2013 financial years, respectively, and by 59 net new stores in the 39 weeks ended 29 December 2013. Poundland has maintained a stable gross margin at approximately 37 per cent. for each of the financial periods under review. This has been achieved through active management and initiatives including managing product range (product de-listings and new product listings), re-engineering of pack sizes, shifting sourcing to lower cost economies, developing new and stronger supplier relationships (leading to increased purchasing power and higher rebates and other incentives) and altering product mix (including improving the Group’s offering of own label items which generally generate higher margins). Underlying EBITDA has increased at a CAGR of 21.0 per cent. from £31.1 million in the 52 weeks ended 27 March 2011 to £45.5 million in the 2013 financial year. Underlying EBITDA increased by 16.5 per cent.

60 to £45.2 million in the 39 weeks to 29 December 2013 compared to £38.8 million in the 39 weeks ended 30 December 2012. The growth in Underlying EBITDA has been primarily driven by new store openings. In addition, Underlying EBITDA margin has increased from 4.8 per cent. in the 52 weeks ended 27 March 2011 to 5.2 per cent. in the 2013 financial year, reflecting the positive operational leverage within the business. This has been achieved despite continued investment in both headcount and infrastructure ahead of the expected growth in the store portfolio. Underlying EBITDA margin increased in the 39 weeks ended 29 December 2013 to 6.0 per cent. compared with 5.8 per cent. in the 39 weeks ended 30 December 2012. Poundland has a track record of strong cash flow generation and conversion and reducing net debt, with £47.5 million of operating cash less maintenance capital expenditure (as defined in footnote (2) on page 61) generated in the 52 weeks ended 1 April 2012, representing cash conversion as a percentage of Underlying EBITDA of 120.4 per cent. and £37.6 million of operating cash less maintenance capital expenditure generated in the 2013 financial year, representing cash conversion as a percentage of Underlying EBITDA of 82.7 per cent. The 2013 financial year was impacted by the planned stock build up for the temporary distribution centre in Hoddesdon that opened in the summer of 2012. Poundland’s growth has historically been funded by internally generated cash flows and, despite the continued investment in new stores as well as infrastructure, Poundland has generated strong cash flow during the period under review. This is in part due to the rapid maturation and pay-back on new stores, with a new store typically recovering all costs associated with their opening, including capital expenditure and all pre-opening costs, in around 12 months of trading. In the 52 weeks ended 27 March 2011, 52 weeks ended 1 April 2012 and 2013 financial year, Poundland opened 195 stores, significantly invested in its supply chain and distribution infrastructure to support a growing business, and reduced its net debt position to £9.2 million as at 31 March 2013 (from £29.6 million as at 27 March 2011), all of which were funded out of Poundland’s operating cash flow.

4.2 Other Operating Metrics The table below presents other operating metrics for the Group.

52 weeks 52 weeks 52 weeks 39 weeks 39 weeks ended ended ended ended ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 Average store size (square feet) ...... 4,770 4,942 5,143 5,080 5,220 Average number of transactions per week (millions) ...... 3.4 4.0 4.4 4.5 4.9 Average transaction value (£) ...... 4.23 4.31 4.44 4.46(4) 4.58(4) Gross sales(1) (£ millions) ...... 738.6(2) 908.3(3) 1,024.3 782.0 882.1

(1) Gross sales is the sum of all sales during the period without deducting VAT (which are deducted from gross sales for purposes of calculating revenue). The Group primarily uses gross sales as the key metric for store-based analysis, including sales per store per week. (2) The unaudited adjusted financial information relating to revenue, gross margin, Underlying EBITDA, Underlying EBITDA margin and underlying profit for the 52 week period ended 27 March 2011 has been derived from the audited UK GAAP financial information for Poundland Limited, the principal trading company of the Group, for the 52 week period ended 27 March 2011, with UK GAAP-to-IFRS adjustments and adjustments for consolidation of the results of the Company and its non-trading subsidiaries and subsidiary undertakings. See Note 4 of Part 10—‘‘Historical Financial Information’’. For a reconciliation of certain KPIs for Poundland Limited (derived from the audited UK GAAP information referred to above) to those of Poundland (unaudited, IFRS) for the 52 week period ended 27 March 2011, see ‘‘Part 2—‘‘Presentation of Financial and Other Information—Presentation of Financial Information’’. This unaudited 52 week adjusted financial information has been prepared for illustrative purposes only and has not been prepared in accordance with Regulation S-X of the Securities Act, the Prospectus Directive or generally accepted accounting standards. (3) Figures for the 52 week period ending 1 April 2012 have been calculated by dividing the 2012 financial year figures by 53 and multiplying by 52 to allow for comparability. (4) Average transaction value for the 39 weeks ended 30 December 2012 and 29 December 2013 are slightly skewed due to the Christmas trading period. During the period under review, the average store size has increased, with the average store size in Poundland’s portfolio increasing from 4,770 square feet as at 27 March 2011 to 5,220 square feet as at 29 December 2013. Typically, larger stores have higher gross margins and average transaction values. The average number of transactions per week has shown continued growth during the period under review, increasing at a CAGR of 15 per. cent. from 3.4 million in the 52 weeks ended 27 March 2011 to 4.4 million

61 in the 2013 financial year, and increasing further to 4.9 million in the 39 weeks ended 29 December 2013. The increase in the average number of transactions per week reflects an increased number of stores, increased customer traffic in stores and an increased frequency of transactions. The average Poundland store serves over 10,000 customers per week. Average transaction value has increased at a CAGR of 2.5 per cent. from £4.23 in the 52 weeks ended 27 March 2011 to £4.44 in the 2013 financial year, and increased further to £4.58 in the 39 weeks ended 29 December 2013. The increase in average transaction value has in part been driven by the opening of Dealz stores which generally have a higher average transaction value than the average Poundland store due to the higher price point of A1.49 for the vast majority of products. Historically, sales growth has been driven more by increases in the average number of transactions per week than by increases in average transaction value.

4.3 Store Performance Indicators The table below presents the Group’s store performance indicators, broken down by store format, for the 2013 financial year and 39 weeks ended 29 December 2013.

(1) Calculated in accordance with UK GAAP. Derived from the unaudited accounting records used to compile the Group’s UK GAAP financial information. There is no difference between average gross sales per store per week calculated under IFRS and UK GAAP for the 2013 financial year or 39 weeks ended 29 December 2013. (2) The information provided for Dealz does not include the two Dealz stores located on the Isle of Man and the Orkney Isles, both of which trade in pounds sterling. Average gross sales per store per week figures for Dealz are converted at an exchange rate of £1 = A1.2. Poundland operates a network of over 500 stores across the UK and Ireland. Stores are located in convenient locations, typically with high footfall, across a mixture of high streets, shopping centres and retail parks. As at 29 December 2013, Poundland operated 435 high street and shopping centres stores and 49 retail park stores in the UK, as well as 31 Dealz stores in Ireland plus one in the Isle of Man and one in Orkney Isles. Historically, most of Poundland’s stores have been located in high streets and shopping centres, and, more recently, Poundland’s strategy has been to expand its store network in retail parks. Based on performance in the 2013 financial year, retail park stores tend to be larger with higher average transaction value and higher profitability than high street and shopping centre stores. Dealz stores in Ireland are located across a mixture of high streets, shopping centres and retail parks. Dealz stores are on average larger than the average UK store, with average gross sales per store per week in line with the UK average. The price point in Ireland is set at A1.49 for over 90 per cent. of products, with some products sold at other round Euro price points. Multi-price products represent approximately 7 per cent. of sales, rising to approximately 9 per cent. in the Christmas period. The higher price point leads to Dealz having an approximately 40 per cent. higher average transaction value than the Poundland average and a higher gross margin than Poundland’s gross margin in the UK. The Directors intend to continue the store roll out in Ireland from 31 as at 29 December 2013 with a relatively modest number of new stores per year, with a long-term potential for over 70 stores.

62 5. DESCRIPTION OF KEY LINE ITEMS 5.1 Revenue The Group generates revenue from the sale of goods to external customers net of VAT and promotional discounts. Revenue is recognised on the sale of goods when the significant risks and rewards of ownership of the goods have passed to the customer and the amount of revenue can be measured reliably.

5.2 Cost of sales Cost of sales represents the cost of products sold plus commission expense, pricing differences, foreign exchange differences on import purchases, freight, retrospective discounts, stock loss and damages, expense of carrier bags and in-store consumable items. The Group also accounts for its supplier and manufacturer purchases within cost of sales.

5.3 Distribution expenses Distribution expenses include all costs associated with distributing products to stores, including wages and salaries, warehouse costs and transport costs, and selling products in stores, including staff costs, property costs, mainly rent and rates, and other costs such as utilities and store maintenance.

5.4 Administrative expenses Administrative expenses include wages and salaries associated with Poundland’s head office, such as Directors, trading, finance, human resources, retail and supply chain. Administrative expenses also include other costs associated with central functions such as travel expenses, project costs for strategic initiatives, professional advisor fees and insurance costs.

5.5 Financial income Financial income consists mainly of interest income on unimpaired financial assets. Financial income also represents the ineffective portion of changes in the fair value of cash flow hedges, which is recognised as non-underlying income.

5.6 Financial expenses Financial expenses primarily consist of total interest expense on financial liabilities, measured at amortised cost. Financial expenses also reflect the net change in the fair value of interest rate swap cash flow hedges recycled from equity (an underlying expense) and the ineffective portion of changes in the fair value of cash flow hedges (a non-underlying expense).

5.7 Taxation The Group’s taxation expense reflects current and deferred tax. The Group recognises deferred tax assets and liabilities based upon future taxable income and the expected recoverability of the balance. The estimate will include assumptions regarding future income streams of the Group and the future movement in corporation tax rates in the respective jurisdictions.

6. RESULTS OF OPERATIONS 6.1 Comparability of results The 2011 financial period constitutes the 41 week period ended 27 March 2011, reflecting the trading performance of the Group from the date of the acquisition of the Group by the Warburg Pincus Funds. As a result, the comparability of the 2011 financial period against the 2012 financial year, which reflects 53 weeks of trading, is limited. The comparative description of the 2011 financial period against the 2012 financial year notes the impact of this disparity where relevant. Typically, Poundland prepares its annual results covering a 52 week period ending on the last Sunday of March. However, the 2012 financial year was a 53 week period. Consequently, the Group’s results for the 2012 financial year include an additional week of trading as compared to the 2013 financial year, which impacts comparability with the 2013 financial year. To assist with comparability, certain line items discussed below for the 2012 financial year have been adjusted to be on a 52 week basis, calculated by dividing the 2012 financial year figures by 53 and multiplying by 52.

63 6.2 Non-underlying items The Group reports non-underlying items in its statement of profit and loss to show one-off items. These have included costs associated with its acquisition of Poundland Holdings Limited and the subsequent negotiation of bank loans, charges relating to foreign exchange hedging instruments, the cost of opening a new distribution centre, strategic initiatives and a one-off corporation tax refund. See Note 6 of Part 10— ‘‘Historical Financial Information’’.

6.3 Results of operations for the 39 weeks ended 29 December 2013 against the 39 weeks ended 30 December 2012 The table below presents the Group’s results of operations for the 39 weeks ended 29 December 2013 and 30 December 2012, which has been extracted without material adjustment from the consolidated historical financial information set out in Part 10—‘‘Historical Financial Information’’.

39 weeks ended 30 December 2012 29 December 2013 Non- Non- Underlying underlying(1) Total Underlying underlying(2) Total £000 Unaudited Revenue ...... 671,100 — 671,100 758,340 — 758,340 Cost of sales ...... (424,540) — (424,540) (479,022) — (479,022) Gross profit ...... 246,560 — 246,560 279,318 — 279,318 Distribution expenses ...... (194,831) (1,651) (196,482) (220,579) — (220,579) Administrative expenses ...... (21,472) (1,178) (22,650) (23,626) (2,032) (25,658) Operating profit ...... 30,257 (2,829) 27,428 35,113 (2,032) 33,081 Financial income ...... 166 102 268 185 55 240 Financial expenses ...... (3,001) — (3,001) (2,728) — (2,728) Net financing expense ...... (2,835) 102 (2,733) (2,543) 55 (2,488) Profit before tax ...... 27,422 (2,727) 24,695 32,570 (1,977) 30,593 Taxation ...... (7,451) 845 (6,606) (8,561) 995 (7,566) Profit for the period ...... 19,971 (1,882) 18,089 24,009 (982) 23,027

(1) Non-underlying results of operations for the 39 weeks ended 30 December 2012 represent the Group’s results of operations including the impact of finance costs relating to US dollar foreign hedging instruments, costs resulting from the opening of a new temporary distribution centre, costs relating to a new store format trial, costs related to strategic initiatives (e-commerce and international expansion) and brand amortisation. (2) Non-underlying results of operations for the 39 weeks ended 29 December 2013 represent the Group’s results of operations including the impact of finance costs relating to US dollar foreign hedging instruments, costs related to strategic initiatives (e-commerce and international expansion) and brand amortisation.

Revenue The Group’s revenue for the 39 weeks ended 29 December 2013 was £758.3 million, as compared to £671.1 million for the 39 weeks ended 30 December 2012, representing an increase of £87.2 million, or 13.0 per cent. This increase was principally due to the opening of new stores, with 59 net new stores opened in the 39 weeks ended 29 December 2013 compared to 67 net new stores opened in the 39 weeks ended 30 December 2012. Revenue on a like-for-like basis, comparing stores that have been trading for a minimum of 14 months, increased by 1.4 per cent. This increase was primarily due to continued innovation in the offer and a more normal number of competitor store openings compared to the 2013 financial year.

Gross profit The Group’s gross profit in the 39 weeks ended 29 December 2013 increased by £32.7 million, or by 13.3 per cent., to £279.3 million, compared with the 39 weeks ended 30 December 2012, reflecting the overall growth of the Group. Gross margins increased slightly at 36.8 per cent. and 36.7 per cent. for the 39 weeks ended 29 December 2013 and 30 December 2012, respectively. Throughout the period, the Group managed its gross margin through a variety of measures including managing its product range, re-engineering of pack sizes, shifting sourcing to lower cost economies, developing new and stronger

64 supplier relationships and altering product mix. The Group also benefited from the increased proportion of Dealz and retail park stores within the store portfolio, as, based on performance in the 2013 financial year, these stores generally have higher gross margins.

Distribution and administrative expenses The table below presents a breakdown of underlying distribution and underlying administrative expenses (or ‘‘Total Underlying Overheads’’) for the 39 weeks ending 29 December 2013 and 30 December 2012.

39 weeks ended 39 weeks ended 30 December 29 December 2012 2013 £000 (except percentages) Underlying distribution expenses(1) ...... 194,831 220,579 Underlying administrative expenses ...... 21,472 23,626 Total Underlying Overheads ...... 216,303 244,205 Payroll ...... 94,782 106,571 Depreciation and amortisation ...... 8,543 10,109 Operating leases ...... 50,335 57,904 Other ...... 62,643 69,621 Total Underlying Overheads ...... 216,303 244,205 % of revenue Payroll ...... 14.1 14.1 Depreciation and amortisation ...... 1.3 1.3 Operating leases ...... 7.5 7.6 Other ...... 9.3 9.2 Total Underlying Overheads ...... 32.2 32.2

(1) In the 39 weeks ended 29 December 2013, there were no non-underlying distribution expenses. The Group’s Total Underlying Overheads for the 39 weeks ended 29 December 2013 were £244.2 million, as compared to £216.3 million for the 39 weeks ended 30 December 2012, representing an increase of £27.9 million, or 12.9 per cent. The increase in Total Underlying Overheads was primarily the result of an increase in underlying distribution expenses, which was principally due to the growth in the Group’s store portfolio resulting in increased store costs and staff costs. As a percentage of revenue, Total Underlying Overheads, comprised of payroll, depreciation and amortisation, operating leases and other costs, decreased slightly from 32.23 per cent. in the 39 weeks ended 30 December 2012 to 32.20 per cent. in the 39 weeks ended 29 December 2013. Underlying distribution expenses increased slightly as a percentage of revenue at 29.1 per cent. for the 39 weeks ended 29 December 2013, compared with 29.0 per cent. for the 39 weeks ended 30 December 2012. The Group had no non-underlying distribution expenses in the 39 weeks ended 29 December 2013, compared with a charge of £1.7 million in the 39 weeks ended 30 December 2012, as a result of costs resulting from the opening of a new temporary distribution centre at Hoddesdon and costs relating to a new store format trial. As a percentage of revenue, underlying administrative expenses decreased slightly to 3.12 per cent. for the 39 weeks ended 29 December 2013, as compared to 3.20 per cent. for the 39 weeks ended 30 December 2012, as the Group was able to control its administrative cost base while delivering strong sales growth through the period. The Group had non-underlying administrative expenses of £2.0 million in the 39 weeks ended 29 December 2013 as a result of costs related to strategic initiatives (e-commerce and international expansion) and brand amortisation, and £1.2 million in the 39 weeks ended 29 December 2012 as a result of costs relating to a new store format trial, costs related to strategic initiatives (e-commerce and international expansion) and brand amortisation.

Operating profit As a result of the above, the Group’s underlying operating profit for the 39 weeks ended 29 December 2013 was £35.1 million, as compared to £30.3 million for the 39 weeks ended 30 December 2012, representing an increase of £4.8 million, or 16.1 per cent. The Group’s total operating profit for the

65 39 weeks ended 29 December 2013 of £33.1 million reflects the impact of a non-underlying administrative expense of £2.0 million, as discussed above. This represents an increase of £5.7 million, or 20.8 per cent., over the operating profit of £27.4 million in the 39 weeks to 30 December 2012. In the 39 weeks to 30 December 2012 there was a non-underlying distribution expense of £1.7 million and a non-underlying administrative expense of £1.2 million, as discussed above.

Financial income The table below presents the breakdown of the Group’s financial income for the 39 weeks ended 29 December 2013 and 30 December 2012.

39 weeks ended 30 December 29 December 2012 2013 Unaudited £000 Interest income on unimpaired financial assets ...... 166 185 Ineffective portion of changes in fair value of cash flow hedges(1) ...... 102 55 Total financial income ...... 268 240

(1) Where hedges do not meet hedge accounting criteria, the movement in the fair value of the hedging instruments is taken to the income statement rather than to reserves. The Group’s financial income for the 39 weeks ended 29 December 2013 was £0.2 million, as compared to £0.3 million for the 39 weeks ended 30 December 2012, representing a decrease of £0.1 million.

Financial expenses The table below presents the breakdown of the Group’s financial expenses for the 39 weeks ended 29 December 2013 and 30 December 2012.

39 weeks ended 30 December 29 December 2012 2013 £000 Unaudited Total interest expense on financial liabilities measured at amortised cost(1) . . . 2,949 2,672 Net change in fair value of interest rate swap cash flow hedges recycled from equity ...... 52 56 Total financial expenses ...... 3,001 2,728

(1) Includes £0.6 million and £0.6 million of amortisation of bank fees in the 39 weeks ended 30 December 2012 and 29 December 2013, respectively. The Group’s financial expenses for the 39 weeks ended 29 December 2013 were £2.7 million, as compared to £3.0 million for the 39 weeks ended 30 December 2012, representing a decrease of £0.3 million. This decrease was principally due to lower interest expenses on the Group’s financial liabilities.

Taxation The Group’s taxation for the 39 weeks ended 29 December 2013 was a charge of £7.6 million, as compared to a charge of £6.6 million for the 39 weeks ended 30 December 2012. The increase in taxation was principally the result of higher profits for the 39 weeks ended 29 December 2013.

Profit for the period As a result of the above, the Group’s underlying profit for the 39 weeks ended 29 December 2013 increased to £24.0 million from £20.0 million for the 39 weeks ended 30 December 2012, an increase of £4.0 million, or 20.0 per cent. Including non-underlying items, profit for the period increased by £4.9 million, or 27.1 per cent., from £18.1 million in the 39 weeks ended 30 December 2012 to £23.0 million in the 39 weeks ended 29 December 2013.

66 6.4 Results of operations for the 2013 financial year against the 2012 financial year The table below presents the Group’s results of operations for the 2013 and 2012 financial years, which has been extracted without material adjustment from the consolidated historical financial information set out in Part 10—‘‘Historical Financial Information’’.

Results of operations for the 2013 and 2012 financial years

53 weeks ended 1 April 2012 52 weeks ended 31 March 2013 Non- Non- Underlying underlying(1) Total Underlying underlying(2) Total £000 Revenue ...... 780,147 — 780,147 880,491 — 880,491 Cost of sales ...... (492,165) — (492,165) (556,980) — (556,980) Gross profit ...... 287,982 — 287,982 323,511 — 323,511 Distribution expenses ...... (232,086) — (232,086) (261,337) (1,859) (263,196) Administrative expenses ...... (26,579) (1,133) (27,712) (28,693) (1,571) (30,264) Operating profit ...... 29,317 (1,133) 28,184 33,481 (3,430) 30,051 Financial income ...... 192 — 192 279 92 371 Financial expenses ...... (4,878) (187) (5,065) (3,945) — (3,945) Net financing expense ...... (4,686) (187) (4,873) (3,666) 92 (3,574) Profit before tax ...... 24,631 (1,320) 23,311 29,815 (3,338) 26,477 Taxation ...... (6,545) 745 (5,800) (8,034) 4,942 (3,092) Profit for the period ...... 18,086 (575) 17,511 21,781 1,604 23,385

(1) Non-underlying results of operations for the 2012 financial year represent the Group’s results of operations including the impact of finance costs relating to US dollar and Euro foreign exchange hedging instruments and brand amortisation. (2) Non-underlying results of operations for the 2013 financial year represent the Group’s results of operations including the impact of a prior year adjustment of approximately £3.8 million principally arising from the tax benefit on certain share transactions in the 2011 financial year, finance costs relating to US dollar and Euro foreign hedging instruments, costs resulting from the opening of a new temporary distribution centre, costs relating to a new store format trial, costs related to strategic initiatives (e-commerce and international expansion) and brand amortisation.

Revenue The Group’s underlying revenue was £880.5 million for the 2013 financial year, as compared to £780.2 million for the 2012 financial year, representing an increase of £100.3 million, or 12.9 per cent. Adjusting for the impact of the 53rd week in the 2012 financial year (as described in paragraph 6.1 above), revenue in the 2013 financial year increased by 15.0 per cent., from £765.4 million in the 52 weeks ended 1 April 2012. The increase was principally due to the opening of new stores, with new store growth contributing 16.3 per cent. to total revenue growth. Revenue on a like-for-like basis, comparing stores that have been trading for a minimum of 14 months, decreased by £13.4 million, or by 1.7 per cent. This decrease was due primarily to a significantly higher than usual number of stores opened by competitors in near proximity to Poundland stores (122 competitor store openings during the 2013 financial year compared to 60 and 71 in the 2011 financial period and 2012 financial year, respectively) resulting in part from the collapse of Peacocks, following which many former Peacocks sites in the immediate vicinity of a Poundland store were leased by Poundland’s competitors. This decrease was also due to the negative effect on high street footfall caused by extreme weather and the London Olympics.

Gross profit The Group’s underlying gross profit was £323.5 million for the 2013 financial year, representing an increase of 12.3 per cent. compared to the 2012 financial year, reflecting the overall growth of the Group. As a percentage of revenue, gross profit remained relatively stable at 36.7 per cent. and 36.9 per cent. for the 2013 and 2012 financial years, respectively. Throughout the period, the Group managed its gross margin through a variety of measures including managing its product range, re-engineering of pack sizes, shifting sourcing to lower cost economies, developing new and stronger supplier relationships and altering product mix.

67 Distribution and administrative expenses The table below presents a breakdown of Total Underlying Overheads for the 2013 and 2012 financial years.

53 weeks 52 weeks ended ended 1 April 31 March 2012 2013 £000 (except percentages) Underlying distribution expenses(1) ...... (232,086) (261,337) Underlying administrative expenses ...... (26,579) (28,693) Total Underlying Overheads ...... (258,665) (290,030) Payroll ...... (112,659) (127,130) Depreciation and amortisation ...... (10,140) (11,968) Operating leases ...... (59,200) (68,725) Other ...... (76,666) (82,207) Total Underlying Overheads ...... (258,665) (290,030) % of revenue Payroll ...... 14.4 14.4 Depreciation and amortisation ...... 1.3 1.4 Operating leases ...... 7.6 7.8 Other ...... 9.8 9.3 Total Underlying Overheads ...... 33.1 32.9

(1) In the 2012 financial year, there were no non-underlying distribution expenses. The Group’s Total Underlying Overheads for the 2013 financial year were £290.0 million, as compared to £258.7 million for the 2012 financial year, representing an increase of £31.3 million, or 12.1 per cent. The increase in Total Underlying Overheads was primarily the result of an increase in underlying distribution expenses, which was principally due to the growth in the Group’s store portfolio resulting in increased store costs and staff costs. As a percentage of revenue, Total Underlying Overheads, comprised of payroll, depreciation and amortisation, operating leases and other costs, decreased slightly from 33.1 per cent. in the 2012 financial year to 32.9 per cent. in the 2013 financial year. Underlying distribution expenses remained stable as a percentage of revenue at 29.7 per cent. for both the 2013 and 2012 financial years, despite increases in costs incurred in connection with Poundland’s cross- docking facilities following the expansion into Ireland and an increase in rental costs relating to the Group’s new temporary distribution centre in Hoddesdon. The Group had non-underlying distribution expenses of £1.9 million in the 2013 financial year, as a result of opening the Hoddesdon distribution centre and costs relating to a new store format trial. As a percentage of revenue, underlying administrative expenses decreased slightly to 3.3 per cent. for the 2013 financial year as compared to 3.4 per cent. for the 2012 financial year, as the Group was able to control its administrative cost base while delivering strong sales growth through the period. The Group had non-underlying administrative expenses of £1.6 million and £1.1 million in the 2013 and 2012 financial years, respectively, as a result of £1.1 million charges in both years for brand amortisation and, in the 2013 financial year, the Group incurred strategic initiative costs of £0.5 million, related to e-commerce and international expansion.

Operating profit As a result of the above, the Group’s underlying operating profit for the 2013 financial year was £33.5 million, as compared to £29.3 million for the 2012 financial year, representing an increase of £4.2 million, or 14.3 per cent. The Group’s total operating profit for the 2013 financial year of £30.0 million reflects the impact of a non-underlying distribution expense of £1.9 million and a non-underlying administrative expense of £1.6 million, as discussed above.

68 Financial income The table below presents the breakdown of the Group’s financial income for the 2013 and 2012 financial years.

53 weeks 52 weeks ended ended 1 April 31 March 2012 2013 £000 Interest income on unimpaired financial assets(1) ...... 192 279 Ineffective portion of changes in fair value of cash flow hedges(2)(3) ...... — 92 Total financial income ...... 192 371

(1) Underlying. (2) Non-underlying. (3) Where hedges do not meet hedge accounting criteria, the movement in the fair value of the hedging instruments is taken to the income statement rather than to reserves. The Group’s underlying financial income for the 2013 financial year was £0.3 million, as compared to £0.2 million for the 2012 financial year, representing an increase of £0.1 million. This increase was principally due to cash generation and control of the Group’s working capital through the 2013 financial year. The Group had non-underlying financial income of £0.1 million for the 2013 financial year, as a result of the impact in changes in the fair value of the Group’s foreign exchange hedging contracts.

Financial expenses The table below presents the breakdown of the Group’s financial expenses for the 2013 and 2012 financial years.

53 weeks 52 weeks ended ended 1 April 31 March 2012 2013 £000 Total interest expense on financial liabilities measured at amortised cost(1)(2) ..... 4,807 3,865 Net change in fair value of interest rate swap cash flow hedges recycled from equity(1) ...... 71 80 Ineffective portion of changes in fair value of cash flow hedges(3)(4) ...... 187 — Total financial expenses ...... 5,065 3,945

(1) Underlying. (2) Includes £0.8 million and £0.8 million of amortisation of bank fees in the 2012 and 2013 financial years, respectively. (3) Non-underlying. (4) Where hedges do not meet hedge accounting criteria, the movement in the fair value of the hedging instruments is taken to the income statement rather than to reserves. The Group’s underlying financial expenses for the 2013 financial year were £3.9 million, as compared to £4.9 million for the 2012 financial year, representing a decrease of £1.0 million, or 20.4 per cent. This decrease was principally due to cash generation and tight control of the Group’s working capital through the year. The Group had non-underlying financial expenses of £0.2 million for the 2012 financial year, as a result of the negative impact in changes in the fair value of the Group’s foreign exchange hedging contracts.

Taxation The Group’s underlying taxation for the 2013 financial year was a charge of £8.0 million, as compared to a charge of £6.5 million for the 2012 financial year. The increase in taxation was principally the result of higher profits for the 2013 financial year. A prior year adjustment of approximately £3.8 million arising principally from the tax benefit on certain share transactions in the 2011 financial year as well as the tax

69 implications of the non-underlying items discussed above resulted in a total non-underlying tax benefit of £4.9 million and £0.7 million for the 2013 and 2012 financial years, respectively.

Profit for the period The Group’s underlying profit for the 2013 financial year increased to £21.8 million from £18.1 million for the 2012 financial year, an increase of £3.7 million, or 20.4 per cent. On a 52 week adjusted basis (as described in paragraph 6.1 above), profit for the period increased by 23.2 per cent. from £17.7 million in the 52 weeks ended 1 April 2012 due to the reasons set forth above. Including non-underlying items, profit for the period increased by £5.9 million, or 33.7 per cent., from £17.5 million in the 2012 financial year to £23.4 million in the 2013 financial year.

6.5 Results of operations for the 2012 financial year against the 2011 financial period The table below presents the Group’s results of operations for the 2012 financial year and the 2011 financial period, which has been extracted without material adjustment from the consolidated historical financial information set out in Part 10—‘‘Historical Financial Information’’. The 2011 financial period constitutes the 41 week period ended 27 March 2011, reflecting the trading performance of the Group from the date of the acquisition of the Group by the Warburg Pincus Funds. As a result, the comparability of the 2011 financial period against the 2012 financial year, which reflects 53 weeks of trading, is limited.

41 weeks ended 53 weeks ended 27 March 2011 1 April 2012 Non- Non- Underlying underlying(1) Total Underlying underlying(2) Total £000 Revenue ...... 518,372 — 518,372 780,147 — 780,147 Cost of sales ...... (327,613) — (327,613) (492,165) — (492,165) Gross profit ...... 190,759 — 190,759 287,982 — 287,982 Distribution expenses ...... (153,532) — (153,532) (232,086) — (232,086) Administrative expenses ...... (16,508) (5,022) (21,530) (26,579) (1,133) (27,712) Operating profit ...... 20,719 (5,022) 15,697 29,317 (1,133) 28,184 Financial income ...... 52 — 52 192 — 192 Financial expenses ...... (4,095) (3,105) (7,200) (4,878) (187) (5,065) Net financing expense ...... (4,043) (3,105) (7,148) (4,686) (187) (4,873) Profit before tax ...... 16,676 (8,127) 8,549 24,631 (1,320) 23,311 Taxation ...... (5,013) 1,580 (3,433) (6,545) 745 (5,800) Profit for the period ...... 11,663 (6,547) 5,116 18,086 (575) 17,511

(1) Non-underlying results of operations for the 2011 financial period represent the Group’s results of operations including the impact of costs associated with its acquisition of Poundland Holdings Limited and the subsequent negotiation of bank loans and finance costs relating to US dollar foreign exchange hedging instruments and brand amortisation. (2) Non-underlying results of operations for the 2012 financial year represent the Group’s results of operations including the impact of finance costs relating to US dollar foreign exchange hedging instruments and brand amortisation.

Revenue The increase in the Group’s underlying revenue was mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period. On a 52 week adjusted basis, revenue increased by £123.9 million, or 19.3 per cent., to £765.4 million in the 52 weeks ended 1 April 2012 from £641.5 million for the 52 weeks ended 27 March 2011. This increase was due to the Group’s ongoing store opening programme, as the Group increased its store portfolio by 62 stores in the 52 weeks ended 1 April 2012 and 64 stores in the 52 weeks ended 27 March 2011. Like-for-like sales increased by 2.3 per cent.

Gross profit The increase in gross profit was mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period.

70 Gross margin was stable at 36.8 per cent. and 36.9 per cent. for the 2011 financial period and 2012 financial year, respectively. On a 52 week adjusted basis, gross margin for the 52 weeks ended 27 March 2011 was 36.7 per cent. The impact of the increased proportion of lower margin third-party branded goods, which increased to 61.7 per cent. in the 2012 financial year from 58.5 per cent. in the 52 weeks ended 27 March 2011 was offset by a combination of measures including product range management, re-engineering of pack sizes, leveraging scale to improve supplier incentives, shifting sourcing to lower cost economies and altering product mix.

Distribution and administrative expenses The table below presents a breakdown of Total Underlying Overheads for the 2011 financial period and 2012 financial year.

41 weeks 53 weeks ended ended 27 March 1 April 2011 2012 £000 (except percentages) Underlying distribution expenses(1) ...... (153,532) (232,086) Underlying administrative expenses ...... (16,508) (26,579) Total Underlying Overheads ...... (170,040) (258,665) Payroll ...... (76,964) (112,659) Depreciation and amortisation ...... (7,525) (10,140) Operating leases ...... (38,925) (59,200) Other ...... (46,626) (76,666) Total Underlying Overheads ...... (170,040) (258,665) % of revenue Payroll ...... 14.8 14.4 Depreciation and amortisation ...... 1.5 1.3 Operating leases ...... 7.5 7.6 Other ...... 9.0 9.8 Total Underlying Overheads ...... 32.8 33.1

(1) The Group had no non-underlying distribution expenses for the 2012 financial year and the 2011 financial period. The increase in the Group’s Total Underlying Overheads was mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period. As a percentage of revenue, Total Underlying Overheads increased from 32.8 per cent. in the 2011 financial period to 33.1 per cent. in the 2012 financial year. On a 52 week adjusted basis, Total Underlying Overheads, excluding depreciation, increased by £39.5 million, or 19.3 per cent. which was primarily the result of increased distribution expenses due to strong sales growth, increased third-party storage costs and increased expenses relating to the growth of the Group’s store portfolio, such as entry into Ireland and the Isle of Man requiring new distribution networks. As a percentage of revenue, Total Underlying Overheads, excluding depreciation, remained broadly stable at 31.8 per cent. in the 52 weeks ended 27 March 2011 and 31.9 per cent. in the 52 weeks ended 1 April 2012. In the 2012 financial year, the Group had non-underlying administrative expenses of £1.1 million. In the 2011 financial period, the Group had non-underlying administrative expenses of £5.0 million, reflecting costs associated with its acquisition of Poundland Holdings Limited. These included deal costs of £4.0 million and professional fees of £0.1 million relating to share capital reductions in subsidiary companies and the setting up of an employee benefit trust.

Operating profit The increase in operating profit was mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period, as well as the other reasons discussed above.

71 Financial income and expenses The table below presents the breakdown of the Group’s financial income and expenses for the 2012 financial year and the 2011 financial period.

41 weeks 53 weeks ended ended 27 March 1 April 2011 2012 £000 Interest income on unimpaired financial assets(1) ...... 52 192 Ineffective portion of changes in fair value of cash flow hedges(2) ...... — — Total financial income ...... 52 192 Total interest expense on financial liabilities measured at amortised cost(3) ...... 4,770 4,807 Net change in fair value of interest rate swap cash flow hedges recycled from equity(2) ...... 45 71 Ineffective portion of changes in fair value of cash flow hedges(2) ...... 2,385 187 Total financial expenses ...... 7,200 5,065

(1) Underlying. (2) Non-underlying. (3) Includes £0.5 million and £0.8 million of underlying amortisation of bank fees in the 2011 financial period and 2012 financial year, respectively and £0.7 million of non-underlying amortisation of bank fees in the 2011 financial period. The increases in underlying financial income and financial expenses were mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period. The Group’s total financial expenses for the 2011 financial period include non-underlying financial expenses of £3.1 million, resulting from £0.7 million in bank fees relating to bridging debt taken out for the acquisition of Poundland Holdings Limited and a charge relating to US dollar foreign exchange hedging instruments recognised as part of the acquisition of Poundland Holdings Limited. This charge is the result of the contracts being acquired as part of the business combination at a value higher than £nil and is therefore not expected to be repeated. The non-underlying financial expenses in the 2011 financial period also include the ineffective portion of hedges in the period.

Profit for the period The increase in profit for the period was mainly the result of the longer duration of the 2012 financial year as compared to the 2011 financial period. On a 52 week adjusted basis, underlying profit for the period increased by 47.5 per cent. from £12.0 million in the 52 weeks ended 27 March 2011 to £17.7 million in the 52 weeks ended 1 April 2012 due to the reasons set forth above.

7. LIQUIDITY AND CAPITAL RESOURCES The Group’s liquidity requirements arise primarily from the need to fund its working capital requirements and new store roll out programme, as well as to make interest payments on its indebtedness. The Group’s principal source of liquidity has been its cash flow from operating activities. The Group will also have a multicurrency revolving facility to support short and medium term liquidity, as described in paragraph 7.3 below.

7.1 Cash flows The table below presents a summary of the Group’s cash flows for the 39 weeks ended 29 December 2013 and 30 December 2012, and for the 2013 and 2012 financial years and the 2011 financial period, which has been extracted without material adjustment from the consolidated historical financial information set out in Part 10—‘‘Historical Financial Information’’.

72 41 weeks 53 weeks 52 weeks ended ended ended 39 weeks ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Net cash from operating activities ...... 14,107 42,918 33,417 45,584 58,319 Net cash (used in) / from investing activities . . (184,886) (16,253) (16,438) (14,717) (13,232) Net cash (used in) / from financing activities . 201,772 (21,742) (10,034) (7,681) (24,915) Net increase in cash and cash equivalents ... 30,993 4,923 6,945 23,186 20,172 Cash and cash equivalents at end of period .. 30,993 35,916 42,861 59,102 63,033

Net cash from operating activities The primary source of the Group’s cash flows is funds generated by operating activities. The Group’s net cash from operating activities primarily comprises the Group’s operating profit for the year adjusted for depreciation and amortisation as well as working capital movements, changes in provisions and other non-current liabilities and tax paid. Net cash from operating activities was £58.3 million in the 39 weeks ended 29 December 2013, an increase of £12.7 million as compared to net cash from operating activities of £45.6 million for the 39 weeks ended 30 December 2012. This increase was principally due to higher EBITDA, the increase in trade payables due to higher sales and timing differences on supplier payments. Net cash from operating activities was £33.4 million in the 2013 financial year, a decrease of £9.5 million compared to the 2012 financial year. Profit for the 2013 financial year adjusted for depreciation and amortisation increased by £7.7 million, or 26.7 per cent. compared to the 2012 financial year. The increase in profit was offset by a negative movement in working capital (as defined in footnote (2) on page 61) of £5.9 million compared to a positive working capital movement in the 2012 financial year of £10.3 million. This working capital outflow in the 2013 financial year was principally due to a planned investment in stockholding due to the opening of the temporary Hoddesdon distribution centre. Net cash from operating activities was £42.9 million in the 2012 financial year, an increase of £28.8 million from the 2011 financial period, principally due to the longer duration of the 2012 financial year compared to the 2011 financial period, as the 41 weeks of 2011 were impacted by four rent quarters. Profit adjusted for depreciation and amortisation increased by £15.3 million, or 113.3 per cent. compared to the 2011 financial period. In addition to the increase in profit, the Group had positive working capital movements (as defined in footnote (2) on page 61) of £10.3 million, compared to an outflow of £9.4 million in the 2011 financial period. The positive working capital movement in the 2012 financial year was a result of stock levels increasing at a slower rate than sales and other creditors.

Net cash (used in) / from investing activities The Group’s net cash (used in) / from investing activities consists of cash used for payments to acquire businesses, cash reinvested by the Group in its store portfolio, primarily through the opening of new stores, and also investment in the Group’s IT and logistics platform. Net cash used in investing activities was £13.2 million in the 39 weeks ended 29 December 2013, a decrease of £1.5 million as compared to net cash used in investing activities of £14.7 million for the 39 weeks ended 30 December 2012. This decrease was principally due to lower capital expenditure due to the timing of store openings and lower expenditure on software. Net cash used in investing activities was £16.4 million in the 2013 financial year, remaining relatively stable compared to net cash used in investing activities of £16.3 million in the 2012 financial year. Within this, expenditure on property, plant and equipment was also relatively stable, at £15.2 million, compared with £15.6 million in the 2012 financial year. Net cash used in investing activities was £16.3 million in the 2012 financial year, a decrease of £168.6 million from the 2011 financial period, principally due to the acquisition of Poundland Holdings Limited in the 2011 financial period. Net cash used in investing activities was £184.9 million in the 2011 financial period, principally due to the acquisition on 17 June 2010 by the Group of 100 per cent. of the issued share capital of Poundland Holdings Limited and subsidiary undertakings. The consideration of £179.9 million including professional fees of £4.0 million was primarily satisfied in cash generated by the issue of share capital.

73 Net cash (used in) / from financing activities The Group’s net cash (used in) / from financing activities consists of proceeds from the issue of new share capital, any form of long-term debt financing raised or repaid, interest paid and cash used for repayment of preference shares. Net cash used in financing activities was £24.9 million in the 39 weeks ended 29 December 2013, an increase of £17.2 million as compared to net cash used in financing activities of £7.7 million for the 39 weeks ended 30 December 2012. This increase was principally due to a £20.0 million redemption of preference shares. Net cash used in financing activities was £10.0 million in the 2013 financial year. This primarily reflects interest paid on the Group’s borrowings of £3.1 million offset by financial income of £0.3 million and the repayment of £7.2 million of the Group’s borrowings. Net cash used in financing activities was £21.7 million in the 2012 financial year. This primarily reflects interest paid on the Group’s borrowings of £4.9 million offset by financial income of £0.2 million, the repayment of £3.1 million of the Group’s borrowings as well as a £14.0 million redemption of preference shares. Net cash used in financing activities was £201.8 million in the 2011 financial period. This primarily reflects proceeds from the issue of new share capital of £164.8 million in connection with the acquisition of Poundland Holdings Limited as well as proceeds from new loans of £60.2 million. This was offset by interest paid on the Group’s borrowings of £3.5 million and a repayment of borrowings of £19.7 million.

7.2 Capital expenditure The table below presents a breakdown of the Group’s capital expenditure for the 39 weeks ended 29 December 2013 and 30 December 2012, the 2013 and 2012 financial years and the 2011 financial period.

41 weeks 53 weeks 52 weeks ended ended ended 39 weeks ended 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 New stores(1)(2) ...... 6,518 12,063 12,393 11,415 9,855 Other(1)(3) ...... 1,051 2,007 2,038 1,641 1,102 Expansion capital expenditure(1) ...... 7,569 14,070 14,431 13,056 10,957 Maintenance capital expenditure(1)(4) ...... 1,894 2,183 2,007 1,661 2,275 Total capital expenditure ...... 9,463 16,253 16,438 14,717 13,232

(1) Amount has been extracted from the unaudited accounting records used to compile the audited consolidated historical financial information set out in Part 10—‘‘Historical Financial Information’’. (2) New stores includes capital expenditure on stores opened during the period. (3) Other includes IT, warehouse and property. (4) Maintenance capital expenditure is capital expenditure on stores opened in the prior period or earlier. The Group’s total capital expenditure in the 39 weeks ended 30 December 2012 and 29 December 2013 was £14.7 million and £13.2 million, respectively. The Group’s total capital expenditure in the 2011 financial period and 2012 and 2013 financial years was £9.5 million, £16.3 million and £16.4 million, respectively. On a 52 week adjusted basis, total capital expenditure for the 52 weeks ended 27 March 2011 was £13.8 million. The most significant element of Poundland’s capital expenditure during the period under review has been the opening of new stores, having increased its store portfolio by 64, 62, 69 and 59 net new stores in the 52 weeks ended 27 March 2011, the 2012 and 2013 financial years and the 39 weeks ended 29 December 2013, respectively. The Group’s expansion capital expenditure principally relates to its fit outs of new stores, funded from the Group’s cash flow. The average net capital expenditure per new store was approximately £149,000 in the 2011, 2012 and 2013 financial years. The average net capital expenditure per new store is expected to increase slightly, reflecting expected changes to Poundland’s store mix. Maintenance capital expenditure includes store development, such as new merchandising initiatives and sales displays, equipment purchase and store maintenance. Maintenance capital expenditure is undertaken

74 by individual stores on an ad-hoc basis, as required, with total capital expenditure for existing stores at approximately £2.0 million for each of the 2012 and 2013 financial years. In the 2014 financial year, the Group’s total capital expenditure is expected to be approximately £18 million. In the 2015 financial year, the Group’s main capital expenditure will include new store openings, maintenance of existing stores, ongoing IT costs, the opening of the new distribution centre in Harlow and the Group’s expansion into continental Europe through a pilot launch in Spain.

7.3 Borrowings As at 26 January 2014, being the latest practicable date prior to publication of this Prospectus, Poundland’s total borrowings were £48.1 million (net of capitalised debt issue costs). Poundland’s total borrowings (net of capitalised debt issue costs) were £49.1 million and £52.0 million as at 29 December 2013 and 31 March 2013, respectively. Cash and cash equivalents were £63.0 million and £42.9 million as at 29 December 2013 and 31 March 2013, respectively, with net cash of £14.0 million and net debt of £9.2 million as at the same dates. On 11 August 2010, Poundland entered into a facilities agreement (the ‘‘2010 Facilities Agreement’’) providing for senior secured bank facilities comprising: (i) a £30.0 million amortising term loan; (ii) a £35.0 million non-amortising term loan and (iii) a £25.0 million revolving credit facility. All amounts due under the 2010 Facilities Agreement are to be repaid in full on the date of Admission using the proceeds made available under the 2014 Facility Agreement (described below), as well as existing cash resources available to Poundland. On 19 February 2014, Poundland entered into a commitment letter providing for a £55.0 million unsecured multicurrency revolving facility, which is to be made available pursuant to a facility agreement (the ‘‘2014 Facility Agreement’’) to be entered into immediately prior to Admission. The facility will be available to be drawn by Poundland from the date of Admission and may be used for the general corporate purposes of the Group. The interest rate payable on a loan for each interest period is LIBOR plus a margin. The margin is subject to a margin ratchet calculated by reference to the ratio of Poundland’s total net debt to EBITDA. The Company and Poundland Holdings Limited will be original borrowers under the 2014 Facility Agreement. The facility is unsecured but certain material subsidiaries of the Company will provide a continuing guarantee of the punctual performance of the borrowers’ payment obligations under the finance documents. The 2014 Facility Agreement contains customary warranties, representations, covenants (including limited restrictions on disposals and acquisitions, financial covenants and a negative pledge) and events of default (in each case, subject to customary agreed exceptions, materiality tests, carve-outs and grace periods) suitable for an investment-grade listed borrower. The termination date under the 2014 Facility Agreement will be the fifth anniversary of the date of Admission. The table below presents the Group’s net debt as at 27 March 2011, 1 April 2012 and 31 March 2013, and as at 30 December 2012 and 29 December 2013.

As at 27 March 1 April 31 March 30 December 29 December 2011 2012 2013 2012 2013 £000 Unaudited Total debt ...... (60,629) (58,401) (52,018) (52,907) (49,081) Cash and cash equivalents at end of period . . . 30,993 35,916 42,861 59,102 63,033 Net (debt)/cash ...... (29,636) (22,485) (9,157) 6,195 13,952

7.4 Contractual obligations The table below presents a summary of the Group’s contractual obligations as at 29 December 2013.

Less than One to More than one year five years five years Total £000 Operating lease obligations ...... 82,401 286,612 228,940 597,953 Total ...... 82,401 286,612 228,940 597,953

75 The Group’s capital commitments to fit out new stores are excluded from the table above, as the Group does not analyse these by year.

7.5 Off balance sheet arrangements In order to finance the Group’s business, the Group uses off-balance sheet arrangements, such as operating leases, guarantees in respect of assigned stores and guarantees in respect of the Group’s duty deferral programme. The Group does not believe that any of these arrangements has or could have a material adverse effect on the Group’s results of operations, financial condition or liquidity.

8. DIVIDEND POLICY The Directors intend to adopt a dividend policy which reflects the long-term earnings and cash flow potential of the Group targeting a level of annual dividend cover of 2.5 to 3.5 times based on earnings. Subject to sufficient distributable reserves being available, the Directors intend that the first dividend to be declared by the Group following Admission will be the interim dividend in respect of the first half of the 2015 financial year, payable in January 2015.

9. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 9.1 Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligation. This risk arises from the Group’s foreign exchange, interest rate and commodity hedging agreements with its banking counterparties. The Group only deals with those banks who are part of the syndicate for the Group’s 2014 Facility Agreement or with banks who are creditworthy, and monitors the creditworthiness of these counterparties using publicly available information. As the principal business of the Group is cash sales, the Group’s trade receivables are small. The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk and any associated impairments are immaterial. Group policy is that surplus funds are placed on deposit with counterparties who are either members of the syndicate for the Group’s 2014 Facility Agreement or who are creditworthy counterparties with a minimum of a BBB credit rating.

9.2 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has sufficient cash or loan facilities to meet all its commitments when they fall due by ensuring that there is sufficient cash or working capital facilities to meet the cash requirements of the Group. The risk is measured by review of forecast liquidity each month to determine whether there are sufficient credit facilities to meet forecast requirements and by monitoring covenants on a regular basis to ensure there are no expected significant breaches, which would lead to an event of default under the Group’s covenants. Cash flow forecasts are submitted monthly to the directors. These continue to demonstrate the strong cash generating ability of the business and its ability to operate within existing banking facilities. There have been no breaches of covenants during the reported periods. On Admission, the Group will have in place a £55.0 million revolving credit facility to support short and medium term liquidity, a portion of which will have been used to repay prior debt facilities. See paragraph 7.3 above for more information on the Group’s borrowings.

9.3 Interest rate risk The Group’s bank borrowings incur variable interest rate charges linked to LIBOR plus a margin dependent on the Group’s net debt ratio. The Group’s policy aims to manage the interest cost of the Group within the constraints of its financial covenants and business plan. The Group has historically held interest rate swap and cap arrangements in connection with the financing put in place at the time of the acquisition of the Group by the Warburg Pincus Funds. The original swap and cap arrangements expired in September 2013 and have since been replaced with a 2 per cent. LIBOR cap covering £10 million of the Group’s outstanding borrowings until 31 October 2014.

76 The Directors believe that its interest rate hedges are adequate, and is continuing to monitor the interest rate swap market to decide on the appropriateness of any further hedges.

9.4 Foreign currency risk The Group has a significant foreign exchange transaction exposure with direct sourced purchases from its suppliers in the Far East, with most of the trade being in US dollars. In addition to this, the Group is exposed to transaction risk on the translation of surplus euro balances, generated by business in Ireland, into pounds sterling. The Group’s policy allows these exposures to be hedged for up to 18 months forward in order to fix the cost in pounds sterling. Hedging is performed through the use of foreign currency bank accounts and forward foreign exchange contracts. These contracts are put in place as part of the Group’s gross margin strategy. It enables buyers to be given targeted buying rates for products, which are set lower than the hedged rate. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is presented in the table below.

29 December 27 March 2011 1 April 2012 31 March 2013 2013 USD Other(1) USD Other(1) USD Other(1) USD Other(1) £000 Cash and cash equivalents ...... 133 708 668 1,594 124 2,342 112 4,124 Trade and other payables ...... (55) (98) 899 (1,498) 1,011 (2,776) 1,246 (3,437) Total ...... 78 610 1,567 96 1,135 (434) 1,358 687

(1) Includes euros and Hong Kong dollars. The Group does not hedge either economic exposure or the translation exposure arising from the profits, assets and liabilities of its non-pounds sterling businesses whilst they remain immaterial. As at 29 December 2013, the Group had open contracts in place extending to May 2015 totalling $208 million at an average US dollar to pounds sterling exchange rate of $1.5699. These contracts are marked to market and the effective portion of changes in fair value of cash flow hedges are noted in other comprehensive income. As at 31 March 2013, this represented a credit of £3.7 million net of tax and as at 29 December 2013, this represented a debit of £7.8 million net of tax. The adverse movement in the US dollar to pounds sterling exchange rate has driven this change, but there is no impact upon either earnings or cashflow.

9.5 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The Group’s exposure to market risk predominantly relates to interest and currency risk, although the Group does hedge fuel used by its fleet of vehicles in the distribution of products to stores.

10. CRITICAL ACCOUNTING POLICIES AND ESTIMATES For a description of the Group’s critical accounting judgements and key sources of estimation uncertainty, see Note 29 of Part 10—‘‘Historical Financial Information’’.

77 PART 9 CAPITALISATION AND INDEBTEDNESS Capitalisation and indebtedness The table below sets out Poundland’s capitalisation and indebtedness as at 29 December 2013. The capitalisation and indebtedness information has been extracted without material adjustment from the Group’s financial information included in Part 10—‘‘Historical Financial Information’’ as at 29 December 2013.

29 December 2013 £000 Total current debt Guaranteed ...... — Secured ...... 2,269 Unguaranteed/unsecured ...... — Total non-current debt (excluding current portion of long-term debt) Guaranteed ...... — Secured ...... 46,812 Unguaranteed/unsecured ...... — Equity attributable to equity holders of the parent Share capital ...... 138,007 Share premium ...... 49 Reserves ...... 22,836 Retained earnings ...... 35,039 Total ...... 195,931

Save as disclosed below, there has been no material change in Poundland’s capitalisation since 29 December 2013. On 19 February 2014, Poundland entered into a commitment letter in connection with the 2014 Facility Agreement providing for a £55.0 million unsecured multicurrency revolving facility, the proceeds of which will be used in part to repay on the date of Admission all amounts due under Poundland’s 2010 Facilities Agreement. For more information, see paragraph 7.3 of Part 8—‘‘Operating and Financial Review— Liquidity and Capital Resources—Borrowings’’.

78 The following table sets out Poundland’s net indebtedness as at 29 December 2013.

29 December 2013 £000 Cash ...... 63,033 Cash equivalent ...... — Trading securities ...... — Liquidity ...... 63,033 Current Financial Receivable ...... — Current bank debt Current portion of non-current debt ...... (2,269) Other current financial debt ...... — Current Financial Debt ...... (2,269) Net Current Financial Indebtedness ...... 60,764 Non current bank loans ...... (46,812) Bonds issued ...... — Other non current loans ...... — Non Current Financial Indebtedness ...... (46,812) Net Cash(1) ...... 13,952

(1) Borrowings are stated net of banking fees of £2.3 million. As at 29 December 2013, certain subsidiaries within the Group (Poundland Holdings Limited, Poundland Retail Limited, Poundland Willenhall Limited and Poundland Limited) are party to cross guarantees given for bank loans and overdrafts amounting to £52,886,000. The Group has no other indirect and contingent indebtedness.

79 PART 10 HISTORICAL FINANCIAL INFORMATION

ACCOUNTANTS’ REPORT

21JUL200414412105 KPMG LLP Arlington Business Park Theale Reading RG7 4SD

The Directors Poundland Group plc Wellmans Road Willenhall West Midlands WV13 2QT

12 March 2014

Dear Sirs

Poundland Group Holdings Limited (‘the Company’) We report on the financial information set out on pages 83 to 136 for the periods ended 27 March 2011, 1 April 2012, 31 March 2013 and 39 weeks ended 29 December 2013. This financial information has been prepared for inclusion in the prospectus dated 12 March 2014 of Poundland Group plc on the basis of the accounting policies set out in note 1 of the Historical Financial Information. This report is required by paragraph 20.1 of Annex I of the Prospectus Directive Regulation and is given for the purpose of complying with that paragraph and for no other purpose. We have not audited or reviewed the financial information for the 39 weeks ended 30 December 2012 which has been included for comparative purposes only, and accordingly do not express an opinion thereon.

Responsibilities The Directors of Poundland Group plc are responsible for preparing the financial information in the basis of preparation set out in note 1 to the financial information and in accordance with International Financial Reporting Standards as adopted by the European Union. It is our responsibility to form an opinion on the financial information and to report our opinion to you. Save for any responsibility arising under Prospectus Rule 5.5.3R (2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with paragraph 23.1 of Annex I of the Prospectus Directive Regulation, consenting to its inclusion in the prospectus.

Basis of opinion We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of the significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the entity’s circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the

80 financial information is free from material misstatement whether caused by fraud or other irregularity or error.

Opinion on financial information In our opinion, the financial information gives, for the purposes of the prospectus dated 12 March 2014, a true and fair view of the state of affairs of Poundland Group Holdings Limited as at 27 March 2011, 1 April 2012, 31 March 2013 and 29 December 2013 and of its profits, cash flows, other comprehensive income and changes in equity for the periods ended 27 March 2011, 1 April 2012, 31 March 2013 and 39 weeks ended 29 December 2013 in accordance with the basis of preparation set out in note 1 of the Historical Financial Information and in accordance with International Financial Reporting Standards as adopted by the European Union as described in note 1 of the Historical Financial Information.

Declaration For the purposes of Prospectus Rule 5.5.3R (2)(f) we are responsible for this report as part of the prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the prospectus in compliance with paragraph 1.2 of Annex I of the Prospectus Directive Regulation.

Yours faithfully KPMG LLP

81 Consolidated Statement of Profit and Loss for period ended 27 March 2011 (41 weeks trading)

41 weeks 20111 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Revenue ...... 1,5 518,372 — 518,372 Cost of sales ...... (327,613) — (327,613) Gross profit ...... 190,759 — 190,759 Distribution expenses ...... (153,532) — (153,532) Administrative expenses ...... (16,508) (5,022) (21,530) Operating profit ...... 1,8,9 20,719 (5,022) 15,697 Financial income ...... 10 52 — 52 Financial expenses ...... 10 (4,095) (3,105) (7,200) Net financing expense ...... (4,043) (3,105) (7,148) Profit before tax ...... 16,676 (8,127) 8,549 Taxation ...... 11 (5,013) 1,580 (3,433) Profit for the period ...... 11,663 (6,547) 5,116 Earnings per share—basic and diluted ...... 3 (7.95)p (73.63)p

1 As explained in note 1, the results reported relate to the 41 week trading period since the acquisition of Poundland Holdings Limited on 17 June 2010.

82 Consolidated Statement of Profit and Loss for period ended 1 April 2012

53 weeks 2012 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Revenue ...... 1,5 780,147 — 780,147 Cost of sales ...... (492,165) — (492,165) Gross profit ...... 287,982 — 287,982 Distribution expenses ...... (232,086) — (232,086) Administrative expenses ...... (26,579) (1,133) (27,712) Operating profit ...... 1,8,9 29,317 (1,133) 28,184 Financial income ...... 10 192 — 192 Financial expenses ...... 10 (4,878) (187) (5,065) Net financing expense ...... (4,686) (187) (4,873) Profit before tax ...... 24,631 (1,320) 23,311 Taxation ...... 11 (6,545) 745 (5,800) Profit for the period ...... 18,086 (575) 17,511 Earnings per share—basic and diluted ...... 3 20.09p 14.32p

83 Consolidated Statement of Profit and Loss for period ended 31 March 2013

52 weeks 2013 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Revenue ...... 1,5 880,491 — 880,491 Cost of sales ...... (556,980) — (556,980) Gross profit ...... 323,511 — 323,511 Distribution expenses ...... (261,337) (1,859) (263,196) Administrative expenses ...... (28,693) (1,571) (30,264) Operating profit ...... 1,8,9 33,481 (3,430) 30,051 Financial income ...... 10 279 92 371 Financial expenses ...... 10 (3,945) — (3,945) Net financing expense ...... (3,666) 92 (3,574) Profit before tax ...... 29,815 (3,338) 26,477 Taxation ...... 11 (8,034) 4,942 (3,092) Profit for the period ...... 21,781 1,604 23,385 Earnings per share—basic and diluted ...... 3 43.25p 59.00p

84 Consolidated Statement of Profit and Loss for period ended 30 December 2012

39 weeks to 30/12/12—Unaudited Non-underlying Note Underlying (note 6) Total £000 £000 £000 Revenue ...... 1,5 671,100 — 671,100 Cost of sales ...... (424,540) — (424,540) Gross profit ...... 246,560 — 246,560 Distribution expenses ...... (194,831) (1,651) (196,482) Administrative expenses ...... (21,472) (1,178) (22,650) Operating profit ...... 1,8,9 30,257 (2,829) 27,428 Financial income ...... 10 166 102 268 Financial expenses ...... 10 (3,001) — (3,001) Net financing expense ...... (2,835) 102 (2,733) Profit before tax ...... 27,422 (2,727) 24,695 Taxation ...... 11 (7,451) 845 (6,606) Profit for the period ...... 19,971 (1,882) 18,089 Earnings per share—basic and diluted ...... 3 69.14p 50.63p

85 Consolidated Statement of Profit and Loss for period ended 29 December 2013

39 weeks to 29/12/13 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Revenue ...... 1,5 758,340 — 758,340 Cost of sales ...... (479,022) — (479,022) Gross profit ...... 279,318 — 279,318 Distribution expenses ...... (220,579) — (220,579) Administrative expenses ...... (23,626) (2,032) (25,658) Operating profit ...... 1,8,9 35,113 (2,032) 33,081 Financial income ...... 10 185 55 240 Financial expenses ...... 10 (2,728) — (2,728) Net financing expense ...... (2,543) 55 (2,488) Profit before tax ...... 32,570 (1,977) 30,593 Taxation ...... 11 (8,561) 995 (7,566) Profit for the period ...... 24,009 (982) 23,027 Earnings per share—basic and diluted ...... 3 101.48p 91.90p

86 Other comprehensive income for period ended 27 March 2011 (41 weeks trading)

41 weeks 2011 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Profit for the period ...... 11,663 (6,547) 5,116 Other comprehensive income Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences—foreign operations . . — (26) (26) Effective portion of changes in fair value of cash flow hedges . — (603) (603) Net change in fair value of cash flow hedges recycled to profit or loss ...... — 63 63 Income tax on items that are or may be recycled subsequently to profit or loss ...... 11 — 141 141 — (425) (425) Other comprehensive income for the period, net of income tax — (425) (425) Total comprehensive income attributable to equity holders of the parent ...... 11,663 (6,972) 4,691

87 Other comprehensive income for period ended 1 April 2012

53 weeks 2012 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Profit for the period ...... 18,086 (575) 17,511 Other comprehensive income Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences—foreign operations . — 9 9 Effective portion of changes in fair value of cash flow hedges — 1,092 1,092 Net change in fair value of cash flow hedges recycled to profit or loss ...... — (964) (964) Income tax on items that are or may be recycled subsequently to profit or loss ...... 11 — (41) (41) —9696 Other comprehensive income for the period, net of income tax ...... — 96 96 Total comprehensive income attributable to equity holders of the parent ...... 18,086 (479) 17,607

88 Other comprehensive income for period ended 31 March 2013

52 weeks 2013 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Profit for the period ...... 21,781 1,604 23,385 Other comprehensive income Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences—foreign operations . — 26 26 Effective portion of changes in fair value of cash flow hedges — 5,182 5,182 Net change in fair value of cash flow hedges recycled to profit or loss ...... — (421) (421) Income tax on items that are or may be recycled subsequently to profit or loss ...... 11 — (1,100) (1,100) — 3,687 3,687 Other comprehensive income for the period, net of income tax ...... — 3,687 3,687 Total comprehensive income attributable to equity holders of the parent ...... 21,781 5,291 27,072

89 Other comprehensive income for period ended 30 December 2012

39 weeks to 30/12/12—Unaudited Non-underlying Note Underlying (note 6) Total £000 £000 £000 Profit for the period ...... 19,971 (1,882) 18,089 Other comprehensive income Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences—foreign operations . — (3) (3) Effective portion of changes in fair value of cash flow hedges — (1,554) (1,554) Net change in fair value of cash flow hedges recycled to profit or loss ...... — (165) (165) Income tax on items that are or may be recycled subsequently to profit or loss ...... 11 — 391 391 — (1,331) (1,331) Other comprehensive income for the period, net of income tax ...... 19,971 (1,331) (1,331) Total comprehensive income attributable to equity holders of the parent ...... 19,971 (3,213) 16,758

90 Other comprehensive income for period ended 29 December 2013

39 weeks to 29/12/13 Non-underlying Note Underlying (note 6) Total £000 £000 £000 Profit for the period ...... 24,009 (982) 23,027 Other comprehensive income Items that are or may be recycled subsequently to profit or loss: Foreign currency translation differences—foreign operations . — (43) (43) Effective portion of changes in fair value of cash flow hedges ...... — (13,067) (13,067) Net change in fair value of cash flow hedges recycled to profit or loss ...... — 3,181 3,181 Income tax on items that are or may be recycled subsequently to profit or loss ...... 11 — 2,104 2,104 — (7,825) (7,825) Other comprehensive income for the period, net of income tax ...... — (7,825) (7,825) Total comprehensive income attributable to equity holders of the parent ...... 24,009 (8,807) 15,202

91 Balance Sheet

27 March 1 April 31 March 29 December Note 2011 2012 2013 2013 £000 £000 £000 £000 Non-current assets Property, plant and equipment ...... 12 28,379 34,343 38,283 41,340 Intangible assets and goodwill ...... 13 186,089 185,088 184,506 183,738 Trade and other receivables ...... 19 283 519 792 823 Other financial assets ...... 15 198 — 403 — Deferred tax asset ...... 17 ——— 112 Total non-current assets ...... 214,949 219,950 223,984 226,013 Current assets Inventories ...... 18 59,662 69,554 81,004 95,007 Tax receivable ...... — 2 —— Other financial assets ...... 15 131 21 4,212 362 Trade and other receivables ...... 19 15,340 20,287 20,734 34,203 Cash and cash equivalents ...... 30,993 35,916 42,861 63,033 Total current assets ...... 106,126 125,780 148,811 192,605 Total assets ...... 321,075 345,730 372,795 418,618 Current liabilities Other interest-bearing loans and borrowings .... 20 (2,208) (3,424) (1,532) (2,269) Trade and other payables ...... 21 (69,146) (89,030) (94,576) (142,581) Tax payable ...... (2,528) (3,349) (4,295) (6,088) Provisions ...... 22 (927) (1,231) (366) (848) Other financial liabilities ...... 16 (905) (633) (397) (4,879) Total current liabilities ...... (75,714) (97,667) (101,166) (156,665) Non-current liabilities Other interest-bearing loans and borrowings .... 20 (58,421) (54,977) (50,486) (46,812) Other payables ...... 21 (11,392) (15,361) (16,931) (17,976) Provisions ...... 22 — (226) (138) (138) Other financial liabilities ...... 16 — (23) — (1,096) Deferred tax liabilities ...... 17 (5,890) (4,098) (3,491) — Total non-current liabilities ...... (75,703) (74,685) (71,046) (66,022) Total liabilities ...... (151,417) (172,352) (172,212) (222,687) Net assets ...... 169,658 173,378 200,583 195,931 Equity attributable to equity holders of the parent Share capital ...... 23 164,967 152,341 152,474 138,007 Share premium ...... 23 ———49 Reserves ...... 23 (425) 12,410 16,097 22,836 Retained earnings ...... 23 5,116 8,627 32,012 35,039 Total equity ...... 169,658 173,378 200,583 195,931

92 Consolidated Statement of Changes in Equity

Capital Share redemption Translation Cash flow Retained Total capital reserve reserve hedge reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at 29 March 2010 ...... — — — — — — Total comprehensive income for the period Profit or loss ...... — — — — 5,116 5,116 Other comprehensive income ..... — — (26) (399) — (425) Total comprehensive income for the period ...... — — (26) (399) 5,116 4,691 Transactions with owners recorded directly in equity Issue of shares ...... 164,967 — — — — 164,967 Total transactions with owners ..... 164,967 — — — — 164,967 Balance at 27 March 2011 ...... 164,967 — (26) (399) 5,116 169,658

93 Consolidated Statement of Changes in Equity (Continued)

Capital Share redemption Translation Cash flow Retained Total capital reserve reserve hedge reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at 28 March 2011 ...... 164,967 — (26) (399) 5,116 169,658 Total comprehensive income for the period Profit or loss ...... — — — — 17,511 17,511 Other comprehensive income ..... — — 9 87 — 96 Total comprehensive income for the period ...... — — 9 87 17,511 17,607 Transactions with owners recorded directly in equity Issue of shares ...... 113 — — — — 113 Redemption of preference share capital ...... (12,739) 12,739 — — (14,000) (14,000) Total transactions with owners ..... (12,626) 12,739 — — (14,000) (13,887) Balance at 1 April 2012 ...... 152,341 12,739 (17) (312) 8,627 173,378

94 Consolidated Statement of Changes in Equity (Continued)

Capital Share redemption Translation Cash flow Retained Total capital reserve reserve hedge reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at 2 April 2012 ...... 152,341 12,739 (17) (312) 8,627 173,378 Total comprehensive income for the period Profit or loss ...... — — — — 23,385 23,385 Other comprehensive income ..... — — 26 3,661 — 3,687 Total comprehensive income for the period ...... — — 26 3,661 23,385 27,072 Transactions with owners recorded directly in equity Issue of shares ...... 133 — — — — 133 Total transactions with owners ..... 133 — — — — 133 Balance at 31 March 2013 ...... 152,474 12,739 9 3,349 32,012 200,583

95 Consolidated Statement of Changes in Equity—Unaudited

Capital Share redemption Translation Cash flow Retained Total capital reserve reserve hedge reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at 2 April 2012 ...... 152,341 12,739 (17) (312) 8,627 173,378 Total comprehensive income for the period Profit or loss ...... — — — — 18,089 18,089 Other comprehensive income ..... — — (3) (1,328) — (1,331) Total comprehensive income for the period ...... — — (3) (1,328) 18,089 16,758 Transactions with owners recorded directly in equity Issue of shares ...... 133 — — — — 133 Total transactions with owners ..... 133 — — — — 133 Balance at 30 December 2012 ..... 152,474 12,739 (20) (1,640) 26,716 190,269

96 Consolidated Statement of Changes in Equity

Capital Share Share redemption Translation Cash flow Retained Total capital premium reserve reserve hedge reserve earnings equity £000 £000 £000 £000 £000 £000 £000 Balance at 1 April 2013 . . 152,474 — 12,739 9 3,349 32,012 200,583 Total comprehensive income for the period Profit or loss ...... — — — — — 23,027 23,027 Other comprehensive income ...... — — — (43) (7,782) — (7,825) Total comprehensive income for the period . . — — — (43) (7,782) 23,027 15,202 Transactions with owners recorded directly in equity Issue of shares ...... 97 49 — — — 146 Redemption of preference share capital ...... (14,564) — 14,564 — — (20,000) (20,000) Total transactions with owners ...... (14,467) 49 14,564 — — (20,000) (19,854) Balance at 29 December 2013 ...... 138,007 49 27,303 (34) (4,433) 35,039 195,931

97 Cash Flow Statement

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks Note 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Cash flows from operating activities Profit for the year ...... 5,116 17,511 23,385 18,089 23,027 Adjustments for: Depreciation and amortisation ...... 12,13 8,393 11,273 13,080 9,377 10,943 Financial income ...... 10 (52) (192) (371) (268) (240) Financial expense ...... 10 7,200 5,065 3,945 3,001 2,728 Loss on disposal of property, plant and equipment ...... 1 17 — —— Taxation ...... 11 3,433 5,800 3,092 6,606 7,566 Transaction costs relating to acquisition of subsidiary ...... 4 4,013 — — —— 28,104 39,474 43,131 36,805 44,024 Decrease/(increase) in trade and other receivables ...... 4,336 (5,140) (627) (9,845) (13,374) Increase in inventories ...... (4,776) (9,892) (11,450) (15,117) (14,003) (Decrease)/increase in trade and other payables ...... (9,194) 24,760 7,168 40,020 48,461 Increase/(decrease) in provisions ...... 284 530 (953) (579) 482 18,754 49,732 37,269 51,284 65,590 Tax paid ...... (4,647) (6,814) (3,852) (5,700) (7,271) Net cash from operating activities ...... 14,107 42,918 33,417 45,584 58,319 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired ...... 4 (175,423) — — —— Acquisition of property, plant and equipment ...... 12 (8,960) (15,582) (15,181) (13,631) (12,603) Acquisition of other intangible assets ..... 13 (503) (671) (1,257) (1,086) (629) Net cash from investing activities ...... (184,886) (16,253) (16,438) (14,717) (13,232) Cash flows from financing activities Proceeds from the issue of share capital . . . 23 164,768 30 — —— Proceeds from new loan ...... 20 60,198 — — —— Repayment of borrowings ...... 20 (19,717) (3,121) (7,200) (6,106) (3,553) Redemption of preference shares ...... 23 — (14,000) — — (20,000) Net financial expense paid ...... (3,477) (4,651) (2,834) (1,575) (1,362) Net cash from financing activities ...... 201,772 (21,742) (10,034) (7,681) (24,915) Net increase in cash and cash equivalents . . 30,993 4,923 6,945 23,186 20,172 Cash and cash equivalents at start of period — 30,993 35,916 35,916 42,861 Cash and cash equivalents at end of period 30,993 35,916 42,861 59,102 63,033

98 Notes (forming part of the financial statements)

1 Basis of preparation and significant accounting policies Poundland Group Holdings Limited (the ‘‘Company’’) is a company incorporated and domiciled in the United Kingdom. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘‘Group’’). The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU (‘‘Adopted IFRSs’’). The Group has prepared its financial statements in accordance with Adopted IFRSs for the first time. The date of transition is 29 March 2010, the beginning of the earliest period reported. During the period ended 27 March 2011, on 17 June 2010, the Group acquired Poundland Holdings Limited. Prior to this date, the Group did not trade; therefore, all results presented in these financial statements relate to the 41 week trading period post-acquisition. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements. Judgements made by the directors in the application of these accounting policies, that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 29.

1.1 Transition to Adopted IFRSs The Group is preparing its financial statements in accordance with Adopted IFRSs for the first time and consequently has applied IFRS 1. An explanation of how the transition to Adopted IFRSs has affected the reported financial position, financial performance and cash flows of the Group is provided in note 30. IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The following exemptions have been taken in these financial statements: • Cumulative translation differences—Cumulative translation differences for all foreign operations have been set to zero at 29 March 2010.

Presentation of Items of Other Comprehensive Income The Group has adopted early the Amendments to IAS 1: Presentation of Other Items of Other Comprehensive Income (mandatory for periods commencing on or after 1 July 2012). The effect of early adoption of this amendment is to present the items of other comprehensive income that may be recycled to profit or loss in the future (if certain conditions are met) separately from those that would never be recycled to profit or loss. Consequently, as the Group presents items of other comprehensive income before related income tax effects the aggregated income tax amount has been allocated between those sections. The comparatives have been presented on the same basis.

1.2 Measurement convention The financial statements are prepared on the historical cost basis except where Adopted IFRSs require an alternative treatment. The principal variations relate to financial instruments.

1.3 Going concern The Group financial statements are prepared on a going concern basis as the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has considerable financial resources, together with a strong ongoing trading performance. In August 2010, a substantial new debt facility was negotiated with a syndicate of banks, which includes Lloyds TSB Bank PLC, The Governor and Company of Bank of Ireland, Societe´ Gen´ erale,´ UniCredit Bank AG and ING Bank NV. The main components of the bank facility include a £30 million term loan repayable semi-annually over six years; a £35 million term loan repayable in one instalment at the end of seven years; and a revolving credit and working capital facility of £25 million, which is available for six years from inception, allowing a number of loan drawdowns for various periods of up to six months.

99 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) These borrowing facilities contain financial covenants which have been met throughout all reported periods. The Group’s forecast and projections show that this facility provides adequate headroom for its current and future anticipated cash requirements.

1.4 Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

1.5 Foreign currency Transactions in foreign currencies are translated to the functional currency of the Group at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s presentational currency, sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from the translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve. The Group has taken advantage of the relief available in IFRS 1 to deem the cumulative translation differences for all foreign operations to be zero at the date of transition to Adopted IFRSs (29 March 2010).

1.6 Classification of financial instruments issued by the Group Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and (b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital exclude amounts in relation to those shares.

100 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) 1.7 Financial Instruments Financial Assets The Group’s financial assets include cash and cash equivalents and trade and other receivables. All financial assets are recognised when the Group becomes party to the contractual provisions of the instrument. i) Trade receivables Trade receivables are recognised and carried at original invoice amount less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows, and is recognised in the statement of profit and loss in administrative expenses. ii) Cash and cash equivalents Cash and cash equivalents includes cash in hand and deposits held at call with banks. For the purpose of the consolidated cash flow statement, cash and cash equivalents includes bank overdrafts in addition to the definition above.

Financial Liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The Group’s financial liabilities comprise trade and other payables and borrowings. All financial liabilities are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. i) Bank borrowings All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of profit and loss over the period of the borrowings using the effective interest method. Financial expenses comprise interest expense on borrowings and the cost of foreign currency forward contracts. ii) Trade payables Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. iii) Derivative financial instruments and hedge accounting Derivative financial instruments (comprising foreign currency forward contracts, interest rate swaps and caps and commodity hedges) are used to manage risks arising from changes in foreign currency exchange rates (relating to the purchase of overseas sourced products), interest rates and fuel price fluctuations. The Group does not hold or issue derivative financial instruments for speculative trading purposes. The Group uses the derivatives to hedge highly probable forecast transactions and therefore the instruments are designated as cash flow hedges. Derivatives are recognised at fair value on the date a contract is entered into and are subsequently remeasured at their fair value. The effective element of any gain or loss from remeasuring the derivative instrument is recognised directly in the cash flow hedge reserve.

101 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) The associated cumulative gain or loss is reclassified from the statement of changes in equity and recognised in the statement of profit and loss in the same period or periods during which the hedged transaction affects the statement of profit and loss. Any element of the remeasurement of the derivative instrument that does not meet the criteria for an effective hedge is recognised immediately in the statement of profit and loss within financial income or financial expenses. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income and is recognised when the forecast transaction is ultimately recognised in the statement of profit and loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is recognised immediately in the statement of profit and loss. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, or as a current asset or liability, if the remaining maturity of the hedged item is less than 12 months from the period end.

1.8 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Depreciation is charged to the consolidated statement of profit and loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Short leasehold property ...... over the term of the lease Property improvements ...... 6-7 years Plant and equipment ...... 6-7 years Fixtures and fittings ...... 6-7 years Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.

1.9 Business combinations Business combinations are accounted for using the acquisition method at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as: • the fair value of the consideration transferred; plus • the fair value of the existing equity interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. Costs relating to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.

1.10 Intangible assets and goodwill Goodwill Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but tested annually for impairment.

102 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) Other intangible assets Expenditure on internally generated goodwill and brands is recognised in the statement of profit and loss as an expense as incurred. Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation Amortisation is charged to the statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Brand ...... 20 years Trademarks ...... 5 years Software ...... 3 years

1.11 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and other costs in bringing them to their existing location and condition.

1.12 Impairment excluding inventories and deferred tax assets Financial assets (including receivables) A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the ‘‘cash-generating unit’’). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, (‘‘CGU’’). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for

103 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the units on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.13 Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of profit and loss in the periods during which services are rendered by employees.

Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

1.14 Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation.

1.15 Revenue recognition Revenue comprises the fair value of goods sold to external customers, net of value added tax and promotional discounts. Revenue is recognised on the sale of goods when the significant risks and rewards of ownership of the goods have passed to the customer and the amount of revenue can be measured reliably.

1.16 Operating lease payments Payments made under operating leases are recognised in the statement of profit and loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in the statement of profit and loss as an integral part of the total lease expense.

1.17 Financial income and expenses Financial expenses comprise interest payable and the ineffective portion of changes in the fair value of cash flow hedges that are recognised in the statement of profit and loss. Financial income comprises interest receivable on funds invested and the ineffective portion of changes in the fair value of cash flow hedges.

104 Notes (forming part of the financial statements) (Continued)

1 Basis of preparation and significant accounting policies (Continued) Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.

1.18 Taxation Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the statement of profit and loss and other comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future profits will be available against which the temporary difference can be utilised.

1.19 Adopted IFRS not yet applied The following Adopted IFRSs have been issued but have not been applied by the Group in these financial statements. Their adoption is not expected to have a material effect on the financial statements: • IFRS 10 Consolidated Financial Statements and IAS 27 (2011) Separate Financial Statements (mandatory for year commencing on or after 1 January 2014). • Amendments to IAS 32 ‘Offsetting Financial Assets and Financial Liabilities’ (mandatory for year commencing on or after 1 January 2014). • Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (mandatory for year commencing on or after 1 January 2014).

2 Operating segments The Group has one reportable segment, discount retailing of a variety of products. The Chief Operating Decision Maker (‘‘CODM’’) is the Board of Directors. Internal management reports are reviewed by the CODM on a monthly basis. Key measures used to evaluate performance are Revenue and EBITDA. Management believes that these measures are the most relevant in evaluating the performance of the segment and for making resource allocation decisions. All material operations of the reportable segments are carried out in the United Kingdom and the Republic of Ireland and all material non-current assets are located in the United Kingdom and the Republic of Ireland. The Group’s revenue is driven by the consolidation of individually small value transactions and, as a result, Group revenue is not reliant on a major customer or group of customers. All revenue is generated from external customers.

105 Notes (forming part of the financial statements) (Continued)

3 Earnings per share Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares has been adjusted for the issues of shares during the period. There are no dilutive shares. The Group has also chosen to present an alternative earnings per share measure, with profit adjusted for non-underlying items because the directors consider it better reflects the Group’s underlying performance.

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Weighted average number of shares in issue, being weighted average number of shares for calculating basic earnings per share ...... 9,966,991 9,975,092 10,181,505 10,171,056 10,246,941

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Profit for the period ...... 5,116 17,511 23,385 18,089 23,027 Non-accrued preference share dividends ...... (12,455) (14,821) (17,377) (12,939) (8,174) Premiums paid on preference share capital redeemed . — (1,261) — — (5,436) Basic earnings attributable to ordinary equity shareholders ...... (7,339) 1,429 6,008 5,150 9,417 Non-underlying items (see note 6) Operating expenses and finance costs ...... 8,127 1,320 3,338 2,727 1,977 Tax on non-underlying items ...... (1,580) (745) (4,942) (845) (995) Underlying earnings before non-underlying items .... (792) 2,004 4,404 7,032 10,399

Earnings per share is calculated as follows:

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 ppppp Basic and diluted earnings per ordinary share ...... (73.63) 14.32 59.00 50.63 91.90 Basic and diluted earnings per ordinary share before non-underlying items ...... (7.95) 20.09 43.25 69.14 101.48

4 Acquisitions of subsidiaries Acquisitions in the period ended 27 March 2011 On 17 June 2010, the Group acquired 100% of the issued share capital of Poundland Holdings Limited and subsidiary undertakings (‘‘Poundland Holdings’’), a discount retailer. The consideration of £179.9 million was satisfied in cash (including transaction costs of £4.0 million). This transaction has been accounted for by the acquisition method of accounting. In the 41 weeks to 27 March 2011 the subsidiary contributed the total net profit for the period. If the acquisition had occurred on 29 March 2010, Group revenue would have been £641.5 million and profit for the period would have been an estimated £3.7 million. In determining these amounts, the directors have assumed that the fair value adjustments arising on the date of acquisition would have been the same if the acquisition had occurred on 29 March 2010.

106 Notes (forming part of the financial statements) (Continued)

4 Acquisitions of subsidiaries (Continued) Effect of acquisition The acquisition had the following effect on the Group’s assets and liabilities.

Recognised values on acquisition £000 Acquiree’s net assets at the acquisition date: Property, plant and equipment ...... 26,607 Intangible assets ...... 22,936 Inventories ...... 54,886 Trade and other receivables ...... 19,661 Financial assets ...... 2,349 Cash and cash equivalents ...... 4,482 Interest-bearing loans and borrowings ...... (19,717) Trade and other payables ...... (90,322) Deferred tax liabilities ...... (8,203) Provisions ...... (643) Total identifiable assets and liabilities ...... 12,036 Cash consideration relating to business combination ...... 175,892 Goodwill on acquisition ...... 163,856

Goodwill has arisen on the acquisition because of the growth potential of the Poundland business, the future income generating potential of the retail estate acquired, the Poundland workforce and the value of other immaterial intangible assets acquired. The trade receivables recognised are equal to the gross contractual amounts due. None of the goodwill recognised is expected to be deductible for income tax purposes. The valuation techniques used for measuring the fair value of material assets acquired were as follows: Property, Plant and Equipment—the directors consider that depreciated replacement cost is the most reliable basis for valuing the property, plant and equipment acquired. Intangible assets—the Poundland brand has been valued independently using the relief from royalty method. Inventories—the fair value is determined based on the estimated selling price in the ordinary course of business less the estimated costs of distribution and sale. Foreign currency contracts—the fair value is determined using the market forward rates at the date of acquisition and the outright contract rate.

Acquisition related costs The Group incurred acquisition related costs of £4.0 million relating to deal fees and stamp duty. These costs have been included as a non underlying item in administrative expenses in the Group’s statement of profit and loss and other comprehensive income.

107 Notes (forming part of the financial statements) (Continued)

5 Revenue

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Sale of goods ...... 518,372 780,147 880,491 671,100 758,340 Total revenues ...... 518,372 780,147 880,491 671,100 758,340

6 Non-underlying items During the period ended 27 March 2011, the Group incurred a number of costs associated with its acquisition of Poundland Holdings Limited and the subsequent negotiation of bank loans. These included: deal costs of £4,013,000; bank fees of £720,000 relating to bridging debt taken out and fully repaid during the period; and professional fees of £141,000 relating to share capital reductions in subsidiary companies and the setting up of an employee benefit trust. On acquisition, the Group recognised an intangible asset relating to the Poundland brand. This is being amortised over 20 years and the amortisation expense is presented as a non-underlying item (2013: £1,112,000; 2012: £1,133,000; 2011: £868,000; 39 weeks to 29 December 2013: £834,000). The Group also incurred a charge of £2,349,000 relating to US dollar foreign exchange hedging instruments recognised as part of the acquisition of Poundland Holdings Limited. These contracts were in place to hedge future cash flows resulting from forecast inventory purchases. At 17 June 2010, the fair value of these instruments, £2,349,000 was recognised on the acquisition balance sheet. By 27 March 2011, these contracts had expired. As a result, a charge of £2,349,000 has been recognised in profit and loss for the period ended 27 March 2011. This charge is the result of the contracts being acquired as part of the business combination at a value higher than £nil and is therefore not expected to be repeated. The non-underlying item also includes the ineffective portion of hedges in the period, £36,000. In the periods ended 1 April 2012, 31 March 2013 and 29 December 2013, the Group has continued to enter into foreign exchange contracts. The ineffective portion of the hedge is recognised as a financial expense and disclosed as a non underlying item (39 weeks to 29 December 2013: £55,000 income; 2013: £92,000 income; 2012: £187,000 expense). During the period ended 31 March 2013, the Group incurred £1,424,000 of costs as a result of opening a new distribution facility in the South East of England and a further £435,000 relating to a new store format trial. The Group also incurred £459,000 in relation to strategic initiatives (ecommerce and international expansion). The expenditure related to strategic initiatives continued in the 39 weeks to 29 December 2013 and the Group incurred £915,000 of cost. In this period, the Group also incurred £284,000 of professional advisors’ costs. In the 39 weeks to 29 December 2013, the group has not accrued any fees relating to the proposed sale. The associated tax implications of the above items are presented as a non-underlying item and are summarised below.

108 Notes (forming part of the financial statements) (Continued)

6 Non-underlying items (Continued)

Additionally, in the period ended 31 March 2013, the Group received a one-off corporation tax refund of £3,950,000 in respect of prior years, which has been presented as a non-underlying item.

Unaudited 41 weeks trading 2011 53 weeks 2012 52 weeks 2013 39 weeks 30/12/12 39 weeks 29/12/13 Non- Non- Non- Non- Non- underlying Tax underlying Tax underlying Tax underlying Tax underlying Tax item impact item impact item impact items impact items impact £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Administrative expenses Transaction costs relating to the acquisition of subsidiaries ...... (4,013) — — — — — — — — — Amortisation expense (brand) ...... (868) 243 (1,133) 295 (1,112) 267 (834) 200 (834) 191 Other administrative expenses ...... (141) 39 — — (459) 110 (344) 83 (1,198) 277 Distribution expenses ...... — — — — (1,859) 446 (1,651) 396 — — (5,022) 282 (1,133) 295 (3,430) 823 (2,829) 679 (2,032) 468 Financial income and expenses Bank fees—bridging debt ...... (720) 202 — — — — — — — — Financial instruments ...... (2,385) 667 (187) 44 92 (23) 102 (26) 55 (15) (3,105) 869 (187) 44 92 (23) 102 (26) 55 (15) Taxation Intangible assets—change in tax rate ..... — 429 — 406 — 192 — 192 — 542 Prior period adjustment ...... — — — — — 3,950 — — — — Total non-underlying items ...... (8,127) 1,580 (1,320) 745 (3,338) 4,942 (2,727) 845 (1,977) 995

7 Auditor’s remuneration

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Audit of these financial statements ...... 20 35 26 19 118 Amounts receivable by the company’s auditor and its associates in respect of: Audit of financial statements of subsidiaries of the company ...... 40 69 52 38 42 Taxation compliance services ...... 42 57 42 33 45 Taxation advisory services ...... 24 57 116 63 96 Other non audit services ...... 35 16 15 4 19

Included within the audit fee for the 39 week period ended 29 December 2013 are fees payable for IFRS accounting conversion support of £97,000.

8 Staff numbers and costs The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:

Number of employees 41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 Administration ...... 255 305 335 332 374 Selling and distribution ...... 8,512 9,733 11,422 11,293 12,376 8,767 10,038 11,757 11,625 12,750

109 Notes (forming part of the financial statements) (Continued)

8 Staff numbers and costs (Continued) The aggregate payroll costs of these persons were as follows:

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Wages and salaries ...... 72,405 106,442 120,099 89,548 100,496 Social security costs ...... 4,097 5,568 6,296 4,702 5,142 Contributions to defined contribution plans ...... 462 649 735 532 933 76,964 112,659 127,130 94,782 106,571

9 Directors’ remuneration

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Directors’ emoluments ...... 783 952 856 637 661 Company contributions to money purchase pension plans ...... 68 81 34 25 26 851 1,033 890 662 687

The aggregate emoluments of the highest paid director was £476,000 (2012: £608,000; 2011: £498,000) and company pension contributions of £nil (2012: £50,000; 2011: £44,000) were made to a money purchase scheme on his behalf. In the 39 weeks to 29 December 2013, his aggregate emoluments were £357,000 and £nil pension contributions were made on his behalf.

Number of directors 41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 Retirement benefits are accruing to the following number of directors under: Money purchase schemes ...... 2 2 111

110 Notes (forming part of the financial statements) (Continued)

10 Financial income and expense Recognised in profit and loss

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Financial income Interest income on unimpaired financial assets ..... 52 192 279 166 185 Ineffective portion of changes in fair value of cash flow hedges ...... — — 92 102 55 Total finance income ...... 52 192 371 268 240 Financial expense Total interest expense on financial liabilities measured at amortised cost ...... 4,770 4,807 3,865 2,949 2,672 Net change in fair value of interest rate swap cash flow hedges recycled from equity ...... 45 71 80 52 56 Ineffective portion of changes in fair value of cash flow hedges ...... 2,385 187 ——— Total financial expense ...... 7,200 5,065 3,945 3,001 2,728

11 Taxation Recognised in profit and loss

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Current taxation Corporation tax charge for the period ...... 5,605 7,926 8,642 7,940 9,211 Adjustments for prior periods ...... — (293) (3,843) — (146) 5,605 7,633 4,799 7,940 9,065 Deferred tax expense Origination and reversal of temporary differences . . . (1,695) (1,500) (1,566) (1,193) (1,426) Reduction in tax rate ...... (477) (282) (141) (141) (73) Adjustment for prior periods ...... — (51) ——— Deferred tax expense ...... (2,172) (1,833) (1,707) (1,334) (1,499) Total tax charge for the period ...... 3,433 5,800 3,092 6,606 7,566

111 Notes (forming part of the financial statements) (Continued)

11 Taxation (Continued) The tax charge is reconciled with the standard rates of UK corporation tax as follows:

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Profit before tax ...... 8,549 23,311 26,477 24,695 30,593 UK corporation tax at standard rate of 23% (2013: 24%; 2012: 26%; 2011: 28%) ...... 2,393 6,060 6,354 5,927 7,036 Factors affecting the charge for the period: Depreciation on expenditure not eligible for tax relief 90 106 295 352 380 Transaction costs relating to acquisition of subsidiary . 1,124 — ——— Other disallowable expenses ...... 307 266 434 473 374 Adjustments in respect of prior periods ...... — (344) (3,843) — (146) Impact of overseas tax rates ...... (4) (6) (7) (5) (5) Impact of reduction in tax rate on deferred tax balance ...... (477) (282) (141) (141) (73) Total tax charge for the period ...... 3,433 5,800 3,092 6,606 7,566

Recognised in other comprehensive income

41 weeks Unaudited trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Effective portion of changes in fair value of cash flow hedges ...... 159 (292) (1,201) 349 2,836 Net change in fair value of cash flow hedges recycled to profit or loss ...... (18) 251 101 42 (732) 141 (41) (1,100) 391 2,104

112 Notes (forming part of the financial statements) (Continued)

12 Property, plant and equipment

Land and Plant and Fixtures and buildings equipment fittings Total £000 £000 £000 £000 Cost Balance at 29 March 2010 ...... — — — — Acquisitions through business combinations ...... 4,276 12,488 9,843 26,607 Additions ...... 1,255 3,406 4,299 8,960 Disposals ...... (501) (184) (245) (930) Balance at 27 March 2011 ...... 5,030 15,710 13,897 34,637 Balance at 28 March 2011 ...... 5,030 15,710 13,897 34,637 Additions ...... 1,389 7,832 6,361 15,582 Disposals ...... (54) (162) (129) (345) Balance at 1 April 2012 ...... 6,365 23,380 20,129 49,874 Balance at 2 April 2012 ...... 6,365 23,380 20,129 49,874 Additions ...... 1,966 6,512 6,703 15,181 Disposals ...... (191) (164) (139) (494) Balance at 31 March 2013 ...... 8,140 29,728 26,693 64,561 Depreciation and impairment Balance at 29 March 2010 ...... — — — — Depreciation charge for the year ...... 2,740 2,346 2,101 7,187 Disposals ...... (495) (204) (230) (929) Balance at 27 March 2011 ...... 2,245 2,142 1,871 6,258 Balance at 28 March 2011 ...... 2,245 2,142 1,871 6,258 Depreciation charge for the year ...... 2,597 3,760 3,244 9,601 Disposals ...... (54) (158) (116) (328) Balance at 1 April 2012 ...... 4,788 5,744 4,999 15,531 Balance at 2 April 2012 ...... 4,788 5,744 4,999 15,531 Depreciation charge for the year ...... 2,422 4,684 4,135 11,241 Disposals ...... (191) (164) (139) (494) Balance at 31 March 2013 ...... 7,019 10,264 8,995 26,278 Net book value At 29 March 2010 ...... — — — — At 27 March 2011 and 28 March 2011 ...... 2,785 13,568 12,026 28,379 At 1 April 2012 and 2 April 2012 ...... 1,577 17,636 15,130 34,343 At 31 March 2013 ...... 1,121 19,464 17,698 38,283 Cost Balance at 1 April 2013 ...... 8,140 29,728 26,693 64,561 Additions ...... 267 7,617 4,720 12,604 Disposals ...... (86) (88) (180) (354) Balance at 29 December 2013 ...... 8,321 37,257 31,233 76,811 Depreciation and impairment Balance at 1 April 2013 ...... 7,019 10,264 8,995 26,278 Depreciation charge for the year ...... 1,765 4,174 3,608 9,547 Disposals ...... (86) (88) (180) (354) Balance at 29 December 2013 ...... 8,698 14,350 12,423 35,471 Net book value At 1 April 2013 ...... 1,121 19,464 17,698 38,283 At 29 December 2013 ...... (377) 22,907 18,810 41,340

113 Notes (forming part of the financial statements) (Continued)

13 Intangible assets

Goodwill Trademarks Software Brand Total £000 £000 £000 £000 £000 Cost Balance at 29 March 2010 ...... — — — — — Acquisitions through business combinations ...... 163,856 — 636 22,300 186,792 Other additions—externally purchased ...... — — 503 — 503 Disposals ...... — — (1) — (1) Balance at 27 March 2011 ...... 163,856 — 1,138 22,300 187,294 Balance at 28 March 2011 ...... 163,856 — 1,138 22,300 187,294 Other additions—externally purchased ...... — — 671 — 671 Disposals ...... — — (3) — (3) Balance at 1 April 2012 ...... 163,856 — 1,806 22,300 187,962 Balance at 2 April 2012 ...... 163,856 — 1,806 22,300 187,962 Other additions—externally purchased ...... — 56 1,201 — 1,257 Disposals ...... — — (1) — (1) Balance at 31 March 2013 ...... 163,856 56 3,006 22,300 189,218 Amortisation Balance at 29 March 2010 ...... — — — — — Amortisation for the period ...... — — 338 868 1,206 Disposals ...... — — (1) — (1) Balance at 27 March 2011 ...... — — 337 868 1,205 Balance at 28 March 2011 ...... — — 337 868 1,205 Amortisation for the period ...... — — 539 1,133 1,672 Disposals ...... — — (3) — (3) Balance at 1 April 2012 ...... — — 873 2,001 2,874 Balance at 2 April 2012 ...... — — 873 2,001 2,874 Amortisation for the period ...... — 7 720 1,112 1,839 Disposals ...... — — (1) — (1) Balance at 31 March 2013 ...... — 7 1,592 3,113 4,712 Net book value At 29 March 2010 ...... — — — — — At 27 March 2011 and 28 March 2011 ...... 163,856 — 801 21,432 186,089 At 1 April 2012 and 2 April 2012 ...... 163,856 — 933 20,299 185,088 At 31 March 2013 ...... 163,856 49 1,414 19,187 184,506 Cost Balance at 1 April 2013 ...... 163,856 56 3,006 22,300 189,218 Other additions—externally purchased ...... — 31 598 — 629 Disposals ...... — — (1) — (1) Balance at 29 December 2013 ...... 163,856 87 3,603 22,300 189,846 Amortisation Balance at 1 April 2013 ...... — 7 1,592 3,113 4,712 Amortisation for the period ...... — 11 552 834 1,397 Disposals ...... — — (1) — (1) Balance at 29 December 2013 ...... — 18 2,143 3,947 6,108 Net book value At 1 April 2013 ...... 163,856 49 1,414 19,187 184,506 At 29 December 2013 ...... 163,856 69 1,460 18,353 183,738

114 Notes (forming part of the financial statements) (Continued)

13 Intangible assets (Continued) Amortisation Amortisation is recognised in distribution and administrative expenses in the statement of profit and loss: Unaudited 41 weeks 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30/12/12 29/12/13 £000 £000 £000 £000 £000 Brand amortisation ...... 868 1,133 1,112 834 834 Software and trademarks ...... 338 539 727 532 563 1,206 1,672 1,839 1,366 1,397

Impairment testing Goodwill of £163.9 million arising on the acquisition of Poundland Holdings Limited in June 2010 is allocated to the Group’s one operating segment. For impairment testing purposes, goodwill has been allocated to a group of cash generating units (CGUs) comprising the Group’s one operating segment. This represents the lowest level within the Group at which goodwill is monitored for internal management purposes. Goodwill is not amortised, but tested annually for impairment on the basis of value in use calculations using discounted cash flows. As the value in use exceeded the carrying value for the cash generating units, no impairment loss was recognised in any of the periods. In assessing the value in use, the four year business plan was used to provide cash flow projections to the period ended 31 March 2017. The cash flow projections are subject to key assumptions in respect of discount rates, expected new store openings, achievement of future revenue and EBITDA growth. The directors have reviewed and approved the assumptions inherent in the model as part of the annual budget process using historic experience and considering economic and business risks facing the Group. In assessing the Group’s value in use a pre-tax discount rate of 11.2% (2013: 12.4%; 2012: 12.4%; 2011: 12.2%) has been applied to the group of CGUs. The calculated value in use exceeded the carrying value of goodwill and no further sensitivity calculations were necessary to conclude there was no impairment.

14 Investments in subsidiaries The Group has the following investments in subsidiaries:

Ownership Country of Class of 27 March 1 April 31 March 29 December incorporation shares held 2011 2012 2013 2013 %%% % Poundland Value Retailing Investment company Great Britain Ordinary 100 100 100 100 Limited* ...... Poundland Retail Limited ...... Investment company Great Britain Ordinary 100 100 100 100 Poundland Holdings Limited .... Investment company Great Britain Ordinary 100 100 100 100 Poundland Willenhall Limited . . . Investment company Great Britain Ordinary 100 100 100 100 Poundland Trustee Limited ..... Trustee Great Britain Ordinary 100 100 100 100 Poundland Limited ...... Single price value retailer Great Britain Ordinary 100 100 100 100 M&O Business Systems Limited . . Dormant Great Britain Ordinary 100 100 100 100 Bargain Limited ...... Dormant Great Britain Ordinary 100 100 100 100 Homes & More Limited ...... Dormant Great Britain Ordinary 100 100 100 100 Poundland Stores Limited ...... Dormant Great Britain Ordinary 100 100 100 100 Poundland International ...... Dormant Great Britain Ordinary 100 100 100 100 Sheptonview Limited ...... Dormant Great Britain Ordinary 100 100 100 100 Poundland Far East Limited .... Product sourcing Hong Kong Ordinary 100 100 100 100

* Directly owned subsidiary. All other subsidiaries are held indirectly.

115 Notes (forming part of the financial statements) (Continued)

15 Other financial assets

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Non-current Derivative financial assets held for trading ...... 198 — 403 — Current Derivative financial assets held for trading ...... 131 21 4,212 362

16 Other financial liabilities

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Current Derivative financial liabilities held for trading ...... 905 633 397 4,879 Non-current Derivative financial liabilities held for trading ...... — 23 — 1,096

17 Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following:

Assets

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Property, plant and equipment ...... — — (205) (1,246) Intangible assets ...... — — —— Inventories ...... (130) (130) (130) (130) Trade and other payables ...... (1,287) (1,348) (1,527) (1,268) Tax value of loss carry-forwards ...... — (12) (29) (29) Other financial liabilities ...... (235) (158) (91) (1,118) Deferred tax (assets)/liabilities ...... (1,652) (1,648) (1,982) (3,791) Net off deferred tax liabilities/(assets) ...... 1,652 1,648 1,982 3,679 Net deferred tax assets ...... — — — (112)

116 Notes (forming part of the financial statements) (Continued)

17 Deferred tax assets and liabilities (Continued) Liabilities

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Property, plant and equipment ...... 1,885 870 —— Intangible assets ...... 5,572 4,871 4,412 3,679 Inventories ...... — — —— Other financial assets ...... 85 5 1,061 — Trade and other payables ...... — — —— Tax value of loss carry-forwards ...... — — —— Deferred tax (assets)/liabilities ...... 7,542 5,746 5,473 3,679 Net off deferred tax liabilities/(assets) ...... (1,652) (1,648) (1,982) (3,679) Net deferred tax liabilities ...... 5,890 4,098 3,491 —

Movement in deferred tax during the periods

Recognised Recognised in other in profit comprehensive Acquired in 29 March and loss income business 27 March 2010 (credit)/charge (credit)/charge combination 2011 £000 £000 £000 £000 £000 Property, plant and equipment ...... — (845) — 2,730 1,885 Intangible assets ...... — (672) — 6,244 5,572 Inventories ...... — — — (130) (130) Other financial assets ...... — (667) 94 658 85 Trade and other payables ...... — 12 — (1,299) (1,287) Other financial liabilities ...... — — (235) — (235) — (2,172) (141) 8,203 5,890

Recognised Recognised in other in profit comprehensive 28 March and loss income 1 April 2011 (credit)/charge (credit)/charge 2012 £000 £000 £000 £000 Property, plant and equipment ...... 1,885 (1,015) — 870 Intangible assets ...... 5,572 (701) — 4,871 Inventories ...... (130) — — (130) Other financial assets ...... 85 (44) (36) 5 Trade and other payables ...... (1,287) (61) — (1,348) Tax value of losses carried forward ...... — (12) — (12) Other financial liabilities ...... (235) — 77 (158) 5,890 (1,833) 41 4,098

117 Notes (forming part of the financial statements) (Continued)

17 Deferred tax assets and liabilities (Continued)

Recognised Recognised in other in profit comprehensive 2 April and loss income 31 March 2012 (credit)/charge (credit)/charge 2013 £000 £000 £000 £000 Property, plant and equipment ...... 870 (1,075) — (205) Intangible assets ...... 4,871 (459) — 4,412 Inventories ...... (130) — — (130) Other financial assets ...... 5 15 1,041 1,061 Trade and other payables ...... (1,348) (179) — (1,527) Tax value of losses carried forward ...... (12) (17) — (29) Other financial liabilities ...... (158) 8 59 (91) 4,098 (1,707) 1,100 3,491

Recognised Recognised in other in profit comprehensive 1 April and loss income 29 December 2013 (credit)/charge (credit)/charge 2013 £000 £000 £000 £000 Property, plant and equipment ...... (205) (1,041) — (1,246) Intangible assets ...... 4,412 (733) — 3,679 Inventories ...... (130) — — (130) Other financial assets ...... 1,061 16 (1,077) — Trade and other payables ...... (1,527) 259 — (1,268) Tax value of losses carried forward ...... (29) — — (29) Other financial liabilities ...... (91) — (1,027) (1,118) 3,491 (1,499) (2,104) (112)

No deferred tax liability has been recognised in respect of £113,000 (2012: £59,000; 2011: £23,000) of undistributed earnings of overseas subsidiaries since such distributions would not be taxable. At 29 December 2013, no deferred tax liability has been recognised in respect of £156,000 of undistributed earnings.

18 Inventories

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Finished goods ...... 52,805 57,950 72,157 88,400 Goods in transit ...... 6,857 11,604 8,847 6,607 59,662 69,554 81,004 95,007

All inventories are expected to be sold within 12 months. During the period £0.4 million (2012: £0.9 million; 2011: £0.2 million) was recognised as an expense in cost of sales in respect of the write down of inventory to net realisable value (39 weeks to 29 December 2013: £nil). No unutilised provisions were reversed in the period. Inventory purchased in the period recognised as an expense was £577.7 million (2012: £508.9 million; 2011: £338.3 million); in the 39 weeks to 29 December 2013 £493.8 million (39 weeks to 30 December 2012: £445.1 million).

118 Notes (forming part of the financial statements) (Continued)

19 Trade and other receivables

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Other receivables due from related parties ...... — 45 145 190 Trade receivables ...... 1,577 1,312 1,699 3,485 Prepayments and accrued income ...... 13,847 19,212 19,412 30,981 Called up share capital not paid ...... 199 237 270 370 15,623 20,806 21,526 35,026 Non-current ...... 283 519 792 823 Current ...... 15,340 20,287 20,734 34,203

20 Other interest-bearing loans and borrowings The contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost are described below. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 24. The Group’s current debt facility came into effect in August 2010. It consists of two term loans and a six year working capital and revolving credit facility of £25 million, held by one of the Company’s subsidiary undertakings, Poundland Holdings Limited. Term loan A (£30 million) is repayable in semi-annual instalments over a period of six years from inception. The Group made the following repayments: £6.1 million (2012: £3.0 million; 2011: £nil). In the 39 weeks to 29 December 2013 the group repaid £2.6 million, including an early repayment of £1.6 million. Term loan B (£35 million) is repayable in one instalment on 10 August 2017. In 2013, the Group made an early repayment of £1.0 million (2012: £nil; 2011: £nil), and in the 39 weeks to 29 December 2013 made a further early repayment of £0.9 million. The facility carries an interest rate at LIBOR plus an agreed margin. The facility is denominated in sterling.

27 March 2011 1 April 2012 31 March 2013 29 December 2013 Year of Face Carrying Face Carrying Face Carrying Face Carrying maturity value amount value amount value amount value amount £000 £000 £000 £000 £000 £000 £000 £000 Term loan A ...... 2016 30,000 27,349 27,000 24,849 20,922 19,229 18,273 16,959 Term loan B ...... 2017 35,000 33,280 35,000 33,552 33,992 32,789 33,114 32,122 Total ...... 65,000 60,629 62,000 58,401 54,914 52,018 51,387 49,081

The Group had the following undrawn committed borrowing facilities available at each balance sheet date in respect of which all conditions precedent have been met:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Expiring between two and five years ...... — 23,500 23,500 23,500 Expiring after five years ...... 24,000 — —— 24,000 23,500 23,500 23,500

The facility relates to the Group’s revolving credit and working capital facility, which incurs commitment fees at market rates.

119 Notes (forming part of the financial statements) (Continued)

21 Trade and other payables

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Current Trade payables ...... 32,961 41,692 48,796 85,785 Other taxation and social security payable ...... 7,303 9,539 10,052 15,813 Other payables ...... 2,935 1,476 1,682 2,385 Accruals and deferred income ...... 25,947 36,323 34,046 38,598 Non-current Accruals and deferred income ...... 11,392 15,361 16,931 17,976 80,538 104,391 111,507 160,557

22 Provisions

Property related 27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 At beginning of period ...... — 927 1,457 504 Provisions made during the period ...... 629 1,215 169 650 Provisions used during the period ...... (23) (372) (600) (44) Provisions reversed during the period ...... (322) (313) (522) (124) Amounts arising from acquisition ...... 643 — — — At end of period ...... 927 1,457 504 986 Non-current ...... — 226 138 138 Current ...... 927 1,231 366 848 927 1,457 504 986

Property related provisions consist of costs associated with vacant properties and outstanding rent reviews. A provision for vacant properties is recognised when the Group’s unavoidable costs of meeting its contractual obligations are higher than the expected benefits to be derived from it. The effect of discounting is not considered material. A rent review provision is recognised when there are additional obligations expected as a result of a rent review. The provision is based on the directors’ best estimate of the amount at which the review will be settled.

23 Capital and reserves Share capital

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Allotted and called up Ordinary £1 A shares ...... 7,825 7,825 7,696 7,696 Ordinary £1 B shares ...... 474 474 474 474 Ordinary £1 C shares ...... 1,668 1,781 2,043 2,140 10% preference shares of £1 each ...... 155,000 142,261 142,261 127,697 164,967 152,341 152,474 138,007

120 Notes (forming part of the financial statements) (Continued)

23 Capital and reserves (Continued) In thousands of shares

Ordinary A shares Ordinary B shares Ordinary C shares 27 March 1 April 31 March 29 December 27 March 1 April 31 March 29 December 27 March 1 April 31 March 29 December 2011 2012 2013 2013 2011 2012 2013 2013 2011 2012 2013 2013 On issue at start of period ...... — 7,825 7,825 7,696 — 474 474 474 — 1,668 1,781 2,043 Issued ...... 7,825 — ——474 — ——1,668 113 133 97 Converted A to C . — — (129) — ———— ——129 — On issue at end of period ...... 7,825 7,825 7,696 7,696 474 474 474 474 1,668 1,781 2,043 2,140

10% £1 preference shares 27 March 1 April 31 March 29 December In thousands of shares 2011 2012 2013 2013 On issue at start of period ...... — 155,000 142,261 142,261 Issued ...... 155,000 — —— Redeemed ...... — (12,739) — (14,564) On issue at end of period—fully paid ...... 155,000 142,261 142,261 127,697

On 17 June 2010 the company reclassified its 2 ordinary shares of £1 as ordinary ‘A’ shares of £1. It then issued 7,824,767 ‘A’ shares in exchange for consideration of £7,824,767. It also issued 474,202 ‘B’ shares in exchange for consideration of £474,202; 1,469,070 ‘C’ shares in exchange for consideration of £1,469,070; and 155,000,000 10% preference shares in exchange for consideration of £155,000,000. On 28 March 2011 the company issued 198,950 ordinary ‘C’ shares for consideration of £198,950. These shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). On 6 April 2011 the company issued 6,000 ordinary ‘C’ shares for consideration of £6,000. These shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). On 3 June 2011, the company redeemed 12,738,860 preference shares at a premium of £1,261,000. Monies returned to shareholders totalled £14.0 million. This largely reflected a return to shareholders of additional funding which was introduced to the company in June 2010 at the time of the acquisition of the Group headed by Poundland Holdings Limited. This additional funding was held by the company’s immediate subsidiary undertaking, Poundland Value Retailing Limited and, as part of the arrangement, it declared and paid a dividend of £14.5 million. The company has transferred an amount equivalent to the nominal value of the redeemed shares (£12,739,000) from retained earnings to the capital redemption reserve. On 13 March 2012, the company issued 31,910 ordinary ‘‘C’’ shares for consideration of £31,910. These shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). On 29 March 2012, the company issued 75,000 ordinary ‘‘C’’ shares for consideration of £75,000. On 1 June 2012, the company issued 32,950 ordinary ‘C’ shares for consideration of £32,950. These shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). On 4 July 2012, the company issued 100,000 ordinary ‘C’ shares for consideration of £100,000. On 10 July 2012, 128,866 ‘A’ shares were converted to 128,866 ‘C’ shares.

121 Notes (forming part of the financial statements) (Continued)

23 Capital and reserves (Continued) On 13 May 2013, the company issued 39,220 ordinary ‘‘C’’ shares for consideration of £39,220. These shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). On 13 September 2013, the company redeemed 14,563,747 preference shares at a premium of £5,436,000. Monies returned to shareholders totalled £20.0 million. The company has transferred an amount equivalent to the nominal value of the redeemed shares (£14,564,000) from retained earnings to the capital redemption reserve. On 24 December 2013, the company issued 24,340 ordinary ‘‘C’’ shares for consideration of £45,029. The company issued a further 32,867 ordinary ‘‘C’’ shares for consideration of £60,804. These latter shares are unpaid at the balance sheet date and are disclosed within non-current trade and other receivables (note 19). In total, at 29 December 2013, 341,897 shares were unpaid, at 31 March 2013 269,810 shares were unpaid (1 April 2012: 236,860 shares; 27 March 2011: 198,950 shares). Ordinary ‘A’, ‘B’ and ‘C’ shares have equal rights as to voting, return of capital and distributions. The preference shares bear the right to a fixed annual 10% dividend, to be paid before any ordinary dividend. They are redeemable at the option of the company at any time if the majority of the preference shareholders agree. The shares bear no further rights to participation in the company.

Dividends At 29 December 2013, cumulative preference dividends of £52,827,000 were not recognised. At 31 March 2013, cumulative preference dividends of £44,653,000 were not recognised (2012: £27,275,000; 2011: £12,455,000).

Share premium In December 2013, the company issued 57,207 shares at a premium of 85p per share.

Reserves The capital redemption reserve represents the nominal value of shares redeemed. This was created via a transfer from retained earnings. The cash flow hedge reserve represents the effective portion of cash flow hedges where the contract has not yet expired. The reserve is stated net of the associated tax. On expiry of the contract, the effective portion is recycled to profit and loss. The translation reserve represents the cumulative translation differences for foreign operations, namely Poundland Far East Limited.

24 Financial instruments and related disclosures Financial risk management The directors have overall responsibility for the oversight of the Group’s risk management framework. A formal process for reviewing and managing risk in the business has been developed. A register of strategic and operational risk is maintained and reviewed by the directors, who also monitor the status of agreed actions to mitigate key risks.

Credit risk Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligation. This risk arises from the Group’s foreign exchange, interest rate and commodity hedging agreements with its banking counterparties. The Group only deals with credit with Banks in the

122 Notes (forming part of the financial statements) (Continued)

24 Financial instruments and related disclosures (Continued) Banking Syndicate or with Banks who are creditworthy, and monitors the creditworthiness of these counterparties using publicly available information. As the principal business of the Group is cash sales the Group trade receivables are small. The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk and any associated impairments are immaterial. Group policy is that surplus funds are placed on deposit with counterparties, who are either party to the Group’s Banking syndicate, or who are credit worthy counterparties with a minimum of BBB credit rating.

Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has sufficient cash or loan facilities to meet all its commitments when they fall due by ensuring that there is sufficient cash or working capital facilities to meet the cash requirements of the Group for the current Business Plan. The risk is measured by review of forecast liquidity each month to determine whether there are sufficient credit facilities to meet forecast requirements and by monitoring covenants on a regular basis to ensure there are no expected significant breaches, which would lead to an ‘‘Event of Default’’. Cash flow forecasts are submitted monthly to the directors. These continue to demonstrate the strong cash generating ability of the business and its ability to operate within existing agreed banking facilities. There have been no breaches of covenants during the reported periods. The Group has a £25.0 million Revolving Credit and Working Capital facility to support short and medium term liquidity.

Market risk Market risk is the risk that changes in the market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The Group’s exposure to market risk predominantly relates to interest and currency risk, although the Group does hedge fuel used by its fleet of vehicles in the distribution of product to stores.

Interest rate risk The Group’s bank borrowings incur variable interest rate charges linked to LIBOR plus a margin dependent on the Group’s net debt ratio. The Group’s policy aims to manage the interest cost of the Group within the constraints of its financial covenants and Business Plan. The Group has hedged interest rate risk by purchasing interest rate swaps and caps to mitigate interest rate risk to the end of September 2013. The Group believes that the current interest rate hedges are adequate, and is continuing to monitor the interest rate swap market to decide on the appropriateness of any further hedges on expiry of the existing contracts.

Foreign currency risk The Group has a significant transaction exposure with increasing, direct sourced purchases from its suppliers in the Far East, with most of the trade being in US dollars. In addition to this, the Group is exposed to transaction risk on the translation of surplus Euro balances, generated by the Republic of Ireland branch, into sterling. The Group’s policy allows these exposures to be hedged for up to 18 months forward in order to fix the cost in sterling. Hedging is performed through the use of foreign currency bank accounts and forward foreign exchange contracts. The Group does not hedge either economic exposure or the translation exposure arising from the profits, assets and liabilities of non-sterling businesses whilst they remain immaterial.

123 Notes (forming part of the financial statements) (Continued)

24 Financial instruments and related disclosures (Continued) The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

27 March 29 December 2011 1 April 2012 31 March 2013 2013 USD Other USD Other USD Other USD Other £000 £000 £000 £000 £000 £000 £000 £000 Cash and cash equivalents ...... 133 708 668 1,594 124 2,342 112 4,124 Trade and other payables ...... (55) (98) 899 (1,498) 1,011 (2,776) 1,246 (3,437) 78 610 1,567 96 1,135 (434) 1,358 687

Pension liability risk The Group has no association with any defined benefit pension scheme and therefore carries no deferred, current or future liabilities in respect of such a scheme. The Group operates a number of Group Personal Pension Plans for its colleagues.

Capital risk management The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to optimise returns to its shareholders. The Board’s policy is to retain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future growth. The directors regularly monitor the level of capital in the Group to ensure that this can be achieved.

Fair value disclosures The fair value of each class of financial assets and liabilities is the carrying amount, based on the following assumptions:

Trade receivables, trade payables, The fair value approximates to the carrying value because of short term deposits and borrowings the short maturity of these instruments. Long term borrowings The fair value of bank loans and other loans approximates to the carrying value reported in the balance sheet. Forward currency contracts The fair value is determined using the market forward rates at the reporting date and the outright contract rate.

Fair value hierarchy Financial instruments carried at fair value should be measured with reference to the following levels: • Level 1: quoted prices in active markets for identical assets or liabilities • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) All financial instruments carried at fair value have been measured using a Level 2 valuation method.

124 Notes (forming part of the financial statements) (Continued)

24 Financial instruments and related disclosures (Continued) The fair value of financial assets and liabilities are as follows:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Cash and cash equivalents ...... 30,993 35,916 42,861 63,033 Trade and other receivables ...... 15,340 20,287 20,734 34,203 Derivative contracts used for hedging (assets) ...... 329 21 4,615 362 Total financial assets ...... 46,662 56,224 68,210 97,598

Trade and other payables ...... (80,538) (104,391) (111,507) (160,557) Borrowings at amortised cost ...... (60,629) (58,401) (52,018) (49,081) Derivative contracts used for hedging (liabilities) ...... (905) (656) (397) (5,975) Total financial liabilities ...... (142,072) (163,448) (163,922) (215,613)

Financial Instruments sensitivity analysis In managing interest rate and currency risks the Group aims to reduce the impact of short term fluctuations on its earnings. At the end of each reporting period, the effect of hypothetical changes in interest and currency rates are as follows:

Interest rate sensitivity analysis The table below shows the Group’s sensitivity to interest rates on floating rate borrowings (i.e. cash and cash equivalents and bank borrowings which attract interest at floating rates) if interest rates were to change by +/ 1%. The impact on the results in the statement of profit and loss and other comprehensive income and equity would be:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 Increase/ Increase/ Increase/ Increase/ (decrease) (decrease) (decrease) (decrease) in equity in equity in equity in equity £000 £000 £000 £000 +1% movement in interest rates ...... 340 261 121 (116) 1% movement in interest rates ...... (340) (261) (121) 116

Foreign exchange rate sensitivity analysis The table below shows the Group’s sensitivity to foreign exchange rates for its US dollar financial instruments, the major currency in which the Group’s derivatives are denominated:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 Increase/ Increase/ Increase/ Increase/ (decrease) (decrease) (decrease) (decrease) in equity in equity in equity in equity £000 £000 £000 £000 10% appreciation of the US dollar ...... 6,678 7,631 9,924 10,723 10% depreciation of the US dollar ...... (8,168) (9,327) (12,112) (13,106)

A strengthening/weakening of sterling, as indicated, against the US dollar at each period end would have increased/(decreased) the cash flow hedge reserve and retained earnings by the amounts shown above. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

125 Notes (forming part of the financial statements) (Continued)

24 Financial instruments and related disclosures (Continued)

There are no material movements in profit and loss for the period. The movement in equity relates to the fair value movements on the Group’s forward contracts that are used to hedge future inventory purchases.

Contractual cash flows The contractual maturity of bank borrowings and excluding the impact of netting agreements is shown below:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Due in less than one year ...... 3,000 4,200 2,322 3,048 Expiring between one and two years ...... 4,200 4,200 6,750 7,275 Expiring between two and five years ...... 18,750 18,600 45,842 41,064 Expiring after five years ...... 39,050 35,000 —— Contractual cash flows ...... 65,000 62,000 54,914 51,387 Carrying amount ...... 60,629 58,401 52,018 49,081

24 Financial instruments and related disclosures (Continued)

The following table provides an analysis of the anticipated contractual cash flows for the Group’s derivative contracts:

27 March 2011 1 April 2012 31 March 2013 29 December 2013 Payable Receivable Payable Receivable Payable Receivable Payable Receivable £000 £000 £000 £000 £000 £000 £000 £000 USD Due in less than one year . . (73,837) 72,953 (84,221) 83,635 (89,040) 93,205 (93,031) 87,911 Expiring between one and two years ...... — — — — (15,479) 15,864 (39,464) 38,196 Contractual cash flows ..... (73,837) 72,953 (84,221) 83,635 (104,519) 109,069 (132,495) 126,107 Fair value ...... (905) — (585) — — 4,615 (5,956) —

27 March 2011 1 April 2012 31 March 2013 29 December 2013 Payable Receivable Payable Receivable Payable Receivable Payable Receivable £000 £000 £000 £000 £000 £000 £000 £000 Euro Due in less than one year ..... — — (5,003) 5,024 (18,661) 18,322 (19,310) 19,672 Expiring between one and two years ...... — — — — —— —— Contractual cash flows ...... — — (5,003) 5,024 (18,661) 18,322 (19,310) 19,672 Fair value ...... — — — 21 (339) — — 362

126 Notes (forming part of the financial statements) (Continued)

24 Financial instruments and related disclosures (Continued)

27 March 2011 1 April 2012 31 March 2013 29 December 2013 Payable Receivable Payable Receivable Payable Receivable Payable Receivable £000 £000 £000 £000 £000 £000 £000 £000 Interest rate swap and cap Due in less than one year ...... — 131 (48) — (58) — — — Expiring between one and two years ...... — 198 (23) — ———— Contractual cash flows ...... — 329 (71) — (58) — — — Fair value ...... — 329 (71) — (58) — — —

27 March 2011 1 April 2012 31 March 2013 29 December 2013 Payable Receivable Payable Receivable Payable Receivable Payable Receivable £000 £000 £000 £000 £000 £000 £000 £000 Fuel hedge Due in less than one year ...... ————— — (19) — Expiring between one and two years ...... ———————— Contractual cash flows ...... ————— — (19) — Fair value ...... ————— — (19) —

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

25 Operating leases Non-cancellable operating lease rentals are payable as follows:

Other Land and buildings 27 March 1 April 31 March 29 December 27 March 1 April 31 March 29 December 2011 2012 2013 2013 2011 2012 2013 2013 £000 £000 £000 £000 £000 £000 £000 £000 Less than one year ...... 2,928 3,983 4,244 4,781 51,296 61,617 71,110 77,620 Between one and five years 5,471 6,632 6,705 6,411 193,404 227,821 251,081 280,201 More than five years ..... — — — — 194,559 209,003 205,657 228,940 8,399 10,615 10,949 11,192 439,259 498,441 527,848 586,761

The Group leases a number of stores and warehouses under operating leases of varying lengths, for which incentives/premiums are received/paid under the relevant lease agreements. During the year £68.7 million was recognised as an expense in the statement of profit and loss in respect of operating leases (2012: £59.2 million; 2011: £38.9 million). In the 39 weeks to 29 December 2013, the group recognised an expense of £57.9 million (39 weeks to 30 December 2012: £50.3 million).

26 Commitments Capital commitments for which no provision has been made in the financial statements of the Group were as follows:

27 March 1 April 31 March 29 December 2011 2012 2013 2013 £000 £000 £000 £000 Contracted ...... 1,307 3,135 1,212 2,158

127 Notes (forming part of the financial statements) (Continued)

27 Contingencies Certain subsidiaries within the Group, namely Poundland Holdings Limited, Poundland Retail Limited, Poundland Willenhall Limited and Poundland Limited, are party to cross guarantees given for bank loans and overdrafts amounting to £56,414,000 (1 April 2012: £63,500,000; 27 March 2011: £66,000,040). At 29 December 2013, these amounted to £52,886,000.

28 Related parties Transactions with key management personnel Directors of Poundland Group Holdings Limited control 13.4% (2012: 12.3%; 2011: 12.4%) of the voting shares of the Company. At 29 December 2013, they control 13.5% of the voting shares of the company. The compensation of key management personnel (including the directors) is as follows:

Unaudited 39 weeks 39 weeks 41 weeks 53 weeks 52 weeks 30 December 29 December trading 2011 2012 2013 2012 2013 £000 £000 £000 £000 £000 Key management personnel emoluments .... 1,515 1,905 2,125 1,568 1,693 Company contributions to money purchase pension schemes ...... 142 177 205 151 164 1,657 2,082 2,330 1,719 1,857

In March 2012, July 2012 and December 2013, loans were advanced to certain directors of one of the Group’s subsidiary companies. No interest is payable on these loans. At 31 March 2013, £145,000 was outstanding (1 April 2012: £45,000) and is included within trade and other receivables. In December 2013, loans were also advanced to certain directors of the company. At 29 December 2013, £190,000 was outstanding. No consideration is paid to the parent in respect of services provided (i.e. key management personnel expenses).

29 Accounting estimates and judgements The preparation of the consolidated financial statements 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. Actual results may differ from these estimates. 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 and in any future periods impacted. The key judgements and estimates employed in the financial statements are considered below.

Impairment of goodwill On an annual basis, the Group is required to perform an impairment review to assess whether the carrying value of goodwill is less than its recoverable amount. Recoverable amount is based on a calculation of expected future cash flows, which include estimates of future performance. Details of assumptions used in the impairment of goodwill are detailed in note 13.

Allowances against the carrying amount of inventories The Group provides against the carrying amount of inventories for inventory lines based on expected demand for its products to ensure that inventory is stated at the lower of cost and net realisable value. Judgement is required in respect of assessing future demand and promotional offers.

128 Notes (forming part of the financial statements) (Continued)

29 Accounting estimates and judgements (Continued) Provisions Provisions are made using the directors’ best estimates of future cash flows based on the current level of information available to them. Actual cash flows will be dependent on future events. For details of assumptions see note 22.

Depreciation and amortisation Judgement is required in assessing the useful economic lives of tangible fixed assets and intangible assets. These assumptions are based on the directors’ best estimate of the life of the asset and its residual value at the end of its economic life.

Valuation of other intangible assets The assessment of fair value in a business combination requires the recognition and measurement of the identifiable assets, liabilities and contingent liabilities in the acquired business. The key judgements required are the identification of intangible assets meeting the recognition criteria of IAS 38 and their attributable fair values. The key assumptions in relation to the brand valuation are the directors’ best estimate of its life and the royalty and discount rate used in its valuation.

Deferred taxation The Group recognises deferred tax assets and liabilities based upon future taxable income and the expected recoverability of the balance. The estimate will include assumptions regarding future income streams of the Group and the future movement in corporation tax rates in the respective jurisdictions.

30 Explanation of transition to Adopted IFRSs These are the Group’s first consolidated financial statements prepared in accordance with Adopted IFRSs. The accounting policies set out in note 1 and herein have been applied in preparing the financial statements for all periods reported. In preparing its IFRS balance sheets, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (UK GAAP) for the periods ended 31 March 2013, 1 April 2012, and 27 March 2011. An explanation of how the transition from UK GAAP to Adopted IFRSs has affected the Group’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. The adoption of IFRS represents an accounting change only and does not affect the operations or cash flows of the Group.

129 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) Reconciliation of profit for the 41 weeks ended 27 March 2011

Effect of transition to adopted UK GAAP IFRSs Adopted IFRSs Non- Non- Non- Underlying underlying Total Underlying underlying Total Underlying underlying Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue ...... 518,372 — 518,372 — — — 518,372 — 518,372 Cost of sales ...... (327,693) — (327,693) 80 — 80 (327,613) — (327,613) Gross profit ...... 190,679 — 190,679 80 — 80 190,759 — 190,759 Distribution expenses ...... (151,910) — (151,910) (1,622) — (1,622) (153,532) — (153,532) Administrative expenses ..... (16,508) (7,059) (23,567) — 2,037 2,037 (16,508) (5,022) (21,530) Operating profit before net financing costs ...... 22,261 (7,059) 15,202 (1,542) 2,037 495 20,719 (5,022) (15,697) Financial income ...... 52 52 — — — 52 — 52 Financial expenses ...... (4,095) (720) (4,815) — (2,385) (2,385) (4,095) (3,105) (7,200) Net financing expense ...... (4,043) (720) (4,763) — (2,385) (2,385) (4,043) (3,105) (7,148) Profit before tax ...... 18,218 (7,779) 10,439 (1,542) (348) (1,890) 16,676 (8,127) 8,549 Taxation ...... (6,016) 241 (5,775) 1,003 1,339 2,342 (5,013) 1,580 (3,433) Profit for the year ...... 12,202 (7,538) 4,664 (539) 991 452 11,663 (6,547) 5,116 Other comprehensive income Foreign currency translation differences—foreign operations ...... — (26) (26) — — — (26) (26) Effective portion of changes in fair value of cash flow hedges — — — — (603) (603) — (603) (603) Net change in fair value of cash flow hedges recycled to profit or loss ...... — — — — 63 63 — 63 63 Income tax on items above . . . — — — — 141 141 — 141 141 — (26) (26) — (399) (399) — (425) (425) Total comprehensive income .. 12,202 (7,564) 4,638 (539) 592 53 11,663 (6,972) 4,691 EBITDA ...... 28,543 (141) 28,402 (299) (4,013) (4,312) 28,244 (4,154) 24,090

130 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) Reconciliation of profit for the 53 weeks ended 1 April 2012

Effect of transition to adopted UK GAAP IFRSs Adopted IFRSs Non- Non- Non- Underlying underlying Total Underlying underlying Total Underlying underlying Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue ...... 780,147 — 780,147 — — — 780,147 — 780,147 Cost of sales ...... (492,432) — (492,432) 267 — 267 (492,165) — (492,165) Gross profit ...... 287,715 — 287,715 267 — 267 287,982 — 287,982 Distribution expenses ...... (229,187) — (229,187) (2,899) — (2,899) (232,086) — (232,086) Administrative expenses ..... (26,579) (9,038) (35,617) — 7,905 7,905 (26,579) (1,133) (27,712) Operating profit before net financing costs ...... 31,949 (9,038) 22,911 (2,632) 7,905 5,273 29,317 (1,133) 28,184 Financial income ...... 192 — 192 — — — 192 — 192 Financial expenses ...... (4,878) — (4,878) — (187) (187) (4,878) (187) (5,065) Net financing expense ...... (4,686) — (4,686) — (187) (187) (4,686) (187) (4,873) Profit before tax ...... 27,263 (9,038) 18,225 (2,632) 7,718 5,086 24,631 (1,320) 23,311 Taxation ...... (7,342) (7,342) 797 745 1,542 (6,545) 745 (5,800) Profit for the year ...... 19,921 (9,038) 10,883 (1,835) 8,463 6,628 18,086 (575) 17,511 Other comprehensive income Foreign currency translation differences—foreign operations ...... — 9 9 — — — — 9 9 Effective portion of changes in fair value of cash flow hedges — — — — 1,092 1,092 — 1,092 1,092 Net change in fair value of cash flow hedges recycled to profit or loss ...... — — — — (964) (964) — (964) (964) Income tax on items above . . . — — — — (41) (41) — (41) (41) — 9 9 — 87 87 — 96 96 Total comprehensive income .. 19,921 (9,029) 10,892 (1,835) 8,550 6,715 18,086 (479) 17,607 EBITDA ...... 40,073 — 40,073 (616) — (616) 39,457 — 39,457

131 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) Reconciliation of profit for the 52 weeks ended 31 March 2013

Effect of transition to adopted UK GAAP IFRSs Adopted IFRSs Non- Non- Non- Underlying underlying Total Underlying underlying Total Underlying underlying Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue ...... 880,491 — 880,491 — — — 880,491 — 880,491 Cost of sales ...... (557,081) — (557,081) 101 — 101 (556,980) — (556,980) Gross profit ...... 323,410 — 323,410 101 — 101 323,511 323,511 Distribution expenses ...... (258,604) (1,424) (260,028) (2,733) (435) (3,168) (261,337) (1,859) (263,196) Administrative expenses ..... (29,152) (8,867) (38,019) 459 7,296 7,755 (28,693) (1,571) (30,264) Operating profit before net financing costs ...... 35,654 (10,291) 25,363 (2,173) 6,861 4,688 33,481 (3,430) 30,051 Financial income ...... 279 — 279 — 92 92 279 92 371 Financial expenses ...... (3,945) — (3,945) — — — (3,945) — (3,945) Net financing expense ...... (3,666) — (3,666) — 92 92 (3,666) 92 (3,574) Profit before tax ...... 31,988 (10,291) 21,697 (2,173) 6,953 4,780 29,815 (3,338) 26,477 Taxation ...... (9,003) 4,292 (4,711) 969 650 1,619 (8,034) 4,942 (3,092) Profit for the year ...... 22,985 (5,999) 16,986 (1,204) 7,603 6,399 21,781 1,604 23,385 Other comprehensive income Foreign currency translation differences—foreign operations ...... — 26 26 — — — — 26 26 Effective portion of changes in fair value of cash flow hedges ...... — — — — 5,182 5,182 — 5,182 5,182 Net change in fair value of cash flow hedges recycled to profit or loss ...... — — — — (421) (421) — (421) (421) Income tax on items above . . . — — — — (1,100) (1,100) — (1,100) (1,100) — 26 26 — 3,661 3,661 — 3,687 3,687 Total comprehensive income .. 22,985 (5,973) 17,012 (1,204) 11,264 10,060 21,781 5,291 27,072 EBITDA ...... 45,428 (1,424) 44,004 22 (895) (873) 45,450 (2,319) 43,131

132 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) Reconciliation of equity

27 March 2011 1 April 2012 31 March 2013 Effect of Effect of Effect of transition transition transition to Adopted Adopted to Adopted Adopted to Adopted Adopted Note UK GAAP IFRSs IFRSs UK GAAP IFRSs IFRSs UK GAAP IFRSs IFRSs £000 £000 £000 £000 £000 £000 £000 £000 £000 Non-current assets Property, plant and equipment ...... a, b, f 33,229 (4,850) 28,379 41,341 (6,998) 34,343 48,005 (9,722) 38,283 Intangible assets . . . a, f 170,916 15,173 186,089 161,878 23,210 185,088 153,011 31,495 184,506 Trade and other receivables ..... a, f — 283 283 — 519 519 — 792 792 Other financial assets c — 198 198 —— — — 403 403 204,145 10,804 214,949 203,219 16,731 219,950 201,016 22,968 223,984 Current assets Inventories ...... 59,662 — 59,662 69,554 — 69,554 81,004 — 81,004 Tax receivable ..... — — — —2 2 —— — Other financial assets c — 131 131 —21 21 — 4,212 4,212 Trade and other receivables ..... a, f 15,031 309 15,340 19,933 354 20,287 20,392 342 20,734 Cash and cash equivalents ..... 30,993 — 30,993 35,916 — 35,916 42,861 — 42,861 105,686 440 106,126 125,403 377 125,780 144,257 4,554 148,811 Total assets ...... 309,831 11,244 321,075 328,622 17,108 345,730 345,273 27,522 372,795 Current liabilities Other interest- bearing loans and borrowings ..... — (2,208) (2,208) — (3,424) (3,424) — (1,532) (1,532) Trade and other payables ...... a (75,446) 6,300 (69,146) (98,431) 9,401 (89,030) (102,323) 7,747 (94,576) Tax payable ...... f — (2,528) (2,528) — (3,349) (3,349) — (4,295) (4,295) Provisions ...... f — (927) (927) — (1,231) (1,231) — (366) (366) Other financial liabilities ...... c — (905) (905) — (633) (633) — (397) (397) (75,446) (268) (75,714) (98,431) 764 (97,667) (102,323) 1,157 (101,166) Non-current liabilities Other interest- bearing loans and borrowings ..... (58,421) — (58,421) (54,977) — (54,977) (50,486) — (50,486) Other payables .... a, f (5,457) (5,935) (11,392) (7,993) (7,368) (15,361) (8,186) (8,745) (16,931) Provisions ...... (902) 902 — (611) 385 (226) (523) 385 (138) Other financial liabilities ...... c — — — — (23) (23) —— — Deferred tax liabilities ...... b, d, f — (5,890) (5,890) — (4,098) (4,098) — (3,491) (3,491) (64,780) (10,923) (75,703) (63,581) (11,104) (74,685) (59,195) (11,851) (71,046) Total liabilities ...... (140,226) (11,191) (151,417) (162,012) (10,340) (172,352) (161,518) (10,694) (172,212) Net assets ...... 169,605 53 169,658 166,610 6,768 173,378 183,755 16,828 200,583 Equity attributable to equity holders of the parent Share capital ..... 164,967 — 164,967 152,341 — 152,341 152,474 — 152,474 Reserves ...... c, d, e — (425) (425) 12,739 (329) 12,410 12,739 3,358 16,097 Retained earnings . . a, b, c, d, e 4,638 478 5,116 1,530 7,097 8,627 18,542 13,470 32,012 Total equity ...... 169,605 53 169,658 166,610 6,768 173,378 183,755 16,828 200,583

133 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) Notes to the reconciliations Explanation of significant adjustments on transition to Adopted IFRSs (a) Leases (IAS 17, SIC 15) Under UK GAAP, operating lease incentives (capital contributions, premia paid and received and rent free periods) were recognised in the profit and loss account over the period to the first rent review. In accordance with Adopted IFRS, lease incentives are now recognised in the statement of profit and loss over the full term of the lease. The resulting difference is included within underlying earnings. (b) Goodwill and Business Combinations (IFRS 3) The acquisition of Poundland Holdings Limited on 17 June 2010 has been accounted for in accordance with IFRS 3. The Group has recognised the identifiable assets acquired and the liabilities assumed and measured these at their acquisition date fair values. This has included the recognition of assets not previously recognised under UK GAAP, namely the ‘Poundland’ brand and derivative foreign currency contracts; the cumulative impact of lease incentive adjustments referred to in note (a) at the acquisition date; and the associated deferred tax assets and liabilities. The professional fees and stamp duty incurred as a result of the acquisition have been expensed to profit and loss and presented as a non underlying item. Under UK GAAP, these costs were included in the value of consideration transferred and formed part of goodwill. The recognition of foreign currency contracts at their fair value at acquisition has resulted in a non underlying expense in the statement of profit and loss in the year of acquisition. This is explained in more detail in note 6. Goodwill represents the difference between the fair value of consideration transferred and the fair value of the net assets acquired. In accordance with IFRS 3, goodwill is not amortised but tested annually for impairment. Impairment losses are recognised in accordance with IAS 36. Under UK GAAP, goodwill was amortised over its useful economic life, which was considered to be 20 years. The ‘Poundland’ brand is amortised over its useful life, which is considered to be 20 years. (c) Derivative transactions (IAS 39) Under UK GAAP, foreign currency exchange contracts were not recognised on the balance sheet. In accordance with IAS 39, the Group now recognises all derivative transactions, measuring them at their fair value. Hedge accounting is applied with the ineffective portion of the cash flow hedge being recognised in the statement of profit and loss. The effective portion is recognised in other comprehensive income and is then recycled to profit and loss when the contract expires. (d) Deferred taxation (IAS 12) IAS 12 takes a balance sheet approach to deferred tax. Deferred tax is recognised in the balance sheet by applying the appropriate tax rate to the temporary differences arising between the carrying value of assets and liabilities and their respective tax base. This contrasts to UK GAAP which considers timing differences arising in profit and loss. Adjustments made to the financial statements on the transition to adopted IFRSs result in related adjustments to deferred tax, particularly with regard to lease incentives, derivative transactions and intangible assets recognised on the acquisition of Poundland Holdings Limited in June 2010. Deferred tax assets and liabilities are presented on a net basis. (e) Cumulative translation differences Under Adopted IFRSs, exchange differences arising on the translation of overseas subsidiaries are required to be recognised as a separate equity reserve. On disposal of an overseas subsidiary, the associated cumulative exchange gain or loss is recycled to the profit and loss account. The current period movement is presented as a non underlying item within other comprehensive income.

134 Notes (forming part of the financial statements) (Continued)

30 Explanation of transition to Adopted IFRSs (Continued) (f) Reclassifications The following presentational changes have been made as a result of the conversion to Adopted IFRSs • Software and trademark assets were presented as tangible fixed assets under UK GAAP. Under Adopted IFRSs, they are presented as intangible fixed assets • Trade and other receivables have been presented as either current or non current assets as appropriate • Deferred tax liabilities are now presented as a separate line item within non current liabilities. Under UK GAAP these were included within provisions • Property provisions which were included within creditors less than one year under UK GAAP are now separately presented within liabilities • Tax payable is now presented as a separate line item within current liabilities.

Cash flow statement There are no significant differences between the cash flow statements as presented under Adopted IFRSs and under UK GAAP.

Opening balance sheet The date of transition is 29 March 2010. At this date, the balance sheet included share capital of £2 and a receivable of £2. There are no IFRS adjustments and, therefore, no opening balance sheet reconciliation is presented.

31 Ultimate parent company The majority shareholder and ultimate controlling party is Warburg Pincus Private Equity X, L.P., which is registered in the United States.

32 Reconciliation of adjusted profit measure (EBITDA) The directors consider EBITDA to be a more consistent measure of operating performance. Operating profit is adjusted to exclude the impact of finance costs, taxation, amortisation and depreciation. Underlying EBITDA excludes the impact of those distribution costs and administrative expenses which do not contribute to current trading activities. The directors consider that this measure more fairly reflects actual operating performance.

41 weeks trading 53 weeks 52 weeks 39 weeks 39 weeks 2011 2012 2013 30.12.12 29.12.13 £000 £000 £000 £000 £000 Operating profit ...... 15,697 28,184 30,051 27,428 33,081 Exclude: Amortisation ...... 1,206 1,672 1,839 1,366 1,397 Depreciation ...... 7,187 9,601 11,241 8,011 9,547 EBITDA ...... 24,090 39,457 43,131 36,805 44,025 Exclude: Non-underlying items excluding brand amortisation . 4,154 — 2,319 1,995 1,198 Underlying EBITDA ...... 28,244 39,457 45,450 38,800 45,223

135 PART 11 DETAILS OF THE GLOBAL OFFER

1. BACKGROUND Pursuant to the Global Offer, the Selling Shareholders intend to sell, in aggregate, approximately 125,000,000 Offer Shares for an aggregate amount of approximately £375.0 million, net of underwriting commissions and other estimated fees and expenses of approximately £10.3 million. The Offer Shares will represent approximately 50.0 per cent. of the expected issued ordinary share capital of the Company immediately following Admission. In addition, a further 18,750,000 Over-allotment Shares are being made available by the Over-allotment Shareholders pursuant to the Over-allotment Option described below. In the Global Offer, the Offer Shares will be offered (i) to certain institutional investors in the United Kingdom and elsewhere outside the United States and (ii) in the United States only to qualified institutional buyers in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Certain restrictions that apply to the distribution of this Prospectus and the Offer Shares being sold under the Global Offer in jurisdictions outside the United Kingdom are described below. When admitted to trading, the Ordinary Shares will be registered with ISIN number GB00BJ34VB96 and SEDOL (Stock Exchange Daily Official List) number BJ34VB9 and trade under the symbol ‘‘PLND’’. Immediately following Admission, it is expected that in excess of 50.0 per cent. of the Company’s issued ordinary share capital will be held in public hands (within the meaning of paragraph 6.1.19R of the Listing Rules) assuming that no Over-allotment Shares are acquired pursuant to the Over-allotment Option (increasing to 57.5 per cent. if the maximum number of Over-allotment Shares are acquired pursuant to the Over-allotment Option). No expenses will be charged by the Company or the Selling Shareholders to any investor who purchases Ordinary Shares pursuant to the Global Offer.

2. REASONS FOR THE GLOBAL OFFER The Directors believe that the Global Offer will: • enable the Selling Shareholders to partially monetise their holding, also allowing for a liquid market for their shares going forward; • diversify the shareholder base; • enhance Poundland’s profile with investors, business partners and customers; • further enhance the ability of Poundland to attract and retain key management and employees; and • enable access to capital markets if necessary for future growth. No proceeds will be received by the Company pursuant to the Global Offer.

3. ALLOCATION The rights attaching to the Ordinary Shares will be uniform in all respects and they will form a single class for all purposes. The Ordinary Shares allocated under the Global Offer have been underwritten, subject to certain conditions, by the Underwriters as described in the paragraph headed ‘‘Underwriting arrangements’’ below and in paragraph 9 of Part 12—‘‘Additional Information—Underwriting arrangements’’. Allocations under the Global Offer will be determined jointly by the Company and the Warburg Pincus Funds after consulting with the Joint Global Co-ordinators. All Ordinary Shares sold pursuant to the Global Offer will be sold, payable in full, at the Offer Price. Liability for UK stamp duty and stamp duty reserve tax is described in paragraph 13 of Part 12—‘‘Additional Information—UK Taxation’’.

4. DEALING ARRANGEMENTS The Global Offer is subject to the satisfaction of certain conditions contained in the Underwriting Agreement, which are typical for an agreement of this nature. Certain conditions are related to events

136 which are outside the control of the Company, the Directors, the Selling Shareholders and the Underwriters. Further details of the Underwriting Agreement are described in paragraph 9.1 of Part 12—’’Additional Information—Underwriting Arrangements—Underwriting Agreement’’. It is expected that Admission will become effective, and that unconditional dealings in the Ordinary Shares will commence on the London Stock Exchange’s Main Market at 8.00 a.m. (London time) on 17 March 2014. Settlement of dealings from that date will be on a three-day rolling basis. Prior to Admission, conditional dealings in the Ordinary Shares are expected to commence on the London Stock Exchange at 8.00 a.m. on 12 March 2014. Dealings on the London Stock Exchange’s Main Market before Admission will only be settled if Admission takes place. The earliest date for such settlement of such dealings will be 17 March 2014. All dealings before the commencement of unconditional dealings will be of no effect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. These dates and times may be changed without further notice. Each investor will be required to undertake to pay the Offer Price for the Offer Shares sold to such investor in such manner as shall be directed by the Joint Global Co-ordinators. It is expected that Ordinary Shares allocated to investors in the Global Offer will be delivered in uncertificated form and settlement will take place through CREST on Admission. No temporary documents of title will be issued. Dealings in advance of crediting of the relevant CREST stock account shall be at the risk of the person concerned.

5. OVER-ALLOTMENT AND STABILISATION In connection with the Global Offer, J.P. Morgan Cazenove, as Stabilising Manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Ordinary Shares or effect other stabilising transactions with a view to supporting the market price of the Ordinary Shares at a higher level than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings in the Ordinary Shares on the main market for listed securities of the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilisation, if commenced, may be discontinued at any time without prior notice. In no event will measure be taken to stabilise the market price of the Ordinary Shares above the Offer Price. Except as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilising transactions conducted in relation to the Global Offer. In connection with the Global Offer, the Stabilising Manager may, for stabilisation purposes, over-allot Ordinary Shares up to a maximum of 15 per cent. of the total number of Ordinary Shares comprised in the Global Offer. For the purposes of allowing the Stabilising Manager to cover short positions resulting from any such overallotments and/or from sales of Ordinary Shares effected by it during the stabilising period, the Over-allotment Shareholders have granted to the Stabilising Manager the Over-allotment Option, pursuant to which the Stabilising Manager may purchase or procure purchasers for additional Ordinary Shares up to a maximum of 15 per cent. of the total number of Ordinary Shares comprised in the Global Offer. The Over-allotment Option will be exercisable, in whole or in part, upon notice by the Stabilising Manager, at any time on or before the 30th calendar day after the commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange. Any Over-allotment Shares made available pursuant to the Over-allotment Option will rank pari passu in all respects with the Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares, will be purchased on the same terms and conditions as the Ordinary Shares being sold in the Global Offer and will form a single class for all purposes with the other Ordinary Shares. For a discussion of certain stock lending arrangements entered into in connection with the Over-allotment Option, see paragraph 9.2 of Part 12—‘‘Additional Information—Underwriting Arrangements—Stock lending agreement’’.

137 6. CREST CREST is a paperless settlement system allowing securities to be transferred from one person’s CREST account to another’s without the need to use share certificates or written instruments of transfer. With effect from Admission, the Articles will permit the holding of Ordinary Shares in the CREST system. Application has been made for the Ordinary Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within the CREST system if any shareholder so wishes. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so.

7. UNDERWRITING ARRANGEMENTS The Underwriters have entered into commitments with the Company, the Directors, the Selling Shareholders and the ESOP Trustee (as nominee for the ESOP Managers) under the Underwriting Agreement pursuant to which they have agreed, subject to certain conditions, to procure purchasers for the Offer Shares to be sold by the Selling Shareholders in the Global Offer, or, failing which, themselves to purchase such Ordinary Shares, at the Offer Price. The Underwriting Agreement contains provisions entitling the Underwriters to terminate the Global Offer (and the arrangements associated with it) at any time prior to Admission in certain circumstances. If this right is exercised, the Global Offer and these arrangements will lapse and any moneys received by the Selling Shareholders in respect of the Global Offer will be returned to applicants without interest. The Underwriting Agreement provides for the Underwriters to be paid commission by the Selling Shareholders in respect of the Offer Shares and any Over-allotment Shares. Any commissions received by the Underwriters may be retained, and any Ordinary Shares acquired by them may be retained or dealt in, by them, for their own benefit. Further details of the terms of the Underwriting Agreement are set out in paragraph 9.1 of Part 12—‘‘Additional Information—Underwriting Arrangements—Underwriting Agreement’’. Certain selling and transfer restrictions are set out below.

8. LOCK-UP ARRANGEMENTS Pursuant to the Underwriting Agreement, the Company and the Warburg Pincus Funds have each agreed, subject to certain customary exceptions, during the period of 180 days from the date of Admission, not, without the prior written consent of the Joint Global Co-ordinators, to issue (in the case of the Company only), offer, lend, sell or contract to sell, grant any option, right or warrant to subscribe or purchase or allow any encumbrance to be created over or otherwise dispose of, directly or indirectly, or announce an offer of any Ordinary Shares (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as, or agree to do, any of such things, or publicly announce any intention to do any of the foregoing. Pursuant to the Underwriting Agreement, the Directors, members of Senior Management and certain other Shareholders have agreed that, subject to certain customary exceptions, during the period of 365 days from the date of Admission, not, without the prior written consent of the Joint Global Co-ordinators, to offer, lend, sell or contract to sell, grant any option, right or warrant to subscribe or purchase or allow any encumbrance to be created over or otherwise dispose of, directly or indirectly, or announce an offer of any Ordinary Shares (or any interest therein in respect thereof) or enter into any transaction with the same economic effect as, or agree to do, any of such things, or publicly announce any intention to do any of the foregoing. David Coxon will be leaving Poundland in July 2014 at which point his lock-up will expire.

9. SELLING RESTRICTIONS The distribution of this Prospectus and the offer of Ordinary Shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions, including those set out in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action has been or will be taken in any jurisdiction that would permit a public offering of the Ordinary Shares, or possession or distribution of this Prospectus or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisement

138 in connection with the Ordinary Shares may be distributed or published in or from any country or jurisdiction except in circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this Prospectus comes should inform themselves about and observe any restrictions on the distribution of this Prospectus and the offer of Ordinary Shares contained in this Prospectus. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Prospectus does not constitute an offer to subscribe for or purchase any of the Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer of solicitation in such jurisdiction.

9.1 European Economic Area In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), no Ordinary Shares have been offered or will be offered pursuant to the Global Offer to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Ordinary Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that offers of Ordinary Shares may be made to the public in that Relevant Member State at any time under the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State: (a) to any legal entity which is a qualified investor as defined under the Prospectus Directive; (b) to fewer than 100, or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Joint Global Co-ordinators for any such offer; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Ordinary Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State. For the purposes of this provision, the expression an ‘‘offer to the public’’ in relation to any Ordinary Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Ordinary Shares to be offered so as to enable an investor to decide to purchase any Ordinary Shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state. The expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU. In the case of any Ordinary Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Ordinary Shares acquired by it in the Global Offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to persons in circumstances which may give rise to an offer of any Ordinary Shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the Joint Global Co-ordinators has been obtained to each such proposed offer or resale. The Company, the Selling Shareholders, the Underwriters and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the Underwriters of such fact in writing may, with the prior consent of the Joint Global Co-ordinators, be permitted to acquire Ordinary Shares in the Global Offer.

9.2 United States The Ordinary Shares have not been and will not be registered under the Securities Act or under any applicable securities laws or regulations of any state of the United States and, subject to certain exceptions, may not be offered or sold within the United States except to persons reasonably believed to be QIBs in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration

139 requirements of the Securities Act. The Ordinary Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S. In addition, until 40 days after the commencement of the Global Offer of the Ordinary Shares an offer or sale of Ordinary Shares within the United States by any dealer (whether or not participating in the Global Offer) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A or another exemption from, or transaction not subject to, the registration requirements of the Securities Act. The Underwriting Agreement provides that the Underwriters may directly or through their respective United States broker-dealer affiliates arrange for the offer and resale of Ordinary Shares within the United States only to QIBs in reliance on Rule 144A or another exemption from, or transaction not subject to, the registration requirements of the Securities Act. Each acquirer of Ordinary Shares within the United States, by accepting delivery of this Prospectus, will be deemed to have represented, agreed and acknowledged that it has received a copy of this Prospectus and such other information as it deems necessary to make an investment decision and that: (a) it is (a) a QIB within the meaning of Rule 144A, (b) acquiring the Ordinary Shares for its own account or for the account of one or more QIBs with respect to whom it has the authority to make, and does make, the representations and warranties set forth herein, (c) acquiring the Ordinary Shares for investment purposes, and not with a view to further distribution of such Ordinary Shares, and (d) aware, and each beneficial owner of the Ordinary Shares has been advised, that the sale of the Ordinary Shares to it is being made in reliance on Rule 144A or in reliance on another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act; (b) it understands that the Ordinary Shares are being offered and sold in the United States only in a transaction not involving any public offering within the meaning of the Securities Act and that the Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, pledged or otherwise transferred except (a) to a person that it and any person acting on its behalf reasonably believe is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, (b) in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, (c) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (d) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. It further (a) understands that the Ordinary Shares may not be deposited into any unrestricted depositary receipt facility in respect of the Ordinary Shares established or maintained by a depositary bank, (b) acknowledges that the Ordinary Shares (whether in physical certificated form or in uncertificated form held in CREST) are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act and that no representation is made as to the availability of the exemption provided by Rule 144 for resales of the Ordinary Shares and (c) understands that the Company may not recognise any offer, sale, resale, pledge or other transfer of the Ordinary Shares made other than in compliance with the above-stated restrictions; (c) it understands that the Ordinary Shares (to the extent they are in certificated form), unless otherwise determined by the Company in accordance with applicable law, will bear a legend substantially to the following effect: THE ORDINARY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON THAT THE SELLER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE

140 SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THE ORDINARY SHARES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE ORDINARY SHARES REPRESENTED HEREBY MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY IN RESPECT OF THE ORDINARY SHARES ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK. EACH HOLDER, BY ITS ACCEPTANCE OF ORDINARY SHARES, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS; and (d) it represents that if, in the future, it offers, resells, pledges or otherwise transfers such Ordinary Shares while they remain ‘‘restricted securities’’ within the meaning of Rule 144, it shall notify such subsequent transferee of the restrictions set out above. The Company, the Underwriters and their affiliates and others will rely on the truth and accuracy of the foregoing acknowledgements, representations and agreements.

9.3 Canada The offer and sale of the Offer Shares in Canada will only be made in the Provinces of Ontario and Quebec´ or to residents thereof and not in, or to the residents of, any other Province or Territory of Canada. Such offers and sales will be made only pursuant to a Canadian Offering Memorandum consisting of this Prospectus accompanied by a Canadian supplement.

9.4 Australia This Prospectus (a) does not constitute a prospectus or a product disclosure statement under the Corporations Act 2001 of the Commonwealth of Australia (‘‘Corporations Act’’); (b) does not purport to include the information required of a prospectus under Part 6D.2 of the Corporations Act or a product disclosure statement under Part 7.9 of the Corporations Act; has not been, nor will it be, lodged as a disclosure document with the Australian Securities and Investments Commission (‘‘ASIC’’), the Australian Securities Exchange operated by ASX Limited or any other regulatory body or agency in Australia; and (c) may not be provided in Australia other than to select investors (‘‘Exempt Investors’’) who are able to demonstrate that they (i) fall within one or more of the categories of investors under section 708 of the Corporations Act to whom an offer may be made without disclosure under Part 6D.2 of the Corporations Act and (ii) are ‘‘wholesale clients’’ for the purpose of section 761G of the Corporations Act. The Ordinary Shares may not be directly or indirectly offered for purchased or sold, and no invitations to subscribe for, or buy, the Ordinary Shares may be issued, and no draft or definitive offering memorandum, advertisement or other offering material relating to any Ordinary Shares may be distributed, received or published in Australia, except where disclosure to investors is not required under Chapters 6D and 7 of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the Ordinary Shares, each purchaser of Ordinary Shares represents and warrants to the Company, the Selling Shareholders, the Underwriters and their affiliates that such purchaser is an Exempt Investor. As any offer of Ordinary Shares under this Prospectus, any supplement or the accompanying prospectus or other document will be made without disclosure in Australia under Parts 6D.2 and 7.9 of the Corporations Act, the offer of those Ordinary Shares for resale in Australia within 12 months may, under the Corporations Act, require disclosure to investors if none of the exemptions in the Corporations Act applies to that resale. By applying for the Ordinary Shares each purchaser of Ordinary Shares undertakes to the Company, the Selling Shareholders, the Underwriters that such purchaser will not, for a period of 12 months from the date of issue or purchase of the Ordinary Shares, offer, transfer, assign or otherwise alienate those Ordinary Shares to investors in Australia except in circumstances where disclosure to investors is not required under the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.

9.5 Japan The Ordinary Shares have not been, and will not be, registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948 as amended, the ‘‘FIEL’’) and disclosure under the FIEL has not been, and will not be, made with respect to the Ordinary Shares. Neither the Ordinary Shares nor any

141 interest therein may be offered, sold, resold, or otherwise transferred, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and all other applicable laws, regulations and guidelines promulgated by the relevant Japanese governmental and regulatory authorities. As used in this paragraph, a resident of Japan is any person that is resident in Japan, including any corporation or other entity organized under the laws of Japan.

9.6 Russian Federation Neither the Ordinary Shares nor this Prospectus have been, or are intended to be, registered with the Central Bank of Russia (the ‘‘CBR’’) or any other state bodies that may from time to time be responsible for such registration. Each Underwriter has agreed that the Ordinary Shares will not be offered, transferred or sold as part of their initial distribution or at any time thereafter to or for the benefit of any persons (including legal entities) resident, incorporated, established or having their usual residence in the Russian Federation or to any person located in the Russian Federation unless and to the extent otherwise permitted under Russian Law; it being understood and agreed that the Underwriters may distribute this Prospectus in the Russian Federation to ‘‘qualified investors’’ (as defined in Russian law) in a manner that does not constitute an advertisement (as defined in Russian law) of the Ordinary Shares and may sell the Ordinary Shares to ‘‘qualified investors’’ (as defined in Russian law) in a manner that does not constitute a ‘‘public placement’’ or a ‘‘public circulation’’ of the Ordinary Shares in the Russian Federation (as defined in Russian law).

9.7 South Africa Due to restrictions under the securities laws of South Africa, the Ordinary Shares are not offered, and the Global Offer shall not be transferred, sold, renounced or delivered, in South Africa or to a person with an address in South Africa, unless one or other of the following exemptions applies: (i) the Global Offer, transfer, sale, renunciation or delivery is to duly registered banks, mutual banks, financial services provider, financial institution, public investment corporation (in each case registered as such in South Africa), a person who deals with securities in their ordinary course of business, or a wholly owned subsidiary of a bank, mutual bank, authorised services provider or financial institution, acting as agent in the capacity of an authorised portfolio manager for a pension fund (duly registered in South Africa), or as manager for a collective investment scheme(registered in South Africa); or (ii) the contemplated acquisition cost of the securities, for any single addressee acting as principal is equal to or greater than R1,000,000.

10. RELATIONSHIP BETWEEN THE UNDERWRITERS OR CERTAIN OF THEIR AFFILIATES AND THE COMPANY OR SELLING SHAREHOLDERS WP X, one of the Selling Shareholders, is a borrower under a $845 million revolving credit facility with a syndicate of banks pursuant to which JPMorgan Chase Bank, N.A. is a lender and administrative agent and J.P. Morgan Securities, LLC is sole lead arranger and bookrunner. JPMorgan Chase Bank, N.A. and J.P. Morgan Securities, LLC are affiliates of J.P. Morgan Cazenove. Pursuant to this credit facility, which matures in July 2017, affiliates of J.P. Morgan Cazenove have made available approximately $65 million to WP X. WP X is currently in compliance with the credit facility and no breach of the facility has been waived by any of the lenders thereunder. The decision to offer the Offer Shares was made solely by the Company and the Selling Shareholders.

142 PART 12 ADDITIONAL INFORMATION

1. INCORPORATION AND SHARE CAPITAL 1.1 The Company was incorporated and registered in England and Wales on 24 January 2014 as a private company limited by shares under the Act with the name Poundland Group Limited and with the registered number 8861243. 1.2 On 14 February 2014, the Company was then re-registered as a public limited company with the name Poundland Group plc. The Reorganisation is described in paragraph 2 of Part 12 ‘‘Reorganisation’’. 1.3 The Company’s registered office and principal place of business is Wellmans Road, Willenhall, West Midlands WV13 2QT, England and its telephone number is + 44 (0) 121 568 7000. 1.4 The principal laws and legislation under which the Company operates and the ordinary shares have been created are the Act and regulations made thereunder. 1.5 The share capital history of Company is as follows: 1.5.1 on incorporation the share capital of the Company was £50,000 divided into 1 Ordinary Share of £1 and 49,999 Preference Shares of £1 each, all of which were allotted to WP X; 1.5.2 immediately prior to the publication of this Prospectus, the share capital of the Company was £50,000.7 divided into 1 Ordinary Share of 170 pence and 49,999 Preference Shares of £1 each, all of which were allotted to WP X; and 1.5.3 immediately following completion of the Global Offer, the issued share capital of the Company is expected to be £425,049,999 comprising: (i) 250,000,000 Ordinary Shares of 170 pence each (all of which will be fully paid or credited as fully paid); and (ii) 49,999 Preference Shares of £1 each (all of which will be fully paid or credited as fully paid). The Preference Shares in issue will be redeemed or cancelled after the completion of the capital reduction referred to in paragraph 2.2 below. 1.6 On 11 March 2014, by resolutions of the Company in general meeting, conditional on Admission: 1.6.1 the Company adopted the Articles, a summary of which is included at paragraph 3 below; 1.6.2 the Directors were authorised for the purposes of section 551 of the Act, in substitution for any prior authority conferred upon the directors of the Company, without prejudice to the continuing authority of the directors of the Company to allot shares or grant rights to subscribe for any security into Ordinary Shares pursuant to an offer or agreement by the Company before the expiry of the authority which such offer or agreement was made: (i) to allot shares in the Company up to an aggregate nominal amount of £425,000,000, in connection with the Reorganisation; and (ii) following Admission, to allot Ordinary Shares and to grant rights to subscribe for or to convert any security into Ordinary Shares, for a period expiring (unless previously renewed, varied or revoked by the Company in general meeting) at the end of the next annual general meeting of the Company (or, if earlier, at the close of business on the date which is fifteen months after the date of the general meeting at which the resolution was passed): (A) up to an aggregate nominal amount of £141,666,667, being approximately one-third of the aggregate value of the issued Ordinary Share capital of the Company immediately following Admission; (B) comprising equity securities (as defined in the Act) up to an aggregate nominal amount of £283,333,333, being approximately two-thirds of the aggregate nominal value of the issued Ordinary Share capital of the Company immediately following Admission, (including within such limit any shares issued or rights granted under paragraph (i) above) in

143 connection with an offer by way of a rights issue to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings and to people who are holders of other equity securities if this is required by the rights of those securities or, if the directors of the Company consider it necessary, as permitted by the rights of those securities; (iii) to make an offer or agreement which would or might require shares to be allotted, or rights to subscribe for or convert any security into shares to be granted, after expiry of this authority and the directors may allot shares and grant rights in pursuance of that offer or agreement as if this authority had not expired; 1.6.3 the Directors were authorised, for a period expiring (unless previously renewed, varied or revoked by the Company in general meeting) at the end of the next annual general meeting of the Company (or, if earlier, at the close of business on the date which is fifteen months after the date of the general meeting at which the resolution was passed), but without prejudice to any allotments made pursuant to the terms of such authorities, to allot equity securities for cash pursuant to the resolution described in paragraph 1.6.2 above, as if section 561(1) of the Act did not apply to such allotment, such power being limited to: (i) the allotment of Ordinary Shares up to an aggregate nominal amount of £425,000,000, in connection with the Reorganisation; and (ii) the allotment of equity securities in connection with an offer of equity securities to the Shareholders in proportion (or as nearly may be) to their existing holding and to people who hold other equity securities, if this is required by the rights of those securities, or, if the directors consider it necessary, as permitted by the rights of those securities, but in each case subject to such exclusions or other arrangements as the directors of the Company deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange; and (iii) the allotment of equity securities for cash (other than as described in (i) and (ii) above) with an aggregate nominal value of up to £21,250,000 (being approximately 5 per cent. of the issued share capital of the Company immediately following Admission); 1.6.4 the Company was generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Act) of Ordinary Shares, subject to the following conditions: (i) the maximum aggregate number of Ordinary Shares authorised to be purchased is 25,000,000, representing 10 per cent. of the Company’s issued Ordinary Share capital immediately following Admission; (ii) the minimum price (excluding expenses) which may be paid for each Ordinary Share is 170 pence (being the nominal value of an Ordinary Share); (iii) the maximum price (excluding expenses) which may be paid for each Ordinary Share is the higher of: (A) 105 per cent. of the average of the middle market quotations for the Ordinary Shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is contracted to be purchased; and (B) an amount equal to the higher of the price of the last independent trade of a Share and the highest current independent bid for a Share as derived from the London Stock Exchange Trading System; and (iv) the authority shall expire at the close of the annual general meeting of the Company to be held in 2015 or, if earlier, 18 months from the date on which the resolution was passed so that the Company may, before the expiry of the

144 authority enter into a contract to purchase Ordinary Shares which will or may be executed wholly or partly after the expiry of such authority; 1.6.5 the Company was authorised in accordance with the Articles, until the Company’s next annual general meeting, to call general meetings on 14 clear days’ notice; and 1.6.6 the Company and all companies that are its subsidiaries at any time up to the end of the annual general meeting of the Company or, if earlier, at the close of business on the date that is fifteen months after the resolution is passed, in aggregate, were authorised to: (a) make political donations to political parties and/or independent election candidates not exceeding £100,000 in total; (b) make political donations to political organisations other than political parties not exceeding £100,000 in total; and (c) incur political expenditure not exceeding £100,000 in total. For the purposes of this authority the terms ‘‘political donation’’, ‘‘political parties’’, ‘‘independent election candidates’’, ‘‘political organisation’’ and ‘‘political expenditure’’ have the meanings given by sections 363 to 365 of the Act. The Company notes that it is not its policy to make political donations and that it has no intention of using the authority for that purpose. 1.7 Save as disclosed above and in paragraphs 5 and 7 below: 1.7.1 no share or loan capital of the Company has, within three years of the date of this Prospectus, been issued or agreed to be issued, or is now proposed to be issued, fully or partly paid, either for cash or for a consideration other than cash, to any person; 1.7.2 no commissions, discounts, brokerages or other special terms have been granted by the Company in connection with the issue or sale of any share or loan capital of any such company; and 1.7.3 no share or loan capital of the Company is under option or agreed conditionally or unconditionally to be put under option. 1.8 The Company will be subject to the continuing obligations of the FCA with regard to the issue of shares for cash. The provisions of section 561(1) of the Act (which confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up in cash other than by way of allotment to employees under an employees’ share scheme as defined in section 1166 of the Act) apply to the issue of shares in the capital of the Company except to the extent such provisions have been disapplied as referred to in paragraph 1.6.3 above.

2. REORGANISATION 2.1 Pre-Admission steps under the Reorganisation 2.1.1 As at the date of this Prospectus, each of the Existing Shareholders holds certain shares in PGHL and on 29 January 2014, the Reorganisation Deed was entered into; 2.1.2 under the terms of the Reorganisation Deed, immediately prior to Admission, the Company will become the holding company of the Group’s existing holding company, PGHL, and all of the shares in PGHL that are held by the Existing Shareholders will be exchanged (as detailed in paragraph 2.1.3 below) for a number of Ordinary Shares that represents the value (on a pro rata basis) of the shares in PGHL held by each of them immediately prior to the Reorganisation; 2.1.3 the shares in PGHL held as at the date of this Prospectus by the Existing Shareholders will be exchanged for Ordinary Shares as follows: (i) the ordinary shares and redeemable preference shares (including any accrued and unpaid dividend) in PGHL held by the Existing Shareholders (other than redeemable preference shares with an aggregate nominal value of £49,999 held by WP X (the ‘‘Remaining PGHL Redeemable Shares’’)) will be re-designated into a single class of ordinary shares in PGHL with the same economic and voting

145 rights (the ‘‘New PGHL Ordinary Shares’’). The conversion ratio will take into account the then relative values of each class of share in PGHL, including the accrued coupon attached to the redeemable preference shares which has yet to be paid; (ii) to the extent required, there will be a sub-division and/or consolidation and/or bonus issue of the New PGHL Ordinary Shares to ensure that the number of New PGHL Ordinary Shares will mirror the number of Ordinary Shares, as determined by the Offer Price; (iii) the Reorganisation may also involve a redesignation of parts of the ordinary shares and/or redeemable preference shares and/or New PGHL Ordinary Shares as deferred shares so as to simplify the nominal value of each individual New PGHL Ordinary Share and avoid a reduction of the aggregate nominal value of shares in PGHL. Such deferred shares will then be repurchased by PGHL for £1 in aggregate, the nominal value of such repurchased deferred shares will be transferred to the capital redemption reserve of PGHL, and such deferred shares subsequently cancelled; and (iv) the Company and the Existing Shareholders shall effect a share-for-share exchange whereby each of the Existing Shareholders will transfer all of the New PGHL Ordinary Shares and the Remaining PGHL Redeemable Shares held by them to the Company, in exchange for the allotment and issue by the Company of an equivalent number of Ordinary Shares. The effect of this step is to ensure that the Existing Shareholders hold Ordinary Shares immediately after the Reorganisation which represent the same economic value as the New PGHL Ordinary Shares and Remaining PGHL Redeemable Shares held by each such person immediately prior to the Reorganisation; and 2.1.4 as the Company will become the holding company of the Group under the Reorganisation, new articles of association will be adopted by PGHL, conditional upon Admission, which contain provisions appropriate to its position, following Admission, as a wholly-owned subsidiary of the Company. 2.2 Post-Admission steps under the Reorganisation The following steps will be carried out under the Reorganisation following Admission: 2.2.1 each of the Company and certain members of the Group will undertake a court-approved capital reduction in accordance with the Act in order to provide it with certain distributable reserves to pay dividends post-Admission; 2.2.2 the Company will redeem the Preference Shares (or the Preference Shares will be otherwise cancelled) issued to WP X on incorporation on completion of the capital reduction (the capital reduction and redemption of Preference Shares have been approved (conditional upon Admission) by resolutions of the Company passed as part of the Reorganisation, and in the case of the capital reduction, will require the approval of the court following Admission); and 2.2.3 following Admission, the Group may also be further reorganised such that the Company becomes the direct holding company of Poundland Holdings Limited (which is, as at the date of this Prospectus, an indirectly wholly-owned subsidiary of PGHL). Surplus holding companies (including PGHL) may be wound up in due course to reduce the administrative burden on the Group and help prevent the erosion of profit and loss reserves between the trading subsidiaries, holding subsidiaries and the Company, which could otherwise result in future dividend blocks. Lastly, it is anticipated that certain intra- Group balances which exist as at the date of this Prospectus will be consolidated after Admission and, to the extent possible, offset between members of the Group, in order to simplify intra-Group accounting arrangements.

146 2.3 Structural changes to the Group under the Reorganisation The structure chart below illustrates the structure of the Group as at the date of this Prospectus, before completion of the steps of the Reorganisation due to take place immediately prior to Admission.

Managers ESOP and ESOP Managers Warburg Pincus Funds

Ordinary / Ordinary Ordinary / Preference shares Preference shares shares Poundland Group Holdings Ltd (PGHL)

Poundland Value Retailing Ltd (PVR)

Poundland Retail Ltd (PRL)

Poundland Holdings Ltd Bank debt (PHL)

Poundland Willenhall Ltd (PWL)

Poundland Ltd (PLTD)

Subsidiary Undertakings 10MAR201417323498

147 The structure chart below illustrates the structure of the Group at Admission (save for Preference Shares, which will be redeemed (or cancelled) following Admission as described in paragraph 2.2.2 above), following completion of the Reorganisation steps which will take effect immediately prior to Admission.

Public Managers ESOP Managers investors Warburg Pincus Funds

Ordinary Ordinary Ordinary Ordinary Shares Shares Shares Shares

The Company

Poundland Group Holdings Ltd (PGHL)

Poundland Value Retailing Ltd (PVR)

Poundland Retail Ltd (PRL)

Poundland Holdings Ltd Bank debt (PHL)

Poundland Willenhall Ltd (PWL)

Poundland Ltd (PLTD)

Subsidiary Undertakings 10MAR201417323643

3. ARTICLES OF ASSOCIATION The Articles of Association of the Company (the ‘‘Articles’’) include provisions to the following effect: 3.1 Share rights Subject to the provisions of the Act, and without prejudice to any rights attached to any existing shares or class of shares: (i) any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine or, subject to and in default of such determination, as the Board shall determine; and (ii) shares may be issued which are to be redeemed or are liable to be redeemed at the option of the Company or the holder and the Board may determine the terms, conditions and manner of redemption of such shares provided that it does so prior to the allotment of those shares.

148 3.2 Voting rights Subject to any rights or restrictions attached to any shares, on a vote on a resolution on a show of hands every member who is present in person shall have one vote and on a poll every member present in person or by proxy shall have one vote for every share of which he is the holder. No member shall be entitled to vote at any general meeting in respect of a share unless all moneys presently payable by him in respect of that share have been paid. If at any time the Board is satisfied that any member, or any other person appearing to be interested in shares held by such member, has been duly served with a notice under section 793 of the Act and is in default for the prescribed period in supplying to the Company the information thereby required, or, in purported compliance with such a notice, has made a statement which is false or inadequate in a material particular, then the Board may, in its absolute discretion at any time thereafter by notice to such member direct that, in respect of the shares in relation to which the default occurred, the member shall not be entitled to attend or vote either personally or by proxy at a general meeting or at a separate meeting of the holders of that class of shares or on a poll. Preference Shares entitle their holder to receive notice of and to attend and speak at general meetings of the Company. Preference Shares do not entitle their holder to vote at general meetings of the Company. 3.3 Dividends and other distributions Subject to the provisions of the Act, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the members, but no dividend shall exceed the amount recommended by the Board. Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend is paid, but no amount paid on a share in advance of the date on which a call is payable shall be treated for these purposes as paid on the share. Subject to the provisions of the Act, the Board may pay interim dividends if it appears to the Board that they are justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the Board may also pay interim dividends on shares which confer deferred, non-preferred or preferential rights with regard to dividends, and may pay at intervals determined by it, any dividend payable at a fixed rate if it appears to the Board that the profits available for distribution justify the payment. If the Board acts in good faith it shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of an interim dividend on any shares having deferred or non-preferred rights. No dividend or other moneys payable in respect of a share shall bear interest against the Company unless otherwise provided by the rights attached to the share. Except as otherwise provided by the rights and restrictions attached to any class of shares, all dividends will be declared and paid according to the amounts paid-up on the shares on which the dividend is paid. The Board may, if authorised by an ordinary resolution of the Company, offer any holder of shares the right to elect to receive shares, credited as fully paid, by way of scrip dividend instead of cash in respect of the whole (or some part, to be determined by the Board) of all or any dividend. Any dividend which has remained unclaimed for 12 years from the date when it became due for payment shall, if the Board so resolves, be forfeited and cease to remain owing by the Company. Except as provided by the rights and restrictions attached to any class of shares, the holders of the Company’s shares will under general law be entitled to participate in any surplus assets in a winding up in proportion to their shareholdings, provided that the assets of the Company available for distribution among the members shall be applied in paying to the preference shareholders in proportion to the number of Preference Shares held by each of them, in priority to any payment to the holders of any Ordinary Shares in the Company, the issue price per Preference Share. A liquidator may, with the sanction of a special resolution and any other sanction required by the Insolvency Act 1986, divide among the members in specie the whole or any part of the assets of

149 the Company and may, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members. 3.4 Variation of rights Subject to the provisions of the Act, rights attached to any class of shares (unless otherwise provided by the terms of allotment of the shares of that class) may be varied or abrogated with the written consent of the holders of three-quarters in nominal value of the issued shares of the class, or the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class. The rights attached to the Preference Shares may be waived, varied or abrogated with the consent in writing of the holders of at least 50 per cent. in nominal value of the Preference Shares in issue. To the extent that such a waiver, variation or abrogation of any of the rights attached to the Preference Shares adversely affects one group of Preference Shares, such waiver, variation or abrogation must be approved by or on behalf of the holders of at least 50 per cent. in nominal value of the Preference Shares in each respective group. 3.5 Lien and forfeiture The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys payable to the Company (whether presently or not) in respect of that share. The Company may sell, in such manner as the Board determines, any share on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within 14 clear days after notice has been sent to the holder of the share, or to the person entitled to it by transmission, demanding payment and stating that if the notice is not complied with the share may be sold. The Board may from time to time make calls on the members in respect of any moneys unpaid on their shares. Each member shall (subject to receiving at least 14 clear days’ notice) pay to the Company the amount called on his shares. If a call or any instalment of a call remains unpaid in whole or in part after it has become due and payable, the board may give the person from whom it is due not less than 14 clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any costs, charges and expenses incurred by the Company by reason of such non-payment. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited. 3.6 Transfer of shares A member may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any other form which the Board may approve. An instrument of transfer shall be signed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of the transferee. An instrument of transfer need not be under seal. The Board may, in its absolute discretion, refuse to register the transfer of a certificated share which is not a fully paid share, provided that the refusal does not prevent dealings in shares in the Company from taking place on an open and proper basis. The Board may also refuse to register the transfer of a certificated share unless the instrument of transfer: 3.6.1 is lodged, duly stamped (if stampable), at the office or at another place appointed by the Board accompanied by the certificate for the share to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer; 3.6.2 is in respect of one class of share only; and 3.6.3 is in favour of not more than four transferees. If the Board refuses to register a transfer of a share in certificated form, it shall send the transferee notice of its refusal within two months after the date on which the instrument of transfer was lodged with the Company. No fee shall be charged for the registration of any instrument of transfer or other document relating to or affecting the title to a share.

150 Subject to the provisions of the Regulations, the Board may permit the holding of shares in any class of shares in uncertificated form and the transfer of title to shares in that class by means of a relevant system and may determine that any class of shares shall cease to be a participating security. 3.7 Alteration of share capital Subject to the Act, the Company may by ordinary resolution increase, consolidate or sub-divide its share capital. 3.8 Purchase of own shares Subject to the Act and without prejudice to any relevant special rights attached to any class of shares, the Company may purchase any of its own shares of any class in any way and at any price (whether at par or above or below par). 3.9 General meetings The Board shall convene and the Company shall hold general meetings as annual general meetings in accordance with the requirements of the Act. The Board may call general meetings whenever and at such times and places as it shall determine. 3.10 Directors 3.10.1 Appointment of Directors Unless otherwise determined by ordinary resolution, the number of Directors shall be not less than three but shall not be subject to any maximum in number. Directors may be appointed by ordinary resolution of Shareholders or by the Board. 3.10.2 No share qualification A Director shall not be required to hold any shares in the capital of the Company by way of qualification. 3.10.3 Annual retirement of Directors At every annual general meeting held after the first annual general meeting after the date of adoption of the Articles, all Directors at the date of notice of annual general meeting shall retire from office. 3.10.4 Remuneration of Directors The emoluments of any Director holding executive office for his services as such shall be determined by the Board, and may be of any description. The ordinary remuneration of the Directors who do not hold executive office for their services (excluding amounts payable under any other provision of the Articles) shall not exceed in aggregate £1,000,000 per year or such higher amount as the Company may from time to time by ordinary resolution determine. Subject thereto, each such Director shall be paid a fee for that service (which shall be deemed to accrue from day to day) at such rate as may from time to time be determined by the Board. In addition to any remuneration to which the Directors are entitled under the Articles, they may be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of the Board or committees of the Board, general meetings or separate meetings of the holders of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties. The Board may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any past or present Director or employee of the Company or any of its subsidiary undertakings or any body corporate associated with, or any business acquired by, any of them, and for any member of his family or any person who is or was dependent on him, and may contribute to any fund and pay premiums for the purchase or provision of any such benefit.

151 3.10.5 Permitted interests of Directors Subject to the provisions of the Act, and provided that he has disclosed to the Board the nature and extent of his interest (unless the circumstances referred to in section 177(5) or section 177(6) of the Act apply, in which case no such disclosure is required), a Director notwithstanding his office: 3.10.5.1 may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise (directly or indirectly) interested; 3.10.5.2 may act by himself or for his firm in a professional capacity for the Company (otherwise than as auditor), and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; 3.10.5.3 may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate in which the Company is (directly or indirectly) interested as a shareholder or otherwise or with which he has such relationship at the request or direction of the Company; and 3.10.5.4 shall not, by reason of his office, be accountable to the Company for any remuneration or other benefit which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such body corporate the acceptance, entry into or existence of which has been approved by the Board pursuant to Article 159 of the Articles or which he is permitted to hold or enter into by virtue of paragraph 3.10.5.1, 3.10.5.2 or 3.10.5.3. 3.10.6 Restrictions on voting Except as provided by the Articles, a Director shall not vote on any resolution of the Board concerning a matter in which he has an interest which can reasonably be regarded as likely to give rise to a conflict with the interests of the Company, unless his interest arises only because the resolution concerns one or more of the following matters: 3.10.6.1 the giving of a guarantee, security or indemnity in respect of money lent or obligations incurred by him or any other person at the request of, or for the benefit of, the Company or any of its subsidiary undertakings; 3.10.6.2 the giving of a guarantee, security or indemnity in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which the Director has assumed responsibility (in whole or part and whether alone or jointly with others) under a guarantee or indemnity or by the giving of security; 3.10.6.3 a contract, arrangement, transaction or proposal concerning an offer of shares, debentures or other securities of the Company or any of its subsidiary undertakings for subscription or purchase, in which offer he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate; 3.10.6.4 a contract, arrangement, transaction or proposal concerning any other body corporate in which he or any person connected with him is interested, directly or indirectly, and whether as an officer, shareholder, creditor or otherwise, if he and any persons connected with him do not to his knowledge hold an interest (as that term is used in sections 820 to 825 of the Act) representing 1 per cent. or more of either any class of the equity share capital (excluding any shares of that class held as treasury shares) of such body corporate (or any other body corporate through which his interest is derived) or of the voting rights available to members of the relevant body corporate (any such interest being deemed for the purpose of this Article to be likely to give rise to a conflict with the interests of the Company in all circumstances): 3.10.6.5 a contract, arrangement, transaction or proposal for the benefit of employees of the Company or of any of its subsidiary undertakings which does not award him

152 any privilege or benefit not generally accorded to the employees to whom the arrangement relates; and 3.10.6.6 a contract, arrangement, transaction or proposal concerning any insurance which the Company is empowered to purchase or maintain for, or for the benefit of, any Directors or for persons who include Directors. 3.10.7 Indemnity of officers Subject to the provisions of the Act, but without prejudice to any indemnity to which the person concerned may otherwise be entitled, every Director or other officer of the Company (other than any person (whether an officer or not) engaged by the Company as auditor) shall be indemnified out of the assets of the Company against any liability incurred by him for negligence, default, breach of duty or breach of trust in relation to the affairs of the Company, provided that this Article shall be deemed not to provide for, or entitle any such person to, indemnification to the extent that it would cause this Article, or any element of it, to be treated as void under the Act.

4. MANDATORY BIDS AND COMPULSORY ACQUISITION RULES RELATING TO ORDINARY SHARES Other than as provided by the City Code and Chapter 28 of the Companies Act, there are no rules or provisions relating to mandatory bids and/or squeeze out and sell out rules relating to the Company. 4.1 Mandatory bid The City Code applies to the Company. Under the City Code, if an acquisition of interests in shares were to increase the aggregate holding of the acquirer and its concert parties to interests in shares carrying 30 per cent. or more of the voting rights in the Company, the acquirer and, depending on the circumstances, its concert parties would be required (except with the consent of the Takeover Panel) to make a cash offer for the outstanding shares in the Company at a price not less than the highest price paid for interests in shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by any acquisition of interests in shares by a person holding (together with its concert parties) shares carrying between 30 per cent. and 50 per cent. of the voting rights in the Company if the effect of such acquisition were to increase that person’s percentage of the total voting rights in the Company. 4.2 Squeeze-out Under the Companies Act, if an offeror were to make an offer to acquire all of the shares in the Company not already owned by it and were to acquire 90 per cent. of the shares to which such offer related it could then compulsorily acquire the remaining 10 per cent. The offeror would do so by sending a notice to outstanding members telling them that it will compulsorily acquire their shares and then, six weeks later, it would deliver a transfer of the outstanding shares in its favour to the Company which would execute the transfers on behalf of the relevant members, and pay the consideration to the Company which would hold the consideration on trust for outstanding members. The consideration offered to the members whose shares are compulsorily acquired under this procedure must, in general, be the same as the consideration that was available under the original offer unless a member can show that the offer value is unfair. 4.3 Sell-out The Act also gives minority members a right to be bought out in certain circumstances by an offeror who has made a takeover offer. If a takeover offer related to all the shares in the Company and, at any time before the end of the period within which the offer could be accepted, the offeror held or had agreed to acquire not less than 90 per cent. of the shares, any holder of shares to which the offer related who had not accepted the offer could by a written communication to the offeror require it to acquire those shares. The offeror would be required to give any member notice of his/her right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority members to be bought out, but that period cannot end less than three months after the end of the acceptance period or, if later, three months from the date on which notice is served on members notifying them of their sell-out rights. If a member exercises his/her rights, the offeror is entitled and bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

153 5. DIRECTORS’ AND SENIOR MANAGEMENT’S INTERESTS 5.1 The interests in the share capital of the Company of the Directors and Senior Management (all of whom, unless otherwise stated, are beneficial or are interests of a person connected with a Director or a member of Senior Management) as at 11 March 2014 (the latest practicable date prior to printing of this Prospectus) were as follows: Following Reorganisation and immediately prior to Admission Immediately following Admission Percentage Percentage of issued of issued Number of Ordinary Number of Ordinary Director Ordinary Shares Share capital Ordinary Shares Share capital Andrew Thomas Higginson ...... 2,387,056 0.95% 1,432,234 0.57% James John McCarthy ...... 16,113,747 6.45% 9,668,249 3.87% Nicholas Roger Hateley ...... 7,012,296 2.80% 4,207,378 1.68% Richard Lancaster ...... 1,852,355 0.74% 1,111,413 0.44% Member of Senior Management David Coxon ...... 3,832,565 1.53% 2,299,539 0.92% Tim McDonnell ...... 3,506,138 1.40% 2,103,683 0.84% Craig Bales ...... 3,506,138 1.40% 2,103,684 0.84% Andy Monk ...... 2,983,855 1.19% 1,790,313 0.72% Mark Powell ...... 942,624 0.38% 754,100 0.30% Mike Gray ...... 942,624 0.38% 754,100 0.30% Jinder Jhuti ...... 246,970 0.10% 222,273 0.09% 5.2 No Director has or has had any interest in any transactions which are or were unusual in their nature or conditions or are or were significant to the business of the Group or any of its subsidiary undertakings and which were effected by the Group or any of its subsidiaries during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed. 5.3 Other than as set out below, there are no outstanding loans or guarantees granted or provided by any member of the Group to or for the benefit of any of the Directors. Certain Directors have outstanding loans owed to Poundland Limited which were used to facilitate the Directors’ acquisition of shares in PGHL, and which are expected to be repaid in full on Admission. The amounts due under the loans are £12,911.15, £6,456.50, £102,319.90 and £2,989.60 owed by James McCarthy, Nicholas Hateley, Richard Lancaster and Andrew Higginson, respectively. 5.4 Subject to the arrangements set out in paragraph 9 below, in so far as the Directors are aware, the persons set out below will immediately prior to, and following, Admission, be interested in 3 per cent. or more of the Company’s issued share capital, assuming no exercise of the Over-allotment Option: Following Reorganisation and Immediately following immediately prior to Admission Admission Percentage Percentage of issued of issued Number of Ordinary Number of Ordinary Shareholders Ordinary Shares Share capital Ordinary shares Share capital Warburg Pincus Private Equity X, L.P...... 192,522,954 77.0% 91,805,402 36.7% James John McCarthy ...... 16,113,747 6.45% 9,668,249 3.87% Save as disclosed above, in so far as is known to the Directors, there is no other person who is or will be immediately following Admission, directly or indirectly, interested in 3 per cent. or more of the issued share capital of the Company, or of any other person who can, will or could, directly or indirectly, jointly or severally, exercise control over the Company. The Directors have no knowledge of any arrangements the operation of which may at a subsequent date result in a change of control of the Company. None of the Company’s major shareholders have or will have different voting rights attached to the shares they hold in the Company.

154 5.5 The following table sets out the interests of each of the Selling Shareholders (all of which, unless otherwise stated, are beneficial or are interests of a person connected with the Selling Shareholder), prior to the Global Offer and the number of Ordinary Shares such Selling Shareholder is selling in the Global Offer. The business address of each such Selling Shareholder, save as noted in the following table, is Wellmans Road, Willenhall, West Midlands WV13 2QT. Ordinary Shares owned following the Reorganisation and Ordinary Shares owned immediately prior to Ordinary Shares to be immediately following Admission sold in the Global Offer Admission Selling Shareholder No. % No. % No. % WP X...... 192,522,954 77.0% 100,717,552(1) 80.6% 91,805,402 36.7% Warburg Pincus X Partners, L.P...... 6,159,144 2.5% 3,222,129(1) 2.6% 2,937,015 1.2% Colin Smith ...... 2,114,705 0.8% 845,882 0.7% 1,268,823 0.5% David Coxon ...... 3,832,565 1.5% 1,533,026 1.2% 2,299,539 0.9% George Oldridge .... 326,427 0.1% 130,570 0.1% 195,857 0.1% James McCarthy .... 16,113,747 6.4% 6,445,498 5.2% 9,668,249 3.9% Nicholas Hateley .... 7,012,296 2.8% 2,804,918 2.2% 4,207,378 1.7% Timothy McDonnell . . 3,506,138 1.4% 1,402,455 1.1% 2,103,683 0.8% Andrew Monk ...... 2,983,855 1.2% 1,193,542 1.0% 1,790,313 0.7% Craig Bales ...... 1,753,069 0.7% 701,227 0.6% 1,051,842 0.4% Mark Powell ...... 942,624 0.4% 188,524 0.2% 754,100 0.3% Michael Gray ...... 942,624 0.4% 188,524 0.2% 754,100 0.3% Richard Lancaster . . . 1,852,355 0.7% 740,942 0.6% 1,111,413 0.4% Andrew Higginson . . . 2,387,056 1.0% 954,822 0.8% 1,432,234 0.6% Jinder Jhuti ...... 246,970 0.1% 24,697 0.0% 222,273 0.1% Rowena Bales ...... 1,753,069 0.7% 701,227 0.6% 1,051,842 0.4% ESOP Trustee ...... 493,426 0.2% 493,426 0.4% — — ESOP Trustee as nominee ...... 5,056,976 2.0% 2,711,039 2.2% 2,345,937 0.9% Total ...... 250,000,000 100.0% 125,000,000 100.0% 125,000,000 50.0%

Notes: (1) Assuming no exercise of the Over-allotment Option. If the Over-allotment Option is exercised in full, WP X will have sold a further 18,168,750 Ordinary Shares, representing 7.27 per cent. of the Company’s issued share capital and Warburg Pincus X Partners, L.P. will have sold a further 581,250 Ordinary Shares, representing 0.23 per cent. of the Company’s issued share capital.

6. DIRECTORS’ TERMS OF EMPLOYMENT 6.1 The Directors and their functions are set out in Part 6—‘‘Directors, Senior Management and Corporate Governance’’. On 27 February 2014 each of the Executive Directors entered into a new service agreement with Poundland Limited and the Chairman and non-independent Non- Executive Directors entered into new letters of appointment with the Company. The agreements are conditional on, and become effective from, Admission. 6.2 With effect from 18 February 2014 each of the independent Non-Executive Directors entered into letters of appointment with the Company. 6.3 Executive Directors 6.3.1 On and from the date of Admission, Jim McCarthy will receive a salary of £440,000 per annum and each of Nick Hateley and Richard Lancaster will receive a salary of £325,000 per annum. 6.3.2 From Admission, each Executive Director will also be eligible to participate in the Company’s cash bonus scheme, Performance Share Plan and Save-As-You-Earn scheme (described at paragraph 7 of this Part 12 below). In respect of each Executive Director, Poundland Limited contributes 15 per cent. of his basic salary to a personal pension

155 scheme on his behalf or the Executive Director may take a cash allowance in lieu of pension. 6.3.3 Each Executive Director’s service agreement is terminable by either party on 12 months’ notice. Poundland Limited, as the employer under the service agreements, is entitled to terminate the Executive Directors’ employment by payment of a cash sum in lieu of notice equal to 118 per cent. of salary for any unexpired portion of the notice period (comprising 100 per cent. in respect of of basic salary, 15 per cent. in respect of pension contributions and 3 per cent. in respect of other benefits). The payment in lieu of notice can, at Poundland Limited’s discretion, be paid as a lump sum or in equal monthly instalments over the notice period. There is a mechanism in the agreement to reduce the instalments where the Executive Director commences alternative employment during the notice period. 6.3.4 For the financial year starting 31 March 2014, each Executive Director will be eligible for a non-pensionable annual bonus with a maximum bonus opportunity of 100 per cent. of his annual basic salary. Any bonus is discretionary and subject to the achievement of performance conditions, which will be set by the remuneration committee and are expected to be primarily linked to the Company’s financial performance. Consistent with best practice, malus and clawback provisions may be operated at the discretion of the remuneration committee in respect of awards granted under the bonus plan in certain circumstances. The terms of the bonus plan that applies to any bonus that is payable in respect of the financial year ending 30 March 2014 will be unaffected by Admission. 6.3.5 Each Executive Director also receives a company car or an annual car allowance, private health insurance for himself and his spouse and dependent children, life insurance, income protection insurance, accidental death insurance and a death in service pension payable in respect of certain financial dependants. Each Executive Director is entitled to reimbursement of reasonable expenses incurred by him in the performance of his duties. 6.3.6 Each Executive Director is entitled to 30 days’ holiday per year plus UK bank and public holidays. 6.3.7 Each Executive Director is subject to a confidentiality undertaking without limitation in time and to non-competition, non-solicitation of employees and non-interference with suppliers restrictive covenants for a period of 12 months (less any period spent on garden leave) after the termination of his employment arrangements. 6.3.8 The Company has customary directors’ and officers’ indemnity insurance in place in respect of each of the Executive Directors. The Company has entered into a qualifying third party indemnity (the terms of which are in accordance with the Companies Act 2006) with each of the Executive Directors. 6.3.9 Pursuant to the Companies Act 2006, the Executive Directors’ remuneration will be subject to shareholder approval. In the event that such approval is not obtained when required, the service agreements provide that the Executive Directors will have no entitlement to compensation or damages in respect of loss suffered as a consequence. 6.4 Chairman and Non-Executive Directors 6.4.1 On and from Admission, Andrew Higginson is entitled to receive an annual fee of £200,000. His appointment as Chairman is terminable by either party giving to the other three months’ written notice or at any time in accordance with the articles of association of the Company or the Act. His letter of appointment states that his appointment is expected to last at least three years. His appointment is subject to annual re-election by the Company in general meeting. The Company will contribute £15,000 per year towards secretarial support incurred by him. He is subject to various restrictions on activities during his appointment and to non-compete and non-solicitation of employees restrictions for the 12 months after its termination. 6.4.2 The appointments of Darren Shapland, Trevor Bond, Tea Colaianni, Grant Hearn, Paul Best and Stephen Coates are for initial terms of three years. They are subject to annual re-election by the Company in general meeting. Their appointments may be terminated at

156 any time upon written notice or in accordance with the articles of association of the Company or the Act or upon their resignations. 6.4.3 Darren Shapland, Trevor Bond, Tea Colaianni and Grant Hearn are entitled to an annual fee of £45,000. Darren Shapland is entitled to an additional annual fee of £10,000 for his role as Senior Independent Director. Trevor Bond is entitled to an additional fee of £5,000 as Chairman of the audit committee. Tea Colaianni is entitled to an annual fee of £5,000 as Chairman of the remuneration committee and Grant Hearn is entitled to an additional £5,000 as Chairman of the governance and nominations committee. Paul Best and Stephen Coates are not entitled to an annual fee. 6.4.4 The Chairman and the Non-Executive Directors are entitled to reimbursement of reasonable expenses. 6.4.5 The Chairman and the Non-Executive Directors are not entitled to receive any compensation on termination of their appointment and are not entitled to participate in the Company’s share, bonus or pension schemes. 6.4.6 The Company has customary directors’ and officers’ indemnity insurance in place in respect of the Chairman and the Non-Executive Directors. The Company has entered into a qualifying third party indemnity (the terms of which are in accordance with the Act) with the Chairman and the Non-Executive Directors. 6.4.7 The Chairman and the Non-Executive Directors are subject to confidentiality undertakings without limitation in time. 6.4.8 Pursuant to the Act, the Chairman’s and the Non-Executive Directors’ remuneration will be subject to shareholder approval. In the event that such approval is not obtained when required, the letters of appointment provide that the Non-Executive Directors will have no entitlement to compensation or damages in respect of loss suffered as a consequence. 6.4.9 Save as set out above, there are no existing or proposed service agreements or letters of appointment between the Directors and any member of the Group. 6.5 Forward-looking Remuneration Policy 6.5.1 In anticipation of Admission, there was a review of the Group’s remuneration policy for senior management (which includes the three Executive Directors and any employees nominated by the Board to be members of the Company’s executive committee from time to time (the ‘‘Executive Committee’’)) in order to ensure that it is appropriate for the listed company environment. In undertaking this review, independent, specialist advice was sought. 6.5.2 The aim of the remuneration policy is to attract, retain and motivate high calibre senior management and to focus them on the delivery of the Group’s strategic and business objectives, to promote a strong and sustainable performance culture, to incentivise high growth and to align the interests of Executive Directors and members of the Executive Committee with those of shareholders through encouraging equity ownership. In promoting these objectives the policy aims to ensure that no more than is necessary is paid and has been structured so as to adhere to the principles of good corporate governance and appropriate risk management. A further aim of the remuneration policy is to encourage widespread equity ownership across the Group. 6.5.3 In connection with these aims, the Company has adopted, conditional on Admission, several new share plans. These are: the Poundland Performance Share Plan; the Poundland Restricted Share Plan; the Poundland Company Share Option Plan; and the Poundland Save As You Earn Option Plan. An overview of how these plans operate is set out at paragraph 7 below. 6.5.4 Taking account of the previous remuneration policy, the experience and calibre of the senior management team, salaries and packages applying post Admission will be broadly in line with those of UK listed companies of a similar size and complexity. The remuneration arrangements have been structured with due consideration of both best practice and market practice for UK listed companies. The primary benchmark for this

157 analysis is FTSE 250 companies (as the Company is expected to be a member of this index following Admission), together with specific practice in selected listed retail companies. 6.5.5 Whilst all of the existing Executive Directors and members of the Executive Committee will, at the time of Admission, have shareholdings worth in excess of their salaries, the remuneration committee wishes to ensure that the remuneration policy is fit for purpose in the event of new senior hires. Accordingly, with effect from Admission, the Company has adopted share ownership guidelines under which Executive Directors are required to build or maintain (as relevant) a shareholding in the Company equivalent in value to 100 per cent. of their base salaries. Ordinary Shares held by individuals on Admission, together with any Ordinary Shares acquired following Admission, will count towards the threshold. 6.6 Directors’ and Senior Management’s Remuneration 6.6.1 Under the terms of their service contracts, letters of appointment and applicable incentive plans, in the 2013 financial year, the aggregate remuneration and benefits to the Directors of the Company and the Senior Management of the Group who served during the 2013 financial year, consisting of 13 individuals, was £2,800,368. 6.6.2 Under the terms of their service contracts, letters of appointment and applicable incentive plans, in the 2013 financial year, the Directors of the Company were remunerated as set out below:

Annual Other Salary Benefits Date of Joining Name Position (£) (£) the Group Andrew Thomas Higginson . Non-Executive Chairman 93,750(1) — July 2012 James John McCarthy .... Chief Executive Officer 454,250 172,124 August 2006 Nicholas Roger Hateley . . . Chief Financial Officer 225,000 140,014 November 2006 Richard Lancaster ...... Executive Director 236,250(2) 45,785 July 2012 Paul Best ...... Non-Executive Director — — April 2010 Stephen John Coates ..... Non-Executive Director — — April 2010 Darren Shapland ...... Independent Non-Executive — — February 2014 Director Trevor Bond ...... Independent Non-Executive — — February 2014 Director Teresa Colaianni ...... Independent Non-Executive — — February 2014 Director Grant Hearn ...... Independent Non-Executive — — February 2014 Director

(1) Mr Higginson’s salary is stated as from July 2012 when he joined Poundland. His full year salary is £125,000. (2) Mr Lancaster’s salary is stated as from July 2012 when he joined Poundland. His full year salary is £315,000. 6.6.3 There is no arrangement under which any Director has waived or agreed to waive future emoluments nor has there been any waiver of emoluments during the financial year immediately preceding the date of this Prospectus. 6.7 Directors’ and Senior Management’s current and past directorships and partnerships Set out below are the directorships (unless otherwise stated) and partnerships held by the Directors and members of Senior Management (other than, where applicable, directorships held in the Company and other members of the Group), in the five years prior to the date of this Prospectus:

Name Current directorships/partnerships Past directorships/partnerships Andrew Thomas Higginson . . British Sky Broadcasting Group Plc; Tesco plc; Tesco Coral (GP) Limited; N Brown Group Plc; The McCurrach Tesco Jade (GP) Limited; Folderpage Group Limited; The Rugby Football Limited; Delamare Road Services Union; Woolworths (S. Africa); VDC Centre Limited; Phonematch Limited; Trading Limited; Cornthwaite Seven TGP (Partnership Nominee) Limited; Limited Buyright (London) Limited; George E.H. Randall (Strood) Limited; Tesco

158 Name Current directorships/partnerships Past directorships/partnerships Atrato (GP) Limited; Tesco Passaic (GP) Limited; Tesco Navona (GP) Limited; Tesco Tech Support Limited; Tesco Personal Finance Compare Limited; Tesco International Internet Retailing Limited; Tesco Mobile Limited; Tesco Personal Finance Plc; Tesco Personal Finance Group Limited; Sarcon (No.239) Limited; Tesco Indigo (GP) Limited; Whitecastle Properties Limited; Honiton Wholesale Supplies Limited; Halesworth SPV Limited; Armitage Finance Unlimited; Motorcause Limited; Orpington (Station Road) Management Company Limited; Tesco Kirkby (General Partner) Limited; Tesco Maintenance Limited; Orpington (Station Road) Limited; Tesco Property Holdings (No.2) Limited; NPL (Hardgate) Limited; Wm. Low Supermarkets Limited; Faraday Properties Limited; Lowfoods Limited; Tesco Capital No.2 Limited; Tesco Aqua (GP) Limited; Tesco Purple (GP) Limited; Tesco Blue (GP) Limited; Tesco Fuchsia (GP) Limited; Oakwood Distribution Limited; Tesco Pink (GP) Limited; Tesco Property Finance 1 Holdco Limited; Tesco Violet (GP) Limited; Tesco Red (GP) Limited; Tesco Grey (GP) Limited; Kansas Transportation Limited; Tesco Property (Sparta Nominees) Limited; Tesco Property (Nominees) (No.4) Limited; Tesco Property (Nominees) (No.3) Limited; Launchtable Limited; Buttoncase Limited; Buttoncable Limited; Launchgrain Limited; Tesco (Foxtrot 2) Limited; Tesco (Foxtrot 1) Limited; Tesco (Tango) Limited; Tapesilver Limited; Spen Hill Developments (Holdings) Ltd; Spen Hill Developments (Tonbridge) Ltd; Spen Hill Developments (Portishead) Ltd; Worple Road Plc; Tesco Property Partner (No.1) Limited; Tesco Home Shopping Limited; Tesco Distribution Holdings Limited; Tesco Overseas Investments Limited; Tesco International Services Limited; Tesco Distribution Limited; Tesco Hungary (Holdings) Limited; Tesco Employees’ Share Scheme Trustees Limited; Tesco Overseas (Holdings) Limited; Tesco Fuel Limited; M & W Limited; One Stop Convenience Stores Limited; T & S Management Services Limited; Dunnhumby Limited; Tesco Property Holdings Limited; Gibbs Newsagents Limited; Tesco (Overseas) Limited; Alfred Preedy & Sons; (Trustees) Limited; T & S Stores Limited; Tesco (Yorkshire) Limited; Tesco Dispensing Limited; Bugden Limited; Tesco Estates Limited; TPF ATM Services Limited; Sanders Supermarkets Limited; J.E. Cohen & Company Limited; Anthony Heagney Limited; Gibbs News Limited; Comar Limited; Adsega

159 Name Current directorships/partnerships Past directorships/partnerships Limited; Tesco Stores Limited; Alfred Preedy & Sons Limited; Harrow Stores (Watford) Limited; Tesco (London) Ltd; Stewarts Supermarkets Limited; Laws Stores Limited; Tesco Holdings Limited; One Stop Community Stores Limited; Dillons Newsagent Limited; T & S Properties Limited; Crazy Prices; Daily Wrap Produce Limited; Kingsway Fresh Foods Limited; Tesco Passaic PI Propco Limited; Tesco Barbers Wood Limited; Tesco Navona PI Propco Limited; J.D. Williams & Company Limited; Parker Capital Limited; Acquisition 1234 Plc; Royal Grammar School High Wycombe; St James Developments (City) Limited; James John McCarthy ..... Wynnstay Group plc Dawson Holdings Ltd Nicholas Roger Hateley .... N/A N/A Richard Lancaster ...... N/A Safeway Stores Limited Paul Best ...... INEA S.A. Ziggo N.V.; Zesko Holding B.V.; PT Platinum Public Limited (formerly IMB Group Holdings Limited); Explorer Bidco Limited; Explorer Midco Limited; Explorer Topco Limited; Stichting Even Investments (Sweet Equity); Stichting Even Investments (Strip) Stephen John Coates ...... Survitec Group (Finance 1) Limited; Solution Acquisitions Limited; Survitec Group (Cayman Islands) Bangleflame Limited Limited; Clondalkin Group (Holdings) B.V. Darren Shapland ...... Ladbrokes plc; Warlingham School Carpetright plc; Carpet Depot Limit; Carpet Express Limited; Carpetright (Torquay) Limited; Carpetright at Home Limited; Carpetright Card Services Limited; Carpetright of London Limited; Carpetright Purfleet Holdings Limited; Carpetright Purfleet Limited; Carpetworld Limited; Carpetworld Manchester Limited; Harris Beds Limited; Harris Carpets At Home Limited; Harris Carpets Direct Limited; Harris Carpets Limited; Harris Furnishings Limited; Harriscarpetdirect.com Limited; In-house Carpets Limited; Mays Carpets Limited; Mays Holdings Limited; Melford Commercial Properties Ltd.; New Carpet Express Limited; Premier Carpets Limited; Rugright (EU) Limited; Sleepright (EU) Limited; Sleepright UK Limited; Storey Carpets Limited; Woodright Limited; Sainsbury’s Bank PLC; Sainsbury’s Supermarkets Ltd; J Sainsbury PLC; JS Information Systems Limited Trevor Bond ...... N/A Cadbury UK Limited; Mondelez UK Confectionary Production Limited; The Old Leo Company Limited; Trebor Bassett Limited; Kraft Foods CEEMA CmbH; Mondelez Europe CmbH; Cadbury Schweppes Ireland Limited; Cadbury Schweppes Treasury International; Cadbury Schweppes Treasury Services

160 Name Current directorships/partnerships Past directorships/partnerships Teresa Colaianni ...... Alexandra Palace Trading Limited N/A Grant Hearn ...... Endell Group Holdings Limited TLLC Group Holdings Limited; TLLC Holdings2 Limited; TLLC Holdings3 Limited; TLLC Holdings4 Limited; TLLC Holdings5 Limited; TLLC Limited; Stewart Watt Limited; TLLC LevPropco1 Limited; TLLC LevPropco5 Limited; TLLC LevPropco7 Limited; TLLC LevPropHoldco1 Limited; TLLC LevPropHoldco2 Limited; TLLC Regent Palace Limited; TLLC Spareco Limited; Travelodge Hotels Limited; TLLC Trustees Limited; British Hospitality Association; Full Moon Holdco 2 Limited; Full Moon Holdco 3 Limited; Full Moon Holdco 4 Limited; Full Moon Holdco 5 Limited; Full Moon Holdco 6 Limited; Full Moon Holdco 3A Limited; Visit London Limited; London & Partners Limited; Travelodge Limited; Thame and London Limited; TLLC Guarantee Limited; Anchor Hotels Limited; Happy Eater Limited; Inhoco 3220 Limited; Kelly’s Kitchen Limited; TLLC Bridgeco8 Limited; TLLC Bridgeco9 Limited; TLLC Devco1 Limited; TLLC Hotels Limited; TLLC LevPropco3 Limited; TLLC LevPropco4 Limited; Waseley Fourteen Limited; Waseley Ten Limited; Waseley Twelve Limited; TLLC SparePropco Limited David Coxon ...... English Character Pubs Ltd N/A Tim McDonnell ...... N/A N/A Craig Bales ...... Chapel Lane Investments Ltd N/A Andy Monk ...... N/A N/A Mark Powell ...... N/A Fat Face Ltd; Fat Face Foundation Mike Gray ...... N/A N/A Jinder Jhuti ...... N/A N/A 6.7.1 Within the period of five years preceding the date of this Prospectus, none of the Directors or members of Senior Management: (i) has had any convictions in relation to fraudulent offences; (ii) save as described in 6.7.2 below, has been a member of the administrative, management or supervisory bodies or director or senior manager (who is relevant in establishing that a company has the appropriate expertise and experience for management of that company) of any company at the time of any bankruptcy, receivership or liquidation of such company; or (iii) has received any official public incrimination and/or sanction by any statutory or regulatory authorities (including designated professional bodies) or has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of affairs of a company. 6.7.2 Grant Hearn was a director of Visit London Limited, a regional government tourist body, between January 2008 and January 2011. Visit London Limited went into administration in April 2011. The administration ceased on 13 September 2011 and liquidators were appointed under a creditors’ voluntary liquidation. Visit London Limited had over £10 million in liabilities when administrators were appointed in April 2011.

161 7. EMPLOYEE SHARE PLANS 7.1 Following Admission, the Company intends to operate the following employee share plans: the Poundland Performance Share Plan (‘‘PSP’’), the Poundland Restricted Share Plan (‘‘RSP’’) and, subject to HMRC approval, the Poundland Company Share Option Plan (‘‘CSOP’’) and the Poundland Save As You Earn Share Option Plan (‘‘SAYE’’), all of which were adopted by the Board on 27 February 2014, subject to Admission. The PSP, the RSP, the SAYE and the CSOP are proposed to be introduced for the purpose of incentivising and motivating Poundland’s employees following Admission.

Details of initial awards to be made 7.2 The remuneration committee intends to make the following initial awards shortly after Admission under the employee share plans:

PSP 7.3 Initial awards under the PSP will be made to James McCarthy in respect of Ordinary Shares with a value of 150 per cent. of annual basic salary and initial PSP awards to Nick Hateley and Richard Lancaster will be made in respect of Ordinary Shares with a value of 125 per cent. of annual basic salary. The value of PSP awards to be made initially to the six current members of the Executive Committee shall be set at a lower level than for that of Nick Hateley and Richard Lancaster. 7.4 The initial PSP awards will be subject to a performance condition measuring the Company’s underlying earnings per share (‘‘EPS’’) performance. The EPS performance measure will compare EPS for the financial year ended 30 March 2014 and EPS for the year ending 26 March 2017. 25 per cent. of an initial PSP Award will vest for threshold compound annual EPS growth of 19 per cent. Initial PSP awards will not vest for EPS below this threshold. 50 per cent. of initial PSP awards will vest for compound annual EPS growth of 26 per cent. and 100 per cent. of an initial PSP award will vest for compound annual EPS growth of 30 per cent. with incremental vesting levels between these three targets.

RSP 7.5 Initial awards under the RSP will be made to approximately 35 senior managers of the Company (excluding the Executive Directors and members of the Executive Committee). RSP Awards may also be made to other eligible employees during 2014 when permitted under the RSP rules. 7.6 The initial RSP awards will not be subject to performance conditions but participants will normally need to remain in employment during the three year period from the date of grant for the award to vest.

CSOP 7.7 Initial options to be granted under the CSOP will be HMRC approved CSOP options and will be granted to approximately 550 selected management grade employees (excluding Executive Directors and members of the Executive Committee). 7.8 Initial CSOP Options will not be subject to the satisfaction of a performance condition.

SAYE 7.9 The Company currently intends that following Admission, but after its announcement of annual results, it will invite all of the Company’s eligible employees in the UK and Ireland to apply for options to acquire ordinary Shares in three year’s time.

Summary of employee share plans 7.10 The principal features of the employee share plans are summarised below.

162 THE PERFORMANCE SHARE PLAN Overview of the PSP 7.11 The PSP was adopted by the Board on 27 February 2014, subject to Admission, and provides for two types of share incentive to be granted (each a ‘‘PSP Award’’): 7.11.1 a conditional share award, which entitles a participant to receive Ordinary Shares for no payment; and 7.11.2 a share option to acquire Ordinary Shares at a nil exercise price. 7.12 PSP Awards are not pensionable and may be granted over newly issued Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market. 7.13 The PSP will terminate on the 10th anniversary of its adoption but the rights of existing participants at that point will not be affected.

Eligibility 7.14 All of the Company’s employees, including its Executive Directors and employees of the Company’s subsidiaries, will be eligible to participate in the PSP at the discretion of the remuneration committee.

Grant of PSP Awards 7.15 Subject to any applicable dealing restrictions, the remuneration committee may grant PSP Awards under the PSP at any time while the Company is listed on the London Stock Exchange. If the Company’s Ordinary Shares are admitted to trading on the Official List of the London Stock Exchange, grants may be made during the period of 42 days commencing on either (i) the date of that admission, (ii) the announcement of the Company’s results for any period or (iii) at such other time as the remuneration committee considers that exceptional circumstances exist that justify a grant. 7.16 No payment will be required for the grant of a PSP Award. PSP Awards are personal to the participant and may not be transferred, except on death.

Individual limits 7.17 The remuneration committee will determine the appropriate level of grant for participants. However, the maximum number of Ordinary Shares under PSP Awards granted to a participant in any financial year will not normally have an aggregate market value, as measured at the date of grant, exceeding 200 per cent. of the participant’s base salary. In exceptional circumstances, such as recruitment or retention, a limit of up to 300 per cent. of annual base salary will apply. 7.18 Market value will be based on the closing middle market quotation for Ordinary Share as derived from the Official List of the London Stock Exchange for the dealing day immediately preceding the date of grant.

Dividend enhancement 7.19 The remuneration committee may elect to increase the number of Ordinary Shares which vest under a PSP Award or pay a cash enhancement to a participant to reflect the value of dividends paid on Ordinary Shares during the vesting period.

Performance conditions 7.20 PSP Awards will be subject to performance conditions imposed by the remuneration committee at the date of grant. Performance conditions will generally be measured over a period of three years. The extent to which the performance conditions are satisfied will determine how many (if any) of the shares under a PSP Award a participant is entitled to acquire. Performance conditions will not be capable of being retested, so that any proportion of a PSP Award which does not vest on the normal vesting date will lapse. 7.21 The specific performance conditions applicable to a grant of a PSP Award will be determined by the remuneration committee at the date of grant. As a general principle performance conditions

163 will be demanding and stretching. Vesting levels will be determined on a sliding scale by reference to achievement of the performance conditions. The performance conditions that will apply to initial PSP Awards are set out at paragraph 7.4 above. 7.22 The remuneration committee may vary the performance conditions applying to existing PSP Awards if an event occurs which results in the conditions no longer being a fair measure of performance provided that in the case of awards granted to Executive Directors the new conditions are, in the reasonable opinion of the remuneration committee, materially no more or less difficult to satisfy than the original conditions.

Vesting of PSP Awards 7.23 Unless the remuneration committee chooses to impose an additional holding period for PSP Awards, the Awards will usually vest on the third anniversary of the date of grant, subject to satisfaction of the applicable performance conditions. Vested share awards will be released to participants within 30 days of the vesting date. Vested share options will be exercisable within the six month period after the vesting date and released to participants automatically within 30 days of the date on which the option is exercised. In certain circumstances, the PSP Awards may be satisfied (in whole or in part) in cash. 7.24 PSP Awards will normally only vest if the participant remains in employment with the Company or one of its subsidiaries. If a participant leaves employment during the vesting period PSP Awards will normally lapse. 7.25 However, if the reason for leaving is death, injury, disability, ill-health, redundancy or any other reason at the remuneration committee’s discretion, PSP Awards will not lapse but will vest on the normal vesting date, to the extent that the remuneration committee determines that the performance conditions have been satisfied over the full performance period but subject to a time pro rating reduction (based on the total number of complete months from the date of grant to the cessation of employment relative to a period of 36 months). Alternatively, the remuneration committee may, in its absolute discretion, determine that PSP Awards should vest on the date of cessation of employment, subject to the satisfaction of the performance conditions at that date and to a time pro rating reduction. In either circumstance, the remuneration committee may determine that the pro rating reduction should not apply at all or should apply to a lesser extent.

Clawback 7.26 The Company has the right, before a PSP Award vests, to reduce the number of Ordinary Shares over which the award was granted in certain circumstances, including on a material misstatement of audited accounts or in the event of significant reputational damage to the Company. The Company also has the right, in those same circumstances, to require the transfer back to the Company of any overpayment made to or benefit received by a participant on the vesting of a PSP Award at any time during the three year period after the vesting date.

Variation of capital 7.27 In the event of any variation in the Company’s share capital (including a rights issue or any sub-division or consolidation of the Company’s share capital), a capital distribution, demerger or special dividend, the remuneration committee may adjust the number of Ordinary Shares under a PSP Award.

Corporate events 7.28 In the event of a change of control or voluntary winding-up, unvested PSP Awards will vest to the extent that the performance conditions have been satisfied at the time of the relevant event but subject to a time pro rating reduction (based on the number of complete months from the date of grant to the date of the relevant event relative to a period of 36 months). The remuneration committee may determine that the pro rating reduction should not apply at all or should apply to a lesser extent where it considers that this is appropriate. PSP Awards granted in the form of options will be deemed to have been automatically exercised on the relevant vesting date. The remuneration committee may also require PSP Awards to be exchanged for equivalent awards over shares in the acquiring company.

164 Amendments 7.29 The remuneration committee may amend the PSP in any respect. However, provisions governing eligibility requirements, the limits on the number of Ordinary Shares available for PSP Awards, the maximum entitlement of participants, the basis for determining a participant’s entitlement and the adjustment of PSP Awards following a variation of the Company’s share capital may not be altered to the advantage of participants without the prior approval of shareholders in general meeting (with the exception of minor amendments made to benefit the administration of the PSP, to take account of a change in legislation or to obtain or maintain favourable (or avoid unfavourable) tax, exchange control or regulatory treatment for eligible employees, participants or for any company in the Group). 7.30 The remuneration committee may establish sub-plans to enable PSP Awards to be granted to employees in different jurisdictions provided the rules are modified only in so far as is necessary to take account of local tax, exchange control or securities law.

THE RESTRICTED STOCK PLAN Overview of the RSP 7.31 The RSP was adopted by the Board on 27 February 2014, subject to Admission and provides for awards over Ordinary Shares to be granted subject only to continued employment (‘‘RSP Awards’’). RSP Awards will not be subject to the satisfaction of performance conditions. RSP Awards are not pensionable. 7.32 Other than initial RSP Awards (described above at 7.5), the remuneration committee’s intention is that RSP Awards will only be made in special or unusual circumstances, such as where it may aid the recruitment of an individual or is necessary and/or desirable for the retention of a key employee. 7.33 RSP Awards are not pensionable and may be granted over newly issued Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market. 7.34 The RSP will terminate on the 10th anniversary of its adoption but the rights of existing participants at that point will not be affected.

Eligibility 7.35 All of the Company’s employees (excluding the Executive Directors and any member of the Executive Committee) and those of the Company’s subsidiaries, will be eligible to participate in the RSP at the discretion of the remuneration committee.

Grant of RSP Awards 7.36 Subject to any applicable dealing restrictions, the remuneration committee may grant RSP Awards under the RSP at any time while the Company is listed on the London Stock Exchange. If the Company’s Ordinary Shares are admitted to trading on the Official List of the London Stock Exchange, grants may be made during the period of 42 days commencing on either (i) the date of that admission, (ii) the announcement of the Company’s results for any period or (iii) at such other time as the remuneration committee considers that exceptional circumstances exist that justify a grant. 7.37 No payment will be required for the grant of a RSP Award. Vesting of RSP Awards will not be subject to performance conditions.

Individual limits 7.38 The remuneration committee will determine the appropriate level of grant of RSP Awards for participants. However, the maximum number of Ordinary Shares under RSP Awards granted to a participant in any financial year will not have an aggregate market value, as measured at the date of grant, exceeding 50 per cent. of the participant’s base salary. In exceptional circumstances, such as on a recruitment or to aid retention, a limit of up to 100 per cent. of annual base salary will apply.

165 7.39 Market value will be based on the closing middle market quotation for Ordinary Share as derived from the Official List of the London Stock Exchange for the dealing day immediately preceding the date of grant.

Dividend enhancement 7.40 The remuneration committee may elect to increase the number of Ordinary Shares which vest under a RSP Award or pay a cash enhancement to a participant to reflect the value of dividends paid on Ordinary Shares during the vesting period.

Vesting of RSP Awards 7.41 The RSP Awards will usually vest three years after the date of grant. Vested share awards will be released to participants automatically within 30 days of the vesting date. 7.42 RSP Awards will normally only vest if the participant remains in employment with the Company or any of its subsidiaries. If a participant leaves employment during the vesting period, unvested RSP Awards will normally lapse. 7.43 However, if the reason for leaving is death, injury, disability, ill-health, redundancy or any other reason at the remuneration committee’s discretion, RSP Awards will not lapse but will vest on the termination date, subject to a time pro rating reduction (based on the total number of complete months from the date of grant to the cessation of employment relative to a period of 36 months). Alternatively, the remuneration committee may, in its absolute discretion, determine that RSP Awards should vest on the normal vesting date, subject to a time pro rating adjustment. In either circumstance, the remuneration committee may determine that the pro rating reduction should not apply at all or should apply to a lesser extent.

Clawback 7.44 The Company has the right, before a RSP Award vests, to reduce the number of Ordinary Shares over which the award was granted in certain circumstances, including on a material misstatement of audited accounts or in the event of significant reputational damage to the Company. The Company also has the right, in those same circumstances, to require the transfer back to the Company of any overpayment made to or benefit received by a participant on behalf of a RSP Award at any time during the three year period after the vesting date.

Variation of capital 7.45 In the event of any variation in the Company’s share capital (including a rights issue or any sub-division or consolidation of the Company’s share capital), a capital distribution, demerger or special dividend, the remuneration committee may adjust the number of Ordinary Shares under a RSP Award.

Corporate events 7.46 In the event of a change of control or voluntary winding-up, unvested RSP Awards will vest subject to a time pro rating reduction based on the number of complete months from the date of grant to the date of the relevant event relative to a period of 36 months. The remuneration committee may determine that the pro rating reduction should not apply at all or should apply to a lesser extent where it considers that this is appropriate. The remuneration committee may also require RSP Awards to be exchanged for equivalent awards over shares in any acquiring company.

Amendments 7.47 The remuneration committee may amend the RSP in any respect. However, provisions governing eligibility requirements, the limits on the number of Ordinary Shares available for RSP Awards, the maximum entitlement of participants, the basis for determining a participant’s entitlement and the adjustment of RSP Awards following a variation of the Company’s share capital may not be altered to the advantage of participants without the prior approval of shareholders in general meeting (with the exception of minor amendments made to benefit the administration of the RSP, to take account of a change in legislation or to obtain or maintain favourable (or avoid

166 unfavourable) tax, exchange control or regulatory treatment for eligible employees, participants or for any company in the Group). 7.48 The remuneration committee may establish sub-plans to enable RSP Awards to be granted to employees in different jurisdictions provided the rules are modified only in so far as is necessary to take account of local tax, exchange control or securities law.

CSOP 7.49 Under the CSOP, the Board may grant to eligible employees options to acquire Ordinary Shares at an exercise price which may not be less than the market value of an Ordinary Share on the date of grant (‘‘CSOP Options’’). The CSOP, which was adopted by the Board on 27 February 2014, subject to Admission, comprises two sections: Part A, which will permit, subject to HMRC approval, the grant of HMRC approved CSOP Options (which may benefit from favourable UK tax treatment); and Part B, which permits the grant of non-HMRC approved CSOP Options. CSOP Options are not pensionable and may be granted over newly issued Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market. 7.50 No CSOP Options may be granted more than 10 years after the date when the CSOP was adopted. 7.51 Employees who hold (or have held within the previous 12 months) a ‘‘material interest’’ in the Company (as defined in the relevant tax legislation) are not allowed to participate in Part A of the CSOP. 7.52 Employees of the Group are eligible to participate in the CSOP at the discretion of the Board.

Grant of options 7.53 Subject to any applicable dealing restrictions, CSOP Options may be granted during the period of 42 days following (i) the date of Admission, (ii) the date of approval by HMRC of Part A; (iii) the announcement of the Company’s results for any period; (iv) the day on which any change to the legislation affecting HMRC-approved Company share option plans is proposed to be made; or (v) at such other time when the Board considers that exceptional circumstances exist which justify a grant.

Individual limits 7.54 The maximum number of shares that an eligible employee may acquire pursuant to options granted to him under the CSOP in any financial year, may not have an aggregate exercise price (determined as at the date of grant) exceeding 100 per cent. of his annual basic salary for that financial year, unless in connection with the recruitment or promotion of a senior executive the Board considers that exceptional circumstances exist which justify a higher level in which case a 200 per cent. limit will apply. A participant may not at any time hold options granted under Part A (the HMRC approved part) which relate to Ordinary Shares having a market value (determined at the date of grant) exceeding £30,000 (and, in cases where the £30,000 limit is higher than the relevant limit in the previous sentence, CSOP Options may be granted up to the £30,000 limit).

Exercise price 7.55 The price per share payable upon the exercise of a CSOP Option must not be less than the market value of Ordinary share on the date of grant. The market value of an Ordinary Share will generally be the closing middle market quotation of a share as derived from the Daily Official List of the London Stock Exchange on the date of grant.

Performance conditions 7.56 CSOP Options may be made subject to performance conditions imposed by the Board, which will determine how many (if any) of the shares will vest and which a participant may acquire on exercise of the option. The conditions applicable to CSOP Options granted in any year (if any) will be disclosed in the directors’ remuneration report for that year. As a general principle performance conditions (if any) will be demanding and stretching. The Board may vary the performance conditions applying to options if an event occurs which results in the conditions no longer being a fair measure of performance provided that, in the reasonable opinion of the Board, the new conditions are equally demanding and no more difficult to satisfy than the original conditions would have been.

167 Exercise of options 7.57 A CSOP Option will normally only be exercisable from the third anniversary of the date of grant and when all restrictions or conditions applying to the option have been satisfied or cease to have effect and to the extent to which any performance conditions have been satisfied (in each case, subject to any dealing restrictions). 7.58 CSOP Options granted under the CSOP are not transferrable other than to a participant’s personal representatives in the event of his death. CSOP Options will not form part of pensionable earnings.

Leaving employment 7.59 CSOP Options will normally cease to be exercisable and will lapse following cessation of a participant’s employment with the Group except where the participant leaves by reason of ill-health, injury or disability, redundancy, his employing company or business ceasing to be part of the Group, retirement or for any other reason at the discretion of the Board, in which case a CSOP Option may be exercised at any time during the period of six months following cessation, to the extent any performance conditions have been satisfied and subject to time pro rating where cessation occurs before the third anniversary of the date of grant. The Board may determine that the pro rating reduction should not apply at all or should apply to a lesser extent.

Corporate events 7.60 Special provisions may also allow early exercise in the event of a change of control, demerger or voluntary winding-up of the Company, subject to the achievement of any performance conditions. Internal reorganisations do not automatically trigger the early exercise of CSOP Options. 7.61 In the event of a variation of the Company’s share capital (whether by way of capitalisation or rights issue or sub-division or consolidation of the shares or a share capital reduction), the number of shares subject to a CSOP Option and the CSOP Option exercise price may be adjusted by the Board.

Amendments 7.62 The Board may amend the CSOP in any respect. However, prior approval of shareholders at a general meeting will be required to amend: provisions governing eligibility requirements, the limits on the number of Ordinary Shares available for options, the maximum entitlement of participants, the basis for determining a participant’s entitlement, the terms of the shares to be provided and the adjustment of options following a variation of the Company’s share capital. 7.63 However, any minor amendments to benefit the administration of the CSOP, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for eligible employees, participants or for any company in the Group may be made by the Board without shareholder approval. 7.64 The Board may establish sub-plans to enable options to be granted to employees in different jurisdictions provided the rules are modified only in so far as is necessary to take account of local tax, legal or regulatory issues.

SAYE 7.65 The SAYE is an ‘‘all-employee’’ share option plan adopted by the Board on 27 February 2014, subject to Admission, and which is intended will be approved by HMRC under Schedule 3 to the Income Tax (Earnings and Pensions Act) 2003. 7.66 The SAYE will also be operated in Ireland, subject to the approval of an Irish sub-plan of the SAYE by the Irish Revenue Commissioners (the ‘‘Irish SAYE’’). Unless otherwise stated, the terms of the Irish SAYE are materially the same as the SAYE. 7.67 Under the SAYE, the Board may, subject to HMRC (and, as applicable, Irish Revenue Commissioners’) approval of the SAYE, invite all eligible employees to apply for options over a number of shares (‘‘Options’’). As part of the application process, employees must enter into a savings contract under which they agree to save up to £250 (£500 from 6 April 2014) per month

168 (Eur 500 in Ireland) (or up to such other limit as may be set by the Company and permitted by the tax legislation governing the SAYE from time to time) for either three or five years (a ‘‘sharesave Contract’’). Options must be granted on the same terms to all eligible employees. 7.68 No Options may be granted more than 10 years after the date when the SAYE was approved by HMRC. 7.69 All employees of the Company and any designated participating subsidiary of the Company who are UK- (or, as appropriate Ireland-) resident taxpayers must be offered the opportunity to participate in the SAYE. Other employees may be permitted to participate at the Board’s discretion. Employees invited to participate may be required to have completed a minimum qualifying period of service before they can participate (of up to five years, or three years under the Irish SAYE).

Grant of options 7.70 Subject to any applicable dealing restrictions, invitations may be sent in the 42 day period following: (i) the date of HMRC (or, as applicable, Irish Revenue Commissioners’) approval of the plan; (ii) the date of Admission; (iii) the announcement of the Company’s results for any period; (iv) the day on which any change to the legislation affecting HMRC-approved savings-related share option plans is proposed or made; or (v) at such other time when the Board determines that exceptional circumstances exist. The employee uses the proceeds of his sharesave Contract including any bonus payable under his sharesave Contract to pay the exercise price upon exercise of his Option.

Exercise price 7.71 The number of Ordinary Shares over which an Option is granted will be determined by the Board at the date of grant to reflect the amount that each employee has agreed to save under his sharesave Contract. The exercise price for the Options will be set by the remuneration committee and will not be less than (i) (in the case of an Option to subscribe for Ordinary Shares) the nominal value of an Ordinary Share on the date of grant, and (ii) 80 per cent. (75 per cent. in Ireland) of: (a) the market value of an Ordinary Share on the dealing day immediately before the invitation to apply for Options is issued, (b) the average of the market value of an Ordinary Share for the three dealing days immediately before the invitation to apply for Options is issued, or (c) the market value of an Ordinary Share at such other date as the Board may agree with HMRC.

Exercise of options 7.72 Ordinarily, an Option may be exercised within six months of the maturity of the related sharesave Contract. Earlier exercise is permitted if an employee ceases to be employed by the Group by reason of injury, disability, redundancy, the transfer of the employee’s employing business or company out of the Group, because of a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006, retirement or on death. Under the Irish SAYE, an Option may under legislation also be exercised following a participant reaching a ‘‘Specified Age’’, which, in the case of the Company, is 65. 7.73 Options granted under the SAYE are not transferable other than to a participant’s personal representatives in the event of his death. Options will not form part of pensionable earnings

Leaving employment 7.74 An employee can also exercise his Option if he ceases to be employed by the Group more than three years after his Option was granted (except where he has been summarily dismissed) for six months following such cessation (for example, where the employee is saving under a five year Savings Contract and ceases to be employed by the Group more than three years after his related Option was granted).

Corporate events 7.75 Special provisions also allow early exercise in the event of a change of control, reconstruction or winding-up of the Company. Internal reorganisations do not automatically trigger the early exercise of Options.

169 7.76 In the event of a variation of the Company’s share capital (whether by way of capitalisation or rights issue or sub-division or consolidation of the shares or a share capital reduction), the number of Ordinary Shares subject to an option and the exercise price may be adjusted by the Board.

Amendments 7.77 The Board may amend the SAYE in any respect. However, prior approval of shareholders at a general meeting will be required for amendments to the advantage of participants relating to eligibility, limits, maximum entitlements, the basis for determining a participant’s entitlement to, and the terms of, the shares provided under the SAYE and adjustments that may be made in the event of any variation to the share capital of the Company. 7.78 However, any minor amendment to benefit the administration of the SAYE, to take into account legislative changes, or to obtain or maintain favourable tax treatment, exchange control or regulatory treatment for eligible employees, participants or for any company in the Group may be made by the Board without shareholder approval. 7.79 The Board may establish sub-plans to enable options to be granted to employees in different jurisdictions (for example, in Spain) provided the rules are modified only in so far as is necessary to take account of local tax, legal or regulatory issues. 7.80 The SAYE may operate over newly issued Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

OVERALL PLAN LIMITS

7.81 To the extent that new Ordinary Shares are to be issued to satisfy options or awards under any of the employee share plans: 7.81.1 no options or awards may be granted under any of plan if it would cause the aggregate number of Ordinary Shares issued or issuable pursuant to options or other rights to subscribe Ordinary Shares which have been granted in the preceding 10 years under that plan and any other employee share plan operated by the Company to exceed 10 per cent. of the Company’s issued Ordinary Share capital at the proposed date of grant; and 7.81.2 no options or awards may be granted under the PSP, RSP, CSOP or any other discretionary executive share plan (together the ‘‘Executive Share Plans’’) if it would cause the aggregate number of Ordinary Shares issued or issuable pursuant to options or other rights to subscribe Ordinary Shares which have been granted in the preceding 10 years under any Executive Share Plan operated by the Company to exceed 5 per cent. of the Company’s issued Ordinary Share capital at the proposed date of grant. 7.82 Ordinary Shares held in treasury will be treated as newly issued for the purpose of this limit until such time as guidelines published by institutional investor representative bodies recommend otherwise. Ordinary Shares purchased in the market to satisfy awards will not count towards this limit.

EMPLOYEE BENEFIT TRUSTS 7.83 The Poundland Employees’ Share Ownership Plan Trust (the ‘‘ESOP’’) was established by PGHL in 2011. The ESOP is a discretionary employee benefits trust and the class of potential beneficiaries includes all employees of the Group. 7.84 The ESOP acts as nominee for approximately 150 individuals in relation to their aggregate holdings of shares under pre-Admission management incentive arrangements operated by PGHL. In addition, the ESOP holds certain unallocated shares in Poundland Group Holdings Limited (the ‘‘Unallocated Pool’’). The ESOP will sell the Unallocated Pool on Admission and distribute the net proceeds after Admission to certain employees who did not participate in the Group’s management incentive arrangements operated prior to Admission. 7.85 In conjunction with the operation of PSP, RSP, SAYE, CSOP and any other employee share plans from time to time, the Company may use the ESOP or establish a new discretionary employee benefits trust. In either case, the trust may acquire Shares either by market purchase or by subscription and the trustee shall be entitled to hold or distribute Shares in respect of awards

170 granted under these plans. Any such trust will be funded by way of loans and other contributions from the Company (or a Group Company) and may not, at any time, without prior shareholder approval, hold more than 5 per cent. of the issued ordinary Share capital of the Company. Any Shares issued to any such trust following Admission will count for the purposes of the limits set out in paragraphs 7.81.

8. PENSIONS The Group operates a defined contribution group personal pension scheme for employees employed in the United Kingdom and a separate defined contribution group personal pension scheme for employees in Ireland. As explained above at paragraph 6.3.3, Poundland Limited contributes up to 15 per cent. of the Executive Directors’ basic salary to a personal pension scheme on their behalf. In relation to the two group personal pension schemes, the relevant employer makes matching contributions to the schemes depending on the employee’s level of contributions. For those employees in the UK who have elected not to join the defined contribution group personal pension scheme, the Group also operates a defined contribution scheme for the purposes of satisfying its obligations under UK automatic enrolment legislation. The Company does not operate a defined benefit pension scheme for the benefit of its Directors or members of the Executive Committee.

9. UNDERWRITING ARRANGEMENTS 9.1 Underwriting Agreement On 12 March 2014, the Company, PGHL, the Directors, the Selling Shareholders, the ESOP Trustee (as nominee for the ESOP Managers) and the Underwriters entered into the Underwriting Agreement. Pursuant to the Underwriting Agreement: 9.1.1 the Selling Shareholders have agreed, subject to certain conditions, to sell or procure the sale of the Offer Shares at the Offer Price; 9.1.2 the Underwriters have severally agreed, subject to certain conditions, to procure purchasers for or, failing which, themselves to purchase for the Offer Shares pursuant to the Global Offer; 9.1.3 the Underwriters will deduct from the proceeds of the Global Offer to the Selling Shareholders a commission of 2.25 per cent. of the product of the Offer Price and the number of Ordinary Shares sold pursuant to the Global Offer (including following any exercise of the Over-allotment Option); 9.1.4 in addition, the Selling Shareholders may, at the discretion of the Warburg Pincus Funds, following consultation with the Company, pay an additional commission of up to 1.0 per cent. (which may become payable following Admission) of the product of the Offer Price and the number of Ordinary Shares sold in the Global Offer (including following any exercise of the Over-allotment Option) (which, in relation to the Offer Shares, may become payable within 45 days after Admission and, in relation to the Over-allotment Shares, may become payable 45 days after the date of settlement of such Over-allotment Shares); 9.1.5 the obligations of the Underwriters to procure purchasers for or, failing which, themselves to purchase Offer Shares on the terms of the Underwriting Agreement are subject to certain conditions. These conditions include, among other things, the absence of any breach of representation or warranty under the Underwriting Agreement and Admission occurring on or before 8.00 a.m. on 17 March 2014 (or such later time and/or date as the Joint Global Co-ordinators and the Company may agree). In addition, the Joint Global Co-ordinators have the right to terminate the Underwriting Agreement, exercisable in certain circumstances, prior to Admission; 9.1.6 J.P. Morgan Cazenove, as Stabilising Manager, has been granted the Over-allotment Option by the Over-allotment Shareholders pursuant to which it may purchase or procure purchasers for up to 15 Over-allotment Shares at the Offer Price for the purposes of

171 covering short positions arising from over-allocations, if any, in connection with the Global Offer and/or from sales of Ordinary Shares, if any, effected during the stabilising period. Except as required by law or regulation, neither the Stabilising Manager, nor any of its agents, intends to disclose the extent of any over-allotments and/or stabilising transactions conducted in relation to the Global Offer. The number of Over-allotment Shares to be transferred pursuant to the Over-allotment Option, if any, will be determined not later than 10 April 2014. Settlement of any purchase of Over-allotment Shares will take place shortly after such determination (or if acquired on Admission, at Admission). If any Over-allotment Shares are acquired pursuant to the Over-allotment Option, the Stabilising Manager will be committed to pay to the Over-allotment Shareholders, or procure that payment is made to it of, an amount equal to the Offer Price multiplied by the number of Over-allotment Shares purchased from such Over-allotment Shareholder, less commissions and expenses; 9.1.7 the Selling Shareholders have agreed to pay any stamp duty and/or stamp duty reserve tax arising on the sale of their respective Ordinary Shares; 9.1.8 to the extent permitted by law, the Company has agreed to pay the costs, charges, fees and expenses of the Global Offer (together with any related value added tax); 9.1.9 each of the Company, the Directors, the Selling Shareholders and the ESOP Trustee (as nominee for the ESOP Managers) has given certain representations, warranties and undertakings, subject to certain limits (except in the case of the Company), to the Underwriters; 9.1.10 the Company has given an indemnity to the Underwriters on customary terms; and 9.1.11 the parties to the Underwriting Agreement have given certain covenants to each other regarding compliance with laws and regulations affecting the making of the Global Offer in relevant jurisdictions. 9.2 Stock lending agreement In connection with settlement and stabilisation, J.P. Morgan Cazenove, as Stabilising Manager, has entered into a stock lending agreement with the Over-allotment Shareholders. Pursuant to this agreement, the Stabilising Manager will be able to borrow up to a maximum of 15 per cent. of the total number of Ordinary Shares comprised in the Global Offer (excluding the Ordinary Shares subject to the Over-allotment Option) on Admission for the purposes, amongst other things, of allowing the Stabilising Manager to settle, on Admission, over-allotments, if any, made in connection with the Global Offer. If the Stabilising Manager borrows any Ordinary Shares pursuant to the stock lending agreement, it will be required to return equivalent securities to the relevant Over-allotment Shareholders by no later than the third business day after the date that is the 30th day after the commencement of conditional dealings of the Ordinary Shares on the London Stock Exchange.

172 10. SUBSIDIARIES AND PRINCIPAL ESTABLISHMENTS Immediately prior to Admission, the Company will become the holding company of the Group and the principal subsidiaries and subsidiary undertakings of the Company will be as follows:

Subsidiaries and subsidiary undertakings

Class and percentage of Country of incorporation ownership interest Name and registered office and voting power Field of activity Poundland Group Holdings Limited(1) ...... England and Wales 100% Intermediate holding company Poundland Value Retailing Limited ...... England and Wales 100% Investment company Poundland Retail Limited . . . England and Wales 100% Investment company Poundland Holdings Limited . England and Wales 100% Investment company Poundland Willenhall Limited England and Wales 100% Investment company Poundland Trustee Limited . . England and Wales 100% Trustee Poundland Limited ...... England and Wales 100% Single price value retailer Poundland Far East Limited . . Hong Kong 100% Product sourcing

(1) Directly owned subsidiary. All other subsidiaries are held indirectly.

Principal establishments The following are the principal establishments of the Group:

Name and location Type of facility Tenure Willenhall Head Office and Distribution Centre Leasehold Distribution Centre Wellmans Road Willenhall West Midlands WV13 2QT Hoddesdon Distribution Centre Distribution Centre Leasehold Ratty’s Lane, Essex Road Hoddesdon Hertfordshire EN11 0RF Springvale Distribution Centre Distribution Centre Leasehold Springvale Avenue Wolverhampton West Midlands WV14 0RJ

11. STATUTORY AUDITORS The auditors of the Company for the period from incorporation on 24 January 2014 to the present have been KPMG LLP, chartered accountants, whose registered address is at One Snowhill, Snowhill Queensway, Birmingham B4 6GH. KPMG LLP have audited the consolidated statutory accounts for the Group for financial information as at and for the 41 weeks ended 27 March 2011, 53 weeks ended 1 April 2012 and 52 weeks ended 31 March 2013 in accordance with applicable laws and International Standards on Auditing (UK and Ireland).

12. MATERIAL CONTRACTS The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or another member of the Group: (a) within the two years immediately preceding the date of this Prospectus which are, or may be, material to the Company or any member of the Group, and (b) at any time and contain provisions under which the Company or any member of the Group

173 has an obligation or entitlement which is, or may be, material to the Company or any member of the Group as at the date of this Prospectus: 12.1 Underwriting Agreement The Underwriting Agreement is described in paragraph 9.1 of this Part 12—‘‘Additional Information—Underwriting Arrangements—Underwriting Agreement’’. 12.2 Relationship Agreement The Relationship Agreement is described in paragraph 4 of Part 6—‘‘Directors, Senior Management and Corporate Governance—Relationship with Principal Shareholder’’. 12.3 Reorganisation Deed The Reorganisation Deed between the Company, PGHL, the Warburg Pincus Funds, James McCarthy and Nicholas Hateley and the ESOP Trustee was entered into on 29 January 2014 in order to set out the agreement on the steps of the Reorganisation. The Company and other relevant parties entered into the Reorganisation Deed in relation to the steps required to be carried out by the Company (or otherwise involving the Company) in connection with the Reorganisation prior to and following the date of Admission. All of the Managers then entered into deeds of adherence to the Reorganisation Deed. 12.4 Banking Facilities The Group’s banking facilities are described in paragraph 7.3 of Part 8—‘‘Operating and Financial Review—Borrowings’’.

13. UK TAXATION The following statements are intended only as a general guide to certain UK tax considerations and do not purport to be a complete analysis of all potential UK tax consequences of holding Ordinary Shares. They are based on current UK legislation and what is understood to be the current practice of HMRC as at the date of this Prospectus, both of which may change, possibly with retroactive effect. These statements apply only to Shareholders who are resident (and, in the case of individuals, domiciled) for tax purposes in (and only in) the UK (except insofar as express reference is made to the treatment of non-UK residents or non-UK domiciled individuals), who hold their Ordinary Shares as an investment (other than under an individual savings account) and who are the absolute beneficial owner of both the Ordinary Shares and any dividends paid on them. The tax position of certain categories of Shareholders who are subject to special rules (such as persons acquiring their Ordinary Shares in connection with employment, dealers in securities, insurance companies and collective investment schemes or those who hold 10 per cent. or more of the Ordinary Shares) is not considered. The statements in paragraph 13.3.4 apply to any holders of Ordinary Shares irrespective of their residence, summarise the current position and are intended as a general guide only. Legislation has recently been enacted which introduces new rules for the determination of the residence status of individuals for UK tax purposes. Prospective investors who are in any doubt as to their tax position or who may be subject to tax in a jurisdiction other than the United Kingdom are strongly recommended to consult their own professional advisers. 13.1 Taxation of Dividends The Company is not required to withhold tax when paying a dividend. The amount of any liability to tax on dividends paid by the Company will depend upon the individual circumstances of a Shareholder. An individual Shareholder who is resident for tax purposes in the UK and who receives a dividend from the Company will generally be entitled to a tax credit equal to one-ninth of the amount of the dividend received, which is equivalent to 10 per cent. of the aggregate of the dividend received and the tax credit (the ‘‘gross dividend’’), and will be subject to income tax on the gross dividend. An individual UK resident Shareholder who is subject to income tax on the gross dividend at the basic rate only will be liable to tax on the gross dividend at the rate of 10 per cent., so that the tax credit will satisfy the income tax liability of such a Shareholder in full. An individual UK resident Shareholder who is subject to income tax on the gross dividend at the higher rate or the additional rate will be liable to income tax on the gross dividend at the rate of 32.5 per cent. to the extent that such sum, when treated as the top slice of that Shareholder’s income, falls above the threshold for

174 higher rate income tax and below the threshold for additional rate income tax. After taking into account the 10 per cent. tax credit, a higher rate taxpayer will therefore be liable to additional income tax of 22.5 per cent. of the gross dividend, equal to 25 per cent. of the cash dividend to the extent that the gross dividend falls above the threshold for higher rate income tax and below the threshold for additional rate income tax. An individual UK resident Shareholder who is subject to income tax on the gross dividend at the additional rate will be subject to income tax on the gross dividend at the rate of 37.5 per cent. of the gross dividend to the extent that such sum, when treated as the top slice of that Shareholder’s income, falls above the threshold for additional rate income tax. After taking into account the 10 per cent. tax credit, an additional rate taxpayer will therefore be liable to additional income tax of 27.5 per cent. of the gross Distribution, equal to approximately 30.6 per cent. of the cash dividend, to the extent that the gross dividend falls above the threshold for the additional rate. Where the tax credit exceeds the Shareholder’s tax liability the Shareholder cannot claim repayment of the tax credit from HMRC. Dividends paid on the Ordinary Shares to corporate Shareholders are in most cases likely to fall within one or more of the classes of dividend qualifying for exemption from corporation tax. However, the exemptions are not comprehensive and are also subject to anti-avoidance rules. Shareholders within the charge to corporation tax should consult their own professional advisers. UK resident Shareholders who are not liable to UK tax on dividends, including pension funds and charities, are not entitled to claim repayment of the tax credit. Shareholders who are resident outside the UK for tax purposes will not generally be able to claim repayment of any part of the tax credit attaching to dividends received from the Company, although this will depend on the existence and terms of any double taxation convention between the UK and the country in which such Shareholder is resident. A Shareholder resident outside the UK may also be subject to taxation on dividend income under local law. A Shareholder who is resident outside the UK for tax purposes should consult his own tax adviser concerning his tax position on dividends received from the Company. 13.2 Taxation of Disposals A disposal or deemed disposal of Ordinary Shares by a Shareholder who is (at any time in the relevant UK tax year) resident in the UK for tax purposes may, depending upon the Shareholder’s circumstances and subject to any available exemption or relief (such as the annual exempt amount for individuals and indexation for corporate shareholders), give rise to a chargeable gain or an allowable loss for the purposes of UK taxation of capital gains. Shareholders who are not resident in the UK will not generally be subject to UK taxation of capital gains on the disposal or deemed disposal of Ordinary Shares unless they are carrying on a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate Shareholder, a permanent establishment) in connection with which the Ordinary Shares are used, held or acquired. An individual Shareholder who has ceased to be resident for tax purposes in the UK for a period of less than five tax years and who disposes of all or part of his Ordinary Shares during that period may be liable to capital gains tax on his return to the UK, subject to any available exemptions or reliefs. 13.3 Stamp duty and Stamp Duty Reserve Tax (‘‘SDRT’’) 13.3.1 The Offer The transfer of, or agreement to transfer, Ordinary Shares sold by the Selling Shareholders under the Global Offer will generally give rise to a liability to stamp duty and/or SDRT at a rate of 0.5 per cent. of the Offer Price (in the case of stamp duty, rounded up to the nearest multiple of £5). Such liability will be met by the Selling Shareholders or, in certain cases, the Company. An exemption from stamp duty is available on an instrument transferring Ordinary Shares where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions in respect of which the aggregate amount or value of the consideration exceeds £1,000.

175 13.3.2 Subsequent Transfers A subsequent transfer for value of Ordinary Shares will generally be subject to stamp duty or SDRT. Stamp duty will arise on the execution of an instrument to transfer Ordinary Shares and SDRT will arise on the entry into an unconditional agreement to sell the Ordinary Shares. The amount of stamp duty or SDRT payable on the transfer is generally calculated at the rate of 0.5 per cent. of the consideration payable (with stamp duty rounded up to the nearest £5). A liability to SDRT will be cancelled and any SDRT already paid will, provided a claim for repayment is made, be repaid (generally, but not necessarily, with interest), where an instrument of transfer is executed and stamp duty is paid on that instrument within six years of the date on which the liability to SDRT arises. As noted above, an exemption from stamp duty is available on an instrument transferring shares where the amount or value of the consideration is £1,000 or less and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee. 13.3.3 Ordinary Shares held through CREST Paperless transfers of Ordinary Shares within CREST are generally liable to SDRT, rather than stamp duty, at the rate of 0.5 per cent. of the amount or value of the consideration. CREST is obliged to collect SDRT on relevant transactions settled within the system. The charge is generally borne by the purchaser. Under the CREST system, no stamp duty or SDRT will arise on a transfer of Ordinary Shares into the system unless such a transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT (usually at a rate of 0.5 per cent.) will arise. 13.3.4 Ordinary Shares held through Clearance Systems or Depositary Receipt Arrangements Current UK law provides that, where shares are issued or transferred to, or to a nominee or agent for, either a person whose business is or includes issuing depositary receipts or a person whose business is or includes the provision of clearance services, such issue or transfer will give rise to stamp duty or SDRT payable at the higher rate of 1.5 per cent. Following litigation, HMRC has accepted that the 1.5 per cent. charge may not be imposed on the issue of shares into a clearance service or depositary receipt arrangement, but transfers of existing shares would generally remain so liable (unless, in the case of a transfer into a clearance service, the clearance service provider has opted for the normal 0.5 per cent. charge to apply to transfers within the service). The statements in this paragraph 13.3.4 apply to any holders of Ordinary Shares irrespective of their residence, summarise the current position and are intended as a general guide only. Special rules apply to agreements made by, amongst others, intermediaries. 13.4 Inheritance Tax The Ordinary Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift or settlement of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax even if the holder is neither domiciled in the UK nor deemed to be domiciled there under certain rules relating to long-term residence or previous domicile. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit. A charge to inheritance tax may arise in certain circumstances where Ordinary Shares are held by close companies and by trustees of settlements. Shareholders who are either close companies or trustees of settlements should consult an appropriate tax adviser as to any inheritance tax implications.

14. US FEDERAL INCOME TAXATION The following discussion is a general summary based on present law of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of Ordinary Shares. The discussion is not a complete description of all tax considerations that may be relevant. It applies only to U.S. Holders (as

176 defined below) that acquire Ordinary Shares in the Global Offer, hold Ordinary Shares as capital assets and use the U.S. dollar as their functional currency. The discussion is a general summary; it is not a substitute for tax advice. It does not address the tax treatment of investors subject to special rules, such as banks or other financial institutions, tax-exempt entities, insurance companies, dealers, traders in securities that elect to mark-to-market, investors liable for alternative minimum tax, U.S. expatriates, investors that directly, indirectly or constructively own 10 per cent. or more of the Company’s voting stock, individual retirement accounts and other tax-deferred accounts, real estate investment trusts or investors that hold Ordinary Shares as part of a straddle, hedging, conversion or other integrated transaction. It also does not address U.S. state and local tax considerations. THE STATEMENTS ABOUT U.S. FEDERAL TAX CONSIDERATIONS ARE MADE TO SUPPORT THE MARKETING OF THE SHARES. NO TAXPAYER CAN RELY ON THEM TO AVOID TAX PENALTIES. EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE FROM AN INDEPENDENT TAX ADVISOR ABOUT THE TAX CONSEQUENCES UNDER ITS OWN PARTICULAR CIRCUMSTANCES OF INVESTING IN THE SHARES UNDER THE LAWS OF THE UNITED KINGDOM, THE UNITED STATES AND ITS CONSTITUENT JURISDICTIONS AND ANY OTHER JURISDICTIONS WHERE THE PURCHASER MAY BE SUBJECT TO TAXATION. As used here, a ‘‘U.S. Holder’’ means a beneficial owner of the Ordinary Shares that is for U.S. federal income tax purposes (i) a citizen or individual resident of the United States, (ii) a corporation created or organised under the laws of the United States or its political subdivisions, (iii) a trust subject to the control of one or more U.S. persons and the primary supervision of a U.S. court and (iv) an estate the income of which is subject to U.S. federal income tax without regard to its source. The U.S. federal income tax treatment of a partner in a partnership that holds Ordinary Shares will depend on the status of the partner and the activities of the partnership. Partnerships should consult their tax advisors concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of Ordinary Shares. The Company believes, and the following discussion assumes, that the Company does not expect to be a passive foreign investment company (‘‘PFIC’’) for US federal income tax purposes for the current year or foreseeable future taxable years. The tests to determine whether a company is a PFIC apply annually, and a company’s status can change depending, among other things, on changes in the composition and relative value of its gross receipts and assets, changes in its operations and changes and the market value of its stock. The Company therefore cannot assure U.S. Holders that it will not become a PFIC. If the Company were a PFIC in any taxable year, U.S. Holders could suffer adverse U.S. tax consequences in that and subsequent years. 14.1 Dividends Distributions on Ordinary Shares will generally be dividend income from foreign sources. The dividends will not be eligible for the dividends-received deduction available to U.S. corporations. Dividends received by eligible non-corporate U.S. Holders, however, should be taxed at the preferential rate applicable to qualified dividend income if (i) the Company qualifies for the benefits of the income tax treaty between the United States and the United Kingdom, which the Company believes it does, (ii) the Company is not a PFIC in the year of distribution or the preceding year and (iii) the holder has held the Ordinary Shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Dividends paid in foreign currency will be included in income in a U.S. dollar amount based on the exchange rate in effect on the day the dividends are actually or constructively received by the U.S. Holder, whether or not the currency is converted into U.S. dollars at that time. A U.S. Holder’s tax basis in the foreign currency will equal the U.S. dollar value on the date of receipt. Generally, any gain or loss on a subsequent conversion or other disposition of the foreign currency for a different U.S. dollar amount will be exchange gain or loss and will be treated as U.S. source ordinary income or loss for foreign tax credit limitation purposes. If dividends received in foreign currency are converted into U.S. dollars on the day they are received, the U.S. Holder generally will not be required to recognise foreign currency gain or loss in respect of the dividend income. 14.2 Dispositions A U.S. Holder generally will recognise capital gain or loss on the sale, exchange or other disposition of Ordinary Shares equal to the difference between the U.S. dollar value of the

177 amount realised and the U.S. Holder’s tax basis in the Ordinary Shares. A U.S. Holder’s adjusted tax basis in the Ordinary Shares will generally be the U.S. dollar cost of the Ordinary Shares. The U.S. dollar cost of a Share purchased with foreign currency generally will be the U.S. dollar value of the purchase price paid in the Global Offer. Any gain or loss generally will be treated as arising from U.S. sources. The gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period exceeds one year. Deductions for capital loss are subject to significant limitations. A U.S. Holder that receives foreign currency on the sale, exchange or other disposition of the Ordinary Shares will realise an amount equal to the U.S. dollar value of the foreign currency received at the spot rate on the date of sale, exchange or other disposition (or in the case of Ordinary Shares traded on an ‘‘established securities market’’ that are sold by a cash basis or electing accrual basis taxpayer, at the spot rate on the settlement date). A U.S. Holder will recognise currency gain or loss if the U.S. dollar value of the currency received at the spot rate on the settlement date differs from the amount realised. A U.S. Holder will have a tax basis in the foreign currency received equal to its value at the spot rate on the settlement date. Any currency gain or loss realised on the settlement date or on a subsequent conversion of the foreign currency into U.S. dollars will be U.S. source ordinary income or loss for foreign tax credit limitation purposes. However, if such non-U.S. currency is converted into U.S. dollars on the date received by the U.S. Holder, the U.S. Holder generally should not be required to recognise any gain or loss on such conversion. 14.3 Medicare Surtax on Net Investment Income Non-corporate U.S. Holders whose income exceeds certain thresholds generally will be subject to a 3.8 per cent. surtax on their ‘‘net investment income’’ (which generally includes, among other things, dividends on, and capital gain from the sale or other taxable disposition of, Ordinary Shares). U.S. Holders should consult their own tax advisors regarding the possible effect of such tax on their ownership and disposition of Ordinary Shares. 14.4 Reporting and Backup Withholding Dividends on Ordinary Shares and proceeds from the sale, exchange or other disposition of Ordinary Shares may be reported to the U.S. Internal Revenue Service (‘‘IRS’’) unless the holder establishes a basis for exemption. Backup withholding tax may apply to amounts subject to reporting. Any amount withheld from a payment to a U.S. Holder will be refunded or credited against the holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. Prospective holders are urged to consult with their own tax advisors regarding their qualification for exemption from backup withholding and the procedure for establishing an exemption. Certain U.S. Holders will be required to report to the IRS information with respect to their investment in Ordinary Shares not held through an account with a financial institution. Investors who fail to report required information could become subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding information reporting requirements with respect to their investment in Ordinary Shares. THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.

15. ENFORCEMENT AND CIVIL LIABILITIES UNDER US FEDERAL SECURITIES LAWS The Company is a public limited company incorporated under English law. Many of the Directors are citizens of the United Kingdom (or other non-US jurisdictions), and a portion of the Company’s assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Directors or to enforce against them in the US courts judgments obtained in US courts predicated upon the civil liability provisions of the US federal securities laws. There is doubt as to the enforceability in England, in original actions or in actions for enforcement of judgments of the US courts, of civil liabilities predicated upon US federal securities laws.

178 16. LITIGATION There are no governmental, legal or arbitration proceedings (including such proceedings which are pending or threatened of which the Company is aware) during the 12 months preceding the date of this Prospectus, which may have, or have had a significant effect on the Company’s and/or the Group’s financial position or profitability.

17. RELATED PARTY TRANSACTIONS Save as described in Note 28 of Part 10—‘‘Historical Financial Information’’, there are no related party transactions between the Company or members of the Group that were entered into during the 2011 financial period and 2012 and 2013 financial years, during the 39 weeks ended 29 December 2013 and during the period between 30 December 2013 and 11 March 2014 (the latest practicable date prior to the publication of this Prospectus).

18. WORKING CAPITAL In the opinion of the Company, taking into account the facilities available to the Group, the working capital available to the Company Group is sufficient for the Company Group’s present requirements, that is for at least the next 12 months from the date of the publication of this Prospectus.

19. NO SIGNIFICANT CHANGE There has been no significant change in the financial or trading position of the Group since 29 December 2013, the date to which the Historical Financial Information in Part 10—‘‘Historical Financial Information’’ was prepared.

20. CONSENTS KPMG LLP is a member firm of the Institute of Chartered Accountants in England and Wales and has given and has not withdrawn its written consent to the inclusion of the report in Part 10—‘‘Historical Financial Information’’, in the form and context in which it appears and has authorised the contents of that part of this Prospectus which comprise its report for the purposes of Rule 5.5.3R(2)(f) of the Prospectus Rules. As the Ordinary Shares have not been and will not be registered under the Securities Act, KPMG LLP has not filed and will not file a consent under the Securities Act. Pragma has given and has not withdrawn its written consent to the inclusion of the information in this Prospectus which has been sourced to Pragma, in the form and context in which it appears. For the purposes of Prospectus Rule 5.5.3R (2)(f), Pragma is responsible for the inclusion of the information in this Prospectus which has been sourced to Pragma and declares that Pragma has taken all reasonable care to ensure that such information is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in this Prospectus in compliance with paragraph 1.2 of Annex I of the Prospectus Directive Regulation. The Javelin Group has given and has not withdrawn its written consent to the inclusion of the information in this Prospectus which has been sourced to the Javelin Group, in the form and context in which it appears. For the purposes of Prospectus Rule 5.5.3R (2)(f), the Javelin Group is responsible for the inclusion of the information in this Prospectus which has been sourced to the Javelin Group and declares that the Javelin Group has taken all reasonable care to ensure that such information is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in this Prospectus in compliance with paragraph 1.2 of Annex I of the Prospectus Directive Regulation.

21. GENERAL The fees and expenses to be borne by the Company in connection with Admission, including the FCA’s fees, professional fees and expenses and the costs of printing and distribution of documents are estimated to amount to approximately £7.6 million (including VAT). The financial information contained in this Prospectus does not amount to statutory accounts within the meaning of section 434(3) of the Act. Full audited accounts have been delivered to the Registrar of Companies for the Company for the period from 17 June 2010 to 27 March 2011, from 28 March 2011 to 1 April 2012 and from 2 April 2012 to 31 March 2013.

179 22. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) for a period of 12 months following the date of this Prospectus at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London EC4Y 1HS: 22.1.1 the Articles; 22.1.2 the audited historical financial information of the Group in respect of the 39 weeks ended 29 December 2013 and the 2011 financial period and 2012 and 2013 financials years, together with the related accountant’s report from KPMG, which are set out in Part 10— ‘‘Historical Financial Information’’; 22.1.3 the unaudited interim financial information in respect of the 39 weeks ended 30 December 2012, which is set out in Part 10—‘‘Historical Financial Information’’; 22.1.4 the consent letters referred to in ‘‘Consents’’ in paragraph 20 above; and 22.1.5 this Prospectus.

Dated: 12 March 2014

180 PART 13 DEFINITIONS AND GLOSSARY Definitions The following definitions apply throughout this Prospectus unless the context requires otherwise:

‘‘2010 Facilities Agreement’’...... the £90.0 million facilities agreement dated 11 August 2010 between, among others, Poundland Retail Limited as parent, Poundland Holdings Limited as original borrower and Lloyds TSB Bank PLC as facility agent and security agent ‘‘2010 PD Amending Directive’’..... Directive 2010/73/EU ‘‘2011 financial period’’...... the 41 weeks ended 27 March 2011 ‘‘2012 financial year’’...... the 53 weeks ended 1 April 2012 ‘‘2013 financial year’’...... the 52 weeks ended 31 March 2013 ‘‘2014 Facility Agreement’’...... the £55.0 million multicurrency revolving facility agreement to be dated the date of Admission between, among others, Poundland Group plc as parent and original borrower and Lloyds Bank as agent ‘‘Act’’...... the Companies Act 2006, as amended ‘‘Admission’’...... the admission of the Ordinary Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities ‘‘AM Nexday’’...... A M Transport Services Limited ‘‘Articles’’...... the Articles of Association of the Company to be effective upon Admission ‘‘Board’’...... the board of directors of the Company ‘‘CAGR’’...... compound annual growth rate ‘‘Canaccord Genuity’’...... Canaccord Genuity Limited, whose registered office is at 88 Wood Street, London EC2V 7QR, United Kingdom ‘‘City Code’’...... the City Code on Take-overs and Mergers ‘‘Co-Lead Managers’’...... Canaccord Genuity and Shore Capital ‘‘Company’’...... Poundland Group plc ‘‘Company Group’’...... prior to the completion of the Reorganisation steps as set out in paragraph 2 of Part 12—‘‘Additional Information— Reorganisation’’ (which is expected to take place immediately prior to Admission), the Company, and thereafter the Company and its consolidated subsidiaries and subsidiary undertakings from time to time ‘‘Credit Suisse’’...... Credit Suisse Securities (Europe) Limited, whose registered office is at One Cabot Square, London E14 4QJ, United Kingdom ‘‘CREST’’...... the UK-based system for the paperless settlement of trades in listed securities, of which Euroclear UK and Ireland Limited is the operator ‘‘DHL’’...... Exel Europe Limited, trading as DHL Supply Chain ‘‘Directors’’...... the Executive Directors and the Non-Executive Directors

181 ‘‘Disclosure and Transparency Rules’’...... the disclosure rules and transparency rules of the FCA made for the purposes of part VI of the FSMA ‘‘EBITDA’’...... earnings before interest, taxation, depreciation and amortisation ‘‘EEA’’...... the European Economic Area ‘‘ESOP’’...... the Poundland Employees’ Share Ownership Plan Trust ‘‘ESOP Managers’’...... certain managers in the Group who, as at the date of the Prospectus, hold shares in PGHL through the ESOP Trustee as nominee ‘‘ESOP Trustee’’...... Barclays Wealth Trustees (Guernsey) Limited as trustee of the ESOP ‘‘EU’’...... the European Union ‘‘euro’’, ‘‘E’’ or ‘‘c’’...... the currency introduced at the start of the third stage of the European economic and monetary union pursuant to the Treaty establishing the European Community, as amended ‘‘European Economic Area’’ ...... the European Union, Iceland, Norway and Liechtenstein ‘‘Executive Directors’’...... the executive directors of the Company ‘‘Existing Shareholders’’...... each of the Warburg Pincus Funds, the Managers and the ESOP Trustee (as nominee for the ESOP Managers and as trustee of the ESOP) ‘‘FCA’’...... the Financial Conduct Authority ‘‘FMCG’’...... fast-moving consumer goods ‘‘FSMA’’ ...... the Financial Services and Markets Act 2000, as amended ‘‘GBP’’, ‘‘£’’ or ‘‘pence’’...... the lawful currency of the United Kingdom ‘‘Global Offer’’...... the sale of Offer Shares by the Selling Shareholders to institutional investors in the United Kingdom and elsewhere described in Part 11—‘‘Details of the Global Offer’’ the ‘‘Group’’ or ‘‘Poundland’’...... PGHL and each of its consolidated subsidiaries and subsidiary undertakings prior to the completion of the Reorganisation steps as set out in paragraph 2 of Part 12—‘‘Additional Information—Reorganisation’’ (which is expected to be immediately prior to Admission) and, thereafter, the Company and its consolidated subsidiaries and subsidiary undertakings from time to time ‘‘HMRC’’...... Her Majesty’s Revenue and Customs ‘‘IFRS’’...... International Financial Reporting Standards, as adopted by the European Union ‘‘inventory shrinkage’’...... the loss of products between the purchase from a supplier and the point of sale ‘‘Ireland’’...... the Republic of Ireland ‘‘IRS’’...... the United States Inland Revenue Service ‘‘ISIN’’...... International Securities Identification Number ‘‘Javelin Group’’...... Javelin Strategy & Research Inc. ‘‘Joint Bookrunners’’...... J.P. Morgan Cazenove and Credit Suisse ‘‘Joint Global Co-ordinators’’...... J.P. Morgan Cazenove and Credit Suisse ‘‘Joint Sponsors’’...... J.P. Morgan Cazenove and Credit Suisse

182 ‘‘J.P. Morgan Cazenove’’...... J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove), whose registered office is at 25 Bank Street, London E14 5YP, United Kingdom ‘‘KPIs’’...... key performance indicators ‘‘Listing Rules’’...... the listing rules of the FCA made under section 74(4) of the FSMA ‘‘London Stock Exchange’’...... London Stock Exchange plc ‘‘Managers’’...... certain managers in the Group who, as at the date of the Prospectus, hold shares in PGHL directly ‘‘Main Market’’...... the London Stock Exchange’s main market for listed securities ‘‘Member State’’...... a member state of the European Union ‘‘Model Code’’...... the model code published in Annex I to LR9 of the Listing Rules ‘‘Non-Executive Directors’’...... the non-executive Directors ‘‘Offer Price’’...... the price at which each Ordinary Share is to be issued or sold under the Global Offer ‘‘Offer Shares’’...... those Ordinary Shares to be sold as part of the Global Offer by the Selling Shareholders (excluding, for the avoidance of doubt, the Over-allotment Shares) ‘‘Official List’’...... the Official List of the FCA ‘‘Ordinary Shares’’...... the ordinary shares of the Company, having the rights set out in the Articles ‘‘Over-allotment Option’’...... the option expected to be granted to the Stabilising Manager by the Over-allotment Shareholders to purchase, or procure purchasers for, up to 18,750,000 additional Ordinary Shares as more particularly described in Part 11—‘‘Details of the Global Offer’’ ‘‘Over-allotment Shareholders’’..... the Warburg Pincus Funds ‘‘Over-allotment Shares’’...... the Ordinary Shares the subject of the Over-allotment Option ‘‘PCAOB’’...... the Public Company Accounting Oversight Board (United States) ‘‘PFIC’’...... passive foreign investment company ‘‘PGHL’’...... Poundland Group Holdings Limited, whose registered office is at Wellmans Road, Willenhall, West Midlands WV13 2QT ‘‘Planet Retail’’...... Planet Retail Limited ‘‘Pragma’’...... Pragma Consulting Limited ‘‘Preference Shares’’...... the 49,999 preference shares of £1.00 each in the share capital of the Company ‘‘Prospectus’’...... the final prospectus as approved by the FCA as a prospectus prepared in accordance with the Prospectus Rules made under section 73A of the FSMA ‘‘Prospectus Directive’’...... Directive (2003/71/EC) (and amendments thereto, including the 2010 PD Amending Directive to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State

183 ‘‘Prospectus Rules’’...... the prospectus rules of the FCA made under Part VI of FSMA relating to offers of securities to the public and admission of securities to trading on a regulated market ‘‘PwC’’...... PricewaterhouseCoopers LLP ‘‘qualified institutional buyers’’ or ‘‘QIBs’’...... has the meaning given by Rule 144A ‘‘Qualified Investors’’...... persons who are ‘‘qualified investors’’ within the meaning of Article 2(1)(e) of the Prospectus Directive ‘‘Registrars’’...... Computershare Investor Services PLC ‘‘Regulation S’’...... Regulation S under the Securities Act ‘‘Regulations’’...... Uncertificated Securities Regulations 2001 ‘‘Relationship Agreement’’...... the relationship agreement entered into between the Company and the Warburg Pincus Funds as described in paragraph 4 of Part 6—‘‘Directors, Senior Management and Corporate Governance—Relationship with Principal Shareholder’’ ‘‘Relevant Member State’’...... each Member State of the European Economic Area that has implemented the Prospectus Directive ‘‘Remaining PGHL Redeemable Shares’’...... the redeemable preference shares in PGHL with an aggregate nominal value of £49,000 held by WP X ‘‘Reorganisation’’...... the reorganisation of the Company in preparation for the Global Offer as described in paragraph 2 of Part 12—‘‘Reorganisation’’ ‘‘Reorganisation Deed’’...... the reorganisation deed dated 29 January 2014 entered into between the Company, PGHL, the Warburg Pincus Funds, the ESOP Trustee, James McCarthy and Nicholas Hateley, later adhered to by each of the Managers ‘‘Rothschild’’...... N M Rothschild & Sons Limited, whose registered office is at New Court, St Swithin’s Lane, London EC4N 8AL, United Kingdom ‘‘Rule 144A’’...... Rule 144A under the Securities Act ‘‘SDRT’’...... stamp duty reserve tax ‘‘Securities Act’’...... United States Securities Act of 1933, as amended ‘‘SEDOL’’...... Stock Exchange Daily Official List ‘‘Selling Shareholders’’...... Shareholders who sell Ordinary Shares as part of the Global Offer ‘‘Senior Management’’...... the individuals listed in paragraph 2 of Part 6—‘‘Directors, Senior Management and Corporate Governance—Senior Management’’ ‘‘Shareholders’’...... the holders of Ordinary Shares in the capital of the Company ‘‘Shore Capital’’...... Shore Capital Stockbrokers Limited, whose registered office is at Bond Street House, 14 Clifford Street, London W1S 4JU, United Kingdom ‘‘SKUs’’...... stock-keeping units ‘‘Stabilising Manager’’...... J.P. Morgan Cazenove ‘‘Takeover Panel’’...... the Panel on Takeovers and Mergers ‘‘Total Underlying Overheads’’...... the sum of underlying distribution and underlying administrative expenses

184 ‘‘UK Corporate Governance Code’’ . . the UK Corporate Governance Code published by the Financial Reporting Council ‘‘UK GAAP’’...... generally accepted accounting practice in the United Kingdom ‘‘UK Listing Authority’’...... the FCA acting as the competent authority under Part VI of FSMA ‘‘Underlying EBITDA’’...... profit for the period before finance costs, finance income, tax, non-underlying items and depreciation and amortisation ‘‘Underwriters’’...... the Joint Bookrunners and the Co-Lead Managers ‘‘Underwriting Agreement’’...... the underwriting agreement entered into between the Company, the Directors, the Selling Shareholders and the Underwriters described in paragraph 9.1 of Part 12—‘‘Additional Information—Underwriting Arrangements—Underwriting Agreement’’ ‘‘United Kingdom’’ or ‘‘UK’’...... the United Kingdom of Great Britain and Northern Ireland ‘‘United States’’ or ‘‘US’’...... the United States of America, its territories and possessions, any State of the United States of America, and the District of Columbia ‘‘US dollars’’ or ‘‘US$’’...... the lawful currency of the United States ‘‘US Exchange Act’’...... US Securities Exchange Act of 1934, as amended ‘‘US GAAP’’...... accounting principles generally accepted in the United States ‘‘US GAAS’’...... auditing standards generally accepted in the United States ‘‘US Holder’’...... a beneficial owner of the Ordinary Shares that is for US federal income tax purposes (i) a citizen or individual resident of the United States, (ii) a corporation or other business entity treated as a corporation created or organised under the laws of the United States or its political subdivisions, (iii) a trust subject to the control of one or more US persons and the primary supervision of a US court and (iv) an estate the income of which is subject to US federal income tax without regard to its source ‘‘VAT’’...... value added tax ‘‘WP X’’...... Warburg Pincus Private Equity X, L.P. ‘‘Warburg Pincus’’...... Warburg Pincus LLC ‘‘Warburg Pincus Funds’’...... WP X and Warburg Pincus X Partners, L.P. ‘‘YouGov’’...... YouGov plc

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