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16 June 2016 Full Year Results for the Year Ended 27 March 2016

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16 June 2016 Full Year Results for the Year Ended 27 March 2016 16 June 2016 Full Year Results for the year ended 27 March 2016 Financial Highlights Underlying Results* Sales +9.7% on a constant currency basis Sales +9.3% to £1,214.8 million on an actual currency basis (2015: £1,111.5 million) Like-for-like sales -3.9% (2015: +2.4%) on a constant currency basis EBITDA -4.1% to £56.9 million (2015: £59.4 million) Comparable EBITDA** (excluding converted 99p Stores) -9.4% to £53.8 million (2015: £59.4 million) Comparable pre-tax profits** (excluding converted 99p Stores, brand amortisation and ineffective element of the hedge) -13.5% to £37.8 million (2015: £43.7 million) Diluted EPS -10.8% to 11.68p (2015: 13.10p) Statutory Results*** Total sales +18.7% to £1,326.0 million (2015: £1,116.9 million) Pre-tax profits -83.7% to £5.9 million (2015: £36.2 million) Diluted EPS -94.6% to 0.61p (2015: 11.34p) Net debt of £12.0 million (2015: net cash of £13.9 million) Final dividend proposed of 2.00p per share (2015: 3.00p), giving total dividend payment for the year of 3.65p per share (2015: 4.50p), with cover maintained at 3 times comparable underlying EPS**. Operational Highlights 60 net new stores, as well as 190 conversions of 99p Stores to Poundland in FY 2016, taking the estate in UK & Republic of Ireland to 896 stores (2015: 588) Conversion programme now complete; 235 stores converted; 17 to be closed, or disposed Group sales area grew by 66% to 5.3 million square feet by year end Retail Park stores now total of 139 in the UK & Republic of Ireland (2015: 87) 10 Dealz stores now open in Spain (2015: 5) Sales in Spain £15.5 million (2015: £5.4 million) 7 million customers served during an average week, including over 300,000 in the Republic of Ireland Planned store openings for FY2017 in the UK and the Republic of Ireland reflect a year of consolidation; 20 to 30 net new stores planned, primarily in the Republic of Ireland and in retail parks Strategic Highlights Acquired 99p Stores at the end of September 2015; conversion programme now complete Extending trial in Spain until November 2016 Trading update for the 11 weeks ended 12 June 2016 Total group sales increased by 30.1% to £300.9 million (2015: £231.6 million) Underlying sales for the 11 weeks ended 12 June 2016 increased by 28.6% (2015: 3.5%) to £294.5 million (2015: £228.9 million) Sales in Spain were £4.0 million (2015: £2.5 million) *Underlying includes contributions from converted 99p Stores. Unconverted 99p Stores’ contributions are included in non-underlying because their performance prior to conversion is not a guide as to future performance **Comparable is underlying excluding converted 99p Stores *** after non-underlying items Darren Shapland, Chairman of Poundland, said: “This has been a challenging but transformative year for Poundland and the acquisition of 99p Stores has further strengthened our position as Europe’s biggest single-price discounter. With all of the 99p Stores now converted to the Poundland fascia, we are strategically well placed for progress under Kevin O’Byrne’s leadership.” Jim McCarthy, Chief Executive of Poundland, said: “After a period of significant change, including an unprecedented integration programme at pace, Poundland now has a unified estate of over 900 stores. The retail environment remains challenging, but with our significantly enlarged store portfolio, greater scale and ability to focus fully on trading our stores, I believe we are well placed to make progress in the year ahead.” “I believe that under the leadership of my successor, Kevin O’Byrne, Poundland will return to growth. I wish Kevin, the leadership team, all of my colleagues and supplier partners every future success.” Kevin O’Byrne, Chief Executive Designate, said: “It is very clear to me that Poundland’s brand, position and focused model are real strengths and resonate strongly with our millions of customers. I’m looking forward to taking up the CEO role in two weeks’ time and the committed, talented and passionate people I’ve encountered throughout the business give me further confidence that Poundland has a bright future at the heart of the discount sector.” Results Presentation A presentation for analysts and investors will be held today at 9am. Please use the following conference call details to listen to the presentation: Dial in: +44 (0) 20 3003 2666 Password: Poundland We will announce our Q2 trading statement for the 13 weeks to 11 September 2016 with our AGM statement on 15 September 2016. We plan to announce our interim results for the six months ended 25 September 2016, on 17 November 2016. For further information please contact Enquiries: Nick Hateley, Chief Financial Officer +44 (0) 121 568 7000 Philip Dorgan, Head of Investor Relations +44 (0) 121 568 7000 Media Enquiries: Citigate Dewe Rogerson Simon Rigby +44 (0) 207 282 2847 Angharad Couch +44 (0) 207 282 2941 FINANCIAL SUMMARY FY 2016 FY 2015 Growth Total sales in UK & Republic of Ireland (£m) 1,310.5 1,111.5 17.9% Like-for-like sales growth (%) -3.9 2.4 Underlying gross margin (%) 37.3 37.1 Up 14 bp Underlying EBITDA (£m) 56.9 59.4 -4.1% Underlying comparable EBITDA (£m) 53.8 59.4 -9.4% Underlying comparable pretax profits (£m) 37.8 43.7 -13.5% Underlying adjusted diluted EPS (p) 11.7 13.1 -10.8% Total dividend per share (p) 3.65 4.50 -19.0% Net (debt)/cash (£m) (12.0) 13.9 PROGRESS AGAINST GUIDANCE FOR FY 2016 UK & RoI Store rollout: FY 2015 FY 2016 Poundland 547 843 Republic of Ireland 41 53 Total 588 896 Reconciliation Start of year 528 588 Openings Poundland 63 69 Dealz 10 10 Total 73 79 99p 252 Total 601 919 Closures Poundland 13 19 99p 4 Total 13 23 Group total 588 896 UK & Republic of Ireland: In line with guidance, we opened a net new 60 Poundland and Dealz stores. Within this, we closed 10 Poundland stores as a consequence of the 99p Stores’ acquisition. Spain: We opened five stores, ending the year with 10 stores, in line with guidance. FX: The Euro FX impact loss on EBITDA was around £3 million, slightly below guidance. Profit phasing: Profit was H2-weighted as expected, due to the phasing of our opening programme in H1. Non-underlying charges: We incurred pilot store costs in Spain of £3.3 million, ahead of guidance of £2.5 million to £3.0 million, because of the costs of implementing our new store model. We incurred additional fees associated with the proposed acquisition of 99p Stores of £2.5 million, in line with guidance. We also incurred non-underlying integration costs of £15.0 million, ahead of guidance, due to the phasing of conversions. Trading EBITDA losses incurred by 99p Stores including both pre-and post-converted stores, totalled £7.8 million, which was in line with guidance. Capital investment: Capital investment for the full year in our core business and Spain of £25.3 million, which was in line with guidance. In addition, we spent £20.1 million converting 190 of the 99p Stores’ portfolio to the Poundland format. This was ahead of guidance of £12 million, due to the acceleration in the conversion programme, because we converted more stores than we originally planned to and to the fact that we took the opportunity to update the stores’ fabric and install CCTV and LED lighting. GUIDANCE FOR FY 2017 Store pipeline: We expect to open 20 to 30 net new stores in the UK & Republic of Ireland, with a focus on Dealz in the Republic of Ireland and retail parks. We expect to re-site around 10 stores in the UK. We expect to open a small number of stores in Spain. H1/H2: Q1 sales patterns have followed recent sales trends and, as anticipated, we expect H1 to be challenging, with negative like-for-like sales growth and continued disruption as the converted 99p Stores bed down into the larger estate. In H2 we expect to see some improvement in trading, assisted by the build-up of benefits associated with the 99p Stores’ acquisition. 99p Stores’ incremental EBITDA: In 2017 we expect to capture around two-thirds of the £25 million annual incremental EBITDA associated with the acquisition and increased scale of the group. Non underlying charges: We expect integration costs of 99p Stores to be around £10 million, primarily associated with the completion of the conversion programme and the costs of closure of its head office. The costs of opening our new warehouse at Wigan and double-running costs associated with 99p Stores’ Northampton warehouse will be around £3.5 million. We expect to incur losses at the non-underlying EBITDA level in Spain of between £2.0 million and £3.0 million. Capital investment: We expect that capital expenditure will be around £25 million, primarily driven by new store openings in the UK, Republic of Ireland and Spain, as well as the last of the 99p Stores’ conversions, which have now been completed. CHIEF EXECUTIVE’S REVIEW Overview The highlight of the 2016 financial year was the transformational acquisition of 99p Stores. The protracted CMA review process , however, significantly impacted the 99p Stores’ business before we completed the acquisition. We therefore decided to accelerate our conversion plans in order to reverse its declining performance and to capture the benefits of scale as quickly as possible. This was completed at unprecedented pace, in just four months, with 190 stores converted to the Poundland format by the end of March 2016 and a further 45 stores converted by the end of April 2016.
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