B&M European Value Retail SA

B&M European Value Retail SA Dividend Analysis and Summary

• Dividend type: Interim
• Amount: 3.5p per share (down 34% YoY from 5.3p)
• Ex-dividend date: 20/11/2025
• Record date: 21/11/2025
• Payment date: 12/12/2025
• Withholding tax: 15% Luxembourg (until redomicile completes)
• Payout policy: Ordinary dividends targeted at 40–50% of after-tax adjusted earnings (post-IFRS 16); typically ~one-third interim and two-thirds final
• Covers and affordability:
  • H1 adjusted diluted EPS: 7.2p ? dividend cover ~2.1x
  • Estimated cash cost of interim: ~£35m (c.1.005bn shares) vs H1 post-tax free cash flow £51m ? FCF cover ~1.5x
• Framework implications: If the one-third/two-thirds split is maintained, this interim would imply a full-year ordinary dividend around ~10.5p, subject to H2 performance and Board discretion.

• Earnings support: H1 adjusted EBITDA (pre-IFRS 16) fell 30% and adjusted EPS fell 48% YoY, but the 3.5p interim remains within stated payout policy (~49% of adjusted EPS). Coverage is acceptable but leaves limited headroom for growth absent an H2 recovery.
• Cash generation: H1 post-tax free cash flow of £51m covers the interim’s ~£35m cost. Cash generated from operations was resilient (£293m, down 3%), though working capital outflows and higher capex tightened FCF.
• Balance sheet and leverage: Net debt rose to £859m; pre-IFRS 16 leverage at 1.6x is slightly above the 1.0–1.5x target range, which could temper near-term scope for special distributions until EBITDA and LFL trends improve.
• Trading trajectory: B&M UK LFL was +0.1% in H1; early Q3 trading cited at the lower end of guidance range. Management still guides FY26 adjusted EBITDA (pre-IFRS 16) to £470m–£520m. Dividend growth prospects hinge on execution of “Back to B&M Basics” restoring LFL growth and margins.
• Capital allocation: The Board reiterates ordinary dividends plus returning excess capital; preference shifting to share buybacks (post-redomicile) rather than special dividends. Ordinary dividend therefore remains the core, policy-linked cash return.