10 November 2022

B&M European Value Retail S.A.

FY23 Interim Results Announcement

Solid underlying growth in a tough environment

B&M European Value Retail S.A. ("the Group"), the UK's leading variety goods value retailer, today announces its interim results for the 26 weeks to 24 September 2022.

HIGHLIGHTS

·     Group revenues increased by 1.8% on prior year to £2,309m (+1.9% constant currency¹). This represents a step up in Q2 sales, which rose by 6.3% compared to a (2.3)% decline in Q1. Momentum has continued into Q3

·   Group adjusted EBITDA⁴ of £232m and margin of 10.0% on a pre-IFRS16 basis versus £282m and margin of 12.4% in the prior year, driven by the reduction in gross margin but a strong increase compared to the pre-pandemic adjusted EBITDA figure in HY1 FY20 of £151m and margin of 8.5%. Current year group adjusted EBITDA on a post-IFRS16 basis was £340m versus £385m in the previous year

·   Group cash generated from operations was £370m (H1 FY22: £201m), year on year ("YoY") growth of 83.3% reflecting planned stock reductions and strong inventory controls

·   B&M UK fascia² revenue decreased by (0.9)% on prior year, with like-for-like³ ("LFL") revenues decreasing by (3.9)%. However, Q2 LFLs were up 2.0%, compared with a decline of (9.1)% in Q1, which was affected by the strong seasonal sales in Q1 in the previous year. Q2 3-year LFL increased by 14.4% with strong transaction numbers

·    B&M UK adjusted EBITDA⁴ % decreased to 10.6% (H1 FY22: 13.5%), which was driven by the trading gross margin % reduction of 213 bps⁸, largely due to higher markdowns in the gardening category resulting from the late arrival of warm weather

·    Total gross new store openings in in H1 FY23 for B&M UK were 10, 4 in France and 7 in Heron. New space is performing well and store standards continue to strengthen

·      Strong strategic and financial progress in France as sales increased by 18.2%, with all stores now under the B&M banner and adjusted EBITDA⁴ of £18m (9.6% of sales) versus £11m in H1 FY22 (7.3% of sales). The business continues to build strong operational momentum

·   Strong operational and financial progress in Heron Foods as sales increased by 14.6% as consumers were attracted to our convenience discount stores. Adjusted EBITDA⁴ of £14m (6.1% of sales) versus £13m in H1 FY22 (6.6% of sales)

·     Group statutory operating profit was £249m (H1 FY22: £283m), statutory profit before tax was £201m (H1 FY22: £241m) and statutory diluted earnings per share was 15.7p (H1 FY22: 19.0p)

·     An interim dividend⁵ of 5.0p per Ordinary Share will be paid on 16 December 2022, which is at the same level as the previous financial year

·   Net debt to adjusted EBITDA leverage ratio (pre-IFRS16) at 1.3x remaining comfortably below our previously stated ceiling of 2.25x. Strong cash generation and low leverage provides the Group with flexibility

·     Trading has been good in the first six weeks of the Golden Quarter, with LFL sales up 2.5% in B&M UK stores and strong sell-through in non-grocery categories. We confirm previous guidance given of £550m - £600m Group adjusted EBITDA⁴, significantly ahead of the pre-pandemic level of £342m in FY20

Alex Russo, Chief Executive, said,

"Sales momentum is good as we enter a difficult period for the economy and consumers. Our value-based approach is winning with existing and new customers, and we will do our very best to help them weather the cost-of-living crisis. We are well positioned as we trade through the Golden Quarter and our strategy remains unchanged - a relentless focus on price and product.

I would like to personally thank Simon Arora for his leadership of B&M. He and his brother Bobby have built an exceptional business and the team will continue to build on Simon's legacy. We see four drivers of long-term growth:

i)    Existing Stores: We see potential for improving sales in existing stores, by continuing to improve store standards, by refining product mix and by emphasising our value for money credentials. Consumers are under pressure from inflation, falling real earnings and rising interest rates, but we are well positioned to help new and existing customers.

ii)   New Stores. We confirm our long-term target of 950 stores in the UK, which would represent an additional 35% more stores. Although new store openings have slowed during and since COVID, we retain a healthy pipeline and there are a significant number of localities in the United Kingdom where B&M is not represented at all.

iii)  France: Our business in France offers excellent long term growth potential - through new stores and through improving the offer as the business adopts B&M best practice and the B&M supply chain. With just 111 stores in a country with a population similar in size to the UK, medium to long term growth potential is high.

iv)  Heron Foods: During tough times consumers seek out value offerings and stores with limited ranges. This helps consumers manage their budgets, and in this environment Heron Foods (along with our B&M fascia stores) is particularly well positioned as a discount convenience store.

We plan for an ongoing long term operating margin higher than pre-pandemic levels. During lockdown, the business demonstrated its ability to deliver operational gearing, as overall Group sales densities and profits increased. As sales returned to a normalised level, albeit significantly higher than pre-lockdown, some of the margin growth and operational gearing has moderated. The longer-term outlook remains positive for sustained margin improvement, with cost control, efficiencies and improved processes offsetting cost inflation.

We remain a highly cash generative business and we maintain our ceiling of 2.25x for gearing.  We expect to be able to continue to return excess cash periodically to shareholders over and above normal dividends."

Financial Results (unaudited)

1.     Constant currency comparison involves restating the prior year Euro revenues using the same exchange rate as that used to translate the current year Euro revenues.

2.     References in this announcement to the B&M UK business includes the B&M fascia stores in the UK except for the 'B&M Express' fascia stores. References in this announcement to the Heron Foods business includes both the Heron Foods fascia and B&M Express fascia convenience stores in the UK. When reporting adjusted EBITDA, B&M UK also includes the corporate segment as referred to in note 2 of the financial statements, and includes an adjusted loss of <£1m (H1 FY22: loss of <£1m).

3.     One-year like-for-like revenues relate to the B&M UK estate only (excluding wholesale revenues) and include each store's revenue for that part of the current period that falls at least 14 months after it opened compared with its revenue for the corresponding part of FY22. This 14-month approach has been adopted as it excludes the 2-month halo period which new stores experience following opening.

4.     The Directors consider adjusted figures to be more reflective of the underlying business performance of the Group and believe that this measure provides additional useful information for investors on the Group's performance. Further details can be found in notes 3 and 4.  In particular, adjusted figures exclude the impact of IFRS16, both to maintain comparability with prior periods and as management consider that the pre-IFRS 16 measure of rental costs is key to the operational management of the business.

5.     Dividends are stated as gross amounts before deduction of Luxembourg withholding tax which is currently 15%.

6.     Net capital expenditure includes the purchase of property, plant and equipment, intangible assets and proceeds of sale of any of those items.  These exclude IFRS16 lease liabilities.

7.     Net debt comprises interest bearing loans and borrowings, overdrafts and cash and cash equivalents. Net debt was £736m at the year end, reflecting £959m as the carrying value of gross debt netted against £223m of cash. See note 8 of the financial statements for more details.

8.     Trading Gross Margin is considered to be a meaningful measure of profitability as it refers to the measure of Gross Margin used by management to commercially run the business. It differs to the statutory definition for B&M, which declined 284bps from 37.3% to 34.5%, due to technical accounting adjustments in relation to the allocation of gains and losses from derivative  accounting, storage costs and commercial income, with the derivative adjustments the main factor.  Our current Group hedging profile is strong with a £108m asset included on the half year statement of financial position which is in relation to our foreign exchange position that runs until September 2023.

9.     The consolidated financial statements are presented in pounds sterling and all values are rounded to the nearest million (£'m), except when otherwise indicated. This is the first interim report where the Group has rounded to the nearest million (previously rounding to the nearest thousand). In transitioning the prior year accounts, usual rounding practices have been adhered to.

Results Presentation

An in-person presentation for analysts in relation to these FY23 Interim Results will be held today at 09:30 am (UK) at Bank of America, 2 King Edward St, London, EC1A 1HQ.  Attendance is by invitation only. 

A simultaneous live audio webcast and presentation will be available via the B&M corporate website at  https://www.bandmretail.com/investors/presentations/year/2022

Enquiries

B&M European Value Retail S.A.

For further information please contact +44 (0) 151 728 5400 Ext 6363

Alex Russo, Chief Executive Officer

Mike Schmidt, Chief Financial Officer

Dave McCarthy, Head of Investor Relations

[email protected]

Media

For media please contact +44 (0) 207 379 5151

Sam Cartwright, Maitland          

[email protected]

This announcement contains statements which are or may be deemed to be 'forward-looking statements'. Forward-looking statements involve risks and uncertainties because they relate to events and depend on events or circumstances that may or may not occur in the future. All forward-looking statements in this announcement reflect the Company's present view with respect to future events as at the date of this announcement. Forward-looking statements are not guarantees of future performance and actual results in future periods may and often do differ materially from those expressed in forward-looking statements. Except where required by law or the Listing Rules of the UK Listing Authority, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect any events or circumstances arising after the date of this announcement.   

Notes to editors

B&M European Value Retail S.A. is a variety retailer with 704 stores in the UK operating under the "B&M" brand, 314 stores under the "Heron Foods" and "B&M Express" brands, and 111 stores in France also operating under the "B&M" brand as at 24 September 2022. It was admitted to the FTSE 100 index on 21 September 2020.

The B&M Group was founded in 1978 and listed on the London Stock Exchange in June 2014. For more information please visit www.bmstores.co.uk

OVERVIEW OF FY23 INTERIM RESULTS

The Group performed well throughout the first half of the financial year, building momentum as the half progressed and providing our customers with the best products and prices in the current environment. Group revenues for the 26 weeks ended 24 September 2022 grew by 1.8% to £2,309m and by 1.9% on a constant currency basis¹. 

In the core B&M UK business, Q1 LFL sales declined by (9.1)%, due to the exceptionally strong seasonal performance at the start of the comparative prior year period. Q2 LFL sales were up 2.0%, showing growing momentum as the half progressed, which has continued into Q3.

Gross margins declined year on year with the main driver a reduction in B&M's trading gross margin by 213 bps⁸ to 34.9% from 37.0%. This reduction is primarily driven by markdowns in the gardening category taken to have a clean closing position. The stock position is significantly lower than in the previous year and in the right place heading into the Golden Quarter. On a statutory basis profit before tax declined to £201m from £241m driven by the reduction in gross margins.

In France, total sales were up 18.2%, the strong momentum from FY22 has carried through and it has been a strong half against the strategic and financial objectives of the business. New store openings are performing well and 31 out of 111 are now company operated, rather than by mandated managers.

Heron Foods performed strongly in the period, with sales up 14.6%. Our discount convenience offering demonstrates that we can provide our customers everyday essentials at cheaper prices than our competitors - helping ease the pressure on many households.  

Momentum builds across the first half of the year

The Group financial statements have been prepared in accordance with IFRS16, however adjusted figures presented before the impact of IFRS16 continue to be reported where they are relevant to understanding the performance of the Group.

B&M UK

In the UK, the B&M fascia² business, total revenues declined by (0.9)% to £1,892m (H1 FY22: £1,910m), against tough comparatives, but momentum built across the half year with Q2 sales up 5.0%. On a one-year basis, LFL sales decreased (3.9)%, Q2 LFLs were up 2.0% compared with the Q1 decline of (9.1)%, which was affected by the strong seasonal comparative.

There were a total of 10 gross new stores openings in H1. The performance of recent openings continues to be strong, with both the FY22 and H1 FY23 cohorts delivering a higher store contribution margin than the company average. New stores do not require a maturity period to achieve profitability, due to the disruptive nature of the retail offer and a capital light model, making the new store payback economics highly attractive. New store openings slowed during the pandemic and lockdown, impacting the pipeline, but we expect this to recover going forward.

B&M UK revenues also included £17m of wholesale revenues (H1 FY22: £24m), the majority of which represented sales made to our associate Centz Retail Holdings Limited, a chain of 49 variety goods stores in the Republic of Ireland.

B&M's trading gross margin reduced by 213 bps⁸ to 34.9% from 37.0%. This reduction is primarily driven by markdowns in the gardening category taken to have a clean closing position. Our YoY total stock position has decreased significantly by £50m. Our current Group hedging profile is strong with a £108m asset included on the half year statement of financial position which is in relation to our foreign exchange position that runs until September 2023.

Operating costs excluding depreciation and amortisation increased by +7bps YoY as a % of revenue to 23.9% from 23.8%. This was because of an increase in store costs driven by a strategic decision to focus on store standards to drive LFL sales, offset against foreign exchange gains made due to our strong hedging position against the underlying spot rate. The increase in store costs is expected to moderate in H2.

Transport and distribution costs were managed effectively as a percentage of revenues despite the slightly negative LFL sales performance.  The business has a long-standing shipping partner for goods sourced out of Asia, with freight rates fixed at contracted rates. Supply chain flexibility and service levels throughout H1 remain very robust.

Adjusted EBITDA⁴ decreased by (22.3)% to £200m (H1 FY22: £258m), with adjusted EBITDA margin decreasing by 292 bps to 10.6% (H1 FY22: 13.5%), caused primarily by the decline in gross margin. Statutory operating profit for the period was £223m (H1 FY22: £265m).

B&M France

In France, revenues increased by 18.2% to £184m (H1 FY22: £155m).  This represented a strong performance highlighting the appeal of the product range and continued improvement in store standards execution, with a modest increase caused by the six week 'soft lockdown' in place at the start of the comparative period.

Adjusted EBITDA⁴ increased by 54.6% to £18m (H1 FY22: £11m), representing an adjusted EBITDA⁴ margin of 9.6%, up 225 bps YoY (H1 FY22: 7.3%). Statutory operating profit for the period was £17m (H1 FY22: £10m).

Heron Foods

The discount convenience chain, Heron Foods, generated revenues of £233m up 14.6% (H1 FY22: £203m). As consumers look to manage their budgets, they increasingly turn to stores with lower prices and limited ranges. Like the B&M fascia, Heron Foods is well positioned to help consumers manage their budgets. 

Adjusted EBITDA⁴ increased by 5.7% to £14m (H1 FY22: £13m) representing an adjusted EBITDA⁴ margin of 6.1%, down 52 bps YoY (H1 FY22: 6.6%). Statutory operating profit for the period was £9m (H1 FY22: £8m).

Group

Group adjusted EBITDA⁴ decreased (17.9)% to £232m (H1 FY22: £282m), representing an adjusted EBITDA⁴ margin of 10.0% (H1 FY22: 12.4%), a reduction of 240 bps year-on-year.

Depreciation and amortisation expenses, excluding the impact of IFRS16, grew by 10.4% to £35m (H1 FY22: £32m).  This was due to continued investment in new stores across all fascias, with 32 more stores year-on-year across the Group at the end of H1.

The Group's adjusted profit before tax⁴ decreased by (25.3)% to £178m (H1 FY22: £238m), whilst statutory profit before tax decreased by (16.7)% to £201m (H1 FY22: £241m). The impact of IFRS16 on the Group's interim financial statements was to decrease profit before tax by £5m.

Cashflow, capital expenditure and leverage

Cash generated from operations was £370m (H1 FY22: £201m), an increase of 83.3% YoY reflecting planned stock reductions and strong controls.

Group net capital expenditure, excluding IFRS16 right-of-use asset additions, was £45m (H1 FY22: £43m). This included £16m spent on 21 new stores opened in the first half across the Group (H1 FY22: £12m on 23 stores), £22m on maintenance works to ensure that our existing store estate and warehouses are appropriately invested (H1 FY22: £19m), and a total of £7m on infrastructure projects and opportunistic freehold acquisitions to support the continued growth of the business (H1 FY22: £12m).

The Group remains comfortably within its stated leverage ceiling of 2.25x, with a net debt⁷ to last-twelve-months adjusted EBITDA⁴ ratio of 1.3x at the end of H1 FY23 (H1 FY22: 1.1x), calculated on a pre-IFRS16 basis.  The current leverage and cash position continues to be evaluated in line with the Group's capital allocation framework.

Dividend

An interim dividend of 5.0p⁵ per Ordinary Share will be paid on 16 December 2022 to shareholders on the register at 18 November 2022. The ex-dividend date will be 17 November 2022. The dividend payment will be subject to a deduction of Luxembourg withholding tax of 15%.

Shareholders and Depository Interest holders can obtain further information on the methods of receiving their dividends on our website www.bandmretail.com or by visiting the website of our Registrar, Capita Asset Services at www.capitashareportal.com.

Strategic performance

The macroeconomic backdrop remains highly uncertain, with the consumer challenged by high inflation, rising interest rates and by declining discretionary incomes. Against this backdrop we remain focused on delivering our strategic priorities around product, price and growth and on helping consumers weather the cost-of-living crisis. In doing so, we will deliver against our strategic priorities and against the 4 drivers of growth outlined earlier:

1.   Growing Sales in Existing Stores

There remains considerable scope for growing sales in existing stores - through attracting new customers from different demographics and from existing customers increasing their spend with us, both helped by our engaging social media presence. B&M is able to trade well in an environment where customers are looking for value.

Whilst there are increasing numbers of people who need a bargain, everyone likes a bargain.  Over the past two years, B&M have seen a number of new customers discover the stores and the brand. Retaining these customers is about providing low prices and quality goods, including leading brands. Our relentless focus on price and product will help us retain many recently won customers.

A combination of our evolving offer, low prices and improving store standards, against a tough consumer environment, leaves our existing stores well positioned to increase sales densities, as evidenced with our growing momentum through the first half.

2.   New B&M Stores

We re-iterate our target of 950 stores, which represents a 35% increase in store numbers compared to today. With our appeal widening to other demographics, there is scope for increasing this number in the future. As it stands, there remain significant localities in the UK, where B&M is either under-represented or not represented at all.

In the core B&M UK business, 10 gross new stores were opened across the UK. There were 4 closures in H1 FY23, of which 3 were relocations, meaning that there was a net increase of 3 stores overall. The closed stores were typically opened over a decade ago and were in catchments where a larger, more modern store had been opened in a prior financial year and which is delivering materially superior returns.

Looking ahead to H2 FY23, the new store pipeline should deliver 10-12 openings in H2. With our uncompromised focus on the quality of store location and premises, progress on the roll out in H1 has been slower than anticipated but we expect this to recover going forward.

3.   France

France is seen as a real growth area for the Group - off the back of the successfully completed B&M rebrand exercise. We remain focussed on working towards our long-term strategic and financial goals for the business. In the short term, a store roll-out plan is in place with further 3 new store openings to be completed in H2 and 10 openings planned for the next financial year.

The rebranding has been a success with 111 stores now under the B&M banner. Product ranges have been refined, prices sharpened and store standards stepped up. Sales in both the grocery and non-grocery categories have performed strongly.

The strong H1 FY23 performance and strong cash generation has demonstrated the significant progress we have made towards achieving our long-term strategic goals for the French business.  Our strategy for France requires a clear focus, and as such no other international geographies are currently being evaluated to avoid any management distraction.

4.   Heron Foods

Heron Foods remains a strong growth opportunity and a core part our business. Its strong sales in the first half demonstrate how this business is well positioned in the current environment. With only 314 stores currently, and requiring only small catchment areas, this convenience discount chain offers considerable scope for long term development.

Heron Foods opened 7 new stores and closed 4 stores in H1 FY23.  These closures included 3 stores that had been unprofitable since opening prior to our acquisition, and 1 relocation. Heron Foods remains on track to achieve 15 gross new stores over the full financial year. The Heron Foods store estate has the potential to be materially larger than its current size over the longer term, and the Group is committed to carefully expanding its UK footprint.

 Environmental, Social & Governance

Since publishing our first standalone ESG report in June 2022 progress has been made with our Scope 1 & 2 reduction targets, which have been validated by SBTi, along with a Scope 3 supplier engagement target and with developing a road map to Net Zero by 2040 using a science-based approach. We will look to improve our data collection processes to achieve more granular metrics and targets for both environmental and social issues, in accordance with the Global Reporting Initiative (GRI).

 Outlook

We expect full year Group adjusted EBITDA⁴ to be in the range £550m - £600m, in line with previous guidance.  We are trading well into the first six weeks of Golden Quarter, with LFL sales at B&M UK up 2.5%. This represents a significant increase in total sales over pre-COVID levels, and is against a backdrop of rising interest rates, increased cost inflation and declining consumer confidence. We expect our gross margin to improve going forwards compared to H1, helped by strong stock discipline, and not impacted by disappointing weather patterns as at the beginning of Spring/Summer 2022.

We remain well positioned to benefit from consumers trading down in grocery and non-grocery. As some customers experience our value for money offer for the first time, so would we expect to retain many of these consumers into any economic recovery.  We will continue to focus on building long term relationships and loyalty with our consumers and will not sacrifice hard-won, long-term positioning for short term gains.

The H2 FY23 new store pipeline for B&M UK is expected to be 10-12 stores, B&M France is on track to open 3 new stores with Heron Foods delivering an additional 8.

 Principal risks and uncertainties

There are a number of risks and uncertainties which could have a material negative impact on the Group's performance over the remainder of the current financial year.  These could cause actual results to materially differ from historical or expected results.  The Board does not believe that these risks and uncertainties are materially different to those published in the Annual Report for the year ended 26 March 2022.

These risks comprise all those associated with the COVID-19 pandemic, the disruption in the supply chain, high levels of competition, the broader economic environment and volatile market conditions, failure to comply with laws and regulations, inherent risks in international expansion, failure to maintain and invest in key infrastructure, disruption to key IT systems, cyber security and business continuity, fluctuations in commodity prices and cost inflation, key management reliance, availability of suitable new stores and failure of stock management controls.

Detailed explanations of these risks are set out on pages 26 to 34 of the Annual Report 2022 which is available at https://www.bandmretail.com/investors/presentations/year/2022

Alex Russo

Chief Executive Officer

 9 November 2022

To the Shareholders of
B&M European Value Retail S.A.
68-70, boulevard de la Pétrusse

L-2320 Luxembourg

Luxembourg

REPORT OF THE REVISEUR D'ENTREPRISES AGREE
ON THE REVIEW OF CONDENSED CONSOLIDATED INTERIM

FINANCIAL INFORMATION

Introduction

We have reviewed the accompanying condensed consolidated statement of financial position of B&M European Value Retail S.A. as at 24 September 2022, the related condensed consolidated statements of comprehensive income, changes in shareholders' equity and cash flows for the 26 week period then ended, and notes to the interim financial information ("the condensed consolidated interim financial information").

Board of Directors' responsibility for the condensed consolidated interim financial information

The Board of Directors is responsible for the preparation and presentation of these condensed consolidated interim financial information in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of condensed consolidated interim financial information that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Responsibility of the Réviseur d'Entreprises Agréé

Our responsibility is to express a conclusion on these condensed consolidated interim financial information based on our review. We conducted our review in accordance with International Standard on Review Engagements (ISRE 2410 "Review of interim financial information performed by the independent auditor of the entity") as adopted for Luxembourg by the "lnstitut des Réviseurs d'Entreprises".

This standard requires us to comply with relevant ethical requirements and conclude whether anything has come to our attention that causes us to believe that the condensed consolidated interim financial information, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework.

A review of condensed consolidated interim financial information in accordance with ISRE 2410 is a limited assurance engagement. The "Réviseur d'Entreprises Agréé" performs procedures, primarily consisting of making inquiries of management and others within the Group, as appropriate, and applying analytical procedures, and evaluates the evidence obtained.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these condensed consolidated interim financial information.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information as at 24 September 2022 is not prepared, in all material respects, in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

Luxembourg, 9 November 2022                                          KPMG Luxembourg

                                                                                          Société anonyme

                                                                                          Cabinet de révision agréé

                                                                                          Thierry Ravasio

Condensed consolidated statement of Comprehensive Income

* Other comprehensive income has been restated in 2021 to remove the effect of the hedging gains and losses transferred to inventories. These are recorded directly in the consolidated statement of changes in equity. See note 1.

All profit and other comprehensive income is attributable to the owners of the parent.

The accompanying accounting policies and notes form an integral part of these condensed consolidated financial statements.

Condensed consolidated statement of Financial Position

The accompanying accounting policies and notes form an integral part of this financial information. The condensed financial statements were approved by the Board of Directors on 9 November 2022 and signed on their behalf by:

A. Russo, Chief Executive Officer.