Annual Report 2025
Value
you feel
For more on Pepco Group, visit our website: www.pepcogroup.eu
For more on our strategy go to page 17
Contents
Pepco Group is a leading variety discount retailer with a strong portfolio of stores
across Central, Eastern and Western Europe. Our strategy is built around our core
Pepco brand which offers quality clothing and general merchandise products at
market-leading prices to a highly loyal customer base.
Value you feel
Introduction
Highlights 1
Strategic report
At a glance 3
Investment case 5
Chair’s statement 6
CEO’s statement 8
Business model 12
Customer proposition 14
Market review 16
Strategic framework 17
Capital allocation framework 28
Sustainability strategy 29
KPIs 38
Financial review 40
Risk management 54
Going concern 62
Governance
Governance introduction 63
Board of Directors 67
Corporate governance statement 70
Audit Committee report 76
Nomination Committee report 81
Remuneration Committee report 83
Divergence from the Dutch
and Warsaw codes
92
Directors’ report 94
Sustainability statement
Contents 97
General disclosures 100
Environment 113
EU Taxonomy 121
Social 127
Governance 149
Appendices 152
Financial statements
Consolidated income statement 161
Consolidated statement of other
comprehensive income
161
Consolidated statement of
financial position
162
Consolidated statement of changes
in equity
163
Consolidated statement of cash flows 165
Notes to the consolidated financial
statements
166
Separate income statement 206
Separate statement of financial
position
206
Separate statement of changes
in equity
207
Separate statement of cash flows 207
Notes to the separate financial
statements
208
Other information
Independent auditor’s report
Independent auditor’s limited
assurance report on the Sustainability
statement
214
220
Articles of Association provisions
governing the distribution of profit
223
List of branches 223
Statutory list of all subsidiaries
and affiliated companies
224
Glossary of terms 226
Shareholder information 227
Pepco Group N.V. Annual Report 2025
Strategic
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Sustainability
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Other
information
Net new stores
Reported earnings per share (c)
Reported operating profit (€m)
Loss for the year including
discontinued operations (€m)
Underlying gross margin (%) Women in leadership positions
Supplier factory audits completed
4
Underlying earnings per share (c)
Free cash flow (€m)
Revenue (€m) Like-for-like revenue growth (%) Scope 1 & 2 GHG emissions
3
4,523
FY25
4,160
FY24
247
FY25
379
FY24
29.8
FY25
22.1
FY24
171
FY25
127
FY24
(176)
FY25
(734)
FY24
38.1
FY25
31.7
FY24
2.6%
FY25
(3.0%)
FY24
48.0%
FY25
47.0%
FY24
342
FY25
281
FY24
FY25
132k tCO2e
81k tCO2e
FY24
50%
FY25
28%
FY24
100%
FY25
100%
FY24
Group financial highlights
1
All metrics are for the continuing business only, unless otherwise specified.
Group sustainability
highlights
2
Group operational highlights
Successful sale
of Poundland
in June 2025
Exit of FMCG in
all Pepco stores
LFL growth restored
in Poland in H2 FY25
Strong growth
delivered in Western
Europe
Improved customer
proposition and
product availability
across our stores
Early progress
made in digital
with significant
advancements
in our infrastructure
1. Many of these financial highlights are Alternative Performance Measures (APM). Please see note 27 for definitions and reconciliations of APMs. Further information on our financial performance can be found on p.40.
2. For more information on our Sustainability performance, see our Sustainability statement on p.96.
3. Pepco Group Scope 1 & 2 marked-based emissions excluding Poundland. For further information on our emissions metrics see Sustainability Statement page 119.
4. Percentage of factories audited against our annual supplier factory audit plan. For further information on our factory audit metric see Sustainability Statement page 145.
FY25 highlights
1 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
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statements
Sustainability
statement
Other
informationHighlights
This year’s performance reflects our commitment to
disciplined execution, customer focus, and long-term
value creation. Across the region, our teams continued
to navigate a dynamic market with resilience and
ambition, delivering strong results while advancing our
strategic priorities. As we look ahead, we remain focused
on sustainable growth, operational excellence, making
everyday essentials affordable for every customer,
improving quality of life and creating opportunities.
Bogdan Grigoriu
Regional Operations Director
Strategic report
2 Pepco Group N.V. Annual Report 2025
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Other
information
39
63
100
1397
344
155
269
500
183
52
175
50
138
42
208
321
64
237
22
A leader in variety discount retailing
Pepco Group is a leading pan-European discount variety retailer specialising in clothing and general merchandise through our core brand, Pepco.
Originally established in Poland, Pepco now has just over 4,000 stores across Central, Eastern and Western Europe and is proud to serve over
41 million customers monthly. Pepco Group also owns Dealz, an FMCG-led business in Poland with 344 stores.
By region
By brand
Our locations
Revenue
Stores
4,359
Customers (per month)
41m
Employees
31,582
Operating countries
18
Pepco Dealz
Distribution
centres
Pepco
Dealz
92.5%
92.5%
7.5%
Poland
Rest of CEE
Western
Europe
38%
47%
15%
1
1
1
3
1. Distribution centres in Poland includes 1 Dealz DC
3 Pepco Group N.V. Annual Report 2025
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Other
informationAt a glance
Our vision is to build Europe’s
leading clothing and general
merchandise discount retailer
Our mission is to offer the lowest
prices and the best value to
families on a budget
Our purpose is to help all our
customers live better lives
Pepco is a fast-growing European discount variety retailer, operating over 4,000 stores across 18 countries.
Pepco is widely recognised as one of CEE’s strongest brands and most dynamic companies.
After more than 21 years of continuous growth, Pepco now serves over 41 million customers a month, offering clothing
for the whole family, as well as household goods and toys, all at the lowest prices.
Pepco is the Group’s primary brand and the focus of our strategy going forward. It represents 93% of Group revenue
and 92% of our store footprint.
Dealz is a chain of FMCG-led stores that has been present in the Polish market since 2018. It has its own independent
management team and operates across 344 locations in Poland. Dealz’s FMCG focus no longer aligns with
the Group's strategy, as a result, we intend to exit this business in the short to medium term.
Read more in our strategy section on pages 17
Simplify and
streamline the
Group portfolio
Refocus and
digitise Pepco’s
customer
proposition
Topline growth
through
measured
expansion in CEE
Win in Western
Europe
Upgrade our
core operating
platform
Our strategy
provides a clear
framework for
value creation
Pepco Group
brands
4 Pepco Group N.V. Annual Report 2025
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Other
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Investment case
Pepco Group has a unique business proposition and is focused on maximising shareholder value.
By delivering value for our
customers, we deliver value
for our shareholders.
Why invest?
Strong brand affinity
We have a well-recognised brand that resonates
with consumers, creating loyalty and regular
visits from our core customer base.
Significant growth opportunity
We will deliver growth through enhanced
operational excellence, increased customer
engagement and expansion in our adjacent
categories. This will be supplemented by
store openings across established and new
markets, with a particular focus on the sizeable
whitespace opportunity in Western Europe.
Price leadership
We have a strong reputation with customers
for offering the best prices on quality clothing
and general merchandise products.
Upside from digital
Pepco currently operates as a purely bricks
and mortar retailer with no digital offering.
There is significant potential to expand our
customer engagement, average basket
size, new customer growth and LTV through
the development of digital capabilities and
leveraging our data.
Simplified, scalable model
We are becoming a more focused, efficient
and disciplined business, centred around
our core Pepco brand, with an increasingly
standardised and scalable operating model.
Focus on shareholder returns
With profitable growth, a strong balance
sheet and a disciplined approach to capital
investment, the Group is generating consistent,
strong free cash flow. We are focused on
returning excess cash to shareholders.
Note: all figures exclude Poundland.
Note: FY25 dividend is proposed and subject
to approval at the AGM in March 2026.
4,5234,523
4,160
FY24
3,595
FY23
FY25
865865
FY25
784
FY24
550
FY23
9.69.6
6.2
FY24
FY25
Revenue (€m)
Underlying EBITDA (€m)
Dividend (cents per share)
25% CAGR
12% CAGR
FY25 payout
ratio of 25%
5 Pepco Group N.V. Annual Report 2025
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Pepco – the core focus
Looking ahead, our business has focus, renewed energy
and significant momentum. We go forward with excitement.
Frederick Arnold
Independent Non-Executive Chair
It was an honour to be asked by my
Board colleagues to take the role
of Chair this year, succeeding Andy
Bond, who made pivotal contributions
as both CEO, and later as Chair.
Andy took the reins at Pepco when
it had a mere c.100 stores in Poland.
He grew the business significantly,
allowing me to inherit a business
with a vast c.4,000 store portfolio
spanning 18 countries. On behalf of
the entire Board, I’d like to thank Andy
once more for his years of dedication
to helping make Pepco the iconic
company it is today.
My mandate as Chair is to help take Pepco
to the next level of performance and to drive
value creation. Under the leadership of our new
CEO, Stephan Borchert, that journey has begun
with a flourish in numerous ways: strategic
redirection, talent augmentation and diligent
execution, all with a renewed sense of passion
and urgency.
Governance & controls
The effectiveness of the ongoing collaboration
between the Board and the management team
is the most important aspect of governance
for me. So much of the success or failure of a
company emanates from this. As such, it is an
area we have intensively sought to improve
this past year as we planned for the strategic
and operational improvements we wanted
to accomplish.
The Board felt that to be the best possible
resource for the new management team,
and to provide best-in-class governance
on behalf of stakeholders, we needed to
understand the Company’s challenges
and opportunities in even greater detail,
while simultaneously creating more effective
processes for nimble and efficient collaboration.
Accordingly, we undertook a series of timely
actions to enable high-value, agile and fast-
paced Board decision-making. As a first step,
we reduced the Board size to five members
in preparation for the transformational change
required. Then, through our Nomination
Committee, we considered which skills and
experience would best support future value
creation during the “New Pepco” phase we
were launching.
As a result, we have added three exceptionally
qualified senior retail leaders as Board
Observers, Dirk van den Berghe, Sander van
der Laan and Nicolò Galante (all of whom will
be proposed for election by our shareholders
as Non-Executive Directors at the AGM on
11 March 2026), while still retaining a nimble,
proactive Board model. For more information
on these appointments please see page 70 in
the Governance section and pages 81 and 82
in the Nomination Committee report. Finally,
we sharpened the focus of our Board meeting
agendas to emphasise and explore in detail
the highly substantive strategic and operational
topics critical to driving value creation, while also
accentuating our focus on enhanced controls.
As to controls, under the focused oversight of
the Board and, in particular, the Audit Committee,
we’ve made great strides in further enhancing
the Company’s global compliance and control
environment. We have achieved this while
working carefully to preserve the entrepreneurial
dynamism that has fuelled Pepco’s growth
over the years. This work has touched many
areas: capital investment decision-making,
sharpened ROIC metrics, enhanced internal
audit processes, augmented IT resilience and
controls, new compliance protocols, enhanced
risk oversight and further sustainability efforts,
to name just a few. In addition, we welcomed
new external auditors to the Group, with Ernst
& Young replacing Mazars, the latter having
served the Company admirably since IPO.
By augmenting our governance and controls
without impairing entrepreneurial dynamism,
we have achieved dramatic improvements
across the business.
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Chair’s statement
For example, in our Western European business,
following intensive evaluation at both the
management and Board levels and decisive
action, we delivered LFL growth, excluding FMCG,
of 14.1% and an uplift in pre-IFRS 16 Store
EBITDA margin of 420bps thanks, in part, to the
successful conversion of all our Pepco Plus stores.
In Poland, the original and veritable core of
Pepco, and still our largest market, we returned
to LFL growth in H2, up 3.9% excluding FMCG.
Cultural and process changes are not always
visible, but allow me to assure you, there is so
much going on beneath the surface – new rigour,
sharper discipline and improved controls.
The results are starting to show and this is
only the beginning.
Strategic redirection
Complementing the work to enhance governance
and controls was a similar collaboration
between Board and management, sharpening
the strategic direction of the Company.
The most critical decision was to exit fast
moving consumer goods (FMCG) and refocus
on Pepco’s core strengths – deep-discount
retailing of quality clothing and general
merchandise in our most attractive markets.
This streamlined strategy was communicated
in detail by Stephan and the wider senior
leadership team at our Capital Markets Day in
March 2025, and is referenced in Stephan’s CEO
statement on page 8.
With Board support, the senior leadership
team has been executing our strategy with
due urgency and rigorous attention to detail –
cultural touchstones for New Pepco. Significant
progress has been made in the nine months
since our new strategy was presented.
Among our many achievements, three critical
milestones in our strategic move back to
our core competitive strengths stand out.
First, we executed a full strategic and financial
separation of Poundland through a sale to
Gordon Brothers in June 2025, positioning
Poundland for a necessary restructuring,
while also creating a potential path for it to
enjoy future success as a stand-alone FMCG-
led company. Second, we removed FMCG from
our Pepco stores, including the reformatting
of our Pepco Plus stores in Iberia, which we
achieved while successfully enhancing core
clothing and GM offerings there. Finally,
we clarified our strategy for FMCG-led Dealz,
helping the business consolidate recent
successes in preparation for its future divestiture.
Our team’s speed of execution on these key
initiatives allowed us to start FY26 with a
streamlined business model we have been
calling “New Pepco” – which of course is partly
a return to the core strengths of old Pepco,
but with an enhanced foundation and a culture
that emphasises disciplined, well-capitalised
and expansive future growth.
Our management team
Our new senior leadership team is driving our
growth-and-returns strategy. Our new Group
CEO, Stephan Borchert, has re-energised
many long-term Pepco leaders and recruited
very talented executives to the business,
instilling a culture of teamwork, transparent
communication and a drive for excellence.
Our recent additions include a new Group CFO,
Pepco CFO, Group CIO, Western Europe COO,
Group HRO, new leadership in PGS, as well as
a new General Counsel of Pepco, alongside
many others. We expect to add further senior
strategic talent in FY26.
Value creation
In July 2025, the Board engaged with
many Pepco leaders when we visited Poznan.
We delved into the detail of the product
range and visited stores, newer and older,
larger and smaller. We also visited an array of
competing stores. The Board is highly engaged
in understanding our competition and adjusting
our model to compete and win.
Through our Remuneration Committee,
the Board is focused on ensuring the team’s
compensation remains closely aligned with
our shareholders’ interests. To that end, in FY25,
we expanded the use of equity-based plans
throughout the senior team and the Board.
We believe that judicious use of incentives that
align our senior leadership with our shareholder
base helps position us for sustained value
creation over time.
It is not just great retailing and operational
execution that drive enhanced share value
over time. The Board also prioritises disciplined
capital allocation and balance sheet
optimisation with a focus on free cash flow.
Accordingly, we have positioned Pepco to be
a robustly cash-positive business with ample
flows to fund both our capital expenditure
programme and enhanced capital returns
to shareholders.
Our carefully crafted capital expenditure
initiatives include both key platform
enhancements, such as new IT systems,
distribution and logistics architecture and
omnichannel engagement, as well as critical
store expansion and upgrades. As to capital
allocation and balance sheet management,
we paid the Group’s first regular cash dividend
in April 2025, as well as announcing and
commencing execution of a share buyback
programme in July 2025 given the Board’s view
that the Group’s opportunities for future value
creation were not reflected in our share price
during the past year. Following the fiscal year
end, we also refinanced our bond and term loan
at significantly lower interest rates, improving
profit after tax and enhancing financial flexibility.
Outlook
Effective Boards are about process and
action. When a Board digs into the detail
to make the kind of adjustments discussed
above, and a strong management team
executes well, positive results generally follow,
as they did in FY25. Underlying EPS growth of
20% really demonstrates the impact of our
actions. The Board thanks the entire team
for their collaboration in seeing these difficult
process changes through and for the work
and commitment that drove these outstanding
FY25 results.
Looking ahead, our business has focus,
renewed energy and momentum, with years
of opportunities both externally and internally
to create and harvest consistent, sustainable
growth. We go forward with excitement.
Frederick Arnold
Independent Non-Executive Chair
7 Pepco Group N.V. Annual Report 2025
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Shaping tomorrow together
2025 has proven to be a real turning point for the Group
and a year of swift strategic execution, made possible
through the support of a reinvigorated leadership team.
Stephan Borchert
Group CEO
Having taken over leadership of Pepco
Group as its new CEO and member
of its Board in October 2024, I am
pleased with the significant strategic,
operational and financial progress
we have made in that time.
After a thorough period of assessment,
I presented to my colleagues on the Board a
quite far-reaching strategic plan which received
broad support and was made public at the
Capital Markets Day in March 2025.
At the same time as delivering on this
plan, we achieved strong sales and profit
performance in our core Pepco business during
FY25, in what still remains a tough consumer and
macro environment. We achieved this against
a backdrop of far-reaching transformation
across the Group and a new strategic roadmap.
I am excited that we are successfully executing
on our set objectives, including the sale of
Poundland, as part of our overall exit from
FMCG, and a consequent refocus on Pepco.
It is now clear that 2025 has proven to be
a real turning point for the Group, which has
been made possible through the support of a
largely new leadership team. I am confident
that we now have the right people across each
role to build on the progress we’ve made this
year. Our sharpened strategy and simplified
Group structure have helped us to refocus on
what makes our business successful – providing
customers with quality products at market-
leading prices.
Simplifying the Group structure
As part of our five-pillar strategic plan,
we made the transformative decision to exit
from our FMCG-led businesses and categories.
Our standard Pepco store format has been
the core value driver for the Group for many
years, operating with faster revenue growth,
higher margins, stronger cash generation
and greater return on capital compared to our
FMCG-led businesses of Poundland and Dealz.
The financial weakness in Poundland,
in particular, was a significant drag on Group
performance amid increasing competitive
and cost challenges. We therefore acted swiftly
and decisively to find the best steward for the
business going forward. The sale to Gordon
Brothers in June 2025 was a huge milestone
for the Group and a significant step forward
in advancing our earnings potential.
We also successfully reformatted all our
Pepco Plus stores in Iberia, which sold primarily
FMCG products, to standard Pepco stores,
returning Pepco to its sole focus on our desired,
higher margin categories – clothing and
general merchandise.
I am pleased to say that the uplift in
performance across these converted stores
was almost immediate, with an increase
in pre-IFRS 16 store EBITDA margin of 12.1ppts
on an annualised basis, thanks to the beneficial
gross profit margin difference.
Refocusing on Pepco has also allowed us
to remove significant excess cost from the
business as we align on our single store
format, increasing synergies across the Group
and enabling us to operate more efficiently.
We’ve made good progress during FY25 but
there is more we can realise in FY26 as we
continue to sharpen our focus on these areas.
Leveraging the power of Pepco
The Pepco brand is the heart of the Group with
a strong reputation among a large and growing
customer base, processing roughly 440 million
transactions per year. Our retail footprint
continues to grow. We achieved a landmark
opening with our 4,000
th
store in Madrid in
September 2025. It was an extra special
milestone to open this store in Western Europe –
a market we have worked hard to prove the
potential of this year, and one in which I am
extremely encouraged by its prospects.
Visiting our retail stores across Europe over
the last year, it is clear that Pepco resonates
strongly with our customers. Our proposition as
the go-to clothing and general merchandise
discount retailer for young families on a budget
is driving increasing loyalty amongst our
customer base, as well as entrenching Pepco’s
market share versus the competition.
8
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More than two-thirds of Pepco sales are
generated by young, middle-income mums on
a budget. These customers see Pepco as a true
destination store, with our most loyal customers
making around 14 visits on average during the
year. As a result, Pepco has a c.30% market
share in kids & baby wear and near complete
brand recognition in our core CEE (Central and
Eastern Europe) markets.
Financial performance
Such quick operational progress shows in our
financial performance, as we delivered strong
revenue of €4,523m, up 9%, and underlying
EBITDA of €865m, up 10% in FY25. We also
outperformed on underlying gross margin,
which was up 100bps to 48.0%. The increase in
gross margin was encouraging and was realised
despite maintaining a strict focus on price
leadership versus our competition.
Revenue growth was driven by Group LFL
growth of 2.6% including FMCG (4.0% excluding
FMCG) and new store expansion with 247 net
new stores opened in FY25.
This growth was primarily driven by Pepco
which delivered LFL growth of 2.7% including
FMCG (4.1% excluding FMCG) and strong
gross margin of 48.6%.
This healthy topline performance translated
into strong profits with underlying profit after Tax
of €219m, up 20% on FY24. Our balance sheet
also remained strong as we continued to deliver
increasing free cash flow, which grew by €61m
YoY. With a healthy year-end cash position of
€464m, we are committed to enhancing returns
for our shareholders and I am therefore pleased
to announce a proposed FY25 dividend per
share of 9.6 cents, up from 6.2 cents in FY24.
Shortly after year end, the Group successfully
completed the refinancing of our external
debt facilities. This was a dual track process
consisting of €770m in committed credit
facilities, for which we were oversubscribed,
as well as a €141m debut Polish bond,
which is part of an up to c.€474m programme,
with funds specifically allocated towards green
projects, supporting our sustainability goals.
The refinancing reduced our average coupon
by 250bps to 3.9%, extended our maturity by
3 years to 2030 and resulted in an annual
interest cost saving of €14m.
Pivoting to growth in Poland
Poland and CEE are fundamental to our business
and central to our success. However, despite
Pepco’s strong history in Poland as its home
market, there was an underlying scepticism
surrounding the strength and relevance of
our customer value proposition and growth
potential in the region. This scepticism was driven
by a negative quarterly like-for-like performance
from the period of Q3 FY25 to Q2 FY25.
Pepco boasts many great attributes in CEE
including near complete brand recognition and
a large presence with 3,432 stores across 13 CEE
countries. These stores are also highly profitable
with >99% generating positive pre-IFRS 16
store EBITDA.
Despite these positives, it is fair to say that in
recent years we had taken our eye off the ball
and diluted our competitive edge. During 2025,
we refocused our efforts on pricing and the
customer offer, restoring a market-leading price
proposition while still delivering strong profits for
the business. In addition, we placed renewed
focus on operational excellence, working to
correct basic operational errors of the past and
improve our supply chain logistics, governance
and merchandising to ensure consistent stock
availability and product quality. We also took
steps to improve the operations of our weakest
performing stores through refits, restaffing,
relocations and modernisation initiatives.
The result is a significant improvement in
performance, with Pepco LFLs in Poland
returning to LFL growth in H2 FY25,
+2.4% including FMCG (+3.9% excluding FMCG),
remaining positive thereafter.
Based on the significant turnaround efforts and
these very encouraging results, I am optimistic
about the further strong and regained
performance potential of Pepco Poland.
We have started to apply a similar playbook
to other selected CEE markets where we feel
that there is more growth to be achieved.
Operational excellence remains central to
our business model and a core priority going
forward. We are confident in our ability to
create further operational leverage and drive
profitable growth whilst providing a blueprint
for growth across potential new markets.
Successful proof points in
Western Europe
I had strong belief in Western Europe as
a significant opportunity for the Group
from the outset. On first review of our track
record in the region, there was no clear
market or customer-related reason for our
underperformance. It was a problem caused
by our strategy and, more specifically, by
our execution. I was therefore confident we
would be able to turn performance around
by implementing the right strategy, executed
by the right team. We appointed a new COO
Western Europe in October 2024 to lead our
transformation. He brings significant international
retail experience which has been invaluable,
and the results so far have exceeded my
initial expectations.
When we talk about Western Europe,
we are focusing on Spain, Portugal and Italy,
which account for more than 80% of our
stores and sales. During 2025, we significantly
improved profitability in both Iberia and Italy.
This was achieved through strong LFL growth,
driven by better stock availability and freshness,
renewed focus on pricing, as well as improved
gross margins as we drove efficiency gains
through our simplified store operating model.
c.30%
market share in kids & baby wear
14
average store visit per most
loyal customer segment
+1.9%
LFL revenue growth - CEE
+6.8%
LFL revenue growth - Western Europe
+2.6%
LFL revenue growth - Group
Note: all LFLs are including FMCG
9 Pepco Group N.V. Annual Report 2025
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In Spain, our new distribution centre (DC),
which opened in Guadalajara in September
2024, further enhanced these efficiency gains.
Previously, products had been travelling
3,000km from our DC in Hungary, so our
new Spanish DC has been quickly impactful
in improving efficiency, with transport costs
down by 380bps and lead times to stores
halved to 3 days.
During the year, we began the process of
exiting several unprofitable stores in Germany
and converted our lower margin Pepco Plus
stores in Iberia to standard Pepco stores, with
very promising initial results. The opportunity
for success in Western Europe is no longer a
question mark, the uplift in performance in
Iberia and Italy speaks for itself and has been
achieved in a matter of months. However,
there is still more we can do to drive improved
growth and margin. We will closely monitor
our turnaround progress in this region and
align our capital allocation on store expansion
accordingly. I am very excited about the
significant future growth opportunity this region
presents for our business, and I believe in our
ability to scale into our ambitions of becoming
a truly pan-European operator.
Significant upside potential
from digital engagement
During our Capital Markets Day in March 2025,
I addressed the huge opportunity for advanced
utilisation of state-of-the-art data and digital
tools. Historically, there has been little to no
investment in this area, with all of our sales
originating in store. We serve approximately
41 million customers per month through the
strength of our brand alone. We are therefore
in an excellent position to build on that
by developing a series of digital customer
engagement channels that will advance the
Group’s digitally influenced store sales and
accelerate growth.
Initially, this will be through the setup of a
central data lake for all customer and Company
data, a materially improved website that will
serve as a compelling online window to all
our products and stores, and the launch of a
mobile app that will house a new customer
loyalty scheme. Testing is already complete
and the app is expected to go live to our Polish
customers in Q1 calendar 2026, with rollout to
several more of our geographies during the year.
With this new platform in place, we will
accelerate our truly holistic customer relationship
management approach. With hundreds of
millions of transactions each year, Pepco is
building ever-growing data insights we can use
to better understand our customers and their
demand and spending patterns. These insights
will be crucial for our loyalty programme and, in
turn, deliver increased value, fuelling our growth
by driving frequency of purchase and basket size.
Empowering change
In 2025, we advanced our sustainability strategy,
“Where Growth Meets Care”, reflecting our belief
that growth and care are mutually reinforcing –
care makes our growth sustainable and growth
expands our capacity to care. Guided by our
values – Care for our people, Be at our best and
Love our customers – the strategy builds on our
2025 double materiality assessment to focus
on key ESG topics across three pillars: People,
Value Chain and Customers. Supported by
strong governance and our sustainability
strategy, it embeds care and responsibility
across our business from supply chain and
renewable energy transition to employee
engagement. In 2025, we made solid progress,
expanding the use of renewable energy (see our
case study on page 35).
For years, our community outreach efforts
have focused on empowering disadvantaged
young people. Helping them build confidence,
develop talents, explore passions and care for
their mental wellbeing as they enter adulthood.
These initiatives are made possible through
community partnerships and the engagement
of our employees and customers. They are
partially funded by the sale of charity bears
and shopping bags, supporting meaningful
local projects. Across all countries where Pepco
operates, we collaborate with trusted NGOs to
invest over €3m annually in children’s education,
talents and mental health, reaching more than
90,000 young people each year. In 2025 we
celebrated the 5
th
anniversary of Better Move,
Better Lives, which brought together Pepco
teams across all markets. By walking, running,
and cycling over 121,000 km, employees raised
€45,000 to support eight NGOs helping children
and youth in need.
People
The strength of performance this year would
not have been possible without the hard work
of our colleagues across the business who
consistently go above and beyond to deliver
results. I would like to personally thank all 31,582
of our colleagues, especially those who delight
customers in our stores every day. Your effort is
clearly reflected in the strength of our
financial results.
We have made significant changes to our
management team this year with key new hires
in each area of our business. This ensures we
now have the right structure in place to deliver
our strategy and a team that is not only aligned
with our vision for the future but also has the
expertise and experience required to execute
on our critical transformation and growth plan.
I was pleased to welcome Willem Eelman as
Group CFO in March 2025. Having spent many
years working alongside Willem at GrandVision,
I was delighted when he decided to join our team.
41m
customers per month
€45,000
raised by employees for charity
100%
Pepco Poland stores running on renewable
energy
>90%
brand recognition in CEE markets
10
Pepco Group N.V. Annual Report 2025
Strategic
reportIntroduction Governance
Financial
statements
Sustainability
statement
Other
informationCEO’s statement continued
In addition, we welcomed several people to
our leadership team to ensure we are best
positioned to action our strategy. This included
new roles filled for the Pepco CFO, Chief Human
Resources Officer, Chief Information Officer and
COO Western Europe.
Driving shareholder returns
Delivering sustainable growth is the primary aim
of our strategy, with high margins that will ensure
we generate continued strong and growing free
cash flow. The early progress we have made in
implementing our strategy shows that we are
well on track to achieve what we set out to.
Our capital allocation framework emphasises
disciplined deployment of capital in existing stores,
new stores, and upgrades to our platform in order
to drive thoughtful growth at attractive returns on
capital. We are highly focused on optimising free
cash flow generation, positioning our Company
to return capital to our shareholders from excess
cash without compromising on our growth and
improvement strategies.
In FY25, we declared an ordinary dividend
of 9.6 cents per share, up 55% relative to our
inaugural FY24 dividend, while also completing
a €50m share buyback programme (the
first tranche of a committed up to €200m
programme to be completed by 2027).
In our overall capital allocation strategy,
we are highly focused on value creation for our
shareholders. Looking forward, we will continue
to consider regular dividends, share buybacks,
and, where appropriate, special dividends as
important parts of this strategy.
Delivering shareholder value
Free cash flow
1
€342m
FY24 €281m
Dividend per share
2
9.6c
FY24 6.2c
Share buyback
€50m
FY24 N/A
Underlying EPS
3
38.1c
FY24 31.7c
1. See note 27 in the financial statements.
2. Subject to approval at the AGM in March 2026.
3. See note 30 in the financial statements.
Summary
I am very proud of what the business has
achieved during FY25. We have delivered on
our strategic roadmap, upgraded our customer
proposition and streamlined our business while
delivering improved profit growth and enhanced
returns for shareholders. However, there is
considerable opportunity ahead as we continue
to implement our strategy, optimise operational
leverage and deliver continued profitable
growth. I am excited for the future and look
forward to further delivering on our ambitions.
Stephan Borchert
Group CEO
Pepco Group N.V. Annual Report 2025
Strategic
reportIntroduction Governance
Financial
statements
Sustainability
statement
Other
information
11
CEO’s statement continued
Business model
D
r
i
v
e
r
e
v
e
n
u
e
g
r
o
w
t
h
Enhanced
efficiency
Winning
customer
proposition
Operational
excellence
D
r
i
v
e
p
r
o
fi
t
g
r
o
w
t
h
D
r
i
v
e
c
u
s
t
o
m
e
r
g
r
o
w
t
h
Pepco Group’s business model is designed to leverage our strengths and resources, balancing efficiency with our desire to prioritise operational excellence
and the customer experience. By doing so, we aim to deliver sustainable, profitable growth and provide value for all our stakeholders.
Winning customer proposition
Quality products at market-leading prices
in convenient store locations
What this means to us
• Consistent focus on our market-leading price proposition
• Offer centred on staple items with broad appeal that
remain resilient to changing trends
• Friendly and helpful service across our highly accessible
store portfolio
Operational excellence
Optimising our operations ensures the
consistency of our customer experience
What this means to us
• Careful stock management to ensure consistent
availability of products in the sizes customers want
• Optimised store layout for a quick and convenient
customer journey
• Integrated supply chain ensuring reliable and ethical
delivery of products
Enhanced efficiency
Efficiency is integral to enabling
our market-leading pricing
What this means to us
• Simplified model and standardised
store format streamlines expansion
• Well trained and skilled colleagues
• Focused SKU count and inventory
management mitigates markdown risk
• Increasing use of renewable energy
in our stores
PEOPLE: Care for colleagues
VALUE CHAIN: Give our best
CUSTOMERS: Love our customers
See more on our Sustainability strategy on p29
12 Pepco Group N.V. Annual Report 2025
Strategic
reportIntroduction Governance
Financial
statements
Sustainability
statement
Other
informationBusiness model
How we create exceptional value for our stakeholders
41k
customers per month
Our strengths
Differentiated products
Leveraging our scale and sourcing strategy,
we offer a diverse range of clothing and general
merchandise products to meet the needs
of our core shopper – families on a budget.
Understanding customer preferences, prioritising
price leadership and focusing on quality are key
to delivering customer satisfaction and growing
our market share.
Local stores in convenient locations
Pepco operates over 4,000 conveniently
located stores across 18 countries. By focusing
on standardisation and repeatability across our
operations, we aim to expand our store footprint
efficiently, in line with our growth objectives.
Infrastructure and distribution network
We continue to invest in the development of
high-quality, scalable infrastructure, including
information technology, warehouses and
back-office support. We are also investing in
our data and technology to drive increased
customer engagement, loyalty and customer
lifetime value.
Direct sourcing operation
Pepco Global Sourcing (PGS) maximises
our buying scale and operating efficiencies,
thereby reducing costs and improving margins.
With the full product development chain for
clothing and general merchandise managed
within the Group, our vertically integrated
model provides flexibility in sourcing.
Our colleagues
We aim to maintain the right pipeline of
skills within the Group to facilitate the long-
term success of our growth strategy. This is
underpinned by a strong commitment to ethical
and responsible business conduct, honesty
and integrity, within the Group and throughout
our value chain.
Customers
Pepco strives to make everyday life better for every customer,
especially families on a budget. Pepco ensures responsible
products are accessible without compromising on price or
quality. By embedding care for people and the planet into
design, sourcing and packaging, we bring our customers
a product portfolio that is both accessible and responsible.
55%
dividend per share growth
Shareholders
Our ambition, strategy and execution generate substantial
shareholder value. With high margins, strong cash conversion
and a robust balance sheet, we can invest to drive future
growth through store expansion in new and existing markets
and strategic initiatives that enhance our share of customer
spend, while also returning surplus cash through annual dividends,
share buybacks and special dividends, as appropriate.
52%
internal development and
promotion in operations
Employees
Our 31,500+ colleagues are the heart of Pepco’s success.
Their diversity of backgrounds and perspectives helps us
understand and serve millions of customers every day. That is why
we aim to create a workplace where everyone feels valued,
included and empowered to thrive – enabling positive customer
experiences, stable teams and sustainable business performance.
-39%
scope 1 & 2 emissions
reduction
1
Environment
As a large multinational retailer, we recognise our responsibility
to manage our impact on the environment and create products
for customers that are responsibly sourced. Our environmental
engagement covers a range of activities including our memberships,
association and accreditations with both international and
local programmes including Better Cotton and the Responsible
Business Forum in Poland.
100%
factories audited against
our annual social and
ethical audit plan
Suppliers
Pepco’s operational success depends on a resilient and
responsible supply chain and operations. Our end-to-end value
chain focuses on transparency, climate-conscious sourcing and
ethical practices to support business continuity while reducing
environmental and social impact.
90,000
young people reached
each year
Communities
Pepco is committed to supporting the communities in which
we operate. Our core customers are low-middle income families
and we work to ensure that every child, especially those that are
most vulnerable, has what they need to thrive through initiatives
such as back-to-school vouchers or free school supply packs.
1. Reduction in emissions in FY25 vs FY24 for the Pepco Group excluding Poundland for Scope 1 & 2 marked-based emissions.
For further information on our emissions metrics see Sustainability Statement page 119.
13 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
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statements
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statement
Other
informationBusiness model continued
Feel the quality, love the price
The Pepco customer proposition centres on providing quality products at
market-leading prices in convenient locations. In doing so, we ensure customers
come back to us again and again. We are also focused on digitally transforming
our customer proposition. By investing in new platforms and technologies that
will make it easier for customers to engage with us, we will drive footfall and loyalty.
Pepco stores are the heart of our model. Our stores
are based in highly accessible locations, in close
proximity to our customer base, ensuring it is
always convenient to visit a Pepco store.
Our customer wants and needs are always at
the forefront of our proposition. We are focused
on providing a holistic range of quality clothing
and general merchandise products at market-
leading prices.
We are investing in data and digital to create
new tools and features that will drive in-store
sales and improvements in the customer
experience. We are early in this journey but
are making quick progress.
Pepco is a leading discount variety retailer,
providing quality clothing and general
merchandise products at leading prices.
Our stores are located in close proximity to
our customers, making it highly convenient
to shop with us.
In FY25 we significantly improved the quality
and availability of our products and restored our
reputation as the destination for essential items
at market-leading prices across all age groups,
adding new curated assortments.
We are focused on prioritising discounter basics
and operational excellence to ensure we always
deliver for our customers and, at the same time,
we are re-imagining our customer journey with
digital in mind. From personalised campaigns
to offers that drive store visits, we are creating
more reasons to visit. This digital transformation
will not only increase engagement but better
enable us to anticipate evolving customer needs.
In FY25, we invested in our digital journey, as we
build quickly from the ground up. This investment
will enable us to launch a new digital store front,
manage and utilise our customer data and
enhance our engagement through a mobile
app and digital loyalty scheme which we will
start rolling out in FY26.
These initiatives will serve to enhance our digital
customer experience, driving sales growth,
customer lifetime value, more frequent visits,
higher retention and improved NPS scores.
Our customer proposition
focuses on three key pillars:
1
2
3
Store at the core
Customer first
Digitally influenced
store sales
14 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
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statements
Sustainability
statement
Other
informationCustomer proposition
Pepco strategy by customer segment
HomewareAdultwearKidswear
€3.5bn
1
€7.3bn
1
€10.1bn
1
Pre-family Young family Households with
teenage family
or post family
Share of Pepco
shoppers
Share of Pepco
shoppers
Share of Pepco
shoppers
Share of Pepco sales
Share of Pepco sales
Share of Pepco sales
Yearly visits:
~14x
Yearly visits:
~4x
Yearly visits:
~2x
Average basket:
€13.0
Average basket:
€ 9.9
Average basket:
€5.7
Key demographic:
Women aged 25-45
with young families
Key demographic:
Households with
teenage family
or no children
Key demographic:
Single/couples
with no children
in the household
69%
20%
23%
8%
30%
50%
Pepco customer demographics
Young families on a budget
Pre and post-family value seekers
Occasionals
Expand
core into
essentials
for young
families
Defend
core in
kidswear
Halo
benefit
into other
segments
Halo
benefit
into other
segments
1. In Poland. Source: OC&C analysis, Global Data.
Market size
1
15 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
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Sustainability
statement
Other
informationCustomer proposition continued
Navigating industry trends
Context
• Despite slowing growth rates, inflation
remains a headwind to input costs globally.
• In 2025, wage inflation across the EU was
3.5-4.0%
8
and although overall employment
costs are generally lower in CEE vs other areas
of Europe, blue collar wage inflation is far
higher, up c.8.3% in Poland and 7.2% in CEE
3
.
• Commodity prices and freight costs are also
driving up input costs. There is increasing
volatility and inflation in sea freight costs
due to bottlenecks, capacity shortages
and geopolitical events.
• The energy crisis is also ongoing with gas
prices rising 59% across the EU in 2024
10
.
Outlook
• With high wage inflation in many of our
core markets and an internal investment
programme in place to grow and refurbish
our store footprint and enhance our digital
capabilities, Pepco is focused on driving
sales productivity and cost efficiency.
• Our decision to exit low margin FMCG
removed complexity, improved efficiency
and facilitated the reallocation of space to
higher margin clothing and GM products.
• We have driven efficiencies across the
business. We opened a new DC in Spain,
reducing transport costs and outsourced
the management of our DCs.
• Moreover, 100% of Pepco Poland stores
operate on renewable energy.
Context
• Globally, we are experiencing historically low
birth rates. The UN has forecast that children
are expected to reduce as a percentage of
the population worldwide. Despite weaker
birth rates in recent years, the number of
households
7
with at least one child has
remained stable and kidswear spend across
CEE and Europe is expected to more than
offset population pressures.
• Kidswear spending is forecast to increase
6.3% in Poland and 8.5% in Romania annually
from 2023 to 2027
8
.
• In Spain, birth rates are expected to improve
by 2030. In the meantime, immigration has
compensated and kidswear spending is up
3% in the 10 years to 2023
5
.
Outlook
• Market conditions remain supportive despite
changing demographics. While kidswear is
a core part of our business, Pepco’s focus is
on everyday essentials with just under 25% of
our sales generated from kidswear and the
remainder from adultwear and GM.
• We are well placed to adapt to evolving
trends with many levers available to drive
growth, including expanding our adultwear
ranges and deepening our category
penetration to drive higher LTV per customer.
• Through our digital transformation, we will
also utilise data and technology to increase
loyalty and spend across a wider category
base which will further support LFL growth.
Context
• Despite expected continued growth of
real disposable income in Poland and CEE,
sustained inflation continues to put pressure
on consumer budgets.
• A 2024 survey showed people in CEE feared
inflation above other potential threats such
as geopolitical and climate-related risks.
• In Western Europe, budgets are also under
pressure with CPI growth in Spain of 5.7%
3
in the two years to June 2025.
• It is therefore no surprise that the variety
discount market expects strong growth
at a 5.7% CAGR in CEE
5
. Discount models
continue to gain share across the apparel
sector, now representing 30% of sales in
most advanced European markets
5
.
Outlook
• We have a strong reputation as a variety
discount retailer, prioritising market-leading
prices and quality products to provide our
customers with great value for money.
• We are therefore well positioned to benefit
from the increasing consumer focus on value.
• We will capture this demand by focusing on
our market-leading pricing, utilising customer
engagement tools to provide offers and
discounts and ensuring we operate efficiently.
• We have taken many steps to improve
efficiency, including onshoring our distribution
to reduce transport costs, and outsourcing
our DC management to optimise efficiency
and labour costs.
Context
• The Polish clothing market is expected to
reach $16.4bn
1
in value in 2025, with clothing
chains continuing to be the leading sales
channel with nearly half of total sales.
• Polish GDP growth is forecast to be one of
the highest across Europe in 2025/26 at 3.2%
and 3.5% respectively. Many CEE economies
anticipate continued growth at above
average rates driven by strong domestic
demand and wage convergence with the
EU average, all of which supports consumer
spending growth in the region.
• In Poland, consumer spending rose 26%
Q2 2023 to Q2 2025
3
. YoY growth in retail sales
grew from c.-6% to c.+5% over the same period.
Outlook
• With a strong backdrop in our core markets,
our focus is on prioritising operational
excellence to capture consumer demand,
attract and retain customers and maintain
our market-leading positions.
• This means executing the basics correctly,
prioritising consistent product availability,
quality and price leadership.
• It also means investing in technology to
digitise customer engagement, creating
more touchpoints with customers, driving visit
frequency, LTV and new customer growth.
• We have made strong progress this year
and, in FY26, we will launch our mobile app,
complete with digital loyalty scheme.
Consumer spending in Poland & CEE Consumers seeking out value Demographics in our markets Cost inflation
5.2%
CAGR (2025-2029) in the Polish apparel market
1
68%
of people in CEE are afraid of inflation
4
3%
growth per year in kidswear (2025-2029)
6
7.2%
wage inflation in CEE
5
1. Statista 2. European Commission 3. Trading Economics 4. Strategy& 5. Internal analysis 6. Euromonitor data for Poland 7. On a CEE weighted basis 8. CBI 9. Eurostat 10. Ember energy
16 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
Financial
statements
Sustainability
statement
Other
informationMarket review
Strategic framework
Following a strategic review, at our Capital Markets Day in March 2025 we set out a new five-pillar strategic framework to drive the business into its
next phase of growth. This sharpened framework is designed to focus and modernise our business and apply the discipline needed to drive sustainable,
profitable growth and to generate consistently attractive returns on capital.
Our strategy centres on delivering exceptional value to both customers and shareholders.
For more on simplifying the Group
portfolio go to page 18
Operate Pepco as our sole
Group brand
Exit FMCG to focus on
higher margin clothing and
general merchandise
Divest Poundland
and Dealz
For more on refocusing our customer
proposition go to page 20
Restore price leadership
position
Grow core in kidswear
and GM and adjacent
categories like adultwear
Enhance our customer
experience with technology
and data
For more on our expansion in CEE
go to page 22
Return Poland to consistent
positive LFL growth
Return CEE to consistent
positive LFL growth
Expand store footprint
in new and existing
geographies
For more on our expansion
in Western Europe go to page 24
Exit FMCG to return to one
brand and one format
Operational improvement
to align store economics
with CEE
Increase brand awareness
and NPS
For more on upgrading our core
operating platform go to page 26
Reset and standardise our
operating model
Create a faster,
more flexible distribution
centre network
Implement new technology
focused on automation
Simplify and
streamline the
Group portfolio
Refocus and
digitise Pepco’s
customer
proposition
Topline growth
through
measured
expansion in CEE
Win in Western
Europe
Upgrade our
core operating
platform
17 Pepco Group N.V. Annual Report 2025
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Financial
statements
Sustainability
statement
Other
informationOur strategy
Simplify and streamline the Group portfolio
Entering FY25, we operated three brands:
Pepco, Poundland and Dealz. Pepco specialises
in clothing and general merchandise (GM),
while Poundland and Dealz are fast-moving
consumer goods (FMCG) led. In our recent
past, and under previous leadership, the Group
sought to integrate the operations of Pepco,
Poundland and Dealz, with the aim of creating
a unified customer offer and a single sourcing
strategy. The expectation was that this would
bring both scale and efficiency benefits.
However, it became clear this was not the case
and integrating our brands wasn’t delivering
for customers or shareholders.
The FMCG-led businesses were hindering
the Group’s financial performance, with
lower revenue growth, lower gross margins,
higher costs to operate and, consequently,
lower profitability. Following a strategic review
in early FY25, we determined that it was in
the best interests of each brand, the Group,
our customers and our shareholders to separate
the three brands and streamline the Group
by exiting FMCG, through the divestment of
Poundland and Dealz, and move forward with
Pepco as our sole brand. We acted quickly,
securing the sale of Poundland just a few months
later in June 2025, taking the Group a significant
step closer to its goal of exiting FMCG.
Pepco is clearly the core growth engine of the
Group, generating strong LFL performance at
consistently high margins. In FY24, pre-IFRS
16 Group EBITDA (excluding corportate costs)
was split 99% Pepco, 3% Poundland and -2%
Dealz, demonstrating the dominant value
Pepco contributes to Group performance.
Pepco has a clear and unique proposition
as a price-leading discount retailer and over
90% brand recognition, making it the obvious
focal point for the Group. Progressing with
one, unified brand ensures the Group is more
focused, agile and dynamic, supporting faster
and more profitable growth.
• Separate the operations of Pepco,
Poundland and Dealz
• Operate Pepco as our sole
Group brand
• Exit FMCG, focusing on clothing
and GM
• Divest Poundland as an immediate
priority due to its declining profitability
• Manage Dealz for value
• Successful separation of Pepco,
Poundland and Dealz, with each
brand operating independently
and with distinct management teams
• Poundland sold to Gordon Brothers
in June 2025
• Pepco Plus store reformatting
completed by August 2025,
marking the removal of FMCG
from all Pepco operations
• Strategic review of Pepco
Germany complete
• Further profitable scaling of our Pepco
operations as we progress with our
disciplined store rollout
• Commencement of divestment
process for Dealz
• Closure of c.50% of Pepco Germany
stores as we scale back our
operations in the region to focus
on our core markets
Key objectives Progress in FY25
What to expect in FY26
18
Pepco Group N.V. Annual Report 2025
Strategic
reportIntroduction Governance
Financial
statements
Sustainability
statement
Other
informationOur strategy continued
Simplify and streamline the Group portfolio
Poundland sale
Poundland is an FMCG-led brand,
with strong customer affinity in its markets.
In FY24, it generated c.€2.0bn in revenue
from 836 stores across the UK and Ireland.
However, its core customer proposition of
FMCG-led goods at low price points had
suffered through an increasingly challenging
environment and an extended period of
high inflation impacting both sales and
profitability. In FY24 Poundland EBITDA
was just €141m. This further intensified in
April 2025, following the UK government’s
changes to National Insurance and National
Minimum and Living Wage, announced as
part of the October 2024 budget. These
changes placed additional pressure on
Poundland’s cost base, further impacting its
profitability. In FY24, Poundland contributed
33% to Group revenues, but just 3% of
EBITDA (pre-IFRS 16) and was a significant
drag on Group free cash flow generation.
In addition, Poundland’s FMCG-led
proposition meant it no longer fit with
the Group’s strategy to simplify and
focus operations on clothing and GM.
The decision to consider strategic options
for Poundland was announced on 12 March
2025. The team executed quickly and the
successful sale of Poundland to Gordon
Brothers was reached on 12 June 2025.
Strategy in action
Terms of the deal:
The shares in Poundland were sold to
Gordon Brothers for a nominal consideration,
with Pepco providing a secured loan of £30m.
Certain unsecured loans initially remained in
place between Pepco Group and Poundland,
including an overdraft facility of up to £30m.
However, following the approval of the
proposed restructuring plan by the UK High
Court on 26 August 2025, these unsecured
loans transitioned into a minority equity
stake in Poundland Group that will enable
Pepco Group to share in the upside potential
of Poundland’s turnaround.
Strategic benefits:
The sale of Poundland was a significant step
towards our strategic goal of solely operating
the Pepco brand and exiting FMCG to focus
on our higher margin clothing and GM ranges.
By divesting Poundland, we benefit from improved
revenue growth, higher profitability and margins
and stronger cash generation, as shown in our
strong FY25 financial performance.
The sale demonstrates our clear focus on
driving shareholder value, our commitment to
the turnaround of the Group and it significantly
advances our strategy and growth momentum.
19
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Simplify and streamline the Group portfolio continued
Our strategy continued
• Restore Pepco’s price leadership,
prioritising value for customers
• Maintain and grow our core in
kidswear and GM, as well as expand
in adjacent categories like adultwear
• Increase use of technology and data
to enhance our customer proposition
and grow LTV
• Launch new, digital loyalty scheme
to drive sales and retention
• New price benchmarking tool
implemented
• Solid LFL revenue growth in adultwear
and GM with improving LFL trend in
kidswear and baby
• Significantly improved availability
of our bestselling key value items
• “Coupon at Till” launched in Poland
with strong early results
• New app developed and ready
for launch in Q1 calendar 2026
• Consistent focus on value proposition
and competitive pricing
• Improvement of the value proposition
of baby and kidswear
• Mobile app launch in Poland
and Spain
• “Coupon at Till” to go live across
Spain, Czechia, Italy and Bulgaria
• Growth in digitally influenced store
sales (DISS)
Refocus and digitise Pepco’s customer proposition
When we think about enhancing our customer
proposition, step one is to home in on what
makes Pepco unique and compelling for
customers and that is providing quality
products at market-leading prices. Step two
is to digitise our proposition, using technology
to improve our customer experience, as well as
offering more to our customers by enhancing
our data capabilities.
In FY25, we held consistent focus on maintaining
our market-leading pricing strategy, while also
turning our attention to improving our product
availability and quality, ensuring the products
customers want and need are always available
in the sizes they are looking for and at the
quality they expect. This is integral to our
success, which means supply chain logistics
and careful stock control are essential. We also
optimised our store layouts and product SKUs
to deliver a more seamless customer journey in
store, as well as increasing our marketing efforts
to drive repeat visits and new customer growth.
For example, in July 2025, we launched a
pilot of our new “Coupon at Till” programme
across 20 stores in Poland. Under our initial
pilot, customers received a coupon after
their purchase based on their basket size.
Following initial strong results, with redemption
rates and sales uplifts beyond our target plan,
the pilot was then extended to 350 Polish stores
by the end of September and across all stores
in Poland by the end of November. It is still early,
but this strong initial momentum is encouraging.
We also significantly expanded our efforts on
digital this year, an area that the Company had
historically under-invested in but has the potential
to be transformational for our business. Pepco has
always been a solely bricks and mortar retailer with
a limited online presence. It will therefore take time
to implement as we are building from the ground
up, but the opportunity ahead of us is significant
and we have a clear roadmap in place.
Progress in FY25 What to expect in FY26
For customers, a key development will be
the launch of our mobile app in 2026 and
its accompanying digital loyalty scheme.
The traction we have built with “Coupon at Till”
not only delivers a near-term sales benefit, it
will make it easier to encourage those same
customers to join our digital loyalty scheme
when it launches. With customers increasingly
primed to review their paper coupons post-
purchase, we can use this habit to provide
them with QR codes that link to our app
download to support new member growth.
Digitising our proposition will allow us to draw in
more customers, increase the frequency of their
visits and encourage them to spend more with
us through greater use of technology and data.
It will enable us to leverage our unique insights
as we accumulate more and more personalised,
attributable purchase data, which we will use
to better understand our customers and their
individual spending behaviour.
Key objectives
20 Pepco Group N.V. Annual Report 2025
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Refocus and digitise Pepco’s customer proposition
Strategy in action
Strategy in action
Building the foundations for Pepco’s digital future
In FY25, Pepco invested to build the core foundations of our new
digital ecosystem, positioning the Company for meaningful digital
activation and customer engagement in 2026. This investment has
created the essential infrastructure needed to operate modern
digital channels - web, mobile app, loyalty, and personalised
customer experiences - delivered at exceptional pace.
We have implemented a best-of-breed architecture, integrating key
platforms such as our Product Information Management (PIM) system,
Content Management System (CMS), loyalty engine, mobile app, and
new website. These components are now connected through a robust
integration layer, allowing us to deliver digital services faster, more
reliably, and with the flexibility to scale with our ambition.
A major part of the investment has been establishing the
foundations of our new data lake, which will enable Pepco
to unlock far greater value from data. This includes improved
accuracy of product and customer information, better insights
for decision-making, and the ability to deliver more personalised
and relevant experiences to customers.
This foundational work is critical: it provides the digital “plumbing”
that underpins future growth.
Although we are starting from a relatively low digital base, this is also
a significant strategic advantage. We are able to design and build
a fully integrated, modern digital ecosystem from day one, without
the complexity, legacy systems, or costly “bolt-on” technology layers
that many long-digitised retailers must navigate. Starting from a
greenfield position also allows us to adopt the latest technology,
apply industry lessons learned, and create a cleaner, more intuitive,
and more scalable foundation that will serve the business well for
many years to come.
With these building blocks now in place, Pepco is ready to activate
digital channels in 2026 with confidence, driving customer engagement,
sales, operational efficiency, and long-term value for shareholders.
Developing our new mobile app
During FY25, we have worked quickly to build our
mobile app, which is ready for launch in Q1 calendar
2026. The app will provide a slick user experience
with enhanced functionality that will allow customers
to view our product ranges and locate a store near
them, driving our digitally influenced store sales.
What’s more, the app will feature an in-built
loyalty programme that will reward customers
with personalised promotions.
Through increased use of the app, we can capture
more data to better understand our customers,
drive enhanced experiences, inform our buying
patterns and respond to customer behaviour.
We can also use this same data to create more
tailored offers for our customers and run targeted
campaigns with offers pushed directly to customers
through the app.
We are still very much in the test and learn phase
but with no legacy systems, we have been able
to build quickly and are confident in the outlook
for our launch.
In time, we expect the app to drive increased
engagement, frequency of visit, basket size and LTV.
21 Pepco Group N.V. Annual Report 202521
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Refocus and digitise Pepco’s customer proposition
Our strategy continued
Topline growth through measured expansion
in Central Eastern Europe
Central Eastern Europe (CEE) is the heartland of
the Group, with 85% of Pepco stores based there
and near 100% brand awareness in the region.
In recent years, our performance was impacted
as we scaled too quickly, lost focus on operational
discipline and allowed our market-leading pricing
to erode. However, the market remains attractive
and continues to offer strong opportunities. Our
established regional presence gives us a robust
platform with multiple levers available for us to
drive growth and gain market share.
Our Pepco CEE business remains the key engine
driver for the Group, delivering the highest
returns across the estate. We operate in 13
CEE countries, with our largest store presence
in Poland. Pepco opened 234 net new stores
during the period, with 85% opened in the CEE
region and the balance in Western European
countries. We opened 58 net new stores in
Poland, totalling 1,397 stores at the year end.
Outside of Poland, the majority of new openings
in the CEE region took place in Bosnia, Romania,
Serbia and Bulgaria.
A key priority in FY25 was not just to restore LFL
growth in CEE as a whole but also in Poland
specifically. To achieve this, we focused on
restoring our market-leading price proposition
to ensure customers find the great value
prices they expect when they visit our stores.
We also improved our supply chain and
restocking strategy to ensure reliable product
and size availability and we turned our
attention to the weakest 20% of stores in Poland
which were dragging country LFL performance.
Our strong portfolio of >3,400 Pepco stores
in CEE is strategically located in close proximity
to our customers, maximising convenience.
This, combined with a renewed focus on price
leadership and product quality, creates a
compelling proposition that underpins
both revenue and market share growth.
Our strategic efforts restored LFL growth in Poland
in Q3 and Q4, up 2.4% in H2 FY25, with CEE
returning to LFL growth in Q1 and continuing
for the entirety of FY25, up 1.9% for the FY.
However, there remains significant opportunity
to further grow our LFL and topline performance.
While our stores are already a compelling
destination for great-value kidswear,
we can drive additional growth by attracting
new customers, increasing basket size and
encouraging more frequent visits through
effective cross-selling across clothing and
general merchandise categories.
To achieve this, we are focusing on design,
quality, availability, and freshness to ensure
our products consistently meet customer
expectations. Strengthening our adultwear
offer represents a straightforward opportunity
to enhance the overall customer experience,
add convenience and drive further growth.
We have made encouraging early progress
this year but the full impact of these initiatives
is expected to be realised next year.
We see substantial potential for further store
expansion as we advance our new store
opening programme across both established
and emerging markets. We believe there is
capacity for a minimum of c.850 additional
Pepco stores across the CEE markets. Our
approach remains measured and disciplined,
guided by a calibrated rollout plan that
prioritises established markets such as Poland.
The new stores opened there in FY25 have seen
strong footfall and attractive returns on capital,
performing in line with our minimum 30% IRR
threshold. Over time, we will extend this growth
into newer markets such as North Macedonia,
capturing additional opportunities across the
region. With our renewed focus on operational
leverage and our refocused strategy, we are
well placed to execute our expansion plans.
Finally, we are actively improving our existing
store portfolio. Refits, relocations, enlargements
and closures began in FY25 and will continue
into FY26, optimising our network to deliver
the best customer experience and enhanced
operational efficiency.
With a renewed focus on operational leverage
and a sharpened strategic direction, we are
well positioned to execute our expansion plans.
By driving thoughtful growth in the CEE region —
a market we know well — we have strengthened
our confidence in delivering consistent,
profitable growth with attractive returns.
• Return Poland to consistent positive
LFL growth
• Return CEE to consistent positive LFL
growth
• Expand store footprint in existing and
new geographies
• Maintain market-leading pricing
• Improve existing store portfolio
• Poland returned to positive LFLs in
Q3 FY25 and Q4 FY25
• CEE returned to positive LFLs in Q1 FY25
and remained positive through the year
• Average pre-IFRS 16 store EBITDA
margin improved by 140bps in Poland
• 215 net new stores opened in CEE
countries (incl Poland) with a payback
period of 24 months
• Store refits launched
• Continued progress in line with our
500-600 net new store openings to
the end of FY27
• New store openings in established
markets such as Serbia and
Romania and in new markets such
as North Macedonia
• 500+ store refits
• CEE will continue to be our
launch market for new data
and digital initiatives
Key objectives Progress in FY25 What to expect in FY26
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Expansion in Central Eastern Europe
Restoring LFL growth in Poland
Poland is Pepco’s largest market and continues
to present ample opportunity for further
growth, despite the negative LFL performance
experienced in FY24 and H1 FY25. During the
year, we took swift action to correct this by
focusing on restoring operational excellence
across the region, with encouraging results as
we returned to LFL growth of 2.4% in H2 FY25.
We achieved this by turning our attention to
three key areas: product availability, product
assortment and our weakest-performing stores.
Product availability had been impacted by
a standardised approach to restocking which
resulted in mismatched size availability versus
demand. Previously, sizes were restocked
in preset packs that did not account for
demand and resulted in an oversupply of less
popular sizes and a lack of availability of the
Strategy in action
sizes in demand. This impacted customer
satisfaction and, ultimately, sales. During FY25,
we implemented a much more tailored
restocking approach based on tracked sales
and have seen good results with a significant
improvement in availability.
Our product assortment contained excessive
breadth of products which impacted availability
and led to product cannibalisation. By investing
in availability rather than breadth, we ensure
a much more positive shopping experience for
customers. At the same time, we also reduced
our aged stock, creating more space for
fresh products.
Lastly, we addressed the weakest 20% of
stores across our Polish estate which were
dragging country LFL performance. The cause
varied but largely focused on people-related
issues, which we addressed by restructuring
or replacing teams, or store-related issues,
which we addressed largely through our refit
programme to refurbish stores and optimise
their layouts. We also relocated a small
number of stores, as well as closing some stores
where relocation was not possible. As a result,
we have improved sales performance across
these weakest stores which has helped deliver
the turnaround in LFL performance across the
country as a whole. It is important to note that
although a drag on LFL performance, these
stores were all already operating profitably.
This work has all been underpinned by the
renewed focus on restoring and maintaining our
market-leading price leadership position which
is crucial to the Pepco customer proposition.
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Expansion in Central Eastern Europe continued
Our strategy continued
Win in Western Europe
Western Europe, in particular Spain,
Portugal and Italy, presents an exciting
opportunity for the Pepco brand. The clothing
and homeware discounter market is forecast
to grow between a 1.5% and a 3.5% CAGR
across Spain, Portugal and Italy from 2024 to
2029, driven by supportive dynamics including
growing populations (bolstered by high levels
of immigration), as well as increasing spend on
kidswear per household. There is also limited
competition for Pepco’s customer proposition
across Western Europe, which provides a
significant opportunity for our brand and a large
whitespace opportunity for expansion.
During our initial Western European rollout,
we made some missteps which hindered our
success. Fundamentally, we didn’t appropriately
consider the varying dynamics between WE
and CEE customers. To ensure our future success,
we now have a new approach, a more measured
expansion plan and a revitalised team with
the experience and expertise required to
deliver. Under new regional management,
the business has shown a marked turnaround,
with double-digit LFL growth in Iberia and Italy
and enhanced store profitability.
During the year, we opened 34 net new Pepco
stores in Western Europe. Pepco operated 583
stores across Western Europe at the end of
FY25, generating revenue of €695 million (15% of
Group sales). The opening of a new distribution
centre (“DC”) in Madrid, Spain in September
2024 marked an important step in realising an
appropriate economic model for our Iberian
operations. Previously goods were travelling
over 3,000km from our DC in Hungary. The new
DC therefore structurally reduced high transport
and distribution costs, while also reducing lead
times, improving availability in stores.
Milestone 4,000
th
Pepco store opens in Madrid
In September 2025, we were proud to open our 4,000
th
Pepco store in Madrid, Spain.
This opening was a clear testament to the Group’s commitment to the Spanish market, where
it already had 237 stores. The new store, Pepco’s 36
th
in Madrid, opened in the Madrid Sur
Shopping Centre in Vallecas, covering 507m
2
. In just four years in Spain, Pepco has successfully
consolidated its business model: a retail concept offering quality fashion and home décor at
competitive prices, designed to make the shopping experience accessible to everyone.
Pepco provides families with everything they need in one convenient and affordable space,
stocking 2,300+ fashion items for the whole family and 2,700+ home, toy, pet and stationery products.
The opening of our 4,000
th
store is not only a milestone achievement, highlighting our expansion
strategy and the flexibility of our model to open in high street locations, retail parks and
shopping centres, it also confirms the business model we will continue to develop in Spain.
Spain is a key market for Pepco and one we will continue to invest in. Pepco plans to open ~75
new stores in Iberia and Italy by the end of FY26, consolidating its presence and reaffirming its
commitment to Western Europe.
Strategy in action
• Deliver improved growth strategy
by exiting FMCG (Pepco Plus) to return
to one brand and one format focused
on clothing and general merchandise
• Deliver operational improvements
to align store economics with CEE
• Increase brand awareness
and NPS scores
• Restore profitability in Germany
• New COO in Western Europe bringing
greater expertise and revised strategy
• 34 new stores opened, including
4,000
th
Pepco store in Madrid
• Spain, Italy and Portugal all profitable
on an underlying pre-IFRS 16 EBITDA
basis. New stores performing in line with
plan with average pre-IFRS 16 store
EBITDA margin of 15.9% and reformatted
stores delivering an annualised pre-IFRS
16 store EBITDA margin uplift of 12.1ppts
• Brand awareness in Spain of 59%
(+600bps) and in Italy of 38% (+600bps)
• Accelerated store expansion
in Spain, Portugal and Italy guided
by attractive returns on investment
• Targeting increased awareness
and NPS
• Rollout of the new loyalty scheme
and mobile app
• Restructuring of store portfolio
in Germany
Key objectives Progress in FY25 What to expect in FY26
A key step in FY25 was our FMCG exit, realised
through the reformatting of our “Pepco
Plus” stores (see case study overleaf). Then,
as with all Pepco stores, we focused on
putting the customer experience first. This
includes focusing on our market-leading
price proposition and standardising our
store formats, so customers know what to
expect when they visit our stores. This will
help build brand awareness and customer
confidence as we work to grow our brand
towards the level of recognition and
satisfaction already established in CEE,
delivering LFL improvements as we do so.
In FY25, we delivered strong LFL growth of 6.8%
including FMCG and 14.1% excluding FMCG.
In FY25, brand awareness increased 600bps
in Spain to 59% and 600 bps in Italy to
38%. We are also focused on our operating
model, turning attention to our distribution
and supply chain to ensure stock availability
and enhance efficiency as we progress with
our controlled store expansion plan.
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Win in Western Europe
Performance uplift in
reformatted Pepco Plus stores
On entering FY25, we operated 123 Pepco
Plus stores, all based in Spain and Portugal.
The ”Pepco Plus” format was launched in 2023
as a set of larger stores that included a range
of FMCG products in addition to our core
clothing and GM ranges.
Pepco Plus stores were also larger in footprint
at 800m
2
on average vs 500m
2
in a standard
store, meaning higher costs from increased rent,
utilities and labour. The focus on FMCG meant
these stores were delivering significantly lower
gross margin and no longer aligned with our
Strategy in action
strategy. However, their locations were good,
with strong demographics and footfall providing
a compelling opportunity for reformatting.
We successfully completed the reformatting
of 117 of our Plus stores, as well as exiting the
six that were unsuitable for reformatting by
August 2025, in line with our plan. The capital
expenditure required to reformat these
stores was low at c.€40k-45k/store and the
resulting uplift in performance exceeded initial
expectations, with an increase in pre-IFRS 16
store EBITDA margin of 12.1ppts across our
converted stores on an annualised basis.
Strategy in action
Three-tier store model
To win in Western Europe, we have simplified
our store model to focus on three distinct
formats to best position us for success. We have
categorised these as A, B or C-stores, with each
format tailored to distinct catchment areas.
Currently, most of our Western Europe portfolio
is A-stores. These stores are based in prime
locations with large catchment areas and high
foot traffic. They generate the highest sales
of c.€1.6-1.8m on average and the highest
pre-IFRS 16 EBITDA per store of c.€220-250k
on average. However, these valuable attributes
mean rents are high.
B-stores, our next most common format,
are typically based in mid-sized catchment
areas, often located in medium sized shopping
centres and retail parks. B-stores generate
€1.3-1.4m in sales and €140-180k pre-IFRS 16
EBITDA on average.
Lastly, C-stores are smaller in size, often based
in small shopping centres, retail parks and
residential high streets. These stores are in
smaller catchment areas, but rents are also
the lowest of the three formats. C-stores
typically generate €1.0-1.1m in sales and
€100-130k in pre-IFRS 16 EBITDA per store.
As we progress with our store opening plans in
FY26, we will continue to assess the attributes
and benefits of each format. Our future
openings will be roughly 25% A-stores, 35%
B-stores and 40% C-stores, where there is the
greatest whitespace opportunity. By correctly
utilising these three formats to balance our
portfolio and creating a more nimble approach,
we can capture greater market share and higher
returns on capital.
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Win in Western Europe continued
Our strategy continued
Upgrade our core operating platform
Investing in and implementing a modern
operating platform is pivotal for our long-term
success and underpins all our strategic pillars.
Our model centres on planning, buying,
transporting and selling products efficiently.
However, our operations have been affected
by a period of significant underinvestment in
certain core operating platforms. As a result,
our processes are unstandardised and often
manual, which can creates inefficiencies.
Our initial focus centres on upgrading two key
areas: our supply chain and our digital customer
experience. This will allow us to operate more
efficiently, a key enabler in maintaining our
market-leading price proposition and driving
free cash flow generation.
We already have an integrated supply chain
through Pepco Global Sourcing (PGS), our
product sourcing, development and technical
services business. This is a real differentiator
which allows us to offer greater value to our
customers. However, we are also working to
upskill our overall distribution network through
partnerships that will enable us to operate
more quickly, flexibly and efficiently. We are
focused on implementing a two-speed supply
chain with two new de-consolidation centres
expected to open by FY28, alongside new
distribution centres (DCs) to reduce lead times
and improve inventory allocation. We will also
deploy new IT systems that will allow for better
planning and steering accuracy and increased
automation, enhancing operational efficiency.
In addition, we will implement a new ERP system,
integrated supply planning and a global POS
technology platform, as well as enhanced
data management and digital tools that will
enable significant improvements in our customer
engagement initiatives.
• Reset and standardise our
operating model
• Create a faster, more flexible
distribution centre network with
shorter lead times
• Implement a new technology
landscape focused on automation
and scalability to support growth
• Implement a new digital ecosystem
to deliver a superior customer
experience
• Implement a new IT operating model
focused on agile ways of working
• Automation in merchandise financial
planning and implementation
of a unified product lifecycle
management tool
• First full trading year with new Spanish
DC, with management of DCs moved
to DHL
• Implementation of new data lake
• Proof of concept with several AI
technologies and use cases
• New digital ecosystem including new
mobile app, new loyalty programme
and new websites
• Further implementation of data use
cases in the new data lake
• Implementation of AI technologies
in several business areas
• Finalise rollout of new HR
information system
Key objectives Progress in FY25 What to expect in FY26
Upgrading our core platform goes beyond new
technologies. It is equally important to align our
organisation and empower our people to unlock
its full potential. By aligning roles, processes and
skills, we ensure that teams can fully leverage
the capabilities to drive efficiency, collaboration
and innovation. This people-focused approach
transforms the use of these new technologies
into a true enabler of business outcomes,
allowing us to deliver greater value to our
customers. Our investment in both technology
and organisation design underscores our
commitment to sustainable growth and
operational excellence.
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Upgrade our core operating platform
New DC in Spain drives efficiency gains
In September 2024, we opened a new distribution centre (DC) in
Guadalajara, Spain to support our operations in Western Europe.
The 45,000 sqm facility services 260 of our stores in Iberia.
This was a crucial next step for our expansion plans in Western Europe,
as Spain is one of our primary growth markets. Previously, products
were transported to stores there from Hungary, c.3,000km away,
which was a significant drag on profitability and stock freshness.
During its first full year of operation, the new DC reduced our transport
costs by 380bps and our average lead time to stores by 3 days.
This supported both increased LFL growth as customers benefitted
from fresher stock and improved availability of items, and increased
profitability as we operated more efficiently and reduced our cost base.
Expansion of DHL supply chain
agreement
As part of our transformation journey and our
efforts to upgrade our end-to-end Value Chain,
the majority of our distribution centres (DCs)
are now being managed by DHL, a leader in
supply chain logistics. Since 2019 we have had
a long-standing agreement in place, first with
operations at our facility in Sosnowiec, Poland,
before expanding the partnership in 2024
with the opening of our DC in Guadalajara,
Spain. Since September 2025 our DC in Rawa
Mazowiecka, Poland and, as of January
2026, our DC in Gyal, Hungary are also being
successfully managed by DHL.
Partnering with DHL allows us to streamline
our operations, reduce our headcount and
drive greater efficiencies. It also helps ensure
customers continue to have timely access
to a wide range of quality products at
competitive prices.
Strategy in action
Strategy in action
DHL provides warehousing, inbound and
outbound picking, loading and value-
added services. With a large employee base
at their disposal and the ability to scale
staffing according to seasonal requirements,
the partnership facilitates optimised
warehousing and distribution costs through
increased efficiency.
With our continued strong growth, it made
strategic sense to expand the agreement,
allowing us to leverage DHL’s extensive logistics
network and expertise, facilitating quicker and
more efficient distribution of products to our
stores and customers. The partnership also
contributes to sustainable practices within
our supply chain.
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Upgrade our core operating platform continued
Our strategy continued
Capital allocation framework
In FY25, we announced a new capital allocation policy prioritising shareholder value creation. Disciplined investment in the business is critical to our ongoing success. It will ensure we continue to provide
a market-leading proposition to our customers and drive growth across the Group, creating enhanced value for all our stakeholders.
Leading to solid and consistent cash conversion
€342m
Free cash flow
2
1. Over the next three years, capital expenditure will be higher than normal in order to fund upgrades in our technology platform. This category of expenditure will significantly lower thereafter.
2. See note 27 of the financial statements.
3. Subject to approval at the AGM in March 2026.
Organic growth
New store opening programme,
as well as refurbs and refits of our
existing estate
€78m
Tech initiatives
Developing data and technology
capabilities and digitising our
customer proposition
€16m
1
Supply chain
Building out and optimising new
distribution and deconsolidation
centres and bonded facilities
€2m
Debt paydown
Maintaining leverage within our target
range of 0.5x-1.5x (pre-IFRS 16)
Leverage:
0.3x
Dividends
We issued our maiden dividend in FY24 of 6.2 cents
per share, a payout ratio of 20%. This was increased
to 25% in FY25
Share buybacks
€200m share buyback programme FY25-27.
We completed €50m in August 2025, with a further
€50m due to complete by January 2026
FY25 dividend per share
3
9.6 cents
Value of shares repurchased in FY25
€50m
Special dividends
Reviewed on a case-by-case basis
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Following our 2025 double materiality
assessment and baseline target setting,
this year we have further developed our
sustainability strategy. It focuses on our most
material sustainability topics, organised under
three strategic pillars – People, Value Chain
and Customers – and anchored by a CSRD-
compliant reporting framework and supported
by strong governance. Read more in our
Sustainability Statement on page 96.
Turning sustainability strategy
into action
“Where Growth Meets Care” is not an add-on
to our business but the continuous evolution
of growing responsibly. It creates value across
our strategic priorities while mitigating critical
risks. It reflects our view of sustainability as an
integrated, ongoing process of translating our
values – “Care for colleagues, Give our best,
Love our customers” – into business decisions,
product design, supply chain practices and
employee experience. Aligned with evolving
European regulations such as the EU Taxonomy,
CSRD and CSDDD, it ensures we remain
competitive, compliant, and trusted.
The three pillars of our sustainability strategy link
to our material topics under the ESRS, as well as
other areas identified as strategically important
to our business resilience and long-term growth.
Read more in our Sustainability Statement on
page 96. This enables us to proactively address
our ESG impacts, risks and opportunities – from
operational disruption and regulatory change
to shifting customer expectations – with clear
mitigation and measurable progress. Read more
in our Risk section on page 54.
Our sustainability strategy: Where Growth Meets Care
Our strategy is primarily focused on Pepco, which represents the majority of the Group’s operations. 2024 serves as the baseline year for the 2030 goals.
For more information on our sustainability metrics please refer to the following pages of our sustainability strategy and our Sustainability Statement.
Priority Building a stable, skilled and safe
workforce.
Creating a transparent, responsible,
and lower-impact value chain.
Enabling access to more responsible
product choices at affordable prices.
Key activities • Strengthen engagement
• Ensure fair working conditions
• Provide L&D opportunities
• Supply chain due diligence and
audit programme
• Climate transition plan
• Responsibly sourced own-brand
materials and products
Key metrics • % Participation in feedback
channels
• % Women in top 3 leadership levels
• % Internal promotion in operations
• % Suppliers audited against our
supplier factory audit plan
• % GHG reduction across all scopes
• % Better Cotton in own-brand textile
products
• % Own-brand product made in Cat.
1-3 factories
• % Reusable, recyclable or
compostable own-brand packaging
2030 Goal • 100% of employees can participate
in feedback channels
• 40% women in top 3 leadership
levels
• 70% internal development and
promotion in operations
• 100% of our factories are audited
against our supplier factory audit
plan at least annually
• 50% Scope 1+2 GHG reduction
by 2030, and 25% Scope 3 GHG
reduction by 2035
• 30% Better Cotton in own-brand
products
• 100% of own-brands made in Cat.
1-3 factories
• 100% of own-brand packaging is
reusable, recyclable or compostable
2050 Ambition A future-ready, stable workforce. A resilient, climate-neutral value chain. Responsibly sourced and
affordable products.
“Where Growth Meets Care” is more than a commitment, it’s our guiding sustainability approach supporting our new five-pillar strategic framework, for becoming
a responsible, resilient, and future-fit organisation. As one of Europe’s leading variety discount retailers, we believe it is vital to embed sustainability into how we
operate and approach long-term planning.
PEOPLE
Care for colleagues
VALUE CHAIN
Give our best
CUSTOMERS
Love our customers
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Transformation with care – our journey
“Where Growth Meets Care” reflects our
transformation in a rapidly evolving retail
landscape defined by rising customer
expectations, tighter regulation, supply chain
volatility, and the accelerating impacts of
climate change. Consumers today expect
more – responsibility, transparency, and trust
from the brands they choose.
In this context, our refined business strategy
outlines how we will achieve growth through
operational excellence, network expansion,
and portfolio simplification. At the same time,
we are embedding care, responsibility, and
future-readiness at the heart of our journey,
ensuring growth that is both sustainable
and empowering.
Each of the Group’s five strategic value
creation pillars (see section Strategic framework
on page 17) – from portfolio simplification
and digitisation to market expansion and
operational excellence — is supported by ESG
priorities that mitigate risks, enhance resilience,
and create long-term value.
For example, integrated sustainability
governance and supplier oversight strengthen
the Group’s portfolio and supply chain
streamlining and stability, while product
traceability and responsible sourcing build
customer trust and protect the Group’s
expansion and licence to operate. Lastly,
embedding ESG data and standards into our
systems improves transparency, compliance,
and investor confidence – ensuring growth
that remains responsible and future-fit.
In turn, business growth amplifies our
sustainability impact by enabling the provision
of affordable, responsibly sourced products
and fair employment, while advancing
robust environmental and social standards
across markets.
Ultimately, “Where Growth Meets Care”
demonstrates how sustainability performance
and business success are mutually reinforcing:
sustainability drives competitiveness, and
growth expands our capacity to care and
create positive impact.
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Reinforcement results
ESG focus areas
• Centralised integrated ESG governance
& supplier oversight
• Product traceability and sustainability
• Affordable, responsibly sourced products
and fair jobs
• Adoption of relevant ESG standards
• ESG data embedded into systems
• Lower ESG risks and impacts; secure supply continuity and compliance
• Stronger customer trust and informed choices
• Responsible growth and fair employment in new markets
• Resilient supply chains, disciplined expansion and investor confidence
• Improved ESG reporting and decision-making, transparency and risk management
Our strategic pillars
Simplify and streamline the
Group portfolio
Refocus and digitise Pepco’s
customer proposition
Topline growth through
measured expansion in CEE
Win in Western Europe
Upgrade our core operating
platform
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Building a stable, skilled, and safe workforce
Our 31,000+ colleagues are the heart
of Pepco’s success. Their diversity of
backgrounds and perspectives helps
us understand and serve millions of
customers every day. That is why we
aim to create a workplace where
everyone feels valued, included,
and empowered to thrive – enabling
strong customer experiences, stable
teams, and sustainable business
performance.
Key actions
• Listening and acting – We believe that
colleagues bring their best to work when
they feel heard, valued and supported,
driving customer satisfaction and
operational excellence. Therefore,
engagement is a management priority.
Our approach is enabled by HR and
corporate communications through tools,
frameworks and guidance, while
employees’ voices are gathered via
surveys, listening sessions, daily dialogue,
Works Councils and an employee
grievance and whistleblowing platform.
Motivated and stable teams strengthen
capabilities, reduce turnover and
support the sustainable growth
of our value retail model.
• Fairness, equity and belonging –
Our Diversity, Equity & Inclusion (DEI)
framework focuses on fostering inclusive
culture, building fair systems and
growing diversity through awareness
and development. We are strengthening
grievance procedures, analysing pay
equity, updating recruitment practices
and embedding DEI learning at all levels.
• Leaders for today and tomorrow – We
invest in tailored leadership programmes
for store, office and senior leaders, aligned
with our values and leadership principles.
Internal mobility is supported through
clear career paths and cross-functional
development opportunities.
• Strong pipelines, stronger futures – We
prioritise internal promotions in operations
and build flexible pathways in head office,
preparing colleagues for future roles and
ensuring business resilience.
Accountability in action
Managers are directly responsible for fostering
engagement and development within their teams,
supported by HR tools, training and oversight. At Group
level, the CHRO monitors trends, ensures alignment with
strategic priorities and oversees the implementation
ofour people initiatives, ensuring that accountability
and support are embedded at every level.
Our ambition
In FY25, we made significant changes to our
management structures to simplify governance,
strengthen accountability, and reflect the evolving
scope of our business.
As a result, the composition of our top leadership has
evolved, achieving greater gender balance across
senior levels and surpassing our gender diversity goal,
with women now representing 50% of our top leadership
(CEO, CEO-1, and CEO-2 levels*).
The 70% internal promotion target, introduced in
FY25, aims to strengthen internal mobility and career
progression across operations – specifically for Store
Manager and Shift Leader promotions. The current
52% share serves as the baseline from which future
progress will be measured.
We continue to strengthen employee voice through
accessible feedback and dialogue channels. Our next
biennial employee survey will take place next year,
providing an important platform to inform our ongoing
engagement strategy.
Looking further ahead to 2050, our goal is to maintain
a workforce that is not only skilled and stable but also
inclusive, adaptable and fully prepared to meet the
demands of the future retail environment.
Full list of topics
More details on topics and metrics related to our
people are available in our Sustainability Statement,
S1: Own Workforce (see page 127).
* The list of leadership levels is verified by the CHRO to ensure consistency
with role definitions. Some roles may be excluded if their impact is not
considered at the leadership level.
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People
Pepcoolture Masters Programme – celebrating
values, driving engagement
Now in its third year, the Pepcoolture Masters Programme is Pepco’s
flagship employee recognition initiative, celebrating individuals
who embody the Company’s values in their daily work. Designed
to strengthen culture and unity across our Pepco and PGS teams,
the programme aims to turn values into visible action. It fosters
appreciation and peer recognition, encourages cross-team
collaboration, and plays a key role in boosting employee engagement,
motivation, and retention.
The 2025 Pepcoolture Masters Programme launched with a nine-
week campaign promoting peer recognition and sharing stories of
values in action. It received over 1,500 nominations – a 25% increase
from the previous year – showing growing cultural engagement.
The programme recognised 34 local winners and 100 standout
nominators, culminating in a global event where eight were named
Global Pepcoolture Masters. Recognised employees reported higher
motivation, while nominators felt more valued. The initiative has been
linked to stronger trust, wellbeing, and retention, and continues to
unify Pepco’s culture and values across all countries, reinforcing its
global Employee Value Proposition.
Strategy in action
People continued
Sustainability strategy continued
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Our success depends on a resilient
and responsible supply chain
and operations. Our Value Chain
pillar focuses on transparent and
responsible sourcing, to support
business continuity while reducing
our environmental and social impact.
Key actions
• Sourcing – We assess factories
that supply own-brand products
against our risk-based audit
plan, complemented by ongoing
engagement to raise standards.
• Operations – We are transitioning
our operations to run on renewable
energy and partnering with our
carbon accounting platform provider
to measure, report and act on carbon
emissions across our value chain,
ensuring data-driven decision-
making and transparent reporting.
We are also reducing waste in our
stores, distribution centres and offices.
• Governance and transparency –
Vertical integration through PGS,
together with our internal sourcing
compliance team, provides high
visibility and control across the supply
chain. We conduct regular reviews
under the oversight of the Audit
Committee to ensure accountability
and drive continuous improvement.
At the same time, we are adopting
tools to advance full supply
chain mapping.
Accountability in action
Sourcing and compliance teams, together with
local management, ensure supplier adherence
to ethical standards. Executive leadership
reviews ethical performance regularly, while
the Audit Committee provides independent
oversight, embedding responsibility throughout
the value chain.
Our ambition
We aim for 100% audit of factories that
supply own-brand products against our
audit plan. This year we have continued
to achieve our goal
1
. See page 148 of the
Sustainability Statement for further details
of our sourcing KPIs.
We have also formalised targets to reduce
Scope 1 and 2 GHG emissions by 50% by 2030
and Scope 3 GHG emissions by 25% by 2035.
In FY25 we delivered a 39% reduction in Scope
1+2 GHG emissions, driven by our investment
in renewable electricity in Poland (further detail
can be found in our strategy in action case
study on page 35) and a 24% decrease in
Scope 3 emissions driven by enhancements
in our carbon accounting data quality and
reporting methodology
2
. Our ambition is to
achieve a climate-neutral value chain that
enhances resilience, protects people and
safeguards the planet, with measurable
progress and transparent reporting along
the way by 2050.
Creating a transparent, responsible, and
lower-impact value chain
To support our carbon targets, we have also
set a goal to reduce operational waste,
covering store, distribution, and office activities,
by 20% by 2030, using 2024 as the baseline.
In FY25, we achieved a 17% reduction compared
to the baseline, marking continued progress
toward our target.
Full list of topics
More details on topics and metrics related
to our value chain are available in our
Sustainability Statement, E1: Climate change
(see page 113) and S2: Workers in the value
chain (see page 127).
1. Our supplier factory audit plan is defined as all active factories for own-branded products that are designated ”own-brand” in our sourcing system, CBX.
2. The 39% and 24% reduction vs FY24 in Scope 1+2 and Scope 3 GHG emissions respectively relates to the Pepco Group excluding Poundland
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Sustainability strategy continued
Value chain
Pepco powers Poland with 100% renewable electricity
Pepco Poland, the Group’s largest European market, now operates entirely on renewable
electricity across all stores and distribution centres.
This milestone represents a significant step towards achieving Pepco’s climate targets and
broader sustainability commitments. As the first market in the Group to sign a long-term
Power Purchase Agreement (PPA), Pepco Poland now sources around 8% of its electricity
directly from a dedicated solar farm, with the remainder supplied through certified
renewable Guarantees of Origin.
This achievement advances the Company’s sustainability strategy, reinforces its emission
reduction goals, and showcases effective collaboration between Procurement and
Sustainability teams, and energy partners, setting a strong example for other markets
across the Group.
Strategy in action
Value chain continued
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Accountability
Customer trust depends on transparency,
product safety and quality. Regular compliance
checks, product quality testing and third-
party certifications reinforce accountability,
while progress is reviewed by Group leadership
to ensure alignment with our sustainability
and business goals.
Our ambition
By 2030, we aim to source at least 30% Better
Cotton in own-brand textile products and expand
the use of other recycled and certified materials.
In the current reporting period, we achieved
25% Better Cotton, representing an increase
in absolute volume compared to last year.
Additionally, all own-brand products will be
sourced from factories meeting Category 1, 2,
or 3 compliance standards; currently, 94% of
our suppliers meet these standards.
We are also redesigning packaging to achieve
100% reusability, recyclability, or compostability,
having already transitioned 97.9% of our packaging.
Full list of topics
More details on topics and metrics related
to our products are available in our
Sustainability Statement, E1: Climate change
(see page 127) and S2: Workers in the value
chain (see page 113).
Enabling access to more responsible product
choices at affordable prices
Key actions
• Materials: We are increasing the share
of Better Cotton in our own-brand
products as well as expanding the
use of other responsibly sourced and
recycled materials.
• Sourcing: We source our own-brand
products from factories that comply
with responsible sourcing standards,
supported by regular assessments to
safeguard working conditions across
our supply chain.
• Packaging: We are redesigning
our packaging to prioritise reuse,
recyclability and compostability.
We strive to make everyday life better for all
customers, especially families on a budget.
Through our Customers pillar, we make responsibly
sourced products accessible and affordable,
without compromising on quality. By embedding
care for people and the planet into design,
sourcing, and packaging, we offer a product
portfolio that is both responsible and accessible.
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Sustainability strategy continued
Customers
Customers continued
Sustainability meets finance – connecting
purpose across teams at Pepco
Pepco is committed to growing responsibly by embedding sustainability
into its core operations and long-term planning. Guided by its values –
Care for colleagues, Give our best, Love our customers – Pepco integrates
sustainability into product design, supply chains, and business decisions.
In a great example of cross-functional collaboration between
Sustainability, Treasury, and Operations teams, Pepco developed its first
Sustainable Finance Framework, receiving a “Good” Second Party Opinion
from Sustainable Fitch. This framework aligns sustainability goals with
financial strategy, enabling funding for projects that reduce environmental
impact and promote positive social outcomes.
The framework funds initiatives such as sustainable resource
management, renewable energy, green buildings, and responsible
sourcing, linking financing to Pepco’s targets of:
• 50% reduction in Scope 1 and 2 GHG emissions by 2030
• at least 30% certified cotton in own-brand textile products
By linking finance with sustainability, Pepco is embedding responsible
growth across teams and operations. This collaborative approach
enhances transparency, accountability, and impact – setting a strong
example of purpose-driven business transformation.
Strategy in action
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Monitoring performance across the Group
The following key performance indicators (KPIs) include Alternative Performance Measures (APMs). The Directors use APMs
1
as they believe these measures provide
additional useful information on the Group’s performance. Unless otherwise stated, all prior year figures are FY24 Restated.
Net new stores Total retail trading space (‘000 sqm) Total revenue growth (%) Underlying gross margin (%)
We took a more disciplined and
targeted approach to growth in FY25,
with 247 net new store openings in line
with guidance, leading to a total of
4,359 stores at year end.
Retail trading space of 1.9 million square
metres represents an increase of 6%
year-on-year.
Underlying gross margin improved
100 bps to 48.0%, driven by enhanced
operational efficiency and FMCG exit.
Definition and relevance:
Disciplined and controlled store growth is
fundamental to our Group strategy, with
strengthened store economics and returns
on capital.
Net new store numbers accounts for store
closures during the year.
Definition and relevance:
Trading space is defined as retail trading
space including tills, excluding back-of-house
and changing rooms.
Store space growth allows us to extend our
ranges and drive profitability.
Definition and relevance:
LFL growth is fundamental to our Group
strategy in delivering operating leverage.
LFL growth is defined as year-on-year
revenue growth for stores open beyond
their trading anniversary and is reported
on a constant currency basis.
Definition and relevance:
Profitability is a core focus, supported by gross
margin expansion through monitoring the
performance of our sourcing model.
Underlying gross margin represents underlying
gross profit divided by sales excluding VAT.
247
FY25
379
FY24
1,795
FY25
1,905
FY24
15.7%
FY25
8.7%
FY24
48.0%
FY25
47.0%
FY24
LFL growth (%)
2.6%
FY25
(3.0)%
FY24
FY25 revenue of €4.5bn, up 9%
year-on-year, driven by LFL growth
of 2.6% and new store expansion.
1. Refer to Alternative Performance Measures (APMs) in Note 27 to the consolidated financial statements on page 200.
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-446
bps
Underlying EBITDA margin (%) Profit conversion (%)
EBITDA margin is up 30bps year-on-year,
driven by continued improvement in
gross margin.
Improved profit conversion of 25% driven
by a reduction of interest expense and
notably lower effective tax rate.
Definition and relevance:
Underlying profit before tax, net finance costs,
depreciation and amortisation, divided by sales
excluding VAT. Prepared on an IFRS 16 basis.
Definition and relevance:
Focus on improving profit conversion,
through tax efficient financing and assessing
the legal and balance sheet structure to
actively manage our effective tax rate.
Underlying profit after tax, divided by
underlying EBITDA.
19.1%
FY25
18.8%
FY24
23.3%
FY25
25.3%
FY24
Underlying EBITDA (€m)
Underlying EBITDA of €865m represents
growth of 10% year-on-year.
Definition and relevance:
Underlying profit before tax, net finance costs,
depreciation and amortisation. Prepared on
an IFRS 16 basis.
865
FY25
784
FY24
Underlying profit after tax (€m)
Sharp improvement in Underlying
profit after tax to €219m, up 20%
year-on-year. This includes a one-off
pre-tax impairment charge of €38m.
Definition and relevance:
Profit after tax excluding exceptional items.
183
FY25
219
FY24
Free cash flow (€m)
Strong free cash generation of €342m,
up 22% year-on-year and above our
newly upgraded mid-term ambition
of at least €250m per annum.
Definition and relevance:
Generation of robust free cash flow is central
to the strategy of enhancing shareholder value.
Cash generated from operations, after
working capital movements, capital
expenditure, tax and rental costs, but pre
funding and investment.
342
FY25
281
FY24
Maintaining strong free cash flow
conversion of 156%, through greater
focus on disciplined capital investment.
Definition and relevance:
Executing in a disciplined manner with a
strong emphasis on efficient working capital
and returns will deliver strong cash flows.
Free cash flow divided by underlying profit
after tax
Free cash flow conversion (%)
156%
FY25
154%
FY24
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Introduction and strategic context
FY25 has been a been a year of transitions
for the Group – transitions to a renewed
leadership team, a sharpened strategy,
and a simpler portfolio and structure.
Willem Eelman
CFO of Pepco Group
This Financial review sets out Pepco
Group’s financial performance
for the year, highlighting how the
results support the execution of
the strategy and long-term value
creation for stakeholders.
Pepco Group operates as a leading clothing
and homeware discount retailer across Europe,
focused on offering quality clothing and general
merchandise products at market-leading prices
and the best value to families on a budget.
FY25 has been a year of transitions for the
Group – transitions to a renewed leadership
team, a sharpened strategy, and a simpler
portfolio and structure.
The Group’s redefined strategic framework
announced at our Capital Markets Day in March
aims to simplify the business model and focus
on profitability, with sustained discipline around
capital investment and optimising free cash
flow. The strategy is built on five pillars:
1. Simplify and streamline the Group portfolio
2. Refocus and digitise Pepco’s
customer proposition
3. Topline growth through measured
expansion in CEE
4. Win in Western Europe
5. Upgrade our core operating platform
These are supported by our value creation
model and a clear capital allocation
framework which is to first invest in the core
business and growth initiatives, and then to
return excess free cash flow to shareholders
through dividends and share buybacks.
Our capital allocation decisions and
long-term planning are informed by our
commitment to sustainability and responsible
business practices, as outlined in the 2030 ESG
Strategy we launched in FY24. This focuses on
carbon reduction, ethical sourcing, and energy
efficiency (as part of a resilient climate-neutral
value chain), and responsibly sourced and
affordable products, including Better Cotton
in own-brand products, and an increasing
use of renewables and a reduction in waste,
especially own-brand packaging.
We set out how we embed sustainability into
how we operate and approach long-term planning
on page 29.
The financial outcomes presented in this review
reflect progress against these priorities despite
a challenging macroeconomic backdrop and
reflect the transformation of the business following
the decision to focus on the Pepco brand as the
single future format, a strategic move away from
FMCG to focus on higher-margin clothing and
general merchandise, and the resulting disposal of
Poundland on 12 June 2025. FMCG now represents
only 8% of revenue mix, down from around 28%
historically, and now primarily reflects the Dealz Poland
business. Dealz is now fully independent, and a
divestment process is intended to commence in 2026
as we explore strategic options for the business.
Clothing FMCG
GM
* FY24 as Reported **FY24 Restated
FY21
FY22
FY23
FY24*
FY24**
FY25
27%
35%
37%
38%
41%
10%
8%
43%
49%
28%
36%
36%
49%
35%
27%
28%
35%38%
Revenue mix by category
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Group performance overview
Profit and Loss (€m)
Continuing operations FY25
FY24
(Restated)
YoY
(reported FX)
YoY
(constant FX)
Revenue 4,523 4,160 8.7% 8.4%
LFL growth (%) 2.6% (3.0)% - -
Underlying Gross profit 2,172 1,953 11.2% 10.9%
Underlying Gross margin % 48.0% 47.0% 100 bps 110 bps
Underlying Operating costs (1,307) (1,170) 11.7% 11.3%
Underlying Operating costs % 28.9% 28.1% 80 bps 70 bps
Underlying EBITDA 865 784 10.3% 10.4%
Underlying EBITDA margin % 19.1% 18.8% 30 bps 30 bps
Underlying EBITDA (pre-IFRS 16) 531 480 10.6% 11.0%
Underlying EBITDA margin (pre-IFRS 16) % 11.7% 11.5% 20 bps 30 bps
Depreciation, amortisation & impairment (494) (417) 18.5% 18.1%
Underlying EBIT 371 367 1.1% 1.7%
Net financial expense (68) (89) (23.6)% (22.6)%
Underlying profit before tax 303 278 9.0% 9.4%
Underlying profit after tax 219 183 19.7% 20.3%
Underlying EPS (cents) 38.1 31.7 20.2% 20.5%
Exceptional items (51) (44) 15.9% 15.4%
Reported profit before tax 251 234 7.3% 8.3%
Tax (80) (107) (25.2)% (24.5)%
Reported profit after tax 171 127 34.6% 35.8%
Reported EPS (cents) 29.8 22.1 34.8% 35.9%
FY25
FY24
(Restated)
YoY
(reported FX)
Net debt 1,229 1,679 (26.8)%
Leverage: Net debt to EBITDA 1.4x 2.1x (0.7)x
Net debt (pre-IFRS 16) 163 257 (36.6)%
Leverage (pre-IFRS 16): Net debt to EBITDA 0.3x 0.5x (0.2)x
Impact of IFRS 16 on leverage 1.1x 1.6x
Numbers above based on continuing operations and according to IFRS 16 unless stated otherwise.
Poundland is classified as a discontinued operation, therefore all numbers above (including comparatives) exclude Poundland.
All foreign currency revenues and costs are translated at the average rate for the month in which they are made.
The Group Executive Committee assesses the performance of the Group using a variety of performance measures; some are IFRS
Accounting Standards and some are adjusted and therefore termed “non-GAAP” measures or Alternative Performance Measures (APMs).
The Group Executive Committee principally discusses the Group’s results on an underlying basis excluding material exceptional, unusual
or other items, and for some measures (such as Underlying EBITDA and net debt) on a “pre-IFRS 16” basis given this is how financial
performance is measured by management and reported to the Board. A reconciliation of these non-GAAP measures to the nearest
measure prepared in accordance with IFRS Accounting Standards is provided in note 27 to the consolidated financial statements
(Alternative Performance Measures note) and, for net debt, is also provided in the Capital Structure and Financing section of this Financial
Review on page 51.
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Financial highlights
The key milestones this year were in line with
the strategy outlined at the Capital Markets
Day and highlight a clear focus on driving
shareholder value by focusing on our successful
Pepco business. The sale of Poundland and
removal of FMCG from the Pepco brand has
resulted in a Group with faster revenue growth,
improved profitability and margins, and stronger
cash generation.
• Revenue of €4.5bn, an increase of 9% on
a reported basis and 8% on a constant
currency basis
• LFL revenue growth of 2.6%, and up 4.0%
excluding the impact of the exit from the
FMCG category
• Volumes grew materially faster than
revenues given our focus on delivering more
competitive prices for our customers
• Gross margin improved 100 bps to 48.0%,
driven by enhanced operational efficiency
and FMCG exit
• Underlying EBITDA growth of 10.3% on a
reported basis and 10.4% on a constant
currency basis to €865m
• Underlying EBITDA margin increased by 30
bps driven by continued improvement in gross
margin and demonstrating disciplined cost
management in light of inflationary pressures
• Sharp improvement in underlying profit after
tax of €219m, up 20% despite a one-off IFRS 16
impairment charge of €38m (pre-tax).
• Profit conversion of 25%, up 200bps on FY24
Restated (and 630 bps on FY24 Reported)
driven by a reduction in interest expense and
a notably lower effective tax rate
• Underlying earnings per share of 38.1 Euro
cents, up 20% year-on-year
• Full-year dividend of 9.6 Euro cents per share,
up 55% on prior year. Dividend payout ratio
increased from 20% to 25% given the focus on
enhancing capital returns to shareholders
• Strong ROIC of 38.5%, up 14.8 ppts year-on-
year, reflecting efficient capital deployment
• Continued robust balance sheet position
and liquidity profile with €464m cash at year
end and free cash flow of €342m, above
our newly upgraded mid-term ambition for
free cash flow of at least €250m per annum,
with strong free cash flow conversion of 156%
of underlying PAT
• Net debt of €1,229m including right-of-use
lease liabilities, a decrease of €450m from
the prior year; net debt to EBITDA leverage
(pre-IFRS 16) reduced to 0.3x, well below our
internal target for a maximum net leverage
(pre-IFRS 16) ratio of up to 1.5x, thereby
ensuring financial flexibility while maintaining
a strong balance sheet
• A full refinancing of the Group’s borrowings
was executed in Q4 FY25 and Q1 FY26,
which materially extended the maturity profile
of debt, as well as reducing the average paid
interest cost from 6.4% to 3.9%
• Announcing and commencing the execution
of a share buyback programme, with
capability of up to €200m authorised
by the Board for use during FY25 to FY27.
The first €50m tranche of the programme
was completed during July to August 2025,
with a second €50m tranche commencing
after the year end on 28 October 2025
with around 90% expected to complete
by mid-January 2026.
+8.7%
Revenue growth
+10.3%
Underlying EBITDA growth
+20%
Underlying earnings per share growth
+55%
Dividend per share growth
€342m
Free cash flow
38.5%
ROIC
18.6%
FY23
22.1%
FY24*
23.7%
FY24**
38.5%
FY25
* FY24 as Reported ** FY24 Restated
As part of setting up efficient infrastructure
and a solid platform to support future growth,
we are focusing on upgrading the core financial
systems and internal control processes within
Finance. During the year this has included:
• appointing EY as the external auditor for
the Group to bring a fresh perspective
and enhance the robustness of our
assurance process;
• implementing a new lease management
software tool in Pepco to streamline lease
administration and ensure compliance with
IFRS 16 reporting requirements;
• performing a deep dive on the balance
sheet for each operating company to ensure
compliance with the Group accounting policy
manual, with special focus on aged items,
the approach to store impairments, and
provisions for dilapidations and stock; and
• establishing tax-efficient financing across
the Group and assessing the Group’s legal
structure and balance sheet structure to
actively manage the effective tax rate
going forward.
As a result, we identified a number of
restatements to the financial statements for
FY24, which primarily relate to correcting errors
in accounting for leases under IFRS 16 identified
by the new tool, the revised approach to the
allocation of central costs in the impairment
review of store assets and establishing
dilapidations provisions for restoration or
dismantling obligations. These are set out in
note 26 to the consolidated financial statements
(Restatement note).
ROIC
42 Pepco Group N.V. Annual Report 2025
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Revenue
Revenue grew by 8.7% on a reported basis to €4,523m (FY24 Restated: €4,160m), supported by 247
net new store openings (6% growth in stores since the end of FY24), a return to growth in Poland
and resilient demand in core markets such as Romania.
Revenue growth % (reported) YoY Pepco Dealz
Continuing
operations
Q1 Total 8.5% 18.9% 9.2%
Q2 Total 10.5% 8.0% 10.3%
Q3 Total 7.4% 12.2% 7.7%
Q4 Total 8.3% 1.0% 7.7%
FY Total 8.6% 10.4% 8.7%
The Group delivered positive trading momentum throughout the year, with LFL growth
accelerating from 2.3% in the first half to 2.9% in the second half, resulting in full year LFL
growth of 2.6% (FY24 down 3.0%).
Positive LFL growth was achieved by both Pepco (up 2.7%) and Dealz (up 1.9%), largely driven by
volume reflecting improved availability and a renewed focus on price leadership of the best-selling
items and investments in stock freshness and price.
LFL growth % YoY Pepco Dealz
Continuing
operations
Q1 1.4% 6.6% 1.8%
Q2 3.6% (1.7)% 3.2%
Q3 2.4% 5.8% 2.6%
Q4 3.8% (3.8)% 3.2%
FY LFL 2.7% 1.9% 2.6%
Gross margin %
* FY24 as Reported ** FY24 Restated
FY23
FY24*
FY24**
FY25
40.0%
48.0%
47.0%
43.9%
Gross margin increased by 100 bps to 48.0% (FY24 Restated: 47.0%), driven by expansion in Pepco
of 90 bps and supported by Dealz up 270 bps. In Pepco, gross margin progression was driven by
improved category mix reflecting our exit from FMCG categories during the year, with sales shifting
into higher margin clothing and homewares.
Margin also benefited from improved buying negotiations which offset an increased level of markdown
to clear older stock. As part of strengthening our operating platform, during the year we outsourced
distribution centre management to DHL which will deliver efficiency savings going forward.
Gross margin % Pepco Dealz
Continuing
operations
Q1 46.2% 33.7% 45.8%
Q2 48.9% 33.8% 48.6%
Q3 49.5% 34.3% 49.0%
Q4 50.6% 30.4% 49.4%
FY25 48.6% 33.1% 48.0%
YoY improvement 90 bps 270 bps 100 bps
43 Pepco Group N.V. Annual Report 2025
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Operating costs
Store costs
Store operating costs as a percentage of revenue increased by 140 bps to 20.6% of sales
(FY24 Restated: 19.2% of sales). Despite the improving momentum in like-for-like growth, store labour
costs increased on account of ongoing elevated wage inflation in the Group’s operating territories,
particularly in Central and Eastern Europe, along with the need to service a higher volume of sales.
We expect this increase to moderate in the future through exiting FMCG, which is more costly to
serve and replenish, and seeking further in-store operating efficiencies.
SG&A costs
Group SG&A costs were largely in line year-on-year, at €373m in FY25 (FY24 Restated: €370m).
Underlying EBITDA
Underlying EBITDA was €865m for FY25, up 10.3% on the prior year (FY24 Restated: €784m),
largely driven by sales growth and continued improvement in gross margin (up 100 bps) as a
result of better contracting with suppliers and sales mix shifting towards higher-margin categories
following the exit of FMCG ranges during the year. Despite continuing inflationary pressures on costs,
Underlying EBITDA margin increased 30 bps to 19.1% (FY24 Restated: 18.8%).
On a pre-IFRS 16 basis, FY25 Underlying EBITDA was €531m, an increase of 10.6% versus the prior year
(FY24 Restated: €480m).
Underlying EBIT
Underlying EBIT was €371m in FY25, up 1.1% on the prior year (FY24 Restated: €367m).
Significant non-cash impairments of €38m were booked in FY25, up €33m on FY24 (Restated)
of €5m. As part of the focus on upgrading financial processes, we have revised our approach to
the allocation of central costs in the impairment review of store assets, and this resulted in an
incremental €10m impairment charge in the year. In Pepco, an additional €12 million right of use
impairment was recognised reflecting more unprofitable stores and €8 million of property, plant and
equipment impairments were booked (which included writing off assets for closed stores). A further
€3 million of the increase reflected Dealz stores reaching sufficient maturity to be included in the
assessment for the first time.
Excluding the non-cash impairments booked in both years, Underlying EBIT would have increased
by 9.9% rather than 1.1%.
Continuing operations (€m) FY25
IFRS 16
impact
FY25
(pre-IFRS 16)
FY24
(Restated)
IFRS 16
impact
FY24
(Restated)
(pre-IFRS 16)
Underlying EBITDA 865 (334) 531 784 (304) 480
Underlying EBIT 371 (9) 362 367 (36) 331
Underlying profit before tax 303 30 333 278 8 285
Reported profit after tax 171 34 206 127 7 134
Exceptional items 48 (9) 39 55 0 55
Underlying profit after tax 219 26 245 183 7 190
Net debt/(cash) 1,229 (1,066) 163 1,679 (1,422) 257
FY23
FY24*
FY24**
FY25
13.5%
19.1%
18.8%
15.3%
* FY24 as Reported ** FY24 Restated
44 Pepco Group N.V. Annual Report 2025
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Segmental reporting
Geographic segments
FY21
FY22
FY23
FY24*
FY24**
FY25
Poland Rest of WE UK and Ireland
Rest of CEE
32%
26%
32%
40%
47%
14%
10%
7%
4%
2%
15%
47%
38%
28%
26%
44%
39%
25%
31%
32%
25%
36%
** FY24 as Reported ** FY24 Restated
In our core Poland and Central European (CEE) markets, energy price shocks and food supply
disruptions resulting from the conflict in Ukraine have driven up inflation in recent years. However,
this is now easing, with the exception of Romania and Hungary which still face elevated rates,
partly linked to these shocks.
In Poland, revenue grew by 4.1% on a constant currency basis to €1.7 billion, driven by new store
openings (71 net new stores covering both Pepco and Dealz, an increase of 4.3%). LFL growth was flat
for the full year; however Pepco Poland returned to growth in the second half, with LFL growth of 2.4%
(versus a decline of 3.1% in H1) driven by strong growth of 4.8% in Q4. Excluding the impact of the exit
of FMCG, LFL growth improved to 6.5% in Q4. The turnaround in Pepco Poland was delivered through
enhanced frontline sales execution, more local and intensified marketing campaigns to strengthen
our competitive position, improved stock freshness and more targeted promotions.
Revenue growth in CEE excluding Poland was strong at 9.3% (on a constant currency basis),
reaching €2.1bn, driven by the expansion of the store estate (store numbers up 7.5%) and supported
by LFL growth of 3.6%. LFL growth was driven by Pepco’s second-largest market of Romania (up 7.6%),
where Pepco marked a decade of operations with the opening of its 500
th
store. Sales in CEE,
excluding Poland, represented 47% of Group revenue in FY25.
Western Europe delivered particularly strong revenue growth of 17.3%, with LFL growth of 6.8%
(cycling a decline of 6.5% in the prior year) driven by Spain and Italy, and store numbers increasing
by 6.2% (with the majority of openings in Greece and Italy). As a result, the region generated 15%
of Group revenue in FY25 (FY24 Restated: 14%). In line with the strategy to simplify the business and
move away from the FMCG category, all “Pepco Plus”’stores (which operated across Iberia) were
either closed or converted to the standard Pepco format by the end of the year. Performance has
been strong on an underlying basis (excluding FMCG from the base), with LFL growth of 14.1% for the
region and 19.3% in Spain where momentum accelerated quarter on quarter, to LFL growth of 24.2% in Q4.
With consumers still under pressure to manage their spend, our markets were highly competitive
throughout the period, with the trading environment in Germany particularly challenging.
This contributed to our decision to restructure our business in Germany and in July we filed for
a company-led insolvency process in order to realign the store network for the German market,
with a smaller store portfolio, focused on more profitable locations where Pepco’s proposition is
most attractive to local shoppers.
Revenue (€m) FY25
FY24
(Restated)
YoY
(reported FX)
YoY
(constant FX)
Poland 1,713 1,618 5.9% 4.1%
CEE excluding Poland 2,116 1,950 8.5% 9.3%
Western Europe 695 592 17.3% 17.3%
Total continuing operations 4,523 4,160 8.7% 8.4%
LFL growth % FY25
FY24
(Restated)
Poland 0.0% (3.6)%
CEE excluding Poland 3.6% (1.7)%
Western Europe 6.8% (6.5)%
Total continuing operations 2.6% (3.0}%
Memo: Western Europe excluding FMCG 14.1% n/a
45 Pepco Group N.V. Annual Report 2025
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Store numbers (#) Pepco Dealz
Continuing
operations
Store numbers at start of FY25 3,781 331 4,112
New openings 260 19 279
Relocations 16 0 16
Closures (42) (6) (48)
Store numbers at end of FY25 4,015 344 4,359
Net new stores 234 13 247
YoY increase 6.2% 3.9% 6.0%
Store numbers (#) Poland
CEE excl.
Poland
Western
Europe
Continuing
operations
Store numbers at start of FY25 1,670 1,893 549 4,112
New openings 84 150 45 279
Relocations 8 7 1 16
Closures (21) (15) (12) (48)
Store numbers at end of FY25 1,741 2,035 583 4,359
Net new stores 71 142 34 247
YoY increase 4.3% 7.5% 6.2% 6.0%
Trading segments
Segmental performance is reported after the apportionment of attributable head office services
costs. Following the disposal of Poundland, Pepco now represents c.93% of Group revenue and over
100% of Underlying EBIT with the breakdown by segment shown below.
Underlying EBIT (€m) FY25
FY24
(Restated)
YoY
(reported FX)
YoY
(constant FX)
Pepco 423 412 2.7% 3.1%
Dealz (17) (20) 15.0% 19.0%
Corporate & central entities (35) (25) (40.0)% (47.2)%
Total continuing operations 371 367 1.1% 1.7%
The Group opened 247 net new stores, a 6.0% increase in store numbers, in line with guidance.
Store expansion continued but at a slower pace, reflecting increased financial governance to focus
on locations that generate the highest returns. As a result, Pepco opened 234 net new stores during
the year, down from 331 in FY24. These were focused in the CEE region, concentrated in Poland (58),
Serbia (30), Romania (25) and Bosnia (15), together with 34 in Western Europe, reflecting our growth
strategy in select Western European markets. In September, Pepco opened its milestone 4,000
th
store
in Europe, located in Madrid, and ended the year with a total network of 4,015 stores (FY24: 3,781).
The 42 Pepco store closures included 11 in Spain, in line with the strategy to exit the “Pepco Plus”
format, and 7 in Poland.
46 Pepco Group N.V. Annual Report 2025
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Pepco
Pepco’s FY25 sales increased by 8.6% to €4,184m (FY24 Restated: €3,853m), driven by new store openings
(net 234 stores) and supported by LFL growth of 2.7% on a reported basis (with growth of 3.8% in
the fourth quarter).
LFL revenues excluding the impact of the FMCG exit grew 4.1% for the year, with sequential
improvement quarter on quarter to 7.5% in Q4, resulting in strong growth of 6.1% in the second half.
LFL momentum was driven by improved availability, a renewed focus on price leadership of the
best-selling items, and an enhanced product offer. Investments in stock freshness and price
supported LFL growth of 2.4% in the clothing category (FY24: down 4.6%), and general merchandise
(GM) rebounded to 6.4% LFL growth (FY24: down 2.5%).
FY25 gross margin was 48.6% (FY24 Restated: 47.7%), an increase of 90 bps. The exit of lower-margin
FMCG products benefitted profitability, partly offset by increased markdown to exit FMCG stock and
improved freshness in other categories. Despite a reduction in average unit prices from targeted
investments in pricing, our focus on better buying and positive foreign exchange movements,
maintained margins.
Underlying operating costs increased by 11.2% year-on-year and were 27.7% of sales, up 60 bps
on prior year (FY24 Restated: 27.1% of sales) driven by store & distribution costs increasing by 15.9%.
Wage inflation in stores and DCs reached high single digits to remain competitive and attract
and retain staff. Pepco continued to invest in process efficiencies and customer experience
improvements, increasing the use of self-checkouts and rolling out the “Full Potential” programme
to standardise and streamline store processes across Western Europe.
FY25 Underlying EBITDA grew by 10.1% to €874m (FY24 Restated: €794 m). The Underlying
EBITDA margin increased to 20.9% (FY24: 20.6%), with gross margin improvements partly offset
by operating cost headwinds. On a pre-IFRS 16 basis, FY25 Underlying EBITDA was €567m,
up by 10.5% year-on-year (FY24 Restated: €513m).
Pepco (Underlying) (€m) FY25
FY24
(Restated)
YoY
(reported FX)
YoY
(constant FX)
Revenue 4,184 3,853 8.6% 8.4%
LFL growth (%) 2.7% (2.8)% - -
Gross profit 2,034 1,837 10.7% 10.6%
Gross margin % 48.6% 47.7% 90 bps 100 bps
Operating costs (1,160) (1,043) 11.2% 10.9%
Operating costs % 27.7% 27.1% 60 bps 60 bps
Underlying EBITDA 874 794 10.1% 10.1%
Underlying EBITDA margin % 20.9% 20.6% 30 bps 30 bps
Underlying EBIT 423 412 2.7% 3.1%
Underlying EBIT margin % 10.1% 10.7% (60) bps (50) bps
Store numbers 4,015 3,781 234
Underlying EBITDA (pre-IFRS 16) 567 513 10.5% 10.9%
Underlying EBITDA margin (pre-IFRS 16) % 13.5% 13.3% 20 bps 30 bps
47 Pepco Group N.V. Annual Report 2025
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Dealz
Dealz delivered revenue growth of 10.4% in FY25, driven predominantly by continued store expansion
in Poland (net 13 new stores). Like-for-like sales increased 1.9%. Trading was strong across the first
three quarters, but softened in Q4, reflecting a challenging performance in health & beauty due
to elevated promotional intensity, weaker soft drink sales during an unseasonably cool summer in
Poland, and underperformance of “back to school” ranges.
Gross margin expanded by 270 bps to 33.1% (FY24 Restated: 30.4%), supported by better supplier
management for perishable goods, and change in mix towards higher-margin FMCG products.
Efficiencies from shifting supply away from Poundland-sourced ranges towards more local sourcing
helped reduce UK-related import costs, including duties and labelling. Margin in Q4 was impacted
by an increased level of markdown as sales volumes weakened.
Operating costs grew broadly in line with revenue, with the ratio to sales improving 30 bps to 25.8%
(FY24 Restated: 26.1%), reflecting inflation and additional operating costs from new stores, partially
offset by central cost savings.
Underlying EBITDA increased by €12m to €25m (FY24 Restated: €13m) as gross margin gains
outpaced operating cost growth. Underlying EBITDA margin increased by 300 bps to 7.3%
(FY24 Restated: 4.3%).
Dealz (Underlying) (€m) FY25
FY24
(Restated)
YoY
(reported FX)
YoY
(constant FX)
Revenue 339 307 10.4% 8.5%
LFL growth (%) 1.9% (4.8)% - -
Gross profit 112 93 20.4% 18.2%
Gross margin % 33.1% 30.4% 270 bps 270 bps
Operating costs (88) (80) 10.0% 7.3%
Operating costs % 25.8% 26.1% (30) bps (30) bps
Underlying EBITDA 25 13 92.3% 85.0%
Underlying EBITDA margin % 7.3% 4.3% 300 bps 300 bps
Underlying EBIT (17) (20) (15.0)% (19.0)%
Underlying EBIT margin % (4.9)% (6.6)% 170 bps 170 bps
Store numbers (#) 344 331 13
Underlying EBITDA (pre-IFRS 16) (1) (8) 91.6% 91.7%
Underlying EBITDA margin (pre-IFRS 16) % (0.2)% (2.7)% 250 bps 250 bps
48 Pepco Group N.V. Annual Report 2025
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Exceptional items and Discontinued operations
Exceptional items constitute material, infrequent, unusual and other items. In determining whether
events or transactions are treated as exceptional items, management considers quantitative as
well as qualitative factors such as the frequency or predictability of occurrence.
In FY25 exceptional items totalled €25m at EBITDA (FY24 Restated: €46m), including:
• Restructuring costs of €17m relating to:
• Pepco’s exit from the FMCG category, which involved the closure of stores in Iberia and the
conversion of “Pepco Plus” stores to the standard Pepco format;
• Pepco Germany insolvency costs, as part of plans to reorganise the store network and better
meet customer demand;
• Redundancy costs associated with the new target operating model; and
• €8m relating to ERP Software-as-a-Service (SaaS) costs which is considered to be an unusual
and material cost by nature.
In addition to the above, we incurred exceptional impairment costs of €17m across fixed assets
and right-of-use assets, of which
• €14m related to the Pepco Germany insolvency and closure of stores; and
• €3m as a result of the announced exit of the FMCG category in Pepco and the closure
and conversion of stores in Iberia.
Exceptional costs impacting EBITDA in FY24 (Restated) were €46m. Additional categories not present
in FY25 were:
• €16m relating to the fraudulent phishing attack in Hungary in February 2024; and
• €1m relating to the Value Creation Plan (VCP) scheme that has now ceased.
The prior year reported results included the non-cash impairment of Poundland (primarily goodwill),
which has now been reclassified to discontinued operations in both FY24 (Restated) and FY25.
Discontinued operations
On 12 June 2025, the Group completed the sale of its entire shareholding in Poundland Limited
to Gordon Brothers, reflecting our strategy to simplify the Group’s structure, focus on the core
Pepco-branded operations and drive shareholder value, as outlined at the Capital Markets Day.
In the last financial year, Poundland contributed 33% to Group revenues, and 15% of Underlying
EBITDA. In the FY25 financial statements, Poundland is presented as a discontinued operation
in line with IFRS 5 in the consolidated income statement, and comparative figures have been
restated accordingly.
The disposal of Poundland led to a loss of €350m, recognised in discontinued operations.
Full disclosures are provided in note 25 to the consolidated financial statements.
By divesting Poundland, we took a significant step towards our strategic goal of solely operating
the Pepco brand and exiting FMCG to focus on our higher-margin clothing and GM ranges.
The transaction significantly advances our strategy and growth momentum, through improved
revenue growth, higher margins and stronger cash generation.
The shares in Poundland were sold for nominal consideration of £1, with Pepco providing a secured
loan of £30m. Certain unsecured loans initially remained in place between Pepco Group and
Poundland, including an overdraft facility of up to £30m. However, following the approval of the
proposed restructuring plan by the UK High Court on 26 August 2025, these unsecured loans were
converted into a minority equity stake in Poundland Group of c.30% that will enable Pepco Group
to share in the upside potential of Poundland’s turnaround.
Taxation
The Group’s statutory profit before tax increased by 7.3% year-on-year, to €251m (FY24 Restated: €234m).
On an underlying basis, profit before tax increased by 9.0% to €303m (FY24 Restated: €278m).
In our five largest operating markets by revenue of Poland, Romania, Spain, Czechia and Hungary,
the headline rate of corporate tax varies between 9% and 25%, with performance in each operating
territory impacting our effective tax rate. The impact of the global minimum tax rules (Pillar Two)
was first recognised by the Group in FY25, the provision being €0.5m.
In FY25 the Group’s reported corporate tax charge was €80m, a decrease of 25.2% compared to
FY24 Restated of €107m, primarily as a result of a reduction in movements in unrecognised temporary
differences across the Group. On a reported basis, our effective tax rate is significantly distorted by
exceptional items on which no current or deferred tax credit is recognised, therefore the Group also
presents an underlying effective tax rate to guide against the underlying performance of the Group.
On an underlying basis, the effective tax rate was 27.6%, which was a 6.6 ppt improvement on the
prior year (FY24 Restated of 34.2%). This measure reflects the underlying tax rate in relation to profit
before tax excluding exceptional items. The tax impact on exceptional items within operating
profit is the sum of the tax on each exceptional item, based on the applicable country tax rates
and tax treatment.
In the medium term, our expectation is that the underlying effective tax rate will be between
22% and 24% as a result of initiatives to optimise the Group’s capital structure.
FY25 FY24 (Restated)
Underlying Exceptional Reported Underlying Exceptional Reported
Profit/ (loss) before
taxation 303 (51) 251 278 (44) 234
Taxation (84) 4 (80) (95) (12) (107)
Profit/ (loss) after taxation 219 (48) 171 183 (55) 127
Effective tax rate % 27.6% 6.9% 31.8% 34.2% (26.5)% 45.6%
The amount of tax paid in the year decreased by €8m to €77m (FY24 Restated: €85m),
as shown in the continuing operations cash flow on the following page.
49 Pepco Group N.V. Annual Report 2025
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Continuing operations cash flow
Operating cash flow and working capital
Net cash inflow from operating activities was €770m, up €36m (4.9%) on the prior year restated
€735m, with strong operating cash conversion of 89% of Underlying EBITDA. Cash flow from working
capital was a small net outflow of €5m in the year. Markdown and sell-through of old inventory
helped to improve stock freshness and drive stock days for the continuing business down to 137 at
the year end from 147 in FY24. Trade payable days declined by 11 days to 99 at year end, from 110
in the prior year, owing to delays in shipments through the Red Sea in FY24, as a result of conflict in
the Middle East, and supported by the normalised payment schedule with partner suppliers in the
current year.
Pepco Group (€m) FY25
FY24
(Restated)
YoY
(Reported)
Underlying EBITDA 865 784 81
Exceptional items (25) (46) 21
Reported EBITDA 840 738 102
Share-based payments (non-cash) 13 7 6
Working capital (5) 75 (80)
Cash generated by operations 848 820 28
Tax paid (77) (85) 8
Net cash inflow from continuing operating activities 770 735 36
Capex (96) (149) 53
IFRS 16 lease liabilities (repayment and interest) (332) (304) (28)
Free cash flow 342 281 61
Net debt 1,229 1,679 (450)
Leverage: Net debt to EBITDA 1.4x 2.1x (0.7)x
Net debt (pre-IFRS 16) 163 257 (94)
Leverage (pre-IFRS 16): Net debt to EBITDA 0.3x 0.5x (0.2)x
Impact of IFRS 16 on leverage 1.1x 1.6x
Capital expenditure
In FY25, capital expenditure represented 2.1% of revenues (FY24 Restated: 3.6%). We continued to take
a more considered approach to investment spending, with store openings reduced versus previous
years and more focus on operational improvements. As a result, capital expenditure was down to
€96m for the FY25, 36% lower than the €149m invested in FY24 (Restated), with the principal areas
of expenditure as follows:
• €59m was invested in opening 295 gross new stores (FY24 Restated: 425 gross new stores);
• €19m was invested in store refits and enlargements, including the conversion of the remaining
“Pepco Plus” stores in Iberia to the standard format;
• €16m was invested in IT, including the digital transformation of our operations; and
• the remaining €2m investment relates to other projects, including existing DCs, our Poznan Head
Office and additional store hardware.
Capital investments are considered in alignment with our ESG strategy, to deliver its objectives
and commitments, for example in energy efficiency and decarbonisation, as well as meeting
financial thresholds.
Free cash flow
We delivered strong free cash flow conversion of 156% of Underlying profit after tax. Free cash flow
was €342m in FY25 up €61m (22%) on prior year (FY24 Restated: €281m), above our newly upgraded
mid-term ambition for free cash flow of at least €250m per annum.
FY24*
FY24**
FY25
342
156%
13.5%
168
94%
281
154%
Free cash flow in €m
Free cash flow in conversion %
* FY24 as Reported ** FY24 Restated
50 Pepco Group N.V. Annual Report 2025
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Other
informationFinancial review continued
Capital structure and financing
Net debt
Net debt (pre-IFRS 16) i.e., excluding right-of-use lease liabilities, reduced by €94m to €163m at
30 September 2025 (FY24 Restated: €257m) with cash and cash equivalents increasing €101 million
to €464m (FY24 Restated: €363m). Including the impact of right-of-use lease liabilities, net debt stood
at €1,229m, a reduction of €450m on prior year (FY24 Restated: €1,679m), broken down as follows:
Pepco Group (€m) FY25
FY24
(Restated)
YoY
(reported FX)
Borrowings from credit institutions 625 625 -
Capitalised costs (5) (12) 7
Redemption premium 6 - 6
Finance leases 1 7 (6)
Gross debt 627 620 7
Cash and cash equivalents (net of overdrafts) (464) (363) (101)
Net debt (pre-IFRS 16) 163 257 (94)
IFRS 16 lease liabilities 1,066 1,422 (356)
Net debt 1,229 1,679 (450)
Maturity of gross debt:
Within one year* (note) 425* - 250
Between one and two years - 250 (250)
Between two and five years 200 375* -
* The €425m shown as due within one year comprised the April 2026 term loan (€250m) and the impact of calling €175m of the senior
secured notes prior to the year-end (as part of the refinancing process detailed below).
Refinancing
In the fourth quarter, the Group initiated a debt-refinancing strategy to strengthen the Group’s
capital structure, significantly lower financing costs and enhance financial flexibility through
extending debt maturities out to November 2028 and beyond. The average maturity of the gross
financial debt portfolio, excluding the undrawn revolving credit facility (RCF), was 1.1 years at year
end (30 September 2024: 2.9 years). If the refinancing process had not begun, average maturity
would have been 1.9 years at year end.
On 24 September we called €175m of the €375m corporate bond, which was repaid after the year end.
After the year end, we completed a significant refinancing in November 2025 as follows:
• Series 1 Bonds Polish Floating Rate Note (FRN) with maturity of October 2030 were issued
under the PLN 2bn bond issuance programme. The proceeds of this issue, totalling PLN 600m
(approximately €141m), were converted to fixed rate Euro at a coupon of 4.4% through
cross-currency swaps.
• €770m of committed credit facilities were signed with a syndicate of 10 relationship banks.
This comprised a 3-year term loan of €235 million maturing in November 2028, a 5-year term
loan of €235m maturing November 2030, and a new 5-year multicurrency RCF of €300m to
November 2030. The RCF has two 1-year uncommitted extension options to extend further to
2032, and replaced the existing undrawn facility of €390m, expiring in April 2027. The facilities were
coordinated by Citibank, ING Bank and J.P. Morgan Securities. Syndication was oversubscribed,
enabling the Group to upsize the facilities from the originally proposed €750m. Opening margins
for the three new facilities range from 1.35% to 1.70% over EURIBOR.
• During December, an existing lender rejoined the syndicate for the committed credit facilities
allowing the Group to increase the RCF, and therefore the total committed credit facilities,
by €30m to €330m (RCF) and €800m (total committed credit facilities).
The new facilities were used to refinance the Group’s indebtedness and extend the maturity of its
debts as shown below:
Refinancing summary (€m)
Pre-transaction
30 September
2025 Refi impact
Post-closing
31 December
2025 Maturity
EUR Senior Unsecured Bonds 375 (375) - Jun-28
Polish FRN - 141 141 Oct-30
Bonds subtotal 375 (234) 141
Existing Term Loan 250 (250) - Apr-26
New 3-year Term Loan - 235 235 Nov-28
New 5-year Term Loan - 235 235 Nov-30
Loans subtotal 250 220 470
Borrowings from credit institutions 625 (14) 611
Capitalised costs and redemption premium 2 (12) (10)
Borrowings 627 (26) 601
RCF (undrawn) 390 (60) 330
Memo: Total committed credit facilities
(Loans plus RCF) 640 160 800
51 Pepco Group N.V. Annual Report 2025
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statement
Other
informationFinancial review continued
100% of the Group’s debt is denominated in Euros, with exposure to the Polish złoty fully hedged
as a result of cross-currency interest rates swaps.
Leverage ratios and liquidity headroom
The Term Loans and Polish Floating Rate Note contain a maximum leverage and a minimum interest
cover covenant relative to EBITDA, which are both calculated on a pre-IFRS 16 basis and are
assessed half-yearly.
Our pre-IFRS 16 leverage was only 0.3x as at 30 September 2025 (FY24 Restated: 0.5x). This remains
well within the debt covenants which are for a maximum leverage of 2.8x (Term Loans) up to 3.5x
(Floating Rate Notes).
Pepco Group (€m) FY25
FY24
(Restated)
YoY
(reported FX)
Net debt 1,229 1,679 (26.8)%
Leverage: Net debt to EBITDA 1.4x 2.1x (0.7)x
Net debt (pre-IFRS 16) 163 257 (36.6)%
Leverage (pre-IFRS 16): Net debt to EBITDA 0.3x 0.5x (0.2)x
Impact of IFRS 16 on leverage 1.1x 1.6x
Finance costs
Reported net financial expenses decreased by €21m year-on-year to €68m in FY25 from €89m (FY24
Restated). Net finance costs in the year included €10m relating to the refinancing, with a further
€12m expense incurred after the year end. The full cash impact of this will be reflected in Q1 FY26.
Excluding the impact of the refinancing costs, net financial expense in FY25 would have been €58m,
a year-on-year reduction of €31m.
The effective interest rate being charged on borrowings by credit institutions decreased to 6.4%
(FY24 Restated: 6.9%), reflecting a fall in the EURIBOR rate. The post year-end refinancing of our bond
and term loan, which achieved significantly lower interest rates (3.9% weighted average interest cost
for total funded debt), will enhance financial flexibility and improve profit conversion going forward.
The interest cover ratio (pre-IFRS 16) increased to 18.3x from 10.6x in the prior year. There is significant
headroom versus the debt covenant for a minimum interest cover of 3.5x on a pre-IFRS 16 basis.
Pepco Group (€m) FY25
FY24
(Restated)
YoY
(reported FX)
Financial income 57 20 185.0%
Financial expense (126) (109) 15.6%
Reported net financial expense (68) (89) (23.6)%
Less interest on lease liabilities 41 44 (6.8)%
FX monetary assets and liabilities revaluation (2) 0 0.0%
Net financial expense (pre-IFRS 16) (29) (45) (35.6)%
Interest cover ratio (pre-IFRS 16) 18.3x 10.6x 7.7x
Effective interest rate % 6.4% 6.9% (50) bps
Credit ratings
Our credit ratings have remained stable and similar to our key peers. At 30 September
2025, the rating agencies rated us as shown below. Post year end, Moody’s have upgraded
Pepco Group to Ba2.
Agency
Rating
@30 Sept 2025
Fitch BB
Moody’s Ba3
S&P Global BB-
0
50
100
150
200
250
300
350
400
FY26FY25 FY28FY27
Existing
RCF
New
RCF
FY30FY29 FY32FY31
2500 375390
0 235 376 330
Existing
New
Refinancing impact on debt maturity profile pre and post refinancing:
52 Pepco Group N.V. Annual Report 2025
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Other
informationFinancial review continued
Hedging and foreign exchange
The Group does not hedge the translation impact of profits generated in non-Euro countries.
Currency movements during the period resulted in a negligible impact of FX translation to FY25
Underlying EBITDA. The average and period-end exchange rates relative to the Group were as follows:
Average rate Period-end rate
FY25 FY24 FY25 FY24
EUR/PLN 4.257 4.354 4.270 4.279
CNY/PLN 0.534 0.557 0.511 0.545
USD/PLN 3.849 4.020 3.637 3.822
The Group hedges the transactional FX risk for inventory purchased in Asia, and paid for in US
Dollars (USD) and Chinese Yuan (CNY), against Pepco’s own operating currencies, in order to reduce
the volatility on gross margin. The majority of the Group’s FX contracts are accounted for in cash
flow hedge relationships. During FY25 there has been general depreciation of USD and CNY against
the Polish Zloty (PLN) in particular which is reflected in an increase in the net liability balance sheet
position for the Group’s derivative financial instruments against FY24.
Shareholder returns
The overriding objective of the Group’s capital allocation framework is to enhance shareholder
value, including maintaining a strong balance sheet and ensuring the business operates with an
ample level of liquidity. Central to this strategy is the generation of robust free cash flow, which the
Group aims to achieve through operational improvements, including stronger LFL sales performance,
gross margin expansion, and tighter control over operating costs. Additionally, a rigorous focus on
net working capital efficiency and optimised cash taxes should further bolster free cash flow.
After investing in its core business and growth initiatives such as store expansion and key platform
enhancements across distribution, logistics and IT systems, Pepco Group expects to generate
substantial free cash flow and be able to return excess cash to shareholders via dividends
and / or share buybacks, subject to the Board’s discretion and (as applicable) shareholder approvals.
The Group introduced an inaugural dividend last year, based on a payout ratio of 20% of full-year
underlying net profit. Given the focus to enhance capital returns to shareholders, and following
a successful refinancing and strengthened balance sheet, the dividend payout ratio is being
increased to 25% of full-year underlying net profit.
As a result, the Board has recommended a full-year dividend of 9.6 Euro cents per share for FY25,
up 55% on FY24 (6.2 Euro cents), subject to the approval of shareholders at the Annual General
Meeting that will be held on 11 March 2026. This is in line with our approach to maintain or increase
the dividend over time.
At the Capital Markets Day in March 2025, the Board authorised a share buyback capability of up
to €200m to be available for use until 2027. The first €50m tranche was completed in August 2025,
with a second €50m tranche commencing after the year end, on 28 October 2025, with around
90% expected to complete by mid-January 2026. The Board will continue to evaluate opportunities
for future capital returns to drive shareholder value.
Sustainability and climate impact
In line with the ESG strategy launched in FY24, the Group includes consideration of the environmental
and social impact of its operations and investments in its decision-making. We regard this as
essential to meeting obligations to our stakeholders, including customers, colleagues, suppliers and
society, as well as making financial sense both over the short and longer term through efficiency,
minimising waste and reducing risk.
Further information on our sustainability strategy “Where Growth Meets Care” and commitments
can be found in pages 29 to 37.
Willem Eelman
CFO of Pepco Group
14 January 2026
53 Pepco Group N.V. Annual Report 2025
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reportIntroduction Governance
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statements
Sustainability
statement
Other
informationFinancial review continued
Our approach to risk management
Risk management and
internal control framework
Risk management is a key driver for
performance and an essential part of doing
business. Throughout 2025, we have delivered
a step change in our risk maturity and an
evolution of our approach. This has closely
aligned managing risk with strategic planning
and decision making and has implemented
greater control focus.
We have reviewed and enhanced our Enterprise
Risk Management (“ERM”) framework, tailoring
the COSO ERM model to embed the practices
and behaviours needed to create and preserve
long-term value and organisational resilience.
We also recognise the changing corporate
governance landscape, including revisions
to the Dutch Code effective from FY26, and
have integrated these into our continuous
improvement programme.
Our framework
Risk management principles
and culture
Endorsed by the Board and championed
throughout the business, the ERM framework
is designed to identify, prioritise and manage,
rather than eliminate, risks to the business
and to provide reasonable assurance against
material misstatement or loss.
Our framework is agile to ensure it can support
the business in responding to constant external
changes, including market conditions and
geopolitical circumstances.
Risk
identification
Risk
Assesment
Risk response
Monitoring,
reporting and
communications
Linking risk
and strategy
Continuous improvement
Governance and Culture
Risk management is a key focus throughout
the organisation. Our “bottom-up” identification
of risk is integrated with a “top-down”
review and challenge process with the Risk
team, Management and the Board. These
assessments are aggregated together and
considered against our risk appetite framework,
to compile an overall Group-wide view of risk.
Risk governance
We operate a dynamic risk governance
model that ensures the right risk conversations
happen at each level of our business. This
includes structured risk review as part of
business planning, integration of key risks into
strategic and operational decision-making
forums and regular reporting to the Executive
Committee and Audit Committee.
The Risk team is responsible for monitoring
progress against our transformation plan,
supporting risk mitigation strategies and
control development, as well as challenging
management on the effectiveness of risk response.
In 2025, we enhanced our management
oversight of risk, updating the structure
and composition of our Group Risk and Audit
Committee. This Committee serves as a central
body to coordinate management priorities
and actions across risk, compliance, audit and
internal control, overseeing progress against our
risk transformation plan and preparation for the
Board level Audit committee.
54 Pepco Group N.V. Annual Report 2025
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Sustainability
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Other
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Strategic
reportIntroductionRisk management
Our approach to risk management is fully
aligned with our strategy, and each principal
risk and uncertainty is considered in the
context of how it relates to the achievement
of the Group’s strategic objectives. The Audit
Committee is a subset of the Board and holds
responsibility for independent review of the
effectiveness of our risk and internal control
systems, as well as the quality and accuracy
of our financial reporting. The Audit Committee
is responsible for the annual review of risk
appetite, oversight of principal risks and internal
controls, ongoing monitoring of external audit
provision and consideration of any findings
shared from the auditor’s scope of review.
Linking risk and strategy
Risk management is a key input into strategic
planning, considering the evolving external
context, priority risks, and new and emerging
risks. Once strategic plans have been agreed,
separate objective assessment of delivery risks
is built into the process to fully understand the
risk environment we face.
Risk appetite
Risk appetite is the amount of risk we are willing
to accept in pursuit of our strategic objectives,
setting out guardrails for decision making and
business operations. Risk appetite is forward
looking and takes into consideration the
internal and external environment, regulatory
obligations, culture, corporate values and the
geographies we operate within.
Our risk appetite is reviewed at least annually
or following material business changes and
approved by the Board. In 2025, a more
granular approach to risk appetite has been
developed, describing it at a category level,
with clear individual statements to contextualise
the target risk environment.
We monitor risk regularly, evaluating our risk
position against appetite levels to determine
what further actions may be required. Appetite
levels are described on a three-point scale:
‘Averse’ (avoidance of risk is a core objective,
and we will always select the lowest risk option),
‘Balanced’ (we will make trade off decisions,
weighing up the impact of the risk vs the
potential benefits) or ‘Tolerant’ (we are willing
to take justified risks to achieve the highest
possible return).
Our approach to risk appetite continues to
evolve, with further developments planned for
2025/26 to formalise and align the structure of
underpinning minimum standards, policies and
key controls.
Strengthening our framework
The risk environment continues to change
around us, requiring constant reflection on
and continuous improvement to our approach,
culture and connectivity throughout the
business. Significant progress was made in
FY25 to improve our maturity within this space,
with further developments planned to fuel our
business performance in the next financial year.
Our ERM roadmap focuses on deeper
reviews of internal controls and enhancements
to our assurance process to integrate self-
assessment evaluations and risk-based control
testing with our ongoing internal audit plan. The
improvements will drive deeper accountability
for key controls, a regular rhythm of insight into
control performance and limited assurance for
management across all key areas.
1
Risk identification
Risk identification is a business-wide
responsibility, with each risk assigned
clear ownership and aligned to our
risk category framework. In addition
to our ongoing new and emerging
risks process, an annual risk reset is
conducted in Q1 each year, followed by
a strategic risk review mid-year.
3
Risk response
By understanding our risks more deeply
we ensure that the right response
strategies are applied. In the year,
we have taken steps to further develop
our internal control environment
through the implementation of specific
control frameworks and targeted
projects to improve key controls.
Where appropriate, we also consider
risk transfer through our insurance
programme, third party contracts and
termination of specific risks through
strategic programmes.
4
Monitoring, Reporting
& Communication
We are monitoring risks and the
effectiveness of our internal controls
through a series of checks and
evaluations across different levels of the
organisation, management oversight
and independent testing, all of which
contribute to our assurance model.
2
Risk assessment
Our risk assessment criteria are
multifaceted, drawing from each
of our risk categories to ensure a
rounded risk assessment of financial
and non-financial measures. Each
risk is assessed inherently and
residually to inform prioritisation,
with a treated risk score indicating
where we forecast the level of risk
to be, based on planned investment
and actions. This structure helps us
to operate more strategically by
understanding the risk reduction
value of our internal controls and
whether further risk remediation will
deliver our target appetite levels.
55 Pepco Group N.V. Annual Report 2025
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Financial
statements
Sustainability
statement
Other
information
Strategic
reportIntroductionRisk management continued
Operations and customer
Risk Description and key drivers Mitigation plans
Colleague and customer safety
Link to strategy
Risk movement
The safety of our colleagues, customers and third parties is critically
important to us and the sustainability of our business. Failure to maintain
appropriate organisation and arrangements for safety could result in harm,
reputational damage and regulatory action.
Sub-risks / drivers:
• Complexity of multi territory operating and compliance models
• High risk business travel
• Product safety issues or recalls
• Fire safety standards
• Safety of store and distribution colleagues
• Health and safety Committee structure and business unit action plans
• Health and safety data collected and monitored locally with centrally reported
Group stats tracked
• Moving to a more integrated model with the introduction of standardised policies
and procedures
• Aligning Group wide model, with input from local representatives and
industry specialists
• Targeted, data driven, improvement programmes focusing on key areas of risk
and compliance
• Continue to identify and respond to regulatory changes and standards
Link to strategy
Simplify and streamline the Group portfolio
Refocus and digitise Pepco’s customer
proposition to drive LFL
Continue to grow our topline through
measured expansion in CEE
Win in Western Europe
Upgrade our core operating platform
Risk movement
Increased
Unchanged
Decreased
New Risk
The Directors confirm that they
have carried out a robust assessment
of the principal risks and uncertainties
facing the Group, including, emerging
risks and those that would threaten its
business model and future performance.
Emerging risks and
opportunities
• Readiness for sustainability and transparency
schemes and reporting e.g. Extended
Producer Responsibility (EPR)
• Increasing geopolitical instability and impact
on global supply chains and transportation
remains a constant factor in planning and
decision making in to 2026
• Further intensification of competition
from agile, online-only platforms offering
ultra-fast fashion
• Expansion into digitally driven sales is
reliant upon leveraging consumer personal
data, which requires close alignment with
data protection teams to enhance privacy
protections and GDPR compliance.
Principal risks 2025
The principal and emerging risks are discussed
and monitored throughout the year to identify
changes to the risk landscape. Risk information
flows up through operating companies and
specialist risk teams to create a Pepco-
wide profile, aligned to strategic, financial,
operational and compliance risk categories.
Principal risks are material risks or themes that
are common across multiple operating areas
or have the potential to significantly impact
strategy. Each principal risk has a defined
response strategy, endorsed by the Board
and Exco, which is regularly monitored and
reported on in line with our risk appetite.
Significant progress has been made in
understanding risks in depth and developing
thorough strategic and operational response
plans, as well in internal control improvements.
Many of these initiatives are multi-year change
programmes designed to embed strong
foundations, transform our business and
fuel growth opportunities.
Principal risks and uncertainties
56 Pepco Group N.V. Annual Report 2025
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Sustainability
statement
Other
information
Strategic
reportIntroductionRisk management continued
Operations and customer continued
Risk Description and key drivers Mitigation plans
Product, sourcing and stock
Link to strategy
Risk movement
Our ability to meet customer demand is dependent on effective sourcing
arrangements and maintaining appropriate stock levels, particularly across
our key sales lines. This relies heavily on robust planning processes, flexible
partnerships and integrated management across the value chain.
Sub-risks / drivers:
• Supply chain readiness and resiliency
• Inventory management
• Product data governance
• Product lead time management
• Experienced buying and supply chain teams responsible for maintaining an
effective and efficient supply chain
• Implementation of a more streamlined target operating model across buying,
sourcing and supply chain
• Strategic supply chain transformation programme to drive efficiency, reduce lead
times and enhance resiliency
• Consistent, seasonally relevant, levels of stock cover by product category are
maintained and regularly reviewed
• Shipping product earlier, optimising shipping routes, diversification of carrier
base and shipping modes, selectively utilising faster carrier options
• Implementation of master data function to refine data completeness, integrity
and quality
People and operating model
Link to strategy
Risk movement
Embedding our target operating model, ensuring we have the right
capabilities in key geographies and driving performance through our
culture and behaviours.
Sub-risks / drivers:
• Recruitment and retention of talent
• Target operating model
• Geographic labour market challenges
• Culture and wellbeing
• Organisational structure
• Reward strategy
• Aligned talent assessment and development approach across Pepco Group
and operating businesses
• Performance and talent management process and training in place across
the business
• Employee opinion surveys rolled out Group-wide with key themes aggregated
across all functions and operating companies to understand employee sentiment
and implement resulting action plans
• Reward and retention strategy to attract and retain talent, aligned to Pepco
values and ethics
• Values based leadership programme to support corporate culture and conduct
expectations for all colleagues
57 Pepco Group N.V. Annual Report 2025
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Sustainability
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Other
information
Strategic
reportIntroductionRisk management continued
Operations and customer continued
Risk Description and key drivers Mitigation plans
Tech, data and security
Link to strategy
Risk movement
Our operations and customer trust rely on the resilience of our technology
platforms, protection of data and robust cyber security. Increasingly
sophisticated cyber threats, system outages, or weakness in data
governance could compromise business continuity, regulatory compliance,
or the security of customer and company data.
Sub-risks/ drivers:
• Cyber threats and information security
• Disaster recovery and resilience
• Data Privacy
• Data Governance
• Information security and data protection policies, underpinned by training and
awareness programmes, with dedicated cyber security specialists and Data
Protection Officers
• Security Centre Operations provide 24/7 monitoring and alerting to act on
potential threats
• Automated simulated phishing campaigns providing colleagues with
additional training
• Critical IT systems have resiliency with proactive monitoring and alerting of system
processing failures
• IT systems increasingly moved to the cloud providing further resilience and
disaster recovery
• There is robust IT change management across the Group with change freeze
periods implemented during the key trading months
• Replatforming legacy systems
• Data Protection resource aligned with project delivery
• Cyber security strategy and roadmap
• Third Party due diligence and supplier management
Strategy and transformation
Risk Description and key drivers Mitigation plans
Business change and transformation
Link to strategy
Risk movement
Delivering large-scale transformation is critical to achieving our strategic
objectives. The scale and pace of change required relies upon robust
planning, colleague engagement and strong execution to deliver and
sustain long term benefits.
Sub-risks / drivers:
• Stakeholder and colleague engagement
• Change management
• Business capacity to support transformation and change agenda
• Transformation programmes are aligned to the Pepco Group business strategy
and closely governed by senior management
• Dedicated strategy and transformation operating model in place to support
focus and track delivery of key programmes and business changes activities
• Proactive governance and support model with regular cadence of reviews
and forward planning, tracking key milestones, costs, benefits and risk
• Colleague and stakeholder communications plans to ensure full and
timely engagement
Business disruption
Link to strategy
Risk movement
We plan for a range of disruption scenarios to ensure that we are resilient
in serving our customer base. Intensification of geopolitical instability,
macroeconomic volatility and other disruptive factors continue to be
a high-risk area and management focus.
Sub-risks / drivers:
• Business Continuity
• Disaster Recovery
• Political instability and transition
• Third party disruption
• Group wide business continuity standards
• Projects established to anticipate change and prepare business for impact of
key changes
• Improved sanctions monitoring, and sanction screening implemented for suppliers
• Group-wide business continuity and disaster recovery programme.
• Diversification of product sourcing
• Strategic supply chain programme
58 Pepco Group N.V. Annual Report 2025
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statements
Sustainability
statement
Other
information
Strategic
reportIntroductionRisk management continued
Strategy and transformation continued
Risk Description and key drivers Mitigation plans
ESG
Link to strategy
Risk movement
Failure to meet our customers’ and wider society’s expectations in
addressing ESG impacts. Balancing the risks we face because of climate
change and limiting the impacts our operations have on the environment
and communities in which we trade.
Sub-risks / drivers:
• Transformation pressures and rapid growth plans
• Adverse external events could increase cost, disrupt our supply chain
and operations, and the demand for our product
• Consideration of ESG within strategy, business change planning
and delivery
• Extreme weather and climate change
• Inflation and supply chain cost pressures
• Supplier resiliency
• Strengthening long term, strategic planning and partnerships
• Group-wide Sustainability Strategy, goals and vision (see our ESG section for
further details)
• Group CFO responsible for setting the Group’s ESG Strategic Framework,
with overall responsibility for execution
• ESG Executive Committee; the purpose of which is to determine, align and review
progress and next steps for ESG across Pepco Group. Chaired by the Group
CFO, its objectives are to create alignment and drive progress across the Group.
The terms of reference and standing agenda of this Committee cover all priority
material topics as identified in the recent double materiality assessment
• Updates on ESG progress are made for review and approval at the Audit
Committee each quarter
• The Group business model, including both the vertical integration of our sourcing
operations through PGS and the work of our in-house Group sourcing compliance
team, provides a high degree of visibility over our supply chain and constructive
working relationships with our supply partners
Customer
Link to strategy
Risk movement
Our success depends on maintaining strong market share in core
categories and keeping pace with evolving customer expectations
and routes to market. Failure to anticipate customer needs, respond
competitively or adapt our channel strategy could lead to loss of relevance
and weakened loyalty.
Sub-risks/ drivers:
• Customer proposition focus
• Channel to market opportunities
• Price competitiveness
• Product quality fails to attract new customers or increase wallet share
• Cost of living pressures
• Operating model enhancements to ensure central focus on customer through the
end-to-end value chain
• Regular customer feedback and consumer insight driving decision making
• Product category strategies driven by customer, competitive landscape &
scalability/ operational efficiencies
• Key focus on driving digitally driven sales
• Continued focus on Pepco pricing strategy
• Centralised quality team across the end-to-end supply chain
59 Pepco Group N.V. Annual Report 2025
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Strategy and transformation continued
Risk Description and key drivers Mitigation plans
Competition
Link to strategy
Risk movement
We operate in highly competitive markets, with increasingly aggressive
multi-channel competitors and pure play fast fashion brands. Both online
and physical expansion is squeezing the sector as a whole and without
strategic intervention could reduce ability to maintain growth levels.
Sub-risks / drivers:
• Aggressive competitor activity
• Co-location of competitor brands
• Emergence of online, super discount brands
• Brand awareness and customer satisfaction insights gathered regularly
• Diversification across multiple markets, fragmenting and limiting the impact
of competition
• We offer a diverse range of homeware-led GM and clothing, providing our core
shoppers, with their regular shopping replenishment needs.
• We own and operate a multi-format, Europe-wide variety discount retail business,
through local and therefore convenient stores, located across 20 countries
• We continue to invest in the development of high-quality, scalable infrastructure,
including information technology, automated warehouses and more efficient and
resilient multi-point distribution
Finance and treasury
Risk Description and key drivers Mitigation plans
Financial controls and performance
Link to strategy
Risk movement
Strong financial management is essential to the delivery of our strategy.
Robust financial processes and reporting, and consistent performance
management is key to ensuring financial targets are met and accuracy
of our reporting.
Sub-risks / drivers:
• Insufficient earnings
• Interest rate volatility
• Access to financing
• Cost Control
• Structured planning processes including bottom-up business reviews and
performance tracking
• Financial controls improvement programme delivering enhanced controls,
with regular testing and assurance reporting
• Finance target operating model with integrated business partnering
60 Pepco Group N.V. Annual Report 2025
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Other
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Strategic
reportIntroductionRisk management continued
Legal and compliance
Risk Description and key drivers Mitigation plans
Compliance and contract
Link to strategy
Risk movement
Operating across multiple territories exposes us to complex and evolving
legal and regulatory requirements. Failure to comply with these obligations,
or to maintain suitable contractual protections, could result in legal claims,
financial penalties or operational restrictions.
Sub-risks / drivers:
• Complex, multi-territory compliance model
• Large scale supply chain and third-party relationships
• Pace and scale of business change requiring legal support
• IP and brand protection
• Pace and scale of global regulatory change and introduction of
mandatory disclosures
• New geographies and markets
• Compliance with ESG reporting requirements
• Steering Committee in place to focus on regulatory mapping and horizon scanning
• In-house legal teams across Group, Pepco and Dealz with dedicated expertise
• Law firm panel of external legal expertise in every key practice area across the Group
• The Group Code of Conduct was updated in 2024, outlining and enhancing core
values, ethics and regulatory requirements
• Supplier Code of Ethics and Factory Audit Policy to inform suppliers of core
requirements and behaviours expected.
• Suite of Group compliance policies covering topics including antibribery and
corruption, due diligence, conflicts, sanctions etc.
• Group-wide mandatory training programme for core, high-risk regulatory areas
• Specific training programmes for senior managers
• Group supplier due diligence procedure integrated across procurement processes
• Monitoring of registered IP and embedded checks when developing
IP/branded products
Fraud, financial crime and CCO
Link to strategy
Risk movement
Losses as a result of physical or financial crime, both internally and
externally, which result in financial losses, reputational damage and cross
functional investigations.
Sub-risks / drivers:
• Fraud and misrepresentation
• Anti-bribery and corruption
• Corporate Criminal Offences
• Retail fraud associated with refunds, mark downs, promotions and
gift cards
• Group wide fraud risk assessment mapping exposure to fraud risks across
key processes
• Suite of Group compliance policies covering topics including anti-bribery and
corruption, due diligence, conflicts, sanctions etc.
• Group-wide mandatory training programme for core, high-risk regulatory areas
• Specific training programmes for senior managers
• Whistleblowing reporting line for colleagues and suppliers to report concerns
re. non-compliance
• Payment processing restrictions defined delegated authority levels and
segregation of duties
• Group treasury function oversight and approvals
• Collaborative working between Finance and Technology to refine security controls
Alignment with sustainability and ESG risks
Our operational and strategic environment is increasingly complex, with many regulatory or
reporting requirements mandating specific risk assessments and alignment between frameworks. In
response, we maintain a close working relationship between our Risk and ESG teams, aligning on key
processes, assessment criteria and reporting.
Within the ERM framework there is a specific ESG category, as well as a mechanism to flag any other
risks which may have implications within ESG reporting. This close alignment provides a structured
understanding of risks, described in a common language and consistently assessed, enabling
management to take decision to protect shareholder value and long term organisational resilience.
61 Pepco Group N.V. Annual Report 2025
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Going concern
The FY25 consolidated financial statements have been prepared on a going concern basis.
The Group maintains access to significant
committed credit facilities and total available
liquidity as of 30 September 2025 exceeded
€850m. Since the year end, the Group has
further improved its balance sheet and financial
strength, supported by the completion of a
dual tracked refinancing of banking facilities
and a Polish bond issuance in November
2025, as part of a review of external funding
to extend the Group’s debt maturity profile out
to 2032, optimise debt pricing and enhance
financial flexibility.
In assessing the Group’s ability to continue as
a going concern, the Directors have considered
the Group’s overall financial position, liquidity,
cash flow forecasts, and the potential impact
of the principal risks and uncertainties outlined
on pages 56 - 61. The assessment included
a review of forecast cash flows and liquidity
headroom under base case, severe but
plausible downside scenarios and a reverse
stress test, over a period of 24 months from the
end of the reporting period to the end of FY27.
These scenarios incorporated assumptions
relating to increasing geopolitical instability,
intensification of competition, changes
in consumer demand and supply chain
disruptions. Even under these scenarios
the Group still retains sufficient headroom
and liquidity across the assessment period,
and is able to comply with the requirements
of its lending covenants.
Based on this review, the Directors are
comfortable that the Group has adequate
facilities and resources to meet its obligations
as they fall due for a period of at least twelve
months from the date of approval of the Group’s
consolidated financial statements.
62 Pepco Group N.V. Annual Report 2025
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Pepco makes me feel secure as a customer.
The products are of good quality, and whenever
there was an issue, I was informed about the next
steps and offered a solution that met my expectations.
That’s why I keep coming back to their stores and
recommend Pepco to my friends and family.
Anna
Pepco customer
Governance
63 Pepco Group N.V. Annual Report 2025
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Introduction to Governance
re-election as Chair. Andy remained on the Board
as a Non-Executive Director until 30 June 2025,
when he stepped down, making him the fifth
Director to leave the Board in FY25, pursuant
to the succession plan designed by our Board,
to support the upcoming transformational
changes the Company required. All of us are
grateful to each of these Directors for their truly
valuable contributions to the Board and the
Group during their time on the Board.
FY25 began a multi-year process of
transformation as we divested Poundland
from the Group, to focus on our core Pepco
brand, followed by the emergence of what we
like to refer to as New Pepco. Alongside these
governance shifts and the strategic redirection
of the business, we have focused intensively
on refreshing and improving our compliance
function and control environment to enable
New Pepco to operate at the highest such
standards throughout our business. In particular,
our Audit Committee has made an enormous
effort to work with both management and our
new external auditor to refresh, modernise,
systematise and otherwise enhance the
Company’s control environment. We have
achieved this progress while working carefully
with the team to preserve the entrepreneurial
dynamism that has fuelled Pepco’s growth over
the years.
Dear Shareholders,
This section of the report outlines the
Group’s corporate governance structure
and addresses key governance matters
relevant to the Company during the reporting
period. As Independent Non-Executive
Chair, I am responsible for leading the
Board and ensuring that we have the right
structure in place to uphold high standards
of corporate governance.
Because governance change, as outlined in
our press release of 28 January 2025, was such
a fundamental element of the Board’s work in
FY25, a discussion of governance consumes
much of my Chair’s Statement, so inevitably
there will be some repetition here.
This was my first year as Chair of the Board, and
as mentioned in the Chair’s Statement, on page
6, it was an honour to be appointed to the role
at the FY24 AGM on 12 March 2025, following the
decision by Andy Bond not to stand for
Good governance is far more than establishing,
improving and monitoring controls. In particular,
the nature, content and effectiveness of
ongoing collaboration between the board
and the management team are essential to
the success of a company. For this reason, we
focused on these topics over the course of
the year, as we looked ahead to the decisive
strategic and operational improvements we
wanted to accomplish.
We sharpened the focus of our Board meeting
agendas to emphasise and explore in detail,
the strategic and operational changes and
workstreams critical to driving value creation.
Over the past six months, we have been
fortunate to add three outstanding senior retail
executives to the Board, initially as Observers
and with your support, at the upcoming AGM
as full Non-Executive Board members. Dirk van
den Berghe brings decades of highly relevant
European and global retailing experience,
through prior senior leadership roles at Walmart
(where he headed Walmart Asia and Global
Sourcing), Delhaize Group and other retailers.
Sander van der Laan has exceptionally deep
experience leading and growing multiple large,
pan-European retail businesses, including over
six years as chief executive of Action. Finally,
Nicolò Galante brings significant expertise
in retail strategy and operations, customer
data and analytics, and business and digital
transformation, through his decades as a
retailing CEO and a senior partner at McKinsey.
The Board warmly welcomes Dirk, Sander and
Nicolò, and we all look forward to working closely
together to support our leadership team in
taking Pepco to the next level of performance.
There is an art to augmenting governance
and controls while not impairing entrepreneurial
dynamism and the picture at Pepco is becoming
increasingly attractive. There is so much going
on beneath the surface – new rigour, sharper
discipline, improved controls – the cultural and
process changes are not always visible, but the
results are beginning to show, and there is so
much more to come.
Pepco Group has reported strong results for
FY25 with revenue growth up 8.7% to €4,523m,
underlying EBITDA up 10.3% to €865m and
underlying Profit after Tax (IFRS 16) up 20%,
to €219m and 247 net new stores opened.
My sincere thanks go to my Board colleagues
and to everyone at Pepco for their continued
hard work and commitment to the success of
the Group, for the benefit of our customers,
investors and other stakeholders.
Frederick Arnold
Independent Non-Executive Chair
14 January 2026
I believe that governance and controls are the core of a
board’s function and the effectiveness of ongoing collaboration
between the board and the management team is essential to
the success of a company.
Frederick Arnold
Independent Non-Executive Chair
64 Pepco Group N.V. Annual Report 2025
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statements
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statement
Other
informationGovernance introduction
Pepco Group N.V. (the Company) is a public
limited liability company and was incorporated
under the laws of the Netherlands on 14 May
2021 (having been converted from Pepco
Group B.V., incorporated under the laws of the
Netherlands on 17 February 2021). Its shares are
listed on the Warsaw Stock Exchange (Giełda
Papierów Wartościowych w Warszawie) (WSE).
The Company is registered in the commercial
register of the Dutch Chamber of Commerce
under number 81928491. The corporate seat
of the Company is in Amsterdam and the
registered office is 14
th
Floor, Capital House,
25 Chapel Street, London, NW1 5DH,
United Kingdom.
The Company has a one-tier governance
structure, under which management and
supervisory duties are performed by the
Board of Directors of the Company (the Board),
comprising both Executive and Non-Executive
Directors. The Board is responsible for the
direction and oversight of the Company and is
accountable for all aspects of the Company’s
business. The Company’s corporate governance
structure is based on the Articles of Association,
the Board of Directors’ Rules of Procedure
(Board Rules), and the terms of reference of
the Board’s Committees, as well as applicable
laws and regulations.
The Articles of Association, Board Rules and
terms of reference of the Board’s Committees
can be viewed on the Company’s website at
www.pepcogroup.eu.
As the Company is incorporated under the laws
of the Netherlands and is listed on the Warsaw
Stock Exchange, it complies with the Code of
Best Practice for GPW Listed Companies 2021
(the Warsaw Code) and also with the Dutch
Corporate Governance Code 2022 (the Dutch
Code). In March 2025, the Dutch Code was
amended and updated and the updated
provisions apply to the Company from FY26.
In preparation for the amended and updated
Dutch Code, the Company has been putting
in place enhanced governance processes
during FY25, including increased focus on risk
management and internal control procedures
under its Enterprise Risk Management (ERM)
framework. Please refer to the Risk section of this
report on pages 54 to 61 for further information.
The full text of the Warsaw Code is available
to view at www.gpw.pl/best-practice2021 and
the full text of the Dutch Code can be viewed at
https://www.mccg.nl/documenten/2022/12/20/
dutch-corporate-governance-code-2022.
Any divergence from the Dutch and Warsaw
Codes is explained in this report in accordance
with the “comply or explain” principle. Please
see pages 92 to 93 for a summary of any areas
of divergence.
65 Pepco Group N.V. Annual Report 2025
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Other
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Senior Leadership Team
*The diagram shows the structure of the Board of Directors and its Committees as at the date of publication. During 2025, Dirk van den Berghe, Sander van der Laan and Nicolò Galante were appointed as Board Observers. Subject to shareholder approval at the 2026 AGM,
they will become Non-Executive Directors.
The Board
Board Committees
Four Non-Executive Directors*
Our four Non-Executive Directors provide advice and constructive challenge to the
Chief Executive Officer and the Executive Committee.
Audit Committee
Key responsibilities:
• monitoring and reviewing the integrity of the financial
statements
• oversight of the Group’s internal control and risk
management systems and approving the assessment
of principal and emerging risks
• oversight of the Group’s Internal Audit function
including approval of the internal audit charter and
annual internal audit plan
• reviewing and monitoring the progress of the Group’s
ESG strategies, goals and targets
Executive Committee
The Executive Committee, composed of key leaders, directs the Company’s strategies, ensuring alignment with objectives and fostering sustainable growth through collective expertise
and decisive leadership. The members of the Executive Committee are set out on the Company’s website www.pepcogroup.eu under the heading “Leadership Team.”
Nomination Committee
Key responsibilities:
• regularly reviewing the structure, size and composition
(including the skills, experience and diversity)
of the Board and its Committees and making
recommendations
• leading the process for appointments to the Board
and assisting in the selection of certain key employees
and succession planning
• undertaking the Board evaluation
Remuneration Committee
Key responsibilities:
• recommending to the Board the Remuneration Policy
and the remuneration of the Executive Director(s) and
the senior leadership remuneration framework
• advising the Board on the structure and target setting
of performance-based incentive plans
• reviewing the design of all share incentive plans and
recommending to the Board awards to be granted
under such plans
Executive Director
Our Chief Executive Officer is appointed to the Board as an Executive Director,
responsible for the day-to-day management of the Group
Membership:
• Brendan Connolly (Interim Chair)
• Grazyna Piotrowska-Oliwa
Membership:
• Frederick Arnold (Chair)
• Sean Mahoney
Membership:
• Brendan Connolly (Chair)
• Frederick Arnold
• Sean Mahoney
• Grazyna Piotrowska-Oliwa
66
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Our governance structure
Governance introduction continued
Board of
Directors
We have a strong, experienced
Board, with a diverse and relevant
range of professional backgrounds,
skills and perspectives. The collective
expertise of the Directors, combined
with independent thought and
constructive debate, enables
the Board to make focused and
balanced decisions which support
the Company’s long-term success.
Back row (left to right): Sean Mahoney,
Grazyna Piotrowska-Oliwa, Stephan Borchert
Front row (left to right): Brendan Connolly,
Frederick Arnold
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Pepco Group N.V. Annual Report 2025
Board of Directors
American, Male, 71
Appointed: 6 June 2024
First term expires in 2027
British, Male, 69
Appointed: 24 May 2021
Second term expires in 2027
Fred is an experienced senior
financial executive who has served
on the boards of numerous public
and private UK and US companies.
He has experience serving as board
chair, audit committee chair and the
chair of a variety of transactional and
other special committees.
Fred has significant financial
leadership experience, having led the
global finance functions of a series
of private equity owned portfolio
companies. Fred also accrued
20 years of investment banking
experience, primarily at Lehman
Brothers and Smith Barney (where
he was Managing Director, Head
of European Investment Banking).
He has extensive experience
in acquisitions and divestitures
and in global equity and debt
capital markets.
With extensive executive and non-
executive experience, Brendan brings
broad operational, commercial and
strategic expertise and insights
to Pepco. He is a non-executive
director at Victrex plc, where he is
a member of the audit, nomination
and remuneration committees.
Brendan previously served as senior
independent director and chair
of the remuneration committee
of Synthomer plc and as an
independent director of Applus
Services Brendan has more than
35 years’ experience in the oil and
gas and the testing and inspection
industries. He was a senior executive
at Intertek Group, having been
chief executive officer of Moody
International, which was acquired
by Intertek in 2011. Brendan was
managing director of Atos Origin
UK after spending more than
25 years with Schlumberger in
senior international roles.
Frederick Arnold
Independent Non-Executive Chair
Brendan Connolly
Independent Non-Executive Director
American, Male, 63
Appointed 15 March 2024
First term expires in 2027
Sean has extensive experience
serving as a board director for
large public and private companies
across Europe and the United States
including currently at Aptiv plc,
Tailored Brands, Lehman Brothers
Holdings Inc (post-bankruptcy) and
various companies within the IBEX
Group. Sean previously served on
the board of directors of Howmet
Aerospace, Alcoa, Formula One
Holdings and iHeartMedia. Prior to
his board director roles, Sean worked
in investment banking for more than
20 years, primarily at Goldman Sachs
& Co, where he was a partner and
Head of the Financial Sponsors Group.
Sean Mahoney
Non-Executive Vice Chair
German, Male, 56
Appointed: 1 July 2024
First term expires in 2027
Stephan is an accomplished CEO
with a strong track record of leading
international companies across
various sectors including fashion,
beauty, pharmacy and healthcare
services. Stephan served from 2018
to 2022 as CEO of Dutch-listed
GrandVision until it was acquired
by EssilorLuxottica in July 2022,
delivering significant value for
shareholders. Prior to GrandVision,
Stephan was President of Sephora
EMEA on the Global Executive
Committee, where he again improved
profitability and increased revenue,
while accelerating the beauty and
cosmetics retailer’s omnichannel
development. He currently holds
one non-executive director role at a
major pan-European retail company
in the beauty sector.
Stephan Borchert
Chief Executive Officer
Polish, Female, 56
Appointed: 24 May 2021
Second term expires in 2027
Grazyna has strong experience
across government and business
both in Poland and CEE. At the
start of her career, Grazyna spent
four years at the Polish Ministry
of the State Treasury, where she
led two different divisions. With
a proven track record in some
of Poland’s WIG20 companies,
Grazyna brings more than 20 years’
experience working at C suite-level
for Telekomunikacja Polska and
PTK Centertel (now Orange Polska),
PZU (on the supervisory board),
PKN Orlen, PGNiG, as well as CEO
and president of the management
board of Virgin Mobile Poland/CEE,
following a period advising private
companies and private equity funds.
Grazyna is co-owner and CEO/Chair
of e-commerce platforms Grupa
Modne Zakupy and RentPlanet and
is a member of the supervisory board
of FixMap.
Grazyna Piotrowska-Oliwa
Independent Non-Executive Director
R RA A
NN AA
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
Chair of Committee
Board of Directors
68 Pepco Group N.V. Annual Report 2025
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Belgian, Male, 62
Appointed as Board Observer: 30 June 2025
Dirk brings deep expertise to the Board
through more than 20 years’ experience
in senior leadership roles at a number
of large retail businesses, including as
regional CEO of Walmart Asia & Canada;
Head of Global Sourcing for Walmart; and
CEO roles for key segments of the Delhaize
Group prior to its merger with Ahold. Dirk
also has significant prior experience as
a non-executive board member of listed
and private companies, including Flipkart
Group in India, JD.com in China, Colruyt in
Belgium and The Very Group in the UK. Dirk
is currently chair of the remuneration and
nomination committees at GoTo Group,
chairman of the Advisory Board of Takko
Fashion and a member of the supervisory
board of IBEX Retail Investment Limited.
Dirk van den Berghe
Board Observer
Dutch, Male, 57
Appointed as Board Observer: 23 September 2025
Sander has extensive experience in retail
operations, strategy and value creation.
He has been the chief executive officer
of the omnichannel premium beauty
retailer DOUGLAS Group since November
2022, where he introduced the customer-
focused “Let it Bloom – DOUGLAS 2026”
growth strategy and led the group
through its initial public offering and
listing on the Frankfurt Stock Exchange
in March 2024. Previously, Sander served
as chief executive officer of Action for
six years, a fast-growing pan-European
non-food discount retailer, and prior
to his leadership role at Action, Sander
spent more than 16 years in management
positions within the Dutch-listed retail
group Ahold Delhaize – including most
recently as chief operating officer of
Ahold Europe and chief executive officer
of Albert Heijn.
Alexander “Sander” van der Laan
Board Observer
1. Board Observers in anticipation of their formal nomination for appointment as Non-Executive Directors at the 2026 AGM.
Italian, Male, 59
Appointed as Board Observer: 14 November 2025
Nicolò Galante
Board Observer
Board Observers
1
Nicolò brings deep expertise in retail
strategy and operations, customer
data and analytics, and business and
digital transformation. Nicolò most
recently served as CEO of Arcaplanet,
an innovative, private-equity-backed
omni-channel retailer based in Italy
focused on the pet sector. Previously,
he served as President of Central Retail
Corporation, an Asia-based retailer with
over $7bn in annual revenues, and as CEO
of Central Department Stores Group. Prior
to these two operating roles, Nicolò was a
senior partner and a leader of the Global
Consumer/Retail and Consumer Digital
Excellence practices at McKinsey. Nicolò
is a trained nuclear engineer and a former
CERN researcher.
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Corporate governance statement
Board of Directors
The Company has a one-tier governance
structure with a single Board, comprising
Executive and Non-Executive Directors.
The Board provides leadership to the Group
and sets and monitors the strategy, to ensure
sustainable long-term value creation and
that decisions are made in a balanced and
effective manner, considering the interests of
all the Group’s stakeholders. It is responsible for
overseeing governance and adopting policies
and values that contribute to a positive culture,
including monitoring the effectiveness of the
system of internal controls within the Group.
The Board considers among other items:
• the implementation and feasibility of
the strategy;
• the appropriateness of the Group’s business
model and the markets in which it operates;
• the opportunities and risks for the Group;
• the Group’s operational and financial goals
and their impact on its future position in the
markets in which it operates;
• compliance with legal and regulatory
obligations; and
• in carrying out its business, the Group’s
impact on the environment, the safety of its
customers and employees and the integrity
of its culture.
The duties, responsibilities and internal
procedures of the Board are addressed in the
Articles of Association and the Board Rules.
Roles and responsibilities
The positions of Chair and CEO are distinct,
each with their own areas of responsibility
conferred by the Board. This distinction is
explained below and further details of the
roles of the Directors are set out in the Articles
of Association and the Board Rules which are
available to view on the Company’s website.
at www.pepcogroup.eu.
The CEO is an Executive Director and is
responsible for the day-to-day management
of the Group and the implementation of the
Group’s strategy. As part of the CEO’s day-to-
day management of the Group, he is a member
of and has overall responsibility for the Group’s
Executive Committee. The Executive Committee
is comprised of key leaders from the business and
is tasked with driving the Company’s strategy,
ensuring alignment with objectives and fostering
value creation through collective leadership.
The Chair is an Independent Non-Executive
Director within the meaning of best practice
provision 2.1.8 of the Dutch Code. The Chair
is responsible for leading the Board and
ensuring that the Board and its Committees
function effectively, setting the Board
agenda and maintaining high standards
of corporate governance. The Chair ensures
effective communication by the Board with
the Company’s shareholders and facilitates
communication between members of the
Board, as well as between the Board and senior
management. The Vice Chair may deputise
for the Chair when required and he acts as
the point of contact for the Board members
regarding the performance of the Chair.
The Non-Executive Directors are responsible
for overseeing the work carried out by the CEO
and the management team and for the policies
put in place by management, with a focus on
internal controls, financial and sustainability
reporting and governance.
Appointment and composition of
the Board
During the reporting period, there were a
number of changes to the composition of
the Board as part of the implementation of
a governance succession plan designed by
the Nomination Committee and approved by
the Board. On 12 March 2025, Frederick Arnold
was appointed Independent Non-Executive
Chair of the Board, replacing Andy Bond in the
Chair role, and Sean Mahoney was appointed
Non-Executive Vice Chair of the Board. María
Fernanda Mejía and Neil Galloway resigned
from the Board on the same date.
On 31 May 2025, Paul Soldatos stepped down
from the Board and on 30 June 2025, Andy
Bond and Neil Brown also stepped down
from the Board.
Dirk van den Berghe was appointed as a Board
Observer with effect from 30 June 2025, Sander
van der Laan was appointed as a Board
Observer with effect from 23 September 2025
and Nicolò Galante was appointed as a Board
Observer with effect from 14 November 2025.
The role of ‘Board Observer’ indicates that
Pepco intends to formally nominate Dirk van
den Berghe, Sander van der Laan and Nicolò
Galante for appointment as Non-Executive
Directors at Pepco’s upcoming annual general
meeting. Until such time, without formally serving
as Directors, they are invited to attend Board
meetings at which they do not have a vote.
As at the end of the reporting period, the
Board comprised four Non-Executive Directors
and one Executive Director. Frederick Arnold,
Brendan Connolly and Grazyna Piotrowska-
Oliwa are considered to be independent in
accordance with the best practice provisions of
the Dutch and Warsaw Codes. Sean Mahoney
is not considered to be independent within
the best practice provisions of the applicable
Codes, due to his position as a director of
the Company’s principal shareholder.
Resolutions proposing the formal appointments
to the Board of Dirk van den Berghe, Sander
van der Laan and Nicolò Galante will be put
forward for approval by the shareholders at
the 2026 AGM.
Board members are appointed for an initial period
of three years and may then be reappointed for
two subsequent three-year terms.
All Directors are subject to formal appointment
by shareholders at a general meeting and to
reappointment after a three-year term in office,
following a binding nomination of the Board and
in accordance with the Articles of Association
of the Company. The general meeting of
shareholders may reject a binding nomination of
the Board by a resolution passed by two-thirds
of the votes cast, representing more than half
of the Company’s issued share capital.
The general meeting of shareholders can dismiss
and suspend members of the Board (other than
on the proposal of the Board), upon a majority of
two-thirds of the votes cast, representing more
than half of the Company’s issued share capital.
If the proposal is made by the Board, a simple
majority of the votes cast is sufficient.
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The Chair of the Board and the Board itself are
supported by the Company Secretary, who is
appointed by the Board and is available to
provide advice and assistance to all Board
members. The Company Secretary is responsible
for ensuring that proper procedures are followed
and that the Board acts in accordance with its
statutory obligations, as well as its obligations
under the Articles of Association of the Company.
Where Board members have external
appointments, the Board has satisfied itself
that such appointments do not impact on the
individual Board member’s ability to devote
adequate time and sufficient attention to
the Company.
Diversity
The Board is committed to cultivating a
diverse workforce and a culture of equality and
inclusion throughout the Group. This remains an
important consideration in succession planning
at both Board and senior management level.
The Company’s Diversity & Inclusion Policy
(“D&I Policy”) was approved by the Board on
12 March 2025 and sets out the Company’s
principles on diversity and inclusion. The policy
makes clear the Company’s stance: everyone
has the right to be treated with dignity and
respect and to be included in all activities
regardless of their age, gender or gender
identity, ethnicity, race or other protected
characteristic. We are committed to advancing
equal opportunities in the areas of access to
employment, career development, progression,
promotion and remuneration. Any discrimination
is prohibited. The D&I Policy addresses the
Company’s legal and regulatory requirements
to set appropriate and ambitious targets, to
achieve a more balanced ratio between men
and women. The Company is also subject to
Dutch statutory law requirements, which require
the Company to set non-binding, appropriate
and ambitious gender diversity targets for its
Executive Directors, Non-Executive Directors
and senior management, and to report on
these targets in its Annual Report and to the
Dutch Economic Counsel (SER).
We have set a target to strive for a composition
of not less than 30% male members and not less
than 30% female members of the top three tiers
of management (Senior Management) under
our D&I Policy. The same targets apply for the
Board; we also strive to achieve a composition
of not less than 30% male members and not
less than 30% female members in respect of
the Executive Directors and the Non-Executive
Directors. As at the year end, twenty-five
members (45%) of Senior Management
were female and thirty members were male
(55%). There were five Board members, four
of whom were male (80%) and one of whom
was female (20%). The three Non-Executive
Director candidates who will be proposed for
election at the 2026 AGM are male. We continue
to monitor our progress and to evaluate
appropriate measures.
When identifying potential candidates for
the Board, the Nomination Committee and
the Board consider a diverse range of personal
qualities including age, ethnicity, social
background and gender (in addition to the
required skills, qualifications and experience
for the role), to increase the diversity of the
Board where practical. The rules and generally
accepted principles of non-discrimination of
candidates with protected characteristics,
are followed in every selection and
nomination process.
Induction, training and development
When appointed to the Board, Directors are
provided with induction training and information
about the Group, including on Directors’ duties,
the role of the Board, the Board Rules and the
matters reserved for the Board’s decision, the
terms of reference of the Board Committees,
and the latest Group financial information.
This is supplemented by meetings with the
Company’s professional advisors and, where
appropriate, visits to key locations and meetings
with members of the Executive Committee and
other senior leaders, to develop the Directors’
understanding of the business.
Throughout their period in office, Non-Executive
Directors are continually updated on the business,
the Group’s markets, strategy and other changes
affecting the Group and the sector in which it
operates, including any changes to the legal and
governance environment and the obligations
applicable to them as Directors.
Board Committees
The Board operates the following principal
committees: the Audit Committee, the Nomination
Committee and the Remuneration Committee.
The function of these Committees is to provide
focused oversight of key risk areas and to
provide specialist input in support of the Board’s
decision-making and the mitigation of risk.
Each Board Committee has in place established
terms of reference, which are reviewed annually
and which set out the Committee’s role and
responsibilities, its composition and the
process through which it discharges its duties.
These terms of reference are available on the
Company’s website: www.pepcogroup.eu.
At all times during the reporting period, at least
half of the members of the Audit Committee
(including its Chair) and the Remuneration
Committee (including its Interim Chair), were
independent within the meaning of the
applicable best practice provisions of the
Warsaw and Dutch Codes, with due observance
to the Dutch Decree on the installation of an
Audit Committee.
Board meetings, attendance and
decision-making
According to the Board Rules, the Board meets
in principle once every two months and at least
once each financial quarter. Each Director is
entitled to cast one vote. In the event of a tie,
the Chair has the casting vote. During FY25,
meetings of the Board were held both in person
and virtually via Microsoft Teams, as permitted
by Article 16.6 of the Articles of Association.
A Director may not participate in deliberations
and decisions on matters in respect of which he
has a conflict of interest and the other Directors
shall resolve the item. If due to this, no resolution
can be adopted by the Executive Directors,
the Non-Executive Directors shall resolve on
the matter. If all the Directors have a conflict
of interest, the Board will resolve on the matter
as if there were no conflict of interest
When determining how many votes are cast
by members of the Board, no account shall be
taken of Board members who are not permitted
to take part in the discussions or decision-
making, due to a conflict of interest.
Decisions of the Board may be taken in writing,
provided that all Board members (in respect
of whom no conflict exists), have consented
in writing.
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Areas of focus in FY25
A summary of the Board’s key activities during
the reporting period is set out below:
Strategy and operational
• Scrutinised operational and business
performance in the context of the
Company’s business plan and long-term
strategy, including through a detailed review
of the five-pillar strategic framework for New
Pepco described in more detail on pages
17 to 27, with a high focus on long-term
value creation
• Approved the strategy of the Group’s exit
from FMCG through the decision to divest
Poundland and Dealz from the Group and
the subsequent approval of the sale of
Poundland to Gordon Brothers in June 2025
• Approved the reformatting of the Pepco Plus
stores in Spain and the decision to conduct
a strategic review of Pepco Germany
External stakeholder engagement
• Reviewed the agenda for the Capital
Markets Day
• Reviewed the content of the Company’s
external announcements
Financial performance and risk
• Focused sharply on the capital allocation
framework and decisions
• Evaluated capital-return strategies,
including dividends and share repurchase
activities
• Evaluated the debt refinancing strategy
and action plans
• Reviewed financial performance and forecasts
• Evaluated and approved the FY25 budget
• Approved the Company’s Annual Report and
Consolidated Financial Statements for FY24,
together with the letter of representation in
connection with the FY24 Annual Report
• Reviewed the approach to risk and the ERM
framework, taking into account the revisions
to the Dutch Code which apply to the
Company from FY26
Governance
• Updated the terms of reference of the
Committees of the Board
• Approved the appointments of Dirk van den
Berghe and Sander van der Laan as Board
Observers in accordance with the terms of
the Relationship Agreement. Their formal
appointments as Non-Executive Directors
(together with that of Nicolò Galante) will be
subject to a decision of the shareholders at
the 2026 AGM
• Approved the updated UK tax strategy
• Approved the updated Board profile as
required by the Dutch Code and approved
changes to the Board Rules
• Recommended to the shareholders the
appointment of EY Accountants B.V. as
the Company’s external auditor for FY25
• Approved the Agenda and Convocation
Notice for the 2025 AGM
• Approved changes to key corporate policies,
including internal Delegation of Authority
and the Insider Trading Policy
• Approved the renewal of the Directors’ and
Officers’ insurance policy
Board and Committee meetings and attendance
All Directors are expected to attend every Board meeting and every meeting of the Committees
of which they are a member, unless there are exceptional circumstances preventing them from
participating. Attendance at Board and Committee meetings in FY25 was as follows:
Directors Board Audit Committee
Remuneration
Committee
Nomination
Committee
Frederick Arnold
(Independent Non-Executive Chair)
1
19/19 8/8 2/2 3/3
Sean Mahoney
(Non-Executive Vice Chair)
2
18/19 8/8 N/A 3/3
Stephan Borchert 19/19 N/A N/A N/A
Brendan Connolly 17/19 8/8 5/5 N/A
Grazyna Piotrowska-Oliwa
3
17/19 5/5 5/5 N/A
Andy Bond
4
16/16 N/A 1/2 1/2
Neil Brown
5
14/16 3/6 2/4 2/2
Neil Galloway
6
9/10 N/A N/A N/A
María Fernanda Mejía
7
6/10 3/3 N/A –
Paul Soldatos
8
11/12 N/A 2/3 –
1. Frederick Arnold was appointed Independent Non-Executive Chair of the Board with effect from 12 March 2025. Until 12 March 2025,
he was Chair of the Audit Committee and a member of the Remuneration Committee. Since 12 March 2025 he has served as Chair
of the Nomination Committee and a member of the Audit Committee.
2. Sean Mahoney was appointed Non-Executive Vice Chair with effect from 12 March 2025.
3. Until 12 March 2025, Grazyna Piotrowska-Oliwa was a member of the Audit Committee. On 12 March 2025, she was additionally
appointed as a member of the Remuneration Committee.
4. Andy Bond was Non-Executive Chair until 12 March 2025, following which he remained a Non-Executive Director until his resignation
from the Board with effect from 30 June 2025. Until 12 March 2025, he was a member of the Nomination Committee and from
12 March 2025 until his resignation from the Board, he was a member of the Remuneration Committee.
5. Neil Brown resigned from the Board with effect from 30 June 2025. Until his resignation from the Board, he was a member of the Audit,
Remuneration and Nomination Committees. From 12 March 2025 until 30 June 2025, he was Chair of the Remuneration Committee.
6. Neil Galloway resigned from the Board with effect from 12 March 2025.
7. María Fernanda Mejía resigned from the Board with effect from 12 March 2025. Until her resignation from the Board, she was Chair
of the Nomination Committee and a member of the Audit Committee.
8. Paul Soldatos resigned from the Board with effect from 31 May 2025. Until his resignation from the Board, he served as a member of
the Audit and Nomination Committees.
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Remuneration
In line with the Remuneration Policy of the
Company, the remuneration of the Chief Executive
Officer is determined by the Non-Executive
members of the Board, upon the recommendation
of the Remuneration Committee. The Non-
Executive Directors appointed via the Relationship
Agreement (being Sean Mahoney and following
their envisaged appointments at the 2026
AGM, Dirk van den Berghe and Sander van der
Laan), do not or will not, receive remuneration
from the Company or any of its direct or indirect
subsidiaries. The Remuneration Committee
recommends to the Board the remuneration of
the Non-Executive Directors including the Chair of
the Board, taking into account the Remuneration
Policy. The Remuneration Committee members
are not involved in any decisions relating to their
own remuneration.
At the AGM held in March 2025, shareholders
approved the Non-Executive Director Equity
Plan (NED Equity Plan), which grants awards
over shares to Non-Executive Directors who are
not appointed via the Relationship Agreement.
The Remuneration Policy can be found on the
Company’s website and the elements of the
remuneration of Board members are set out
in the Remuneration report on pages 86 to 91.
Conflicts of interest
The Articles of Association and the Board Rules
prescribe how conflicts of interest between
the Company and Board members must be
managed. Transactions between the Company
and a Board member who has a conflict of
interest must be entered into on arm’s length
terms. A Board member who has a conflict of
interest cannot participate in deliberations and
decision-making relating to the subject matter
of the conflict of interest.
In FY25, payments totalling £24,207 (including VAT)
were made to Woodcliffe Associates Limited, a
company that Andy Bond, who was a member of
the Board until 30 June 2025, had a related party
interest in.
Any decision to enter into a transaction under
which a member of the Board has a conflict of
interest that is of material significance to the
Company and/or the relevant Board member,
requires the approval of the Board.
There were no material transactions which
gave rise to conflicts of interest with any Board
members reported during the reporting period.
Reference is made to note 24 (Related party
transactions) of the consolidated financial
statements for a description of any related
party transactions.
Risk management activities of
the Board
The Board has overall responsibility for ensuring
that the Group maintains a strong system of
internal controls. The Board is supported by the
Audit Committee in discharging this responsibility.
The Group’s system of internal controls is
designed to identify, manage and evaluate
the risk of failing to achieve business objectives.
It can therefore provide reasonable but
not absolute assurance against material
misstatement, loss or failure to meet objectives
of the business, due to the inherent limitations
of any such system.
Internal audit activities are consolidated into one
independent Group Internal Audit function, to
provide assurance over key risks in all operating
companies. A Group risk management framework
is in place and updates to risk registers are
presented to the Board.
In FY25, the Board reviewed and approved
an enhanced ERM framework, applicable
throughout the business, and conducted a
regular sequence of Board engagement in risk
management through the Audit Committee.
Key engagement activities throughout the
period included:
• Annual fraud and financial crime risk
assessment (November 2024)
• Board risk workshop to provide oversight,
challenge and approval of the Group’s risk
profile and risk appetite (May 2025)
• Strategic risk review and principal risk
oversight (September 2025).
The Board is satisfied that the key risks to
the business and relevant mitigating actions
are acceptable for a business of the type,
size and complexity of that operated by
the Group. In addition, in recognition of the
continuing evolution of the risk management
and internal controls environment and in
preparation for compliance with the updated
Dutch Code which applies from FY26,
the Company has been putting in place
enhanced governance processes.
The key elements of the Group’s system of
internal controls are as follows:
• Financial reporting: Monthly management
accounts are provided to members of the
Board. Reporting includes an analysis of
actual versus budgeted performance and
overviews of reasons for any significant
differences in outcomes. The annual budget
is reviewed and approved by the Board.
The Group reports half yearly.
• Risk management: An ERM framework
has been created and is continuously
updated and monitored. Each risk identified
is allocated an owner and the actions
required are set out.
• Monitoring of controls: The Audit Committee
receives regular reports from the external
auditor and internal audit team. There are
formal policies and procedures in place to
ensure the integrity and accuracy of the
accounting records of the Group and to
safeguard the Group’s assets.
• Staff policies: There are formal policies
and processes in place within the Group,
supported by third-party technology in
relation to anti-bribery and corruption and
anti-slavery, as well as whistleblowing policies
and independent reporting mechanisms,
to facilitate the reporting of any suspected
wrongdoing or malpractice.
Information on the key risks and uncertainties of the Group
is set out on pages 56 to 61
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General meetings
The Articles of Association require that an AGM
be held in the Netherlands within six months
of the end of the financial year. Additional
general meetings may be convened at other
times as deemed necessary by the Board.
The Company’s 2025 AGM was held on
12 March 2025.
Shareholders were invited to attend the AGM
in person, and the AGM was broadcast via
the Company’s website. The right to vote at
the AGM could be exercised by an electronic
voting proxy with voting instructions to a
civil law notary, or by submitting the voting
instructions by means of a proxy form via the
Company’s website. Shareholders were entitled
to submit questions in relation to the agenda
items prior to the AGM.
The 2026 AGM will be held on 11 March 2026. The
following topics are currently expected to be
addressed at the 2026 AGM:
• advisory vote in respect of the
Remuneration report;
• discussion of the Annual Report;
• discussion and adoption of the annual accounts;
• (if put on the agenda) discharge of the Board
members from liability;
• (if put on the agenda) designation of the
Board as competent to issue shares;
• (if put on the agenda) approval of the
payment of a final dividend;
• (if put on the agenda) appointment of the
external auditor; and
• (if put on the agenda) authorisation of the
Board to permit the Company to acquire its
own shares.
It is also expected that the AGM agenda will
include the approval of the appointments to the
Board of Dirk van den Berghe, Sander van der
Laan and Nicolò Galante.
Convocation
Each general meeting is convened by
publication of a notice on the Company’s
website at least 42 days prior to the date of
the general meeting. Shareholders are entitled
to propose to the Board, items for inclusion in
the agenda of the general meeting, provided
that alone or jointly, they hold at least 3% of
the issued and outstanding share capital of the
Company. Proposals for agenda items must be
submitted at least 60 days prior to the date
of the meeting. A request from a shareholder
for an item to be included on the agenda of a
general meeting must be explained in writing.
The principles of reasonableness and fairness
may permit the Board to refuse such request.
Voting rights
The authorised share capital of the Company is
€17,250,000.00 and is divided into 1,725,000,000
shares with a nominal value of €0.01 each. The
total nominal value of the issued share capital
of the Company is €5,774,519.35 divided into
577,451,935 shares. The shares are listed on
the Warsaw Stock Exchange.
All shares carry equal rights and are
freely transferable.
With the exception of treasury shares, which do
not carry voting rights, each share in the issued
and outstanding share capital of the Company,
confers the right to cast one vote at a general
meeting. As at 30 September 2025, 9,382,732
shares were held in treasury.
Shareholders who hold shares on a statutory
record date (i.e. the 28
th
day prior to the general
meeting) are entitled to attend and vote at the
general meeting.
Shareholders may exercise their rights if they
are shareholders of the Company on the record
date and they or their proxy have notified
the Company of their intention to attend the
general meeting either in writing or by any
electronic means that can be reproduced on
paper, ultimately at a date set for that purpose
by the Board. Such date may not be earlier than
the seventh day prior to the general meeting.
Adoption of resolutions
Subject to certain exceptions provided by Dutch
law or the Articles of Association, resolutions of
the general meeting are adopted by a simple
majority of the votes cast at the meeting.
Shareholder votes can be cast either in writing
or electronically.
Amendment of the Articles
of Association
The Articles of Association can be amended by
resolution of the general meeting. A resolution
to amend the Articles of Association can only
be adopted at the proposal of the Board.
A resolution to partially amend the Articles
of Association was passed at the 2025 AGM.
These amendments included (i) allowing newly
issued shares to be paid up from distributable
reserves, (ii) updating the Company’s statutory
indemnification clause for Directors, and
(iii) clerical changes in the unofficial English
translation only.
Appointment and dismissal
of Directors
Appointment and/or dismissal and/or
suspension of the members of the Board is the
prerogative power of the general meeting of
the shareholders. The Executive Director(s) may
also, at any time, be suspended by the Board.
Pursuant to the Articles of Association, the
number of Directors shall be determined by the
Board. Following a binding nomination by the
Board, with due observance of the provisions
under the Articles of Association, the Directors
are appointed at the general meeting. When
selecting and nominating candidates for the
Board, the D&I Policy is taken into consideration.
Substantial shareholdings
Pursuant to the Financial Supervision Act
(Wet op het financieel toezicht) and the Dutch
Decree on Disclosure of Major Holdings and
Capital Interests in Issuing Institutions, the
Company has been notified of the following
substantial shareholdings in the Company
as at 30 September 2025:
Shares Percentage
Ibex Retail Investments
(Europe) Limited 415,594,616 71.97
Directors
1
591,149 0.1
Pepco Group Employee
Benefit Trust
2
336,317 0.06
Shares held in treasury 9,382,732 1.62
Other shareholders 151,547,121 26.24
Total 577,451,935 100.00
1. Shareholdings of current Directors.
2. Shares are held on trust for the benefit of current and former
employees and the trust operates for the fulfilment of share
plans, as described in the Remuneration report.
As shown in the table above, at 30 September
2025, 71.97% of the Company’s issued share
capital was owned by Ibex Retail Investments
(Europe) Limited and ultimately owned by
IBEX Topco B.V. (ITBV). As far as the Company
is aware, no other shareholder owned 3% or
more of the issued shares or voting rights in
the general meeting.
0.1% of the Company’s shares, in aggregate,
were owned by the Directors and 0.06% were
held by the Pepco Group Employee Benefit Trust
for the benefit of current and former employees.
At the time of the Company’s initial listing on the
WSE, the Company entered into a relationship
agreement (the Relationship Agreement)
with a predecessor of ITBV “Predecessor) and
certain of its affiliate enterprises to regulate
the relationship between the Company
and its majority shareholder. Following the
implementation of the reorganisation of the
Predecessor group, the rights were transferred
to ITBV, resulting in an amended and restated
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Relationship Agreement between ITBV and
certain of its affiliate enterprises (the ITBV
Affiliates) on the one hand and the Company
on the other. The Relationship Agreement was
further amended and restated on 24 March
2025. Best Practice Provision 2.7.5 of the Dutch
Code was observed when entering into the
amended and restated Relationship Agreement.
The Relationship Agreement provides that:
• for so long as the ITBV Affiliates hold, in
aggregate, more than 30% of the voting
rights of the Company, the ITBV Affiliates
shall jointly be entitled to nominate three
Non-Executive Directors to the Board. The
Non-Executive Directors appointed pursuant
to the Relationship Agreement shall jointly
be entitled to nominate (i) the Director to
be appointed as Chair of the Board, and
(ii) the Director to be appointed as Chair
of the Remuneration Committee;
• for so long as the ITBV Affiliates hold, in
aggregate, less than 30% but more than 20%
of the voting rights of the Company, the ITBV
Affiliates shall jointly be entitled to nominate
two Non-Executive Directors to the Board;
• for so long as the ITBV Affiliates hold, in
aggregate, less than 20% but more than 10%
of the voting rights of the Company, the ITBV
Affiliates shall jointly be entitled to nominate
one Non-Executive Director to the Board;
• if the ITBV Affiliates hold, in aggregate, less
than 10% of the voting rights of the Company,
they will no longer be entitled to nominate
any members of the Board;
• subject to compliance with applicable laws
and regulations, including the Market Abuse
Regulation, the Company will (i) provide
certain information to the ITBV Affiliates to
enable the ITBV group of companies to fulfil
its regulatory and legal obligations and to
facilitate the preparation of the accounts of
the ITBV Affiliates and connected enterprises,
for so long as such provision is reasonably
required by generally applicable accounting
principles and (ii) provide reasonable
assistance and access to the Company’s
management in connection with any planned
disposal of shares in the Company, that are
held by the ITBV Affiliates;
• transactions and arrangements between the
ITBV group of companies and the Group will
be conducted on an arm’s length basis and
on normal commercial terms; and
• no member of the ITBV group of companies
will propose or procure the proposal of any
shareholder resolution which would prevent
the Company from complying with its legal,
statutory or regulatory obligations.
Issuance of shares, acquisitions
of own shares, disapplication
of pre-emption rights and
transfers of shares
The Articles of Association of the Company
(Articles) provide that the general meeting is
authorised to issue shares (or delegate that
authority to the Board). Any delegation to
the Board to issue shares must specify (i) the
maximum number of shares that can be issued
under the delegation and (ii) the duration of the
delegation, which shall not be for more than
five years. The duration of the delegation may
be extended from time to time for periods not
exceeding five years.
A resolution by the general meeting to issue
shares or to delegate such authority to the Board
can only be taken at the proposal of the Board.
The Articles permit the general meeting to
restrict or exclude the pre-emption rights of
shareholders at the proposal of the Board.
A resolution to exclude shareholders’ pre-
emption rights requires a majority vote of
at least two-thirds of votes cast if less than
half of the Company’s issued and outstanding
share capital is present at the general meeting.
Under the Articles, the Company may acquire
its own shares if the general meeting authorises
the Board to do so. An authorisation for the
Board to acquire shares in the Company
is limited to 18 months. Such authorisation
was obtained at the 2025 AGM and will be
requested at the 2026 AGM.
On 6 March 2025, the Company announced
the Board’s authorisation of a share buyback
capability of up to €200m to be available during
FY25-FY27, which allows the Board to consider
from time to time the potential acquisition by the
Company of its own shares in accordance with
the relevant authorisation granted at the AGM.
On 10 July 2025, the Company announced
the initiation of a tranche of the share buyback
programme of up to €50m, pursuant to which
the Company purchased a total of 9,382,732
of its own shares over the period from 17 July
to 22 August 2025.
Following the reporting period, the Company
announced on 28 October 2025 the initiation
of a second tranche of the share buyback
programme of up to €50m, pursuant to which the
Company may acquire a maximum of 7,502,127
shares (as calculated based on the share price
at announcement). This second tranche will end
no later than 16 January 2026.
On 22 December 2025, 250,000 treasury shares
were transferred from treasury to the Pepco Group
Employee Benefit Trust to enable the Company to
fulfil its obligations under its share plans
No authorisation of the general meeting is
required for the Company to acquire its own
shares for the purpose of transferring such
shares to employees of the Group under an
applicable share plan.
There are no restrictions on the transferability
of the shares either under the Articles or under
Dutch law.
Lock-up arrangements
In the period prior to the Company’s admission
to listing on the WSE (Admission), one-off fees
were paid to certain current and former Directors,
including Brendan Connolly, María Fernanda
Mejía, Grazyna Piotrowska-Oliwa and Pierre
Bouchut, in respect of work undertaken by them
in relation to and in preparation for their roles as
Board members. The fees were used by these
individuals to subscribe for shares in the Company
on Admission (at the Admission offer price).
Shares acquired by these individuals on
Admission must be held until the first anniversary
of the date on which the relevant Director
ceases to be a Director of the Company. Pierre
Bouchut resigned from the Board on 14 March
2024 and the shares he purchased on Admission
were released from their lock-up provisions on
14 March 2025. María Fernanda Mejía resigned
from the Board on 12 March 2025 and the shares
she purchased on Admission will be released
from their lock-up provisions on 12 March 2026.
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Audit Committee report
Upholding governance and oversight in a
year of transformation.
Brendan Connolly
Audit Committee Chair
Dear Shareholders,
On behalf of the Audit Committee, I am pleased
to present the Committee’s report outlining our
responsibilities and main activities during the
year ended 30 September 2025.
This marks my first report since being appointed
Chair of the Audit Committee on 12 March 2025
following Frederick Arnold’s appointment as
Chair of the Board at the 2025 AGM. I am very
pleased that Frederick continues to be a valued
member of the Audit Committee and thank
him for his tenure as Chair of the Committee.
On behalf of the Audit Committee, I would also
like to express our gratitude to María Fernanda
Mejía and Neil Brown, who stepped down as
Non-Executive members of the Board in March
and June 2025, respectively, for their service
as members of the Audit Committee during
the year.
Taking on the role of Chair of the Committee
during a period of significant transformation
for the business, which has included the
divestment of Poundland, managing Dealz
Poland to optimise value in the medium term,
the removal of the FMCG offer from the Pepco
brand, whilst transitioning to a new external
auditor, has had its challenges and increased
the workload significantly. I would therefore like
to thank my fellow Committee members and
the wider finance, internal audit and risk teams
for their support and collaboration throughout
this transition.
The Committee plays a vital role in supporting
the Board’s oversight of financial integrity,
risk management, internal controls, and audit
quality. This year, we paid particular attention
to the evolving regulatory landscape, including
the Financial Reporting Council’s (FRC) 2025
guidance on going concern and liquidity risk
disclosures given Pepco Group N.V. provides
parental letters of support to its UK-registered
subsidiaries. In line with this, we encouraged
management to adopt a broader,
longer-term approach to evaluating risks
and uncertainties facing the business,
including inflationary pressures, shifts in
consumer demand and supply chain resilience.
We reviewed the assumptions underpinning
the going concern assessment and ensured
that disclosures were clear, proportionate and
reflective of the specific dynamics of our retail
operations across multiple European markets.
A key development this year was the
appointment of a new external auditor for
the Group for the 2025 financial year (FY25).
We proactively engaged with the incoming
audit team from EY Accountants B.V. (EY) to
support their understanding of our operations
and risk profile. The Committee oversaw the
transition and onboarding process, to ensure
continuity, audit quality and alignment with
our business model and geographic footprint.
I would like to thank EY for their professionalism
and contribution since they were appointed
auditor and we are confident that their fresh
perspective will enhance the robustness of
our assurance processes.
I would also like to thank my fellow Committee
members for their diligence and engagement
during FY25. The past year has been
transformational for the business, as we reset
our strategy to simplify the Group to focus on
our core Pepco brand across its key markets
in CEE and Western Europe. As we move into
FY26 and begin the next chapter of our journey,
the Audit Committee remains committed to
constructive challenge, robust governance
and ensuring our oversight continues to evolve
in step with stakeholder expectations and
regulatory developments across Europe.
Brendan Connolly
Audit Committee Chair
14 January 2026
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Committee membership and meetings
The Audit Committee concluded the year with
four members. The Committee must have at
least one member with recent and relevant
financial experience, and the Committee
as a whole shall have competence relevant
to the sector. The Board is satisfied that
all Committee members have the required
experience to enable the Committee to fulfil its
duties. Audit Committee member biographies
and attendance at meetings during the
year are set out on pages 68, 69 and 72.
Three members of the Audit Committee are
considered to be Independent Non-Executive
Directors within the meaning of the Dutch and
Warsaw Codes (myself, Frederick Arnold and
Grazyna Piotrowska-Oliwa). Sean Mahoney
is not considered to be independent due to
his position as a director of the Company’s
principal shareholder.
At the invitation of the Chair of the Committee,
the Group CFO, the Group Head of Internal
Audit and members of the EY team are invited
to attend Audit Committee meetings. The
Company Secretary acts as secretary to
the Committee.
Other regular attendees include the Group CEO,
the CFO of Pepco, and the Group Financial
Controller. In addition, the Group Treasurer,
Group Chief Information Officer, Group Chief
Legal Officer, Head of Group Reporting, Head
of Sustainability, and Head of Tax are invited
to attend all or part of any meetings and are
available to meet on a one-to-one basis
as and when required to support the Audit
Committee in fulfilling its role.
At the conclusion of each meeting, the lead
audit partner from EY and the Group Head
of Internal Audit are each separately given
the opportunity to discuss matters with the
Committee without management being
present. Similar private sessions are regularly
held with the Group CFO, the Group Financial
Controller and the Head of Financial Reporting,
among others.
The Audit Committee has a schedule of regular,
structured meetings throughout the year, but
meets as often as is required for its proper
functioning and to respond to matters requiring
oversight as they arise. The timing of meetings
is agreed in advance and set to accommodate
a regular cadence of matters and key dates
in the financial calendar and, on behalf of the
Board, to provide oversight of the Group’s risk
management and internal control processes.
In addition to the regular formal meeting
schedule, the Committee Chair, and to a lesser
extent the other Committee members, maintain
a dialogue with key individuals involved in the
Group’s governance, including consulting with
the external audit lead partner, and senior
management on an ad hoc basis.
Details of attendance of all Board and Committee meet-
ings by Directors are set out on page 72.
Role of the Audit Committee
The formal role of the Committee, as delegated
by the Board, is set out in written terms of
reference, which are reviewed annually by the
Committee and are available on our website.
The Committee’s responsibilities include, but are
not limited to, the following matters:
• financial and sustainability reporting and
compliance with relevant accounting standards
and other legal and regulatory requirements;
• reviewing the Group’s accounting policies
and, in particular, reviewing and challenging
any changes to them; any major accounting
issues of a subjective nature are discussed by
the Committee;
• reviewing the Group’s half-yearly and annual
financial statements (including clarity and
completeness of disclosure) and any quarterly
trading updates;
• providing oversight of the Group’s internal
control and risk management systems and
considering reports on their effectiveness from
the Group CFO, Group Financial Controller
and Group Head of Internal Audit;
• assisting the Board with the development
and execution of the risk management
strategy, risk policies and current risk
exposures, including maintenance of the
Group’s risk register; significant risk issues
are referred to the Board of Directors
for consideration;
• reviewing ESG strategies, reporting, goals and
targets, monitoring progress and advising the
Board as appropriate;
• monitoring the scope of work, quality,
effectiveness and independence of the
external auditor and recommending to the
Board their appointment, reappointment and
fees; and
• reviewing the engagement of the external
auditor to ensure that the provision of non-
audit services by the external audit firm is in
accordance with the Group’s policy which
seeks to ensure that their independence is
not impaired.
Key judgements and financial
reporting matters
Financial statements
The financial statements are prepared in
accordance with International Financial
Reporting Standards (IFRS) as adopted by the
European Union and the Dutch Civil Code, and
the audit of the Group’s financial statements is
performed by EY.
Prior to their publication, the Committee reviews
the interim results announcement and interim
financial statements, the Annual Report and
associated results announcement, together
with the independent auditor’s report, and
the quarterly trading updates.
In particular, in FY25, the Audit Committee
considered the following in relation to the
financial statements:
• the accounting principles, policies and
practices adopted and the adequacy
of related disclosures in the reports;
• the significant accounting issues, estimates
and judgements of management in relation
to financial reporting;
• whether any significant adjustments were
required as a result of the audit;
• the uncertainties related to IFRS 16 and
other balances in Poundland due to the
sale of the business on 12 June 2025 and
loss of direct access and control over
Poundland management, the finance team
or operational processes, which therefore
impacts the split of the loss on discontinued
operations between FY24 and FY25, but
not the total shareholders’ equity as of
30 September 2025;
• the recognition and valuation of any
subsequent retained interest on completion
of the Poundland restructuring plan;
• the classification of Pepco Austria as a
discontinued operation in the prior period;
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• the accounting implications of the
restructuring of Pepco Germany and filing
for insolvency proceedings in July 2025;
• the restatement of prior year balances,
in particular in relation to the impairment
assessment of goodwill recognised on the
purchase of Poundland, lease accounting in
accordance with IFRS 16, the application of
IAS 36 to retail store impairment testing, and
the calculation of dilapidation provisions;
• the classification and presentation of
Exceptional Costs;
• compliance with statutory tax obligations;
• whether the information set out in the
Annual Report and the financial statements
is fair, balanced, comprehensive, clear, and
understandable and covers both positive
and negative aspects of performance; and
• whether the use of Alternative Performance
Measures (APMs) obscures IFRS Accounting
Standards measures.
Going concern
The Committee assessed and confirmed the
appropriateness of adopting the going concern
basis of accounting in preparing the Annual
Report. The Committee considered the FRC’s
guidance issued in February 2025 including
the encouragement for Directors to take a
broader view, over the longer term, of the risks
and uncertainties in order to help investors
better understand the Group’s solvency and
liquidity risks.
The Committee assessed the Group’s overall
financial position, liquidity and covenant
compliance under a base case, severe, but
plausible, downside scenarios and a reverse
stress test. The assessment reflected the Group’s
available credit facilities, reflecting the impact
of the debt-refinancing strategy initiated in
September 2025 to reduce the Group’s average
interest rate and extend debt maturities.
True and fair view
At the request of the Board, the Committee
considered whether the financial statements
and the elements of the Annual Report that are
relevant to the financial statements, as a whole,
are fair, balanced and understandable and
whether they provide the necessary information
to shareholders to assess the Group’s position,
performance, business model and strategy.
To form its opinion, the Committee reviewed
the financial statements set out in the Annual
Report and interim results, together with
management and the external auditor’s
assessment of items included in the financial
statements and the prominence given to them.
The Committee, and subsequently the Board,
is satisfied that, taken as a whole, the Annual
Report and Consolidated Financial Statements
is fair, balanced, and understandable.
External auditor
EY were appointed as the Group’s independent
auditor for the financial year ending 30 September
2025 at the 2025 AGM. The partner responsible
for the Group audit opinion is Jean-Louis Geutjes.
As this was an initial audit for EY, as part of
the transition process they have engaged in
comprehensive onboarding discussions with
management and the Board.
Audit of the annual accounts
EY are engaged to express an opinion on
the FY25 consolidated and separate financial
statements of Pepco Group N.V. EY have also
performed a limited assurance engagement
on the sustainability statement included in
this Annual Report.
The Committee met with the external auditor
during the year and reviewed, discussed and
challenged their proposed FY25 audit plan,
including the materiality applied, EY’s scope,
and their assessment of the financial reporting
risk profile of the Group. The audit plan was
approved by the Committee in May 2025.
The Committee discussed the views and conclusions
of EY regarding audit and accounting matters,
together with management’s treatment of
significant transactions and areas of judgement
during the year. The Committee considered
these and is satisfied with the treatment and
disclosures in the financial statements.
The Committee continually assesses the
ongoing effectiveness and quality of the
independent auditor and the audit process,
which includes discussing details of the audit
process with our senior financial team, the
auditor, and a variety of staff throughout
the organisation. We seek and encourage
feedback from the members of the Committee
and stakeholders at all levels across the Group
on our auditor’s objectivity, appropriate mindset
and professional scepticism.
Independence and objectivity
The Committee is responsible for the
annual assessment of the external auditor’s
independence, taking into account the
Group’s relationship with the auditor as a
whole, including any threats to the auditor’s
independence and the safeguards applied to
mitigate those threats including the provision of
any non-audit services. In order to ensure the
independence and objectivity of the financial
auditor is safeguarded, the Group applies a
Pre-Approval Policy that defines the types of
non-audit services that the financial auditor
may provide and the principles to be applied
by management.
Auditor independence is maintained
by reviewing EY’s confirmation of their
independence and their internal policies,
global systems and processes designed to
safeguard independence, objectivity and
integrity, and monitoring the nature and
value of non-audit services performed.
Audit fees and non-audit services
EY fees in the financial year ended
30 September 2025 for audit, audit-related
(including limited assurance on the sustainability
statement) and other services are set out in note 5
to the consolidated financial statements.
The Group’s policy prevents the external
auditor from providing any services designated
as prohibited within the Dutch and Warsaw
Codes and requires Committee approval of
their provision of any other services regardless
of their magnitude. The default position of the
Group is that the independent auditor will not
be engaged for any non-audit services other
than those specifically pre-approved by the
Audit Committee.
Any non-audit services will be subject to tender
processes, with the allocation of work made on
the basis of competence, cost effectiveness,
regulatory requirements, potential conflicts of
interest, and knowledge of the Group’s business.
Non-audit fees paid to EY as a percentage of
audit fees totalled 8.8% in FY25.
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Risk management and internal
controls assurance
Risk management systems
The Board is responsible for overseeing the
Group’s approach to risk and ensuring that a
sound system of internal control is maintained.
There are inherent limitations in any system
of internal control and while no framework
can entirely remove risk or provide absolute
assurance against misstatement, loss, or failure,
the Board is committed to ensuring that risk
management remains effective, proportionate,
and aligned with the Group’s long-term
strategy. The Board delegates oversight
of risk to the Audit Committee.
This year, the Audit Committee has overseen
a strengthening of the Group’s ERM framework.
These developments represent a more strategic
and forward-looking approach to risk across
the organisation. In particular, the Group has:
• reset its understanding of the Group’s overall
risk profile, with a sharper focus on emerging
risks and strategic interdependencies;
• redefined the risk appetite framework to
ensure it supports decision-making and
investment priorities;
• initiated priority programmes to strengthen
the risk culture and address areas of
heightened risk exposure, such as the
fraud improvement programme and
the risk appetite framework; and
• taken into account the growing importance
of ESG, climate and regulatory change, with
close working relationships between the Risk
Management and ESG teams.
A description of the key risks is set out on pages 56 to 61.
These enhancements provide the foundation for
sustainable growth and resilience. The changes
enable the Group to take a more forward-
looking perspective on risk, to help anticipate
challenges and make informed decisions in
pursuit of the Group’s strategic objectives.
The Group’s risk register has been updated to
reflect this evolved approach, with a sharper
focus on potential impacts, mitigation actions,
and accountability. While no system can
guarantee elimination of the risk of failure to
meet the objectives of the business, the Board
has carried out an assessment of the principal
risks facing the Group, including those that
could threaten delivery of our business model,
performance, solvency or liquidity.
Looking ahead, the Board is confident that
the strengthened ERM framework will enable
the Group to respond with agility to an
evolving external environment, balance risk
with opportunity, and support the creation
of long-term value for shareholders and other
stakeholders. Plans are already in place to
facilitate required reporting enhancements to
comply with revised corporate governance
requirements for our FY26 Annual Report.
Internal control framework
During the year, the Board has not been
advised by the Committee of, nor has it
identified itself, any failings, fraud or weaknesses
in internal control which it considers material in
the context of the financial statements.
The Committee has overseen the delivery of a
Group-wide programme to enhance the control
environment across Pepco. This has focused on
strengthening financial and general IT controls,
embedding greater consistency across business
units, and introducing structured control testing
and monitoring processes, thereby providing
consistent reporting to both management
and the Audit Committee.
As a result, the Group now benefits from
improved visibility of control completion
and effectiveness for areas in scope for
the 2025 controls programme. This provides
management with better information to support
decision-making and ensures that the Audit
Committee can maintain effective oversight of
control performance and remediation activity
where required. This model will now be further
rolled out, through a risk-based approach,
using a combination of self-assessment and
additional testing. The Group’s Internal Control
assurance strategy for FY26 and beyond has
been developed to respond to areas of highest
risk, as well as meet regulatory and corporate
governance requirements. The key inputs
included preparation for complying with the
new requirements regarding the enhanced risk
statement under the Dutch Code, the principal
risks and uncertainties assessment and risk
appetite framework that was approved by the
Committee in May 2025.
The Audit Committee continues to promote and
support the ongoing strengthening of controls
throughout the Group. It is satisfied that the
Group has a well-defined organisational
structure with clear lines of responsibility,
supported by a comprehensive financial
reporting system and an independent Internal
Audit function that reports directly to the
Committee. These developments ensure that
the Group’s control environment is both resilient
and capable of supporting sustainable growth.
As noted in the Financial review on page 42,
as part of setting up efficient infrastructure
and a solid platform to support future growth,
the Group has been upgrading core financial
systems and internal control processes,
which included implementing new lease
management software to ensure compliance
with IFRS 16 reporting requirements, as well
as performing a deep dive on the balance
sheet for each operating company to ensure
compliance with the Group accounting
policy manual. As a result, a number of
restatements to the financial statements for
FY24 were identified, which primarily relate
to correcting errors in accounting for leases
under IFRS 16 (as identified by the new tool),
the revised approach to the allocation of
central costs in the impairment review of store
assets and establishing dilapidations provisions
for restoration or dismantling obligations.
These are set out in note 26 to the consolidated
financial statements (Restatement note).
Regulation
As a large multinational retail business, the
Group operates in a dynamic and complex
regulatory environment spanning areas such
as anti-bribery and corruption, the importation
of goods, data protection, health and safety
and wider sustainability and ESG-related
requirements. The Board recognises that
compliance with these regulatory requirements
is essential for safeguarding the Group’s
reputation, maintaining trust with stakeholders
and facilitating the delivery of sustainable growth.
The enhancement of our ERM Framework in FY25
is designed to enable the Group to anticipate,
monitor and respond to evolving regulatory
risks more effectively. This is underpinned by the
ongoing strengthening of our internal controls
and the implementation of regular compliance
training to ensure Group Compliance Policies
are embedded throughout the business. For
further details, see pages 54 and 55 of the Risk
management section and pages 149 to 151 of the
Sustainability Statement (Governance).
Policies and compliance
The Group continues to invest in embedding
policies into day-to-day operations, increasing
awareness and training across the business, and
enhancing monitoring processes. These steps
have already improved consistency, visibility,
and accountability in compliance practices
across the Group.
On an annual basis, the Committee reviews
the Group’s Treasury Policy (covering risk
management, treasury governance and
internal controls, systems and practices) and
Tax Strategy, and receives reports to confirm
compliance with the policies.
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The Group has policies and processes in
place for whistleblowing and work continues
on embedding the independently facilitated
whistleblowing hotline Group-wide, to ensure
employees can raise concerns confidentially
and without fear of retaliation.
During the year, management has
demonstrated their commitment to maintaining
a strong focus on compliance through the
rollout of the redefined Group Code of Ethics,
supported by engaging communications and
a refreshed suite of Group Compliance Policies,
which includes anti-bribery and corruption.
An agreed set of priority compliance topics
has been established to provide clarity and
focus across all operating companies.
Looking ahead, the Group will continue to build
maturity in its compliance capability, ensuring
readiness for evolving regulatory requirements
and supporting the Board’s commitment to
responsible and sustainable business conduct.
Internal audit
The Internal Audit function operates under a
Charter that defines the purpose, authority
and responsibility of the function within the
organisation and establishes its independence
and authority. The Charter and governance
structure of the Internal Audit function are
reviewed annually and no changes have been
proposed this year. To ensure the independence
of the function and that it remains objective
in its evaluations, the Group Head of Internal
Audit reports functionally directly to the Audit
Committee Chair and organisationally to the
Group CFO.
The internal audit plan is risk-based and
approved annually by the Audit Committee.
It covers a combination of processes, functions
and specific risks. The Committee received
regular reports on the progress of the internal
audit plan execution, findings, management’s
responses to the findings, and progress
reporting on outstanding agreed audit actions.
The Committee oversees in detail the design
and ownership of processes to resolve
outstanding issues or actions.
During the year, the Committee or Committee
Chair met frequently with the Group Head of
Internal Audit without management present.
Internal audit effectiveness
The Committee assesses the performance
and effectiveness of the Internal Audit function
during the year through the approval of the
internal audit plan, periodic reports on its work
to the Committee and the private sessions
between the Committee and the Group Head
of Internal Audit. The Committee concluded that
the Internal Audit function has been effective.
In addition, the Internal Audit function
conducted a self-assessment of its operations
and reported the results to the Committee.
The assessment confirmed that the function is
effective in fulfilling its core responsibilities, with
continued focus on delivering improvements
during the year in areas such as data analytics,
use of audit software and improved quality
assurance frameworks.
Sustainability and
environmental, social and
governance (ESG)
The sustainability strategy is set at Group
level and pulls together the sustainability
plans and actions of our operating companies.
Within the business, sustainability actions and
initiatives are directed and prioritised by a
management-led ESG Committee, which is
chaired by the Group CFO and meets monthly
to review progress. The ESG Committee is
a management committee responsible for
operational implementation of sustainability
initiatives, whilst the Audit Committee provides
Board-level oversight and governance.
The Audit Committee reviews sustainability
strategies, goals and targets, and monitors
progress on a quarterly basis, advising the
Board as appropriate.
We continue to monitor that the Group is
compliant with ESG regulatory reporting
requirements today and in the future and keep
ourselves updated on the changing regulatory
requirements in this area. This year we reported
our first Sustainability Statement in accordance
with the EU’s Corporate Sustainability Reporting
Directive (CSRD) and European Sustainability
Reporting Standards (ESRS), as noted on page
97. A quarterly ESG report is provided to the
Audit Committee providing an update on the
sustainability strategy and goals.
For further information on the Group’s sustainability strate-
gy, please see our report on pages 96 to 159
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Nomination Committee report
The Board itself is now largely where we believe we need to be,
with fabulous new talent and robust onboarding exercises.
Frederick Arnold
Nomination Committee Chair
Dear Shareholders,
This is my first report as Chair of the Nomination
Committee, following my appointment to the
role in March 2025, when María Fernanda Mejía
stepped down from the Board at the 2025
AGM. On behalf of the Nomination Committee,
I would like to extend our appreciation to María
Fernanda for her valuable contributions and
commitment, both to the Committee and to
the Group as a whole, throughout her nearly
four years of service on the Board.
FY25 saw the departure of four other Directors
from the Board, three of whom, in addition to
Maria Fernanda, had been a part of the Group
since it began its journey as a public company
in 2021. We all appreciate and thank Paul
Soldatos, Andy Bond and Neil Brown for their
dedication to the Board and for the insights
they provided, including designing the Board
succession plan we effected in FY25. Finally, our
CFO and Board member Neil Galloway left the
Company in FY25, and thanks go to him for all
the efforts he made as Pepco prepared to move
toward the transformation you have read about
in the Strategic report.
As described in the Introduction to Governance
on page 64 of this Annual Report, FY25 was a
year marked by evolutionary change across the
Group and consequently this Committee has
been extremely busy with Board and Committee
membership changes and advising our CEO
on the Group’s new senior leadership team
appointments. The diligence and commitment of
all Committee members during this transformative
year are deeply appreciated, and all of us look
forward to continuing our work in FY26.
Key areas of focus in FY25
The Committee’s primary focus in FY25 was to
review the size, structure and composition of the
Board and propose the necessary changes as
described more fully in the Chair’s Statement on
pages 6 to 7 and Introduction to Governance
on pages 64 to 65. The result of this intense
work, was the addition of three new proposed
Non-Executive Directors (subject to approval
at our upcoming AGM) who shift our balance
of skills and experiences. We also oversaw
succession planning and talent strategy and
we advised and made recommendations to
the Board on the D&I Policy and the updates to
the Nomination Committee terms of reference.
We also conducted in FY25 a very thoughtful
Board self-evaluation process, the findings of
which were discussed with the members of this
Committee and the full Board and indeed many
of the suggestions emanating therefrom, have
already begun to be implemented.
Board changes
In light of the critical importance the Board put
on refreshing both the way the Board worked
with management, and the composition of the
Board itself, the Chair’s Statement on pages
6 to 7 and the Introduction to Governance on
pages 64 to 65 both give great prominence to
those activities. Those reports review the thinking
behind these changes, the processes undertaken
and the results themselves so I refer you to those
sections and will not repeat them here.
Talent and succession planning
Senior leadership
An important part of our journey in the creation
of New Pepco in FY25, was supporting our
new CEO, Stephen Borchert, in the recruitment
and selection process for new members of
the Group’s senior leadership team as part of
the realisation of management’s “Talent and
Succession Strategy”, which the Committee
reviewed in FY24. We wanted to ensure that
we had a highly capable and experienced
leadership team to lead the Group through
the transformational journey ahead.
Nomination Committee key
responsibilities
The Committee’s main duties are:
• to lead the process for Board
appointments including selection
criteria and appointment procedures;
• to review the structure, size and composition
of the Board;
• to make recommendations to the Board on
the profile of the Board;
• to make recommendations to the Board on
the D&I Policy;
• to manage succession planning for the Board
and senior Executives of the Company; and
• to review the Board evaluation process
and results.
The Committee held three scheduled meetings
during the year and a number of additional
meetings in relation to Board recruitment.
More detail on the role and duties of the
Committee can be found in the terms of
reference for the Committee, which are
published on the Company’s website.
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Using management’s and the Board’s personal
networks, augmented by the assistance of
an external search firm, we identified and
interviewed a multitude of suitable candidates
for numerous key executive positions.
Throughout this process we took into account
both the D&I Policy and our commitment
to finding candidates with best-in-class
expertise to fulfil the relevant role, before we
would recommend her or him to the Board
for hiring approval.
The Committee recognises the importance of
a continued focus by both management and
the Board, on enhancing the bench strength
of the senior leadership team and effectively
managing the available resources within the
Group, to ensure and support the development
of a diverse pipeline of talent.
The search process concluded with the
successful recruitment of highly qualified
individuals in the following roles:
• Group CFO
• Pepco CFO
• Chief Human Resources Officer
• Chief Information Officer
• COO Western Europe
The members of our Leadership Team are
set out in full on the Company’s website
www.pepcogroup.eu
Board evaluation
One of the roles of the Committee is to oversee
the Board evaluation process, which for FY25
was a self-evaluation led by me as Chair of
both the Board and the Nomination Committee.
The key areas of focus for the self-evaluation
were: the culture and focus of the Board as
a whole and of the Directors individually; the
mechanics and tone of Board/management
engagement; content and utility of materials
and reports prepared for Board discussion;
meeting cadence, time commitment and
workload of Non-Executive Directors; and the
composition and structure of the Board and
its Committees.
This evaluation was conducted through in-depth,
one-on-one interviews between the Chair and
each of the Directors. The Vice Chair conducted
the review of the Chair. The findings from the
interviews were then reported at the next
following Board meeting. Key areas identified
for adjustment included, among others:
• The nature, style and frequency of
Board/management interactions;
• Board meeting length, frequency, content
and location;
• The timing and types of Board-only interactions;
• Committee processes and content and how
they intertwine with full Board processes
and content;
• Delegation of Authority cascades to enhance
Board processes; and
• Skillset augmentation at Board level.
The Committee will review and track progress on
actions arising from this evaluation during FY26.
Profile of the Board
The Board regularly reviews its size and
composition, taking into account the nature
of the business and its relevant activities. The
combined work experience, areas of expertise,
background and independence of the Board
members, enables the Board to carry out its
duties and responsibilities effectively, for the
benefit of the Company and its stakeholders.
Brendan Connolly, Grazyna Piotrowska-Oliwa
and I are all independent and as such, the Board
complies with the independence requirements of
the Dutch and Warsaw Codes. The appointment
to the Board of Sean Mahoney and, following
their anticipated formal appointment at the 2026
AGM, Dirk van den Berghe and Sander van der
Laan, as the nominees of our major shareholder,
comply with the terms of the Relationship
Agreement. The addition of Nicolò Galante as a
Board Observer in November 2025 (also subject
to the same formal approval at the 2026 AGM)
brings a fourth Independent Non-Executive
Director to the Group.
Diversity and inclusion
The Company has a D&I Policy which
underscores our commitment to promoting
equality, diversity and inclusion at both the
Board level and within the senior leadership
team. A diverse and inclusive workplace
continues to be a priority for the Board and
the Committee. Please see page 71 of the
Corporate governance section and the
Sustainability Statement, on pages 98 to 159,
for more information. Our D&I Policy can be
found on our website www.pepcogroup.eu.
Committee composition
and organisation
On 12 March 2025, María Fernanda Mejía
stepped down as Chair of the Committee and
as a Director. I was appointed by the Board as
the new Chair of the Committee in connection
with my appointment as Chair of the Board.
Our Committee comprises two Non-Executive
Directors, myself and Sean Mahoney. I am
considered independent within the meaning
of the Dutch and Warsaw Codes. Sean is
not considered to be independent due to his
position as a director of the Company’s majority
shareholder. The Company Secretary acts as
secretary to the Committee.
The Nomination Committee terms
of reference state that it is anticipated
that the Nomination Committee will comprise
three members. While the Committee currently
has two members, I am satisfied that it is able
to fulfil its obligations effectively and that
a third member will be added during FY26.
The Committee has a strategic work plan
and meets at least three times a year
and otherwise as required. Committee meetings
are scheduled in advance. The quorum for
the transaction of business by the Committee
is two members. The Committee makes
recommendations to the Board on any area
within its remit that it deems appropriate.
With these technicalities aside, allow me to
mention that given the intensity of our work
in FY25, including the need to add new talent
to the Board following the resignations of five
Directors, the Committee met informally in
excess of 50 times during the year.
The Board itself is now largely where we believe
we need to be, with fabulous new talent and
robust onboarding exercises (including site
visits) underway. Of course, Board composition
is always an ongoing area of discussion at the
Committee but our key areas of focus for FY26
will naturally shift somewhat. While needs are
constantly changing, and we are a very agile
and quickly reactive Board, I anticipate that the
Committee will focus on the following priorities in
the forthcoming year:
• refreshing processes relating to the review of
management talent and succession strategy;
• reassessing our approach to shareholder
engagement;
• optimising Board effectiveness by carefully
designing Committee membership assignments;
• further enhancing Board effectiveness
by crafting with our CEO specific areas of
engagement by particular Board members in
the operations and strategic direction of the
Company; and
• all required matters including annual review
and approval of the Board profile, Nomination
Committee terms of reference and the
Directors’ retirement schedule.
Frederick Arnold
Nomination Committee Chair
14 January 2026
82
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Remuneration Committee report
Dear Shareholders
I would like to thank you for your continued
support in FY25, during which time we have
further aligned the remuneration and business
strategy in what was a busy year, with multiple
structural and organisational changes. To that
end, we amended our Remuneration Policy, with
the introduction of the NED Equity Plan and
amendments to our existing Share Matching
Plan (SMP) at the 2025 AGM, which received a
94.1% vote in favour and was designed to further
align with our strategy. We have continued to
operate within this policy during FY25 and as a
Dutch company listed on the WSE we have dual
reporting requirements, which we have chosen
to supplement with additional information. The
Remuneration report on pages 83 to 91 will be
presented for an advisory vote at our next AGM
in March 2026.
Introduction
The Remuneration Committee’s purpose is
to develop a reward package for Executive
Directors and senior leadership, that supports
the Company’s vision and strategy, and
to ensure that rewards are performance
based, encourage sustainable long-term
value creation and take into account the
remuneration of the wider workforce. More
detail on the role and duties of the Committee
can be found in the terms of reference on the
Company’s website.
Committee composition
The Committee currently comprises two
members Grazyna Piotrowska-Oliwa and me.
Neil Brown and Paul Soldatos stood down as
Directors during the year. Grazyna Piotrowska-
Oliwa and I qualify as Independent Non-
Executive Directors within the meaning of the
Dutch and Warsaw Codes. The Company
Secretary acts as secretary to the Committee
and other individuals, including senior
executives and external professional advisors
to the Committee, may be invited to attend
when appropriate and necessary. No individual
is present when their own remuneration is
discussed.
The Remuneration Committee meets at least
three times each year and is responsible for
making recommendations to the Board on
the remuneration of members of the Board
and selected senior executives. This year, the
Remuneration Committee met eight times.
The Committee is also responsible for reporting
to the Board on the implementation of the
Remuneration Policy in each fiscal year, in the
context of achievement of the Company’s long-
term strategy and objectives. It seeks approval
for all decisions made by the Remuneration
Committee.
Responsibilities
As a reminder, the main duties of the
Remuneration Committee are as follows:
• to recommend to the Board the
Remuneration Policy of the Company and
to review it on an ongoing basis;
• to advise on and recommend to the
Board the remuneration framework for the
Executive Directors and selected senior
executives and to advise the AGM on
the remuneration of the Non-Executive
Directors;
• to recommend to the Board the
remuneration of the Non-Executive
Directors in accordance with the
Remuneration Policy;
• to advise on the targets and the structure
of target setting for performance-based
incentive plans of the Company, including
monitoring performance against targets;
• to review all share incentive plans for
approval by the Board and shareholders;
and
• to prepare the Remuneration report.
The role of the Committee is to support the
Board in developing and implementing the
remuneration policy, ensuring alignment with
shareholders and Company strategy.
Brendan Connolly
Remuneration Committee Chair
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£446,667, with a pension allowance of 13% of
base salary. Willem was eligible for a maximum
bonus of 150% of salary and participation in
the Share Matching Plan (SMP), allowing him to
invest up to 70% of his annual salary in shares in
the Company.
The STIP target for Stephan Borchert and Neil
Galloway consisted of achieving a financial goal
of €545.9m at target for the Group’s underlying
EBITDA delivery on an IAS 17 basis, representing
80% of the annual bonus opportunity, with the
remaining 20% based on achieving strategic
goals. The strategic goals comprised a focus
on the implementation roadmaps for Group
and Western European expansion strategies,
putting in place organisational changes and
achieving ESG ethical compliance targets:
specifically, 100% of factories audited for ethical
compliance in line with our ethical sourcing KPIs.
These were achieved.
STIP
Following an assessment by the Committee
of Stephan Borchert’s and Neil Galloway’s
personal contributions and the financial
outcome achieved during the year, they have
been awarded cash bonuses of £1,104,300
and £337,479 respectively. The bonus for
Neil Galloway has been calculated on a time
pro-rata basis for the part-year. Further details
of performance against financial and strategic
criteria can be found on page 87.
For FY26, the STIP will provide a normal
maximum bonus opportunity for the CEO of
150% of salary and the bonus opportunity will
continue to be divided into 80% for underlying
Group EBITDA on an IAS 17 basis and 20% for
strategic goals. This financial performance
metric is directly aligned with senior
management’s bonus plan. Due to the sensitive
commercial nature of these targets these will be
published in the FY26 Annual Report.
Additionally, for FY26 only, we have allocated
an additional bonus for 14 key individuals
including the CEO, for a more stretching level of
Group EBITDA performance above the normal
maximum in the STIP. This bonus will only be
paid if the maximum target for EBITDA growth
is exceeded, otherwise it will lapse. For the
CEO, the incremental amount will equate to a
maximum of 15% of his base salary at maximum
performance. The Board is of the view that this
is appropriate for FY26 only, as it will incentivise
the delivery of performance in excess of the
normal stretch EBITDA target set for FY26, in a
critical year for building on the transformation of
the business.
Long Term Incentive Plans
The Company operates both a Performance
Share Plan (PSP) and a Share Matching
Plan (SMP). Both have been designed to
incentivise management to deliver the business
strategy and to create strong alignment with
shareholders’ interests.
PSP
The PSP awarded in 2025 consists of the
following targets: underlying earnings per share
growth (45%), return on invested capital on an
IFRS 16 basis (45%) and ESG targets of a 10%
reduction in Scope 1 and 2 GHG emissions and
100% coverage for factory audits for ethical
compliance in line with our ethical sourcing KPIs.
The FY26 PSP consists of the same financial
measures, with adjusted and more challenging
targets for ESG.
No awards under the PSP will vest in 2025 as the
first PSP was awarded in 2024 and will not vest
until the end of FY26.
Committee activities in FY25
During the reporting period, the Committee
focused on the areas as set out below:
• reviewed remuneration for the Executive
Directors and selected senior executives;
• reviewed and approved remuneration
outcomes for the FY24 STIP and Value
Creation Plan (VCP);
• reviewed the fee level for the Chair;
• reviewed and approved treatment of share
awards for leavers;
• reviewed and approved salary levels for
the Executive Directors and selected senior
executives;
• reviewed and approved the introduction
of the Share Matching Plan along with
performance measures and targets in relation
to the awards for selected senior executives;
• reviewed and approved the FY25 STIP
measures, weightings and targets;
• reviewed and approved appropriate
measures, weightings and targets for the
Group LTIP for the FY25 award;
• considered the workforce remuneration
approach and policies;
• considered the Executive Remuneration
market update provided by the Committee’s
advisors;
• reviewed and approved the Committee’s
terms of reference to ensure alignment with
the Dutch and Warsaw Codes;
• reviewed Executive Directors’ shareholdings
against shareholding requirements;
• reviewed the AGM shareholder and proxy
voting agency feedback;
• considered the alignment of Executive pay
with market; and
• reviewed and approved the Remuneration
report.
Board changes
Executive Directors
As previously announced, Neil Galloway, Chief
Financial Officer, stepped down from the Board
on 12 March 2025 and was succeeded as Chief
Financial Officer by Willem Eelman, who is not a
member of the Board.
Non-Executive Directors
Maria Fernanda Meija stepped down from
the Board on 12 March 2025, whilst Andy Bond
stepped down from the Board on 30 June 2025,
having previously stepped down from his role
as Chair on 12 March 2025. Neil Brown and Paul
Soldatos stepped down from the Board on
30 June 2025 and 31 May 2025 respectively.
Frederick Arnold succeeded Andy Bond as
Chair on 12 March 2025.
Neil Galloway and Andy Bond’s leaving
arrangements are fully in line with our
Remuneration Policy and are set out on pages
86 and 87.
Remuneration outcomes in FY25
Performance has been strong in 2025 in the core
business post the divestment of Poundland,
achieving high growth levels of EBITDA and
leading to a 81.8% STIP (Short Term Incentive
Plan or bonus plan) achievement. This strong
performance has also been reflected in the
Company’s improved share price.
Stephan Borchert’s remuneration arrangements
have remained unchanged during FY25, with
no salary increase and his pension allowance
remaining at 13% of base salary.
Willem Eelman, although not a Director,
is remunerated in line with the Directors’
Remuneration Policy. His salary is set at
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SMP
For the CEO, SMP awards require an individual
investment of up to two times salary in Pepco
Group shares with the Company providing
an award of matching shares up to 11.5
times the investment dependent upon the
achievement of share price growth targets that
range between PLN 20 and PLN 48 per share.
Matching shares received under the plan will not
be released until the end of FY29. Further details
can be found on page 88.
Recognising his 200% of base salary investment
in the Company’s shares, a conditional award
was granted under the SMP to Stephan
Borchert in FY25. The maximum number of
shares that can be released to him under this
conditional Share Matching Plan award based
on share price targets measured following the
announcement of the financial results for FY25,
FY26, FY27, FY28 and FY29 is a total of 6,253,677
shares. As a result of his participation in the SMP,
Stephan does not participate in the PSP.
The SMP outcome for 2025 will be reported at
the end of 2026 as the measurement period
does not coincide with the reporting period.
The legacy Value Creation Plan awarded to
the remaining participant (Andy Bond) lapsed
in accordance with the Plan rules without
delivering any value.
NED Equity Plan
Following the approval of the NED Equity
Plan by shareholders at the 2025 AGM, the
first awards were granted in FY25 to Frederick
Arnold, Grazyna Piotrowska-Oliwa and myself.
The awards will normally vest on each of the
first, second and third Annual General Meetings
of the Company following the date of grant.
There are no performance conditions applicable
to the awards granted. Further details can be
found on pages 88 and 89. As per our terms of
reference the beneficiaries of these awards did
not participate in the discussion and approval
of this plan or the awards granted under it.
Chair and Non-Executive Director fees
Non-Executive Director fees remained
unchanged during FY25 excluding the Chair
fee which reduced from £400,000 to £250,000
(inclusive of all Committee fees) upon the
appointment of Frederick Arnold. The fees for all
Non-Executive Directors will remain unchanged
in FY26 with fees for the roles as follows:
Non-Executive Director base fee (£78,000),
Committee membership fee (£7,000), Audit Chair
fee (£28,000), Remuneration Committee Chair
fee (£23,000), Nomination Committee Chair fee
(£18,000).
Alignment to Group strategy
To ensure alignment with Group strategy,
achieving profitable growth in a sustainable
manner that is reflected in the share price,
we have centred the targets around these
themes in the various long-term and short-term
incentive plans.
Conclusion
The Committee has satisfied itself that
the remuneration outcomes for FY25 are
appropriate and that the Remuneration Policy
has operated as intended.
I would like to thank the Committee for its work,
debate and input during the year.
Brendan Connolly
Remuneration Committee Chair
14 January 2026
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Single total figure of remuneration table
The following table sets out the total remuneration for the Executive Directors and Non-Executive Directors for the year ended 30 September 2025 converted to Euros.
Salary/Fees
4
Benefits
4
Pension
3
Bonus
4
LTIP Other Total remuneration Total fixed remuneration Total variable remuneration
FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24
€ € € € € € € € € € € € € € € € € €
Executive
Directors
Stephan Borchert
1,4,9
1,064,340 263,111 380,410 83,656 138,364 34,204 1,305,945 258,901 - - - 643,915 2,889,059 1,283,787 1,583,114 380,971 1,305,945 902,816
Neil Galloway
10
327,007 701,628 16,580 2 7,0 8 2 42,511 91,212 399,103 721,975 1,302,138 - 368,426 - 2,455,764 1,541,897 386,098 819,922 2,069,666 721,975
Non-Executive
Directors
Frederick Arnold
11
223,023 55,058 - - - - - - - - - 223,023 55,058 223,023 55,058 - -
Brendan Connolly
12
134,340 113,284 - - - - - - - - - - 134,340 113,284 134,340 113,284 - -
Grazyna
Piotrowska-Oliwa
13
105,106 86,534 - - - - - - - - - - 105,106 86,534 105,106 86,534 - -
Andy Bond
2,. 8, 10
242,894 976,432 3,382 4,852 - - - 960,809 - 2,881,008 182,120 428,396 4,823,101 246,276 981,284 182,120 3,841,817
María Fernanda
Mejía
10
54,501 104,075 - - - - - - - - 60,904 - 115,405 104,075 54,501 104,075 60,904 -
Neil Brown
7, 14
- - - - - - - - - - - - - - - - - -
Paul Soldatos
7
- - - - - - - - - - - - - - - - - -
Sean Mahoney
7
- - - - - - - - - - - - - - - - - -
Directors’ Remuneration report
The following section provides details of how
Board members were remunerated during the
financial year to 30 September 2025.
The Remuneration Committee members,
activities and meetings during the year are
set out on pages 83 and 84 along with the
Committee’s purpose, roles and responsibilities,
and are thereby included in this part of the
report by reference.
The Remuneration Committee took scenario
analyses into account when initially setting
the Remuneration Policy and continues to
take them into account when operating the
Remuneration Policy. Payout opportunities
in different scenarios were conducted when
setting remuneration. None of the Directors
received any remuneration from entities within
the Group other than as disclosed in this report.
The Remuneration Committee did not deviate
from the Remuneration Policy in the year.
No concerns or issues were raised with respect
to the advisory vote of the AGM approving the
2024 Remuneration report.
Advisors
Korn Ferry is a signatory to the UK Remuneration
Consultants Group Code of Conduct (the
Code of Conduct) and was appointed by
the Remuneration Committee in 2021 having
submitted a proposal which demonstrated its
skills and experience in executive remuneration
both in the UK and across Europe. Korn Ferry
provides advice to the Committee on matters
relating to executive remuneration.
The Committee was satisfied that the advice
provided by Korn Ferry remains objective and
independent, having noted its commitment to
the Code of Conduct.
1. Stephan Borchert was appointed as CEO with effect from
1 July 2024. His remuneration in the table for FY24 is pro-rated
for the proportion of the year in which he performed the role.
2. Andy Bond became Executive Chair on 12 September
2023, returning to his role as Non-Executive Chair on
1 October 2024. He stepped down as Non-Executive Chair on
12 March 2025 and from the Board on 30 June 2025. Andy’s
fees for FY24 are therefore reflective of the salary he received
as Executive Chair of £835,000 p.a. and his fees for FY25 are
reflective of the fees he received as Non-Executive Chair
of £400,000 p.a. and his fees as a Board and Committee
member of £92,000 p.a.
3. Andy Bond did not receive a separate pension payment
within his role of Executive Chair. Stephan Borchert’s pension
is in the form of a cash equivalent payment. Neil Galloway’s
pension is split, part contribution to a pension scheme, and
part cash equivalent payment.
4. Salary/fees, benefits and bonus are all short-term employee
benefits. FY25 benefits for Stephan Borchert includes a
housing allowance and relocation benefits.
5. The Company has not revised or clawed back the
remuneration of any Directors in the year.
6. No loans, advances or guarantees have been provided to
any Director.
7. Neil Brown, Paul Soldatos and Sean Mahoney did not receive
payment from the Company in FY24 or FY25. Paul Soldatos
and Neil Brown stepped down from the Board on 31 May
2025 and 30 June 2025 respectively.
8. “LTIP” in respect of Andy Bond relates to 600,000 unexercised
share options vested under the Chair Award in FY24 at a
closing share price of PLN 20.52.
9. FY24 “Other” remuneration for Stephan Borchert includes
a single payment in relation to a forfeited bonus from a
previous role prior to joining the Company.
10. FY25 “Other” remuneration for Neil Galloway includes
£266,377 pay in lieu of notice and £45,162 holiday pay
reflecting the required six months’ notice. For Andy Bond,
FY25 “Other” includes £154,000 pay in lieu of notice reflecting
the required six months’ notice from his role as Non-Executive
Chair of the Board and similarly for María Fernanda Mejía
a payment of £51,500 pay in lieu of notice reflecting the
required six months’ notice from her Board role.
11. Frederick Arnold became Chair on 12 March 2025.
12. Brendan Connolly became Chair of the Audit Committee on
12 March 2025 but remained a member of the Remuneration
Committee and on 30 June he became Interim Chair of the
Remuneration Committee.
13. Grazyna Piotrowska-Oliwa became a member of the Audit
Committee on 12 March 2025.
14. Neil Brown became Remuneration Committee Chair on
12 March 2025 and stepped down from the Board on
30 June 2025.
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FY25 annual bonus performance against targets
When considering the STIP outcome for Stephan Borchert and Neil Galloway, the Committee uses a scorecard of measures that reflect the Group’s business strategy, and which align with the interests of
our stakeholders. In FY25, the STIP outcome (as adjusted for items that the Committee determined were of a sufficiently exceptional nature and not factored into the threshold to stretch target range that
was set) was measured against Group EBITDA (80% of the total outcome) as well as other strategic measures and ESG criteria (20% of the total outcome). Performance has been strong in 2025 in the core
business (Pepco), post divestment of Poundland, with the Group achieving 101% of the target financial goal of €546m for EBITDA delivery on an IAS 17 basis (at which three quarters of the 80% is earned) ,
leading to a bonus outcome of 61.8% out of the 80% attributable to this metric.
The strategic goals comprised a focus on the implementation of roadmaps for Group and Western European expansion strategies, putting in place organisational changes and achieving ESG ethical
compliance targets. The Committee assessed that the performance against these strategic measures some of which included quantitative targets had been fully met and so warranted a bonus outcome of
20%.
Combining the financial and strategic results gives a total bonus outcome of 81.8% for Stephan Borchert and Neil Galloway, with Neil Galloway’s STIP outcome being time pro-rated to reflect the time spent
in role. The Committee has determined that the resulting payment of £1,104,300 to Stephan Borchert and £337,479 for Neil Galloway appropriately reflects the financial and strategic performance delivered.
Directors’ share option plans in Pepco Group
The table below details outstanding share awards previously granted to the Executive Directors.
Scheme Award date Exercise price
Share price used
(PLN)
Share awards
held at
30 September
2024
Awarded during
the year
Vested during
the year
Share awards
lapsed during
the year
Share awards
held at
30 September
2025
Total share value
at award (EUR) Vesting date Exercise period
Stephan Borchert SMP
1
04/04/2025 Nil 16.5711 6,253,677 6,253,677 24,439,381 See notes 30/09/2029
Neil Galloway Buy Out
2
12/10/2023 Nil 30.00 156,888 156,888 1,109,978 See notes 01/04/2026
VCP transfer
3
30/09/2023 Nil 22.42 181,600 166,467 15,133 960,185 See notes 30/09/2025
NCOs
4
22/12/2023 Nil 25.42 322,714 167,246 155,468 1,934,625 See notes 30/09/2026
NCOs 24/12/2024 Nil 16.32 - 481,627 410,373 71,254 1,853,678 See notes 30/09/2027
Andy Bond VCP
5
14/02/2022 Nil 46.35 2,389,162 2,389,162 26,115,525 See notes 02/03/2032
Special Award
6
11/04/2024 Nil 20.52 800,000 800,000 3,871,424 See notes On vesting
1. The SMP award granted to Stephan Borchert shown in the table is the number of matching shares he will receive if certain share price goals are met by the end of FY29. The matching shares will not release until the end of FY29.
2. Following appointment, in acknowledgement of the forfeited short-term incentives from Neil Galloway’s past employment, Neil was granted nil-cost options equivalent to 150% of his annual base salary. This award vested in full when Neil stepped down from the Board in
March 2025.
3. The VCP opportunity granted to Neil Galloway was exchanged for RSUs as detailed in this table alongside participation in the Group LTIP. The time pro-rated award vested when Neil stepped down from the Board in March 2025. The remaining shares lapsed.
4. Neil Galloway was awarded 322,714 share awards in relation to nil cost options which vest in FY26 as long as certain performance conditions are met. 167,246 shares lapsed upon him ceasing to be an employee on 29 July 2025 with the remainder vesting on the normal
vesting date.
5. The VCP award of nil-cost options granted to Andy Bond has lapsed in full in accordance with the plan rules.
6. The “Chair Award” granted to Andy Bond in April 2024 has lapsed in full after failing to meet its performance conditions.
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The table below details outstanding share awards previously granted to the Non-Executive Directors.
Scheme Award date Exercise price
Share price used
(PLN)
Share awards
held at
30 September
2024
Awarded during
the year
Vested during
the year
Share awards
lapsed during
the year
Share awards
held at
30 September
2025
Total share value
at award (EUR)
Frederick Arnold NED Equity 04/04/2025 Nil 16.2045 - 170,088 170,088 650,000
Brendan Connolly NED Equity 04/04/2025 Nil 16.2045 - 157,004 157,004 600,000
Grazyna Piotrowska-Oliwa NED Equity 04/04/2025 Nil 16.2045 - 130,837 130,837 500,000
1. The NED Equity awards granted to Frederick and Brendan are in the form of restricted stock units whilst the award to Grazyna Piotrowska-Oliwa is in the form of a nil cost option.
2. The awards will normally vest in equal thirds on each of the first, second and third Annual General Meetings of the Company following the date of grant. There are no performance conditions applicable to the awards granted.
Awards granted during the financial year to 30 September 2025
Stephan Borchert – SMP award
Under the SMP, approved on 6 June 2024, Stephan purchased shares to the value of 200% of his salary in April 2025 using a share price of PLN 16.5711 to calculate the value of his investment. The Company
will provide an award of matching shares of up to 11.5 times the investment over the five-year period, dependent upon the achievement of share price growth targets ranging between PLN 20 and PLN 48
per share. Matching shares received under the plan will not be released until the end of FY29.
Date of grant Number of invested shares Vesting date Performance conditions
4 April 2025 543,798 30 September 2029 As outlined above
Neil Galloway – LTIP awards
Under the LTIP, approved at the 2022 AGM, Neil was granted an award of shares of 250% of his salary in December 2024 using a share price of PLN 16.32 to calculate the number of shares. The award has
performance conditions over the three years to vesting of the award at the end of FY27 of underlying EPS (45%) and ROIC (45%) and ESG targets of a 10% reduction in Scope 1 and 2 emissions and 100%
coverage for factory audits.
Date of grant Number of share options Vesting date Performance conditions
24 December 2024 481,627 30 September 2027 As outlined above
Frederick Arnold – NED Equity awards
Under the NED Equity Plan, approved at the 2025 AGM, Frederick was granted a restricted stock award of shares of €650,000 in April 2025 using a share price of PLN 16.2045 to calculate the number of
shares. The awards have no performance conditions, and will normally vest in equal thirds on each of the first, second and third Annual General Meetings of the Company following the date of grant.
Date of grant Number of share options Vesting date Performance conditions
4 April 2025 170,088 As outlined above N/A
Brendan Connolly – NED Equity awards
Under the NED Equity Plan, approved at the 2025 AGM, Brendan was granted a restricted stock award of shares of €600,000 in April 2025 using a share price of PLN 16.2045 to calculate the number of
shares. The awards have no performance conditions, and will normally vest in equal thirds on each of the first, second and third Annual General Meetings of the Company following the date of grant.
Date of grant Number of share options Vesting date Performance conditions
4 April 2025 157,004 As outlined above N/A
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Grazyna Piotrowska-Oliwa – NED Equity awards
Under the NED Equity Plan, approved at the 2025 AGM, Grazyna was granted a restricted stock award of shares of €500,000 in April 2025 using a share price of PLN 16.2045 to calculate the number of
shares. The awards have no performance conditions, and will normally vest in equal thirds on each of the first, second and third Annual General Meetings of the Company following the date of grant.
Date of grant Number of share options Vesting date Performance conditions
4 April 2025 130,837 As outlined above N/A
Statement of Directors’ shareholding and share interest
Under the share ownership guidelines set out in the Remuneration Policy, the CEO and CFO are encouraged to build and maintain a shareholding equivalent to at least 300% and 200% of their base salaries
respectively. Shares are valued using the Company’s closing middle market share price on 29 September 2025 of PLN 25.895, the PLN/EUR exchange rate of 0.2350 and the GBP/EUR exchange rate of 1.1826.
The following table shows how the CEO complies with the shareholding guidelines and the share awards granted to Non-Executive Directors by Pepco Group NV under the NED Equity Plan as at
30 September 2025:
Shares held at
30 September
2025
Shares held
by connected
persons
Unexercised and/or unvested
and subject to service and
performance requirement
Shareholding
requirement
Current
shareholding
% of salary
Requirement
met
Executive Directors
Stephan Borchert
1
543,798 6,253,677 300% of salary 311% Yes
Non-Executive Directors
Frederick Arnold 170,088
Brendan Connolly 157,004
Grazyna Piotrowska-Oliwa 130,837
1. Stephan Borchert was appointed to the Board on 1 July 2024. The shareholdings in the table represent his holdings that he has purchased, where these shares count towards the Investment Shares within the Share Matching Plan. The unexercised shares represent the
maximum number of shares that can be released to him under this conditional Share Matching Plan award based on share price targets measured following the announcement of the financial results for FY25, FY26, FY27, FY28 and FY29.
Directors’ and employees’ remuneration table
The information below is in respect of the financial year ended 30 September 2025 against the prior year comparison.
Total
remuneration
2025
€
Total
remuneration
2024
€
Executive Directors
Stephan Borchert 2,889,059 1,283,787
Non-Executive Directors
Frederick Arnold (Chair) 223,023 55,058
Brendan Connolly (Committee Chair) 134,340 113,284
Grazyna Piotrowska-Oliwa (NED) 105,106 86,534
Andy Bond (Previously Chair, resigned June 2025) 428,396 4,823,101
María Fernanda Mejía (previously Committee Chair, resigned March 2025) 115,405 104,075
Neil Brown (NED, resigned June 2025) - -
Paul Soldatos (NED, resigned June 2025) - -
Sean Mahoney - -
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Change in Director and employee remuneration
The following table outlines the percentage change from one year to the next for Director and employee remuneration, reported in line with the regulations.
Executive pay ratio
The Dutch Code requires the executive pay ratio and the trend to be disclosed in the annual Remuneration report. The basis of the pay ratio comparison uses the Dutch methodology of average employee
remuneration.
The chart below summarises the five-year history of total remuneration for the Executive Directors, being the CEO and CFO, alongside the average remuneration per FTE (excluding Executive Directors).
Also shown is the remuneration ratio of the CEO versus the average employee remuneration.
Note, whilst the table has been shown in Euros to reflect the reporting currency of the Group, the Executive Directors were paid in GBP. In FY25, Neil Galloway received a salary of £618,000 per annum, and
Stephan Borchert received a salary of £900,000 per annum.
FY21
€
FY22
€
FY23
€
FY24
€
FY25
€
CEO
1,4,,5, 6
total remuneration (A) 801,970 1,103,330 4,079,370 4,823,101 2,889,059
YoY % 37% 38% 270% 18% (40%)
CFO
1,3
total remuneration 964,442 710,005 1,087,566 1,541,896 2,455,764
YoY % 38% (26%) 53% 42% 59%
Average employee (FTE) total remuneration costs
2
(B) 20,640 21,309 21,395 22,817 24,235
YoY % 15% 3% 0% 7% 6%
Ratio (A) versus ratio (B) 39:1 52:1 191:1 211:1 119:1
1. Remuneration of CEO and CFO reflects the total remuneration by year including base salary, taxable benefits, Company pension contributions, STIPs and LTIPs (where received). The GBP amounts have been converted to Euros based on foreign exchange rates used for
consolidating the Group’s results.
2. Average employee remuneration is based on total employee costs across the Group divided by average number of employees on a “full time equivalent” basis by year.
3. The CFO prior to Neil Galloway retired with effect from May 2022 so the 2022 figure reflects the pre-retirement remuneration. The next CFO (Neil Galloway) joined the Group on 1 April 2023 and left in July 2025. Therefore the 2023 and 2025 figures reflect a partial year only.
4. The former CEO (Trevor Masters) was appointed to the role in May 2022; therefore, the 2022 figure reflects an aggregated figure for the retired CEO (Andy Bond) up to his retirement in March 2022 and the former CEO from his appointment in May 2022.
5. Andy Bond’s remuneration in his role as Executive Chair has been included in the CEO line for FY24. No amounts have been included in the CEO line for Stephan Borchert in FY24.
6. Remuneration for Trevor Masters includes unexercised share options and excludes severance payments.
7. Remuneration for Neil Galloway for FY25 includes pay in lieu of notice and holiday pay as required under his contract of employment.
Relative importance of spend on pay
The table below shows the Company’s expenditure on employee pay compared to distributions to shareholders between 1 October 2024 and 30 September 2025.
FY25 FY24
€m €m
Distributions to shareholders 85.6 -
Total employee pay 900.2 863.9
Distributions to shareholders includes €49.9m of share buybacks in FY25 whilst total employee pay includes Poundland.
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Implementation of Policy from 1 October 2025 to 30 September 2026
Policy element Stephan Borchert (CEO)
Base salary £900,000
Benefits Pension of 13% of base salary, private medical insurance, life assurance, income protection, car and housing allowance
Annual bonus (payable in cash following completion of the
annual audit)
Maximum entitlement of £1,350,000 (150% of salary). Additionally, for FY26 a maximum of a further 15% of salary will be payable if the
maximum target for EBITDA is exceeded.
LTIP Grant of performance share awards with a three-year
performance period and additional two-year holding period
(see below)
Not eligible to participate
Share Match Plan Investment in shares in the Company. In return
the Company awards matching shares
One-time award of matching shares
Malus and clawback Provisions apply
Shareholding requirement (whilst employed) 300% of salary
SMP performance conditions
In FY25 the CEO received a one-time award under the SMP. The SMP allows the investment of up to two times salary where the Company then provides an award of matching shares up to 11.5 times the
investment dependent upon the achievement of share price growth targets that range between PLN 20 and PLN 48.
No further awards will be made to the CEO under this plan in FY26.
Directors’ Remuneration Policy
The Remuneration Policy is available on our website. It was amended following shareholder approval at the March 2025 AGM and has not changed since then. The changes approved were to:
• provide a right for Non-Executive Directors to participate in the NED Equity Plan; and
• amend the Pepco Group N.V. Share Matching Plan.
The Remuneration Policy permits deviation from the Policy in the event that it is required for the long-term interests and stability of the Company or for its profitability. There has been no deviation from the
Remuneration Policy (or the malus and clawback provisions contained within it) to report for the period to 30 September 2025.
The proportion of fixed and variable remuneration
To support the Policy’s objectives to deliver long-term sustainable success of the Company, the remuneration package of our CEO includes a mix of fixed and variable remuneration. The proportion for FY25
is approximately 31% fixed pay and 69% variable remuneration on a target basis.
Brendan Connolly
Remuneration Committee Chair
On behalf of the Board
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Divergence from the Dutch and Warsaw Codes
2.1.7 Independence
of the Non-
Executive Directors
The Company operates a one-tier Board which complies with principle
2.1.7(i). The Board consists of one Non-Independent Non-Executive Director,
three Independent Non-Executive Directors, and one Executive Director.
With regard to principle 2.1.7(iii), one Non-Executive Director is appointed
to the Board pursuant to arrangements between the Company’s majority
shareholder (which holds more than 10% of the shares of the Company)
and certain of its creditors. This arrangement was entered into before
the Company listed on the WSE.
The conditions of appointment of the shareholder-nominated Non-Executive
Directors are set out in a Relationship Agreement between the Company
and certain affiliates of the Company’s majority shareholder. A summary
of the key terms of the Relationship Agreement is available on the
Company’s website.
2.1.9 Independence
of the Chairman of
the Board
Andy Bond was formerly CEO and Executive Director of the Company.
Therefore, until his resignation as Executive Chair on 12 March 2025,
Andy Bond was a Non-Independent Chair of the Board. Following the
appointment of Frederick Arnold at the 2025 AGM as an Independent
Non-Executive Chair, the Company is in compliance with provision 2.1.9.
2.2.2 Appointment
and reappointment
periods – Non-
Executive Directors
Members of the Board are appointed for a period of three years and may
then be reappointed twice for three-year periods. These appointment
arrangements are permitted under the Warsaw Code to which the
Company is subject and nine year terms for Non-Executive Directors
are common in the United Kingdom. For these reasons, the status
of compliance with 2.2.2 is not expected to change.
2.2.4 Succession The Company’s Articles of Association and the Relationship Agreement
set out the maximum term of appointment of the members of the Board.
The term of appointment for the shareholder-appointed Non-Executive
Directors is determined by the Relationship Agreement. The Independent
Non-Executive Directors have all been appointed for a term of three years,
capable of extension for a further two three-year terms. A retirement
schedule is in place and has been published on the Company’s website.
2.5.2 Code of
Conduct
The Company does not currently have a single Group-wide code of
conduct. Most of the subject matter which is traditionally included in
a code of conduct is included in the Group-wide Compliance Manual,
which applies to employees across the Group. This Compliance Manual
is published on the Group’s internal intranet but is not published on the
Group’s website.
2.5.4 Accountability
regarding culture
The Company reports on its culture in accordance with principle 2.5.4
paragraphs (i) and (ii) of the Dutch Code. However, in a divergence from
principle 2.5.4 paragraph (iii) of the Dutch Code, the Company does not
currently report on the effectiveness of, and compliance with, its code of
conduct as the Company does not currently have a single Group-wide
code of conduct. Most of the subject matter which is traditionally included
in a code of conduct is included in the Group-wide Compliance Manual.
As the Company is incorporated under the laws of the Netherlands and listed on the WSE, the
Company applies the Code of Best Practice for GPW Listed Companies 2021 (the Warsaw Code)
and complies with the Dutch Corporate Governance Code 2022 (the Dutch Code). Both of these
Codes operate on a “comply or explain” basis, meaning companies must either comply with the
provisions of these Codes or explain any divergence from them in this report. In March 2025, the
Dutch Code was amended and updated. The provisions of the updated Dutch Code apply to the
Company from FY26 and the Company has been putting in place enhanced governance processes
during the year, in preparation. In particular we have increased our focus on risk management and
internal control procedures under our ERM framework. Please refer to the risk section of this report
on pages 54 to 61 for further information.
As the principles set out in the Warsaw Code are similar to those of the Dutch Code, the Company
complies with the majority of the principles and best practice provisions of the Dutch Code.
The Company currently does not apply the following provisions of the Dutch Code:
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The Company currently does not apply the following provisions of the Warsaw Code:
1.5 Disclose amounts expensed
by the group in support of
culture, sports, charities,
media, social organisations,
trade unions, etc.
Any such expenses have been reported internally, disclosure
and reporting on the assessment as to the rationality of
such expenditures will continue to be considered in the
new fiscal year.
2.1 and 2.2 Gender diversity of
corporate bodies
The Group’s D&I Policy sets a goal of 30% female
representation on the Board, but this has not yet been
achieved. The D&I Policy does not set a target date for
achieving this ratio, which is not compliant with the Warsaw
Code but is consistent with the past practice of the Group.
2.11.5 The supervisory board
prepares a report to the AGM
once per year to include an
assessment of the rationality
of expenses referred to in
principle 1.5
Any such expenses have been reported internally; disclosure
and reporting on the assessment as to the rationality of
such expenditure will continue to be considered in the
new fiscal year.
3.4 Basis of remuneration
for those responsible for risk,
compliance and internal audit
Risk and compliance are managed by the Chief Legal Officer
and the Head of Internal Audit. The remuneration of these
individuals is primarily dependent on the performance of
delegated tasks. However, consistent with all employees of
the Company, a proportion of these individuals’ respective
annual bonuses is dependent on the Company achieving
specific financial targets for the relevant financial year.
The financial targets for the Company’s annual bonus
scheme are set by the Company’s Remuneration Committee.
3.5 Persons responsible for
risk/compliance management
report directly to the president
or other member of the
management board
The Head of Internal Audit reports to the CFO, who is not
a member of the Board. However, the Risk/Compliance
function and the Head of Internal Audit also report to
the Chair of the Audit Committee.
3.6 Head of internal audit reports
to the president of the board
(i.e the CEO)
The Head of Internal Audit reports to the Chair of the
Audit Committee in addition to reporting to the CFO.
3.3.2 Remuneration
of Non-Executive
Directors
One-off fees were paid to Brendan Connolly, María Fernanda Mejía,
Grazyna Piotrowska-Oliwa and Pierre Bouchut, in respect of work
undertaken by them in relation to, and in preparation for, their roles as
Board members, in the period prior to the Company’s listing on the WSE.
These fees were used by them, to subscribe for shares in the Company on
admission to the WSE (at the Admission offer price). The shares acquired
by these Board members on Admission must be held by them until the first
anniversary of the date on which each of them ceases to be a Director of
the Company.
In addition, under the NED Equity Incentive Plan, which forms part
of the Remuneration Policy, the Non-Executive Directors (excluding
any Non-Executive Directors appointed pursuant to the Relationship
Agreement) are eligible to receive a one-time equity grant. The Chair
of the Board and the Chair of the Audit Committee are eligible to
participate in further equity grants.
Equity award arrangements for Board members are increasingly common
in Europe and the United Kingdom and are permitted under the Warsaw
Code, to which the Company is subject. The Board has determined,
(and shareholders have approved the proposal), that the NED Equity
Incentive Plan reflects the Board’s high standards and expectations for
engagement, availability, and value-add from the Non-Executive Directors
and was adopted to increase alignment and incentives tied to multi-year
shareholder outcomes.
5.1.3 –
Independence of
the Chair of the
Board of Directors
Andy Bond was formerly the CEO and an Executive Director of the
Company. Therefore, until his resignation as Executive Chair on 12 March
2025, Andy Bond was a non-independent Chair of the Board. Following
the appointment of Frederick Arnold at the 2025 AGM as an Independent
Non-Executive Chair, the Company was in compliance with provision 5.1.3.
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Directors’ report
The Board presents its report, together with the audited consolidated financial statements, for the year ended 30 September 2025.
Indemnity provisions
The Company indemnifies all Directors within its
Articles of Association.
In addition, the Company holds: (i) Directors’
and Officers’ liability insurance, which provides
cover for liabilities incurred by Directors in
the performance of their duties or powers;
and (ii) Public Offering of Securities Insurance,
to ring-fence any exposure arising from the
Initial Public Offering in May 2021.
No payments were made as a result of
the indemnity or by the insurer during the
reporting period.
Conflicts of interest
Group-wide processes are in place to review
potential conflicts of interest held by senior
management, including the Board.
Conflicts are routinely raised at Board meetings
and recorded as appropriate.
Audit information
The Board confirms that: (i) to its knowledge
there is no relevant audit information of which
the auditors are unaware; and (ii) the Board
has taken all reasonable steps to ascertain
any relevant audit information and ensure that
the auditors are aware of such information.
Information contained in the
Strategic report
The Strategic report on pages 1 to 62 contains
certain information required to be included
within this Directors’ report. This relates to
employee matters, future developments,
sustainability and progress against the CSRD,
risk management and how the Board considers
the views of stakeholders. The Sustainability
report on pages 96 to 159 forms part of this
Directors’ Report in accordance with Article
2:391 of the Dutch Civil Code and the Corporate
Sustainability Reporting Directive.
To the extent that the reports contain forward-
looking statements, these are made by the
Board in good faith, based on the information
available at the time of the Annual Report.
Financial instruments
Details of the Group’s objectives and policies on
financial risk management and of the financial
instruments currently in use are set out in note 17
to the consolidated financial statements which
form part of this report.
Employees
Diversity and inclusivity
The Company is fully committed to the
elimination of unlawful and unfair discrimination
and values the difference that a diverse
workforce brings to the Company. The Company
has policies applicable to all colleagues in
furtherance of these commitments and will
continue to focus on developing these in FY26.
Disabled people
The Group seeks to ensure that disabled
people, whether applying for a vacancy
or already in employment, receive equal
opportunities in respect of job vacancies that
they are able to fulfil. They are not discriminated
against on the grounds of their disability
and are given full and fair consideration
of applications, continuing training while
employed, and equal opportunity for career
development and promotion. Where an existing
colleague suffers a disability, it is our policy
to retain them in the workforce where that
is practicable.
Ethical conduct
The Board is committed to ensuring that all
employees, customers and suppliers act in
an ethical manner. The Group has policies in
place relating to, among other matters, anti-
bribery and corruption, anti-money laundering,
insider trading, child labour, human rights and
sanctions.
See further detail on pages 96 to 159.
Going concern
The Board is satisfied that the Group will be
able to operate within the levels of its facilities
and resources for the foreseeable future and
deems it appropriate to adopt the going
concern basis in preparing the financial
statements. This is outlined in more detail in
the Going concern statement on page 62.
Additional information
Political donations
No political donations were made and no
political expenditure was incurred during
the year (FY24: €Nil). The Company has an
established policy of not making donations
to any political party.
Dividends
The Board has recommended a full year
dividend of 9.6 Euro cents per share subject to
the approval of shareholders at the 2026 AGM.
Significant post-balance sheet events
In November 2025 the Group completed a
significant refinancing. For full details please
refer to the Finance Review page 51.
Under the Company’s share buyback
programme, a second €50m tranche was
commenced on 28 October 2025, with
around 90% expected to complete by mid-
January 2026.
Articles of Association
The Company’s Articles of Association may
only be amended by a resolution passed
at a general meeting of the shareholders.
Rules of Procedure
The Rules of Procedure provide for an internal
division of tasks, procedures and decision-
making of the Board. In performing their duties,
the Directors shall comply with these rules.
94 Pepco Group N.V. Annual Report 2025
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Research and development
The Group designs products for sale in stores
and has arrangements with suppliers for
the development of goods. The Group has
also invested in the use of more sustainable
products and packaging (see the Sustainability
Statement on pages 96 to 159 for further details]).
Change of control
The Senior Facilities Agreement provides
that if the Company is delisted or otherwise
removed from the WSE, or all or substantially
all of the assets of the Group are sold in a
single transaction or a series of transactions,
the Company is required to notify the finance
agent. Following a negotiation period,
the lenders have a right to cancel their
commitments upon giving 30 days’ notice.
Board of Directors’ statement
The Board is responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
The Board of Directors hereby represents, to
the best of its knowledge, that the statutory
financial statements of the Company, and its
consolidated subsidiaries for the year ended
30 September 2025 are prepared in accordance
with the applicable accounting standards and
that they give a true and fair view of the assets,
liabilities, financial position, and results of the
Company and its consolidated subsidiaries,
and that the report of the Board of Directors
for the year ended 30 September 2025 gives
a true and fair view of the position of the
Company and its consolidated subsidiaries as
at 30 September 2025 and of the development
and the performance of the Company and its
consolidated subsidiaries during the year ended
30 September 2025, including a description of the
key risks that the Company is confronted with.
The Board confirms that:
i. the report provides sufficient insights into any
failings in the effectiveness of the internal
risk management and control systems;
ii. the aforementioned systems provide
reasonable assurance that the financial
reporting does not contain any material
inaccuracies;
iii. based on the current state of affairs, it
is justified that the financial reporting is
prepared on a going concern basis; and
iv. the report states those material risks
and uncertainties that are relevant to the
expectation of the Company’s continuity
for the period of 12 months after the
preparation of the report.
Stephan Borchert
Chief Executive Officer
14 January 2026
Frederick Arnold
Independent Non-Executive Chair
14 January 2026
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As communication professionals, our role, goes beyond sharing
information, we ensure it’s understood. Well-informed teams create
an engaging store environment, so we make sure all Pepco projects are
clearly communicated and never lost in translation. In every message,
I reinforce our internal priorities: quality, sustainable production, reduced
packaging, and our commitment to low, family-friendly prices.
Ana Margarida
Country Communication Support Specialist
Sustainability statement
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General disclosures
Disclosure requirements index 98
General basis for the preparation of the Sustainability Statement 100
Governance 101
Strategy, business model and value chain 104
Our material impacts, risks and opportunities 107
Conducting our double materiality assessment 112
Environment
E1: Climate change 113
EU Taxonomy 121
Social
S1: Own workforce 127
S2: Workers in the value chain 145
Governance
G1: Business conduct 149
Appendices
Appendix 1: Data points that derive from other EU legislation 152
Appendix 2: Emission factors applied to Scope 1-3 GHG
emissions
158
Contents
Welcome to the Pepco Group’s Sustainability Statement for 2025. This
is our first year of reporting of ESG progress against the EU Corporate
Sustainability Reporting Directive (CSRD) and European Sustainability
Reporting Standards (ESRS). As such, our report is structured based on
the topical standards of the ESRS. Each section takes its starting point
in the impacts, risks and opportunities material to our business. We then
detail the key policies, actions and targets that address these topics.
This year the Group completed its first ESRS-aligned double materiality assessment,
which identified topics with the greatest relevance to the Group and its stakeholders.
The Sustainability Statement was compiled on the basis of the double materiality
assessment and includes the following topical standards: ESRS E1 Climate change, ESRS
S1 Own workforce, ESRS S2 Workers in the value chain and ESRS G1 Business conduct.
The statement also includes the mandatory disclosures required under the ESRS 2 General
disclosures standard.
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General disclosures
IRO-2
The following index lists all the ESRS disclosure requirements in ESRS 2 and the four topical
standards that are material to the Pepco Group and have guided the preparation of our
Sustainability Statement. The index can be used to navigate to information relating to a specific
disclosure requirement within the Sustainability Statement, and also shows where we have utilised
incorporation by reference for disclosure requirements that are dealt with outside the Sustainability
Statement and consequently sit in the Governance section of this report or in the Remuneration
Report which forms part of the Pepco Group FY25 Annual Report.
Standard Section Page
ESRS 2 – General disclosures
BP-1 General basis for preparation of the Sustainability Statement 100
BP-2 Disclosures in relation to specific circumstances
100
BP-2 Disclosures on value chain estimates and
measurement uncertainties
101
GOV-1 The role of the administrative, management and
supervisory bodies
/
101
GOV-1 Characteristics of the supervisory board and management
members
/
101
GOV-2 Information provided to and sustainability matters addressed
by the undertaking’s administrative, management and
supervisory bodies
101
GOV-3 Integration of sustainability-related performance in
incentive schemes
102
83
GOV-4 Statement on due diligence
103
GOV-5 Risk management and internal controls over
sustainability reporting
103
Key:
Sustainability
Statement
Governance section of
Management Report
Remuneration Report
Incorporation by
reference
Disclosure requirements index
Standard Section Page
SBM-1 Strategy, business model and value chain 104
SBM-2 Interests and views of stakeholders
106
SBM-3 Material impacts, risks and opportunities and their interaction
with strategy and business model
107
SBM-3 Changes to the material impacts, risks and opportunities
from previous year
107
IRO-1 Description of the processes to identify and assess material
impacts, risks and opportunities
112
IRO-2 Disclosure requirements in ESRS covered by the
undertaking’s sustainability
112
IRO-2 Determining thresholds for inclusion in the Sustainability
Statement
112
IRO-2 Data points that derive from other EU legislation
152
E1 – Climate change
GOV-3 Integration of sustainability-related performance in
incentive schemes
102
E1-1 Transition plan for climate change mitigation
113
SBM-3 Material impacts, risks and opportunities and their interaction
with strategy and business model
113
IRO-1 Description of the processes to identify and assess material
climate-related impacts, risks and opportunities
113
E1-2 Policies related to climate change mitigation and adaptation
114
E1-3 Actions and resources in relation to climate change policies
115
E1-4 Targets related to climate change mitigation and adaptation
116
E1-4 Stakeholder involvement in target setting
116
E1-5 Energy consumption and mix
117
E1-6 Gross Scope 1, 2, 3 and total GHG emissions
118
E1-6 GHG emissions disaggregated by value chain stage
118
E1-8 Internal carbon pricing
118
98
Pepco Group N.V. Annual Report 2025
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Financial
statements
Sustainability
statement
Other
informationSustainability statement
Standard Section Page
S1 – Own workforce
SBM-3 Material impacts, risks and opportunities and their interaction
with strategy and business model
129
S1-1 Policies related to own workforce
133, 136,
137, 138,
139, 141,
143
S1-2 Processes for engaging with own workers and workers’
representatives about
132
S1-3 Processes to remediate negative impacts and channels
for own workers to raise concerns
132
S1-4 Actions and resources related to own workforce
133, 118,
136, 137,
138, 140,
141, 142,
144
S1-5 Targets related to managing material negative impacts,
advancing positive impacts, and managing material risks
and opportunities
Stakeholder involvement in target setting
134, 136,
137, 138,
140, 141,
142, 144
S1-6 Characteristics of the undertaking’s employees
128
S1-9 Diversity metrics
129
S1-10 Adequate wages
139
S1-14 Health and safety metrics
134
S1-16 Remuneration metrics (gender pay gap)
143
S1-16 Remuneration metrics (total remuneration ratio)
143
S1-17 Incidents, complaints and severe human rights impacts
140
Standard Section Page
S2 – Workers in the value chain
SBM-3 Material impacts, risks and opportunities and their interaction
with strategy and business model
145
S2-1 Policies related to value chain workers
146
S2-2 Processes for engaging with value chain workers about impacts
147
S2-3 Processes to remediate negative impacts and channels for value
chain workers to raise concerns
147
S2-4 Actions and resources related to value chain workers
147
S2-4 Severe human rights incidents
147
S2-5 Targets related to managing material negative impacts,
advancing positive impacts, and managing material risks
and opportunities
148
S2-5 Stakeholder involvement in target setting
148
G1 – Business conduct
IRO-1 Description of the processes to identify and assess material
impacts, risks and opportunities
149
G1-1 Corporate culture and business conduct policies and
corporate culture
149
G1-1 Reporting business conduct incidents
150
G1-2 Management of relationships with suppliers
151
G1-3 Prevention and detection of corruption and bribery
150
G1-3 Process to report outcomes to administrative, management
and supervisory bodies
150
G1-4 Confirmed incidents of corruption or bribery
150
G1-4 Actions taken to address breaches in procedures and standards
of anti-corruption and anti-bribery
150
Key:
Sustainability
Statement
Governance section of
Management Report
Remuneration Report
Incorporation by
reference
99 Pepco Group N.V. Annual Report 2025
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Sustainability
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Other
information
General basis for the preparation of the Sustainability Statement
BP-1, BP-2
Scope of consolidation, coverage of value chain and other basis of preparation
information
Although the CSRD has not been transposed and implemented in Dutch law on the date of this
Annual Report, the Pepco Group has prepared the accompanying statement in accordance
with the ESRS adopted by the European Commission. The Sustainability Statement also meets
the specifications adopted pursuant to Article 8 (4) of the Taxonomy Regulation (Regulation (EU)
2020/852 of the European Parliament and of the Council.
The statement has been prepared in consolidated form. The information, data, indicators and
assertions contained in the statement refer to the same reporting entity referred to in the financial
statements, i.e. the entire Pepco Group, unless stated otherwise. The phrases “Pepco Group”,
“the Group” and “the Company” mean the parent company, Pepco Group N.V. together with
its subsidiaries subject to consolidation. The scope of consolidation in the statement corresponds
to the consolidated financial statements for the period from 1 October 2024 to 30 September 2025
and covers the same companies (see 224).
The Group completed the sale of Poundland on 12 June 2025. Unless otherwise stated, FY25 metrics
include Poundland data up to the disposal date. Data was collected for the nine months ended
30 June 2025 and then adjusted on a pro-rata basis to exclude the period from 12 to 30 June 2025
1
.
This ensures that Poundland is reflected in Group reporting only up to its final full day of operations
within the Pepco Group (11 June 2025). Baseline values and targets are expected to be revised
to exclude the Poundland operating unit in FY26.
The statement includes information on material impacts, risks and opportunities and takes into
account the Group’s direct and indirect business relationships across its value chain, i.e. both
own operations as well as upstream and downstream value chain.
The Pepco Group has not used the option to omit a specific piece of information corresponding
to intellectual property, know-how or the results of innovation. The Group also did not use the
exemption from disclosure of subsidiaries provided for in articles 10a (3) and 29a (3) of Directive
2013/34/EU.
Throughout the Sustainability Statement we refer to several Company policies. The key contents
of the policy and its scope or any exclusions are provided in the relevant sections. Unless otherwise
stated, the Group’s Legal and Compliance team manages the development, review and renewal
of corporate business conduct and responsible sourcing policies, the Group’s ESG team manages
the development, review and renewal of the environmental policy and the Group’s HR team
manages the development, review and renewal of employee-related policies. The Board is
responsible for approving Group policies and has overall accountability for their implementation.
Any third-party standards or initiatives that are respected through implementation of the policy
are disclosed as relevant. Comments from key stakeholder groups are included as part of policy
development, review and renewal.
In the Sustainability Statement, unless otherwise stated, the Group uses definitions of time horizons
in accordance with ESRS 1: a short-term horizon covering a period of 1 to 12 months; a medium-term
horizon meaning a period from 1 to 5 years; and a long-term perspective – a timeframe of more
than 5 years.
Limited assurance procedures were performed by EY Accountants B.V. For further details we refer
to the assurance report Limited assurance report of the independent auditor on the sustainability
statement on page 220. The metrics within the Group’s Sustainability Statement have not been
subject to separate external verification.
The Group has omitted the following information for the first year of preparation of its Sustainability
Statement in accordance with Appendix C of ESRS 1 which sets phase-in provisions for the disclosure
requirements:
• ESRS 2 SBM-1 paragraph 40(b) breakdown of total revenue by significant ESRS sector and 40 (c)
list of additional ESRS sectors
• Material impacts, risks and opportunities and their interaction with strategy and business model:
ESRS 2 SBM-3 paragraph 48 (e) (anticipated financial effects)
• Anticipated financial effects from material physical and transition risks and potential climate-
related opportunities: ESRS E1 (E1-9)
• Policy information and metrics related to characteristics of non-employees in the undertaking’s
own workforce: ESRS S1 (S1-7)
• Metrics related to social protection: ESRS S1 (S1-11)
• Metrics related to training and skills development: ESRS (S1-13)
• Metrics related to health and safety: ESRS S1 (S1-14) (reporting on non-employees, cases of work-
related ill health and numbers of days lost to injuries, accidents, fatalities and work-related ill-health)
• Metrics related to work-life balance: ESRS S1 (S1-15)
The statement uses incorporation by reference through a reference to the Governance Report of the
Group. Additionally, references to various sections of the statement containing related information
are included throughout the document.
1. Nine months of data to end of 30 June 2025 was divided by 273 and multiplied by 254 to adjust for the reporting period.
General disclosures
100 Pepco Group N.V. Annual Report 2025
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Financial
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Sustainability
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Other
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Sources of estimation and uncertainty
Metrics are prepared in accordance with the definitions as set out in the ESRS, unless stated
otherwise. Any Pepco Group-specific definitions are included where applicable.
In E1, measurement uncertainty is primarily related to conversions applied to harmonise the
input data used in Scope 1, 2 and Scope 3 GHG emissions. In addition, due to the timing of data
availability, E1 energy consumption and emissions have been prepared using ten months of actual
input data and two months of estimated data.
S1-16 metrics have been prepared using 11 months of actual input data and one month of estimated
data, with the exception of head office employees in the UK and sourcing employees in India and
Bangladesh where actual data is reported for 12 months. Further adjustments have been made
in relation to employees on long-term absence for over three months and mid-year starters. For
further details please refer to section S1-16. In S1-14, the number and rate of recordable work-related
accidents for employees has been estimated based on data for employees in Poland for the first
nine months of the year (in the final three months of the year data is based on country by country
reporting rather than estimated based on Poland). For further details please refer to section S1-14.
Value chain estimates are mostly prevalent in Scope 3 GHG emissions. Where we have not been
able to directly measure metrics, we have estimated them using internal and external data from
a variety of sources. Some value chain metrics disclosed under ESRS E1, especially Scope 3 GHG
emissions, are based on indirect sources, including secondary emission factors, supplier invoices
and spend-based models. We are continuously working to increase the use of high-quality primary
data and improve transparency and accuracy across the value chain.
Where applicable, we have further disclosed the source of uncertainty and the key assumptions,
approximations and judgements made to arrive at that estimate in the relevant section of the report.
Comparative information
This year is the first year the Group has presented its Sustainability Statement in accordance with
ESRS standards and therefore the Group reports no changes in the preparation or presentation
method or errors of previous periods. For the first year of reporting, the ESRS does not require
comparative information and therefore no comparatives have been presented in this report.
Governance
GOV-1, GOV-2
Oversight of sustainability matters
As a Group, we are committed to responsible business conduct, strong corporate governance,
sustainability and transparency, aligning performance with our long-term goals. We have
established governance frameworks aimed at ensuring the effective operation of our Board,
protecting stakeholder interests, maintaining business resilience and building trust.
The Company is organised in a one-tier Board structure, under which managing and supervisory
duties are performed by the Board of Directors of the Company (the Board). The Board is responsible
for the direction and oversight of the Company and is accountable for all aspects of the Company’s
business. The Company’s corporate governance structure is based on the Articles of Association,
the Board of Directors Rules of Procedure (Board Rules), and the terms of reference of the Board’s
Committees, as well as applicable laws and regulations.
We have a strong, experienced Board, with a diverse range of professional backgrounds, skills and
perspectives. As at year end, the Board comprised a total of five Directors-one Executive Director
and four Non-Executive Directors, three of whom are considered independent (60%) within the
meaning of the Dutch Corporate Governance Code and the Code of Best Practices for WSE Listed
Companies, and one of whom is not considered independent within the meaning of the applicable
Codes. As at year end, the percentage of female Board members is 20%, while the percentage
of male board members is 80%, resulting in a gender diversity ratio of 1:4. When considering
nominations of new Board members, account is taken of the following diversity aspects: nationality,
work background, gender, age, and qualifications (including education and expertise).
During the financial year, there were several changes to the composition of the Board, which
are detailed in the Appointment and composition of the Board sub-section of the Corporate
governance statement of the Annual Report on page 70. These changes had the primary effect
of creating a smaller, agile Board while retaining the relevant skills and expertise needed to oversee
the management of the business. Consequently, there were no new Board appointments formalised
in the year-ended 30 September 2025 and no significant changes to the overall mix of relevant
skills and expertise.
The Board takes overall accountability of business conduct within the Group, with day-to-day
oversight from the management team. The Board and Audit Committee receive regular feedback
from management related to business performance and risks, including with respect to sustainability.
The Internal Audit and Risk teams report directly to the Audit Committee to ensure independence.
While there are no formal employee representatives appointed to the Board, regular Executive
Committee meetings provide an opportunity to discuss feedback and escalate to the Board as
required. The Group’s Chief Human Resources Officer (CHRO) attends Executive Committee meetings
to represent and discuss core employee issues.
Further detail regarding the Board identity, composition and individual experience as at
30 September 2025 is covered in our Corporate governance statement detailed on page 71.
This includes the relevant skills and expertise to oversee business matters and how they relate
to Pepco Group’s impacts, risks and opportunities. We recognise that there is room for increased
sustainability expertise on our Board and will continue to look for opportunities to strengthen
that skillset within our Board, including through “deep-dives” with relevant members of the Pepco
Executive Committee and the Head of ESG.
The accountability for governing Pepco Group’s material sustainability impacts, risks and
opportunities reflects the Group’s overarching governance structure. While the Board takes overall
accountability for Group sustainability governance, responsibility for the management of material
sustainability impacts, risks and opportunities is delegated to the CFO. The Group’s sustainability
strategy, activities and progress are reported quarterly to the Audit Committee, which is responsible
for making recommendations and seeking approval from the Board as appropriate.
The Pepco Executive Committee is responsible for monitoring the integration of sustainability
activities with business objectives. It also approves the direction and scope of ESG activities,
supervising progress in the implementation of the sustainability strategy and managing
and monitoring targets on an ongoing basis.
101
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reportIntroduction Governance
Financial
statements
Sustainability
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Other
information
Role of supervisory bodies
The Board receives additional contribution on sustainability matters from the following Board
sub-committees:
• The Audit Committee’s terms of reference include responsibility for non-financial disclosures
in our Annual Report which encompasses disclosures under the ESRS and review of any internal
and external assurance activities obtained over the disclosures. In the reporting period the Audit
Committee also reviewed sustainability-related impacts, risks and opportunities as part of their
review of the double materiality assessment.
• The Remuneration Committee supports the delivery of the sustainability strategy through the
alignment of executive remuneration schemes to the sustainability strategy and goals and
targets.
• The Nomination Committee is responsible for ensuring that the composition of the Board includes
sufficient skills and experience, including as needed to effectively deliver on the sustainability
agenda. The terms of reference require the Nomination Committee to ensure the Board has the
appropriate diversity with respect to expertise, experience and competencies.
Role of management in addressing IROs
Our refreshed sustainability strategy “Where Growth Meets Care” aligns with our overall value
creation plan and corporate strategic framework. It comprises three pillars: People, Value Chain
and Customers. In FY25, the Group conducted an updated and ESRS-aligned double materiality
assessment (DMA) which identified our material impacts, risks and opportunities (IROs). The ESG
Executive Committee members were engaged in the DMA process as executive stakeholders.
Material topic and IRO outcomes were reviewed and approved by the ESG Executive Committee
as well as the Audit Committee. Broad alignment between the pillars of our sustainability strategy
and our material topics reinforces the strategic direction we have set.
To support accountability and performance across the Group’s sustainability strategy, responsibility
for each strategic pillar and goal is allocated at the executive level. Implementation is managed
at an operational level, with cross-functional collaboration to monitor progress and address key risks.
Governance structures are in place to ensure that material issues are escalated appropriately.
The Group Head of ESG leads the Group’s ESG team, which comprises three sustainability
professionals and a Head of ESG Reporting. They work closely with the relevant business unit
leadership and functional teams to embed sustainability impacts, risks and opportunities into
their strategies, and to ensure progress against actions and targets is monitored. The ESG team
supports decision-making by providing regular updates on sustainability progress and emerging
risks to relevant governance bodies. Our supply chain and procurement functions are also critical
to supporting the delivery of our sustainability strategy through collaboration with our suppliers
and other value chain partners, as well as managing key supply chain related risks.
Our Board and Executives bring a diverse set of skills and experiences including in areas related to
ESG matters. An explanation of the process for appointing Directors to the Board and considerations
when selecting new members of senior leadership can be found in the Nomination Committee report
on page 81. Collectively our Executive Leadership team possesses a strong understanding of retail
operations, environmental and carbon reduction initiatives, business conduct, HR and responsible
supply chain matters. The Board and Executive Leadership team are supported by subject matter
experts in each of these areas through our ESG team, our Internal Audit and Sourcing function and
Compliance and Legal teams.
Material risks identified through the DMA process have been incorporated into the Group’s ESG risk
category within the Group Enterprise Risk Management framework to ensure a cohesive approach
to the management of impacts, risks and opportunities, and alignment between frameworks.
Regular ESG team and business owner meetings are focused on reviewing key risks and areas
for development with respect to sustainability, and provide a forum for business leaders to discuss
these issues and identify where further expertise is required.
The ESG Executive Committee receives a monthly update from the Head of ESG on material ESG
impacts, risks and opportunities, the implementation of due diligence and the performance and
effectiveness of policies, activities, metrics and targets, as well as considering trade-offs associated
with those impacts, risks and opportunities. The ESG Committee takes this into account when
overseeing strategy, key transactions and investment decisions and risk management, which
embeds a comprehensive approach to sustainability and responsible management. Compromises
in relation to our impacts, risks, and opportunities are only accepted if there are no breaches
of the law and, at the same time, all relevant codes and sustainability targets are complied with.
In addition, the Audit Committee receives a quarterly update on our ESG strategy, reporting
and activities. In FY25 these updates have focused on the double materiality assessment analysis
including reviewing all material IROs identified and preparation of due diligence processes for CSRD
reporting. The double materiality analysis review included an explanation of the process undertaken
and the material impacts, risks and opportunities identified. The Audit Committee also receives
regular updates regarding the Group’s supplier factory audit programme (described in more detail
in S2: Workers in the value chain section on page 145).
Integration of sustainability-related performance in incentive schemes
GOV-3
Executive pay is linked to sustainability performance through STIP and LTIP schemes (see page 84).
The STIP is an annual bonus arrangement designed to align the interests of Executive Directors to
those of the Company and deliver reward only where performance warrants it. In FY25 the bonus
payable to any Executive Director will be a maximum of 150% of base salary and is paid entirely in
case following the determination of the performance conditions being met.
As detailed in our Directors’ Remuneration Policy (which is reviewed and approved by shareholders
every three years) bonus payouts are determined on the satisfaction of a range of key financial
and strategic/personal objectives which are set annually by the Remuneration Committee. No more
than 20% of the overall bonus opportunity will be payable by reference to performance against
strategic and personal targets. Key financial measures include any combination of EBITDA, return on
investment and other corporate financial measures, whilst strategic objectives include ESG measures
such as ethical sourcing KPIs. In FY25, 80% of the maximum payout is conditional upon the delivery
of the Group’s EBITDA target and 20% is conditional upon strategic KPIs. Specifically, 4% of the CEO
and CFO bonus will be measured against the 100% completion of factory audits against our annual
supplier factory audit plan. For further details of this metric please refer to the Targets and metric
sub-section of the S2: Workers in the value chain section on page 145.
102
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GOV-4
Statement on due diligence
The Group’s approach to responsible business embeds human rights and environmental matters into
our due diligence processes. The mechanisms to identify, mitigate and account for how we address
actual and potential negative environmental and human rights impacts are detailed throughout
our Sustainability Statement. The table below provides a mapping of the core elements of our due
diligence approach.
Core elements of due
diligence Paragraphs in Sustainability Statement
Embedding due diligence
in our governance,
strategy and business
model
• ESRS 2 GOV-2: Information provided to and sustainability matters
addressed by the undertaking’s administrative, management and
supervisory bodies
• ESRS 2 GOV-3: Integration of sustainability-related performance
incentive schemes
• ESRS 2 SMB-3 Material impacts, risks and opportunities and their
interaction with strategy and business model
Engaging with affected
stakeholders
• ESRS GOV-2: Information provided to and sustainability matters
addressed by the undertaking’s administrative, management
and supervisory bodies
• ESRS 2 SBM-2: Interests and views of stakeholders
• ESRS 2 IRO-1: Description of the processes to identify and assess
material impacts, risks and opportunities
• Topical ESRS: Reflecting the different stages and purposes of
stakeholder engagement throughout the due diligence process
Identifying and assessing
adverse impacts
• ESRS 2 IRO-1: Description of the processes to identify and assess
material impacts, risks and opportunities
• ESRS 2 SBM-3: Material impacts, risks and opportunities and their
interaction with strategy and business model
Taking actions to address
those adverse impacts
• Topical ESRS: Reflecting the range of actions through which
impacts are addressed
Tracking the effectiveness
of these efforts and
communicating the
results
• Topical ESRS regarding metrics and targets
GOV-5
Risk management and internal controls for ESG reporting
The Group’s Enterprise Risk Management (ERM) framework has been designed to consistently
identify, assess, manage and monitor material risks, including those in relation to sustainability
reporting. It defines our approach to governance and integrated decision-making, as well as our
target risk culture and the corresponding roles, responsibilities and behaviours expected across the
organisation. The ERM framework risk assessment criteria was consistently applied through the DMA
process to ensure alignment and act as a bridge between the two processes. Through the risk
and DMA process, we have identified a number of material risks, across strategic, operational,
compliance, financial and data governance categories. The overarching framework helps us to
ensure we have a consistent approach and integrity in our reporting across risk and ESG.
We evaluate the effectiveness of our framework through an annual maturity assessment. Separate
evaluation of individual risk areas, including sustainability reporting, is conducted through our
developing internal controls programme and independent audits. Enhancements to our framework
are in progress, strengthening our approach and aligning with Dutch Corporate Governance
revisions, developing and rolling out a business-wide risk and control self-assessment approach,
with annual certification at executive level. This is designed to provide management with an
understanding of the certainty we have in relation to the effectiveness of our control environment.
Sustainability risks are highlighted through several channels, including regular risk workshops
conducted at multiple levels across the organisation and including a range of operational
colleagues, senior management and executive leaders, horizon scanning for new and emerging risks,
tapping into external sources, data points and benchmarking, strategic review and Internal Audit
findings. Mitigation of these risks include our ESG Governance and Executive Committee reporting
processes and implementation of our ESG strategic framework and Board-approved goals. We have
strengthened our sustainability reporting by extending internal control practices used in financial
reporting to our ESG data processes, including applying clear data governance and calculation
methodologies.
The Group CFO oversees our Sustainability Statement as a whole and is responsible for the integrity
of ESG data and information. The Group CFO is supported by the Head of ESG in assessing
and managing risk in relation to sustainability reporting. A Topic Owner from the ESG Executive
Committee has been established for each of the four ESRS topics we are reporting on, with sub-
owners for the narrative and metrics elements of each topical standard also assigned. Metrics
owners are responsible for developing and documenting the basis of preparation for metrics,
which includes any definitions, assumptions and estimations. Narrative owners are responsible
for the collection and preparation of narrative disclosures. Narrative and metrics are signed off by
the respective owner and subject to review by the Topical Owner. The Audit Committee oversees
the reporting of ESRS information and reviews the processes and controls that are the basis for
its preparation. Limited assurance procedures are performed by EY.
103
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Strategy, business model and value chain
SBM-1
Our strategy and business model
Pepco Group is a leading variety discount retailer, specialising in clothing and general merchandise
through our Pepco brand, which has over 4,000 stores across 18 countries in Central, Eastern and
Western Europe. Pepco sells apparel for the whole family, as well as household goods and toys.
Pepco Group also owns Dealz, a small FMCG-led business in Poland.
The Pepco Group’s mission is to offer the lowest prices and the best value to families on a budget.
Our vision is to build Europe’s leading variety discount retailer and our purpose is to help customers
live better lives.
We employ over 31,500 employees
1
, generating €4.5bn of sales
2
. As a large, global retailer, we
recognise the importance of sustainable business practices as part of long-term value creation.
Our stakeholders increasingly expect responsibility, transparency, and trust from the brands and
products they choose.
Following a strategic review, at our Capital Markets Day in March 2025, Pepco Group set out a new
five-pillar strategic framework to drive the business into its next phase of growth. This sharpened
framework is designed to focus and modernise our business and ensure we operate with the
discipline needed to generate sustainable, long-term and profitable growth. Our refined business
strategy defines how Pepco will grow through operational efficiency, network expansion, and
portfolio simplification — while embedding care, responsibility, and
future-readiness at the core of our journey.
Our values — Care for colleagues, Give our best, Love our customers — remain the foundation
of this transformation. They define who we are. Our sustainability strategy, Where Growth Meets
Care, turns our values into action, making growth and care interdependent: care ensures our growth
is sustainable, and growth expands our ability to care. It comprises three pillars: People, Value
Chain and Customers. The material topics identified through our DMA are broadly aligned with
these three pillars although we recognise business conduct topics are not explicitly embedded.
These topics are managed through our corporate governance programmes as detailed in the G1:
Business conduct section.
Value chain
Our value chain comprises the activities required to design, manufacture, source and sell our
products. Our own operations focus on our retail estate of over 4,000 stores across 18 countries
where we sell our products. Our store network is supported by our vertically integrated sourcing
model which provides direct product sourcing, product development and technical services. Key
warehousing infrastructure and transport and logistics operations enable the movement of products
from our suppliers into our stores.
Our upstream value chain includes the processing, production and transportation of materials and
input goods such as cotton and wool required to produce our goods. Like most clothing retailers,
we do not own factories, but instead we work through our vertically integrated sourcing model
to partner with independent manufacturers to produce the goods we sell through a supply network
of vendors and factories.
Our downstream value chain includes the use, reuse, resale, recycling and disposal of our products.
Pepco’s business model relies on key inputs including products sourced from a diverse supplier
base, resources such as energy, water and fuel used across logistics, warehousing, retail stores and
offices, and effective governance and workforce capabilities. These inputs are supported by internal
systems and infrastructure that ensure operational efficiency and responsible decision-making,
guided by the Group’s policies and sustainability ambitions. This generates outputs including
product sales, emissions, packaging and product waste. These outputs lead to outcomes that vary
by stakeholder: customers benefit from product quality and service satisfaction, fostering loyalty and
trust; investors gain from financial results, resilience, and ESG risk management supporting long-term
value; and society and the environment experience impacts related to energy, emissions and supply
chain responsibility.
1. Headcount at year-end for Pepco Group excluding Poundland as set-out in S1: Own workforce. For headcount by geographical
area, see S1: Own Workforce disclosures (page 128).
2. For segmented revenue information, see Financial Statements (page 45). As the Pepco Group operates in the retail sector and
all revenue relates to retail operations, no further breakdown is provided.
104 Pepco Group N.V. Annual Report 2025
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Other
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Our value chain
Raw material sourcing and processing
Suppliers of raw materials or base components
to Tier 2 factories
Retail stores
Sales to customers in our store network
Distribution centres
Distribution centres and warehouses which hold
products within our own operational boundary
Manufacturing processes
Suppliers undertaking manufacturing activities
that include washing, printing and dyeing
Primary manufacturing sites
Suppliers creating the finished product
Transportation and logistics of our products by our supply chain partners
Customer use
Clothing, homeware-led GM and FMCG
products used by our customers
End of product life
Waste management including re-use,
recycle and re-sale
Tier 3 Tier 2 Tier 1
Transportation and logistics within our own operations
Vertically integrated
sourcing model
Product creation
and development in
partnership with our
suppliers
Suppliers Employees CommunitiesCommunities CommunitiesInvestors Customers
Upstream
Own
operations
Downstream
Stakeholders
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SBM-2
Interests and views of stakeholders
We identify five groups of key stakeholders: our customers, our colleagues, our suppliers, our shareholders and the environment & communities. We engage with each of these groups through a range
of stakeholder engagement activities – see table below.
Stakeholder feedback is reflected in the Group’s operations and strategy on an ongoing basis through different engagement routes – for example customer listening circles, employee feedback surveys,
supplier training conferences and investor meetings.
We also engaged with stakeholder groups through our DMA process to identify and manage our material impacts, risks and opportunities in relation to ESG matters. The results of our DMA, including
stakeholder engagement, were presented to our ESG Executive Committee as part of our review and governance processes.
Stakeholder group Stakeholder interests and purpose of engagement How we engage Impact or outcome of engagement
Customers Customer engagement enables us to make informed decisions and tailor our
product offerings to match evolving customer preferences. Through our Where
Growth Meets Care sustainability strategy we aim to offer access to more responsible
product choices at an affordable price.
Customer surveys and
focus groups; materiality
assessments.
Customer research and market analysis is incorporated into
our buying and marketing strategies on an ongoing basis.
Employees Our 31,500+ employees are the heart of Pepco’s success. Their diversity of
backgrounds and perspectives helps us understand and serve millions of customers
every day. That is why we aim to create a workplace where everyone feels valued,
included, and empowered to thrive – enabling strong customer experiences, stable
teams, and sustainable business performance.
Employee surveys and
feedback; materiality
assessments.
The results of our employment survey are reflected in our
people strategy and employee management practices.
Suppliers Pepco’s operational success depends on a resilient and responsible supply chain and
operations. Our end-to-end value chain focuses on transparency and responsible
sourcing practices to support business continuity while managing environmental and
social impact.
Supplier engagement;
training and information
days; audit programmes;
materiality assessments.
Our supplier engagement model is based on a partnership
approach where we work with our suppliers to design and
produce quality products at an affordable price for our
customers.
Shareholders Our ambition, strategy and execution generate substantial shareholder value. With
high margins, strong cash conversion and a robust balance sheet, we can invest
to drive future growth through store expansion in new and existing markets and
strategic initiatives that enhance our share of customer spend, while also returning
surplus cash through annual dividends, share buybacks and special dividends,
as appropriate.
Investor presentations,
meetings and conferences
which provide an
opportunity for discussion
and feedback; materiality
assessments.
We regularly engage with existing and potential
investors, for example hosting a Capital Markets Day
in March 2025 and presenting our refined business
strategy update, including our sustainability strategy.
The insights and expectations of our shareholders help
shape our responsible business practices and inform value-
driven decision-making.
Environment and
communities
As a large multinational retailer, we recognise our responsibility to manage
our impacts on the environment and create products for customers that are
responsibly sourced.
Pepco is committed to supporting the communities in which we operate. Our
core customers are families on a budget and we work to ensure that every child,
especially those that are most vulnerable, has what they need to thrive through
initiatives such as back-to-school vouchers or free school supply packs.
Engagement with
environmental and
community focused NGOs
and through our Corporate
Social Responsibility teams;
materiality assessments.
Our environmental and social engagement covers a range
of activities including through our memberships, association
and accreditations with both international and local
programmes including Better Cotton Initiative and the
Responsible Business Forum Poland.
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Our material impacts, risks and opportunities
SBM-3
A summary of our material IROs is set-out below. The detailed ESRS-aligned analysis of the resilience of our strategy and business model to these IROs has not yet been carried out. In the reporting year,
these risks and opportunities did not lead to any changes to our overall strategy or business model. They also did not result in any material financial effects on our financial position, performance or cash
flows.
Material
topic
Impacts, risks
and opportunities Description
Where in the
value chain? Time horizon Key policies Key actions Targets
E1: Climate change
Climate
change
Actual negative
impact
Negative impact from GHG emissions
in our operations and our value
chain on the environment.
• Environment Policy
• Supplier Code
of Ethics
(environmental
considerations)
FY25 focus:
• Energy efficiency
initiatives within our own
operations
• Switching to renewable
energy within our own
operations
Future focus areas:
• Green logistics and
transportation
• Product-related carbon
impacts
• Supply chain emissions
• Reduce Scope 1
& 2 GHG
emissions by 50%
by 2030*
• Reduce Scope 3
GHG emissions
by 25% by 2035*
* Against FY24 baseline
year
Physical risk Changing climate and the impact
of extreme weather events damaging
or disrupting the Group’s operations
or those of its supply chain, leading
to increased financial costs.
Transition risk Climate change, resource scarcity
and sourcing complexity leading
to increased operational costs.
Energy Transition risk Energy price fluctuations as a result
of climate change and geopolitical
uncertainty.
• No specific policy
aligned to IRO
Time horizon Value chain
Upstream Own operations DownstreamShort-term Medium-term Long-term
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Material
topic
Impacts, risks
and opportunities Description
Where in the
value chain? Time horizon Key policies Key actions Targets
S1: Own workforce
Health and
safety
Potential negative
impact
Work-related health and safety
incidents can lead to injury, disability
and mortality.
Health and Safety
Policy
FY25 focus:
• Launch of Health and
Safety Policy
Future focus areas:
• Strengthen Health
and Safety through
expanded guidance,
audits, unified reporting,
and employee feedback
to build a safer, more
resilient workplace
N/A
1
Working time Risk Unpredictable working patterns
risk undermining wellbeing, causing
absenteeism and turnover, and
reducing ability to attract and retain
retail talent.
N/A Future focus areas:
• Developing Pepco Group
Working Time Policy
• Continued roll-out of
electronic time tracking
with clock-in/out
functions
• Local monitoring and
management oversight
N/A
1
Secure
employment
Risk Overreliance on temporary contracts
risks lower engagement and
productivity and higher turnover costs.
N/A Future focus areas:
• Develop Group Secure
Employment Policy
N/A
1
Adequate
wages
Risk Insufficient pay may reduce Pepco
Group’s ability to attract and retain
talent, while ensuring adequate
wages support workforce stability
and mitigate operational risk.
Global Pay Guidelines FY25 focus:
• Consistent use of
external benchmarking
and stable annual salary
review processes
• Launch of Global Pay
Guidelines
Future focus areas:
• Developing indicators
related to adequate
wages
N/A
1
1. Although we do not currently set targets for most S1 topics we intend to review this in the future. Please see S1 section for more details.
Time horizon Value chain
Upstream Own operations DownstreamShort-term Medium-term Long-term
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Material
topic
Impacts, risks
and opportunities Description
Where in the
value chain? Time horizon Key policies Key actions Targets
S1: Own workforce
Gender
equality
Risk Reduced talent attraction and
retention due to insufficient gender
diversity and unequal opportunities
for progression and pay amongst
the Group's female employees.
Global Pay Guidelines FY25 focus:
• Launch of Global Pay
Guidelines
Future focus areas:
• Launch mentorship
programme, integrate
DEI policy Group-wide
40% women in
senior positions
by 2030
Measures
against
violence and
harassment
Risk Operational disruption, increased
attrition and potential litigation
due to violence or harassment in
the workplace resulting in employee
harm and distress.
Difficult Case
Procedure
FY25 focus:
• Centralised case
tracking via Safecall, and
updated Difficult Case
Procedure for Pepco.
• Poundland entity-
specific colleague safety
programme
Future focus areas:
• Training for colleagues
on violence and
harassment prevention
N/A
1
Forced and
child labour
Potential negative
impact
Forced and child labour breaches
fundamental human rights and
undermines people’s wellbeing,
creating a material impact.
Human Rights Policy FY25 focus:
• Localised right-to-work
verification procedures
• Group-wide rollout of
whistleblowing and
grievance mechanisms
Future focus areas:
• Use of HR systems and
payroll providers to verify
age and legal working
status
N/A
1
Risk Such incidents also expose the
Company to significant risks, including
reputational damage, investor
divestment, regulatory penalties,
and litigation.
1. Although we do not currently set targets for most S1 topics we intend to review this in the future. Please see S1 section for more details.
Time horizon Value chain
Upstream Own operations DownstreamShort-term Medium-term Long-term
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Material
topic
Impacts, risks
and opportunities Description
Where in the
value chain? Time horizon Key policies Key actions Targets
S2: Workers in the value chain
Child and
forced labour
Potential negative
impact
Incidents of forced and child labour
violate human rights and wellbeing.
• Supplier Code of
Ethics
• Child Labour Policy
• Factory Audit Policy
• Supplier screening,
risk assessment and
onboarding
• Factory audits
• Supplier training
programmes
• 100% of Pepco
own-brand
products
sourced through
our PGS sourcing
arm are made
in Category 1-3
factories
• 100% of factories
are audited
against our
annual supplier
factory audit
plan
Risk Pepco Group’s exposure to this
through the value chain may result
in significant reputational damage,
fines and litigation.
Measures
against
violence and
harassment
Potential negative
impact
Workplace violence and harassment
in supplier and factory settings
violates human rights and wellbeing.
Risk Incidents in the value chain could
pose risks including reputational
damage, investor divestment,
fines and litigation.
Health and
safety
Potential negative
impact
Health and safety incidents result in
value chain worker injury, particularly
where significant volumes of goods
are stored or heavy machinery
is operated.
Time horizon Value chain
Upstream Own operations DownstreamShort-term Medium-term Long-term
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topic
Impacts, risks
and opportunities Description
Where in the
value chain? Time horizon Key policies Key actions Targets
G1: Business conduct
Corruption and
bribery
Risk Fines, litigation and reputational
damage due to inadequate due
diligence and anti-bribery controls,
leading to exposure to unethical
practices that may also affect
product quality and cost.
• Anti-bribery Policy
• Whistleblowing
Policy
• Code of Ethics
• Supplier Code of
Ethics
• Conflict of Interest
Policy
• Gifts and
Hospitality Policy
• Anti-bribery and
corruption risk mapping
exercises
• Anti-bribery and
corruption and
whistleblowing training
programmes
N/A
1
Protection of
whistleblowers
Risk Increased litigation, reputational
damage, and reduced employee
morale due to inadequate
whistleblower protection or channels,
allowing ethical or legal breaches
to go unreported and harming
whistleblower wellbeing
Management
of relationship
with suppliers
Risk Fines, litigation and reputational
damage due to inadequate due
diligence and management practices,
leading to exposure to ethical
breaches such as unclear supplier
ownership.
1. Due to the nature of material topics the Group has not set targets in relation to G1: Business Conduct topics
Time horizon Value chain
Upstream Own operations DownstreamShort-term Medium-term Long-term
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Conducting our double materiality assessment
IRO-1, IRO-2
In order to identify and prioritise sustainability matters along our value chain, in FY25 we completed
our first ESRS-aligned double materiality assessment (DMA). In completing this assessment we
built on our previous materiality approach, enhancing our stakeholder analysis and aligning
to ESRS requirements.
The DMA takes both impact and financial materiality into account:
• Impact materiality: the impact of the Pepco Group outwards on society and the environment
• Financial materiality: the sustainability-related risks or opportunities that could reasonably be
expected to affect the Company’s financial performance, cash flows or enterprise value
Due diligence is an on-going practice that responds to and may trigger changes in the Company’s
strategy, business model, activities, business relationships, operating, sourcing and selling contexts.
The DMA process requires the Company to make key judgements and use thresholds. Therefore,
the Sustainability Statement may not include every impact, risk and opportunity or additional
entity-specific disclosure that each individual stakeholder group may consider important in its
own particular assessment.
Description of the processes to identify and assess material impacts,
risks and opportunities
Our DMA comprised four stages:
1. Identification
• Value chain mapping and landscape review – A review of activities across the Pepco Group
value chain, considering upstream, downstream and own operations across all retail brands and
geographies.
• Identification and scoping of relevant impacts, risks and opportunities – Using the outputs
from the value chain mapping and landscape review, as well as peer review, input from key
stakeholders and existing corporate risk assessments, impacts, risks and opportunities were
identified and scoped.
• Stakeholder engagement – Internal and external stakeholders from across the value chain were
consulted on the relevant topics. Stakeholders provided coverage and insight across Pepco Group
retail brands, geographies and specific operations within the Company, as well as across the
value chain. Where engagement with a specific type of stakeholder was not possible this year,
we conducted proxy research and used outputs from previous stakeholder engagement. We used
existing engagement to provide insight for consumers, suppliers, value chain workers and affected
communities as we were unable to carry out new engagement in the time frame required. We
recognise that such proxy research has limitations and intend to extend our direct engagement
with these stakeholder groups in the future.
Stakeholder engagement also considered the dependency of Pepco Group’s business on human,
natural and social resources at appropriate prices and quality. Considerations on the subject
were specifically included across stakeholder engagement insights conversations, and informed
identification and scoring of impacts, risks and opportunities.
We plan to keep an open dialogue with stakeholders engaged throughout the process to
continue to incorporate their views and expectations. The insights gained from the DMA
will continue to inform our internal processes and approach to ESG.
2. Assessment and prioritisation
• Assessment – Our assessment included consideration of both impact and financial materiality.
The impact assessment considered both positive and negative impacts as well as actual and
potential impacts, over three timeframes (short-, medium-, and long-term). Impact materiality
was assessed against the criteria of scale, extent, irreversibility (assessed for negative impacts)
and likelihood (assessed for potential impacts) against a rating scale of 1 to 5, while financial
materiality was assessed against the criteria of financial magnitude on a rating scale of 1 to 5,
aligning to our internal corporate risk framework, and probability.
• In line with ESRS guidance, for human rights topics scoring “severity” takes precedence over
“likelihood”. For this reason, when considering a score for impacts related to human rights,
“likelihood” scores were not considered when calculating the average score.
• Materiality thresholds – Thresholds for impact materiality and financial materiality were set
independently by a group of key stakeholders and reviewed by the ESG Executive Committee.
Topics scoring above either threshold were defined as material and mapped to the relevant
topical ESRS standard.
3. Validation
A summary of the analysis and key outputs were reviewed and validated by the ESG Executive
Committee and other key internal stakeholders including finance, risk and sustainability
representatives.
4. Monitoring and reporting
The DMA process and outcomes were reviewed by the Audit Committee during the reporting period.
The material impacts, risks and opportunities identified through the process and corresponding
material topics will be monitored through the ESG Executive Committee at least once a year, with
a full reassessment of the DMA every three years, in line with ESRS guidance. The policies, actions
and targets associated with the material topics identified and our monitoring process to assess
effectiveness of strategies are explained further in each of the topical sections of the Sustainability
Statements. The material topics identified in the process have also been aligned with the ESG risk
category within our ERM framework and will be incorporated into our risk assurance framework
as it is rolled out in FY26.
No entity-specific material topics were identified as part of the DMA. However, two entity-specific
metrics were mapped to a material IRO related to ESRS S2 (Workers in the value chain).
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The Group’s end-to-end value chain activities – up and downstream of our business – have
impacts on climate change. Through our DMA, we identified impacts and/or risks relating to climate
change mitigation, adaptation, and energy. For further details please refer to section IRO 1 of ESRS
2, “Conducting our double materiality assessment”. Our activities generate greenhouse gas (GHG)
emissions through our operations, products and packaging. The main Scope 1 and 2 sources of
emissions within our value chain are electricity in our stores and distribution centres as well as the
fuels used in the transportation of goods. Indirect or Scope 3 emissions are principally generated
by the raw materials and manufacturing of the products we source and sell, and to a lesser extent
the inbound and outbound transport of those products.
Transition plan for climate change mitigation
E1-1
To take action on climate change, we have developed targets to reduce Scope 1 and 2 carbon
emissions by 50% by 2030 and Scope 3 carbon emissions by 25% by 2035. Both goals are absolute
targets with an FY24 baseline year
1
.
We also have a long-term ambition to achieve net zero across all scopes by 2050. We have not yet
adopted a complete climate transition plan that meets all the elements required by the ESRS. We
continue to develop such a plan and aim to agree and finalise the actions required in the coming
years. When this climate transition plan work is complete we intend to formalise our net zero 2050
ambition into a target.
Although we do not currently utilise carbon credits or removals, we may evaluate their use in
the future to support achievement of our 2050 net zero ambition, limited to neutralising residual
emissions once all feasible reduction measures have been implemented.
Our intention is to ensure alignment with the limiting of global warming to 1.5°C in line with the Paris
Agreement through using the Science-Based Targets initiative (SBTi) assessment process, but we
have not yet completed this work. Pepco Group is not excluded from EU Paris-aligned Benchmarks.
IRO-1
The process of assessing our climate-related impacts, risks and opportunities started with our FY25
DMA and GHG inventory covering Scope 1, 2 and 3 emissions. Compilation of the inventory has
enabled us to understand where we impact climate change directly and indirectly, and at which
stage of the value chain. In addition to an overview of the sources and types of emissions, we also
break down the data by brands and markets. Analysis of the GHG inventory provides a starting point
for understanding our key challenges and identifying the levers of our decarbonisation plan.
As we have not yet completed an ESRS-aligned climate transition plan, resilience plan or scenario
analysis, we are not yet able to quantify climate-related physical or transition risks or the levers
within our decarbonisation plan (see Actions section on page 115).
1. The calculation method for targets aligns with how GHG emissions are reported under E1-6.
Environment
E1: Climate change
MATERIAL TOPICS:
• Climate change
• Energy
KEY POLICIES:
• Environment Policy
• Supplier Code of Ethics (environmental
considerations)
KEY TARGETS:
• Reduce Scope 1 & 2 carbon emissions by
50% by 2030 *
• Reduce Scope 3 carbon emissions by 25%
by 2035 *
* Against FY24 baseline year
Material impacts, risks and opportunities
SBM-3
Climate change negatively affects the health and safety of people worldwide, with over half of
the global population living in vulnerable areas. Increasing extreme weather events and record
temperatures underline the urgent need for action on climate change, therefore we are committed
to reducing emissions both within our own operations and throughout our value chain, addressing
this collaboratively with our various stakeholder groups.
KEY ACTIONS:
FY25 focus:
• Energy efficiency initiatives within our own
operations
• Switching to renewable energy within our
own operations
Future focus areas:
• Green logistics and transportation
• Product-related carbon impacts
• Supply chain emissions
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Topic
Impact or
risk Description
Where in
the value
chain?
Time
horizon
Climate
change
Actual
negative
impact
Negative impact from GHG
emissions in our operations
and our value chain on the
environment.
Own
operations,
Value chain
(Upstream &
Downstream)
Short,
Medium,
Long-term
Physical risk Changing climate and the
impact of extreme weather
events damaging or disrupting
the Group’s operations or
those of its supply chain,
leading to increased financial
costs.
Own
operations,
Value chain
(Upstream)
Medium,
Long-term
Transition risk Climate change, resource
scarcity and sourcing
complexity leading to
increased operational costs.
Own
operations,
Value chain
(Upstream)
Medium,
Long-term
Energy Transition risk Energy price fluctuations as a
result of climate change and
geopolitical uncertainty.
Own
operations,
Value chain
(Upstream)
Short,
Medium,
Long-term
Climate action as part of our business strategy
SBM-3
Our sustainability strategy “Where Growth Meets Care” has been embedded in our overall value
creation plan, with our decarbonisation plan a key part of our “Value chain” pillar, including levers
and actions (as detailed below). These have been discussed and approved by the ESG Executive
Committee, although a resilience analysis is still to be completed.
Responsibility for progress towards decarbonisation goals lies with the Group CFO, with performance
updates reported to Pepco Group’s Executive Committee and Board at least annually to ensure
ongoing integration of our transition plans into financial oversight and decision-making.
Policies
E1-2
We address our material climate-related impacts, risks, and opportunities through an overarching
Environment Policy, which is further supported by environmental considerations for our suppliers
within our Supplier Code of Ethics. These policies were developed prior to our DMA assessment.
While the energy-related IRO from our DMA is not explicitly referred to in the Environment Policy,
our approach to decarbonisation, and energy efficiency as a component of that, is integrated into
our strategic planning processes through the decarbonisation levers and actions described below.
Environment Policy: The objective of our Environment Policy is to outline our approach to reducing
our carbon footprint, sustainable resource use and environmental compliance. The detailed
implementation work is managed through our sustainability strategy, for example, switching to
renewable energy sources for Scope 1 and 2 GHG emissions. The way we manage and track our
progress is described under each topic’s targets, actions and metrics. The policy applies to all
Directors, officers and employees of Pepco Group, as well as any person or company acting on
behalf of the Group, whether as an associate, contractor, consultant, agent or otherwise. The policy
commits us to adhering to applicable laws and regulations. The Group CFO oversees the Group’s
sustainability strategy and the implementation of the policy, both of which were approved at Board
level, and is responsible for strategy execution, supported by senior management in the operating
companies and the Group’s Head of ESG.
Supplier Code of Ethics (Environmental considerations): Our Supplier Code of Ethics addresses
environmental concerns as they relate to our upstream supply chain, specifically the management
of environmental issues, Scope 3 carbon emissions, water and waste. It applies to all suppliers and
details the minimum requirements we expect them to adhere to regarding these topics, based
on both regulatory requirements and our own commitment to reduce environmental impacts.
The Supplier Code of Ethics also states that suppliers must proactively work to understand and
reduce their direct and indirect carbon footprint throughout their supply chains. The Group General
Counsel is the most senior executive responsible for developing the Supplier Code of Ethics.
These policies will be periodically reviewed and updated, as necessary, to ensure that they remain
an effective tool for the business.
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Actions
E1-3
As part of our net zero ambition, we have developed a decarbonisation plan, including a series of levers and associated actions to mitigate and address our climate change and energy impacts and risks.
We do not currently have a climate transition plan and have not yet completed a scenario analysis to quantify each lever’s impact, but intend to progress with this work in the coming years. We monitor
progress against our decarbonisation plan and emission reduction targets through regular reporting and monitoring of our emissions. As we develop our climate transition plan, scenario analysis and
quantification of each lever’s impact, we will also continue to develop our approach to monitoring of our progress against our targets.
Decarbonisation plan
Lever Details Actions
Energy
efficiency
Focusing on energy efficiency has short, medium and long-term benefits in managing both climate change and energy
related impacts and risks.
Our first priority is reducing energy consumption in our own operations throughout our stores, distribution centres and
offices (both owned and leased in each case). Using energy more efficiently addresses both negative climate change
impacts and energy price fluctuation risks.
Our investments in energy efficiency measures include the installation of more energy-efficient refrigerator unit doors, the
continued roll-out of LED lighting in stores, distribution centres and offices, upgrades to more efficient air conditioning
and heating units throughout our operations and investments in building management systems which include smart
meters and other energy management tools and technologies.
FY25 actions focused on:
• Installation of energy-efficient doors on in-store refrigerator
units in our Dealz stores.
• The continued roll-out of in-store LED lighting and air
conditioning equipment upgrades in Pepco.
Renewable
power
In addition to improving our energy efficiency, we are increasing our purchase of renewable power across our operations
through Power Purchase Agreements (PPAs) with energy providers. Where renewable power is not directly available to us
in markets, we use Renewable Energy Guarantees of Origin (GOs) to support transition to renewable power generation.
Increasing our purchase of renewable power addresses our climate change impacts in the short, medium and long-term
through using lower carbon-emitting forms of energy and supporting national infrastructure to further move away from
fossil fuels. Long-term energy supply contracts such as PPAs mitigate the risk from short-term energy price shocks.
Where possible in the future, we plan to install on-site renewable energy projects such as solar panels on distribution
centre roofs. As many of our stores, offices and distribution centres are leased, we will also engage with our various
landlords and adapt contracts and agreements with regard to the use of renewable power.
FY25 actions focused on:
• Developing a renewable energy sourcing strategy, covering
all of our European markets. Several of our markets already
procure renewable energy including Poland, Spain and
Germany. For our operations in Poland, we have invested
in GOs and a renewable energy Power Purchase Agreement
(PPA) for Pepco. The PPA has also been extended to cover
Dealz stores and the Dealz distribution centre in Poland.
Green
logistics and
transport
This lever covers both Scope 1 mobile combustion and Scope 3 business travel and upstream and downstream logistics.
We plan to transition our company car fleet to lower carbon-emitting fuels and collaborate with third-party logistics
providers to optimise logistics routes and transition to lower-carbon fuels, both improving efficiency and minimising
emissions.
Within our own operations, we aim to reduce business travel and increase fuel efficiency wherever possible.
Our future actions:
• We intend to set specific targets and action plans for Scope
1 mobile combustion and Scope 3 upstream transportation
to reduce carbon emissions from both logistics and employee
transport.
Product-
related
carbon
impacts
We recognise a significant portion of our carbon footprint is associated with Scope 3 Category 1: Purchased goods
and services (81% of all Scope 3 emissions). Our decarbonisation plan in this area requires collaboration with our supply
chain partners and covers both the materials and packaging of our products as well as the manufacturing processes.
Our future actions:
• We intend to analyse the specific carbon footprints of our key
products, setting more specific reduction plans for them
• We plan to reduce the amount of packaging associated with
our own label products and to increase the recycled content
of our packaging
Supply
chain
emissions
Extending into our upstream value chain, we intend to further engage with our suppliers on transitioning to lower carbon
products and processes.
Our future actions:
• We intend to develop more specific action plans to monitor
and report progress in Scope 3 decarbonisation.
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Current and future allocated resources
Each of the FY25 actions identified above (investments in renewable energy and energy efficiency
measures) has been implemented using budgets within individual business units. These investments
are not specifically segmented in our accounting and are reported based on the general
rules for financial reporting. We intend to develop our approach to tracking investments in our
decarbonisation plan in a more segmented manner in the future.
Targets
E1-4
To address and mitigate our climate impact, operations across all of our markets including
stores, distribution centres and offices are working towards our 2030 target to reduce carbon
emissions from our operations (Scope 1 and 2) by 50%, from a FY24 baseline. For Scope 3 (value
chain emissions) our target is to reduce absolute emissions by 25% by 2035 from a FY24 baseline.
These targets were approved by both the ESG Executive Committee and the Board.
These climate-related targets are included in our Environment Policy and form part of our business
strategy through our sustainability focus areas. The targets were developed with senior leaders
and key functional groups within the business.
These targets have not yet been assessed by the SBTi for alignment to limiting global temperature
rises to 1.5 degrees Celsius.
We have established the following FY24 baselines against which to measure future progress:
Unit
FY24 baseline
year data % of total
Scope 1 GHG emissions tCO
2
e 20,477 1%
Scope 2 GHG emissions tCO
2
e 129,099 4%
Scope 3 GHG emissions tCO
2
e 2,944,536 95%
Consistency between GHG emission reduction targets and GHG inventory boundaries is ensured by
using recognised protocols, defining clear boundaries, and transparently reporting emissions data.
Pepco Group uses the Greenhouse Gas Protocol for GHG emissions accounting, which helps ensure
consistency.
We set our baseline for carbon emissions reporting in FY24. At the time of setting the baseline data,
the activities of the Group – a retailer, sourcing and selling products – had been broadly consistent
for more than three years. Store growth had been on a continued and consistent pattern and
there were no significant structural changes that influenced our baseline year. Our carbon emission
targets were developed in FY24 and as such use FY24 as a baseline year.
In FY25 the Group announced the completed sale of its Poundland operating unit. FY25 carbon
emissions metrics include data related to the Poundland operating unit up to the disposal date
of 12 June 2025. We expect to revise our baseline values in FY26 following the disposal of Poundland.
Accounting policies
The absolute GHG emissions in our targets and baselines include Scope 1 and 2 (market-based)
GHG emissions and Scope 3 GHG emissions associated with the Pepco Group (specifically from
procurement, production and distribution of Pepco Group products)
1
.
Due to the availability of data at the time of setting our baselines, we have not included Scope
3 Categories 11 (use of sold products) and 12 (end-of-life treatment of sold products) in FY24
baseline data. These categories are included in FY25 data reporting and will be included in
the future when re-baselining.
For more information on the accounting policies which underpin Scope 1, 2 and 3 GHG emissions
reporting see accounting policies sections on page 119.
A higher degree of measurement uncertainty is present in the spend-based input data related
to Scope 3 in particular.
Performance against targets
As this is our first year of CSRD reporting, our prior year (and baseline year) data has not been
included in the scope of our Sustainability Statements and audit. We are therefore not reporting
detailed information regarding performance against targets and year-on-year progress.
Target Unit FY25 result
Scope 1 & 2 GHG emissions tCO
2
e 89,876
Scope 3 GHG emissions tCO
2
e 2,240,252
1. Scope 3 Categories 1, 3, 4, 5 and 6 are included in our targets and baseline data, in line with our Scope 3 emissions reporting
approach. Scope 3 Categories 2, 7, 8, 9, 10, 13, 14 and 15 are not applicable or significant to the Pepco Group and are therefore
excluded, also in line with our Scope 3 emissions reporting approach. For information on the accounting policies which underpin
Scope 3 GHG emissions reporting, see the relevant accounting policy section.
Due to the availability of data at the time of setting our baselines and targets, we have not included Scope 3 Categories 11 and 12
in our targets or baseline data. These categories are included in FY25 emissions reporting and will be included in the future when
re-baselining.
116 Pepco Group N.V. Annual Report 2025
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1. An energy intensity metric of 57.8 MWh/EUR m is disclosed for the Pepco Group excluding Poundland. In addition, an energy
intensity metric of 81.3 MWh/EUR m is disclosed for the Pepco Group including Poundland, which reflects total energy consumption
for Pepco, Dealz, and Poundland (up to the 12 June 2025 Poundland sale date), in accordance with ESRS E1-5 paragraph 37.
This total energy consumption is divided by the Pepco Group revenue for continuing operations (excluding Poundland), as
presented in the financial statements, in line with ESRS E1-5 paragraph 43.
Energy consumption
E1-5
Description Unit
Pepco Group
excluding
Poundland
Poundland (up
to 12 June exit
date)
Pepco Group
including
Poundland
Total energy consumption related to own
operations
MWh 261,231 106,326 367,557
Total energy consumption from fossil
sources
MWh 142,893 33,991 176,885
Total energy consumption from nuclear
sources
MWh 29,971 279 30,249
Percentage of energy consumption
from nuclear sources in total energy
consumption
% 11.5 0.3 8.2
Total energy consumption from renewable
sources
MWh 88,367 72,056 160,423
Fuel consumption from renewable sources MWh 630 8,997 9, 627
Consumption of purchased or acquired
electricity, heat, steam, and cooling from
renewable sources
MWh 87,712 63,059 150,771
Consumption of self-generated non-fuel
renewable energy
MWh 63,059 Nil 25
Percentage of renewable sources in total
energy consumption
% 33.8 67.8 43.6
Fuel consumption from coal and coal
products
MWh Nil Nil Nil
Fuel consumption from crude oil and
petroleum products
MWh 15,691 31,645 47,336
Fuel consumption from natural gas MWh 8,924 1,515 10,439
Fuel consumption from other fossil
sources
MWh 2,477 Nil 2,477
Consumption of purchased or acquired
electricity, heat, steam, or cooling from
fossil sources
MWh 115,801 831 116,633
Percentage of fossil sources in total
energy consumption
% 54.7 32.0 48.1
Non-renewable energy production MWh 14,862 1,515 16,377
Renewable energy production MWh 25 Nil 25
Accounting policies
Total energy consumption related to own operations includes fuel consumption at sites
(stores, distribution centres and offices), fuel consumption in owned and leased vehicles, and
consumption of purchased energy (electricity, heat and cooling). The Pepco Group obtains
Guarantees of Origin (GO) and Power Purchase Agreements (PPAs) to source its renewable
electricity.
Description Unit
Pepco Group
excluding
Poundland
1
Total energy consumption from activities in high climate impact
sectors
MWh 261,231
Net revenue used to calculate energy intensity EUR 000s 4,523,463
Energy intensity from activities in high climate impact sectors MWh/EUR m 57.8
Accounting policies
For energy intensity, the total energy consumption is divided by total net revenue. All revenue
generating activities are either directly related to retail activities or support that objective,
which is considered a high climate impact sector. Therefore, there is no difference in scope
compared to total energy consumption and total net revenue. The figure for total net revenue
can be found in the financial statements, income statement, page 41.
117
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GHG emissions
E1-6, E1-8
Description Unit
Pepco Group
excluding
Poundland
Poundland (up
to 12 June exit
date)
Pepco Group
including
Poundland
Scope 1 GHG emissions
Gross Scope 1 greenhouse gas emissions
1
tCO
2
e 7,068 8,852 15,920
Scope 2 GHG emissions
Gross location-based Scope 2 greenhouse
gas emissions
tCO
2
e 94,183 13,490 107,673
Gross market-based Scope 2 greenhouse
gas emissions
tCO
2
e 73,508 449 73,956
Significant Scope 3 GHG emissions
Gross Scope 3 greenhouse gas emissions tCO
2
e 1,933,125 307,126 2,240,252
Category 1: Purchased goods and services tCO
2
e 1,562,976 251,776 1814,751
Category 2: Capital goods tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 3: Fuel and energy-related
activities
tCO
2
e 24,897 6,787 31,683
Category 4: Upstream transportation and
distribution
tCO
2
e 101,532 10,444 111,976
Category 5: Waste generated in
operations
tCO
2
e 5,448 170 5,618
Category 6: Business travel tCO
2
e 879 234 1,113
Category 7: Employee commuting tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 8: Upstream leased assets tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 9: Downstream transportation
and distribution
tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 10: Processing of sold products tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 11: Use of sold products tCO
2
e 221,150 35,136 256,285
Category 12: End-of-life treatment of sold
products
tCO
2
e 16,244 2,581 18,825
Category 13: Downstream leased assets tCO
2
e Not
applicable
Not
applicable
Not
applicable
Description Unit
Pepco Group
excluding
Poundland
Poundland (up
to 12 June exit
date)
Pepco Group
including
Poundland
Category 14: Franchises tCO
2
e Not
applicable
Not
applicable
Not
applicable
Category 15: Investments tCO
2
e Not
applicable
Not
applicable
Not
applicable
Total GHG emissions
Total GHG emissions location-based tCO
2
e 2,034,377 329,468 2,363,845
Total GHG emissions market-based tCO
2
e 2,013,701 316,427 2,330,128
The Pepco Group does not use carbon credits or removals and does not use internal carbon pricing.
1. 0% of Scope 1 greenhouse gas emissions are from regulated emission trading schemes.
118 Pepco Group N.V. Annual Report 2025
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Accounting policies
Scope 1 GHG emissions include all direct GHG emissions from energy consumption, purchased
CO
2
and the use of refrigerants in own operations, calculated in line with the GHG Protocol.
Energy consumption includes all direct energy sources (oil, natural gas and biogas) at owned and
leased sites (stores, distribution centres and offices) or by vehicles. GHG emissions are calculated
as energy consumption multiplied by relevant emission factors which are detailed further in
Appendix 2.
Scope 2 GHG emissions include indirect GHG emissions from the generation of electricity and
heat purchased and consumed, calculated in line with the GHG Protocol. Both location- and
market-based GHG emissions are calculated by multiplying the amount of energy purchased
by country-specific emission factors which are detailed further in Appendix 2. Market-based
emissions take into account renewable electricity purchased through PPAs or GOs.
Scope 3 GHG emissions include indirect GHG emissions from operations in the value chain,
covering both upstream and downstream activities. Scope 3 GHG emissions are calculated
following the GHG Protocol Corporate Value Chain (Scope 3) Standard. Further details of the
emission factors applied are detailed in Appendix 2.
Pepco Group does not report on Scope 3 emissions in Categories 2 (Capital expenditure on
equipment, buildings, facilities and vehicles with an extended life), 7 (Employee commuting and
working from home, 8 (Upstream leased assets), 9 (Downstream leased assets), 10 (Processing
of sold products), 13 (Downstream leased assets), 14 (Franchises) and 15 (Investments), since these
activities are not applicable or significant to Pepco Group.
A higher degree of measurement uncertainty is present in the spend-based input data for Scope
3 emissions.
The accounting policies for the categories in scope are further described below.
Category 1: upstream GHG emissions related to the manufacturing and processing of purchased
goods and materials including textile, footwear and general merchandise production and
packaging materials. The GHG emissions are calculated based on spend reports and emission
factors by product category.
Category 3: upstream well-to-tank (WTT) GHG emissions related to fuel consumed and energy
purchased (as included in Scope 1 and 2). The GHG emissions are calculated based activity
data from logistics partners.
Category 4: lifecycle GHG emissions related to the inbound transportation of materials and
packaging materials and third-party distribution. The GHG emissions are calculated based
on activity data from logistics partners.
Category 5: downstream GHG emissions related to the external waste treatment of waste
generated in Pepco Group stores, distribution centres and offices. The GHG emissions are
calculated based on waste weight data and emission factors.
Category 6: business-related travel activities of employees paid for by Pepco Group, including
third-party transportation services, reimbursed transport in employees’ own vehicles (mileage
allowance), and reimbursed accommodation and meals during travel. The GHG emissions are
calculated based on travel expense reports and emission factors by mode.
Category 11 and 12 emissions have been calculated on the basis set-out below for the Pepco
operating unit. Category 11 and 12 emissions for Poundland and Dealz have been estimated
based on the relative size of Category 11 and 12 emissions vs total Scope 3 emissions in Pepco.
Category 11: use of sold products including emissions from the use phase of electrical and
rechargeable products sold by the Company. The GHG emissions are calculated based on sales
data, third-party estimates of product lifetime and usage patterns and relevant emission factors.
Category 12: end-of-life treatment of sold products including emissions from the waste treatment
of electrical and rechargeable products sold by the company. The GHG emissions are calculated
based on sales data, third party estimates of product lifetime and disposal patterns and relevant
emission factors.
For more information on the applied emission factors for Scope 1-3 GHG emissions, please see Appendix 2.
In FY25, the majority of our Scope 3 GHG emissions have been calculated using spend data
versus primary data. In FY25 we started contacting key suppliers to prepare them to report
carbon emissions to us. In FY26 we expect to include further activity-based emissions data
in our Scope 3 Category 1 reporting.
Energy and GHG intensity
Description Unit
Pepco Group
excluding
Poundland
1
Total GHG emissions intensity location-based tCO
2
e/EUR m 4 49. 7
Total GHG emissions intensity market-based tCO
2
e/EUR m 445.2
Description Unit
Pepco Group
excluding
Poundland
1
Net revenue used to calculate GHG intensity EUR m 4,523
Net revenue (other) EUR m Nil
Total net revenue (in financial statements) EUR m 4,523
1. As required under ESRS E1, GHG emissions intensity metrics of 449.7 tCO
2
e/EUR m and 445.2 tCO
2
e/EUR m on a location-based
and market-based methodology respectively are disclosed for the Pepco Group excluding Poundland. In addition, GHG emissions
intensity metrics of 522.6 tCO
2
e/EUR m and 515.1 tCO
2
e/EUR m are disclosed for the Pepco Group including Poundland on a
location-based and market-based methodology respectively, which reflects total GHG emissions for Pepco, Dealz, and Poundland
(up to Poundland’s exit date), in accordance with ESRS E1-6 paragraph 44. Total GHG emissions for Pepco, Dealz and Poundland
are divided by Pepco Group revenue for continuing operations (excluding Poundland), as presented in the financial statements,
in line with ESRS E1-6 paragraphs 53-55.
119 Pepco Group N.V. Annual Report 2025
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Biogenic emissions
Description Unit
Pepco Group
excluding
Poundland
Poundland (up
to 12 June exit
date)
Pepco Group
including
Poundland
Biogenic emissions not included in Scope 1
GHG emissions
tCO
2
e 193 2,022 2,215
Biogenic emissions not included in Scope 2
GHG emissions
tCO
2
e 1,872 185 2,056
Biogenic emissions of CO
2
not included in
Scope 3 GHG emissions
tCO
2
e 10,128 122 10,249
Contractual instruments
Description Unit
Pepco Group
excluding
Poundland
Poundland (up
to 12 June exit
date)
Pepco Group
including
Poundland
Share of Scope 2 GHG emissions covered
by contractual instruments
% 33.4 9 7.1 47. 2
Share of Scope 2 GHG emissions
covered by energy attribute certificates
(unbundled)
% 22.9 9 7.1 38.9
Share of Scope 2 GHG emissions covered
by power purchase agreements (bundled)
% 10.5 0.0 8.3
Accounting policies
To calculate GHG intensity, we divide gross Scope 1, 2 and 3 GHG emissions by total net revenue,
calculated for both market- and location-based emissions. The figure for total net revenue can
be found in the financial statements, income statement, page 41.
Biogenic emissions not included in Scope 1 include: CO
2
emissions from the combustion of
biomass, biofuels and biogas in stores, DCs and head offices. Biogenic emissions not included
in Scope 2 include CO
2
emissions from purchased district heating where the energy source
is biomass. Biogenic emissions not included in Scope 3 include CO
2
emissions from suppliers
using biomass, biogas or biofuel to produce materials, biofuel use in inbound and outbound
transportation and distribution and landfill emissions from the end of life of biological packaging
materials (e.g. cardboard). All biogenic emissions are calculated in line with the GHG Protocol and
by multiplying the input data by the relevant emission factors.
Contractual instruments are the sum of purchased energy bundled with attributes about energy
generation (PPAs) and energy purchased from unbundled energy attribute certificates (EACs)
divided by total energy consumption.
120
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EU Taxonomy
Eligibility assessment
Due to the core business of the Pepco Group, the retail of apparel and general merchandise
goods, falling out of scope of the Taxonomy, we report no turnover-generating Taxonomy-eligible
activities in FY25.
According to the NACE-code framework, the Pepco Group’s main activity, sale of goods
as a variety discount retailer, is considered under the economic activities 47.11 “Retail sale in
non-specialised stores with food, beverages or tobacco predominating”, 47.19 “Retail of sale of
clothing in specialised stores” and 47.71 “Other retail sale in non-specialised stores”. These economic
activities have not been adopted by the EU Taxonomy and are therefore non-eligible. The Group’s
turnover relates solely to these economic activities groups and therefore as in previous years we
report no turnover-generating Taxonomy-eligible activities in FY25.
The climate change mitigation objective of the Taxonomy is relevant to the Pepco Group in
relation to the following activities: 5.5 Collection and transport of non-hazardous waste in source
segregated fractions, 6.5 Transport by motorbikes, passenger cars and light commercial vehicles,
7.2 Renovation of existing buildings, 7.3 Installation, maintenance and repair of energy efficiency
equipment, 7.5 Installation, maintenance and repair of instruments and devices for measuring,
regulation and controlling energy performance of buildings, and 7.7 Acquisition and ownership of
buildings (including building leases).
An assessment of our Capex against these economic activities recognises an eligibility of 87%.
An assessment of our Opex recognises an eligibility of 1%.
In FY25, Pepco enhanced the granularity of its eligibility assessment. This closer alignment with
financial accounting schedules and the more detailed evaluation of Capex and Opex resulted in
an increase in eligibility percentages compared to FY24. These changes reflect methodological
refinements rather than any material operational changes affecting eligibility.
Taxonomy alignment
The Taxonomy alignment assessment requires a thorough review of the criteria related to substantial
contribution, “do no significant harm” (DNSH) and minimum safeguards. To perform a Taxonomy
alignment assessment, a Taxonomy-aligned climate risk assessment must be completed. Due
to the current availability of information, the Group has not yet completed this assessment and
therefore it is not possible to conclude that any Taxonomy-eligible activities meet the alignment
criteria. As a result we report 0% alignment for our Capex and Opex.
121 Pepco Group N.V. Annual Report 2025
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Accounting policies
Turnover
The turnover measure comprises the net revenue line items from the consolidated income
statement. All of our revenue is derived from the sale of clothing and general merchandise.
These revenue streams are currently non-eligible according to the Taxonomy Regulation.
Capex
The Taxonomy definition of Capex results in a total value of €403m (the denominator of the
Capex KPI). The denominator contains, in accordance with the definition of the Taxonomy
and as disclosed in this report, additions to buildings, technical equipment and machinery,
other equipment, furniture and fixtures, right-of-use assets, and other intangible assets, before
depreciation, amortisation, and remeasurements.
To calculate the numerator of the Capex KPI, we analysed the additions in relation to the
identified eligible activities as described below.
Most of the eligible Capex in FY25 (73%) relates to building leases for our stores, distribution
centres and head offices (allocated to CCM 7.7).
Amounts reported under CCM 7.2 Renovation of existing buildings comprise 12% of eligible
Capex and represent all investment in shops and distribution centres to refit, enlarge and
refurbish assets. All construction and engineering works related to our store investment which
is not captured in CCM 7.7 is included within CCM 7.2
In addition 2% of eligible Capex is reported under CCM 7.3, Installation, maintenance and repair
of energy efficiency equipment. This relates to installation of energy-efficient LED lighting and air
conditioning units.
Amounts reported under CCM 6.5 Transport by motorbikes, passenger cars and light commercial
vehicles, CCM 5.5 Collection and transport of non-hazardous waste in source-segregated
fractions, and CCM 7.5 Installation, maintenance and repair of instruments and devices for
measuring, regulation and controlling energy performance of buildings each comprise 1% of
eligible Capex, reflecting the limited investments in these categories.
Opex
The Taxonomy definition of Opex results in a total value of €208m (the denominator of the Opex KPI).
The denominator shall cover direct non-capitalised costs that relate to research and
development, building renovation measures, short-term lease, maintenance and repair, and
any other direct expenditures relating to the day-to-day servicing of assets of property, plant
and equipment by the undertaking or third party to whom activities are outsourced that are
necessary to ensure the continued and effective functioning of such assets.
To calculate the numerator of the Opex KPI, we analysed expenditure in relation to identified
eligible activities. Amounts reported under CCM 5.5 Collection and transport of non-hazardous
waste in source segregated fractions comprise 1% of eligible Opex and represent expenditure
on waste segregation equipment in distribution centres in Dealz.
Poundland sale
The Group completed the disposal of Poundland on 12 June 2025. In the FY25 financial
statements, Poundland is presented as a discontinued operation, and no associated turnover
or operating expenditure is recognised in the Group Income Statement. Accordingly, revenue
and operating expenditure relating to Poundland are excluded from the Group’s EU Taxonomy
disclosures for the year.
In accordance with the Taxonomy Regulation, capital additions to tangible and intangible assets
during the reporting period must be included in the Group’s Capex reporting. This requirement
extends to capital expenditure incurred in relation to Poundland up to the date of disposal
(12 June 2025), which is also reported within Note 1.3 on page 167. As such, Capex additions
relating to Poundland up to the disposal date are included in the Group’s EU Taxonomy Capex
reporting.
Uncertainties related to the Capex taxonomy disclosure related to the former
Poundland segment
Due to the sale of Poundland on 12 June 2025, the Board no longer has direct access and
control over Poundland management, the finance team or operational processes. The reporting
requirements provided for in Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation) include
KPIs related to group capital expenditure (Capex KPIs) for which the denominator and numerator
include additions based on IFRS 16 Leases paragraph 53 (h). In this group capital expenditure
figures, the Poundland figures are integrated that, may exclude required adjustments for IFRS
16 lessee accounting. The Board is not able to require Poundland to undertake the extensive
recalculations, system reconfiguration of the IFRS 16 tool, and data extraction work that would
be necessary to investigate any required adjustment to the Capex disclosure. Further information
has been provided in note 1.29 in the Group consolidated financial statements on page 177. As a
result, the Board was unable to obtain sufficient appropriate information on the adjustments,
if any, to the Capex KPIs, including the required disclosures under Article 8(2) of Regulation (EU)
2020/852 (Taxonomy Regulation), for additions relating to the former Poundland segment for the
period from 1 October 2024 to 12 June 2025.
122
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Turnover
FY25 Substantial contribution criteria DNSH criteria (’Do Not Significant Harm’)
Economic activities (1)
Code (2)
Turnover (3)
Proportion of
Turnover (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water
(7)
Pollution
(8)
Circular Economy
(9)
Biodiversity and
ecosystems (10)
Climate Change
Mitigation (11)
Climate Change
Adaptation (12)
Water
(13)
Pollution
(14)
Circular Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Taxonomy aligned
or eligible
proportion
of turnover,
FY24 (18)
Enabling activity
(19)
Transitional activity
(20)
Millions
EUR %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
A.1. Turnover of environmentally sustainable
activities (Taxonomy-aligned)
0 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Of which Enabling 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E
Of which Transitional 0 0% 0% N N N N N N N 0% T
A.2. Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
0 0% 0% 0% 0% 0% 0% 0% 0%
A. Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A1 + A2)
0 0% 0% 0% 0% 0% 0% 0% 0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible
activities (B)
4,523 100%
Total (A+B) 4,523 100%
123
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Capex
FY25 Substantial contribution criteria DNSH criteria (’Do Not Significant Harm’)
Economic activities (1)
Code (2)
Capex (3)
Proportion of
Capex (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water
(7)
Pollution
(8)
Circular
Economy
(9)
Biodiversity and
ecosystems (10)
Climate Change
Mitigation (11)
Climate Change
Adaptation (12)
Water
(13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Taxonomy
aligned or eligible
proportion of
Capex, FY24 (18)
Enabling activity
(19)
Transitional
activity
(20)
Millions EUR % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
A.1. Capex of environmentally sustainable
activities (Taxonomy-aligned)
0 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Of which Enabling 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E
Of which Transitional 0 0% 0% N N N N N N N 0% T
A.2. Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
Collection and transport of non-hazardous
waste in source segregated fractions
CCM 5.5 0 0%
EL N/EL N/EL N/EL N/EL N/EL
0%
Transport by motorbikes, passenger cars
and light commercial vehicles
CCM 6.5 1 0%
EL N/EL N/EL N/EL N/EL N/EL
0%
Renovation of existing buildings CCM 7.2 50 12%
N/EL N/EL N/EL N/EL N/EL
0%
Installation, maintenance and repair
of energy efficiency equipment
CCM 7.3 10 2%
N/EL N/EL N/EL N/EL N/EL
3%
Installation, maintenance and repair of
instruments and devices for measuring,
regulation and controlling energy
performance of buildings
CCM 7.5 1 0%
N/EL N/EL N/EL N/EL N/EL
0%
Acquisition and ownership of buildings CCM 7.7 292 73%
N/EL N/EL N/EL N/EL N/EL
0%
Capex of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
353 88% 88% 0% 0% 0% 0% 0% 3%
A. Capex of Taxonomy-eligible but not
environmentally sustainable activities (not
Taxonomy-aligned activities) (A1 + A2)
353 88% 88% 0% 0% 0% 0% 0% 3%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Capex of Taxonomy-non-eligible activities (B) 50 12%
Total (A+B) 403 100%
124
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Opex
FY25 Substantial contribution criteria DNSH criteria (’Do Not Significant Harm’)
Economic activities (1)
Code (2)
Opex (3)
Proportion of
Capex (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water
(7)
Pollution
(8)
Circular Economy
(9)
Biodiversity and
ecosystems (10)
Climate Change
Mitigation (11)
Climate Change
Adaptation (12)
Water
(13)
Pollution
(14)
Circular Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Taxonomy aligned
or eligible
proportion
of Opex,
FY24 (18)
Enabling activity
(19)
Transitional activity
(20)
Millions
EUR %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
A.1. Opex of environmentally sustainable
activities (Taxonomy-aligned)
0 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Of which Enabling 0 0% 0% 0% 0% 0% 0% 0% N N N N N N N 0% E
Of which Transitional 0 0% 0% N N N N N N N 0% T
A.2. Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
Collection and transport of
non-hazardous waste in source
segregated fractions
CCM
5.5
1 1% EL N/EL N/EL N/EL N/EL N/EL 0%
Opex of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
1 1% 1% 0% 0% 0% 0% 0% 0%
A. Opex of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A1 + A2)
1 1% 1% 0% 0% 0% 0% 0% 0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Opex of Taxonomy-non-eligible
activities (B)
207 99%
Total (A+B) 208 100%
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Nuclear and fossil gas related activities
Nuclear energy related activities
The undertaking carries out, funds or has exposures to research, development,
demonstration and deployment of innovative electricity generation facilities that
produce energy from nuclear processes with minimal waste from the fuel cycle.
No
The undertaking carries out, funds or has exposures to construction and safe operation of
new nuclear installations to produce electricity or process heat, including for the purposes
of district heating or industrial processes such as hydrogen production, as well as their
safety upgrades, using best available technologies.
No
The undertaking carries out, funds or has exposures to safe operation of existing nuclear
installations that produce electricity or process heat, including for the purposes of district
heating or industrial processes such as hydrogen production from nuclear energy, as well
as their safety upgrades.
No
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or operation of
electricity generation facilities that produce electricity using fossil gaseous fuels.
No
The undertaking carries out, funds or has exposures to construction, refurbishment, and
operation of combined heat/cool and power generation facilities using fossil gaseous fuels.
No
The undertaking carries out, funds or has exposures to construction, refurbishment and
operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.
No
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SOCIAL
S1: Own workforce
MATERIAL TOPICS:
• Health and safety
• Working time
• Secure employment
• Adequate wages
• Gender equality
• Measures against violence
and harassment
• Forced and child labour
KEY POLICIES:
• Global Pay Guidelines
• Pepco Group Health
& Safety Policy
• Difficult Case Procedure
KEY TARGETS:
• 40% women in senior
positions by 2030
KEY ACTIONS:
FY25 focus:
• Health and Safety: Launched our Health and
Safety Policy
• Adequate wages and Gender equality:
• Launched our Global Pay Guidelines
• Maintained annual salary reviews and benchmarks
• Began developing a Diversity, Equity & Inclusion (DEI)
workplan and continued our gender representation
tracking
• Measures against violence and harassment: Launched a
centralised case tracking process via our whistleblowing
hotline “Safecall” and updated the Difficult Case Procedure
(grievances process) in our Pepco operating unit
Future focus areas:
• Health and safety: Strengthen our health and safety
processes through expanded guidance, audits, unified
reporting and employee feedback to build a safer, more
resilient workplace
• Secure employment and Working time: Develop a
Group-wide Secure Employment Policy and a Working
Time Policy
• Gender equality: Launch a mentorship programme and
integrate our DEI workplan across the Group
• Adequate wages: Develop indicators for adequate wages
• Measures against violence and harassment: Develop
indicators on violence and harassment resolution and
launch training on violence and harassment prevention
Material topics overview
A strong, committed workforce is at the heart of Pepco Group’s ability to deliver affordable products
and a consistent customer experience across our markets. The wellbeing, stability, and inclusion of
our people are directly linked to our operational success and long-term growth.
Through our double materiality assessment, we identified the material topics set out below.
Managing these effectively helps us attract and retain top talent, mitigate operational risks,
and fulfil our responsibilities as an employer.
Priority
area
Impact
or risk Description
Where in
the value
chain?
Time
horizon
Health and
safety
Potential
negative
impact
Work-related health and safety incidents can
lead to injury, morbidity, disability and mortality.
Own
operations
Short,
Medium,
Long-
term
Working
time
Risk Unpredictable working patterns risk
undermining wellbeing, causing absenteeism
and turnover, and reducing ability to attract
and retain retail talent.
Own
operations
Short,
Medium,
Long-
term
Secure
employment
Risk Over reliance on temporary contracts risks
lower engagement and productivity and
higher turnover costs.
Own
operations
Short,
Medium,
Long-
term
Adequate
wages
Risk Insufficient pay may reduce Pepco Group’s
ability to attract and retain talent, while
ensuring adequate wages support workforce
stability and mitigate operational risk.
Own
operations
Short,
Medium,
Long-
term
Gender
equality
Risk Reduced talent attraction and retention due
to insufficient gender diversity and unequal
opportunities for progression and pay
amongst the Group’s female employees.
Own
operations
Short,
Medium,
Long-
term
Measures
against
violence and
harassment
Risk Operational disruption, increased attrition
and potential litigation due to violence or
harassment in the workplace resulting in
employee harm and distress.
Own
operations
Short,
Medium,
Long-
term
Forced and
child labour
Potential
negative
impact
Risk
Forced and child labour breaches
fundamental human rights and undermines
people’s wellbeing, creating a material impact.
Such incidents also expose the Company
to significant risks, including reputational
damage, investor divestment, regulatory
penalties, and litigation.
Own
operations
Short,
Medium,
Long-
term
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Interaction of material workforce impacts, risks and opportunities with strategy
and business model
SBM-3
How workforce impacts connect to our strategy and business model
Pepco Group’s business model is built on delivering affordable products through a high-volume,
value retail format, supported by an extensive store network, regional distribution centres, and
centralised head office functions. Our strategy, which includes targeted network expansion,
portfolio simplification, and operational efficiency, depends on a stable, skilled, and safe workforce.
The material workforce topics identified through our double materiality assessment originate from
the operational demands of this model and are directly connected to our strategic objectives.
Managing these topics is essential to safeguard business continuity, maintain employee
engagement, and control operational costs. While risks such as working time and wage adequacy
can arise in specific markets or employee groups, we have established processes – including pay
benchmarking, time-tracking, and local compliance monitoring – to identify and address these
issues where they occur. Other impacts, such as specific health and safety or workplace conduct
cases, are typically linked to individual incidents.
Pepco Group ensures its practices comply with applicable labour and employment laws, which we
consider the primary safeguard against negative impacts on employees. This includes compliance
monitoring on wages, working hours, contracts and data use. Where commercial pressures arise,
legal obligations take precedence and guide management decisions.
The double materiality assessment findings informed strategic adjustments, such as the introduction
of several new policies and adjustments to existing policies in FY25:
• Wage adequacy risks led to the adoption of a Group-wide Global Pay Guideline
• Health and safety risks prompted the implementation of a Group-wide Health and Safety Policy
• Workplace conduct concerns resulted in an update to our Difficult Case Procedure within the
Pepco operating unit, to strengthen accessibility, impartiality, and anti-retaliation measures
Inclusion of all materially impacted workers
Our disclosures include all Pepco Group employees, as defined by local labour regulations,
across retail, distribution centres, and office functions. Non-employees, including agency workers,
contractors, and individuals on civil contracts, are excluded from this disclosure in accordance with
the applicable phase-in provisions.
Characteristics of employees
S1-6
At the close of FY25, the Pepco Group employed over 31,500 people
1
across more than 20 countries
2
.
Our workforce comprises retail, distribution, and office colleagues, with women representing 93.5%
of the total employees. We maintain a high proportion of permanent roles (72.6%), reflecting our
preference for stable, long-term employment relationships.
Most of our employees work full-time (81.3%), with part-time arrangements primarily in retail
operations. Our most significant workforce presence is in Poland (37.9%), followed by Romania (12.4%)
3
.
Although Pepco Group expanded its operations during the reporting period, the total number
of employees remained broadly stable. This reflects offsetting effects: efficiency improvements
and evolving staffing models supported growth, while optimisation measures balanced overall
headcount. Divestment of the Poundland operating unit during the reporting period has also
impacted total Group employee numbers.
Number of employees by gender
Gender
Pepco Group
excluding
Poundland
Pepco Group
including
Poundland
Male 2,056 7, 72 8
Female 29,526 38,199
Other Nil Nil
Not reported Nil Nil
Total employees 31,582 45,927
Number of employees in countries with 50 or more employees representing at
least 10% of the total number of employees
Country
Number of
employees
(headcount)
3
Poland 11,956
Romania 3,932
United Kingdom 13,036
1. Headcount basis.
2. The Pepco Group operates in stores across 18 countries in Central, Eastern and Western Europe as well as through an Asian
sourcing arm, with employees in over 20 countries in total.
3. In FY25 the Pepco Group including Poundland had more than 10% of its total workforce employed in each of Poland and the
UK (reflecting Pepco Group excluding Poundland headcount at 30 September 2025 and Poundland operations at divestment
date). All other countries employed less than 10% of the workforce on this basis. At 30 September 2025 the Pepco Group including
Poundland had 37.9% of employees in Poland and 12.4% of employees in Romania (two largest countries of employment).
128 Pepco Group N.V. Annual Report 2025
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Information on employees by contract type and gender
S1-9
Pepco Group excluding Poundland
Female Male Other Not disclosed Total
Number of
employees
(headcount)
29,526 2,056 Nil Nil 31,582
Number of
permanent
employees
(headcount)
21,284 1,637 Nil Nil 22,921
Number of temporary
employees
(headcount)
8,242 419 Nil Nil 8,661
Number of
non-guaranteed
employees
(headcount)
Nil Nil Nil Nil Nil
Number of
full-time employees
(headcount)
23,903 1,763 Nil Nil 25,666
Number of
part-time employees
(headcount)
5,623 293 Nil Nil 5,916
Pepco Group including Poundland
Female Male Other Not disclosed Total
Number of
employees
(headcount)
38,199 7, 72 8 Nil Nil 45,927
Number of
permanent
employees
(headcount)
29,761 7,188 Nil Nil 36,949
Number of temporary
employees
(headcount)
8,438 540 Nil Nil 8,978
Number of
non-guaranteed
employees
(headcount)
Nil Nil Nil Nil Nil
Number of
full-time employees
(headcount)
25,423 3,618 Nil Nil 29,041
Number of
part-time employees
(headcount)
12,776 4,110 Nil Nil 16,886
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Gender and age distribution
Pepco Group excluding Poundland
Female Male Total
Headcount % Headcount % Headcount
CEO 0 0% 1 100% 1
Aged <30 0 0% 0 0% 0
Aged 30-50 0 0% 0 0% 0
Aged >50 0 0% 1 100% 1
CEO -1 1 13% 7 88% 8
Aged <30 0 0% 0 0% 0
Aged 30-50 1 20% 4 80% 5
Aged >50 0 0% 3 100% 3
CEO -2 19 61% 12 39% 31
Aged <30 0 0% 0 0% 0
Aged 30-50 13 57% 10 43% 23
Aged >50 6 75% 2 25% 8
Other Employees 29,506 94% 2037 6% 31,543
Aged <30 8,305 93% 610 7% 8,927
Aged 30-50 18,297 93% 1277 7% 19,567
Aged >50 2,903 95% 149 5% 3,048
Not disclosed 1 0% 0 0% 1
Pepco Group including Poundland
Female Male Total
Headcount % Headcount % Headcount
CEO 0 0% 1 100% 1
Aged <30 0 0% 0 0% 0
Aged 30-50 0 0% 0 0% 0
Aged >50 0 0% 1 100% 1
CEO -1 1 13% 7 88% 8
Aged <30 0 0% 0 0% 0
Aged 30-50 1 20% 4 80% 5
Aged >50 0 0% 3 100% 3
CEO -2 19 61% 12 39% 31
Aged <30 0 0% 0 0% 0
Aged 30-50 13 57% 10 43% 23
Aged >50 6 75% 2 25% 8
Other employees 38,179 83% 7,708 17% 45,887
Aged <30 10,660 81% 2,533 19% 13,193
Aged 30-50 22,178 85% 4,007 15% 26,185
Aged >50 5,340 82% 1,168 18% 6,508
Not disclosed 1 0% 0 0% 1
Employee turnover
Pepco Group excluding Poundland Pepco Group including Poundland
Number of leavers
Rate of employee
turnover Number of leavers
Rate of employee
turnover
17,989 54% 21,905 46%
The reported turnover includes all voluntary and involuntary separations as well as the natural end
of temporary contracts. The level reflects the seasonal nature of retail operations and differences
across countries, where local labour markets and contract types influence mobility. During the year,
we reviewed and aligned onboarding processes across all Pepco operating companies and for
selected countries introduced locally tailored retention measures to strengthen workforce stability.
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Accounting policies
Headcount is reported as of the reporting period end date. This is 30 September 2025 for all
operating units except the Poundland operating unit, where Poundland data is included up to
the disposal date. Average headcount is determined using daily employee status (either active
or inactive), averaged across the reporting period. Turnover rate is the number of leavers during
the reporting period divided by the average headcount. Employee characteristics are reported
by employment type, gender, contract type and age.
Employment type is categorised as either “Permanent”, for employees with a permanent
employment contract or “Temporary” for employees with a temporary employment contract.
A Full Time Equivalent (FTE) is calculated by converting the number of hours of a part-time
employee to a full-time equivalent basis.
Senior employees are defined as CEO, CEO-1 and CEO-2 levels.
Age is determined by the employee age on at the reporting period end date.
Remuneration ratio
S1-16
The annual total remuneration ratio in FY25 was 1:199
1
. Our remuneration ratio is structurally high
due to the composition of our workforce, with the majority employed in store operations roles
in Central and Eastern Europe (CEE) markets where average wage levels are comparatively low
balanced against a corporate head office function in the UK where wages are relatively high. This
lowers the median employee pay, thereby increasing the ratio, while executive remuneration remains
aligned with external retail benchmarks and sector practices.
Accounting policies
The annual total remuneration ratio shows the difference between the highest-paid individual
in the Group and the median pay of all active permanent and fixed-term employees. Data is
reported as of 30 September 2025 (except for the Poundland operating unit which is reported
up to disposal date).
Total remuneration includes base salary, bonuses, incentive payments and other allowances
or benefits.
Pay for employees who worked part of the year is adjusted to a full-year basis. For colleagues
on long-term absence exceeding three months, remuneration is estimated based on their
contractual base pay, as actual paid salaries are not reliable due to varying compensation
schemes during absence.
Remuneration metrics have been prepared using 11 months of actual input data and one month
of estimated data other than for our head office employees in the UK and sourcing employees in
India and Bangladesh where actual data is reported for 12 months. In addition the highest-paid
individual’s pay is on a 12 month basis and aligned with the Remuneration Report.
1. The reported total remuneration ratio includes Poundland. When Poundland is excluded, the annual remuneration ratio changes to 1:198.
Green transition and workforce impact
SBM-3
As explained in the E1: Climate change section, the Pepco Group has not yet adopted an
ESRS-aligned climate transition plan. Once we have such a plan, it will include understanding
the impacts on our own workforce. Currently, we have not taken specific measures, such as reskilling,
redeployment, or employment guarantees related to the climate transition, as our business is not
currently exposed to significant transition-related restructuring.
Operations at risk of forced or child labour
SBM-3
We recognise the potential negative impacts of child and forced labour due to the severity of harm
they would cause if they occurred within our own workforce. We have not identified any incidents of
such in the reporting year.
While UNICEF records child labour in Serbia, Bangladesh and India (countries in which we have
employees), and the WalkFree Global Slavery index points to a higher prevalence of forced labour
in Bosnia & Herzegovina, India, Hungary and Slovakia (countries in which we have employees),
our activities in all these locations are limited to office, retail, and distribution functions. These
roles require employees to be of legal working age and are governed by formal contracts and
employment practices that prevent such incidents.
While the likelihood of occurrence in our own operations is very low, we continue to treat child and
forced labour as salient human rights issues and monitor them within our due diligence framework.
Workforce groups at risk and Pepco Group-specific risks & opportunities
SBM-3
As part of our materiality assessment (ESRS 2, IRO-1), we have considered how specific roles or work
contexts within our operations may present different levels of exposure to impacts and risks. Internal
HR data, health and safety reporting, employee feedback, and local legal requirements inform this
understanding.
While our policies and programmes are designed to apply to all employees, some risks and
opportunities are more relevant in specific contexts. For example, health and safety considerations are
particularly pertinent for employees in customer-facing and distribution centre roles, while working
time arrangements are most significant in operational environments with variable scheduling. In some
markets, pay equity initiatives may focus on improving representation or progression within particular
job families or levels.
We continue to monitor these patterns across the Group to ensure that measures remain relevant,
proportionate, and responsive to the needs of our entire workforce.
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Processes for engaging with own workforce
S1-2
As described in ESRS 2, Interests and views of stakeholders section, the Pepco Group maintains
structured engagement processes with its workforce. The same channels and methods described
in ESRS 2 apply to the scope of this disclosure, covering colleagues across retail, distribution centre,
and office roles. Effectiveness tracking and responsibilities are also outlined in ESRS 2.
In addition, employees are engaged on human rights-related topics, such as fair working hours,
equal treatment, and workplace conduct, through the types of engagement described in the
section below.
The Group currently has one target related to the gender equality topic: 40% women in senior
positions by 2030. The target was approved by the ESG Executive Committee and the Group Board.
Going forward, we plan to strengthen alignment by incorporating workforce perspectives into the
design and review of targets. Insights from engagement surveys, local consultation mechanisms, and
workforce representation bodies will inform future target-setting and adjustments.
Types and frequency of engagement
The Group has a number of employee engagement channels as set out below:
Structured feedback channels:
• Employee engagement survey: Once every two years, multilingual survey capturing workforce
sentiment, with results reviewed at the Group, country, and functional levels.
• Exit surveys: Conducted consistently to capture insights from departing colleagues, helping
identify improvement areas in retention and employee experience.
Day-to-day dialogue:
• Line manager dialogue: Managers are expected to engage regularly with their teams, supported
by training in active listening and constructive feedback.
• Store and site visits: Leaders meet colleagues directly during site visits, reinforcing trust and visibility.
Representation and escalation channels:
• Workforce representation: In countries with works councils or collective bargaining agreements
(e.g. Spain), formal engagement takes place on pay, working conditions, and employee rights.
• Safecall: An independent, anonymous reporting channel available to all colleagues, promoted
across sites and offices to ensure accessibility.
Inclusivity of engagement
We aim to ensure 100% of employees can participate in feedback channels by 2030 which will ensure
all employees can raise issues and contribute feedback. We plan to achieve this by expanding access
to our digital engagement survey, ensuring language accessibility, and tracking participation.
Responsibility for engagement
Employee engagement at Pepco is a core management responsibility. All managers are
accountable for fostering dialogue and acting on feedback. Local HR teams coordinate and
support these activities, while the Chief Human Resources Officer (CHRO) ensures that workforce
insights inform Group strategy and risk management.
Processes to remediate negative impacts and channels for own workforce to
raise concerns
S1-3
General approach to remedy
Pepco Group is committed to addressing and remedying negative impacts on its workforce,
including discrimination, harassment and unfair treatment. Remediation measures may include
corrective or disciplinary action, changes in the work environment, additional training or direct
support to the affected individual(s).
HR teams are responsible for ensuring fair and timely resolution, in line with local legal frameworks
and collective agreements. Where necessary, external mediation or legal counsel may be utilised.
The effectiveness of the remedy is currently assessed at the local level on a case-by-case basis,
but the Group is working to standardise this process.
Channels to raise concerns
Pepco Group maintains multiple channels for employees to raise concerns or report misconduct.
These channels and remediation processes apply across all material workforce topics identified
through our double materiality assessment, including discrimination and harassment, working time
management, wage adequacy, and health and safety and include:
Grievance procedures
Formal grievance procedures are in place across all business units. In FY25, Pepco has updated and
extended it’s “Difficult Case” procedure. The procedures prohibit discrimination, harassment, and
retaliation, and guarantee fair process for all employees. Colleagues may raise concerns relating to:
• Discrimination or harassment;
• Behaviour violating Company values;
• Workplace-related grievances.
Reports may be made to line managers, HR, or via formal grievance forms. In Dealz, colleagues
report grievances via a dedicated email managed by the HR team. Mediation may be offered where
constructive resolution is possible.
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Whistleblowing hotline (Safecall)
As described in the G1: Business conduct section, the Group uses an independent whistleblowing
hotline operated by Safecall which is available in over 150 languages for use by both colleagues and
suppliers, who can report anonymously if required. Reports can also be made directly to our internal
compliance and internal audit teams. At Dealz, colleagues report incidents via a dedicated ethics
email managed by the company’s ethics consultant.
• Direct manager or HR contact: Employees are encouraged to raise concerns through informal
channels such as through their manager or local HR team.
• Workforce representation bodies: In markets with works councils or trade unions, formal structures
exist to allow employee group concerns to be raised and addressed through structured dialogue.
Monitoring and effectiveness
Currently, grievance cases are tracked locally within each business unit, using country-specific tools.
There is no unified Group-wide logging or case tracking system in place at this stage. However, to
improve consistency and oversight, Pepco Group is implementing a centralised case logging and
monitoring system via the Safecall platform for the Pepco operating unit (including the PGS sourcing
arm) starting in FY26. Dealz will maintain its local case logging. This will support secure tracking of
case volumes and types, resolution timelines and outcomes and recurring issues.
Currently, the Group does not formally measure the effectiveness of its grievance mechanisms across
the whole organisation. Effectiveness is assessed informally at the local level, primarily by confirming
whether reported issues are resolved and no further concerns are raised. We are planning to
introduce Group-level indicators (e.g., resolution quality, timeliness and user experience) by FY27.
Trust in these mechanisms will be indirectly assessed through future employee engagement surveys
and feedback on psychological safety, once sufficient data is available following implementation.
Employee awareness
Awareness of concern-raising channels is promoted through posters in break areas for retail and
distribution centre staff, the Pepco Intranet for office-based employees, published procedures via
e-mail for Dealz and local manager briefings.
Protection against retaliation
We are committed to ensuring that no colleague experiences retaliation as a result of raising a
concern. Our grievance procedures and Whistleblowing Policy explicitly prohibit retaliation and
provide for confidential handling of all reports. Any act of retaliation is subject to disciplinary action.
Material topic: Health and safety
We consider health and safety a material topic because our retail and distribution operations
involve large frontline teams, physical handling of goods and customer-facing activities. Effective
health and safety management reduces accident risks, prevents ill health, supports employee
wellbeing, and strengthens operational continuity. Poor safety performance could lead to higher
absence, turnover, and regulatory penalties, while a strong safety culture helps attract and retain
talent, maintain service quality and enhance our reputation.
Policies
S1-1
The Group introduced a Group-wide Health and Safety Policy in FY25, covering all employees,
contractors, customers, visitors and anyone affected by our operations. It applies to 100% of our
own workforce and non-employees in our operations.
The policy is designed to comply with applicable local and international health and safety laws,
regulations, and standards, prevent accidents and work-related ill health through effective risk
assessment, safe systems of work, and regular training, foster a culture where safety is an integral
part of daily operations and line management responsibilities and provide transparent governance
and accountability at all levels.
The policy covers all countries in which the Group has employees. Local business units may set
higher standards based on local legal requirements or operational needs. Contracted third parties
are expected to follow equivalent safety standards when operating on Pepco premises.
Governance and accountability
Overall Group-level accountability for our health and safety programmes is with the Pepco
Chief Operating Officer, Managing Director of Dealz and the Group CHRO. Local accountability is
managed by country-level health and safety managers, supported by internal or external specialists
depending on jurisdiction. Oversight is provided by the Health and Safety Committee which reports
to the Pepco Audit & Risk Committee. The Health and Safety Committee comprises representatives
from all countries where we have operations, with plans to expand to also include representatives
from the Property and Operations teams. Where there is a legal requirement in certain markets,
worker representatives are engaged in safety governance.
Actions
S1-4
In FY25 the Group developed a Health and Safety Policy and corporate governance guidance
on safety management, accident reporting, audits and checklists. Governance was strengthened
and broadened by adding Health and Safety Committee representation. An updated definition
of “work-related accidents” was included within the policy, aligning to the ESRS definition. We
also began development of an integrated accident reporting system for consistent, comparable
Group-wide data.
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Additional actions planned in FY26 and FY27 are set-out below.
Action Status
Outcome and
impact Scope
Time
horizon
Effectiveness
tracking
Expand health and
safety guidance to
include fire safety,
evacuation, and
first aid procedures
Planned Stronger
preparedness and
emergency response;
reduced incident
severity and better
compliance
Group-wide FY26 Incident
response
evaluations
Enhance audit
methodology with
detailed checklists,
digital tools,
and expanded
coverage to ensure
comprehensive and
accurate results
Planned More robust
monitoring and faster
corrective action;
earlier identification
of risks
Group-wide FY27 Audit
completion
and pass rates
Launch training on
the new accident
definition and
reporting rules
Planned Consistent incident
recording, increased
reporting of near
misses, and improved
prevention
Group-wide FY26 Training
completion
and reporting
trends
Implement unified
reporting of work-
related ill health
and lost days
Planned Comprehensive and
standardised data
collection across
all operating units,
addressing current
inconsistencies
in definitions and
reporting practices.
This will enable
better trend analysis
and targeted
interventions
to reduce risks.
Group-wide FY26 Health and lost
days data
Collect and analyse
representative
feedback on health
and safety from
across the Group
Planned Employee-informed
improvements;
stronger safety
culture and
engagement
Group-wide FY26 Survey and
feedback
analysis
Targets
S1-5
We do not currently have a defined target in the area of health and safety. We recognise that
targets are important for effective risk management and monitoring progress in improving working
conditions and therefore plan to develop appropriate indicators and targets during FY26. This will
enable us to assess the effectiveness of our health and safety initiatives more effectively and further
enhance our safety management system. Our approach is based on continuous improvement and
systematic analysis of accidents and audits, enabling us to identify areas that require attention and
implement effective preventive measures.
As a result of the implementation of the Group’s Health and Safety Policy at the end of FY25, FY26
will serve as the base year for future target setting. We expect the effects of the reporting system
changes and the implementation of the audit process to be embedded in FY26.
Percentage of own workforce covered by health and safety management system
S1-14
To ensure that no one gets hurt, we expect everyone to play their individual part in making the
Pepco Group a safe place to work and take personal responsibility for their own safety, as well as
the safety of our customers, visitors, and everyone they work with. Under Polish law employee safety
is required to be overseen by an internal health and safety team. In other countries, health and
safety is supported by external providers.
Our health and safety management system covers 99.3% of our own workforce (excluding Poundland,
98.9%). The key elements of the system include:
• Regular risk assessments tailored to the specifics of each job role
• Training programmes that enhance employee awareness and competencies, compliant with local
legal regulations
• Preventive occupational health examinations that ensure early identification of health hazards,
regulated by local laws
• Systematic audits to verify working conditions
• Analysis of the causes of accidents and incidents to implement effective preventive measures
The safety management system provides coverage across our operations, ensuring consistent
standards for employee health protection internationally, along with the ability to continuously
monitor and improve processes at each location.
In FY25, the rate of recordable work-related accidents was 7.83 per million hours worked for
the Pepco Group excluding Poundland and 9.62 per million hours worked for the Pepco Group
including Poundland.
During the year we introduced an updated, ESRS-aligned accident definition, expanding the
scope to include mental harm, as well as near misses. A new reporting system is being developed
to ensure consistent data collection and faster analysis. Its full impact will be reflected in future
reporting periods.
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Rate of recordable accidents, number of recordable accidents and fatalities
Pepco Group
excluding
Poundland
Pepco Group
including
Poundland
Number of recordable work-related accidents for own workforce 383 588
Rate of recordable work-related accidents for own workforce 7. 83 9. 62
Number of fatalities in the own workforce and other workers working
on undertaking sites as a result of work-related injuries and work-
related ill health
1
1 1
In 2025, following the tragic loss of a colleague in a road accident during a business trip, we
provided financial and emotional support to their family and care for impacted colleagues. In the
small community where the store operates, we closed the store during the funeral as a gesture of
collective grief and respect.
Accounting policies
Rate of recordable accidents and number of recordable accidents and fatalities metrics
covers all Pepco Group own operations and apply to employees with permanent or fixed-term
contracts. Civil contractors and external service providers are excluded.
The ESRS definition of work-related accidents or fatalities is a discrete occurrence in the
course of work which leads to physical or mental harm. Under the ESRS definition of recordable
accidents, cases resulting from injuries from workplace hazards, business travel incidents, remote
work injuries (if directly linked to duties) and medically confirmed mental health issues are all
included. Excluded cases comprise health events unrelated to work, private commuting accidents
and lifestyle-related health issues.
Operations in Poland (both Pepco and Dealz) reported in line with the ESRS definition throughout
the reporting period.
For the period from 1 October 2024 to 30 June 2025 no Pepco countries (except Poland) were
reporting in line with the ESRS definition of recordable accidents. In these countries accidents
were recorded only where absence was over one day (whereas the ESRS definition requires all
accidents to be recorded regardless of length of absence). In order to adjust for this discrepancy,
recordable accidents in countries outside Poland were adjusted upwards based on the difference
between recordable accidents in Poland for absences under one day and recordable accidents
in Poland for absences over one day. Poland is considered an appropriate reference country for
this estimation basis, as it is the Group’s largest reporting country, has homogeneous employee
characteristics to other countries and reports in line with the ESRS definition.
The Poundland operating unit reported recordable accidents in accordance with the applicable
local legislation definition of an incident that happens unexpectedly and unintentionally, typically
resulting in injury or damage and includes all recordable accidents, regardless of length of
absence. The Poundland recordable accidents definition excluded incidents of mental harm.
In order to align with the ESRS definition (which includes incidents of mental harm), an adjustment
for the rate of mental harm incidents recorded in Poland was applied. The rate of incidents in
Poland was nil and therefore a nil adjustment was made.
From July 2025 all operating units reported in line with the ESRS definition.
The rate of recordable accidents is based on recordable accident numbers, from accident
register records and hours worked, which includes contracted and overtime hours and excludes
paid vacation leave, sick leave and public holidays.
Resources
The Group invests in colleagues within dedicated health and safety functions at Group and country
level, supported by internal specialists (for example in Poland) and external consultants (other markets).
1. The fatal incident reported occurred during a business trip. In accordance with the Group’s adopted methodology, it has been
classified as a work-related accident.
135 Pepco Group N.V. Annual Report 2025
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Material topic: Secure employment
In the Group’s high-volume, value retail model, stable and experienced store and distribution teams
are critical to delivering consistent customer service and maintaining operational efficiency. Secure
employment enables us to retain skilled colleagues, reduce recruitment and training costs, and preserve
institutional knowledge – all of which underpin productivity in our multi-country store network.
Because retail involves seasonal peaks and varying shift patterns, there may occasionally be
a need for temporary contracts in specific periods or locations. While this is a normal aspect of
retail operations, maintaining stable employment remains our preferred approach, as it supports
workforce continuity, predictable scheduling, and consistent service delivery.
Policies
S1-1
While the Group does not yet have a dedicated Group-wide secure employment policy, we apply
a common principle: wherever operationally feasible and in line with local labour laws, we provide
permanent employment. Currently, around 72.6% (excluding the Poundland operating unit) and 80.5%
(including the Poundland operating unit) of our workforce are employed on a permanent contract
basis, reflecting our preference for stable, long-term employment relationships.
Contract type decisions are made locally by operating units to best fit operational needs and
apply only to direct employees. While there are currently no Group-wide definitions or thresholds
for employment stability, most countries follow a similar practice.
We recognise that the absence of a formal Group-wide policy may result in inconsistencies between
markets. To address this, we plan to introduce a Secure Employment Policy by FY26 to strengthen
consistency across all markets.
Where legally required, we engage in dialogue with workers’ representatives during restructuring
processes. National labour regulations guide our approach and we continue to explore
opportunities to strengthen consistency in secure employment practices across the Group.
Actions
S1-4
The Pepco Group undertakes a range of actions to support employment stability across its markets:
Action Status
Expected
outcome Scope
Time
horizon
Remedy
/ positive
impact Tracking
Review
contract
type mix
(permanent
vs.
temporary/
part-time)
Localised /
ad hoc
Identify
reliance
on non-
permanent
work and risk
areas
Country-
level,
depending
on need
Ongoing Helps
address
issues
affecting
employment
stability
Group-wide
tracking of
contract mix
planned for
FY26
Informal
retention
planning
during
restructuring
Localised/
reactive
Reduce
attrition
and avoid
redundancy
Units
undergoing
change
As
needed
Supports job
continuity
and
reassignment
No formal
process; aim
to establish by
FY26
Engage
with works
councils/
unions
during
restructuring
Legal
requirement
in some
countries
Ensure
lawful and
respectful
transitions
Markets
with works
councils
(e.g.,
Poland,
Spain)
Ongoing Enhances
transparency
and worker
protections
Collect
representative
feedback in
FY26
Develop
Group
Secure
Employment
Policy
Planned Set
consistent
principles
and minimum
expectations
Group-
wide
In FY26 Reduce
reliance on
temporary
contracts;
strengthen
job security
Annual review
of contract
mix and
trends
Effectiveness and targets
S1-5
At present, the effectiveness of actions related to secure employment is not systematically tracked
at Group level, and no defined level of ambition has been set. The Group has not established formal
targets for secure employment because this area is currently managed through a decentralised
approach at operating unit level and there is no Group-wide policy framework in place.
The immediate focus is on developing a common policy and centralised tracking process to ensure
consistent definitions and data across markets. These steps, planned as part of the Group Secure
Employment Policy in FY26, will enable future Group-level monitoring and, if appropriate, the introduction
of ambition levels or measurable indicators.
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Resources
The Group has invested resources in local HR teams to monitor contract types, manage retention
planning and ensure legal compliance, Group HR leadership to oversee policy development,
tracking systems and targets and workforce representatives to provide input during restructuring
in applicable markets. Investments have also been made in HR systems and analytics to support
centralised contract mix tracking from FY26.
Material topic: Working time
In the Group’s value retail model, our ability to serve customers depends on well-coordinated store
and distribution teams, supported by schedules that match demand while protecting colleagues’
wellbeing. Good working time management not only ensures smooth day-to-day operations and
consistent service but also helps colleagues maintain a healthy work-life balance. Sustainable
scheduling can support engagement, reduce fatigue and contributes to retaining experienced
teams – which, in turn, strengthens customer experience and overall business performance.
Policies
S1-1
While we do not yet have a formal global policy on working time, Pepco Group applies consistent
principles across markets to promote fair and sustainable scheduling practices for our colleagues.
A separate global policy has not been established at this stage because working time
arrangements are already comprehensively regulated through national legislation and, where
applicable, collective agreements. Our approach is built on the following commitments:
• Legal compliance commitment: Compliance with national regulations on working hours, rest
periods, and overtime in all countries of operation.
• Compensated overtime principle: No unpaid overtime; all overtime is recorded and compensated
in line with national legislation.
• Local oversight and HR accountability: Local HR and payroll teams ensure compliance, monitoring
and escalation.
• Engagement with employee representatives: Consultation where required by law or practice to
align working time arrangements with local labour frameworks or collective agreements.
Actions
S1-4
Pepco Group undertakes a range of actions to support working time management across its markets:
Action Status
Expected
outcome and
impact Scope
Time
horizon
Effectiveness
tracking
Use of electronic
time tracking in
key markets for
retail employees
(in Poland,
Romania, UK,
Ireland, Spain,
Portugal)
Ongoing Accurate monitoring
of hours and
overtime
Key retail
markets
Ongoing Local
compliance
checks
Rollout of
electronic time
tracking to
certain additional
countries
Planned Strengthened
oversight across the
Group
Group-
wide
End of
FY28
Implementation
progress
monitored
Local monitoring
via planning tools
and management
oversight, where
electronic systems
with clock-in and
out are not yet
in place
Ongoing Compliance with
legal requirements
Remaining
markets
Ongoing Local
compliance
checks
Develop and
implement the
Group Working
Time Policy
Planned Establish consistent
principles
and minimum
expectations for
scheduling, overtime
and rest periods
to ensure a clear
understanding of
expectations
Group-
wide
In FY26 Policy adoption
Effectiveness and targets
S1-5
Currently, effectiveness is monitored locally through electronic time tracking and management
oversight to ensure compliance with legal working time requirements. No Group-wide ambition or
indicators have been set at this stage.
The Group has not set formal targets for working time because this area is already comprehensively
regulated through national legislation and, where applicable, collective agreements. At this stage,
our focus is on ensuring compliance and building a consistent policy framework.
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During FY26, the planned Group Working Time Policy will establish minimum expectations for
scheduling, overtime management and compliance. This will create a foundation for introducing
measurable indicators in the future if appropriate.
Resources allocated
Management of working time is supported through investment in electronic time-tracking systems,
HR and payroll team capacity for monitoring and compliance and training and guidelines for
managers on scheduling principles and legal requirements.
Material topic: Adequate wages
Paying fair and adequate wages is essential to supporting employee wellbeing, retention, and
engagement — particularly for our large frontline retail workforce. Adequate wages contribute to
workforce stability and operational performance, while reinforcing our reputation as a responsible
employer in the competitive value retail sector.
As a multinational retailer operating across both mature and emerging markets, we face some
dynamic developments related to rising labour costs, evolving minimum wage legislation and
changes in employer tax and social security obligations. These factors can create short-term margin
pressure. However, we view responsible pay practices as a strategic investment in workforce stability,
employer reputation and long-term business performance.
Policies
S1-1
We are guided by our Global Pay Guidelines, implemented in FY25:
• Description and objectives: The Global Pay Guidelines set the Group-wide framework for
establishing and reviewing pay levels to ensure fairness, compliance with legal requirements,
and competitiveness in local markets. They aim to provide equal pay for equal work, and align
compensation with skills, performance, and role requirements.
• Scope: The guidelines apply to all Pepco Group employees across retail, distribution, and office
functions, regardless of contract type or working pattern.
• Accountability: The Group’s Compensation and Benefits team and local HR country managers
are responsible for implementing and overseeing the Global Pay Guidelines. Line managers are
accountable for applying these principles consistently and fairly. Executive oversight is provided
by the Remuneration Committee and the Pepco Group Executive Committee, ensuring alignment
with internal guidelines and consistent application across the organisation.
• Stakeholder consideration: Developed with input from HR leadership and the Compensation and
Benefit team.
• Availability: The guidelines were approved in FY25 and are currently being launched to head
office managers and HR teams across all business units.
The following principles also guide our approach to adequate wages:
• Definition of adequate wages: We define an adequate wage as at least meeting the legal minimum
wage or Collective Bargaining Agreement (CBA) minimum, depending on the local context.
• Social Dialogue Commitment: Where required by law, we engage with employee representative
bodies to ensure transparency in wage-setting and adjustments.
Actions
S1-4
To implement Global Pay Guidelines and address wage-related impacts and risks, we have put the
following actions in place:
Action Status
Outcome /
Impact Scope
Time
horizon
Effectiveness
tracking
Annual
salary review
vs. market,
inflation, and
laws
Ongoing Supports
retention,
attraction,
and fair pay
Group-wide Annual Pay review
results
Use of external
market
benchmarks
Ongoing Ensures wage
competitiveness
and fairness
Group-wide Annual Benchmark
variance
Monitor
statutory wage
changes and
cost impacts
Ongoing Ensures proactive
compliance &
cost planning
Group-wide Continuous On-time
change
Engage
with unions/
representatives
in wage
processes
Ongoing* Builds trust,
supports
compliance
Applicable
markets
Ongoing Meeting
records
Develop
indicators
related to
adequate
wages
Planned Strengthens
reporting,
identifies gaps
Group-wide By FY27 To be
developed
* in applicable markets
Effectiveness and Targets
S1-5
Our current approach focuses on maintaining full compliance with statutory minimum wage
regulations in all operating countries. We do not set additional quantitative targets beyond legal
requirements. The effectiveness of our approach is monitored through regular salary reviews that
ensure continued compliance across markets. Over time, we plan to assess whether broader
Group-wide indicators could be introduced to enhance our monitoring framework.
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Resources
Adequate wage programmes of work are resourced through both HR teams in each market
dedicated to annual pay review processes and compliance monitoring as well as the central HR and
Compensation & Benefits functions who coordinate Global Pay Guidelines and consolidate market
data. Budget allocation for annual pay adjustments is linked to inflation and market movements.
Adequate wage
S1-10
All active employees of Pepco Group receive at least an adequate wage. For employees who are
temporarily inactive, their remuneration is adjusted to meet or exceed the applicable minimum wage
level upon their return to work.
Accounting policies
Workforce data is collected from each operating unit and standardised and consolidated to give
a single group view for the reporting period. Each employee’s gross annual salary is converted
into a monthly or hourly amount and compared to the applicable statutory minimum wage
(or sectoral agreement where relevant). EU countries are assessed on monthly salary; the UK
and Republic of Ireland (ROI) on hourly rates, reflecting age-based minimum wage rules.
National minimum wage levels are taken from official sources.
An adequate wage is defined as gross pay at or above the applicable legal minimum wage.
Employees on long-term absence or with mid-period birthday pay uplifts in the UK, ROI, or Isle
of Man are excluded from the calculation.
Material topic: Measures against violence and harassment
A safe and respectful workplace protects employee wellbeing, supports retention and reduces
operational disruption. It also safeguards Pepco Group’s reputation, limits legal and financial
exposure and strengthens our ability to attract diverse talent in competitive labour markets.
Violence, harassment and bullying in the workplace undermine dignity, safety, and wellbeing and
can cause severe physical and psychological harm. Addressing these risks is essential to ensuring
a respectful, inclusive, and productive work environment and to maintaining Pepco Group’s
reputation as a responsible employer.
Policies
S1-1
At the end of FY25, Pepco introduced an updated “Difficult Case Procedure”, strengthening our
zero-tolerance approach to any form of violence, harassment or bullying. Our Whistleblowing Policy
and local HR grievance policies support this.
In our Difficult Case Procedure, we describe our belief that no one should suffer disadvantage of
experience or outcome or be subject to any acts of discrimination, bullying and/or harassment,
no matter their age, disability, gender reassignment, marriage and civil partnership, pregnancy
and maternity, race, ethnic origin, religion or belief, sex and sexual orientation. We are committed
to a zero-tolerance policy regarding such behaviours. Pepco Group currently has no specific policy
commitments or procedures explicitly focused on vulnerable groups.
Personal grievance procedures
• Accessibility: Grievance channels include options for direct reporting to managers, anonymous
reporting via a confidential line operated by an external provider (Safecall) and escalation to
HR teams. Safecall is actively promoted across the organisation: posters are displayed in common
areas for employees without computer access, and information is available through the Pepco
Intranet and screensavers for employees with digital access.
• Dealz has a dedicated email address to receive reports, which is managed by the local Dealz
HR team, instead of the Safecall platform.
• Procedural fairness: All reports are handled impartially. Employees have the right to respond
to allegations, and internal or external mediation is offered where it can help resolve
concerns constructively.
• Timeliness: All grievances are acknowledged within at least 10 working days.
• Accountability: The HR team is responsible for maintaining the procedure and ensuring
consistent application.
Remedy and continuous improvement
Where grievances reveal negative impacts on employees, the Pepco Group takes appropriate
remedial action, such as corrective or disciplinary measures, changes in the work environment or
additional training. Our Employee Assistance Programme (EAP) in applicable markets also plays an
essential role in providing confidential counselling and wellbeing support to employees affected by
such issues.
Protection against retaliation
We are committed to ensuring that no colleague experiences retaliation as a result of raising a concern.
All reports are treated confidentially, and any acts of retaliation are subject to disciplinary action.
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Actions
S1-4
Action Status
Expected
outcome /
impact Scope
Time
horizon
Effectiveness
tracking
Centralise
Group-level
case tracking
via Safecall
Planned Consistent
oversight and
better trend
analysis
Group-wide FY26 Safecall reporting
data
Develop
and roll out
training on
violence and
harassment
prevention
Planned Increase
awareness,
reduce
incidents,
strengthen
culture
Group-wide FY26 Training
completion rates
Establish
Group
indicators
(e.g., resolution
timeliness,
recurrence
rates)
Planned Improved
monitoring
and early
intervention
Group-wide FY27 KPI tracking in HR
dashboards
Effectiveness and targets
S1-5
Effectiveness is currently tracked locally through grievance handling, Safecall reports and EAP usage.
No Group-wide targets or ambitions are set at this stage, as the focus is on building consistent
reporting and case management processes.
From FY26, centralised case tracking and Group indicators are planned to enable systematic
monitoring and potential target setting.
Resources
HR teams in each market manage case handling, supported by a central HR team for escalations
and policy oversight. In addition we invest in Safecall, an external hotline provider for confidential
and anonymous reporting, available 24/7 in multiple languages. EAP providers in applicable markets
support affected employees.
Discrimination incidents
S1-17
Pepco Group
including
Poundland
Pepco Group
excluding
Poundland
Incidents of discrimination, including harassment 93 23
Complaints filed through channels for people in own workforce to
raise concerns
288 147
Severe human rights incidents Nil Nil
One complaint during the reporting period was settled prior to court proceedings, resulting in
compensation below €10,000, recorded within Poundland’s results for the period which have been
disclosed within note 25. No fines or sanctions were issued.
Accounting policies
The Group reports incidents of discrimination and harassment, other complaints received through
grievance mechanisms, related financial penalties or compensation and severe human rights
impacts in line with ESRS S1-17. Data is consolidated annually from country HR case logs and the
Safecall hotline, classified into incidents or complaints, and reconciled with finance records. All
cases are included in the year reported, where:
Discrimination and harassment cases are defined as confirmed or undisputed cases of
discrimination, including harassment, connected to the Company’s own workforce, reported in
the reporting period.
Complaints are any allegations, concerns, or grievances raised by individuals in the Company’s
own workforce through internal or external channels, related to workplace issues, such as
discrimination, harassment, or other employment-related matters such as workplace conditions,
pay and benefits, management behaviour, workplace culture, that have not been confirmed or
substantiated as a discrimination/harassment case.
Each case is counted once. Severe cases are identified using the Group’s criteria which is aligned
with United Nations and International Labour Organization standards. Anonymous reports are
included if they can be classified.
In some cases, data may be incomplete or pending final investigation outcomes. These cases
are classified using standard Group assumptions to ensure consistency but actual outcomes
may differ over time.
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Material topic: Colleague safety and violence prevention
Context of the divestment of Poundland
The Group completed the sale of its Poundland operating unit on 12 June 2025. Colleague safety,
particularly the prevention of workplace violence, was identified as a material issue for this entity.
This disclosure has been included to provide transparent information on how this IRO was managed
up to the date of disposal. Poundland will not be included in the Group’s future disclosures as a result
of the disposal in FY25.
Incidents of violence and aggression towards retail workers is a recognised operational risk within
the UK retail sector. As a retailer Poundland is particularly exposed and attentive to this issue and
the potential impact it may have on UK employees. To address this, a range of measures have been
adopted and designed to prevent workplace violence and to provide support to any employees
who may be affected within the Poundland operating unit.
Policies
S1-1
Poundland’s core approach centres on the “Three Steps to Colleague Safety” policy – a non-
confrontational approach to shoplifting and customer aggression. It is embedded in induction and
e-learning for employees and reinforced through in-store marketing and customer-facing posters.
Actions
S1-4
Measures adopted to prevent workplace violence in Poundland stores are deployed based on risk
and include:
• Over 100 of the highest-risk Poundland stores have manned guards and over 140 further stores
are equipped with body-worn cameras. These are complemented by estate-wide CCTV, panic
buttons in cash handling areas and coded locks in restricted spaces.
• Day-to-day support is strengthened through practical tools. 80% of stores are equipped with
headsets for immediate assistance, all locations use an incident reporting app and employees
escalate issues through a 24/7 “Serious Incident Contact” line or the Safecall hotline.
• Poundland also collaborates with external partners, including police forces, business crime
reduction partnerships and Poundland’s security provider.
Targets
S1-5
At the time of Poundland’s sale, no formalised Group-level targets on colleague assaults had
been established. Monitoring was carried out through internal function-level KPIs tracked by the
Poundland Profit Protection team. Incident reporting took place continuously via an app and was
analysed monthly at store, area and regional levels. Serious incidents were escalated through the
Serious Incident line and tracked by the Poundland Risk Committee with auditable action logs. In
addition, Safecall reports were escalated to the Poundland Risk Committee, ensuring oversight and
follow-up on critical cases.
Resources
Activities and resources in relation to this IRO are integrated across functions within Poundland.
Significant investment has been made in security measures (for example security guards, body-worn
cameras and tech infrastructure) but is not separately tracked as a standalone operational budget.
Governance is managed through weekly senior management updates on serious incidents, the
monthly review at the Poundland Risk Committee (with an escalation route to the Poundland and
Group Board) and through union consultation and external partnerships to ensure ongoing scrutiny
and improvement.
Material topic: Gender equality
A diverse and inclusive workforce fosters creativity, better decision-making, and stronger
connections with our customers. Ensuring equal opportunities for all employees, regardless of gender,
ethnicity, religion, nationality, disability, age or any other characteristic, helps us attract and retain
talent, enhance employee engagement, and reflect the diverse communities we serve. Diversity also
reduces the risk of discrimination claims and strengthens our reputation as a fair employer.
In our business model, where women make up the majority of our store workforce and men are
proportionally more represented in head office and technical roles, gender distribution naturally
influences our gender pay gap figures. This gap does not indicate unequal pay for equal work, but
rather reflects the structural distribution of roles within the organisation. Nevertheless, we recognise
the importance of addressing representation imbalances over time, particularly in senior and higher-
paid roles.
Policies
S1-1
Our commitment to diversity, inclusion, and equal pay is embedded in our Global Pay Guidelines
(see further detail in the Material topic: Adequate wage section), DEI workplan and our Difficult
Case Procedure (see further detail in the Material topic: Measures against violence and harassment).
In addition we operate the following policies and programmes:
• Equal pay: In stores, all employees in the same role receive the same fixed rate of pay. For store
managers and head office roles, defined salary ranges reflect market benchmarks, job evaluation
outcomes, and internal equity.
• Fair salary decisions: Salaries within ranges are determined using objective criteria such as skills,
performance and role fit.
• Annual review: Salary ranges and positioning are reviewed annually to maintain market
competitiveness and internal fairness.
• Non-discrimination: Anti-discrimination clauses are embedded in our Difficult Case Procedure.
• DEI work plan: This has been approved and will be activated in FY26.
Accountability for implementing the DEI Workplan rests with the CHRO, with day-to-day
responsibility delegated to relevant HR functions. Global Pay Guidelines accountability is described
in the “Adequate wages” Policies sections, while the Difficult Case Procedure is described in the
“Measures against violence and harassment” Policies section.
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Actions
S1-4
Action Status
Expected outcome
/ impact Scope
Time
horizon
Effectiveness
tracking
Annual salary
review using
market
benchmarks
and internal
equity checks
Ongoing Fair, competitive,
consistent pay
Group-
wide
Annual As of FY26: Salary
and gender pay gap
analysis
Job
evaluation
framework
consistently
applied
Ongoing Clear, equitable
grading & pay structure
Group-
wide
Ongoing Periodic grade
consistency reviews
Review of
gender
representation
in leadership
Ongoing Identify progression
barriers
Group-
wide
Annual As of FY26: Track
promotion rates and
succession on top
grades
DEI workplan
activation
Planned Deliver structured
initiatives
Group-
wide
FY26 Workplan milestone
tracking
Develop DEI
policy
Planned Establish a clear
Group-wide
commitment to
diversity, equity, and
inclusion, aligning
initiatives across
markets
Group-
wide
FY26 Policy approval
and integration into
HR and business
processes
Run
mentorship
programme
Planned Accelerating positive
career development
impacts
Pepco FY26 Participation rates
Targets
S1-5
In relation to this IRO we have the following leadership representation goal: increase the share of
women in senior leadership to 40% by 2030. The FY24 baseline was 28%. This target applies to the
top 3 senior leadership levels across the Group. It is measured as percentage of women in total
leadership level headcount. This is an internally set voluntary target. In FY25 we report that share
of women in senior leadership position at 50%.
This target directly supports our DEI workplan objective to strengthen representation and gender
balance in leadership roles, promoting a more inclusive workplace. The target was set internally
by senior management and HR leadership, without direct employee involvement.
Resources
Resource investment includes our Compensation & Benefits team which leads pay equity reviews,
our HR analysis team which tracks performance against our target and our Employer Branding
& Culture team which leads DEI programme design. In addition local HR teams manage data
collection and the implementation of pay and promotion processes.
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Gender pay gap
S1-16
Our gender pay gap reflects the structure of our workforce. A large proportion of our employees
in operational store roles are women, while men are more often represented in administrative and
higher-paid specialist positions. Because operational roles make up the majority of our workforce,
this distribution has a significant impact on the overall gender pay gap.
Gender pay gap
Pepco Group excluding Poundland 51.8%
Pepco Group including Poundland 41.7%
Accounting policies
The gender pay gap metric shows the difference in average pay in local currency between
men and women in permanent and fixed-term employee roles across all Group entities as of
30 September 2025 (Poundland employees are included up to the disposal date). The gender
pay gap is calculated as the average male hourly rate less the average female hourly rate,
divided by the average male hourly rate.
The metric is based on total remuneration, which includes base salary, bonuses, incentive
payments, and other allowances or benefits. Each employee’s total remuneration is converted
into an hourly rate based on the actual total hours worked during the period covered by
available payroll and working-time data, as detailed below. This ensures differences in working
time are reflected in the calculation.
In the absence of granular absence-type data, all absences (holiday, sickness, parental,
maternity, etc.) were aggregated. This may slightly overstate or understate pay for colleagues on
paid vs. unpaid leave, depending on country-specific entitlements.
To avoid distortions caused by long-term absences (LTA), all absences were included in the
payroll dataset (e.g. holiday, sickness, parental, and maternity/pregnancy leave). For colleagues
who were on long-term absence for part of the reporting period, their gender pay gap ratio was
calculated by dividing total remuneration by standard contractual hours worked. This adjustment
prevents severe underestimation of hourly rates that could arise from using raw payroll data during
unpaid or partially paid absence periods. Employees who have been on LTA full-year (including
those who had 0 regular worked hours and those having had 0 payout) have been excluded.
Due to variations in payroll processing and payout schedules across countries, 11 months of
actual payroll data was available for most Operating Companies. Bangladesh, India and The
Pepco Group provided a complete 12-month payroll dataset. Accordingly, the Pepco Group
(excluding Bangladesh and India and Pepco Group unit) gender pay gap calculations are based
on 11 months of actual data.
For entities reporting in non-euro currencies, September’s exchange rate (as defined by Group Finance)
was applied.
Overall, these limitations are not expected to materially misrepresent the gender pay gap
directionally. Pepco Group will continue improving data collection consistency to enhance
accuracy in future reporting cycles.
Material topic: Child and forced labour
Pepco Group recognises that risks associated with child and forced labour present not only direct
human rights violations but also substantial reputational, legal and commercial consequences. In
response, the Group has established and continues to develop a comprehensive policy framework
to mitigate these risks across its own operations and value chain (refer to S2: Workers in the value
chain for further explanation on our approach to child and forced labour in the value chain).
With strong Board-level accountability and risk-based audit regimes, the Group takes a proactive
and transparent approach in line with global best practices. There were no confirmed cases of child
or forced labour in our own workforce during the reporting year.
Policies
S1-1
Human Rights Policy
The Group’s Human Rights Policy formalises Pepco Group’s commitment to upholding internationally
recognised human rights, including International Labour Organization (ILO) conventions. It mandates
zero tolerance for child or forced labour, requires fair treatment and safe workplaces, and promotes
respect and dignity throughout the workforce and supply chain. It applies to all Pepco Group
employees and all tiers of the supply chain globally, with special emphasis on operations in higher-
risk geographies. Accountability for upholding human rights commitments is shared across the
organisation – employees are expected to raise concerns and management is responsible for
ensuring appropriate actions are taken.
The Group’s Human Rights Policy is aligned with the UN Guiding Principles on Business and
Human Rights and ILO Conventions No. 138 and 182. Particularly vulnerable worker groups were
considered in it’s development. The policy recognises rising expectations from investors, customers,
and communities and is communicated internally and shared with key suppliers (see S2: Workers
in the value chain for further details regarding communication with key suppliers).
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Actions
S1-4
We have implemented a wide range of country-specific procedures to mitigate the risk of child
and forced labour and ensure legal and ethical employment across our operations. These practices
collectively support the Group’s zero-tolerance approach and align with international standards,
including ILO Conventions 138 and 182.
Action
1
Expected outcome Time horizon
Contribution to
policy objectives
Implementation of
localised right-to-
work (RTW) verification
procedures across
each country, tailored
to legal frameworks
(e.g. ID verification,
education checks,
parental consent)
Legal compliance,
elimination of
underage employment
risk, and improved
audit readiness
Implemented and
ongoing across all
Group operating units
Ensures legal and
ethical employment,
fulfilling Human Rights
Policy and Modern
Slavery Statement
obligations
Use of HR systems and
payroll providers to
verify age and legal
working status
Automation of RTW
due diligence and
reduction of errors
Operational and
progress is underway
to enhance by 2026
Enhances monitoring
effectiveness and
policy compliance
tracking
Group-wide rollout
of whistleblowing
and grievance
mechanisms
Channels for reporting
unethical practices or
rights violations
In place Supports remedy
processes for material
negative impacts
Targets and effectiveness
S1-5
The effectiveness of actions to prevent child and forced labour is monitored through existing
processes, including payroll-based age verification, whistleblowing channels and colleague
feedback mechanisms. These processes support ongoing compliance and help identify any
emerging risks.
At present, the Group has not established formal targets or measurable indicators for child and
forced labour, as this is a zero-tolerance commitment managed through compliance and risk-based
controls rather than performance targets. There are no prescribed metrics currently measured.
The Group’s priority remains on prevention and continuous monitoring through due diligence
mechanisms. Should future regulation or policy developments require quantifiable indicators,
the Group will review its approach accordingly.
1. The scope of our actions covers the following areas: recruitment, onboarding, contracting, and HR due diligence processes and
is applicable across our own operations (direct workforce) in all operating geographies (the 20+ countries in which the Group
has employees). Stakeholders affected include prospective and current employees, particularly young workers, as well as HR
and payroll departments who implement these processes.
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Topic
Impact or
risk Description
Where in
the value
chain?
Time
horizon
Child and
forced labour
Potential
negative
impact
Risk
Incidents of forced and child
labour violate human rights
and wellbeing.
Pepco Group’s exposure to
this through the value chain
may result in significant
reputational damage, fines
and litigation.
Value chain
(upstream)
Short,
medium and
long-term
Measures
against
violence and
harassment in
the workplace
Potential
negative
impact
Risk
Work-place violence and
harassment in supplier and
factory settings violates
human rights and wellbeing.
Incidents in the value chain
could pose risks for Pepco
Group including reputational
damage, investor divestment,
fines and litigation.
Value chain
(upstream)
Short,
medium and
long-term
Health and
safety
Potential
negative
impact
Health and safety incidents
result in value chain worker
injury, particularly where
significant volumes of goods
are stored or heavy machinery
is operated.
Value chain
(upstream)
Short,
medium and
long-term
Understanding our value chain
To source the products we sell Goods-For-Resale (GFR) we work with a range of third-party
suppliers and factories. The majority of our own-brand GFR products (92%) are sourced through our
vertically integrated sourcing arm, PGS. The remainder are sourced directly through commercial
teams in our retail business units. We believe our PGS sourcing model enhances visibility across the
supply chain, optimising control and coordination between our sourcing and buying teams. From
FY26 we intend to move all own-brand sourcing under the PGS sourcing model, providing further
visibility and oversight over our supply chain.
S2: Workers in the value chain
MATERIAL TOPICS:
• Child and forced labour
• Measures against violence and harassment
• Health and safety
KEY POLICIES:
• Supplier Code of Ethics
• Child Labour Policy
• Factory Audit policy
KEY TARGETS:
• 100% of own-brand products are made in
Cat 1, 2 or 3 factories
• 100% of factories are audited against our
annual social and ethical audit plan
KEY ACTIONS:
• Supplier onboarding programmes
• Factory audit programmes
• Supplier training
Material impacts, risks and opportunities
SBM-3
Having a strong partnership with our suppliers helps us to achieve a more resilient and efficient
supply chain. Our vertically integrated sourcing model and global supply chain depend on value
chain workers across multiple regions, and we recognise our role as part of a responsible value
chain. Through our double materiality assessment, we have identified three topics and associated
material risks and impacts related to workers in our value chain: child and forced labour, measures
against violence and harassment in the workplace and health and safety.
Our risks and impacts in this section relate predominantly to our suppliers and factory workers in our
upstream supply chain who manufacture our products.
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Most products sourced through PGS come from China, India and Bangladesh (79%), with a smaller
proportion coming from Pakistan, Cambodia and Vietnam along with some near-shore sourcing
in Europe. Workers in factories producing our own-brand products experience varying degrees of
impact, shaped by the nature of their work. We segment our suppliers and factories into three tiers:
• “Tier 1” factories are primary manufacturing sites where the Group’s own-brand products are
produced
• “Tier 2” factories undertake activities that may include (but are not limited to) washing, embroidery,
printing, dyeing, label and accessories. In these factories the Pepco brand logo and its licensee
merchandise are visible
• “Tier 3” factories provide the raw materials or base components to Tier 2 factories
The impacts and risks we have identified in relation to workers in the value chain are focused on the
workers in factories supplying our own-brand GFR products. These upstream workers are not part of
our own workforce, and instead are employed by our supply chain partners, working in supplier sites
and factories rather than the Group’s sites. We recognise the inherent increased vulnerability to risks
and impacts of child and forced labour, health and safety, and violence and harassment impacts
given the sector, and the geographies we source from.
In addition to our own-brand products, we also sell third-party branded products sourced from
domestic and international suppliers. These are predominantly FMCG products such as food and
beverages, personal care and home care through our Dealz and (previously Poundland) retail
brands. We also work with Goods-Not-For-Sale suppliers such as infrastructure and corporate
service providers. We consider the risks and impacts higher, and our ability to influence and manage
them greater, in relation to our own-brand GFR products than other segments of our supply chain,
where we leverage the supplier’s own risk management processes. The rest of this section therefore
focuses on our risks, impacts and management in relation to the suppliers and factories for our
own-brand GFR goods.
Policies
S2-1
The Group has a number of policies in place to manage the risks and impacts related to our supply
chain: Supplier Code of Ethics, Child Labour Policy and Factory Audit Policy. Further details of each
policy are set-out below:
• Supplier Code of Ethics: The objective of the Supplier Code of Ethics is to outline to suppliers the
core principles of ethical, sustainable and socially responsible sourcing practices we expect them
to follow, and to secure their commitment to acting ethically and responsibly at all times. It is
aligned with the International Labour Organization, derived from the UN Guiding Principles, and
sets out clear expectations for suppliers on topics including but not limited to, each of our material
risks and impacts: forced and child labour, violence and harassment in the workplace and health
and safety. The Supplier Code of Ethics is shared with all own-brand Tier 1 and Tier 2 suppliers,
and a signed declaration confirming understanding and acceptance of the Code is required as
part of the supplier onboarding process.
• Child Labour Policy: Pepco also has a Child Labour Policy, which, along with the Supplier Code
of Ethics, requires suppliers to prevent child labour through strict monitoring and age verification
checks. Our policy outlines steps to be taken if child labour is discovered, requiring appropriate
escalation, investigation and the implementation of a remediation plan.
• Factory Audit Policy: Our Factory Audit Policy supplements our Supplier Code of Ethics, setting out
our expectations, monitoring approach and how we evaluate compliance with the Supplier Code
of Ethics through audits. This policy is supported by an internal factory audit process framework.
Further details are provided in the supplier audit section below.
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Supplier engagement
S2-2, S2-3
We engage with our suppliers through a range of processes:
• Supplier onboarding – We engage suppliers through a structured onboarding process. All Tier 1
and 2 own-brand suppliers are required to review and confirm compliance with our Supplier Code
of Ethics before being approved to undertake orders.
• Training and ongoing engagement – We provide training to our supply chain partners to improve
working practices and effectiveness. We do this through several forums:
• Each year, we invite own-brand suppliers to undertake in-person training sessions provided by
our Ethical Sourcing Audit team, focusing on topics included in the Supplier Code of Ethics and
the whistleblowing platform.
• Suppliers also participate in workshops and conferences with our sourcing and commercial
teams at the beginning of each buying season to collaborate on seasonal buying trends and
new products and processes.
• Through these initiatives, whilst we do not specifically engage directly with factory-level workers,
we encourage suppliers to engage in discussions with value chain workers, and it is expected
that suppliers will share this information with their workers.
• Supplier factory audits – The supplier audit section below explains our approach to supplier
audits including our engagement with suppliers through this process.
• Collaboration with unions and industry bodies – We engage with NGOs and industry bodies who
work with our suppliers and in their local communities. This includes our membership of Better
Cotton Initiative (BCI) which aims to support farming communities socially, environmentally and
economically (explained further in G1).
• Whistleblowing – A QR code in the Supplier Code of Ethics provides access to our whistleblowing
hotline, Safecall, and information is available in local languages. Should incidents be reported
to the Group through other channels, for example through our Ethical Audit Sourcing teams, the
complaint is referred to our whistleblowing processes. Our whistleblowing hotline is managed by
our ompliance team with further details set-out in G1.
• When we identify potential negative impacts on workers within our value chain, either through our
supplier factory audits, whistleblowing programme or broader engagement programmes, we work
to address issues in line with our policies.
• Overall responsibility for management of human rights and supply chain risks sits with the Board.
• Our approach to working with our suppliers to address negative impacts identified through our
supplier factory audit programme is set out in the Actions section.
Actions
S2-4
The Group has an established and ongoing responsible sourcing programme. In FY25 the Group
undertook the following programmes of work:
Supplier onboarding – Own-brand Tier 1 and Tier 2 suppliers receive our Supplier Code of Ethics
as part of their onboarding process. In 2025 we reviewed and updated our Supplier Code of Ethics,
reinforcing our commitment to acting ethically and responsibly in all regions where we operate.
Updates to our supplier onboarding process are ongoing, to improve efficiency and increase the
transparency of information provided during the onboarding stage.
Supplier factory audits – Our supplier factory audit programme plays a critical role in managing
reputational, legal and operational risks by ensuring that suppliers meet our ethical, environmental
and labour standards. Supplier factory audits are largely performed by our in-house Ethical Sourcing
Audit team and accredited Supplier Ethical Data Exchange (SEDEX) approved third-party providers,
in accordance with our Factory Audit Policy (see Policy section above). In FY25 we broadened our
audit programme to include own-brand Tier 2 suppliers, as well as Tier 1 suppliers, resulting in 1,829
audits and 1,266 factories.
Following an audit, each factory receives a rating from Category 1 to 5, along with a Corrective
Action Plan (CAP) if required. Our Ethical Sourcing Audit team advises and supports the suppliers
and factories to address the CAPs effectively, particularly for critical or high-risk issues (Category 4
and 5). Follow-up audits are also conducted for the critical and high-risk rated factories.
The outcomes of our supplier factory audits are monitored closely by our sourcing and commercial
teams as well as our Board and Audit Committee.
It is not possible to allocate human and financial resources for the management of the described
actions above with accuracy due to the complexity of our business activities. Typically, all actions
are implemented using the budgets of individual business functions and normally do not require
significant additional operating or capital expenditure. In addition to investment in our Compliance
and Ethical Sourcing Audit teams the Group also invests in membership of SEDEX, one of the world’s
largest supply chain compliance platforms.
Governance
Overall responsibility for human rights and supply chain, including our factory and supplier audit
programme, sits with the Board, which is also responsible for approving and reviewing Group policies.
The Audit Committee oversees the Group’s approach to ethical and responsible business practices,
receiving an annual ethical sourcing report from our Ethical Sourcing Audit team.
The Ethical Sourcing Audit team is responsible for regular reporting, including the immediate
escalation of any significant issues to our Legal and Compliance team as required. In addition
to the annual Audit Committee report, ethical sourcing reports are provided to sourcing and
commercial teams on a monthly basis, and management teams on a quarterly basis.
Severe human rights issues
During the reporting period, we identified one severe human rights incident within our supply chain.
A case of child labour was detected through our supplier factory audit process. The violation
took place at an unauthorised factory that had been subcontracted without our approval.
1. These are entity-specific targets and metrics.
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Accounting policies
Own-brand products are defined as products offered to consumers under the Pepco, Poundland
and Dealz brands, and manufactured by suppliers with design, qualities and packaging specified
by the Pepco Group. The metric currently only relates to products sourced through our PGS
sourcing arm. In FY25 this covers 92% of own-brand goods sold. From FY26 we intend to move
all own-brand sourcing under the PGS sourcing model and as such we expect to include 100%
of own-brand products in this metric in the future.
Category 1,2,3 factories are defined as having no-risk to medium- risk issues and are approved
for new business with Pepco Group. Business restrictions are imposed on factories with category
4 and category 5 ratings for having high-risk or critical issues. Factories need to submit a
Corrective Action Plan for all high-risk issues identified during the audit.
Our annual supplier factory audit plan is an internal audit plan created and managed by our
Ethical Sourcing Audit team. It covers all PGS-sourced factories that supply own-branded goods
(92% of own-brand goods) as well as some non-PGS-sourced factories that are notified to the
Ethical Sourcing Audit team. We intend to move all own-brand sourcing under the PGS sourcing
model in the future. The supplier factory audit plan requires an on-boarding audit for every new
factory and at least annual audits of every active factory thereafter.
Upon confirmation of the incident, in line with our Policy, the Group immediately cancelled the
order and terminated all commercial relationships and contractual arrangements with the primary
contracted factory. No goods were shipped and no further orders were placed. While unacceptable,
this case demonstrates that our factory audit programme is operating effectively and we remain
strongly committed to ethical standards.
Targets
S2-5
Our “Where Growth Meets Care” sustainability strategy focuses on Value Chain as one of its
three core pillars. As part of our strategy we have set responsible sourcing targets which track
the effectiveness of our actions in addressing material risks and impacts related to workers in our
value chain: child and forced labour, measures against violence and harassment in the workplace
and health and safety. These targets relate to our supplier factory audit programme which plays
a critical role in addressing these risks and impacts as described above. We report these targets
1
and our performance metrics against them in this section.
When we identify potential negative impacts on workers within our value chain through our supplier
factory audit programme, we work with suppliers to identify the cause and implement preventative
measures. We do not currently engage with value chain workers directly in setting the targets or
identifying lessons or improvements as a result of performance against these targets.
Target
FY25
performance
FY24
baseline
Sourcing target: 100% of own-brand products sourced through our
PGS sourcing arm are made in Cat 1, 2 or 3 factories
94% 94%
Audit target: 100% of factories are audited against our annual
supplier factory audit plan
2
100% 100%
1. These are entity-specific targets and metrics.
2. Our supplier factory audit plan is defined as all active factories for own-branded products that are designated ”own-brand” in our
sourcing system, CBX.
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Topic
Impact or
risk Description
Where in
the value
chain?
Time
horizon
Corruption
and bribery
Potential risk Fines, litigation and
reputational damage due to
inadequate due diligence and
anti-bribery controls, leading
to exposure to unethical
practices that may also affect
product quality and cost.
Own
workforce
Short,
Medium,
Long-term
Protection of
whistleblowers
Potential risk Increased litigation,
reputational damage, and
reduced employee morale due
to inadequate whistleblower
protection or channels,
allowing ethical or legal
breaches to go unreported
and harming whistleblower
wellbeing
Own
workforce &
Value chain
(upstream)
Short,
Medium,
Long-term
Management
of relationship
with suppliers
Potential risk Fines, litigation and
reputational damage due
to inadequate due diligence
and management practices,
leading to exposure to ethical
breaches such as unclear
supplier ownership.
Own
workforce &
Value chain
(upstream)
Short,
Medium,
Long-term
Policies
G1-1
The Group adopts a structured and proactive approach to preventing, detecting and addressing
bribery and corruption, underpinned by its Anti-Bribery and Corruption Policy, which sits within
the Compliance Policies Manual. This policy applies to all employees, Directors, suppliers and
contractors, and reflects our commitment to ethical conduct and zero tolerance for bribery in
any form. We have a Whistleblowing Policy, supported by country-specific policies tailored to local
regulatory requirements. These are translated into local languages and made accessible via each
country’s dedicated intranet.
The policy framework is regularly reviewed, and changes are subject to Board approval as required.
To support understanding and reinforce expectations, key messages are cascaded through senior
leadership, internal communications campaigns and targeted workshops.
The Group’s ethical expectations are further supported by the Company internal Code of Ethics
as well as the Supplier Code of Ethics (detailed in the S2: Workers in the value chain section of this
report), which includes specific Anti-Bribery and Corruption (ABC) provisions.
G1: Business conduct
MATERIAL TOPICS:
• Corruption and bribery
• Protection of whistleblowers
• Management of suppliers
KEY POLICIES:
• Anti-bribery Policy
• Whistleblowing Policy
• Code of Ethics
• Supplier Code of Ethics
• Gifts and Hospitality Policy
• Conflicts of Interest Policy
KEY ACTIONS:
• Anti-bribery and corruption risk
mapping exercises
• Anti-bribery and corruption and
whistleblowing training programmes
GOVERNANCE
Material impacts, risks and opportunities
SBM-3, IRO-1
We are committed to responsible business conduct, underpinned by honesty, integrity and
transparency across our operations and value chain. We uphold high standards of corporate
governance through policies and frameworks that support the effective functioning of our Board,
protect stakeholder interests and promote accountability and resilience. These practices help foster
a culture of responsibility across all of our operating companies, employees and suppliers, driving
long-term sustainable value creation and the trust essential to our continued success. With a clear
understanding of the need for robust business conduct, our DMA identified three risks: corruption and
bribery, protection of whistleblowers and our relationships with suppliers. In the following section, we
outline these areas in more detail, including the assessments we undertake to identify, detect and
prevent such risks, as well as the policies and processes that underpin their effective management.
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Preventing, detecting and addressing allegations or incidents of corruption
and bribery
G1-3
Risk mapping exercises (as part of the enterprise risk management process), role analysis and
jurisdiction-specific corruption indices were reviewed and updated during FY25, allowing the Group
to identify and assess risks associated with corruption and bribery. As a result, a number of focused
measures were reviewed and updated, including our governance and policy framework and our
enhanced awareness of our whistleblowing mechanism.
As a key preventative control, the Group operates a Conflicts of Interest Policy and Gifts and Hospitality
Policy, supported by a declaration process focused on senior leaders and higher-risk functions
(including Property and Procurement). The Gifts and Hospitality Policy prohibits the giving or receiving
of any gifts and hospitality must be appropriate and approved through the correct channels.
These policies are communicated internally and enhanced training provided for higher-risk roles.
The Group has dedicated channels for raising concerns, triaging serious allegations and
investigating concerns. Where required, the Audit Committee is notified of ethical concerns and our
in-house Ethical Sourcing Audit team escalates findings in factories and concerns raised by suppliers
(for further details regarding our in-house Ethical Sourcing Audit team please see the S2: Workers in
the value chain section of this report).
Actions: Training and awareness
G1-4
Training is a crucial element of our compliance framework and annual activity plan. It was one of the
key actions taken in FY25 to reinforce our policies and instil commitments across the Group. Other key
actions include a monthly Ethics and Compliance communications programme in PGS, Compliance
“Town Hall” meetings held in higher-risk markets such as Bangladesh and India and coverage in
Pepco’s internal employee magazine launching the new Code of Ethics.
Anti-Bribery and Corruption training is provided to all head office employees via an eLearning
module. We provide this base-level training on an annual basis to head office employees across
all functions and Board members, classifying all head office business functions to be “at-risk”
under the ESRS definition and providing all at-risk functions with training. This base-level training
is complemented by tailored eLearning training and workshops for functions exposed to elevated
risk or “high-risk” functions, including workshops developed for Property and Procurement teams.
There were zero convictions or fines for violations of anti-corruption or anti-bribery laws in the
reporting period.
For FY25, the Group did not set a target in relation to incidences of corruption and bribery. We
believe tracking of the effectiveness of our policies and actions in relation to this topic is instead
best managed through our reporting and management of corruption and bribery incidents and
adherence to our zero-tolerance position.
Whistleblowing
G1-1
The Group uses an independent whistleblowing hotline operated by Safecall which is available
in over 150 languages for use by both employees and suppliers, who can report anonymously if
required. Reports can also be made directly to our internal compliance and internal audit teams.
The Chief Legal Officer, Audit Committee and/or external counsel are notified of significant cases
where appropriate. Whistleblowing concerns are assessed and investigated either at the Group or
local level, depending on relevance and risk.
Nominated investigators at an operating company level manage reports locally. The Group
Compliance team has an immediate notification as well as access to all cases, and can ensure
cases are assigned to the appropriate level.
To ensure independence from local management and objectivity when investigating cases, we
have measures that drive impartiality and objectivity throughout the process. This includes diverting
certain cases to the Legal function and introducing an investigator conflict of interest declaration
ensuring that sensitive or complex matters are handled without bias or influence.
Our central triage process further supports impartiality and integrity by reviewing and classifying
cases before escalation. If the accused person is among the report recipients, a control ensures that
Safecall bypasses that person and escalates the case to the next management level. This structure
upholds the fairness and integrity of all investigations.
Protection of whistleblowers
G1-3
We strongly encourage individuals to speak up and are committed to protecting and supporting
whistleblowers, maintaining a zero-tolerance stance on retaliation in accordance with applicable
law. To help add further protection the whistleblower has the option to report matters anonymously,
semi-anonymously or named.
Employees receive training on whistleblowing and reporting procedures through our eLearning
platform. To enhance understanding, we provide a clear process map and comprehensive
guidance including questions and answers on our intranet that outline each step taken when
a report is submitted.
Investigators receive training on the Safecall platform and are provided with essential resources,
including templates and guidance notes, to support consistent and effective case handling.
To facilitate global accessibility, all templates, acknowledgement texts and follow-up communication
scripts have been translated into various local languages.
150
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Management of relationships with suppliers
G1-2
We are committed to ethical and responsible business conduct worldwide, which includes setting
expectations for our suppliers. Our goal is to source products and services in an ethical, sustainable
and socially responsible manner guided by our Supplier Code of Ethics. The Supplier Code of Ethics
sets out our minimum standards for supplier conduct, helping to protect the integrity of our supply
chain and align partners with our principles on business ethics and responsible sourcing. Suppliers
are expected to uphold high standards across key areas including anti-bribery and corruption,
financial crime prevention, ethical trading and fair competition, and conflict of interest management.
We expect our suppliers never to use or tolerate any form of forced labour or human trafficking,
or child labour (as defined by the International Labour Organization). We look to our suppliers
not only to comply with legal obligations but also to act with integrity and pursue continuous
improvement in their ethical and social practices, reinforcing our commitment to responsible
business conduct across the value chain.
As set out in the S2: Workers in the value chain section of this report, Tier 1 and 2 own-brand GFR
suppliers are required to review and confirm compliance with our Supplier Code of Ethics as part
of our responsible sourcing processes. All own-brand GFR suppliers are audited against our Factory
Audit Policy when onboarded and annually thereafter, allowing us to monitor compliance and to
support suppliers in improving their practices. The Group’s Factory Audit Policy supplements our
Supplier Code of Ethics, setting out our expectations, monitoring approach and how we evaluate
compliance through audits of GFR suppliers. The Audit Committee oversees the approach to ethical
and responsible business practices and receives an annual governance report regarding the
compliance programme findings.
Pepco integrates environmental and social criteria into our supplier selection and sourcing strategy.
This includes our membership of the Better Cotton Initiative (BCI) which aims to support farming
communities socially, environmentally and economically. By sourcing through BCI, Pepco Group
contributes to raising standards of cotton production, which translates into the wellbeing of farmers
and the environment. In addition, we source textiles certified by Oeko-Tex, which ensures products
are tested for harmful substances and meet social and environmental standards, and materials
certified by the Forest Stewardship Council (FSC), supporting responsible forest management.
By prioritising education and collaboration within our supply chain operations, we strive to foster
a culture of sustainability and responsibility. Pepco engages with suppliers, facilitated via training
sessions and supplier conferences (see further information on page 147). With a large regional
footprint, we dedicate time, expertise and resources to managing social and environmental
risks within our supply chain. To achieve this, we have in-country teams fluent in local languages
who conduct on-the-ground assessments and work closely with suppliers to uphold our rigorous
standards. These teams include specialists from a wide range of areas across the business, including
quality assurance, buyers and ethical sourcing to achieve an integrated approach in effectively
monitoring, supporting and continuously improving supply chain practices.
The Group does not currently operate a Group-wide late payments policy, however the Group
has invested in a Supply Chain Finance (SCF) programme which is offered to the vast majority
of our commercial product suppliers
1
. This process provides liquidity to our supply chain partners,
supporting their financial resilience, while also improving our cash conversion cycle.
1. The SCF programme is offered to all commercial product suppliers meeting minimum order thresholds, with the exception of
suppliers in Pakistan and Europe. The Group is currently exploring options to extend the SCF programme to suppliers in Pakistan
and Europe.
151 Pepco Group N.V. Annual Report 2025
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Appendix 1: Data points that derive from other EU legislation
Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS 2 GOV-1 Indicator number 13 of
Table #1 of Annex 1
Commission Delegated
Regulation (EU) 2020/1816 ( 27 ) ,
Annex II
Material 101
Board’s gender diversity paragraph 21 (d)
ESRS 2 GOV-1 Delegated Regulation
(EU) 2020/1816, Annex II
Material 101
Percentage of board members who are
independent paragraph 21 (e)
ESRS 2 GOV-4 Indicator number
10 Table #3 of Annex 1
Material 103
Statement on due diligence paragraph 30
ESRS 2 SBM-1 Indicators number
4 Table #1 of Annex 1
Article 449a Regulation (EU)
No 575/2013;
Delegated Regulation
(EU) 2020/1816, Annex II
Not material 104
Involvement in activities related to fossil fuel
activities paragraph 40 (d) i
Commission Implementing Regulation
(EU) 2022/2453 ( 28 ) Table 1:
Qualitative information on
Environmental risk and Table 2:
Qualitative information on Social risk
ESRS 2 SBM-1 Indicator number 9 Table
#2 of Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II
Not material 104
Involvement in activities related to chemical
production paragraph 40 (d) ii
ESRS 2 SBM-1 Indicator number 14 Table
#1 of Annex 1
Delegated Regulation
(EU) 2020/1818 ( 29 ), Article 12(1)
Delegated Regulation
(EU) 2020/1816, Annex II
Not material 104
Involvement in activities related to controversial
weapons paragraph 40 (d) iii
ESRS 2 SBM-1 Delegated Regulation
(EU) 2020/1818, Article 12(1)
Delegated Regulation
(EU) 2020/1816, Annex II
Not material 104
Involvement in activities related to cultivation
and production of tobacco paragraph 40 (d) iv
ESRS E1-1 Regulation (EU)
2021/1119, Article 2(1)
Material 113
Transition plan to reach climate neutrality
by 2050 paragraph 14
152
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Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS E1-1 Article 449a Delegated Regulation
(EU) 2020/1818, Article12.1 (d)
to (g), and Article 12.2
Material 113
Undertakings excluded from Paris-aligned
Benchmarks paragraph 16 (g)
Regulation (EU) No 575/2013;
Commission Implementing Regulation
(EU) 2022/2453 Template 1: Banking
book-Climate Change transition risk:
Credit quality of exposures by sector,
emissions and residual maturity
ESRS E1-4 Indicator number 4 Table
#2 of Annex 1
Article 449a Delegated Regulation
(EU) 2020/1818, Article 6
Material 116
GHG emission reduction targets paragraph 34 Regulation (EU) No 575/2013;
Commission Implementing Regulation
(EU) 2022/2453 Template 3: Banking
book – Climate change transition
risk: alignment metrics
ESRS E1-5 Indicator number
5 Table #1 and Indicator
n. 5 Table #2 of Annex 1
Material 117
Energy consumption from fossil sources
disaggregated by sources (only high climate
impact sectors) paragraph 38
ESRS E1-5 Energy consumption and mix
paragraph 37
Indicator number
5 Table #1 of Annex 1
Material 117
ESRS E1-5 Indicator number
6 Table #1 of Annex 1
Material 117
Energy intensity associated with activities in high
climate impact sectors paragraphs 40 to 43
ESRS E1-6 Indicators number 1 and 2
Table #1 of Annex 1
Article 449a; Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 1: Banking
book – Climate change transition
risk: Credit quality of exposures
by sector, emissions and residual
maturity
Delegated Regulation
(EU) 2020/1818, Article 5(1), 6
and 8(1)
Material 118
Gross Scope 1, 2, 3 and Total GHG emissions
paragraph 44
ESRS E1-6 Indicators number 3 Table
#1 of Annex 1
Article 449a Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 3: Banking
book – Climate change transition
risk: alignment metrics
Delegated Regulation
(EU) 2020/1818, Article 8(1)
Material 118
Gross GHG emissions intensity paragraphs
53 to 55
Appendix 1: Data points that derive from other EU legislation continued
153 Pepco Group N.V. Annual Report 2025
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Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS E1-7 Regulation (EU)
2021/1119, Article 2(1)
Material 118
GHG removals and carbon credits paragraph 56
ESRS E1-9 Delegated Regulation
(EU) 2020/1818, Annex II
Delegated Regulation
(EU) 2020/1816, Annex II
Material but
phase-in
applied
Not
applicable
Exposure of the benchmark portfolio to
climate-related physical risks paragraph 66
ESRS E1-9 Article 449a Regulation (EU)
No 575/2013; Commission Implementing
Regulation (EU) 2022/2453 paragraphs
46 and 47; Template 5: Banking book –
Climate change physical risk: Exposures
subject to physical risk.
Material but
phase-in
applied
Not
applicable
Disaggregation of monetary amounts by acute
and chronic physical risk paragraph 66 (a)
ESRS E1-9
Location of significant assets at material
physical risk paragraph 66 (c).
ESRS E1-9 Breakdown of the carrying value of its
real estate assets by energy-efficiency classes
paragraph 67 (c).
Article 449a Regulation (EU) No 575/2013;
Commission Implementing Regulation
(EU) 2022/2453 paragraph 34;Template
2:Banking book - Climate change
transition risk: Loans collateralised by
immovable property – Energy efficiency
of the collateral
Material but
phase-in
applied
Not
applicable
ESRS E1-9 Delegated Regulation
(EU) 2020/1818, Annex II
Material but
phase-in
applied
Not
applicable
Degree of exposure of the portfolio to
climate- related opportunities paragraph 69
ESRS E2-4 Indicator number 8
Table #1 of Annex 1
Indicator number 2
Table #2 of Annex 1
Indicator number 1
Table #2 of Annex 1
Indicator number 3
Table #2 of Annex 1
Not material Not
applicable
Amount of each pollutant listed in Annex II of the
E-PRTR Regulation (European Pollutant Release
and Transfer Register) emitted to air, water and
soil, paragraph 28
ESRS E3-1 Indicator number 7
Table #2 of Annex 1
Not material Not
applicable
Water and marine resources paragraph 9
ESRS E3-1 Indicator number 8
Table 2 of Annex 1
Not material Not
applicable
Dedicated policy paragraph 13
Appendix 1: Data points that derive from other EU legislation continued
154 Pepco Group N.V. Annual Report 2025
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Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS E3-1 Indicator number 12
Table #2 of Annex 1
Not material Not
applicable
Sustainable oceans and seas paragraph 14
ESRS E3-4 Indicator number 6.2
Table #2 of Annex 1
Not material Not
applicable
Total water recycled and reused paragraph 28 (c)
ESRS E3-4 Indicator number 6.1
Table #2 of Annex 1
Not material Not
applicable
Total water consumption in m
3
per net revenue
on own operations paragraph 29
ESRS 2- SBM 3 – E4 paragraph 16 (a) i Indicator number 7
Table #1 of Annex 1
Not material Not
applicable
ESRS 2- SBM 3 – E4 paragraph 16 (b) Indicator number 10
Table #2 of Annex 1
Not material Not
applicable
ESRS 2- SBM 3 – E4 paragraph 16 (c) Indicator number 14
Table #2 of Annex 1
Not material Not
applicable
ESRS E4-2 Indicator number 11
Table #2 of Annex 1
Not material Not
applicable
Sustainable land / agriculture practices or
policies paragraph 24 (b)
ESRS E4-2 Indicator number 12
Table #2 of Annex 1
Not material Not
applicable
Sustainable oceans / seas practices or policies
paragraph 24 (c)
ESRS E4-2 Indicator number 15
Table #2 of Annex 1
Not material Not
applicable
Policies to address deforestation paragraph 24 (d)
ESRS E5-5 Indicator number 13
Table #2 of Annex 1
Not material Not
applicable
Non-recycled waste paragraph 37 (d)
ESRS E5-5 Indicator number 9
Table #1 of Annex 1
Not material Not
applicable
Hazardous waste and radioactive waste
paragraph 39
ESRS 2- SBM3 – S1 Indicator number 13
Table #3 of Annex I
Material 145
Risk of incidents of forced labour paragraph 14 (f)
ESRS 2- SBM3 – S1 Indicator number 12
Table #3 of Annex I
Material 145
Risk of incidents of child labour paragraph 14 (g)
Appendix 1: Data points that derive from other EU legislation continued
155 Pepco Group N.V. Annual Report 2025
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Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS S1-1 Indicator number 9
Table #3 and Indicator
number 11 Table #1 of Annex I
Material 146
Human rights policy commitments paragraph 20
ESRS S1-1 Delegated Regulation
(EU) 2020/1816, Annex II
Material 143
Due diligence policies on issues addressed
by the fundamental International Labour
Organization Conventions 1 to 8, paragraph 21
ESRS S1-1 Indicator number 11
Table #3 of Annex I
Material 143
processes and measures for preventing
trafficking in human beings paragraph 22
ESRS S1-1 Indicator number 1
Table #3 of Annex I
Material 133
workplace accident prevention policy or
management system paragraph 23
ESRS S1-3 Indicator number 5
Table #3 of Annex I
Material 132
grievance/complaints handling mechanisms
paragraph 32 (c)
ESRS S1-14 Indicator number 2
Table #3 of Annex I
Delegated Regulation
(EU) 2020/1816, Annex II
Material 135
Number of fatalities and number and rate of
work-related accidents paragraph 88 (b) and (c)
ESRS S1-14 Indicator number 3
Table #3 of Annex I
Material but
phase-in
applied
Not
applicable
Number of days lost to injuries, accidents,
fatalities or illness paragraph 88 (e)
ESRS S1-16 Indicator number 12
Table #1 of Annex I
Delegated Regulation
(EU) 2020/1816, Annex II
Material 143
Unadjusted gender pay gap paragraph 97 (a)
ESRS S1-16 Indicator number 8
Table #3 of Annex I
Material 131
Excessive CEO pay ratio paragraph 97 (b)
ESRS S1-17 Indicator number 7
Table #3 of Annex I
Material 140
Incidents of discrimination paragraph 103 (a)
ESRS S1-17
Non-respect of UNGPs on Business and Human
Rights and OECD Guidelines paragraph 104 (a)
Indicator number 10
Table #1 and Indicator
n. 14 Table #3 of Annex I
Delegated Regulation (EU)
2020/1816, Annex II Delegated
Regulation (EU) 2020/1818 Art 12 (1)
Material 140
Appendix 1: Data points that derive from other EU legislation continued
156 Pepco Group N.V. Annual Report 2025
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statements
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statement
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information
Disclosure requirement
and related data point SFDR ( 23 ) reference Pillar 3 ( 24 ) reference
Benchmark
Regulation ( 25 ) reference
EU
Climate
Law ( 26 )
reference Materiality
Page
reference
ESRS 2- SBM3 – S2 Indicators number 12 and
n. 13 Table #3 of Annex I
Material 145
Significant risk of child labour or forced labour
in the value chain paragraph 11 (b)
ESRS S2-1 Indicator number 9 Table
#3 and Indicator n. 11 Table
#1 of Annex 1
Material 146
Human rights policy commitments paragraph 17
ESRS S2-1
Policies related to value chain workers
paragraph 18
Indicator number 11 and
n. 4 Table #3 of Annex 1
Material 146
ESRS S2-1
Non-respect of UNGPs on Business and
Human Rights principles and OECD guidelines
paragraph 19
Indicator number 10
Table #1 of Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II
Delegated Regulation
(EU) 2020/1818, Art 12 (1)
Material 146
ESRS S2-1 Delegated Regulation
(EU) 2020/1816, Annex II
Material 146
Due diligence policies on issues addressed
by the fundamental International Labour
Organization Conventions 1 to 8, paragraph 19
ESRS S2-4 Indicator number 14
Table #3 of Annex 1
Material 147
Human rights issues and incidents connected
to its upstream and downstream value chain
paragraph 36
ESRS G1-1 Indicator number 15
Table #3 of Annex 1
Material 149
United Nations Convention against Corruption
paragraph 10 (b)
ESRS G1-1 Indicator number 6
Table #3 of Annex 1
Material 150
Protection of whistle- blowers paragraph 10 (d)
ESRS G1-4 Indicator number 17
Table #3 of Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II)
Material 150
Fines for violation of anti-corruption and
anti-bribery laws paragraph 24 (a)
ESRS G1-4 Indicator number 16
Table #3 of Annex 1
Material 150
Standards of anti- corruption and anti- bribery
paragraph 24 (b)
Appendix 1: Data points that derive from other EU legislation continued
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Appendix 2: Emission factors applied to Scope 1, 2 and 3 GHG emissions
Scope Categories Source of data Data used by source Units CO
2
units
Scope 1 Fugitive emissions DESNZ (UK gov) In air conditioning and refrigerations kg CO
2
-eq
Stationary combustion DESNZ (UK gov);
IEA (International Energy Agency)
Liquid and solid;
Prices for fuels
EUR, kWh, litre, kg CO
2
-eq
NA
Mobile combustion DESNZ (UK gov);
IEA (International Energy Agency)
EFs for vehicles;
Prices for fuels
EUR, km, litre CO
2
-eq
NA
Scope 2 Cooling Via electricity database EFs for cooling m
2
CO
2
Electricity IEA (International Energy Agency)
AIB (Association of Issuing Bodies);
EPA (Environmental Protection Agency)
EFs for electricity generation;
EFs for electricity generation;
EFs for electricity generation
EUR, kWh, m
2
CO
2
-eq
CO
2
CO
2
-eq
Heating DESNZ (UK gov)
NO, SE, FI; Technical paper (e.g. A);
EFs for onsite and district heating
EFs for onsite and district heating
EUR, kWh, m
2
CO
2
-eq
CO
2
Scope 3 Purchased goods and services DESNZ (UK gov);
Exiobase;
Idemat;
Concito;
IFEU;
Ecoinvent
EFs for production of several minerals input output
model Cradle-to-gate/cradle to grave EFs grave
for food packaging
Cradle-to-gate EFs for food
Cradle-to-gate EfFs
EUR, kWh, m
2
, m
3
, kg, piece CO
2
-eq
Capital goods Exiobase;
DESNZ (UK gov);
Exoinvent
Idemat
Input output model;
EFs for production of several materials;
Cradle-to-gate EFs;
Cradle-to-gate/cradle-to-grave EFs
EUR, kWh, m
2
, m
3
, kg, piece CO
2
-eq
Fuel- and energy-related
activities
DESNZ (UK gov)
Exiobase
IEA (International Energy Agency)
Well-to-tank EFs for fuels;
input output model;
Well-to-tank EFs (Electricity)
EUR, kWh, kg, litre CO
2
-eq
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Scope Categories Source of data Data used by source Units CO
2
units
Upstream transportation
and distribution
DESNZ (UK gov);
Idemat;
Exiobase
EFs for freighting goods;
Cradle-to-gate EFs;
input output model
EUR, tonne*km, km, litre CO
2
-eq
Waste generated in operations DESNZ (UK gov);
Exiobase;
Quartz;
Idemat
Modelling approach for waste disposal EFs;
input output model;
End-of-life EFs;
End-of-life EFs
EUR, kg CO
2
-eq
Business travel DESNZ (UK gov);
Exiobase
EFs for passenger travel;
input-output model
passenger*km, day CO
2
-eq
Downstream transportation
and distribution
DESNZ (UK gov);
DESNZ (UK gov);
Idemat;
Exiobase
EFs for vehicles travel and transport;
EFs for freighting goods;
Cradle-to-gate EFs;
input output model
EUR, tonne*km, km, litre CO
2
-eq
Use of sold product DESNZ (UK gov);
IEA (International Energy Agency);
AIB (Association of Issuing Bodies)
Well to wheel EFs for fuels;
Well to wheel EFs for electricity;
Well to wheel EFs for electricity
EUR, kg, litre, m
3
, kWh CO
2
-eq
End of life treatment
of sold products
IEA (International Energy Agency);
AIB (Association of Issuing Bodies);
EPA (Environmental Protection Agency)
EFs for electricity generation;
EFs for electricity generation;
EFs for electricity generation
EUR, kWh, m
2
CO
2
-eq
CO
2
CO
2
-eq
Appendix 2: Emission factors applied to Scope 1, 2 and 3 GHG emissions continued
159 Pepco Group N.V. Annual Report 2025
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My child loves toys from Pepco. Our favourite
store always has a wide selection for kids of all ages.
Thanks to their great prices and good quality, I can buy
them without feeling guilty. They make our playtime
together much more fun and varied.
Katarzyna
Pepco customer
Financial statements
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Consolidated income statement
for the year ended 30 September 2025
[
| Year to | |||
| Year to | 30 September | ||
| 30 September | 2024 | ||
| 2025 | (Restated) | ||
| Note | €000 | €000 | |
| Continuing operations | |||
Revenue | 3 | ||
Cost of sales | ( | ( | |
Gross profit | |||
Administrative expenses | ( | ( | |
Impairment of non-financial assets | 10,11,12 | ( | ( |
Operating profit from continuing operations | 5 | ||
Financial income | 6 | ||
Financial expense | 7 | ( | ( |
Profit before taxation from continuing operations for the year | |||
Taxation | 9 | ( | ( |
Profit from continuing operations for the year | |||
Loss on discontinued operations | 25 | ( | ( |
Loss for the year | ( | ( | |
Earnings per share | 30 | ||
Basic earnings per share from continuing operations | |||
Basic earnings per share from discontinued operations | ( | ( | |
Basic earnings per share | ( | ( | |
Diluted earnings per share from continuing operations | |||
Diluted earnings per share from discontinued operations | ( | ( | |
Diluted earnings per share | ( | ( |
The notes on pages 166 to 205 form part of these financial statements.
* Comparatives have been restated to present Poundland as a discontinued operation and to restate prior period errors.
Refer to note 25 and note 26 for further details.
Consolidated statement of other
comprehensive income
for the year ended 30 September 2025
[
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Loss for the year | ( | ( |
| Other comprehensive income | ||
| Items that are or may be reclassified subsequently to profit or loss: | ||
Foreign currency translation differences – foreign operations | ||
Effective portion of changes in fair value of cash flow hedges | ( | |
Net change in fair value of cash flow hedges reclassified to profit or loss | ( | |
Deferred tax on items that are or may be reclassified subsequently to profit or loss | ( | |
| Net reserves recycled to profit or loss on disposal | ||
of discontinued operations | ( | |
Other comprehensive income/(loss) for the year, net of income tax | ( | |
Total comprehensive income/(loss) for the year | ( | ( |
| Total comprehensive income/(loss) for the year arising from: | ||
| Continuing operations | ||
| Discontinued operations | ( | ( |
The notes on pages 166 to 205 form part of these financial statements.
* Comparatives have been restated to present Poundland as a discontinued operation and to restate prior period errors.
Refer to note 25 and note 26 for further details.
161 Pepco Group N.V. Annual Report 2025
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statement
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informationFinancial statements
Consolidated statement of financial position
at 30 September 2025
| As at | ||||
| 30 September | 1 October | |||
| 30 September | 2024 | 2023 | ||
| 2025 | (Restated) | (Restated) | ||
| Note | €000 | €000 | €000 | |
| Non-current assets | ||||
Property, plant and equipment | 10 | |||
Right-of-use asset | 12 | |||
Goodwill and other intangible assets | 11 | |||
Loans receivable | ||||
Trade and other receivables | 14 | |||
Derivative financial instruments | 17 | |||
Deferred tax asset | 18 | |||
| Current assets | ||||
Inventories | 13 | |||
Tax receivable | ||||
Trade and other receivables | 14 | |||
Derivative financial instruments | 17 | |||
Cash and cash equivalents | ||||
Total assets | ||||
| Current liabilities | ||||
Trade and other payables | 15 | |||
Current tax liabilities | ||||
Lease liabilities | 12 | |||
Borrowings | 16 | |||
Derivative financial instruments | 17 | |||
Provisions | 19 | |||
| As at | ||||
| 30 September | 1 October | |||
| 30 September | 2024 | 2023 | ||
| 2025 | (Restated) | (Restated) | ||
| Note | €000 | €000 | €000 | |
| Non-current liabilities | ||||
Trade and other payables | 15 | |||
Lease liabilities | 12 | |||
Borrowings | 16 | |||
Derivative financial instruments | 17 | |||
Provisions | 19 | |||
Total liabilities | ||||
Net assets | ||||
| Equity attributable to equity holders of the parent | ||||
Share capital | 20 | |||
Share premium reserve | 20 | |||
Treasury shares | 20 | ( | ||
Cash flow hedge reserve | ( | ( | ( | |
Merger reserve | ( | ( | ( | |
Translation reserve | ( | |||
Share-based payment reserve | ||||
Retained earnings | ||||
Total shareholders’ equity |
The notes on pages 166 to 205 form part of these financial statements.
* Comparatives have been restated. Refer to note 26 for further details.
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Consolidated statement of changes in equity
for the year ended 30 September 2025
| Share-based | |||||||||
| Share | Treasury | Share | Cash flow | Translation | Merger | payment | Retained | Total | |
| capital | shares | premium | hedge reserve 1 | reserve 2 | reserve 3 | reserve 4 | earnings | equity | |
| €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Balance at 1 October 2024 | ( | ( | |||||||
| Total comprehensive income for the period | |||||||||
Loss for the year | ( | ( | |||||||
Other comprehensive income for the period | ( | ( | ( | ||||||
Total comprehensive income for the period | ( | ( | ( | ( | |||||
| Transactions with owners, recorded directly in equity | |||||||||
Equity-settled share-based payments (see note 21) | |||||||||
Dividends declared | ( | ( | |||||||
Issue of share capital | |||||||||
Own shares acquired in the year | ( | ( | |||||||
Total contributions by and distributions to owners | ( | ( | ( | ||||||
Balance at 30 September 2025 | ( | ( | ( |
1. The cash flow hedge reserve represents the cumulative effect of fair value gains and losses on cash flow hedges in the Group.
2. The translation reserve represents the cumulative foreign exchange differences on the translation of the net assets of the Group’s foreign operations from their functional currency to the presentation currency of the parent.
3. The merger reserve represents the difference between the cost of the Company’s investment in its subsidiaries acquired using the principles of merger accounting and the aggregate carrying value of assets and liabilities of the subsidiaries acquired.
4. The Group provides equity-settled share-based payment awards; see note 21.
The notes on pages 166 to 205 form part of these financial statements.
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Consolidated statement of changes in equity
for the year ended 30 September 2024
| Share-based | |||||||||
| Share | Treasury | Share | Cash flow | Translation | Merger | payment | Retained | Total | |
| capital | shares | premium | hedge reserve 1 | reserve 2 | reserve 3 | reserve 4 | earnings | equity | |
| €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Balance at 1 October 2023 | ( | ( | ( | ||||||
Impact of correction of errors (note 26) | ( | ( | ( | ||||||
Restated balance at 1 October 2023 | ( | ( | ( | ||||||
| Total comprehensive income for the period (restated) | |||||||||
Loss for the year (restated) | ( | ( | |||||||
Other comprehensive income for the period | |||||||||
Total comprehensive income for the period | ( | ( | |||||||
| Transactions with owners, recorded directly in equity | |||||||||
Issue of share capital | |||||||||
Equity-settled share-based payments (see note 21) | |||||||||
Total contributions by and distributions to owners | |||||||||
Balance at 30 September 2024 (restated) | ( | ( |
1. The cash flow hedge reserve represents the cumulative effect of fair value gains and losses on cash flow hedges in the Group.
2. The translation reserve represents the cumulative foreign exchange differences on the translation of the net assets of the Group’s foreign operations from their functional currency to the presentation currency of the parent.
3. The merger reserve represents the difference between the cost of the Company’s investment in its subsidiaries acquired using the principles of merger accounting and the aggregate carrying value of assets and liabilities of the subsidiaries acquired.
4. The Group provides equity-settled share-based payment awards; see note 21.
The notes on pages 166 to 205 form part of these financial statements.
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Consolidated statement of cash flows
for the year ended 30 September 2025
| 30 September | |||
| 30 September | 2024 | ||
| 2025 | (Restated) | ||
| Note | €000 | €000 | |
| Cash flows from operating activities | |||
Profit for the period from continuing operations: | |||
| Adjustments for: | |||
Depreciation, amortisation and impairment | 10,11,12 | ||
Right-of-use asset depreciation | 12 | ||
Financial income | 6 | ( | ( |
Financial expense | 7 | ||
Profit on sale of property, plant and equipment | ( | ( | |
Equity-settled share-based payment expenses | 21 | ||
Taxation | 9 | ||
(Increase)/decrease in trade and other receivables | ( | ||
Decrease in inventories | |||
Decrease in trade and other payables | ( | ( | |
Increase in provisions and employee benefits | |||
Settlement of derivatives | |||
Cash generated by operations | |||
Tax paid | ( | ( | |
Net cash from operating activities in discontinued operations | |||
Net cash inflow from operating activities | |||
| Cash flows used in investing activities | |||
Proceeds from sale of property, plant and equipment | |||
Interest received | |||
Disposal of a subsidiary net of cash disposed | ( | ( | |
Additions to property, plant and equipment | 10 | ( | ( |
Additions to other intangible assets | 11 | ( | ( |
Net cash from investing activities in discontinued operations | ( | ( | |
Net cash outflow used in investing activities | ( | ( |
| 30 September | |||
| 30 September | 2024 | ||
| 2025 | (Restated) | ||
| Note | €000 | €000 | |
| Cash flows from financing activities | |||
Proceeds from the issue of share capital | |||
Purchase of own shares | ( | ||
Dividends paid | ( | ||
Proceeds from borrowings net of fees incurred | |||
Repayment of borrowings | ( | ||
Interest paid | ( | ( | |
Payment of interest on lease liabilities | 12 | ( | ( |
Repayment of lease liabilities | 12 | ( | ( |
Net cash from financing activities in discontinued operations | ( | ( | |
Net cash outflow from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | |||
Cash and cash equivalents at beginning of period | |||
Effect of exchange rate fluctuations on cash held | |||
Cash and cash equivalents at end of period |
The notes on pages 166 to 205 form part of these financial statements.
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Notes to the consolidated financial
statements
1. Significant accounting policies
The Group financial statements have been prepared in accordance with International Financial
Reporting Standards, as adopted by the EU (Adopted IFRS Accounting Standards), and also comply
with the statutory provisions of part 9 of Book 2 of the Dutch Civil Code. The parent company
financial statements have been prepared in accordance with IFRS Accounting Standards as
endorsed by the EU and with part 9 of Book 2 of the Dutch Civil Code; these are presented on
pages 206 to 213.
The accounting policies set out below have, unless otherwise stated, been applied consistently
to all years presented in these Group financial statements.
1.1 Measurement convention
The financial statements have been prepared on the historical cost basis except for derivatives
which are measured at fair value. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. In estimating the
fair value of an asset or a liability, the Group takes into account the characteristics of the asset or
liability if market participants would take those characteristics into account when pricing the asset
or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these
consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of IFRS 2 and measurements that have some similarities to fair
value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
1.2 Going concern
The FY25 consolidated financial statements have been prepared on a going concern basis.
The Group maintains access to significant committed credit facilities and total available liquidity
as of 30 September 2025 exceeded €850m. Since the year end, the Group has further improved its
balance sheet and financial strength, supported by the completion of a dual-tracked refinancing
of banking facilities and a Polish bond issuance in November 2025, as part of a review of external
funding to extend the Group’s debt maturity profile out to 2032, optimise debt pricing and enhance
financial flexibility.
In assessing the Group’s ability to continue as a going concern, the Directors have considered
the Group’s overall financial position, liquidity, cash flow forecasts and the potential impact of the
principal risks and uncertainties outlined on pages 56 to 61. The assessment included a review of
forecast cash flows and liquidity headroom under a base case, severe but plausible downside
scenarios and a reverse stress test over a period of 24 months from the end of the reporting period
to the end of FY27.
These scenarios incorporated assumptions relating to increasing geopolitical instability,
intensification of competition, changes in consumer demand and supply chain disruption.
Even under these scenarios, the Group retains sufficient headroom and liquidity throughout
the assessment period and is able to comply with the requirements of its lending covenants.
Based on this review, the Directors are comfortable that the Group has adequate facilities and
resources to meet its obligations as they fall due for a period of at least 12 months from the date of
approval of the Group’s financial statements, and therefore that it is appropriate to apply the going
concern basis for the preparation of the FY25 consolidated financial statements.
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1.3. Basis of consolidation continued
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1.7 Derivative financial instruments and hedging continued
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1.20 Lease accounting continued
1.24 Events after the balance sheet date
The consolidated financial statements are adjusted to reflect events that occurred provided they
give evidence of conditions that existed at the balance sheet date.
Events that are indicative of conditions that arose after the balance sheet date are disclosed where
significant, but do not result in an adjustment of the consolidated financial statements themselves.
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1.27 Reserves
Merger reserve
The merger reserve arose on consolidation as a result of the acquisition of the Pepco Group
companies and Pepkor Import BV on 4 May 2016 and also the acquisition of Fully Sun China Limited
and its subsidiaries on 18 January 2018 and the share for share exchange transaction that took
place on 13 May 2021. It represents the difference between the cost of the Company’s investment
in its subsidiaries acquired using the principles of merger accounting and the aggregate carrying
value of assets and liabilities of the subsidiaries acquired.
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Lease Term
Management exercises judgement in determining the lease term on its lease contracts.
Within its lease contracts, particularly those in respect of its retail business, break options
and extension clauses are included to provide operational and financial security should store
performance be different to expectations. At inception of a lease, management will typically assess
the lease term as being up until the first extension option, which is typically 5 years, given historical
data and as such it is reasonably certain that break options will not be exercised. Management
will continue to assess this estimate to ensure it aligns with the lease term of the stores, and whether
lease extension options are generally exercised
As stated in the accounting policies, the discount rate used to calculate the lease liability is based
on the incremental borrowing rate. Incremental borrowing rates are determined quarterly and
depend on the lease term, currency and start date of the lease. The incremental borrowing rate is
determined based on a series of inputs including the risk-free rate based on government bond rates,
country-specific risk and entity-specific risk. See note 12 for detailed disclosures.
1.31 Alternative Performance Measures (APMs)
Management exercises judgement in determining the adjustments to apply to IFRS Accounting
Standards measurements in order to derive suitable APMs. As set out in note 27, APMs are used
as management believes these measures provide additional useful information on the underlying
trends, performance and position of the Group. These measures are used for performance analysis.
The APMs are not defined by IFRS Accounting Standards and therefore may not be directly
comparable with other companies’ APMs. These measures are not intended to be a substitute
for, or superior to, IFRS Accounting Standards measurements.
2. Segmental analysis
Operating segments are defined as components of the Group about which separate financial
information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM),
or decision-making group, in deciding how to allocate resources and in assessing performance.
Operating segments are reported in a manner consistent with the internal reporting provided to
the Group Executive Committee, which is considered the Group’s CODM.
The Group has identified two significant revenue-generating operating segments: one being
business trading under the Pepco banner and the other being business trading under the Dealz
banner. In previous reporting periods, the Group referred to three significant revenue-generating
operating segments whereby business trading under the Poundland banner was also included.
This segment was sold during FY25 and therefore the results from this segment are no longer
included in the segmental analysis. A final “other” operating segment includes the Group’s sourcing
operations, Group functions and other activities that do not meet the threshold requirements for
individual reporting.
EBITDA is the primary profit metric reviewed by the CODM and has been presented by operating
segment with a reconciliation to operating profit. EBITDA is defined as operating profit before
depreciation, amortisation, impairment and profit/loss on disposal of tangible and intangible assets.
Tax and interest are not reviewed by the CODM on an operating segment basis. Segment assets
and liabilities are measured in the same way as in the consolidated historical financial information.
These assets and liabilities are allocated based on the operations of the segment and the physical
location of the asset. Investments in subsidiaries within the Group, along with relevant consolidation
adjustments and eliminations, are allocated to the relevant segment. Assets and liabilities included
within the “other” segment relate to balances held by the Group’s sourcing operations.
All income statement disclosures are for the continuing business only. The total asset, total liability
and capital expenditure disclosures are for the entire Group.
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| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Revenue | ||
Pepco | 4,184,209 | 3,853,169 |
Dealz Poland | 339,254 | 307,247 |
Group Revenue | 4,523,463 | 4,160,416 |
| Cost of sales | ||
Pepco | 2,128,499 | 1,998,243 |
Dealz | 230,032 | 213,544 |
Consolidation adjustments | (1,594) | (4,751) |
Group cost of sales | 2,356,937 | 2,207,036 |
| Underlying EBITDA | ||
Pepco | 874,327 | 792,906 |
Dealz Poland | 24,694 | 13,117 |
Other | (33,749) | (22,144) |
Group Underlying EBITDA | 865,272 | 783,879 |
| Reported EBITDA | ||
Pepco | 847,101 | 750,643 |
Dealz Poland | 16,777 | 11,299 |
Other | (23,786) | (24,162) |
Reported EBITDA | 840,092 | 737,780 |
| Less reconciling items to operating profit | ||
Depreciation of right-of-use asset | (301,301) | (271,440) |
Impairment of right-of-use asset | (32,631) | (419) |
Depreciation of property, plant and equipment | (145,604) | (132,435) |
Impairment of property, plant and equipment | (22,639) | (4,437) |
Amortisation of other intangibles | (8,117) | (5,662) |
Impairment of other intangibles | (10,146) | (619) |
Profit on disposal of property, plant and equipment | 220 | 272 |
Other expenses | – | 1 |
Group operating profit from continuing operations | 319,874 | 323,041 |
All income statement disclosures are for the continuing business only. The total asset, total liability
and capital expenditure disclosures are for the entire Group.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Depreciation and amortisation | ||
Pepco | 417,687 | 375,633 |
Dealz Poland | 35,598 | 32,352 |
Other | 1,737 | 1,552 |
Group depreciation and amortisation | 455,022 | 409,537 |
| Impairment of non-financial assets | ||
Pepco | 59,646 | 4,362 |
Dealz Poland | 5,770 | 1,113 |
Other | – | – |
Group Impairment of non-financial assets | 65,416 | 5,475 |
| Total assets | ||
Pepco | 2,836,714 | 2,839,273 |
Dealz Poland | 148,229 | 176,266 |
Other | 52,057 | 12,735 |
Poundland | – | 988,362 |
Group total assets | 3,037,000 | 4,016,636 |
| Total liabilities | ||
Pepco | 2,090,802 | 2,089,183 |
Dealz Poland | 108,145 | 110,268 |
Other | 675,041 | 662,831 |
Poundland | – | 713,103 |
Group total liabilities | 2,873,988 | 3,575,385 |
| Additions to non-current assets | ||
Pepco | 342,362 | 535,087 |
Dealz Poland | 17,516 | 30,910 |
Other | 1,932 | 1,948 |
Poundland | – | 138,914 |
Group additions to non-current assets | 361,810 | 706,859 |
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| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Poland | 1,712,936 | 1,617,790 |
Rest of Central and Eastern Europe | 2,115,578 | 1,950,271 |
Western Europe | 694,949 | 592,355 |
4,523,463 | 4,160,416 |
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
UK and Republic of Ireland | 32,847 | 624,165 |
Poland | 384,901 | 472,926 |
Rest of Central and Eastern Europe | 618,082 | 634,522 |
Western Europe | 565,028 | 611,598 |
1,600,858 | 2,343,211 |
4. Exceptional items
The Group believes underlying profit, an alternative profit measure, is a valuable way in which
to present business performance as it provides the users of the accounts with a clear and more
representative view of ongoing business performance. Exceptional items, which are removed
from the reported IFRS Accounting Standards measures, are defined as material, exceptional,
unusual and other items.
Underlying performance measures should be considered in addition to IFRS Accounting
Standards measures and are not intended to be a substitute for them. The Group also uses
underlying financial performance to improve the comparability of information between reporting
periods and geographical units and to aid users in understanding the Group’s performance.
Consequently, the Group uses underlying financial performance for performance analysis,
planning, reporting and incentive setting.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Reported EBITDA from continuing operations | 840,092 | 737,780 |
Group Value Creation Plan (VCP) | – | 590 |
| Impact of implementation of IFRIC interpretation on SaaS arrangements | ||
and expensing significant ERP programme costs incurred | 7,780 | 28,590 |
Restructuring costs 1 | 17,400 | 675 |
Hungary fraud incident | – | 16,243 |
Underlying EBITDA from continuing operations | 865,272 | 783,878 |
Reported operating profit from continuing operations | 319,874 | 323,041 |
Group Value Creation Plan (VCP) | – | 590 |
| Impact of implementation of IFRIC interpretation on SaaS arrangements | ||
and expensing significant ERP programme costs incurred | 16,997 | 26,329 |
Restructuring costs 1 | 34,131 | 675 |
Hungary fraud incident | – | 16,243 |
Underlying operating profit from continuing operations | 371,002 | 366,878 |
Reported profit before taxation from continuing operations for the year | 251,474 | 234,079 |
Group Value Creation Plan (VCP) | – | 590 |
| Impact of implementation of IFRIC interpretation on SaaS arrangements | ||
and expensing significant ERP programme costs incurred | 16,997 | 26,338 |
Restructuring costs 1 | 34,131 | 675 |
Hungary fraud incident | – | 16,243 |
Underlying profit before tax from continuing operations | 302,602 | 277,925 |
1. Restrcuturing costs include €5.6m which is included within cost of sales.
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IFRS 2 charge: A Value Creation Plan (VCP) was approved by the Board of Directors in March 2020
as a reward tool to incentivise the top management of the Pepco Group and to retain them post
an IPO. The remaining VCP charges treated as exceptional costs were completed in FY24.
Impact of implementation of IFRIC interpretation on SaaS arrangements and expensing significant
ERP programme costs incurred: Following the IFRIC interpretation on accounting for SaaS costs,
the Group has expensed previously capitalised costs in relation to certain SaaS projects as
part of the retrospective application of the new accounting policy. In FY24 and FY25, the Group
has specifically expensed costs related to significant ERP programmes alongside a significant
impairment in FY25.
Restructuring costs: The Group undertook a strategic decision in the year to restructure Pepco
Spain and Pepco Germany. In the case of Pepco Spain, the exceptional items relate to closure costs
of stores and conversions to remove FMCG from the Pepco Spain offering. With regards to Pepco
Germany, the exceptional items relate to costs for the insolvency and closure of the relevant Pepco
Germany stores. In addition, the Group also has included exceptional costs relating to write off of
certain trade balances due from Poundland as a result of the sale.
Hungary fraud incident: During FY24, the Group incurred a loss due to a fraud incident which
occurred in Pepco Hungary. The loss to the business is an exceptional item as it was material,
exceptional and unusual in nature. All costs have been captured that relate to this issue and
classified as exceptional.
Please note that the prior year reported results included the non-cash impairment of Poundland
(primarily goodwill), which has now been reclassified to discontinued operations in both FY24
(restated) and FY25.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Operating (loss)/profit for the period has been arrived at after charging: | ||
Expense relating to short-term, low-value and variable leases | 57,979 | 57,316 |
| Depreciation of tangible fixed assets and other items: | ||
Owned | 145,604 | 132,435 |
Depreciation of right-of-use assets | 301,301 | 271,440 |
Impairment of property, plant and equipment | 22,639 | 4,437 |
Amortisation of other intangibles | 8,117 | 5,662 |
Impairment of other intangible assets | 10,146 | 619 |
Impairment of right-of-use assets | 32,631 | 419 |
Cost of inventories recognised as an expense | 2,310,235 | 2,162,448 |
Write downs of inventories recognised as an expense | 31,333 | 41,877 |
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
| Auditors’ remuneration | ||
Fees payable to the Company’s auditors and their associates for the audit of the Company’s annual accounts 1 | 1,375 | 538 |
Fees payable to the Company’s auditors and their associates for the audit of the Company’s subsidiaries 1 | 4,465 | 1,182 |
| Fees payable to other auditors and their associates for the audit | ||
of the Company’s subsidiaries | – | 782 |
| Fees payable to other auditors and their associates in the current | ||
year in relation to prior year audit | – | 128 |
Total audit fees | 5,840 | 2,630 |
Other assurance services 2 | 560 | 165 |
Other services | – | – |
Total auditors’ remuneration 3 | 6,400 | 2,795 |
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| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Bank interest income | 23,178 | 22,063 |
Interest on external loans 1 | 4,712 | – |
Foreign exchange gains/(losses) | 29,220 | (2,163) |
57,110 | 19,900 |
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Interest on bank loans and amortisation of capitalised finance costs | 60,613 | 67,784 |
Bond call premium payable 1 | 6,344 | – |
Release of capitalised finance costs due to bond call 1 | 3,509 | – |
Interest on lease liabilities | 41,181 | 43,678 |
Foreign exchange losses | 13,863 | (2,600) |
125,510 | 108,862 |
The average number of persons employed by the Group (including Directors) during each year was
as follows:
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
Administration | 2,650 | 2,821 |
Selling and distribution | 41,113 | 46,246 |
43,763 | 49,067 |
The table is completed above including staff numbers from discontinued operations. If discontinued
operations were to be excluded, the average number of persons employed for FY25 would be
34,200 (FY24: 32,853).
The Group does not have any staff employed in the Netherlands.
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
| (Restated) | ||
| €000 | €000 | |
Wages and salaries | 606,449 | 527,712 |
Social security costs | 104,746 | 89,422 |
Other pension costs (note 23) | 35,569 | 29,947 |
Share-based payments expense (note 21) | 12,590 | 6,677 |
759,354 | 653,758 |
| Other | Post- | |||||
| Short-term | short-term | employment | ||||
| Basic | annual bonus | Company | pension | |||
| remuneration | paid | contributions | contribution | LTIP 1 | Total | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
2025 | 2,546 | 2,157 | 1,011 | 216 | 1,302 | 7, 2 3 2 |
2024 | 3,068 | 1,942 | 116 | 125 | 6,184 | 11,435 |
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| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Current tax (charge)/credit | ||
Current tax for the year | (105,193) | (111,512) |
Global minimum top-up tax | (461) | – |
Adjustments in respect of prior periods | 3,994 | (18,151) |
Total current tax | (101,660) | (129,663) |
| Deferred tax (charge)/credit | ||
Origination and reversal of temporary differences | 22,710 | 20,617 |
De-recognition of previously recognised temporary differences | – | (5,714) |
Change in deferred tax rate | 619 | – |
Adjustments in respect of prior periods | (1,748) | 8,057 |
Total deferred tax | 21,581 | 22,960 |
Total tax charge for the year | (80,079) | (106,703) |
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Profit before tax – continuing operations | 251,474 | 234,079 |
Expected tax charge at the UK statutory rate of 25.0% (2024: 25.0%) | (62,869) | (58,520) |
| Effects of: | ||
Movement in unrecognised temporary differences* | (25,403) | (40,415) |
Expenses not deductible for tax purposes | (19,833) | (7,537) |
Fixed asset differences | (2,179) | – |
Overseas tax rate differences** | 27,440 | 9,863 |
Adjustments in respect of prior periods | 2,246 | (10,094) |
Difference in tax rates | 519 | – |
Total tax charge for the year | (80,079) | (106,703) |
| where the statutory tax rate is, in many cases, lower than the UK statutory rate of 25.0%. IAS 12 does not provide specific guidance |
| on how to reflect the impact of global minimum top-up tax in the reconciliation of the effective tax rate. The Group has therefore |
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9. Taxation continued
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Deferred tax (charge)/credit | ||
Fair value movements on derivative financial instruments | 5,267 | (8,238) |
Total tax (charge)/credit recognised in other comprehensive income | 5,267 | (8,238) |
The total tax (charge)/credit for the year relates to continuing operations and excludes amounts
recognised within discontinued operations. In the year ended 30 September 2025, the Group
recognised a tax (charge)/credit within “profit/(loss) from discontinued operations” of €2.0m
(2024: €(36.4)m).
Factors that may affect future current and total tax
As a large multinational enterprise the Group falls within the scope of the global minimum
tax rules (Pillar Two) which are now effective in most jurisdictions in which the Group operates.
Relevant legislation was substantively enacted in the UK on 20 June 2023, effective for accounting
periods commencing on or after 31 December 2023. In this respect the current financial year
(i.e. ended 30 September 2025) is the first in relation to which the rules are effective for the Group.
In the financial year ended 30 September 2025 the Group had operations in Bosnia and
Herzegovina, Bulgaria, Hungary, Isle of Man, Republic of Ireland and Switzerland, all of which
currently have a headline tax rate below 15%.
In most jurisdictions in which the Group operates the Pillar Two rules are not expected to have a
significant impact on the Group’s financial statements, either as a result of available safe harbours,
elections or the substance-based income exclusion. In the current year the Group has provided for
a potential top-up tax under the Pillar Two rules in Bulgaria amounting to €0.5m. No provision has
been recorded for any top-up tax arising under the Pillar Two rules in any other jurisdiction.
The Group accounts for the impact of any top-up tax arising under the Pillar Two rules when it
is incurred and has applied a temporary mandatory relief from deferred tax accounting for the
impacts of the Pillar Two rules.
The Group continues to monitor developments in the implementation of Pillar Two rules across
all relevant jurisdictions. Additional compliance obligations under the rules may arise as legislation
is enacted and guidance is clarified.
| Leasehold | Fixtures | |||
| Land and | property | and | ||
| buildings | improvements | equipment | Total | |
| €000 | €000 | €000 | €000 | |
| Cost | ||||
Balance at 1 October 2023 | 90,852 | 496,895 | 680,236 | 1,267,983 |
Additions | 6,988 | 88,348 | 105,833 | 201,169 |
Disposals | (77) | (22,590) | (33,012) | (55,679) |
Differences on translation | (11,572) | 29,221 | 19,509 | 37,158 |
Balance at 30 September 2024 (restated) | 86,191 | 591,874 | 772,566 | 1,450,631 |
Balance at 1 October 2024 | 86,191 | 591,874 | 772,566 | 1,450,631 |
Additions | 2,775 | 41,281 | 47,227 | 91,283 |
Disposals | – | (3,788) | (4,559) | (8,347) |
Differences on translation | (4,255) | (1,633) | 17,958 | 12,070 |
Discontinued operations | (5,931) | (131,988) | (281,171) | (419,090) |
Balance at 30 September 2025 | 78,780 | 495,746 | 552,021 | 1,126,547 |
| Depreciation and impairment | ||||
Balance at 1 October 2023 | 11,852 | 165,642 | 344,052 | 521,546 |
Charge for the period | 2,904 | 79,876 | 99,602 | 182,382 |
Disposals | (125) | (10,973) | (23,979) | (35,077) |
Impairment | – | 76,308 | – | 76,308 |
Differences on translation | (2,195) | 32,254 | 3,316 | 33,375 |
Balance at 30 September 2024 (restated) | 12,436 | 343,107 | 422,991 | 778,534 |
Balance at 1 October 2024 | 12,436 | 343,107 | 422,991 | 778,534 |
Charge for the period | 1,416 | 73,048 | 71,140 | 145,604 |
Disposals | – | (1,668) | (3,358) | (5,026) |
Impairment | – | 13,045 | 9,594 | 22,639 |
Differences on translation | (150) | (17,668) | 6,285 | (11,533) |
Discontinued operations | (1,189) | (111,041) | (171,300) | (283,530) |
Balance at 30 September 2025 | 12,513 | 298,823 | 335,352 | 646,688 |
| Net book value | ||||
Balance at 30 September 2025 | 66,267 | 196,923 | 216,669 | 479,859 |
Balance at 30 September 2024 (restated) | 73,755 | 248,767 | 3 49, 575 | 672,097 |
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10. Property, plant and equipment continued
| Software and | ||||
Goodwill 1 | Brand 1 | trademarks | Total | |
| €000 | €000 | €000 | €000 | |
| Cost | ||||
Balance at 1 October 2023 | 820,281 | 127,069 | 68,913 | 1,016,263 |
Additions | – | – | 7,189 | 7,189 |
Disposals | – | – | (1,033) | (1,033) |
Differences on translation | 21,164 | 4,433 | 2,998 | 28,595 |
Balance at 30 September 2024 | 841,445 | 131,502 | 78,067 | 1,051,014 |
Balance at 1 October 2024 | 841,445 | 131,502 | 78,067 | 1,051,014 |
Additions | – | – | 6,917 | 6,917 |
Disposals | – | – | (1,630) | (1,630) |
Differences on translation | – | – | 584 | 584 |
Discontinued operations | (841,445) | (131,502) | (26,517) | (999,464) |
Balance at 30 September 2025 | – | – | 5 7, 4 2 1 | 5 7, 4 2 1 |
| Amortisation and impairment | ||||
Balance at 1 October 2023 | 116,621 | 16,016 | 36,149 | 168,786 |
Amortisation for the period | – | 3,924 | 7,400 | 11,324 |
Disposals | – | – | (380) | (380) |
Impairments | 578,098 | – | 619 | 578,717 |
Differences on translation | – | (41) | 261 | 220 |
Balance at 30 September 2024 | 694,719 | 19,899 | 44,049 | 758,667 |
Balance at 1 October 2024 | 694,719 | 19,899 | 44,049 | 758,667 |
Amortisation for the period | – | – | 8,117 | 8,117 |
Impairments | – | – | 10,146 | 10,146 |
Differences on translation | – | – | (312) | (312) |
Discontinued operations | (694,719) | (19,899) | (22,206) | (736,824) |
Balance at 30 September 2025 | – | – | 39,794 | 39,794 |
| Net book value | ||||
Balance at 30 September 2025 | – | – | 17,627 | 17,627 |
Balance at 30 September 2024 | 146,726 | 111,603 | 34,018 | 292,347 |
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Right-of-use assets
| Buildings | Equipment | Vehicles | Total | |
| €000 | €000 | €000 | €000 | |
| Cost | ||||
Balance at 1 October 2023 | 2,153,862 | 45,596 | 28,499 | 2,227,957 |
Additions | 487,202 | 5,660 | 5,638 | 498,500 |
Disposals | (52,300) | – | (150) | (52,450) |
Differences on translation | 81,478 | 19,325 | (15,454) | 85,349 |
Balance at 30 September 2024 (restated) | 2,670,242 | 70,581 | 18,533 | 2,759,356 |
Balance at 1 October 2024 | 2,670,242 | 70,581 | 18,533 | 2,759,356 |
Additions | 262,345 | 525 | 740 | 263,610 |
Disposals | (2,349) | – | – | (2,349) |
Differences on translation | (40,581) | (17,572) | 16,634 | (41,519) |
Discontinued operations | (737,120) | (39,431) | (25,980) | (802,531) |
Balance at 30 September 2025 | 2,152,537 | 14,103 | 9,9 2 7 | 2,176,567 |
| Depreciation | ||||
Balance at 1 October 2023 | 939,371 | 26,110 | 15,639 | 981,120 |
Depreciation for the period | 360,838 | 4,666 | 3,136 | 368,640 |
Disposals | (11,625) | – | (17) | (11,642) |
Impairment | 81,404 | – | – | 81,404 |
Differences on translation | 35,824 | 22,476 | (8,997) | 49,303 |
Balance at 30 September 2024 (restated) | 1,405,812 | 53,252 | 9,761 | 1,468,825 |
Balance at 1 October 2024 | 1,405,812 | 53,252 | 9,761 | 1,468,825 |
Depreciation for the period | 297,033 | 1,756 | 2,512 | 301,301 |
Disposals | (594) | – | – | (594) |
Impairment | 32,631 | – | – | 32,631 |
Differences on translation | (19,024) | (20,803) | 9,9 6 5 | (29,862) |
Discontinued operations | (544,271) | (21,736) | (16,003) | (582,010) |
Balance at 30 September 2025 | 1,171,587 | 12,469 | 6,235 | 1,190,291 |
| Net book value | ||||
Balance at 30 September 2025 | 980,950 | 1,634 | 3,692 | 986,276 |
Balance at 30 September 2024 (restated) | 1,264,430 | 17,329 | 8,772 | 1,290,531 |
An impairment was recognised in the year of €32.6m (2024: €81.4m) as a result of the expected store
closures and impairment reviews on loss-making stores.
Lease liabilities
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
At beginning of period | 1,428,864 | 1,293,171 |
Additions | 258,161 | 517,913 |
Interest on lease liability | 41,181 | 67,671 |
Repayment of lease liability | (332,066) | (441,585) |
Disposal | (1,886) | (35,521) |
Differences on translation | (4,026) | 27,215 |
Discontinued operations | (323,918) | – |
At end of period | 1,066,310 | 1,428,864 |
Current | 284,796 | 394,469 |
Non-current | 781,514 | 1,034,395 |
1,066,310 | 1,428,864 |
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Interest expenses (included in finance cost) | 41,181 | 43,678 |
| Expense relating to short-term leases (included in cost of goods sold | ||
and administrative expenses) | 1,203 | 580 |
Expense relating to leases of low-value assets that are not shown above as short-term leases (included in administrative expenses) | 223 | 221 |
| Expense relating to variable lease payments not included in lease liabilities | ||
(included in administrative expenses) | 56,552 | 49,603 |
Amounts recognised in the statement of cash flows
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
Total cash outflow for leases | 390,044 | 491,989 |
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12. Leases continued
13. Inventories
| 30 September | ||
| 30 September | 2024 | |
| 2025 | €000 | |
| €000 | (Restated) | |
Goods purchased for resale | 538,371 | 750,537 |
Goods in transit | 354,116 | 424,139 |
892,487 | 1,174,676 |
Cost of inventories from continuing operations recognised as an expense for the year ended
30 September 2025 were €2,310.2m (FY24: €2,183.3m).
In addition, inventory losses and provisions from continuing operations recognised as an expense
for the year ended 30 September 2025 were €31.3m (FY24: €41.9m)
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
| Non-current trade and other receivables | ||
Other receivables | 64 | 52 |
64 | 52 | |
| Current trade and other receivables | ||
Trade receivables | 521 | 4,991 |
Other receivables | 43,093 | 27,184 |
Prepayments | 19,641 | 70,699 |
63,255 | 102,874 |
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| 30 September | ||
| 30 September | 2024 | |
| 2025 | €000 | |
| €000 | (Restated) | |
| Current | ||
Trade payables | 646,019 | 852,951 |
Other taxation and social security | 71,258 | 71,724 |
Other payables | 72,886 | 81,326 |
Accruals 1 | 159,419 | 351,907 |
949,582 | 1,357,908 | |
| Non-current | ||
Accruals and deferred income | 3,404 | 3,396 |
3,404 | 3,396 |
| 30 September | |
| 2025 | |
| €000 | |
Presented within trade and other payables | 412,543 |
– of which is drawn under the supply chain finance programmes | 362,398 |
| 120–150 days | |
| Liabilities that are part of supplier finance arrangements | after invoice date |
| 60–150 days | |
| Comparable trade payables that are not part of supplier finance arrangements | after invoice date |
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
| Current | ||
Principal – Borrowings from credit institutions | 250,000 | – |
Principal – Secured bond issuance | 175,000 | – |
Capitalised costs | (407) | – |
Redemption premium | 6,344 | – |
430,937 | – | |
| Non-current | ||
Principal – Borrowings from credit institutions | – | 250,000 |
Principal – Secured bond issuance | 200,000 | 375,000 |
Capitalised costs | (4,307) | (12,020) |
195,693 | 612,980 |
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| September | September | September | September | September | September | |
| 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
Fixed | Float | Tota l | Fixed | Float | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | |
| Cash and cash | ||||||
equivalents | – | 464,357 | 464,357 | – | 362,881 | 362,881 |
| Borrowings from credit | ||||||
institutions | (377,333) | (249,297) | (626,630) | (364,750) | (248,230) | (612,980) |
Finance lease liabilities | (1,066,310) | – | (1,066,310) | (1,428,864) | – | (1,428,864) |
(1,443,643) | 215,060 | (1,228,583) | (1,793,614) | 114,651 | (1,678,963) |
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17. Financial instruments and related disclosures continued
| 2025 | 2024 | |
| (decrease)/ | (decrease)/ | |
| increase in | increase in | |
| profit | profit | |
| €000 | €000 | |
100 bps increase in interest rates | 2,144 | 1,129 |
100 bps decrease in interest rates | (2,144) | (1,129) |
30 September 2025 | 30 September 2024 | |||||||
GBP | EUR | PLN | Others | GBP | EUR | PLN | Others | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
| Cash and cash | ||||||||
equivalents | (342,361) | 598,046 | 26,171 | 182,501 | 163,353 | (26,308) | 11,718 | 214,573 |
Trade and other receivables | 31,090 | 2,207 | 22,498 | 10,705 | 63,769 | 25,318 | 4,178 | 9,661 |
Borrowings | – | (626,630) | – | – | – | (612,980) | – | – |
Trade and other payables | (1,964) | (90,097) | (350,874) | (510,033) | (294,856) | (117,041) | (863,693) | (108,325) |
Provisions | (1,030) | (31,102) | (35,832) | (17,797) | (6,473) | (3,944) | (22,095) | (1,759) |
Lease liabilities | (234) | (823,372) | (193,767) | (48,938) | (282,436) | (900,641) | (152,698) | (45,214) |
(314,499) | (970,948) | (531,804) | (383,562) | (356,643) | (1,635,596) | (1,022,590) | 68,936 |
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
| Average rate for the year | ||
Polish Zloty | 4.26 | 4.33 |
Pound Sterling | 0.85 | 0.86 |
| Statement of financial position rates | ||
Polish Zloty | 4.27 | 4.28 |
Pound Sterling | 0.87 | 0.84 |
2025 | Increase/ | 2024 | Increase/ | |
| (decrease) in | (decrease) in | |||
| equity | equity | |||
€000 | €000 | |||
10% appreciation of the Euro against the Polish Zloty | 59,089 | 113,621 | ||
10% depreciation of the Euro against the Polish Zloty | (59,089) | (113,621) | ||
10% appreciation of the Euro against Pound Sterling | 34,944 | 3 9, 6 27 | ||
10% depreciation of the Euro against Pound Sterling | (34,944) | (39,627) |
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17. Financial instruments and related disclosures continued
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 Board regularly monitors the level of capital in the Group to ensure that this can be achieved.
The Group monitors capital using net debt, leverage and interest cover. (Please refer to note 27
where the calculation of net debt is disclosed.)
The Board can manage the Group’s capital structure by diversifying the debt portfolio, adjusting the
size and timing of dividends paid to shareholders, issuing new shares or repurchasing shares in the
open market and flexing capital expenditure.
From time to time, the Group may purchase shares in the Company from the open market for the
purpose of satisfying awards under the Group’s employee share plans.
The Senior Facilities Agreement has debt covenants related to leverage debt and interest coverage.
Part of the Group’s capital risk management is to ensure compliance with these covenants. In
addition to there being no breaches in the financial year, there is significant headroom within all
covenants as at 30 September 2025.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Financial assets measured at fair value | ||
Derivative contracts used for hedging (assets) | 16,612 | 34,507 |
| Financial assets not measured at fair value | ||
Cash and cash equivalents | 464,357 | 362,881 |
Trade and other receivables | 63,319 | 102,926 |
Total financial assets | 544,288 | 500,314 |
| Financial liabilities measured at fair value | ||
Derivative contracts used for hedging (liabilities) | 87,398 | 52,486 |
| Financial liabilities not measured at fair value | ||
Trade and other payables | 952,986 | 1,361,304 |
Borrowings | 631,239 | 619,926 |
Finance lease liabilities | 1,066,310 | 1,428,864 |
Total financial liabilities | 2,737,933 | 3,462,580 |
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| 30 September 2025 | ||||
| Expiring | ||||
| between one | Expiring after | |||
| Due in less | to five | five | ||
| than one year | years | years | Total | |
| €000 | €000 | €000 | €000 | |
Borrowings 1 | 457,751 | 229,443 | – | 687,194 |
Trade and other payables | 949,582 | 3,404 | – | 952,986 |
Lease liabilities | 330,013 | 629,705 | 243,442 | 1,203,160 |
1,737,346 | 862,552 | 243,442 | 2,843,340 |
| 30 September 2024 | ||||
| Expiring | ||||
| between one | ||||
| Due in less | to five | Expiring after | ||
| than one year | years | five | Total | |
| (Restated) | (Restated) | years | (Restated) | |
| €000 | €000 | €000 | €000 | |
Borrowings | 32,261 | 702,580 | – | 734,841 |
Trade and other payables | 1,357,908 | 3,396 | – | 1,361,304 |
Lease liabilities | 389,038 | 853,018 | 258,937 | 1,500,993 |
1,779,207 | 1,558,994 | 258,937 | 3,597,138 |
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
Derivative financial assets at beginning of period | (17,980) | (44,437) |
Recognised in the income statement - cost of sales | 44,249 | (85,240) |
Recognised in the income statement - other finance income/(expense) | 435 | 2,688 |
Recognised in other comprehensive income | (72,926) | 121,518 |
Cash flow hedge adjustment to inventory | (22,930) | (14,350) |
Translation differences | (1,634) | 1,842 |
Derivative financial (liabilities)/assets at end of period | (70,786) | (17,979) |
FY25 | FY24 | |||||||
Asset | Liability | Asset | Liability | |||||
Notional | Fair value | Notional | Fair value | Notional | Fair value | Notional | Fair value | |
| Derivatives held | ||||||||
| for cash flow | ||||||||
hedging | (761,286) | 14,025 | 1,001,539 | (84,376) | (1,062,696) | 34,506 | 1,176,395 | (52,486) |
Derivatives not in a formal hedge | ||||||||
relationship | (171,500) | 2,587 | 33,349 | (3,022) | – | – | – | – |
Total | (932,786) | 16,612 | 1,034,888 | (87,398) | (1,062,696) | 34,506 | 1,176,395 | (52,486) |
| 30 September 2025 | |||||
| EUR | USD | CNY | Other | Total | |
| €000 | €000 | €000 | €000 | €000 | |
Maturing in less than one year | (690,590) | 614,889 | 719,889 | (398,245) | 245,943 |
Maturing in greater than one year | (123,400) | 91,858 | 77,066 | (51,213) | (5,689) |
Total | (813,990) | 706,747 | 796,955 | (449,458) | 240,254 |
| 30 September 2024 | |||||
| EUR | USD | CNY | Other | Total | |
| €000 | €000 | €000 | €000 | €000 | |
Maturing in less than one year | (1,190,314) | 683,074 | 865,745 | (324,011) | 34,494 |
Maturing in greater than one year | (115,000) | 114,862 | 114,506 | (10,000) | 104,368 |
Total | (1,305,314) | 797,936 | 980,251 | (334,011) | 138,862 |
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17. Financial instruments and related disclosures continued
30 September 2025 | 30 September 2024 | |||
| Payable | Receivable | Payable | Receivable | |
| EUR | €000 | €000 | €000 | €000 |
Due in less than one year | (1,255) | 13,199 | (824) | 21,957 |
Expiring between one and two years | (3) | 545 | (68) | 506 |
Contractual cash flows | (1,258) | 13,744 | (892) | 22,463 |
Fair value | (1,251) | 13,604 | (892) | 22,463 |
30 September 2025 | 30 September 2024 | |||
| Payable | Receivable | Payable | Receivable | |
| USD | €000 | €000 | €000 | €000 |
Due in less than one year | (37,417) | 219 | (25,172) | 129 |
Expiring between one and two years | (969) | 23 | (952) | 81 |
Contractual cash flows | (38,386) | 242 | (26,124) | 210 |
Fair value | (38,087) | 238 | (26,124) | 210 |
30 September 2025 | 30 September 2024 | |||
| Payable | Receivable | Payable | Receivable | |
| CNY | €000 | €000 | €000 | €000 |
Due in less than one year | (41,607) | 204 | (24,931) | 2,697 |
Expiring between one and two years | (69) | 35 | (207) | 962 |
Contractual cash flows | (41,676) | 239 | (25,138) | 3,659 |
Fair value | (41,421) | 236 | (25,138) | 3,659 |
30 September 2025 | 30 September 2024 | |||
| Payable | Receivable | Payable | Receivable | |
| Other | €000 | €000 | €000 | €000 |
Due in less than one year | (6,145) | 2,546 | (333) | 7,9 5 8 |
Expiring between one and two years | (555) | – | – | 218 |
Contractual cash flows | (6,700) | 2,546 | (333) | 8,176 |
Fair value | (6,639) | 2,533 | (333) | 8,176 |
30 September 2025 | 30 September 2024 | |||
| Payable | Receivable | Payable | Receivable | |
| Total | €000 | €000 | €000 | €000 |
Due in less than one year | (86,423) | 16,167 | (51,260) | 32,741 |
Expiring between one and two years | (1,596) | 603 | (1,227) | 1,766 |
Contractual cash flows | (88,019) | 16,770 | (52,487) | 34,507 |
Fair value | (87,398) | 16,612 | (52,487) | 34,507 |
| Borrowings | Total liabilities | ||
| from credit | from financing | ||
| Lease liabilities | institutions | activities | |
| €000 | €000 | €000 | |
At 30 September 2024 | (1,428,864) | (612,980) | (2,041,844) |
Financing cash flows 1 | 290,885 | – | 290,885 |
Interest cash flows 1 | 41,181 | – | 41,181 |
Other changes 2 | 26,463 | (13,650) | 12,813 |
Foreign exchange | 4,025 | – | 4,025 |
At 30 September 2025 | (1,066,310) | (626,630) | (1,692,940) |
| Total liabilities | |||
| Borrowings | from financing | ||
| Lease liabilities | from credit | activities | |
| (Restated) | institutions | (Restated) | |
| €000 | €000 | €000 | |
At 30 September 2023 | (1,293,171) | (729,064) | (2,022,235) |
Financing cash flows 1 | 373,914 | 120,000 | 493,914 |
Interest cash flows 1 | 67,671 | 56,184 | 123,855 |
Other changes 2 | (604,493) | (60,100) | (664,593) |
Foreign exchange | 27,215 | – | 27,215 |
At 30 September 2024 | (1,428,864) | (612,980) | (2,041,844) |
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| Fair value | |||
| through | |||
| Amortised | Fair value | income | |
| cost | through OCI | statement | |
| Non-current financial assets | |||
Derivative financial instruments | – | 589 | – |
Trade and other receivables | 64 | – | – |
64 | 589 | – | |
| Current financial assets | |||
Trade and other receivables | 43,614 | – | – |
Derivative financial instruments | – | 13,436 | 2,587 |
Cash and cash equivalents | 464,357 | – | – |
5 0 7,9 7 1 | 13,436 | 2,587 | |
| Non-current financial liabilities | |||
Borrowings | 195,693 | – | – |
Lease liabilities | 781,514 | – | – |
Derivative financial instruments | – | 1,559 | – |
Trade and other payables | 3,404 | – | – |
980,611 | 1,559 | – | |
| Current financial liabilities | |||
Borrowings | 430,937 | – | – |
Lease liabilities | 284,796 | – | – |
Derivative financial instruments | – | 82,817 | 3,022 |
Trade and other payables | 949,582 | – | – |
1,665,315 | 82,817 | 3,022 |
| Fair value | |||
| through | |||
| Amortised | Fair value | income | |
| cost | through OCI | statement | |
| Non-current financial assets | |||
Derivative financial instruments 1 | – | 1,766 | – |
Trade and other receivables | 52 | – | – |
52 | 1,766 | – | |
| Current financial assets | |||
Trade and other receivables | 32,175 | – | – |
Derivative financial instruments 1 | – | 32,741 | – |
Cash and cash equivalents | 362,881 | – | – |
395,056 | 32,741 | – | |
| Non-current financial liabilities | |||
Borrowings | 612,980 | – | – |
Lease liabilities | 1,034,395 | – | – |
Derivative financial instruments 1 | – | 1,227 | – |
Trade and other payables | 3,396 | – | – |
1,650,771 | 1,227 | – | |
| Current financial liabilities | |||
Borrowings | – | – | – |
Lease liabilities | 394,469 | – | – |
Derivative financial instruments 1 | – | 51,259 | – |
Trade and other payables | 1,357,908 | – | – |
1,752,377 | 51,259 | – |
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18. Deferred tax assets and liabilities
| 30 September | ||
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Net deferred tax assets at beginning of period | 86,418 | 116,621 |
Recognised in the income statement (note 9) | 21,581 | 22,960 |
Recognised in other comprehensive income (note 9) | 5,267 | (8,238) |
Discontinued operations | (1,010) | (49,270) |
Exchange differences | 988 | 4,345 |
Net deferred tax assets at end of period | 113,244 | 86,418 |
Deferred tax assets | Deferred tax liabilities | Net | ||||
| 30 September | 30 September | 30 September | ||||
| 30 September | 2024 | 30 September | 2024 | 30 September | 2024 | |
| 2025 | (Restated) | 2025 | (Restated) | 2025 | (Restated) | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
Property, plant and equipment | 6,403 | 33,993 | – | (1,306) | 6,403 | 32,687 |
Intangible assets | 20 | – | – | (27,901) | 20 | (27,901) |
| Right-of-use assets & | ||||||
lease liabilities (IFRS 16) | 203,514 | 197,595 | (190,274) | (190,649) | 13,240 | 6,946 |
Provisions | 57,232 | 48,058 | (8) | – | 57,224 | 48,058 |
Financial assets and liabilities | 4,797 | 2,566 | – | – | 4,797 | 2,566 |
Tax losses and other temporary differences | 31,560 | 24,062 | – | – | 31,560 | 24,062 |
303,526 | 306,274 | (190,282) | (219,856) | 113,244 | 86,418 |
| Recognised in | ||||||
| 1 October | Recognised in | other | ||||
| 2024 | income | comprehensive | Discontinued | Exchange | 30 September | |
| (Restated) | statement | income | operations | differences | 2025 | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
Property, plant and equipment | 32,687 | 1,962 | – | (28,339) | 93 | 6,403 |
Intangible assets | (27,901) | 18 | – | 27,901 | 2 | 20 |
| Right-of-use assets & | ||||||
lease liabilities (IFRS 16) | 6,946 | 4,671 | – | 236 | 1,387 | 13,240 |
Provisions | 48,058 | 9,084 | – | 2 | 80 | 57,224 |
Financial assets and liabilities | 2,566 | (1,855) | 5,267 | (915) | (266) | 4,797 |
Tax losses and other temporary differences | 24,062 | 7,701 | – | 105 | (308) | 31,560 |
86,418 | 21,581 | 5,267 | (1,010) | 988 | 113,244 |
| Recognised in | Recognised in | |||||
| 1 October | income | other | Discontinued | Exchange | 30 September | |
| 2023 | statement | comprehensive | operations | differences | 2024 | |
| (Restated) | (Restated) | income | (Restated) | (Restated) | (Restated) | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
Property, plant and equipment | 35,680 | 1,442 | – | (7,890) | 3,455 | 32,687 |
Intangible assets | (28,167) | – | – | 1,011 | (745) | (27,901) |
| Right-of-use assets & | ||||||
lease liabilities (IFRS 16) | 6,699 | 532 | – | (448) | 163 | 6,946 |
Provisions | 24,625 | 21,649 | – | (3,301) | 5,085 | 48,058 |
Financial assets and liabilities | 13,051 | 790 | (8,238) | (2,200) | (837) | 2,566 |
Tax losses and other temporary differences | 64,733 | (1,453) | – | (36,442) | (2,776) | 24,062 |
116,621 | 22,960 | (8,238) | (49,270) | 4,345 | 86,418 |
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Property provisions | Other provisions | Total | ||||
| 30 September | 30 September | 30 September | ||||
| 30 September | 2024 | 30 September | 2024 | 30 September | 2024 | |
| 2025 | (Restated) | 2025 | (Restated) | 2025 | (Restated) | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
At beginning of period | 58,729 | 51,890 | 26,917 | 17,773 | 85,646 | 69,663 |
Provisions made during the period | 3,146 | 8,952 | 31,789 | 27,120 | 34,935 | 36,072 |
Provisions utilised during the period | – | – | (16,398) | (4,263) | (16,398) | (4,263) |
Provisions reversed during the period | (625) | (6,259) | (6,299) | (15,348) | (6,924) | (21,607) |
Translation differences | (856) | 4,146 | (1) | 1,635 | (857) | 5,781 |
Movements due to discontinued operations | (11,502) | – | 860 | – | (10,642) | – |
48,892 | 58,729 | 36,868 | 26,917 | 85,760 | 85,646 | |
Current | 6,685 | 9,5 2 3 | 31,183 | 16,518 | 37,868 | 26,041 |
Non-current | 42,207 | 49,206 | 5,685 | 10,399 | 47,892 | 59,605 |
48,892 | 58,729 | 36,868 | 26,917 | 85,760 | 85,646 |
| 30 September | 30 September | ||
| 2025 | 2024 | ||
| €000 | €000 | ||
| Ordinary share capital | |||
| Allotted, issued, and fully paid | |||
577,451,935 | (2024: 576,027,342) A ordinary shares of €0.01 each | 5,775 | 5,760 |
| Nominal value | Shares | Share capital | Share premium | Merger reserve | |
| € | (‘000) | €000 | €000 | €000 | |
At 30 September 2024 | €0.01 | 576,027 | 5,760 | 13 | (751) |
At 30 September 2025 | €0.01 | 577,452 | 5,775 | 13 | (562) |
21. Share-based payments
Value Creation Plan
During the period ended 30 September 2025, the Group operated six equity-settled share-based
payment arrangements, summarised as follows:
• The Value Creation Plan
• The Long Term Incentive Plan
• The CFO Award
• The Chair Award
• The NED Award
• Share matching plan award
The estimated weighted average fair value of awards granted in the period was €2.25, and the
weighted average exercise price of awards granted in the period was nil. The awards outstanding
as at 30 September 2025 had a weighted average exercise price of nil, and a weighted average
remaining contractual life of 4.97 years.
No cash-settled share-based payment arrangements were operated in the period.
In the period ended 30 September 2025, the Group recognised a total share-based payment
expense of €15.2m (2024: €7.9m), including employer’s social security accrual of €2.9m (2024: €1.0m).
Value Creation Plan
The Value Creation Plan (VCP) was adopted on 3 March 2020. The VCP aligns the remuneration of
Executive Directors with the value generated for shareholders. The VCP was originally granted by
Pepco Group Limited, which was acquired by Pepco Group N.V. on 13 May 2021, and awards novated
to Pepco Group N.V. at that time.
Nature of Conditional Award
Under the VCP, participants are granted a “Conditional Award” giving the potential right to be
granted nil-cost options based on the absolute Total Shareholder Return (TSR) generated above a
hurdle (the Threshold TSR) at the end of each plan year (the “Measurement Date”) over a seven-year
period.
At each Measurement Date, up to 6.5% of the value created above the hurdle may be “banked” in
the form of a grant of nil-cost options. For any Measurement Date since 18 April 2023, the maximum
value of nil-cost options which may be granted for each performance period is €52m (based on a
full 6.5% Conditional Award allocation).
The Initial Price for the VCP is based on a proxy for the average valuation for the Group on
1 October 2022. Participants may receive a grant of nil-cost options at the end of each year of
the performance period with a value representing a proportion of the Company’s TSR above the
Threshold TSR at the relevant Measurement Date.
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The Threshold TSR or hurdle which has to be exceeded before share awards can be earned by
participants is the higher of:
• the highest previous measurement of TSR (for any Measurement Date on or after 18 April 2023 the
reference point is not earlier than 1 October 2022); and
• the Initial Price compounded by 10% p.a. (re-based with effect from 1 October 2022).
If the value created at the end of a given plan year does not exceed the Threshold TSR, no nil-cost
options will be granted on the Measurement Date following that year under the VCP.
The next Measurement Date will be in January 2026, 30 days after publication of the 2025 full-year
results.
Vesting of nil-cost options
Under the VCP, nil-cost options may vest in three tranches of 50%, 50% and 100% (in each case, with
the percentage applying to the unvested nil-cost options held).
Vesting schedule for nil-cost options granted prior to 18 April 2023
The vesting schedule provides that 50% of the cumulative number of nil-cost options may vest
following the third Measurement Date, 50% following the fourth Measurement Date and 100%
following the fifth Measurement Date. At each vesting date, vesting of awards is subject to:
a. a minimum Threshold TSR of 10% CAGR on the Initial Price being maintained:
• where the TSR has been achieved at the third Measurement Date, 50% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point but they will not lapse;
• where the TSR has been achieved at the fourth Measurement Date, 50% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point but they will not lapse; and
• where the TSR has been achieved at the fifth Measurement Date, 100% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point and the remaining cumulative balance will lapse;
b. shares allocated as a result of the vesting of nil-cost options are subject to a two-year post-
vesting holding period from the first vesting date; and
c. a personal annual cap on vesting of €20m for the CEO and a proportionate limit for other
participants:
• in the event that in any year vesting as described above would exceed the personal annual
cap, any nil-cost options above the cap will be designated as deferred nil-cost options and will
be rolled forward and allowed to vest in subsequent years provided the cap is not exceeded in
those years, until the VCP is fully paid out or after five years after the fifth Measurement Date
when any deferred nil-cost options will vest. Such deferred nil-cost options are not subject to
further underpins, performance conditions or service conditions.
Vesting schedule for nil-cost options granted on or after 18 April 2023
The vesting schedule provides that 50% of the cumulative number of nil-cost options may vest
following the fifth Measurement Date, 50% following the sixth Measurement Date and 100% following
the seventh Measurement Date. At each vesting date, vesting of awards is subject to:
a. a minimum Threshold TSR of 10% CAGR on the Initial Price being maintained:
• where the TSR has been achieved at the fifth Measurement Date, 50% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point but they will not lapse;
• where the TSR has been achieved at the sixth Measurement Date, 50% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point but they will not lapse; and
• where the TSR has been achieved at the seventh Measurement Date, 100% of the cumulative
balance of nil-cost options will vest. If the TSR has not been achieved no nil-cost options will
vest at this point and the remaining cumulative balance will lapse;
b. shares allocated as a result of the vesting of nil-cost options are subject to a two-year post-
vesting holding period from the first vesting date;
c. a personal annual cap on vesting of €20m, €14m and €10m respectively for Trevor Masters,
Andy Bond and any other Executive Director at the time of grant:
• in the event that in any year vesting as described above would exceed the personal annual
cap, any nil-cost options above the cap will be designated as deferred nil-cost options and will
be rolled forward and allowed to vest in subsequent years provided the cap is not exceeded
in those years, until the VCP is fully paid out or after two years after the seventh Measurement
Date when any deferred nil-cost options will vest. Such deferred nil-cost options are not subject
to further underpins, performance conditions or service conditions; and
d. no nil-cost options may be exercised until 1 October 2025.
Valuation of awards
The fair value of awards granted under the VCP was initially calculated at €45.3m and employer
social security liability of €9.7m spread over the initial five-year period. An expense of €2.0m was
recognised during the period (FY24: €3.5m).
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Financial statements continued
21. Share-based payments continued
Long-term awards
VCP replacement awards
On 30 September 2023, the Board approved the grant of restricted stock units (RSUs) and nil-cost
options under the Pepco Group N.V. Long Term Incentive Plan (LTIP) to replace selected existing
awards granted under the VCP. These awards were granted on 22 December 2023.
The terms of this award are set out in the new LTIP rules approved by the Board on 27 January 2022
and subsequently amended on 15 March 2024. The RSUs are subject to an EBITDA performance
condition and a service condition lasting until 30 September 2024 for 50% of the award, and
30 September 2025 for the remaining 50% of the award. The nil-cost options are subject to four
non-market-based performance conditions (EBIT, EBITDA, CO
2
emissions and ethical sourcing), and
a service condition lasting until 30 September 2026.
In addition, the shares underpinning the RSU awards granted to an Executive Director are subject to
a holding period running until 30 September 2026 and the shares underpinning the nil-cost option
awards granted to Executive Directors are subject to a holding period running until 22 December
2028. As these holding periods extend beyond the service completion dates, they represent post-
vesting restrictions for the purposes of IFRS 2.
Management have identified the LTIP awards granted to the holders of VCP awards who agreed
to surrender their existing awards as replacement awards and have applied the principles of
modification accounting to this transaction. As such, the underlying expense associated with the
VCP awards is continuing to be recognised over the original service period. An additional expense is
recognised over the vesting period of the replacement awards to reflect the increase in fair value of
the replacement awards over the fair value of the VCP awards at the modification date.
The VCP replacement awards were valued using a Black Scholes methodology with a discount
to reflect the impact of post-vesting holding periods, where applicable. For the purposes of
determining the increase in fair value resulting from the modification, the VCP awards were valued
as at the modification date using a Monte Carlo methodology. During the period, an expense of
€0.2m (FY24: €0.2m) was recognised in relation to the VCP replacement awards, which reflected the
likelihood of the non-market-based performance conditions being achieved.
CFO Award
On 12 October 2023, a one-off share-based payment award was granted to the CFO in the form of
a nil-cost option over 156,888 shares. The CFO Award is not subject to any performance conditions,
but has a service condition lasting until 1 April 2026. The CFO left the Group in FY25 and the award
was settled in full during the period. Subsequently the full IFRS 2 charge was accelerated during the
period.
The CFO Award was valued using a Black Scholes methodology which resulted in a fair value equal
to the share price on the date of grant. During the period, a charge of €0.3m was recognised in the
income statement (FY24: credit of €0.3m).
Chair Award
On 11 April 2024, a one-off share-based payment award was granted to the Chair in the form of a
nil-cost option over a total of 1.6 million shares.
The Chair Award is subject to various EBITDA performance conditions and a service condition lasting
until 30 September 2024 for 50% of the award, and 30 September 2025 for the remaining 50% of the
award.
The Chair Award was valued using a Black Scholes methodology which resulted in a fair value equal
to the share price on the date of grant. During the period, no charge to the P&L was required as the
performance conditions were not achieved (FY24: charge of €2.6m).
Other LTIP awards
There have been grants of LTIP awards in the form of RSUs and nil-cost options on 22 December
2023 and 11 April 2024 over a total of 1.5 million shares.
The RSUs are subject to an EBITDA performance condition and a service condition lasting until
30 September 2024 for 50% of the award, and 30 September 2025 for the remaining 50% of
the award. The nil-cost options are subject to four non-market-based performance conditions
(EBIT, EBITDA, CO
2
emissions and ethical sourcing), and a service condition lasting until either
30 September 2025 or 30 September 2026.
Additional grants of these awards were performed on 24 December 2024, 21 January 2025 and
7 April 2025 for a total of 3.4 million shares.
The LTIP awards were valued using a Black Scholes methodology which resulted in a fair value equal
to the share price on the date of grant. During the period, an expense of €4.6m (FY24: €0.3m) was
recognised in relation to the new LTIP awards, which reflected the likelihood of the non-market-
based performance conditions being achieved.
Share matching plan awards
During FY25, the Group implemented the share matching plan (SMP) to align the incentives of
selected senior employees (including the Chief Executive Officer, who is also a Director) and the
Company's shareholders to grow the underlying equity value of the Company. To participate in the
SMP, participants are required to acquire up to a specified number of Company shares (“Invested
Shares”) by 30 September 2025. In return for acquiring their Invested Shares, participants are granted
a conditional share right to acquire 11.5 nil-cost matching shares (“Matching Shares”) for each
Invested Share, subject to the achievement of annual performance conditions over the period to the
final performance measurement date. The Group granted a total of 14.1 million shares between the
period of 14 April 2025 and 22 August 2025.
For a participant’s SMP to vest, they must continue to hold their Invested Shares until the final
performance measurement date, which is defined as the date on which the Board assesses whether
the performance condition for FY29 has been satisfied. While a participant may sell their Invested
Shares at any time, disposal before the final performance measurement date will reduce the number
of Matching Shares delivered.
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Financial statements continued
21. Share-based payments continued
The award is subject to both Company share price performance (a market-based performance
condition) and continued employment (a service condition). The performance condition assessment
is based on the Company’s 60-day volume weighted average price (VWAP) immediately following
the announcement of the Company’s audited full-year financial results for each financial year.
As the SMP awards are subject to a market-based performance condition, the valuation model is
required to consider the achievement of this performance condition. We have therefore adopted a
Monte Carlo simulation option pricing methodology. This results in a charge of €6.3m to the income
statement in FY25.
Non-Executive Director (NED) awards
On 9 April 2025, the Group granted awards under the NED Plan. The NED Plan awards are structured
as NSOs and RSUs over a maximum of 457,929 shares with no performance conditions and with a
service condition which vests in three equal tranches on the AGM dates for FY26, FY27 and FY28.
The awards are subject to a holding period which runs until the FY28 AGM date.
The NED Award was valued using a Black Scholes methodology which resulted in a fair value
equal to the share price on the date of grant. During the period, a charge of €0.5m to the P&L
was recognised.
| 30 September | 30 September | |
| 2025 | 2024 | |
| €000 | €000 | |
Acquisition of property, plant and equipment and intangible assets | 33,795 | 74,944 |
23. Pension scheme
The Group operates a defined contribution pension scheme. The pension cost charge for the
year represents contributions payable by the Group to the scheme for continuing operations and
amounted to €35.6m (2024: €29.9m).
24. Transactions with related parties
Please refer to note 8 for remuneration paid to key management. In FY25, payments totalling
£24,207.19 were made to Woodcliffe Associates Limited, a company that Andy Bond has a related
party interest in.
Year to 30 September 2025 | Year to 30 September 2024 | |||||
| Poundland | Pepco Austria | Poundland | Pepco Austria | |||
| disposal | disposal | Total | disposal | disposal | Total | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
| Discontinued operations | ||||||
Revenue | 1,333,208 | – | 1,333,208 | 2,006,333 | 26,279 | 2,032,612 |
Cost of sales | (912,060) | – | (912,060) | (1,241,725) | (13,304) | (1,255,029) |
Gross profit | 421,148 | – | 421,148 | 764,608 | 12,975 | 777,583 |
Administrative expenses | (518,588) | 2,996 | (515,592) | (782,992) | (21,903) | (804,895) |
Impairment in other non- financial assets | (119,336) | - | (119,336) | (157,055) | - | (157,055) |
Operating (loss)/gain | (216,776) | 2,996 | (213,780) | (175,439) | (8,928) | (184,367) |
Financial income | 578 | – | 578 | 896 | 187 | 1,083 |
Financial expense | (16,509) | – | (16,509) | (24,019) | (623) | (24,642) |
Loss before taxation for the period | (232,707) | 2,996 | (229,711) | (198,562) | (9,364) | (207,926) |
Taxation | 2 | – | 2 | (36,416) | 7 | (36,409) |
(Loss)/gain for the period | (232,705) | 2,996 | (229,709) | (234,978) | (9,357) | (244,335) |
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25. Discontinued operations continued
Year to 30 September 2025 | Year to 30 September 2024 | |||||
| Poundland | Pepco Austria | Poundland | Pepco Austria | |||
| disposal | disposal | Total | disposal | disposal | Total | |
| €000 | €000 | €000 | €000 | €000 | €000 | |
Total costs included in total loss on discontinued | ||||||
| operations | ||||||
Loss for the period from discontinued operations | ||||||
(as per the prior page) | (232,705) | 2,996 | (229,709) | (234,978) | (9,357) | (244,335) |
| Impairment of receivables | ||||||
and loans payable to fellow subsidiaries | – | – | – | – | (73,106) | (73,106) |
| Gain on extinguishment | ||||||
of Pepco Austria | – | – | – | – | 40,633 | 40,633 |
Gain on disposal of Poundland 1 | 387,045 | – | 387,045 | – | – | – |
Additional impairment of loans associated with the disposal | (332,028) | – | (332,028) | – | – | – |
Additional costs and provisions associated | ||||||
with the disposal | (25,780) | – | (25,780) | – | (6,700) | (6,700) |
| Impairment of Poundland | ||||||
goodwill | (146,726) | – | (146,726) | (578,098) | - | (578,098) |
| Loss on discontinued | ||||||
operations | (350,194) | 2,996 | (347,198) | (813,076) | (48,530) | (861,606) |
| At 1 October 2023 | ||||
| FY23 | Pepco | Poundland | FY23 | |
| Reported | dilapidations | aged AP items | Restated | |
€000 | €000 | €000 | €000 | |
| Balance sheet | ||||
| Non-current assets | ||||
Right-of-use asset | 1,225,683 | 21,154 | – | 1,246,837 |
Deferred tax asset | 113,414 | 3,207 | – | 116,621 |
| Current liabilities | ||||
Trade and other payables | 1,270,302 | – | 27,643 | 1,297,945 |
| Non-current liabilities | ||||
Provisions | 28,319 | 39,090 | – | 67,409 |
| Equity | ||||
Translation reserve | (23,407) | (1,918) | 96 | (25,229) |
Retained earnings | 1,155,471 | (12,810) | (27,740) | 1,114,921 |
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| Year to 30 September 2024 | ||||||||||||
Adjustments from discontinued operations | Adjustments from continuing operations | |||||||||||
| Total | Total | |||||||||||
| adjustments | adjustments | |||||||||||
| Poundland | Other | from | Other | from | ||||||||
| FY24 | Poundland AP | store | Deferred tax | Poundland | discontinued | Pepco | Pepco leases | Pepco stock | adjustments | continuing | FY24 | |
| Reported | write-offs | impairment | adjustment | adjustments | operations | dilapidations | adjustment | adjustment | Dealz | operations | Restated | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
| Balance sheet | ||||||||||||
| Non-current assets | ||||||||||||
Property, plant and equipment | 742,833 | – | (70,456) | – | – | (70,456) | – | – | – | (280) | (280) | 672,097 |
Right-of-use asset | 1,304,678 | – | (75,299) | – | – | (75,299) | 21,019 | 40,133 | – | – | 61,152 | 1,290,531 |
Goodwill and other intangible assets | 107,316 | – | 185,031 | – | – | 185,031 | – | – | – | – | – | 292,347 |
Deferred tax asset | 106,434 | – | (52,994) | 29,210 | – | (23,784) | 4,501 | – | (733) | – | 3,768 | 86,418 |
| Current assets | ||||||||||||
Cash and cash equivalents | 363,336 | – | – | – | – | – | – | – | – | (455) | (455) | 362,881 |
Inventories | 1,235,457 | – | – | – | (3,627) | (3,627) | – | – | (55,235) | (1,919) | (57,154) | 1,174,676 |
| Current liabilities | ||||||||||||
Trade and other payables | 1,380,519 | 28,608 | – | – | 4,070 | 32,678 | – | – | (63,152) | 7, 8 6 3 | (55,289) | 1,357,908 |
Current tax liabilities | 21,683 | – | – | – | – | – | – | – | 12,422 | – | 12,422 | 34,105 |
Lease liabilities | 346,594 | – | – | – | – | – | – | 47, 8 7 5 | – | – | 4 7, 8 7 5 | 394,469 |
Provisions | 20,504 | – | – | – | 5,027 | 5,027 | 510 | – | – | – | 510 | 26,041 |
| Non-current liabilities | ||||||||||||
Provisions | 13,767 | – | – | – | – | – | 44,201 | – | – | 1,637 | 45,838 | 59,605 |
| Equity | ||||||||||||
Translation reserve | 25,535 | (868) | (1,217) | 168 | (72) | (1,989) | (2,141) | 6 | (1,466) | 36 | (3,565) | 19,981 |
Retained earnings | 445,302 | (27,740) | (12,501) | 29,042 | (12,652) | (23,851) | (17,050) | (7,748) | (3,772) | (12,190) | (40,760) | 380,691 |
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| Year to 30 September 2024 | |||||||||||||
Adjustments from discontinued operations | Adjustments from continuing operations | ||||||||||||
| Discontinued | Total | Total | |||||||||||
| operations | adjustments | adjustments | |||||||||||
| reclassification | Poundland | Other | from | Other | from | ||||||||
| FY24 | in income | Poundland AP | store | Deferred tax | Poundland | discontinued | Pepco | Pepco leases | Pepco stock | adjustments | continuing | FY24 | |
| Reported | statement 1 | write-offs | impairment | adjustment | adjustments | operations | dilapidations | adjustment | adjustment | Dealz | operations | Restated | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
| Income statement | |||||||||||||
Revenue | 6,166,749 | (2,006,333) | – | – | – | – | (2,006,333) | – | – | – | – | – | 4,160,416 |
Cost of sales | (3,460,720) | 1,234,113 | – | – | – | – | 1,234,113 | – | – | 28,757 | (9,186) | 19,571 | (2,207,036) |
Gross profit | 2,706,029 | (772,220) | – | – | – | – | (772,220) | – | – | 28,757 | (9,186) | 19,571 | 1,953,380 |
Administrative expenses | (2,371,764) | 779,342 | – | – | – | – | 779,342 | (3,719) | (4,635) | (21,112) | (2,976) | (32,442) | (1,624,864) |
Goodwill impairment | (724,824) | 724,824 | – | – | – | – | 724,824 | – | – | – | – | – | – |
Impairment in other non-financial assets | (54,578) | 49,103 | – | – | – | – | 49,103 | – | – | – | – | – | (5,475) |
Finance expense | (140,785) | 24,047 | – | – | – | – | 24,047 | (1,735) | 9,639 | – | (28) | 7,876 | (108,862) |
Finance income | 31,803 | (896) | – | – | – | – | (896) | – | (12,752) | 1,745 | – | (11,007) | 19,900 |
Taxation | (107,520) | 12,765 | – | – | – | – | 12,765 | 1,214 | – | (13,162) | – | (11,948) | (106,703) |
| Profit/(loss) from continuing operations | |||||||||||||
for the year | (661,639) | 816,965 | – | – | – | – | 816,965 | (4,240) | (7,748) | (3,772) | (12,190) | (27,950) | 127,376 |
Loss on discontinued operations | (48,530) | (816,965) | – | (12,501) | 29,042 | (12,652) | (813,076) | – | – | – | – | – | (861,606) |
Loss for the year | (710,169) | – | – | (12,501) | 29,042 | (12,652) | 3,889 | (4,240) | (7,748) | (3,772) | (12,190) | (27,950) | (734,230) |
| FY24 | FY24 | ||
Reported | Adjustments | Restated | |
| Earnings per share | |||
Basic earnings per share from continuing operations | (114.9) | 137.0 | 22.1 |
Basic earnings per share from discontinued operations | (8.4) | (141.2) | (149.6) |
Basic earnings per share | (123.3) | (4.2) | (127.5) |
Diluted earnings per share from continuing operations | (114.9) | 136.9 | 22.0 |
Diluted earnings per share from discontinued operations | (8.4) | (140.1) | (148.5) |
Diluted earnings per share | (123.3) | (3.2) | (126.5) |
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26. Restatement note continued
27. Alternative Performance Measures (APMs)
Introduction
The Group Executive Committee assesses the performance of the Group using a variety of
performance measures; some are IFRS Accounting Standards and some are adjusted and therefore
termed ‘‘non-GAAP’’ measures or “Alternative Performance Measures” (APMs). The rationale for
using adjusted measures is explained below. The Group Executive Committee principally discusses
the Group’s results on an ‘‘underlying’’ basis. Results on an underlying basis are presented before
exceptional items (material, unusual and other items). These APMs help stakeholders assess the
Group’s performance on a like-for-like underlying basis, excluding one-off items and exchange rate
fluctuations to improve transparency and comparability of performance across geographies and
reporting periods. They provide a basis for measuring sustainable core operating performance, and
the Group’s ability to retire debt and invest in new business opportunities, by excluding items that do
not reflect ongoing business operations.
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The APMs used in this Annual Report are outlined in detail throughout this note. A reconciliation from
these non-GAAP measures to the nearest measure prepared in accordance with IFRS Accounting
Standards is presented below where practical. The APMs we use may not be directly comparable
with similarly titled measures used by other companies.
All of the IFRS measures and APMs listed within this note where referencing income statement
balances, relate only to continuing operations.
Exceptional and other items
The Directors believe that presentation of the Group’s results on an underlying basis provides a
useful alternative analysis of the Group’s financial performance, as exceptional and other items are
identified by virtue of their size, nature or incidence. This presentation is consistent with the way
that financial performance is measured by management and reported to the Board and assists in
providing a relevant analysis of the trading results of the Group. In determining whether events or
transactions are treated as exceptional and other items, management considers quantitative as
well as qualitative factors such as the frequency or predictability of occurrence.
The following charges and credits have been included within exceptional and other items for the
year ended 30 September 2025; see note 4 for more details:
• impact of implementation of IFRIC interpretation on SaaS arrangements and expensing significant
ERP programme costs incurred; and
• business restructuring programmes.
Revenue growth metrics
The Group utilises two APMs in relation to revenue and revenue growth. Like-for-like revenue growth
is a measure which seeks to reflect the underlying performance of the Group’s stores. The measure
is defined as year-on-year revenue growth for stores open beyond their trading anniversary,
with stores relocated in a catchment and/or upsized included within LFL provided the enlarged
store footprint is less than 50% bigger than the existing store. In addition, annual revenue growth
is measured at constant currency (defined as “Constant currency revenue growth”) to provide a
reflection of the annualised revenue growth without exchange rate impacts across the various
geographical markets.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
Reported revenue growth | 8.7% | 15.7% |
Impact of constant currency translation | (0.3)% | (0.2)% |
Constant currency revenue growth | 8.4% | 15.5% |
Like-for-like revenue growth | 2.6% | (3.0)% |
Gross margin
Gross margin is also considered an APM and represents gross profit divided by revenue. These
are both directly reported IFRS figures included in the consolidated income statement. The Group
uses gross margin in its business operations, among other things, as a means of comparing the
underlying profitability of the Group from period to period and the performance of its sourcing
model. Gross margin is expressed as a percentage.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Reported Gross profit | 2,166,526 | 1,953,380 |
Exceptional items | 5,754 | – |
Underlying Gross profit | 2,172,280 | 1,953,380 |
Revenue | 4,523,463 | 4,160,416 |
Underlying Gross margin % | 48.0% | 47.0% |
Underlying P&L metrics
The Group considers various P&L metrics which have been adjusted from the IFRS reported balances
by excluding exceptional costs. The table below highlights how key metrics in the reported financial
statements have been adjusted (by excluding exceptional items) to arrive at an underlying P&L
metric. Please note that in arriving at reported EBITDA, a reconciliation is provided in note 2 of these
financial statements.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Underlying EBITDA | ||
Reported EBITDA | 840,092 | 737,780 |
Exceptional items | 25,180 | 46,098 |
Underlying EBITDA | 865,272 | 783,878 |
| Underlying EBIT | ||
Operating profit from continuing operations | 319,874 | 323,041 |
Exceptional items | 51,127 | 43,845 |
Underlying EBIT | 371,001 | 366,886 |
| Underlying profit before tax | ||
Reported profit before tax | 251,474 | 234,079 |
Exceptional items | 51,127 | 43,845 |
Underlying profit before tax | 302,601 | 277,924 |
| Underlying profit after tax | ||
Reported profit after tax | 171,395 | 127,376 |
Exceptional items | 47,601 | 55,455 |
Underlying profit after tax | 218,996 | 182,831 |
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27. Alternative Performance Measures (APMs) continued
Underlying P&L metrics (pre-IFRS 16)
The Group considers various P&L metrics on a pre-IFRS 16 basis which have been adjusted from
the IFRS reported balances by excluding exceptional costs and removing the impact of IFRS 16
accounting. The table below highlights how key metrics in the reported IFRS financial statements
have been adjusted to arrive at an underlying P&L (pre-IFRS 16) metric.
| Year to | |||
| Year to | 30 September | ||
| 30 September | 2024 | ||
| 2025 | €000 | ||
| €000 | (Restated) | ||
| Underlying EBITDA (pre-IFRS 16) | |||
Reported EBITDA | 840,092 | 737,780 | |
Exceptional items | 25,180 | 46,098 | |
IFRS 16 adjustments | (334,280) | (304,077) | |
Underlying EBITDA (pre-IFRS 16) | 530,992 | 479,801 | |
| Underlying EBIT (pre-IFRS 16) | |||
Operating profit from continuing operations | 319,874 | 323,041 | |
Exceptional items | 51,127 | 43,845 | |
IFRS 16 adjustments | (9,153) | (36,359) | |
Underlying EBIT (pre-IFRS 16) | 361,848 | 330,527 | |
Underlying profit before tax | (pre-IFRS 16) | ||
Reported profit before tax | 251,474 | 234,079 | |
Exceptional items | 51,127 | 43,845 | |
IFRS 16 adjustments | 30,296 | 7,541 | |
Underlying profit before tax (pre-IFRS 16) | 332,897 | 285,465 | |
Underlying profit after tax | (pre-IFRS 16) | ||
Reported profit after tax | 171,395 | 127,376 | |
Exceptional items | 47,601 | 55,455 | |
IFRS 16 adjustments | 25,625 | 7,006 | |
Underlying profit after tax (pre-IFRS 16) | 244,621 | 189,837 | |
EBITDA margin
EBITDA margin is considered an APM and is equal to EBITDA divided by the Group’s revenue.
The Group considers various EBITDA margins based on the reported EBITDA, underlying EBITDA
and underlying EBITDA (pre-IFRS 16) in line with the P&L metrics highlighted above.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Revenue | 4,523,463 | 4,160,416 |
Reported EBITDA | 840,092 | 737,780 |
Reported EBITDA margin % | 18.6% | 17.7% |
Underlying EBITDA | 865,272 | 783,878 |
Underlying EBITDA margin % | 19.1% | 18.8% |
Underlying EBITDA (pre-IFRS 16) | 530,992 | 479,801 |
Underlying EBITDA margin (pre-IFRS 16) % | 11.7% | 11.5% |
Operating cost margin
Operating cost margin is considered an APM and is equal to operating costs divided by the Group’s
revenue. To arrive at operating costs the Group calculates the difference between reported EBITDA
and gross margin. The Group also excludes exceptional costs when considering the operating cost
margin.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Reported Administrative expenses | 1,781,236 | 1,624,864 |
less Depreciation and Amortisation | (455,022) | (409,537) |
less Gains on disposal of PPE | 220 | 272 |
less Exceptional items in Reported EBITDA | (25,180) | (46,098) |
exclude Exceptional items in gross profit | 5,754 | – |
Underlying Operating costs | 1,307,008 | 1,169,501 |
Revenue | 4,523,463 | 4,160,416 |
Underlying Operating costs % | 28.9% | 28.1% |
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27. Alternative Performance Measures (APMs) continued
Operating cash flow and free cash flow
Operating cash flow is considered to be equal to cash generated by operations, less taxes paid,
being the net cash inflow from continuing operating activities. Free cash flow is defined as cash
generated by operations, deducted with tax paid, capital expenditure items, and IFRS 16 cash
flows shown by the reconciliation below:
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Cash generated by operations | 847,598 | 819,964 |
Tax paid | (77,256) | (85,449) |
Operating cash flow (Net cash inflow from continuing operating activities) | 770,342 | 734,515 |
Additions to property, plant and equipment | (89,338) | (144,380) |
Additions to other intangible assets | (6,463) | (4,552) |
Payment of interest on lease liabilities | (41,181) | (53,436) |
Repayment of lease liabilities | (290,885) | (250,938) |
Free cash flow | 342,475 | 281,209 |
The Group calculates operating cash flow conversion as a percentage of underlying EBITDA to
provide a metric on how the Group has generated cash from operations from the core business
during the period. This is calculated as highlighted below.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Net cash inflow from continuing operating activities | 770,342 | 734,515 |
Underlying EBITDA | 865,272 | 783,878 |
Operating cash flow conversion | 8 9.0 % | 93.7% |
The Group also calculates a free cash flow conversion as a percentage of underlying PAT to provide
a metric on how efficiently the Group has converted profit after tax into unlevered free cash flow.
This is calculated as highlighted below.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
Free cash flow | 342,475 | 281,209 |
Underlying profit after tax | 218,996 | 182,831 |
Free cash flow conversion % | 156% | 154% |
Net debt
The Group uses net debt because it believes this measure provides an indicator of the overall
strength of its balance sheet and can be used to assess its earnings as compared to its
indebtedness as defined by the Group’s financing agreements. The Group calculates net debt
on a pre-IFRS 16 basis by excluding all IFRS 16 balances such as lease liabilities. This is in line
with the reporting requirements relating to the external loan arrangements which the Group
utilised as at 30 September 2025 and 2024. The Group also calculates net debt on an IFRS 16
basis. Both calculations have been provided below.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
Borrowings | 626,630 | 612,980 |
Obligations under finance leases | 612 | 6,785 |
Gross debt | 6 2 7, 2 4 2 | 619,765 |
Closing cash balance | (464,357) | (362,881) |
Net debt (pre-IFRS 16) | 162,885 | 256,884 |
IFRS 16 lease liabilities | 1,065,698 | 1,422,079 |
Net debt | 1,228,583 | 1,678,963 |
The Group calculates a leverage ratio of the debt on both an IFRS 16 and pre-IFRS 16 basis by
comparing the calculated net debt to underlying EBITDA. See calculations below.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
Net debt | 1,228,583 | 1,678,963 |
Underlying EBITDA | 865,272 | 783,878 |
Leverage: Net debt to EBITDA | 1.4x | 2.1x |
Net debt (pre-IFRS 16) | 162,885 | 256,884 |
Underlying EBITDA (pre-IFRS 16) | 530,992 | 479,801 |
Leverage (pre-IFRS 16): Net debt to EBITDA | 0.3x | 0.5x |
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
Financial income | 57,110 | 19,900 |
Financial expense | (125,510) | (108,862) |
Reported net financial expense | (68,400) | (88,962) |
Less interest on lease liabilities | 41,181 | 43,678 |
Foreign exchange monetary assets and liabilities revaluation | (1,733) | 221 |
Net financial expense (pre-IFRS 16) | (28,952) | (45,063) |
Underlying EBITDA (pre-IFRS 16) | 530,992 | 479,801 |
Interest cover ratio (pre-IFRS 16) | 18.3x | 10.6x |
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Return on invested capital
This provides an annual measure of return based on the capital invested. The calculation is based
on the following inputs:
NOPAT/IC, where IC (invested capital) = Property, plant and equipment + intangibles (excl. goodwill)
+ net working capital (current assets – current liabilities excluding IFRS 16 lease liabilities) and where
NOPAT is defined as net underlying operating profit after tax.
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
ROIC | 38.5 | 23.7 |
28. Subsequent events
In the fourth quarter, the Group initiated a debt-refinancing strategy and on 24 September called
€175 million of the €375 million corporate bond, which was repaid after the year end.
In November 2025, the Group completed a significant refinancing, of €770 million in committed credit
facilities provided by a syndicate of 10 relationship banks. The new financing comprises a 3-year
term loan of €235 million maturing November 2028, a 5-year term loan of €235 million maturing
November 2030, and a 5-year multicurrency revolving credit facility of €300 million. Opening margins
for the three new facilities range from 1.35% to 1.70% over EURIBOR.
During December, an existing lender re-joined the syndicate for the committed credit facilities
allowing the Group to increase the RCF, and therefore the total committed credit facilities,
by €30m to €330m (RCF) and €800m (Total committed credit facilities).
These facilities refinanced existing indebtedness including the April 2026 term loan (€250 million), the
April 2027 revolving credit facility (€390 million), and the remaining 7.25% July 2028 senior secured
notes (€200 million). Complementing this, the Group completed a PLN 600 million (approximately
€141 million) bond issuance under its PLN 2 billion programme, converted to fixed rate EUR at 4.4%
through cross-currency swaps.
This dual-track refinancing strengthened the Group's capital structure and enhanced financial
flexibility through extending debt maturities out to November 2028 and beyond, while significantly
lowering financing costs with an effective initial interest rate of 3.90%.
29. Ultimate parent company
shares as of 30 September 2025. As such, the Company is classified, from a Dutch law perspective
pursuant to section 2:24a of the Dutch Civil Code, as a direct subsidiary of IRIEL, which is registered
in England. IRIEL’s registered address is The Space (Floor 3), 120 Regent Street, London, W1B 5FE.
At the reporting date, the Company’s ultimate parent company was IBEX Topco B.V . an entity
registered in the Netherlands.
30. Earnings per share
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| ¢ | ¢ | |
| Basic earnings per share | ||
Earnings per share from continuing operations | 2 9. 8 | 22.1 |
Earnings per share from discontinued operations | (60.4) | (149.6) |
Earnings per share | (30.6) | (127.5) |
| Earnings per share from continuing operations adjusted | ||
for non-underlying items | 38.1 | 31.7 |
| Diluted earnings per share | ||
Diluted earnings per share from continuing operations | 28.9 | 22.0 |
Diluted earnings per share from discontinued operations | (58.6) | (148.5) |
Diluted earnings per share | (29.7) | (126.5) |
| Diluted earnings per share from continuing operations adjusted | ||
for non-underlying items | 3 7. 0 | 31.5 |
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Financial statements continued
30. Earnings per share continued
Basic earnings per share is based on the profit for the year attributable to equity holders of the
Company divided by the number of shares ranking for dividend.
Diluted earnings per share is calculated by adjusting the weighted average number of shares
used for the calculation of basic earnings per share as increased by the dilutive effect of potential
ordinary shares. The only potentially dilutive instrument in issue is share awards under the VCP
scheme. Please see note 21 for further details of this scheme.
The following table reflects the profit data used in the basic and diluted earnings per share
calculations:
| Year to | ||
| Year to | 30 September | |
| 30 September | 2024 | |
| 2025 | (Restated) | |
| €000 | €000 | |
| Profit/(loss) from continuing operations attributable to the ordinary equity | ||
holders of the Company | 171,395 | 127,376 |
Add back non-underlying items: | 51,127 | 43,845 |
Add back tax on non-underlying items | (3,526) | 11,610 |
Adjusted profit attributable to the ordinary equity holders of the Company | 218,996 | 182,831 |
The following table reflects the share data used in the basic and diluted earnings per share
calculations:
| Year to | Year to | |
| 30 September | 30 September | |
| 2025 | 2024 | |
| ‘000 | ‘000 | |
| Weighted average number of shares | ||
Weighted average number of ordinary shares in issue | 575,288 | 576,000 |
| Weighted average number of shares for basic earnings per share | ||
Weighted average of dilutive potential shares | 16,911 | 4,113 |
Weighted average number of shares for diluted earnings per share | 592,199 | 580,113 |
The weighted average number of shares used in the EPS calculation has been adjusted to exclude
treasury shares held by the Group during the period, in accordance with IAS 33 Earnings per Share.
31. Other information
Distribution of profit
The Board of Directors declared a dividend of 6.2 Euro Cents per share on 12 March 2025. The
total amount of dividend paid was €35.7m. A dividend of 9 .6 Euro Cents per share has been
recommended by the Board subject to approval of the shareholders at the Annual General Meeting
on 11 March 2026.
Approval and signatories
London (United Kingdom), 14 January 2026
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Notes to the consolidated financial statements continued
Financial statements continued
Separate income statement
Parent company (Pepco Group N.V.) - income statement
for the year ended 30 September 2025
Note
Period to
30 September
2025
€000
Period to
30 September
2024
€000
Administrative expenses (11,527) (658)
Impairment expense 7 (4,728) –
Operating loss for the year 2 (16,255) (658)
Financial income 3 164 4
Financial expense 4 (490) (6)
Dividend income 5 39,365 –
Profit before taxation for the year 22,784 (660)
Taxation 6 2,868 166
Profit/loss for the year 25,652 (494)
The above results were derived from continuing operations.
There was no other comprehensive income for the period.
The notes on pages 208 to 213 form part of these financial statements.
Separate statement of financial
position
Parent company (Pepco Group N.V.) - statement of financial position
at 30 September 2025
Note
30 September
2025
€000
30 September
2024
€000
Non-current assets
Investment in subsidiary companies 7 718,467 709,199
Trade and other receivables 8 63 57
718,530 709,256
Current assets
Trade and other receivables 8 3,906 812
Cash and cash equivalents 77 13
3,983 825
Total assets 722,513 710,081
Equity and liabilities
Capital and reserves
Share capital 10 5,775 5,760
Treasury shares 10 (49,912) –
Share premium reserve 10 663,599 663,599
Share-based payment reserve 53,887 39,908
Accumulated losses (11,852) (1,760)
Total shareholders' equity 661,497 707,507
Non-current liabilities
Trade and other payables 9 46,422 –
Current liabilities
Trade and other payables 9 14,594 2,574
Total equity and liabilities 722,513 710,081
The notes on pages 208 to 213 form part of these financial statements.
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Separate statement
of changes in equity
Parent company (Pepco Group N.V.) - statement of changes in equity
for the year ended 30 September 2025
Share
capital
€000
Treasury
shares
€000
Share
premium
reserve
€000
Share-based
payment
reserve
€000
Accumulated
losses
€000
Total
equity
€000
Balance at 1 October 2023 5,760 – 663,599 33,013 (1,266) 701,106
Total comprehensive income for the year
Loss for the year – – – – (494) (494)
Total comprehensive income for the year – – – – (494) (494)
Transactions with owners, recorded
directly in equity
Equity-settled share-based payments – – – 6,895 – 6,895
New shares issued – – – – – –
Total contributions by and distributions
to owners – – – 6,895 – 6,895
Balance at 30 September 2024 5,760 – 663,599 39,908 (1,760) 707,507
Share
capital
€000
Treasury
shares
€000
Share
premium
reserve
€000
Share-based
payment
reserve
€000
Accumulated
losses
€000
Total
equity
€000
Balance at 1 October 2024 5,760 – 663,599 39,908 (1,760) 707,507
Total comprehensive income for the year
Profit for the year – – – – 25,652 25,652
Total comprehensive income for the year – – – – 25,652 25,652
Transactions with owners, recorded
directly in equity
Equity-settled share-based payments – – – 13,979 – 13,979
New shares issues 15 – – – – 15
Dividends declared – – – – (35,744) (35,744)
Treasury shares – (49,912) – – – (49,912)
Total contributions by and distributions
to owners 15 (49,912) – 13,979 (35,744) (71,662)
Balance at 30 September 2025 5,775 (49,912) 663,599 53,887 (11,852) 661,497
Refer to note 10 for a description of each reserve held within equity and details of movements in the
period. The notes on pages 208 to 213 form part of these financial statements.
Separate statement
of cash flows
Parent company (Pepco Group N.V.) - statement of cash flows
for the year ended 30 September 2025
Note
30 September
2025
€000
30 September
2024
€000
Cash flows from operating activities
Cash generated by operations 11 261 1
Net cash inflow from operating activities 261 1
Cash flows from investing activities
Interest received – –
Dividends received 39,365 –
Net cash inflow from investing activities 39,365 –
Cash flows from financing activities –
Proceeds from the issue of share capital 15
Purchase of own shares (49,912) –
Dividends paid (35,744) –
Proceeds from loans from Group undertakings 46,422 –
Repayment of loans from Group undertakings – –
Interest paid – –
Net cash inflow from financing activities (39,219) –
Effect of exchange rate fluctuations on cash held (343) (1)
Cash and cash equivalents at beginning of period 13 13
Net (decrease)/increase in cash and cash equivalents 64 –
Cash and cash equivalents at end of period 77 13
The notes on pages 208 to 213 form part of these financial statements.
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Notes to the separate financial
statements
Parent company (Pepco Group N.V.)
1. Significant accounting policies
Pepco Group N.V. (the Company) is a public limited liability company incorporated in the
Netherlands (registration number 81928491) and domiciled in the United Kingdom. The Company has
a primary listing on the Warsaw Stock Exchange. The registered address is 14
th
Floor, Capital House,
25 Chapel Street, London, NW1 5DH, United Kingdom.
As part of a Group reorganisation undertaken prior to the IPO, the Company acquired the entire
shareholding of Pepco Group Limited from Flow Newco Limited on 13 May 2021 (the acquisition date),
in a share for share exchange by issuing its ordinary shares. Consequently the Company became the
immediate holding company of Pepco Group Limited.
The Group reorganisation has been accounted for as a common control transaction whereby the
cost of investment in Pepco Group Limited has been determined based on its net asset value on the
acquisition date. Please see note 6 for details of the Group reorganisation.
These separate financial statements have been prepared in accordance with IFRS Accounting
Standards as endorsed by the EU and with part 9 of Book 2 of the Dutch Civil Code and are
presented in addition to the consolidated financial statements of Pepco Group N.V.
Unless otherwise stated, the accounting policies applied are the same as those in the consolidated
financial statements.
1.1 Measurement convention
The financial statements have been prepared on the historical cost basis. Historical cost is generally
based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. In estimating the
fair value of an asset or a liability, the Company takes into account the characteristics of the asset
or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date.
1.2 Going concern
The separate financial statements have been prepared on a going concern basis.
In the 2025 reporting period, the Company’s current liabilities exceed the current assets.
Refer to the Going concern section of the consolidated financial statements for a detailed going
concern assessment of the Group, including the Company.
1.3 Investments in subsidiaries
Investments in subsidiaries are carried at cost less impairment provisions. Investments in subsidiaries are
impaired to their recoverable amount. Where a common control transaction takes place, an investment
is recognised at a value equivalent to the net assets of the acquired entity on the acquisition date.
Please see note 6 for more details surrounding the common control acquisition made during 2021.
1.4 Shareholders’ equity
The reserves are recognised in accordance with the Dutch Civil Code.
1.5 Changes in accounting policies
Refer to note 1 of the consolidated financial statements for disclosures regarding new accounting
standards adopted by the Company and the Group.
1.6 Accounting estimates and judgements
The preparation of these financial statements requires the exercise of judgement, estimates and
assumptions that affect the application of policies and reported amount of assets and liabilities,
income and expenses. Estimates and judgements are continually evaluated and are based on
historical experience and various other factors, including expectations of the future events that
are believed to be reasonable under the circumstances. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future period impacted.
The Company makes estimates and assumptions concerning the future. By definition, the resulting
accounting estimates will seldom equal the related actual results. The Directors continually evaluate
the estimates, assumptions and judgements based on available information and experience.
Key sources of estimation uncertainty
The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities are discussed below.
Impairment of investments
The Company assesses whether there are any indicators of impairment as at the reporting date for
all investments in subsidiaries. Investments are tested for impairment when there are indicators that
the carrying amounts may not be recoverable.
When value in use calculations are undertaken, the Directors must estimate the expected future
cash flows from the cash-generating unit and choose a suitable discount rate in order to calculate
the present value of those cash flows. The Company assesses the recoverability of this investment by
comparing the recoverable amount to the value of the Group as listed on the stock exchange. Refer
to note 1 of the consolidated financial statements for detailed disclosures.
Key judgements
There are no key judgements made in preparation of these financial statements.
1.7 Standards issued but not effective
For a list of new standards issued but not yet effective, please refer to note 1.28 of the consolidated
financial statements.
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Notes to the separate financial statements
Financial statements continued
2. Operating loss
The Company does not have any employees. Details of Directors’ remuneration can be found in note
8 of the consolidated financial statements. The Company does not receive a charge for these costs
as these are borne by another Group entity.
Auditors’ remuneration is borne by another Group entity. Please refer to note 5 of the consolidated
financial statements for details of total Group auditors’ remuneration.
Note in FY25, the company was recharged costs from a fellow Group entity to reflect services
performed for this company. In addition, an impairment was identified in relation to an investment in
Poundland Limited was sold during the year as highlighted in the Group Financial statements.
3. Financial income
Year to
30 September
2025
€000
Year to
30 September
2024
€000
Interest income on loans to Group undertakings 164 4
164 4
4. Financial expense
Year to
30 September
2025
€000
Year to
30 September
2024
€000
Interest expense on loans to Group undertakings 331 –
Bank fees 103 –
Foreign exchange losses 56 6
490 6
5. Dividend income
During the year, the Company recognised dividend income of €39.4 million (2024: nil) in profit or loss.
The dividend income relates to distributions received from an investments in a subsidiary.
6. Taxation
Analysis of tax (charge)/credit for the year recognised in the income statement
Year to
30 September
2025
€000
Year to
30 September
2024
€000
Current tax (charge)/credit
Current tax for the year 2,869 165
Adjustments in respect of prior periods (1) 1
Total current tax (charge)/credit 2,868 166
Deferred tax (charge)/credit
Origination and reversal of temporary differences – –
Adjustments in respect of prior periods – –
Total deferred tax (charge)/credit – –
Total tax (charge)/credit for the year 2,868 166
The current tax credit is recoverable via group relief.
Factors affecting the tax (charge)/credit for the year recognised in the income
statement
The tax credit for the year differs from the standard rate of corporation tax in the UK of 25.0%
(2024: 25.0%). The differences are explained below.
Year to
30 September
2025
€000
Year to
30 September
2024
€000
Profit/(loss) before tax 22,784 (660)
Expected tax (charge)/credit at the UK statutory rate of 25.0% (2024: 25.0%) (5,696) 165
Effects of:
Income not taxable 8,660
Adjustments in respect of prior periods (1) 1
Expenses not deductible (95) –
Total tax (charge)/credit for the year 2,868 166
The Company is UK tax resident based on the Company being managed and controlled in the UK
and as such is subject to UK corporation tax with the expected tax (charge)/credit reconciled to the
UK statutory rate.
Deferred tax not recognised
The Company has no temporary differences (2024: nil) and therefore no deferred tax assets have
been recognised.
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Notes to the separate financial statements continuedNotes to the separate financial statements continued
Financial statements continued
7. Investments in subsidiaries
Country of
incorporation
Issued share
capital
Shareholding
%
Total carrying
value
€000
Pepco Group Limited
United
Kingdom £1,801 100 669,291
On 13 May 2021 the Company acquired the entire share capital of Pepco Group Limited in exchange
for issuing its own shares. As a common control transaction, the deemed cost of the investment was
the net asset value of Pepco Group Limited on the acquisition date of €669,291,000.
30 September
2025
€000
30 September
2024
€000
Historical cost 669,291 669,291
Group share-based payments
1
53,887 39,908
Impairments
2
(4,711) –
718,467 709,199
1. The Company’s subsidiaries recognise the amounts relating to awards to their employees as a share-based payment expense
in their financial statements. As Pepco Group N.V. will settle the share awards, this is recognised as an increase in the investment
in relevant subsidiaries in accordance with IFRS 2 “Share-based Payment”. For details of the share-based payments which have
increased the Company’s investments, see note 21 to the consolidated financial statements.
2. During the period, the company impaired an investment in Poundland Limited.
8. Trade and other receivables
30 September
2025
€000
30 September
2024
€000
Non-current trade and other receivables
Loans to Group undertakings 63 57
Current trade and other receivables
Interest due from Group undertakings 6 10
Amounts due from Group undertakings 418 532
Prepayments 3,482 270
3,906 812
9. Trade and other payables
30 September
2025
€000
30 September
2024
€000
Non-current trade and other payables
Loans from Group undertakings 46,422 –
Current trade and other payables
Interest due to Group undertakings 331 –
Amounts due to Group undertakings 14,141 2,445
Trade payables 122 129
14,594 2,574
10. Share capital and reserves
30 September
2025
€000
30 September
2024
€000
Authorised share capital
1,725,000,000 ordinary shares of €0.01 each 17,250 17,250
Issued share capital
577,451,935 (2024: 576,027,342) ordinary shares of €0.01 each 5,775 5,760
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at the meetings of the Company.
Share premium reserve
The closing share premium reserve on 30 September 2025 was €663,599,000 (2024: €663,599,000).
Share-based payment reserve
This reserve comprises the cumulative value of shares to be issued as a result of the Group equity-
settled share-based payment scheme. Upon the issue of any shares resulting from the scheme, a
transfer will be made out of the share-based payment reserve to share capital and share premium
as applicable. Please see note 21 of the consolidated financial statements for details about the
share-based payment scheme.
Treasury shares
During the year ended 30 September 2025, the Company purchased 9,382,732 of its own shares
under the share buyback programme for total consideration of €49.9m. These shares are held
as treasury shares to satisfy obligations under employee share schemes. These shares do not
carry voting rights, are not entitled to dividend, and are presented as a deduction from equity in
accordance with IAS 32.
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Financial statements continued
11. Cash flow information
Cash utilised in operations
30 September
2025
€000
30 September
2024
€000
Loss before tax 22,784 (660)
Adjusted for:
Impairment of investment in subsidiaries 4,728 –
Dividend income (39,365) –
Financial income (164) (4)
Financial expense 490 6
Changes in working capital:
Increase in trade and other receivables (3,100) (54)
Increase in trade and other payables 12,020 548
Impact of group relief not yet received 2,868 165
Net changes in working capital 11,788 659
Cash generated from operations 261 1
Net debt reconciliation
30 September
2025
€000
30 September
2024
€000
Cash and cash equivalents 77 13
Loans receivable from Group undertakings 63 57
Loans payable to Group undertakings (46,422) –
(46,282) 70
12. Transactions with related parties
The following is a summary of transactions with Group companies during the period and balances
at the end of the period:
Year to
30 September
2025
€000
Year to
30 September
2024
€000
Interest income
Peu (Fin) Plc 13 5
Peu (Tre) Limited 151 –
Interest expense
Peu (Tre) Limited (331) –
Dividend income
Pepco Group Limited 39,365 –
Loans receivable
Peu (Fin) Plc 63 57
Interest accrued on loans
Peu (Fin) Plc 6 10
Amounts due from Group undertakings
Peu (Fin) Plc – 360
Peu (Tre) Limited 3,482 –
Poundland Limited – 52
Poundland Elgin Limited – 77
Pepkor Europe Limited – 43
Loans payable
Peu (Tre) Limited (46,422) –
Interest accrued on loans
Peu (Tre) Limited (331) –
Amounts owed to Group undertakings
Peu (Fin) Plc (159) –
Peu (Tre) Limited (1,122) (958)
Pepco Group Services Limited (12,860) (1,488)
Interest is charged on the loans receivable at the gross effective interest rate of the Group’s external
debt, plus an appropriate transfer pricing mark-up where appropriate. Loans are unsecured and
repayable in line with the maturity of the Group’s external debt.
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Financial statements continued
13. Financial risk management
The Management Board and Executive team are responsible for implementing the risk management
strategy to ensure that an appropriate risk management framework is operating effectively within the
Company. The Company does not speculate in the trading of derivative or other financial instruments.
Total financial assets and liabilities
30 September
2025
€000
30 September
2024
€000
Related party loans receivable 63 57
Non-current financial assets 63 57
Related party loans receivable 6 10
Amounts due from Group undertakings 3,482 532
Cash and cash equivalents 77 13
Current financial assets 3,565 555
Related party loans payable (46,422) –
Non-current financial liabilities (46,422) –
Amounts owed to Group undertakings (14,141) (2,445)
Trade payables (122) (129)
Current financial liabilities (14,263) (2,574)
No items were classified as “at fair value through profit or loss” or “at fair value through other
comprehensive income” during the 2025 and 2024 reporting period.
The carrying amount of financial assets and liabilities approximates its fair value.
The fair value calculation of the financial assets and liabilities was performed at the reporting
date. Between the reporting date and the date of this report, the fair values reported may have
fluctuated with changing market conditions and therefore the fair values are not necessarily
indicative of the amounts the Company could realise in the normal course of business subsequent
to the reporting date.
Foreign currency risk
The financial assets and liabilities of the Company are denominated in the functional currency
except for the following British Pound denominated related party loans receivable, cash and cash
equivalents and amounts owed to Group undertakings.
30 September
2025
€000
30 September
2024
€000
Related party loans receivable 57 52
Cash and cash equivalents 1 1
Amounts owed to Group undertakings (7,337) (316)
Trade payables (107) (87)
(7,386) (350)
The following significant exchange rates applied during the period and were used in calculating
sensitivities:
Forecast rate Spot rate
Euro:British Pound 1.14 1.19
Sensitivity analysis
The table below indicates the Company’s sensitivity at the reporting date to the movements in the
British Pound that the Company is exposed to on its financial instruments. The percentage given
below represents a weighting of foreign currency rates forecasted by the major banks that the
Company transacts with regularly. This analysis assumes that all other variables, in particular interest
rates, remain constant. The impact on the reported numbers, using the forecast rates as opposed to
the reporting date spot rates, is set out below.
30 September
2025
€000
30 September
2024
€000
Through profit/(loss)
British Pound strengthening by 10% against the Euro (739) (35)
British Pound weakening by 10% against the Euro 739 35
If the foreign currencies were to weaken/strengthen against the Euro, by the same percentages as
set out in the table above, it would have an equal, but opposite, effect on profit or loss.
Interest rate risk
At the reporting date the interest rate profile of the Company’s financial instruments was:
30 September 2025 30 September 2024
Variable
€000
Non-interest
bearing
€000
Total
€000
Variable
€000
Non-interest
bearing
€000
Total
€000
Non-current financial
assets 63 – 63 57 – 57
Non-current financial
liabilities (46,422) – (46,422) – – –
Current financial assets – 3,565 3,565 – 23 23
Current financial liabilities – (14,263) (14,263) – – –
(46,359) (10,698) (57,057) 57 23 80
Sensitivity analysis
For assets and liabilities which hold variable interest rates, a 1% increase/decrease would increase/
decrease profit by EUR 464k.
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Notes to the separate financial statements continuedNotes to the separate financial statements continued
Financial statements continued
13. Financial risk management continued
Credit risk
Potential concentration of credit risk consists principally of related party loans receivable. At
30 September 2025, the Company did not consider there to be any significant concentration of
credit risk which had not been adequately provided for.
The carrying amounts of financial assets represent the maximum credit exposure.
The maximum remaining exposure to credit risk at the reporting date, without taking account of
the value of any collateral obtained, was €3.6m (2024: €0.1m). All exposure to credit risk is within the
United Kingdom.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated
with financial liabilities. Liquidity risk arises because of the possibility that the entity could be
required to pay its liabilities earlier than expected. The Company is not exposed to significant
liquidity risk on the basis that its only financial liabilities are owed to other Group companies.
14. Reconciliation of net profit and shareholders’ equity of the
Company with the consolidated results
30 September 2025 30 September 2024
Total equity
€000
Net profit for
the period
€000
Total equity
(Restated)
€000
Net profit for
the period
(Restated)
€000
Shareholders’ equity and net profit for the period
according to separate financial statements 661,497 25,652 707,507 (494)
Share of subsidiaries’ consolidated (loss)/profit for
the period (201,455) (201,455) (733,736) (733,736)
Share of subsidiaries’ consolidated other
comprehensive income for the period (1,754) – 73,250 –
Share of subsidiaries’ consolidated movements
due to discontinued operations (27,325) – – –
Prior period share of subsidiaries’ consolidated
total comprehensive income for the period and
other reserve movements (267,951) – 394,230 –
Equity and profit after tax for the period
according to consolidated financial statements 163,012 (175,803) 441,251 (734,230)
This note has been restated for FY24 to reflect the restatements that have taken place in the
consolidated financial statements. Please see note 26 in the consolidated financial statements for
further details.
15. Subsequent events
There are no reportable subsequent events.
16. Principal subsidiaries
The statutory list of all subsidiaries and affiliated companies is included on pages 224 to 225.
17. Ultimate parent company
IBEX Retail Investments (Europe) Limited (“IRIEL”) owned 71.97% of the Company’s outstanding
shares as of 30 September 2025. As such, the Company is classified, from a Dutch law perspective
pursuant to section 2:24a of the Dutch Civil Code, as a direct subsidiary of IRIEL, which is registered
in England. IRIEL’s registered address is The Space (Floor 3), 120 Regent Street, London, W1B 5FE.
At the reporting date, the Company’s ultimate parent company was IBEX Topco B.V., an entity
registered in the Netherlands.
18. Approval and signatories
London (United Kingdom), 14 January 2026
Management
Stephan Borchert, Chief Executive Officer (and Executive Director)
Willem Eelman, Chief Financial Officer
Non-Executive Directors
Frederick Arnold, Independent Non-Executive Director
Brendan Connolly, Independent Non-Executive Director
Sean Mahoney, Non-Executive Director
Grazyna Piotrowska-Oliwa, Independent Non-Executive Director
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Notes to the separate financial statements continued
Financial statements continued
Independent auditor’s report
To: the shareholders and the board of directors of Pepco Group N.V.
Report on the audit of the
financial statements for the
year ended 30 September 2025
included in the annual report
Our qualified opinion
We have audited the accompanying financial
statements for the year ended 30 September
2025 of Pepco Group N.V. based in Amsterdam,
the Netherlands.
In our opinion, except for the possible effects
of the matter described in the ‘Basis for
our qualified opinion’ section, the financial
statements give a true and fair view of the
financial position of Pepco Group N.V. as at
30 September 2025 and of its result and its cash
flows for the year then ended in accordance
with IFRS Accounting Standards as adopted
in the European Union (IFRS Accounting
Standards) and with Part 9 of Book 2 of the
Dutch Civil Code.
The financial statements comprise:
• The consolidated and separate statement of
financial position as at 30 September 2025
• The following statements for the year ended
30 September 2025: the consolidated and
separate income statement, the consolidated
and separate statements of other
comprehensive income, changes in equity
and cash flows
• The notes comprising material accounting
policy information and other explanatory
information
Basis for our qualified opinion
Note 1.29 “Uncertainties related to disclosure
notes 25 (Discontinued operations) and 26
(Restatement note) related to the former
Poundland segment” to the consolidated
financial statements, discloses that Pepco
Group N.V. sold Poundland on 12 June 2025.
Following the sale the board of directors was
unable to require Poundland to undertake the
required analysis and produce the required
information on opening balances restatements,
in particular relating to the required adjustments
for IFRS 16 lessee accounting and possibly
other Poundland adjustments related to trade
payables, prepayments and deferred income.
With regard to the required adjustment for IFRS
16 lease accounting, the board was not able to
require Poundland to undertake the extensive
recalculations, system reconfiguration of the
IFRS 16 tool, and data extraction work that
would be necessary to investigate any required
adjustment to the previously published IFRS 16
lease liability and right of use asset balances
as at 1 October 2024 and other possible
adjustments from discontinued operations
disclosed in Note 26 “Restatement note” to
the consolidated financial statements. As a
result, we were unable to perform our planned
audit procedures relating to Poundland’s
lessee accounting in accordance with IFRS
16. Therefore, we were also unable to obtain
sufficient and appropriate audit evidence on
the adjustments from discontinued operations
disclosed in Note 25 “Discontinued operations”
and any potential further adjustments required
as discussed in Note 1.29. We concluded that the
possible effects of undetected misstatements,
if any, could be material but not pervasive for
the financial statements as a whole.
We conducted our audit in accordance with
Dutch law, including the Dutch Standards
on Auditing. Our responsibilities under those
standards are further described in the Our
responsibilities for the audit of the financial
statements section of our report.
We are independent of Pepco Group N.V.
in accordance with the EU Regulation on
specific requirements regarding statutory
audit of public-interest entities, the Wet
toezicht accountantsorganisaties (Wta, Audit
firms supervision act), the Verordening inzake
de onafhankelijkheid van accountants bij
assurance-opdrachten (ViO, Code of Ethics
for Professional Accountants, a regulation with
respect to independence) and other relevant
independence regulations in the Netherlands.
Furthermore, we have complied with the
Verordening gedrags- en beroepsregels
accountants (VGBA, Dutch Code of Ethics for
Professional Accountants).
We believe the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our qualified opinion.
Information in support of our opinion
We designed our audit procedures in the
context of our audit of the financial statements
as a whole and in forming our opinion thereon.
The following information in support of our
opinion and any findings were addressed in
this context, and we do not provide a separate
opinion or conclusion on these matters.
Our understanding of the business
Pepco Group N.V. (the company) and, together
with its consolidated subsidiaries, “the group”,
offers its clients products as a discount retailer.
The group is mainly active in Central and
Eastern Europe with sourcing in Asia. We paid
specific attention in our audit to a number of
areas driven by the operations of the Company
and our risk assessment.
Materiality
We determined materiality and identified and
assessed the risks of material misstatement of
the financial statements, whether due to fraud
or error in order to design audit procedures
responsive to those risks and to obtain audit
evidence that is sufficient and appropriate to
provide a basis for our opinion.
Materiality €22 million
Benchmark applied 2.65% of Reported
EBITDA from
continuing operations
Explanation Based on our analyses
of the common
financial information
needs of users of the
financial statements,
we presume EBITDA
is an appropriate
benchmark to
determine materiality.
We have also taken into account misstatements
and/or possible misstatements that in our
opinion are material for the users of the financial
statements for qualitative reasons.
We agreed with the audit committee of the
board of directors (the audit committee) that
misstatements in excess of €1.1 million, which are
identified during the audit, would be reported
to the audit committee, as well as smaller
misstatements that in our view must be reported
on qualitative grounds.
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Scope of the group audit
Pepco Group N.V. is at the head of a group of
entities. The financial information of this group is
included in the financial statements.
We are responsible for planning and performing
the group audit to obtain sufficient appropriate
audit evidence regarding the financial
information of the entities or business units
within the group as a basis for forming an
opinion on the financial statements. We are also
responsible for the direction, supervision, review
and evaluation of the audit work performed for
purposes of the group audit. We bear the full
responsibility for the auditor’s report.
Based on our understanding of the group
and its environment, the applicable financial
framework and the group’s system of internal
control, we identified and assessed risks
of material misstatement of the financial
statements and the significant accounts and
disclosures. Based on this risk assessment, we
determined the nature, timing and extent of
audit work performed, including the entities or
business units within the group (components)
at which to perform audit work. For this
determination we considered the nature of
the relevant events and conditions underlying
the identified risks of material misstatements
for the financial statements, the association of
these risks to components and the materiality
or financial size of the components relative to
the group.
We have worked closely with together with
our regional component team in Poland,
in performing audit work in respect of the
restatements of opening balances and
comparative information (including IFRS 16
lessee accounting adjustments) and our
audit approach related to fraud risks and
non-compliance with laws and regulations;
as well in directing, supervising, reviewing or
coordinating the work of component teams. We
communicated the audit work to be performed
and identified risks through instructions for
component auditors, who are familiar with local
laws and regulations. We requested component
auditors to communicate matters related to the
financial information of the component that is
relevant to identifying and assessing risks.
This resulted in a coverage of 99,2% of Reported
EBITDA from continuing operations, 99,5% of
revenue and 99,8% of total assets.
For other components, we performed specified
procedures and analytical procedures to
corroborate that our risk assessment and
scoping remained appropriate throughout the
audit.
We performed site visits to meet with local
management and the regional and component
teams and to observe the components
operations. We have had several (virtual)
meetings during each phase of the audit to
discuss the group risk assessment and the risks
of material misstatements and ultimately we
discussed the outcome of audit procedures with
all component auditors and attended closing
meetings with local management. In addition
we visited our component auditors in the
United Kingdom, Poland and Hong Kong and
reviewed and evaluated the adequacy of the
deliverables and their electronic audit files to
address the risks of material misstatement.
By performing the audit work mentioned above
at the entities or business units within the group,
together with additional work at group level,
we have been able to obtain sufficient and
appropriate audit evidence about the group’s
financial information to provide an opinion on
the financial statements.
Teaming and use of specialists
We ensured that the audit teams both at
group and at component levels included the
appropriate skills and competences which
are needed for the audit of a listed client in
the retail industry. We included specialists in
the areas of IT audit, income tax, pensions,
derivatives, share based payments, legal and
forensics.
Our focus on climate-related risks and
the energy transition
Climate change and the energy transition are
high on the public agenda. Issues such as CO
2
reduction impact financial reporting, as these
issues entail risks for the business operation,
the valuation of assets and provisions or the
sustainability of the business model and access
to financial markets of companies with a larger
CO
2
footprint.
The board of director’s summarized the group’s
commitments and obligations, and reported
in the Sections “Sustainability strategy” and
“Environment” of the annual report how the
company is addressing climate-related and
environmental risks.
As part of our audit of the financial statements,
we evaluated the extent to which climate-
related risks and the effects of the energy
transition and the company’s commitments and
obligations, are taken into account in estimates
and significant assumptions as well as in the
design of relevant internal control measures.
Furthermore, we read the annual report and
considered whether there is any material
inconsistency between the sustainability
information in Sections “Sustainability strategy”
and “Environment” and the financial statements.
Based on the audit procedures performed,
we do not deem climate-related risks to
have a material impact on the financial
reporting judgements, estimates or significant
assumptions as at 30 September 2025.
Our focus on fraud and non-
compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing
fraud or non-compliance and we cannot be
expected to detect non-compliance with all
laws and regulations, it is our responsibility
to obtain reasonable assurance that the
financial statements, taken as a whole, are free
from material misstatement, whether caused
by fraud or error. The risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
Our audit response related to fraud risks
We identified and assessed the risks of material
misstatements of the financial statements
due to fraud. During our audit we obtained
an understanding of the company and its
environment and the components of the system
of internal control, including the risk assessment
process and the board of directors’ process for
responding to the risks of fraud and monitoring
the system of internal control, as well as the
outcomes. We refer to Chapter “Our approach
to risk management” of the annual report for
the board of directors’ (fraud) risk assessment.
We evaluated the design and relevant
aspects of the system of internal control and in
particular the fraud risk assessment, as well as
the Pepco Group N.V. Prevention of Bribery and
Corruption Policy, the Supplier Code of Conduct
and whistleblowing policy. We evaluated the
design and the implementation and, where
considered appropriate, tested the operating
effectiveness, of internal controls designed to
mitigate fraud risks.
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As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to
financial reporting fraud, misappropriation of assets and bribery and corruption in close co-
operation with our forensic and legal specialists. We specifically considered fraud risk factors
relating to non-compliance with anti-fraud and bribery laws and regulations through agent deals
and purchasing agreements (the supply side). We evaluated whether these factors indicate that a
risk of material misstatement due to fraud is present.
We incorporated elements of unpredictability in our audit. We also considered the outcome of
our other audit procedures and evaluated whether any findings were indicative of fraud or non-
compliance.
We addressed the risks related to management override of controls, as this risk is present in all
organizations. For these risks we have, amongst other things, performed procedures to evaluate
whether the selection and application of accounting policies by the company, particularly those
relating to subjective measurements and complex transactions, as disclosed in Note 1.29 ‘Accounting
estimates and judgements’ to the consolidated financial statements. We have also used data
analysis to identify and address high-risk journal entries and other adjustments made in the
financial reporting process. We evaluated the business rationale (or the lack thereof) of significant
extraordinary transactions, including those with related parties.
The following fraud risk identified required significant attention during our audit.
Presumed risks of fraud in revenue recognition
Fraud risk We presumed that there are risks of fraud in revenue recognition. We mainly relate
this risk to management its unique position to adjust the financial statements
through inappropriate journal entries and other adjustments made in the financial
reporting process related to revenue recognition.
Our audit
approach
We describe the audit procedures responsive to this fraud risk in the description of
our audit approach for the key audit matter Revenue recognition.
We considered available information and made enquiries of relevant members of the board of
directors, internal audit, legal, compliance, local management.
The fraud risks we identified, enquiries and other available information did not lead to specific
indications for fraud or suspected fraud potentially materially impacting the view of the financial
statements.
Our audit response related to risks of non-compliance with laws and regulations
We performed appropriate audit procedures regarding compliance with the provisions of those laws
and regulations that have a direct effect on the determination of material amounts and disclosures
in the financial statements. Furthermore, we assessed factors related to the risks of non-compliance
with laws and regulations that could reasonably be expected to have a material effect on the
financial statements from our general industry experience, through discussions with the board of
directors, reading minutes, inspection of internal audit and compliance reports and performing
substantive tests of details of classes of transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities and remained
alert to any indication of (suspected) non-compliance throughout the audit. Finally, we obtained
written representations that all known instances of non-compliance with laws and regulations have
been disclosed to us.
Our audit response related to going concern
As disclosed in section Basis of preparation in Note 1.2 to the financial statements, the financial
statements have been prepared on a going concern basis. When preparing the financial
statements, the board of directors made a specific assessment of the company’s ability to continue
as a going concern and to continue its operations for the foreseeable future.
We discussed and evaluated the specific assessment with the board of directors exercising
professional judgment and maintaining professional scepticism. We considered whether the board
of directors’ going concern assessment, based on our knowledge and understanding obtained
through our audit of the financial statements or otherwise, contains all relevant events or conditions
that may cast significant doubt on the company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion.
Based on our procedures performed, we did not identify material uncertainties about going concern
or the board of directors’ use of the going concern basis of accounting. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause a company to cease to continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements. We have communicated the key audit matters to the board of
directors. The key audit matters are not a comprehensive reflection of all matters discussed.
In addition to the matter described in the ‘Basis for our qualified opinion’ section we identified the
following key audit matters.
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Revenue recognition
Risk The regular sale transactions of Pepco Group are typically smaller amounts and
paid for when the products are sold to the customers.
As disclosed in Note 1.16 Revenue, it is the group’s policy to sell its products to
customers with a right of return. However, the level of returns is not considered
material and therefore no right of return asset or refund liability is recognised. On
the basis of materiality revenue is therefore recognised at the full value of the
consideration received.
We presumed that there are risks of fraud in revenue recognition as part of the
financial reporting process, given that revenue is considered one of the key
performance indicators of the group. The reported revenues and EBITDA from
continuing operations could be manipulated by recording inappropriate manual
journal entries and other adjustments in the preparation of the financial statements.
We therefore considered revenue recognition to be a key audit matter.
Our audit
approach
Our audit procedures related to this key audit matter included, amongst others,
evaluating the appropriateness of the group’s revenue recognition policies in
accordance with IFRS 15, “Revenue from Contracts with Customers” and whether
these policies have been applied consistently or whether changes, if any, are
appropriate in the circumstances.
We have obtained an understanding and evaluated the design of the processes
and key controls implemented by the group in connection with revenue recognition,
including the financial reporting process.
Furthermore, we performed the following audit procedures to address the matter in
our audit:
• We evaluated reconciliations between sales systems and cash
• We challenged management position on manual revenue adjustments based on
supporting documentation and the group’s accounting policy.
• Performed test of details on transactions close to year-end
Finally, we evaluated the adequacy of the related disclosure in the consolidated
financial statements.
Key
observations
Based on the audit procedures performed, we did not identify any material
misstatements in the revenue recognized in the financial statements.
Restatements of opening balances and comparative information
Risk As disclosed in note 26 ‘Restatement note’ of the consolidated financial statements,
the group identified a number of prior year adjustments, impacting the opening
balances as at 1 October 2023, 1 October 2024 and the year ended 30 September
2024. The prior period adjustments impact both the reported financial position and
income statement for the year ended 30 September 2024.
We considered the restatements of opening balances and comparative information
a key audit matter because of the effect on our audit of the financial statements.
The restatements related to ‘Pepco Leases adjustment’ (IFRS 16 lessee accounting)
in particular required significant attention from both the group and the auditor. As
part of the implementation of a new leasing system to replace the legacy system,
the group noted errors in relation to how leases were calculated in prior periods and
a restatement was made.
Our audit
approach
Our audit procedures related to this key audit matter included, amongst others,
evaluating the appropriateness of the restatements, including related disclosures,
in accordance with IAS 8 “Accounting policies, changes in accounting estimates
and errors”, in particular the restatements relating to the group’s lessee accounting
in accordance with IFRS 16 and whether these restatements are appropriate in the
circumstances.
Our audit procedures included obtaining an understanding of the methods and
models used by the group in determining the valuation of right of use assets and
liabilities, including an understanding of relevant controls. We have evaluated
the measurement of the right of use assets and liabilities and challenged the
reasonableness and consistency of the assumptions used by management.
Key
observations
Based on our procedures performed, we consider the restatements to prior year
appropriate, including the restatements related to IFRS 16 lessee accounting in
accordance with IFRS Accounting Standards.
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Report on other information included in the annual report
The annual report contains other information in addition to the financial statements and our
auditor’s report thereon.
Based on the following procedures performed, we conclude that the other information:
• Is consistent with the financial statements and does not contain material misstatements
• Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the
management report (excluding the sustainability statement) and the other information as required
by Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and 2:145 sub
section 2 of the Dutch Civil Code for the remuneration report
We have read the other information. Based on our knowledge and understanding obtained
through our audit of the financial statements or otherwise, we have considered whether the other
information contains material misstatements. By performing these procedures, we comply with the
requirements of Part 9 of Book 2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the
Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of
those performed in our audit of the financial statements.
The board of directors is responsible for the preparation of the other information, including the
management report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other
information required by Part 9 of Book 2 of the Dutch Civil Code. The board of directors is responsible
for ensuring that the remuneration report is drawn up and published in accordance with Sections
2:135b and 2:145 sub section 2 of the Dutch Civil Code.
Description of responsibilities regarding the financial statements
Responsibilities of the board of directors for the financial statements
The board of directors is responsible for the preparation and fair presentation of the financial
statements in accordance with IFRS Accounting Standards and Part 9 of Book 2 of the Dutch Civil
Code. Furthermore, the board of directors is responsible for such internal control as the board of
directors determines is necessary to enable the preparation of the financial statements that are free
from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the board of directors is responsible for
assessing the company’s ability to continue as a going concern. Based on the financial reporting
framework mentioned, the board of directors should prepare the financial statements using the
going concern basis of accounting unless the board of directors either intends to liquidate the
company or to cease operations, or has no realistic alternative but to do so. The board of directors
should disclose events and circumstances that may cast significant doubt on the company’s ability
to continue as a going concern in the financial statements.
The audit committee, consisting of non-executive directors, is responsible for monitoring the integrity
of the financial statements of the company.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain
sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we
may not detect all material misstatements, whether due to fraud or error during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements. The materiality affects the nature, timing and extent of
our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional scepticism throughout
the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence
requirements. The Information in support of our opinion section above includes an informative
summary of our responsibilities and the work performed as the basis for our opinion.
Our audit further included among others:
• Performing audit procedures responsive to the risks identified, and obtaining audit evidence that
is sufficient and appropriate to provide a basis for our opinion
• Obtaining an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control
• Evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the board of directors
• Evaluating the overall presentation, structure and content of the financial statements, including
the disclosures
• Evaluating whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation
Communication
We communicate with the board of directors regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant findings in internal
control that we identify during our audit. In this respect we also submit an additional report to the
audit committee of the board of directors in accordance with Article 11 of the EU Regulation on
specific requirements regarding statutory audit of public-interest entities. The information included in
this additional report is consistent with our audit opinion in this auditor’s report.
We provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the board of directors, we determine the key audit matters:
those matters that were of most significance in the audit of the financial statements. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, not communicating the matter is in the public
interest.
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Report on other legal and
regulatory requirements
and ESEF
Engagement
We were engaged by the shareholders meeting
as auditor of Pepco Group N.V. on 21 March
2025, as of the audit for the year 2025..
No prohibited non-audit services
We have not provided prohibited non-audit
services as referred to in Article 5(1) of the EU
Regulation on specific requirements regarding
statutory audit of public-interest entities.
European Single Electronic Reporting
Format (ESEF)
Pepco Group N.V. has prepared the annual
report in ESEF. The requirements for this are set
out in the Delegated Regulation (EU) 2019/815
with regard to regulatory technical standards
on the specification of a single electronic
reporting format (hereinafter: the RTS on ESEF).
In our opinion the annual report prepared in
the XHTML format, including the (partially)
marked-up consolidated financial statements
as included in the reporting package by Pepco
Group N.V., complies in all material respects with
the RTS on ESEF.
The executive board is responsible for preparing
the annual report, including the financial
statements, in accordance with the RTS on
ESEF, whereby the executive board combines
the various components into a single reporting
package.
Our responsibility is to obtain reasonable
assurance for our opinion whether the annual
report in this reporting package complies with
the RTS on ESEF.
We performed our examination in accordance
with Dutch law, including Dutch Standard
3950N, ”Assurance-opdrachten inzake het
voldoen aan de criteria voor het opstellen
van een digitaal verantwoordingsdocument”
(assurance engagements relating to
compliance with criteria for digital reporting).
Our examination included amongst others
• Obtaining an understanding of the Company’s
financial reporting process, including the
preparation of the reporting package
• Identifying and assessing the risks that the
annual report does not comply in all material
respects with the RTS on ESEF and designing
and performing further assurance procedures
responsive to those risks to provide a basis for
our opinion, including:
• Obtaining the reporting package and
performing validations to determine
whether the reporting package containing
the Inline XBRL instance document and the
XBRL extension taxonomy files, has been
prepared in accordance with the technical
specifications as included in the RTS on
ESEF
• Examining the information related to the
consolidated financial statements in the
reporting package to determine whether all
required mark-ups have been applied and
whether these are in accordance with the
RTS on ESEF
Utrecht, 14 January 2026
EY Accountants B.V.
Signed by J.L. Geutjes
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Limited assurance report of the independent auditor
on the sustainability statement
To: the shareholders and the Board of Directors of Pepco Group N.V.
Our qualified conclusion
We have performed a limited assurance
engagement on the consolidated
sustainability statement for the year ended
30 September 2025 of Pepco Group N.V. based
in Amsterdam, the Netherlands (hereinafter:
the company) in section Sustainability
Statement of the accompanying Annual
Report including the information incorporated
in the sustainability statement by reference
(hereinafter: the sustainability statement).
Based on our procedures performed and the
evidence obtained, except for the possible
effects of the matter described in the ‘Basis
for our qualified conclusion’, nothing has come
to our attention that causes us to believe
that the sustainability statement is not,
in all material respects:
• prepared in accordance with the European
Sustainability Reporting Standards (ESRS)
as adopted by the European Commission
and compliant with the double materiality
assessment process carried out by the
company to identify the information reported
pursuant to the ESRS; and
• compliant with the reporting requirements
provided for in Article 8 of Regulation (EU)
2020/852 (Taxonomy Regulation).
Our qualified conclusion has been formed on
the basis of the matters outlined in this limited
assurance report.
Basis for our
qualified conclusion
As disclosed in paragraph ‘Uncertainties related
to the Capex taxonomy disclosure related to
the former Poundland segment’ in EU Taxonomy
as part of the sustainability statement, due to
the sale of Poundland on 12 June 2025,
the company no longer has access to sufficient
and appropriate information about adjustments
required for IFRS 16 lessee accounting, if any,
related to the former Poundland segment. The
reporting requirements provided for in Article
8 of Regulation (EU) 2020/852 (Taxonomy
Regulation) include KPIs related to capital
expenditure (CapEx KPIs) for which the
denominator and numerator include additions
based on IFRS 16 Leases, paragraph 53 (h). As
result, we were unable to determine whether
adjustments were required, if any, to the
CapEX KPIs, including the required disclosures
under Article 8(2) of Regulation (EU) 2020/852
(Taxonomy Regulation), for additions relating to
the former Poundland segment for the period
from 1 October 2024 to 12 June 2025.
We have performed our limited assurance
engagement on the sustainability statement
in accordance with Dutch law, including Dutch
Standard 3810N, “Assurance-opdrachten inzake
duurzaamheidsverslaggeving” (Assurance
engagements relating to sustainability
reporting), which is a specified Dutch standard
that is based on the International Standard on
Assurance Engagements (ISAE) 3000 (Revised),
“Assurance engagements other than audits or
reviews of historical financial information”.
Our assurance engagement was aimed
to obtain a limited level of assurance that
the sustainability statement is free from
material misstatements. The procedures
vary in nature and timing from, and are less
in extent, than for a reasonable assurance
engagement. Consequently, the level of
assurance obtained in a limited assurance
engagement is substantially lower than the
assurance that would have been obtained
had a reasonable assurance engagement
been performed.
Our responsibilities in this regard are further
described in the section ‘Our responsibilities
for the limited assurance engagement on
the sustainability statement’ of our report.
We are independent of Pepco Group N.V.
in accordance with the Verordening inzake
de onafhankelijkheid van accountants bij
assurance-opdrachten (ViO, Code of Ethics
for Professional Accountants, a regulation
with respect to independence) and other
relevant independence regulations in
the Netherlands. This includes that we
do not perform any activities that could
result in a conflict of interest with our
independent assurance engagement and
we are not involved in the preparation
of the sustainability statement, as doing
so may compromise our independence.
Furthermore, we have complied with the
Verordening gedrags- en beroepsregels
accountants (VGBA, Dutch Code of Ethics
for Professional Accountants). The ViO and VGBA
are at least as demanding as the International
code of ethics for professional accountants
(including International independence
standards) of the International Ethics Standards
Board for Accountants (the IESBA Code) as
relevant to limited assurance engagements
on sustainability statements of public interest
entities in the European Union.
We believe that the assurance evidence
we have obtained is sufficient and appropriate
to provide a basis for our qualified conclusion.
Emphasis on future
improvements in the double
materiality assessment process
We draw attention to section ‘Conducting
our Double Materiality Assessment’ in the
sustainability statement. This disclosure explains
future improvements in the ongoing due
diligence and double materiality assessment
process, including robust engagement with
affected stakeholders. Due diligence is an
on-going practice that responds to and may
trigger changes in the company’s strategy,
business model, activities, business relationships,
operating, sourcing and selling contexts.
The double materiality assessment process
requires the company to make key judgments
and use thresholds.
Our conclusion is not modified in respect
of this matter.
220 Pepco Group N.V. Annual Report 2025
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Other
informationOther information
Inherent limitations
associated with measurement
or evaluation of sustainability
information
Significant uncertainties affecting
the quantitative metrics
Section ‘Sources of estimation and
uncertainty’ (part of the ‘General basis for the
preparation of the Sustainability Statement’)
in the sustainability statement identifies the
quantitative metrics that are subject to a
high level of measurement uncertainty and
discloses information about the sources of
measurement uncertainty and the assumptions,
approximations and judgements the company
has made in measuring these in compliance
with the ESRS.
Comparability may be limited
for entity-specific sustainability
information
The company provides additional entity-
specific sustainability information in Section ‘S2:
Workers in the value chain’ in the sustainability
statement. The comparability of entity-specific
sustainability information between entities and
over time may be affected by the absence of
a uniform practice or availability of external
information sources to measure or evaluate
this information that can support comparability.
This allows for the application of different,
but acceptable, measurement techniques.
Inherent limitations of a double
materiality assessment process
The sustainability statement may not include
every impact, risk and opportunity or additional
entity-specific disclosure that each individual
stakeholder (group) may consider important in
its own particular assessment.
Inherent limitations of forward-looking
information
In reporting forward-looking information
in accordance with the ESRS, the Board of
Directors describes the underlying assumptions
and methods of producing the information, as
well as other factors that provide evidence that
it reflects the actual plans or decisions made
by the company (actions). Forward-looking
information relates to events and actions that
have not yet occurred and may never occur.
The actual outcome is likely to be different
since anticipated events frequently do not
occur as expected.
Comparative information
not assured
Sustainability information for Financial Years up
to and including the year ended 30 September
2024 included in the sustainability statement,
has not been part of this limited assurance
engagement. Consequently, we do not
provide any assurance on the comparative
information and thereto related disclosures
in the sustainability statement for Financial
Years up to and including the year ended
30 September 2024.
Our conclusion is not modified in respect
of this matter.
Responsibilities of Board
of Directors for the
sustainability statement
The Board of Directors is responsible for the
preparation of the sustainability statement in
accordance with the ESRS, including the double
materiality assessment process carried out by
the company as the basis for the sustainability
statement and disclosure of material impacts,
risks and opportunities in accordance
with the ESRS. As part of the preparation
of the sustainability statement, the Board
of Directors is responsible for compliance
with the reporting requirements provided
for in Article 8 of Regulation (EU) 2020/852
(Taxonomy Regulation).
The Board of Directors is also responsible
for selecting and applying additional
entity-specific disclosures to enable users
to understand the company’s sustainability-
related impacts, risks or opportunities
and for determining that these additional
entity-specific disclosures are suitable
in the circumstances and in accordance
with the ESRS.
Furthermore, the Board of Directors is
responsible for such internal control as
it determines is necessary to enable the
preparation of the sustainability statement
that is free from material misstatement,
whether due to fraud or error.
The audit committee, consisting of non-
executive directors, is responsible for monitoring
the integrity of the sustainability statement.
Our responsibilities for the
limited assurance engagement
on the sustainability statement
Our responsibility is to plan and perform the
limited assurance engagement in a manner that
allows us to obtain sufficient and appropriate
assurance evidence for our qualified conclusion.
We apply the applicable quality management
requirements pursuant to the Nadere
voorschriften kwaliteitsmanagement (NVKM,
regulations for quality management) and the
International Standard on Quality Management
(ISQM) 1, and accordingly maintain a
comprehensive system of quality management
including documented policies and procedures
regarding compliance with ethical requirements,
professional standards and other relevant legal
and regulatory requirements.
Our limited assurance engagement included
amongst others:
• Performing inquiries and an analysis of the
external environment and obtaining an
understanding of relevant sustainability
themes and issues, the characteristics of the
company, its activities and the value chain
and its key intangible resources in order to
assess the double materiality assessment
process carried out by the company as
the basis for the sustainability statement
and disclosure of all material sustainability-
related impacts, risks and opportunities
in accordance with the ESRS
• Obtaining through inquiries a general
understanding of the internal control
environment, the company’s processes for
gathering and reporting entity-related and
value chain information, the information
systems and the company’s risk assessment
process relevant to the preparation of the
sustainability statement and for identifying
the company’s activities, determining
eligible and aligned economic activities and
prepare the disclosures provided for in Article
8 of Regulation (EU) 2020/852 (Taxonomy
Regulation), without obtaining assurance
information about the implementation or
testing the operating effectiveness of controls
• Assessing the double materiality assessment
process carried out by the company
and identifying and assessing areas of
the sustainability statement, including
the disclosures provided for in Article 8
of Regulation (EU) 2020/852 (Taxonomy
Regulation), where misleading or unbalanced
information or material misstatements,
whether due to fraud or error, are likely
to arise (‘selected disclosures’). Designing
and performing further assurance procedures
aimed at assessing that the sustainability
statement is free from material misstatements
responsive to this risk analysis.
Other information continued
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• Considering whether the description of the
double materiality assessment process in the
sustainability statement made by the Board
of Directors appears consistent with the
process carried out by the company
• Performing analytical review procedures on
quantitative information in the sustainability
statement, including consideration of data
and trends
• Assessing whether the company’s methods
for developing estimates are appropriate and
have been consistently applied for selected
disclosures. We considered data and trends,
however our procedures did not include
testing the data on which the estimates
are based or separately developing our own
estimates against which to evaluate Board
of Directors’ estimates
• Analyzing, on a limited sample basis, relevant
internal and external documentation
available to the company (including publicly
available information or information from
actors throughout its value chain) for
selected disclosures
• Reading the other information in the annual
report to identify material inconsistencies,
if any, with the sustainability statement
• Considering whether the disclosures provided
to address the reporting requirements
provided for in Article 8 of Regulation (EU)
2020/852 (Taxonomy Regulation) for each
of the environmental objectives, reconcile
with the underlying records of the company
and are consistent or coherent with the
sustainability statement, appear reasonable,
in particular whether the eligible economic
activities meet the cumulative conditions to
qualify as aligned and whether the technical
screening criteria are met, and whether the
key performance indicators disclosures have
been defined and calculated in accordance
with the Taxonomy delegated acts, and
comply with the reporting requirements
provided for in Article 8 of Regulation
(EU) 2020/852 (Taxonomy Regulation),
including the format in which the activities
are presented
• Considering the overall presentation,
structure and fundamental qualitative
characteristics of information (relevance
and faithful representation: complete,
neutral and accurate) reported in the
sustainability statement, including the
reporting requirements provided for in
Article 8 of Regulation (EU) 2020/852
(Taxonomy Regulation)
• Considering, based on our limited assurance
procedures and evaluation of the evidence
obtained, whether the sustainability
statement as a whole, is free from material
misstatements and prepared in accordance
with the ESRS.
Communication
We communicate with the Board of Directors
regarding, among other matters, the
planned scope and timing of the assurance
engagement and significant findings that we
identify during our assurance engagement.
Amsterdam, 14 January 2026
EY Accountants B.V.
Signed by R.T.H. Wortelboer
Other information continued
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List of branches
The table below lists all branches of the Company as well as all subsidiaries whose results were
consolidated during the reporting period.
Branch Place of branch Country of branch Register of branch Origin entity
Country of origin
entity
Fully Sun
China Limited
– Bangladesh
Bangladesh Bangladesh TIN- 4404-
3933-6667
Fully Sun China
Limited
China
(Hong Kong)
Articles of Association provisions
governing the distribution of profit
The holders of ordinary shares are entitled to one vote per share and to participate in the
distribution of dividends and liquidation proceeds. Pursuant to Article 26 of the Articles of
Association, a dividend may be declared provided that the Company’s equity exceeds the
amount of the paid-up and called-up part of the issued capital, increased by the reserves which
must be kept by virtue of the law. The Board shall determine the amount of profits to be reserved.
The general meeting is authorised to, in whole or in part, distribute the profits remaining thereafter
and to declare a distribution in kind. The Board is authorised to declare interim distributions of profits
or on account of a freely distributable reserve.
Other information continued
223 Pepco Group N.V. Annual Report 2025
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Country of
incorporation Entity name Registered no. Shareholding Principal place of business
England and
Wales
Pepco Group
International
Limited
14772767 100% 14
th
Floor Capital House, 25
Chapel Street, London, United
Kingdom, NW1 5DH
Pepco Group
Limited
9127609 100% 14
th
Floor, Capital House, 25
Chapel Street, London, United
Kingdom NW1 5DH
Pepco Group
Services
Limited
10972213 100% 14
th
Floor, Capital House, 25
Chapel Street, London, United
Kingdom NW1 5DH
Pepco
Vaucluse
Limited
3484379 100% 14
th
Floor, Capital House, 25
Chapel Street, London, United
Kingdom NW1 5DH
Peu (Fin) Plc 11808114 100% 14
th
Floor, Capital House, 25
Chapel Street, London, United
Kingdom NW1 5DH
Peu (Tre)
Limited
11808312 100% 14
th
Floor, Capital House, 25
Chapel Street, London, United
Kingdom NW1 5DH
Estonia Pepco
Estonia OÜ
14249111 100% Sõpruse Pst 145, Kristiine
District, Tallinn, 13417, Estonia
France Pepkor
France S.A.S.
RCS 805 402 104 100% 1 Place Boieldieu, 75002,
Paris, France
Vaucluse
Diffusion
S.A.S.
RCS 306 487 075 100% 19 Rue du Musée
13001 Marseille, France
Germany Pepco
Germany
GmbH
HRB 224064 100% c/o WeWork, Kemperplatz 1,
DE-10785, Berlin
Greece Pepco
Greece IKE
162515401000 100% Municipality of Nikaia – Agios
Ioannis Renti, at Petrou Ralli
Street No 97, PC 18233
Hungary Pepco
Hungary Kft
Cg. 01-09-192750 100% H-1138 Budapest, Váci út 187
Pepco
Ingatlan Kft
Cg. 01-09-300734 100% H-1138 Budapest, Váci út 187
India PGS Partner
India Private
Limited
U74999HR2018
FTC073537
100% Unit No-128, Suncity Success
Tower Sector, 65, Gold
Course Extn Road, Gurugram,
Gurgaon HR, 122005
Statutory list of all subsidiaries
and affiliated companies
List of direct and indirect subsidiaries as at 30 September 2025
Country of
incorporation Entity name Registered no. Shareholding Principal place of business
Austria Pepco
Austria
GmbH
FN 534293a 100% Gertrude-Fröhlich-Sandner-
Straße 2-4/ Turm 9/7. Stock,
1100 Wien
Bosnia and
Herzegovina
Pepco B-H
d.o.o.
4203144510006 100% Sarajevo, street Skenderpašina
no. 1, Municipality Centar
Sarajevo, 71 000 Sarajevo,
Bosnia
Bulgaria Pepco
Bulgaria
EOOD
205119149 100% Mladost 4, Bul./Ul. Ul. Biznes
Park Sofiya 1, Bl. Sgrada 8, ET. 6
Sofia 1766, Bulgaria
China Pepco
Global
Sourcing
Shanghai
Co., Ltd
913100007914 100% 8
th
Floor, H Zone (East), 666
Beijing East Road, Huangpu
District, Shanghai
China (Hong
Kong)
Fully Sun
China
Limited
CR 1075298 100% Rm 1006-8, 10/F, Sun House,
181, Des Voeux Road Central
Sheung Wan, Hong Kong
Croatia Pepco
Croatia d.o.o.
MBS 081038164 100% Zagreb (Grad Zagreb), Damira
Tomljanovića Gavrana 11
Czechia Pepco Czech
Republic s.r.o.
24294420 100% Prague 4 – Nusle, Hvězdova
1716/2b, PSČ 14078
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Country of
incorporation Entity name Registered no. Shareholding Principal place of business
Italy Pepco Italy
S.r.l
MI-2568153 100% Via Michelangelo Buonarroti
39, 20145 Milano (MI), Italy
Latvia Pepco Latvia
SIA
40203062113 100% Strelnieku iela 9 – 7, Riga, LV-
1010, Latvia
Lithuania Pepco
Lithuania
UAB
304488450 100% Vilnius, Upės g. 9-2, LT-09308,
Lithuania
North
Macedonia
PEPCO
DOOEL
Skopje
7869932 100% Naum Naumovski-Borche St.
No. 40/5-8, Skopje – Centar
Netherlands Konopacka
Holdings B.V.
KvK 58864504 100% Noord Brabantlaan 265,
5652LD Eindhoven
Pepkor
Import B.V.
KvK 61649112 100% Noord Brabantlaan 265,
5652LD Eindhoven
Rawksa
Holdings B.V.
KvK 58864385 100% Noord Brabantlaan 265,
5652LD Eindhoven
Poland Cardina
Investments
Sp z.o.o.
KRS 0000424893 100% ul. Strzeszyńska 73B lok.
4, 60-479 Poznań
Dealz Poland
Sp z.o.o.
KRS 0000692949 100% Ul. Jasielska 16A, 60-476
Poznan, Wielkopolskie
Evarts
Investments
Sp z.o.o.
KRS 0000471011 100% ul. Strzeszyńska 73B lok.
4, 60-479 Poznań
Pepco
Distribution
Sp. z o.o.
1042265 100% ul. Strzeszyńska
75, 60 – 479 Poznań
Pepco
Holdings Sp
z.o.o.
791461 100% ul. Strzeszyńska
73A, 60-479 Poznań
Pepco
Poland Sp
z.o.o.
KRS 0000111962 100% ul. Strzeszyńska
73A, 60-479 Poznań
Pepco
Properties Sp
z.o.o.
KRS 0000356422 100% ul. Strzeszyńska
73A, 60-479 Poznań
Country of
incorporation Entity name Registered no. Shareholding Principal place of business
Portugal Pepco
Portugal
Unipessoal
LDA
3453-7748-7417 100% Rua Hermano Neves 18, piso 3,
E7, 1600-477 Lisbon (Portugal)
Republic of
Ireland
Dealz
Retailing
(Ireland)
Limited
541977 100% Unit 3 Westend Retail Park,
Blanchardstown, Dublin 15
Romania Pepco Retail
SRL
J40/4655/2013 100% 17 Ceasornicului street,
3
rd
floor, District 1,
Bucharest, Romania
Serbia Pepco d.o.o.
Beograd-
Novi
Beograd
21457345 100% Bulevar Mihaila Pupina 10L,
11000 Novi Beograd, Serbia
Slovakia Pepco
Slovakia s.r.o.
46 868 674 100% Nevädzova 6, Ružinov,
Bratislava, 821 01, Slovakia
Slovenia Pepco d.o.o. 7176457000 100% Tržaška cesta 515, Brezovica
pri Ljubljani, 1351, Slovenia
Spain Dealz
España S.L
B86867512 100% C/Bravo Murillo 192,
Madrid, Spain
Pepco
Logistics S.L
773439 100% C/Bravo Murillo 192,
Madrid, Spain
Pepco Retail
España S.L
B86283751 100% Avda. Baix Llobregat 1-3,
Módulo A, Planta Baja Par No.,
Esc. P, El Prat de Llobregat
Switzerland Pepkor
Europe
GmbH
CHE-194.732.602 100% c/o Kanzlei Pilatushof,
Hirschmattstrasse 15,
6003 Luzern
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Term Definition
FY22 1 October 2021 to 30 September 2022
FY23 1 October 2022 to 30 September 2023
FY24 1 October 2023 to 30 September 2024
FY25 1 October 2024 to 30 September 2025
GM General merchandise
GOTS Global Organic Textile Standard
Group/Pepco Group The Company and its subsidiaries
IAS International Accounting Standards
IBEX/ITBV IBEX Topco B.V.
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
IPO Initial Public Offering – on 26 May 2021 the Company was admitted for
listing on the Warsaw Stock Exchange
LFL Like-for-like revenue growth
LTIP Long Term Incentive Plan
NED Non-Executive Director
New Pepco Pepco and Dealz operations, excluding Poundland
NOPAT Net underlying operating profit after tax
Opex Operating expenditure
PAT Profit after tax
PBT Profit before tax
Pepco Clothing-led variety discount retailer
PGS Pepco Global Sourcing
Poundland FMCG-led price-anchored retailer (UK)
Poundland Group Poundland companies
RCF Revolving credit facility
Relationship Agreement Agreement between affiliates of ITBV and the Company
ROIC Return on invested capital
SaaS Software-as-a-Service
Share A share in the capital of the Company
Shareholder Holder of one or more shares
STIP Short Term Incentive Plan
Subsidiary Subsidiary of the Company as referred to in Section 2:24a
of the Dutch Civil Code
VCP Value Creation Plan
WE Western Europe
WSE Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie)
Warsaw Code Code of Best Practice for GPW Listed Companies 2021
YoY Year on year
Glossary of terms
Term Definition
AGM Annual General Meeting of shareholders
APM Alternative Performance Measure
Annual Report Management report (bestuursverslag) as referred to in Section 2:391 of
the Dutch Civil Code
Articles Articles of Association of the Company, as amended from time to time
BCI Better Cotton Initiative
Board Directors of the Company
Board Rules Board of Directors’ Rules of Procedure
CAGR Compound Annual Growth Rate
Capex Capital expenditure
CEE Central and Eastern Europe
CEO Chief Executive Officer of the Company
CFO Chief Financial Officer of the Company
CGU Cash-generating unit
CODB Cost of doing business
Company/PGNV Pepco Group N.V.
Company Secretary Company secretary of the Company
CSRD Corporate Sustainability Reporting Directive
DC Distribution centre
Dutch Code Dutch Corporate Governance Code
Dealz FMCG-led price-anchored retailer (non-UK)
EAP Equity Award Plan
EBITDA Operating profit or loss before depreciation and amortisation adjusted
for capital and reclassification items
EGM Extraordinary General Meeting of shareholders
EPS Earnings per share
ERP Enterprise resource planning
ESG Environmental, social and governance
EU European Union
External Auditor EY
EY EY, the Company’s External Auditor
FMCG Fast-moving consumer goods
FVOCI Fair value through other comprehensive income
FVTPL Fair value through profit and loss
FY19 1 October 2018 to 30 September 2019
FY20 1 October 2019 to 30 September 2020
FY21 1 October 2020 to 30 September 2021
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Shareholder information
The Board values the insight gained from shareholder engagement and places significant
importance on maintaining close relationships with shareholders, taking account of and responding
to their views. The Group’s CEO, CFO and investor relations team communicate on a regular basis
with shareholders and analysts and endeavour to facilitate open engagement. In FY25, frequent
investor meetings were held alongside a focused Capital Markets Day in March 2025.
The Group has an investor relations website at www.pepcogroup.eu/investors where all regulatory
news as well as other information on the Pepco Group is available.
We aim to maintain strong dialogue with our shareholders and regularly collect feedback. Please
contact investorrelations@pepcogroup.eu.
The Company’s Annual General Meeting will be held on 11 March 2026.
Contact details
General enquiries
14
th
Floor, Capital House, 25 Chapel Street, London, NW1 5DH,
United Kingdom
0203 735 9210
Investor relations
investorrelations@pepcogroup.eu
General media enquiries
media@pepcogroup.eu
Financial and corporate media enquiries
PEPCOGroup-LON@finsbury.com
227 Pepco Group N.V. Annual Report 2025
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228 Pepco Group N.V. Annual Report 2025
Pepco Annual Report
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Pepco Group N.V.
14
th
Floor
Capital House
25 Chapel Street, London
NW1 5DH
United Kingdom