TIDMAPP
RNS Number : 1945T
Appreciate Group PLC
23 November 2021
23 November 2021
Appreciate Group plc
Half Year Unaudited Results for the six months ended 30
September 2021
A resilient performance as trading returns to pre-pandemic
levels
Q2 ahead of FY2020 and FY2021
Appreciate Group plc, a leading UK multi-redemption product
provider to corporate and consumer markets, is pleased to announce
its Half Year Unaudited Results for the six months ended 30
September 2021.
Appreciate Group's highly seasonal business typically sees a
loss in the first half of the financial year. The loss has
significantly improved on H1 FY2021 which had been heavily impacted
from the introduction of initial lockdowns. We have therefore
provided some additional comparisons with H1 FY2020, the financial
period prior to the pandemic.
Financial Highlights
-- Billings up 19.6% to GBP118.2m (H1 FY2021: GBP98.8m), broadly
similar to H1 FY2020 (GBP120.2m), the last period of normal trading
prior to the pandemic
-- Revenue increased 49.6% to GBP41.0m (H1 FY2021: GBP27.4m)
benefiting from redemptions, which had been deferred as a result of
lockdowns, being realised as anticipated. Revenue was 23.5% higher
than the pre-pandemic period (H1 FY2020: GBP33.2m)
-- Significant reduction in pre-tax loss to GBP2.0m (H1 FY2021:
GBP6.2m loss) (H1 FY2020: GBP1.3m loss)
-- Proposed interim dividend of 0.6p (H1 FY2021: 0.4p)
-- Financial position:
- Cash balances, including cash held in trust, at 30 September
2021, were GBP207.1m (H1 FY2021: GBP227.3m)
- Free cash lower at GBP2.9m (H1 FY2021: GBP24.9m) - this is
typically the low point in our cash cycle and also reflected growth
in regulatory billings (which require customer monies to be held in
trust until redemption)
- Free cash at 31 October 2021 was GBP 34.0m, (31 October
2020:GBP39.1m) as monies held in trust were released as Christmas
Savers product was dispatched
Operational highlights
Corporate
-- Billings increase of 20.9% to GBP 80.5m (H1 FY2021:
GBP66.6m), and marginally ahead of H1 FY2020 (GBP 80.1m)
-- Revenue up 46.3% to GBP27.8m (H1 FY2021: GBP19.0m); 14.4%
above the pre-pandemic period ( H1 FY2020: GBP24.3m)
-- Continued to strengthen redemption proposition with 54
partners added across the product range including new additions
such as Greggs, Habitat, Carpetright and Canvas Holidays
Consumer
-- Billings up 16.7% to GBP37.7m (H1 FY2021: GBP32.3m); down 6.0% on H1 FY2020 (GBP 40.1m )
-- Revenue increased 59.0% to GBP13.2m (H1 FY2021: GBP8.3m)
benefiting from deferred redemptions and up by 48.3% from H1 FY2020
( GBP8.9m)
-- Christmas Savings order book completed (14% down as
predicted), with billings of GBP164.0m (FY2021 GBP191.5m), having
been impacted by lockdown restrictions affecting face-to-face agent
activity last winter
Continued strategic progress
The Group focused on delivering a number of key strategic
initiatives during the first half of the financial year:
-- Operational improvements - enhancements in productivity and
operational efficiencies have led to reduced use of overtime and
seasonal temps during current peak trading period
-- Growth in digital continues - digital billings up 15.7% to
GBP28.0m (H1 FY2021 GBP24.2m), whilst paper fell from 19.2% to
14.5% within the product mix
-- Leveraging our hero brand - we have launched our first
campaign specifically promoting Love2shop, the brand which
underpins all our products. The campaign got underway earlier this
month and will support all Consumer and Corporate business lines
during the key Q3 trading period
-- Enhanced digital marketing approach - strengthened our
marketing with greater use of insight and digital marketing to
support further growth in digital products
-- Redemption range strengthened - continued broadening of the
redemption range by expanding the choice of leisure, hospitality
and food options
-- Reinvigorating Christmas Savings - enhanced advertising,
marketing campaigns and engagement with agents to retain and
recruit savers for Christmas 2022
-- PayPoint partnership - continued to build awareness through
PayPoint's 28,000 UK retailers and customers, and explore
opportunities to enhance services offered through its network
-- Enterprise Resource Planning (ERP) programme - further
progress made, the next implementation phase has been rescheduled
for Q4 avoiding any potential disruption during our peak trading
period
-- Underlining our ESG commitments - our flagship programme with
Everton in the Community, which helps teach young people technology
skills, has reached over 500 schoolchildren. We are also focusing
on setting realistic future emissions' reduction targets following
the move to the new head office.
Current trading and outlook
-- The Group has seen the usual seasonal increase in demand for
its products in its key Q3 trading period to date, with a good
pipeline of business; and the Love2shop marketing campaign, which
is now underway, expected to support activity levels
-- However, these are currently below levels seen in FY2021 and
FY2022 due largely to our decision not to supply low margin
business to a direct competitor. Billings for Q3 so far would be
3.2% ahead for Q3 FY2021; and 2.0% below Q3 FY2020 on a
like-for-like basis
-- Overall, billings for Q3 FY2022 up to 21 November are
GBP37.0m (FY2021: GBP39.4m) (FY2020: GBP43.9m), with an improvement
in November to a level which is closer to the previous years
-- Uncertainty persists and we continue to see fluctuations in
billings trends as we emerge from the lockdowns
-- Overall, this performance is in line with our expectations for the full year
Ian O'Doherty, Chief Executive Officer, at Appreciate Group plc,
said:
"I am pleased to report a robust performance in the first half
of the year, bouncing back strongly from the impact of last year's
lockdowns, and continued progress in delivering on our strategic
plans.
"We typically see about a quarter of billings in the first half
of the financial year and around three quarters coming in our
second half, and I am confident that we will deliver our
expectations for the financial year.
"Whilst economic uncertainties remain - particularly from wider
supply chain issues and potential rises to the cost of living - we
are now in a stronger position to deliver as we are a more
efficient business, with an improved digital offering and a
platform which is more robust and scalable."
The information contained within this announcement is deemed by
Appreciate Group to constitute inside information as stipulated
under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Appreciate Group will host a webcast presentation for analysts
at 9.00am this morning.
If you would like to attend, please contact MHP on 020 3128 8193
or AppreciateGroup@mhpc.com .
Appreciate Group Liberum MHP Communications
plc (NOMAD and broker)
Ian O'Doherty, CEO Richard Crawley Reg Hoare
Tim Clancy, CFO Jamie Richards Katie Hunt
Charles Hirst
Andy Hammerton, Head
of Corporate Affairs Tel: 020 3100 2222 Tel: 020 3128 8193
Email: appreciategroup@mhpc.com
Tel: 0151 653 1700
Notes to Editors:
Appreciate Group is one of the UK's leading gifting, pre-payment
and engagement companies, and experts at creating joyful
experiences and connecting people to the things in life they enjoy
the most.
Everything Appreciate Group does is focused on creating more joy
in the world, and it is proud to be trusted to help its customers
create moments they can treasure and remember, whether they are
giving, celebrating or rewarding.
Appreciate Group is a financial services business with a wide
portfolio of brands which provide solutions for its consumer and
business customers. Its consumer-facing brands meet a range of
prepayment and gifting needs, while its business products help
corporate customers reward and recognise their employees and
clients.
Appreciate Group is home to many of the country's most-loved
gifting, pre-payment and engagement solutions including Park
Christmas Savings, highstreetvouchers.com and Love2shop, and we are
fast-becoming the home of digital innovation in gifting.
Whether it's saving towards the perfect family Christmas or
celebrating with gift cards and vouchers, we create and supply
products that millions of people trust when it comes to giving and
receiving with family, friends or colleagues.
Park Christmas Savings: As the UK's largest family Christmas
savings club, Park Christmas Savings has helped over 2.7 million
families budget for Christmas on a short-term or year-round
basis.
Love2shop: Love2shop offers gift cards and gift vouchers
available to spend at stores and attractions across the UK. They
are also used through our Love2shop Business Services providing
corporate partners with incentives and rewards for their employees
and clients.
Appreciate Group plc's shares are traded on AIM, a market
operated by the London Stock Exchange.
The Park Prepayments Protection Trust is designed to increase
protection for customers' prepayments. The Trust has three
directors, two of whom are independent of Appreciate. Details of
the trust are set out here:
https://www.getpark.co.uk/CORPORATE/declaration.pdf
Business review for the six months ended 30 September 2021
Introduction
Appreciate Group is a leading UK gifting, pre-payment and
engagement company which provides solutions for consumer and
business customers. Its portfolio of brands include Love2shop,
Appreciate Business Services, Park Christmas Savings, and
Highstreetvouchers.com.
As a seasonal business, we traditionally report a loss for the
first half of the year. The loss in the current year has
significantly reduced compared to H1 FY2021 which was heavily
affected by the disruption caused when lockdowns were first
introduced. There have also been no exceptional costs incurred in
the first half of the current financial year.
We typically see about a quarter of billings in the first half
of the financial year and around three quarters coming in the
second half of the year. The Group expects its performance for the
full year to be in line with expectations.
Improved H1 performance
A pre-tax loss of GBP2.0m (H1 FY2021: GBP6.2m loss) is markedly
lower than H1 FY2021 when the Group was initially unable to
dispatch physical products due to the first lockdown. This
performance was despite GBP0.5m one off pension reorganisation
costs incurred in the first half, and therefore compares well to a
loss of GBP1.3m in H1 FY2020, normal trading prior to the
pandemic.
Billings are up 19.6% for the six months to 30 September to
GBP118.2m (H1 FY2021: GBP98.8m), and were broadly flat compared to
H1 FY2020 at GBP120.2m. Whilst Q1 was slower than anticipated, Q2
was ahead of both Q2 FY2021 and Q2 FY2020. This is despite Q2
performance in FY2021 benefiting from higher levels of low margin
billings via the free school meals initiative.
Billings Q1 Q2 H1 excluding H1 Reported
Corporate and free school meals
Gifting only scheme
FY2022 GBP39.0m GBP79.2m GBP109.9m GBP118.2m*
--------- --------- ------------------ -----------
FY2021 GBP21.3m GBP77.5m GBP88.5m GBP98.8m*
--------- --------- ------------------ -----------
FY2020 GBP41.4m GBP78.8m GBP120.2m GBP120.2m
--------- --------- ------------------ -----------
% diff (FY22 vs
FY21) +83.1% +2.2% +24.2% +19.6%
--------- --------- ------------------ -----------
% diff (FY22 vs
FY20) -5.8% +0.5% -8.6% -1.7%
--------- --------- ------------------ -----------
*Includes billings through free school meal scheme H1 FY2021:
GBP10.3m; H1 FY2022: GBP8.3m
Group revenue increased 49.6% to GBP41.0m (H1 FY2021: GBP27.4m)
as the expected deferred redemption was realised as lockdown
restrictions eased and customer spending patterns began to return
to more normal levels. Revenue was 23.5% higher than H1 FY2020 (
GBP33.2m).
Digital billings increased by 15.7% from GBP24.2m to GBP28.0m.
This has been achieved despite reduced billings in FY2022 through
the free school meals initiative and a period in FY2021 when
physical products could not be dispatched. Card billings as a
percentage of total billings in the period went up from 55.8% to
61.7%, reflecting the continued move towards card and digital from
paper, which is down from 19.2% to 14.5%. The growth in digital
should enhance the Group's margin mix in the medium-term.
The Group continues to focus on driving its own, more profitable
multi-redemption product. Multi-redemption billings increased by
20.3% to GBP103.1m (H1 FY2021: GBP85.7m). Single store billings
increased to GBP14.3m (H1 FY2021: GBP10.9m) but are down on H1
FY2020 (GBP16.8m), showing that the underlying trend is a shift
towards multi-redemption and away from single store .
Our financial position remains robust with cash balances,
including cash held in trust, of GBP207.1m (H1 FY2021: GBP227.3m)
as at 30 September 2021. Free cash stood at GBP2.9m as at 30
September 2021, lower than H1 FY2021 (GBP24.9m) reflecting growth
in regulatory billings which require customer monies to be held in
trust until redemption, and a catch up in customer spending
patterns. This is also typically the low point in our cash cycle.
Free cash as at 31 October 2021 was GBP34.0m as monies held in
trust were released as the Christmas Savings product was
dispatched.
We are yet to utilise the GBP15m revolving credit facility (RCF)
put in place during FY2021 with Santander UK, and do not forecast
it being used during the remainder of the financial year. This
arrangement supports the Group's long-term strategy to grow
regulatory products and continues to provide additional financial
flexibility should it be required, along with an additional
uncommitted accordion of GBP10m.
We continued to broaden our redemption range by expanding the
choice to leisure, hospitality and food options, with 54 partners
added across the range, including new additions such as Greggs,
Habitat, Carpetright and Canvas Holidays.
In order to leverage high levels of awareness for our hero brand
- Love2shop, which underpins all our products - we have initiated
our first campaign to specifically promote the brand. The campaign
launched during our critical Q3 trading period and is expected to
support all our Consumer and Corporate business lines.
Segmental performance
Corporate
Corporate billings rose by 20.9% to GBP80.5m (H1 FY2021:
GBP66.6m). The Q2 performance was ahead of the same period for both
FY2021 and FY2020, showing positive momentum as we head into our
peak Q3 trading period. Excluding the free school meals scheme,
Corporate billings rose by 28.2% to GBP72.2m (H1 FY2021: GBP56.3m),
albeit behind H1 FY2020 (GBP80.1m).
Business from medium to larger clients has returned to pre-Covid
levels whereas billings from smaller clients are taking longer to
recover. The Group continued to enjoy good levels of new business,
above the level seen prior to the pandemic; whilst recurring
business from existing clients has returned to pre-pandemic levels
of above 90% following a temporary reduction in FY2021.
Corporate revenue was up by 46.3% to GBP27.8m (H1 FY2021:
GBP19.0m); and 14.4% above the pre pandemic period (H1 FY2020:
GBP24.3m).
Overall, the Group believes the Corporate business is benefiting
from the investments made to strengthen the proposition and
delivering underlying growth.
Consumer
Consumer billings were up 16.7% to GBP37.7m (H1 FY2021:
GBP32.3m) and down on H1 FY2020 (GBP40.1m). Revenue increased 59%
to GBP13.2m (H1 FY2021: GBP8.3m) following an uplift in
redemptions. Compared to the pre-pandemic period, revenue was up
48.3% (H1 FY2020: GBP8.9m).
The 2021 Christmas Savings order book has completed (down 14% -
in line with previous expectations) having been held back by
lockdown restrictions impacting face-to-face agent activity.
Although billings from Christmas Savings have been in decline for
several years, we remain determined to reverse the trend in the
number of customers saving with us. We continue to believe this
business offers an invaluable solution to help consumers budget
towards the cost of Christmas. We are focused on retention of our
existing agents and encouraging them to recruit more of their
family and friends to save through them; and growing our Directs
business (direct to consumer rather than via an agent). Our
campaign for Christmas 2022 gets underway next month and will use a
more targeted approach to optimise media spend, combining increased
social and digital focus with traditional media including our usual
TV advertising. This will be supported by a programme to engage
agents.
Gifting billings via Highstreetvouchers.com were GBP12.1m, up
68.1% (H1 FY2021: GBP7.2), albeit down 9.0% on H1 FY2020 at
GBP13.3m. The growth in this sector is yet to materialise and we
have therefore adjusted our approach by reducing marketing spend,
and targeting actions on strengthening margins, rather than driving
transaction volumes.
Nevertheless, overall visits to Highstreetvouchers.com were up
31.8% from 1.95m to 2.57m with conversion rates stable at 4.4%. We
are focused on using our enhanced insight and digital capability to
optimise sales and conversions. Billings from the partnership with
PayPoint have been much slower than anticipated during the early
stages of the initiative; however, we continue to believe this
partnership offers a medium-term growth opportunity and are working
to build retailer and customer awareness.
Costs
Having made significant investments in transformation over the
last two years, the one off costs incurred for major initiatives
such as the head office relocation, company rebranding, IT
upgrades, consultancy and pension costs are largely complete.
The progress on transformation has also enabled us to take the
opportunity to carry out a rigorous review of our ongoing costs,
focused on optimising the efficiencies derived from the
transformation and ensuring we have the most efficient cost base in
place. This has included streamlining to a smaller leadership team,
shaped to support our growth plans; not hiring for vacant roles
unless they were critical to our strategy; and a reduced use of
overtime and seasonal temps during peak periods.
As a result, the Group expects administration costs to reduce to
c.GBP20m for current financial year (FY2021: GBP21.1m); and to
c.GBP19m for the following year.
The ERP implementation phase that had been planned during the
first half has been rescheduled for Q4 avoiding any potential
disruption during our peak trading period. This is expected to add
GBP0.2m to the cost of the programme.
Evolution of strategic business plan
Since December 2018, we have been implementing our strategic
business plan under four pillars of Productivity, Appeal, Clarity
and Experience. This has successfully delivered a more robust and
scalable business model, and with the majority of the
transformation completed, the strategic focus is now shifting to
leveraging the investments made and delivering on our growth
ambitions.
Our strategy has always been to support delivery of growth, and
we will therefore focus on growth by emphasising four key
areas:
-- Performance - f ocusing on understanding our customers better
and delivering for them, delivering growth in our core products;
whilst remaining efficient on costs
-- Products - p roviding customers with market-leading products,
integrated across channels, with a digital-first focus whilst
responding to their needs and demands
-- Partnerships - e nhancing our services to customers through
partnerships and brands they value, meeting their needs and
enhancing our reach
-- Platform - developing our websites, apps, services and
back-office processes to enhance the end-to-end customer experience
and be easy to deal with, enabling customers to interact with us at
a time and place of their choosing
Interim dividend
The Board has declared an interim dividend of 0.6p per share, an
increase of 50% on last year (H1 FY2021 0.4p). The dividend will be
paid on 6 April 2022 to shareholders on the register on 25 February
2022, with an ex-dividend date of 24 February 2022. Appreciate
Group's dividend policy seeks to reflect the Group's strong
underlying cash flow and profit generation, whilst retaining
sufficient capital to fund investment in the business.
ESG
We continue to focus on our ESG commitments; we are proud that
our flagship community programme with Everton in the Community is
helping to teach young people technology skills and has now reached
over 500 schoolchildren.
Following the move to our modern offices in the centre of
Liverpool, we are also focusing on setting realistic future
emissions reduction targets for the forthcoming financial year. We
also plan to broaden our use of more environmentally friendly paper
cards in place of plastic cards following a successful pilot.
Board
As announced at the time of the AGM in September 2021, Laura
Carstensen intends to step down as Chairman as part of the Board's
succession plan . A search is underway to appoint a successor and
enable an orderly handover. A further update will be provided as
and when appropriate.
Outlook
Whilst economic uncertainties remain, we are confident we will
see the usual swing in profitability in our important second half
trading period. In the early weeks of Q3, we have seen the
encouraging trends of Q2 continue with the usual increase in demand
for our products in our peak trading period, providing us with the
confidence that we will deliver in line with our expectations for
the full year.
Billings during Q3 up to 21 November 2021 are currently below
levels seen in FY2021 and FY2022 due largely to our decision not to
supply low margin business to a direct competitor. Billings for Q3
so far would be 3.2% ahead for Q3 FY2021; and 2.0% below Q3 FY2020
on a like-for-like basis. Overall, billings for Q3 FY2022 up to 21
November are GBP37.0m (FY2021: GBP39.4m) (FY2020: GBP43.9m), with
an improvement in November to a level which is closer to the
previous years.
The investments in infrastructure and technology mean we are
better positioned to serve our customers through our expanded
distribution channels, digital-first approach and a more efficient
business. With this transformation phase in our strategy now moving
to the final stages, we enter a new phase that will seek to exploit
the benefits and efficiencies provided, and deliver growth
supported by an economy recovering from the pandemic.
Overall, we remain determined to deliver sustainable returns to
our shareholders by fulfilling our long-term ambitions and
leveraging the progress we have made.
I would like to again thank all my colleagues across the
business for their continued commitment to support our customers.
This gives me great confidence that we will deliver on our plans
notwithstanding the challenges the external environment may
bring.
Laura Carstensen
Chairman
23 November 2021
APPRECIATE GROUP PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE HALF YEAR TO 30 SEPTEMBER
2021
Unaudited Unaudited Audited
Half Year to Half Year to Year to
30.09.21 30.09.20 31.03.21
Notes GBP'000 GBP'000 GBP'000
Billings 118,231 98,839 406,532
-------------- -------------- ---------
Revenue
- Goods - Single retailer redemption
products 26,945 16,996 78,154
- Other goods 42 177 259
- Services - Multi-retailer
redemption products 13,255 8,100 24,736
- Other services 753 2,058 3,509
- Other - 58 147
-------------- -------------- ---------
40,995 27,389 106,805
Cost of sales excluding exceptional
items (31,442) (22,388) (82,055)
Impairment of obsolete stock - (400) (414)
-------------- -------------- ---------
Gross profit 9,553 4,601 24,336
Distribution costs (539) (366) (1,784)
Administrative expenses (10,999) (9,946) (21,070)
-------------- -------------- ---------
Operating (loss)/profit before
exceptional item (1,985) (5,711) 1,482
Impairment of goodwill - - (218)
Redundancy costs - (630) (639)
Profit on sale of assets held
for sale - 41 205
-------------- -------------- ---------
Operating (loss)/profit (1,985) (6,300) 830
Finance income 202 459 783
Finance costs (222) (382) (360)
-------------- -------------- ---------
(Loss)/profit before taxation (2,005) (6,223) 1,253
Taxation 2 381 1,182 (402)
-------------- -------------- ---------
(Loss)/profit for the period attributable
to equity holders of the parent (1,624) (5,041) 851
(Loss)/earnings per share 3
- basic (0.87)p (2.71)p 0.46p
- diluted (0.87)p (2.71)p 0.46p
All activities derive from continuing operations.
APPRECIATE GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEAR TO 30 SEPTEMBER 2021
Unaudited Unaudited Audited
Half Year Half Year Year to
to to
30.09.21 30.09.20 31.03.21
GBP'000 GBP'000 GBP'000
(Loss)/profit for the period (1,624) (5,041) 851
Other comprehensive income
Items that will not be reclassified to profit
or loss:
Remeasurement of defined benefit pension schemes - - (2,146)
Deferred tax on defined benefit pension schemes - - 408
----------- ----------- ---------
- - (1,738)
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (4) (5) 3
----------- ----------- ---------
Other comprehensive expense for the period,
net of tax (4) (5) (1,735)
----------- ----------- ---------
Total comprehensive expense for the period
attributable to equity holders of the parent (1,628) (5,046) (884)
----------- ----------- ---------
APPRECIATE GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021 Unaudited Unaudited Audited
30.09.21 30.09.20 31.03.21
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 582 800 582
Other intangible assets 4 10,824 6,917 8,861
Property, plant and equipment 1,966 2,742 2,188
Right of use asset 4,098 4,009 4,373
Retirement benefit asset 2,086 4,206 2,086
--------- --------- ---------
19,556 18,674 18,090
--------- --------- ---------
Current assets
Inventories 10,467 10,566 3,638
Trade and other receivables 7,340 8,540 11,405
Tax receivable 1,816 1,831 738
Monies held in trust 5 202,453 202,315 132,054
Cash and cash equivalents 6 4,598 24,944 31,415
--------- --------- ---------
226,674 248,196 179,250
Assets held for sale - 1,024 -
--------- --------- ---------
226,674 249,220 179,250
--------- --------- ---------
Total assets 246,230 267,894 197,340
--------- --------- ---------
Liabilities
Current liabilities
Bank overdraft (1,744) - -
Trade payables (111,260) (144,132) (52,776)
Payables in respect of cards and
vouchers (27,956) (23,425) (25,302)
Deferred income (9,361) (8,231) (11,152)
Other payables (2,964) (3,549) (7,040)
Provisions (73,246) (68,598) (77,915)
Liabilities directly associated
with the assets held for sale - (1,077) -
--------- --------- ---------
(226,531) (249,012) (174,185)
--------- --------- ---------
Non-current liabilities
Lease liabilities (4,575) (4,445) (4,666)
Deferred tax liability (779) (1,011) (779)
--------- --------- ---------
(5,354) (5,456) (5,445)
--------- --------- ---------
Total liabilities (231,885) (254,468) (179,630)
---------
Net assets 14,345 13,426 17,710
--------- --------- ---------
Equity attributable to equity holders
of the parent
Share capital 3,727 3,727 3,727
Share premium 6,470 6,470 6,470
Retained earnings 4,459 3,540 7,824
Other reserves (311) (311) (311)
--------- --------- ---------
Total equity 14,345 13,426 17,710
--------- --------- ---------
APPRECIATE GROUP plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained Unaudited
Total
capital premium reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2021 3,727 6,470 (311) 7,824 17,710
Total comprehensive expense
for the period
Loss - - - (1,624) (1,624)
Other comprehensive expense
Foreign exchange translation
adjustments - - - (4) (4)
------------ -------------- -------------- --------- ---------
Total other comprehensive expense - - - (4) (4)
------------ -------------- -------------- --------- ---------
Total comprehensive expense
for the period - - - (1,628) (1,628)
------------ -------------- -------------- --------- ---------
Transactions with owners, recorded
directly in equity
Equity settled share-based
payment transactions - - - 126 126
Dividends - - - (1,863) (1,863)
------------ -------------- -------------- --------- ---------
Total contributions by and
distribution to owners - - - (1,737) (1,737)
------------ -------------- -------------- --------- ---------
Balance at 30 September 2021 3,727 6,470 (311) 4,459 14,345
------------ -------------- -------------- --------- ---------
Share Share Other Retained Unaudited
Total
capital premium reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2020 3,727 6,470 (311) 8,461 18,347
Total comprehensive expense
for the period
Loss - - - (5,041) (5,041)
Other comprehensive expense
Foreign exchange translation
adjustments - - - (5) (5)
------------ -------------- -------------- --------- ---------
Total other comprehensive expense - - - (5) (5)
------------ -------------- -------------- --------- ---------
Total comprehensive expense
for the period - - - (5,046) (5,046)
------------ -------------- -------------- --------- ---------
Transactions with owners, recorded
directly in equity
Equity settled share-based
payment transactions - - - 125 125
------------ -------------- -------------- --------- ---------
Total contributions by and
distribution to owners - - - 125 125
------------ -------------- -------------- --------- ---------
Balance at 30 September 2020 3,727 6,470 (311) 3,540 13,426
------------ -------------- -------------- --------- ---------
Share Share Other Retained Audited
Total
capital premium reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2020 3,727 6,470 (311) 8,461 18,347
Total comprehensive expense
for the year
Profit - - - 851 851
Other comprehensive (expense)/
income
Remeasurement of defined benefit
pension schemes - - - (2,146) (2,146)
Tax on defined benefit pension
schemes - - - 408 408
Foreign exchange translation
adjustments - - - 3 3
------------ -------------- -------------- --------- ---------
Total other comprehensive expense - - - (1,735) (1,735)
------------ -------------- -------------- --------- ---------
Total comprehensive expense
for the year - - - (884) (884)
------------ -------------- -------------- --------- ---------
Transactions with owners, recorded
directly in equity
Equity settled share-based
payment transactions - - - 261 261
Tax on equity settled share-based
payment transactions - - - (14) (14)
------------ -------------- -------------- --------- ---------
Total contributions by and
distribution to owners - - - 247 247
------------ -------------- -------------- --------- ---------
Balance at 31 March 2021 3,727 6,470 (311) 7,824 17,710
------------ -------------- -------------- --------- ---------
APPRECIATE GROUP plc
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR TO 30 SEPTEMBER
2021
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash (used in)/generated from operations 7 (23,804) (4,576) 4,918
Interest received 393 647 784
Interest paid (93) (264) (351)
Tax paid (698) (399) (599)
----------- ----------- ---------
Net cash (used in)/generated from operating
activities (24,202) (4,592) 4,752
----------- ----------- ---------
Cash flows from investing activities
Proceeds from sale of assets held for
sale 50 3,100 3,116
Proceeds from sale of property, plant
and equipment - - 6
Purchase of intangible assets (2,392) (2,755) (5,164)
Purchase of property, plant and equipment (15) (364) (585)
----------- ----------- ---------
Net cash used in investing activities (2,357) (19) (2,627)
----------- ----------- ---------
Cash flows from financing activities
Payment of lease liabilities (282) (77) (342)
Dividends paid to shareholders (1,720) - -
----------- ----------- ---------
Net cash used in financing activities (2,002) (77) (342)
----------- ----------- ---------
Net (decrease)/increase in cash and
cash equivalents (28,561) (4,688) 1,783
----------- ----------- ---------
Cash and cash equivalents at beginning
of period 31,415 29,632 29,632
Cash and cash equivalents at end of
period 2,854 24,944 31,415
Cash and cash equivalents comprise:
Cash 4,598 24,944 31,415
Bank overdrafts (1,744) - -
----------- ----------- ---------
2,854 24,944 31,415
----------- ----------- ---------
APPRECIATE GROUP plc
SEGMENTAL REPORTING
FOR THE HALF YEAR TO 30 SEPTEMBER 2021
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
GBP'000 GBP'000 GBP'000
Billings
Consumer 37,738 32,283 205,282
Corporate 80,493 66,556 201,250
------------ ----------- ---------
Total billings 118,231 98,839 406,532
------------ ----------- ---------
Revenue
Consumer 13,218 8,346 53,138
Corporate 27,777 19,043 53,667
------------ ----------- ---------
Total revenue 40,995 27,389 106,805
------------ ----------- ---------
Operating (loss)/profit
Consumer (474) (3,768) 532
Corporate (162) (858) 2,638
All other segments (1,349) (1,674) (2,340)
------------ ----------- ---------
Operating (loss)/profit (1,985) (6,300) 830
------------ ----------- ---------
NOTES TO THE HALF YEAR RESULTS
(1) Basis of preparation
The financial information in this interim report has been
prepared in accordance with international accounting standards in
conformity with the Companies Act 2006 and on the basis of the
accounting policies described in the Group's annual report and
accounts for the year ended 31 March 2021. These accounting
policies have been based on the current standards and
interpretations expected to be effective at 31 March 2022. The
Group does not expect there to be a significant impact on the
results from standards, amendments or interpretations which are
available for early adoption but which have not yet been
adopted.
The financial statements have been prepared under the historical
cost convention, as modified by the accounting for financial
instruments at fair value. In addition, this interim financial
report does not comply with IAS34 Interim Financial Reporting,
which is not currently required to be applied under AIM rules.
The Directors are of the opinion that the financial information
should be prepared on a going concern basis, in the light of
current trading and the forecast positive cash balances for the
foreseeable future, taking into account reasonably possible changes
in trading performance and customer behaviour. The Group has
prepared three forecast scenarios (low, medium and high billings
volume) for the next year and applied five plausible downside
scenarios to the 'low' forecast. The forecasts take account of the
transfer to free cash of GBP11m which was previously held as ring
fenced funds (see note 5). In all scenarios the Group maintains
positive free cash and does not utilize the agreed RCF during the
period to 31 March 2023.
The unaudited interim condensed consolidated financial
statements do not constitute statutory financial statements as
defined in section 435 of the Companies Act 2006 and therefore do
not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the Group's annual financial statements as at 31 March 2021. The
financial information for the preceding year is based on the
statutory financial statements for the year ended 31 March 2021.
These financial statements, upon which the auditors issued an
unqualified opinion, have been delivered to the Registrar of
Companies. These financial statements did not require a statement
under either section 498(2) or section 498(3) of the Companies Act
2006.
(2) Taxation
The taxation credit for the six months to 30 September 2021 has
been calculated using an overall effective tax rate of 19.0%, which
has been applied to the taxable income (half year to 30 September
2020: 19.0%).
(3) Earnings per share
Basic earnings per share (EPS) is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
For diluted EPS, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential
ordinary shares.
The calculation of basic and diluted EPS is based
on the following figures:
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -----------
Earnings
Underlying (loss)/profit (1,624) (4,011) 1,917
Exceptional items - (1,030) (1,066)
--------------------------------------- ----------- ----------- -----------
Total (loss)/earnings for period (1,624) (5,041) 851
--------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
--------------------------------------- ----------- ----------- -----------
Weighted average number of shares
Basic EPS - weighted average
number of shares 186,347,228 186,347,228 186,347,228
Diluting effect of employee - - -
share options
--------------------------------------- ----------- ----------- -----------
Diluted EPS - weighted average
number of shares 186,347,228 186,347,228 186,347,228
--------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
--------------------------------------- ----------- ----------- -----------
Basic EPS
Weighted average number of ordinary
shares in issue 186,347,228 186,347,228 186,347,228
--------------------------------------- ----------- ----------- -----------
EPS (p) (0.87) (2.71) 0.46
--------------------------------------- ----------- ----------- -----------
Underlying EPS
Weighted average number of ordinary
shares in issue 186,347,228 186,347,228 186,347,228
--------------------------------------- ----------- ----------- -----------
EPS (p) (0.87) (2.15) 1.03
--------------------------------------- ----------- ----------- -----------
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
--------------------------------------- ----------- ----------- -----------
Diluted EPS
Weighted average number of ordinary
shares 186,347,228 186,347,228 186,347,228
--------------------------------------- ----------- ----------- -----------
EPS (p) (0.87) (2.71) 0.46
--------------------------------------- ----------- ----------- -----------
Underlying diluted EPS
Weighted average number of ordinary
shares 186,347,228 186,347,228 186,347,228
--------------------------------------- ----------- ----------- -----------
EPS (p) (0.87) (2.15) 1.03
--------------------------------------- ----------- ----------- -----------
(4) Other intangible assets
Unaudited Unaudited Audited
30.09.21 30.09.20 31.03.21
GBP'000 GBP'000 GBP'000
Other intangible assets 10,824 6,917 8,861
Additions during the period include GBP1,867k related to the new
Enterprise Resource Planning (ERP) system (H1 FY2021: GBP1,812k).
This will be the cornerstone of the business to build on going
forward, utilising new, cloud-based technology. It is expected that
amortisation will commence in the year ending 31 March 2022, as
this is when it is expected the Group will commence deriving an
economic benefit from the asset.
(5) Monies held in trust
During the six months to 30 September 2021 a review of the ring
fencing of balances in relation to digital code was undertaken.
These products are not regulated products but the balances had
historically been segregated from AG cash balances and the amounts
segregated had grown significantly over the last 18 months. The
review concluded that there was no regulatory requirement to ring
fence balances and no contractual requirement, other than for one
particular customer. Therefore, in September 2021 GBP11m of ring
fenced funds were transferred to free cash.
(6) Cash and cash equivalents
The bank overdraft at 30 September 2021 is a cashbook balance
that has arisen due to the timing of unpresented cheques.
(7) Reconciliation of (loss)/profit for the period to net cash (outflow)/inflow
from operating activities
Unaudited Unaudited Audited
Half year Half year Year to
to 30.09.21 to 30.09.20 31.03.21
GBP'000 GBP'000 GBP'000
(Loss)/profit for the period (1,624) (5,041) 851
Adjustments for:
Tax (381) (1,182) 402
Interest income (202) (459) (783)
Interest expense 222 382 360
Research and development tax credit - - (98)
Depreciation and amortisation 891 912 1,791
Impairment of goodwill - - 218
Profit on sale of assets held for sale - (41) (205)
Profit on sale of property, plant and
equipment - - 544
Increase in inventories (6,829) (7,727) (798)
Decrease/(increase) in trade and other
receivables 3,825 394 (1,841)
Increase in trade and other payables 55,240 92,892 9,500
(Decrease)/increase in provisions (4,669) 14,796 24,113
Increase in monies held in trust (70,399) (99,622) (29,360)
Movement in retirement benefit asset - - (26)
Translation adjustment (4) (5) 3
Share-based payments 126 125 247
------------ ------------ ---------
Net cash (outflow)/inflow from operating
activities (23,804) (4,576) 4,918
------------ ------------ ---------
(8) Approval
This statement was approved by the board on 22 November
2021.
(9) Reports
A copy of this announcement will be available on the Group's
website from today www.appreciategroup.co.uk and will be mailed to
shareholders on or before 17 December 2021. Copies will also be
available for members of the public at the Company's registered
office - Valley Road, Birkenhead CH41 7ED and also at the offices
of the Company's registrars, Computershare Investor Services PLC, P
O Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.
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END
IR PPGUCGUPGPUP
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