TIDMAPP
RNS Number : 4274Q
Appreciate Group PLC
28 June 2022
28 June 2022
Appreciate Group plc
Final Results for the Year Ended 31 March 2022
Strong full-year performance driven by growth in Corporate
Important technology acquisition announced separately today
Appreciate Group Plc (the 'Group'), UK's leading multi-retailer
redemption product provider to Corporate and Consumer markets,
today announces its final results for the financial year ended 31
March 2022 and provides an update on current trading for the new
financial year to date.
Financial highlights :
-- Profit before tax and exceptional items (+) of GBP8.4m (Restated* FY21: GBP2.3m)
- Strong recovery in profitability of both divisions
- Excludes exceptional costs of GBP2.7m (Restated* FY21: GBP2.5m
of exceptional items), largely in relation to certain intangibles
related write offs, including the impact of changes in I FRS
guidance on the treatment of cloud-based technology costs
- Adjusted PBT ahead of market expectations, as announced in
year-end trading update on 28 April
-- Group revenue up 15.4% to GBP123.3m (FY21: GBP106.8m) driven
by a strong performance in the Corporate business
-- Good progress with key areas of Corporate and digital billings:
o Billings excluding Christmas Savings were GBP222.0m, up 5.5%
(FY21: GBP210.5m), following three consecutive quarters of
double-digit growth from Q2 onwards
o Digital billings (excluding billings from free school meals)
up 20.5% to GBP 54.8m (FY21: GBP45.5m)
o Total Group billings down to GBP385.8m (FY21: GBP406.5m)
following reduction in billings from Christmas Savings which were
impacted by lockdown measures, restricting agent collections
-- Solid financial position maintained:
o Total funds held, including monies held in trust and bank
deposits, at 31 March 2022, were GBP139.7m (FY21: GBP163.5m)
o Year-end free cash and cash equivalents (excluding monies held
in trust) amounted to GBP20.2m (FY21: GBP31.4m), reflecting the
normalisation of customer spending patterns during the year
-- Underlying earnings per share of 3.46p (Restated* FY21 0.90p)
-- The Board has recommended a final dividend of 1.2p, making a
full dividend for the year of 1.8p per share (FY21: 1.0p)
Statutory results:
-- Statutory profit before tax of GBP5.6m (Restated* FY21 loss of GBP0.1m)
-- Statutory earnings per share of 2.36p (Restated* FY21: loss per share of 0.15p)
-- Statutory diluted earnings per share 2.35p (Restated* FY21: 0.15p)
Gift card technology provider acquisition
-- As announced separately today, the Group has acquired the
entire share capital of MBL Holdco Ltd.
-- Acquisition anticipated to accelerate the Group technology plans by approximately 18 months.
-- As well as offering immediate commercial opportunities, it
supports key areas of growth through SaaS solutions, outsourced
gift card programmes and bespoke white labelling of gift card
websites for Corporate clients.
Operational and strategic highlights - strong divisional
performance bouncing back from Covid
-- Corporate
o Corporate billings of GBP212.1m up 5.4% (FY21: GBP201.3m)
o Corporate revenue increased 42.8% to GBP76.7m (FY21:
GBP53.7m)
o Segmental operating profit of GBP7.8m (FY21: GBP2.6m)
o Performance benefited from deferred revenue release in the
year which was impacted by Covid restrictions last year, and from
higher margins as billings from (lower margin) free school meals
scheme reduced
-- Consumer
o Billings were GBP173.7m (FY21: GBP205.3m); reduction reflected
lower billings from Christmas Savings due to impact of lockdown
restrictions during key agent collections period
o Consumer revenue was GBP46.5m (FY21: GBP53.1m) reflecting
lower billings
o Segmental operating profit of GBP3.3m (FY21: GBP0.5m)
Significant progress delivering our strategic business plan
-- Strong growth in Corporate - three quarters of consecutive
double-digit growth following market repositioning in FY21.
-- Continued outperformance of digital - billings rose by more than a fifth .
-- Reinvigorating Christmas Savings - projected billings for the
Christmas Savings business for FY23 are currently down c.3%, a
significant improvement on the 15% decline seen in FY22.
-- ERP Progress - successfully replaced the legacy systems that
support the HighStreetVouchers.com website, providing us with a
more robust and scalable platform which supports our plans for
growth.
-- Operational improvements - enhancements in productivity and
operational efficiencies with use of seasonal temps reduced by 11%
during the peak trading period and Customer Care calls down by
almost a third.
-- Continued focus on costs - large one off costs incurred for
major transformation initiatives now complete, administration costs
now expected to reduce to c.GBP19.0m for FY23 (FY22: GBP21.3m).
-- Broadening product appeal - further enhancements to
redemption choice with new brands added to our multi-redemption
range including Primark, Pandora and Sports Direct.
-- Good progress with ESG commitments - achieved an ISO 14001
Environmental Management certification and introduced a new
eco-friendly, non plastic card.
Current trading and outlook
-- Trading in the first 12 weeks of the current financial year
has been in line with the Board's expectations.
-- Billings (excluding Christmas Savers) are up 4.5% on FY22 up to 24 June 2022.
-- The Group continues to focus on reducing costs and leveraging
the investments made in recent years to help grow
profitability.
See accounting policies for a reconciliation of billings to
revenue
* The FY21 results have been restated as set out in the
statement of significant accounting policies
(+) See financial review for reconciliation of adjusted to
statutory profit measure
Plans for new Chief Financial Officer
The search for a new Chief Financial Officer is continuing and
the Group is encouraged by the standard of applicants. It plans to
appoint an interim CFO by the end of July and will provide an
update regarding a permanent appointment in due course.
Ian O'Doherty, Chief Executive Officer, commented:
" I am delighted that we outperformed and exceeded expectations
last year, bouncing back strongly from the impact of the
pandemic.
" We are enjoying continued growth in the Corporate segment, and
within our product mix, in digital billings, whilst good progress
is being made in reinvigorating Christmas Savings. We are also
focused on reducing our cost base as we move forward.
"Notwithstanding economic headwinds , we are confident of
delivering another year of progress through our increased
capabilities. I nitial trading so far this year has been
encouraging and we are seeing strong demand from organisations that
are focusing on retaining and attracting employees and customers
during the current economic challenges.
"I would like to take this opportunity to thank the entire team
for their hard work and commitment over what has been an incredibly
busy year and look forward to building on this progress during the
next 12 months."
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
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").
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
corporate 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, Appreciate Business
Services 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 helps around three hundred
thousand 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 Appreciate 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
Chair Statement
Since joining the business as Chair in April, I have spent time
meeting our colleagues and major shareholders to build a full
understanding of the challenges we face as well as the many
opportunities we have to grow.
It is with pleasure that in my first annual review I am able to
report that the Group has delivered a strong performance for the
year. As expected, the Group's financial results have bounced-back
following the pandemic, with a substantial improvement in profits
delivered through our range of products and services.
The improvements come as we transition to a new phase in our
strategy and I'm excited about the opportunities we have to deliver
increased value for our shareholders. Following progress in
creating a more focussed organisation, with a robust and scalable
business model, we can now build on these strengths to accelerate
growth in the markets we've chosen to operate in.
All our colleagues across the organisation have shown tremendous
dedication and enthusiasm rising to the challenge of supporting our
customers and one another since the onset of the pandemic. I am
proud of their resilience and continued commitment and I want to
thank them for their outstanding efforts.
The Group has emerged from the pandemic in solid shape and
enters FY23 from a position of strength with good momentum. We have
a clear strategy and well-articulated customer propositions for
growth. We are seeing the benefits of our re-focused approach in
Corporate, with digital billings excluding free school meals up by
a fifth, and an improved trend in Christmas Savings for FY23.
As we prepare for the future, I am confident in our prospects
and that our team will continue to help create more joyful moments
for a greater number of consumers and organisations in line with
our ambitions.
Improved performance
The first quarter of the financial year got off to a slower than
anticipated start as UK lockdowns remained in place and corporate
clients were prioritising plans for the return of their people to
the workplace. Since then, we have experienced three quarters of
double-digit growth in billings() , excluding Christmas savers,
compared to the same period prior to the pandemic.
At the centre of this improved performance is demand from
organisations that have sought our products to reward and recognise
their employees and attract and retain their customers, underpinned
by the robust and scalable business platform we have been
building.
There has been an improvement in the trend of projected billings
for the Christmas Savings business for FY23, following this year's
recruitment campaign. These are currently down c.3%, a significant
improvement on historical trends, giving us confidence that we will
be able to grow Christmas Savings billings again in the medium
term.
Dividend
The Group is maintaining its progressive dividend policy to
reflect the cash-generative nature of the business, the strong
balance sheet and growth that has been seen. The Board is
recommending a final dividend for FY22 of 1.2p (2021: 0.6p).
Combined with the interim dividend of 0.6p (FY21: 0.4p), the
resulting total dividend in respect of FY22 is 1.8p (FY21: 1.0p).
The dividend will be payable on 3 October 2022 to shareholders on
the register on 26 August 2022, subject to shareholder
approval.
Board and governance
The Board invited me to take on the role of Chair from Laura
Carstensen following her decision to stand down, having served
almost nine years on the Board. I would like to thank Laura on
behalf of the Board for her hard work in helping the Group evolve
its strategy and growth journey, as well as helping it navigate the
unprecedented challenges of the pandemic. The change of Chair comes
at an opportune time, with the Group's strategy pivoting to
leveraging the progress made in the Group's transformation to drive
growth. I am confident I can help the Group as it seeks to achieve
these growth ambitions and I look forward to working with the Board
to lead the Group in the next successful stage of its journey.
As announced on 28 April 2022, Tim Clancy, will step down from
his role as Chief Financial Officer at the end of July 2022 to take
up another opportunity. The Group has started a search process, is
encouraged by the quality of the candidates it is seeing, and will
provide a further update when it has appointed a replacement. The
Board would like to thank Tim for his significant contribution to
the launch of the Group's strategic business plan in 2018 and for
building a more robust and scalable platform for growth.
The Board takes its responsibilities to all its stakeholders
seriously and we are committed to maintaining direct and productive
relationships with our shareholders, colleagues and communities,
taking a range of perspectives and feedback into account in our
decision-making and stewardship.
Preparing for the future
I am pleased to confirm that the Group has bolstered its
technology plans by completing the acquisition of MBL Holdco Ltd
post year end, a gift card technology provider to UK businesses and
consumers. The move provides us with access to MBL's market-leading
technology platform and accelerates our technology plans by
approximately 18 months, thus bringing forward our ability to
leverage further growth for the Group. As well as offering
immediate commercial opportunities, it strengthens our ability to
deliver SaaS solutions, outsourced gift card programmes and bespoke
white labelling of gift card websites for Corporate clients.
Our team is determined to build on the success in Corporate and
has weighted resources accordingly to support efforts in this
market, supported by enhancements to the proposition and
strengthened data and insight capability to target B2B customer
retention and acquisition. We also see opportunities to support
Corporate customers with the challenges around staff retention and
assisting employees through the cost of living crisis.
We are focused on capitalising on the increased capability of
the business while refining our product range and customer
experience to help drive customer appeal and loyalty.
Responsible business
People
The wellbeing of our colleagues remained a priority throughout
the year. A new hybrid working model was introduced, combining the
benefits of being together in the workplace with the flexibility
that comes from remote working. We have listened to our colleagues'
views through regular engagement surveys and we were delighted to
receive a Great Place to Work accreditation for the second year in
succession. This was achieved with an improved Trust Index and
reflects the success of our cultural transformation. We also
achieved a Best Workplace for Women Status, with fair treatment
regardless of gender scoring 90%, underlining our commitment to
diversity. We are committed to making further enhancements to make
the Group an even better place to work using the feedback provided
by our colleagues.
We also recognise that current rises in the cost of living are
impacting our people. With this in mind, we are providing all
colleagues with a one-off payment of GBP500 to help them with these
challenges. While those not in a bonus scheme, will also receive a
gift card of GBP250 as a thank you for their support.
Environment
In FY22, we achieved an ISO 14001 Environmental Management
certification and now meet the highest international standards for
environmental management, demonstrating our strong commitment to
sustainability and protection. However, we recognise that this is
only the start of the journey and that there is more we must do,
which is why we are developing a Climate Transition Plan to fulfil
our aim of becoming a future net zero organisation.
We also successfully completed an exercise using eco-friendly,
non plastic cards with one of our large Corporate clients and are
now rolling this out to other customers.
Communities
We are committed to helping create a positive impact in our
communities; our ground-breaking programme with Everton in the
Community is helping children in the Liverpool City Region learn
technology skills that could help them in their future careers. Our
support for the charity has now generated almost GBP750,000 of
societal value.
Looking ahead
As we enter FY23, we remain cautious about the pressures on our
customers, through increases in the cost of living, the terrible
events taking place in Ukraine, the impacts of the UK's exit from
the EU and the potential future paths of COVID-19. The team is
focused on ensuring we remain well placed to support with the
challenges faced by our customers, whether it be spreading the
costs of major events such as Christmas, or helping Corporate
clients with attracting and retaining their customers and
employees.
We have good momentum and a clear focus on continuing to deliver
our strategy to drive future years of growth. We are well
positioned to capitalise on opportunities whilst remaining true to
our purpose and values.
I am excited about the next phase in our journey with the Group
and look forward to helping it deliver further progress and the
success that is to come.
Guy Parsons
Chair
27 June 2022
* The FY21 results have been restated as set out in the
statement of significant accounting policies
See page accounting policies for a reconciliation of billings to
revenue
Chief Executive's Review
Introduction
This is a year in which we have made significant progress as a
Group, despite continued impacts from the pandemic on our
customers, colleagues and business - particularly in the first
half.
The commitment and consistent hard work of the team has
delivered a strong financial performance. This demonstrates that
our strategy to create a more modern organisation remains
appropriate and is starting to deliver positive results. We are now
in an improved position to exploit future opportunities. The
benefits of the investments we have made in recent years are
clearly coming through.
I am extremely proud to lead an organisation with people who
display huge talent, passion, and commitment to help drive our
business forward. This gives me confidence about what we can
achieve over the next year and beyond to fully leverage the
benefits of the changes we have made to accelerate our growth.
Results for the year
The Group has delivered a significantly improved financial
performance, with profits rising on last year as trading returned
to more normal patterns following the lifting of the UK's lockdown
restrictions after Covid. This has been driven by strong demand in
Corporate and an increase in digital billings (excluding billings
from free school meals) of almost a fifth.
Profit before tax and exceptional items(+) was GBP8.4m
(Restated*FY21: GBP2.3m) excluding the main exceptional costs
arising from IFRS guidance on how cloud-based technology costs are
presented. This result reflects a strong second half, especially in
our peak Q3 Christmas trading period. Profit before tax was GBP5.6m
(Restated FY21*: -GBP0.1m).
Total Group billings () of GBP385.8m were down on the previous
year (FY21: GBP406.5m), largely due to a reduction in billings ()
through the Government's free school meals scheme and an impact on
Christmas Savings during the pandemic, when Agent collections were
restricted by social distancing measures preventing face to face
contact during the key customer recruitment period.
Billings () excluding Christmas Savings were GBP222.0m, up 3.6%
(FY21: GBP214.3m) following a strong performance in our Corporate
business. Whilst the first quarter was initially slower than
anticipated as lockdown restrictions began to be eased, these
billings () saw three consecutive quarters of double- digit growth
from Q2 onwards.
Full-year digital billings () increased 20.5% to GBP54.8m (FY21:
GBP45.5m) excluding billings () from free school meals.
Total Group revenue went up 15.4% to GBP123.3m (FY21: GBP106.8m)
driven by an improvement in the Corporate business.
Operating profit before exceptional items(+) for the year was
GBP8.5m (Restated* FY21: GBP1.9m). Statutory Operating Profit was
GBP5.7m (Restated* FY21: loss of GBP0.6m)
As outlined in our year end trading statement on 28 April 2022,
the lockdowns in FY21 caused a delay in the redemption of the
Group's products for which income is recognised at the point of
redemption. The financial impact of this in FY21 was to reduce
profits by GBP3.9m and, as expected, part of this has reversed in
FY22 increasing profits in the year by GBP3.4m.
We previously stated that we expected to confirm a charge
following changes to guidance on accounting for cloud computing
arrangements from the International Financial Reporting
Interpretations Committee (IFRIC). Following the finalisation of
the adjustment, we can confirm that there was a total exceptional
charge of GBP2.7m recorded in FY22 in relation to the Group's
Intangible assets. Of this charge, GBP0.8m was associated with the
change in accounting policy driven by the IFRIC agenda decision.
Further, the FY21 results have been restated to reflect an
exceptional charge of GBP1.4m and an opening reserves adjustment of
GBP0.9m in relation to this change. Taken together, this reduces
the total asset value, as at 31 March 2022, by GBP5.0m.
Underlying basic earnings per share went up from -0.15p
(Restated*) in FY21 to 2.36p, and following the improvement in
performance we are pleased to be in a position to declare a final
dividend of 1.2p (FY21: 0.6p).
Year-end free cash and cash equivalents of GBP20.2m (FY21:
GBP31.4m) as at 31 March 2022 - excluding funds required to be held
in trust - reflected a catch up in customer spending patterns and
continued growth in regulatory billings which require increased
customer monies to be held in trust until redemption. Average funds
held (including cash held in trust) were GBP178.6m (FY21:
GBP181.2m).
See accounting policies for a reconciliation of billings to
revenue
* The FY21 results have been restated as set out in the
statement of significant accounting policies
(+) see financial review for reconciliation of adjusted to
statutory profit measure
Divisional Review
Our business is split into two segments of Corporate - serving
our B2B customers - and Consumer which supports retail customers
through Park Christmas Savings and HighStreetVouchers.com.
Corporate (62.3% (2021: 50.2%) of Group revenue in the year
ended 31 March 2022)
Appreciate Group's Corporate business provides around 40,000
business customers with market- leading incentive, recognition and
rewards options for an estimated two million recipients to use with
over 200 redemption partners online or across thousands of physical
outlets.
Our Corporate business delivered strong growth with revenue
increasing by GBP23.0m to GBP76.7m (FY21: GBP53.7m), benefitting
from normalisation of customer spending patterns, net of a
reduction in (lower margin) free school meals as a share of
Corporate billings. Billings rose 5.4% to GBP212.1m versus
GBP201.3m in FY21. As a result, segmental profit for Corporate
increased from GBP2.6m in FY21 to GBP7.8m.
The division has historically had a successful track record in
capturing repeat business from existing clients. Business retained
from existing clients has returned to over 90%, in line with
pre-pandemic levels. We continue to focus on increasing and
diversifying the client base while maintaining high levels of
repeat business which will drive further growth.
The division had seen a growth of new business during Q3 in the
prior year because organisations bought our products to reward
employees during lockdowns as an alternative to Christmas parties.
We were pleased to be able to maintain a significant proportion of
this business in the financial year 2022. We will be targeting
further opportunities to support Corporate customers with the
challenges they currently face around employee retention and in
helping them support staff during the cost of living crisis, in
addition to developing innovative approaches to customer retention
and acquisition.
Corporate billings include billings of GBP26.0m (FY21: GBP22.0m)
bought by organisations via our ecommerce site
HighStreetVouchers.com. These are provided at a low cost to serve,
with little administration required and without any negotiated
discount.
Billings from the free school meals reduced to GBP16.2m (FY21:
GBP23.0m), as use of the Government scheme, introduced to ensure
vulnerable children did not go hungry during the pandemic when
schools were closed, wound down.
We have continued to focus on broadening our client base by
attracting new Corporate customers through greater use of insight,
automation of onboarding, and sector-specific targeting. We served
over 960 organisations for the first time, including well-known
brands such as Brewdog, British Airways IAG Cargo and Go Outdoors
who became partners.
Consumer (37.7% (2020: 49.8%) of Group revenue in the year ended
31 March 2022)
Consumers can access Appreciate Group's multi-retailer
redemption product directly from our website HighStreetVouchers.com
or via our leading Christmas savings offering, which currently
helps approximately 300,000 families budget for Christmas.
Consumer billings were GBP173.7m - down on the prior year (FY21:
GBP205.3m). Consumer revenue was GBP46.5m (2020: GBP53.1m) with a
segmental profit of GBP3.3m versus GBP0.5m in FY21, which had been
impacted by the increase in deferred revenue due to reduced
redemption options during lockdowns.
Billings for the Christmas Savings business were GBP164.0m, down
from GBP193.3m in the previous financial year. These were
particularly impacted by social distancing measures that restricted
face-to-face contact during the key recruitment period for our
agents. However, projected billings for the Christmas Savings
business for FY23 are currently down c.3%, a significant
improvement on the 15% decline seen in FY22. This follows a major
focus on driving its performance, as described in more detail
below.
Consumer billings via HighStreetVouchers.com were slightly lower
at GBP10.1m (FY21: GBP10.2m). This included another strong
December, traditionally the key trading month in the year, with
billings of GBP3.1m (FY21: GBP3.3m). We continue to focus on
driving traffic to our website and optimising conversion, with
rates holding firm at 4.4%.
Clear strategy for growth
The Group's has undergone a transformation as part of its
strategy to create a robust and scalable business model to support
future growth. Following the progress made in delivering these
initiatives, the strategy has now evolved to focus on leveraging
the benefits of its investments to accelerate growth. Progress has
been made in a number of key areas during the year:
Strong growth in Corporate
Our Corporate business has now seen three quarters of
consecutive double-digit growth. This encouraging performance
follows a repositioning of the business to the Corporate market in
FY21 to better place us as experts in supporting organisations with
reward and recognition.
Our Corporate business continues to deliver high levels of
customer satisfaction. It is rated 'Excellent' overall based on
customer reviews via Trustpilot with an average of 4.3 out of 5 and
94% of reviews rating it as 'excellent'or 'good'. Our Net Promoter
Score (NPS) of 54% compares favourably - ahead of a benchmark for
financial services of 44%.
Digital growth continues
Digital billings (excluding free school meals) continue to rise
and now account for 19% of the product mix. Digital demand is
particularly prevalent in e-gift codes which provide customers with
the opportunity to exchange for a range of spending products
online.
Working to reinvigorate Christmas Savings
During the year we delivered a significant change in our
marketing, utilising a fully integrated campaign spanning digital,
social media and TV channels to help drive customer acquisition for
FY23. This was supported with enhancements to improve user
experience, customer onboarding and digital journeys, which helped
boost the number of customers commencing payment plans after
initially signing up, with first-time direct debit payment rates up
32% year on year.
A new Mastercard enabled Love2shop products - the "Purple Card"
- was launched to Christmas Savings customers which has also proven
popular. Redeemable with 125 brands, the product currently accounts
for orders of over GBP18m for FY23. We have also delivered an
'always on' campaign to strengthen relationships and engagement
with our Agents to support the key customer recruitment period and
to maintain regular dialogue to help focus on maintaining payment
collections. Given the seasonal nature of the business, this
campaign will determine the outcome for FY23, but early indications
show a significant improvement in the level of decline seen in
recent years.
Redemption range enhanced
We have continued to explore opportunities to strengthen the
number and quality of our redemption partners to increase the
attractiveness of our products for customers. We maintained our
focus on broadening the appeal through leisure, hospitality and
food options, alongside leading retailers. We were delighted to add
attractive new brands to our redemption range during the year such
as Pizza Express, Merlin attractions and Primark. We firmly believe
each of these will prove attractive for our customers, with Primark
of particular appeal to our Christmas Savers.
Strengthened leadership team
As part of the evolution of our strategy towards growth, and
with much of the transformation work complete, we reshaped our
leadership team to a smaller number. Jonathan Biggin joined us as
Chief Operating Officer with responsibility to deliver our
operational and technology plans. He has a key role to play in
delivering our focus on back-office simplification and digitising
customer journeys.
Enhanced digital marketing approach
Our marketing function has also been structured to support the
focus on greater use of insight, digital marketing and commercial
planning of campaigns. This includes a new Digital Acquisitions
team with expertise in digital marketing. We also took the
opportunity to align the Marketing and Product functions with our
Commercial division, led by Chief Commercial Officer, Julian
Coghlan, to underpin the focus on growth.
Leveraging our hero brand
In November, we launched our first-ever campaign specifically
promoting Love2shop, the brand which underpins all our products.
This was designed to boost existing high levels of awareness whilst
promoting Love2shop during the Q3 peak trading period helping to
boost prompted consumer awareness from 40% to 43% as at 31 March
2022.
PayPoint partnership
Our partnership with PayPoint - providing access to a physical
distribution network of 28,000 UK outlets - got off to a slow start
when it launched in May 2021. However, we have since gained
significant insight to assist us in how we promote the products to
the network's retailers and customers which will help us going
forward. We have been supporting PayPoint in delivering promotional
activity and are in discussions about potential ways to broaden the
service which we believe would enhance the opportunities of the
partnership.
Delivering efficiencies
ERP Progress
Through our Enterprise Resource Planning (ERP) programme we
successfully replaced the legacy systems that support the
HighStreetVouchers.com website. This is supporting scalability and
resilience.
Operational improvements
We made a number of enhancements in productivity and operational
efficiencies that led to improvements. Use of seasonal temps
reduced by 11% during the peak trading period and Customer Care
calls are down by almost a third. A ticketing system was introduced
to help improve management of incoming enquiries for Corporate
customers and is helping strengthen the customer experience.
Continued focus on costs
With 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 and
consultancy costs are largely complete. We therefore expect
administration costs to reduce to c.GBP19.0m next year, a
significant reduction as a percentage of growing revenues.
Safeguarding customers' money
As an e-money provider, we are now required to undertake an
annual audit of safeguarding practices. As expected, and referenced
in our FY21 Annual Report and in line with many providers across
the industry, last year's review identified several areas for
improvement. We have made substantial progress over the last 12
months and this year's annual audit has significantly improved. We
welcome any measures that are designed to provide increased
protection for customers and we are committed to the relevant
regulation in this area.
Looking ahead
Our long-term strategy has been to enable growth by creating a
more robust and scalable business model. With the work required to
deliver this transformation now complete, the business is making
clear progress and in better shape.
As the cost of living rises sharply and with inflation predicted
to hit double-digit in the year ahead, the macro-economic outlook
remains challenging. However, I remain excited about the future
opportunities for the Group and the undeniable potential we now
have to continue to drive strong demand in Corporate, increase our
digital billings, and reinvigorate Christmas savings.
We will continue to evolve so that we are best positioned to
respond and thrive in an increasingly competitive and dynamic
environment. We are ready to take advantage of the strong
propositions in our markets and differentiated product and service
offerings.
I am confident we will deliver success with the same commitment
and determination that has been shown over the last 50 years.
Ian O'Doherty
Chief Executive
27 June 2022
Chief Financial Officer Review
The Group's financial performance was significantly impacted by
Covid-19 and the associated lockdowns in FY21. With these
restrictions now coming to an end, the Group saw a return to growth
in its core Corporate business and an overall return to greater
profitability.
Billings and Revenue
The Group's products are split into the following
categories:
Multi-retailer redemption products - Love2shop vouchers,
flexecash(R) cards, Mastercards and e-codes
Single retailer redemption products - third party retailer
vouchers, cards and e-codes
Other - Consultancy fees, SaaS fees and handling fees
Multi-retailer redemption product billings are the gross value
of goods and services shipped and invoiced to customers during the
year. Revenue for multi-retailer redemption products is the net
service fee received on redemption, cardholder fees and
non-redemption income which are recognised when multi-retailer
redemption products are redeemed.
For single retailer redemption products and other, both billings
and revenue are the gross value of goods and services shipped and
invoiced to customers during the year.
See accounting policies for a reconciliation of billings to
revenue
Billings 2022 2021 Change
GBPm GBPm %
Multi-retailer redemption
products 337.5 351.8 -4.1%
Single retailer redemption
products 46.6 50.8 -8.4%
Other 1.7 3.9 -56.4%
Total 385.8 406.5 -5.1%
Multi-retailer redemption product billings include billings
in respect of e-codes which are capable of being converted into
either multi-retailer redemption products or single retailer
redemption products. Revenue figures below reflect the product
into which the e-code is converted by the cardholder.
Revenue 2022 2021 Change
GBPm GBPm %
Multi-retailer redemption
products 38.1 24.7 54.3%
Single retailer redemption
products 83.4 78.2 6.7%
Other 1.8 3.9 -53.8%
Total 123.3 106.8 15.4%
Total Group billings of GBP385.8m were down on the previous year
(FY21: GBP406.5m), largely due to a reduction in billings through
the Government's free school meals scheme and the impact on
Christmas Savings during the pandemic, when Agent collections were
restricted by social distancing measures preventing face to face
contact during the key customer recruitment period.
Total billings excluding Christmas Savings, were GBP222.0m, up
3.6% (FY21: GBP214.3m) following a strong performance in our
Corporate business. Whilst the first quarter was initially slower
than anticipated as lockdown restrictions began to be eased, these
billings saw three consecutive quarters of double-digit growth from
Q2 onwards.
The mix of in-house, multi-retailer products remains high within
billings, in line with the strategy of promoting our own products
(Love2Shop). The mix of multi-retailer redemption products was
87.4% of total billings, marginally higher than last year's
86.5%.
Revenue increased by 15.4%, significantly there was an increase
in Multi-retailer redemption product revenue of 54.3%, driven by a
return to the high street following the ending of Covid-19
restrictions, this benefitted products that can be spent online and
physically.
As referenced last year, Q4 FY2021 saw the start of another
national lockdown, non-essential retail businesses were temporarily
closed again, which limited the opportunity for our customers to
use their products. This meant that redemption levels during Q4
FY2021 were lower than expected, leading to higher unspent
balances. Whilst this preserved cash relating to unregulated
products, it created a much higher level of deferred revenue in
FY21. We had expected this deferred revenue to come through this
financial year, as all lockdowns eased, and this was the case. The
level of deferred revenue moved back to pre-pandemic levels
(GBP7.8m in 2022 v GBP11.2m in 2021). Some of this comprised of
additional non-redemption noted in the year in relation to vouchers
where the group in FY21 had extended the redemption period for our
customers.
Profit from operations
The Group's operations are divided into two principal operating
segments:
Consumer - which represents sales to consumers, utilising the
Group's Christmas savings offering and our website,
highstreetvouchers.com; and
Corporate - comprising sales to businesses, offering primarily
sales of the Love2shop voucher, flexecash(R) cards, Mastercards and
e-codes in addition to other retailer vouchers.
All other segments comprise central costs, property costs and
impairment charges which are shown separately in order to give a
more meaningful view of divisional performance.
2022 2021 Change
Restated*
--------------------
GBP'000 GBP'000 GBP'000
-------------------- -------- ----------- --------
Consumer 3,253 532 2,721
-------------------- -------- ----------- --------
Corporate 7,824 2,638 5,186
-------------------- -------- ----------- --------
All other segments (5,362) (3,730) 1,632
-------------------- -------- ----------- --------
Operating profit 5,715 (560) 6,275
-------------------- -------- ----------- --------
* The FY21 results have been restated as set out in the
statement of significant accounting policies
Consumer
In the Consumer business, customer billings have decreased by
15.4% from GBP205.3m to GBP173.7m largely driven by Billings for
Christmas savers that were down by 15.3%. Billings from the
Christmas Savings order book for Christmas 2022 are expected to be
down by c.3%, showing an improvement on the annual decline noted in
recent years.
The decline in Billings in FY22 led to a decrease in Revenue in
the year by 12.5% to GBP46.5m (2021: GBP53.1m).
Operating profit was GBP3.3m, an increase of GBP2.8m from the
profit of GBP0.5m in the prior year. This was primarily due to
exceptional costs in the prior year of the closure of the Hamper
packing business (GBP1.1m), these exceptional costs were not
repeated in this financial year. Profitability has also improved
because of an uplift in redemption.
Corporate
In the Corporate business, customer billings have increased by
5.4%, from GBP201.3m to GBP212.1m. These billings include GBP16.2m
of Free School Meal codes (GBP23.0m in the prior year) redeemable
through Iceland. Corporate revenue increased by 43% over the prior
year, from GBP53.7m to GBP76.7m. This increase was due to increased
billings referenced above plus more conversions to single retailer
products (reported gross in revenue) and a higher deferred profit
release.
Operating profit increased to GBP7.9m (2021: GBP2.6m) due to
increased redemptions as spend patterns of customers normalised and
additional non-redemption income relating to previous year's
deferral materialised in the current year.
All other segments
This includes the exceptional charge in relation to impairment
of other intangibles of GBP2.7m (2021: GBP1.4m).
Exceptional items
Exceptional items are presented separate from the underlying
results of the Group where they are significant in size and nature,
and either they do not form part of the trading activities of the
Group, or their separate presentation enhances understanding of the
financial performance of the Group. This presentation of underlying
results gives stakeholders a better understanding of the Group's
trading position.
Exceptional items during the year amounted to GBP2,744k (2021
(restated*): GBP2,456k) on a pre-tax basis and are summarised in
the table below:
2022 2021
Restated*
GBP'000 GBP000
--------------------------------------------- -------- -----------
Underlying profit before tax 8,387 2,319
Exceptional items - impacting profit/(loss)
before tax:
Costs associated with the Other intangible
assets (2,667) (1,390)
Impairment of goodwill (77) (218)
Impairment of obsolete stock - (414)
Redundancy costs - (639)
Profit on sale of assets held for sale - 205
--------------------------------------------- -------- -----------
Total exceptional items (2,744) (2,456)
--------------------------------------------- -------- -----------
Statutory profit / (loss) before tax 5,643 (137)
--------------------------------------------- -------- -----------
The main exceptional item included in the current year results
is the one associated with the implementation of the new ERP
system. The total cost of GBP2,667k is split into the following
categories:
a) Certain project configuration and customisation costs
associated with cloud computing arrangements (GBP739k), which are
now expensed rather than being capitalised as intangible assets
following IFRS Interpretation Committee guidance on this topic
issued during the year. This is a change in accounting policy
adopted in the current year but applied retrospectively, resulting
in an additional exceptional charge of GBP1,390k in FY21. This
change has resulted in the restatement of prior year results. For
details on the change in accounting policy, please see the
Statement of significant accounting policies.
b) Other costs incurred during the year associated with the
Group's strategic ERP project which were deemed redundant in nature
and therefore not eligible for capitalisation - GBP1,059k.
c) There was part of the new ERP project which was capitalised
last year but in the current year management decided to discontinue
the use of that element of the asset. This has resulted in an
impairment charge of GBP869k recorded in the year.
The exceptional costs for FY21 were GBP1,066k prior to
restatement. In the prior year, we closed the hamper production and
contract packing businesses based at Valley Road. Following
consultation with staff, we made 40 roles redundant and had
incurred exceptional costs of GBP639k. Additionally, we had
impaired the value of hamper stock by GBP414k.
The total tax impact of exceptional items was a reduction in tax
charge of GBP681k in FY 22 (restated* FY21: reduction of
GBP505k).
Taxation
The effective tax rate for the year was 22.2% (2021: restated*
100.7%) of profit before tax. The rate is higher than the standard
rate of corporation tax of 19%, primarily due to legal fees,
depreciation of assets and the share option charge not attracting
tax relief.
Earnings per share
Basic earnings per share (EPS) rose to 2.36p from a restated*
loss per share of (0.15)p in 2021. Excluding the exceptional charge
basic EPS is 3.46p (2021: restated* 0.90p).
Dividends
It has been the Board's policy to distribute just over half of
post-tax profit as dividend, with one third of that as an interim
dividend and the remaining two thirds as a final dividend. Having
already paid an interim dividend of 0.60p (2021: 0.40p) in April
2022, the Board is pleased to recommend a final dividend of 1.20p
(2021: 0.60p) per share giving a full year dividend of 1.8p (2021:
1.00p) per share.
Cash flows and treasury
During the year, GBP6.6m of cash flows were utilized in
operating activities. In FY21 we generated cash from operations of
GBP3.4m (restated*) so there was an increase in cash usage of
GBP10.0m in the year. This was driven primarily by the lower
redemption levels in prior year which meant lower payments to our
redemption partners and higher monies held in trust balance. With
redemption patterns now returning to more normal levels, there has
been a catch up this year on redemption, resulting in higher
payments to suppliers, offset by a lower monies held in trust
balance.
This reduction is offset by the decrease in monies held in trust
balance, which has reduced from GBP132.1m in FY21 to GBP119.5m at
31 March 2022. The balance last year included ring fenced funds of
GBP11.1m in relation to e-codes, which were funds not required to
be ring fenced either by regulation or Trust. During the year, a
decision was taken to release these funds to free cash, in line
with other non-regulated products.
Balances held in respect of the Park Card Services Limited
e-money Trust (PCSET), to support the e-money float in accordance
with regulatory requirements, and the Park Prepayments Trustee
Company Limited, which holds payments received in respect of orders
for delivery the following Christmas, were broadly in line with
balances in the prior year.
The total amount of cash and deposits net of any overdraft
position held by the Group, combined with the monies held in trust,
has decreased in the year by 14.6% to GBP139.7m from GBP163.5m.
These total balances peaked at just over GBP215m in the year,
representing a decrease of GBP20.7m from the prior year.
In August 2020 we completed a bank financing exercise of an
unsecured 5 year revolving credit facility (RCF) with Santander UK
of GBP15m plus an additional uncommitted accordion of GBP10m. This
facility provides additional financial flexibility enabling longer
term growth, as well as investing in the continued switch to
digital products. This facility has not yet been utilized to
date.
Trade and other payables
Included within trade and other payables is deferred income in
respect of multi-retailer redemption products (vouchers, cards and
e-codes). Revenue is deferred for service fees and non-redemption
income, net of discount. The amount of revenue deferred at March
2022 has decreased to GBP7.8m from GBP11.2m in the prior year. The
balance had increased at March 2021 due to the closure of
non-essential retail in Q4 causing much slower redemptions by
customers. This has not reoccurred in the current year.
Provisions
At 31 March 2022, provisions have decreased to GBP61.5m from
GBP77.9m. This was mainly due to a decrease in the amounts provided
in respect of amounts provided for unspent vouchers of
GBP16.2m.
Pensions
The Group continues to operate two defined benefit pension
schemes, where pensions at retirement are based on service and
final salary. These schemes are now closed to future accrual of
benefit arising from service with the Group. These schemes have a
combined net pension surplus of GBP1.3m based on the valuation
under IAS19 performed at 31 March 2022 (2021 restated*: surplus of
GBP0.5m).
The Group has recognised net interest income of GBP31,000 (2021:
GBP99,000) in the statement of profit or loss in respect of the
pension schemes. In addition, the Group has recognised a
re-measurement gain in the statement of comprehensive income (SOCI)
of GBP0.9m (2021: loss of GBP2.1m) net of tax.
In the year ended 31 March 2022, there were no contributions by
the Group to the schemes (2021: nil). The latest triannual scheme
funding reports, performed as at 31 March 2019, indicated that one
scheme had a technical provisions deficit (reflecting the
liabilities to pay pension benefits in relation to past service as
they fall due) of GBP0.1m and one had a surplus on the same basis
of GBP1.6m. No further contributions to either scheme are currently
required. The next triannual valuation will be undertaken as at 31
March 2022 when the positions will be reassessed.
During the year, a retrospective change to the Park Group
Pension Scheme has been made which has resulted in an increase of
GBP1.6m in the associated pension liability at 31 March 2022 (PY:
GBP1.6m). For details, please see the Statement of significant
accounting policies.
Tim Clancy
Chief Financial Officer
27 June 2022
Going Concern Disclosures
The financial statements are prepared on a going concern
basis.
The Group and Company's ability to continue as a going concern
is dependent on maintaining adequate levels of liquidity and
ensuring covenant compliance to continue to operate for the Going
Concern assessment period to 30 November 2023 (the 'Going Concern
period'). When assessing the going concern of the Group, the
directors have reviewed the year to date financial results, and
have modelled management's best estimate of financial results for
the Going Concern period, which is based on the Board approved
budget and five-year plan.
Liquidity and financing
At 31 March 2022, the Group held instantly accessible cash and
cash equivalents of GBP20.2m (excluding Monies held in trust). The
Group also has access to a GBP15m Revolving Credit Facility ("RCF")
that is available until August 2025. A further GBP10m of
uncommitted funds is available via an accordion facility attached
to the RCF however this is uncommitted. The Group has not drawn
down on the facility throughout FY22 or in the subsequent months,
including and up to the date of these financial statements.
The Group is required to comply with covenants attached to the
RCF. These covenants are:
-- Interest Cover (the ratio of EBITDA to Finance Charges) in
respect of any relevant period ending on or after 31 March 2021
shall not be less than 4.0:1.
-- Adjusted Leverage (the ratio of Total Net Debt to Adjusted
EBITDA) in respect of any relevant period ending on or after 30
September 2020 must not exceed 3.0:1.
-- PPPT Balance (the ratio of PPPT Balance to Monies in Advance
Balance) on each Quarter Date shall not be less than 1.0:1.
Approach to forecasting and sensitivities
The Group has taken a measured approach to its forecast. With
Covid-19 restrictions now removed across the country, the Group has
seen a return to a more normal trading pattern, which is also
reflected in the results for FY22. Key assumptions in the plan,
which models free cash available for use in the business, are:
1. Billings - Modest year on year growth driven by our Corporate business.
2. Cost base - Assumed reduction from FY 22 cost base due to known savings.
3. Non-Redemption - Rate of redemption is in line with current
experience in FY22, with a level of overall non-redemption forecast
to be in line with current trends observed in FY22.
4. Product mix - The base case assumes a modest decline in paper
billings versus FY22 actuals, with a corresponding increase across
card, digital and single store product billings in line with the
Group's strategy.
5. Capital expenditure - In line with spend in FY22.
6. Completion of an acquisition in FY23. It is assumed that the
post-acquisition costs will be net neutral during the going concern
period. For details, please see note 27.
While the forecasting uncertainties associated with Covid-19
have eased, the Board acknowledges the uncertainty presented by the
macro-economic indicators, including but not limited to the ongoing
conflict in Ukraine and the cost of living crisis. Consequently,
while the Board believes the base model used in the assessment is
robust and achievable, a series of severe-but-plausible downside
scenarios have also been considered as follows:
1. Reduction of 5% on Christmas Savers billings in FY23 and an
additional 20% in the remaining period. Our order book for
Christmas 2022 is secured and historic attrition rates considered
within our base case. This 5% reduction provides a further
sensitivity to our historic attrition rates on the secured order
book.
2. Scenario one above and no growth on FY22 across both Engagement and Gifting.
3. Scenario one above and a 5% decline across both Engagement
and Gifting as compared to FY22
actuals.
4. A 15% uplift on current spend rates on unregulated products
and a 15% reduction in spend rates across regulated products.
5. A shift in product mix with 15% of unregulated products moving to regulated products.
6. A combined sensitivity covering scenarios 3, 4 and 5.
In the base model and across each of the additional six
sensitivities, the Group will have adequate headroom on the
available liquidity position, and will remain compliant with all
banking covenants throughout the going concern period. The lowest
liquidity headroom across all scenarios will be observed in
September 2023 in the combined scenario (scenario six) of GBP6m
without any mitigation - this is deemed to be remote.
Management have also performed a reverse stress test which shows
that it will take a sustained reduction of 32% in billings across
all channels in the going concern period against the base case
model to breach the RCF covenant in September 2023. Liquidity
however is not breached at this point. Subject to receiving relief
on covenant requirements, it will take a sustained reduction of 52%
in billings across all channels in the going concern period for the
business to breach its liquidity model in September 2023. The
Directors consider these scenarios to be remote based on past
experience and recent trading.
In all of the aforementioned scenarios, including the reverse
stress test, management has not taken any mitigating actions into
consideration. The Group however does have several mitigating
actions under its control including minimising capital expenditure
to critical requirements, reducing levels of discretionary spend
including bonus payments, rationalising its overhead base and
curtailing future dividend payments which, although not forecast to
be required, could be implemented in order to be able to meet the
covenant tests and to continue to operate within borrowing facility
limits.
Conclusion
Having carefully considered the base case, downside scenarios,
reverse stress test, and trends since the year-end, as well as the
GBP15m committed RCF, the directors have a reasonable expectation
that the Group and Company have adequate resources to enable them
to continue in operational existence for the period to 30 November
2023. Accordingly, the directors continue to adopt the going
concern basis of accounting in preparing the Group and Company
financial statements.
Principal Risks & Uncertainties
Financial risks
Risk area Potential impact Mitigation
Group funding The Group depends on its The Group manages its capital
ability to continue to to safeguard its ability to operate
service its debts as they as a going concern.
fall due and to have access The 5 year RCF secured by the
to finance where this Group in 2020 continues to provide
is necessary. additional financial flexibility.
In addition the Group has a high
level of visibility of future
revenue streams from its consumer
business. The funding requirements
of the business are continually
reforecast to ensure that sufficient
liquidity exists to support its
operations and future
plans.
--------------------------------- --------------------------------------
Treasury The Group has significant The Group treasury policy ensures
risks funds on deposit and as that funds are only placed with
such is exposed to interest and spread between high quality
rate risk, counterparty counterparties and where appropriate
risk and exchange rate any exchange rate exposure is
movements. managed, using forward contracts
to minimise any potential impact.
Some funds are placed on fixed
term deposits to mitigate interest
rate fluctuations.
Our exit from the Ireland market
in 2020 considerably reduced our
exchange rate exposure.
--------------------------------- --------------------------------------
Banking system Disruption to the banking The Group seeks wherever possible
system would adversely to offer the widest possible range
impact on the Group's of payment options to customers
ability to collect payments to reduce the potential impact
from customers and could of failure of a single payment
adversely affect the Group's route.
cash position.
--------------------------------- --------------------------------------
Pension funding The Group may be required The Group's pension schemes are
to increase its contributions closed to future benefit accrual
to cover any funding shortfalls. related to service.
A matter has been identified Funding rates are in accordance
in the year which could with the agreements reached with
potentially result in the trustees after
a deficit in one of the consultation with the scheme actuary.
schemes. If materialised,
this could result in additional
funding requirements for
the scheme in the future.
--------------------------------- --------------------------------------
Financial The business model may The Group has a regulatory team
services and be compromised by changes that monitors and enforces compliance
other market to existing regulations with existing regulations and
regulation or the introduction of keeps the Group up to date with
new regulations or expectations impending regulation.
of regulators.
During 2020/21 the FCA The Board has oversight of the
carried out a review of regulated e- money business and
the e-money and payment safeguarding practices. The Group
service provider sector has substantially improved its
into the effects of the practices and have addressed most
coronavirus pandemic on of the material findings identified
non-bank payment providers, in last year's safeguarding audit.
with a focus on ensuring There were two remaining findings
customer funds are appropriately identified at the end of FY22
protected. It increased which the Group is working to
its scrutiny in this area, resolve post year end. However,
mandated the introduction it is to be noted that none of
of annual external safeguarding the findings have any impact on
audits of all e-money the funds safeguarded.
issuers and updated its
approach document in November
2021.
Separately, the UK Government The Group shares the objectives
has recently announced of Government in treating customers
its intention to legislate fairly and in the protection of
to require prepayments customer prepayments. The Group
made by customers for operates a number of trusts to
future delivery of goods safeguard funds held on behalf
and services to be protected of customers and has been protecting
against the risk of insolvency prepayments received from our
by placing them in a trust Christmas savers through a trust
account or through insurance. since 2007, so we expect minimal
This will include prepayments impact from this change, although
to Christmas savings clubs. the details are yet to be published.
These prepayments are
not electronic money so
are not
regulated by the FCA.
--------------------------------- --------------------------------------
Credit risks Failure of one or more Customers are given an appropriate
customers and the risk level of credit based on their
of default by credit customers trading history and financial
due to reduced economic status, and a prudent approach
activity. is adopted towards credit control.
Credit insurance is used in the
majority of cases where customers
do not pay in advance.
--------------------------------- --------------------------------------
Operational risks
Risk area Potential impact Mitigation
Business Failure to provide adequate The Group has a hybrid technology
continuity service levels to customers, resiliency strategy incorporating
retail partners or other on premise and Cloud high availability
suppliers, resulting in services. We have separate data/comms
a failure to maintain centres and a remote recovery site
services that generate for core data and infrastructure
revenue. to ensure that service is maintained
in the event of a site loss event.
We previously implemented Microsoft
Office 365 which supports full
remote working capability for all
office based staff.
During the year the Group implemented
a new ERP system, Microsoft Dynamics,
which has provided scalability,
resilience and efficiency.
The Group continues to review and
develop its operational resilience
and business continuity procedures
in preparation for catastrophic
events and interruptions to critical
business services and is currently
reviewing its arrangements in light
of changed IT systems and future
technology roadmap.
------------------------------- -------------------------------------------
Cyber security There is a risk that an Our infrastructure has a layered
attack on our infrastructure approach to cybersecurity, with
by an individual or group proactive external and internal
could be successful and monitoring and alerting designed
impact the availability to prevent unauthorised access
of critical systems. and active defence to reduce the
likelihood and impact of a successful
attack. We retained our ISO 27001
certification during the year.
We nevertheless asked our internal
auditors to review our cyber security
arrangements, which has identified
some areas for improvement, so
management is implementing an action
plan to address the key
findings.
------------------------------- -------------------------------------------
Data management Incorrect data retention, We implemented a new Data Warehouse
data management or data with automated data cleansing and
loss with customer, financial, active data management including
regulatory, reputational active data loss prevention protocols
impact. in messaging platforms. We previously
deployed Microsoft Office 365 with
higher encryption standards, and
are PCI
and ISO 27001 certified.
------------------------------- -------------------------------------------
Technology Hardware and software The Group continues to actively
risk obsolescence causing system address hardware and software obsolescence
failure with customer, and during the year implemented
financial, regulatory, a new ERP system, Microsoft Dynamics.
reputational impact. The Group now has hybrid Cloud
Implementation of new solutions which have improved scalability,
hardware, software, managed and resilience.
services causing system Software and services are extensively
failure with customer, tested prior to implementation.
financial, regulatory, There is a robust vendor management
reputational impact. process in place for critical
service suppliers.
------------------------------- -------------------------------------------
Loss of key The Group depends on its Existing key appointments are rewarded
management directors and key personnel. with competitive remuneration packages
The loss of the services including long term incentives
of any directors or other linked to the Group's performance
key employees could damage and shareholder return.
the Group's business, Management efforts to build bench
financial condition and strength in key areas mitigate
results. the impact of such
departures.
Loss of relationships The Group is dependent The Group has a dedicated team
with high upon the success of its of managers whose role it is to
street and Love2shop products and ensure that the Group's products
online retailers flexecash(R) card. These are accepted by a full range of
products only operate retailers. They also work closely
provided the participating with all retailers to promote their
retailers continue to businesses to our customers who
accept them as payment use our vouchers and cards to drive
for goods or services forward incremental sales to their
provided. The failure retail outlets.
of one or more participating Contracts that provide minimum
retailers could make these notice periods for withdrawal are
products less attractive in place with all retailers and
to customers. are designed to mitigate any potential
impact on our business.
We are a Mastercard issuer and
use the services of a transaction
processor for some of our products
to be accepted at retailers.
------------------------------- -----------------------------------------
Failure of The failure of the distribution Wherever possible the Group uses
the distribution network during the Christmas a wide range of geographically
network period, for example a spread carriers to mitigate the
Post Office strike, road failure of a single operator.
network disruption or The strategy towards digital will
fuel shortages could adversely further help to mitigate this risk.
impact the results and
reputation
of Appreciate's brands.
--------------------------------- ---------------------------------------
Assisted by our internal auditors, the Group is evolving its
enterprise risk management framework to reflect a concentrated
number of principal risk categories that better reflect the Group's
actual risk profile across internal and external risks. As part of
this, a number of risks that were included in last year's report
have diminished in their likelihood or impact such that they no
longer represent principal risks so have been removed from this
section. These are risks relating to Brand perception and
reputation, Promotional activity, Competition, and Coronavirus.
These risks are however still monitored and reported on as part of
the Group's risk management process that ensures management and the
Audit Committee has visibility and can consider appropriate risk
treatment based on their trending risk score.
Ian O'Doherty
Chief Executive Officer
27 June 2022
Appreciate Group PLC
Consolidated Statement of Profit or loss for the Year to 31
March 2022
Exceptional
Exceptional items Total
Underlying^ items Total Underlying^ Restated* Restated*
2022 2022 2022 2021 2021 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Billings 385,840 - 385,840 406,532 - 406,532
----------- ----------- -------- ----------- ----------- ----------
Revenue
Goods - Single
retailer redemption
products 83,370 - 83,370 78,154 - 78,154
Other goods 102 - 102 259 - 259
Services -
Multi - retailer
redemption
products 38,148 - 38,148 24,736 - 24,736
Other services 1,645 - 1,645 3,509 - 3,509
Other - - - 147 - 147
----------- ----------- -------- ----------- ----------- ----------
1 123,265 - 123,265 106,805 - 106,805
----------- ----------- -------- ----------- ----------- ----------
Cost of sales (91,832) - (91,832) (82,055) (414) (82,469)
----------- ----------- -------- ----------- ----------- ----------
Gross profit 31,433 - 31,433 24,750 (414) 24,336
Distribution
costs (1,637) - (1,637) (1,784) - (1,784)
Administrative
expenses (21,337) (2,744) (24,081) (21,070) (2,042) (23,112)
----------- ----------- -------- ----------- ----------- ----------
Operating
profit/(loss) 8,459 (2,744) 5,715 1,896 (2,456) (560)
Finance income 3 379 - 379 783 - 783
Finance costs 3 (451) - (451) (360) - (360)
----------- ----------- -------- ----------- ----------- ----------
Profit/(loss)
before taxation 1, 2 8,387 (2,744) 5,643 2,319 (2,456) (137)
Taxation 4 (1,932) 681 (1,251) (643) 505 (138)
----------- ----------- -------- ----------- ----------- ----------
Profit/(loss)
for the year
attributable
to equity
holders of
the parent 6,455 (2,063) 4,392 1,676 (1,951) (275)
----------- ----------- -------- ----------- ----------- ----------
Earnings per share
(p) (note 5)
- basic 3.46p 2.36p 0.90p (0.15p)
- diluted 3.46p 2.35p 0.90p (0.15p)
All activities derive from continuing operations.
^Underlying represents the results before exceptional items. See
the Statement of significant accounting policies for further
details.
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Appreciate Group PLC
Consolidated Statement of Comprehensive Income for the Year to
31 March 2022
Restated*
2022 2021
Notes GBP'000 GBP'000
Profit/(loss) for the year 4,392 (275)
-------- ---------
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss
Remeasurement of defined benefit pension
schemes 19 868 (2,146)
Deferred tax on defined benefit pension
schemes 4 (114) 408
-------- ---------
754 (1,738)
Items that may be reclassified subsequently
to profit or loss
Foreign exchange translation differences 5 3
-------- ---------
Other comprehensive income/(expense)
for the year net of tax 759 (1,735)
-------- ---------
Total comprehensive income/(expense)
for the year attributable to equity
holders of the parent 5,151 (2,010)
-------- ---------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Appreciate Group PLC
(Registration number: 1711939)
Statements of Financial Position as at 31 March 2022
Consolidated Company
Restated**
Restated* 1 April
2022 2021 2020 2022 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 6 505 582 800 - -
Other intangible
assets 7 6,937 6,503 3,789 9 23
Investments 8 - - - 7,963 7,963
Property, plant and
equipment 9 1,761 2,188 2,662 76 175
Right of use assets 18 3,994 4,373 3,799 - -
Retirement benefit
asset 19 1,327 490 2,610 2,046 1,938
--------- --------- ---------- -------- --------
14,524 14,136 13,660 10,094 10,099
--------- --------- ---------- -------- --------
Current assets
Inventories 11 5,201 3,638 2,840 - -
Trade and other receivables 12 11,928 11,405 9,457 1,836 22,707
Tax receivable 745 738 266 - -
Monies held in trust 13 119,537 132,054 102,693 - -
Cash 14 20,842 31,415 29,632 20,124 32,501
--------- --------- ---------- -------- --------
158,253 179,250 144,888 21,960 55,208
Assets classified
as held for sale - - 3,153 - -
--------- --------- ---------- -------- --------
Total assets 172,777 193,386 161,701 32,054 65,307
--------- --------- ---------- -------- --------
Liabilities
Current liabilities
Bank overdraft 16 (660) - - - -
Trade payables 16 (52,036) (52,776) (57,150) - -
Payables in respect
of cards and vouchers 16 (22,035) (25,302) (17,060) - -
Deferred income 16 (7,816) (11,152) (7,359) - -
Other payables 16 (6,102) (7,040) (5,294) (17,947) (47,402)
Provisions 17 (61,507) (77,915) (53,802) - -
--------- --------- ---------- -------- --------
(150,156) (174,185) (140,665) (17,947) (47,402)
--------- --------- ---------- -------- --------
Non-current liabilities
Deferred tax liability 10 (66) (28) (634) (368) (259)
Long term lease liabilities 16 (4,500) (4,666) (4,132) - -
--------- --------- ---------- -------- --------
(4,566) (4,694) (4,766) (368) (259)
--------- --------- ---------- -------- --------
Total liabilities (154,722) (178,879) (145,431) (18,315) (47,661)
--------- --------- ---------- -------- --------
Net assets 18,055 14,507 16,270 13,739 17,646
--------- --------- ---------- -------- --------
Consolidated Company
Restated**
Restated* 1 April
2022 2021 2020 2022 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Equity attributable
to equity holders
of the parent
Share capital 21.a 3,727 3,727 3,727 3,727 3,727
Share premium 6,470 6,470 6,470 6,470 6,470
Retained earnings 8,169 4,621 6,384 3,542 7,449
Other reserves (311) (311) (311) - -
-------- --------- ---------- -------- --------
Total equity 18,055 14,507 16,270 13,739 17,646
-------- --------- ---------- -------- --------
The company reported a loss for the financial year ended 31
March 2022 of GBP2,357,000 (2021 loss: GBP2,233,000).
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
**The 2020 results have been restated as set out in the
Statement of significant accounting policies.
The financial statements were approved and authorised for issue
by the Board of Directors on 27 June 2022 and were signed on its
behalf by:
.........................................
I O'Doherty
Chief executive
Appreciate Group PLC
Consolidated Statement of Changes in Equity
Share Share Other Retained Total
capital premium reserves earnings equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2021
(Restated)* 3,727 6,470 (311) 4,621 14,507
Total comprehensive income
for the year
Profit for the year - - - 4,392 4,392
Total other comprehensive
income - - - 759 759
-------- -------- --------- --------- --------
Total comprehensive income
for the year - - - 5,151 5,151
-------- -------- --------- --------- --------
Transactions with owners,
recorded directly in equity
Dividends 22 - - - (1,863) (1,863)
Equity settled share-based
payment transactions 21.b - - - 260 260
-------- -------- --------- --------- --------
Total contributions by
and distribution to owners - - - (1,603) (1,603)
-------- -------- --------- --------- --------
Balance at 31 March 2022 3,727 6,470 (311) 8,169 18,055
-------- -------- --------- --------- --------
Balance at 1 April 2020
as originally reported 3,727 6,470 (311) 8,461 18,347
Restatement** - - - (2,077) (2,077)
----- ----- ----- ------- -------
Restated balance as at
1 April 2020** 3,727 6,470 (311) 6,384 16,270
----- ----- ----- ------- -------
Total comprehensive loss for the year
Loss for the year (Restated)* - - - (275) (275)
Total other comprehensive
expense (Restated)* - - - (1,735) (1,735)
----- ----- ----- ------- -------
Total comprehensive loss
for the year (Restated)* - - - (2,010) (2,010)
----- ----- ----- ------- -------
Transactions with owners, recorded directly in equity
Equity settled share-based
payment transactions 21.b - - - 247 247
----- ----- ----- ------- -------
Total contributions by
and distribution to owners - - - 247 247
----- ----- ----- ------- -------
Balance at 31 March 2021
(Restated)* 3,727 6,470 (311) 4,621 14,507
----- ----- ----- ------- -------
Other reserves relate to the acquisition of the minority
interest in a subsidiary.
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
**The 2020 results have been restated as set out in the
Statement of significant accounting policies.
Appreciate Group PLC
Company Statement of Changes in Equity
Share Share Retained
capital premium earnings Total
Notes GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2021 3,727 6,470 7,449 17,646
Total comprehensive loss for the year
Loss for the year - - (2,357) (2,357)
Total other comprehensive
income - - 53 53
-------- -------- --------- --------
Total comprehensive loss
for the year - - (2,304) (2,304)
-------- -------- --------- --------
Transactions with owners,
recorded directly in equity
Dividends 22 - - (1,863) (1,863)
Equity settled share-based
payment transactions 21.b - - 260 260
-------- -------- --------- --------
Total contributions by
and distribution to owners - - (1,603) (1,603)
-------- -------- --------- --------
Balance at 31 March 2022 3,727 6,470 3,542 13,739
-------- -------- --------- --------
Balance at 1 April 2020 3,727 6,470 9,510 19,707
Total comprehensive loss for the year
Loss for the year - - (2,233) (2,233)
Total other comprehensive
expense - - (75) (75)
----- ----- ------- -------
Total comprehensive loss
for the year - - (2,308) (2,308)
----- ----- ------- -------
Transactions with owners,
recorded directly in equity
Equity settled share-based
payment transactions 21.b - - 247 247
----- ----- ------- -------
Total contributions by
and distribution to owners - - 247 247
----- ----- ------- -------
Balance at 31 March 2021 3,727 6,470 7,449 17,646
----- ----- ------- -------
Appreciate Group PLC
Statements of Cash Flows for the Year to 31 March 2022
Consolidated Company
Restated*
2022 2021 2022 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash (used in)/generated
from operations 23 (5,844) 3,528 (9,125) 4,198
Interest received 648 784 17 78
Interest paid (107) (351) - -
Tax paid (1,334) (599) (1,406) (599)
-------- --------- -------- --------
Net cash (used in)/generated
from operating activities (6,637) 3,362 (10,514) 3,677
-------- --------- -------- --------
Cash flows from investing
activities
Proceeds from sale of
property, plant and
equipment - 6 - 5
Proceeds from sale of
assets held for sale 15 94 3,116 - -
Proceeds from sale of
investments - - - 50
Purchase of intangible
assets (2,192) (3,774) - -
Purchase of property,
plant and equipment (30) (585) - -
-------- --------- -------- --------
Net cash (used in)/generated
from investing activities (2,128) (1,237) - 55
-------- --------- -------- --------
Cash flows from financing
activities
Payment of lease liabilities (605) (342) - -
Dividends paid to shareholders (1,863) - (1,863) -
-------- --------- -------- --------
Net cash used in financing
activities (2,468) (342) (1,863) -
-------- --------- -------- --------
Net (decrease)/increase
in cash and cash equivalents (11,233) 1,783 (12,377) 3,732
-------- --------- -------- --------
Cash and cash equivalents
at beginning of period 31,415 29,632 32,501 28,769
-------- --------- -------- --------
Cash and cash equivalents
at end of period 20,182 31,415 20,124 32,501
-------- --------- -------- --------
Cash and cash equivalents
comprise:
Cash 14 20,842 31,415 20,124 32,501
Bank overdrafts 16 (660) - - -
-------- --------- -------- --------
Cash and cash equivalents
at end of period 20,182 31,415 20,124 32,501
-------- --------- -------- --------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Appreciate Group PLC
Notes to the Accounts for the Year Ended 31 March 2022
Statement of significant accounting policies
Basis of preparation
The Group and parent Company financial statements have been
prepared in accordance with UK adopted international accounting
standards in conformity with the Companies Act 2006.
Appreciate Group plc is a company limited by shared and is
incorporated and domiciled in the United Kingdom. It is listed on
AIM.
The financial statements have been prepared under the historical
cost convention. The Group and company financial statements are
presented in sterling and all values are rounded to the nearest
thousand (GBP'000) except where otherwise stated.
The accounting policies have, unless otherwise been stated,
applied consistently to all periods presented in these financial
statements and by all Group entities.
In preparing the financial statements, the Group has considered
the impact of risks of climate change and concluded that it does
not have a material impact on the recognition and measurement of
the assets and liabilities in these financial statements as at 31
March 2022.
The exceptional items have been shown on the face of the profit
and loss account as a separate column. This has no impact on the
gross profit, operating profit or profit before tax amounts for
FY21.
The financial information set out above does not constitute the
Group or Company's statutory accounts for the years ended 31 March
2022 or 2021 but is derived from those accounts.
Statutory accounts for 2021 have been delivered to the registrar
of companies. The auditor, Ernst & Young LLP, has reported on
the 2021 accounts; the report (i) was unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498(2) or (3) of
the Companies Act 2006.
The statutory accounts for 2022 will be delivered to the
registrar of companies following the AGM. The auditors have
reported on these accounts; their report (i) is unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report,
and (iii) does not contain a statement under section 498(2) or (3)
of the Companies Act 2006.
The annual report will be posted to shareholders on or before 10
August 2022 and will be available from that date on the Group's
website: www.appreciategroup.co.uk .
Going concern
The financial statements are prepared on a going concern
basis.
The Group and Company's ability to continue as a going concern
is dependent on maintaining adequate levels of liquidity and
ensuring covenant compliance to continue to operate for the Going
Concern assessment period to 30 November 2023 (the 'Going Concern
period'). When assessing the going concern of the Group, the
directors have reviewed the year to date financial results, and
have modelled management's best estimate of financial results for
the Going Concern period, which is based on the Board approved
budget and five-year plan.
Liquidity and financing
At 31 March 2022, the Group held instantly accessible cash and
cash equivalents of GBP20.2m (excluding Monies held in trust). The
Group also has access to a GBP15m Revolving Credit Facility ("RCF")
that is available until August 2025. A further GBP10m of
uncommitted funds is available via an accordion facility attached
to the RCF however this is uncommitted. The Group has not drawn
down on the facility throughout FY22 or in the subsequent months,
including and up to the date of these financial statements.
The Group is required to comply with covenants attached to the
RCF. These covenants are:
-- Interest Cover (the ratio of EBITDA to Finance Charges) in
respect of any relevant period ending on or after 31 March
2021 shall not be less than 4.0:1.
-- Adjusted Leverage (the ratio of Total Net Debt to Adjusted
EBITDA) in respect of any relevant period ending on or after
30 September 2020 must not exceed 3.0:1.
-- PPPT Balance (the ratio of PPPT Balance to Monies in Advance
Balance) on each Quarter Date shall not be less than 1.0:1.
Approach to forecasting and sensitivities
The Group has taken a measured approach to its forecast. With
Covid-19 restrictions now removed across the country, the Group has
seen a return to a more normal trading pattern, which is also
reflected in the results for FY22. Key assumptions in the plan,
which models free cash available for use in the business, are:
1) Billings - Modest year on year growth driven by our Corporate
business.
2) Cost base - Assumed reduction from FY 22 cost base due to
known savings.
3) Non-Redemption - Rate of redemption is in line with current
experience in FY22, with a level of overall non-redemption
forecast to be in line with current trends observed in FY22.
4) Product mix - The base case assumes a modest decline in paper
billings versus FY22 actuals, with a corresponding increase
across card, digital and single store product billings in
line with the Group's strategy.
5) Capital expenditure - In line with spend in FY22.
6) Completion of an acquisition in FY23. It is assumed that the
post-acquisition costs will be net neutral during the going
concern period. For details, please see note 27.
While the forecasting uncertainties associated with Covid-19
have eased, the Board acknowledges the uncertainty presented by the
macro-economic indicators, including but not limited to the ongoing
conflict in Ukraine and the cost of living crisis. Consequently,
while the Board believes the base model used in the assessment is
robust and achievable, a series of severe-but-plausible downside
scenarios have also been considered as follows:
1) Reduction of 5% on Christmas Savers billings in FY23 and an
additional 20% in the remaining period. Our order book for
Christmas 2022 is secured and historic attrition rates considered
within our base case. This 5% reduction provides a further
sensitivity to our historic attrition rates on the secured
order book.
2) Scenario one above and no growth on FY22 across both Engagement
and Gifting.
3) Scenario one above and a 5% decline across both Engagement
and Gifting as compared to FY22 actuals.
4) A 15% uplift on current spend rates on unregulated products
and a 15% reduction in spend rates across regulated products.
5) A shift in product mix with 15% of unregulated products moving
to regulated products.
6) A combined sensitivity covering scenarios 3, 4 and 5.
In the base model and across each of the additional six
sensitivities, the Group will have adequate headroom on the
available liquidity position, and will remain compliant with all
banking covenants throughout the going concern period. The lowest
liquidity headroom across all scenarios will be observed in
September 2023 in the combined scenario (scenario six) of GBP6m
without any mitigation - this is deemed to be remote.
Management have also performed a reverse stress test which shows
that it will take a sustained reduction of 32% in billings across
all channels in the going concern period against the base case
model to breach the RCF covenant in September 2023. Liquidity
however is not breached at this point. Subject to receiving relief
on covenant requirements, it will take a sustained reduction of 52%
in billings across all channels in the going concern period for the
business to breach its liquidity model in September 2023. The
Directors consider these scenarios to be remote based on past
experience and recent trading.
In all of the aforementioned scenarios, including the reverse
stress test, management has not taken any mitigating actions into
consideration. The Group however does have several mitigating
actions under its control including minimising capital expenditure
to critical requirements, reducing levels of discretionary spend
including bonus payments, rationalising its overhead base and
curtailing future dividend payments which, although not forecast to
be required, could be implemented in order to be able to meet the
covenant tests and to continue to operate within borrowing facility
limits.
Conclusion
Having carefully considered the base case, downside scenarios,
reverse stress test, and trends since the year-end, as well as the
GBP15m committed RCF, the directors have a reasonable expectation
that the Group and Company have adequate resources to enable them
to continue in operational existence for the period to 30 November
2023. Accordingly, the directors continue to adopt the going
concern basis of accounting in preparing the Group and Company
financial statements.
New standards, interpretations and amendments adopted
The following amendments and interpretations apply for the first
time in 2022, but have not had a material impact on the Financial
Statements of the Group:
-- Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS 39
Interest Rate Benchmark Reform - Phase 2
-- Amendments to IFRS 16 Covid-19 Related Rent Concessions
beyond 30 June 2021
New standards, amendments and interpretations not yet
adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 March 2022 reporting
periods and have not been early adopted by the Group. None of these
are expected to have a material impact on the Group in the current
or future reporting periods or on foreseeable future transactions.
Below is a list of new standards which will be effective in future
periods:
-- Amendments to IFRS 3 Reference to the Conceptual Framework***
-- Amendments to IAS 16 Property, Plant and Equipment (Proceeds
before intended use)***
-- Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments
to IFRS 1 First-time Adoption of International Financial Reporting
Standards, IFRS 9 Financial Instruments, and IAS 41 Agriculture)***
-- Amendments to IAS 1 Classification of Liabilities as Current
or Non-current****
-- Amendments to IAS 8 - Definition of Accounting Estimates****
-- Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure
of Accounting Policies****
-- Amendments to IAS 12 Deferred Tax related to Assets and Liabilities
arising from a Single Transaction****
-- IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture****
*** Effective for annual periods beginning on or after 1 January
2022
**** Effective for annual periods beginning on or after 1
January 2023
Prior year restatement
The Statements of Financial Position for 31 March 2021 and 1
April 2020 have been restated. The table below summarises the
changes made (All amounts in GBP'000).
31 March 1 April 2020
2021
-------------------- ---------- ---------------- -------- ---------- ---------------- --------
Previously SaaS Pension Restated Previously SaaS Pension Restated
reported Impact impact reported Impact impact
-------------------- ---------- ------- ------- -------- ---------- ------- ------- --------
Other intangible
assets 8,861 (2,358) - 6,503 4,757 (968) 3,789
Retirement benefit
asset/(obligation) 2,086 - (1,596) 490 4,206 - (1,596) 2,610
Deferred tax
liability (779) 448 303 (28) (1,121) 184 303 (634)
Retained earnings 7,824 (1,910) (1,293) 4,621 8,461 (784) (1,293) 6,384
-------------------- ---------- ------- ------- -------- ---------- ------- ------- --------
Details of the changes are included in the proceeding
paragraphs.
1) Change in accounting policy - Software as a Service ("SaaS")
arrangements
Following the IFRS Interpretations Committee (IFRIC) agenda
decision published in 2021, the Group has reviewed its accounting
policy regarding the configuration and customisation costs incurred
in implementing SaaS arrangements.
SaaS arrangements are arrangements in which the Group does not
control the underlying software used in the arrangement.
The Group's revised policy is as follows:
-- Where costs incurred to configure or customise SaaS arrangements
result in the creation of a resource which is identifiable,
and where the Group has the power to obtain the future economic
benefit flowing from the underlying resource and to restrict
the access of others to those benefits, such costs are capitalised
as separate software intangible assets and amortised over the
useful life of the software on a straight-line basis.
-- Where costs incurred to configure or customise do not result
in the recognition of an intangible software asset then those
costs that provide the Group with a distinct service (in addition
to the SaaS access) are recognised as expenses when the supplier
provides the services. When such costs incurred do not provide
a distinct service, the costs are expensed as incurred. Costs
are included within exceptional items in the Consolidated Statement
of Profit or Loss if they relate to significant strategic projects
and are considered to meet the Group's definition of exceptional
items.
Previously some configuration and customisation costs relating
to SaaS arrangements, which did not result in a separately
identifiable software intangible assets, had been capitalised.
The change in accounting policy has been retrospectively
applied, resulting in a restatement to previously reported numbers.
The impact on the Consolidated Statement of Profit or Loss for 31
March 2021 is an increase in exceptional administrative expense of
GBP1,390k and a decrease in tax charge of GBP264k, resulting in a
net change in profit after tax of GBP1,126k. The impact of change
in accounting policy for FY22 is included in the Segmental note
(Note 1).
The basic and diluted earnings per share for the year ended
March 2021 has been restated from 0.46p per share to a loss of
0.15p per share, resulting in an impact of 0.61p per share in basic
and diluted loss per share from continuing operations.
The impact on the Consolidated Statement of Cash Flows is an
increase in the net cash inflow from investing activities of
GBP1,390k (due to a reduction in the purchase of other intangibles)
and a decrease in the net cash used in operating activities of
GBP1,390k, with no change in the overall increase in cash and cash
equivalents in the year.
2) Retrospective restatement of incorrect valuation of
retirement benefit obligation
Since FY 11 (restated in FY 12) financial statements, Park Group
Pension Scheme (PGPS) members' deferred benefits, for all relevant
years past and present, have been revalued in line with the
Consumer Prices Index ("CPI"). Prior to that the FY 10 financial
year statements used the Retail Prices Index ("RPI") as the basis
for deferred revaluation under the PGPS. This change to the
revaluation index arose because of a change in scheme rules in 2007
that aligned the revaluation requirements with statutory minimum
revaluation at the time and then a subsequent change in 2011 in the
statutory minimum basis itself which changed from RPI to CPI.
The Group received legal advice in 2011 which was considered to
support the change in indexation assumption that was disclosed in
the FY12 financial statements. However, during the current year, a
matter was raised by a member to the Trustees which indicated that
the change described above was potentially incorrect in how it
revalued deferred pensions at that time. Management has since
sought further legal and pension advice in the year and have also
consulted with the Trustees. Based on this, while the matter itself
remains unresolved, it is considered probable that the change made
in FY11 was based on an incorrect application of RPI and CPI. This
would mean that certain deferred benefits relating to pensionable
service during a particular time period may need to be uplifted. As
a result, the pension liability has been recalculated using
adjusted indexation assumptions after taking into account the
likely change. The ultimate decision whether the change has to be
made will be taken by the Trustees.
Given this change relates to 2011 and the years following, and
arose because of potentially incorrect assumption and legal advice
received at the time, this has resulted in the restatement of
previously reported balances. The impact on the Statement of
Financial position and Equity is a reduction in Retirement Benefit
Asset and Retained Earnings of GBP1.6m at 1 April 2020 and at 31
March 2021. There is no impact on the Consolidated Statement of
Profit or Loss or in the Consolidated Statement of Cash Flows.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the company and its subsidiaries made up to 31 March
each year.
Subsidiaries are entities controlled by the investor. Control is
achieved when the investor is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. The
results of a subsidiary undertaking are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. All subsidiaries
share the same reporting date and are based on consistent
accounting policies. Losses applicable to the non-controlling
interests in a subsidiary are allocated to the non-controlling
interests, even if doing so causes the non-controlling interests to
have a deficit balance.
Intra-group balances, and any unrealised gains or losses or
income and expenses arising from intra-group transactions, are
eliminated on consolidation.
Generally, there is a presumption that a majority of voting
rights results in control. The Group re-assesses whether or not it
controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. If the
Group loses control over a subsidiary, it derecognises the related
assets (including goodwill), liabilities, non- controlling interest
and other components of equity, while any resultant gain or loss is
recognised in profit or loss. Any investment retained is recognised
at fair value.
As permitted by section 408 of the Companies Act 2006, the
statement of profit or loss of the parent company has not been
separately presented. The profit of the parent company is shown in
a footnote to its statement of financial position.
Business combinations
A business combination is recognised where separate entities or
businesses have been acquired by the Group.
The acquisition method of accounting is used to account for the
business combinations made by the Group. The cost of a business
combination is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at
the date of exchange. Where the consideration includes a contingent
consideration arrangement, the contingent consideration is measured
at its acquisition date fair value and included as part of the cost
of the acquisition. Acquisition related costs are expensed as
incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in the business combination are measured
initially at their fair values at the acquisition date. The excess
of the cost of acquisition over the fair value of the Group's share
of the identifiable net assets acquired is recorded as goodwill. If
this is less than the fair value of the Group's share of the
identifiable net assets of the subsidiary acquired, the difference
is taken immediately to the statement of profit or loss.
Segmental reporting
An operating segment is a distinguishable component of an entity
about which separate financial information is available that is
evaluated regularly by management in deciding how to allocate
resources and in assessing performance. Provided certain
quantitative and qualitative criteria are fulfilled, IFRS 8
Operating Segments permits the aggregation of those components into
reportable segments for the purposes of disclosure in the Group's
financial statements. In assessing the Group's reportable segments,
the directors have had regard to the nature of the products offered
and the client bases amongst other factors. The operating segments
as set out in note 1 are consistent with the internal reporting
provided to the chief operating decision maker. For the purposes of
IFRS 8 the chief operating decision maker has been identified as
the executive members of the Board of directors. All inter-segment
transfers are carried out at arm's length prices.
The Group operates in one geographical segment, being the UK.
The Group operations in the Eurozone are immaterial to the results
and assets of the Group in the year ended 31 March 2022 (31 March
2021 - same).
Revenue from contracts with customers
The Group recognises revenue from contracts with customers when
control over the goods and services is transferred to the customer.
Revenue is recognised at an amount that reflects the consideration
to which the Group expects to be entitled in exchange for those
goods and services, net of VAT, rebates and discounts.
The Group is a principal if it controls the promised good or
service before transferring it to the customer. The Group is an
agent if its role is to arrange for another entity to provide the
good or service. The Group acts as an agent in the sale of
multi-retailer redemption products and travel agency services and
therefore fees that are retained for its agency service are
recorded in revenue on a net basis. For all other products and
services, the Group acts as a principal and revenues are recorded
on a gross basis.
As described below, the majority of revenues are recognised at a
point in time. For multi-retailer redemption products, revenue is
recognised when the products are redeemed; for single retailer
redemption products and other goods, revenue is recognised when the
products are received by the customer. Revenue for other services
is recognised over time or at a point in time depending on the
nature of the revenue stream, as described further in (ii)
below.
The Group's multi-retailer redemption products may be partially
or fully redeemed, and the unused amount (i.e. the non- refundable
unredeemed or unspent funds on a voucher, card or e-code at expiry)
is referred to as non-redemption income. Where the end user has no
right of refund (corporate gifted cards), the Group may expect to
earn a non-redemption income amount and this is recognised as
revenue in proportion to the actual timing of redemptions. Where
the customer has the right of refund, non-redemption income is
recognised as revenue when the card has expired and the right of
refund has lapsed.
Significant accounting judgements and estimates relating to
revenue are described below.
The Group's primary revenue streams are as follows:
1. Services - multi-retailer redemption products
a) Love2shop vouchers
b) flexecash(R) cards and e-codes
c) Mastercards
2. Goods - single retailer redemption products
a) third party vouchers, cards and e-codes
3. Other services
a) brand engagement
b) packing
c) collection and delivery
d) travel agency
e) other services
Customers are offered standard business credit terms or pay in
advance for their products and services.
For multi-retailer redemption products, the Group recognises
revenue for service fees, card holder fees and non-redemption
income.
The Group has contractual relationships with each of the
redeemers. The Group earns a service fee from the redeemer when a
consumer redeems their voucher, card or e-code with that
redeemer.
Card holder fees are earned for services provided to cardholders
such as issue, dealing with lost/stolen/damaged cards and
maintenance.
(i) Principal and Agent
Under IFRS15, the Group is a principal (and records revenue on a
gross basis) if it controls the promised good or service before
transferring it to the customer.
The Group is an agent (and records as revenue the net amount
that it retains for its agency services) if its role is to arrange
for another entity to provide the good or service.
Revenue stream Principal/ Gross/net Revenue based on
Agent revenue
--- ----------------------- ---------- --------- ---------------------------
1a) Love2shop vouchers Agent Net Service fees received
from redeemers
--- ----------------------- ---------- --------- ---------------------------
1b) flexecash(R) cards and Agent Net Service fees received
e-codes from redeemers
--- ----------------------- ---------- --------- ---------------------------
1c) Mastercards Agent Net Service fees received
from redeemers
--- ----------------------- ---------- --------- ---------------------------
2a) Third party vouchers, Principal Gross Values invoiced to external
cards and e-codes customers for goods
--- ----------------------- ---------- --------- ---------------------------
3a) Brand engagement Principal Gross Values invoiced to external
customers for goods
--- ----------------------- ---------- --------- ---------------------------
3b) Packing Principal Gross Values invoiced to external
customers for goods
--- ----------------------- ---------- --------- ---------------------------
3c) Collection and delivery Principal Gross Values invoiced to external
customers for goods
--- ----------------------- ---------- --------- ---------------------------
3d) Travel agency Agent Net Agent's commission received
--- ----------------------- ---------- --------- ---------------------------
3e) Other services Principal Gross Values invoiced to external
customers for services
--- ----------------------- ---------- --------- ---------------------------
For multi-retailer redemption products, in addition to the
service fees noted above, the Group also earns cardholder fees and
non-redemption income as follows:
Revenue stream Principal/ Gross/net Revenue based on
Agent revenue
--------------------- ---------- --------- -------------------------
1. Cardholder fees Principal Gross Changes levied
--------------------- ---------- --------- -------------------------
2. Non-redemption income Principal Gross Non-refundable unredeemed
funds
--------------------- ---------- --------- -------------------------
For all revenue streams, intra-group sales are eliminated and
revenue is recorded net of VAT, rebates and discounts.
(ii) Timing of revenue recognition
Under IFRS15, revenue is recognised when (or as) an entity
satisfies an identified performance obligation by transferring a
promised good or service to a customer. A good or service is
considered to be transferred when the customer obtains control.
Revenue stream Revenue recognised
--- ----------------------- --------------------------------------------
1a) Love2shop vouchers Service fees - when product is redeemed.
--- ----------------------- --------------------------------------------
Non-redemption income - in proportion
to actual redemption timing.
--------------------------------------------
1b) flexecash(R) cards and Service fees - when product is redeemed.
e-codes
--- ----------------------- --------------------------------------------
Card holder fees - when fees are levied.
--- ----------------------- --------------------------------------------
Non-redemption income (where end user
has no right of refund) - in proportion
to actual redemption timing.
--- ----------------------- --------------------------------------------
Non-redemption income (where end user
has the right of refund) - when product
has expired and the right of refund
has lapsed.
--- ----------------------- --------------------------------------------
1c) Mastercards Service fees - when product is redeemed.
--- ----------------------- --------------------------------------------
Cardholder fees - when fees are levied.
--- ----------------------- --------------------------------------------
Non-redemption income (where end user
has no right of refund) - in proportion
to actual redemption timing.
--- ----------------------- --------------------------------------------
Non-redemption income (where end user
has the right of refund) - when product
has expired and the right of refund
has lapsed.
--- ----------------------- --------------------------------------------
2a) Third party vouchers, When the customer obtains control of
cards and e-codes the goods- usually the date on which
they are received by the customer.
--- ----------------------- --------------------------------------------
3a) Brand engagement Over time. As the services provided
are unique to each client, the Group's
performance creates an asset with no
alternative use to the Group. Additionally,
the Group has an enforceable right
to payment for work performed. Revenue
continues to be recognised using input
methods, as this is the measure of
progress which most faithfully depicts
the Group's performance towards complete
satisfaction of the performance obligation.
The majority of projects are less than
12 months in duration.
--- ----------------------- --------------------------------------------
3b) Packing When the customer obtains control of
the service - usually the date on which
they are received by the customer.
--- ----------------------- --------------------------------------------
3c) Collection and delivery When the customer obtains control of
the service - usually the date on which
they are received by the customer.
--- ----------------------- --------------------------------------------
3d) Travel agency When the commission is paid by the
third party agent.
--- ----------------------- --------------------------------------------
3e) Other services When the customer obtains control of
the service - usually the date on which
they are received by the customer.
--- ----------------------- --------------------------------------------
Travel commission represents variable consideration contingent
on future events (as travel plans can be changed or cancelled after
the original booking date). Accordingly, the Group does not
recognise revenue until it is highly probable that a significant
reversal in the amount of cumulative revenue will not occur.
Under IFRS15, certain costs related to discounts and commissions
are recognised as follows:
Cost Timing of recognition
--------------------------------------- -----------------------
Discounts for multi-retailer redemption In proportion to actual
products provided to corporate clients redemption timing.
--------------------------------------- -----------------------
Commission rewards for multi-retailer In proportion to actual
redemption products redemption timing.
--------------------------------------- -----------------------
(iii) Presentation and disclosure
Under IFRS15, the below items are presented as follows:
Presentation
--------------------------------------- --------------------------------------
Non-redemption income on multi-retailer Presented as revenue in the Statement
redemption products of Profit or Loss.
--------------------------------------- --------------------------------------
Deferred revenue (contract liabilities) Presented as deferred income in
for multi-retailer redemption the Statement of Financial Position
products - service fees for vouchers, cards and e-codes.
--------------------------------------- --------------------------------------
Deferred revenue for multi-retailer Presented as deferred income in
redemption products - non-redemption the Statement of Financial Position
income for vouchers, cards and e-codes.
--------------------------------------- --------------------------------------
Discounts Discounts form part of the transaction
price and are therefore presented
as deductions from revenue in
the Statement of Profit or Loss.
--------------------------------------- --------------------------------------
Deferred discounts for multi-retailer Netted against deferred income
redemption products in the Statement of Financial
Position for vouchers, cards and
e-codes.
--------------------------------------- --------------------------------------
Agents' commission Incremental cost of obtaining
customer contracts, presented
in cost of sales in the Statement
of Profit or Loss and in prepayments
in the Statement of Financial
Position.
--------------------------------------- --------------------------------------
Deferred agents' commission for Commission costs for multi-retailer
multi-retailer redemption products redemption products are included
in prepayments in the Statement
of Financial Position.
--------------------------------------- --------------------------------------
Prepaid costs and deferred income are not discounted to take
into account the expected timing of redemption as the impact is not
considered to be material. This is due to the fact that over 85% of
multi-retailer redemption products are redeemed within 12 months of
issue.
Contract balances
Trade Receivables
A receivable represents the Group's right to an amount of
consideration that is unconditional (i.e. only the passage of time
is required before payment of that consideration is due).
Contract Liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Group has received
consideration from the customer. Contract liabilities are presented
as deferred income within trade and other payables.
Billings
Billings represents the value of goods and services shipped and
invoiced to customers during the year and is recorded net of VAT,
rebates and discounts. Billings is an alternative performance
measure, which the directors believe provides a more meaningful
measure of the level of activity of the Group than revenue. This is
due to revenue from multi-retailer redemption products being
reported on a 'net' basis, whilst revenue from single retailer
redemption products and other goods are reported on a 'gross'
basis.
The reconciliation between billings and revenue are as
follows:
2022 2021
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Billings 385,840 406,532
Multi-retailer redemption products- gross to
net revenue recognition (265,758) (295,816)
Timing of revenue recognition 3,183 (3,911)
--------------------------------------------- --------- ---------
Revenue 123,265 106,805
--------------------------------------------- --------- ---------
Operating profit/(loss)
Operating profit/(loss) is reported as profit before taxation
and finance income and costs; but after distribution costs and
administrative expenses.
Finance income and costs
Finance income comprises the returns generated on cash and cash
equivalents, other financial assets, leases for which the Group is
the lessor, and monies held in trust, and is recognised as it
accrues.
Finance costs comprise the interest on external borrowings and
lease liabilities, facility and arrangement fees and costs of
obtaining external finance and are recognised as they accrue.
Goodwill
Goodwill arising on acquisition represents the difference
between the consideration and the fair value of net assets
acquired. Goodwill is not amortised, but is reviewed annually for
impairment and whenever events or changes in circumstances indicate
that the carrying value of the goodwill may not be recoverable.
Goodwill in existence at 1 April 2004, the date of transition to
IFRS for the Group, is carried in the statement of financial
position as deemed cost less accumulated impairment losses at that
date.
Impairment of property, plant and equipment and intangibles
At each reporting date, the Group reviews the carrying value of
its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
Intangible assets with indefinite lives, such as goodwill, are
tested annually for impairment. All other assets subject to
amortisation are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. In addition, assets not yet in use are also reviewed
for any impairment. An impairment loss is recognised to the extent
that the carrying amount of the asset exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and its value in use. Value in use is
calculated using cash flows derived from budgets and projections
approved by the board which are discounted at the Group's risk
adjusted weighted cost of capital calculated from equity market
data and borrowing rates.
Testing is performed at the level of a cash generating unit
(CGU) in order to compare the CGU's recoverable amount against its
carrying value. Goodwill and intangible assets, i.e. customer
lists, are allocated to CGUs based on past acquisitions of
Christmas savings club brands and customer lists. Whilst these are
not operating segments, as management do not manage and review the
business at this level, information is available to enable the
assets to be tested for impairment at this level.
Any impairment is recognised immediately through the statement
of profit or loss. Impairment losses are reversed if there is
evidence of an increase in the recoverable amount of a previously
impaired asset, but only to the extent that the recoverable amount
does not exceed the carrying amount that would have been determined
if no impairment loss had been recognised. Impairments in respect
of goodwill are not subsequently reversed.
Other intangible assets
Purchased software
Acquired software licences are capitalised at cost and are
amortised on a straight-line basis over their anticipated useful
life, which is 3-5 years.
Software development
Costs that are directly associated with the creation of
identifiable software, which meet the development asset recognition
criteria as laid out in IAS 38 Intangible Assets, are recognised as
intangible assets. Direct costs include the employment costs of
staff directly involved in specific software development projects
and external consultancy fees.
All other software development and maintenance costs are
recognised as an expense as incurred.
Computer software development costs recognised as assets are
amortised over their anticipated useful lives of between 3 and 10
years on a straight-line basis. Amortisation begins on the date the
asset is completed.
Included in the Intangibles Asset balance is an asset of GBP4.6m
that represents the implementation of a new ERP system that will
replace our back office systems with a robust and scalable platform
that will permit development of added value services. The ERP
system went live during the year.
Customer lists
Customer lists acquired are included at cost less accumulated
amortisation and impairment. They are amortised over their useful
life of up to 10 years based on the pattern of forecast cash flows
to be generated.
Investments
Investments are stated at cost less any provision for impairment
in their value. Impairment is calculated based on lower of cost or
recoverable amount, determined with reference to the higher of fair
value less cost of disposal and value in use.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Cost represents expenditure
that is directly attributable to the purchase of the asset.
Depreciation is charged on a straight-line basis, so as to write
off the costs of assets less their residual values over their
estimated useful lives, on the following basis:
Freehold land nil
Freehold buildings 2-2.5%
Leasehold improvements over term of the lease or the useful
economic life of between 3 and 15 years,
whichever is lower
Short leasehold over unexpired term of lease
Fixtures and equipment 10-20%
Motor vehicles 20%
----------------------- -----------------------------------------
The assets' estimated useful lives, depreciation rates and
residual values are reviewed, and adjusted if appropriate, at the
end of each reporting period. An asset's carrying value is written
down immediately to its recoverable amount if its carrying value is
greater than its recoverable amount.
The gain or loss arising on disposal of an asset is determined
as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the statement of profit or
loss.
Assets held for sale
On initial classification as held for sale, assets are measured
at the lower of their present carrying amount and the fair value
less costs to sell, with any adjustments taken to the statement of
profit or loss. These assets are not depreciated.
Assets are classified as held for sale when they satisfy the
following criteria:
-- management is committed to a plan to sell
-- the asset is available for immediate sale
-- an active programme to locate a buyer is initiated
-- the sale is highly probable, within 12 months of classification
as held for sale (subject to limited exceptions)
-- the asset is being actively marketed for sale at a sales price
reasonable in relation to its fair value
-- actions required to complete the plan indicate that it is unlikely
that plan will be significantly changed or withdrawn
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined by the average purchase price. Finished
goods and work in progress includes attributable production
overheads. Net realisable value is based on estimated selling price
in the ordinary course of the business less cost of disposal having
regard to the age, saleability and condition of the inventory.
Financial instruments
Financial assets and liabilities are recognised in the Group's
statement of financial position when the Group becomes party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing
them.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
(SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
The Group only holds financial assets that are classified as
loans and receivables and are measured at amortised cost. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a Group of similar financial assets) is primarily
derecognised (i.e. removed from the Group's statement of financial
position) when:
-- The rights to receive cash flows from the asset have expired;
or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party
under a 'pass-through' arrangement; and either:
(a) the Group has transferred substantially all the risks and
rewards of the asset, or
(b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred
control of the asset.
When it has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred control of
the asset, the Group continues to recognise the transferred asset
to the extent of its continuing involvement.
Trade and other receivables and contract assets
For trade and other receivables and contract assets, the Group
applies the simplified approach permitted by IFRS9, with lifetime
expected credit losses (ECLs) recognised from initial recognition
of the receivable or contract asset. These assets are assessed
based on the Group's historical credit loss experience adjusted for
forward looking information. The Group uses historical trends to
then apply this to an assessment of the likely credit losses in the
future. The Group's experience has shown that aging of receivable
balances is primarily due to normal collection process issues
rather than increased likelihood of non-recoverability. At each
reporting date, management reviews the carrying amount of its
receivables and contract assets to determine whether there is any
indication that those assets had suffered an impairment loss.
In respect of receivables from subsidiaries, management's
assessment of the impact of IFRS9 has focused on the change in
IFRS9 around ECLs on intercompany balances. The loans to the
subsidiary companies are classified as repayable on demand.
Management have considered the probability of default, the loss
given default, when the borrower is not capable of repaying on
demand, and the discount rate when calculating ECLs.
Monies held in trust
On 13 August 2007 a declaration of trust constituted the PPPT to
hold agents' prepayments. Park Prepayments Trustee Company Limited,
as trustee of the trust, holds this money on behalf of agents. The
conditions of the release of this money to the Group are detailed
in the trust deed, which is available at www.getpark.co.uk.
On 16 February 2010 a declaration of trust constituted the PCSET
to hold the e-money float in accordance with regulatory
requirements. The e-money float represents the value of the
obligations of the company to cardholders and redeemers. The
liability in respect of deposits received on flexecash(R) cards, is
held within trade payables and provisions.
Ring fenced funds represent amounts segregated from Group cash
balances and are in respect of monies held on cards which are not
subject to regulatory requirements.
Monies held under the declaration of trust with the PPPT and the
PCSET on behalf of customers, cardholders and redeemers, and ring
fenced funds are recognised on the statement of financial position
as the Group has access to the interest on these monies and can,
having met certain conditions, withdraw the funds. However, given
the restrictions over these monies, the amounts held in trust and
ring fenced funds are not included in cash and cash equivalents for
the purposes of the statement of cash flows.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand and deposits
held with banks with short maturities of three months or less,
however, the deposits can be accessed immediately if required. It
is therefore considered appropriate that these deposits be classed
as cash and cash equivalents. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial
position. Cash balances and overdrafts are offset where the Group
has the ability and intention to settle these balances on a net
basis. For cash flow purposes, bank overdrafts are shown within
cash and cash equivalents.
Financial liabilities
Non-derivative financial liabilities are classified as other
financial liabilities. The Group's other financial liabilities
comprise borrowings, trade and other payables. Other financial
liabilities are carried at amortised cost using the effective
interest method. A financial liability is derecognised only when
the obligation is extinguished, that is, when the obligation is
discharged or cancelled or expires.
Trade and other payables
Trade and other payables are initially recorded at fair value
and subsequently measured at amortised cost using the effective
interest method. The unspent balances on flexecash(R) cards and
e-codes where the cardholder has the right of redemption are
accounted for as a financial liability as required under IFRS 9,
and are reported separately under trade and other payables.
Provisions
Unredeemed vouchers and cards
Unredeemed vouchers and unspent balances on flexecash(R) cards
and e-codes where the card holder does not have the right of refund
(corporate gifted cards), are included at their present value at
the date of recognition. This comprises the anticipated amounts
payable to retailers on redemption, after applying an appropriate
discount rate to take into account the expected timing of payments.
Anticipated payments to retailers are assessed by reference to
historical data as to voucher and card redemption rates and
timings. The key estimates used in deriving the provision include
the future service fees paid by retailers, interest rates used for
discounting and the timing and amount of the future redemption of
vouchers and cards. The future cash payments are discounted as
required under IAS 37 Provisions, Contingent Liabilities and
Contingent Assets, as the amounts are considered to be material.
The service fee and non-redemption income associated with
multi-retailer redemption products is deferred as described in the
revenue recognition accounting policy.
Dilapidations
An amount is provided to cover the future cost of removing
leasehold improvements and restoring the Group's leased offices to
their previous condition. Per IAS16.16, if an entity installs
leasehold improvements that it is later obligated to remove, the
obligating event is the installation of the leasehold improvements,
and therefore the debit side of this provision is recorded as part
of the leasehold improvements in the property, plant and equipment
note.
Employee benefits
Retirement benefit obligation
The Group has both defined benefit and defined contribution
pension plans. The assets of the defined benefit pension plans are
held in separate trustee administered funds.
Defined benefit plan
The fair value of the plan assets less the present value of the
defined benefit obligation is recognised in the statement of
financial position as the retirement benefit asset, after applying
the asset ceiling test. The limit on the recognition of a defined
benefit pension asset is measured as the value of economic benefit
available to the group in the form of refunds or reductions in
future contributions, in accordance with the rules of the pension
schemes.
Regular valuations are prepared by independent professionally
qualified actuaries on the projected unit credit method. The
valuations are carried out every three years and updated on a
yearly basis for accounting purposes. These determine the level of
contribution required to fund the benefits set out in the rules of
the plans and allow for the periodic increase of pensions in
payment.
The schemes are closed to future accrual for years' service but
pensions are still dependent on actual final salaries.
Consequently, the Group may have an amendment in future where
salary rises differ from those projected. For any related plan
amendment, these are recognised immediately in the statement of
profit or loss.
Remeasurements comprise actuarial gains and losses on the
obligations and the return on scheme assets (excluding interest).
They are recognised immediately in other comprehensive income in
the Consolidated Statement of Comprehensive Income (SOCI). Net
interest cost is calculated by applying the discount rate on
liabilities to the net pension liability or asset (adjusted for
cash flows over the accounting period) and is recognised within
administrative expenses.
Defined contribution plans
For defined contribution plans, the Group pays contributions to
privately administered pension plans on a contractual basis. The
contributions are recognised as an employee benefit expense as they
fall due.
Holiday pay
Provision is made for any holiday pay accrued by employees to
the extent that the holiday entitlements accrued have not been
taken at the period end.
Share-based payments
The Group operates a number of equity settled share-based
payment plans.
The expense is calculated as the fair value of the share options
at the date of grant, using monte-carlo simulation (LTIP and SGP
awards), Black-Scholes formula (SAYE 2018) and the binomial method
(SAYE 2015). A corresponding amount is recorded as an increase in
equity. This expense is recognised on a straight-line basis over
any relevant vesting period and is adjusted on a prospective basis
at each period end for any changes in assumptions or estimates that
relate to non-market conditions, taking into account the conditions
existing at each year end. Where an employee fails to complete a
specified service period, including termination of employment, the
awards are considered to have been forfeited and the cumulative
expense is reversed.
Own shares
The Group has an employee benefit trust used for the granting of
shares to executives and certain employees. Own shares held are
recognised at cost as a deduction from shareholders' equity.
Subsequent consideration received for the sale of such shares is
also recognised in equity, with any difference between the sales
proceeds and original cost being taken to equity.
Foreign currency
Transactions in foreign currencies are recorded at the rates of
exchange at the date the transactions occur. Amounts recognised in
the SOCI are translation differences. Monetary assets and
liabilities are restated at the prevailing exchange rate at each
year end. Differences arising on restatement are included in the
SOCI for the year.
Leases
At inception of a contract the Group assesses whether a contract
is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
At inception or on reassessment of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative
standalone price. However, for leases of land and buildings in
which it is a lessee, the Group has elected not to segregate
non-lease components and account for the lease and non-lease
components as a single lease component.
As a lessee
The Group recognises a right-of-use-asset (ROUA) and a lease
liability (LL) at the lease commencement date. The right-of-
use-asset is initially measured at cost, which comprises:
-- The amount of the initial measurement of the LL;
-- Any lease payments made at or before the commencement
date, less any lease incentives;
-- Any initial direct cost incurred by the lessee;
-- An estimate of costs to be incurred by the lessee in
restoring the site on which the assets are located.
The right-of-use-asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term. In addition, the right-of-use-asset is periodically
tested for impairment (see 'Impairment of property, plant and
equipment and intangibles' accounting policy), and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following:
-- fixed payments including in substance fixed payments, less
any lease incentives receivable;
-- variable lease payments that depend on an index or rate, initially
measured using the index or rate as at the commencement date;
-- amounts expected to be payable under a residual value guarantee;
and
-- the exercise price under a purchase option that the Group is
reasonably certain to exercise an option, and penalties for
early termination unless the Group is reasonably certain not
to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change of index or rate, if
there is a change in future lease payments arising from a change in
the Group's estimate of the amount payable under a residual value
guarantee, if there is a change in lease term, or if the Group
changes its assessment of whether it will exercise a purchase
extension or termination option.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of plant & machinery that have a lease
term of 12 months or less and leases of low-value assets of less
than GBP5,000. The Group recognises the lease payments associated
with these leases as an expense on a straight-line basis over the
lease term.
As a lessor
When the Group acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
To classify each lease, the Group makes an overall assessment of
whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is
the case, then the lease is a finance lease; if not then it is an
operating lease. As part of this assessment, the Group considers
certain indicators such as whether the lease is for the major part
of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its
interest in the head lease and sub-lease separately. It assesses
the lease classification of the sub-lease with reference to the
right-of-use-asset arising from the head lease, not with reference
to the underlying asset. If a head lease is a short-term lease to
which the Group applies the exemption described above, then it
classifies the sub-lease as an operating lease.
If an arrangement contains a lease and a non-lease component,
the Group applies IFRS 15 to allocate the consideration in the
contract.
Taxation
The charge for taxation is based on the result for the year and
takes into account taxation deferred because of temporary
differences between the treatment of certain items for taxation and
accounting purposes.
Current tax is the expected tax payable on the taxable result
for the year using tax rules enacted or substantively enacted at
the year end, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. The following temporary
differences are not provided for: when the deferred tax asset
relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transition,
affects neither the accounting profit nor taxable profit or loss.
Deferred tax is determined using tax rates and laws that have been
enacted or substantively enacted by the year end and are expected
to apply when the related deferred tax asset is realised or the
deferred tax liability is settled. Deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary
differences can be utilised.
Taxation is recognised in the statement of profit or loss except
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
Dividends
In accordance with IAS 10 Events After the Reporting Period,
dividends are recognised in the financial statements in the period
in which they are approved by shareholders in the case of the final
dividends and when paid in the case of the interim dividends.
Exceptional items
Income statement items are presented in the middle column of the
Consolidated income statement entitled Exceptional Items where they
are significant in size and nature, and either they do not form
part of the trading activities of the Group, or their separate
presentation enables identification of the financial performance of
the Group.
Items classified as Exceptional items are as follows:
Impairment charges and costs associated with other
intangibles
Impairment charges related to non-current assets are non-cash
items and tend to be significant in size. The presentation of these
as exceptional items enables identification of the underlying
financial performance of the Group. This also includes costs
incurred in relation to the change in accounting policy with
regards to SaaS arrangements, as described in more details in note
titled 'Change in accounting policy - Software as a Service
("SaaS") arrangements'.
Net operating losses attributable to businesses identified as
non-core
Operating results from businesses identified as non-core do not
form part of the ongoing trading activities of the Group and they
are therefore recorded separately in Exceptional items in order to
enable the understanding of the ongoing financial performance of
the Group and its businesses. Non-core businesses are those
businesses that have been closed or disposed of, or where the Board
has resolved to close or dispose of the business by the year end
and which don't meet the criteria to be classified as a
discontinued operation. There are currently no businesses
classified as non-core, but the Group did discontinue the hamper
business in the prior year and so the impairment of obsolete stock
and redundancy costs associated with that business are included as
exceptional items in FY21.
Other specific items
Other specific items are recorded in Exceptional items where
they do not form part of the underlying trading activities of the
Group in order to enable the understanding of the financial
performance of the Group. This includes, for example, profit on
sale of property not related to ongoing operations (i.e. related to
a branch or business closure) or property sold as part of a
fundamental restructuring programme. Profit on the sale of property
in connection with branch or office moves in the normal course of
business is included within underlying results.
Key judgements and estimates
The preparation of financial statements in conformity with IFRS
requires the use of estimates and judgements that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
Judgements
In applying the accounting policies, management has made the
following judgements:
Other Intangibles
Following the IFRIC agenda decision, management has reviewed the
costs incurred during the implementation of all SaaS arrangements.
The IFRIC amongst other things makes a distinction between
configuration and customisation and outlines that certain
customisations can be capitalised if the criteria in IAS 38 is met.
There was an element of judgement exercised in determination of
which customisations could still result in recognition of an asset.
It was concluded that any customisation that resulted in
development of new code which is in the Group's possession, is a
viable asset and can be capitalised, is under Group's control and
from which future economic benefit can be derived by the Group.
Consequently, these costs were capitalised. Any costs that did not
meet the criteria were written off, as disclosed in the change in
accounting policy note.
When assessing the costs noted above, management also identified
certain other costs capitalised in the period which were redundant
in nature and therefore did not meet the capitalisation criteria.
An element of judgment was exercised in identifying these
costs.
Pensions
The Group has two defined benefit pension schemes, as described
in note 19, in one of them the fair value of plan assets exceeds
the present value of the scheme liabilities. The Group has
determined, based on an evaluation of the rules of the pension
scheme and legal advice, that it has a right to a refund during the
life of the schemes or when the schemes are settled, that is not
conditional upon factors beyond the Group's control. On this basis,
the Group has recognised the surplus in full as an asset on the
balance sheet. This accounting treatment is consistent with prior
years.
During the year a matter with regards to a potential incorrect
valuation of the Park Group Pension Scheme was noted. While the
matter remains unresolved, a judgment has been exercised by
management in concluding that a change to certain deferred benefits
is probable, based on legal advice received to date and discussion
with Trustees. As a result, this has been included in the current
year financial statements as a retrospective adjustment. For
details, please see the Prior year restatements note in the
Statement of significant accounting policies.
Revenue
In applying the principles of IFRS 15, management have
considered whether the Group is a principal or agent when it
supplies multi-retailer redemption products. Having assessed the
nature of the Group's contractual relationships with retailers, the
directors have concluded that the Group acts as an agent in
exchange for a service fee as it does not control the transfer of
goods or services by the retailer to the product holder upon
redemption. This results in 'net' revenue recognition as described
in the revenue recognition accounting policy.
For card holder fees and non-redemption income associated with
multi-retailer redemption products, the Group acts as a principal
in its contractual relationship with the product holders. This
results in 'gross' revenue recognition as described in the revenue
recognition accounting policy.
Under IFRS 15, entities are required to disclose disaggregated
revenue information to illustrate how the nature, amount, timing
and uncertainty about revenue and cash flows are affected by
economic factors. Directors have considered this requirement and
have disclosed information with regard to type of good or service,
market or type of customer, timing of transfer of goods or services
and geographical region. Directors believe that this level of
disaggregation is sufficient to satisfy the disclosure requirements
of the standard.
Unredeemed cards
The directors have assessed the features of the Group's
multi-retailer redemption products and concluded that unredeemed
balances on corporate gifted cards do not meet the definition of a
financial liability within the scope of IFRS 9. This is because the
cards have expiry dates after which the card cannot be redeemed.
The cards can also be redeemed with the Group for certain goods or
services and cannot be redeemed in cash. As a result, the
liabilities relating to these products are not within the scope of
IFRS 9 and are instead measured in accordance with IAS 37
Provisions, Contingent Liabilities and Contingent Assets (note
17).
Determining the lease term of contracts with renewal and
termination options-Group as lessee
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has two material lease contracts that include
extension and termination options. One of these is the lease of
floor 3 and 4, 20 Chapel Street Liverpool. The Group included the
renewal period as part of the lease term, as the majority of the
Group's operations are based in this site in Liverpool City Centre.
As a result of this, the lease extension is reasonably certain to
be exercised.
The other lease is for rack space and data hosting services,
which has an initial term of one year with an automatic rolling 12
month extension option if not cancelled. The lease was renewed for
its second year during the period, and it has been estimated the
lease will be renewed for a further one year, which is consistent
with its original capitalised term of three years.
Estimates
The key assumptions and other sources of estimation uncertainty
at the reporting date are described below:
Provisions for unredeemed vouchers and cards
A provision is made in respect of unredeemed vouchers and cards,
as described in note 17. The provision is calculated by estimating
anticipated amounts payable to retailers on redemption and the
expected timing of payments. Historical data over a number of years
and current trends are regularly reviewed and are used to prepare
these estimates. Any differences to the estimates may necessitate a
material adjustment to the level of the provision held in the
statement of financial position. Management have considered the
sensitivities of the key estimates and do not foresee that any
likely change in these estimates will have a material impact on the
size of the provision.
Non-redemption income
For multi-retailer redemption products where the end user has no
right of redemption (corporate gifted cards and vouchers), the
Group may expect to earn a non-redemption income amount. In order
to calculate the expected non-redemption income amount, the Group
estimates how many products will be fully redeemed and how many
will be partially redeemed. For those which are partially redeemed,
the Group estimates projected balances remaining on the products at
expiry. Historical data and current trends regarding patterns of
redemption and expiry are used to prepare the estimates. As
redemption behaviour may differ by market, historical data and
current trends are reviewed at this level. If the expected level of
non-redemption income were to change by 1.0%, the impact on revenue
for the reporting period would be GBP0.1m. Management have
considered the sensitivity of this estimate and do not foresee that
any likely change to the estimate will have a material impact on
either the level of deferred income held in the statement of
financial position or the amount of revenue for the reporting
period.
Deferred income - Love2shop voucher redemption timing
As described in the revenue recognition accounting policy and as
shown in note 16, revenue for multi-retailer redemption products is
recognised in proportion to actual redemption timing, generating
deferred income balances until the point of redemption. For
Love2shop vouchers, there is a time delay between the point of
redemption and when they are physically returned to the Group for
validation and accounting purposes. To negate the effects of this
delay, an adjustment is made at the end of the reporting period,
which estimates the value of vouchers already redeemed but not yet
returned to the Group and records the associated revenue.
Historical data over a number of years and current trends are used
to prepare the estimate. Management have considered the sensitivity
of this estimate and do not foresee that any likely change to the
estimate will have a material impact on either the level of
deferred income held in the statement of financial position or the
amount of revenue for the reporting period.
Goodwill
Goodwill arising on acquisition represents the difference
between the consideration and the fair value of net assets
acquired. Goodwill is not amortised, but is reviewed annually for
impairment and whenever events or changes in circumstances indicate
that the carrying value of the goodwill may not be receivable. The
impairment review relies on a number of assumptions (see note 6 for
details). Any differences to the assumptions made may necessitate a
material adjustment to the level of goodwill held in the statement
of financial position.
Other intangible Assets
The Group applies judgement in assessing whether the costs
incurred, both internal and external, will generate future economic
benefits and therefore should be capitalised. Any redundant costs
are not capitalised, but are expensed during the period in which
they are incurred. Amortisation commences when management determine
the asset is available for use i.e. when it is in the location and
condition necessary for it to be capable of operating in the manner
intended by management.
Significant judgements and estimates are applied in determining
the carrying value of the assets, including assumptions made in
respect of the status of the programme each asset relates to, and
there may be a range of possible outcomes when a programme is
complex. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the
asset are considered to modify the amortisation period or method,
as appropriate, and are treated as changes in accounting estimates.
At each reporting date the Group reviews the carrying value of its
tangible and intangible assets, including those not yet in use, to
determine whether there is any indication that those assets have
suffered an impairment loss (see note 7 for details).
Incremental borrowing rate (IBR)
The Group cannot readily determine the interest rate implicit in
the lease, therefore, it uses its incremental borrowing rate (IBR)
to measure lease liabilities. The IBR is the rate of interest that
the Group would have to pay to borrow over a similar term, and with
a similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. Management have used rates ranging from 3.4% to 3.5%
in respect of leases entered in to during the year.
1 Segmental reporting
The Group's operations are divided into two principal operating
segments:
-- Consumer - which represents sales to consumers, utilising the
Group's Christmas savings offering and our website, highstreetvouchers.com;
and
-- Corporate - comprising sales to businesses.
Both segments offer primarily sales of the Love2shop voucher,
flexecash(R) cards, Mastercards and e-codes in addition to other
retailer vouchers, cards and e-codes.
All other segments are those items relating to the corporate
activities of the group which it is felt cannot be reasonably
allocated to either business segment.
The amount included within the elimination column reflects
vouchers sold by the corporate vouchers segment to the consumer
segment. They have been included in elimination so as to show the
total revenue for both segments.
Finance income, finance costs and taxation are not allocated to
individual segments as they are managed on a group basis.
The group operates in only one geographical segment, being the
UK. The group's operations in Ireland were immaterial to the
results of the group for the year ended 31 March 2022.
2022 All other
Consumer Corporate segments Total
GBP'000 GBP'000 GBP'000 GBP'000
Total billings 173,743 212,097 - 385,840
-------------------------------- -------- --------- --------- --------
Total revenue 46,520 76,745 - 123,265
-------------------------------- -------- --------- --------- --------
Segment operating profit/(loss) 3,253 7,824 (5,362) 5,715
-------------------------------- -------- --------- --------- --------
Finance income - - - 379
-------------------------------- -------- --------- --------- --------
Finance costs - - - (451)
-------------------------------- -------- --------- --------- --------
Profit before taxation - - - 5,643
-------------------------------- -------- --------- --------- --------
Taxation - - - (1,251)
-------------------------------- -------- --------- --------- --------
Profit - - - 4,392
-------------------------------- -------- --------- --------- --------
All other segments loss comprises primarily of staff costs,
professional fees and the impairment of non-current assets.
In arriving at segment operating profit/(loss), exceptional
costs have been charged to the segments as follows:
All other
Consumer Corporate segments Group
GBP'000 GBP'000 GBP'000 GBP'000
Exceptionals
Impairment of goodwill (77) - - (77)
Impairment of other
intangibles - - (869) (869)
Costs associated with
Other intangible assets - - (1,798) (1,798)
-------- --------- --------- --------
(77) - (2,667) (2,744)
-------- --------- --------- --------
The main exceptional item included in the current year results
is the one associated with the implementation of the new ERP
system. The total cost of GBP2,667k is split into the following
categories:
a) Certain project configuration and customisation costs associated
with cloud computing arrangements (GBP739k), which are now
expensed rather than being capitalised as intangible assets
following IFRS Interpretation Committee guidance on this topic
issued during the year. For details on the change in accounting
policy, please see the Statement of significant accounting
policies.
b) Other costs incurred during the year associated with the Group's
strategic ERP project which were deemed redundant in nature
and therefore not eligible for capitalisation - GBP1,059k.
c) There was part of the new ERP project which was capitalised
last year but in the current year management decided to discontinue
the use of that element of the asset. This has resulted in
an impairment charge of GBP869k recorded in the year.
The total tax impact of exceptional items was a reduction in tax
charge of GBP681k in FY22.
An analysis of the group's external revenue is as follows:
Consumer Corporate Group
GBP'000 GBP'000 GBP'000
Revenue from contracts with customers
Goods - Single retailer redemption
products 31,028 52,342 83,370
Other goods - 102 102
Services - Multi-retailer redemption
products 15,393 22,755 38,148
Other services 99 1,546 1,645
-------- --------- --------
46,520 76,745 123,265
-------- --------- --------
The majority of revenue from contracts with customers is
recognised at a point in time.
For details of the Group's primary revenue streams, please see
the revenue recognition accounting policy in the relevant section
above.
The Group has elected not to report on segment assets and
liabilities as this information is not provided to the Chief
Operating Decision Maker (CODM) and is not relevant to the CODM's
decision making. In respect of Appreciate Group plc the CODM is
regarded as the executive members of the Board of directors.
2021 All other
segments
Consumer Corporate (Restated)* Total
GBP'000 GBP'000 GBP'000 GBP'000
Total billings 205,282 201,250 - 406,532
-------------------------------- -------- --------- ------------ --------
Total revenue 53,138 53,667 - 106,805
-------------------------------- -------- --------- ------------ --------
Segment operating profit/(loss)
(Restated)* 532 2,638 (3,730) (560)
-------------------------------- -------- --------- ------------ --------
Finance income - - - 783
-------------------------------- -------- --------- ------------ --------
Finance costs - - - (360)
-------------------------------- -------- --------- ------------ --------
Loss before taxation
(Restated)* - - - (137)
-------------------------------- -------- --------- ------------ --------
Taxation (Restated)* - - - (138)
-------------------------------- -------- --------- ------------ --------
Loss (Restated)* - - - (275)
-------------------------------- -------- --------- ------------ --------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
All other segments loss comprises primarily of staff costs and
professional fees.
In arriving at segment operating profit/(loss) exceptional
profits/(costs) have been charged to the segments as follows:
All other
segments
Consumer Corporate (Restated)* Group
GBP'000 GBP'000 GBP'000 GBP'000
Exceptionals
Impairment of obsolete
stock (414) - - (414)
Impairment of goodwill (218) - - (218)
Redundancy costs (639) - - (639)
Profit on sale of assets
held for sale 205 - - 205
Costs associated with
Other intangible assets - - (1,390) (1,390)
-------- --------- ------------ --------
(1,066) - (1,390) (2,456)
-------- --------- ------------ --------
The main exceptional item included in the prior year results* is
the one associated with the implementation of the new ERP system.
Certain project configuration and customisation costs associated
with cloud computing arrangements, which are now expensed rather
than being capitalised as intangible assets following IFRS
Interpretation Committee guidance on this topic issued during the
year. This is a change in accounting policy adopted in the current
year but applied retrospectively, resulting in an additional
exceptional charge of GBP1,390k in FY21. This change has resulted
in the restatement of prior year results. For details on the change
in accounting policy, please see the Statement of significant
accounting policies.
The remaining exceptional costs for FY21 were GBP1,066k prior to
restatement and tax. In the prior year, we closed the hamper
production and contract packing businesses based at Valley Road.
Following consultation with staff, we made 40 roles redundant and
had incurred exceptional costs of GBP639k. Additionally, we had
impaired the value of hamper stock by GBP414k.
The total tax impact of exceptional items in FY21 was a
reduction in tax charge of GBP505k.
An analysis of the Group's external revenue is as follows:
Consumer Corporate Group
GBP'000 GBP'000 GBP'000
Revenue from contracts with customers
Goods - Single retailer redemption
products 38,610 39,544 78,154
Other goods 153 106 259
Services - Multi-retailer redemption
products 13,493 11,243 24,736
Other services 739 2,770 3,509
Other 143 4 147
-------- --------- --------
53,138 53,667 106,805
-------- --------- --------
2 Profit/(loss) before taxation
The following items have been charged/(credited) in arriving at
profit/(loss) before taxation and exceptional items:
2022 2021
GBP'000 GBP'000
Staff costs (see note 20) 13,917 15,515
Cost of inventories recognised as an expense
(included in cost of sales) 32,213 40,530
Reduction of inventories recognised as
a credit (included in cost of sales) (1) (77)
Pension interest income (see note 19) 31 (99)
Depreciation expense 457 516
Amortisation expense 839 853
Depreciation of right of use assets (see
note 18) 570 422
Loss on disposal of property, plant and
equipment - 544
Repairs and maintenance on property, plant
and equipment 708 979
-------- --------
For details on exceptional items please see note 1.
Services provided by the Group's auditor
During the year the Group obtained the following services from
the company's auditor at costs as detailed below:
2022 2021
GBP'000 GBP'000
Fees payable to the company's auditor
for the audit of:
- company's annual accounts 238 164
- subsidiaries pursuant to legislation 558 317
Fees payable to the company's auditor
in excess of base fee for the audit of:
- company's annual accounts current year - 123
- company's annual accounts prior year - 147
- subsidiaries pursuant to legislation
current year 25 -
- subsidiaries pursuant to legislation
prior year 191 19
Fees payable to the company's auditor
and its associates for other services:
- other services pursuant to legislation
current year 228 149
- expenses - 3
-------- --------
1,240 922
-------- --------
Fees paid for non-audit services to the company itself are not
disclosed in the individual accounts of Appreciate Group plc
because the company's consolidated accounts are required to
disclose such fees on a consolidated basis.
3 Finance income and costs
2022 2021
GBP'000 GBP'000
Finance income
Bank interest receivable and other 379 783
------------ ------------
379 783
------------ ------------
Finance costs
Bank interest payable 183 115
Lease and other interest 268 245
------------ ------------
451 360
------------ ------------
4 Income tax
Restated*
2022 2021
GBP'000 GBP'000
Analysis of profit or loss charge in period
Current tax 1,355 236
Adjustments to current tax in respect of
prior periods (28) (10)
------------ ------------
1,327 226
------------ ------------
Deferred tax (105) (153)
Adjustments to deferred tax in respect
of prior periods 29 65
------------ ------------
(76) (88)
------------ ------------
Taxation 1,251 138
------------ ------------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Tax charged/(credited) directly to other
comprehensive income
Deferred tax on actuarial gains/(losses)
on defined benefit pension plans 114 (408)
--- -----
Tax charged directly to equity
Reduction in deferred tax on removal of
assets held for sale - 110
--- -----
The tax for the period is higher (2021: higher) than the
standard rate of corporation tax in the UK of 19% (2021: 19%).
The differences are explained below:
Restated*
2022 2021
GBP'000 GBP'000
Profit/(loss) on ordinary activities before
tax 5,643 (137)
--------- ---------
Expected tax charge/(credit) at 19% (2021:
19%) 1,072 (26)
Effects of:
Adjustments to tax in respect of prior
periods 1 55
Amounts not taxable/expenses not deductible
for tax purposes 116 99
Tax in respect of share-based payments (5) 10
Effect of rate change on current year deferred
tax 67 -
--------- ---------
Total taxation 1,251 138
--------- ---------
5 Earnings per share
Basic 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:
Restated*
2022 2021
GBP'000 GBP'000
Earnings
Profit for the year before exceptional items 6,455 1,676
*Exceptional items net of tax (see note
1) (2,063) (1,951)
-------- ---------
Profit/(loss) for the year attributable
to equity shareholders 4,392 (275)
-------- ---------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
2022 2021
Weighted average number of shares
Weighted average number of ordinary shares
in issue 186,347,228 186,347,228
Diluting effect of employee share options
and LTIP awards 402,209 -
----------- -----------
Diluted EPS - weighted average number of
shares 186,749,437 186,347,228
----------- -----------
No shares have been considered anti-dilutive during the year,
that could potentially dilute basic EPS in the future (2021:
109,348 shares).
2022 2021
------------------------------------------- ----------- -----------
Basic EPS
Weighted average number of ordinary shares
in issue 186,347,228 186,347,228
EPS (p) 2.36 (0.15)
------------------------------------------- ----------- -----------
Underlying basic EPS
------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
in issue 186,347,228 186,347,228
EPS (p) 3.46 0.90
------------------------------------------- ----------- -----------
2022 2021
------------------------------------------- ----------- -----------
Diluted EPS
Weighted average number of ordinary shares
in issue 186,749,437 186,347,228
EPS (p) 2.35 (0.15)
------------------------------------------- ----------- -----------
Underlying diluted EPS
-------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
in issue 186,749,437 186,347,228
EPS (p) 3.46 0.90
-------------------------------------------- ----------- -----------
6 Goodwill
Group
Total
GBP'000
Cost - Actual or deemed
At 1 April 2021 and 31 March 2022 3,707
--------
Impairment
At 1 April 2021 3,125
Impairment in year 77
--------
At 31 March 2022 3,202
--------
Net book amount
At 31 March 2022 505
--------
At 31 March 2021 582
--------
Total
GBP'000
Cost - Actual or deemed
At 1 April 2020 5,048
Disposals (1,341)
--------
At 31 March 2021 3,707
--------
Impairment
At 1 April 2020 4,248
Impairment in year 218
Eliminated on disposal (1,341)
--------
At 31 March 2021 3,125
--------
Net book amount
At 31 March 2021 582
--------
At 31 March 2020 800
--------
Goodwill allocation to CGUs
Goodwill is allocated to the following operating segments and is
tested for impairment at this level:
CGUs Goodwill
Goodwill at at 31 March
1 April 2021 Additions Impairment 2022
GBP'000 GBP'000 GBP'000 GBP'000
Consumer 582 - (77) 505
Corporate - - - -
------------- --------- ---------- ------------
Net book amount 582 - (77) 505
------------- --------- ---------- ------------
The group tests annually for impairment of goodwill. The
recoverable amounts of CGUs are determined using value in use
calculations.
Consumer - Family
The key assumptions in the value in use calculations were as
follows:
-- The final order position for the previous Christmas.
-- The budgeted gross margins. These margins are forecast to
be maintained going forward.
-- Average agent retentions forecast. These are based on historical
performance of agent retention achieved. Historically, such
forecasts have been materially correct.
-- Base case scenario revenue. This is based on average historical
order value and average agent retention rates.
The model has been built using the next 5 years forecasts and
has been extrapolated to perpetuity. This is a change from prior
year where a 10 year cash flow model was used. The model used in
the current year is better aligned with the requirements of IFRS.
No revenue growth has been factored into the data used in the
calculation (2021: nil).
The resulting cash flows were discounted using a pre-tax
discount rate of 20.9% (2021: 17.0%).
The impairment in the year of GBP77,000 (2021: GBP157,000)
against the Family Franchisee goodwill represents the impact of a
small reduction in margin due to the change in product mix and
higher commissions. The impairment is included within exceptional
costs in the Consumer segment.
There is a reasonably possible chance that a change in one or
more of the key assumptions could give rise to an impairment. A
sensitivity analysis was performed where changes in key assumptions
were tested, those being additional changes in the discount rate,
retention of agents and margin. The following table summarises the
impact on the goodwill impairment at the end of the reporting
period, if each of these key assumptions were changed, in
isolation.
Change in assumption Change in goodwill
impairment
--------------------- -------------------- ---------------------
Discount rate increase by 1% increase by GBP11,000
Retention of agents decrease by 1% increase by GBP29,000
Margin decrease by 1% increase by GBP5,000
--------------------- -------------------- ---------------------
7 Other Intangibles
Group
Computer Agency customer
software lists Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2021 (Restated)* 15,079 2,350 17,429
Additions - internally developed
assets 1,232 - 1,232
Additions - externally purchased
assets 910 - 910
--------- --------------- --------
At 31 March 2022 17,221 2,350 19,571
--------- --------------- --------
Amortisation and impairment
At 1 April 2021 8,576 2,350 10,926
Amortisation charge 839 - 839
Impairment 869 - 869
--------- --------------- --------
At 31 March 2022 10,284 2,350 12,634
--------- --------------- --------
Net book amount
At 31 March 2022 6,937 - 6,937
--------- --------------- --------
At 31 March 2021 (Restated)* 6,503 - 6,503
--------- --------------- --------
The additions during the year includes GBP1,610,000 related to
our Enterprise Resource Planning (ERP) system which will be the
cornerstone of the business to build on utilising new, cloud-based
technology. The ERP system went live during the year.
Included within Computer software is an amount of GBP281k
relating to a cloud migration project which is currently work in
progress. It is expected that amortisation of this asset will
commence in FY23.
For details with regards to the impairment charge recognised
during the year, please see note 1.
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Computer Agency customer
software lists Total
GBP'000 GBP'000 GBP'000
Cost
Balance at 1 April 2020 as originally
reported 12,542 2,350 14,892
Restatement due to adoption of
IFRIC** (968) - (968)
--------- --------------- --------
Restated balance as at 1 April
2020** 11,574 2,350 13,924
Additions - internally developed
assets (Restated)* 1,492 - 1,492
Additions - externally developed
assets (Restated)* 2,089 - 2,089
Disposals (76) - (76)
--------- --------------- --------
At 31 March 2021 (Restated)* 15,079 2,350 17,429
--------- --------------- --------
Amortisation and impairment
At 1 April 2020 7,807 2,328 10,135
Amortisation charge 831 22 853
Amortisation eliminated on disposals (62) - (62)
--------- --------------- --------
At 31 March 2021 8,576 2,350 10,926
--------- --------------- --------
Net book amount
At 31 March 2021 (Restated)* 6,503 - 6,503
--------- --------------- --------
At 31 March 2020 (Restated)** 3,767 22 3,789
--------- --------------- --------
The agency customer lists relate to lists of 30,000 agents
nationwide acquired from FHSC Limited on 15 February 2006, 7,500
agents nationwide acquired from Findel PLC on 7 March 2007, 4,000
agents in the Republic of Ireland acquired from Dublin based Celtic
Hampers and Family Hampers on 25 October 2010 and 388 agents
nationwide acquired from I and J L Brown Limited, who operated a
Country Christmas Savings Club franchise, on 3 December 2012.
Customer lists are amortised over their useful life of up to 10
years based on the pattern of forecast cash flows expected to be
generated. The customer list was fully amortised in the prior
year.
**The 2020 results have been restated as set out in the
Statement of significant accounting policies.
Company
Computer
software
GBP'000
Cost
At 31 March 2021 and 31 March 2022 2,289
---------
Amortisation and impairment
At 1 April 2021 2,266
Amortisation charge 14
---------
At 31 March 2022 2,280
---------
Net book amount
At 31 March 2022 9
---------
At 31 March 2021 23
---------
Computer
software
GBP'000
Cost
At 31 March 2020 and 31 March 2021 2,289
-----------
Amortisation and impairment
At 1 April 2020 2,245
Amortisation charge for the year 21
-----------
At 31 March 2021 2,266
-----------
Net book amount
At 31 March 2021 23
-----------
At 31 March 2020 44
-----------
8 Investments
Company
Shares in
subsidiary
undertakings
GBP'000
Cost
At 1 April 2021 and 31 March 2022 8,523
Provision
At 1 April 2021 and 31 March 2022 560
-------------
Net book amount
At 31 March 2022 7,963
-------------
At 31 March 2021 7,963
-------------
At 31 March 2022 the parent company's subsidiary undertakings
included in the consolidation were:
Name of company Nature of business
--------------------------------- -------------------------------------
Park Group UK Limited(1) Holding company
Park Retail Limited(2) Gifting and prepayment
Park Direct Credit Limited(2) Debt collection services (no longer
active)
Park Financial Services Insurance broking services (no longer
Limited(2) active)
Park Card Services Limited(1) Electronic money issuer
Park Card Marketing Services Card administration support services
Limited(1)
Country Christmas Savings Dormant company - trading name used
Club Limited(2) by Park Retail Limited
Family Christmas Savings Dormant company - trading name used
Club Limited(1) by Park Retail Limited
Handling Solutions Limited(2) Dormant company - trading name used
by Park Retail Limited
High Street Vouchers Limited(2) Dormant company - trading name used
by Park Retail Limited
Park Christmas Savings Club Dormant company - trading name used
Limited (2) by Park Retail Limited
Park Travel Service Limited(1) Dormant company - trading name used
by Park Retail Limited
Agency Administration Limited(2) Dormant company
Brightdot Limited(3) Dormant company
Cheshire Bank Limited(2) Dormant company
Cheshire Securities Limited(2) Dormant company
Family Hampers Limited(1) Dormant company
Heritage Hampers Limited(2) Dormant company
MaximB2B Limited(3) Dormant company
Opal Loans Limited Dormant company
Park Connect Limited Dormant company
Park Food (Warrington) Limited(1) Dormant company
Park Group Secretaries Limited(1) Dormant company
Park Hamper Company Limited(1) Dormant company
Park.com Limited(1) Dormant company
The Perfect Hamper Co. Limited(2) Dormant company
Wirral Cold Store Limited(2) Dormant company
--------------------------------- -------------------------------------
(1) Wholly owned subsidiary undertakings of Appreciate Group
plc
(2) Wholly owned subsidiary undertakings of Park Group UK
Limited
(3) Wholly owned subsidiary undertakings of Park Retail
Limited
Park Group UK Limited direct holding represents 70% and
subsidiary undertakings direct holdings represent 30% of issued
share capital
Appreciate Group plc direct holding represents 1% and Park Group
UK Limited direct holdings represent 99% of issued share
capital
All of the above companies are registered in England.
9 Property, plant and equipment
Group
Land and Leasehold Fixtures
buildings improvements and equipment Motor Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2021 25 1,518 2,256 6 3,805
Additions - - 30 - 30
---------- ------------- -------------- -------------- --------
At 31 March 2022 25 1,518 2,286 6 3,835
---------- ------------- -------------- -------------- --------
Accumulated Depreciation
At 1 April 2021 - 153 1,459 5 1,617
Charge for the year 5 102 349 1 457
---------- ------------- -------------- -------------- --------
At 31 March 2022 5 255 1,808 6 2,074
---------- ------------- -------------- -------------- --------
Net book amount
At 31 March 2022 20 1,263 478 - 1,761
---------- ------------- -------------- -------------- --------
At 31 March 2021 25 1,365 797 1 2,188
---------- ------------- -------------- -------------- --------
Land and Leasehold Fixtures
buildings improvements and equipment Motor Vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2020 1,105 1,649 4,242 20 7,016
Additions 25 51 509 - 585
Disposals (1,105) (182) (2,495) (14) (3,796)
---------- ------------- -------------- -------------- --------
At 31 March 2021 25 1,518 2,256 6 3,805
---------- ------------- -------------- -------------- --------
Accumulated Depreciation
At 1 April 2020 1,105 57 3,174 18 4,354
Charge for year - 106 409 1 516
Eliminated on disposal (1,105) (10) (2,124) (14) (3,253)
---------- ------------- -------------- -------------- --------
At 31 March 2021 - 153 1,459 5 1,617
---------- ------------- -------------- -------------- --------
Net book amount
At 31 March 2021 25 1,365 797 1 2,188
---------- ------------- -------------- -------------- --------
At 31 March 2020 - 1,592 1,068 2 2,662
---------- ------------- -------------- -------------- --------
Company
Fixtures
and equipment
GBP'000
Cost
At 1 April 2021 1,004
------------------------
At 31 March 2022 1,004
------------------------
Accumulated depreciation
At 1 April 2021 829
Charge for the year 99
------------------------
At 31 March 2022 928
------------------------
Net book amount
At 31 March 2022 76
------------------------
At 31 March 2021 175
------------------------
Land and Fixtures
buildings and equipment Total
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2020 31 2,087 2,118
Disposals (31) (1,083) (1,114)
---------- -------------- --------
At 31 March 2021 - 1,004 1,004
---------- -------------- --------
Accumulated depreciation
At 1 April 2020 31 1,737 1,768
Charge for year - 163 163
Eliminated on disposal (31) (1,071) (1,102)
---------- -------------- --------
At 31 March 2021 - 829 829
---------- -------------- --------
Net book amount
At 31 March 2021 - 175 175
---------- -------------- --------
At 31 March 2020 - 350 350
---------- -------------- --------
10 Deferred tax
Group
Restated*
2022 2021
GBP'000 GBP'000
Deferred tax asset 265 65
Deferred tax liability (331) (93)
-------- ---------
Net deferred tax liability (66) (28)
-------- ---------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
IAS 12 Income Taxes requires the offset of deferred tax balances
meeting the offset criteria in the standard. All deferred tax
liabilities were available for offset against deferred tax
assets.
The rate of corporation tax was reduced to 19% from 1 April 2017
in the Budget of July 2015 and the rate change was substantively
enacted on 26 October 2015. The rate was increased to 25% with
effect from 1 April 2023 in the Budget of March 2021 and this rate
change was substantively enacted on 24 May 2021. Deferred tax is
calculated in full on temporary differences under the liability
method using a tax rate of 25% (2021: 19%).
The movement on the deferred tax account is shown below:
2022 2021*
GBP'000 GBP'000
At 1 April as originally reported (28) (1,121)
Prior year adjustment** - 487
-------- --------
At 1 April as restated** (28) (634)
Profit or loss charge 76 88
Statement of comprehensive income credit/(charge) (114) 408
Amounts relating to subsidiaries disposed
of - 110
-------- --------
At 31 March (restated)* (66) (28)
-------- --------
Deferred tax assets have been recognised in respect of other
temporary differences giving rise to deferred tax assets where it
is probable that these assets will be recovered. Deferred tax
assets have not been provided on brought forward trading losses of
GBP20,729,000 (2021: GBP20,624,000) and on capital losses of
GBP190,000 (2021: GBP443,000) as, at the year end, the Group do not
believe it is probable that they will be able to be utilised
against future taxable income. Both trading and capital losses can
be carried forward indefinitely.
There are no deferred tax liabilities arising on temporary
differences associated with subsidiaries.
The movements in deferred tax assets and liabilities are shown
below:
Restated* Restated*
Retirement PPE and other Restated*
benefit obligation intangibles Total
GBP'000 GBP'000 GBP'000
Deferred tax liabilities
At 1 April 2021 (restated)* (93) - (93)
Charged to profit or loss (124) - (124)
Charged to statement of comprehensive
income (114) - (114)
------------------- -------------- ---------
At 31 March 2022 (331) - (331)
------------------- -------------- ---------
At 1 April 2020 as reported (496) (332) (828)
Prior year adjustment** - 184 184
----- ----- -----
At 1 April 2020 as restated** (496) (148) (644)
Charged/(credited) to profit
or loss (5) 103 98
Credited to statement of comprehensive
income 408 - 408
Amounts relating to subsidiaries
disposed of - 110 110
Transfer to assets - (65) (65)
----- ----- -----
At 31 March 2021 (restated)* (93) - (93)
----- ----- -----
**The 2020 results have been restated as set out in the
Statement of significant accounting policies.
Restated*
PPE and other
Share options intangibles Total
GBP'000 GBP'000 GBP'000
Deferred tax assets
At 1 April 2021 (restated)* - 65 65
Credited to profit or loss 6 194 200
------------- -------------- --------
At 31 March 2022 6 259 265
------------- -------------- --------
At 1 April 2020 10 - 10
Charged to profit or loss (10) - (10)
Transferred from liabilities
(restated)* - 65 65
------------- -------------- --------
At 31 March 2021 (restated)* - 65 65
------------- -------------- --------
Company
2022 2021
GBP'000 GBP'000
Deferred tax asset 143 109
Deferred tax liability (511) (368)
-------- --------
Net deferred tax liability (368) (259)
-------- --------
IAS12 requires the offset of deferred tax balances meeting the
offset criteria in the standard. All deferred tax liabilities were
available for offset against deferred tax assets.
The rate of corporation tax was reduced to 19% from 1 April 2017
in the Budget of July 2015 and the rate change was substantively
enacted on 26 October 2015. The rate was increased to 25% with
effect from 1 April 2023 in the Budget of March 2021 and this rate
change was substantively enacted on 24 May 2021. Deferred tax is
calculated in full on temporary differences under the liability
method using a tax rate of 25% (2021: 19%).
The movement on the deferred tax account is shown below:
2022 2021
GBP'000 GBP'000
At 1 April (259) (262)
Profit or loss charge (95) (15)
Statement of comprehensive income credit/(charge) (14) 18
-------- --------
At 31 March (368) (259)
-------- --------
Deferred tax assets have been recognised in respect of other
temporary differences giving rise to deferred tax assets where it
is probable that these assets will be recovered. Deferred tax
assets have not been provided on capital losses of GBPnil (2021:
GBP443,000) as, at the year end, the company does not believe it is
probable that they will be able to be utilised against future
taxable income. The tax losses can be carried forward
indefinitely.
The movements in deferred tax assets and liabilities are shown
below:
Retirement
benefit obligation
GBP'000
Deferred tax liabilities
At 1 April 2021 (368)
Charged to profit or loss (129)
Credited to statement of comprehensive income (14)
-------------------
At 31 March 2022 (511)
-------------------
At 1 April 2020 (377)
Charged to profit or loss (9)
Credited to statement of comprehensive income 18
-----
At 31 March 2021 (368)
-----
PPE and
other intangibles Share options Total
GBP'000 GBP'000 GBP'000
Deferred tax assets
At 1 April 2021 109 - 109
Credited/(charged) to profit or
loss 28 6 34
------------------ ------------- --------
At 31 March 2022 137 6 143
------------------ ------------- --------
At 1 April 2020 105 10 115
Credited/(charged) to profit or
loss 4 (10) (6)
---- ---- ---
At 31 March 2021 109 - 109
---- ---- ---
11 Inventories
Group
2022 2021
GBP'000 GBP'000
Finished goods 5,201 3,638
-------- --------
5,201 3,638
-------- --------
The cost of inventories recognised as an expense in the year is
GBP32,213,000 (2021: GBP40,530,000).
The reduction of write down of inventories credited to the
income statement in the period is GBP1,000 (2021 : write down of
inventories recognised as an expense in the period GBP337,000).
Following the closure of the packing operations, including
hamper packing, in the year ended 31 March 2021, the Group impaired
raw materials and finished goods stock by GBP414,000, which is
included within the GBP337,000 as detailed above.
12 Trade and other receivables
Group
2022 2021
GBP'000 GBP'000
Trade receivables 6,952 5,798
Less: Expected credit loss provision (75) (73)
-------- --------
Net trade receivables 6,877 5,725
Other receivables 2,790 3,463
Prepayments and accrued income 2,261 2,217
-------- --------
11,928 11,405
-------- --------
Of the trade receivables net balance above, GBP6,499,000 is due
within one month (2021: GBP5,488,000), with the remaining
GBP378,000 falling due in more than one but less than three months
(2021: GBP237,000). Other receivables are due within one month.
2022 2021
GBP'000 GBP'000
Credit quality of trade receivables
Neither past due nor impaired 5,598 4,510
Past due but not impaired 1,279 1,687
Past due and impaired 75 73
-------- --------
Total 6,952 6,270
-------- --------
The Group has charged GBP110,000 in respect of ECLs during the
year (2021: GBP52,000). Of this total, GBP2,000 is ECL's on trade
receivables and GBP108,000 is ECL's on the other receivables
balance.
The Group applies the IFRS9 simplified approach to measuring
Expected Credit Losses (ECLs) for trade receivables at an amount
equal to lifetime ECLs. The ECLs on trade receivables are
calculated based on actual credit loss experience over the
preceding two years on the total balance of trade receivables
before impairment and are adjusted for forward looking information.
The Group's credit loss experience has shown that ageing of
receivable balances is primarily due to normal collection process
issues rather than increased likelihood of non-recoverability. This
is shown in the fact that the Group has only experienced credit
losses of GBP1,000 in the preceding two years which is less than
0.0007% of the credit sales made in that period. Credit rating of
debtors are carefully monitored when initially offering credit and
the use of credit insurance and up front payments further mitigate
the risk of default. The Group has fully analysed the impact of
Covid-19 on the future ECLs and concluded that with the safeguards
outlined above and taking into consideration recent collection
patterns that there has not been material impact on the assessment
of ECLs.
The movement in the provision for ECLs on trade receivables is
as follows:
2022 2021
GBP'000 GBP'000
At 1 April (73) (21)
Additional provisions (2) (52)
Amounts used - -
Amounts recovered - -
-------- --------
At 31 March (75) (73)
-------- --------
The other receivables balance above of GBP2,790,000 (2021:
GBP3,463,000) primarily relates to the float account payment
arrangement that several of the Group's suppliers operate. The
Group pays these suppliers in advance and is then able to utilise
that balance for future orders.
Within the prepayments balance above, GBP160,000 (2021:
GBP201,000) relates to the incremental costs of obtaining contracts
with customers. Park Christmas Savings agents earn commission
rewards on their orders and this is an incremental cost of
obtaining their contracts.
For multi-retailer redemption products (vouchers, cards and
e-codes), the commission costs are prepaid. The costs are
recognised in cost of sales when the services are transferred to
the customer, i.e. when the customer redeems their product or when
charges are levied.
The prepayment at 31 March 2022 relates to Christmas 2022 and
will be recognised in cost of sales over the forthcoming six months
in proportion to the actual timing of redemption and charges.
Commission reward payments for single retailer redemption
products and other goods are expensed as incurred.
The movement in the prepayment of costs of obtaining contracts
with customers is as follows:
2022 2021
GBP'000 GBP'000
At 1 April 201 156
Prepaid commissions 160 201
Commissions recognised in cost of sales (201) (156)
-------- --------
At 31 March 160 201
-------- --------
No impairment losses were recognised during the year (2021:
GBPnil).
Company
2022 2021
GBP'000 GBP'000
Receivables from related parties 870 22,457
Other receivables 729 214
Prepayments and accrued income 237 36
-------- --------
1,836 22,707
-------- --------
Other receivables are due within one month.
The receivables from subsidiaries balances stated above are
shown net of the following provisions:
2022 2021
GBP'000 GBP'000
Provision against inter company loans 10,967 10,967
-------- --------
The movement in the provision against inter company loans is as
follows:
2022 2021
GBP'000 GBP'000
At 1 April (10,967) (10,967)
Additional provisions - -
Amounts used - -
Amounts recovered - -
-------- --------
At 31 March (10,967) (10,967)
-------- --------
Management have considered the probability of default, the loss
given default when the borrower is not capable of repaying on
demand and the discount rate when calculating ECLs. The company has
fully analysed the impact of Covid-19 on the future ECLs and
concluded that there has not been a material impact on the
assessment of ECLs.
13 Monies held in trust
Group
2022 2021
GBP'000 GBP'000
Park Prepayments Protection Trust 49,782 51,534
E money Trust 69,754 69,374
Ring fenced funds 1 11,146
-------- --------
Monies held in trust 119,537 132,054
-------- --------
On 13 August 2007 a declaration of trust constituted PPPT to
hold customer prepayments. Park Prepayments Trustee Company
Limited, as trustee of the trust, holds this money on behalf of the
agents.
The conditions of the trust that allow the release of money to
the Group are summarised below:
1 Purchase of products to be supplied to customers.
2 Supply of products to customers less any amounts already
received under condition 1 (above).
3 Amounts required as a security deposit to any credit card
company or other surety.
4 Amounts payable for VAT.
5 Amount equal to any bond required by the Christmas Prepayments
Association (CPA).
6 Amounts to meet its working capital requirements.
7 Residual amounts upon completion of despatch of all orders in
full.
Products for this purpose means goods, vouchers, prepaid cards
or other products ordered by customers.
Prior to any such release of monies under condition 6 above, the
trustees of PPPT require a statement of adequacy of working capital
from the directors of Park Retail Limited, stating that it will
have sufficient working capital for the year.
A summary of the main provision of the deeds and a copy of the
trust deed is available at www.getpark.co.uk.
On 16 February 2010 a declaration of trust constituted the PCSET
to hold the e-money float in accordance with regulatory
requirements. The e-money float represents the value of the
obligations of the company to cardholders and redeemers.
The ring fenced funds, represent amounts segregated from Group
cash balances in respect of monies held on code which are not
subject to regulatory requirements. As a result the amounts are not
held within the E money Trust. Given there is no regulatory, Trust
or other contractual requirement to hold these in Trust, a decision
was taken in the year to release them to cash.
The release of these funds is disclosed within working capital
movements in monies held trust. This ensures the inflow to cash is
consistent with the previous outflow postings, as these amounts
represented day to day transactional activity.
Monies held in trust are invested in deposit accounts with
maturity dates of up to two years. The timing of the release of the
monies to the Group from PPPT is as detailed above and is expected
to be within 12 months of the year end. The release of monies from
the E money Trust occurs as the obligations fall due.
14 Cash
Group
2022 2021
GBP'000 GBP'000
Cash at bank and in hand 20,842 31,415
-------- --------
All cash held at bank at 31 March 2022 and 31 March 2021 was
held in instant access accounts.
Company
2022 2021
GBP'000 GBP'000
Cash at bank and in hand 20,124 32,501
-------- --------
All cash held at bank at 31 March 2022 and 31 March 2021 was
held in instant access accounts.
15 Assets held for sale
Group
2022 2021
GBP'000 GBP'000
Asset held for sale at 1 April - 3,153
Additions - 1,024
Disposals - (4,177)
-------- --------
Asset held for sale at 31 March - -
-------- --------
2022 2021
GBP'000 GBP'000
Liabilities directly associated with assets
held for sale at 1 April - -
Additions - 1,077
Disposals - (1,077)
-------- --------
Liabilities directly associated with assets
held for sale at 31 March - -
-------- --------
The assets held for sale balance as at 1 April 2020 related to
the Valley Road property, held by the Group's subsidiary at the
time, Budworth Properties Limited. This subsidiary was sold on 11
August 2020 to HP (Valley Road) Limited for cash consideration
generating a profit on sale of GBP41,000 as shown below. As part of
the transaction the Group has leased back space for the small
number of remaining operational staff. The gain is included in the
profit for the prior year in the statement of other comprehensive
income.
2022 2021
GBP'000 GBP'000
Proceeds - 3,118
Less NBV of subsidiary at date of disposal - (3,077)
-------- --------
Profit on disposal - 41
-------- --------
The assets transferred to assets held for sale on 30 September
2020, and associated liabilities relate to the Group's then
subsidiary Fisher Moy International Limited (FMI). These were both
also disposed of during the prior year as the Group sold Fisher Moy
International on 7 December 2020 to Neon Agency Ltd for GBP50,000
cash consideration and GBP134,000 deferred consideration. This
generated a profit on sale of GBP164,000 as shown below. This gain
is included in the profit for the prior year in the statement of
other comprehensive income.
2022 2021
GBP'000 GBP'000
Proceeds - 184
Less NBV of subsidiary at date of disposal - (20)
-------- --------
Profit on disposal - 164
-------- --------
At the time of its sale, FMI had cash in the bank of GBP52,000.
This had been deducted from the proceeds from the sale of Budworth
(GBP3,118,000) and cash consideration from the sale of FMI
(GBP50,000) in arriving at the Sale of assets held for sale figure
of GBP3,116,000 per the Statement of Cash Flows.
GBP94k receipt in the current year relates to the inflow of
prior year debtors in relation to the aforementioned sale.
16 Trade and other payables
Group
2022 2021
GBP'000 GBP'000
Non-current
Lease liabilities (note 18) 4,500 4,666
-------- --------
4,500 4,666
-------- --------
2022 2021
GBP'000 GBP'000
Trade payables 52,036 52,776
Payables in respect of card and vouchers 22,035 25,302
Bank overdraft 660 -
Lease liabilities (note 18) 569 563
Other taxes and social security payable 916 1,211
Other payables 2,456 2,765
Accruals 2,161 2,501
-------- --------
Other payables 6,102 7,040
Deferred income 7,816 11,152
-------- --------
88,649 96,270
-------- --------
Trade payables fall due as follows:
2022 2021
GBP'000 GBP'000
Not later than one month 52,036 52,683
Later than one month and not later than
three months - 93
-------- --------
52,036 52,776
-------- --------
Trade payables include savers' prepayments for products that
will be supplied prior to Christmas 2022, upon confirmation of
order. Until orders are confirmed savers' prepayments are repayable
on demand.
Within the other taxes and social security payable balance at 31
March 2021 is GBP697,954 of VAT deferred after taking advantage of
the government's COVID-19 VAT deferral scheme. This was repaid in
full during the year.
Payables in respect of cards and vouchers fall due as
follows:
2022 2021
GBP'000 GBP'000
Not later than one month 21,512 24,822
Later than one month and not later than
three months 523 480
-------- --------
22,035 25,302
-------- --------
Payables in respect of cards and vouchers include balances due
to both customers (GBP18.7m (2021: GBP19.9m)) and retailers in
respect of flexecash(R) cards, and amounts due to retailers for
Love2shop vouchers.
Other payables are due within one month.
Deferred income is in respect of multi-retailer redemption
products (vouchers, cards and e-codes). Revenue is deferred for
service fees and non-redemption income, net of discount.
The movement in deferred revenue is as follows:
2022 2021
GBP'000 GBP'000
At 1 April 11,152 7,359
Revenue deferred in the period 6,281 8,363
Revenue recognised in the period (9,617) (4,570)
-------- --------
At 31 March 7,816 11,152
-------- --------
Revenue is recognised when the customer redeems their product or
when charges are levied. Over 85% of multi-retailer redemption
products are redeemed within 12 months of issue, with the
associated revenue being recognised in the same period.
Company
2022 2021
GBP'000 GBP'000
Current
Other taxes and social security payable 614 675
Payables to subsidiaries 16,921 46,131
Other payables 109 148
Accruals and deferred income 303 448
-------- --------
Other payables 17,947 47,402
-------- --------
Other payables are due within one month.
Payables to subsidiaries are not interest bearing, unsecured and
are repayable on demand.
17 Provisions
Group
Vouchers Corporate gifted
cards
-------- --------------- -------- ----------------------------------- --------
Gross Impact Net Gross Impact Net Total
of discounting of discounting
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- --------------- -------- -------- --------------- -------- --------
At 1 April 2021 34,843 (23) 34,820 43,124 (29) 43,095 77,915
Arising on vouchers/cards
despatched in period
at date of despatch 13,676 (105) 13,571 38,255 (256) 37,999 51,570
Increase in provision
arising from the
unwind of the discount
recorded on initial
recognition - (16) (16) - (5) (5) (21)
Vouchers/cards
issued in prior
periods, utilised
in current period (29,744) - (29,744) (38,213) - (38,213) (67,957)
-------------------------- -------- --------------- -------- -------- --------------- -------- --------
At 31 March 2022 18,775 (144) 18,631 43,166 (290) 42,876 61,507
-------------------------- -------- --------------- -------- -------- --------------- -------- --------
The voucher provision is made in respect of unredeemed vouchers
which are included at the present value of expected redemption
amounts. This comprises the anticipated amounts payable to
retailers on redemption after applying an appropriate discount rate
to take into account the expected timing of payments. The
anticipated amounts payable to retailers are arrived at by
reference to historical data as to voucher redemption patterns.
Whilst the voucher redemption provision covers a number of years of
expected redemptions, over 85% of vouchers are redeemed within 12
months of issue.
Provision is made for redemption of corporate gifted cards where
the cardholder does not have the right of redemption.
The unwinding of the discount recorded on initial recognition in
respect of vouchers and cards is included within cost of sales in
the statement of profit or loss. The discount rate used is 1.35%
(2021: 0.11%).
18 Leases
Group as a lessee
The Group leases assets including land and buildings and plant
and equipment. Information about leases for which the Group is a
lessee is presented below.
Land and Plant and
Buildings Equipment Total
Right of Use Assets GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 April 2021 4,307 642 4,949
Additions - 180 180
Remeasurement - 11 11
---------- ---------- --------
At 31 March 2022 4,307 833 5,140
---------- ---------- --------
Accumulated Depreciation
At 1 April 2021 522 54 576
Charge in year 337 233 570
Disposals - - -
---------- ---------- --------
At 31 March 2022 859 287 1,146
---------- ---------- --------
Net book amount
At 31 March 2022 3,448 546 3,994
---------- ---------- --------
Land and Plant and
Buildings Equipment Total
Right of Use Assets GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 April 2020 4,003 75 4,078
Additions 404 641 1,045
Disposals (100) (74) (174)
---------- ---------- --------
At 31 March 2021 4,307 642 4,949
---------- ---------- --------
Accumulated Depreciation
At 1 April 2020 262 17 279
Charge in year 344 78 422
Disposals (84) (41) (125)
---------- ---------- --------
At 31 March 2021 522 54 576
---------- ---------- --------
Net book amount
At 31 March 2021 3,785 588 4,373
---------- ---------- --------
The Group's largest land and buildings leases relate to floors 3
and 4, 20 Chapel Street Liverpool.
The lease remeasurement is the result of the renewal of the
rolling 12 month lease for hosting services from the prior year at
a higher rate.
There are no securities held or financial covenants required to
be maintained in respect of these leases.
There is a dilapidation provision of GBP50,000 (2021: GBP50,000)
related to the Chapel Street lease. The debit is held within
leasehold improvements in Property, plant and equipment (note 9),
and the credit with Trade and other payables (note 16).
Plant and
Land and Buildings Equipment Total
Lease Liabilities GBP'000 GBP'000 GBP'000
At 1 April 2021 4,657 572 5,229
New Leases - 174 174
Remeasurements - 11 11
Interest Expense 244 16 260
Lease payments (347) (258) (605)
------------------ ---------- --------
At 31 March 2022 4,554 515 5,069
------------------ ---------- --------
Plant and
Land and Buildings Equipment Total
Lease Liabilities GBP'000 GBP'000 GBP'000
At 1 April 2020 4,293 58 4,351
New Leases 404 621 1,025
Interest Expense 238 7 245
Lease payments (262) (80) (342)
Disposals (16) (34) (50)
------------------ ---------- --------
At 31 March 2021 4,657 572 5,229
------------------ ---------- --------
The cost relating to variable lease payments that do not depend
on an index or a rate amounted to GBPnil in the period.
There were no leases with residual value guarantees or leases
not yet commended to which the Group is committed.
Maturity Analysis - contractual undiscounted cash flows
A maturity analysis of lease liabilities based on undiscounted
gross cash flow is reported in the table below:
2022 2021
GBP'000 GBP'000
Less than one year 569 563
One to Five years 2,686 2,563
More than Five Years 3,481 4,021
-------- --------
Undiscounted lease liabilities at 31 March 6,736 7,147
-------- --------
Lease Liabilities included in the Statement of Financial
Position
2022 2021
GBP'000 GBP'000
Current 569 563
Non-current 4,500 4,666
-------- --------
Discounted lease liabilities at 31 March 5,069 5,229
-------- --------
Amounts recognised in the statement of profit or loss
2022 2021
GBP'000 GBP'000
Interest on Lease Liabilities 260 245
Expenses relating to short term leases
(included within administrative expenses) 7 305
-------- --------
Total amount recognised in the statement
of profit or loss for the year ended 31
March 267 550
-------- --------
Amounts Recognised in the statement of cash flows
2022 2021
GBP'000 GBP'000
Total Cash Outflows for leases for the
year ended 31 March 605 342
-------- --------
i. Real estate leases
The Group leases land and buildings for its head office and
operations facilities. The lease for the Group's head office runs
for 10 years, and operations facilities for between 5 to 7 years.
The head office lease includes an option to renew the lease for a
period of up to 5 years at the end of the contract term.
Extension Options
The 10 year head office lease contains an extension option of 5
years. Where practicable, the Group seeks to include extension
options in new leases to provide operational flexibility. The
extension options held are exercisable only by the Group and not by
the lessors. The Group assesses at lease commencement whether it is
reasonably certain to exercise the extension options. The Group
reassesses whether it is reasonably certain to exercise the option
if there is a significant event or significant change in the
circumstances within its control. The head office has been
accounted for on the basis that the extension option will be taken
and is therefore accounted for on a 15 year basis.
ii. Other Leases
During the year Group signed a new lease relating to a direct
internet line which had a term of 3 years, and leased a printer
with a term of 5 years.
Extension Options
The 12 month rolling lease for data hosting equipment signed in
the prior year was renewed in the year at a higher rate, which
caused the lease liability and right of use asset to be remeasured.
The term the lease has been capitalised over has remained
consistent at 3 years, as this is the length of time the Group
believe it will be renewed for.
iii. Finance Lease
In November 2019 the Group sublet a portion of its Oxford office
building. The Group classified the sub-lease as a finance lease,
because the sub-lease was for the whole remaining term of the head
lease, which ended 31 January 2021. This lease was disposed of in
December 2020 when the Group sold its subsidiary company FMI, which
held the both the Oxford office building lease and sub-lease.
2022 2021
GBP'000 GBP'000
Finance lease income (Land and Buildings) - 7
-------- --------
The Group has no lease receivables, with no lease payments to be
received after the reporting date.
19 Pension and other schemes
Group and Company
Defined Benefit Plan
The Group operates two defined benefit pension schemes, Park
Food Group plc Pension Scheme (PF) and Park Group Pension Scheme
(PG), providing benefits based on final pensionable pay. Both
schemes are closed to future accrual of benefit based on service.
The assets of the schemes are held separately from those of the
company in trustee administered funds. Contributions to the schemes
are determined by a qualified actuary on the basis of triennial
valuations.
The company operates the PF defined benefit scheme.
Both schemes are subject to the funding legislation which came
into force on 30 December 2005, outlined in the Pensions Act 2004.
This, together with documents issued by the Pensions Regulator, the
Guidance Notes adopted by the Financial Reporting Council, set out
the framework for funding defined benefit occupational pension
plans in the UK. The trustees of the schemes are required to act in
the best interests of the schemes beneficiaries and are responsible
for setting the investment, funding and governance policies of the
fund. The schemes are administered by an independent trustee
appointed by the Group. Appointment of the trustees is determined
by the schemes' trust documentation.
The Group and company has applied IAS 19 Employee Benefits
(revised 2011) and the following disclosures relate to this
standard. The present value of the scheme liabilities is measured
by discounting the best estimate of future cashflows to be paid out
of the scheme using the projected unit credit method. All actuarial
gains and losses have been recognised in the period in which they
occur in other comprehensive income. There have been no scheme
amendments, curtailments or settlements in the year.
For the purposes of IAS19 the results of the actuarial valuation
as at 31 March 2019, for both schemes, which was carried out by a
qualified independent actuary, have been updated on an approximate
basis to 31 March 2022. There have been no changes in the valuation
methodology adopted for this years disclosures compared to the
previous year.
The schemes typically expose the Group to actuarial risks such
as investment risk, interest rate risk, salary growth risk,
mortality risk and longevity risk.
The amounts recognised in the statement of financial position
are as follows:
Group Company
Restated**
Restated* 1 April
2022 2021 2020 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of pension
obligation (23,898) (24,956) (21,279) (1,560) (1,577)
Fair value of scheme
assets 25,225 25,446 23,889 3,606 3,515
-------- --------- ---------- -------- --------
Net pension surplus 1,327 490 2,610 2,046 1,938
-------- --------- ---------- -------- --------
- comprising schemes
in asset surplus 2,046 1,938 2,610 - -
-------- --------- ---------- -------- --------
- comprising schemes
in asset deficit (719) (1,448) - - -
-------- --------- ---------- -------- --------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
**The 2020 results have been restated as set out in the
Statement of significant accounting policies.
Details with regards to originally reported numbers and the
adjustments made to them are included in the tables below.
The amounts recognised in the statement of profit or loss are as
follows:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Past service cost - 73 - -
Net interest income 31 (99) (41) (47)
-------- -------- -------- --------
Components of defined benefit
income recognised in the
statement of profit or
loss 31 (26) (41) (47)
-------- -------- -------- --------
Following a High Court ruling in October 2018 the Group is
required to equalise Guaranteed Minimum Payments (GMPs) for men and
women. The impact of this for the year to 31 March 2022 was GBPnil
(2021: GBP73,000).
The costs are all recognised within administration expenses in
the income statement.
Analysis of amount to be recognised in the SOCI:
Group Company
Restated*
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Return on scheme assets (260) 1,525 119 4
Experience gains arising
on the defined benefit
obligation (337) 147 (23) 23
Effects of changes in the
demographic assumptions
underlying the present
value of the defined benefit
obligation (386) (377) (7) 2
Effects of changes in the
financial assumptions underlying
the present value of the
defined benefit obligation 1,851 (3,441) (22) (122)
-------- --------- -------- --------
Remeasurements of defined
benefit schemes recognised
in the SOCI 868 (2,146) 67 (93)
-------- --------- -------- --------
Scheme assets
It is the policy of the trustees of the company to review the
investment strategy at the time of each funding valuation. The
trustees' investment objectives and the processes undertaken to
measure and manage the risks inherent in the scheme's investment
strategy are documented in the scheme's Statement of Investment
Principles.
Fair value of scheme assets:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Fixed Interest Gilt Fund 1,863 1,483 - -
Diversified Growth Assets
(DGA) 1,981 3,393 - -
Gilts 3,525 3,473 3,525 3,473
LDI 2,303 3,110 - -
Loan Fund 1,866 3,012 - -
Multi Asset Credit 3,553 4,463 - -
Index Linked Gilts 6,069 5,433 - -
Cash and other 4,065 1,079 81 42
-------- -------- -------- --------
Total assets 25,225 25,446 3,606 3,515
-------- -------- -------- --------
None of the fair values of the assets shown above include any of
the company's own financial instruments or any property occupied
by, or other assets used by, Appreciate Group plc. All of the
schemes assets have a quoted market price in an active market with
the exception of the property and the Trustee's bank account
balance.
The movement in the fair value of scheme assets is as
follows:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Fair value of scheme
assets at the start
of the period 25,446 23,889 3,515 3,528
Interest income 529 566 73 83
Return on scheme
assets (260) 1,525 119 4
Contributions by
employer - - - -
Contributions by
employees - - - -
Benefits paid (490) (534) (101) (100)
-------- -------- -------- --------
25,225 25,446 3,606 3,515
-------- -------- -------- --------
Actual return on scheme assets for the year to 31 March 2022 was
(GBP273,000) (2021: GBP2,004,000) for the PG scheme and GBP127,000
(2021: GBP87,000) for the PF scheme.
Present value of obligations
The movement in the present value of the defined benefit
obligation is as follows:
Group Company
Restated*
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit
obligation as originally
reported 24,956 19,683 1,577 1,544
Prior year restatement** - 1,596 - -
-------- --------- -------- --------
Opening defined benefit
obligation (restated)** 24,956 21,279 1,577 1,544
Interest cost 560 467 32 36
Actuarial losses/(gains)
due to scheme experience 337 (147) 23 (23)
Actuarial losses due to
changes in demographic
assumptions 386 377 7 (2)
Actuarial (gains)/losses
due to changes in financial
assumptions (1,851) 3,441 22 122
Benefits paid (490) (534) (101) (100)
Past service costs - 73 - -
-------- --------- -------- --------
23,898 24,956 1,560 1,577
-------- --------- -------- --------
The average duration of the defined benefit obligation at the
period ended 31 March 2022 is 8 years for the PF scheme and 19
years for the PG scheme.
Significant actuarial assumptions
The following are the principal actuarial assumptions at the
reporting date (expressed as weighted averages):
The following information relates to the PG scheme:
2022 2021
% per annum % per annum
--------------------------------------------- ----------- ------------
Financial and related actuarial assumptions:
Discount rate 2.80 2.10
Inflation (RPI) 3.60 3.30
Inflation (CPI) 3.20 2.70
Future salary increases 3.60 3.30
Allowance for revaluation of deferred
pensions of CPI or 5% pa if less 3.20 2.70
Allowance for revaluation of deferred
pensions of CPI or 2.5% pa if less 2.50 2.50
Allowance for pension in payment
increases of CPI or 5% pa if less 3.10 2.70
Allowance for pension in payment
increases of CPI or 3% pa if less 2.40 2.20
Allowance for pension in payment
increases of CPI or 2.5% pa if less 2.10 1.90
Allowance for commutation of pension 80% of Post 100% of Post
for cash at retirement A Day A Day
---------------------------------------------- ----------- ------------
The following information relates to the PF scheme:
2022 2021
% per % per
annum annum
--------------------------------------------- ------ ------
Financial and related actuarial assumptions:
Discount rate 2.70 2.10
Inflation (RPI) 4.10 3.30
Allowance for revaluation of deferred
pensions of CPI or 8.5% pa if less 4.10 3.30
---------------------------------------------- ------ ------
The mortality assumptions adopted for the PG scheme are 105% of
the standard tables S2PxA, year of birth, no age rating for males
and females, projected using Continuous Mortality Investigation
(CMI) _ 2021 converging to 1.25% pa. These imply the following life
expectancies:
2022 2021
Years Years
------------------------------- ----- -----
Life expectancy at age 65 for:
Male - retiring in 2022 21.3 21.3
Female - retiring in 2022 23.2 23.2
Male - retiring in 2042 22.3 22.3
Female - retiring in 2042 24.4 24.5
------------------------------- ----- -----
The mortality assumptions adopted for the PF scheme are 89% of
the standard tables S2PxA, year of birth, no age rating for males
and females, projected using Continuous Mortality Investigation
(CMI) _ 2021 converging to 1.25% pa. These imply the following life
expectancies:
2022 2021
Years Years
------------------------------- ----- -----
Life expectancy at age 65 for:
Male - retiring in 2022 22.7 22.5
Female - retiring in 2022 24.6 24.4
Male - retiring in 2042 24.0 23.5
Female - retiring in 2042 26.2 25.7
------------------------------- ----- -----
Sensitivity analysis on significant actuarial assumptions:
The following table summarises the impact on the defined benefit
obligation at the end of the reporting period, if each of the
significant actuarial assumptions above were changed, in isolation.
The inflation sensitivity includes the impact of changes to the
assumptions for revaluation, pension increases and salary growth.
The sensitivities shown below are approximate.
Change in assumption Change in liabilities
----------------- --------------------------- ---------------------
PG scheme:
Discount rate decrease of 0.25% pa increase by 4.8%
Discount rate increase of 0.25% pa decrease by 4.5%
Rate of inflation decrease of 0.25% pa decrease by 2.7%
Rate of inflation increase of 0.25% pa increase by 2.8%
Rate of mortality decrease in life expectancy decrease by 3.1%
of 1 year
Rate of mortality increase in life expectancy increase by 3.1%
of 1 year
PF scheme:
Discount rate decrease of 0.25% pa increase by 2.4%
Discount rate increase of 0.25% pa decrease by 2.3%
Rate of inflation decrease of 0.25% pa decrease by 1.7%
Rate of inflation increase of 0.25% pa increase by 1.8%
Rate of mortality decrease in life expectancy decrease by 5.5%
of 1 year
Rate of mortality increase in life expectancy increase by 5.7%
of 1 year
----------------- --------------------------- ---------------------
The sensitivity assumption used in the year was 0.25% (2021:
0.25%). This is in line with the standard sensitivity analysis used
by pension advice providers in their disclosures to clients.
The schemes typically expose the group to actuarial risks such
as investment risk, interest rate risk, salary growth risk,
mortality risk and longevity risk. A decrease in corporate bond
yields, a rise in inflation or an increase in life expectancy would
result in an increase to the schemes liabilities. This would
detrimentally impact on the statement of financial position and may
give rise to increased charges in future income statements. This
effect would be partially offset by an increase in the value of the
schemes bond holdings. Additionally, caps on inflationary increases
are in place to protect the scheme against extreme inflation.
Funding
The group expects to contribute GBPnil to the PG scheme for the
accounting period commencing 1 April 2022. This is based upon the
current schedule of contributions following the actuarial valuation
carried out as at 31 March 2019. The best estimate of contributions
to be paid to the PF scheme is GBPnil per annum.
Defined contribution plan
The group makes contributions to a defined contribution pension
scheme which is insured with Aviva. It also makes contributions to
a defined contribution stakeholder pension plan, insured with NEST,
for employees who are not eligible to join the Aviva defined
contribution scheme, as well as to individual personal pension
plans for certain employees.
The total pension charge for the year to 31 March 2022 was
GBP731,000 (2021: GBP834,000) for the defined contribution pension
schemes. At 31 March 2022, contributions of GBP66,000 (2021:
GBP71,000) were outstanding, which represented the contributions
for the month of March.
20 Staff costs
Employee benefit expense for the Group during the year
(including executive directors)
2022 2021
GBP'000 GBP'000
Wages and salaries 13,559 14,997
Social security costs 1,387 1,510
Other pension costs 762 807
Share-based payments 259 247
Other benefits 47 60
-------- --------
16,014 17,621
-------- --------
Included within the above are staff costs of GBP1,232,000 (2021
restated*: GBP1,492,000) which have been capitalised as intangible
assets.
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
Included in the above for prior year there were redundancy costs
of GBP639,000 which relate to a one-off redundancy exercise. The
driving force behind this exercise was the closure of the hamper
packing part of the business.
Average monthly number of people (including executive directors)
employed
2022 2021
No. No.
Consumer 132 174
Corporate 162 170
All other segments 9 11
---- ----
Average number employed 303 355
---- ----
Key management compensation
2022 2021
GBP'000 GBP'000
Salaries and short term employee benefits 1,706 1,689
Post employment benefits 44 49
Share-based payments 220 204
-------- --------
1,970 1,942
-------- --------
Key management are deemed to be the Group's executive and
non-executive directors and the senior leadership team.
Details of directors' emoluments (including those of the highest
paid), pension contributions and details of share awards (including
options) can be found in the Remuneration Report.
21.a Share capital
Group and Company No of shares GBP'000
Authorised: Ordinary shares of 2p each
At 31 March 2021 and 2022 195,000,000 3,900
------------- -------
Allotted, called up and fully paid
At 31 March 2021 and 2022 186,347,228 3,727
------------- -------
21.b Share-based payments
SGP
On 21 December 2018, the Park Group Strategic Growth Plan was
adopted by the remuneration committee. This plan is for the benefit
of certain employees selected at the discretion of the committee.
The plan provides the participants with a pool of shares with a
value equal to 10% of any cumulative shareholder value created
above a compound hurdle of 10% per annum over a performance period
between 1 October 2018 and 30 September 2023. Each participant is
allocated a share of the pool. An overall cap on the maximum number
of shares that can be granted under the SGP is set at 5% of the
outstanding share capital at grant, to prevent excessive payouts or
dilution. Further details can be found in the Remuneration
Report.
In January 2021 an Incentive Plan was adopted by the
remuneration committee (AGIP). This plan was for the benefit of
certain employees at the discretion of the committee. The awards
consist of an allocation of shares, the final distribution of which
is dependent on certain profit targets. Each participating employee
can be awarded shares up to a maximum percentage of their salary,
determined by the committee at the date of notification of
eligibility for the award.
Subsequent to the year end, Tim Clancy (Group CFO) tendered his
resignation and will leave the business at the end of July 2022.
Following his departure from the Group in FY23, the total
accumulated SGP charge (31 March 2022: GBP0.2m) will be released to
the income statement in line with the requirements of the
accounting standard.
Appreciate Group plc 2009 LTIP
In June 2010, an LTIP was adopted by the remuneration committee
('2009 LTIP'). This plan was for the benefit of certain employees
selected at the discretion of the committee. The awards consist of
allocations of shares, the final distribution of which is dependent
on market performance targets. Each participating employee can be
awarded shares up to a maximum value of 100% of salary.
SAYE
This scheme is open to all employees. Under this scheme
employees enter into a savings contract for a period of three years
and agree to save a regular amount each month between GBP5 and
GBP500. Options are granted on commencement of the contract and
exercisable using the amount saved under the contract at the time
it terminates. Options under the scheme are granted at a discount
of 10% to the market price at the start of the contract and are not
subject to performance conditions.
Exercise of options is subject to continued employment. Options
lapse if an individual leaves the company by resigning or if they
choose to stop paying into their savings accounts. In either
instance they can withdraw their money they have already saved but
cannot exercise their options. Options must be exercised within six
months after the end of the three year savings period.
The tables below summarise the outstanding options and
awards:
SGP 2022 2021
--------------------- ---------------------
Number Weighted Number Weighted
average average
exercise exercise
price (p) price (p)
Outstanding at 1 April and 31
March 6,520,942 - 6,520,942 -
--------------------------------------- --------- ---------- --------- ----------
Exercisable at 31 March - - - -
--------------------------------------- --------- ---------- --------- ----------
2022 2021
--------------------------------------- --------- ---------- --------- ----------
SGP awards outstanding at end
of period
Weighted average remaining contractual 1.5 years 2.5 years
life
--------------------------------------- --------- ---------- --------- ----------
LTIP 2022 2021
------------------- ---------------------
Number Weighted Number Weighted
average average
exercise exercise
price (p) price (p)
Outstanding at 1 April - - 162,877 -
--------------------------------------- ------- ---------- --------- ----------
Granted 402,209 -
--------------------------------------- ------- ---------- --------- ----------
Expired - - (162,877) -
--------------------------------------- ------- ---------- --------- ----------
Outstanding at 31 March 402,209 - - -
--------------------------------------- ------- ---------- --------- ----------
Exercisable at 31 March - - - -
2022 2021
--------------------------------------- ------- ---------- --------- ----------
LTIP awards outstanding at end
of period
Weighted average remaining contractual 2.2 years 0.0 years
life
--------------------------------------- ------- ---------- --------- ----------
SAYE 2022 2021
--------------------- ---------------------
Number Weighted Number Weighted
average average
exercise exercise
price (p) price (p)
--------------------------------------- --------- ---------- --------- ----------
Outstanding at 1 April 319,750 12.20 619,176 12.20
Cancelled - 12.20 (107,782) 12.20
Lapsed (319,750) 12.20 (191,644) 12.20
--------------------------------------- --------- ---------- --------- ----------
Outstanding at 31 March - 12.20 319,750 12.20
--------------------------------------- --------- ---------- --------- ----------
Exercisable at 31 March - - - -
2022 2021
--------------------------------------- --------- ---------- --------- ----------
SAYE awards outstanding at end
of period
Weighted average remaining contractual 0.0 years 0.9 years
life
--------------------------------------- --------- ---------- --------- ----------
Details of the weighted average fair value of the awards made in
the year, together with how this value was calculated, can be found
below.
The fair values of awards under the LTIP and the SAYE are
calculated at the date of grant using the monte carlo simulation
model and the binomial option pricing model respectively. The
significant inputs into the model and assumptions used in the
calculations are as follows:
LTIP SAYE SGP 2018-23 LTIP
2017-20 2018-21 2021-24
----------------------------------------------- --------- -------- ----------- --------
Grant date 02.10.17 23.07.18 21.12.18 22.06.21
Share price at grant date 82.00p 72.75p 71.50p 26.90p
Exercise price Nil 67.30p Nil Nil
Number of shares under option or provisionally
awarded 1,483,583 811,734 N/a 402,209
Option/award life (years) 2.69 3.11 5.00 3.00
Vesting period (years) 2.69 3.00 4.88 3.00
Expected volatility 33% 28% 29% N/a
Risk free rate 0.76% 0.80% 0.91% N/a
Expected dividend yield 4.00% 4.19% 4.34% N/a
Forfeiture rate 0% 0% 0% 0%
Fair value per option/award 42.80p 12.00p N/a 26.90p
Total fair value of awards N/a N/a GBP990,000 N/a
----------------------------------------------- --------- -------- ----------- --------
In respect of 2009 LTIP awards the expected volatility of the
share price was based on historical movements in the share price,
calculated as the standard deviation of percentage returns on the
shares in the period since 2006. The risk free interest rate is
based on the yield available on zero coupon UK Government bonds of
a term consistent with the assumed option life. Projected dividend
yield was based on historical dividend payments in the three years
prior to the dates of the awards, relative to the average annual
share prices in that period. A forfeiture rate of nil is assumed on
the basis that awards are granted to senior management.
In respect of the AGIP a valuation of the deferred awards is not
necessary as the fair value of the awards are equal to the share
price at grant and the awards are in the form of nil-cost options
with no share price based performance conditions.
In respect of SGP, the expected volatility of the share price
has been calculated using the volatility of the company's TSR using
daily data over a period commensurate with the remaining
performance period as at the date of grant. The risk free interest
rate has been set as the yield as at the calculation date on zero
coupon Government bonds with remaining term commensurate with the
projection period of the award life. Projected dividend yield was
based on actual dividend yield at the date of grant. A forfeiture
rate of nil is assumed on the basis that awards are granted to
senior management.
The scheme rules for the LTIP includes a provision which gives
the remuneration committee the discretion to settle up to 50% of
the value of shares to be awarded in cash. On the assumption that
Appreciate intends to settle the entire obligation in shares, there
is considered to be no present obligation and so these awards have
been valued and accounted for as equity settled share-based
payments.
All 2009 LTIP awards and the SGP incorporate a market condition
(TSR), which is taken into account in the grant date measurement of
fair value.
The Group recognised a total charge of GBP260,000 (2021:
GBP247,000) related to equity settled share-based transactions
during the year ended 31 March 2022. This charge was split across
the schemes as follows:
2022 2021
GBP'000 GBP'000
---------------- ------- -------
LTIP 2016-19 - -
LTIP 2017 - 20 - 5
LTIP 2021 - 24 22 15
LTIP 2022 - 25 34 -
SGP 2018-23 198 198
SAYE 2018-21 6 29
---------------- ------- -------
260 247
---------------- ------- -------
22 Dividends
Amounts recognised as distributed to equity holders in the
year:
2022 2021
GBP'000 GBP'000
Interim dividend for the year ended 31 March
2021 of 0.40p (31 March 2020:0.00p) 745 -
Final dividend for the year ended 31 March
2021 of 0.60p (31 March 2020:0.00p) 1,118 -
-------- --------
1,863 -
-------- --------
An interim dividend of 0.60p per share in respect of the
financial year ended 31 March 2022 was paid on 6 April 2022 and
absorbed GBP1,118,083 of shareholders' funds. In addition, the
directors are proposing a final dividend in respect of the
financial year ended 31 March 2022 of 1.20p per share which will
absorb an estimated GBP2,236,000 of shareholders' funds. The final
dividend will be paid on 3 October 2022 to shareholders who are on
the register of members at the close of business on 26 August 2022.
Neither of these dividends were paid or provided for in the
year.
23 Reconciliation of profit/(loss) for the year to net cash
(outflow)/inflow from operating activities
Group Company
Restated*
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) for
the year 4,392 (275) (2,357) (2,233)
Adjustments for:
Tax 1,251 138 (390) (441)
Interest income (379) (783) (26) (58)
Interest expense 451 360 - -
Research and development
tax credit - (98) - -
Depreciation and
amortisation 1,866 1,791 114 184
Impairment of other
intangibles 869 - - -
Impairment of goodwill 77 218 - -
Profit on sale of
investments - - - 757
Profit on sale of
assets held for sale - (205) - -
Loss on sale of property,
plant and equipment
and other intangibles - 544 - 6
Increase in inventories (1,563) (798) - -
(Increase)/decrease
in trade and other
receivables (970) (1,841) (708) 286
(Decrease)/increase
in trade and other
payables (8,243) 9,500 (245) 680
Movement in balances
with related parties - - (5,733) 5,740
Impairment of investment - - - (924)
(Decrease)/increase
in provisions (16,408) 24,113 - -
Decrease/(increase)
in monies held in
trust 12,517 (29,360) - -
Movement in retirement
benefit asset 31 (26) (40) (46)
Translation adjustment 5 3 - -
Share-based payments 260 247 260 247
-------------- ---------------- ------------- -------------
Net cash (outflow)/inflow
from operating activities (5,844) 3,528 (9,125) 4,198
-------------- ---------------- ------------- -------------
*The 2021 results have been restated as set out in the Statement
of significant accounting policies.
The movement in Monies held in trust account includes the
following:-
a) A one-off transfer of GBP4.8m from Cash to Monies held in
trust was made during May 2021.
b) Release of ring fenced funds to Cash amounting to GBP11.1m
in September 2021. Further information is provided in note
13.
24 Capital and other financial commitments
Group and Company 2022 2021
GBP'000 GBP'000
Contracts placed for future capital expenditure
not provided in the financial statements - 220
-------------------- -------------------
25 Related party transactions
Group
Transactions between the Group's wholly owned subsidiaries,
which are related party transactions, have been eliminated on
consolidation and are therefore not disclosed in this note.
There are no transactions with key management personnel other
than those disclosed in the directors' Remuneration Report and note
20.
Company
The following transactions with subsidiaries occurred in the
year:
2022 2021
GBP'000 GBP'000
Dividends received - -
-------- --------
The Company did not charge for any intercompany IT services,
interest or rental income in the year.
Year end balances arising from transactions with
subsidiaries
2022 2021
GBP'000 GBP'000
Receivables from subsidiaries (note 12) 870 22,457
-------- --------
Payables to subsidiaries (note 16) 16,921 46,131
-------- --------
The receivables balances stated above are shown net of
provisions, as set out in note 12.
The payables to subsidiaries arise mainly due to cash collected
on behalf of other subsidiaries. All balances are repayable on
demand.
Appreciate Group plc acts as a treasury management function for
the other Group companies, hence why the related party balances
move despite no related party transactions taking place.
26 Financial instruments
The Group's activities expose it to a variety of risks: market
risk (including interest rate and foreign currency risk), credit
risk and liquidity risk. The Group has in place risk management
policies that seek to limit the adverse effect on the financial
performance of the Group by using various instruments and
techniques.
The financial assets and financial liabilities of the Group and
the company are detailed below:
Group 2022 2021
Notes GBP'000 GBP'000
Financial assets
Monies held in trust 13 119,537 132,054
Cash at bank and in hand 14 20,842 31,415
Trade receivables 12 6,877 5,725
Other receivables 12 2,790 3,463
-------- --------
150,046 172,657
-------- --------
Financial liabilities
Trade payables 16 52,036 52,776
Payables in respect of cards and
vouchers 16 22,035 25,302
Other payables 16 2,456 2,765
Lease liabilities 18 5,069 5,229
-------- --------
81,596 86,072
-------- --------
Company 2022 2021
Notes GBP'000 GBP'000
Financial assets
Cash at bank and in hand 14 20,124 32,501
Receivables from subsidiaries 12 870 22,457
Other receivables 12 729 214
-------- --------
21,723 55,172
-------- --------
Financial liabilities
Trade payables 16 - -
Amounts due to related parties 16 16,921 46,131
Other payables 16 109 148
-------- --------
17,030 46,279
-------- --------
For further details of each of the financial assets and
financial liabilities, see note numbers as detailed above.
Due to their relatively short maturity, the carrying amounts of
all financial assets and financial liabilities approximate to their
fair values.
The provisions for unredeemed vouchers and corporate gifted
cards are not a financial liability and are therefore excluded from
the table above.
Interest rate risk
Due to the significant levels of cash and cash equivalents held
by the Group and in trust, the Group has an exposure to interest
rates. In respect of all other financial assets and liabilities,
the Group does not have any interest rate exposure.
A 0.5% movement in the interest rate applied to cash and cash
equivalents, monies held in trust and other current financial
assets would change the profit before tax (PBT) by approximately
GBP846,000 (2021: 0.5% movement would change the PBT by
approximately GBP884,000).
Foreign currency risk
The Group buys and sells goods denominated in non-sterling
currencies, principally euros. As a result, movements in exchange
rates can affect the value of the Group's income and expenditure.
The Group's exposure in this area is not considered to be
significant.
Credit risk
Credit risks arise principally from the Group's cash and cash
equivalents, monies held in trust and trade receivables.
The Group gives careful consideration to which organisations it
uses for its banking services in order to minimise credit risk. The
Group seeks to limit the level of credit risk on its cash balances
by only placing funds with UK counterparties that have high credit
ratings.
Credit evaluations are performed for all customers. Management
has a policy in place and the exposure to credit risk is monitored
on an ongoing basis. The majority of trade receivables are subject
to credit insurance, which further reduces credit risk.
At the year end there were no significant concentrations of
risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the statement of
financial position.
Liquidity risk
The Group manages liquidity risk by continuously monitoring
actual and forecast cash flows and by matching the maturity
profiles of financial assets and liabilities. The Group generates
operational cash flows which enable it to meet its liabilities as
they fall due. The Group maintains an e-money float, regulated by
the Financial Conduct Authority, to hold e-monies totally separate
from Group funds. The Group is entitled to make limited drawdowns
from the PPPT subject to specific conditions being met as set out
in the trust deed available from www.getpark.co.uk, and as part of
the RCF covenants.
In August 2020, the Group agreed a committed GBP15m revolving
credit facility with Santander. This facility will provide the
additional financial flexibility to protect against downside risk
in the short term; whilst enabling longer term growth, as well as
investing in the continued switch to digital products.
Details of the maturity of financial liabilities can be found in
note 16. Comments on the Group liquidity position and financial
risk are set out in the Financial Review and in the Group risk
factors. Comments on provisions, an area of concentration of risk,
can be found in note 17.
Capital management
The Group's objectives in managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders. The
Group's capital management focus is to ensure that it has adequate
working capital, including management of its draw down facility
with the PPPT and the extent to which net cash inflows from prepaid
corporate customers are available to meet the Group's liabilities
as they fall due.
27 Subsequent events
a) Appreciate Group plc acquired the entire share capital of MBL
Holdco Ltd (MBL) on 24 June 2022. MBL is a Gift Card processing and
management business supplying gift cards to businesses and
consumers in the UK.
The acquisition will allow the Group to accelerate our
technology plans. The Group will use the MBL platform to deliver
our Modular Technology plans earlier, and at a lower cost. This
will allow the Group to realise commercial benefits from the
development sooner than originally planned. MBL also offers a new
business line in the form of end to end card processing solutions,
with white label B2B card management, in addition to creating
cross-sell opportunities.
The consideration consists of upfront cash payment of GBP1,650k
in addition to an element of deferred consideration. The amount of
deferred consideration will be based on the financial performance
of MBL in the first year following acquisition, i.e. the year
ending 31 March 2023. The maximum amount the group would have to
pay under this arrangement is GBP1,800k. The deferred consideration
will be paid in cash not later than 2 months after completion of
the FY23 audited accounts of MBL.
The total consideration will include an element of goodwill
which represents the expected synergies from combining the
operations, cross-sell capabilities and use of the MBL platform to
accelerate the Modular Technology plans of the Group.
As the acquisition occurred so close to the announcement date,
various details are still being finalised and therefore it is
impracticable at this stage to disclose the following:
-- Details in respect of fair value of
assets and liabilities acquired; and
-- The goodwill that has arisen on acquisition.
b) Subsequent to the year end, Tim Clancy (Group CFO) tendered
his resignation and will leave the business at the end of July
2022. For impact on SGP, please see note 21.b.
28 Responsibility Statement
To the best of each director's knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
-- the management report includes a fair review of the development
and performance of the business and the position of the issuer
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks
and uncertainties that they face.
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END
FR SEFSIAEESEIM
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