TIDMAPP

RNS Number : 5162Q

Appreciate Group PLC

28 June 2022

28 June 2022

Appreciate Group plc

Replacement - Final Results for the Year Ended 31 March 2022

The following amendments have been made to the RNS announcement (RNS Number: 4274Q) released at 07:00 on 28 June 2022 by the Company:

Billings excluding Christmas Savings were GBP222.0m, up 3.6%, not 5.5% as previously announced, with FY21 billings at GBP214.3m. This follows three consecutive quarters of double-digit growth from Q2 onwards.

All other details remain unchanged. T he error has been corrected and the full amended text is shown below.

See accounting policies for a reconciliation of billings to revenue

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 3.6% (FY21: GBP214.3m) , 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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