TIDMAPP
RNS Number : 3850L
Appreciate Group PLC
30 April 2020
30 April 2020
Appreciate Group plc
("Appreciate" the "Company" or the "Group")
Year End Trading Update
Notice of Results
Appreciate Group plc, the UK's leading multi-retailer redemption
product provider to corporate and consumer markets, announces an
update on trading for its financial year ended 31 March 2020.
Summary
-- Results broadly in line with expectations - having been
impacted by the lockdown in last few weeks of our financial
year:
o Revenue* expected to be GBP118m
o Adjusted PBT* expected to be c.GBP11.5m (excluding a non-cash
impairment charge expected to be in the range of GBP2-3.0m and
exceptional items of GBP0.5m)
-- Year-end free cash of GBP30m (excluding funds required to be
held in trust), and projected adequate liquidity for at least until
31 March 2021 covering a range of financial scenarios
-- Actions being taken to mitigate the impact of the lockdown on
trading in the new financial year
-- Continued progress implementing the strategic business plan
and pivoting to digital products to position the Group to emerge
from the lockdown a stronger business
*subject to audit and restricted data due to Covid 19 related
delays
Year End Trading Update
Trading & Impact of Covid 19
As reported in our market update issued on 31 March 2020,
trading for the 11 months to February 2020 was in line with
expectations. During March, we followed Government health and
safety advice and temporarily closed our distribution and warehouse
facilities in order to protect our employees and local communities
by limiting the spread of Covid 19. During this time, our focus has
been to accelerate our digital offering with a number of new
products launched, helping to partially mitigate the fact that our
ability to distribute physical product has been limited. Although
immediate demand is significantly reduced, we are well placed for
when market conditions normalise.
The redemption rates of our products currently in circulation
have also been affected, as the number of outlets open to use our
products has decreased, albeit we continue to see customers
redeeming products in high street stores that remain open and at
online retailers. However, lower redemption rates in March, as a
consequence of lower consumer spending, have had a financial impact
on the results for the year ended 31 March 2020, amounting to
around GBP0.3m on profitability. Conversely, this delay in spending
has a positive impact on cashflow.
Exceptional Items
In accordance with IFRS we have conducted an impairment review
of balance sheet items at the balance sheet date (31 March 2020).
Current market conditions and uncertainty are expected to lead to
an impairment charge for some assets, particularly the land and
buildings at Valley Road, currently held as an asset held for sale
(the previously planned sale of which has now been postponed), and
the investment in our brand engagement agency, FMI, acquired in
2016. We expect these non-cash charges to the profit and loss
account to be in the range of GBP2-3.0m. Under certain
circumstances, IFRS specifically allows for impairment reversals in
later periods, should conditions change.
In addition, following a management restructure in Q4 to
streamline our operations, we expect to include GBP0.5m of
redundancy costs in exceptional items for the 2019/20 financial
year.
Outlook
The Board remains positive about the prospects of the business
and the long term benefits of the Group's strategic business plan
which is currently being implemented. Whilst the UK remains in
lockdown and the timing of a return to normal market conditions
remains unknown, it is difficult to assess the overall impact of
Covid-19 on the new financial year ending 31 March 2021. In the
short-term, demand in our Corporate and Other Consumer areas is
approximately 70% below last year. Additions to our order book for
our Christmas Savings business are normally completed by now and it
is currently 10% below the prior year. Current cancellation rates
are similar to previous years and we continue to reassure our
customers that their savings remain protected by the Park
Prepayment Protection Trust.
Following the decision by the Bank of England to reduce the base
rate, there will be an adverse annualised impact to interest income
of GBP1.5m, if the rate remains at this level for the whole of the
new financial year.
We remain focussed on reducing costs where possible and delaying
any discretionary spend or capital projects. We have cancelled
annual pay reviews, postponed the leadership team's share incentive
awards and will be reviewing all bonus schemes. As previously
announced, we decided to cancel the interim dividend payable in
April 2020, conserving GBP2m of cash, and will review the full year
dividend at the time of the announcement of our annual results.
We have taken advantage of the Government's Job Retention Scheme
with approximately 80 employees being furloughed, whose pay we have
topped up to 100%. Our remaining c.230 employees are taking
advantage of our technology investments and are working from home
to high levels of productivity.
Looking further ahead we remain confident in our growth plan.
The Board has reviewed several financial scenarios of the likely
impact of Covid 19 on the business and, in each of those scenarios,
we have positive free cash this financial year. However, in order
to accelerate our medium and long-term growth, as well as invest in
the continued switch to digital, we have commenced a bank financing
exercise and we will provide an update on progress with our annual
results.
Strategic Progress
We have made good progress during the year continuing the
implementation of our strategic business plan (as set out in
December 2018) to build a robust and scalable platform on which to
grow. We categorised these plans under four pillars: Productivity,
Appeal, Clarity and Experience (PACE). The main areas of progress
are as follows:
-- Completed our relocation to Liverpool city centre and
implemented technology to facilitate agile working. This has
enabled the majority of our employees to work from home during the
current lockdown.
-- Continued the long term switch to digital products; this
included important learnings from our trials of new digital
products, Select and Giftli, enabling us to design an enhanced
proposition for full launch later this year.
We will provide a fuller update on progress with the four
pillars of the strategic business plan with the annual results
announcement.
Ian O'Doherty, Chief Executive of Appreciate, said:
"Appreciate delivered another good performance last year.
Covid-19 has impacted everyone, but we are safeguarding our staff,
preserving cash, reducing costs, switching emphasis to our digital
offerings and preparing carefully for the resumption of full
operations post-lockdown supported by our strong balance sheet.
" We have also established a recovery plan whilst accelerating
strategic change already underway; this includes enhancing our
sales and marketing capabilities, improving internal business
practices and ensuring that we deliver ongoing initiatives.
Overall, we believe this will enable us to emerge from the lockdown
a stronger business ."
Notice of Results
Reflecting recent advice from the FRC and FCA around issuing
results, and our desire to provide greater clarity around the
impact of COVID-19 on current financial year performance, the Group
is postponing its planned announcement of its final results (which
had been expected to be issued on 17 June 2020). Accordingly, we
will make a further announcement regarding our notice of results in
due course.
For further information please contact:
Appreciate Group Liberum MHP Communications
plc
Ian O'Doherty Richard Crawley Reg Hoare
Tim Clancy Jamie Richards Katie Hunt
Charles Hirst
Tel: 0151 653 1700 Tel: 020 3100 2222 appreciategroup@mhpc.com
Tel: 020 3128 8193
Notes to Editors:
Appreciate Group is one of the UK's leading gifting, pre-payment
and engagement companies, and experts at creating joyful
experiences and connecting people to the things in life they enjoy
the most.
Everything Appreciate Group does is focused on creating more joy
in the world, and it is proud to be trusted to help its customers
create moments they can treasure and remember, whether they are
giving, celebrating or rewarding.
Appreciate Group is a financial services business with a wide
portfolio of brands which provide solutions for its consumer and
business customers. Its consumer-facing brands meet a range of
prepayment and gifting needs, while its business products help
corporate customers reward and recognise their employees and
clients.
Appreciate Group is home to many of the country's most-loved
gifting, pre-payment and engagement solutions including Park
Christmas Savings, Highstreetvouchers.com and Love2shop, and we are
fast-becoming the home of digital innovation in gifting.
Whether it's saving towards the perfect family Christmas or
celebrating with gift cards and vouchers, we create and supply
products that millions of people trust when it comes to giving and
receiving with family, friends or colleagues.
Park Christmas Savings: As the UK's largest family Christmas
savings club, Park Christmas Savings has helped over 2.7 million
families budget for Christmas on a short-term or year-round
basis.
Love2shop: Love2shop offers gift cards and gift vouchers
available to spend at stores and attractions across the UK. They
are also used through our Love2shop Business Services providing
corporate partners with incentives and rewards for their employees
and clients.
Giftli: Giftli is a personalised gift card, available to spend
online at over 60 brands. The card can be personalised through
photos and a personalised message.
Select Digital Gift Card: The UK's first fully digital
multi-retailer gift card, available to spend online or in-store
through your mobile wallet.
Appreciate Group plc's shares are traded on AIM, a market
operated by the London Stock Exchange.
For further information on Appreciate Group please visit:
www.appreciategroup.co.uk
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
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END
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