TIDMMEGP
RNS Number : 4220R
ME Group International PLC
01 March 2023
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
1 March 2023
ME GROUP INTERNATIONAL PLC
("Me Group" or "the Group" or "the Company")
Audited Annual Results for the 12 months ended 31 October
2022
Me Group International plc (LON: MEGP), the instant-service
equipment group, announces its results for the 12 months ended 31
October 2022 ("FY 2022" or the "Period").
KEY FINANCIALS
Reported
12 months ended 12 months ended
31 October 2022 31 October 2021 Change
--------------------------------------------------- -------
Revenue GBP259.8m GBP214.4m +21.2%
EBITDA(1) GBP92.2m GBP65.1m +41.6%
Profit before tax(2) GBP53.4m GBP28.6m +86.7%
Profit after tax GBP38.8m GBP21.9m +77.2%
Cash generated from operations GBP87.9m GBP66.1m +33.0%
Gross cash GBP136.2m GBP99.4m +37.0%
Net cash(3) GBP34.0m GBP34.9m +2.6%
Earnings per share (diluted) 10.23p 5.77p +77.3%
Dividends:(4)
- Interim Dividend per ordinary share (declared) 2.6p nil n/a
- Special Dividend per ordinary share (paid) 6.5p nil n/a
- Final Dividend per ordinary share (declared) 3.0p 2.89p n/a
----------------- ----------------- -------
Total dividend per ordinary share 12.1p 2.89p n/a
(1) EBITDA is Reported profit before tax, total depreciation and
amortisation, other net gains, finance cost and income.
(2) Includes impairments and provisions
(3) Net cash excludes investments in convertible bonds (GBP4.3m)
and lease liabilities (GBP15.9m). See note 19 of the Financial
Statements for details of net cash
(4) Special Dividend paid on 1 September 2022 (GBP24.57m),
Interim Dividend paid on 3 November 2022. The Declared Final
Dividend will be paid on 12 May 2023, subject to approval at the
AGM
HIGHLIGHTS
-- Strong financial performance was driven by increased demand
and a progressive increase of prices, particularly for photobooth
and laundry services, across Continental Europe and in the UK &
the Republic of Ireland
-- Photo.ME revenue increased by 25.2% to GBP154.3 million as
photobooth activity continued to recover following the easing of
travel and social restrictions across most territories
-- Wash.ME revenue increased by 14.0% to GBP61.8 million
reflecting the successful rollout, and uptake, of higher
cost-per-use laundry machines
-- The total number of Revolution laundry units in operation
increased by 16.1% to 4,754 as the Group continued its strategic
expansion of the estate
-- Print.ME revenue slightly decreased due to the removal of
unprofitable machines. Replacement of 500 machines with newer model
commenced in H2
-- Feed.ME pizza vending business underwent a transition period,
including reorganization of the sales teams and upgrading technical
software across our pizza vending estate.
-- Continued to execute innovation and diversification strategy
to meet ever-changing consumer needs, including the launch of new
self-service machine formats and liveness detection technology to
mitigate photo ID manipulation
-- The Company name changed to ME Group International plc
(previously Photo-Me International plc), to better reflect the
Group's operations today and the evolution of the Group over the
past 60 years through innovation to expand and diversify its
operations internationally
OUTLOOK
-- The Group has set out its five-year growth strategy, centered
on five core pillars, to support the development of each of the
Group's principal business areas and continue to drive sustainable
revenue and profit performance
-- Execution of next-generation multi-service photobooth rollout
programme commenced in Q1 FY 2023, to deploy approx. 10,000 units
by 2025, with an initial target of 3,000 machines installed in
France by the end of October 2023 in France
-- Continued focus on deployment of Revolution laundry units,
with plans to accelerate installations at a rate of approx. 80-90
per month, alongside an increased focus on developing cost and
energy-saving models
-- Increase in activity around the expansion of Feed.ME
business, targeting an increase in the number of lease agreements
for further fruit juice vending equipment (in Japan) and pizza
vending equipment (in France)
-- Whilst still early into the financial year, the Board has
seen a continuation of positive trading momentum and as a result,
the Board anticipates that results for FY 2023 will be in line with
current market expectations*, subject to any changes to the broader
macroeconomic environment
(*) The Group's compiled analysts' consensus forecast for the
financial year ended 31 October 2023 shows revenue of GBP284.8m,
EBITDA of GBP91.1m and profit before tax of GBP58.5m.
Serge Crasnianski, CEO & Deputy Chairman, commented:
"Our performance in FY 2022 showed strong recovery particularly
within our photobooth operations despite some continued disruption
from COVID-19 in the Period, and the macro-economic challenges
impacting business. We have continued with our strategic focus on
innovation, R&D and diversification which remain important
factors in the Group's long-term growth strategy. We remain in a
strong financial and liquidity position to fund future growth
whilst continuing to navigate the broader macroeconomic
headwinds."
Annual Report and Accounts
On Tuesday 28 February 2023, ME Group International plc
published its annual report and accounts for the financial year
ended 31 October 2022 (the "Annual Report"). The Annual Report is
available on the Company's website at www.me-group.com .
The Annual Report will be posted to those shareholders who have
not chosen to receive electronic communication or communication
through the Company's website.
A copy of the Annual Report will also be submitted to the
National Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Enquiries:
ME Group International plc +44 (0) 1372 453 399
Serge Crasnianski, CEO
Stéphane Gibon, CFO
Hudson Sandler +44 (0) 20 7796 4133
me-group@hudsonsandler.com
Wendy Baker/Nick Moore/ Ben Wilson
NOTES TO EDITORS
ME Group International plc (LSE: MEGP) operates, sells and
services a wide range of instant-service vending equipment,
primarily aimed at the consumer market.
The Group operates vending units across 20 countries* and its
technological innovation is focused on four principal areas:
-- Photo.ME - Photobooths and integrated biometric identification solutions
-- Wash.ME - Unattended laundry services and launderettes
-- Print.ME - High-quality digital printing kiosks
-- Feed.ME - Vending equipment for the food service market
*South Korea subsidiary sold in November 2022. Following this
disposal, the Group has operations in 19 countries.
In addition, the Group operates other vending equipment such as
children's rides, amusement machines, and business service
equipment.
Whilst the Group both sells and services this equipment, the
majority of units are owned, operated and maintained by Me Group
International plc. The Group pays the site owner a commission based
on turnover, which varies depending on the country, location and
the type of machine.
The Group has built long-term relationships with major site
owners and its equipment is generally sited in prime locations in
areas of high footfall such as supermarkets, shopping malls
(indoors and outdoors), transport hubs, and administration
buildings (City Halls, Police etc.). Equipment is maintained and
serviced by an established network of 650 field engineers.
In August 2022 the Company changed its listed entity name to ME
Group International plc (previously Photo-Me International plc) to
better reflect the Group's diversification focus and business
strategy.
The Company's shares have been listed on the London Stock
Exchange since 1962.
For further information: www.me-group.com
CHAIRMAN'S STATEMENT
2022 Overview
The Group delivered a strong performance in the Period, driven
by the recovery across most of our markets and principal business
areas. Most significant was the resurgence in activity across our
photo ID and laundry services, which was most evident in
Continental Europe, particularly France, the UK and Germany.
As a result of the positive trading momentum, the Group
performed better than initially anticipated at the outset of FY
2022, which lead to the Board revising its revenue and profit
expectation on two separate occasions during the Period. Total
Group revenue increased by 21.2% and EBITDA increased by 41.6%
compared to the prior 12 months to 31 October 2021.
Change of the Company name to ME Group
In August, we announced the change of the Company name to ME
Group International plc, with the new London stock market ticker
'MEGP'. The new Company name marked an important milestone for the
Group in its 60(th) year as a public listed company. Our new name
better reflects our innovation and diversification strategy, as
well as the evolution of our product offer today. We look forward
to the next exciting chapter of the Group's growth as we continue
to innovate and extend our product range to meet the needs of our
customers and consumers across the world.
Business model and growth strategy
We have a proven business model which benefits from a dominant
market position, with limited or no competition, in many of the
countries in which we operate. Each day, millions of people see and
use our conveniently positioned instant service machines as we
strive to make people's lives easier every day around the
world.
Our growth strategy is focused on diversifying our product
portfolio, expanding the number of units in operation and
increasing the yield per unit. This is underpinned by our
disciplined approach to minimising production and operational
costs, enabling us to capitalise on operating leverage.
Our long-standing partnerships with site owners and utilisation
of long-term contracts ensure consistent and solid recurring
revenue streams and revenue visibility, year on year. These are
characteristics similar to those of an infrastructure business
which provide the Group with good visibility and predictability on
revenue streams. In 90% of cases, contracts are tacit renewals. We
also benefit from economies of scale through our extensive machine
network and the increasing trend towards automation, where we have
a depth of expertise, which also presents significant barriers to
potential competitors.
Our five-year growth strategy is centred on five core pillars to
support the development of each of the Group's principal business
areas - photo identification (Photo.ME), laundry services
(Wash.ME), digital printing services (Print.ME) and food vending
equipment (Feed.ME) through:
1. Expansion into new geographic territories and continue to
build the Group's international presence including recently entered
markets of Italy, Finland and Australia.
2. Entering new market segments through securing new
partnerships with businesses such as supermarkets and smaller
retailers.
3. Ongoing new product and technology innovation to meet the
vending needs of consumers through state-of-the-art user
experience, backed by the best technology, and an omnichannel
approach.
4. Continued expansion and diversification of services and
revenue growth through a multi-service instant service offering and
integration of centralised operating systems.
5. Merger & Acquisition strategy focused on enabling our
growth strategy through bolt-on acquisitions, which meet the
Group's return on investment criteria, to extend our geographic
footprint, consolidate our market position and increase the breadth
of our services available through our portfolio.
The Board believes this growth strategy will enable the Group to
continue to drive sustainable revenue and profit performance over
the next five years.
Dividend
The strong performance delivered in FY 2022 continues to give
the Board confidence in the future performance of the Company.
In July, the Board announced that it was adopting a distribution
policy under which, for the foreseeable future, it will pay annual
dividends in excess of 50% of its annual profits after tax subject
to market and capital requirements. This total will be split
between interim dividends (1/3) (generally to be paid in the month
of November) and final dividends (2/3) (generally to be paid in the
month of May).
The Board declared an interim dividend for the six months ended
30 April 2022 of 2.6 pence per Ordinary share (the "Interim
Dividend"), which amounted to GBP9.84 million, paid to shareholders
on 3 November 2022.
At the same time, the Board was also pleased to announce an
additional return of GBP24.57 million to shareholders by way of a
special dividend of 6.5 pence per ordinary share ("Special
Dividend"). This was paid to shareholders on 1 September 2022.
The Board has declared a final dividend of 3.00 pence per
Ordinary share ("Final Dividend"). This does not exactly correspond
to the 2/3 split mentioned above since this year the Company paid a
special dividend which, when added to the interim dividend, already
exceeded 50% of PBT. When combined with the Interim Dividend of 2.6
pence and the Special Dividend of 6.5 pence, this brings the total
dividend for the year ended 31 October 2022 to 12.10 pence per
Ordinary share.
Subject to approval at the Company's annual general meeting on
28 April 2023, the Final Dividend will be paid on 12 May 2023 to
shareholders listed on the register at the close of business on 21
April 2023. The ex-dividend date will be 20 April 2023.
The Board & Executive Team
There were two changes in the composition of the Board of
Directors. On 29 April 2022, Jean-Marcel Denis stepped down from
the Board as a Non-executive Director. I would like to extend my
sincere thanks and gratitude to Jean-Marcel for his loyal service
and continued support to both myself and the Board.
On 13 May 2022 Sigieri Diaz Della Vittoria Pallavicini resigned
as an Independent Non-executive Director having joined the Group in
June 2021. I would like to extend my thanks to Sigieri and wish him
all the best in his future endeavours.
The Board of Directors has worked hard to refresh its membership
and believes it has a strong team in place to continue supporting
the leadership team in delivering on the Group's long-term growth
strategy.
The composition of the Executive Team has also evolved.
Christian Autié, has been appointed as COO . on 1 November 2022.
Christian was previously the Group's Head of Asia where he held the
role for 5 years.
Corporate responsibility
We remain committed to strengthening our Sustainability activity
to deliver our goals through inventing eco-responsible local
services to support growth by integrating social, environmental,
and economic expectations into our strategy and operations. Details
of our Sustainability approach and KPIs are available on the
Group's website me-group.com.
Looking ahead
We have made great progress during FY 2022 during which most of
our key markets continued to recover from the post-COVID impacts,
despite the challenging backdrop that is facing so many
sectors.
The Group remains highly cash generative and our financial
position remains strong, driven by good momentum across the
business, leaving the Group well placed to withstand the current
macroeconomic headwinds. We are well positioned to deliver on our
strategic priorities as we enter FY 2023 which includes the rollout
of next-generation multi-service photobooths as well as the
continued expansion of our laundry operations and food vending
equipment operations, whilst exploring further opportunities in new
and existing geographies.
Unless there are major changes to the macroeconomic, the Board
remains confident in the Group's long-term growth opportunities and
its ability to deliver its key strategic priorities. For the 2023
financial year, the Board expects the Group to achieve revenue
between GBP280 and GBP300 million, EBITDA between GBP95 and GBP105
million and profit before tax between GBP61 and 65 million.
Sir John Lewis OBE
Non-executive Chairman
28 February 2023
CHIEF EXECUTIVE'S REPORT
BUSINESS REVIEW
Our performance in FY 2022 showed strong recovery particularly
within our photobooth operations. We have continued to benefit from
our disciplined approach to cost management and our ability to
increase pricing, as well as our ongoing marketing activity, all of
which have underpinned the recovery in performance. The Group has
delivered figures comparable to the performance achieved in 2019.
This is despite some continued disruption from COVID-19 in the
Period, and the macro-economic challenges impacting business.
We continue with a strategic focus on innovation, R&D and
diversification which remain important factors in the Group's
long-term growth strategy, ensuring the continued delivery of
solutions and services that can address ever-changing consumer
needs.
Financial performance
Reported revenue in the Period increased by 21.2% to GBP259.8
million, compared with GBP214.4 million in the prior 12 months
ended 31 October 2021. This performance was primarily driven by a
strong performance across Continental Europe and in the UK &
the Republic of Ireland. The Group benefited from a recovery in
activity levels from Q2 onwards, particularly for photobooths and
laundry services, as well as substantial price increases in Germany
and France during H2 2022.
Revenue for Continental Europe was up 22.6% and operating profit
up 73.3%, mainly driven by activity in France. In the UK &
Republic of Ireland, revenue was up 41.9% and operating profit
improved by 132.0%. Activity in Asia Pacific was more subdued, due
to pandemic restrictions remaining in place for longer than in the
Group's other operating regions, with revenue and operating profit
both flat year-on-year.
Profitability improved year-on-year across all regions,
benefiting from a recovery in demand, our successful recent
restructuring programme to remove unprofitable machines, and an
increase in consumer pricing during the year. A breakdown of
performance by region is set out in the Review of Performance by
Geography.
Reported EBITDA (excluding associates) was GBP92.2 million, an
increase of 41.6%% on the prior 12-month period, which delivered an
EBITDA margin of 35.5%.
Reported profit before tax increased by GBP24.8 million (+86.7%)
to GBP53.4 million (2021: 28.6 million).
Capital expenditure in the Period was GBP38.2 million, primarily
related to Machines costs (GBP28.2m), Plant and Machinery (GBP5.1m)
and the rest is Intangible assets (Goodwill: GBP1.7m, R&D:
GBP1.4m, Other Intangibles: GBP1.7m).
Further detail of the Group's financial performance is set out
in the Financial Review.
Funding and liquidity
The Group continues to be highly cash generative. At 31 October
2022, the Group had gross cash of GBP136.2 million and a net cash
balance of GBP34.0 million. This is net of GBP0.7 million cash
investment in acquisitions and dividends paid during the year which
amounted to GBP35.5 million. We did not have the benefit of any
government facilities in the Period.
The Group remains in a strong financial and liquidity position
to fund future growth whilst continuing to navigate the broader
macroeconomic headwinds.
nnovation and diversification
We are proud of our track record in new product development and
our innovative approach, supported by our team of 50 engineers
located in our R&D centres situated in France (primary
facility) and Vietnam. Our in-house R&D team is continuously
working on new product innovation to meet ever-changing customer
and consumer needs, providing them with a range of instant service
equipment that is modern, convenient and user-friendly.
Our approach to innovation and diversification is focused on two
key pillars:
1. A state-of-the-art user experience, backed by the best
proprietary technology, including the design of new, intuitive, and
modern user interfaces across multiple product categories; the
integration of digital payment systems across vending estate; and
up-to-date functionalities, through an aggregate of the best of
external technology providers
2. An omnichannel approach, leveraging digital functionalities
to enhance the user experience of our brands and explore new
business models, including the use of a powerful CRM which offers a
customised experience to end users; the launch of applications that
connect to our machines to offer mobile-to-machine features; the
remote management of our self-service vending equipment through a
cloud-based infrastructure; multi-service functionality for the
next-generation machines; and centralised operating system offers a
seamless, connected user experience for the consumer
Overview of principal business areas
Below is an overview of the Group's four principal business
areas: Identification (Photo.ME), Laundry (Wash.ME), Kiosks
(Print.ME) and Food (Feed.ME). In addition, the Group operates
other vending equipment.
Photo.ME
Photobooths and integrated biometric identification
solutions
12 months ended 12 months ended
31 October 2022 31 October 2021
Number of units in operation 27,625 27,867
------------------------------------------------------------ -----------------
Percentage of total group vending estate (number of units) 62.9% 63.6%
------------------------------------------------------------ ----------------- -----------------
Revenue GBP154.3m GBP123.2m
------------------------------------------------------------ ----------------- -----------------
Capex GBP3.0m GBP5.0m
------------------------------------------------------------ ----------------- -----------------
EBITDA GBP54.2m GBP36,4m
------------------------------------------------------------ ----------------- -----------------
We saw a strong recovery in photo ID demand for passports and
other official documentation restrictions were eased and consumers
were able to travel and socialise, as well as other products
delivered via our photobooth estate. Notably, demand was strong in
Continental Europe, particularly France, from February onwards. The
UK showed a similar trend from May onwards, despite the
Government's ongoing acceptance of home-taken photos for official
documents. The Asia market was subdued due to covid
restrictions.
We gradually and successfully implemented price changes in H2
2022. The cost per use of our photobooths increased from EUR6 to
EUR8 in France (10% of machines remained at EUR6 per use), and from
EUR8 to EUR10 in Germany and Austria, which did not have an adverse
impact on consumer demand. Subsequently, similar price increases
were implemented across most of our operating markets during the
second half of the year. We anticipate that the full benefit of
these price increases will be evident in FY 2023.
Revenue increased by 25.2% to GBP154.3 million (2021: GBP123.2
million), driven largely by the increase in cost per use
implemented across the Group's machine estate in certain
territories along with increasing post-Covid demand. The average
revenue per machine (excluding VAT) increased to GBP5,586 per year
(2021: GBP4,421 per year).
Subsequently, EBITDA was GBP54.2 million, and represented 63.8%
of Group EBITDA (excluding the property sale). EBITDA was 55.8% of
the revenue during the Period.
Overall, this performance is a testament to the resilience and
long-term future of our photobooth estate.
Capex in the Period decreased by 40.0% to GBP3.0 million,
reflecting a deferral of investment in next-generation photobooths.
The Group began the rollout and installation of next-generation
photobooths during Q1 2023, initially with the deployment of 50
units in France. It is the Group's aim to deploy approximately
3,000 next-generation photobooths during FY 2023, with a view of
rolling out c.10,000 units over the next three years. Consequently,
the Group anticipates that Photo.ME capex will be significantly
higher during FY 2023 in the range of GBP15.0 - GBP20.0 million.
Whilst this is a material increase in capex, we expect our
next-generation machines will achieve an attractive return on
investment within one year.
At 31 October 2022, the number of photobooths in operation
remained broadly flat at 27,625 units (2021: 27,867). Photo.ME
operations accounted 62.9% of the Group's total vending units.
Growth strategy
Our photobooths meet the needs of consumers who are required to
have official photo ID for documents such as passports and driving
licences. This quasi-compulsory service and its strong market
position give the Group pricing power for this service.
Increasingly governments are seeking to improve and digitise photo
ID security to combat fraud and terrorist activity. In addition,
consumers are seeking multi-functional instant services through a
single vending machine.
Alongside deploying our proven identification security
technologies in existing and new countries of operation, we are
continuously innovating with the aim of expanding the services
available via our next-generation photobooth. This includes fun
features and social media sharing functions providing customers
with additional, diversified services. We are also targeting new
strategic partnerships which will enable us to operate at
high-footfall locations, including supermarkets, smaller retail
shops and retail parks.
Strategy in action
Since February 2022, our face ID anti-spoofing technology
secured compliance recognition under the international Biometrics
Presentation Attack Detection standards (ISO/IEC 30107-3) by
Cabinet Louis Reynolds (CLR), the French biometrics and security
technologies experts. This recognises the Group's anti-spoofing
technology, which helps to ensure that all ME Group photobooths are
biometrically secure and mitigative against "fake" photo ID for
official documents, as credible by regulatory standards.
The Board continues to believe that there are longer-term
opportunities in the photo ID market across both existing and new
geographic markets. Our new multiservice next-generation photobooth
will integrate the consumer journey into specific omnichannel
automated services.
Wash.ME
Unattended Revolution laundry services and launderettes
12 months ended 12 months ended
31 October 2022 31 October 2021
Total Laundry units deployed (owned, sold and acquisitions) 5,924 5,533
--------------------------------------------------------------- -----------------
Total revenue from Laundry operations GBP61.8m GBP54.2m
--------------------------------------------------------------- ----------------- -----------------
Total Laundry EBITDA GBP29.1m GBP22.6m
Revolution
(excludes Launderettes and B2B):
--------------------------------------------------------------- ----------------- -----------------
- Number of Revolutions in operation* 4,754 4,094
--------------------------------------------------------------- ----------------- -----------------
- Percentage of total group vending estate (number of units) 10.8% 9.3%
--------------------------------------------------------------- ----------------- -----------------
- Total revenue from Revolutions GBP56.7m GBP44.8m
--------------------------------------------------------------- ----------------- -----------------
- Revolution capex GBP20.2m GBP15.9m
--------------------------------------------------------------- ----------------- -----------------
* There were 4,424 Revolution units in operation through the
entirety of the 12 months ended 31 October 2022 compared with 3,765
in 12 months ended 31 October 2021.
Total revenue from our laundry operations grew by 14.0% % to
GBP61.8 million, driven by an increase in the number of Revolution
units in operation. At 31 October 2022, the total number of laundry
units deployed (owned, sold) was up to 5,924.
La Wash, our Spanish B2B laundry service franchise business, was
sold in November 2021. La Wash represented a minor part of the
laundry business. Following this disposal, we no longer operate B2B
laundry services except for a small level of activity in
Ireland.
Continued growth of Revolution laundry operations
In line with our growth strategy, the Group installed an average
of 70 machines per month, primarily in Continental Europe and the
UK & Republic of Ireland. As a result, the number of units in
operation grew by 16.1% to 4,754. Revolution laundry machines
accounted for 10.8% of the Group's total estate by number of
machines (2021: 9.3%).
Revenue increased by 26.6% to GBP 56.7 million, which
represented 21.8% of Group revenue. The average revenue per machine
(excluding VAT) was GBP12,816 per year (2021: GBP11,899 per year).
EBITDA was GBP29.1 million and contributed 34.3% of Group EBITDA
(excluding property sales). EBITDA was 34.7% of revenue in the
Period.
Revolution capex increased to GBP20.2 million (2021: GBP15.9
million) reflecting an increase in production and installation
costs, along with the redeployment of selected machines to more
profitable locations. Additionally, the Group has entered a period
of machine refurbishment and maintenance, the first since we
launched our laundry operations in 2012.
Growth strategy
Revolution laundry services remain a key growth driver for the
Group and revenue from this business area is expected to continue
to increase as a proportion of total Group revenue.
Our strategy is to further expand our operations through new and
existing partnerships with site owners in target territories to
address consumer demand for convenient and competitively priced
high-capacity laundry services. Our R&D teams will also
continue to innovate to improve and upgrade our product range and
commercialise new formats aimed at specific market segments.
In FY 2023, we plan to invest approx. GBP23.0 million in Wash.ME
and our aim is to increase Revolution installations to 80-90 units
per month, targeting a return on investment of approx. 18
months.
Strategy in action
During the Period the Group launched two newly developed laundry
machine formats - the Revolution Compact V3 which offers a more
environmentally friendly solution by using less energy and
detergent, and the Revolution Flex which offers a compact format
that can be deployed inside co-living locations.
We continue to innovate and over time we will deploy lower-cost
models which will offer substantial savings in production costs and
flexibility of deployment, along with improved energy efficiency
features that aim to reduce water and electricity consumption.
We have continued to deliver on our sustainability commitment
and reduce our impact on the environment. To date, we have
installed 223 Photovoltaic solar panels on Revolution units
primarily in France and expect to roll this out into other
geographies in time.
Our strategy to expand existing and secure new long-term
partnerships with site owners has enabled us to expand our
Revolution estate in the key UK market and extend our footprint
across major, high-footfall locations bringing our laundry services
to even more existing and potential customers. We have begun pilot
testing of our new indoor and outdoor "Flex" laundry machine
format. We believe there is a large-scale opportunity in the
European market for this compact machine format.
Print.ME
High-quality digital printing services
12 months ended 12 months ended
31 October 2022 31 October 2021
Number of units in operation 4,785 5,173
------------------------------------------------------------ -----------------
Percentage of total group vending estate (number of units) 10.9% 11.8%
------------------------------------------------------------ ----------------- -----------------
Revenue GBP10.7m GBP11.7m
------------------------------------------------------------ ----------------- -----------------
Capex GBP1.3m GBP0.5m
------------------------------------------------------------ ----------------- -----------------
EBITDA GBP3.6m GBP3.4m
------------------------------------------------------------ ----------------- -----------------
Our estate of digital printing kiosks offers a wide range of
competitively priced print formats and personalised products. Our
key markets are France, where most machines are situated, the UK
and Switzerland.
At 31 October 2022 the Group had 4,785 kiosks in operation, down
7.5% compared with the prior year. Kiosks accounted for 10.9% of
the total number of vending units in operation.
Revenue decreased slightly to GBP10.7 million from GBP11.7
million in the prior year, due to a reduction in the number of
digital printing kiosks in operation, following the removal of
unprofitable machines. Print.ME revenue represented 4.6% of Group
revenue. EBITDA was GBP3.6 million and contributed 4.2% of Group
EBITDA in the Period.
The average revenue per machine (excluding VAT) was GBP2,279 per
year (2021: GBP2,146).
Capex for the Period was GBP1.3 million in line with our
strategy to focus our investment on expanding our growing Wash.ME
and Feed.ME businesses during FY 2022. During the second half of
the year, this capex was invested in 500 new kiosks to refresh our
machine portfolio in France. The replacement of machines began in
H2 2022 and will complete during H1 2023. The expected return on
investment is 18 months and the benefit is expected to be evident
in FY 2023.
Growth strategy
There remains demand for high-quality printing services
reflecting the increased use of smartphones and digital sharing
across social media networks. Print.ME's convenient, affordable and
easy-to-use instant printing services enable consumers to print
direct from smart devices.
The Group is considering opportunities to further extend its
digital kiosk services offered through its instant-service machine
network, as well as a focus on identifying product partnership
opportunities within existing territories. Our next generation
photobooths are multi-functional and will have similar functions as
our digital printing kiosks, in line with our innovation and
diversification plan for our services.
Feed.ME Vending equipment for the food service market
Feed.ME business model is different from our other business
areas. It is primarily based on equipment sales, and on a smaller
scale on operating machines in Japan (214 orange juice machines).
There is currently no significant capex requirement for this
business area.
Our food vending equipment operations, which further diversify
our vending services, are the Group's newest business area.
Activities are focused on (i) self-service fresh fruit juice
equipment market and (ii) pizza vending machines aimed at the B2B
retail and hospitality markets. The Group currently has such
operations in Belgium, France, Japan and Switzerland.
The Group sells its vending equipment to customers, typically
with a maintenance agreement for the Group to service the
equipment. Customers typically (but not exclusively) choose to
enter into a sale and leaseback arrangement with a third-party
financing company for a period of 15 months for fruit juice
machines and five years for pizzas machines. At the end of a sale
and leaseback contract, the Group has the option to buy the machine
back and to refurbish it. The machine can then be sold again. The
renewal rate for existing customers is over 70%. The Group does not
operate food vending equipment in Japan except for fresh fruit
juice vending machines.
Revenue solely from the sale of equipment was GBP9.9 million,
adding other revenue (GBP2.6m), the total revenue of Feed.ME is
GBP12.5m which reflected the good strategic progress made in the
Period. This business area contributed 4.8% of total Group
revenue.
EBITDA was GBP3.4 million and contributed 4.0% of Group EBITDA
(excluding the property sale).
Growth strategy
There is a growing demand for vending services within the food
sector, particularly for fresh fruit juice and pizza. Our growth
strategy is built around new product innovation and is focused on
three key areas (i) expanding our presence in the self-service
fruit juice equipment market, (ii) establishing a larger presence
in the pizza-vending equipment market, and (iii) building new
partnerships with site owners to sell or deploy food vending
equipment.
Strategy in action
-- Fresh Fruit Juice equipment
Our new product innovation capabilities have enabled us to
further expand our presence in the self-service fruit juice
equipment market through a wider variety of self-service fresh
juice options. We have installed new professional apple, pineapple
and grape juice vending machines in France, Belgium and Japan, as
part of our juice wall concept. The orange juice vending model in
Japan continued to grow with very satisfying results. There are now
214 machines active in Japan which are operated by ME Group, the
only geography where the Group does operate food vending
equipment.
Following delays due to the pandemic, the Group's professional
apple and pineapple machines were installed across France and
Belgium. Furthermore, nine of the Group's innovative 'juice wall
concept' were deployed in the Period, which offers consumers
different fruit juice options.
-- Pizza vending equipment
Our pizza vending machines, which are sold to site owners, offer
consumers ready to eat pizza in four minutes available 24 hours a
day, seven days a week. In line with our strategy, we accelerated
the rate of machine sales during the year to an average of 20
machines per month in France. We have started to deploy further
machines in Spain, Belgium and the Netherlands in the second half
of the year.
In May we announced a new technological partnership with
Digitiz.me, a ground-breaking digital platform, enabling the Group
to accelerate development in the fast-growing connected food
vending market. Through this new partnership, omnichannel software
offering an all-in-one complete solution will be rolled out across
all ME Group pizza vending equipment to offer consumers an easy and
integrated experience, whilst also improving our ability to
remotely manage units. We believe this will revolutionise the way
our food vending machines function and deliver value for our
partners. The deployment of this technology will start in H1
2023.
We continue to invest in new product innovation to enhance our
product range. In June, we launched our second-generation pizza
kiosk, which is aimed at the independent pizziaolos market as well
as global hypermarket key accounts. In October, we launched
64-pizza Muliquattro V3 and 96-pizza capacity kiosks. These new
design machines, and our new industrialisation process, have
enabled us to decrease production costs and optimise logistics
costs. The Group has started with the development of a new pizza
vending machine unit, offering a smaller one-pizza format designed
for more compact locations.
Our strategy is to enhance our presence in the pizza vending
equipment market, with the aim of becoming a leader in the European
market. We are also exploring new business models and opportunities
to accelerate expansion of our presence in the growing food service
vending equipment market.
Other vending equipment
At 31 October 2022, the Group operated 6,483 (2021: 6,624) other
vending units in addition to our four principal business areas.
This included 2,489 children's rides (Amuse.ME), 3,456 photocopiers
(Copy.ME) and 538 other miscellaneous machines.
These machines are typically located in high-footfall locations
alongside the Group's principal activities, thereby benefiting from
existing site owner relationships and operating synergies. The
Group will continue to operate other vending units where
profitable.
Other vending equipment accounted for 15.3% of the Group's total
vending estate by number of units, down 0.2% compared to the
previous year and represented 2.0% of the total Group revenue.
REVIEW OF PERFORMANCE BY GEOGRAPHY
Commentary on the Group's financial performance is set out
below, in line with the segments as operated by the Board and the
management of the Group. These segmental breakdowns are consistent
with the information prepared to support the Board's
decision-making. Some commentary below relates to the performance
of specific products in the relevant geographies.
Vending units in operations
At October 2022 At October 2021
Number % of total Number % of total
of units estate of units estate
Continental Europe 25,331 57.7% 25,111 57.3%
UK & Republic of Ireland 6,858 15.6% 7,238 16.5%
Asia Pacific 11,721 26.7% 11,468 26.2%
Total 43,910 100% 43,817 100%
-------------------------- --------- ----------- -----------
As expected, the total number of vending units in operation at
31 October 2022 increased slightly 0.2% to 43,910 compared with the
prior year (2021: 43,817), reflecting the Group's strategy to
remove unprofitable machines as part of the restructuring programme
initiated in April 2021. This was compensated by the number of new
installations.
Key financials
The Group reports its financial performance based on three
geographic regions of operation: (i) Continental Europe; (ii) the
UK & Republic of Ireland; and (iii) Asia Pacific.
Revenue by geographic region
12 months ended 12 months ended
31 October 31 October
2022 2021
Continental Europe GBP177.8m GBP145.0m
UK & Republic of Ireland GBP42.0m GBP29.6m
Asia Pacific GBP39.9m GBP39.8m
Total GBP259.7m GBP214.4m
---------------- ----------------
Operating profit by geographic region
12 months ended 12 months ended
31 October 2022 31 October 2021
Continental Europe GBP51.3m GBP29.6m
UK & Republic of Ireland GBP11.6m GBP5.0m
Asia Pacific GBP2.0m GBP2.0m
Corporate costs GBP(8.1)m GBP(7.3)m
Total GBP56.8m GBP29.3m
----------------- -----------------
The Group delivered a 21.2% increase in total revenue to
GBP259.8 million driven by recovering markets, price increases as
well as the successful completion of the Group's restructuring
programme.
Operating revenue evolution (last 12 months by quarter)
The table below provides a detailed breakdown of changes in
operating revenue by geographic region and business area for the
Period, compared with the similar period in the 12 months ended 31
October 2022.
Operating revenue is sales revenue generated by vending units,
less VAT. It excludes sales of machines and parts and other
ancillary revenue streams.
Nov 2021 Feb 2022 May 2022 Aug 2022
to Jan 2022 to Apr 2022 to Jul 2022 to Oct 2022 Total
CONTINENTAL EUROPE
Photo.ME 40.7% 38.4% 29.2% 30.2% 33.4%
Print.ME (13.2)% (6.7)% 5.0% 0.2% (4.2)%
Wash.ME 32.2% 30.9% 19.8% 12.2% 21.9%
Other Vending and Feed.ME (25.9)% 2.8% 4.3% (13.2)% (9.3)%
Total 28.1% 31.3% 24.5% 21.7% 25.7%
UK & REPUBLIC OF IRELAND
Photo.ME 85.5% 127.3% 76.4% 26.4% 72.9%
Print.ME (17.8)% (73.8)% (78.6)% (73.6)% (58.4)%
Wash.ME 49.4% 39.3% 32.0% 19.9% 34.0%
Other Vending and Feed.ME 93.8% 109.1% 37.8% 7.5% 46.7%
Total 63.2% 81.6% 52.3% 20.4% 50.5%
ASIA PACIFIC
Photo.ME 2.0% (28.1)% (5.1)% 20.8% (6.4)%
Print.ME (6.0)% (19.7)% (10.9)% (12.5)% (12.5)%
Wash.ME 78.6% 83.3% 63.4% 30.8% 60.5%
Other Vending and Feed.ME 524.0% 71.6% (599.5)% 910.5% 510.9%
Total 8.7% -22.8% 11.6% 36.8% 3.6%
TOTAL
Photo.ME 31.4% 18.7% 25.3% 27.7% 25.4%
Print.ME (13.4)% (11.6)% 0.3% (4.0)% (7.5)%
Wash.ME 37.5% 33.3% 22.7% 14.2% 25.2%
Other Vending and Feed.ME 41.7% 47.0% 169.1% 82.1% 76.9%
Total 29.3% 20.9% 26.0% 23.7% 24.7%
Continental Europe
Continental Europe is the Group's largest region by both number
of machines and contribution to Group revenue.
Revenue increased 22.6% to GBP177.8 million driven by a strong
recovery in photobooth and laundry activity throughout the Period.
Kiosk demand improved in Q3 and Q4. Operating revenue for Photo.ME
was up 33.6%, Wash.ME was up 12.2% and Print.ME up 4.6%. Operating
profit increased by GBP21.7 million to GBP56.8 million.
France performed particularly strongly, benefiting from the
recovery in activity alongside an increase in consumer pricing.
In April 2022, the Group sold an office building for GBP7.1
million, which had a positive impact on the region's operating
profit.
In November 2021 we sold La Wash, our Spanish B2B laundry
service franchise business at a loss of GBP(0.5) million. This item
was not included in Continental Europe's operating profit but was
reported in other net gains and losses, below operating profit.
At 31 October2022, 25,331 units were in operation in Continental
Europe which represented 57.7% of the Group's total estate.
Continental Europe contributed 68.5% of total Group revenue.
UK & Republic of Ireland
Revenue in the UK & the Republic of Ireland grew by 41.9% to
GBP42.0 million driven by a strong recovery in photobooth and
laundry activity in the second half of the year, the Group's key
business areas in the region. The significant increase in demand
for photo ID for passports and official documents led to a 70.2%
increase in Photo.ME operating revenue in the Period. Wash.ME
performance was consistently strong, with operating revenue growth
delivered each quarter which resulted in operating revenue for the
year up 19.0%. The Group's other vending equipment in the region
benefited from increased footfall matches in the second half of the
year, following the lifting of pandemic restrictions.
Profitability in the region improved, with an operating profit
of GBP 11.6 million, compared to GBP 5.0 million in the prior year.
This performance reflected the successful restructuring programme
in the region (completed in April 2021), which included the removal
of unprofitable machines and bolstering of the management team in
the region.
As at 31 October 2022, there were 6,858 units in operation in
the UK & Republic of Ireland, a decrease of 5.3%, representing
15.6% of the Group's total vending estate.
Asia Pacific
The Group's operations continued to be impacted by extended
COVID-19 restrictions which severely limited consumer demand,
notably in Japan and China. This particularly affected photobooth
activity, our largest business area in the region, with Photo.ME
operating revenue down 6.5% compared to the prior year. Our laundry
operations were more resilient with operating revenue up 50.0%
year-on-year.
Despite these challenges, revenue in the region grew slightly by
0.3% to GBP39.9 million whilst operating profit was flat
year-on-year at GBP2.0 million.
As at 31 October 2022, there were 11,721 units in operation
which represented 26.7% of the Group's total vending estate.
In October, Japan eased restrictions and since then trading has
started to rebound as anticipated.
Key performance Indicators (KPIs)
The Group measures its performance using different types of
indicators. The main objective of these KPIs is to monitor the
Group's cash generation, long-term profitability, preservation of
the value of its assets, and of returns to shareholders.
Description Relevance Performance
------------------------------------------------ ------------------------- ----------------------------------
12 months ended 12 months ended
31 October 31 October
2022 2021
Total Group revenue at actual rate of
exchange GBP259.8m GBP214.4m
------------------------------------------------ ------------------------ ---------------- ----------------
Group Profit before tax GBP53.4m GBP28.6m
------------------------------------------------ ------------------------ ---------------- ----------------
Increase in number of photobooths (242) 679
--------------------------------------------------------------------------- ---------------- ----------------
The increase in number
of Revolutions is
a constant priority
and a main driver
Increase in number of Laundry units (operated) for growth 660 657
------------------------------------------------ ------------------------- ---------------- ----------------
PRINCIPAL RISKS
Similar to any business, the Group faces risks and uncertainties
that could impact the achievement of the Group's strategy.
These risks are accepted as inherent to the Group's business.
The Board recognises that the nature and scope of these risks can
change; it therefore regularly reviews the risks faced by the Group
as well as the systems and processes to mitigate them.
The table below sets out what the Board believes to be the
principal risks and uncertainties, their impact, and actions taken
to mitigate them.
Economic
Nature of risk Description and impact Mitigation
--------------------- ------------------------------ ----------------------------------
COVID-19 COVID-19 has continued The Group continues to
to cause disruption to monitor the COVID-19 situation
worldwide markets and closely and update its
supply chains, including practices in line with
those that ME Group operates government guidelines
within. and other relevant guidance.
The pandemic cleaning
regime continues, to help
reduce the risk of cross
contamination between
the Company's customers.
Measures taken include
providing employees with
face shields, surgical
masks, gloves, hand sanitiser.
The cleaning equipment
additions such as SD90
and DEW remain in use.
--------------------- ------------------------------ ----------------------------------
Global economic Economic growth has a The Group focuses on maintaining
conditions major influence on consumer the characteristics and
spending. affordability of its needs-driven
A sustained period of products.
economic recession and Like most businesses around
a period of high inflation the world, the Group has
could lead to a decrease had to face a significant
in consumer expenditure increase in supply chain
in discretionary areas. and raw material costs,
however, its strong position
in the markets in which
it operates gives the
Group significant pricing
power.
The Group has no exposure
to the invasion of Ukraine
by Russia.
--------------------- ------------------------------ ----------------------------------
Volatility of foreign The majority of the Group's The Group hedges its exposure
exchange rates revenue and profit is to currency fluctuations
generated outside the on transactions, as relevant.
UK, and the Group's financial However, by its nature,
results could be adversely in the Board's opinion,
impacted by an increase it is very difficult to
in the value of sterling hedge against currency
relative to those currencies. fluctuations arising from
translation in consolidation
in a cost-effective manner.
--------------------- ------------------------------ ----------------------------------
Regulations
Nature of risk Description and impact Mitigation
------------------ --------------------------------- ---------------------------------
Centralisation of In many European countries The Group has developed
the production of where the Group operates, new systems that respond
ID photos if governments were to to this situation, leveraging
implement centralised 3D technology in ID security
image capture, for biometric standards, and securely
passport and other applications, linking our booths to
or widen the acceptance the administration repositories.
of self-made or home-made Solutions are in place
photographs for official in France, Ireland, Germany,
document applications, Switzerland and the UK;
the Group's revenues and discussions in Belgium
profits could be affected. and the Netherlands.
Furthermore, the Group
also ensures that its
ID products remain affordable
and of a high-quality.
------------------ --------------------------------- ---------------------------------
Brexit The UK left the EU on The Board is continually
31 January 2020. This reviewing the potential
has led to changes in impact on the Group's
the UK regulations as operations following the
modifications to numerous UK's leaving the EU.
arrangements between the Any potential developments,
UK and other members of including new information
the EU and EEA, affecting and policy indications
trade and customs conditions, from the UK Government
taxation, movements of and the EU, is scrutinised
resources, among other with a view to enhancing
things. the Group's ability to
take appropriate action
targeted at managing and,
where possible, minimising
adverse repercussions
of Brexit.
The business carried out
post-transition impact
assessments to include
all customs documentation,
licences, permits, consents,
certificates, rules of
origin, commodity codes,
and delays at the borders.
The Board foresees that
in the short-term the
negative impact of the
uncertainty overshadowing
the general UK economy
could spill over into
the Group's UK operations.
------------------ --------------------------------- ---------------------------------
Strategic
Nature of risk Description and impact Mitigation
--------------------------- ----------------------------- ----------------------------------
Identification of The failure to identify Management teams constantly
new business opportunities new business areas may review demand in existing
impact the ability of markets and potential
the Group to grow in the new opportunities. The
long-term. Group continues to invest
in research in new products
and technologies. Furthermore,
the Group also ensures
that its ID products remain
affordable and of a high-quality.
--------------------------- ----------------------------- ----------------------------------
Inability to deliver The realisation of long-term The Group regularly monitors
anticipated benefits anticipated benefits depends the performance of its
from the launch mainly on the continued entire estate of machines.
of new products growth of the laundry New technology-enabled
and food businesses and secure ID solutions are
the successful development heavily trialled before
of integrated secure ID launch and the performance
solutions. of operating machines
is continually monitored.
--------------------------- ----------------------------- ----------------------------------
Market
Nature of risk Description and impact Mitigation
------------------------ ------------------------------- -----------------------------
Commercial relationships The Group has well-established, The Group's major key
long-term relationships relationships are supported
with a number of site-owners. by medium-term contracts.
The deterioration in the The Group actively manages
relationship with, or its site-owner relationships
ultimately the loss of, at all levels to ensure
a key account would have a high quality of service.
an adverse, albeit contained, The Group continues to
impact on the Group's monitor the situation
results, bearing in mind in both the French and
that the Group's turnover the
is spread over a large UK markets.
client base and none of
the accounts represent
more than 2% of Group
turnover.
To maintain its performance,
the Group needs to have
the ability to continue
trading in good conditions
in France and the UK,
taking into account the
situation in these two
countries.
------------------------ ------------------------------- -----------------------------
Operational
Nature of risk Description and impact Mitigation
------------------- ------------------------------ -----------------------------------
Reliance on foreign The Group sources most Extensive research is
manufacturers of its products from outside conducted into quality
the UK. Consequently, and ethics before the
the Group is subject to Group procures products
risks associated with from any new country or
international trade. supplier. The Group also
maintains very close relationships
with both its suppliers
and shippers to ensure
that risks of disruption
to production and supply
are managed appropriately.
------------------- ------------------------------ -----------------------------------
Reliance on one The Group currently buys The Board has decided
single supplier all its paper for photobooths to hold a strategic stock
of consumables from one single supplier. of paper, allowing for
The failure of this supplier 6-9 months' worth of paper
could have a significant consumption, to allow
adverse impact on paper enough time to put in
procurement. place alternative solutions.
------------------- ------------------------------ -----------------------------------
Reputation The Group's brands are The protection of the
key assets of the business. Group's brands in its
Failure to protect the core markets is sustained
Group's reputation and with certain unique features.
brands could lead to a The appearance of the
loss of trust and confidence. machine is subject to
This could result in a high maintenance standards.
decline in our customer Furthermore, the reputational
base. risk is diluted as the
Group also operates under
a range of brands.
------------------- ------------------------------ -----------------------------------
Product and The Board recognises that The Group continues to
service quality the quality and safety invest in its existing
of both its products and estate, to ensure that
services are of critical it remains contemporary,
importance and that any and in constant product
major failure will affect innovation to meet customer
consumer confidence. needs.
The Group also has a programme
in place to regularly
train its technicians.
------------------- ------------------------------ -----------------------------------
Technological
Nature of risk Description and impact Mitigation
------------------------ --------------------------------- ---------------------------------
Failure to keep The Group operates in The Group mitigates this
up with advances fields where upgrades risk by continually focusing
in technology to new technologies are on R&D.
critical.
------------------------ --------------------------------- ---------------------------------
Cyber risk: Third The Group operates an The Group undertakes an
party attack on increasing number of photobooths ongoing assessment of
secure ID data transfer capturing ID data and the risks and ensures
feeds transferring these data that the infrastructure
directly to government meets the security requirements.
databases.
------------------------ --------------------------------- ---------------------------------
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
28 February 2023
GROUP FINANCIAL STATEMENTS
Group Statement of Comprehensive Income
For the 12 months ending 31 October 2022
31 October 31 October
2022 2021
Notes GBP '000 GBP '000
------------------------------------------------------------------------ ------ --------------------- -----------
Revenue 3 259,780 214,404
Cost of Sales (178,377) (161,467)
------------------------------------------------------------------------ ------ --------------------- -----------
Gross Profit 81,403 52,937
Other Operating Income 4 7,916 317
Administrative Expenses (32,638) (23,919)
------------------------------------------------------------------------ ------ --------------------- -----------
Operating Profit 56,681 29,335
Other net (losses) / gains 4 (1,176) 1,998
Finance Income 6 - 177
Finance Cost 6 (2,151) (2,955)
------------------------------------------------------------------------ ------ --------------------- -----------
Profit before Tax 3 53,354 28,555
Total Tax Charge 7 (14,561) (6,703)
------------------------------------------------------------------------ ------ --------------------- -----------
Profit for the year 38,793 21,852
------------------------------------------------------------------------ ------ --------------------- -----------
Other Comprehensive Income
------------------------------------------------------------------------ ------ --------------------- -----------
Items that are or may subsequently be classified to Profit and Loss:
Exchange Differences Arising on Translation of Foreign Operations 829 (6,987)
Total Items that are or may subsequently be classified to profit and
loss 829 (6,987)
------------------------------------------------------------------------ ------ --------------------- -----------
Items that will not be classified to profit and loss:
Remeasurement gains in defined benefit obligations and other
post-employment benefit obligations 1,151 560
Deferred tax on remeasurement gains (248) (94)
------------------------------------------------------------------------ ------ --------------------- -----------
Total Items that will not be classified to profit and loss 903 466
------------------------------------------------------------------------ ------ --------------------- -----------
Other comprehensive income / (expense) for the year net of tax 1,732 (6,521)
------------------------------------------------------------------------ ------ --------------------- -----------
Total Comprehensive income for the year 40,525 15,331
------------------------------------------------------------------------ ------ --------------------- -----------
Profit for the Year Attributable to:
Owners of the Parent 38,793 21,713
Non-controlling interests - 139
------------------------------------------------------------------------ ------ --------------------- -----------
38,793 21,852
------------------------------------------------------------------------ ------ --------------------- -----------
Total comprehensive income attributable to:
Owners of the Parent 40,525 15,192
Non-controlling interests - 139
------------------------------------------------------------------------ ------ --------------------- -----------
40,525 15,331
------------------------------------------------------------------------ ------ --------------------- -----------
Earnings per Share
------------------------------------------------------------------------ ------ --------------------- -----------
Basic Earnings per Share 10 10.26p 5.78p
Diluted Earnings per Share 10 10.23p 5.77p
------------------------------------------------------------------------ ------ --------------------- -----------
All results derive from continuing operations.
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these Group financial statements
Group Statement of Financial Position
As at 31 October 2022
Group
------------------------------------
31 October 31 October
2022 2021
(Restated)
Notes GBP'000 GBP'000
------------------------------------- ------ ----------------------- -----------
Assets
Goodwill 11 17,116 15,305
Other intangible assets 11 15,620 19,988
Property, plant & equipment 12 101,090 91,973
Investment property 13 592 597
Investment in associates 14 21 21
Financial instruments held
at FVTPL 15 5,239 1,501
Other receivables 16 1,974 1,868
------------------------------------- ------ ----------------------- -----------
Non-Current Assets 141,652 131,253
------------------------------------- ------ ----------------------- -----------
Inventories 17 25,491 18,458
Trade and other receivables 16 20,050 22,452
Current tax 2,990 1,417
Cash and cash equivalents 18 136,185 99,362
------------------------------------- ------ ----------------------- -----------
Current assets 184,716 141,688
------------------------------------- ------ ----------------------- -----------
Total assets 326,368 272,941
------------------------------------- ------ ----------------------- -----------
Equity
Share capital 20 1,889 1,889
Share premium 10,627 10,599
Translation and other reserves 11,159 9,435
Retained earnings 108,974 106,051
------------------------------------- ------ ----------------------- -----------
Equity attributable to owners
of the Parent 132,649 127,974
Non-controlling interests - 1,720
------------------------------------- ------ ----------------------- -----------
Total Shareholders' funds 132,649 129,694
------------------------------------- ------ ----------------------- -----------
Liabilities
Financial liabilities 21 82,429 55,058
Post-employment benefit obligations 22 3,850 4,933
Deferred tax liabilities 24 7,760 9,362
Provisions 23 - 338
------------------------------------- ------ ----------------------- -----------
Non-current liabilities 94,039 69,691
------------------------------------- ------ ----------------------- -----------
Financial liabilities 21 35,657 25,877
Provisions 23 1,567 1,828
Current tax 10,208 3,367
Trade and other payables 25 52,248 42,484
------------------------------------- ------ ----------------------- -----------
Current liabilities 99,680 73,556
------------------------------------- ------ ----------------------- -----------
Total equity and liabilities 326,368 272,941
------------------------------------- ------ ----------------------- -----------
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these Group financial statements
The accounts were approved by the Board on 28 February 2023 and
signed on its behalf by:
Serge Crasnianski Sir John Lewis OBE
Director (Chief Executive Officer) Non-executive Chairman (Director)
Registration number: 00735438
Company Statement of Financial Position
As at 31 October 2022
Company
------------------------------------
31 October 31 October
2022 2021
Notes GBP'000 GBP'000
-------------------------------- ------ ----------- -----------------------
Assets
Other intangible assets 11 5 -
Property, plant & equipment 12 15,364 10,933
Investment in subsidiaries 14 44,468 46,901
Financial instruments held
at FVTPL 15 789 1,292
Non-current assets 60,841 59,125
-------------------------------- ------ ----------- -----------------------
Inventories 17 1,830 1,492
Trade and other receivables 16 23,142 19,454
Cash and cash equivalents 18 13,321 4,002
Current tax 1,205 583
-------------------------------- ------ ----------- -----------------------
Current assets 39,498 25,531
-------------------------------- ------ ----------- -----------------------
Total assets 100,340 84,656
-------------------------------- ------ ----------- -----------------------
Equity
Share capital 20 1,889 1,889
Share premium 10,627 10,599
Translation and other reserves 2,728 2,207
Retained earnings 68,743 46,405
-------------------------------- ------ ----------- -----------------------
Total Shareholders' funds 83,987 61,100
-------------------------------- ------ ----------- -----------------------
Liabilities
Financial liabilities 21 741 1,727
Non-current liabilities 741 1,727
-------------------------------- ------ ----------- -----------------------
Financial liabilities 21 1,060 830
Trade and other payables 25 14,552 20,999
-------------------------------- ------ ----------- -----------------------
Current liabilities 15,612 21,829
-------------------------------- ------ ----------- -----------------------
Total equity and liabilities 100,340 84,656
-------------------------------- ------ ----------- -----------------------
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these financial statements.
The Company recognised a profit after tax for the period of
GBP57,824,000 (2021: profit of GBP785,000).
The accounts were approved by the Board on 28 February 2023 and
signed on its behalf by:
Serge Crasnianski Sir John Lewis OBE
Director (Chief Executive Officer) Non-executive Chairman (Director)
Registration number: 00735438
Group Statement of Cash Flows
For the period ended 31 October 2022
31 October 2022 31 October 2021
Notes GBP'000 GBP'000
------ -------------------- --------------------
Cash flow from operating activities
Profit before tax 53,354 28,555
Finance costs 794 697
Interest of lease liabilities 1,357 2,258
Finance income - (177)
Other gains 1,176 (1,998)
Operating profit 56,681 29,335
-------------------------------------------------------------- ------ -------------------- --------------------
Amortisation and impairment of intangible assets 4 6,772 5,419
Depreciation and impairments of property,plant and equipment 4 28,791 30,328
Profit on sale of property, plant and equipment (7,490) (368)
Exchange differences (594) (355)
Movements in provisions (809) 400
Other non cash items (432) 680
Changes in working capital:
Inventories (7,033) (1,847)
Trade and other receivables 2,295 (5,780)
Trade and other payables 9,764 8,278
Cash generated from operations 87,945 66,090
-------------------------------------------------------------- ------ -------------------- --------------------
Interest paid (2,151) (2,956)
Taxation paid (10,895) (9,269)
-------------------------------------------------------------- ------ -------------------- --------------------
Net cash generated from operating activities 74,899 53,865
-------------------------------------------------------------- ------ -------------------- --------------------
Cash flows from investing activities
Acquisition of subsidiaries 29 (739) (10,133)
Proceeds from disposal of subsidiaries 152 1,050
Investment in intangible assets (2,486) (2,529)
Proceeds from sale of intangible assets 71 -
Purchase of property, plant and equipment (32,670) (26,376)
Proceeds from sale of property, plant and equipment 8,997 3,904
Investment in financial instruments (4,450) -
Interest received - 73
Dividends received from associates - 104
-------------------------------------------------------------- ------ -------------------- --------------------
Net cash in investing activities (31,125) (33,907)
-------------------------------------------------------------- ------ -------------------- --------------------
Cash flows from financing activities
Issue of ordinary shares to equity shareholders 28 -
Acquisition of minority interest (2,985) -
Repayment of principal of leases 19 (6,196) (4,600)
Repayment of borrowings 19 (24,622) (22,365)
Increase in borrowings 19 61,773 5,093
Decrease in assets held to maturity / held at amortised cost 19 - 25
Dividends paid to owners of the Parent 9 (35,497) -
Net cash utilised in financing activities (7,499) (21,847)
-------------------------------------------------------------- ------ -------------------- --------------------
Net interest / (decrease) in cash and cash equivalents 36,275 (1,889)
-------------------------------------------------------------- ------ -------------------- --------------------
Cash and cash equivalents at beginning of year 99,362 107,177
Exchange loss on cash and cash equivalents 548 (5,926)
-------------------------------------------------------------- ------ -------------------- --------------------
Cash and cash equivalents at end of year 136,185 99,362
-------------------------------------------------------------- ------ -------------------- --------------------
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these Group financial statements.
Company Statement of Cash Flows
For the period ended 31 October 2022
31 October 2022 31 October 2021
Notes GBP'000 GBP'000
------- ----------------- -----------------
Cash flow from operating activities
Profit before tax 57,111 2,050
Finance costs - 36
Interest of lease liabilities 209 247
Finance income (15) (76)
Dividends received (56,511) -
Other losses 914 311
Operating profit 1,708 2,568
----------------------------------------------------------------------- ----------------- -----------------
Depreciation and impairments of property,plant and equipment 2,123 3,436
(Loss) / gain on sale of property, plant and equipment (110) 31
Non cash movement in investment of subsidary 2,956 -
Other non cash items (125) (848)
Changes in working capital:
Inventories (338) (230)
Trade and other receivables (3,676) 5,455
Trade and other payables (6,448) (3,362)
----------------------------------------------------------------------- ----------------- -----------------
Cash (utilised in)/ generated from operations (3,911) 7,049
----------------------------------------------------------------------- ----------------- -----------------
Interest paid (194) (283)
Taxation paid (125) (2,373)
----------------------------------------------------------------------- ----------------- -----------------
Net cash (utilised in) / generated from operating activities (4,230) 4,394
----------------------------------------------------------------------- ----------------- -----------------
Cash flows from investing activities
Acquisition of subsidiaries - (2,440)
Proceeds from disposal of subsidiaries - 1,050
Purchase of property, plant and equipment (7,095) (4,387)
Investment in intangible assets (5) -
Proceeds from sale of property, plant and equipment 450 450
Dividends received from associates and subsidaries 56,511 76
----------------------------------------------------------------------- ----------------- -----------------
Net cash generated from / (utilised in) investing activities 49,862 (5,251)
----------------------------------------------------------------------- ----------------- -----------------
Cash flows from financing activities
Issue of ordinary shares to equity shareholders 28 -
Repayment of principal of leases (844) (1,020)
Dividends paid to owners of the Parent (35,497) -
Net cash utilised in financing activities (36,313) (1,020)
----------------------------------------------------------------------- ----------------- -----------------
Net increase / (decrease) in cash and cash equivalents 9,319 (1,877)
----------------------------------------------------------------------- ----------------- -----------------
Cash and cash equivalents at beginning of year 4,002 5,879
Cash and cash equivalents at end of year 13,321 4,002
----------------------------------------------------------------------- ----------------- -----------------
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these Group financial statements.
Group Statement of Changes in Equity
For the period ended 31 October 2022
Attributable
to
owners
Share Share Other Translation Retained of the Non-controlling
capital premium reserves reserve earnings Parent interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
At 1 November 2020 1,889 10,599 1,781 14,533 83,379 112,181 1,689 113,870
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Profit for the
period - - - - 21,713 21,713 139 21,852
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Other
comprehensive
(expense)/income:
Exchange
differences - - - (6,879) - (6,879) (108) (6,987)
Remeasurement
losses in defined
benefit pension
scheme and other
post-employment
benefit
obligations - - - - 560 560 - 560
Deferred tax on
remeasurement
gains - - - - (94) (94) - (94)
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Total other
comprehensive
(expense)
/ income - - - (6,879) 466 (6,413) (108) (6,521)
Total
comprehensive
(expense) /
income - - - (6,879) 22,179 15,300 31 15,331
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Transactions with
owners of the
Parent:
Share options - - - - 493 493 - 493
Dividends - - - - - - - -
Total transactions
with owners
of the Parent - - - - 493 493 - 493
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
At 31 October 2021 1,889 10,599 1,781 7,654 106,051 127,974 1,720 129,694
At 1 November 2021 1,889 10,599 1,781 7,654 106,051 127,974 1,720 129,694
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Profit for the
period - - - - 38,793 38,793 - 38,793
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Other
comprehensive
(expense)/income:
Exchange
differences - - - 840 - 840 (11) 829
Remeasurement
losses in defined
benefit pension
scheme and other
post-employment
benefit
obligations - - - - 1,151 1,151 - 1,151
Deferred tax on
remeasurement
gains - - - - (248) (248) - (248)
Total other
comprehensive
(expense)
/ income - - - 840 903 1,743 (11) 1,732
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Total
comprehensive
(expense)
/ income - - - 840 39,696 40,536 (11) 40,525
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
Transactions with
owners of the
Parent:
Shares issued in
the period - 28 - - - 28 - 28
Share options - 884 - - 884 - 884
Dividends - - - - (35,497) (35,497) - (35,497)
Acquisition of
minority - - - - (1,276) (1,276) (1,709) (2,985)
Total transactions
with owners
of the Parent - 28 884 - (36,773) (35,861) (1,709) (37,570)
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
At 31 October 2022 1,889 10,627 2,665 8,494 108,974 132,649 - 132,649
------------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------------- ----------------- -----------------
The notes on pages 121 to 193 of the Annual Report 2022 are an
integral part of these Group financial statements.
Company Statements of Changes in Equity
For the period ended 31 October 2022
Share Share Other Retained
capital premium reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
At 1 November 2020 1,889 10,599 2,207 45,632 60,327
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Profit for the period - - - 785 785
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Other comprehensive gain - - - (12) (12)
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Total other comprehensive gain - - - (12) (12)
Total comprehensive income for
the period - - - 773 773
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
At 31 October 2021 1,889 10,599 2,207 46,405 61,100
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
At 1 November 2021 1,889 10,599 2,207 46,405 61,100
Profit for period - - - 57,824 57,824
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Other comprehensive expense - - - 11 11
Total other comprehensive gain - - - 11 11
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Total comprehensive gain - - - 57,835 57,835
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Transactions with owners of the
Parent
Shares issued in the period - 28 - - 28
Capital contributions relating to
share-based payments (net) - - 521 - 521
Dividends - - - (35,497) (35,497)
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Total transactions with the
Parent - 28 521 (35,497) (34,948)
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
At 31 October 2022 1,889 10,627 2,728 68,743 83,987
---------------------------------- ----------------- ----------------- -------------- ----------------- ---------
Notes to the Financial Statements
General information
Me Group International plc (the "Company") is a public limited
company incorporated and registered in England and Wales and whose
shares are quoted on the London Stock Exchange, under the symbol
MEGP. The registered number of the Company is 735438 and its
registered office is at Unit 3B, Blenheim Rd, Epsom, KT19 9AP.
The principal activities of the Group continue to be the
operation, sale, and servicing of a wide range of instant-service
equipment. The Group operates coin-operated automatic photobooths
for identification and fun purposes, and a diverse range of vending
equipment, including digital photo kiosks, laundry machines, and
business service equipment, and amusement machines.
Authorisation of the financial statements and statement of
compliance with IFRSs
The Group and the Company financial statements of Me Group
International plc (the "Company") for the period ended 31 October
2022 were authorised for issue by the Directors on 28 February 2023
and the statements of financial position were signed by Mr Serge
Crasnianski, Chief Executive Officer and Sir John Lewis OBE,
Non-executive Chairman.
The financial statements have been prepared in accordance with
UK-adopted international accounting standards and in conformity
with the requirements of the Companies Act 2006.
Change of company name
On 1 August 2022 the Company changed its name from Photo-Me
International Plc to Me Group International Plc. On the same date,
the Company's London Stock Exchange symbol changed from PHTM to
MEGP.
1 ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
the Group's consolidated financial statements and the Company's
individual financial statements are set out below. The policies
have been consistently applied, unless otherwise stated, to all of
the statements presented. New standards adopted for this financial
period are shown in note 2 on page 133 of the Annual Report
2022.
1.1 BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards under
the historical cost convention except for certain financial
instruments held at FVTPL.
Going concern
The financial statements of the Group and the Parent Company
have been prepared on the going concern basis.
In reaching this conclusion, the Directors have reviewed
detailed budgets, which reflect, where applicable, the current
economic conditions, with regard to the level of demand for the
Group's and Parent Company's produced equipment, the level of
consumer confidence including the potential prolonged impact of the
COVID 19 pandemic and cash flow forecasts for at least the next
twelve months.
Directors assessed the Group's and Parent Company's going
concern by stress testing four scenarios and their projected
financial impact over a five-year period. The Directors' have used
the five-year business plan in this assessment which covers a
period of 12 months for the assessment of going concern and a
period of five years for the assessment of viability. The following
scenarios were tested:
Scenario 1:
The budget, elaborated with each country manager and validated
by the top management, which we consider as the best scenario.
Scenario 2:
The "most likely scenario" is based on the budget, but with the
following sensitivities:
-- A 10% decrease in machine installations due to supply chain issues,
-- A 5% price increase in spare parts and consumables
-- A 10% increase in paper costs
-- A 1% drop in total revenue due to loss of key accounts
-- A 2% drop in revenue due to the ongoing COVID pandemic.
-- This scenario does not consider the potential impact of new
regulations regarding photo identification or permission of selfies
as official photos within the five year forecast.
Scenario 3:
The "mild" scenario is based on the budget, but with the
following sensitivities:
-- A 20% decrease in machine installations due to supply chain issues,
-- A 10% price increase in spare parts and consumables
-- A 20% increase in paper costs
-- A 1% drop in total revenue due to loss of key accounts
-- A 3% drop in revenue due to the ongoing COVID pandemic.
-- Revenue is reduced by 2% each year due to the potential
impact of new regulations regarding photo identification or
permission of selfies as official photos.
Scenario 4:
The "worst case" scenario is based on the budget, but with the
following sensitivities:
-- A 30% decrease in machine installations due to supply chain issues,
-- A 20% price increase in spare parts and consumables
-- A 30% increase in paper costs
-- A 3% drop in total revenue due to loss of key accounts
-- A 5% drop in revenue due to the ongoing COVID pandemic.
-- Revenue is reduced by 5% each year due to the potential
impact of new regulations regarding photo identification or
permission of selfies as official photos.
In all four scenarios, exchange rate assumptions are as per the
budget. The forecasts assume payment of dividends in line with the
groups policy.
In all four scenarios tested, the Group continues to comply with
its bank covenants and loan repayment terms and is in a strong
financial position after five years.
Management do not expect the Ukrainian conflict to have any
impact on the business. The group has no activity in this
region.
Management does not consider interest rate risk to be a threat
to the Group's going concern, as all current debt is at fixed rates
and the forecasts indicate no requirement for new debt
facilities.
As a result, the cash flow projections indicate that the Group
and the Parent Company will remain within their available banking
facilities over the 12 months from signing these financial
statements. Additional information on these facilities is provided
in note 15.
Critical accounting estimates and key judgements
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
1) Development costs - notes 1.4 and 11.
Management determine when the criteria for capitalisation of
development costs have been met including commercial viability and
ability to reliably measure costs as an intangible asset based on
discounted expected cash flows. Judgement is required in
determining the practice for capitalising development costs and is
required in assessing whether the development costs meet the
criteria for capitalisation. This judgement has been applied
consistently year to year.
2) Application of IFRS16 to site agreements - note 1.7
The Group operates vending units which are deployed under a
fee-paying agreement with the site owner. These agreements vary
widely in their terms and conditions. Due to the high volume of
such agreements, the accounting impact is material to the Group.
Management assesses, on agreement-by-agreement basis, whether the
criteria for recognition as a lease under IFRS 16 has been met,
which requires judgement. This judgement has been applied
consistently year to year.
Group and Company
The following are areas of estimation uncertainty:
1) Goodwill and other intangible assets - notes 1.4, 1.8 and 11.
The recoverable amount of cash generating units (CGUs) has been
determined by management on a value in use basis. These
calculations require estimates by management, including
management's expectations of future growth in revenue, costs and
profit margins, cash flows and discount rates.
The carrying value of goodwill and intangible assets at the
period end were GBP17,116,000 and GBP15,620,000 respectively.
For both goodwill and intangible assets, we have used for
impairment tests the discounted cash flows method to evaluate the
asset value. Value in use was determined by discounting the future
cash flows of the CGU. Cash flows include a forecast period of five
years, based on actual operating results, budgets and economic
market research with a terminal value based on a long-term growth
rate applied thereafter. The Growth rate assumption for all CGUs
was 1%.
WACC discount rates were calculated for each territory and
ranged between 9.7% and 14.2%. Further details of impairment
testing are disclosed in note 11.
Goodwill impairments are not reversed or adjusted.
2) Useful lives and Impairment of property, plant and equipment - notes 1.5, 1.8, 12 and 13
Management make estimates of the useful life of property, plant
and equipment as disclosed below in notes 1.4 and 1.5.
Technological developments and regulatory changes can impact on the
lives of the vending estate. Management consider these factors in
assessing the useful lives of the assets.
Each of the Group's vending machine units is considered a
standalone cash generating unit. The COVID 19 pandemic negatively
impacted the cash generation of vending units, indicating potential
impairment at that point in time. Consequently, at 31 October 2020
each unit was subject to impairment testing, based on each
individual unit's projected EBITDA, as described in note 12.
Impairment charges were recognised where value in use of a unit was
lower than its carrying value.
At 31 October 2021 and 31 October 2022 all units were subject to
updated impairment tests and impairments were updated accordingly.
Where impairment tests indicated a reduced level of impairment, the
impairment held was reduced, with care taken to ensure that the
closing net book value did not exceed what it would have been had
the original impairment never occurred. Further details are
disclosed in note 12.
The carrying value of property, plant and equipment at the
period end was GBP101,090,000.
3) Valuation of pension obligations - note 1.13 and 22
The Group operates pension and other retirement and
post-employment schemes including both funded defined benefit
schemes, and defined contribution schemes. The schemes' assets and
liabilities are valued annually by third party actuaries, in
accordance with IAS19. Pension valuations are subject to estimation
and uncertainty due to the complex nature of actuarial assumptions.
Management reviews the appropriateness of the actuaries'
assumptions each year as part of the valuation process.
The carrying value of the Group's pension and retirement
obligations at the period end was GBP3,850,000.
4) Determination of discount rates for lease accounting - notes 1.7 and 12
To calculate the value of right of use assets and lease
liabilities recognised in the Statement of Financial Position,
management must determine an appropriate discount rate to apply to
the cashflows of each lease agreement. Discount rates are subject
to uncertainty and estimation as they are based on numerous
external inputs and assumptions.
Management determines discount rates using the Group's external
cost of borrowing adjusted for timing of borrowing, lease term,
country and currency impacts. An asset specific adjustment is also
applied to tailor the discount rate to the specific characteristic
of the leased asset. For the purpose of determining asset specific
adjustments leases have been organised into pools of similar leased
asset types.
Management obtained expert external advice on the determination
of appropriate discount rates for the year ended 31 October 2022.
The discount rates used range between 0.05% and 2.29%.
1.2 BASIS OF CONSOLIDATION
The Group consolidates the financial statements of the Company
and all of its subsidiaries, and includes associates under the
equity method, as at each year end.
Subsidiaries
Subsidiaries are all entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights that are currently exercisable. The acquisition date
is the date on which control is transferred to the acquirer. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date on which control ceases. Losses applicable
to 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 negative balance.
The principal subsidiaries affecting the results and financial
position of the Group are shown in note 28.
Changes in ownership of subsidiaries and loss of control
Changes in the Group's interest in a subsidiary that do not
result in loss of control are accounted for as equity
transactions.
Where the Group loses control of a subsidiary, the assets and
liabilities are derecognised along with any related non controlling
interest and other components of equity. Any resulting gain or loss
is recognised in profit and loss. Any interest retained in a
subsidiary is measured at fair value when control is lost.
The Group uses the acquisition method to account for business
combinations. Acquisition costs for business combinations are
expensed as incurred. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
acquired, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially
measured at their fair values on acquisition date. The Group
recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised
amounts of acquiree's identifiable net assets.
If the business combination is achieved in stages, the carrying
value of the acquirer's previously held interest in the acquiree is
re-measured to fair value at the acquisition date, with such gains
or losses arising from re-measurement recognised in profit and
loss.
Transactions eliminated on consolidation
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
Unrealised gains arising from transactions with equity-accounted
investees are eliminated against the investment to the extent of
the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment. Where necessary,
subsidiaries' accounting policies have been changed to ensure
consistency with the Group's policies.
Associates
Associates are those entities in which the Group has significant
influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when the Group
holds between 20% and 50% of the voting power of another
entity.
Application of the equity method to associates and joint
ventures
Associates are accounted for using the equity method (equity
accounted investees) and are initially recognised at cost. The
Group's investment includes goodwill identified on acquisition, net
of any accumulated impairment losses. The consolidated financial
statements include the Group's share of the total comprehensive
income and equity movements of equity accounted investees, from the
date that significant influence or joint control commences until
the date that significant influence or joint control ceases. When
the Group's share of losses exceeds its interest in an equity
accounted investee, the Group's carrying amount is reduced to nil
and recognition of further losses is discontinued except to the
extent that the Group has incurred legal or constructive
obligations or made payments on behalf of an investee.
The principal associates affecting the results and financial
position of the Group are shown in note 28.
Non-controlling interests
Non-controlling interests represent the portion of results for
the period and net assets not held by the Group. They are presented
separately within the statement of comprehensive income and the
statement of financial position.
The Group treats transactions with non-controlling interests as
transactions with equity owners of the Group. When a
non-controlling interest is acquired by the Group, any difference
between the consideration paid and the accumulated value of the
non-controlling interest is recognised in equity. Gains or losses
on disposal of non-controlling interests are also recognised in
equity.
1.3 FOREIGN CURRENCY TRANSLATION
The consolidated financial statements and the Company's own
financial statements are presented in Sterling being the functional
and presentational currency of the Parent Company and all values
are shown in GBP'000 except where indicated.
Transactions in foreign currencies are translated into the
respective functional currencies of the Group's subsidiaries at the
exchange rate ruling on the date the transaction is recorded.
Monetary assets and liabilities denominated in foreign currencies
are translated using the exchange rates ruling at 31 October.
Exchange gains and losses resulting from the above translation are
reflected in the income statement, except where they qualify as
cash flow hedges and are reflected in equity. There were no
qualifying cash flow hedges in 2022 or 2021.
Income statements of overseas entities are translated into
Sterling, at weighted average rates of exchange, as a reasonable
approximation to actual exchange rates at the date of the
transaction and their statements of financial position are
translated at the exchange rate ruling at 31 October. Exchange
differences arising on the translation of opening net assets are
taken to equity, as is the exchange difference on the translation
of the income statement between average and closing exchange rates.
For this purpose, net assets includes loans between group companies
and any related foreign exchange contracts where settlement is
neither planned nor likely to occur in the foreseeable future. Such
cumulative exchange differences are released to the income
statement on disposal of the subsidiary or associate.
1.4 INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of cost of an acquisition of a
subsidiary or associate over the fair value of the Group's share of
net identifiable assets at the date of acquisition. Goodwill on
acquisition of associates is included in investment in associates
and impairments thereof in administrative expenses in the income
statement.
Goodwill is not amortised but is tested annually for impairment
or more frequently if events or changes in circumstances indicate
that the carrying amounts may be impaired and is carried at cost
less any impairment. On disposals, goodwill is included in the
calculation of gains or losses on the sale of the previously
acquired entity.
For the purposes of impairment testing, goodwill is allocated to
cash-generating units. Each of these units represents the Group's
investment in operating subsidiary .
Research and development expenditure
Research and Development costs are accounted for in line with
all relevant criteria as mandated by IAS 38 Intangible Assets.
Research expenditure is expensed as incurred. Costs incurred in
developing projects are capitalised as intangible assets when it is
considered that the commercial viability of the project will be a
success based on discounted expected cash flows, and the costs can
be reliably measured. Other development costs are expensed and are
not recognised as assets.
Other intangible assets
Intangible assets (including research and development) acquired
as part of a business combination are capitalised at fair value at
the date of acquisition. Other intangibles are capitalised at
cost.
The policies applied to the Group's intangible assets are
summarised as follows:
Development Customer Patents and Droit au
costs Software related licences Bail
------------ ----------------- -------------- ---------------- ---------------- -----------------
Useful lives Finite Finite Finite Finite Indefinite
------------ ----------------- -------------- ---------------- ---------------- -----------------
Amortisation Straight-line Straight-line Customer related Patents and Not amortised,
basis, with basis, with intangible licence assets but subject
a maximum a maximum assets are are amortised to impairment
life of four life of three amortised over their testing annually
years from years, with over their useful lives
commencement no residual useful lives of between
of commercial value of between seven and
production, three and 10 years on
with no residual 10 years on a straight-line
value a straight-line basis with
basis with no residual
no residual value
value
------------ ----------------- -------------- ---------------- ---------------- -----------------
Internally Internally Acquired Acquired Acquired Acquired
generated generated
or acquired
------------ ----------------- -------------- ---------------- ---------------- -----------------
Amortisation of capitalised development costs are included in
the cost of sales. Amortisation of other intangible assets
categories is included in both the cost of sales and administration
expenses in the income statement.
1.5 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is shown at cost, less accumulated
depreciation and any impairment.
Subsequent expenditure on property, plant and equipment is
capitalised, either as a separate asset, or included in the cost of
the asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group
and the cost can be measured reliably. The carrying amount of any
parts of the assets that are replaced are derecognised. All other
costs are recognised in the income statement as an expense as
incurred.
Freehold land is not depreciated. Other assets are depreciated
on a straight-line basis, to reduce cost to the estimated residual
value over the estimated useful life of the asset at the following
rates:
Freehold buildings 2% - 5% straight-line
------------------------------------- --------------------------------
Photobooths and vending machines 10% - 33.33% straight-line
------------------------------------- --------------------------------
Right of use assets Depreciated over the lease term.
------------------------------------- --------------------------------
Plant, machinery, furniture, fixtures 12.5% - 33.33% straight-line.
and motor vehicles
------------------------------------- --------------------------------
The assets' residual values and useful lives are reviewed at
each year end and adjusted, if appropriate.
Operating equipment assets are reviewed at least annually for
impairment testing.
1.6 INVESTMENT PROPERTY
Certain of the Group's properties are classified as investment
properties; being held for long-term investment and to earn rental
income. Investment properties are stated at cost and the building
element is depreciated to reduce cost to its estimated residual
value at rates between 3.33% and 8.33% on a straight-line
basis.
1.7 LEASES
The Group has arrangements across three main categories that
meet the definition of a lease under IFRS 16: site agreements,
property and motor vehicles. The Group assesses whether a contract
is or contains a lease at inception of the contract. The Group
recognizes a right-of use asset and corresponding lease liability
at the lease commencement date, except for short term leases and
leases of low value. For these leases, the lease payments are
recognized as an operating expense on a straight-line basis over
the term of the lease.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liabilities adjusted for
any lease payments made at or before the commencement date, plus
any initial costs incurred. The right-of-use assets are
subsequently measured at cost less accumulated depreciation and
impairment losses. The right-of-use assets are from the
commencement date depreciated over the shorter period of lease term
and useful life of the underlying asset. The estimated useful lives
of right-of-use assets are determined on the same basis as those of
property and equipment.
The lease liabilities are initially measured at the present
value of the lease payments that are not paid at the commencement
date, discounted using the relevant country discount rate. Lease
Liabilities are adjusted for certain re-measurement events, e.g.
revised discount rate, change in the lease term or change in future
lease payments resulting from a change in an index. Discount rates
are determined using the Group's external cost of borrowing
adjusted for timing of borrowing, lease term, country and currency
impacts. An asset specific adjustment is also applied to tailor the
discount rate to the specific characteristic of the leased asset.
For the purpose of determining asset specific adjustments leases
have been organised into pools of similar leased asset types.
Site agreements
The Group operates vending units which are deployed under a
fee-paying agreement with the site owner. These agreements vary
widely in their terms and conditions. The Group examines, on an
individual basis, the degree to which these agreements meet the
definition of a lease under IFRS 16, with particular regard to the
presence of an identified asset with no substitution rights. While
the standard sets out the definition of a lease, judgement is
required in assessing the degree to which those criteria are met,
particularly with regard to the presence of an identified asset
with no substitution rights.
Non-IFRS16 leases
Some of the Group's lease arrangements do not meet the criteria
for IFRS16 treatment (eg variable rent, site owners have the
control on the machine location or Me Group can stop a contract
with a short period notice at any time) and are de facto accounted
for as operating costs.
1.8 IMPAIRMENT
For goodwill and intangible assets with indefinite lives, the
carrying value is reviewed annually for impairment or more
frequently if events or changes in circumstances indicate that the
carrying amounts may be impaired.
Other intangible assets and property, plant and equipment are
reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. If the carrying value of the asset is higher than the
recoverable amount of the asset an impairment loss is recognised.
In carrying out such impairment evaluations the recoverable amount
is the higher of the asset's value in use or its fair value less
costs to sell. Assets that do not generate largely independent cash
inflows are grouped at the lowest level for which separately
identifiable cash flows exist (cash-generating units) and the
recoverable amount is determined for the cash-generating unit
(CGU). If necessary, the carrying value is reduced by charging an
impairment loss in the income statement.
These impairments are shown under "Administrative expenses" on
the Statement of Comprehensive income.
Reversal of impairment
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that it does not exceed the carrying
amount that would have been determined had no impairment loss been
recognised. No impairment loss is reversed for goodwill or
intangible assets with indefinite lives.
1.9 FINANCIAL INSTRUMENTS
(i) Financial assets
Classification of financial assets
Financial instruments are classified based on the Group's
business model for managing financial assets and the contractual
cash flow characteristics of the financial asset.
(a) Trade receivables
Trade receivables are initially measured at fair value, and
subsequently at their amortised cost as reduced by appropriate
allowances for estimated irrecoverable amounts.
(b) Financial assets held at amortised cost
Initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method. The amortised
cost is reduced by any impairment losses. Interest income, foreign
exchange gains and losses and impairments are recognised in the
income statement. Any gain or loss on derecognition is recognised
in the income statement.
(c) Financial assets at fair value through profit or loss
Financial assets in this category are initially recorded and
subsequently valued at fair value, with changes in fair value
recognised in the income statement.
For investments designated as financial assets at fair value
through profit or loss, the fair values of quoted investments are
based on current bid prices. For unlisted investments the Group
uses various valuation techniques to determine fair values.
(ii) Financial liabilities
(a) Borrowings
Borrowings are recorded initially at the fair value of the
consideration received net of directly attributable transaction
costs.
After initial recognition, borrowings are subsequently measured
at amortised cost using the effective interest rate method. This
method includes any initial issue costs and discounts or premiums
on settlement. Finance costs on the borrowings are charged to the
income statement under the effective interest rate method.
Financial liabilities are derecognised when the obligation under
the liability is cancelled, discharged or has expired.
(b) Trade and other payables
Trade payables are initially recorded at fair value and
subsequently recorded at amortised cost using the effective
interest rate method.
1.10 INVENTORIES
Inventories are stated at the lower of cost and net realisable
value. Cost includes costs incurred in bringing inventories to
their present location and condition. The cost of work-in-progress
and finished goods includes an appropriate proportion of production
overheads.
Finished goods also include operating equipment not yet
sited.
Raw materials and consumables are valued on a first-in first-out
basis or on an average cost basis where average cost is not
significantly different to first-in first-out due to the fast
turnaround of consumables. The Group uses standard costs to value
inventory and these standard costs are regularly updated to reflect
current prices.
Inventories are stated net of provisions for slow moving and
obsolete inventory based on expected future usage.
1.11 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are carried in the statements of
financial position at cost. Bank overdrafts are included within
borrowings in current liabilities in the statements of financial
position. For the purposes of the statements of cash flows, cash
and cash equivalents comprises cash on hand, restricted and
unrestricted deposits held at banks and other highly liquid
investments with an original maturity of three months or less, less
bank overdrafts.
1.12 SHARE CAPITAL
Shares of the Company are classified as equity.
Where the Company acquires its own equity share capital
(treasury shares), the consideration paid, including any directly
attributable incremental costs (net of tax relief), is deducted
from equity attributable to the Company's equity shareholders until
the shares are either cancelled or subsequently reissued. The
amount is shown in equity as treasury shares. Where such shares
(the treasury shares) are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction
costs and the related income tax effects, is included in equity
attributable to the Company's equity holders.
1.13 EMPLOYEE BENEFITS
Pension obligations
Group companies have various pension schemes in accordance with
local conditions and practices in the countries in which they
operate.
The Company operates a defined benefit pension scheme, which is
closed to new entrants, with contributions made by employees and
the Company with defined benefits being based upon the employee's
length of service and final pensionable salary. The Company also
operates a defined contribution pension scheme.
Defined benefit scheme
Details of the pension schemes are included in note 22.
The net obligation for the Group's defined benefit pension
schemes is calculated for each scheme separately by estimating the
future benefit that employees have earned in the current and prior
periods, discounting that amount and deducting the fair value
amount of plan assets. The calculation is performed by independent
actuaries using the projected unit credit actuarial method. If this
calculation results in a potential asset for the Group, this asset
is only recognised to the present value of the economic benefits
available in the form of a refund of contributions paid to the fund
or reductions in future contributions. In calculating the present
value of any economic benefit consideration is given to any minimum
funding requirements.
Re-measurement of the net liability, which comprises actuarial
gains and losses, the return on plan assets (excluding interest)
and the effects of any asset ceiling, are recognised in other
comprehensive income. The Group determines the net interest expense
(income) on the net liability (asset) for the period by applying
the discount rate used to measure the defined benefit obligation at
the beginning of the period to the then net defined liability
(asset), taking into account changes in the period as a result of
contributions and pension benefits paid. Other expenses are charged
to profit and loss.
When plan benefits are changed or the plan curtailed, the
resulting change in benefit that relates to past service or the
gain or loss on curtailment is recognised in profit and loss. Gains
and losses on settlement of any plan are recognised when settlement
occurs.
Defined contribution scheme
Contributions to defined contribution schemes are expensed as
incurred.
Other post-employment benefits
In addition to the pension schemes noted above, contracts of
employment in certain Group companies require provision to be made
for employee retirements. These provisions are based on local
circumstances, length of service and salaries of the employees
concerned. They are included in post-employment benefit obligations
and shown in note 22 as other retirement provisions.
Equity compensation benefits
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date of grant,
determined using the Black-Scholes model. The fair value is
expensed on a straight-line basis over the vesting period, based on
management's estimate of the number of shares that will eventually
vest. The Group does not have options with market conditions.
On exercise of the option the proceeds received are allocated to
share capital (nominal value of shares) and share premium.
The grant by the Company of options over its equity instruments
(shares) to the employees of subsidiary undertakings in the Group
is treated as a capital contribution. The fair value of the
employee services received, measured by reference to the grant date
fair value, is recognised over the investing period as an increase
to the investment in subsidiary undertakings with a corresponding
credit to other reserves in equity.
Details of equity compensation benefits are included in note
20.
Termination benefits
Termination benefits are recognised in the income statement in
the period when the Group is demonstrably committed to the
termination of employment or to provide termination benefits as a
result of an offer made to encourage voluntary redundancy.
o Short-term employee benefits
The Group recognises a liability and an expense for short-term
employee benefits (such as holiday pay, bonuses and profit sharing)
where these obligations contractually arise (for example, as a
result of employment contracts) or where a constructive obligation
has arisen from past practice.
1.14 PROVISIONS
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation and a reliable estimate can be made. Provisions are
discounted where the effect of the time value of money is
material.
1.15 TAXATION
Tax expense for the current period comprises current and
deferred tax and is recognised in the income statement, except to
the extent that it relates to items recognised in other
comprehensive income or equity. The current tax charge is
calculated on the basis of the laws enacted or substantively
enacted at the statement of financial position date in the
countries where the Group operates.
Deferred tax is provided in full on temporary differences
arising between the tax base of assets and liabilities and their
carrying value in the accounts.
Deferred tax is measured on an undiscounted basis at the tax
rates that are expected to apply in future periods in which the
temporary difference will reverse, based on tax rates and laws
enacted or substantively enacted at the year end.
Deferred tax assets are recognised to the extent that it is
probable that the future taxable profit, against which the
deductible temporary differences can be utilised, will be
available.
Deferred tax is provided, or an asset recognised, on taxable
temporary differences arising on investments in subsidiaries and
associates, except where the timing of the reversal of the
temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable
future.
Current tax assets and liabilities are measured at the amounts
expected to be recovered from, or paid to, the taxation
authorities, based on tax rates and laws that are enacted or
substantively enacted at year end.
1.16 SEGMENT REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker
as required by IFRS 8 Operating Segments. Details of the segments
are shown in note 3.
1.17 REVENUE RECOGNITION
There are 3 types of revenue considering by the Group:
-- Vending revenue from the operating machines is recognised
when the services are provided which is when payment is received.
Vending revenue is total consideration received during the period
including that held in machines at the statement of financial
position date. There are no vending transactions requiring
unbundling of components. Revenue is the fair value of
consideration received or receivable and is measured net of
discounts, VAT and other sales-related taxes. Payment is received
immediately before the service is delivered to the customer.
-- Revenue from the sale of equipment, spare parts and
consumables is recognised upon delivery of products and acceptance,
if applicable, by the customer. Equipment, spare parts and
consumables are sold on their own and no unbundling is required for
accounting purposes. Revenue is the fair value of consideration
received or receivable and is measured net of discounts, VAT and
other sales-related taxes. Payment is typically due and received 30
days after the delivery of the product.
The Group offers a two-year warranty on all machines sold and is
responsible for any repairs required in that period.
-- Revenue from the provision of services, principally
maintenance contracts, is recognised at the time the service is
delivered to the customer. Services are sold on their own as
stand-alone products with no unbundling required. Revenue is the
fair value of consideration received or receivable and is measured
net of discounts, VAT and other sales-related taxes. Revenue is
recognised in a straight-line manner over the maintenance contract
term. Payment is typically due and received 30 days after the
delivery of the service is complete. Contract terms do not exceed
one year in length.
1.18 DIVID DISTRIBUTIONS
Dividends to the Company's shareholders are recognised as a
liability and deducted from shareholders' equity in the period in
which the shareholders' right to receive payment is
established.
1.19 COMPANY INVESTMENTS
In the Company statement of financial position, investments in
subsidiaries and associates are stated at cost less impairment. The
Company reviews, at least annually, the carrying value of
investments and performs an impairment exercise.
An impairment charge is made where there is evidence that the
carrying value exceeds the future cash flows of the investment or
where its carrying amount will not be recovered from sale.
2 NEW STANDARDS, AMMENTS AND INTERPRETATIONS
New accounting standards
Adopted by the Group
The Group has adopted the following new standards and amendments
for the first time in these financial statements with no material
impact.
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-- COVID-19-Related Rent Concessions beyond 20 June 2021 (Amendment to IFRS 16)
Not yet adopted by the Group
Certain new accounting standards and interpretations have been
published that are not mandatory for the current period and have
not been early adopted by the Group. These new standards and
interpretations, which are not expected to have a material effect
on the Group, are set out below.
Date required to
be adopted by the
Description Group
------------------------------------------------- ------------------
Onerous Contracts Cost of Fulfilling a Contract
(Amendments to IAS 37) 1 January 2022
Annual Improvements to IFRS Standards 2018-2020 1 January 2022
Property, Plant and Equipment: Proceeds before
Intended
Use (Amendments to IAS 16) 1 January 2022
Reference to the Conceptual Framework (Amendments
to
IFRS 3) 1 January 2022
IFRS 17 Insurance Contracts 1 January 2023
Disclosure of Accounting Policies (Amendments
to IAS 1
and IFRS Practice Statement 2) 1 January 2023
Definition of Accounting Estimate (Amendments
to IAS 8) 1 January 2023
3 SEGMENTAL ANALYSIS
IFRS 8 requires operating segments to be identified, based on
information presented to the Chief Operating Decision Maker (CODM)
in order to allocate resources to the segments and monitor
performance. The Group reports its segments on a geographical
basis: Asia Pacific, Continental Europe and United Kingdom &
Ireland. The Group's Continental European operations are
predominately based in Western Europe and, with the exception of
the Swiss operations, use the Euro as their domestic currency. The
Board, being the CODM, believe that the economic characteristics of
the European operations, together with the fact that they are
similar in terms of operations, use common systems and the nature
of the regulatory environment allow them to be aggregated into one
reporting segment.
Segmental results are reported before intra-group transfer
pricing charges.
Continental United
Asia Kingdom
Pacific Europe & Ireland Corporate Total
12 months ended GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 October 2022
----------------------- -------- ------------ ---------- ---------- ---------
Total revenue 39,945 187,897 41,996 - 269,838
Inter segment
sales - (10,058) - - (10,058)
----------------------- -------- ------------ ---------- ---------- ---------
Revenue from
external customers 39,945 177,839 41,996 - 259,780
----------------------- -------- ------------ ---------- ---------- ---------
EBITDA 9,094 75,497 15,388 (7,738) 92,241
----------------------- -------- ------------ ---------- ---------- ---------
Depreciation,
amortisation
and impairment (7,136) (24,234) (3,868) (322) (35,560)
Operating profit/loss
excluding associates 1,958 51,263 11,520 (8,060) 56,681
----------------------- -------- ------------ ---------- ---------- ---------
Operating profit 56,681
Other losses (1,176)
Finance income -
Finance costs (2,151)
Profit before
tax 53,354
----------------------- -------- ------------ ---------- ---------- ---------
Tax (14,561)
----------------------- -------- ------------ ---------- ---------- ---------
Profit for the
period 38,793
----------------------- -------- ------------ ---------- ---------- ---------
Capital expenditure
(excluding Right
of Use assets) 4,218 20,056 9,522 1,359 35,156
----------------------- -------- ------------ ---------- ---------- ---------
Non-current assets 24,870 90,932 25,054 796 141,652
----------------------- -------- ------------ ---------- ---------- ---------
Asia Continental United Kingdom
Pacific Europe & Ireland Corporate Total
12 months ended GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 October 2021
----------------------- --------- ------------ --------------- ---------- ----------
Total revenue 39,751 152,257 29,644 - 221,652
Inter segment
sales - (7,248) - - (7,248)
----------------------- --------- ------------ --------------- ---------- ----------
Revenue from external
customers 39,751 145,009 29,644 - 214,404
----------------------- --------- ------------ --------------- ---------- ----------
EBITDA 8,062 54,809 8,587 (6,381) 65,077
----------------------- --------- ------------ --------------- ---------- ----------
Depreciation,
amortisation and
impairment (6,024) (25,174) (3,643) (901) (35,742)
Operating profit/loss
excluding associates 2,038 29,635 4,944 (7,282) 29,335
----------------------- --------- ------------ --------------- ---------- ----------
Operating profit 29,335
Other gains 1,998
Finance income 177
Finance costs (2,955)
Profit before
tax 28,555
----------------------- --------- ------------ --------------- ---------- ----------
Tax (6,703)
----------------------- --------- ------------ --------------- ---------- ----------
Profit for the
period 21,852
----------------------- --------- ------------ --------------- ---------- ----------
Capital expenditure
(excluding Right
of Use assets) 2,993 20,749 5,974 245 29,961
----------------------- --------- ------------ --------------- ---------- ----------
Non-current assets 28,088 85,150 18,643 (1,419) 130,462
----------------------- --------- ------------ --------------- ---------- ----------
Inter-segment revenue mainly relates to sales of equipment.
Total revenue from external customers is analysed below:
Group
--------------------------------------------------------
12 months ended 31 October 12 months ended 31 October
2022 2021
GBP'000 GBP'000
----------------------------------------------- --------------------------- ---------------------------
Total revenue from external customers
Sales of equipment, spare parts & consumables 20,459 21,013
Sales of services 3,895 3,772
Other sales - 130
24,355 24,915
Vending revenue 235,425 189,488
----------------------------------------------- --------------------------- ---------------------------
Total revenue 259,780 214,404
----------------------------------------------- --------------------------- ---------------------------
There were no key customers in the period ended 31 October 2022
(2021: none).
4 PROFIT FOR THE PERIOD
Costs and overhead items charged/(credited) in arriving at
profit for the period, include the following:
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------------------ ----------- -----------
Amortisation, depreciation and impairment
Amortisation of capitalised research and development expenditure 2,955 1,396
Amortisation of intangible assets other than research and development 3,664 (49)
Impairment of / (reversal of impairment of) capitalised research and development
expenditure 153 (112)
Impairment of / (reversal of impairment of) intangible assets other than research and
development - 3,602
Impairment of goodwill - 582
6,772 5,419
------------------------------------------------------------------------------------------ ----------- -----------
Depreciation of property, plant and equipment and investment property
Depreciation of owned assets 25,774 28,767
Depreciation of right of use asset 6,445 4,420
Impairment of / (reversal of impairment of) owned property, plant and equipment and
investment
property (3,443) (2,875)
28,776 30,312
------------------------------------------------------------------------------------------ ----------- -----------
Amortisation of capitalised research and development expenditure
- reflected in income statement in cost of sales 2,955 1,396
Amortisation of intangible assets other than research and development
- reflected in income statement in cost of sales 3,394 1,181
- reflected in income statement in administrative expenses 272 (1,231)
6,621 1,346
------------------------------------------------------------------------------------------ ----------- -----------
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------------------ ----------- -----------
Short term leases
- property 945 537
- plant and equipment 825 888
1,770 1,425
------------------------------------------------------------------------------------------ ----------- -----------
Inventory cost
Cost of inventories recognised as an expense 6,580 8,537
6,580 8,537
------------------------------------------------------------------------------------------ ----------- -----------
During the period the Group provided GBP288,000 in respect of
obsolete stock (2021: GBP1,268,000).
31 October 31 October
2022 2021
GBP'000 GBP'000
---------------------------------------------------------------------- ----------- -----------
Other items
Research and development current period expenditure, not capitalized 1,724 1,463
Trade receivables impairment / (reduction of impairment) (note 15) (126) 850
Net foreign exchange losses 630 689
(Gain) on sale of property, plant and equipment (175) (368)
Direct expenses for investment properties generating rental income - 12
Audit and non-audit services
The following fees for audit and non-audit services were paid or
are payable to the Company's auditor, Mazars (2021: Mazars) and its
associates.
31 October 31 October
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------- ----------- -----------
Fees for the audit of the company and the group - Mazars LLP 313 232
Fees for the audit of the subsidiaries - other Mazars 39 192
Fees for audit related services (interim review) - Mazars 50 -
Fees for the audit of the subsidiaries - Other firms 84 83
486 507
-------------------------------------------------------------- ----------- -----------
In order to maintain the independence of the external auditors,
the Board has determined policies as to what non-audit services can
be provided by the Company's external auditors and the approval
processes related thereto. This function is performed by the Audit
Committee. No such services were delivered in the year or in the
previous year.
In addition to the audit fees payable to the Group's auditor and
its associates, certain Group subsidiaries are audited by other
firms.
Other operating income
31 October 31 October
2022 2021
GBP'000 GBP'000
Gain on disposal of property 7315
Rental income from investment property (note 13) 365 98
Other small items of non-trading income 236 219
7916 317
-------------------------------------------------- ----------- -----------
The Group generated a gain of GBP7,315,000 from the sale of an
office property in France.
Other gains and losses
Other gains and losses comprise of transactions relating to
financial instruments held at FVTPL, other financial instruments
and the disposal of subsidiaries. They have been disclosed
separately in order to improve a reader's understanding of the
financial statements and are not disclosed within operating profit
as they are non-trading in nature.
31 October 31 October
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------- ----------- -----------
Other gains and losses
(Loss)/gain on disposal of subsidiary (459) 1093
Fair value (loss)/gain on financial instrument held at FVTPL (330) 546
(Loss)/gain on available for sale financial instruments (20) 26
Other (losses)/gains (367) 333
(1,176) 1,998
-------------------------------------------------------------- ----------- -----------
Period ended 31 October 2022
The Group incurred a loss on disposal of GBP459,000 from the
disposal of its Spanish subsidiary La Wash Group, recognized in
other losses in the income statement.
Period ended 31 October 2021
The gain of GBP1,093,000 related to the disposal of the Group's
investments in Revolution Max Limited and Inox Limited, previously
subsidiary undertakings.
5 EMPLOYEES
Employment costs
31 October 31 October
2022 2021
GBP'000 GBP'000
-------------------------------------------------- ----------- -----------
Wages and salaries 41,394 38,920
Social security costs 9,017 7,491
Share options granted to directors and employees 884 493
Post-employment benefit costs
- defined benefit schemes 383 251
- defined contribution schemes 265 447
51,943 47,602
-------------------------------------------------- ----------- -----------
Number of employees
The average number of employees during the period (including
executive directors) comprised:
31 October 31 October
2022 2021
Full - time 996 860
Part - time 121 113
1,117 973
------------------------------------------ ----------- -----------
UK : Full - time 159 103
UK : Part - time 4 0
Continental Europe : Full - time 688 625
Continental Europe : Part - time 24 35
Asia and rest of the world : Full - time 149 132
Asia and rest of the world : Part - time 93 78
1,117 973
------------------------------------------ ----------- -----------
Employees by category
As at As at
31 October 31 October
2022 2021
---------------------------------------------------------------- ----------- -----------
Senior managers in the Group (excluding directors of Me Group) 27 31
Employees- Sales 110 113
Employees-Administration 191 184
Employees-Operating 789 645
Total 1,117 973
---------------------------------------------------------------- ----------- -----------
6 FINANCE INCOME AND COSTS
31 October 31 October
2022 2021
GBP'000 GBP'000
--------------------------------------------- ----------- -----------
Finance income
Dividends received from investments - 104
Other financial income - 73
- 177
--------------------------------------------- ----------- -----------
Finance costs
Bank loans and overdrafts at amortised cost (714) (691)
Interest on lease liabilities (1,437) (2,254)
(2,151) (2,955)
--------------------------------------------- ----------- -----------
7 TAXATION EXPENSE
Tax charges/(credits) in the statement of comprehensive
income
31 October 31 October
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Taxation
Current taxation
UK Corporation tax
- current period 6,104 3,562
- prior periods 2,253 (259)
----------- -----------
8,357 3,303
---------------------------------------------------- ----------- -----------
Overseas taxation
- current period 7,200 3,415
- prior periods 90 259
----------- -----------
7,290 3,674
---------------------------------------------------- ----------- -----------
Total current taxation 15,647 6,977
---------------------------------------------------- ----------- -----------
Deferred taxation
Origination and reversal of temporary differences
- current period - UK (150) (301)
- current period - overseas (961) 119
Adjustments in respect of prior periods 27 -
- UK
Adjustments in respect of prior periods 45 -
- Overseas
Impact of change in rate (47) -
----------- -----------
Total deferred tax (1,086) (181)
---------------------------------------------------- ----------- -----------
Tax charge in the income statement 14,561 6,796
---------------------------------------------------- ----------- -----------
Tax relating to items (credited)/charged
to other components of comprehensive income
Corporation tax - -
Deferred tax 248 94
Tax charge in other comprehensive income 248 94
---------------------------------------------------- ----------- -----------
Total tax charge in the statement of comprehensive
income 14,809 6,890
---------------------------------------------------- ----------- -----------
Reconciliation of total tax charge
The difference between the Group tax charge and the standard UK
corporation tax rate of 19% (2021: 19%) is explained below:
31 October 31 October
2022 2021
GBP'000 GBP'000
----------- -----------
Profit before tax 53,354 28,555
--------------------------------------------- ----------- -----------
Tax using the UK corporation tax rate of
19% (2021: 19%) 10,137 5,425
Effect of:
- non-taxable items 405 63
- overseas tax rates 1,983 354
- remeasurement of deferred tax for changes
in tax rates (47)
- losses not recognised in deferred tax
(relieved)/incurred (1,053) 648
- non-deductible expenses (98) -
- adjustments to tax in respect of prior 2,416 -
periods
- foreign exchange movements - 213
- other adjustments 818 -
Total tax charge 14,561 6,703
---------------------------------------------
Effective tax rate 27.3% 23.8%
--------------------------------------------- ----------- -----------
The Group tax charge of GBP14.8m (2021: GBP6.8m) corresponds to
an effective tax rate of 27.7% (2021: 23.8%).
There will be an increase in the main rate of corporation tax in
the UK from 19% to 25% from 1 April
2023. The deferred tax assets and liabilities have been
recognised based on the corporation tax rate at
which they are anticipated to unwind.
The Group undertakes business in multiple tax jurisdictions.
8 PROFITS ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
The profit for the period, after tax, dealt with in the
financial statements of the Parent Company is GBP57,824,000 (2021:
GBP785,000), including dividends received from subsidiaries.
9 DIVIDS PAID AND PROPOSED
31 October 2022 31 October 2021
-------------------------- --------------------------
pence per share GBP'000 pence per share GBP'000
-------------------------------------------- ---------------- -------- ---------------- --------
Dividends Paid
Special dividend
Approved by the Board on 18 July 2022 6.50 24,572 - -
Final
2021 approved at AGM held on 29 April 2022 2.89 10,925 - -
9.39 35,497 - -
-------------------------------------------- ---------------- -------- ---------------- --------
Dividends Proposed
Interim Dividend
2022 approved by the board on 18 July 2022 2.60 9,829 - -
2.60 9,829 - -
-------------------------------------------- ---------------- -------- ---------------- --------
Period ended 31 October 2022 - Dividends paid
The Board proposed a final dividend of 2.89p per ordinary share
in respect of the year ended 31 October 2021, which was approved by
shareholders at the Annual General Meeting held on 29 April 2022
and paid on 13 May 2022.
The Board also approved, at its 18 July meeting, a special
dividend of 6.50p per ordinary share, which was paid on 1 September
2022.
Period ended 31 October 2022 - Proposed dividends not yet
paid
The Board proposed an interim dividend of 2.60p per ordinary
share for the six month period ended 30 April 2022. The interim
dividend was approved by the Board on 18 July 2022 and paid on 3
November 2022.
Period ended 31 October 2021
No dividends were paid in the year ended 31 October 2021.
10 EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net
earnings attributable to shareholders of the Parent of
GBP38,793,000 (2021: GBP21,852,000) by the weighted average number
of shares in issue during the period.
Diluted earnings per share amounts are calculated by dividing
the net earnings attributable to shareholders of the Parent by the
weighted average number of shares outstanding during the period
plus the weighted average number of shares that would be issued on
conversion of all the dilutive potential shares into shares. The
Group has only one category of dilutive potential shares being
share options granted to senior staff, including directors, as
detailed in note 20.
The earnings and weighted average number of shares used in the
calculation are set out in the table below:
31 October 2022 31 October 2021
--------------------------------- ---------------------------------
Weighted Earnings Weighted Earnings
average per share average per share
number pence number pence
Earnings of shares Earnings of shares
GBP'000 '000 GBP'000 '000
---------------------------------- --------- ---------- ---------- --------- ---------- ----------
Basic earnings per share 38,793 378,052 10.26 21,852 378,012 5.78
Effect of dilutive share options - 1,048 (0.03) - 927 (0.01)
Diluted earnings per share 38,793 379,100 10.23 21,852 378,938 5.77
---------------------------------- --------- ---------- ---------- --------- ---------- ----------
Potential shares (for example, arising from exercising share
options) are treated as dilutive only when their conversion to
shares would decrease basic earnings per share or increase loss per
share from continuing operations.
11 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Group
GBP'000
--------------------------------- ---------
Cost:
At 1 November 2020 19,246
Exchange differences (370)
Additions 4,685
Disposals (2,826)
At 31 October 2021 20,735
--------------------------------- ---------
IFRS remeasurement (2,337)
At 31 October 2021 (restated) 18,398
--------------------------------- ---------
At 1 November 2021 18,398
Exchange differences 204
Additions 1,652
Disposals (2,523)
At 31 October 2022 17,731
--------------------------------- ---------
Impairment charges:
At 1 November 2020 5,478
Exchange differences (141)
Disposals (2,826)
Impairment charge in the period 582
At 31 October 2021 3,093
--------------------------------- ---------
At 1 November 2021 3,093
Disposals (2,523)
At 31 October 2022 615
--------------------------------- ---------
Net book value:
At 31 October 2021 15,305
At 31 October 2022 17,116
--------------------------------- ---------
In the period the purchase price allocation was completed for
two acquisitions: Société Générale d'Equipement de Restauration and
Now Retail Group. Brand, patent and customer related intangible
assets with a total value of GBP3,128,000 were identified and
transferred from goodwill to intangible assets. A deferred tax
liability of GBP791,000 was recognised in respect of these
intangible assets and added to the value of goodwill. Further
details of the purchase price allocation are provided in note
29.
Additions to goodwill in the year are in relation to the
following acquisitions of subsidiaries:
Additions: GBP'000
------------------------------- ---------
Dreamakers 1,652
1,652
------------------------------- ---------
Disposals: GBP'000
------------------------------- ---------
Global Network Investment SL:
Cost 2,523
Impairment (2,523)
Net book value -
------------------------------- ---------
The assessment of the purchase price adjustments in relation to
Dreamakers was still in progress at 31 October 2022.
Company
The Company has no goodwill.
Goodwill by segments
The table below shows the allocation of goodwill acquired
through business combinations between segments.
The amount of impairment losses is recognised in Administrative
costs.
Goodwill has been allocated for impairment testing purposes to
nine (2021: nine) cash-generating units (CGUs); allocated between
geographical areas and activity in accordance with impairment
testing in the prior period:
31 October 31 October
2022 2021
GBP'000 GBP'000
----------------------------------------------- ----------- -----------
Carrying amount
UK & Ireland
CGU 1 - ME Group Ireland Supplies Limited 154 154
CGU 2 - Photo-Me Northern Ireland 14 14
Total UK & Ireland 168 168
----------------------------------------------- ----------- -----------
Continental Europe
CGU 1 - ME Group France SAS 308 303
CGU 2 - ME Group Germany GmbH 1,976 1,941
CGU 3 - Sempa SARL 3,374 3,299
CGU 4 - KIS SAS* 693 653
CGU 5 - Dreamakers** 1,692 -
Total Continental Europe 8,043 6,196
----------------------------------------------- ----------- -----------
Asia
CGU 1 - Nippon Auto-Photo Kabushiki Kaisha*** 7,801 7,854
CGU 2 - Now Retail Group 1,104 1,087
Total Asia 8,905 8,941
----------------------------------------------- ----------- -----------
Total 17,116 15,305
----------------------------------------------- ----------- -----------
* Europe CGU 4 includes goodwill from the acquisition of
Resto'Clock, which was merged into KIS SAS on 31(st) May 2022.
** This amount is converted at the closing balance FX rate when
the amount in the previous table is converted at the FX rate at the
date of acquisition
*** Asia CGU 1 includes goodwill from the acquisition of Photo
Plaza Co Ltd, which was merged into Nippon Auto-Photo Kabushiki
Kaisha on 15(th) March 2021.
The Group tests annually, for impairment, or more frequently if
there are indications that goodwill might be impaired. The
recoverable amount of all CGUs has been determined on a value in
use basis.
Value in use was determined by discounting the future cash flows
of the CGU. Cash flows include a forecast period of five years,
based on actual operating results, budgets and economic market
research with a terminal value based on a long-term growth rate
applied thereafter.
Key assumptions
Long-term growth rate 1% (2021: 0% to 1%)
The long-term growth rate assumption for all Group CGUs was 1%.
The long-term growth rate has been determined based on a
conservative basis for expected growth in EBITDA for each CGU and
takes into account revenue, volumes, selling prices and operating
costs. It is based on past experience and expected future
developments in markets and operations, and for the current period
taking into account in particular the COVID-19 pandemic and
economic conditions.
Discount rate 9.74%-14.24% (2021: 12.63%-14.50%)
The pre-tax discount rates applied to the cash flow forecasts
for the CGUs are derived from the pre-tax weighted average cost of
capital for the Group adjusted for country specific risks, local
risk free borrowing rates and local tax rates for the specific
country concerned.
The rates used are: United Kingdom 13.28%, (2021: 13.14%),
Ireland 10.40% (2021: 13.39%), France 12.36% (2021: 13.05%),
Germany 11.16% (2021: 12.61%), Spain 14.24% (2021: 13.97%), Japan
10.65% (2021: 13.20%), Portugal 12.29% (2021: 14.50%), Belgium
10.12% (2021: 13.14%), Netherlands 11.28% (2021: 12.63%),
Switzerland 10.00% (2021: 12.67%) and Austria 9.74% (2021: 12.96%).
The Board is confident, overall, that these discount rates reflect
the circumstances in each country, and are in accordance with IAS
36.
Sensitivity to key assumptions
As at the measurement date, the recoverable amount of all
cash-generating units, based on their value in use, is
significantly higher than the carrying amount relevant for the
impairment test. After considering all key assumptions, management
considers that a reasonably pessimistic revision of key assumptions
which can rationally be expected would still cause the carrying
amount of the cash-generating units to exceed their recoverable
amount.
Other intangible assets - Group
Capitalised Other
development intangible
costs assets Total
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ----------- ---------
Cost:
At 1 November 2020 12,919 23,036 35,955
Exchange differences (710) (1,311) (2,021)
Additions external 1,802 727 2,529
Additions new subsidiary - 7,644 7,644
Disposals (1,000) (42) (1,042)
--------------------------------------------- ------------ ----------- ---------
At 31 October 2021 13,011 30,054 43,065
--------------------------------------------- ------------ ----------- ---------
IFRS remeasurement - 3,128 3,128
At 31 October 2021 (restated) 13,011 33,182 46,193
--------------------------------------------- ------------ ----------- ---------
At 1 November 2021 13,011 33,182 46,193
Exchange differences (16) (306) (322)
Additions external 1,418 1,068 2,486
Additions new subsidiary - 98 98
Disposals (6,374) (4,306) (10,680)
At 31 October 2022 8,039 29,736 37,775
--------------------------------------------- ------------ ----------- ---------
Amortisation:
At 1 November 2020 9,243 13,246 22,489
Exchange differences (1,157) (1,066) (2,223)
Provided during the period 1,284 3,553 4,837
Transfer from property, plant and equipment 758 386 1,144
Disposals - (42) (42)
At 31 October 2021 10,128 16,077 26,205
--------------------------------------------- ------------ ----------- ---------
At 1 November 2021 10,128 16,077 26,205
Exchange differences (31) (182) (213)
Provided during the period 3,108 3,664 6,772
Disposals (6,341) (4,268) (10,609)
At 31 October 2022 6,864 15,291 22,155
--------------------------------------------- ------------ ----------- ---------
Net book value:
At 1 November 2020 3,676 9,790 13,466
At 31 October 2021 2,883 17,105 19,988
At 31 October 2022 1,175 14,445 15,620
--------------------------------------------- ------------ ----------- ---------
Capitalised research and development expenditure is amortised
over a maximum of four years, with no residual value.
Other intangible assets consist of software (GBP1,390,000),
brands (GBP665,000), customer related assets (GBP11,181,000),
patents (GBP1,089,000) and Droit au Bail (GBP120,000).
Research and development
An impairment charge of GBP153,000 (2021: credit for reversal of
impairment of GBP112,000) is recognised in the line "Costs of
sales". The impairment charge was made against the intangible
assets of KIS SAS (GBP49,000) and the Photo-Me (Shanghai) Co
Limited (GBP104,000). Impairment losses were due to a reduction in
forecast cash generation of the affected subsidiaries.
Other intangible assets
No impairment charges or reversals were recognised in the year
(2021: GBP3,602,000 impairment charge was recognised in
"Administrative expenses").
Company
Other
intangible
assets
GBP'000
-------------------- -----------
Cost:
At 1 November 2020 776
At 31 October 2021 776
Addition 5
At 31 October 2022 781
-------------------- -----------
Amortisation:
At 1 November 2020 776
At 31 October 2021 776
At 31 October 2022 776
-------------------- -----------
Net book value:
At 1 November 2020 0
At 31 October 2021 0
At 31 October 2022 5
-------------------- -----------
12 PROPERTY, PLANT AND EQUIPMENT
Own work capitalised
Some of the Group's subsidiaries manufacture vending equipment,
which is then sold to the Group's operating companies and
capitalised by them as fixed assets. The amount capitalised
includes direct costs associated with the manufacture of such items
together with applicable overheads, but excludes general overheads
and administration costs. When relevant, profits made by the
selling company are eliminated on consolidation.
Group
Land & Photobooth Plant, Right of Use Right of Use Right of Use Total
Buildings & vending machinery, Land & Plant, Motor vehicles
machines furniture, Buildings machinery,
fixtures & furniture,
motor vehicles fixtures
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Cost:
At 31 October
2020 19,308 278,800 27,258 1,003 10,715 4,814 341,898
Exchange
difference (1,359) (17,747) (1,481) (49) (520) (234) (21,390)
Additions
internal - 22,450 4 - - - 22,454
Additions
external 425 113 4,437 3,517 4,356 1,868 14,716
Additions -
new sub - 2,207 274 - - - 2,481
Disposals (313) (20,991) (2,362) (71) (976) (998) (25,711)
At 31 October
2021 18,061 264,832 28,130 4,400 13,575 5,450 334,448
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Exchange
difference 206 (644) 295 59 155 102 173
Additions
internal - 21,496 - - - - 21,496
Additions
external 683 5,709 4,782 2,878 1,803 2,617 18,472
Additions -
new sub 3 8 - - - - 11
Disposals (3,650) (14,477) (3,042) (2,328) (1,047) (1,707) (26,251)
At 31 October
2022 15,303 276,924 30,165 5,009 14,486 6,462 348,349
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Depreciation:
At 31 October
2020 9,690 213,280 22,115 291 4,409 1,828 251,613
Exchange
difference (798) (13,922) (1,597) (14) 11 (89) (16,409)
Provided
during the
period 330 25,931 2,506 972 2002 1446 33,187
Impairments 95 (4,167) 1,197 - - - (2,875)
Transfers to
intangibles - (1,144) - - - - (1,144)
Disposals (56) (18,960) (1,114) 271 (1,137) (901) (21,897)
At 31 October
2021 9,261 201,018 23,107 1,520 5,285 2,284 242,475
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Exchange
difference 7 (1,439) 357 93 23 40 (919)
Provided
during the
period 322 22,849 2,603 2,015 2,619 1,811 32,219
Impairments (86) (2,650) (707) - - - (3,443)
Disposals (2,510) (14,477) (1,862) (1,470) (1,047) (1,707) (23,073)
At 31 October
2022 6,994 205,301 23,498 2,158 6,880 2,428 247,259
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Net book
value:
At 1 November
2020 9,618 65,520 5,143 712 6,306 2,986 90,285
At 31 October
2021 8,800 63,814 5,023 2,880 8,290 3,166 91,973
At 31 October
2022 8,309 71,623 6,667 2,851 7,606 4,034 101,090
--------------- ---------------- ----------- ---------------- ---------------- ---------------- ---------------- ---------
Internal additions for photobooths and vending machines of
GBP21,496,000 (2021: GBP22,450,000) relate to own work capitalised,
being equipment manufactured by the subsidiaries and capitalised by
the group companies.
The Group and the Company test all significant operating
equipment asset classes for impairment annually, or more frequently
if there are indications of impairment. Impairment reviews on
operating equipment are all conducted on a value in use basis.
The key assumptions for the value in use calculation were those
regarding the discount rates, growth during the forecast period.
The estimated growth rates were based on historic performance
trends and budgets. The long-term growth rate used to extrapolate
cash flow projections beyond the period covered by the financial
forecasts was 1% (2021: 0%- 1%). Pre-tax discount rates ranging
between 9.7% and 14.2% (2021: 12.6% to 14.5%) were applied to the
cash flows.
At the current year end all units were subject to an updated
impairment test and impairments updated accordingly. Where
impairment tests indicated a reduced level of impairment, the
impairment held was reduced, with care taken to ensure that the
closing net book value did not exceed what it would have been had
the original impairment never occurred. Impairments or reversals of
impairment to photobooths and vending machines were recognised in
the following operating segments: Asia Pacific - impairment charge
of GBP1,603,000; Continental Europe - impairment reversal of
(GBP1,405,000); and United Kingdom - impairment reversal of
(GBP2,848,000).
A reversal of impairment to land and buildings of (GBP86,000)
was recognised in the United Kingdom operating segment.
Impairments or reversals of impairment to plant, machinery,
furniture, fixtures and motor vehicles were recognised in the
following operating segments: Asia Pacific - impairment charge of
GBP9,000; Continental Europe - impairment reversal of (GBP563,000);
and United Kingdom - impairment reversal of (GBP153,000).
Significant impairment charges were made against the Group's
property, plant and equipment during the pandemic affected period,
when the uncertain outlook and reduced trading indicated
impairment. In the current and prior years, as the pandemic
restrictions has eased in most of our territories, the value in use
of assets has increased and provisions have been reversed where
appropriate.
Company
Land & Photobooth & Plant, Right of Use Right of Use Right of Use Total
Buildings vending machinery, Land & Plant, Motor vehicles
machines furniture, Buildings machinery,
fixtures & furniture,
motor vehicles fixtures
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Cost:
At 1 November
2020 - 42,530 1,440 - 2,438 955 47,363
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Additions
internal - 3,226 - - - - 3,226
Additions
external - 193 969 - - - 1,162
Additions
right of use - - - 1,011 109 772 1,892
Disposals
external - (7,517) (128) - (649) (312) (8,606)
At 31 October
2021 - 38,432 2,281 1,011 1,898 1,415 45,037
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Additions
internal 572 5,063 - - - - 5,635
Additions
external - 430 1,030 - 28 60 1,548
Disposals
external - (3,603) (150) - (427) (361) (4,541)
At 31 October
2022 572 40,323 3,161 1,011 1,499 1,114 47,679
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Depreciation:
At 31 October
2020 - 36,612 400 - 1,163 434 38,609
Provided
during the
period - 1,524 822 107 628 354 3,435
Disposals
external - (7,128) (35) 162 (649) (290) (7,940)
At 31 October
2021 - 31,008 1,187 269 1,142 498 34,104
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Provided
during the
period 18 1,107 147 107 408 336 2,123
Additions
internal 289 - - - - - 289
Disposals
external - (3,347) (66) - (427) (361) (4,201)
At 31 October
2022 307 28,768 1,268 376 1,123 473 32,315
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Net book
value:
At 1 November
2020 1,796 4,321 1,041 1,041 1,041 1,041 7,158
At 31 October
2021 2,537 7,424 972 972 972 972 10,933
At 31 October
2022 265 11,554 1,891 634 375 640 15,364
--------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- --------
Internal additions for photobooths and vending machines of
GBP5,063,000 (2021: GBP3,226,000) relate to new equipment produced
by subsidiaries and equipment previously capitalised by the Group's
subsidiaries and sold to the parent.
13 INVESTMENT PROPERTY
Group
GBP'000
---------------------------- ---------
Cost:
At 1 November 2020 13,660
Exchange differences (838)
At 31 October 2021 12,822
---------------------------- ---------
Exchange differences 230
At 31 October 2022 13,052
---------------------------- ---------
Depreciation:
At 1 November 2020 13,008
Exchange differences (799)
Provided during the period 16
At 31 October 2021 12,225
---------------------------- ---------
Exchange differences 220
Provided during the period 15
At 31 October 2022 12,460
---------------------------- ---------
Net book value:
At 1 November 2020 652
At 31 October 2021 597
At 31 October 2022 592
---------------------------- ---------
The investment property is freehold and is stated at cost less
depreciation and any impairment charges. The directors are
satisfied that the fair value of the Investment property is not
less than its net book value.
Rental income from the investment property was GBP365,000 (2021:
GBP98,000) (note 4).
Company
The Company has no investment property.
14 INVESTMENTS IN ASSOCIATES AND SUBSIDIARIES
Investment in associates
Group
GBP'000
----------------------- -----------------------
Cost:
At 1 November 2020 57
Exchange differences (1)
Disposal (see note 4) (35)
At 31 October 2021 21
----------------------- -----------------------
Exchange differences (1)
Disposal (see note 4) -
Dividends -
At 31 October 2022 20
----------------------- -----------------------
Share of
Name Country of Assets Liabilities Revenue profit Dividends Interest
incorporation GBP'000 GBP'000 GBP'000 GBP'000 received %
------------ --------------- ------------------ ------------------ ---------------- ---------------- ---------------- ------------------
At 31
October
2021
Globe
Connect &
Photomaton
Maroc Morocco 90 69 - - - -
90 69 - - - 50
------------------ ------------------ ---------------- ---------------- ---------------- ------------------
At 31
October
2022
Globe
Connect &
Photomaton
Maroc Morocco 90 70 - - - 50
90 70 - - - 50
------------------ ------------------ ---------------- ---------------- ---------------- ------------------
Company
Associated Subsidiary
undertakings undertakings Total
GBP'000 GBP'000 GBP'000
------------------------------------------- ----------------------- ----------------------- -----------------------
Costs :
At 1 November 2020 41 48,119 48,160
Addition - 2,953 2,953
Disposal (35) (2,251) (2,286)
At 31 October 2021 6 48,821 48,827
------------------------------------------- ----------------------- ----------------------- -----------------------
At 1 November 2021 6 48,821 48,827
Capital increase relating to share-based
payment (net) - 521 521
Disposal - (2,956) (2,956)
At 31 October 2022 6 46,386 46,392
------------------------------------------- ----------------------- ----------------------- -----------------------
Provision:
At 1 November 2020 3 2,623 2,626
Impairment 3 1,548 1,552
Disposal - (2,251) (2,251)
At 31 October 2021 6 1,920 1,926
------------------------------------------- ----------------------- ----------------------- -----------------------
At 1 November 2021 6 1,920 1,926
Impairment - - -
Disposal - (2) (2)
At 31 October 2022 6 1,918 1,924
------------------------------------------- ----------------------- ----------------------- -----------------------
Net book value:
At 1 November 2020 38 45,496 45,534
At 31 October 2021 - 46,901 46,901
At 31 October 2022 - 44,468 44,468
------------------------------------------- ----------------------- ----------------------- -----------------------
The net capital increase relating to share-based payments
relates to share options in the parent company, Me Group
International plc, granted to employees of subsidiary undertakings
of the Group. Refer to note 20 for further details on the Group's
share option schemes.
The details of all the Group's subsidiaries and associates are
given in note 28 of the Annual Report 2022.
15 FINANCIAL INSTRUMENTS
Group Treasury
The Group has a centralised treasury function. The primary aim
for this function is to manage liquidity and funding arrangements
and the Group's exposure to associated financial and market risks,
including credit risk, interest rate risk and foreign currency
risk. The general approach for Group Treasury is one of risk
reduction within a framework of delivering total shareholder
return.
Treasury operations
Overview and policy
Treasury policy is set by the Board. Group treasury activities
are subject to a set of controls appropriate for the magnitude of
the borrowing, investments and group-wide exposures. To date the
treasury function has limited itself to obtaining surplus cash from
the subsidiaries and depositing this in bank accounts owned by the
Group's Treasury Company. The Board has defined an investment
strategy, amounts and types of products to which the surplus cash
may be invested.
The Board monitors the performance of the Treasury function and
is responsible for making changes to the personnel and limits of
authority of Treasury personnel.
The Board has provided written principles for overall risk
management of the Treasury Function. It has also defined policies
and procedures covering such areas as foreign exchange risk,
interest rate risk, credit risk, the use of derivative instruments
and investment of excess liquidity (surplus funds above the
immediate and short-term operational funding needs, such as working
capital requirements). The key objectives for Group Treasury are to
protect the principal value of cash and cash equivalents, to
concentrate cash at the centre to minimise external borrowings, and
to maximise the return on cash.
Liquidity risk
Liquidity risk is the risk that the Group will face in meeting
its obligations in settling its financial liabilities. The Group's
approach to managing liquidity risk is to ensure that it has
sufficient funds to meet its liabilities when due without incurring
unacceptable losses. A material and sustained shortfall in the
Group's cash flow could undermine the Group's credit rating, impair
major investor confidence and restrict the ability of the Group to
raise new funds.
The Group maintained a satisfactory net cash position throughout
the period and preceding periods as a result of cash generation
from the business.
During the current period and prior period surplus cash held by
the operating subsidiaries, over and above balances required for
working capital management was transferred to Group Treasury. These
funds were kept in their local currency, or converted into sterling
and kept in the Treasury Company bank accounts which are interest
bearing.
The strong cash generation and retention from the business
together with available credit resources, help mitigate liquidity
risk.
The Group may hold financial instruments (such as bank and other
loans) to finance its day to day working capital requirements, for
capital expenditure, for corporate transactions (such as dividend
payments to shareholders, share buybacks, acquisitions), for the
management of currency and interest rate exposure arising from its
operations (which may involve the use of derivatives and swaps) and
for the temporary investment of short-term funds. No derivatives or
swaps have been used in the period ending 31 October 2022 (31
October 2021: none). With a satisfactory net cash position, the
Group largely finances its working capital and capital expenditure
programmes from its own resources. In addition, financial
instruments such as trade receivables (amounts due from customers
as a result of a sale) and trade payables (arising from purchases
of materials and services) arise from day-to-day trading.
The following notes describe the Group's financial risk
management policy and details on financial instruments.
15(A) FAIR VALUES OF FINANCIAL INSTRUMENTS BY CLASS
There is no difference between the fair values and the carrying
values of financial assets and financial liabilities held in the
Group's or the Company's statement of financial position.
The Group holds an investment in Max Sight Group Holdings Ltd,
which as a listed company. This investment is valued at level 1.
The Group owns 109,972,500 Max Sight Group Holdings Ltd's shares
valued at 0,065 HKD per share as at 31 October 2022, giving a value
at that date of GBP788,643.
On 27 October 2022, the Group subscribed to 500,000 convertible
bonds in Energy Observer Developments SAS, a privately held
company. This investment is valued at level 3 as its value is
linked to the equity value of Energy Observer Developments SAS,
which is not observable market data. At both the subscription date,
27 October 2022, and at the reporting date, 31 October 2022, the
investment is valued at is issue price of EUR5,000,000
(GBP4,300,335).
In the absence of observable relevant market data, the bond's
issue price is deemed to be the best measure of fair value.
There are no material Level 2 investments held by the Group or
Company.
Financial instruments by category
The tables below show financial instruments by category for the
Group
Group
At 31 October 2022 Fair Value
Loans and Through Total
receivables Profit & Loss
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------------- ------------------------ --------
Assets per statement of financial position
Financial instruments held at FVTPL - 5,239 5,239
Financial assets - held at amortised cost:
Trade and other receivables 10,449 - 10,449
Cash and cash equivalents 136,185 - 136,185
146,634 5,239 151,873
--------------------- ------------------------ --------
Other financial Total
liabilities at
amortised cost
GBP'000 GBP'000
------------------------------------------------- --------------------- ------------------------ --------
Liabilities per statement of financial position
Borrowings 102,163 102,163
Leases 15,923 15,923
Trade and other payables 52,248 52,248
170,334 170,334
------------------------ --------
At 31 October 2021 Fair Value
Loans and Through Total
receivables Profit & Loss
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------------- ------------------------ --------
Assets per statement of financial position
Financial instruments held at FVTPL - 1501 1501
Financial assets - held at amortised cost:
Trade and other receivables 24,320 - 24,320
Cash and cash equivalents 99,362 - 99,362
124,826 1501 125,183
--------------------- ------------------------ --------
Other financial Total
liabilities at
amortised cost
GBP'000 GBP'000
------------------------------------------------- --------------------- ------------------------ --------
Liabilities per statement of financial position
Borrowings 64,443 64,443
Leases 16,493 16,493
Trade and other payables 42,484 42,484
123,420 123,420
------------------------ --------
Company
At 31 October 2022 Fair Value
Loans and Through Total
receivables Profit
& Loss
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------------- ------------------------ --------
Assets per statement of financial
position
Financial assets held at FVTPL - 789 789
Financial assets - held at amortised
cost:
Trade and other receivables 23,142 - 23,142
Cash and cash equivalents 13,321 - 13,321
36,463 789 37,251
--------------------- ------------------------ --------
Other Total
financial
liabilities
at
amortised
cost
GBP'000 GBP'000
---------------------------------------- --------------------- ------------------------ --------
Liabilities per statement of financial
position
Leases 1,801 1,801
Trade and other payables 14,551 14,551
16,352 16,352
------------------------ --------
At 31 October 2021 Fair Value
Loans and Through Total
receivables Profit &
Loss
GBP'000 GBP'000 GBP'000
---------------------------------------- --------------------- ------------------------ --------
Assets per statement of financial
position
Financial assets held at FVTPL - 1,292 1,292
Financial assets - held at amortised
cost:
Trade and other receivables 19,454 - 19,454
Cash and cash equivalents 4,002 - 4,002
23,456 1,292 24,748
--------------------- ------------------------ --------
Other Total
financial
liabilities
at
amortised
cost
GBP'000 GBP'000
---------------------------------------- --------------------- ------------------------ --------
Liabilities per statement of financial
position
Leases 2,557 2,557
Trade and other payables 20,999 20,999
23,556 23,556
------------------------ --------
15(B) FINANCIAL STATEMENT RISK MANAGEMENT
Financial risk factors and financial risk management
Overview
The Group and the Company are exposed to the following risks
arising from financial instruments:
(i) Credit risk
(ii) Liquidity risk
(iii) Market risk
Credit risk is the risk of financial loss to the Group and the
Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. It mainly arises on
trade and other receivables and bank balances.
Liquidity risk arises from the Group and the Company having
insufficient cash resources to meet its obligations as and when
they fall due for payment.
Market risk arises from changes in market prices, such as
exchange rates, interest rates and equity prices that will impact
on the Group's and the Company's statement of comprehensive income
or the value of its holding of financial instruments.
Listed below are details of these risks, the Group's objectives,
policies and processes for measuring and monitoring risks and the
Group's management of capital.
Risk Management Framework
The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential risks for the Group. Information has been disclosed
relating to the Parent Company only where material risk exists.
There is a continuous process for identifying, evaluating and
managing the key financial risks faced by the Group in line with
changing market conditions and the Group's strategy. If necessary,
the Group's internal audit function may assist in monitoring and
assessing the effectiveness of controls and procedures. The Board
retains responsibility for ensuring the adequacy of systems for
identifying and assessing significant risks, that appropriate
control systems and other mitigating actions are in place and that
residual exposures are consistent with the Group's strategy and
objectives. Assessments are conducted for all material
entities.
The Group may use derivatives to manage exchange or interest
rate risk. Approval for their use is given by the Board and the
position is monitored constantly.
With regard to management of interest rate risk, the objectives
are to lessen the impact of adverse interest rate movements on
earnings and shareholders' funds and to ensure no breach of
covenants. This is mainly achieved by reviewing the mix of fixed
and floating rate borrowings.
The Group's liquidity risk management involves maintaining
sufficient cash and cash equivalents and the availability of
funding through an adequate amount of committed credit
facilities.
(i) Credit risk
The Group has no significant concentrations of credit risk.
Credit risk arises from cash and cash equivalents and deposits with
banks and financial institutions, and on outstanding trade and
other receivables. Cash deposits are limited to high credit quality
financial institutions. The Group has policies in place to ensure
that sales of products and services are made to customers with an
approved credit history.
Credit quality of financial assets
Individual Group companies have banking relationships with
leading banks in the country in which the Group company operates.
Surplus cash is placed with Group Treasury bank accounts, as
described above. The Group has procedures in place to ensure that
cash is placed with sound financial institutions.
The Group and the Company trade with a large number of
customers, ranging from quoted companies and state organisations to
individual traders. Individual Group companies have credit control
procedures in place before making sales to new customers and levels
of credit are reviewed in light of trading experience. The normal
terms of trade are in the range 30-90 days. The collection of
outstanding receivables is monitored at both the Group and
subsidiary level.
The Group and the Company make provisions against trade and
other receivables, such provisions being based on the previous
credit history of the debtor and if the debtor is in receivership
or liquidation.
The maximum credit risk for financial assets is the carrying
value.
Trade and other receivables are normally interest free. The
normal terms of settlement for trade receivables are between 30 and
90 days.
Trade receivables and contract assets are written off when there
is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the group,
and a failure to make contractual payments for a period of greater
than 120 days past due or an impairment amount being required under
the ECL model mandated by IFRS 9.
Under the Group's operating model, most revenue is collected at
the point of sale. Where credit terms are offered, the Group has a
strong record of debtor recovery.
Any balances that are more than 90 days past due date are
provided for in their entirety. The only exceptions to this policy
are accounts where the Group has open work in progress or where
technical issues are preventing the proper operation of the vending
unit in question.
Impairment losses on trade receivables and contract assets are
presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are
credited against the same line item.
The Group does not require collateral in respect of trade and
other receivables. The Group does not have trade receivable and
contract assets for which no loss allowance is recognised because
of collateral.
The Directors have concluded that the credit risk of trade and
other receivables has not increased significantly since initial
recognition. The Directors have come to this conclusion having
considered micro and macro-economic factors including Brexit, the
Group's knowledge of its customers, payment history of the
customers and industry trends.
The ageing of net current trade receivables is as follows:
Group Company
--------------------------------------- ------------------------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------------- ---------------- ------------------------- ---------------------
Current 4,209 7,061 12 (2)
------------------------- --------------------- ---------------- ------------------------- ---------------------
Past due
- overdue 1-30 days
- overdue 31-60 days 39 1,280 5 65
- overdue 61 days 1,630 1,370 8 (52)
Total past due 1,669 2,650 13 13
------------------------- --------------------- ---------------- ------------------------- ---------------------
Total trade receivables 5,878 9,711 25 11
------------------------- --------------------- ---------------- ------------------------- ---------------------
The credit quality of trade receivables that are neither past
due nor impaired is assessed on an individual basis, based on
credit ratings and experience. Management believes adequate
provision has been made for trade receivables.
(ii) Liquidity risk
The Group's liquidity risk management involves maintaining
sufficient cash and cash equivalents and the availability of
funding through an adequate amount of committed credit facilities.
Trading forecasts indicate that the current facilities provide more
than sufficient liquidity headroom to support the business for the
foreseeable future. The net cash position at 31 October 2022 and 31
October 2021 has reduced liquidity risk for the Group.
The Group has adequate undrawn facilities and, having regard to
the Group's cash flow, it is considered that these facilities
provide adequate headroom for the Group's needs. The facilities are
generally reaffirmed by the banks annually. These undrawn
facilities, if used, will be subject to floating rates of interest
and may be subject to the normal covenant conditions attached to
such borrowings.
Certain lending banks may impose loan covenants on borrowings,
which are normal for these types of borrowings, and, during the
years to 31 October 2022 and 31 October 2021, the Group and the
Company have comfortably complied with such requirements.
The table below summarises the maturity profile of the Group's
and Company's financial liabilities (including trade and other
payables) at 31 October 2022 and 31 October 2021 based on
contractual undiscounted payments.
Group contractual cash flows
Within Over
one year Year 2 Year 3 Year 4 Year 5 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------------ ----------------- ---------------------- ----------------- ----------------- ----------------- ---------------
At 31
October
2022
Interest
bearing
loans and
borrowings
and
interest
free loans 29,799 25,678 19,523 16,735 10,158 271 102,164
Finance
leases 5,858 2,568 2,513 2,503 2,481 - 15,922
Trade and
other
payables 52,248 - - - - - 52,248
87,905 28,246 22,036 19,238 12,639 271 170,334
------------------ ----------------- ---------------------- ----------------- ----------------- ----------------- ---------------
At 30
October
2021
Interest
bearing
loans and
borrowings
and
interest
free loans 20,120 17,770 13,593 7,381 4,410 1,169 64,443
Finance
leases 5,757 2,556 2,141 2,082 2,071 1,887 16,493
Trade and
other
payables 42,484 - - - - - 42,484
68,361 20,326 15,734 9,463 6,481 3,056 123,420
------------------ ----------------- ---------------------- ----------------- ----------------- ----------------- ---------------
Company contractual cash flows
Within Over
one year Year 2 Year 3 Year 4 Year 5 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- -------------------- ----------------- ---------------------- ----------------- ----------------- ----------------- ----------------
At 31
October
2022
Finance
leases 1,060 185 185 185 185 - 1,801
Trade and
other
payables 14,552 - - - - - 14,552
15,612 185 185 185 185 - 16,353
-------------------- ----------------- ---------------------- ----------------- ----------------- ----------------- ----------------
At 30
October
2021
Finance
leases 830 361 361 361 361 282 2,557
Trade and
other
payables 20,999 - - - - - 20,999
21,829 361 361 361 361 282 23,556
-------------------- ----------------- ---------------------- ----------------- ----------------- ----------------- ----------------
Financial instruments held at amortised cost and held to
maturity
These largely comprise of restricted bank deposit accounts where
the cash acts as security against possible shortfalls in the
Group's UK pension fund obligations.
(iii) Market risk
Foreign exchange risk
The Group is exposed to foreign currency risk on sales and
purchases that are denominated in a currency other than the local
functional currency. In addition, the Group faces currency risks
arising from monetary financial instruments held in non-functional
currencies. The income statement reflects the impact of realised
and unrealised exchange differences on trading items and monetary
financial instruments (note 4).
The Group has certain investments in foreign operations, whose
net assets are exposed to foreign currency translation risk. The
main currency translation risk relates to foreign operations whose
functional currency is the Euro, Swiss Franc or Japanese Yen. The
investments are not hedged. The translation reserve reflects the
exchange differences arising on translation of the opening net
assets and results of the foreign operation (note 20).
Operational foreign exchange exposure
Where possible, the Group tries to invoice in the local currency
of the respective entity. If this is not possible, to mitigate
exposure, the Group endeavours to buy from suppliers and sell to
customers in the same currency. The exposure relating to
receivables and payables denominated in the non-functional currency
is normally less than 3 months as this is the normal settlement
period for these items.
Subject to the requirements of Group Treasury, as noted above,
where possible, the Group tries to hold the majority of its cash
and cash equivalent balances in the local currency of the
respective entity.
Monetary assets/liabilities
The Group continues to monitor exchange rates and buy or sell
currencies in order to minimise the open exposure to foreign
exchange risk.
The Group may use derivative financial instruments mainly to
reduce the risk of foreign exchange exposure on trading items
(sales or purchases in currencies other than the domestic currency
of the company concerned) and interest rate movements. The Group
does not hold or issue derivative financial instruments for
financial trading purposes.
Borrowings
At 31 October 2022 and 31 October 2021 the majority of the
Group's borrowings were denominated in Euros and held by
subsidiaries whose functional currency is the Euro.
Analysis monetary assets and liabilities by currency
Group
At 31 Swiss Japanese Other
October 2022
Sterling Euro Franc Yen Currencies Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------------- --------------------- --------------------- --------------------- --------------------
Assets per
statement of
financial
position
Financial
instruments
held at
FVTPL 789 4,450 - - - 5,239
Trade and
other
receivables 2,152 15,708 139 3,002 1,023 22,024
Cash and cash
equivalents 15,781 105,910 5,236 7,694 1,564 136,185
18,722 126,068 5,375 10,696 2,587 163,448
--------------------- -------------------- --------------------- --------------------- --------------------- --------------------
Liabilities
per
statement of
financial
position
Borrowings
and Leases 1,802 110,801 435 4,944 104 118,086
Trade and
other
payables 9,109 37,149 2,300 3,170 520 52,248
10,911 147,950 2,735 8,114 624 170,334
--------------------- -------------------- --------------------- --------------------- --------------------- --------------------
At 31 Swiss Japanese Other
October 2021
Sterling Euro Franc Yen Currencies Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ---------------------- --------------------- --------------------- --------------------- --------------------
Assets per
statement of
financial
position
Financial
instruments
held at
FVTPL 1,425 76 - - - 1,501
Trade and
other
receivables 4,340 15,897 291 2,236 1,556 24,320
Cash and cash
equivalents 5,146 80,199 3,493 8,539 1,985 99,362
10,911 96,172 3,784 10,775 3,541 125,183
-------------------- ---------------------- --------------------- --------------------- --------------------- --------------------
Liabilities
per
statement of
financial
position
Borrowings
and Leases 114,045 (29,652) (1,637) 3,420 (5,240) 80,936
Trade and
other
payables 8,417 28,329 1,769 3,202 767 42,484
122,462 (1,323) 132 6,622 (4,473) 123,420
-------------------- ---------------------- --------------------- --------------------- --------------------- --------------------
IFRS 7 sensitivity analysis
Sensitivity analysis has been performed on the Group's Euro
foreign exchange risk, as its most material foreign currency. A 10%
strengthening of Euro against Sterling, at the Statement of
Financial Position date, would have caused a GBP2,432,000 decrease
in the Group's net assets at that date (2021: GBP267,000 increase
in net assets). A 10% weakening of Euro against Sterling would have
had the equal and opposite effect on the Group's net assets..
Interest rate risk
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------ -------------------- -----------------
Net cash
Mainly non-interest bearing current
accounts:
Cash at bank and in hand 81,219 97,683
Deposit accounts - generally interest
bearing:
Bank deposit accounts 53,981 695
Restricted bank deposit accounts 985 984
Other items
Interest free and interest bearing loans (102,163) (64,443)
34,022 34,919
-------------------- -----------------
The above table shows which components of net debt are subject
to interest. The Group has no exposure to floating rate interest
bearing debt and a change in interest rates will not have a
material change on interest expense.
IFRS 7 sensitivity analysis
All of the Group's debt is subject to fixed rates of interest,
so interest payable charges would not be materially impacted by a
change in interest rates. Consequently, no sensitivity tables have
been presented.
Details of the Group's borrowings are shown in the table below.
All loans are subject to fixed rates of interest. An increase of 1%
in the fixed rate of interest would result in an extra GBP1,022,000
(31 October 2021: GBP644,000) of interest expense.
Terms and debt repayment schedule
The table below shows the maturity profile and interest rates of
the Groups borrowings at 31 October 2022 and 31 October 2021.
2022 2021
Carrying Carrying
Interest Year of amount amount
Group Status Currency Rate maturity GBP'000 GBP'000
------------------- ------------ ---------- ------------- ---------- --------- ---------
Loans Fixed rate Euro 0.49% - 1.2% 2022-2026 102,163 64,443
Lease liabilities Fixed rate Various 6,1% - 18.6% Various 15,923 16,493
118,086 80,936
------------------------------------------- ------------- ---------- --------- ---------
Price risk
The Group and the Company are exposed to changes in prices on
raw materials, consumables and finished goods purchased from
suppliers. Wherever possible, price rises are passed on to
customers via sales price increases to help manage this risk.
The Group's other investments in equity securities are not
listed, and are not material thus the Group does not have any
significant exposure to price risk on these equity investments.
15(C) CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern and to enhance
long-term shareholder value, by investing in the business so as to
improve the return on investment (by increasing profits available
for dividends) and by managing the capital gearing ratio (mixture
of equity and debt).
The Group manages, and makes adjustments to, its capital
structure in light of the prevailing risks and economic conditions
affecting its business activities. This may involve adjusting the
rate of dividends, purchasing the Company's own shares, the issue
of new shares and reviewing the level and type of debt. The Group
manages its borrowings by appraising the mix of fixed and floating
rate borrowings and the mix of long-term and short-term borrowings.
Details of how the Group and subsidiaries are funded are shown
below. There were no changes to the Group's approach to capital
management during the period.
Group
The Group is funded by share capital and retained earnings;
supplemented by external borrowing as required. The Group has had a
strong net cash position throughout the current and comparative
period.
Subsidiary companies
Subsidiary companies are funded by share capital and retained
earnings, and where applicable local borrowings by the subsidiaries
in appropriate currencies.
The capital structure of the Group is presented below.
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------ -------------- --------------
Cash and cash equivalents 136,185 99,362
Borrowings (102,163) (64,443)
Net cash (excluding restricted deposits) 34,022 34,919
Equity 132,649 129,964
-------------- --------------
The Group has various borrowings and available facilities that
contain certain external capital requirements (covenants) that are
considered normal for these types of arrangements. The Group
remains comfortably within all such covenants.
16 TRADE AND OTHER RECEIVABLES
Group Company
---------------------------------- ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ---------------- ---------------- ----------------
Non-current assets
Other receivables 1,974 1,784 - -
Prepayments - 84
1,974 1,868 - -
---------------- ---------------- ---------------- ----------------
Current assets
Gross trade receivables 6,865 10,587 101 115
Provision for trade receivables (987) (876) (76) (104)
Trade receivables 5,878 9,711 25 11
Amounts due from subsidiaries - - 21,525 17,020
Other receivables 2,597 5,282 354 127
Prepayments 11,549 7,458 1,238 2,296
20,024 22,451 23,142 19,454
---------------- ---------------- ---------------- ----------------
All trade receivables arise from contracts with customers.
Non-current other receivables include deposits relating to
operating sites and properties. Current other receivables include
deposits relating to operating sites and properties, indirect and
other taxation and other receivables.
17 INVENTORIES
Group Company
-------------------------------- ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------------- --------------- ---------------- ----------------
Raw materials and consumables 18,774 14,271 1,066 999
Finished goods 6,717 4,187 764 493
25,491 18,458 1,830 1,492
--------------- --------------- ---------------- ----------------
The replacement value of inventories is not materially different
from that stated above.
18 CASH AND CASH EQUIVALENTS
Group Company
-------------------------------- ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ -------------- ---------------- ---------------- ----------------
Cash at bank and in hand 81,220 97,683 2,516 3,026
Deposit accounts (excluding restricted
deposits) 53,980 695 9,829 -
Restricted deposit accounts 985 984 976 976
Cash and cash equivalents per statement of
financial position 136,185 99,362 13,321 4,002
============== ================ ================ ================
Cash and cash equivalents per cash flow comprise cash at bank
and in hand and short-term deposit accounts with an original
maturity of less than three months, less bank overdrafts. The
amounts placed in short-term deposit accounts depend on the
immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rate. Cash at bank is generally
interest free but may earn interest at the applicable daily bank
floating deposit rate.
The restricted bank deposit accounts of GBP985,000 (2021:
GBP984,000) are subject to restrictions and are not freely
available for use by the Group or Company.
19 NET CASH
Group Company
------------------------------ ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------ -------------- -------------- ---------------- ----------------
Cash and cash equivalents per statement
of financial position 18 136,185 99,362 13,321 4,002
Non-current borrowings 21 (72,365) (44,323) - -
Current borrowings 21 (29,799) (20,120) - -
Net Cash 34,021 34,919 13,321 4,002
-------------- -------------- ---------------- ----------------
At 31 October 2022, GBP985,000 of the total net cash (2021:
GBP984,000) comprised bank deposit accounts that are subject to
restrictions and are not freely available for use by the Group and
Company.
Net cash is a non-GAAP measure since it is not defined in
accordance with IFRS but is a key indicator used by management in
assessing operational performance and financial position strength.
The inclusion of items in net cash as defined by the Group may not
be comparable with other companies' measurement of net cash/debt.
The Group includes in net cash, cash and cash equivalents and
certain financial assets, mainly deposits, less current and
non-current borrowings outstanding excluding lease liabilities of
GBP15,922,000 (2021: GBP16,493,000).
The tables below reconcile the Group's net cash to the Group's
statement of cash flows.
Group
Exchange Other
1 November differences movements Cash flow 31 October
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- ------------------ -------------------- ----------------- ----------------
31 October 2022
Cash and cash
equivalents per
statement of
financial position
and cash flow 99,362 548 - 36,275 136,185
Financial asset held -
at amortised cost
Non-current loans (44,323) (310) 27,740 (55,473) (72,366)
Current loans (20,120) (255) (27,740) 18,316 (29,799)
34,919 (17) - (882) 34,020
-------------- ------------------ -------------------- ----------------- ----------------
31 October 2021
Cash and cash
equivalents per
statement of
financial position
and cash flow 107,177 (5,926) - (1,889) 99,362
Financial asset held -
at amortised cost
Non-current loans (39,444) 2,413 (3,295) (3,997) (44,323)
Current loans (45,434) 2,989 3,295 19,030 (20,120)
22,299 (524) (0) 13,144 34,919
-------------- ------------------ -------------------- ----------------- ----------------
Company
1 November Cash flow 31 October
GBP'000 GBP'000 GBP'000
---------------------------------------------------------------- ---------------- ---------------- ----------------
31 October 2022
Cash and cash equivalents per statement of financial position
and cash flow 4,002 9,319 13,321
Financial instrument held at amortised cost/held to maturity - -
4,002 9,319 13,321
---------------- ---------------- ----------------
31 October 2021
Cash and cash equivalents per statement of financial position
and cash flow 5,879 (1,877) 4,002
Financial instrument held at amortised cost/held to maturity - -
5,879 (1,877) 4,002
---------------- ---------------- ----------------
20 SHARE CAPITAL AND RESERVES
31 October 31 October 31 October 31 October
2022 2021 2022 2021
Share Capital Number Number GBP'000 GBP'000
------------------------------------------ ------------ ------------ ------------------ ------------------
Allotted, issued and fully paid:
Ordinary shares of 0.5p each
At the beginning of the period 378,011,637 377,992,637 1,889 1,889
Issued in year - share options exercised 40,000 19,000 - -
At the end of the period 378,051,637 378,011,637 1,889 1,889
The holders of Ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Share options, which have been granted to senior staff,
including directors, to purchase Ordinary shares of 0.5p each, are
as follows:
Date At 31 October 2021 Exercise Granted Lapsed or Exercised At 31 October 2022 Exercise Date from Last date
options price during forfeited during price which on which
granted year during year year exercisable exercisable
=========== =================== ========= ========== ============ ========== =================== ========= ============ ============
09-Jul-15 761,000 133.33p - (761,000) - - 133.33p 09-Jul-18 08-Jul-22
13-Jul-16 499,300 141.50p - (50,000) - 449,300 141.50p 13-Jul-19 12-Jul-23
21-Jul-17 260,000 157.00p - (260,000) - - 157.00p 21-Jul-20 21-Jul-24
27-Aug-19 976,509 101.40p - (30,000) - 946,509 101.40p 27-Aug-22 26-Aug-26
4-Oct-19 1,000,000 93.30p - - - 1,000,000 93.30p 4-Oct-22 4-Oct-26
5-Oct-20 1,000,000 51.05p - - - 1,000,000 51.05p 5-Oct-23 5-Oct-27
19-Apr-21 1,265,000 61.40p - - (20,000) 1,245,000 61.40p 19-Apr-24 19-Apr-28
05-Aug-21 2,184,774 77.50p - - (20,000) 2,164,774 77.50p 05-Aug-24 05-Aug-28
5-Oct-21 1,000,000 61.10p - - - 1,000,000 61.10p 5-Oct-24 5-Oct-28
12-May-22 - 68,73p 2,225,000 - - 2,225,000 68.73p 12-May-25 12-May-29
----------- ------------------- --------- ---------- ------------ ---------- ------------------- --------- ------------ ------------
8,946,583 2,225,000 (1,101,000) (40,000) 10,030,583
=========== =================== ========= ========== ============ ========== =================== ========= ============ ============
All options can be exercised, in normal circumstances, within a
period of four years from the grant date, providing that the
performance criterion or performance condition has been achieved.
The subscription price for all options is based upon the average
market price on the three days prior to the date of grant. Options
are restricted, or may lapse, if the grantee leaves the employment
of the Group before the first exercise date.
All options are equity settled options.
Options granted after 2005 are covered by the new Me Group
Executive Share Option Scheme. The vesting of options is subject to
an EPS-based performance condition relating to the extent to which
the Company's basic EPS for the third financial year, following the
date of grant, reaches a sliding scale of challenging EPS
targets.
Options are normally granted over shares worth up to 150% of a
participant's salary each year. In exceptional cases as part of the
terms of attracting senior management, options in excess of that
number may be granted.
The weighted average exercise price of all options outstanding
at 31 October 2022 is 75.98p (2021: 86.91p) and the weighted
average exercise price of options exercisable at 31 October 2022 is
105.54p (2021: 140.06p).
The weighted average share price for options exercised during
the period ended 31 October 2022 was 96.35p (31 October 2021: no
options exercised).
The weighted average remaining years for options outstanding at
the period-end date is 5.2 years (2021: 4.9 years).
Share-based payments
In accordance with IFRS 2 Share-based Payments, share options
granted to senior management including directors after November
2002 have been fair-valued and the Company has used the
Black-Scholes option pricing model. This model takes into account
the terms and conditions under which the options were granted.
The following table lists the inputs to the model used for the
years ended 31 October 2022 and 31 October 2021:
27 August 4 October
Date of grant 2019 2019
----------------------------- ---------- ----------
Vesting period 3 years 3 years
Share price volatility 32.5% 32.59%
Share price on date of grant 101.40p 92.80p
Option price 103.00p 93.30p
Expected term 3.25 years 3.25 years
Dividend yield 0.00% 3.98%
Risk free interest rate 0.00%
Fair value 45.51p
------------------------------ ---------- ----------
5 October 19 April 5 August
Date of grant 2020 2021 2021
----------------------------- ---------- ---------- ----------
Vesting period 3 years 3 years 3 years
Share price volatility 31.64% 51.40% 77.50%
Share price on date of grant 42.30p 63.20p 77.50p
Option price 93.30p 61.40p 77.50p
Expected term 3.25 years 3.25 years 3.25 years
Dividend yield 0.00% 0.00% 0.00%
Risk free interest rate 0.17% 0.15%
Fair value 34.89p 28.18p
----------------------------- ---------- ---------- ----------
12 May 5 October
Date of grant 2022 2021
----------------------------- ---------- ----------
Vesting period 3 years 3 years
Share price volatility 49.91% 49.48%
Share price on date of grant 65.20p 65.50p
Option price 68.73p 61.10p
Expected term 3.25 years 3.25 years
Dividend yield 4.43% 0.00%
Risk free interest rate 1.24% 0.56%
Fair value 25.17p 24.47p
------------------------------ ---------- ----------
The charge for share-based payments was GBP884,000 (2021:
GBP493,000) and for the Company the charge was GBP321,000 (2021:
GBP5,000).
Share price volatility is based on historical data.
Reserves
Group
Treasury shares (Group and Company)
In accordance with shareholders' resolutions passed at Annual
General Meetings, the Company may purchase its own shares up to a
maximum of 10% of the Ordinary shares in issue. At 31 October 2022
and 31 October 2021 the Company held no shares in treasury.
Share premium
Share premium reserve is the cumulative value of the excess
received for shares above their nominal value.
Other reserves
Other reserves mainly arise in subsidiaries, are generally not
distributable, and arise as a result of local legislation regarding
capital maintenance.
Translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries and associates. In accordance
with the options allowed under IFRS 1, only exchange rate
differences arising on translation after the date of transition, 1
May 2004, are shown in this reserve. When an overseas subsidiary or
associate is disposed, the cumulative exchange difference relating
to the entity disposed is recycled through the statement of
comprehensive income as part of the profit or loss on sale in
finance revenue/cost and is shown as a movement in other
comprehensive income.
Company
Other reserves
The Company's other reserves include GBP521,000 (2021:
GBP201,000) arising on the redemption of the deferred shares and
GBP2,007,000 (2021: GBP2,006,000) relating to the fair value of
options granted to employees of Group undertakings.
21 FINANCIAL LIABILITIES
Group Company
------------------------------ ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- -------------- ---------------- ----------------
Non-current liabilities
Non-current instalments due on bank loans 72,365 44,323 - -
Current liabilities
Current instalments due on loans 29,799 20,120 - -
Bank loans bear fixed rates of interest. Margins are generally
between 0.4% and 1.0%. Further details are provided in note 15.
Lease liabilities
In addition to bank loans, the Group has lease liabilities of
GBP15,922,000 (2021: GBP16,493,000).
The Company has lease liabilities of GBP1,801,000 (2021:
GBP2,557,000).
The Group has arrangements across three main categories: site
agreements, property and motor vehicles. The key quantitative
information regarding the lease portfolio is shown below:
Group Motor
As at 31 October 2022 Site agreements Property vehicles
--------------------------------- ---------------- --------- ----------
Number of lease agreements 545 9 423
Average lease term 74 66 43
Average remaining term (months) 34 28 10
Company Motor
As at 31 October 2022 Site agreements Property vehicles
--------------------------------- ---------------- --------- ----------
Number of lease agreements 65 1 99
Average lease term 47 113 47
Average remaining term (months) 6 72 17
The maturity profile of lease liabilities is shown below:
Group Within Over
one year Year 2 Year 3 Year 4 Year 5 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- -------- -------- -------- -------- ------------ --------
At 31 October 2022
Leases 5,858 2,568 2,513 2,503 2,481 - 15,922
--------- -------- -------- -------- -------- ------------ --------
At 31 October 2021
Lleases 5,757 2,556 2,141 2,082 2,071 1,887 16,493
--------- -------- -------- -------- -------- ------------ --------
Company Within Over
one year Year 2 Year 3 Year 4 Year 5 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- -------- -------- -------- -------- ------------ --------
At 31 October 2022
Lleases 1,060 185 185 185 185 - 1,801
--------- -------- -------- -------- -------- ------------ --------
At 31 October 2021
Leases 830 361 361 361 361 282 2,557
--------- -------- -------- -------- -------- ------------ --------
22 POST-EMPLOYMENT BENEFIT OBLIGATIONS
The Company and its principal subsidiaries operate pension and
other retirement and post-employment schemes including both funded
defined benefit schemes, and defined contribution schemes.
Defined benefit plans
A defined benefit plan is a pension arrangement under which
participating members receive a benefit at retirement. The amount
is determined by the plan rules and is dependent on such factors as
age, years of service and pensionable pay and is not dependent on
contributions made by the Company or members. The income statement
service cost, in respect of defined benefit plans represents the
increase in the defined benefit liability arising from pension
benefits accrued by members in the current period. The Company
having such plans is exposed to investment and other experience
risks and may need to make additional contributions where it is
estimated that the benefits will not be covered by the assets of
the plan.
The Group's and the Company's policy is to recognise actuarial
gains and losses immediately each year in the statement of changes
in equity, under other comprehensive income. These comprise the
impact on the defined benefit liability of changes in demographic
and financial assumptions compared with the start of the year,
actual experience being different to those assumptions and the
return on plan assets above the amount included in net pension
interest.
Defined contribution plans are arrangements in which the
benefits paid to participants are linked to the amount of
contributions paid and the performance of the scheme. Such plans
are independent of the Company and the Group and the Company and
the Group have no exposure to investment and experience risks. The
income statement charge for these plans represents the
contributions paid by the Group based on a percentage of employees'
pay.
The Group's and the Company's defined benefit pension schemes
are included in the statement of financial position under
employment benefit obligations, as are other overseas retirement
provisions.
The amounts charged to profit and loss for all post-employment
benefits are shown in note 5.
The amount shown in the statement of financial position is
detailed as follows:
Group Company
---------------------- ----------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- ---------- ----------
Employment benefit obligations 3,692 4,425 - -
Defined benefit schemes 158 508 - -
---------- ---------- ---------- ----------
3,850 4,933 - -
========== ========== ========== ==========
Me Group International plc defined benefit pension scheme
The Company operates a final salary defined benefit scheme in
the UK for some long-serving employees, which is funded by
contributions from the Company and by members of the scheme. This
pension scheme (the Photo-Me International plc Pension and Life
Assurance Fund) is closed to new entrants. The defined benefits are
based upon then employee's length of service and final pensionable
salary.
The actuarial valuation of the UK Pension scheme has revealed a
surplus at 31 October 2022, 31 October 2021, 31 October 2020, 30
April 2019, 30 April 2018 and 30 April 2017. This surplus has not
been recognised as an asset, in accordance with IFRIC 14, as in the
future the surplus will not be recovered by a reduction in future
contributions to the scheme. The scheme has been closed to new
members for over 30 years.
The Fund is administered by a corporate Trustee, with Trustee
Directors, which is legally separate from the Company. The Trustee
Directors include representatives of both the Company and Fund
members. The Trustee Directors are required by law to act in the
interest of all relevant beneficiaries and are responsible for the
investment policy with regard to the assets plus the day to day
administration of the benefits.
The level of benefits provided by the Fund depends on a member's
length of service and salary at date of leaving or retiring from
the Fund. Annual pension increases between leaving the Fund and
retirement are linked to increases in the Retail Prices Index
(RPI). After retirement, annual pension increases are at 3.0% per
annum for pension accrued before April 1997 and in line with
increases in the RPI, up to a maximum of 5.0% pa, for pension
accrued from April 1997.
The benefit payments are from a trustee administered fund
containing assets held in trust and governed by UK regulations and
practice. The amount of Company contributions is decided jointly by
the Trustee Directors and the Company.
The Fund's investment strategy is decided by the Trustee
Directors, in consultation with the Company. The Trustee Directors
exercise their powers of investment (or delegation where these
powers have been delegated to a fund manager) in a manner
calculated to ensure the security, quality, liquidity and
profitability of the portfolio as a whole. In order to avoid an
undue concentration of risk a spread of assets is held. The
diversification is both within and across asset classes. The assets
are invested in a manner appropriate to the nature and duration of
the expected future retirement benefits payable under the Fund. Day
to day selection of stocks is delegated to fund managers appointed
by the Trustee Directors. As regards the review and selection of
their fund managers, the Trustee Directors take expert advice.
Profile of the Fund
The defined benefit obligation includes benefits for deferred
pensioners and current pensioners. The defined benefit obligation
is broadly split 99%/1% between pensioners and deferred
members.
The defined benefit obligation for certain current pensioners is
backed by insurance policies. A corresponding asset equal to the
defined benefit obligation is included in this note in respect of
these members.
The Fund duration is an indicator of the weighted-average time
until benefit payments are made. For the Fund as a whole, the
duration is around 9 years.
Funding requirements
UK legislation requires that pension schemes are funded
prudently. The most recent triennial funding valuation of the Fund
was carried out by a qualified actuary with an effective date of 1
June 2021. At this date the Fund had a funding level of 102% and a
surplus of approximately GBP0.2 million on a technical provisions
basis. This basis uses actuarial assumptions adopted by the Trustee
Directors of the Fund that are consistent with the Fund continuing
on an ongoing basis with support from the Company.
The last active member ceased employment with the Company in
2020 so contributions are no longer required in respect of the
accrual of benefits in the Fund.
Risks associated with the Fund
The fund exposes the Company to a number of risks, the most
significant of which are described below.
Asset volatility The liabilities are calculated using a discount
rate set with reference to corporate bond
yields; if assets underperform this yield,
this will create a deficit.
---------------------- -------------------------------------------------
Changes in bond yields A decrease in corporate bond yields will increase
the value placed on the Fund's liabilities
for IAS 19, although this will be partially
offset by an increase in the value of the
Fund's bond holdings and insurance policies
backing pensions in payment.
---------------------- -------------------------------------------------
Inflation risk Some of the Fund's benefit obligations are
linked to inflation, and higher inflation
will lead to higher liabilities (although,
in most cases, caps on the level of inflationary
increases are in place to protect against
extreme inflation). In addition, increases
in expected inflation will be offset by an
increase in the value of the Fund's index-linked
bond holdings and insurance policies backing
pensions in payment.
---------------------- -------------------------------------------------
Life expectancy The majority of the Fund's obligations are
to provide benefits for the life of the member,
so increases in life expectancy will result
in an increase in the liabilities. Increases
in life expectancy will be partially offset
by an increase in the value of the insurance
policies backing pensions in payment.
---------------------- -------------------------------------------------
Reconciliation of the movement in the present value of the
defined benefit obligation
31 October 31 October
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ------------ ----------
Present value of defined benefit obligation at
beginning of the period 5,788 6,267
Current service cost - -
Interest cost 107 98
Actuarial losses/(gains) on fund liabilities
arising in demographic assumptions 67 (8)
Actuarial losses/(gains) from changes in financial
assumptions (1,332) (151)
Actuarial losses/(gains) on liabilities from
experience 84 (79)
Benefits paid (350) (339)
------------ ----------
Present value of defined benefit obligation at
end of the period 4,364 5,788
============ ==========
Reconciliation of the movement in the fair value of plan
assets
31 October 31 October
2022 2021
GBP'000 GBP'000
----------------------------------------------- ------------ ----------
Fair value of plan assets at beginning of the
period 6,641 7,040
Interest income on fund assets 123 110
Remeasurement gains on assets (1,645) (170)
Benefits paid (350) (339)
------------ ----------
Fair value of plan assets at end of the period 4,769 6,641
============ ==========
Amount to be recognised in the statement of financial
position
31 October 31 October
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ------------ ----------
Present value of funded obligations 4,364 5,788
Fair value of scheme assets 4,769 6,641
------------ ----------
Net surplus (405) (853)
Effect of limit of recognition of an asset 405 853
------------ ----------
Amount recognised in statement of financial position - -
============ ==========
Amount recognised in profit and loss
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ------------ ----------
Amount recognised in profit and loss
Current service cost - -
Interest on net defined liability/(asset) - -
------------ ----------
Total charge - -
------------ ----------
Pension expense recognised in profit and loss - -
------------ ----------
Remeasurement in Other Comprehensive Income
Return on Scheme assets in excess of that recognised
in net interest 1,645 170
Actuarial losses due to changes in financial
assumptions (1,332) (151)
Actuarial losses/(gains) due to changes in demographic
assumptions 67 (8)
Actuarial losses/(gains) on liabilities arising
from experience 84 (79)
Adjustment due to the asset ceiling (464) 68
------------ ----------
Total expense/(income) amount recognised in Other
Comprehensive Income - -
------------ ----------
Total expense amount recognised in Comprehensive
Income - -
============ ==========
The amounts shown above are included in staff costs (note 5) and
in administrative expenses.
An analysis of the assets of the plan is as follows:
31 October 2022 31 October 2021
------------------ ------------------
GBP'000 % GBP'000 %
----------------------------- --------- ------- --------- -------
Bonds and insurance policies 4,704 99 6,628 100
Other 65 1 13 -
--------- ------- --------- -------
4,769 100 6,641 100
========= ======= ========= =======
There were no financial instruments of the Company included in
the plan assets (2021: none) and there were no property assets
occupied by the Company (2021: none).
Principal actuarial assumptions
31 October 31 October
2022 2021
------------------------------------- ------------ ----------
Discount rate for scheme liabilities 4.9 1.9
Rate for increase in salaries n/a n/a
Price inflation 3.1 3.3
Pension increases 3.0 3.2
------------------------------------- ------------ ----------
The mortality tables used for 2022 are S3NXA Light tables for
males and S3NXA All lives for females, with CMI 2021 projections
and a long-term rate of improvement of 1.25% pa. The mortality
tables used for 2021 were also S3NXA Light tables, but with CMI
2020 projections and a long term rate of improvement of 1.25% pa.
The mortality assumptions allow for expected future improvements in
mortality rates.
Salary increases are not relevant to the valuation as the scheme
has been closed to new entrants for 30 years, so all members are
now retired.
31 October 2022 31 October 2021
--------------------- --------------------- ---------------------
Male currently aged 23.8 years (age 88.8) 23.3 years (age 88.3)
65
--------------------- --------------------- ---------------------
Female currently aged 25.1 years (age 90.1) 24.6 years (age 89.6)
65
--------------------- --------------------- ---------------------
Male currently aged 25.0 years (age 90.0) 24.5 years (age 89.5)
45
--------------------- --------------------- ---------------------
Female current aged 26.5 years (age 91.5) 26.0 years (age 91.0)
45
--------------------- --------------------- ---------------------
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- --------- ---------
Fair value of defined
benefit obligation 4,364 5,788 6,267 5,940 5,947
Fair value of assets 4,769 6,641 7,040 6,675 6,657
--------- --------- --------- --------- ---------
Surplus/(deficit) 405 853 773 735 710
========= ========= ========= ========= =========
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Experience gains/(losses)
on fund assets (1,645) (170) 622 160 (409)
----------- --------- -------- -------- ---------
Experience (losses)/gains
on plan liabilities (84) 79 (67) 9 87
=========== ========= ======== ======== =========
Liabilities for 2022, 2021, 2020, 2019 and 2018 relate to
gains/(losses) in respect of liability experience only, and
excludes any change in liabilities in respect of changes to the
actuarial assumptions used.
Sensitivity to key assumptions
The key assumptions used for the IAS 19 valuation are: discount
rate, inflation rate and mortality. If different assumptions were
used, this could have a material effect on the results disclosed.
The table below shows the sensitivity to the key assumptions noted
above.
Defined
Plan benefit
assets obligation Surplus
Period ended 31 October 2022 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- ------------ --------
As reported 4,769 4,364 405
Following a 0.1% decrease in the discount
rate 4,780 4,400 380
Following a 0.1% increase in the inflation
assumption 4,771 4,376 395
Following an increase in the life expectancy
of one year 4,891 4,579 315
--------------------------------------------- -------- ------------ --------
The sensitivity information shown above has been prepared using
the same method as adopted when adjusting the results of the latest
valuation to the statement of financial position data. This is the
same approach as has been adopted in previous years.
Overseas pension schemes
The Group's Swiss subsidiary, Me Group Switzerland AG
participates in funded multi-employer pension schemes. A guaranteed
return for such employees' schemes is mandated by the Swiss state.
An actuarial valuation was performed at 31 October 2022 and 31
October 2021 by independent actuaries.
Reconciliation of the movement in the present value of the
defined benefit obligation
31 October 31 October
2022 2021
GBP'000 GBP'000
----------------------------------------------- ------------ ----------
Present value of defined benefit obligation at
start of the period 3,621 4,792
Exchange difference 275 (329)
Contribution by members 36 37
Current service cost 172 214
Past service cost (29) -
Interest cost 8 8
Remeasurement gains on plan liabilities (658) (436)
Prepaid risk premiums (38) -
Benefits paid (491) (667)
Administration costs 2 2
------------ ----------
Present value of defined benefit obligation at
end of the period 2,898 3,621
============ ==========
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------- ------------ ----------
Fair value of plan assets at start of the period 3,113 3,615
Exchange difference 245 (190)
Contributions by company and members 178 183
Expected return on plan assets 9 6
Remeasurement gain on plan assets (276) 166
Benefits paid (491) (667)
Prepaid risk premiums (38) -
------------ ----------
Fair value of plan assets at end of the period 2,740 3,113
============ ==========
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------- ------------ ----------
Net liability at start of the period 508 1,177
Exchange difference 30 (138)
Decrease in liability (380) (531)
------------ ----------
Net liability at end of the period 158 508
============ ==========
Amounts recognised in comprehensive income
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------------------------------------ ---------- ----------
Amount recognised in profit and loss
Amounts recognised in comprehensive income
Current service cost 172 214
Past service cost (29) -
Administrative expenses 2 2
Net pension interest (1) 2
---------- ----------
Total charge 144 218
========== ==========
Amount recognised in other comprehensive income
Loss/(gains) on scheme assets 276 (166)
Actuarial gains on defined benefit obligation (658) (436)
---------- ----------
Total amount recognised in other comprehensive
income (382) (602)
---------- ----------
Total amount recognised in profit and loss and
other comprehensive income (238) (384)
========== ==========
31 October 2022 30 October 2021
------------------ ------------------
GBP'000 % GBP'000 %
---------------------------- --------- ------- --------- -------
Cash 27 1 31 1
Equities & debt instruments 1,863 68 2,117 68
Other 849 31 965 31
--------- ------- --------- -------
Total plan assets 2,740 100 3,113 100
========= ======= ========= =======
Principal actuarial assumptions
31 October 31 October
2022 2021
% %
---------------------------------------------- ---------- ----------
Discount rate 2.40 0.30
Expected return on plan assets at end of year n/a n/a
Rate of increase in salaries 1.20 1.20
Price inflation 1.00 1.00
---------- ----------
o The normal retirement age for males is between 60 - 65 years
and for females between 59 - 64 years for both 2022 and 2021.
o The mortality tables used in 2022 and 2021 were the BVG 2020 GT tables
o The mortality tables used in 2020, 2019 and 2018 were the BVG 2015 GT tables.
History of assets, liabilities and actuarial gains and
losses
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- ----------- ----------- ----------
Present value of defined
benefit obligation 2,898 3,621 4,792 4,144 3,826
Fair value of assets 2,740 3,113 3,615 3,087 2,894
--------- --------- ----------- ----------- ----------
Deficit (158) (508) (1,177) (1,057) (932)
========= ========= =========== =========== ==========
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- -------- -------- -------- --------
Experience (losses)/gains
on plan liabilities 658 436 (93) (144) 131
- as a percentage of
the present value of
plan liabilities (23%) (12%) 2% 3% 3%
Remeasurement gains/(losses)
on plan assets (276) 166 (69) 96 (78)
- as a percentage of
the present value of
plan assets (10%) 5% (2%) 3% (3%)
========= ======== ======== ======== ========
Sensitivity to key assumptions
The key assumptions used for the IAS 19 valuation are: discount
rate, inflation rate and mortality.
If different assumptions were used, this could have a material
effect on the results disclosed.
The table below shows the sensitivity to the key assumptions
noted above.
Increase/
(decrease)
in
Defined defined
benefit benefit
obligation obligation
GBP'000 GBP'000
--------------------------- --------------------------- ----------- -----------
Defined benefit obligation
as reported 2,898 -
- with discount rate -
Defined benefit obligation 0.25% 2,989 91
- with discount rate 0.25% 2,812 (85)
- with salary decrease
- 0.25% 2,971 73
- with salary increase
0.25% 2,829 (69)
- with life expectancy
1 year 2,929 31
- with life expectancy
- 1 year 2,865 (33)
------------------------------------------------------- ----------- -----------
The Group's best estimate for contributions to be paid by the
company next year to the scheme is GBP133,000 (2021:
GBP142,000).
The amount recognised in the income statement for this scheme
was GBP144,000 (2021: GBP218,000).
Overseas post-employment benefit obligations
Provisions for obligations to make termination payments on
retirement, to employees who are not members of the pension and
retirement schemes, are as follows:
-- The Group's Japanese subsidiary undertaking, Nippon
Auto-Photo K.K, has an unfunded post-employment retirement
provision based on an employee's length of service with the company
and their current salary. The allowance is paid to an employee when
they leave the company. This has been provided for in full within
the accounts. Nippon Auto -Photo K.K, agreed with the employees
that 50 % of the liability for the retirement provision will be
paid in cash to an independently controlled defined contribution
scheme, with the balance to be met by the company when the employee
leaves. The provisions were valued by an independent actuary using
the Projected Unit Credit Method at 31 October 2022 and 31 October
2021. This actuarial valuation incorporated the following principal
assumptions in arriving at the present value of the
obligations:
31 October 31 October
2022 2021
----------------------------- -------------------- --------------------
Discount rate 0.49% 0.23%
Rate of increase in salaries 0% 0%
Retirement age 60 years 60 years
Standard mortality Standard mortality
rates under defined rates under defined
benefit corporation benefit corporation
pension plan (the pension plan (the
22(nd) Life Table 22(nd) Life Table
Mortality table for male & female) for male & female)
----------------------------- -------------------- --------------------
-- To meet the legal obligations within France, the Group's
subsidiary undertakings have unfunded retirement provisions, which
were valued by an independent actuary using the Projected Unit
Credit Method at 31 October 2022 and 31 October 2021. This
actuarial valuation incorporated the following principal
assumptions in arriving at the present value of the
obligations:
31 October 31 October
2022 2021
----------------------------- ----------- -----------
Discount rate 4.00% 0.65%
Rate of increase in salaries 2.00% 1.75%
Retirement age 62-67 years 62-67 years
Inflation rate 2.00% 1.75%
Mortality table TGH/TGF 05 TGH/TGF 05
----------------------------- ----------- -----------
23 PROVISIONS
Group
Employee
related Product
claims warranties Other Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------------------- ------------------- ------------------ ------------------
At 31 October 2020 349 99 814 1,262
Exchange differences 84 (10) (176) (103)
Charged to income statement 255 675 77 1,007
At 31 October 2021 688 764 714 2,166
------------------------------------ ------------------- ------------------- ------------------ ------------------
Amount shown as current liability 688 426 714 1,828
------------------------------------ ------------------- ------------------- ------------------ ------------------
Amount shown as non-current
liability - 338 - 338
------------------------------------ ------------------- ------------------- ------------------ ------------------
At 31 October 2021 688 764 714 2,166
Exchange differences 3 7 18 28
Utilised and other movements (453) (338) (760) (1,551)
Charged to income statement - 202 722 924
At 31 October 2022 238 635 694 1,567
------------------------------------ ------------------- ------------------- ------------------ ------------------
Amount shown as current liability 238 635 694 1,567
------------------------------------ ------------------- ------------------- ------------------ ------------------
Amount shown as non-current - - - -
liability
------------------------------------ ------------------- ------------------- ------------------ ------------------
24 DEFERRED TAXATION
Deferred tax comprises:
Group Company
------------------------ ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
(Restated)
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ----------- ----------- ---------------- ----------------
Temporary differences relating to property, plant and
equipment 187 140 (907) (732)
Other temporary differences in recognising revenue and
expense items in other periods for
taxation purposes:
- capitalised development costs 1,015 514 - -
- post-employment benefit provisions (1,243) 99 - -
- losses - 30 - -
- acquisition related intangibles 5,020 5,530 - -
- other short-term temporary differences 2,781 3,049 (41) -
7,760 9,362 (948) (732)
----------- ----------- ---------------- ----------------
The closing balance comprises:
Deferred tax assets (1,982) (833) (948) (732)
Deferred tax liabilities 9,742 10,195 -
7,760 9,362 (948) (732)
----------- ----------- ---------------- ----------------
The movements on deferred taxation during the period were as
follows:
Group Company
----------------------------- ----------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
(Restated)
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ---------------- ----------- ---------------- ----------------
Opening balance 9,362 6,058 (732) (670)
Exchange differences (137) 98 - -
Adjustments for prior periods 82 - - -
Arising on acquisition of subsidiary - 2,362 - -
Post-employment benefit provisions 248 98 - -
Charge / (credit) for the period in income
statement (1,169) (181) (216) (62)
Amounts (credited)/charged to other comprehensive - 136 - -
income
Other (626) - - -
---------------------------------------------------
Closing balance 7,760 8,571 (948) (732)
--------------------------------------------------- ---------------- ----------- ---------------- ----------------
IFRS remeasurement - 791 - -
Closing balance (restated) 7,760 9,362 (948) (732)
--------------------------------------------------- ---------------- ----------- ---------------- ----------------
Temporary differences associated with Group investments
Unremitted earnings of overseas affiliates
No deferred tax liability has been recognised on the unremitted
earnings of overseas subsidiaries as no tax is expected to be
payable on them in the foreseeable future based on current
legislation or where the Group is able to control remittance of
earnings and it is possible that such earnings will not be remitted
in the foreseeable future.
Unrecognised deferred tax assets
Unrecognised deferred tax assets amounting to nil (2021:
GBP3,012,000) arising on temporary differences in respect of
unrelieved tax losses and other temporary differences have not been
recognised, as their future economic benefit is uncertain.
The expiry dates of unrelieved tax losses are as follows:
Group
-----------------------------------
31 October 31 October
2022 2021
GBP'000 GBP'000
----------------------------------- ----------------- ----------------
Expiring in less than one year - -
Expiring between two and 20 years - 2,713
No expiry date - 299
- 3,012
----------------------------------------------------- ----------------
The Group has an unrecognised deferred tax asset on gross
capital losses of GBP3,756,000 ( 2021: GBP3,756,000), of which
GBP3,627,000 (2021: GBP3,627,000) relate to the Company, which have
not been recognised as their future economic benefit is not
certain.
Factors that may affect future tax charges
There will be an increase in the main rate of corporation tax in
the UK from 19% to 25% from 1 April 2023. The deferred tax assets
and liabilities have been recognised based on the corporation tax
rate at which they are anticipated to unwind.
25 TRADE AND OTHER PAYABLES
Group Company
---------------------------------- --------------------------------------
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Amounts shown as current liabilities
Trade payables 29,364 24,599 3,207 3,624
Amounts owed to subsidiaries - - 8,736 15,030
Other taxes and social security costs 4,176 3,820 736 871
Other payables 11,081 7,232 64 62
Accruals and deferred income 7,627 6,833 1,808 1,412
52,248 42,484 14,552 20,999
26 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Contingent liabilities
The Company and subsidiary undertakings have given guarantees in
the normal course of business to third parties, including to the
Group's bankers. No losses are expected from guarantees given by
the Company and subsidiary undertakings.
In the opinion of the Directors, adequate provision has been
made for claims and legal disputes and the Directors therefore
consider that no contingent liability for litigation exists.
The Group has no contingent liabilities with regard to its
interest in the associated undertakings (2021: none).
27 RELATED PARTIES
The Group's related parties are its associated undertakings,
subsidiary undertakings and its key management personnel, which
comprises the Board of Directors.
The following transactions were carried out with related
parties:
Directors' compensation
Group Company
31 October 31 October 31 October 31 October
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------------- ---------------- ----------------
Salaries and other short-term employee
benefits excluding long-term incentives and
pension
contributions 1, 315 1,110 - -
Share-based payment charge 246 127 - -
1,561 1,237 - -
---------------- ---------------- ---------------- ----------------
The remuneration of the directors, both executive and
non-executive, of the Company, who are the key management personnel
of the Group, is set out in the table above. These figures include
amounts payable to third party companies for services of the
directors. Certain executive directors, with UK salaries, are
entitled to join the Company's Group Personal Pension Plan, to
which the Company contributes 5% of their basic salaries. The
charge for the period in respect of this was GBPnil (2021: GBPnil).
No director who served during the year was a member of the
Company's defined benefit pension scheme (2021: none).
Directors of the Company control 36.60% of the Ordinary shares
of the Company.
Company
31 October 31 October
2022 2021
GBP'000 GBP'000
------------------ ------------------
Transactions with subsidiaries:
Purchases 36 20
Amounts owed by subsidiaries 22,371 18,279
Amounts owed to subsidiaries 8,736 15,030
Other items:
Intercompany fees charged by / (received from) subsidiaries 6,388 1,646
Property, plant and equipment
acquired from subsidiaries 5,635 3,226
Dividend income
- from subsidiaries 56,511 -
- from subsidiaries 56,511 -
------------------ ------------------
28 GROUP UNDERTAKINGS
This disclosure is made in accordance with Section 409 of the
Companies Act 2006 and the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008, as amended by the
Companies, Partnerships and Groups (accounts and reports)
Regulations 2015. A full list of subsidiary undertakings and
associated undertakings (showing country of incorporation, which is
also the main trading location of the company, and the effective
percentage of equity shares held) at 31 October 2022 is shown
below. Unless indicated otherwise the equity shares held are in the
form of ordinary shares or common stock.
Principal group undertakings which affect the financial
statements of the Group are highlighted in bold. Together with the
parent company, Me Group International plc, these companies
contributed over 90% of the Group's revenue and operating
profit.
Principal Group Country of
Company name Activity interest Registered office address incorporation
UK & Ireland
Jolly Roger (Amusement Dormant 100% Unit 3B, Blenheim Road, UK
Rides) Limited Epsom, KT19 9AP
MgInvest Investments Investment 100%* Unit 3B, Blenheim Road, UK
Limited Epsom, KT19 9AP
Me Group International Dormant 100% Unit 3B, Blenheim Road, UK
Limited Epsom, KT19 9AP
Photo-Me (Retail) Limited Dormant 100% Unit 3B, Blenheim Road, UK
Epsom, KT19 9AP
Photo-Me Limited Corporate 100% Unit 3B, Blenheim Road, UK
Epsom, KT19 9AP
Photo-Me Trustee Company Dormant 100% Unit 3B, Blenheim Road, UK
Limited Epsom, KT19 9AP
Xpand Investments Limited Investment 100% Unit 3B, Blenheim Road, UK
Epsom, KT19 9AP
Power-Me Limited Dormant 100% Unit 3B, Blenheim Road, UK
Epsom, KT19 9AP
Me Group Ireland Supplies Operations 100% Unit A4, Alexander House, Republic of
Limited Tallaght Cross East, Ireland
Tallaght, Dublin 24
Continental Europe
Me Group Austria G.m.b.H. Operations 100% Industriestraße Austria
7/K01 L/10, 2100 Korneuburg
Prontophot Belgium Operations 100% Boulevard Paepsem 8a, Belgium
NV 1070 Anderlecht
Photo-Me Czech Republic Dormant 100%* Husova 2117, 256 01 Benešov Czech Republic
s.p.o.l. s.r.o.
Me-Group SPC Finland Operations 100% Unit 3B Blenheim Road, Finland
Oy Epsom, UNITED KINGDOM.
KT19 9AP
KIS SAS Production 100%* 7 Rue Jean-Pierre Timbaud, France
38130 Echirolles
Me Group France Operations 100%* 8 rue Auber 75009, Paris France
Sempa SARL Operations 100%* 73 D rue du Général France
Mangin, 38000 Grenoble
Me Group GSS Corporate 100% 8 rue Auber 75009, Paris France
SCI Immobilière Property 100%* 7 Rue Jean-Pierre Timbaud, France
du 21 38130 Echirolles
Dreamaker Operations 100% 80 route des Lucioles France
06560 Valbourne
Me Group Germany G.m.b.H. Operations 100% Gervinusstraße 15-17, Germany
60322 Frankfurt am Main
Me-Group Italia Srl Operations 100% Roma (RM) Via Lovanio Italy
1, CAP 00198
Kis Italia Srl Dormant 100% Milano, Via Tiziano 32, Italy
CAP 20145
Prontophot Holland Operations 100% Loonseweg 14, 5527 AC Netherlands
B.V Hapert
KIS Poland s.p.z.o.o. Operations 100% ul. Targowa 46/5, 03-733 Poland
Warszawa
Me Group Portugal LDA Operations 100% Industrial do Carvalhinho Portugal
- Fracção K
2860-579 MOITA
Me Group Spain Solutions Operations 100% 28224 - Pozuelo de Alarcón Spain
(Madrid), Calle de las
Dos Castillas, 33, Ático
7
Me Group Switzerland Operations 100% Sonnentalstrasse 5, 8600Dübendorf Switzerland
AG
Asia & ROW
Me Group Australia Pty Operations 100% 4/24 Philip Street, Hawthorne, Australia
Ltd Queensland 4171
Now Retail Group Pty Operations 100% Level 9, 123 Albert Street, Australia
Ltd Brisbane, Queensland
4000
Photo-Me (Shanghai) Operations 100%* Room 1102 Tongyong Tower, China
Co Limited No. 1346 Gong he Xin
Road, Zha bei District,
Shanghai 200070
Photo-Me Beijing Co Operations 100%* Room 1124, Ocean Natural China
Limited Xintiandi, No.106 East
Majiapu Road, Fengtai
District, Beijing 100000
Photo-Me Chengdu Co Dormant 100%* Room 1124, Ocean Natural China
Limited Xintiandi, No.106 East
Majiapu Road, Fengtai
District, Beijing 100000
Nippon Auto-Photo Kabushiki Operations 100% Room 1302, Atlas Tower Japan
Kaisha Roppongi, Roppongi 7-7-13,Minato-Ku,
106 0032
Photo-Me Korea Company Operations 100%* Room #203-1, Daeryung Korea
Limited techno town 1st, Gasan
Digital 2 ro 18, Geumcheon-gu,
Seoul, 08592
Photomatico (Singapore) Operations 100% 26 Sin Ming Lane, Singapore Singapore
Pte Limited 573971
KIS Technology Company Dormant 100% P.1003, Ford Thang Long Vietnam
Limited Building, 105 Lang Ha,
Lang Ha Street, Ba Dinh
district, Hanoi
Photomaton Maroc SARL Operations 50% 131 Bd D'Anfares Azur Morocco
Sidi Belyout,/Casablanca
* Investments in subsidiaries not owned directly by Me Group
International plc.
Photo-Me CR.s.p.o.l.s.r.o. is owned 20% by Me Group
International plc and 80% by Me Group Austria G.m.b.H.
The results of the Group's subsidiaries and associates are
consolidated for the period ended 31 October 2022. Certain
subsidiaries and associates have a different statutory year end,
sometimes due to legal requirements in the country concerned.
The parent company, Me Group International Plc, has issued
guarantees under section 479C of the Companies Act 2006, which
exempts the following subsidiaries from the requirements relating
to the audit of individual accounts by virtue of parental
guarantee:
- Jolly Roger (Amusement Rides) Limited;
- Photo-Me (Retail) Limited;
- Xpand Investments Limited;
- Mginvest Investments Limited; and
- Photo-Me Limited.
29 BUSINESS COMBINATIONS
Dreamakers
On 31 March 2022 the Group acquired 100% of the issued share
capital of Dreamakers for a consideration of EUR3,900,000
(GBP3,274,000), obtaining control of the company on that date.
Dreamakers, which operates under the trading name 'VIP BOX', is
a France based, market leader in the rental and sale of selfie
stations for private and professional events. This acquisition
supports the Group's strategic aim of product diversification.
The acquisition was funded from the Group's cash resources.
Deferred consideration
Of the total consideration, EUR600,000 (GBP504,000) is deferred
and contingent on future performance. The deferred payment will be
due 12 months from the acquisition date. The value will be
determined based on Dreamakers' profit before tax over the 12
months following the acquisition date.
Management expects Dreamakers to meet the maximum profit before
tax target, so have accrued the maximum contingent consideration
value of EUR600,000 and included this amount in the total
consideration.
Acquired assets and liabilities
The purchase price allocation, including determination of the
fair value of intangible assets recognised on consolidation has not
been finalised.
Goodwill has been calculated using the provisional fair values
of the assets and liabilities acquired, with a value of
GBP1,652,000 recognised in the Group's Statement of Financial
Position, pending valuation of assets and liabilities acquired.
Pending receipt of the final valuations of the assets acquired,
in accordance with IFRS3, the accounts will be adjusted
retrospectively within the measurement period of no more than one
year from the acquisition date.
The provisional fair values of the assets and liabilities
acquired, cash outlay on acquisition and results of the acquired
business included in Group results in the year ended 31 October
2022 are shown in the table below.
GBP'000
Property, plant and equipment 121
Total non-current assets 121
Inventory 47
Trade and other receivables 372
Cash and cash equivalents 2,031
Total current assets 2,450
Trade and other payables 949
Total current liabilities 949
Total liabilities 949
Total identifiable net assets excluding goodwill 1,622
Goodwill 1,652
Total identifiable net assets acquired 3,274
Satisfied by:
Cash 2,770
Deferred consideration 504
Total consideration 3,274
Cash consideration per cashflow:
Cash consideration 2,770
Net cash acquired (2,031)
Initial cash outlay on purchase of subsidiaries 739
Revenue 1,756
Profit before tax 71
Société Générale d'Equipement de Restauration (SGER)
On 30 June 2021 the Group acquired 100% of the issued share
capital of SGER for a consideration of EUR3,489,000 (GBP2,948,000),
obtaining control of the company on that date.
SGER, which operates under the trading name 'Resto'clock', is a
France based, market leader in pizza vending equipment. This
acquisition supports the Group's strategic aim of diversification
and becoming a European market leader in food vending equipment.
The acquisition was funded from the Group's cash resources.
Due to the proximity of the transaction to the prior period
reporting date, the purchase price allocation, including
determination of the fair value of intangible assets recognised on
consolidation, had not been finalised when the prior period
financial statements were approved.
With the purchase price allocation now complete, the Group has
during the period adjusted the provisional amounts that were
recorded in the prior period financial statements by increasing
intangible assets by EUR 2,491,000 (GBP2,142,000) and reducing
goodwill by the same amount (see note 11).
As part of the purchase price allocation, the Group has
recognised separately identifiable acquired intangible assets in
accordance with IAS38 and had their fair values assessed by an
independent expert.
The fair value adjustments in respect of acquired intangible
assets are due to the recognition of EUR99,000 (GBP85,000) in
respect of SGER's order backlog at the acquisition date;
EUR1,398,000 (GBP1,202,000) in respect of the patents over SGER's
proprietary technology which underpin its future cash generation;
and EUR994,000 (GBP855,000) in respect of the 'Resto'clock' brand,
which has been in existence for over 25 years.
There is a small balance of residual goodwill of EUR806,000
(GBP693,000) which we consider is attributable to SGER's acquired
workforce.
A deferred tax liability of EUR629,000 (GBP541,000), in respect
of the patent intangible asset, has been recognised and reflected
in the adjusted goodwill value.
Now Retail Group (NRG)
On 3 September 2021 the Group acquired 100% of the issued share
capital of Now Retail Group Pty Ltd for a consideration of AUD
3,504,000 (GBP1,913,000), obtaining control of the company on that
date.
Now Retail Group is an Australian owner and operator of
automated retail units, with a focus on health, beauty and consumer
electronics products. This acquisition supports the Group's
strategic aims of geographic and product diversification. The
acquisition was funded from the Group's cash resources.
Due to the proximity of the transaction to the prior period
reporting date, the purchase price allocation, including
determination of the fair value of intangible assets recognised on
consolidation, had not been finalised when the prior period
financial statements were approved.
With the purchase price allocation now complete, the Group has
during the period adjusted the provisional amounts that were
recorded in the prior period financial statements by increasing
intangible assets by AUD 1,777,000 (GBP987,000) and reducing
goodwill by the same amount (see note 11).
As part of the purchase price allocation, the Group has
recognised separately identifiable acquired intangible assets in
accordance with IAS38 and had their fair values assessed by an
independent expert.
The fair value adjustments in respect of acquired intangible
assets are due to the recognition of AUD 1,352,000 (GBP751,000) in
respect of NRG's non contractual customer relationships; AUD
226,000 (GBP126,000) in respect of contractual customer
relationships; and AUD 199,000 (GBP110,000) in respect of brand
related assets.
There is a balance of residual goodwill of AUD 2,015,000
(GBP1,104,000) which we consider is attributable to NRG's acquired
workforce.
Other changes to the composition of the Group
Disposal of La Wash Group
On 8 April 2022, the group disposed of its Spanish B2B laundry
business La Wash Group. This was for consideration of GBP152,000.
The group incurred a loss of GBP459,000 which has been recognised
in other losses in the income statement.
Acquisition of non-controlling interest in SCI du Lotissement
d'Echirolles
The Group owned 61% of SCI Lotissement d'Echirolles (SCI), with
the remaining 39% previously being held by a third party
non-controlling interest.
In April 2022, the Group acquired the remaining 39% from the
non-controlling interest increasing its ownership of SCI to 100%.
The consideration paid for the non-controlling interest was
EUR3,554,000 (GBP2,985,000).
In accordance with IAS27 this acquisition was accounted for as
an equity transaction, reducing the Group's equity by EUR3,554,000
(GBP2,985,000).
30 PERIOD SUMMARY
Income statement (unaudited)
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------------- ----------------- ------------------ ------------------ ----------------
Revenue
UK & Ireland 41,996 29,644 54,623 52,919 63,707
Continental Europe 177,839 145,009 195,230 130,661 121,134
Asia 39,945 39,751 60,392 44,538 44,973
Total revenue 259,780 214,404 310,245 228,118 229,814
---------------- ----------------- ------------------ ------------------ ----------------
Operating profit 56,681 29,335 3,317 42,739 46,106
Net finance
(cost)/income & Other
gains (3,327) (780) (2,825) (146) 4,069
Profit before taxation 53,354 28,555 492 42,593 50,175
Taxation (14,561) (6,703) (2,844) (11,314) (9,889)
Profit after taxation 38,793 21,852 (2,352) 31,279 40,286
---------------- ----------------- ------------------ ------------------ ----------------
Attributable to:
- equity owners of the
Parent 38,793 21,713 (2,305) 31,226 40,134
- Non-controlling
interests - 139 (47) 53 152
38,793 21,852 (2,352) 31,279 40,286
---------------- ----------------- ------------------ ------------------ ----------------
Earnings per share -
Basic 10.26 5.78 (0.62)p 8.27p 10.64p
Earnings per share -
Diluted 10.23 5.72 (0.62)p 8.26p 10.60p
Dividends - interim 2,60p 0.00p 0.00p 3.71p 3.71p
Dividends - final 3,00p 2,89p 0.00p 4.73p 4.73p
Dividends - special 0.00p 6,50p 0.00p 0.00p 0.00p
Total dividends 5,60p 9,39p 0.00p 8.44p 8.44p
---------------- ----------------- ------------------ ------------------ ----------------
Statements of financial position
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ------------------ ---------------- ----------------
Intangible assets 32,736 34,502 32,739 41,816 27,395
Property, plant and
equipment 101,090 91,973 90,937 95,353 93,232
Other non-current
investments 21 21 57 415 1,583
Other non-current
assets 7,805 3,966 3,743 5,693 10,047
Current assets 184,716 141,688 139,760 128,723 106,652
Assets held for sale - - - - -
Total assets 326,368 272,150 267,237 272,000 238,909
------------------ ------------------ ------------------ ---------------- ----------------
Share capital 1,889 1,889 1,889 1,889 1,887
Share premium 10,627 10,599 10,599 10,588 10,366
Reserves 120,133 115,486 99,693 129,500 131,004
Equity of the Parent 132,649 127,974 112,181 141,977 143,257
Non-controlling
interests - 1,720 1,689 1,870 1,553
Total equity 132,649 129,694 113,870 143,847 144,810
Total non-current
liabilities 94,039 68,900 52,968 64,450 35,959
Total current
liabilities 99,680 73,556 100,399 63,703 58,140
Total equity and
liabilities 326,368 272,150 267,237 272,000 238,909
------------------ ------------------ ------------------ ---------------- ----------------
Net cash 34,021 34,919 21,877 16,338 26,688
------------------ ------------------ ------------------ ---------------- ----------------
Note: The figures above have been extracted from the accounts
for the relevant period and have not been adjusted for changes in
accounting policies as a result of adoption of new accounting
standards.
Financial & operating statistics
2022 2021 2020 2019 2018
--------------------------------- --------------- --------------- --------------- --------------- ---------------
Capital expenditure - photobooth
& vending machines GBP'000 27,205 22,563 38,435 24,938 35,588
Capital expenditure - research &
development GBP'000 1,418 1,802 2,296 1,631 2,510
EBITDA GBP'000 92,241 65,077 87,313 69,705 70,981
EBITDA % of revenue 35.5% 30.4% 28.1% 30.6% 30.9%
Number of vending sites 43,900 43,800 44,500 47,000 47,000
--------------- --------------- --------------- --------------- ---------------
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END
FR DDGDDRBDDGXI
(END) Dow Jones Newswires
March 01, 2023 02:00 ET (07:00 GMT)
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