Appreciate Group Plc – AGM Statement

Appreciate Group plc

Annual General Meeting (AGM) statement and trading update

Trading improves in Q2 – billings up 3.6% year to date on FY20

Appreciate Group plc (the 'Group'), the  UK's leading multi-retailer redemption product provider to corporate and consumer markets, is today holding its Annual General Meeting. The Chairman, Laura Carstensen, will make the following comments on current trading for the financial year commencing 1 April 2021.

Q2 improvement in trading – now ahead of both FY20 and FY21 for year to date

I am pleased to report that there has been an improvement in trading since our last update, which was issued at the time our final results were announced on 29 June 2021.

Corporate and Gifting billings in Q2 are 14.6% ahead of levels seen in FY20 (the last normal trading year before the pandemic) with year to date (1 April 2021 until 17 September 2021) billings now up 3.6%, a considerable improvement on Q1, which was 6.0% lower than the same period in FY20.

Performance is also significantly better than the same period in FY21, which was severely impacted by the first lockdown. Corporate and Gifting billings for the year to date are up 28.1% on the comparable period in FY21. Billings of £40.7m for Q2 are broadly similar to Q2 FY21 (FY21: £40.9m) which benefitted from involvement in the free school meals initiative. 

*Includes billings through free school meal scheme FY21: £10.4m; FY22: £8.2m

This improvement has been driven by strong Q2 performance from our Corporate business, which is currently 6.8% up year to date against FY20 with billings of £68.3m (FY20: £63.9m).

Gifting billings continue to narrow the gap to FY20 levels. They currently stand at £11.5m (FY20: £13.0m), down 12.1% on the comparable period in FY20. The Group has strengthened its approach to digital marketing and continues to focus on initiatives to drive business, which has resulted in visits to Highstreetvouchers.com increasing by 36.4% on the prior year.

As was expected, there has been a significant improvement in redemptions as restrictions have eased and in person consumer activity has increased. Overall redemptions are up 70.6% on the prior year, with paper voucher redemptions 89.2% higher as we see the anticipated deferred revenue come through.

There is no change to our expectation (as stated on 29 June 2021) that the Christmas Savings business will be c.14% down on FY21. The order book is now largely complete and we began dispatching the first customer orders earlier this month.

PayPoint partnership ramp up and further expansion of redemption choices

Following the announcement of the new partnership on 27 May 2021 to offer the Group's gifting products to consumers via PayPoint's network of 28,000 outlets, we continue to work with them to build awareness and availability of our products with its retailers, as well as their customers. The partnership is an exciting opportunity over the medium term, although it remains at an early stage, and we are exploring ways to enhance the services we offer through the PayPoint network.

We have also continued to increase the appeal of our products by adding to the choice of both in-person and online redemption options available to customers. This includes dining out through restaurant chains such as All Bar One, Browns and Toby Carvery; increased leisure offerings via Canvas Holidays and Merlin's attractions including Legoland and Madame Tussauds; along with retailers like Habitat, Crew Clothing and F.Hinds.

Evolving our strategy to focus on growth

Since 2018, the Group has been implementing a strategy which was focused on building a more robust and scalable platform from which to drive growth. Significant progress has been made through investments in technology and digital enablement, together with simplification and repositioning of the organisation, the benefits of which are beginning to come through.

Having completed the simplification and repositioning activity, we now have a more robust and scalable platform. Our focus is on using this bedrock to deliver our growth opportunities in our key markets, whilst prioritising costs which are aligned to the strategy, at a time when the economy appears to have moved up a gear. We will provide an update on these growth initiatives at the time of the Group's half year results which we expect to issue on 23 November 2021.

Peak trading period remains key to performance for the year

Having enjoyed a strong Q3 peak trading in FY21, including our best ever December (boosted by Corporate clients choosing to reward staff over traditional Christmas parties), we are focused on driving another strong performance in this key period for the current financial year.

Reinvigorating Christmas Savings

We are building a detailed marketing campaign for Christmas Savers to secure optimal account acquisition and retention for 2022. This includes utilising an extensive review of media effectiveness, introducing improvements in our product offering, dedicated retention initiatives; alongside evolving our marketing approach.

Looking forward with building momentum and confidence

As the UK economy and consumer confidence shows signs of returning towards pre-pandemic levels, we are pleased to see the anticipated improvement in performance during Q2, giving us momentum as we enter our main seasonal trading period.

Following the changes we have made to invest in and reposition our Corporate business, we are now seeing positive trends and this gives us confidence for the year ahead.

We are nearing the final stage in our transformation. We have now invested in a more robust and scalable platform and our focus is on leveraging this to deliver on our growth opportunities, at a time when the economy appears to have moved up a gear but with distance to go to restore pre-Covid momentum and prospects. We believe we are positioned to benefit from any upward economic trajectory.