Appreciate Group plc
Half Year Unaudited Results for the six months ended 30 September 2021
A resilient performance as trading returns to pre-pandemic levels
Q2 ahead of FY2020 and FY2021
Appreciate Group plc, a leading UK multi-redemption product provider to corporate and consumer markets, is pleased to announce its Half Year Unaudited Results for the six months ended 30 September 2021.
Appreciate Group's highly seasonal business typically sees a loss in the first half of the financial year. The loss has significantly improved on H1 FY2021 which had been heavily impacted from the introduction of initial lockdowns. We have therefore provided some additional comparisons with H1 FY2020, the financial period prior to the pandemic.
Financial Highlights
· Billings up 19.6% to 118.2m (H1 FY2021: 98.8m), broadly similar to H1 FY2020 (£120.2m), the last period of normal trading prior to the pandemic
· Revenue increased 49.6% to 41.0m (H1 FY2021: 27.4m) benefiting from redemptions, which had been deferred as a result of lockdowns, being realised as anticipated. Revenue was 23.5% higher than the pre-pandemic period (H1 FY2020: £33.2m)
· Significant reduction in pre-tax loss to 2.0m (H1 FY2021: 6.2m loss) (H1 FY2020: £1.3m loss)
· Proposed interim dividend of 0.6p (H1 FY2021: 0.4p)
· Financial position:
– Cash balances, including cash held in trust, at 30 September 2021, were 207.1m (H1 FY2021: 227.3m)
– Free cash lower at £2.9m (H1 FY2021: 24.9m) – this is typically the low point in our cash cycle and also reflected growth in regulatory billings (which require customer monies to be held in trust until redemption)
– Free cash at 31 October 2021 was £ 34.0m, (31 October 2020:£39.1m) as monies held in trust were released as Christmas Savers product was dispatched
Operational highlights
Corporate
· Billings increase of 20.9% to £ 80.5m (H1 FY2021: £66.6m), and marginally ahead of H1 FY2020 (£ 80.1m)
· Revenue up 46.3% to £27.8m (H1 FY2021: £19.0m); 14.4% above the pre-pandemic period ( H1 FY2020: £24.3m)
· Continued to strengthen redemption proposition with 54 partners added across the product range including new additions such as Greggs, Habitat, Carpetright and Canvas Holidays
Consumer
· Billings up 16.7% to £37.7m (H1 FY2021: £32.3m); down 6.0% on H1 FY2020 (£ 40.1m )
· Revenue increased 59.0% to £13.2m (H1 FY2021: £8.3m) benefiting from deferred redemptions and up by 48.3% from H1 FY2020 ( £8.9m)
· Christmas Savings order book completed (14% down as predicted), with billings of £164.0m (FY2021 £191.5m), having been impacted by lockdown restrictions affecting face-to-face agent activity last winter
Continued strategic progress
The Group focused on delivering a number of key strategic initiatives during the first half of the financial year:
· Operational improvements – enhancements in productivity and operational efficiencies have led to reduced use of overtime and seasonal temps during current peak trading period
· Growth in digital continues – digital billings up 15.7% to £28.0m (H1 FY2021 £24.2m), whilst paper fell from 19.2% to 14.5% within the product mix
· Leveraging our hero brand – we have launched our first campaign specifically promoting Love2shop, the brand which underpins all our products. The campaign got underway earlier this month and will support all Consumer and Corporate business lines during the key Q3 trading period
· Enhanced digital marketing approach – strengthened our marketing with greater use of insight and digital marketing to support further growth in digital products
· Redemption range strengthened – continued broadening of the redemption range by expanding the choice of leisure, hospitality and food options
· Reinvigorating Christmas Savings – enhanced advertising, marketing campaigns and engagement with agents to retain and recruit savers for Christmas 2022
· PayPoint partnership – continued to build awareness through PayPoint's 28,000 UK retailers and customers, and explore opportunities to enhance services offered through its network
· Enterprise Resource Planning (ERP) programme – further progress made, the next implementation phase has been rescheduled for Q4 avoiding any potential disruption during our peak trading period
· Underlining our ESG commitments – our flagship programme with Everton in the Community, which helps teach young people technology skills, has reached over 500 schoolchildren. We are also focusing on setting realistic future emissions' reduction targets following the move to the new head office.
Current trading and outlook
· The Group has seen the usual seasonal increase in demand for its products in its key Q3 trading period to date, with a good pipeline of business; and the Love2shop marketing campaign, which is now underway, expected to support activity levels
· However, these are currently below levels seen in FY2021 and FY2022 due largely to our decision not to supply low margin business to a direct competitor. Billings for Q3 so far would be 3.2% ahead for Q3 FY2021; and 2.0% below Q3 FY2020 on a like-for-like basis
· Overall, billings for Q3 FY2022 up to 21 November are £37.0m (FY2021: £39.4m) (FY2020: £43.9m), with an improvement in November to a level which is closer to the previous years
· Uncertainty persists and we continue to see fluctuations in billings trends as we emerge from the lockdowns
· Overall, this performance is in line with our expectations for the full year
Ian O'Doherty, Chief Executive Officer, at Appreciate Group plc, said:
“I am pleased to report a robust performance in the first half of the year, bouncing back strongly from the impact of last year's lockdowns, and continued progress in delivering on our strategic plans.
“We typically see about a quarter of billings in the first half of the financial year and around three quarters coming in our second half, and I am confident that we will deliver our expectations for the financial year.
“Whilst economic uncertainties remain – particularly from wider supply chain issues and potential rises to the cost of living – we are now in a stronger position to deliver as we are a more efficient business, with an improved digital offering and a platform which is more robust and scalable.”
The information contained within this announcement is deemed by Appreciate Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”).
Appreciate Group will host a webcast presentation for analysts at 9.00am this morning.
If you would like to attend, please contact MHP on 020 3128 8193 or AppreciateGroup@mhpc.com.