Audited Annual Results
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
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Reported |
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12 months ended |
12 months ended |
Change |
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Revenue |
£259.8m |
£214.4m |
+21.2% |
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EBITDA1 |
£92.2m |
£65.1m |
+41.6% |
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Profit before tax2 |
£53.4m |
£28.6m |
+86.7% |
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Profit after tax |
£38.8m |
£21.9m |
+77.2% |
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Cash generated from operations |
£87.9m |
£66.1m |
+33.0% |
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Gross cash |
£136.2m |
£99.4m |
+37.0% |
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Net cash3 |
£34.0m |
£34.9m |
+2.6% |
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Earnings per share (diluted) |
10.23p |
5.77p |
+77.3% |
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Dividends:4 |
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- Interim Dividend per ordinary share (declared) |
2.6p |
nil |
n/a |
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- Special Dividend per ordinary share (paid) |
6.5p |
nil |
n/a |
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- Final Dividend per ordinary share (declared) |
3.0p |
2.89p |
n/a |
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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 (£4.3m) and lease liabilities (£15.9m). See note 19 of the Financial Statements for details of net cash
4 Special Dividend paid on 1 September 2022 (£24.57m), 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 £154.3 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 £61.8 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 £284.8m, EBITDA of £91.1m and profit before tax of £58.5m.
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:
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ME Group International plc |
+44 (0) 1372 453 399 |
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Serge Crasnianski, CEO |
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Stéphane Gibon, CFO |
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Hudson Sandler |
+44 (0) 20 7796 4133 |
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Wendy Baker/Nick Moore/ Ben Wilson
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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 60th 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 £9.84 million, paid to shareholders on 3 November 2022.
At the same time, the Board was also pleased to announce an additional return of £24.57 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 £280 and £300 million, EBITDA between £95 and £105 million and profit before tax between £61 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 £259.8 million, compared with £214.4 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 £92.2 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 £24.8 million (+86.7%) to £53.4 million (2021: 28.6 million).
Capital expenditure in the Period was £38.2 million, primarily related to Machines costs (£28.2m), Plant and Machinery (£5.1m) and the rest is Intangible assets (Goodwill: £1.7m, R&D: £1.4m, Other Intangibles: £1.7m).
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 £136.2 million and a net cash balance of £34.0 million. This is net of £0.7 million cash investment in acquisitions and dividends paid during the year which amounted to £35.5 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
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12 months ended |
12 months ended |
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Number of units in operation |
27,625 |
27,867 |
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Percentage of total group vending estate (number of units) |
62.9% |
63.6% |
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Revenue |
£154.3m |
£123.2m |
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Capex |
£3.0m |
£5.0m |
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EBITDA |
£54.2m |
£36,4m |
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 €6 to €8 in France (10% of machines remained at €6 per use), and from €8 to €10 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 £154.3 million (2021: £123.2 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 £5,586 per year (2021: £4,421 per year).
Subsequently, EBITDA was £54.2 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 £3.0 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 £15.0 - £20.0 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
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12 months ended |
12 months ended |
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Total Laundry units deployed (owned, sold and acquisitions) |
5,924 |
5,533 |
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Total revenue from Laundry operations |
£61.8m |
£54.2m |
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Total Laundry EBITDA |
£29.1m |
£22.6m |
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Revolution |
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(excludes Launderettes and B2B): |
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- Number of Revolutions in operation* |
4,754 |
4,094 |
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- Percentage of total group vending estate (number of units) |
10.8% |
9.3% |
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- Total revenue from Revolutions |
£56.7m |
£44.8m |
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- Revolution capex |
£20.2m |
£15.9m |
* 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 £61.8 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 £ 56.7 million, which represented 21.8% of Group revenue. The average revenue per machine (excluding VAT) was £12,816 per year (2021: £11,899 per year). EBITDA was £29.1 million and contributed 34.3% of Group EBITDA (excluding property sales). EBITDA was 34.7% of revenue in the Period.
Revolution capex increased to £20.2 million (2021: £15.9 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. £23.0 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
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12 months ended |
12 months ended |
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Number of units in operation |
4,785 |
5,173 |
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Percentage of total group vending estate (number of units) |
10.9% |
11.8% |
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Revenue |
£10.7m |
£11.7m |
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Capex |
£1.3m |
£0.5m |
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EBITDA |
£3.6m |
£3.4m |
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 £10.7 million from £11.7 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 £3.6 million and contributed 4.2% of Group EBITDA in the Period.
The average revenue per machine (excluding VAT) was £2,279 per year (2021: £2,146).
Capex for the Period was £1.3 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 £9.9 million, adding other revenue (£2.6m), the total revenue of Feed.ME is £12.5m which reflected the good strategic progress made in the Period. This business area contributed 4.8% of total Group revenue.
EBITDA was £3.4 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 |
|
|
|
|
|
Continental Europe |
£177.8m |
£145.0m |
|
UK & Republic of Ireland |
£42.0m |
£29.6m |
|
Asia Pacific |
£39.9m |
£39.8m |
|
Total |
£259.7m |
£214.4m |
Operating profit by geographic region
|
|
12 months ended |
12 months ended |
|
|
|
|
|
Continental Europe |
£51.3m |
£29.6m |
|
UK & Republic of Ireland |
£11.6m |
£5.0m |
|
Asia Pacific |
£2.0m |
£2.0m |
|
Corporate costs |
£(8.1)m |
£(7.3)m |
|
Total |
£56.8m |
£29.3m |
The Group delivered a 21.2% increase in total revenue to £259.8 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 £177.8 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 £21.7 million to £56.8 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 £7.1 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 £(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 £42.0 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 £ 11.6 million, compared to £ 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 £39.9 million whilst operating profit was flat year-on-year at £2.0 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 |
|
|
|
|
2022 |
2021 |
|
Total Group revenue at actual rate of exchange |
|
|
£259.8m |
£214.4m |
|
Group Profit before tax |
|
|
£53.4m |
£28.6m |
|
Increase in number of photobooths |
|
|
(242) |
679 |
|
Increase in number of Laundry units (operated) |
The increase in number of Revolutions is a constant priority and a main driver 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 to cause disruption to worldwide markets and supply chains, including those that ME Group operates within. |
The Group continues to monitor the COVID-19 situation closely and update its practices in line with government guidelines 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 major influence on consumer spending. A sustained period of economic recession and a period of high inflation could lead to a decrease in consumer expenditure in discretionary areas. |
The Group focuses on maintaining the characteristics and affordability of its needs-driven products. Like most businesses around the world, the Group has had to face a significant increase in supply chain 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 exchange rates |
The majority of the Group's revenue and profit is generated outside the UK, and the Group's financial results could be adversely impacted by an increase in the value of sterling relative to those currencies. |
The Group hedges its exposure to currency fluctuations on transactions, as relevant. However, by its nature, in the Board's opinion, it is very difficult to hedge against currency fluctuations arising from translation in consolidation in a cost-effective manner. |
Regulations
|
Nature of risk |
Description and impact |
Mitigation |
|
Centralisation of the production of ID photos |
In many European countries where the Group operates, if governments were to implement centralised image capture, for biometric passport and other applications, or widen the acceptance of self-made or home-made photographs for official document applications, the Group's revenues and profits could be affected. |
The Group has developed new systems that respond to this situation, leveraging 3D technology in ID security standards, and securely linking our booths to the administration repositories. Solutions are in place in France, Ireland, Germany, Switzerland and the UK; discussions in Belgium 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 31 January 2020. This has led to changes in the UK regulations as modifications to numerous arrangements between the UK and other members of the EU and EEA, affecting trade and customs conditions, taxation, movements of resources, among other things. |
The Board is continually reviewing the potential impact on the Group's operations following the UK's leaving the EU. Any potential developments, including new information and policy indications from the UK Government and the EU, is scrutinised with a view to enhancing 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 new business opportunities |
The failure to identify new business areas may impact the ability of the Group to grow in the long-term. |
Management teams constantly review demand in existing markets and potential new opportunities. The 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 anticipated benefits from the launch of new products |
The realisation of long-term anticipated benefits depends mainly on the continued growth of the laundry and food businesses and the successful development of integrated secure ID solutions. |
The Group regularly monitors the performance of its entire estate of machines. New technology-enabled secure ID solutions are heavily trialled before launch and the performance of operating machines is continually monitored. |
Market
|
Nature of risk |
Description and impact |
Mitigation |
|
Commercial relationships |
The Group has well-established, long-term relationships with a number of site-owners. The deterioration in the relationship with, or ultimately the loss of, a key account would have an adverse, albeit contained, impact on the Group's results, bearing in mind that the Group's turnover is spread over a large 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. |
The Group's major key relationships are supported by medium-term contracts. The Group actively manages its site-owner relationships at all levels to ensure a high quality of service.
The Group continues to monitor the situation in both the French and the |
Operational
|
Nature of risk |
Description and impact |
Mitigation |
|
Reliance on foreign manufacturers |
The Group sources most of its products from outside the UK. Consequently, the Group is subject to risks associated with international trade. |
Extensive research is conducted into quality and ethics before the Group procures products from any new country or 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 single supplier of consumables |
The Group currently buys all its paper for photobooths from one single supplier. The failure of this supplier could have a significant adverse impact on paper procurement. |
The Board has decided to hold a strategic stock of paper, allowing for 6-9 months' worth of paper consumption, to allow enough time to put in place alternative solutions. |
|
Reputation |
The Group's brands are key assets of the business. Failure to protect the Group's reputation and brands could lead to a loss of trust and confidence. This could result in a decline in our customer base. |
The protection of the Group's brands in its core markets is sustained with certain unique features. The appearance of the machine is subject to high maintenance standards. Furthermore, the reputational risk is diluted as the Group also operates under a range of brands. |
|
Product and |
The Board recognises that the quality and safety of both its products and services are of critical importance and that any major failure will affect consumer confidence. |
The Group continues to invest in its existing estate, to ensure that it remains contemporary, and in constant product innovation to meet customer 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 up with advances in technology |
The Group operates in fields where upgrades to new technologies are critical. |
The Group mitigates this risk by continually focusing on R&D. |
|
Cyber risk: Third party attack on secure ID data transfer feeds |
The Group operates an increasing number of photobooths capturing ID data and transferring these data directly to government databases. |
The Group undertakes an ongoing assessment of the risks and ensures that the infrastructure meets the security requirements. |
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 |
'000 |
|
'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 |
£'000 |
£'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 |
£'000 |
£'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 £57,824,000 (2021: profit of £785,000).
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 |
£'000 |
£'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 |
£'000 |
£'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
|
|
Share |
Share |
Other |
Translation |
Retained |
Attributable to |
Non-controlling |
Total |
|
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 |
Total |
|
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 £17,116,000 and £15,620,000 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 £101,090,000.
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 £3,850,000.
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 £'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 costs |
Software |
Customer related |
Patents and licences |
Droit au Bail |
|
Useful lives |
Finite |
Finite |
Finite |
Finite |
Indefinite |
|
Amortisation |
Straight-line basis, with a maximum life of four years from commencement of commercial production, with no residual value |
Straight-line basis, with a maximum life of three years, with no residual value |
Customer related intangible assets are amortised over their useful lives of between three and 10 years on a straight-line basis with no residual value |
Patents and licence assets are amortised over their useful lives of between seven and 10 years on a straight-line basis with no residual value |
Not amortised, but subject to impairment testing annually |
|
Internally generated or acquired |
Internally generated |
Acquired |
Acquired |
Acquired |
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 and motor vehicles |
12.5% - 33.33% straight-line. |
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 DIVIDEND 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, AMENDMENTS 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.
|
Description |
Date required to be adopted by the 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.
|
|
Asia |
Continental |
United Kingdom |
|
|
|
|
Pacific |
Europe |
& Ireland |
Corporate |
Total |
|
12 months ended 31 October 2022
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
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 31 October 2021 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
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 |
|
|
£'000 |
£'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
|
|
|
£'000 |
|
£'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
|
|
|
£'000 |
|
£'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 £288,000 in respect of obsolete stock (2021: £1,268,000).
|
|
31 October |
|
31 October |
|
|
2022
|
|
2021
|
|
|
£'000 |
|
£'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
|
|
|
£'000 |
|
£'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
|
|
|
£'000 |
|
£'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 £7,315,000 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
|
|
|
£'000 |
|
£'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 £459,000 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 £1,093,000 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
|
|
|
£'000 |
|
£'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
|
|
|
£'000 |
|
£'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
|
|
|
£'000 |
|
£'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 - UK |
27 |
|
- |
|
Adjustments in respect of prior periods - Overseas |
45 |
|
- |
|
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
|
|
|
£'000 |
|
£'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 periods |
2,416 |
|
- |
|
- 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 £14.8m (2021: £6.8m) 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 £57,824,000 (2021: £785,000), including dividends received from subsidiaries.
9 DIVIDENDS PAID AND PROPOSED
|
|
31 October 2022 |
|
31 October 2021 |
||
|
|
pence per share |
£'000 |
|
pence per share |
£'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 £38,793,000 (2021: £21,852,000) 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 |
|
|
|
£'000 |
'000 |
|
£'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
|
|
'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 £3,128,000 were identified and transferred from goodwill to intangible assets. A deferred tax liability of £791,000 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: |
'000 |
|
Dreamakers |
1,652 |
|
|
1,652 |
|
|
|
|
Disposals: |
'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 |
|
|
£'000 |
|
£'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 31st 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 15th 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 |
|
|
£'000 |
|
£'000 |
|
£'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 (£1,390,000), brands (£665,000), customer related assets (£11,181,000), patents (£1,089,000) and Droit au Bail (£120,000).
Research and development
An impairment charge of £153,000 (2021: credit for reversal of impairment of £112,000) is recognised in the line "Costs of sales". The impairment charge was made against the intangible assets of KIS SAS (£49,000) and the Photo-Me (Shanghai) Co Limited (£104,000). 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: £3,602,000 impairment charge was recognised in "Administrative expenses").
Company
|
|
Other |
|
|
intangible |
|
|
assets |
|
|
£'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 & Buildings |
Photobooth & vending machines |
Plant, machinery, furniture, fixtures & motor vehicles |
Right of Use Land & Buildings |
Right of Use Plant, machinery, furniture, fixtures |
Right of Use Motor vehicles |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 £21,496,000 (2021: £22,450,000) 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 £1,603,000; Continental Europe - impairment reversal of (£1,405,000); and United Kingdom - impairment reversal of (£2,848,000).
A reversal of impairment to land and buildings of (£86,000) 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 £9,000; Continental Europe - impairment reversal of (£563,000); and United Kingdom - impairment reversal of (£153,000).
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 & Buildings |
Photobooth & vending machines |
Plant, machinery, furniture, fixtures & motor vehicles |
Right of Use Land & Buildings |
Right of Use Plant, machinery, furniture, fixtures |
Right of Use Motor vehicles |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 £5,063,000 (2021: £3,226,000) 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
|
|
'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 £365,000 (2021: £98,000) (note 4).
Company
The Company has no investment property.
14 INVESTMENTS IN ASSOCIATES AND SUBSIDIARIES
Investment in associates
Group
|
|
£'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 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
'000 |
'000 |
'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 £788,643.
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 €5,000,000 (£4,300,335).
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 |
|
|
|
£'000 |
£'000 |
£'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 |
|
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'000 |
£'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 |
|
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'000 |
£'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 financial |
Total |
|
|
|
liabilities at |
|
|
|
|
amortised cost |
|
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'000 |
£'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 financial |
Total |
|
|
|
liabilities at |
|
|
|
|
amortised cost |
|
|
|
|
£'000 |
£'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
|
|
|
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 October 2022 |
|
|
|
Swiss |
Japanese |
Other |
|
|
|
|
Sterling |
Euro |
Franc |
Yen |
Currencies |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 October 2021 |
|
|
|
Swiss |
Japanese |
Other |
|
|
|
|
Sterling |
Euro |
Franc |
Yen |
Currencies |
Total |
|
|
|
'000 |
'000 |
'000 |
'000 |
'000 |
'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 £2,432,000 decrease in the Group's net assets at that date (2021: £267,000 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 |
|
|
£'000 |
£'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 £1,022,000 (31 October 2021: £644,000) 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 |
£'000 |
£'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
|
|
|
£'000 |
£'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
|
|
|
£'000 |
£'000 |
£'000 |
£'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
|
|
|
£'000 |
£'000 |
£'000 |
£'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
|
|
|
£'000 |
£'000 |
£'000 |
£'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 £985,000 (2021: £984,000) 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 |
£'000 |
£'000 |
£'000 |
£'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, £985,000 of the total net cash (2021: £984,000) 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 £15,922,000 (2021: £16,493,000).
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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
£'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 |
£'000 |
£'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 options granted |
At 31 October 2021 |
Exercise price |
Granted during year |
Lapsed or forfeited during year |
Exercised during year |
At 31 October 2022 |
Exercise price |
Date from which exercisable |
Last date on which 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:
|
Date of grant |
|
27 August 2019 |
4 October 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 |
|
|
Date of grant |
5 October 2020 |
19 April 2021 |
5 August 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 |
|
Date of grant |
|
12 May 2022 |
5 October 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 £884,000 (2021: £493,000) and for the Company the charge was £321,000 (2021: £5,000).
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 £521,000 (2021: £201,000) arising on the redemption of the deferred shares and £2,007,000 (2021: £2,006,000) 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
|
|
|
£'000 |
£'000 |
£'000 |
£'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 £15,922,000 (2021: £16,493,000).
The Company has lease liabilities of £1,801,000 (2021: £2,557,000).
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 |
Site agreements |
Property |
Motor vehicles |
|
Number of lease agreements |
545 |
9 |
423 |
|
Average lease term |
74 |
66 |
43 |
|
Average remaining term (months) |
34 |
28 |
10 |
|
|
|
|
|
|
Company |
Site agreements |
Property |
Motor 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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 2022
£'000 |
31 October 2021
£'000 |
31 October 2022
£'000 |
31 October 2021
£'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 £0.2 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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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 |
||
|
|
£'000 |
% |
£'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 2022
|
31 October 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 65 |
23.8 years (age 88.8) |
23.3 years (age 88.3) |
|
Female currently aged 65 |
25.1 years (age 90.1) |
24.6 years (age 89.6) |
|
Male currently aged 45 |
25.0 years (age 90.0) |
24.5 years (age 89.5) |
|
Female current aged 45 |
26.5 years (age 91.5) |
26.0 years (age 91.0) |
|
|
2022 £'000 |
2021 £'000 |
2020 £'000 |
2019 £'000 |
2018 £'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 £'000 |
2021 £'000 |
2020 £'000 |
2019 £'000 |
2018 £'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.
|
Period ended 31 October 2022 |
Plan assets £'000 |
Defined benefit obligation £'000 |
Surplus £'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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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 2022
£'000 |
31 October 2021
£'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
|
||
|
|
£'000 |
% |
£'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 2022
% |
31 October 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 £'000 |
2021 £'000 |
2020 £'000 |
2019 £'000 |
2018 £'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 £'000 |
2021 £'000 |
2020 £'000 |
2019 £'000 |
2018 £'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.
|
|
|
Defined benefit obligation £'000 |
Increase/ (decrease) in defined benefit obligation £'000 |
|
Defined benefit obligation as reported |
|
2,898 |
- |
|
Defined benefit obligation |
- with discount rate - 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 £133,000 (2021: £142,000).
The amount recognised in the income statement for this scheme was £144,000 (2021: £218,000).
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 2022 |
31 October 2021 |
|
Discount rate |
0.49% |
0.23% |
|
Rate of increase in salaries |
0% |
0% |
|
Retirement age |
60 years |
60 years |
|
Mortality table
|
Standard mortality rates under defined benefit corporation pension plan (the 22nd Life Table for male & female) |
Standard mortality rates under defined benefit corporation pension plan (the 22nd Life Table 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 2022 |
31 October 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 |
|
|
£'000 |
£'000 |
£'000 |
£'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) |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'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) |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'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 income |
- |
136 |
- |
- |
|
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: £3,012,000) 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
|
|
|
£'000 |
£'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 £3,756,000 ( 2021: £3,756,000), of which £3,627,000 (2021: £3,627,000) 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
|
|
|
£'000 |
£'000 |
£'000 |
£'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
|
|
|
£'000 |
£'000 |
£'000 |
£'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 £nil (2021: £nil). 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
|
|
|
£'000 |
£'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.
|
Company name |
Principal Activity |
Group interest |
Registered office address |
Country of incorporation |
|
UK & Ireland |
|
|
|
|
|
Jolly Roger (Amusement Rides) Limited |
Dormant |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
MgInvest Investments Limited |
Investment |
100%* |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Me Group International Limited |
Dormant |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Photo-Me (Retail) Limited |
Dormant |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Photo-Me Limited |
Corporate |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Photo-Me Trustee Company Limited |
Dormant |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Xpand Investments Limited |
Investment |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Power-Me Limited |
Dormant |
100% |
Unit 3B, Blenheim Road, Epsom, KT19 9AP |
UK |
|
Me Group Ireland Supplies Limited |
Operations |
100% |
Unit A4, Alexander House, Tallaght Cross East, Tallaght, Dublin 24 |
Republic of Ireland |
|
Continental Europe |
|
|
|
|
|
Me Group Austria G.m.b.H. |
Operations |
100% |
Industriestraße 7/K01 L/10, 2100 Korneuburg |
Austria |
|
Prontophot Belgium NV |
Operations |
100% |
Boulevard Paepsem 8a, 1070 Anderlecht |
Belgium |
|
Photo-Me Czech Republic s.p.o.l. s.r.o. |
Dormant |
100%* |
Husova 2117, 256 01 Benešov |
Czech Republic |
|
Me-Group SPC Finland Oy |
Operations |
100% |
Unit 3B Blenheim Road, Epsom, UNITED KINGDOM. KT19 9AP |
Finland |
|
KIS SAS |
Production |
100%* |
7 Rue Jean-Pierre Timbaud, 38130 Echirolles |
France |
|
Me Group France |
Operations |
100%* |
8 rue Auber 75009, Paris |
France |
|
Sempa SARL |
Operations |
100%* |
73 D rue du Général Mangin, 38000 Grenoble |
France |
|
Me Group GSS |
Corporate |
100% |
8 rue Auber 75009, Paris |
France |
|
SCI Immobilière du 21 |
Property |
100%* |
7 Rue Jean-Pierre Timbaud, 38130 Echirolles |
France |
|
Dreamaker |
Operations |
100% |
80 route des Lucioles 06560 Valbourne |
France |
|
Me Group Germany G.m.b.H. |
Operations |
100% |
Gervinusstraße 15-17, 60322 Frankfurt am Main |
Germany |
|
Me-Group Italia Srl |
Operations |
100% |
Roma (RM) Via Lovanio 1, CAP 00198 |
Italy |
|
Kis Italia Srl |
Dormant |
100% |
Milano, Via Tiziano 32, CAP 20145 |
Italy |
|
Prontophot Holland B.V |
Operations |
100% |
Loonseweg 14, 5527 AC Hapert |
Netherlands |
|
KIS Poland s.p.z.o.o. |
Operations |
100% |
ul. Targowa 46/5, 03-733 Warszawa |
Poland |
|
Me Group Portugal LDA |
Operations |
100% |
Industrial do Carvalhinho - Fracço K 2860-579 MOITA |
Portugal |
|
Me Group Spain Solutions |
Operations |
100% |
28224 - Pozuelo de Alarcón (Madrid), Calle de las Dos Castillas, 33, Ático 7 |
Spain |
|
Me Group Switzerland AG |
Operations |
100% |
Sonnentalstrasse 5, 8600Dübendorf |
Switzerland |
|
Asia & ROW |
|
|
|
|
|
Me Group Australia Pty Ltd |
Operations |
100% |
4/24 Philip Street, Hawthorne, Queensland 4171 |
Australia |
|
Now Retail Group Pty Ltd |
Operations |
100% |
Level 9, 123 Albert Street, Brisbane, Queensland 4000 |
Australia |
|
Photo-Me (Shanghai) Co Limited |
Operations |
100%* |
Room 1102 Tongyong Tower, No. 1346 Gong he Xin Road, Zha bei District, Shanghai 200070 |
China |
|
Photo-Me Beijing Co Limited |
Operations |
100%* |
Room 1124, Ocean Natural Xintiandi, No.106 East Majiapu Road, Fengtai District, Beijing 100000 |
China |
|
Photo-Me Chengdu Co Limited |
Dormant |
100%* |
Room 1124, Ocean Natural Xintiandi, No.106 East Majiapu Road, Fengtai District, Beijing 100000 |
China |
|
Nippon Auto-Photo Kabushiki Kaisha |
Operations |
100% |
Room 1302, Atlas Tower Roppongi, Roppongi 7-7-13,Minato-Ku, 106 0032 |
Japan |
|
Photo-Me Korea Company Limited |
Operations |
100%* |
Room #203-1, Daeryung techno town 1st, Gasan Digital 2 ro 18, Geumcheon-gu, Seoul, 08592 |
Korea |
|
Photomatico (Singapore) Pte Limited |
Operations |
100% |
26 Sin Ming Lane, Singapore 573971 |
Singapore |
|
KIS Technology Company Limited |
Dormant |
100% |
P.1003, Ford Thang Long Building, 105 Lang Ha, Lang Ha Street, Ba Dinh district, Hanoi |
Vietnam |
|
Photomaton Maroc SARL |
Operations |
50% |
131 Bd D'Anfares Azur Sidi Belyout,/Casablanca |
Morocco |
* 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 €3,900,000 (£3,274,000), 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, €600,000 (£504,000) 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 €600,000 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 £1,652,000 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.
|
|
£'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 €3,489,000 (£2,948,000), 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 € 2,491,000 (£2,142,000) 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 €99,000 (£85,000) in respect of SGER's order backlog at the acquisition date; €1,398,000 (£1,202,000) in respect of the patents over SGER's proprietary technology which underpin its future cash generation; and €994,000 (£855,000) 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 €806,000 (£693,000) which we consider is attributable to SGER's acquired workforce.
A deferred tax liability of €629,000 (£541,000), 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 (£1,913,000), 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 (£987,000) 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 (£751,000) in respect of NRG's non contractual customer relationships; AUD 226,000 (£126,000) in respect of contractual customer relationships; and AUD 199,000 (£110,000) in respect of brand related assets.
There is a balance of residual goodwill of AUD 2,015,000 (£1,104,000) 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 £152,000. The group incurred a loss of £459,000 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 €3,554,000 (£2,985,000).
In accordance with IAS27 this acquisition was accounted for as an equity transaction, reducing the Group's equity by €3,554,000 (£2,985,000).
30 PERIOD SUMMARY
Income statement (unaudited)
|
|
2022
|
2021
|
2020
|
2019
|
2018
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 £'000 |
27,205 |
22,563 |
38,435 |
24,938 |
35,588 |
|
Capital expenditure - research & development £'000 |
1,418 |
1,802 |
2,296 |
1,631 |
2,510 |
|
|
|
|
|
|
|
|
EBITDA £'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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