Resilient H1 and well placed for recovery

Appreciate Group 16 December 2020 Update
Download PDF

Appreciate Group

Resilient H1 and well placed for recovery

Interim results update

Financial services

16 December 2020

Price

30p

Market cap

£56m

Net cash (£m) at 30 September 2020

24.9

Shares in issue

186.3m

Free float

100%

Code

APPS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.4

2.0

(37.0)

Rel (local)

0.2

(5.4)

(29.8)

52-week high/low

65p

24p

Business description

Appreciate Group is a specialised financial services business and is the UK’s leading provider of multi-retailer redemption products to the corporate and consumer markets. Consumers can access these products directly through its market-leading Christmas Savings offering. Corporate customers use these products to supply a range of incentive and reward products, often tailor made.

Next events

Post-Christmas trading update

12 January 2021

Year-end trading update

29 April 2021

Analyst

Martyn King

+44 (0)20 3077 5745

Appreciate Group is a research client of Edison Investment Research Limited

H121 performance was resilient, ahead of management’s mid-range scenario for the effect of COVID-19, and the steady recovery in customer activity from the April low continued into the seasonally significant Q3 period. With management increasingly confident of the H2 recovery, backed by a solid free cash position, dividends were reinstated. Accelerated digitalisation of the business has mitigated the effects of the pandemic and positions Appreciate Group well for recovery.

Year end

Billings*
(£m)

Revenue
(£m)

Adj. PBT**
(£m)

EPS***
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/19

426.9

110.4

12.5

4.8

3.20

6.3

10.7

03/20

419.9

112.7

11.4

4.9

0.00

6.1

N/A

03/21e

360.9

93.5

4.2

1.9

1.20

15.5

4.0

03/22e

392.3

101.0

7.1

3.1

1.50

9.7

5.0

Note: *Billings is a non-statutory measure of sales defined as the face value of voucher sales and the amount of value loaded on prepaid cards, less any discount given to customers. **PBT is adjusted for exceptional items. ***EPS is fully diluted on a statutory basis.

Continuing recovery from April lows

With the pandemic lockdown measures introduced at the start of the current financial year, billings were 17.8% lower and the usual seasonal pre-tax loss was increased to £6.2m or £4.6m excluding exceptional/non-recurring items (H120: £1.2m loss) relating to the wind-down of the hamper and contract packaging operations, continuing the group’s refocusing on its core activities. The monthly billings performance has been improving steadily since the April low (when it was
-64% y-o-y), continuing into the seasonally important Q3 trading period despite the second lockdown measures. An interim DPS of 0.4p per share was declared. The free cash position remained solid at £24.9m. The pace of billings recovery leads us to increase our FY21 forecasts with further progress expected in FY22.

Well placed to benefit from market recovery

The strategic business plan aims to build a more robust and scalable business model, capable of capitalising on growth opportunities in the large and fragmented market in which the group operates. Although ongoing, progress made to date in enhancing operating systems and processes and putting a greater focus on digital products and services, supported H121. As well as mitigating the impact of the pandemic, this positions the group well for post-pandemic recovery and better exploiting existing industry trends. We expect future growth to be focused on digital/card product, higher margin but less immediately cash generative compared with paper vouchers. We believe this near-term pressure on cash flow from the change in business mix is a one-time adjustment and the recently arranged £15.0m revolving credit facility (RCF) remains undrawn and ready to support growth.

Valuation: Uncertainty has weighed on valuation

Our modified DCF valuation of 60p per share (unchanged) is looks through the near-term suppression of earnings by the pandemic and ‘one-time’ cash flow adjustment from business mix changes (see page 8). It implies a calendar year 2021 P/E of c 21x and yield of 3.3%, reasonable in a ‘peer group’ context.

Resilient H121 and well placed for recovery

COVID-19 magnified the normal seasonal loss

Appreciate’s business is highly seasonal with most billings (typically more than 80%) generated in the second half of the year, which includes the Christmas trading period. This is true of both the Corporate and Consumer businesses although it is higher in Consumer, which is dominated by the Christmas savings business. With costs spread more evenly across the year, H1 is typically loss making with all profits generated in the second half of the year. We expect a similar trend in the current year, although with the significant effect of the pandemic lockdown and gradual ongoing recovery accelerating the trend in the current year.

Exhibit 1: H1/H2 trend in billings

Exhibit 2: H1/H2 trend in operating profit*

Source: Appreciate Group data

Source: Appreciate Group data. Note: Operating profit before exceptional and non-recurring items.

Exhibit 1: H1/H2 trend in billings

Source: Appreciate Group data

Exhibit 2: H1/H2 trend in operating profit*

Source: Appreciate Group data. Note: Operating profit before exceptional and non-recurring items.

Billings are continuing their steady recovery

Billings fell sharply as the lockdown was introduced but have been recovering month by month. Importantly, this positive trend continued into H221 and at the time of reporting interims the seasonally important Q3 trading period, through November, continued to reflect this trend, with no material effect from the second lockdown at that time.

Exhibit 3: Steady recovery in billings from April lows

Corporate and HSV billings (£m)

Apr

May

June

July

Aug

Sept

Oct

YTD*

FY21

5.0

7.4

8.6

11.8

10.2

14.9

24.0

81.9

FY20

14.0

13.7

13.8

14.4

12.4

13.0

26.4

107.6

% variance

-63.9%

-46.5%

-37.5%

-17.6%

-17.7%

+14.8%

-9.3%

-23.9%

Source: Appreciate Group. Note: *Financial year to date (1 April to 31 October).

It is worth noting that Exhibit 3 refers only to billings through the corporate business and highstreetvouchers.com (HSV) and specifically does not include the Christmas savings business. Christmas savings is not included to provide a better indication of underlying trading. Christmas savings billings are driven by Christmas order despatches, primarily in the second half of the year, from an order book built primarily in the first half of the year. Positively, the Christmas 2020 order book has ended up c 8% lower year on year compared with earlier indications of c 10%.

Continuing to reposition the business

The strategic business plan aims to build a more robust and scalable business model, capable of capitalising on growth opportunities in the large and fragmented market in which the group operates, which should position the group well for post-pandemic recovery. Although ongoing, the progress made in FY20 in the strategic business plan, enhancing operating systems and process and putting a greater focus on digital products and services were a positive support in H121, mitigating the effect of the pandemic. Decisive action was taken to adapt to the new environment, with a further acceleration in digitalisation, in step with market developments, leaving the group in a better position to capitalise on market recovery and exploit growth opportunities. The group has also taken steps to increase its focus on the core offering of own branded multi-retailer product, putting in place plans to exit the hamper production and contract packaging and is in discussions for the sale of the brand engagement subsidiary FMI. The next stage of the new enterprise resource planning system is on track for implementation in summer 2021.

H1 results in detail

With the pandemic lockdown measures introduce at the start of the current financial year, performance in the six months to 30 September 2020 (H121) was relatively resilient, and ahead of management’s mid-range scenario for the effect of COVID-19 as detailed in the FY20 annual report.

Exhibit 4: Summary of H121 financials

£m unless stated otherwise

H121

H120

Difference

Consumer billings

32.3

40.1

(7.8)

Corporate billings

66.6

80.1

(13.5)

Total billings

98.8

120.2

(21.4)

Revenue

27.4

33.2

(5.8)

Cost of sales

(22.4)

(25.0)

2.6

Gross profit

5.0

8.2

(3.2)

Distribution costs

(0.4)

(0.7)

0.3

Admin costs

(9.9)

(9.6)

(0.4)

Operating profit (before exceptional/non-recurring items)

(5.3)

(2.0)

(3.3)

Net finance income

0.1

0.8

(0.7)

Profit before tax (before exceptional/non-recurring items)

(5.2)

(1.3)

(4.0)

Exceptional & non-recurring*

(1.0)

0.0

(1.0)

Reported PBT

(6.2)

(1.3)

(4.9)

Tax

1.2

0.2

0.9

Net profit after tax

(5.0)

(1.0)

(4.0)

Basic EPS (p)

(2.71)

(0.56)

Diluted EPS (p)

(2.71)

(0.56)

DPS (P)

0.40

0.00

Total cash - including monies held in trust

227.3

213.1

Period end group cash (excluding overdraft)

24.9

6.3

Source: Appreciate Group data. Note: *H121 exceptional item/non-recurring relates to redundancy costs (£0.6m), impairment of obsolete stock (£0.4m) and small (£41k) profit on disposal.

Brief overview of H121 results

The key drivers of the H121 financial results were:

Group billings declined by 17.8% to £98.8m with a continuing recovery from the low point in April (-64%) at the height of the lockdown. This included a £10.3m contribution from the successful free summer school meals partnership with Iceland, one-off in nature and relatively low margin, and excluding this, billings were 27% lower than in H120.

Revenues fell at a similar rate to billings, down 17.6% to £27.4m.

Gross profit was 39.3% lower at £5.0m before the £0.4m effect of stock impairment resulting from the hamper and contract packaging business winddown. The gross margin on billings reduced to 5.1% from 6.9%, reflecting the mix of business and the maintenance during the period of promotional costs in respect of Christmas 2020.

Distribution costs were lower, reflecting reduced billings and a mix switch towards digital product, and administrative costs were slightly higher by a similar amount. The increase in administrative costs reflected professional fees in respect of the sale of the Valley Road site as well as costs in respect of the arrangement of the £15m five-year unsecured RCF.

Net finance income was modest in period as result of sharply reduced deposit rates on cash balances and increased finance expense, primarily facility fees relating to the RCF, for now undrawn. The RCF will provide additional financial flexibility and support the expected future growth of card and digital product, higher margin than vouchers but less immediately cash generative than paper vouchers.

The PBT loss, before c £1.0m of exceptional and non-recurring items, was £5.2m compared with £1.3m in H120. The exceptional/non-recurring items primarily relate to the hamper and contract packaging business wind-down, including the stock impairment and a £0.6m redundancy charge. The sale of its largely vacated Valley Road site for £3.2m generated a small £41k disposal gain. The company adjusted pre-tax loss measure was £4.6m) and additionally excludes £0.6m of trading losses relating to the hamper and contract packaging wind-down. As the business is wound down, the loss is much greater than normal, primarily due to fixed premises costs and will continue through to the end of FY21.

Exhibit 5: Reconciliation to adjusted PBT

£m

H121

H120

Reported PBT

(6.2)

(1.3)

Adjusted for:

Redundancy costs

0.6

Impairment of obsolete stock

0.4

Gain on disposal

(0.0)

PBT before exceptional & non-recurring items

(5.2)

(1.3)

Hamper business trading losses

0.6

0.1

Adjusted PBT

(4.6)

(1.2)

Source: Appreciate Group

The statutory net loss after tax was £5.0m (H120: £1.0m loss) 2.71p. per share on both a basic and diluted basis.

The interim DPS of 0.4p reflects the company’s confidence at returning to profitability in H221, seasonally stronger and additionally benefiting from the continuing recovery in customer activity. Although there is no guidance in respect of a final dividend, the interim distribution has typically represented c one-third of the total.

Free cash at year-end was just under £30m but, with the impact of the pandemic on current year trading still uncertain ahead of the peak Q3 trading period, no final dividend was declared (and no dividend paid for the year) to maintain financial flexibility. The board hopes to return to its existing dividend policy as soon as possible and this has typically seen a c 50% distribution of earnings weighted around one-thirds to H1 and around two-thirds to H2.

Cash balances remained strong with free cash of £24.9m (H120: £7.7m) while customer balances held in trust represented an additional £227.3m, up from £213.1m in H120.

More detail by product and business division

Looking more closely at the trends by business division and product, we note the following:

Consumer billings were 19.5% lower at £32.3m and were affected by the timing of despatches for the Christmas savers business (for Christmas 2020). For the full year we expect billings to reflect the total order book, -8% and better than management previously expected. The Christmas 2020 order book was largely built before the pandemic but has proved resilient and the decline in orders mainly reflect the continued decline of agency distribution business. Appreciate Group has introduced new commission schedules and enhancements to the range of redemption partners to stimulate activity for Christmas 2021. The reduction in ‘other consumer’ reflects the effect of the pandemic while ‘other income’ was also affected by the wind down of the hamper and repackaging operations.

Exhibit 6: Consumer billings

£m

H121

H120

Change

Christmas savings

29.8

36.3

-17.8%

Other consumer

2.2

3.0

-24.4%

Multi and single retailer sub-total

32.0

39.3

-18.6%

Other income

0.3

0.8

-65.7%

Total Consumer billings

32.3

40.1

-19.5%

Source: Appreciate Group

Corporate billings were 16.9% lower but management notes recent strong order trends and a good level of new business. Customer incentives performed better than the average due to increased marketing activities by some clients, particularly within financial services. Staff rewards were relatively weak compared with the average, but Appreciate Group expects a pick-up in H2 as companies seek to reward employees for their efforts during the lockdown aand with alternatives to traditional Christmas parties. Intermediary business has been managed down in recent years but received a boost from the Iceland deal.

Exhibit 7: Corporate billings

£m

H121

H120

Change

Customer incentives

19.8

20.5

-3.6%

Intermediaries

19.2

17.2

11.6%

Staff rewards

19.8

30.4

-35.0%

Employee benefits

5.7

9.2

-37.9%

Multi and single retailer sub-total

64.5

77.3

-16.6%

Other income

2.1

2.8

-26.2%

Total Corporate billings

66.6

80.1

-16.9%

Source: Appreciate Group

The group’s own multi-retailer billings (cards, vouchers and digital) remained the main source of billings (86.7% compared with 83.0% in H120) while lower-margin, third-party single retailer product reduced (11.0% compared with 14.0% in H120).

Exhibit 8: Increased focus on core own branded multi-retailer offering

£m

H121

H120

Change

Multi-retailer

85.7

99.8

-14.1%

Single retailer

10.9

16.8

-25.3%

Multi and single retailer sub-total

96.6

116.6

-17.2%

Other income

2.3

3.6

-38.2%

Total billings

98.8

120.1

-17.8%

Source: Appreciate Group

Further progress by product mix is reflected in strong growth in digital product and further decline paper vouchers. The growth in digital partly reflects the Iceland contract but the share of billings was still 8.8 percentage points ahead adjusting for this. The pandemic has accelerated existing trends in the market, which are reflected in the group’s strategy to focus on higher margin cards and digital product.

Exhibit 9: Billings mix by product

% of multi and single retailer billings

H120

H220

Change

Paper

19.2%

38.8%

-19.6% pts

Card

55.8%

53.9%

+1.8% pts

e-Code

25.1%

7.3%

+17.8% pts

Source: Appreciate Group

Financials

The positive trend in billings in recent months combined with the accelerated shift away towards higher-margin own branded multi-retailer product, particularly digital and card product, and away from vouchers led us to increase our FY21 forecasts. For FY22 we had already assumed a material rebound and have increased our billings forecast slightly, although our PBT estimate is not materially changed. We have also introduced a tentative FY23 forecast for the first time.

Our forecast uplift for billings is driven by the Corporate business, while for the Consumer business we have taken a more cautious approach in respect of the headwind from the agency distribution channel.

Exhibit 10: Summary of billings forecast

New

Old

Change

£m

FY21

FY22

FY21

FY22

FY21

FY22

Consumer billings

194.4

192.5

195.7

203.6

-0.7%

-5.4%

Corporate billings

166.5

199.8

144.1

174.3

15.5%

14.6%

Total billings

360.9

392.3

339.8

377.9

6.2%

3.8%

Source: Edison Investment Research

For FY21 the billings forecast uplift feeds through into higher adjusted PBT, although for FY22 we have taken a slightly more cautious view on gross margin development despite the continuing positive shifts in product mix.

Our DPS forecast for FY21 is increased to 1.2p per share (was 1.0p) and we continue to expect further growth in FY22 and FY23, well covered by earnings.

Exhibit 11: Estimate revisions

Billings (£m)

Revenues (£m)

Adj. PBT (£m)*

Diluted EPS (p)

DPS (p)

New

Old

Change

New

Old

Change

New

Old

Change

New

Old

Change

New

Old

Change

03/21e

360.9

339.8

6.2%

93.5

87.1

7.3%

4.2

3.9

6.7%

1.9

1.7

14.6%

1.20

1.00

20.0%

03/22e

392.3

377.9

3.8%

101.0

100.6

0.4%

7.1

7.1

0.3%

3.1

3.1

0.8%

1.50

1.50

0.0%

03/23e

417.2

N/A

N/A

107.4

N/A

N/A

9.4

N/A

N/A

4.1

N/A

N/A

2.10

N/A

N/A

Source: Edison Investment Research

Valuation

Our analysis continues to identify significant value in Appreciate Group shares based on the return to more normal trading conditions reflected in our near-term forecasts and longer-term growth, enhanced by the strategic refocusing on card and digital products, the drivers of industry growth. We estimate a fair value of c 60p and the shares are trading at a c 50% discount to this value. We believe this discount reflects the uncertainty created by the pandemic in respect of near-term earnings and dividends as well as the distorting, negative effect of the shift from paper vouchers to digital/card product.

As discussed in detail in our outlook note, we believe this is primarily a one-off, temporary adjustment to cash flow, which masks the long-term recurring cash flow potential of the business and is any case ‘stripped out’ of our valuation analysis. The continuing strong growth in the share of card/digital products and the relative decline in own voucher products, both as a share of the total and in absolute terms, is positive for profitability and to be welcomed. However, in the near term it has the effect of reducing operational cash flow. This is not because card/digital products consume cash to any significant extent; rather it is because the lower-margin voucher products are cash generative so long as sales are rising and cash negative when sales are falling.

DCF valuation supported by ‘peer’ comparison

Given the lack of satisfactory direct valuation comparisons (see below), we continue to focus on an ‘absolute’ valuation determined by our modified discounted cashflow methodology, cross-referenced to a ‘relative value’ based on a comparison with a selected group of listed stocks that are engaged in activities providing at least some overlap with the group. There are no direct comparators for the Christmas savers business and competitor employee benefits and service providers are either private companies or relatively small parts of larger groups, complicating any attempt at a relative valuation approach. In incentive and rewards products, Sodexo and Edenred are both much larger and more international and the overlap between Appreciate and Sodexo is limited (Sodexo Benefits and Rewards Services is only a minor part of Sodexo Group). We nevertheless include these in our quoted comparator group along with a selection of prepaid card and payments service providers (Euronet Worldwide, Fleetcor Technologies, Green Dot Corp and EML Payments).

Our DCF value is unchanged at 60p with the effect of higher near-term earnings offset by an increased long-term capex assumption. This DCF valuation implies a CY20 P/E multiple of 22x adjusted EPS and a CY21 P/E multiple of 21x. Although relatively high as a result of near-term earnings pressures, we believe these multiples are reasonable in the context of the comparator stocks, despite the relatively low market capitalisation and implied lower liquidity. Based on our FY23 forecast, the CY22 implied P/E is 15.6x.

Exhibit 12: Comparator valuation summary

 

Share price (local)

Market cap (£m)

P/E (x)
CY20

P/E (x)
CY21

EV/EBITDA (x)
CY20

EV/EBITDA (x)
CY21

Dividend yield (%)

Incentive

 

 

 

 

 

 

 

Edenred

46

10275.9

42.6

35.4

21.9

19.1

1.4

Sodexo

73

9570.5

38.1

23.5

14.3

11.6

0.0

Incentive average

40.3

29.5

18.1

15.3

0.7

FleetCor Technologies

276

17095.8

25.2

21.7

21.2

17.7

N/A

Green Dot

56

2231.2

27.6

24.4

15.8

13.7

N/A

EML Payments

4

862.3

47.4

35.9

14.9

9.9

N/A

Euronet Worldwide

138

5367.9

55.7

N/A

27.3

15.0

N/A

Prepaid card and payment services average

39.0

27.3

19.8

14.1

N/A

Total group average

39.4

28.2

19.2

14.5

0.7

Appreciate Group

30

55.9

11.3

10.8

8.1

7.2

4.0

Source: Edison estimates for Appreciate Group. Note: Earnings data on a calendar year basis, using adjusted EPS. Appreciate’s enterprise value (EV) excludes voucher provision balance from cash. Prices at 16 December 2020.

DCF value of 60p

Our modified DCF valuation differs from a standard DCF in that we include the interest earned on segregated customer cash balances (but not on the group cash balances), recognising this is an integral part of the returns the company generates. The customer cash is excluded from the overall valuation and we also exclude the voucher provisions balance, as this will eventually flow out in settlement of vouchers that have been issued but not yet redeemed. Our key assumptions have been held constant for an extended period, including an assumed 10% discount rate and 10x terminal multiple. Beyond the forecast period (now extended to FY23 from FY22) we use a two-stage growth assumption to allow for the potential medium-term benefits of the strategic business plan investment. For the first two years (previously three) beyond the forecast period (years four and five) we assume 10% growth in underlying free cash flows, followed by a reversion to a long-term growth rate of 5% up until year 10. We continue to assume an eventual ‘normalisation’ in interest rates and assume a stepped increase in market deposit rates to 1.5% in FY24 (was FY23) and 3% from FY25 (was FY24) and, as noted above, we deduct upfront from the DCF valuation the amount of voucher provisions (£30.2m at end-FY20) on the basis that the matching cash is only temporarily available to the group, albeit on a revolving basis. As a result, the expected further decline in the voucher provision balance, and the negative impact on near-term operating cash flow, has no effect on our DCF valuation.

Exhibit 13: Financial summary

Year end 31 March

£'000s

2015

2016

2017

2018

2019

2020

2021

2022

2023

PROFIT & LOSS

Consumer billings

196,796

208,352

216,771

232,635

232,096

222,207

194,416

192,532

197,463

Corporate billings

176,091

176,679

187,741

180,151

194,805

197,650

166,500

199,800

219,720

Total Billings

 

372,887

385,031

404,512

412,786

426,901

419,857

360,916

392,332

417,183

Revenue

 

85,769

100,556

119,637

111,054

110,394

112,724

93,461

100,995

107,429

Cost of sales

(59,193)

(72,030)

(89,944)

(79,628)

(79,117)

(79,778)

(67,760)

(72,211)

(76,275)

Gross profit

26,576

28,526

29,693

31,426

31,277

32,946

25,702

28,784

31,155

Gross margin as % billings

7.1%

7.4%

7.3%

7.6%

7.3%

7.8%

7.1%

7.3%

7.5%

Distribution costs

(2,761)

(2,909)

(2,940)

(3,002)

(2,934)

(2,838)

(1,805)

(1,765)

(1,669)

Administrative expenses excluding depreciation & amortisation

(14,914)

(15,176)

(16,348)

(15,702)

(16,007)

(18,377)

(17,887)

(17,850)

(18,052)

EBITDA

 

8,901

10,441

10,405

12,722

12,336

11,731

6,010

9,168

11,434

Depreciation & amortisation

0

0

0

(1,405)

(1,394)

(1,659)

(2,113)

(2,350)

(2,350)

Operating profit before exceptional items

 

8,901

10,441

10,405

11,317

10,942

10,072

3,897

6,818

9,084

Exceptional items

0

0

0

0

(1,210)

(3,676)

(989)

0

0

Operating profit

 

8,901

10,441

10,405

11,317

9,732

6,396

2,908

6,818

9,084

Net Interest

1,245

1,457

1,470

1,270

1,572

1,304

263

296

322

Profit Before Tax & exceptional items

 

10,146

11,898

11,875

12,587

12,514

11,376

4,161

7,114

9,406

Profit before tax

 

10,146

11,898

11,875

12,587

11,304

7,700

3,172

7,114

9,406

Tax

(2,284)

(2,177)

(2,361)

(2,398)

(2,422)

(2,189)

(603)

(1,352)

(1,787)

Profit after tax (IFRS)

 

7,862

9,721

9,514

10,189

8,882

5,511

2,569

5,762

7,619

Average number of shares (m)

182.5

183.7

183.9

185.3

186.0

186.3

186.3

186.3

186.3

Fully diluted average number of shares (m)

184.7

187.2

187.2

185.9

186.1

186.3

186.3

186.3

186.3

Basic EPS - IFRS (p)

 

4.3

5.3

5.2

5.5

4.8

3.0

1.4

3.1

4.1

Fully diluted EPS - IFRS (p)

 

4.3

5.2

5.1

5.5

4.8

3.0

1.4

3.1

4.1

Adjusted EPS (excludes exceptional/nonrecurring items)

 

4.3

5.2

5.1

5.5

4.8

4.9

1.9

3.1

4.1

Dividend per share (p)

2.40

2.75

2.90

3.05

3.20

0.00

1.20

1.50

2.10

Pay-out ratio (Adj. earnings)

55.7%

52.0%

57.1%

55.5%

67.0%

0.0%

62.1%

48.5%

51.4%

BALANCE SHEET

Non-current assets

 

13,924

13,749

14,399

14,868

12,606

16,224

18,974

19,924

20,874

Goodwill

1,320

1,320

2,202

2,185

2,168

800

800

800

800

Other intangible assets

3,168

3,036

2,682

2,278

2,295

4,757

7,017

7,767

8,517

Property, plant, & equipment

8,143

8,003

7,688

7,684

6,216

2,662

2,942

3,142

3,342

Retirement benefit asset

1,293

1,390

1,827

2,721

1,927

4,206

4,206

4,206

4,206

Other non-current assets

0

0

0

0

0

3,799

4,009

4,009

4,009

Current assets

 

107,095

119,496

129,322

142,423

153,475

148,041

130,760

138,187

147,636

Inventories

3,186

2,182

2,632

3,808

4,574

2,840

2,000

2,500

2,500

Trade & other receivables

11,309

8,860

9,236

10,917

12,582

9,457

9,023

9,808

10,430

Monies held in trust

65,728

75,219

83,018

86,992

99,251

102,693

96,131

106,196

116,078

Cash & equivalents

26,333

32,735

34,236

40,311

36,868

29,632

21,776

17,852

16,798

Other current assets

539

500

200

395

200

3,419

1,831

1,831

1,831

Current liabilities

 

(121,545)

(128,164)

(133,789)

(142,604)

(148,818)

(140,665)

(123,547)

(128,398)

(133,601)

Trade & other payables

(77,688)

(83,135)

(87,201)

(94,592)

(61,191)

(57,150)

(50,167)

(54,926)

(59,240)

Tax payable

(671)

(262)

(424)

0

(580)

0

0

0

0

Provisions

(43,186)

(44,767)

(46,164)

(48,012)

(58,286)

(53,802)

(46,644)

(45,548)

(45,530)

Non-current liabilities

 

(2,907)

(1,881)

(1,118)

(662)

(553)

(5,253)

(5,456)

(5,456)

(5,456)

Deferred tax liability

(273)

(181)

(194)

(662)

(553)

(1,121)

(1,011)

(1,011)

(1,011)

Retirement benefit obligation

(2,634)

(1,700)

(924)

0

0

0

0

0

0

Lease liabilities

(4,132)

(4,445)

(4,445)

(4,445)

Net assets

 

(3,433)

3,200

8,814

14,025

16,710

18,347

20,731

24,257

29,453

Minorities

0

0

0

0

0

0

0

0

0

Shareholders' equity

 

(3,433)

3,200

8,814

14,025

16,710

18,347

20,731

24,257

29,453

CASH FLOW

Operating Cash Flow

14,106

12,184

9,603

10,540

6,874

6,866

(4,287)

2,668

6,134

Net interest

1,176

1,339

1,539

1,267

1,497

1,640

263

296

322

Tax paid

(2,132)

(2,490)

(2,258)

(2,537)

(1,576)

(2,864)

(2,184)

(1,352)

(1,787)

Capex

(597)

(1,126)

(717)

(1,020)

(1,152)

(5,030)

(4,619)

(3,300)

(3,300)

Acquisitions/disposals

41

52

(875)

1

0

1

3,047

0

0

Dividends paid

(4,198)

(4,380)

(5,052)

(5,370)

(5,668)

(5,963)

0

(2,236)

(2,423)

Other

0

0

305

0

345

419

(77)

0

0

Net cash flow

8,396

5,579

2,545

2,881

320

(4,931)

(7,856)

(3,924)

(1,054)

Opening net (debt)/cash

14,842

23,238

28,817

31,362

34,243

34,563

29,632

21,776

17,852

Closing net (debt)/cash

 

23,238

28,817

31,362

34,243

34,563

29,632

21,776

17,852

16,798

Overdraft

3,095

3,918

2,874

6,068

2,305

0

0

0

0

Closing net (debt)/cash as per balance sheet

 

26,333

32,735

34,236

40,311

36,868

29,632

21,776

17,852

16,798

Source: Appreciate Group, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Appreciate Group and prepared and issued by Edison, in consideration of a fee payable by Appreciate Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for ‘wholesale clients’ within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are ‘wholesale clients’ for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a ‘personalised service’ and, to the extent that it contains any financial advice, is intended only as a ‘class service’ provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘FPO’) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the ‘publishers' exclusion’ from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Appreciate Group and prepared and issued by Edison, in consideration of a fee payable by Appreciate Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for ‘wholesale clients’ within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are ‘wholesale clients’ for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a ‘personalised service’ and, to the extent that it contains any financial advice, is intended only as a ‘class service’ provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘FPO’) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the ‘publishers' exclusion’ from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues