REG - ME Group Intl. - Interim Results
12/07/2023 07:00
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RNS Number : 7127F ME Group International PLC 12 July 2023
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310.Upon the publication
of this announcement, this inside information is now considered to be in the
public domain.
12 July 2023
ME GROUP INTERNATIONAL PLC
("ME Group" or "the Group" or "the Company")
Interim Results for the six months ended 30 April 2023
Strong first-half performance across all business areas, underpinned by
consumer demand and diversification of services
ME Group International plc (LSE: MEGP), the instant-service equipment group,
announces its results for the six months ended 30 April 2023 (the "Period").
KEY FINANCIALS Reported
Six months ended Six months ended Change
30 April 2023
30 April 2022
Revenue £143.8m £115.3m +24.7%
EBITDA(1) £46.1m £40.2m +14.7%
Profit before tax £27.2m £19.9m +36.7%
Profit after tax £20.4m £16.4m +24.4%
Cash generated from operations £36.8m £29.8m +23.5%
Gross cash(2) £113.1m £95.8m +18.1%
Net cash(2) £24.4m £42.2m -42.1%
Earnings per share (diluted) 5.34p 4.35p +22.8%
Dividends:
- Interim Dividend per ordinary share 2.97p 2.60p
- Special Dividend per ordinary share - 6.50p
Total dividend per ordinary share 2.97p 9.10p -67.4%
( )( )( )
(1 ) EBITDA is profit before depreciation, amortisation, other net gains
and finance cost and income.
(2 ) Refer to note 9 for the reconciliation of net cash to cash and cash
equivalents per the financial statements. The comparative figures for net
cash, and gross cash, have been restated by £(1) million to reflect a change
in accounting policy which reclassified certain restricted deposits from cash
to debtors. This ensures comparability with the current period balances.
H1 HIGHLIGHTS
· Strong financial performance, with revenue up 24.7% and profit before
tax up 36.7%, driven by progress across all of the Group's key business areas
- photobooth, laundry and digital printing services - and in all of its 19
operating markets.
· Photo.ME revenue was up 25.4% to £83.9 million, driven by demand for
photo ID and increased activity across all territories, particularly
Continental Europe and Asia Pacific.
· Wash.ME revenue was up 37.0% to £37.8 million which was reflected in
the growth of the Group's laundry estate - a key focus of investment.
Revolution laundry units in operation grew 15.8% and represented 11.5% of
total group vending estate - the Group installed new machines at a rate of
50-60 per month in the Period.
· Print.ME revenue up 11.5% at 5.8 million with 183 new kiosks were
deployed in France during the Period.
· Food.ME revenue contribution was 4.5% of Group revenue, up 106.5% to
£6.4m (H1 2022: £3.1 million).
OUTLOOK
· Continued focus on the Group's five-year growth strategy to support
the development of each principal business area, including M&A activity
where the Group has an active pipeline of opportunities, to drive sustainable
revenue and profit performance.
· Rollout of next-generation multi-service photobooths is underway
and the Group is focused on deploying these across its key territories. The
Group aims to install between 1,000 and 1,500 machines in France by the end of
October 2023.
· Sustained pace of rollout for Revolution laundry units at between
50-60 per month, as the Group continues to expand its laundry machine estate
and deploy new laundry formats, including compact and energy-saving models.
· Continued focus on developing Feed.ME business area to accelerate
deployment of the Group's new pizza vending machine in France as well as the
extension of fresh fruit juice vending equipment presence in Japan.
· Return to the FTSE 250 index post-period end was a momentous
milestone for the Company, supported by the delivery of its diversification
growth strategy.
· As previously reported, the Group has continued to see positive
trading momentum across its operations. Consequently, the Board expects that
results for FY 2023 will be in line with recently revised market
expectations(*), subject to any changes to the broader macroeconomic
environment.
*Current market expectations are revenue between £300 million and £320
million, EBITDA between £100 million and £110 million and profit before tax
between £64 million and £67 million
Serge Crasnianski, CEO & Deputy Chairman, commented:
"The Group has achieved an extremely strong first-half performance across its
key business areas and in all of its 19 operating markets, which delivered
significant growth in revenue, EBITDA and profit before tax in the Period. As
a result, the Board increased its outlook for the current financial year FY
2023 in early June.
"ME Group is a high-potential business that continues to offer growth
opportunities in existing and new geographic markets. We have a dominant
market position in most of the markets in which we operate and our long-term
customer contracts provide us with good predictability and visibility on
revenue streams. Our operations are highly cash-generative and these cash
flows are used to fund growth through product innovation and expansion, and
allow us to deliver value to shareholders through growth and dividends.
Reflecting our solid business model and continued strategic progress, ME Group
has re-entered the FTSE 250 Index.
"Looking ahead, the Board remains confident in the Group's growth strategy and
strong financial position which provides us with a platform to fund future
growth opportunities."
ENQUIRIES:
ME Group International plc +44 (0) 1372 453 399
Serge Crasnianski, CEO
Stéphane Gibon, CFO
Hudson Sandler +44 (0) 20 7796 4133
Wendy Baker / Nick Moore / Ben Wilson me-group@hudsonsandler.com (mailto:me-group@hudsonsandler.com)
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 19 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
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 the Group. 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 more than 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 (http://www.me-group.com)
CHAIRMAN'S STATEMENT
The Group is pleased to announce it has delivered another strong performance
during the Period, across its key business areas and its key operating
markets. Consumer demand and activity levels have continued to be strong,
particularly for official photo ID and laundry services across all
territories, with notable growth in the Asia Pacific region where countries
such Japan had pandemic restrictions eased during the Period.
Driven by strong trading through the first half of the year, as reported in
the Group's trading update on
1 June, the Board significantly increased its revenue, EBITDA and Profit
before tax expectations for the FY 2023.
Business model and growth strategy
The Group continues to move from strength to strength, against a challenging
consumer backdrop, which we believe is an outcome of our proven and resilient
business model where we benefit from a dominant market position, with limited
or no competition, in many of the countries in which we operate.
Our growth strategy, which underpins each of our business areas and key
operating markets, is focused on diversifying our product portfolio, targeting
new markets, expanding the number of units in operation and increasing the
yield per unit. Our disciplined approach to minimising production and
operational costs underpinned this, enabling us to capitalise on operating
leverage.
During the Period we continued to make good progress against our five-year
strategy, which is based on five core pillars to support the development of
our principal business areas through:
1. Expansion into new geographic territories and continuing 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.
Central to delivery of our strategic growth plans are innovation and
diversification which continue to underpin our offering, providing the
platform to expand into new geographies, enter new market segments and to grow
and diversify our services. In July, the Group entered into a binding
conditional agreement to buy the automated photobooth business owned and
operated by two subsidiaries of FUJIFILM Corporation in Japan. The transaction
is expected to complete by the end of September 2023. The Group continues to
explore potential acquisitions and we have an active pipeline of
opportunities, of which we will provide any updates on in due course.
Dividends
As previously announced, it is the Group's policy that we will continue to
seek to pay annual dividends in excess of 55% of 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).
Special dividend
On 20 April 2023, the Group was pleased to announce the additional return of
£2,268,910 to shareholders by way of a special dividend of 0.6 pence per
ordinary share in respect of the 12 months ended 31 October 2022. Following
the announcement of its Annual Results, the Board considered the strong
financial performance from FY 2022 as well as immediate capital requirements
and concluded that a one-off special dividend was an appropriate way to return
excess capital to shareholders. The special dividend was paid on May 2023.
Interim dividend
The Board is declaring an interim dividend of 2.97 pence per Ordinary Share
(H1 2022: 2.60 pence per Ordinary Share). The dividend will be paid on 23
November 2023 to shareholders on the register on 3 November 2023. The
ex-dividend date will be 2 November 2023.
Inclusion in the FTSE 250 Index
We were delighted that the latest quarterly review by FTSE Russell, the global
index provider, confirmed that ME Group met the requisite criteria and the
Company has once again been included as a constituent of the FTSE 250 Index,
with effect from the start of trading on 19 June 2023.
This is a momentous corporate milestone for ME Group and demonstrates the
journey that we have been on in recent years to evolve the Group through
technological innovation to expand and diversify our operations. This has
enabled the Group to bring evermore innovative automated self-service
solutions to consumers, delivered through an enhanced and more self-sufficient
customer experience every day.
I would like to thank my Board colleagues, the executive team, and every
employee across the Group for their continued dedication, commitment and hard
work, which has made this achievement possible.
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
(https://me-group.com/our-approach-and-kpis/) .
Looking ahead
The Group has made a very encouraging start to the current financial year,
with a strong first-half performance which resulted in the Board upgrading its
FY 2023 revenue, EBITDA and profit before tax expectations. This has been
achieved despite the ongoing global macro challenges that are impacting so
many sectors and markets.
Our core markets have continued to demonstrate strong levels of activity as
more consumers turn to ME Group for high quality and highly reliable instant
services, that offer diversity and convenience.
The Group remains highly cash generative with a strong financial and liquidity
position, providing us with the platform to fund future growth and M&A
opportunities.
We continue to make solid progress against our five-year growth strategy,
underpinned by our proven business model, further solidifying our market
leading position across our key business areas and operating markets. This
growth strategy will enable us to continue expanding our operations across
Photo.ME, Wash.ME, Print.ME and Feed.ME.
Notwithstanding any major changes to the macroeconomic backdrop, the Board
expects the Group to achieve its FY 2023 expectations, as updated in the
Trading Update issued on 1 June 2023, of revenue between £300 million and
£320 million, EBITDA between £100 million and £110 million and profit
before tax between £64 million and £67 million.
Sir John Lewis OBE
Non-executive Chairman
11 July 2023
CHIEF EXECUTIVE'S BUSINESS AND FINANCIAL REVIEW
Financial performance
Reported revenue for the six months ended 30 April 2023 was £143.8 million,
an increase of 24.7% compared with the six months ended 30 April 2022 ("H1
2022"). This was driven by a strong performance across all of the Group's key
business areas as well as its 19 operating markets, and through a combination
of a higher consumer demand for the Group's instant-service machines and, to a
lesser extent, the company-wide pricing implemented during FY2022.
The performance by geography saw revenue for Continental Europe increase by
23.5% to £93.4 million and operating profit increase by 23.5% to £21.0
million. In the UK & Republic of Ireland, revenue was up 31.7% to
£26.2 million and operating profit was up by 33.3% to £5.6 million. Revenue
for Asia Pacific increased by 22.2% to £24.2 million driven by a continued
recovery in photobooth activity across Japan and China.
Our photobooth business (Photo.ME) performed well in the Period, benefitting
from increased demand for photo ID across the Group's key markets, with
revenue up 25.4% to £ 83.9 million whilst EBITDA increased to £29.7 million.
Our laundry operations (Wash.ME) continued to perform strongly, with total
laundry revenue up 37.0% at £37.8 million whilst EBITDA increased to £18.3
million. Revolution laundry operations also showed strong growth with revenue
up 37.5% at £34.8 million.
Print.ME also demonstrated a good performance, with revenue up 11.5% at £5.8
million, driven predominantly by activity in France. This was supported by
continued investment in new machines to upgrade the existing estate as well as
expand into new locations. The Group plans to deploy a total of 2,500 new
digital kiosks by October 2025.
Reported EBITDA(1) increased by 14.7% to £46.1 million (H1 2022: £40.2
million), which delivered an EBITDA margin of 32.1% (H1 2022: 35.0%). In H1
2022, EBITDA was positively impacted by the disposal of an office building for
£7.1 million, which was included in administrative expenses.
Reported profit before tax(2) was up 36.7% at £27.2 million (H1 2022: £19.9
million). Profit after tax increased by 24.4% to £20.4 million (H1 2022:
£16.4 million).
The Group remains cash flow positive, with a 23.5% increase in cash generated
from operations to £36.8 million during the Period (H1 2022: £29.8 million).
We continue to invest across our operations, in all business areas, and remain
focused on delivering our five-year growth strategy. As a result, capital
expenditure in the Period was up at £21.1 million (H1 2022: £14.4 million).
Funding and liquidity
As at 30 April 2023, the Group had gross cash of £113.1 million, up 18.1%
compared with H1 2022. The Net cash balance reduced 42.1% to £24.4 million
(H1 2022: £42.2m), reflecting an increase in borrowing compared to April
2022. During the last 12 months, the Group has returned £45.3 million to
shareholders by way of dividend payments. The Group continues to comply with
its banking covenants and remains in a strong financial and liquidity position
to fund its future growth strategy.
Overview of principal business areas
Below is an overview of the Group's four principal business areas which are
Photo.ME, Wash.ME, Print.ME and Feed.ME. In addition, the Group operates other
vending equipment.
Photo.ME Photobooths and integrated biometric identification
solutions
Six months ended Six months ended
30 April 2023
30 April 2022
Number of units in operation 27,275 27,617
Percentage of total group vending estate (number of units) 62.3% 63.7%
Revenue £83.9m £66.9m
Capex £1.3m £1.4m
EBITDA £29.7m £23.5m
Photobooth operations continues to be our largest business area by number of
units, revenue and EBITDA contribution.
During the Period, revenue increased by 25.4% to £83.9 million (H1 2022:
£66.9 million), driven by an increase in activity across all the Group's key
territories, particularly Europe and Asia, as demand for photo ID continued to
grow. The average revenue per machine was up significantly at £6,152 (H1
2022: £4,941) as operations benefitted from an increase in the cost per use
implemented across most of the portfolio in FY 2022 alongside an increase in
consumer activity levels compared with H1 2022.
Capex remained broadly flat at £1.3 million (H1 2022: £1.4 million). This
was largely due to a slower than anticipated rollout of next-generation
photobooths explained below.
EBITDA increased to £29.7 million, driven by the strong performance due to
the higher consumer demand, and it represented 64.4% of Group EBITDA. EBITDA
was 35.4% of the revenue during the Period.
At 30 April 2023, the number of photobooths in operation was slightly down
by 1.2% at 27,275 units (H1 2022: 27,617), mainly due to the removal of
unprofitable machines which can be relocated to more profitable sites.
Photo.ME operations accounted for 62.3% of the Group's total vending units.
Strategic progress
Our photobooths are designed to meet the needs of consumers who require photo
ID for official documents such as passports and driving licences. The Group
has a market leading proposition through its estate of photobooths, offering a
quasi-compulsory service, and has established pricing power. We ensure that
the services offered through our photobooth operations maintain relevance
through our dedicated approach to continuous innovation with the aim of
continuing to expand the services available.
Deployment of our next-generation photobooth remains a key focus and part of
the Group's five-year growth strategy. The Group plans to deploy up to 10,000
next-generation photobooth units which is now expected to be completed by the
end of FY 2025. While deployment of the machines began in the Period as
scheduled, supplier delays affected delivery so the rollout has been slower
than initially expected. Consequently, the Group now expects to install circa
1,000 next-generation photobooths in France by the end of FY 2023. 3,000
next generation photobooths will be deployed in 2024 as well as in 2025
This photobooth is compliant with the Group's digital platform. Greater
functionality enhances the consumer experience and provides additional
diversified services, such as fun features. The Group's in-house R&D team
is continuing to develop new functionalities including biometric
identification solutions - fingerprint and eye scanning - as well as printing
capabilities similarly offered through our digital kiosks. Furthermore,
anti-spoofing patents that we have in place are enabling the Group to make
rapid and sustained progress on new ICAO and ISO biometric standards which we
expect will become the norm by 2025.
Wash.ME Unattended Revolution laundry services and
launderettes
Six months ended Six months ended
30 April 2023
30 April 2022
Total Laundry units deployed (owned, sold and acquisitions) 6,239 5,565
Total revenue from Laundry operations(1) £37.8m £27.6m
Total Laundry EBITDA £18.3m £13.2m
Revolution
(excludes Launderettes and B2B):
- Number of Revolutions in operation 5,048 4,360
- Percentage of total group vending estate (number of units) 11.5% 10.1%
- Total revenue from Revolutions £34.8m £25.3m
- Revolution capex £10.8m £8.5m
( )
(1) In the 'Interim Results for the Six Months Ended 2022' issued on 19th July
2022, total revenue from laundry operations was incorrectly reported as £25.9
million, as revenue from sales of laundry machines of £1.8m were omitted in
error. The correct figure of £27.6 million is now shown in the comparative
column in the above table. Total reported revenue was unaffected.
( )
Total revenue from our laundry operations grew by 37.0% to £37.8 million,
driven by an increase in the number of Revolution units in operation
alongside a continuation of strong consumer demand. At 30 April 2023, the
total number of laundry units deployed (owned, sold and acquired) was up 12.1%
at 6,239.
Total laundry EBITDA increased to £18.3 million and contributed 39.7% to
Group EBITDA. EBITDA was 48% of revenue in the Period.
Continued growth of Revolution laundry operations
Revolution revenue increased by 37.5% to £34.8 million, which represented
24.2% of total Group revenue in the Period. The average revenue per machine
(excluding VAT) increased to £15,226 per year (H1 2022: £12,884 per year).
Revolution capex increased to £10.8 million (H1 2022: £8.5 million)
reflecting an uptick in production and installation costs, along with the
redeployment of selected machines to more profitablelocations.Additionally,
the Group has entered a period of machine refurbishment and maintenance, the
first since laundry operations were launched in 2012.The Group remains focused
on expanding its laundry estate, led by the continued deployment of Revolution
units. The number of Revolution units in operation grew by 15.8% to 5,048. In
line with the Group's strategy, Revolution laundry machines once again
increased as a proportion of the total estate and at the Period end accounted
for 11.5% of the Group's total estate by number of machines (H1 2022: 10.1%).
Strategic progress
The rate of deployment of Revolution laundry units accelerated to 50-60
machines per month as we continue to expand our presence in the self-service
laundry market.
We continue to rollout our newest laundry machine formats - Revolution Compact
V3 which offers a more environmentally friendly solution and Revolution Flex
which offers a compact format. These new machines will further diversify our
laundry offering for the benefit of consumers, whilst enabling the Group to
save on costs as well as water and energy consumption.
In June, we started to roll out a new consumer App. This digital tool aims to
improve the user experience whilst enabling the Group to better analyse and
understand its end consumers in terms of usage and expectations. The App will
help to further build consumer loyalty and is expected to boost performance
for Wash.ME. The first version was launched in June and includes a 'Revolution
laundry finder' function which enables consumers to easily locate their
nearest Revolution laundry machines. The App also provides full details of the
services available and it rewards consumers through an effective loyalty
programme offering promotions. A full roadmap of enhanced App features has
been planned.
Print.ME High-quality digital printing service
Six months ended Six months ended
30 April 2023
30 April 2022
Number of units in operation 4,740 4,848
Percentage of total group vending estate (number of units) 10.8% 11.2%
Revenue £5.8m £5.2m
Capex £1.3m £0.1m
EBITDA £2.0m £1.6m
Total revenue increased by 11.5% to £5.8 million (H1 2022: £5.2
million) as the Group benefitted from the replacement of 413 old machines
with new digital kiosks.
Print.ME revenue represented 4.0% of Group revenue. EBITDA reduced year on
year to £2.0 million and contributed 4.3% of Group EBITDA in the Period.
The average revenue per machine (excluding VAT) was £2,447 per year (H1 2022:
£2,172 per year). EBITDA was 34.5% of the revenue in the Period.
Capex during the Period was £1.3 million, a significant increase on the
prior year (H1 2022: £0.1 million), as the Group progressed the rollout of
new kiosk installations as well as replacing some of its existing machines,
the benefit of which is expected to be evident in FY 2023.
At 30 April 2023 the Group had 4,740 kiosks in operation, down 2.2% compared
with the prior year (H1 2022: 4,848). Kiosks accounted for 10.8% of the total
number of vending units in operation.
Strategic progress
Over recent years the Group has mostly focused investment in the Photo.Me,
Wash.ME and Feed.ME businesses, nevertheless, there continues to be demand for
high-quality printing services. This is reflected in the Group's stronger
revenue performance.
The Group continues to consider opportunities to further extend digital kiosk
services offered through its instant-service machine network and remains
focused on identifying partnership opportunities within existing territories.
The Group is currently completing the installation of 200 kiosks as part of a
major new contract worth 12 million prints a year. Additionally, the Group
will continue to replace existing machines with new digital kiosks.
The next-generation photobooth discussed above will have similar
functionalities to the Group's digital printing kiosks, thereby expanding the
availability of this service to the consumer.
Feed.ME Vending equipment for the food service market
Our food vending equipment operations remain a key strategic focus for the
Group and an area where we believe there to be long-term growth opportunities
to meet growing demand. Operations are focused on two areas: i) self-service
fresh fruit juice equipment for the B2B market and (ii) pizza vending machines
targeted at the B2B hospitality market (restaurants, takeaways).
Revenue solely from the sale of equipment during the Period was £6.4 million
(H1 2022: £3.1 million) up 106.5% and contributed 4.5% to Group revenue.
During the Period, the Group sold approximately 20 machines per month.
Although the installation of pizza machines is not yet at the expected level,
the Group's orange juice business in Japan has started to recover post-COVID.
Strategic progress
Feed.ME remains a core strategic focus of expansion for the Group, albeit
progress was slower than expected due to technical adjustments to the Group's
new pizza vending machine. As a consequence, the Group has taken steps to
bring the manufacturing of the pizza vending equipment in-house during the
commercialisation phase, with the aim of increasing production to between 30
and 40 machines per month. This will ensure that these operations have the
support and oversight of our expert R&D team whilst also improving
quality, control and cost efficiencies.
In Japan, we have restarted our B2B fresh fruit juice vending operations
(which includes fulfilment of the oranges for the machines) aimed at end
markets such as the hospitality sector. The Group has c.200 machines operating
in Japan and plans to continue expanding its estate.
During the Period we began deploying omni-channel software across our pizza
vending estate in partnership with a third party. This new technology will
offer consumers an easy and integrated solution whilst providing the Group
with the capability to manage units remotely.
Other vending equipment
As at 30 April 2023, the Group operated 6,702 (30 April 2022: 6,460) other
vending units in addition to our four principal business areas. This included
2,399 children's rides (Amuse.ME), 3,385 photocopiers (Copy.ME) and 918 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 0.4% compared with the previous year and
represented 2.4% 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. Although the Group is not managed around product
lines, some commentary below relates to the performance of specific products
in the relevant geographies.
Vending units in operation
At 30 April 2023 At 30 April 2022
Number % of total Number % of total
of units estate of units estate
Continental Europe 25,604 58.4% 25,047 57.8%
UK & Republic of Ireland 6,586 15.0% 6,874 15.9%
Asia Pacific 11,621 26.5% 11,415 26.3%
Total 43,811 100% 43,336 100%
The total number of vending units in operation at 30 April 2023 increased
slightly by 1.1% to 43,811 compared with the prior year (H1 2022: 43,336),
mainly driven by the expansion of laundry operations.
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
Six months ended Six months ended
30 April 2023
30 April 2022
Continental Europe £93.4m £75.6m
UK & Republic of Ireland £26.2m £19.9m
Asia Pacific £24.2m £19.8m
Total £143.8m £115.3m
Operating profit by geographic region
Six months ended Six months ended
30 April 2023
30 April 2022
Continental Europe £21.0m £17.0m
UK & Republic of Ireland £5.6m £4.2m
Asia Pacific £3.3m £1.9m
Corporate costs £(2.3)m £(1.6)m
Total £27.6m £21.5m
Operating revenue evolution
The table below provides a detailed breakdown of operating revenue evolution
by geographic region and business area in H1 2023 vs H1 2022.
H1 2022
Nov 2022
to Apr 2023
CONTINENTAL EUROPE
Photo.ME 32.6%
Print.ME 14.8%
Wash.ME 31.6%
Other Vending Equipment 13.4%
Total 30.5%
UK & REPUBLIC OF IRELAND
Photo.ME 15.1%
Print.ME -67.9%
Wash.ME 50.9%
Other Vending Equipment 23.8%
Total 29.1%
ASIA PACIFIC
Photo.ME 14.6%
Print.ME -8.8%
Wash.ME 3.9%
Other Vending Equipment 96.3%
Total 22.1%
TOTAL
Photo.ME 25.2%
Print.ME 11.2%
Wash.ME 37.3%
Other Vending Equipment 52.4%
Total 28.6%
Continental Europe
Continental Europe is the Group's largest region by both number of machines
and contribution to Group revenue.
Revenue increased by 23.5% to £93.4 million driven in large part by a strong
performance in photobooth activity, as demand for photo ID continued to grow,
and laundry. In addition, the Group saw the benefit of the consumer price
increases introduced for photobooth operations during FY 2022, which were
implemented across France and Germany, moving the price from €6 to €8 and
€8 to €10 respectively.
Photo.ME and Wash.ME operating revenue significantly grew vs H1 2022, up 32.6%
and 31.6% respectively. Print.ME operating revenue increased by 14.8%. The
region contributed 65.0% of total Group revenue. Operating profit increased by
23.5% to £21.0 million.
As at 30 April 2023, there were 25,604 units in operation in the region, which
represented 58.4% of the Group's total vending estate.
UK & Republic of Ireland
Revenue in the region increased by 31.7% to £26.2 million and contributed
18.2% to Group revenue. Operating revenue from Photo.ME was up 15.1% This was
driven primarily by a very strong performance in photobooths with improved
demand for photo ID services for passports and official documents.
Wash.ME performed strongly, with operating revenue up 50.9%, reflecting the
ongoing expansion of the Group's laundry operations in the region. Revolution
units in operation in the region increased by 11.4% compared with H2 2022.
Print.ME was trialled in the UK and Ireland however, the Group decided to
remove the machines and transferred them to France where they were far more
profitable.
Other vending equipment, which was also severely impacted by restrictions
during the pandemic, saw a significant increase in operating revenue which was
up by up 23,,8%
Operating profit in the region increased by 33.3% to £5.6 million, driven by
the installation of Revolution laundry machines and photobooths performance.
As at 30 April 2023, there were 6,586 units in operation in the region, which
represents 15.0% of the Group's total vending estate.
Asia Pacific
Revenue in the region increased by 22.2% to £24.2 million, driven by a
continued recovery of key markets particularly in China and Japan which lifted
pandemic restrictions later than other territories.
Operating revenue for Photo.ME improved by 14.6% as the Group experienced
strong demand for photo ID across its Asia operations. There was an increase
in operating revenue for Wash.ME, up 3.9%, while operating revenue for other
vending equipment improved significantly, up 96.3%.
Operating profit in the region was £3.3 million, an increase of 73.7% which
reflects the continued recovery of activity.
The Group continued to successfully expand its fresh fruit operations in Japan
with further machines installed.
As at 30 April 2023, there were 11,621 units in operation in the region, an
increase of 1.8%, representing 26.5% of the Group's total units in operation.
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
Global economic Economic growth has a major influence on consumer spending. The Group focuses on maintaining the characteristics and affordability of its
conditions
needs-driven products.
A sustained period of economic recession and a period of high inflation could
lead to a decrease in consumer expenditure in discretionary areas. 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, The Group hedges its exposure to currency fluctuations on transactions, as
and the Group's financial results could be adversely impacted by an increase relevant. However, by its nature, in the Board's opinion, it is very difficult
in the value of sterling relative to those currencies. 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 The Group has developed new systems that respond to this situation, leveraging
implement centralised image capture, for biometric passport and other 3D technology in ID security standards, and securely linking our booths to the
applications, or widen the acceptance of self-made or home-made photographs administration repositories. Solutions are in place
for official document applications, the Group's revenues and profits could be in France, Ireland, Germany, Switzerland and the UK; discussions are
affected. ongoing in Belgium and the Netherlands.
Furthermore, the Group also ensures that its ID products remain affordable and
of a high-quality.
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 Management teams constantly review demand in existing markets and potential
to grow in the long-term. 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 The Group regularly monitors the performance of its entire estate of machines.
continued growth of the laundry and food businesses and the successful New technology-enabled secure ID solutions are heavily trialled before launch
development of integrated secure ID solutions. 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 The Group's major key relationships are supported by medium-term contracts.
site-owners. The deterioration in the relationship with, or ultimately the The Group actively manages its site-owner relationships at all levels to
loss of, a key account would have an adverse, albeit contained, impact on the ensure a high quality of service.
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 The Group continues to monitor the situation where the main key accounts are
turnover. operating
To maintain its performance, the Group needs to have the ability to continue
trading in good conditions in France and the UK, taking into account the
situation in these two countries.
Operational
Nature of risk Description and impact Mitigation
Reliance on foreign manufacturers The Group sources most of its products from outside the UK. Consequently, the Extensive research is conducted into quality and ethics before the Group
Group is subject to risks associated with international trade. 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 The Board has decided to hold a strategic stock of paper, allowing for 6-9
supplier. The failure of this supplier could have a significant adverse impact months' worth of paper consumption, to allow enough time to put in place
on paper procurement. alternative solutions.
Reputation The Group's brands are key assets of the business. Failure to protect the The protection of the Group's brands in its core markets is sustained with
Group's reputation and brands could lead to a loss of trust and confidence. certain unique features. The appearance of the machine is subject to high
This could result in a decline in our customer base. 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 The Group continues to invest in its existing estate, to ensure that it
service quality services are of critical importance and that any major failure will affect remains contemporary, and in constant product innovation to meet customer
consumer confidence. needs.
The Group also has a programme in place to regularly train its technicians.
Technological
Nature of risk Description and impact Mitigation
Failure to keep 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 The Group undertakes an ongoing assessment of the risks and ensures that the
transferring these data directly to government databases. infrastructure meets the security requirements.
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
12 July 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 April 2023
Unaudited Unaudited Audited
six months to six months to 12 months to
30 April 30 April 31 October
2023 2022 2022
Notes £ '000 £ '000 £ '000
Revenue 3 143,822 115,261 259,780
Cost of Sales (100,301) (85,634) (178,377)
Gross Profit 43,521 29,627 81,403
Other Operating Income 123 159 7,916
Administrative Expenses (16,180) (8,268) (32,638)
Operating Profit 3 27,464 21,518 56,681
Other net gains / (losses) 4 191 (462) (1,176)
Finance Income 580 19 -
Finance Cost (1,050) (1,129) (2,151)
Profit before Tax 27,185 19,946 53,354
Total Tax Charge 5 (6,797) (3,514) (14,561)
Profit for the period 20,388 16,432 38,793
Other Comprehensive Income
Items that are or may subsequently be classified to Profit and Loss:
Exchange Differences Arising on Translation of Foreign Operations 1,195 120 829
Total Items that are or may subsequently be classified to profit and loss 1,195 120 829
Items that will not be classified to profit and loss:
Remeasurement gains in defined benefit obligations and other post-employment benefit obligations - - 1,151
Deferred tax on remeasurement gains - - (248)
Total Items that will not be classified to profit and loss - - 903
Other comprehensive income / (expense) for the year net of tax 1,195 120 1,732
Total Comprehensive income for the period 21,583 16,552 40,525
Profit for the Period Attributable to:
Owners of the Parent 20,388 16,432 38,793
Non-controlling interests - - -
20,388 16,432 38,793
Total comprehensive income attributable to:
Owners of the Parent 21,583 16,552 40,525
Non-controlling interests - - -
21,583 16,552 40,525
Earnings per Share
Basic Earnings per Share 7 5.39p 4,35p 10.26p
Diluted Earnings per Share 7 5.34p 4,35p 10.23p
All results derive from continuing operations.
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GROUP STATEMENT OF FINANCIAL POSITION
as at 30 April 2023
Unaudited Unaudited Audited
30 April 30 April 31 October
2023 2022 2022
(Restated) (Restated)
Notes £'000 £'000 £'000
Assets
Goodwill 9 16,420 19,272 16,320
Other intangible assets 9 15,569 14,088 16,434
Property, plant & equipment 9 104,780 88,337 101,090
Investment property 9 596 585 592
Investment in associates 21 21 21
Financial instruments held at FVTPL 10 5,437 1,501 5,239
Other receivables 3,013 2,773 2,959
Non-Current Assets 145,836 126,577 142,655
Inventories 11 33,595 21,737 25,491
Trade and other receivables 20,767 19,197 20,050
Current tax 3,227 3,273 2,990
Cash and cash equivalents 12 113,057 95,773 135,200
Current assets 170,646 139,980 183,731
Total assets 316,482 266,557 326,386
Equity
Share capital 1,890 1,889 1,889
Share premium 10,627 10,599 10,627
Translation reserve 9,689 7,785 8,494
Other reserves 3,096 1,781 2,665
Retained earnings 119,533 121,207 108,974
Total Shareholders' funds 144,835 143,261 132,649
Liabilities
Financial liabilities 12 67,726 45,523 82,429
Post-employment benefit obligations 3,884 4,888 3,850
Deferred tax liabilities 7,491 7,781 7,778
Non-current liabilities 79,101 58,192 94,057
Financial liabilities 12 34,140 21,665 35,657
Provisions 1,607 1,351 1,567
Current tax 4,727 668 10,208
Trade and other payables 52,072 41,400 52,248
Current liabilities 92,546 65,104 99,680
Total equity and liabilities 316,482 266,557 326,386
The accompanying notes form an integral part of these condensed consolidated
financial statements.
Refer to notes 9 and 12 for details of restatements.
GROUP CONDENSED STATEMENT OF CASH FLOWS
for the six months ended 30 April 2023
Unaudited Unaudited Audited
Six months to
Six months to
12 months to
30 April
30 April
31 October
2023
2022
2022
(Restated) (Restated)
Notes £'000 £'000 £'000
Cash flow from operating activities
Profit before tax 27,185 19,946 53,354
Finance costs 495 404 794
Interest of lease liabilities 555 725 1,357
Finance income (580) (19) -
Other (gains)/losses (191) 462 1,176
Operating profit 27,464 21,518 56,681
Amortisation and impairment of intangible assets 2,309 4,030 6,772
Depreciation and impairments of property, plant and equipment 16,358 14,620 28,791
Loss / (profit) on sale of property, plant and equipment 254 (7,277) (7,490)
Exchange differences (498) (348) (594)
Movements in provisions 77 (863) (809)
Other non cash items (131) (812) (433)
Changes in working capital:
Inventories (8,104) (3,279) (7,033)
Trade and other receivables (772) 3,333 2,295
Trade and other payables (176) (1,084) 9,764
Cash generated from operations 36,781 29,837 87,944
Interest paid (1,051) (1,129) (2,151)
Taxation paid (12,802) (8,839) (10,895)
Net cash generated from operating activities 22,928 19,869 74,898
Cash flows from investing activities
Acquisition of subsidiaries - (739) (739)
Proceeds from disposal of subsidiaries 209 152 152
Investment in intangible assets (1,372) (1,266) (2,486)
Proceeds from sale of intangible assets 41 - 71
Purchase of property, plant and equipment (19,767) (13,123) (32,670)
Proceeds from sale of property, plant and equipment 1,079 7,945 8,997
Investment in financial instruments - - (4,450)
Interest received 580 19 -
Net cash in investing activities (19,230) (7,012) (31,125)
Cash flows from financing activities
Issue of ordinary shares to equity shareholders 1 - 28
Acquisition of minority interest - (2,985) (2,985)
Repayment of principal of leases (2,707) (2,105) (6,196)
Repayment of borrowings (16,288) (9,862) (24,622)
Increase in borrowings 863 186 61,773
Dividends paid to owners of the Parent (9,829) - (35,497)
Net cash utilised in financing activities (27,960) (14,766) (7,499)
Net (decrease) / increase in cash and cash equivalents (24,262) (1,909) 36,274
Cash and cash equivalents at beginning of year 135,200 98,378 98,378
Exchange gain / (loss) on cash and cash equivalents 2,119 (696) 548
Cash and cash equivalents at end of year 12 113,057 95,773 135,200
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 April 2023
Share Share Other Translation Retained Attributable to Non-controlling Total
capital
premium
reserves
reserve
earnings
owners of the
interests
£'000
£'000
£'000
£'000
£'000
£'000
Parent
£'000
£'000
At 1 November 2021 1,889 10,599 1,781 7,654 106,051 127,974 1,720 129,694
Profit for the period - - - - 16,432 16,432 - 16,432
Other comprehensive
(expense)/income:
Exchange differences - - - 131 - 131 (11) 120
Total other comprehensive - - - 131 - 131 (11) 120
(expense) / income
Total comprehensive - - - 131 16,432 16,563 (11) 16,552
(expense) / income
Transactions with owners
of the Parent:
Acquisition of minority - - - - (1,276) (1,276) (1,709) (2,985)
Total transactions with owners of the Parent - - - - (1,276) (1,276) (1,709) (2,985)
At 30 April 2022 1,889 10,599 1,781 7,785 121,207 143,261 - 143,261
Share Share Other Translation Retained Total
capital
premium
reserves
reserve
earnings
£'000
£'000
£'000
£'000
£'000 £'000
At 1 November 2022 1,889 10,627 2,665 8,494 108,974 132,649
Profit for the period - - - - 20,388 20,388
Other comprehensive
(expense)/income:
Exchange differences - - - 1,195 - 1,195
Total other comprehensive (expense) / income - - - 1,195 - 1,195
Total comprehensive - - - 1,195 20,388 21,583
(expense) / income
Transactions with owners
of the Parent:
Shares issued in the period 1 - - - - 1
Share options - 431 - - 431
Dividends - - - - (9,829) (9,829)
Acquisition of minority - - - - - -
Total transactions with 1 - 431 - (9,829) (9,397)
owners of the Parent
At 30 April 2023 1,890 10,627 3,096 9,689 119,533 144,835
The accompanying notes form an integral part of these condensed consolidated
financial statements
NOTES
1. General information and authorization of the Interim Report
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.
The condensed consolidated interim financial statements of Me Group
International plc (the "Company") for the six months ended 30 April 2023 ("the
Interim Report") were approved and authorised for issue by the Board of
Directors on 11 July 2023. These condensed consolidated interim financial
statements comprise the Company and its subsidiaries (together the "Group")
and are presented in pounds sterling, rounded to the nearest thousand.
2. Basis of preparation and accounting policies
The financial statements have been prepared in accordance with IAS 34. The
accounting policies applied are consistent with those that were applied in the
Company's consolidated financial statements for the 12 months ended 31 October
2022 and that are expected to be applied in its consolidated financial
statements for the year ended 31 October 2023.
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.
· Onerous Contracts - Cost of Fulfilling a Contract
(Amendments to IAS 37)
· Annual Improvements to IFRS Standards 2018-2020
· Property, Plant and Equipment: Proceeds before
Intended Use (Amendments to IAS 16)
· Reference to the Conceptual Framework (Amendments
to IFRS 3)
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
IFRS 17 Insurance Contracts 1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice 1 January 2023
Statement 2)
Definition of Accounting Estimate (Amendments to IAS 8) 1 January 2023
IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising 1 January 2023
from a Single Transaction
The condensed consolidated interim financial statements comprise the unaudited
financial information for the six months ended 30 April 2023. They do not
include all of the information and disclosures required for full annual
financial statements, and should be read in conjunction with the Group's
financial statements for the period ended 31 October 2022. The condensed
financial statements do not constitute statutory accounts within the meaning
of section 434 of the UK Companies Act 2006.
The consolidated financial statements of the Group as at and for the period
ended 31 October 2022 are available at www.me-group.com or upon request from
the Company's registered office at Unit 3B, Blenheim Rd, Epsom, KT19 9AP,
Surrey.
The Interim Report is unaudited but has been reviewed by the auditors and
their report to the Company is included in the Interim Report. The comparative
figures for the financial period ended 31 October 2022 are not the Company's
statutory accounts for that financial year. Those accounts have been reported
on by the Company's auditors and delivered to the Registrar of Companies. The
report of the auditors (i) was unmodified, (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis without
modifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
Accounting policies and estimates
The accounting policies applied by the Group in this Interim Report are the
same as those applied in the Group's financial statements for the 12 months
period ended 31 October 2022.
Estimates and significant judgements
The preparation of the condensed consolidated financial information requires
management to make estimates and assumptions that affect the reported amounts
of revenue, expenses, assets and liabilities and the disclosure of contingent
liabilities at the date of the condensed consolidated financial information.
Such estimates and assumptions are based on historical experience and various
other factors that are believed to be reasonable in the circumstances and
constitute management's best judgement at the date of the financial
statements. In future, actual experience may deviate from these estimates and
assumptions, which could affect the financial statements as the original
estimates and assumptions are modified, as appropriate, in the period in which
the circumstances change.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were in the same areas
as those that applied in the consolidated financial statements as at and for
the period ended 31 October 2022.
Use of non-GAAP profit measures
The Group measures performance using earnings before interest, tax,
depreciation and amortisation ("EBITDA"). EBITDA is a common measure used by a
number of companies, but is not defined in IFRS.
The Group measures cash on a net cash basis as explained in note 12.
Going Concern
The Annual Report for the period ended 31 October 2022 provided a full
description of the Group's business activities, its financial position, cash
flows, funding position and available facilities together with the factors
likely to affect its future development, performance and position. It also
detailed risks associated with the Group's business. This interim report
provides updated information on these subjects for the six months to 30 April
2023.
The Group has at the date of this Interim Report, sufficient financing
available for its estimated requirements for at least the next twelve months,
together with the proven ability to generate cash from its trading
performance. This provides the Directors with confidence that the Group is
well placed to manage its business risks successfully in the context of the
current financial conditions and the general outlook in the global economy.
After reviewing the Group's annual budgets, plans and financing arrangements,
the Directors consider that the Group has adequate resources to continue
operating for the foreseeable future. The board considers it appropriate to
adopt the going concern basis of accounting in preparing the interim financial
statements and has not identified any material uncertainties to the company's
ability to continue to do so over a period of at least twelve months from
their date of approval.
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.
Seasonality of operations
Historically, the second half of the financial year is seasonally the
strongest for the Group in terms of profits.
Segmental results are reported before intra-group transfer pricing charges.
Asia Continental United Corporate Total
Europe
Pacific Kingdom
& Ireland
Six months to 30 April 2023 £'000 £'000 £'000 £'000 £'000
Total revenue 24,235 96,130 26,172 - 146,537
Inter segment sales - (2,708) (7) - (2,715)
Revenue from external customers 24,235 93,422 26,165 - 143,822
EBITDA 5,794 33,322 9,126 (2,112) 46,130
Depreciation, amortisation and impairment (2,539) (12,363) (3,597) (167) (18,666)
Operating profit 3,255 20,959 5,529 (2,279) 27,464
Operating profit 27,465
Other gains 191
Finance income 580
Finance costs (1,050)
Profit before tax 27,185
Tax (6,797)
Profit for the period 20,388
Capital expenditure (excluding Right of Use assets) 4,000 13,953 2,817 369 21,139
Asia Continental United Kingdom
Pacific Europe & Ireland Corporate Total
Six months to 30 April 2022 £'000 £'000 £'000 £'000 £'000
Total revenue 19,793 80,597 19,866 - 120,256
Inter segment sales - (4,994) (2) - (4,996)
Revenue from external customers 19,793 75,603 19,864 - 115,261
EBITDA 4,531 29,262 7,532 (1,157) 40,168
Depreciation, amortisation and impairment (2,638) (12,266) (3,337) (409) (18,650)
Operating profit 1,893 16,996 4,195 (1,566) 21,518
Operating profit 21,518
Other losses (462)
Finance income 19
Finance costs (1,129)
Profit before tax 9,946
Tax (3,514)
Profit for the period 16,432
Capital expenditure (excluding Right of Use assets) 1,725 7,595 3,933 1,136 14,389
Asia Continental United Kingdom
Pacific Europe & Ireland Corporate Total
12 months to 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 -
s (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
Total revenue from external customers is analysed below:
Six months to Six months to 12 months to
30 April 30 April 31 October
2023 2022 2022
£'000 £'000 £'000
Total revenue from external customers:
Sales of equipment, spare parts & consumables 9,524 9,779 20,459
Sales of services 1,546 1,746 3,895
11,071 11,525 24,355
Vending revenue 132,751 103,736 235,425
Total revenue 143,822 115,261 259,780
There were no key customers in the period ended 30 April 2023 (2022: none).
4. 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.
Six months to Six months to 12 months to
30 April 30 April 31 October
2023 2022 2022
£'000 £'000 £'000
Other gains and losses
Gain/(loss) on disposal of subsidiary 57 (462) (459)
Fair value gain/(loss) on financial instrument held at FVTPL 111 - (330)
Loss on available for sale financial instruments - - (20)
Other gains/(losses) 23 - (367)
191 (462) (1,176)
Six months to 30 April 2023
The Group generated a profit on disposal of £57,000 from the disposal of its
Korean subsidiary Photo-Me Korea Company Limited, recognized in other gains in
the income statement.
Six months to 30 April 2022
The Group incurred a loss on disposal of £462,000 from the disposal of its
Spanish subsidiary La Wash Group, recognized in other losses in the income
statement.
5. Taxation
Six months to Six months to 12 months to
30 April 30 April 31 October
2023 2022 2022
£'000 £'000 £'000
Profit / (loss) before tax 27,185 19,946 53,354
Total taxation charge (6,797) (3,514) (14,561)
Effective tax rate 25.0% 17.6% 27.3%
The tax charge in the Group Income Statement is based on management's best
estimate of the full year effective tax rate based on expected 12 Months
profits to 31 October 2023.
The UK main rate of corporation tax increased from 19% to 25% on 1 April 2023.
The Group undertakes business in multiple tax jurisdictions.
6. Dividends paid and proposed
30 April 2023 31 October 2022
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 dividend
2021 approved at AGM held on 29 April 2022 - - 2.89 10,925
Interim dividend
2022 approved by the board on 18 July 2022 2.60 9,829 - -
2.60 9,829 9.39 35,497
Dividends Proposed
Final dividend
2022 approved at AGM held on 28 April 2023 3.00 11,345 - -
Special dividend
2022 approved by the board on 20 April 2023 0.60 2,269 - -
3.60 13,613 - -
The Board proposed a final dividend of 3.00p per ordinary share in respect of
the year ended 31 October 2022, which was approved by shareholders at the
Annual General Meeting held on 28 April 2023 and paid on 12 May 2023.
The Board proposed an additional, special dividend of 0.60p per ordinary share
in respect of the year ended 31 October 2022, which was approved by the Board
on 20 April 2023 and paid on 19 May 2023.
7. Earnings per share
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 8.
The earnings and weighted average number of shares used in the calculation of
earnings per share are set out in the table below:
Six months to Six months to 12 months to
30 April 30 April 31 October
2023 2022 2022
Basic earnings per share 5.39 4.35 10.26
Diluted earnings per share 5.34 4.35 10.23
Earnings available to shareholders (£'000) 20,388 16,432 38,793
Weighted average number of shares in issue in the period
- Basic ('000) 378,152 378,012 378,052
- Including dilutive share options ('000) 381,795 378,012 379,100
8. Share based payments
The Group grants share options to senior staff, including directors, allowing
them to purchase Ordinary shares of 0.5p each. As at 30 April 2023, the total
number of options granted and within their vesting period or available to
exercise was 11,723,030.
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.
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 charge for share-based payments in the six months to 30 April 2023 was
£431,000.
9. Non-current assets: Goodwill, other intangibles, property, plant and
equipment and investment property
Goodwill Other Property, plant Investment
intangible & equipment property
assets
£'000 £'000 £'000 £'000
Net book value at 1 November 2021 15,305 19,988 91,973 597
Exchange adjustment 159 (109) 1,092 10
Additions - photobooths & vending machines - - 27,205 -
Additions - other assets - 2,486 5,465 -
Additions - right of use assets - - 7,298 -
Additions - new subsidiaries 1,652 98 11 -
Transfers - - - -
Amortisation / Depreciation - (6,772) (32,219) (15)
(Impairment) / Reversal of impairment - - 3,443 -
Disposals at net book value - (71) (3,178) -
Net book value at 31 October 2022 17,116 15,620 101,090 592
Purchase price allocation adjustment (Note 13) (796) 814 - -
Net book value at 31 October 2022 (restated) 16,320 16,434 101,090 592
Exchange adjustment 100 182 1,537 12
Additions - photobooths & vending machines - - 16,926 -
Additions - other assets - 1,372 2,841 -
Additions - right of use assets - - - -
Additions - new subsidiaries - - - -
Transfers - (69) 69
Amortisation / Depreciation - (2,309) (16,319) (8)
(Impairment) / Reversal of impairment - - (31) -
Disposals at net book value - (41) (1,333) -
Net book value at 30 April 2023 16,420 15,569 104,780 596
10. 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 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 30 April 2023, 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 30 April
2023 the investment is valued at €5,127,000 (£4,648,000), being the
€5,000,000 principal plus accrued interest. In the absence of observable
relevant market data, the bond's issue price plus accrued interest 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 held by the Group.
At 30 April 2023 Fair Value
Loans and Through Total
receivables Profit & Loss
£'000 £'000 £'000
Assets per statement of financial position
Financial instruments held at FVTPL - 5,437 5,437
Financial assets - held at amortised cost:
Trade and other receivables 11,924 - 11,924
Cash and cash equivalents 113,057 - 113,057
124,981 5,437 130,418
Other financial Total
liabilities at
amortised cost
£'000 £'000
Liabilities per statement of financial position
Borrowings 88,649 88,649
Leases 13,216 13,216
Trade and other payables 52,072 52,072
153,937 153,937
At 30 April 2022 Fair Value
Loans and Through Total
receivables Profit & Loss (Restated)
(Restated)
£'000 £'000 £'000
Assets per statement of financial position
Financial instruments held at FVTPL - 1,501 1,501
Financial assets - held at amortised cost:
Trade and other receivables 18,423 - 18,423
Cash and cash equivalents 95,773 - 95,773
114,196 1,501 115,697
Other financial Total
liabilities at
amortised cost
£'000 £'000
Liabilities per statement of financial position
Borrowings 53,603 53,603
Leases 13,585 13,585
Trade and other payables 41,400 41,400
108,588 108,588
At 31 October 2022 Fair Value
Loans and Through Total
receivables Profit & Loss (Restated)
(Restated)
£'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 11,434 - 11,434
Cash and cash equivalents 135,200 - 135,200
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
11. Inventories
Unaudited Unaudited Audited
30 April 30 April 31 October
2023 2022 2022
£'000 £'000 £'000
Raw materials and consumables 24,884 15,857 18,774
Finished goods 8,711 5,880 6,717
33,595 21,737 25,491
At 30 April 2023 the Group held a high volume of spare parts and materials, in
preparation for upcoming machine upgrades and refurbishments. Inventory of new
machines also increased versus 30 April 2022 and 31 October 2022 levels.
12. Net cash
Unaudited Unaudited Audited
30 April 30 April 31 October
2023 2022 2022
(Restated) (Restated)
£'000 £'000 £'000
Cash and cash equivalents per statement of financial position 113,057 95,773 135,200
Non-current borrowings (59,836) (34,673) (72,365)
Current borrowings (28,813) (18,930) (29,799)
Net cash 24,408 42,170 33,036
At 30 April 2022 and 31 October 2022 certain restricted deposits were included
in net cash which have now been reclassified to other receivables. Comparative
figures have been restated to show net cash excluding the restricted deposits.
The value of restricted deposits reclassified out of net cash was £984,000 at
30 April 2022 and £985,000 at 31 October 2022. The value of restricted
deposits included in other receivables at 30 April 2023 was £985,000.The
restatement had no impact on opening retained earnings or prior period EPS.
Cash and cash equivalents per the 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.
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 instalments on loans and
other borrowings.
The table above, which is not currently required by IFRS, reconcile the
Group's net cash to the Group's statement of cash flows. Management believes
the presentation of the tables will be of assistance to shareholders.
13. IFRS3 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.
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 €929,000 (£814,000)
and reducing goodwill by the same amount (see note 9).
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 €255,000 (£223,000) in respect of Dreamakers' marketing
database; €190,000 (£166,000) in respect of contractual customer
relationships and order backlog; and €484,000 (£425,000) in respect of
brand related assets.
The balance of residual goodwill is €1,060,000 (£929,000).
A deferred tax liability of €21,000 (£18,000), in respect of the order
backlog intangible asset, has been recognised and reflected in the adjusted
goodwill value.
14. Changes to the composition of the Group
Disposal of Photo-Me Korea
On 30 November 2022 the group disposed of its South Korean subsidiary,
Photo-Me Korea Company Limited. This was for consideration of £209,000. The
group generated a profit of £57,000 which has been recognised in other gains
in the income statement.
15. Events after statement of financial position date
On 3 July 2023, the Group's Japanese subsidiary, ME Group Japan K.K. entered
into a binding conditional agreement to buy the automated-photobooth business
owned and operated by two subsidiaries of FUJIFILM Corporation in Japan.
The total transaction consideration is approximately £5.5 million (Japanese
Yen 996 million) and is capped at that amount but may reduce subject to an
adjustment mechanism under the binding conditional agreement. The Group
expects to fund the transaction by means of a new local loan facility on
commercially advantageous terms. Should this not be available, the Group will
fund the transaction from its existing cash resources. The Group believes that
the Transaction will complete by the end of September 2023
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY
FINANCIAL REPORT
We confirm that to the best of our knowledge:
· The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
· The Interim Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period and any changes in
the related party transactions described in the last annual report that could
do so.
By order of the Board
Sir John Lewis OBE (Non-executive Chairman)
Serge Crasnianski (Chief Executive Officer and Deputy Chairman)
12 July 2023
INDEPENDENT REVIEW REPORT
We have been engaged by Me Group International PLC ("the Company") to review
the financial information for the six months ended 30th April 2023 which
comprises the Group Condensed Statement of Comprehensive Income, the Group
Condensed Statement of Financial Position, the Group Condensed Statement of
Cash Flows and the Group Condensed Statement of Changes in Equity and the
related explanatory notes. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing
Practices Board and our Engagement Letter dated 5th July 2023. Our work has
been undertaken so that we might state to the Company those matters we are
required to state to them in an independent review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Responsibilities of directors
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', in
accordance with Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority which requires that the interim report
must be prepared and presented in a form consistent with that which will be
adopted in the company's annual accounts having regard to the accounting
standards applicable to such annual accounts.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Responsibilities of auditors
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed financial information in the interim report does
not give a true and fair view of the financial position of the Company as at
30th April 2023 and of its financial performance and its cash flows for the
six months then ended, in accordance with International Accounting Standard
34, 'Interim Financial Reporting and Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Signed:
Mazars LLP
Chartered Accountants
30 Old Bailey
London
EC4M 7AU
Date: 12 July 2023
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