APP.L Regulatory News (APP)

29 April 2021

Appreciate Group plc

Year-end trading update

Resilient full year performance, in line with market expectations

Appreciate Group plc (the 'Group'), the UK's leading multi-retailer redemption product provider to corporate and consumer markets, today provides an update on its full year performance for the year ended 31 March 2021.

Highlights

· Results for the year in line with market expectations1

· A resilient second half performance reflects strong Corporate demand, increased digital sales and previous restructuring actions, mitigating COVID impacts

· This excludes c.£3.0m of non-recurring restructuring costs including the wind down of hamper production and the Republic of Ireland business, of which at least £0.6m is expected to be classified as exceptional costs

· Year‐end free cash of £32.9m (excluding funds required to be held in trust) (2020: £29.6m)

· Total Group billings, including free school meals initiative, of £406.5m (2020: £419.9m)

· Underlying billings (which includes Corporate and Highstreetvouchers.com (HSV) only) continued to stabilise following the improvements seen since the initial impact of the pandemic

o Underlying billings down 11.2% in Q4 2021 compared to the same period last year

o Underlying billings for the year were down by 8.0% to £187.5m, from £203.8m in 2020

\* Total billings when free school meals added to Corporate and HSV for 2021 are £210.5m

1 Current range of analyst expectations for FY 2021 Profit Before Tax are £4.1m to £4.8m.

Lockdown impact on customers

· As stated in the Q3 Trading Update on 12 January 2021, we continue to see a delay in spending patterns whilst customers had fewer options to redeem their products in stores. This has led to a greater level of deferred profit, equating to c.£3m. We expect this delayed spend to come through in the new financial year as lockdown restrictions ease.

· The Christmas Savings' order book is predicted to be c.11% lower, having been held back by COVID-19 restrictions impacting face-to-face agent activity. Unspent paper vouchers are £6.4m higher compared to last year due to shopping restrictions and it would appear some customers intend to use them towards Christmas 2021, rather than starting a new savings plan. A number of initiatives are underway to recruit Christmas savings' customers and incentivise agents.

Continued momentum in digital

· The accelerated digitalisation of the business has helped mitigate the effects of the pandemic. Digital billings were up more than five-fold in Q4 to £19.2m (2020: £3.5m)

· Overall digital billings increased 286% to £68.4m (2020: £17.7m) during the year, building on the four-fold rise in the important Q3 peak trading period.

· Progress in the transition away from paper continues, with billings down 46% year on year, partially driven by the impact of lockdown.

Strategic progress

Significant progress was made over the last year in building the robust and scalable business model that will position the Group well for future sustainable growth.

· The Group is now fully focused on growing the core, more profitable business having disposed of, or withdrawn from, hamper production, contract packing, our operations in the Republic of Ireland, and the brand engagement agency, FMI.

· The next phase of the Enterprise Resource Planning (ERP) programme remains on track to be delivered in the summer; with the following phase due to be delivered in the second half of the financial year. This is a cornerstone in the Group's plans to build a robust and scalable platform and will provide significant benefits through enhanced resilience and workflow. The original scope of the project has evolved as the Group has accelerated its digital focus during the pandemic, with cumulative project costs up to the financial year ended 31 March 2021 of c.£6m. The Group plans to continue to invest in enhancing its digital proposition to exploit future growth opportunities.

· The Corporate business was repositioned during the year to support plans for growth in the market, helping to deliver our busiest ever December, as clients looked at alternatives to reward their workforces, and record levels of new business.

· Cultural transformation has enabled us to become more effective and deliver a range of important growth initiatives over the last year, such as rebranding our Corporate business and launching Love2shop Digital Contactless Gift Card. We've also been recognised externally with a prestigious Business Culture Award for Best Working Environment & Workplace Design, following the head office move to Chapel Street, Liverpool, as well as having attained Great Place to Work accreditation.

Notice of results

Appreciate Group expects to publish its full year results for 2020/21 on 29 June 2021.

Ian O'Doherty, Chief Executive Officer, Appreciate Group plc, commented:

"We have met the unprecedented challenges of the last year by focusing on colleagues' wellbeing and the needs of our customers; this meant accelerating our plans to become a leaner, more digital-focused business, with an improved proposition for Corporate and Consumer customers. Our recent investments in infrastructure and workplace culture underpinned our ability to come through the crisis stronger. All of which has helped us mitigate the worst impacts of the pandemic and reposition the business so we are better placed for future growth.

"Our people have been outstanding during this period and demonstrated exceptional commitment, flexibility and resilience.

"Whilst the speed at which normal levels of activity will return is unclear, we believe that, as the economy emerges from lockdown, we are better positioned to exploit the trends in our market and deliver sustainable growth in future years."

END

For further information please contact:

For further information please visit  https://www.appreciategroup.co.uk or contact:

The information contained within this announcement is deemed by Appreciate Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

Notes to Editors:

Appreciate Group is one of the UK's leading gifting, pre-payment and engagement companies, and experts at creating joyful experiences and connecting people to the things in life they enjoy the most.

Everything Appreciate Group does is focused on creating more joy in the world, and it is proud to be trusted to help its customers create moments they can treasure and remember, whether they are giving, celebrating or rewarding.

Appreciate Group is a financial services business with a wide portfolio of brands which provide solutions for its consumer and business customers. Its consumer-facing brands meet a range of prepayment and gifting needs, while its business products help corporate customers reward and recognise their employees and clients.

Appreciate Group is home to many of the country's most-loved gifting, pre-payment and engagement solutions including Park Christmas Savings, Highstreetvouchers.com and Love2shop, and we are fast-becoming the home of digital innovation in gifting.

Whether it's saving towards the perfect family Christmas or celebrating with gift cards and vouchers, we create and supply products that millions of people trust when it comes to giving and receiving with family, friends or colleagues.

Park Christmas Savings: As the UK's largest family Christmas savings club, Park Christmas Savings has helped over 2.7 million families budget for Christmas on a short-term or year-round basis.

Love2shop: Love2shop offers gift cards and gift vouchers available to spend at stores and attractions across the UK. They are also used through our Love2shop Business Services providing corporate partners with incentives and rewards for their employees and clients.

Love2shop Contactless Gift Card: The UK's first fully digital multi-retailer gift card, available to spend online or in-store through your mobile wallet.

Appreciate Group plc's shares are traded on AIM, a market operated by the London Stock Exchange.

The Park Prepayments Protection Trust is designed to increase protection for customers' prepayments. The Trust has three directors, two of whom are independent of Appreciate.