REG - Moonpig Group plc - Half-year results announcement
05/12/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231205:nRSE6348Va&default-theme=true
RNS Number : 6348V Moonpig Group plc 05 December 2023
5 December 2023
Moonpig Group plc ("Moonpig Group" or the "Group")
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2023
Return to technology-driven revenue growth
Current trading in line with our expectations and guidance unchanged
Summary financial results
Six months ended Six months ended Year-on-year
31 October 2023 31 October 2022 growth %
Group revenue (£m) 152.1 142.8 6.5%
Gross profit (£m) 89.0 77.2 15.3%
Gross margin (%) 58.5% 54.1% 4.4%pts
Adjusted EBITDA (£m)(1) 41.4 34.6 19.9%
Adjusted EBITDA margin (%)(1) 27.2% 24.2% 3.0%pts
Reported profit before taxation (£m) 18.9 9.1 107.8%
Adjusted profit before taxation (£m)(1) 20.8 18.9 9.7%
Basic earnings per share (pence) 4.1 1.7 141.2%
Adjusted basic earnings per share (pence)(1) 4.6 4.3 7.0%
1 Before Adjusting Items of £1.9m in H1 FY24 and £9.8m in H1 FY23. See
Note 3 and Note 19.
Results summary
· Revenue growth of 6.5% year-on-year to £152.1m. Pro forma
revenue growth (adjusted for acquisitions) was 2.1%.
· Adjusted EBITDA growth to £41.4m (H1 FY23: £34.6m) reflecting
improved gross margin rate and disciplined cost control.
· Adjusted Profit before Taxation of £20.8m (H1 FY23: £18.9m)
reflecting stronger trading offset in part by higher interest charges and the
amortisation of technology platform investments.
Strategic and operational highlights
The Group delivered revenue growth in H1 FY24:
· Trading performance has been underpinned by Moonpig, which grew
revenue year-on-year by 4.9% and has consistently delivered growth at a
mid-single digit percentage rate in recent months.
· Greetz revenue decreased by 9.8% year-on-year during H1 FY24 with
a continued trajectory of improvement in trading across the period.
· At Experiences, pro forma revenue increased by 4.5%, albeit with
lower new voucher sales. There has been good delivery against our strategy for
this segment.
We have driven revenue growth through continued focus on technology
innovation, including new features to drive order frequency:
· Encouraging traction with Moonpig Plus subscriptions, which are
driving consistently higher customer order frequency.
· Greetz Plus subscriptions scheduled for roll-out during the
second half of this financial year.
· Nearly 4 million customers used our innovative card creativity
features, including video and audio messages, stickers for the inside of
cards, emojis, flexible photographs, moveable text boxes and AI-driven
customised messages.
We continue to improve how we leverage AI to personalise recommendations to
customers:
· Significant upgrade to our AI capabilities, which now incorporate
customer-level data alongside data from card personalisation into our gift
recommendation algorithms.
· New features that make it easier for customers to attach a gift,
such as "perfect pairings" for cards and gifts frequently bought together,
suggested add-ons and a redesign of the product details page for gifts and
flowers.
· A tailored online journey for every user, including personalised
homepage banners and personalised promotions.
We are investing in technology at Experiences and upgrading how we cross-sell
gift experiences to Moonpig customers:
· Full re-platforming of Experiences, with new home pages and
product detail pages already launched.
· New payment options for Red Letter Days and Buyagift.
· Faster experimentation, including the introduction of upsell
recommendations.
· An upgraded Moonpig user journey for gift experiences and launch
of instant delivery of a digital gift with an e-card.
Our business is resilient, profitable and cash generative:
· Continued focus on profitability, with gross margin rate
strengthened by 4.4%pts year-on-year. This includes the benefits of insourcing
UK fulfilment at our Tamworth facility.
· Resilience is rooted in the stability of the greeting cards
market and in our loyal customer cohorts, with 91% of Moonpig and Greetz
revenue from existing customers (H1 FY23: 90%).
· Strong operating cash conversion on an annual basis, with cash
inflows seasonally weighted into the second half of the year. Net debt
maintained at £166.9m as at 31 October 2023 (30 April 2023: £167.7m, 31
October 2022: £208.8m).
· Net debt to pro forma Adjusted EBITDA decreased to 1.83x as at 31
October 2023 (1.97x as at 30 April 2023, 2.45x as at 31 October 2022).
· Significant liquidity and covenant headroom, with debt facilities
committed until December 2025.
Outlook
Current trading remains in line with our overall expectations. Consolidated
revenue growth in recent weeks has continued the positive trends seen in the
first half, underpinned by growth at the Moonpig brand. Whilst the external
environment remains challenging, our expectations for full year consolidated
revenue and Adjusted EBITDA remain unchanged. We remain focused on
deleveraging and expect to reduce the ratio of net debt to Adjusted EBITDA by
approximately 0.5x during FY24.
Nickyl Raithatha, CEO, commented
"We are pleased to report year-on-year growth in both revenue and profit
despite the challenging macro-economic environment, marking the Group's return
to revenue growth. Our focus on technology is driving this growth, underpinned
by our resilient, profitable and cash generative business model, leveraging
our unique use of data to drive customer loyalty.
We continue to innovate to attract and retain our loyal customers. During the
period nearly 4 million customers used our innovative card creativity features
such as audio and video messages, AI-generated text suggestions, stickers,
flexible photos and digital gifting solutions. As the clear online leader in
greetings cards, we remain well positioned to benefit from the long-term
structural market shift to online."
Investor and analyst meeting
The full year results presentation will be available on the Investor Relations
section of Moonpig Group's corporate website (www.moonpig.group/investors)
shortly after 7:00am on 5 December 2023.
Nickyl Raithatha (CEO) and Andy MacKinnon (CFO) will host a Q&A for
analysts and investors via webcast at 9:30am. Please note that the
presentation will not be repeated during the webcast.
Analysts wishing to register for the event should email investors@moonpig.com.
Investors wishing to listen to the Q&A should register via the following
link:
https://www.lsegissuerservices.com/spark/MoonpigGroup/events/fba22c69-8df2-4cb2-9703-f06922f8268f
(https://www.lsegissuerservices.com/spark/MoonpigGroup/events/fba22c69-8df2-4cb2-9703-f06922f8268f)
Enquiries
Brunswick Group
+44 20
7404 5959
Sarah West, Fiona Micallef-Eynaud, Sofie Brewis
moonpig@brunswickgroup.com
Moonpig Group
investors@moonpig.com, pressoffice@moonpig.com
Nickyl Raithatha, Chief Executive Officer
Andy MacKinnon, Chief Financial Officer
About Moonpig Group
Moonpig Group plc (the "Group") is a leading online greeting cards and gifting
platform, comprising the Moonpig, Red Letter Days and Buyagift brands in the
UK and the Greetz brand in the Netherlands. The Group's leading customer
proposition includes an extensive range of cards, a curated range of gifts,
personalisation features and next day delivery offering.
The Group offers its products through its proprietary technology platforms and
apps, which utilise unique data science capabilities designed by the Group to
optimise and personalise the customer experience and provide scalability.
Learn more at https://www.moonpig.group/ (https://www.moonpig.group/) .
Forward Looking Statements
This announcement contains certain forward-looking statements with respect to
the financial condition, results or operation and businesses of Moonpig Group
plc. Such statements and forecasts by their nature involve risks and
uncertainty because they relate to future events and circumstances. There are
a number of other factors that may cause actual results, performance or
achievements, or industry results to be materially different from those
projected in the forward-looking statements.
These factors include general economic and business conditions; changes in
technology; timing or delay in signing, commencement, implementation and
performance of programmes, or the delivery of products or services under them;
industry; relationships with customers; competition and ability to attract
personnel. You are cautioned not to rely on these forward-looking statements,
which speak only as of the date of this announcement. We undertake no
obligation to update or revise any forward-looking statements to reflect any
change in our expectations or any change in events, conditions or
circumstances.
Business review
Overview
The first half of FY24 has been a period of strong strategic delivery, with
activity focused in the following key areas:
· Innovation on the Moonpig and Greetz technology platform to drive
revenue growth. Our product, data and technology teams have significantly
increased the velocity of delivery for customer-facing growth initiatives.
These include Moonpig Plus subscriptions, card creativity features (such as
audio and video messages, group cards, digital delivery of gift experiences)
and AI technologies that leverage data on previous customer purchase behaviour
to enhance gifting recommendation algorithms.
· Continued execution of the transformation project at Experiences,
including phased migration to a new technology platform and the launch of a
new visual identity for both brands to support differentiated market
positioning.
· Developing our pipeline of initiatives intended to drive
medium-term growth, including testing of our prototype Moonpig at Work
solution for SME business to employee gifting.
Moonpig Group has maintained its investment in technology, marketing and
operations through the economic cycle due to the resilience, profitability and
cash generation of our business:
· Our focus on customer lifetime value equips us with resilience in
more challenging conditions. Our approach at Moonpig and Greetz is focused on
acquiring loyal customer cohorts that drive recurring revenue and 91% of
revenue at these brands was generated from existing customers (H1 FY23: 90%).
The long-term "sticky" nature of these customer cohorts is supported by our
data and technology platform, which allows us to personalise the user
experience. More generally, the greeting cards market has a long track record
of recession-resilience.
· We have further increased profitability, raising our Adjusted
EBITDA margin rate to 27.2% (H1 FY23: 24.2%) through a combination of gross
margin rate improvement and disciplined control of indirect costs. Our
low-inventory strategy means that profit margins are not exposed to
significant stock-related risks.
· We are cash generative with significant liquidity and covenant
headroom. In line with prior year, the seasonality of our business means that
we expect cash inflows to arise in the second half of the year. The ratio of
net debt to pro forma Adjusted EBITDA decreased from 1.97x as at 30 April 2023
to 1.83x as at 31 October 2023, driven by earnings growth.
Leveraging data and technology
Last year, we completed a multi-year project to unite Moonpig and Greetz onto
a single technology platform. This freed the majority of our technology teams
to focus on innovation and experimentation, driving an acceleration of the
pace at which we deploy new features.
We have delivered features to encourage existing customers to place orders
more frequently:
· We launched our subscription scheme Moonpig Plus, which has been
encouraging in terms of both the sign-ups that we have seen and the frequency
uplifts that it has driven from these customers. We intend to roll-out Greetz
Plus in the second half of this financial year.
· Nearly 4 million customers used our innovative card creativity
features including video and audio messages, stickers for the inside of cards,
emojis, flexible photographs, moveable text boxes and AI-driven customised
messages.
We are building new functionality to promote the collaborative use of Moonpig
and Greetz:
· Introduced further functionality for group cards. We are seeing
an average of 10 messages per card, providing multiple opportunities to
convert collaborators into new customers.
· We have launched an invite-only beta version of our new corporate
offering, Moonpig at Work. This is initially targeted at SME gifting to
employees around events such as birthdays, work anniversaries and Christmas.
As we continue to test and iterate this product based on customer feedback, we
will expand the service to our waitlist in the coming months.
We continue to improve how we leverage AI to personalise recommendations to
customers:
· Significant improvement to our gifting recommendation
capabilities, which now use customer-level data in addition to the data from
personalisation of greeting cards that our algorithms already leverage.
· New features that make it easier for customers to attach a gift,
such as a "perfect pairings" carousel for cards and gifts frequently purchased
together, suggested add-ons and a redesign of the product details page for
gifts and flowers.
· A tailored online journey for every user, including personalised
homepage banners and personalised promotions.
We are investing in technology at Experiences, and upgrading how we cross-sell
gift experiences to Moonpig customers:
· Full re-platforming of Experiences, with new home pages and
product detail pages already launched.
· New payment options for Red Letter Days and Buyagift.
· Faster experimentation, including the introduction of upsell
recommendations.
· An upgraded Moonpig user journey for gift experiences and launch
of instant delivery of a digital gift with an e-card.
Building our brands
Our brands are powerful assets, which have been built over several decades,
with high levels of consumer awareness and strong association with the
attributes of convenience, service and range.
As we increasingly differentiate our card offering through new technology
features, we are broadening the focus of brand marketing activity at Moonpig
and Greetz to emphasise the fact that we offer a better card than the online
and offline competition. Our marketing showcases specific product features, to
raise awareness of differentiated card creativity options such as video and
audio messages, stickers and photo upload as well as new propositions such as
group cards and Moonpig Plus. We will deliver this through leveraging website
real estate, social media and display marketing. This has commenced in the
Netherlands with our recent "With Greetz you give more than a card" campaign.
Our strategy remains focused on delivering revenue growth through our existing
customer base and the share of revenue from existing customers increased
year-on-year to 91% (H1 FY23: 90%). We maintained our disciplined approach to
new customer acquisition, ensuring that payback periods stay within our
framework. We continue to acquire high-quality, loyal customer cohorts that
deliver lifetime value rather than pursuing short-term, transactional revenue.
At Experiences, we have continued the process of differentiating the Red
Letter Days and Buyagift brands, so that the former emphasises iconic
experiences and a more curated range, whilst the latter is more value-led. A
new, fresh visual identity has been rolled-out at each brand. We have also
increased marketing investment during the key pre-Christmas trading period,
supplementing the optimisation of performance marketing with new brand
marketing activity focused around online video and social media to build
awareness and purchase consideration.
Evolving our range
In the current trading environment, Moonpig and Greetz have prioritised the
delivery of improvements in gross margin rate and operational process
efficiency ahead of range expansion. This has enabled an increase in Group
gross margin rate to 58.5% (H1 FY23: 54.1%), the reduction in gross
inventories to £12.4m (31 October 2022: £14.8m) and an extension in the
Greetz cut-off time for same-day dispatch to 11pm for all cards, gifts and
flowers.
During the second half of FY23, we created a single global team responsible
for all designs on greeting cards and personalised gifts such as mugs and
balloons. This team manages in-house and licensed designs and it remains
focused on a programme of negotiation with global licensors to bring
internationally recognised properties to Greetz that already feature on
Moonpig.
At Moonpig, we have extended our existing partnership with Virgin Wines so
that it also covers personalised bottles of still and sparkling wine. We are
working with a small number of potential new branded gifting partners ahead of
planned launch in the second half of the year.
At Experiences, we have focused on acquiring premium partners such as
Champneys Health Spa and W Hotels to support differentiation, alongside new
partnerships with popular brands across the UK. Work is also ongoing on a
partnership that will materially expand our premium restaurant proposition
upon launch.
Maintaining high ethical, environmental and sustainability standards
We continue to execute against our ESG strategy, which commits the Group to
eight long-term goals focused on the environment, its people and its
communities.
A key area of focus is customer net promoter score, which continues to be
impacted by Royal Mail not meeting its regulatory performance targets for the
delivery of First Class mail. We are taking steps to mitigate this, including
the introduction of earlier communication with customers who have set occasion
reminders to encourage advance ordering. We also plan to leverage
postcode-level data to provide dynamic guidance to UK customers on the
predicted delivery date for their order.
We have commenced a programme of engagement with suppliers to secure
SBTi-aligned commitments to set greenhouse gas emissions reduction targets.
Our immediate target is to secure commitments from suppliers representing
18.0% of our Scope 3 emissions by 30 April 2024 (April 2023: 9.7%), with a
medium-term goal of achieving 67.0% coverage by April 2030.
We are making progress on employee engagement and expect to report a
year-on-year improvement in employee engagement score at the full year, albeit
there is continued impact from the need for disciplined control of costs
during an economic downturn.
We are passionate about diversity in the technology sector and were delighted
to welcome the Group's first female Chief Product and Technology Officer to
our Executive Committee in August this year. One of our sustainability goals
is to maintain the proportion of new hires into technology security,
engineering, product and analytics roles at around 45% women. In a period of
reduced recruitment activity, this ratio decreased to 38% in H1 FY24 (H1 FY23:
46%). We remain committed to hiring on a diverse basis for these roles.
Financial review
Overview
The Group delivered consolidated revenue growth at 6.5% in H1 FY24, which
equates to pro forma growth of 2.1% against a prior year comparative including
six months of trading at Experiences. Trading performance has been underpinned
by revenue at the Moonpig brand, which grew year-on-year by 4.9% and has
consistently delivered growth at a mid-single digit percentage rate in recent
months.
Our growth is being delivered through technology innovation. Our product, data
and technology workforce is now primarily focused on customer-facing growth
initiatives, delivering features that will drive low-cost new customer
acquisition (such as group cards, which encourage message contributors to
register with Moonpig), customer purchase frequency (including Moonpig Plus
subscriptions and card creativity features such as audio and video messages)
and gift attachment (such as digital gift experiences and improved gifting
recommendation algorithms that leverage data on customers previous purchase
behaviour).
Our business model is resilient and profitable, which means that we remain
well-positioned to navigate the continued challenging market environment. Our
resilience is rooted in the loyalty of our customer cohorts and the
recession-resilient characteristics of the greeting card market. We have
further increased profitability, raising our Adjusted EBITDA margin rate to
27.2% (H1 FY23: 24.2%) through a combination of gross margin rate improvement
and disciplined control of indirect costs. Our low-inventory strategy means
that profit margins are not exposed to significant stock-related risks.
We are cash generative with significant liquidity and covenant headroom. In
line with prior year, the seasonality of our business means that we expect
cash inflows to arise in the second half of the year. The ratio of net debt to
pro forma Adjusted EBITDA decreased from 1.97x as at 30 April 2023 to 1.83x as
at 31 October 2023, driven by earnings growth.
Financial performance - Group
Six months Six months H1 FY24
ended ended Year-on-year
31 October 2023 31 October 2022 growth %
Revenue (£m) 152.1 142.8 6.5%
Gross profit (£m) 89.0 77.2 15.3%
Gross margin (%) 58.5% 54.1% 4.4%pts
Adjusted EBITDA (£m)(1) 41.4 34.6 19.9%
Adjusted EBITDA margin (%)(1) 27.2% 24.2% 3.0%pts
Reported profit before taxation (£m) 18.9 9.1 107.8%
Adjusted profit before taxation (£m)(1) 20.8 18.9 9.7%
Earnings per share - basic (pence) 4.1 1.7 141.2%
Earnings per share - diluted (pence) 4.0 1.7 135.3%
Net debt (£m)(2) (166.9) (208.8) 20.1%
1 Before adjusting items of £1.9m in H1 FY24 and £9.8m in H1 FY23. See
Adjusting Items at Note 3 and definition of Alternative Performance Measures
at Note 19.
2 Net debt is defined as total borrowings, inclusive of lease liabilities,
less cash and cash equivalents.
The Group delivered revenue of £152.1m in the first half of FY24,
representing year-on-year growth of 6.5% on a consolidated basis. This
reflects the inclusion of a full six months of Experiences revenue in H1 FY24,
which would have contributed an additional £6.3m of prior year revenue if
owned throughout H1 FY23. Pro forma revenue growth was 2.1%, underpinned by
the Moonpig brand.
Gross margin rate strengthened by 4.4%pts year-on-year reflecting the benefits
from insourcing fulfilment at Tamworth, the impact of changes to card prices
and shipping prices for gifts and the mix impact of a full six months of
trading at Experiences. Combined with disciplined control of indirect costs,
this enabled the Group to deliver an increase in Adjusted EBITDA margin to
27.2% (H1 FY23: 24.2%).
Adjusted PBT was £20.8m (H1 FY23: £18.9m), reflecting higher Adjusted EBITDA
offset in part by higher depreciation resulting from FY23 capital expenditure
on new operational facilities at Tamworth and Almere, higher amortisation
(reflecting increased technology investment and a full period charge for the
amortisation of acquired intangible assets arising on business combination
with Experiences) and increased finance costs on the unhedged element of our
bank borrowings resulting from higher interest rates.
Net debt is a non-GAAP measure and is defined as total borrowings, inclusive
of lease liabilities, less cash and cash equivalents. Group net debt as of 31
October 2023 was £166.9m (30 April 2023: £167.7m; 31 October 2022:
£208.8m), resulting in a ratio of net debt to Adjusted EBITDA of 1.83x (30
April 2023: net debt to pro forma Adjusted EBITDA 1.97x; 31 October 2022: net
debt to pro forma Adjusted EBITDA of 2.45x). Net debt excluding lease
liabilities was £149.0m (30 April 2023: £148.1m; 31 October 2022: £188.9m).
Revenue
Six months Six months H1 FY24
ended ended Year-on-year
31 October 2023 31 October 2022 growth %
Moonpig and Greetz orders (m) 16.0 16.9 (5.1)%
Moonpig and Greetz AOV (£ per order) 8.3 7.8 7.1%
Moonpig and Greetz revenue (£m) 133.4 131.1 1.7%
Moonpig revenue (£m) 108.0 103.0 4.9%
Greetz revenue (£m) 25.3 28.1 (9.8)%
Moonpig and Greetz revenue (£m) 133.4 131.1 1.7%
Experiences revenue (£m) 18.8 11.7 60.6%
Group revenue (£m) 152.1 142.8 6.5%
Note: Figures in this table are individually rounded to the nearest £0.1m. As
a result, there may be minor discrepancies in the subtotals and totals due to
rounding differences.
Moonpig increased revenue year-on-year by 4.9% and has consistently delivered
growth at a mid-single digit percentage rate in recent months. Growth in H1
FY24 includes the impact of a £0.20 increase in the price of a standard-sized
greeting card that was implemented from 1 November 2022 in the UK and which
therefore will not contribute to growth in the second half of the year.
The 9.8% decrease in Greetz revenue has been driven by the economic downturn.
We have acted to address this and have delivered a trajectory of improvement
in trading across the half year. We have made structural changes which enable
greater collaboration, maximising the opportunity for Greetz to take advantage
of Group capabilities in areas such as marketing and card design. We are
rapidly rolling-out new technology features such as video and audio messages
for Dutch customers and our brand marketing is focused around the
differentiated features that Greetz cards now offer. We are driving
initiatives to promote customer frequency including reminder setting and have
driven growth in app share of Greetz orders to 26.5% in October 2023 (October
2022: 17.6%). We intend to roll-out Greetz Plus subscription membership in the
second half of this financial year.
Combined Moonpig and Greetz revenue increased by 1.7% year-on-year, with
orders 5.1% lower than prior year. Average Order Value (AOV) increased by
7.1%, in part reflecting prior year card price increases and the pass-through
of Royal Mail stamp price increases in the UK. There has also been a moderate
year-on-year increase in the proportion of orders for which customers attach a
gift.
Revenue at Experiences totalled £18.8m, an increase of 4.5% compared to prior
year revenue of £18.0m (stated pro forma as if the business had been owned
throughout the period). The year-on-year movement in pro forma revenue would
have been a mid single digit percentage reduction without temporarily higher
breakage relating to gift boxes (primarily distributed through high street
retail partners) and vouchers that were sold during Covid with extended expiry
dates; this is not expected to recur in future years.
Gifting mix of revenue
Six months Six months H1 FY24
ended ended Year-on-year
31 October 2023 31 October 2022 growth %
Moonpig and Greetz cards revenue (£m) 79.0 74.7 5.7%
Moonpig and Greetz attached gifting revenue (£m) 50.4 51.3 (1.9)%
Moonpig and Greetz standalone gifting revenue (£m) 4.0 5.0 (20.9)%
Moonpig and Greetz revenue (£m) 133.4 131.1 1.7%
Experiences gifting revenue (£m) 18.8 11.7 60.6%
Group revenue (£m) 152.1 142.8 6.5%
Moonpig / Greetz total gifting revenue (£m) 54.4 56.4 (3.6)%
Moonpig / Greetz gifting revenue mix (%) 40.8% 43.0% (2.2)%pts
Group gifting mix of revenue (%) 48.1% 47.7% 0.4%pts
Note: Figures in this table are individually rounded to the nearest £0.1m. As
a result, there may be minor discrepancies in the subtotals and totals due to
rounding differences.
The Group's gifting mix of revenue increased slightly to 48.1% (H1 FY23:
47.7%) reflecting the consolidation of Experiences revenue throughout H1 FY24.
For Moonpig and Greetz, gifting mix of revenue decreased by 2.2%pts, driven by
the impact of price rises on greeting card revenue.
Attached gifting revenue decreased year-on-year by 1.9%, whereas orders
decreased by 5.1%, reflecting a reduction in promotional discounting and a
modest increase in the proportion of customers choosing to attach a gift.
Standalone gifting, which is not a strategic focus and is more susceptible to
the impact of economic downturn, decreased by 20.9% year-on-year.
Gross margin rate
Six months Six months H1 FY24
ended ended Year-on-year
31 October 2023 31 October 2022 growth %
Moonpig gross margin (%) 55.5% 51.9% 3.6%pts
Greetz gross margin (%) 46.8% 45.7% 1.1%pts
Moonpig and Greetz gross margin (%) 53.8% 50.6% 3.2%pts
Experiences gross margin (%) 91.8% 93.7% (1.9)%pts
Group gross margin (%) 58.5% 54.1% 4.4%pts
Management has maintained its focus on margin rate improvement, increasing the
gross margin rate across Moonpig and Greetz to 53.8% (H1 FY23: 50.6%). This
reflects benefit from opening new operational facilities at Tamworth, the
impact of greeting card price changes and changes to shipping prices for
gifts. We have maintained intake margin on gifts at both segments.
Experiences gross margin decreased to 91.8% (H1 FY23: 93.7%), which reflects
provisions against gift box inventory in view of the roll-out of a new visual
identity for the Red Letter Days and Buyagift brands. The relatively high
gross margin rate reflects the nature of revenue recognised at this segment,
which comprises agency commission earned from partners for the distribution of
experiences, rather than gross transactional value. Cost of goods at the
Experiences segment relates primarily to packaging and distribution for those
orders where the consumer elects to pay for a physical gift box rather than
digital delivery.
Adjusted EBITDA margin
Six months Six months H1 FY24
ended ended Year-on-year
31 October 2023 31 October 2022 growth %
Moonpig Adjusted EBITDA margin % 30.3% 25.3% 5.0%pts
Greetz Adjusted EBITDA margin % 16.8% 16.4% 0.4%pts
Moonpig and Greetz Adjusted EBITDA margin % 27.7% 23.4% 4.3%pts
Experiences Adjusted EBITDA margin % 23.6% 33.0% (9.4)%pts
Group Adjusted EBITDA margin % 27.2% 24.2% 3.0%pts
Adjusted EBITDA margin rate at Moonpig increased by 5.0%pts, reflecting
pass-through of the higher gross margin rate. At Greetz, Adjusted EBITDA
margin rate increased by 0.4%pts, which is lower than the rise in gross margin
rate and reflects the operational leverage impact of lower revenue. Across
both businesses, we have applied disciplined management of indirect costs.
Experiences Adjusted EBITDA margin rate was 23.6%, which compares to a pro
forma Adjusted EBITDA margin rate of 27.5% for H1 FY23, stated as if the
business had been owned throughout the half year. The year-on-year movement
reflects provisions against gift box inventory and limited, planned investment
in staff costs to raise capability. The reported prior year Adjusted EBITDA
margin rate of 33.0% relates to only part of the year and is therefore
impacted by the seasonality of trading, which is typically lower in the
pre-acquisition months that were excluded from consolidation.
Given the external environment we have managed costs cautiously, deferring
investments into the second half of the year to maintain flexibility.
Expectations for absolute full year Adjusted EBITDA remain unchanged.
Alternative Performance Measures
The Group has identified certain Alternative Performance Measures ("APMs")
that it believes provide additional useful information on the performance of
the Group. These APMs are not defined within IFRS and are not intended to
substitute or be considered as superior to IFRS measures. Furthermore, these
APMs may not necessarily be comparable to similarly titled measures used by
other companies. The Group's Directors and management use these APMs in
conjunction with IFRS measures when budgeting, planning and reviewing business
performance. Executive management bonus targets include an Adjusted EBITDA
measure and long-term incentive plans include an Adjusted Basic Pre-Tax
Earnings Per Share ("EPS") measure.
Six months ended Six months ended
31 October 2023 31 October 2022
Adjusted Adjusting IFRS Adjusted Adjusting IFRS
Measures(1) Items(1) Measures Measures(1) Items(1) Measures
Pre-IPO share-based payment charges (£m) - (0.6) - - (3.5) -
Pre-IPO bonus awards (£m) - (1.2) - - (1.9) -
M&A related transaction costs (£m) - - - - (4.4) -
EBITDA margin (%) 27.2% - 26.0% 24.2% - 17.3%
EBITDA (£m) 41.4 (1.9) 39.6 34.6 (9.8) 24.7
Depreciation and amortisation (£m) (12.6) - (12.6) (9.8) - (9.8)
EBIT margin (%) 19.0% - 17.8% 17.4% - 10.4%
EBIT (£m) 28.9 (1.9) 27.0 24.8 (9.8) 14.9
Finance costs (£m) (8.1) - (8.1) (5.8) - (5.8)
PBT margin (%) 13.7% - 12.4% 13.2% - 6.4%
PBT (£m) 20.8 (1.9) 18.9 18.9 (9.8) 9.1
Taxation (£m) (5.1) 0.3 (4.8) (4.3) 1.0 (3.3)
PAT (£m) 15.6 (1.6) 14.1 14.6 (8.8) 5.8
Basic Earnings per Share (pence) 4.6p (0.5p) 4.1p 4.3p (2.6p) 1.7p
1 See Adjusting Items at Note 3 and Alternative Performance Measures at Note
19.
Note: Figures in this table are individually rounded to the nearest £0.1m. As
a result, there may be minor discrepancies in the subtotals and totals due to
rounding differences.
The definitions for the adjusted measures in the table are as follows:
· Adjusted PAT is profit after taxation and before Adjusting Items.
· Adjusted PBT is profit before taxation and Adjusting Items.
Adjusted PBT margin is Adjusted PBT divided by total revenue.
· Adjusted EBIT is profit before taxation, interest and Adjusting
Items. Adjusted EBIT margin is Adjusted EBIT divided by total revenue.
· Adjusted EBITDA is profit before taxation, interest,
depreciation, amortisation and Adjusting Items. Adjusted EBITDA margin is
Adjusted EBITDA divided by total revenue.
Adjusting Items comprise:
· Pre-IPO incentive scheme costs, consisting of £0.6m (H1 FY23:
£3.5m) share-based payment charges and £1.2m (H1 FY23: £1.9m) cash bonus
awards. These relate to one-off compensation arrangements granted prior to IPO
and set out in the Prospectus. The Group treats these costs as Adjusting Items
as they relate to one-off awards implemented whilst the Group was under
private equity ownership and are not part of the Group's ongoing remuneration
arrangements.
· M&A-related transaction costs of £nil (H1 FY23: £4.4m). The
prior year costs comprise advisers' fees, stamp duty and other costs directly
relating to the acquisition of Experiences. The Group treats these costs as
Adjusting Items as they are not part of normal business operations.
Determining which items should be classified as Adjusting Items involves the
exercise of judgement. Our classification of items as Adjusting Items has
remained unchanged year-on-year. We do not classify the following as Adjusting
Items on the basis that they are recurring costs associated with delivery of
financial performance. However, we have observed that certain users of our
accounts adopt a different approach in their own financial modelling and have
therefore provided the information below to assist these users:
Six months Six months
ended 31 ended 31
October 2023 October 2022
Amortisation of acquired intangible assets (£m) 4.2 3.1
Share-based payment charges relating to operation of post-IPO Remuneration 2.0 1.3
Policy(1) (£m)
1 Share-based payment charges are stated inclusive of national insurance
of £0.2m (H1 FY23: £0.1m).
Profit before taxation ("PBT")
Group PBT increased by 107.8%, from £9.1m in H1 FY23 to £18.9m in H1 FY24,
as a lower charge for Adjusting Items was offset in part by higher
depreciation and amortisation and higher finance costs.
Depreciation and amortisation increased to £12.6m (H1 FY23: £9.8m). The
year-on-year movement is predominantly driven by a £1.6m increase in the
amortisation of internally generated intangible assets due to the decision
taken in FY22 to increase investment in our technology and £1.1m relating to
a full six months' charge for the amortisation of acquired intangible assets
arising on business combination with Experiences. There has been no change in
the Group's accounting policies or practices relating to the capitalisation of
costs as internally generated intangible assets. We continue to amortise
internally generated intangible assets over a relatively short useful life of
three years.
Finance costs increased from £5.8m in H1 FY23 to £8.1m in H1 FY24:
· Interest on bank borrowings increased from £5.0m in H1 FY23 to
£6.5m in H1 FY24. The impact of a higher reference rate on the unhedged
element of the Group's interest rate exposure was offset in part by lower
draw-down of the Group's revolving credit facilities, which were unutilised as
at 31 October 2023.
· Amortisation of fees increased from £0.9m in H1 FY23 to £1.1m
in H1 FY24, reflecting a full six-month amortisation charge for: (i)
arrangement fees for the additional revolving credit facility put in place in
July 2022; and (ii) up-front fees for the interest rate cap put in place in
August 2022.
· Interest on lease liabilities remained flat year on year at
£0.4m.
· There was a £0.6m movement in the monetary foreign exchange
impact of Euro-denominated intercompany loan balances. The Group recognised a
£0.1m loss (H1 FY23: £0.4m gain), with the corresponding intercompany gain
recognised in Other Comprehensive Income in accordance with IAS 21.
The taxation charge of £4.8m (H1 FY23: £3.3m) represents an effective
taxation rate of 25.5% (H1 FY23: 35.9%). This exceeded the prevailing rate of
corporation tax of 25% in the UK primarily because of the impact of the
Group's legacy share schemes. Expressed as a percentage of Adjusted Profit
Before Taxation, the effective tax rate was 23.2% (H1 FY23: 22.8%).
Earnings Per Share ("EPS")
Basic EPS for H1 FY24 was 4.1p (H1 FY23: 1.7p) and Adjusted Basic EPS, which
is stated before Adjusting Items was 4.6p (H1 FY23: 4.3p). After accounting
for the effect of employee share arrangements, diluted earnings per share was
4.0p (H1 FY23: 1.7p).
The calculation of basic EPS is based on the weighted average number of
ordinary shares outstanding during the period of 342,890,896 (H1 FY23:
339,036,292). Throughout H1 FY23, the total issued share capital was
342,111,621, however 3,075,329 shares issued to employees prior to the IPO
remained subject to recall within a two-year period, until January 2023, if
employment conditions were not met. These shares are included in the number of
ordinary shares outstanding for H1 FY24 but are excluded for H1 FY23 in
accordance with paragraph 24 of IAS 33 on the basis that they were
contingently returnable throughout that period.
During H1 FY24, 1,165,744 shares were issued to employees following vesting of
the first tranche of the pre-IPO awards.
Cash flow
Cash generated from/(used in) operating activities was £21.3m (H1 FY23:
(£4.2m)):
There was a cash inflow in the period of £3.4m (H1 FY23: £1.1m outflow), due
to lower inventories driven by improved operational efficiency. Inventory at
31 October 2023 was £8.9m (H1 FY23: £12.6m).
There was a trade and other payables working capital outflow in the period of
£24.1m (H1 FY23: £30.8m).
· The outflow at Moonpig and Greetz was in line with the previous
period at £10.3m (H1 F23: £10.2m outflow), reflecting the seasonality of the
working capital cycle.
· The outflow at Experiences was £13.8m (H1 FY23: £20.6m). The
year-on-year reduction in outflow reflects the one-off settlement in H1 FY23
of £13.2m of legacy incentive obligations associated with the acquisition of
Experiences, which were fully provided for in the opening balance sheet.
The merchant accrual as at 31 October 2023 was £36.8m (H1 FY23: £49.3m). A
payables balance is recognised when a gift experience is sold to a consumer to
reflect the expected future liability to the merchant; this balance is settled
through the remittance of cash to the merchant following redemption of the
voucher by the recipient. The year-on-year reduction in merchant accrual
balance reflects the unwind of the impact of a higher extension rate seen
through Covid.
Capital expenditure decreased year-on-year to £7.8m (H1 FY23: £14.2m)
reflecting one-off expenditure on plant and equipment in the prior year to fit
out new operational facilities in Tamworth, UK and Almere in the Netherlands.
Adjusted Operating Cash Conversion
The Group is cash generative on an annual basis, with cash inflows strongly
weighted into the second half of each financial year. The Group generated an
operating cash inflow of £15.1m in H1 FY24, compared to £1.1m in H1 FY23.
Adjusted Operating Cash Conversion increased from 3% in H1 FY23 to 36% in H1
FY24, reflecting non-recurrence of prior year capital expenditure on new
operational facilities at Tamworth in the UK and Almere in the Netherlands.
Six months ended Six months ended
31 October 2023 31 October 2022
£m £m
Profit before taxation 18.9 9.1
Add back: Finance costs 8.1 5.8
Add back: Adjusting Items (excluding share-based payments) 1.2 6.3
Add back: Adjusting Items - Share-based payments 0.6 3.5
Add back: Depreciation and amortisation 12.6 9.8
Adjusted EBITDA 41.4 34.6
Less: Capital expenditure (fixed and intangible assets) (7.8) (14.2)
Adjust: Impact of share-based payments(1) 2.0 0.9
Add back: Decrease / (increase) in inventories(2) 3.4 (1.1)
Add back: Decrease in trade and other receivables(2) 0.2 1.8
Add back: (Decrease) in trade and other payables(2) (24.1) (20.9)
Operating cash flow(3) 15.1 1.1
Adjusted Operating Cash Conversion 36% 3%
Add back: Capital expenditure 7.8 14.2
Add back: (Decrease) / increase in debtors and creditors with - 0.3
undertakings formerly under common control
Less: Adjusting Items (excluding share-based payments) (1.2) (6.3)
Less: Research and development tax credit (0.4) (0.3)
Cash generated from underlying operating activities 21.3 9.0
Settlement of M&A related employee bonuses at Experiences(3) - (13.2)
Cash generated from / (used in) operating activities 21.3 (4.2)
1 Reflecting the non-cash share-based payment charge recognised within
Adjusted EBITDA, net of NI on the share-based payments recognised below
EBITDA.
2 Working capital movements for the six months ended 31 October 2022 have been
adjusted for the opening balances arising upon acquisition of Experiences.
3 Operating cash flow excludes settlement of legacy incentive obligations in
H1 FY23 associated with the acquisition, which were fully provided for in the
opening balance sheet.
Operating cash flow and Adjusted Operating Cash Conversion are non-GAAP
measures. Adjusted Operating Cash Conversion is defined as operating cash flow
divided by Adjusted EBITDA, expressed as a ratio. Adjusted Operating Cash
Conversion informs management and investors about the cash operating cycle of
the business and how efficiently operating profit is converted into cash.
Capital structure
Net debt decreased during the period, from £167.7m at 30 April 2023 to
£166.9m as at 31 October 2023. Net leverage improved to 1.83x (30 April 2023:
1.97x) through growth in earnings. Net debt is a non-GAAP measure and is
defined as total borrowings, inclusive of lease liabilities, less cash and
cash equivalents.
As at As at As at
31 October 2023 31 October 2022 30 April 2023
£m £m £m
Borrowings(1) (171.4) (229.9) (170.5)
Cash and cash equivalents 22.4 41.0 22.4
Borrowings less cash and cash equivalents (149.0) (188.9) (148.1)
Lease liabilities (18.0) (19.8) (19.5)
Net debt (166.9) (208.8) (167.7)
Last twelve months Adjusted EBITDA 91.1 74.4 84.2
Net debt to last twelve months' Adjusted EBITDA 1.83:1 2.80 :1 1.99:1
Last twelve months pro forma Adjusted EBITDA(2) 91.1 85.1 85.1
Net debt to last twelve months pro forma Adjusted EBITDA(2) 1.83:1 2.45:1 1.97:1
Committed debt facilities (£m) 255.0 255.0 255.0
1 Borrowings are stated net of capitalised loan arrangement fees and
hedging instrument fees of £3.7m as at 31 October 2023 (31 Oct 2022: £5.2m,
30 April 2023: £4.6m).
2 Pro forma Adjusted EBITDA is stated inclusive of a full year of profit
from acquired businesses.
The Group maintains considerable liquidity headroom, with bank facilities of
£255.0m. These facilities consist of a term loan of £175.0m with a bullet
repayment profile and Revolving Credit Facilities of £80.0m. The facilities
agreement runs until January 2026 with the facilities committed until December
2025.
The Group has significant covenant headroom. Bank facilities are subject to a
single covenant of net debt to last twelve months' pro forma Adjusted EBITDA
which is tested six-monthly.
The Group's interest rate hedging arrangements now comprise an interest rate
cap in place with a cap strike rate of 3.0000% on £70m notional until 30
November 2024. This follows the expiry of an interest rate swap (a rate of
2.4725% on £90m notional) on 30 November 2023.
The Group's short term capital allocation priority remains deleveraging. We do
not intend to pay a dividend as we continue to invest in growth. We will
continue to evaluate dividend policy over time.
Outlook
Current trading remains in line with our overall expectations. Consolidated
revenue growth in recent weeks has continued the positive trends seen in the
first half, underpinned by growth at the Moonpig brand. Whilst the external
environment remains challenging, our expectations for full year consolidated
revenue and Adjusted EBITDA remain unchanged. We remain focused on
deleveraging and expect to reduce the ratio of net debt to Adjusted EBITDA by
approximately 0.5x during FY24.
Technical guidance
Adjusting Items We anticipate that Adjusting Items will include a charge of approximately £4m
in FY24 relating to the pre-IPO Award. There will be no charge in future years
as the final tranche of the award vests on 30 April 2024, subject to continued
employment.
The pre-IPO Award comprises a combination of cash and shares. The first
tranche was paid in Q1 FY24 and the second tranche will be paid in Q1 FY25,
resulting in an expected cash outflow of approximately £5m (excluding
national insurance) and the issue of up to 1.4m shares.
Capital expenditure We expect total tangible and intangible capital expenditure to revert to the
pre-Covid trend level of around 5% of revenue in FY24 and we plan to maintain
this ratio going forward. Within this, we expect that tangible capital
expenditure will remain below £2m per year.
Depreciation and amortisation For FY24, we expect a total charge for depreciation and amortisation of
between £27m and £29m:
· The combined charge for depreciation of purchased tangible fixed
assets and amortisation of internally generated intangible fixed assets is
expected to increase to between £16m and £18m in FY24, reflecting the
fit-out of operational facilities in FY23 and ongoing increased technology
investment.
· We anticipate a charge of around £3m per annum for the
depreciation of IFRS 16 right-of-use assets, reflecting the full-year impact
of depreciation related to new leases for Tamworth and Almere.
· We expect the amortisation of intangible fixed assets arising on
business combination to be approximately £8m per annum (comprising
approximately £6m relating to Experiences and approximately £2m relating to
Greetz).
Net finance costs We expect net finance costs in FY24 to be in the region of £15m. This
includes approximately £2m relating to the amortisation of fees and £1m of
interest on lease liabilities. We have assumed no monetary gain or loss on
Euro-denominated intercompany loan balances.
Taxation We expect the Group's effective tax rate to be approximately 26% of PBT in
FY24, reducing to 25% in FY25 and thereafter. The expected effective rate for
FY24 is higher than the prevailing tax rate in the UK and in the Netherlands
due to the impact of the Group's legacy share schemes.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these Condensed Consolidated Interim Financial
Statements have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months 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 financial year; and
· material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
On behalf of the Board
Nickyl Raithatha Andy
MacKinnon
Chief Executive Officer Chief
Financial Officer
4 December 2023 4 December 2023
Condensed Consolidated Interim Financial Statements
Condensed Consolidated Income Statement
For the six-month period ended 31 October 2023
Note Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Revenue 2 152,136 142,793
Cost of sales (63,096) (65,552)
Gross profit 89,040 77,241
Selling and administrative expenses (62,678) (62,959)
Other income 664 661
Operating profit 27,026 14,943
Finance costs 4 (8,131) (5,849)
Profit before taxation 18,895 9,094
Taxation 5 (4,812) (3,268)
Profit after taxation 14,083 5,826
Profit attributable to:
Equity holders of the Company 14,083 5,826
Earnings per share (pence)
Basic 6 4.1 1.7
Diluted 6 4.0 1.7
All activities relate to continuing operations.
The accompanying notes are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed Consolidated Statement of Comprehensive Income
For the six-month period ended 31 October 2023
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Profit for the period 14,083 5,826
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 12 (179)
Cash flow hedge:
Fair value changes in the period 491 2,354
Cost of hedging reserve 17 225
Fair value movements on cash flow hedges transferred to profit and loss (1,285) (148)
Total other comprehensive income (765) 2,252
Total comprehensive income for the period 13,318 8,078
The accompanying notes are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed Consolidated Balance Sheet
As at 31 October 2023
Note At 31 October At 31 October At 30 April
2023 2022 2023
£000 £000 £000
Non-current assets
Intangible assets 7 207,999 212,893 210,455
Property, plant and equipment 8 29,769 33,139 32,311
Other non-current assets 10 2,140 2,178 2,153
Financial derivatives 15 1,600 3,253 1,757
241,508 251,463 246,676
Current assets
Inventories 9 8,948 12,601 12,333
Trade and other receivables 10 6,184 10,073 6,331
Current tax receivable - 1,977 1,260
Financial derivatives 15 198 - 711
Cash and cash equivalents 22,443 40,972 22,394
37,773 65,623 43,029
Total assets 279,281 317,086 289,705
Current liabilities
Trade and other payables 11 88,927 98,241 110,119
Provisions for other liabilities and charges 2,011 1,486 1,617
Current tax payable 354 - 805
Contract liabilities 3,136 2,862 2,589
Lease liabilities 12 3,266 3,087 3,443
Borrowings 12 85 162 27
97,779 105,838 118,600
Non-current liabilities
Trade and other payables 11 1,006 7,331 4,858
Borrowings 12 171,332 229,751 170,493
Lease liabilities 12 14,691 16,735 16,082
Deferred tax liabilities 9,748 11,535 10,978
Provisions for other liabilities and charges 2,443 2,709 2,413
199,220 268,061 204,824
Total liabilities 296,999 373,899 323,424
Equity
Share capital 14 34,328 34,211 34,211
Share premium 14 278,083 278,083 278,083
Merger reserve (993,026) (993,026) (993,026)
Retained earnings 621,896 583,068 603,849
Other reserves 14 41,001 40,851 43,164
Total equity (17,718) (56,813) (33,719)
Total equity and liabilities 279,281 317,086 289,705
The accompanying notes are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed Consolidated Statement of Changes in Equity
For the six-month period ended 31 October 2023
Note Share Share Merger Retained Other Total
capital premium reserve earnings reserves equity
£000 £000 £000 £000 £000 £000
Balance at 1 May 2022 34,211 278,083 (993,026) 576,507 34,906 (69,319)
Profit for the period - - - 5,826 - 5,826
Foreign currency translation reserve reclassification - - - 735 (735) -
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - (179) (179)
Cash flow hedges:
Fair value changes in the period - - - - 2,354 2,354
Cost of hedging reserve - - - - 225 225
Fair value movements on cash flow hedges transferred to profit and loss - - - - (148) (148)
Total comprehensive income for the period - - - 6,561 1,517 8,078
Share-based payments 13 - - - - 4,428 4,428
As at 31 October 2022 34,211 278,083 (993,026) 583,068 40,851 (56,813)
Profit for the period - - - 20,781 - 20,781
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - 21 21
Cash flow hedges:
Fair value changes in the period - - - - (463) (463)
Cost of hedging reserve - - - - (99) (99)
Fair value movements on cash flow hedges transferred to profit and loss - - - - 12 12
Total comprehensive income for the period - - - 20,781 (529) 20,252
Share-based payments 13 - - - - 2,842 2,842
As at 30 April 2023 34,211 278,083 (993,026) 603,849 43,164 (33,719)
Profit for the period - - - 14,083 - 14,083
Other comprehensive income:
Exchange differences on translation of foreign operations - - - - 12 12
Cash flow hedges:
Fair value changes in the period - - - - 491 491
Cost of hedging reserve - - - - 17 17
Fair value movements on cash flow hedges transferred to profit and loss - - - - (1,285) (1,285)
Total comprehensive income for the period - - - 14,083 (765) 13,318
Share-based payments 13 - - - - 2,578 2,578
Deferred tax on share-based payments - - - - 105 105
Share options exercised 13 117 - - 3,964 (4,081) -
As at 31 October 2023 34,328 278,083 (993,026) 621,896 41,001 (17,718)
The accompanying notes are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed Consolidated Cash Flow Statement
For the six-month period ended 31 October 2023
Note Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Cash flow from operating activities
Profit before taxation 18,895 9,094
Adjustments for:
Depreciation and amortisation 7,8 12,553 9,788
Finance costs 4 8,131 5,849
R&D tax credit (366) (300)
Share-based payment charges 13 2,578 4,428
Changes in working capital:
Decrease/(increase) in inventories 3,385 (1,103)
Decrease/(increase) in trade and other receivables 192 (1,385)
(Decrease) in trade and other payables (24,053) (30,847)
Net (increase)/decrease in trade and other receivables and payables with (31) 270
undertakings formerly under common control
Cash generated from / (used in) operating activities 21,284 (4,206)
Income tax paid (4,925) (5,036)
Net cash generated from / (used in) operating activities 16,359 (9,242)
Cash flow from investing activities
Capitalisation of intangible assets 7 (7,001) (6,665)
Purchase of property, plant and equipment 8 (813) (7,574)
Acquisition of subsidiary, net of cash acquired - (88,598)
Net cash (used in) investing activities (7,814) (102,837)
Cash flow from financing activities
Proceeds from new borrowings 12 10,000 60,000
Payment of fees related to borrowings - (988)
Repayment of borrowings 12 (10,000)
Payment of interest rate cap premium - (940)
Interest paid on borrowings 12 (7,737) (4,879)
Interest received/(paid) on swap derivatives 1,331 (148)
Lease liabilities paid 12 (1,799) (1,195)
Interest paid on leases 12 (412) (423)
Net cash generated (used in) / generated from financing activities (8,617) 51,427
Net cash flows (used in) operating, investing, and financing activities (72) (60,652)
Differences on exchange 121 (53)
Net increase / (decrease) in cash and cash equivalents in the period 49 (60,705)
Net cash and cash equivalents at beginning of the period 22,394 101,677
Net cash and cash equivalents at the end of the period 22,443 40,972
The accompanying notes are an integral part of these Condensed Consolidated
Interim Financial Statements.
Notes to the Condensed Consolidated Interim Financial Statements
1 General information
Moonpig Group plc (the "Company") is a public limited company incorporated in
the United Kingdom under the Companies Act 2006, whose shares are traded on
the London Stock Exchange. The Condensed Consolidated Interim Financial
Statements of the Company as at and for the period ended 31 October 2023
comprise the Company and its interest in subsidiaries (together referred to as
the "Group"). The Company is domiciled in the United Kingdom and its
registered address is Herbal House, 10 Back Hill, London, EC1R 5EN, United
Kingdom. The Company's LEI number is 213800VAYO5KCAXZHK83.
Basis of preparation
The annual financial statements of Moonpig Group plc will be prepared in
accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The annual financial statements will
also comply with International Financial Reporting Standards ("IFRS") as
adopted by the United Kingdom. These Condensed Consolidated Interim Financial
Statements for the six-month period ended 31 October 2023 have been prepared
in accordance with UK adopted International Accounting Standard ("IAS") 34,
'Interim Financial Reporting' and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
These Condensed Consolidated Interim Financial Statements do not constitute
statutory accounts as defined by the Companies Act 2006, Section 435. This
report should be read in conjunction with the Group's Annual Report and
Accounts as at and for the year ended 30 April 2023 ("last Annual Report and
Accounts"), which were prepared in accordance with IFRSs as adopted by the
United Kingdom. The last Annual Report and Accounts have been filed with the
Registrar of Companies. The auditors' report on these accounts was
unqualified.
All figures presented are rounded to the nearest thousand (£000), unless
otherwise stated.
The Condensed Consolidated Interim Financial Statements have been prepared on
a going concern basis and under the historical cost convention.
The Condensed Consolidated Interim Financial Statements were approved by the
Board of Directors on 4 December 2023 and have been reviewed and not audited
by PricewaterhouseCoopers LLP, the auditors, and its report is set out at the
end of this document.
Consideration of climate change
In preparing the Condensed Consolidated Interim Financial Statements, the
Directors have considered the impact of climate change, particularly in the
context of the risks identified in the Taskforce on Climate-related Financial
Disclosures ("TCFD") within the Annual Report and Accounts for the year ended
30 April 2023. There has been no material impact identified on the financial
reporting judgements and estimates. In particular, the Directors considered
the impact of climate change in respect of the following areas:
· Going concern of the Group.
· Cash flow forecasts used in the impairment assessments of non-current
assets including goodwill and other intangible assets.
· Carrying amount and useful economic lives of property, plant and
equipment.
Whilst there is currently no material financial impact expected from climate
change in the short or medium term, the Directors will assess climate-related
risks at each reporting date against judgements and estimates made in
preparation of the Group's Condensed Consolidated Interim Financial Statements
and Annual Report and Accounts.
Going concern
These Condensed Consolidated Interim Financial Statements have been prepared
on a going concern basis. The Group ended the six-month period with a cash and
cash equivalents balance of £22,443,000 (30 April 2023: £22,394,000). The
Group has a facilities agreement comprising a term loan of £175,000,000 and
RCF of £80,000,000, provided by a syndicate of banks. All facilities provided
under the facilities agreement are committed until December 2025. Lease
liabilities arising are also reported in borrowings. As at 31 October 2023 the
RCF is undrawn (H1 FY23: £60,000,000 drawn down).
The term loan and amounts drawn under the RCF bear interest at a floating rate
linked to SONIA, plus a margin.
On 1 August 2022, the Group executed two interest rate derivative agreements,
with the intention of hedging its exposure to increases in SONIA for broadly
three quarters of its current expected future bank debt (net of cash) until
November 2024. The Group's interest rate hedging arrangements now comprise an
interest rate cap with a cap strike rate of 3.0000% on £70m notional until 30
November 2024. This follows the expiry of an interest rate swap (a rate of
2.4725% on £90m notional) on 30 November 2023.
The Group's facilities agreement is subject to a Total Net Debt to last twelve
months' pro forma Adjusted EBITDA covenant of 3.50x. It is tested on a
semi-annual basis, based on Total Net Debt and last twelve months' pro forma
Adjusted EBITDA as defined in the facilities agreement. The Group has complied
with all covenants from entering that agreement until the date of these
Condensed Consolidated Interim Financial Statements and is forecast to comply
with these during the going concern assessment period.
The Directors have reviewed a downside scenario, which is considered to be
severe but plausible and the resulting impact on the Group's performance and
position. In this scenario, which models the possibility that a downturn in
consumer demand could lead to a sustained adverse impact on trading in
addition to the impact of a temporary closure in one of the Group's fulfilment
sites, the Group continues to have sufficient resources to continue operating.
Should more severe impacts occur, further mitigating actions would be
available to the Group.
The Directors also reviewed the results of reverse stress testing performed to
provide an illustration of the cumulative extent to which existing customer
purchase frequency and levels of new customer acquisition would need to
deteriorate to either trigger a breach in the Group's covenants under the
facilities agreement or else exhaust liquidity. The probability of this
scenario occurring was deemed to be remote given the strong cash conversion of
the Group and the resilient nature of its business model.
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for at least
12 months from the date of signing the Condensed Consolidated Interim
Financial Statements.
Accounting policies
The Condensed Consolidated Interim Financial Statements have been prepared in
accordance with the accounting policies set out on pages 147-153 of the
Group's Annual Report and Accounts for the year ended 30 April 2023. During
the period the Group launched a subscription membership service which is
addressed by the additional revenue accounting policy set out below:
Revenue recognition
The Group operates subscription membership schemes whereby customers are
charged an upfront annual fee in return for discounts on subsequent greeting
card purchases and other ancillary benefits over the following 12-month
period. In addition, for new members, the initial greeting card purchase is
typically subject to a discount.
Revenue is measured at the transaction price, which is the standalone selling
price of the subscription membership. The membership contract gives rise to a
performance obligation because it grants the customer an option to acquire
additional goods and services and that option provides material rights that
the customer would not receive without entering that contract. Revenue is
recognised as goods or services are transferred in line with the exercise of
those material rights.
The material rights provided to subscription members currently comprise:
· The discount on the initial greeting card purchase, in the first
year of subscription membership only, to the extent that this exceeds the
price that a customer could access through generally available discounts.
· Expected usage of the discount on subsequent card purchases, to
the extent that this exceeds the price that a customer could otherwise access
through generally available discounts.
· Expected usage of ancillary benefits, such as free postcards.
Taxation
Taxes on income in the interim periods are accrued using the effective tax
rate that would be applicable to expected annual profit or loss.
Critical accounting judgements and estimates
In preparing these Condensed Consolidated Interim Financial Statements,
management has made judgements, estimates and assumptions that affect the
application of the accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
The area of judgement which has the greatest potential effect on the amounts
recognised in these Condensed Consolidated Interim Financial Statements is the
capitalisation of internally generated assets, whilst the areas of estimates
and assumption that have the greatest potential effect are the useful life of
internally generated assets, the merchant accrual and the carrying amount of
Experiences segment Goodwill. These are consistent with matters disclosed on
pages 146 and 147 in the FY23 Annual Report and Accounts.
2 Segmental analysis
The chief operating decision maker ("CODM") reviews external revenue and
Adjusted EBITDA to evaluate segment performance and allocate resources to the
overall business.
"Adjusted EBITDA" is a non-GAAP measure. Adjustments are made to the statutory
IFRS results to arrive at an underlying result which is in line with how the
business is managed and measured on a day-to-day basis. Adjustments are made
for items that are individually important to understand the financial
performance. If included, these items could distort understanding of the
performance for the period and the comparability between periods. Management
applies judgement in determining which items should be excluded from
underlying performance. See Note 3 for details of these adjustments.
The three segments (Moonpig, Greetz and Experiences) are the reportable
segments for the Group, with Moonpig and Experiences based in the UK and
Greetz in the Netherlands. The three segments form the focus of the Group's
internal reporting systems and are the basis used by the CODM for assessing
performance and allocating resources. Finance costs are not allocated to the
reportable segments, as this activity is managed centrally.
Most of the Group's revenue is derived from retail sales to consumers in the
cards and gifting markets. No single customer accounted for 10% or more of the
Group's revenue. In common with many retailers, revenue and trading profit are
subject to seasonal fluctuations and are weighted towards the second half of
the financial year which includes the key peak periods for the business.
The following table shows revenue by segment that reconciles to the
consolidated revenue for the Group.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Moonpig 108,016 103,018
Greetz 25,343 28,085
Experiences 18,777 11,690
Total external revenue 152,136 142,793
The following table shows revenue by key geography that reconciles to the
consolidated revenue for the Group. The geographical split of revenue is based
on the website from which the customer order is placed:
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
UK 123,289 111,985
Netherlands 25,343 28,085
Rest of the world(1) 3,504 2,723
Total external revenue 152,136 142,793
1 Rest of the world revenue includes Ireland, the USA and Australia.
The following table shows the information regarding assets by segment that
reconciles to the consolidated results of the Group.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Moonpig
Non-current assets(1) 39,729 40,893
Capital expenditure(2) (408) (5,563)
Intangible expenditure (5,328) (6,415)
Depreciation and amortisation (6,907) (4,883)
Greetz
Non-current assets(1) 28,160 27,319
Capital expenditure(2) (378) (7,353)
Intangible expenditure - -
Depreciation and amortisation (1,831) (2,115)
Experiences
Non-current assets(1) 169,879 177,820
Capital expenditure (27) (15)
Intangible expenditure (1,673) (250)
Depreciation and amortisation (3,815) (2,790)
Group
Non-current assets(1) 237,768 246,032
Capital expenditure(2) (813) (12,931)
Intangible expenditure (7,001) (6,665)
Depreciation and amortisation (12,553) (9,788)
1 Comprises intangible assets and property, plant and equipment (inclusive of
ROU assets).
2 Includes ROU assets capitalised in the period of £276,000 (31 October 2022:
£5,325,000).
The Group's measure of segment profit and Adjusted EBITDA excludes the
Adjusting Items set out at Note 3; refer to Alternative Performance Measures
("APMs") at Note 19 for calculation.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Adjusted EBITDA
Moonpig 32,745 26,090
Greetz 4,253 4,600
Experiences 4,438 3,861
Group Adjusted EBITDA 41,436 34,551
Depreciation and amortisation
Moonpig 6,907 4,883
Greetz(1) 1,831 2,115
Experiences(2) 3,815 2,790
Group depreciation and amortisation 12,553 9,788
1 Includes amortisation arising on consolidation of intangibles forming part
of the Greetz Cash Generating Unit ("CGU").
2 Includes amortisation arising on consolidation of intangibles forming part
of the Experiences CGU.
The following table shows Adjusted EBITDA that reconciles to the consolidated
results of the Group.
Note Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Adjusted EBITDA 19 41,436 34,551
Depreciation and amortisation 7,8 (12,553) (9,788)
Adjusting items 3 (1,857) (9,820)
Operating profit 27,026 14,943
Finance costs 4 (8,131) (5,849)
Profit before taxation 18,895 9,094
Taxation 5 (4,812) (3,268)
Profit for the period 14,083 5,826
3 Adjusting Items
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Pre-IPO bonus awards (1,245) (1,899)
Pre-IPO share-based payment charges (612) (3,530)
M&A related transaction costs - (4,391)
Total adjustments made to operating profit (1,857) (9,820)
Pre-IPO bonus awards
Pre-IPO bonus awards are one-off cash-settled bonuses and the cash component
of the Pre-IPO schemes, awarded in relation to the IPO process that completed
during the year ended 30 April 2021.
Pre-IPO share-based payment charges
Pre-IPO share-based payment charges relate to the Legacy Schemes, Pre-IPO
awards that were granted in relation to the IPO process that completed during
the year ended 30 April 2021.
M&A-related transaction costs
M&A related transaction costs relate to fees and costs incurred in
relation to the acquisition of the Experiences segment.
Cash paid in relation to adjusting items in the period totalled £4,917,000
(H1 FY23: £5,419,000).
4 Net Finance costs
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Interest payable on leases (412) (423)
Bank interest payable (6,464) (4,965)
Amortisation of capitalised borrowing costs (839) (790)
Amortisation of interest rate cap premium (235) (117)
Interest on discounting of financial liability (44) -
Net foreign exchange (loss) / gain on financing activities (137) 446
Net finance costs (8,131) (5,849)
5 Taxation
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Total current tax 6,278 3,897
Total deferred tax (1,466) (629)
Total tax charge in the income statement 4,812 3,268
Effective tax rate % 25.5% 35.9%
The Finance Bill 2021 included legislation to increase the main rate of
corporation tax from 19% to 25% from 1 April 2023.
According to the Netherlands 2023 Tax Plan, the general corporate income tax
rate will remain 25.8% for the year 2023 whereby the first €200K profit is
taxed at 19%.
6 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the period. For the purposes of this calculation, the weighted
average number of ordinary shares in issue during the period was 342,890,896
(H1 FY23: 339,036,292). The period-on-period increase reflects the release of
3,075,329 shares, on 7 January 2023, from repurchase obligations that were
deducted from ordinary shares outstanding at 31 October 2022 as well as the
issue of 1,165,744 shares in order to satisfy the Group's obligation to its
employees in relation to the vested Tranche 1 of the pre-IPO share based
payment scheme in April 2023 (see Note 13 for further details):
Shares in issue Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
As at 1 May 342,111,621 342,111,621
Issue of shares during the period 1,165,744 -
As at 31 October 343,277,365 342,111,621
31 October 2023 31 October 2022
Number of shares Number of shares
Weighted average number of shares in issue 342,890,896 342,111,621
Less: weighted average number of shares held subject to potential repurchase - (3,075,329)
Weighted average number of shares for calculating basic earnings per share 342,890,896 339,036,292
Diluted earnings per share
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. The Group has potentially dilutive ordinary shares arising from share
options granted to employees under the share schemes as detailed in Note 13 of
these Condensed Consolidated Interim Financial Statements.
Adjusted earnings per share
Earnings attributable to ordinary equity holders of the Group for the period,
adjusted to remove the impact of Adjusting Items and the tax impact of these;
divided by the weighted average number of ordinary shares outstanding during
the period.
31 October 2023 31 October 2022
Number of shares Number of shares
Weighted average number of shares for calculated basic earnings per share 342,890,896 339,036,292
Weighted average number of dilutive shares 10,876,799 10,052,323
Total number of shares for calculated diluted earnings per share 353,767,695 349,088,615
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Basic earnings attributable to equity holders of the Company 14,083 5,826
Adjusting Items (see Note 3) 1,857 9,820
Tax on Adjusting Items (312) (1,018)
Adjusted earnings attributable to equity holders of the Company before 15,628 14,628
Adjusting Items
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Basic earnings per ordinary share (pence) 4.1 1.7
Diluted earnings per ordinary share (pence) 4.0 1.7
Basic earnings per ordinary share before Adjusting Items (pence) 4.6 4.3
Diluted earnings per ordinary share before Adjusting Items (pence) 4.4 4.2
7 Intangible assets
Technology
and
development Customer
Goodwill Trademark costs relationships Software Total
£000 £000 £000 £000 £000 £000
Net Book Value at 1 May 2022 6,236 5,401 14,565 7,749 77 34,028
Additions - - 6,657 - 8 6,665
Additions from acquisition of subsidiary 135,489 7,686 1,177 33,831 - 178,183
Amortisation charge for the period - (709) (3,431) (2,348) (43) (6,531)
Foreign exchange 130 177 - 241 - 548
NBV at 31 October 2022 141,855 12,555 18,968 39,473 42 212,893
Additions - - 6,092 - 192 6,284
Additions from acquisition of subsidiary 1,778 - - (1,698) - 80
Amortisation charge for the period - (785) (4,965) (3,327) (104) (9,181)
Foreign exchange 178 62 - 137 2 379
NBV at 30 April 2023 143,811 11,832 20,095 34,585 132 210,455
Additions - - 7,001 - - 7,001
Amortisation charge for the period - (816) (5,000) (3,328) (110) (9,254)
Foreign exchange (51) (69) - (61) (22) (203)
NBV 31 October 2023 143,760 10,947 22,096 31,196 - 207,999
(a) Goodwill
Goodwill of £6,493,000 (31 October 2022: £6,366,000) relates to the
acquisition of Greetz in 2018, recognised within the Greetz CGU.
Goodwill of £137,267,000 (31 October 2022: £135,489,000) relates to the
acquisition of the Experiences segment and is allocated to the Experiences
CGU. The movement relates to an additional adjustment upon finalisation of the
purchase price allocation, which was completed in the second half of FY23.
The Group performed its annual impairment test at 30 April 2023; the results
of this, the sensitivity analysis and narrative disclosure are set out on
pages 163-164 of the Group's Annual Report and Accounts for the year ended 30
April 2023.
No impairment to the carrying amount of Experiences goodwill was recorded for
the year ended 30 April 2023, reflecting the fact that carrying amount was
lower than the recoverable amount. However, in view of the outcome of the
sensitivity analysis performed, the Directors did identify the compound annual
revenue growth rate as a matter of major source of estimation uncertainty.
For the period ended 31 October 2023, the Group has concluded that there are
no indicators of impairment over the carrying amount of the goodwill allocated
to the Experiences CGU. However, noting that as at 30 April 2023 the
calculation was sensitive to changes in the compound annual revenue growth
rate, the Group has included the sensitivity analysis with respect to this
assumption within these Condensed Consolidated Interim Financial Statements.
The calculation performed as at 30 April 2023 concluded that the headroom
would decrease to £2.7m if there was a 15% decrease in forecasted revenue.
The Group considers the recoverability of goodwill on an ongoing basis and
will continue to monitor the CGUs for any indicators of impairment in
subsequent reporting periods. This disclosure is provided in accordance with
IAS 34 'Interim Financial Reporting' and should be read in conjunction with
the Group's Annual Report and Accounts for the year ending 30 April 2023.
(b) Trademark
£4,259,000 (31 October 2022: £5,098,000) of the asset balance are trademarks
relating to the acquisition of Greetz with finite lives. The remaining useful
economic life at 31 October 2023 of the trademarks is 4 years 10 months (31
October 2022: 5 years 10 months).
£6,688,000 (31 October 2022: £7,457,000) of trademark assets relate to the
brands valued on the acquisition of the Experiences segment. The remaining
useful economic life at 31 October 2023 on these trademarks is 8 years 9
months (31 October 2022: 9 years 9 months).
(c) Technology and development costs
Technology and development costs of £21,431,000 (31 October 2022:
£17,909,000) relate to internally developed assets. The costs of these assets
include capitalised expenses of employees working full time on software
development projects and third-party consulting firms.
Technology and development costs of £665,000 (31 October 2022: £1,059,000)
relate to the acquisition of the Experiences segment and are allocated to the
Experiences CGU. The remaining useful economic life at 31 October 2023 is 1
year 9 months (31 October 2022: 2 years 9 months.)
(d) Customer relationships
£6,645,000 (31 October 2022: £7,484,000) of the asset balance relates to the
valuation of existing customer relationships held by Greetz on acquisition.
The remaining useful economic life at 31 October 2023 on these customer
relationships is 6 years 10 months (31 October 2022: 7 years 10 months).
£24,551,000 (31 October 2022: £31,989,000) of customer relationship assets
relates to those valued on the acquisition of the Experiences segment. The
remaining useful economic life at 31 October 2023 on these customer
relationships ranges between 5 years 9 months and 2 years 9 months (31 October
2022: 6 years 9 months and 11 months).
(e) Software
Software intangible assets include accounting and marketing software purchased
by the Group and software licence fees from third-party suppliers.
8 Property, plant and equipment
Right-of- Right-of-
use Use
Fixtures assets assets
Freehold Plant and and Leasehold Computer plant and land and
property machinery fittings Improvements equipment machinery buildings Total
£000 £000 £000 £000 £000 £000 £000 £000
NBV at 1 May 2022 1,854 2,574 288 2,070 890 206 13,359 21,241
Additions - 2,203 5 4,960 406 24 5,333 12,931
Acquired additions - - 692 - 143 371 933 2,139
Disposals - - 6 (6) - - - -
Transfers - - (81) 205 (124) - - -
Depreciation charge for the period (78) (666) (147) (285) (294) (185) (1,602) (3,257)
Foreign exchange - 31 - 9 13 5 27 85
NBV at 31 October 2022 1,776 4,142 763 6,953 1,034 421 18,050 33,139
Additions - - 263 1,719 181 941 219 3,323
Disposals - (57) - - (20) 15 (43) (105)
Transfers - (880) 880 - - - - -
Depreciation charge for the period (78) (313) (621) (523) (337) (206) (1,606) (3,684)
Impairment - - - - - - (428) (428)
Foreign exchange - 12 11 23 7 (3) 16 66
NBV at 30 April 2023 1,698 2,904 1,296 8,172 865 1,168 16,208 32,311
Additions - 219 10 222 87 - 275 813
Depreciation charge for the period (78) (571) (292) (548) (288) (220) (1,302) (3,299)
Foreign exchange - (2) (7) (16) (4) (2) (25) (56)
NBV at 31 October 2023 1,620 2,550 1,007 7,830 660 946 15,156 29,769
( )
( )
9 Inventories
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Raw materials and consumables 1,882 2,434 2,128
Finished goods 10,509 12,318 13,425
Total inventory 12,391 14,752 15,553
Less: Provision for write-off of:
Raw materials and consumables (583) (10) (153)
Finished goods (2,860) (2,141) (3,067)
Net inventory 8,948 12,601 12,333
The cost of inventories recognised as an expense and included in cost of sales
during the period amounted to £20,060,000 (H1 FY23: £21,595,000).
10 Trade and other receivables
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Current:
Trade receivables 1,107 1,742 1,901
Less: provision for impairment of receivables (301) (408) (470)
Trade receivables - net 806 1,334 1,431
Other receivables 867 4,354 2,117
Other receivables with entities formerly under common control 181 150 151
Prepayments 4,330 4,235 2,632
Total current trade and other receivables 6,184 10,073 6,331
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Non-current other receivables
Other receivables 2,140 2,178 2,153
Total non-current trade and other receivables 2,140 2,178 2,153
Non-current other receivables relate to security deposits in connection with
leased property.
11 Trade and other payables
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Current
Trade payables 14,369 23,150 26,726
Other payables 4,728 418 4,569
Other taxation and social security 9,134 6,325 6,756
Accruals 23,878 19,079 16,272
Merchant accrual 36,818 49,269 55,796
Total current trade and other payables 88,927 98,241 110,119
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Non-current
Other payables - 6,005 3,168
Other taxation and social security 368 688 1,052
Other payables to entities formerly under common control 638 638 638
Total non-current trade and other payables 1,006 7,331 4,858
12 Borrowings
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Current
Lease liabilities 3,266 3,087 3,443
Borrowings 85 162 27
Non-current
Lease liabilities 14,691 16,735 16,082
Borrowings 171,332 229,751 170,493
Total borrowings and lease liabilities 189,374 249,735 190,045
The Group's sources of borrowing for liquidity purposes include its facilities
agreement, which was executed on 7 January 2021 and amended on 22 June 2022.
This facility comprises a Term Loan of £175,000,000 and RCF of £80,000,000,
provided by a syndicate of banks. All facilities provided under this agreement
are committed until December 2025. Lease liabilities arising are also reported
in borrowings. As at 31 October 2023 the RCF is undrawn (31 October 2022:
£60,000,000 drawn down).
Interest on all amounts drawn under the facilities agreement is calculated at
a floating reference rate, SONIA, plus a margin.
On 1 August 2022, the Group executed two interest rate derivative agreements,
comprising an interest rate swap at a rate of 2.4725% with a floor strike rate
of 0% on £90m notional until 1 December 2022 and £55m notional until 30
November 2023 and an interest rate cap with a cap strike rate of 3.0000% on
£70m notional until 30 November 2024.
The Group's facilities agreement is subject to a Total Net Debt to last twelve
months' pro forma Adjusted EBITDA (stated pro forma to include a full year's
profit from acquired businesses) covenant of 3.50x, tested semi-annually, with
Total Net Debt and Adjusted EBITDA as defined in the facilities agreement.
Borrowings are repayable as follows:
At At At
31 October 31 October 30 April
2023 2022 2023
£000 £000 £000
Within one year 85 162 27
Within one and two years - - -
Within two and three years 171,332 - 170,493
Within three and four years - 229,751 -
Within four and five years - - -
Beyond five years - - -
Total borrowings(1) 171,417 229,913 170,520
1 Total borrowings include £85,000 (H1 FY23: £162,000) in respect of accrued
unpaid interest and are shown net of capitalised borrowing costs of
£3,668,000 (H1 FY23: £5,249,000).
The table below details changes in liabilities arising from financing
activities, including both cash and non-cash changes.
Lease
Borrowings liabilities Total
£000 £000 £000
1 May 2022 170,163 15,320 185,483
Cash flow 55,121 (1,618) 53,503
Foreign exchange - 31 31
Interest and other(1) 4,629 6,089 10,718
31 October 2022 229,913 19,822 249,735
Cash flow (67,265) (1,886) (69,151)
Foreign exchange - 67 67
Interest and other(1) 7,872 1,522 9,394
30 April 2023 170,520 19,525 190,045
Cash flow (7,737) (2,211) (9,948)
Foreign exchange - (64) (64)
Interest and other(1) 8,634 707 9,341
31 October 2023 171,417 17,957 189,374
1 Interest and other within borrowings comprises amortisation of capitalised
borrowing costs and the interest expense in the period. Interest and other
within lease liabilities comprises interest on leases as disclosed in Note 4,
as well as the lease liability addition in relation to the new Netherlands
facility and office and the lease liability acquired on acquisition of the
Experiences segment.
13 Share-based payments
Legacy schemes
Prior to Admission to the London Stock Exchange during the year ended 30 April
2021, share and cash-based incentives were awarded by the Former Parent
Undertaking (as defined in the last Annual Report and Accounts) in relation to
legacy compensation agreements for certain employees, senior management and
Directors. Such shares have been converted into separate shares in Moonpig
Group plc and other companies formerly under common control. These were
accounted for in accordance with IFRS 2 and disclosed in the Prospectus, which
can be found at www.moonpig.group/investors
(https://www.moonpig.group/investors) . The awards included 3,075,329 shares
in Moonpig Group plc that did not vest at the date of Admission, and which
vested on the 7 January 2023. In respect of these shares there were non-cash
charges of £nil in H1 FY24 (H1 FY23: £1,643,000). National Insurance is not
included on these schemes as they operated at an unrestricted tax market
value.
Pre-IPO awards
Awards were granted on 27 January 2021 and comprise two equal tranches, with
the vesting of both subject to the achievement of revenue and Adjusted EBITDA
performance conditions for the year ended 30 April 2023 and for participants
to remain employed by the Company over the vesting period. The Group exceeded
maximum performance for both measures, including on an organic basis without
the post-acquisition revenue and profit from Experiences. Accordingly, the
first tranche vested on 30 April 2023 and was paid in July 2023; the second
tranche will vest on 30 April 2024 and be payable shortly thereafter. Given
the constituents of the scheme, no attrition assumption has been applied. The
scheme rules provide that when a participant leaves employment, any
outstanding award may be reallocated to another employee (excluding the
Executive Directors), in accordance with which share awards were granted in
May, September, October and December 2022 and January, February and April
2023, all of which will vest on 30 April 2024. Vesting may arise sooner where
a former employee is a "good leaver" and the Remuneration Committee exercises
discretion to permit vesting at cessation of employment.
Number of
shares
Pre-IPO awards
Outstanding at the beginning of the period 2,619,716
Granted -
Exercised (1,165,744)
Forfeited (7,143)
Outstanding at the end of the period 1,446,829
Exercisable at the end of the period -
Long-Term Incentive Plan ("LTIP")
Awards were granted on 1 February 2021 and will vest on 30 June 2024. Half of
the share awards vesting is subject to a relative Total Shareholder Return
("TSR") performance condition measured against the constituents of the FTSE
250 Index (excluding Investment Trusts). The other half of the share awards
vesting is subject to the achievement of an Adjusted Basic Pre-Tax EPS
performance condition (calculated as Adjusted Profit Before Taxation, divided
by the undiluted weighted average number of ordinary shares outstanding during
the year). Participants are also required to remain employed by the Company
over the vesting period, with Executive Directors to 30 April 2026. Given the
constituents of the scheme, no attrition assumption has been applied. On 4
July 2023 and 19 September 2023 new awards were granted under the existing
scheme and will vest on 4 July and 19 September 2026 respectively. Consistent
with the existing scheme, participants are required to remain employed by the
Company over the vesting period, with the Executive Directors to 4 July 2028.
Vesting may arise sooner where a former employee is a "good leaver" and the
Remuneration Committee exercises discretion to permit vesting at cessation of
employment. The below tables give the assumptions applied to the options
granted in the period and the shares outstanding:
September 2023 July 2023
Valuation model Stochastic and Black-Scholes and Chaffe Stochastic and Black-Scholes and Chaffe
Weighted average share price (pence) 164.90 159.40
Exercise price (pence) 0 0
Expected dividend yield 0% 0%
Risk-free interest rate 4.47%/4.54% 5.13%/4.80%
Volatility 32.54%/33.25% 33.79%/33.21%
Expected term (years) 3.00/2.00 3.00/2.00
Weighted average fair value (pence) 137.25/164.90 129.70/159.40
Attrition 0% 0%
Weighted average remaining contractual life (years) 3.90 3.70
LTIP awards Number of
shares
Outstanding at the beginning of the period 3,064,998
Granted 6,991,966
Exercised -
Forfeited (492,570)
Outstanding at the end of the period 9,564,394
Exercisable at the end of the period -
Deferred Share Bonus Plan ("DSBP")
The Group has bonus arrangements in place for Executive Directors and certain
key management personnel within the Group whereby a proportion of the annual
bonus is subject to deferral over a period of three years with vesting subject
to continued service only. Vesting may arise sooner where a former employee is
a "good leaver" and the Remuneration Committee exercises discretion to permit
vesting at cessation of employment.
The outstanding number of shares at the end of the period is 419,492 (31
October 2022: 392,289), with an expected vesting profile as follows:
FY24 FY25 FY26 FY27 Total
Share options granted on 6 August 2021 1,853 88,744 - - 90,597
Share options granted on 5 July 2022 8,550 - 273,181 - 281,731
Share options granted on 4 July 2023 2,286 - - 44,878 47,164
The below tables give the assumptions applied to the options granted in the
period and the shares outstanding:
July 2023
Valuation model Black-Scholes
Weighted average share price (pence) 159.40
Exercise price (pence) 0
Expected dividend yield 0%
Risk-free interest rate N/A
Volatility N/A
Expected term (years) 3.00
Weighted average fair value (pence) 159.40
Attrition 0%
Weighted average remaining contractual life (years) 3.50
DSBP Number of
shares
Outstanding at the beginning of the period 392,289
Granted 47,164
Exercised -
Forfeited (19,961)
Outstanding at the end of the period 419,492
Exercisable at the end of the period -
Save As You Earn ("SAYE")
The Group entered a SAYE scheme for all eligible employees under which
employees are granted an option to purchase ordinary shares in the Company at
an option price set at a 20% discount to the average market price over the
three days before the invitation date, in three years' time, dependent on
their entering into a contract to make monthly contributions into a savings
account over the relevant period.
The FY22 awards were granted on 3 September 2021 and will vest on 1 October
2024, with a six-month exercise period following vesting. The awards are
subject only to service conditions with the requirement for the recipients of
awards to remain in employment with the Company over the vesting period. FY23
awards were granted on 8 September 2022 and will vest on 1 October 2025, they
are subject to the same conditions as the FY22 grant. The FY24 awards were
granted on 28 July 2023 and will vest on 1 August 2026, they are subject to
the same conditions as the FY23 grant.
The below tables give the assumptions applied to the options granted in the
year and the shares outstanding:
July 2023
Valuation model Black-Scholes
Weighted average share price (pence) 176.40p
Exercise price (pence) 117.00p
Expected dividend yield 0%
Risk-free interest rate 3.93%
Volatility 32.54%
Expected term (years) 3.00
Weighted average fair value (pence) 67.09p
Attrition 15%
Weighted average remaining contractual life (years) 2.75
SAYE Number of
shares
Outstanding at the beginning of the period 783,819
Granted 842,522
Exercised -
Cancelled (461,453)
Forfeited -
Outstanding at the end of the period 1,164,888
Exercisable at the end of the period -
The fair value of awards under the Pre-IPO and DSBP awards are equal to the
share price on the date of award as there is no price to be paid and employees
are entitled to dividend equivalents. For awards with a market condition,
volatility is calculated over the period commensurate with the remainder of
the performance period immediately prior to the date of grant. For all other
conditions, volatility is calculated over the period commensurate with the
expected term. As the Company had only recently listed, a proxy volatility
equal to the median volatility of the FTSE 250 (excluding Investment Trusts)
over the respective periods has been used. Consideration has also been made to
the trend of volatility to return to its mean, by disregarding extraordinary
periods of volatility.
Share-based payments expenses recognised in the income statement:
Six months ended Six months ended Year ended
31 October 2023 31 October 2022 30 April 2023
£000 £000 £000
Legacy schemes - 1,643 2,251
Pre-IPO awards 612 1,887 3,168
LTIP 1,517 833 1,876
SAYE 261 258 351
DSBP 186 160 273
Share-based payments expense(1) 2,576 4,781 7,919
1 The £2,576,000 (H1 FY23: £4,781,000) stated above is presented inclusive
of employer's national insurance, a net £2,000 credit in the period. This is
made up of contributions of £321,000 (H1 FY23: £353,000) offset by a release
of £323,000 in relation to the vesting of Tranche 1 of the pre-IPO awards.
14 Share capital and reserves
The Group considers its capital to comprise its ordinary share capital, share
premium, merger reserve, retained earnings, share-based payments reserve,
hedging reserve and foreign exchange translation reserve. Quantitative detail
is shown in the Condensed Consolidated Statement of Changes in Equity. The
Directors' objective when managing capital is to safeguard the Group's ability
to continue as a going concern in order to provide returns for the
shareholders and benefits for other stakeholders.
Called-up share capital
Ordinary share capital represents the number of shares in issue at their
nominal value. Ordinary shares in the Company are issued, allotted and fully
paid up.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. The shareholding as at 31 October 2023 is:
Number of shares £000
Allotted, called-up and fully paid ordinary shares of £0.10 each 343,277,365 34,328
As at 31 October 2023, ordinary share capital represents 343,277,365 (31
October 2022: 342,111,621) ordinary shares with a par value of £0.10 (31
October 2022: £0.10). The movement in share capital during the period relates
to the issuance of shares upon vesting of the Group's pre-IPO incentive
scheme. 1,165,744 shares were issued at nominal value of £0.10, with the
issuance being paid up by the Group through distributable reserves,
specifically the share-based payment reserve.
Share premium
Share premium represents the amount over the par value which was received by
the Company upon the sale of the ordinary shares. Upon the date of listing the
par value of the shares was £0.10 but the initial offering price was £3.50.
Share premium is stated net of direct costs of £736,000 (31 October 2022:
£736,000) relating to the issue of the shares.
Merger reserve
The merger reserve arises from the Group reorganisation accounted for under
common control.
Other reserves
Other reserves represent the share-based payment reserve, hedging reserve and
the foreign currency translation reserve.
Share-based payment reserve
The share-based payment reserve is built up of charges in relation to
equity-settled share-based payment arrangements which have been recognised
within the Condensed Consolidated Income Statement.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net
change in the fair value of cash flow hedging instruments related to hedged
transactions that have not yet occurred and the cumulative net change in the
fair value of time value on the cash flow hedging instruments.
Foreign currency translation reserve
The foreign currency translation reserve represents the accumulated exchange
differences arising since the acquisition of Greetz from the impact of the
translation of subsidiaries with a functional currency other than Sterling.
Foreign
Share-based currency
payment translation Hedging Total
reserve reserve reserve other reserves
£000 £000 £000 £000
At 1 May 2022 34,941 (35) - 34,906
Other comprehensive income:
Foreign currency translation reserve reclassification - (735) - (735)
Cash flow hedges:
Fair value changes in the period - - 2,354 2,354
Cost of hedging reserve - - 225 225
Fair value movements on cash flow hedges transferred to profit and loss - - (148) (148)
Exchange differences on translation of foreign operations - (179) - (179)
Share-based payment charge (excluding National Insurance) 4,428 - - 4,428
At 31 October 2022 39,369 (949) 2,431 40,851
Other comprehensive income:
Foreign currency translation reserve reclassification - - - -
Cash flow hedges:
Fair value changes in the period - - (463) (463)
Cost of hedging reserve - - (99) (99)
Fair value movements on cash flow hedges transferred to profit and loss - - 12 12
Exchange differences on translation of foreign operations - 21 - 21
Share-based payment charge (excluding National Insurance) 2,842 - - 2,842
At 30 April 2023 42,211 (928) 1,881 43,164
Other comprehensive income:
Cash flow hedges:
Fair value changes in the period - - 491 491
Cost of hedging reserve - - 17 17
Fair value movements on cash flow hedges transferred to profit and loss - - (1,285) (1,285)
Exchange differences on translation of foreign operations - 12 - 12
Share-based payment charge (excluding National Insurance) 2,578 - - 2,578
Deferred tax on share-based payments 105 - - 105
Share options exercised (4,081) - - (4,081)
At 31 October 2023 40,813 (916) 1,104 41,001
15 Financial instruments and related disclosures
The amounts in the Condensed Consolidated Balance Sheet and related notes that
are accounted for as financial instruments and their classification under IFRS
9, are as follows:
Note At At At
31 October 2023 31 October 2022 30 April 2023
£000 £000 £000
Financial assets
Financial assets at amortised cost:
Trade and other receivables(1) 10 3,994 8,017 5,852
Cash 22,443 40,972 22,394
Financial assets measured at fair value
Financial derivatives(3) 1,798 3,253 2,468
28,235 52,242 30,714
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables(2) 11 80,431 98,559 107,169
Lease liabilities 12 17,957 19,822 19,525
Borrowings 12 171,417 229,913 170,520
269,805 348,294 297,214
1 Excluding prepayments.
2 Excluding other taxation and social security.
3 Financial derivatives include an interest rate cap and swap and a
foreign exchange derivative.
The interest rate cap and swap derivatives measured at fair value are valued
using market data to construct a forward interest rate curve which govern the
future flows under the derivative. These are then discounted back at the
requisite discount curve.
On 3 May 2023 the Group executed a foreign currency forward contract agreement
on a notional amount of EUR10,000,000 for the period until 30 April 2024. The
Group does not apply hedge accounting to this derivative, any gains or losses
in relation to the fair value of the derivative are recorded in the profit and
loss account.
Financial assets and liabilities held at amortised cost are initially
recognised at their fair value and then subsequently measured at amortised
costs using the effective interest method. The effective interest rate is the
rate that discounts the future cash flows expected to be paid over the life of
the liability or received over the life of the asset. Any interest expense /
income arising on the unwind of the liability is recognised within finance
costs.
To the extent that financial instruments are not carried at fair value in the
Condensed Consolidated Balance Sheet, the carrying values approximate the fair
values at 31 October 2023, 30 April 2023 and 31 October 2022, except for
borrowings where the fair value of bank loans is £175,000,000 (FY23:
£175,000,000; H1 FY23: £235,000,000). There have been no changes to
classifications in the current or prior period.
16 Commitments and contingencies
a) Commitments
The Group entered a financial commitment in respect of floristry supplies of
£nil (31 October 2022: £91,000) and rental commitments of £12,000 (31
October 2022: £12,000) which are due within one year.
b) Contingencies
Group companies have given a guarantee in respect of the external bank
borrowings of the Group which amounted to £255,000,000 at 31 October 2023.
This includes the Term Loan of £175,000,000 and the RCF of £80,000,000 of
which £nil was drawn down at 31 October 2023 (31 October 2022: £60,000,000
drawn down).
17 Related party transactions
Transactions with related parties
The Group has transacted with entities formerly under common control which are
presented below.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Other income from other related parties formerly under common control 664 661
At the balance sheet date, the Group had the following balances with entities
formerly under common control:
At At At
31 October 2023 31 October 2022 30 April 2023
£000 £000 £000
Trade and other receivables from other related parties formerly under common 181 150 150
control
Trade and other payables to other related parties formerly under common (638) (638) (638)
control
There is no expected credit loss provision recognised in relation to the above
receivables as the probability of default and any corresponding expected
credit loss are immaterial to the Group.
18 Events after the balance sheet date
There were no adjusting or non-adjusting events after the balance sheet date.
19 Alternative Performance Measures
Adjusted EBITDA
Adjusted EBITDA is a measure of the Group's operating performance and debt
servicing ability. It is calculated as operating profit adding back
depreciation and amortisation and Adjusting Items (Note 3 of these Condensed
Consolidated Interim Financial Statements).
Depreciation and amortisation can fluctuate, is a non-cash adjustment and is
not linked to the ongoing trade of the Group.
Adjusting Items are excluded as management believe their nature distorts
trends in the Group's reported earnings. This is because they are often
one-off in nature or not related to underlying trade.
A reconciliation of operating profit to Adjusted EBITDA is as follows:
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Operating profit 27,026 14,943
Depreciation and amortisation 12,553 9,788
Adjusting Items 1,857 9,820
Adjusted EBITDA 41,436 34,551
Adjusted EBIT
Adjusted EBIT is calculated as operating profit before Adjusting Items as
follows:
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Operating profit 27,026 14,943
Adjusting items 1,857 9,820
Adjusted EBIT 28,883 24,763
Adjusted PBT
Adjusted PBT is the profit before taxation and before Adjusting Items.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
PBT 18,895 9,094
Adjusting Items 1,857 9,820
Adjusted PBT 20,752 18,914
Adjusted PAT
Adjusted PAT is the profit after tax, before Adjusting Items and the tax
impact of these adjustments. The adjusted PAT is used to calculate the
adjusted basic earnings per share in Note 6 of these Condensed Consolidated
Interim Financial Statements.
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
PAT 14,083 5,826
Adjusting Items 1,857 9,820
Tax impact of the above (312) (1,018)
Adjusted PAT 15,628 14,628
Net debt
Net debt is a measure used by the Group to reflect available headroom compared
to the Group's committed debt facilities. The calculation is as follows:
At At At
31 October 2023 31 October 2022 30 April 2023
£000 £000 £000
Borrowings (171,417) (229,913) (170,520)
Cash and cash equivalents 22,443 40,972 22,394
Lease liabilities (17,957) (19,822) (19,524)
Net debt (166,931) (208,763) (167,650)
Ratio of net debt to Adjusted EBITDA
The ratio of Net Debt to Last Twelve Months' pro forma Adjusted EBITDA helps
management to measure its ability to service debt obligations. The calculation
is as follows:
At At At
31 October 2023 31 October 2022 30 April 2023
£000 £000 £000
Net debt (166,931) (208,763) (167,650)
Pro forma Adjusted EBITDA 91,083 85,142 85,127
Total Net debt to Last Twelve Months' pro forma Adjusted EBITDA 1.83:1 2.45:1 1.97:1
Adjusted Operating Cash Conversion
Adjusted Operating Cash Conversion is operating cash flow divided by Adjusted
EBITDA, expressed as a ratio. The calculation of Adjusted Operating Cash
Conversion is as follows:
Six months ended Six months ended
31 October 2023 31 October 2022
£000 £000
Profit before taxation 18.9 9.1
Add back: Finance costs 8.1 5.8
Add back: Adjusting Items (excluding share-based payments) 1.2 6.3
Add back: Adjusting Items - Share-based payments 0.6 3.5
Add back: Depreciation and amortisation 12.6 9.8
Adjusted EBITDA 41.4 34.6
Less: Capital expenditure (fixed and intangible assets) (7.8) (14.2)
Adjust: Impact of share-based payments(1) 2.0 0.9
Add back: Decrease / (Increase) in inventories(2) 3.4 (1.1)
Add back: Decrease in trade and other receivables(2) 0.2 1.8
Add back: (Decrease) in trade and other payables(2) (24.1) (20.9)
Operating cash flow(3) 15.1 1.1
Adjusted Operating Cash Conversion 36% 3%
Add back: Capital expenditure 7.8 14.2
Add back: (Decrease) / increase in debtors and creditors with - 0.3
undertakings formerly under common control
Less: Adjusting items (excluding share-based payments) (1.2) (6.3)
Less: Research and development tax credit (0.4) (0.3)
Cash generated from underlying operating activities 21.3 9.0
Settlement of M&A related employee bonuses at Experiences(3) - (13.2)
Cash generated from / (used in) operating activities 21.3 (4.2)
1 Reflecting the non-cash share-based payment charge recognised within
Adjusted EBITDA, net of NI on the share-based payments recognised below
EBITDA.
2 Working capital movements for the six months ended 31 October 2022 have been
adjusted for the opening balances arising upon acquisition of Experiences.
3 Operating cash flow excludes settlement of legacy incentive obligations in
H1 FY23 associated with the acquisition, which were fully provided for in the
opening balance sheet.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board of Directors has collective overall responsibility for the
identification and management of the principal and emerging risks to the
Group. The Board has carried out a robust assessment of such risks. This
included an assessment of the likelihood of each risk identified and of the
potential impact of each risk after considering mitigating actions being
taken. Risk levels were reviewed and modified where appropriate to reflect the
Board's current view of the relative significance of each risk.
The principal risks and uncertainties identified are detailed below.
Additional risks and uncertainties for the Group, including those that are not
currently known or are not considered material, may individually or
cumulatively also have a material effect on the Group's business, results of
operations and/or financial condition.
The Board has approved amendments of the Group's assessment of principal risks
since the prior year. The risk in relation to leadership retention has been
removed following approval of the 2023 Remuneration Policy at AGM. The risk in
relation to input cost inflation has been removed as the Group has not seen
significant input cost inflation; the Group continues to monitor this closely.
Other risks have been amended as appropriate based on the output of risk
management assessment.
Risk Description Management and mitigation
1. Technology security and data protection As a digital platform business, the Group requires its technology The Group has a disaster recovery and business continuity plan which is
infrastructure to operate. Downtime of the Group's systems resulting from a regularly reviewed and tested. The Group's platforms are cloud-based, hosted
technology security breach would cause an interruption to trading. by leading technology firms.
Either a technology security breach or a failure to appropriately process and The Group's technology security team performs regular security testing of the
control the data that the Group's customers share (whether because of internal key platform and applications and reviews internal processes and capabilities.
failures or a malicious attack by a third party), could result in reputational The Group subscribes to bug bounty schemes that reward friendly hackers who
damage, loss of customers, loss of revenue and financial losses from uncover security vulnerabilities.
litigation or regulatory action.
Quarterly health checks are performed on critical security tools to ensure
they are configured and operating appropriately.
The Group works closely with suppliers to ensure that they only receive and
store minimum data for the purposes required; security audits are performed to
confirm suppliers operate at a high standard to protect and manage data.
Annual GDPR training is mandatory for all employees.
Since acquisition, significant work has been performed to bring Experiences
within the Group's internal control framework, including in respect of
technology security and data protection.
2. Consumer demand The economic downturn has resulted in a more challenging trading environment The UK greeting card market has historically proven recession-resilient,
in the last twelve months. Any further demonstrating consistent growth through the 2008-2009 downturn (Source:
OC&C, June 2022).
deterioration in the economic environment could impact demand and Group
revenue.
Our approach at Moonpig and Greetz is focused on acquiring loyal customer
cohorts that drive recurring revenue, which provides further resilience 91% of
Whilst the single greeting cards market has been stable across a long-time revenue at these brands in H1 FY24 was generated from existing customers (H1
horizon, it is possible that physical greeting cards could become less FY23: 90%).
culturally relevant in the UK and the Netherlands. There is no evidence of
this currently, either for consumers generally or for individual age cohorts.
Our business model is flexible, and we can respond rapidly to cyclical
economic changes, for instance with respect to pricing, merchandise range and
cost base.
We continue to invest in the development of digital gifting solutions and
would be able to prioritise this work if we saw indications of changing
cultural attitudes to card giving.
3. Strategy The Group's strategy is focused on investment in technology and data to drive The Group monitors return on investment for all technology development. The
growth across each of our businesses. There is a risk that this strategy does product, data and technology functions are managed on an agile basis,
not deliver growth in revenue and profit to the extent expected. facilitating rapid redirection of resource towards those projects that most
strongly contribute to revenue growth. Should our strategy not deliver growth
in revenue to the extent expected, there is scope to flex investment
accordingly.
Our strategy for Experiences is to transform it from an ecommerce marketing
operation into a technology and data-led platform. As with any business
acquisition the delivery of plans carries a higher level of execution risk
compared to segments that have been operated by the Group for some time. The Experiences segment has been integrated into the Group's business review
framework to ensure regular challenge and discussion of performance.
Development work to deliver revenue synergies from the Experiences acquisition
is ongoing, Moonpig offers a digital gifting experience on the inside of a
card.
4. Changes to the universal postal service Moonpig and Greetz use regulated monopoly postal services for the final leg of We maintain good relationships with postal service providers and there is
delivery for greeting cards sent by envelope post. regular, senior-level communication. We will engage fully in regulatory
consultations.
Demand for single greeting cards could be impacted by changes to the
frequency, reliability or affordability of postal delivery. Our strategy is to grow attached gifting, which moves orders from envelope
post to parcel courier delivery for which there are multiple providers.
The UK regulator with responsibility for the universal postal service (Ofcom)
has announced its intention to consult on reducing the universal service At Experiences, a significant proportion of orders are fulfilled digitally
obligation from six to five days of delivery per week. rather than physically. We are also innovating solutions for digital delivery
at Moonpig and Greetz.
Royal Mail is consulting on plans to cease mail flights from Jersey and the
Isle of Man, with a proposal that any future similar change in relation to Cessation of mail flights from Guernsey would not impact our ability to fulfil
Guernsey should not require consultation. Moonpig greeting card orders.
5. Brand strength and reputation The Group's continued success depends on the strength of its market-leading There is high consumer awareness of the Group's brands, which is maintained by
brands: Moonpig, Greetz, Red Letter Days and Buyagift. ongoing investment in marketing. This is further strengthened by network
effects from recipients receiving cards and gifts.
Any event that damages the Group's reputation or brands could adversely impact
its business, results of operations, financial condition or prospects. Significant ongoing investment in technology, with innovations such as video
and audio messages in greeting cards, help to differentiate our brand from its
online and offline competitors.
Investment in data protection and technology security helps to protect the
Group from the adverse impact of a data breach or cyber-attack.
6. Disruption to operations Any disruption to in-house or third-party facilities within the Group's We operate flexible fulfilment technology with application programming
production and fulfilment network could have an adverse effect on trading. interface ("API") based data architecture which allows the addition of
third-party suppliers to the production and fulfilment network with relative
speed.
In the UK, there was service disruption at Royal Mail from August to December
2022 due to industrial action. This could recur in future periods.
We continued to adopt a multi-site approach to ensure resilience for our UK
and Dutch operations. The Group's new in-house facilities at Almere and
Tamworth operate alongside our existing Guernsey site and continued use of
The Group uses select third-party suppliers for certain solutions on its outsourced partners. Flowers are fulfilled by a single supplier in both the UK
platforms and any disruptions, outages or delays in these would affect the and the Netherlands, however there is partial substitutability of demand
availability of, prevent or inhibit the ability of customers to access or between flowers and other gifting product categories.
complete purchases on its platforms.
The Group carries out due diligence on all key suppliers at the onset of a
relationship. This includes technology and data protection due diligence and
checks on financial viability.
Independent review report to Moonpig Group plc
Report on the Condensed Consolidated Interim Financial Statements
Our conclusion
We have reviewed Moonpig Group plc's Condensed Consolidated Interim Financial
Statements (the "interim financial statements") in the Half Year Results of
Moonpig Group plc for the 6 month period ended 31 October 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed Consolidated Balance Sheet as at 31 October 2023;
· the Condensed Consolidated Income Statement and Condensed
Consolidated Statement of Comprehensive Income for the period then ended;
· the Condensed Consolidated Statement of Changes in Equity for the
period then ended;
· the Condensed Consolidated Cash Flow Statement for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Results of Moonpig
Group plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). 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.
We have read the other information contained in the Half Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half Year Results, including the
interim financial statements, the directors are responsible for assessing the
group'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 group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Year Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 December 2023
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR ZZMGZRDLGFZMRecent news on Moonpig
See all newsREG-Moonpig Group Plc: Holding(s) in Company
AnnouncementREG-Moonpig Group Plc: Holding(s) in Company
AnnouncementREG-Moonpig Group Plc: Holding(s) in Company
AnnouncementREG-Moonpig Group Plc: Holding(s) in Company
AnnouncementREG-Moonpig Group Plc: Holding(s) in Company
Announcement