ME Group
Annual Report 2022
60 years
of innovation
We have changed our name from
Photo-Me International to ME Group.
In August 2022 we completed our transition to our new identity with the change of
the Company name to ME Group International plc | LSE TIDM ticker: MEGP.1
Over the last 60 years, the Group has evolved through innovation to expand and
diversify its operations internationally. ME Group, which stands for ‘Making Easy’
better reflects our mission to revolutionise local retail by bringing innovative
automated self-service solutions to consumers, delivered through a more
self-sufficient customer experience every day.
Our Company name change is an exciting and important milestone for the Group,
which will support our plans for growth and continued diversification to meet the
needs of customers and consumers today and in the future.
1 The Company was previously called Photo-Me International plc | LSE ticker: PHTM.
60 years of innovation
Photo-Me International plc is listed
on the London Stock Exchange
1962
Invention and launch of
the minilab, the first
minute photo printing
machine (in 1 hour)
1981
1963
Serge Crasnianski
founds KIS, and invents
Astro the first minute
key machine
1994
KIS joins Photo-Me
Contents
OUR BUSINESS
2022 in summary
Business at a Glance
Photo.ME
Wash.ME
Print.ME
Feed.ME
STRATEGIC REPORT
Chairman’s Statement
Business Model and Strategy
Five-year growth strategy
Outlook
Investment priorities by business area
Chief Executive’s Report
Innovation and diversification
Review of performance by geography
Section 172(1) statement
Principal risks
Sustainability Statement
Viability Statement
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CORPORATE GOVERNANCE
Board of Directors & Company Secretary
Report of Directors
Corporate Governance
Statement of Directors’ Responsibilities
Directors’ Remuneration Report
Remuneration Policy Report
Annual Report on Remuneration
FINANCIAL STATEMENTS
Independent auditor’s report to the
members of ME Group International plc
Group Statement of Comprehensive Income
Group Statement of Financial Position
Company Statement of Financial Position
Group Statement of Cash Flows
Company Statement of Cash Flows
Group Statement of Changes in Equity
Company Statements of Changes in Equity
Notes to the Financial Statements
Company Information & Advisers
Shareholder Information
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Launch of new Revolution
self-service laundry concept
Launch of Iconic photobooth,
Starbooth designed by
Philippe Starck
2012
Launch of encrypted
photo ID technology
for passport renewal
Acquisition of Sempa and launch
of fresh orange juice machines
2011
2017
2019
2022
Photo-Me International plc
changes its listed entity name to
ME Group International plc
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Our business
2022 in summary
Key financial
For the 12 months ended 31 October 2022
R E V E N U E
£259.8m
2021: £214.4m
E B I T DA 1
£92.2m
2021: £65.1m
P R O F I T B E FO R E TA X 2
£53.4m
2021: £28.6m
P R O F I T A F T E R TA X
£38.8m
2021: £21.9m
C A S H G E N E R AT E D
F R O M O P E R AT I O N S
£87.9m
2021: £66.1m
Highlights
G R O S S C A S H 4
£136.2m
2021: £99.4m
N E T C A S H 3
£34.0m
2021: £34.9m
E A R N I N G S P E R S H A R E (D I LU T E D)
10.23p
2021: 5.77p
TOTA L D I V I D E N D P E R
O R D I N A RY S H A R E 3
12.10p
2021: 2.89p
▪ Strong financial performance was driven by increased
▪ Feed.ME pizza vending business underwent a
demand and a progressive increase of prices, particularly
for photobooth and laundry services, across Continental
Europe and in the UK & Republic of Ireland
transition period, including reorganization of the
sales teams and upgrading technical software across
our pizza vending estate
▪ Photo.ME revenue increased by 25.2% to £154.3 million
as activity continued to recover following the easing of
travel and social restrictions across most territories
▪ Wash.ME revenue increased by 14.0% to £61.8 million
reflecting the successful rollout, and uptake, of higher
cost-per-use laundry machines. The total number of units
in operation increased by 16.1% to 4,754 as the Group
continued its strategic expansion of the estate
▪ Print.ME revenue decreased due to the removal of
unprofitable machines. Replacement of 500 machines
with newer model commenced in H2
▪ Continued to execute innovation and diversification
strategy to meet ever-changing consumer needs,
including the launch of new self-service machine
formats and liveness detection technology to
mitigate photo ID manipulation
▪ Company name changed to ME Group International
plc (previously Photo-Me International plc), to better
reflect the Group’s operations today evolution of the
Group over the past 60 years through innovation to
expand and diversify its operations internationally
1 EBITDA is Reported profit before tax, total depreciation and amortisation, other net gain, finance cost and income
2
Includes impairments and provisions
3 Net cash excludes investments in convertible bonds (£4.3m) and lease liabilities (£15.9m). See note 19 for details of net cash
4 Special dividend paid on 1 September 2022 (£24.57m), Interim Dividend paid on 3 November 2022. Declared Final Dividend
will be paid on 12 May 2023, subject to approval at the AGM
5 South Korea subsidiary sold in November 2022. Following this disposal the Group has operations in 19 countries
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ME Group plc Annual Report 2022 Business at a Glance
Business at a Glance
Our purpose:
To create eco-responsible local
services that make everyday life easier.
UK & Republic of Ireland
Asia Pacific
Continental Europe
Three core geographies
O P E R AT I O N S I N
20 countries5
Australia, Austria, Belgium, China, Finland, France, Germany, Ireland, Italy,
Japan, Morocco, Netherlands, Poland, Portugal, Singapore, South Korea, Spain,
Switzerland, United Kingdom, and Vietnam
R & D C E N T R E S
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Situated in France (primary facility),
and Vietnam, supported by a team
of more than 50 engineers
V E N D I N G U N I T S
I N O P E R AT I O N
43,910
Four principal business areas
Photobooths and
integrated biometric
identification solutions
Unattended laundry
services and launderettes
Print.
High-quality digital
printing kiosks
Vending equipment for
the food service market
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ME Group plc Annual Report 2022
Photo.ME
Our business
G R O U P TOTA L V E N D I N G E S TAT E
62.9%
P H OTO B O OT H U N I T S
I N O P E R AT I O N
27,625
P H OTO B O OT H P R E S E N C E I N
20 countries1
Australia, Austria, Belgium, China, Finland, France,
Germany, Ireland, Italy, Japan, Morocco,
Netherlands, Portugal, Singapore, South Korea,
Spain, Switzerland, the United Kingdom, Vietnam
R E V E N U E 2
25.2%
2022: £154.3m
2021: £123.2m
1 South Korea subsidiary sold in November 2022.
Following this disposal the Group has operations
in 19 countries
2 For the 12 months ended 31 October
Photobooths with integrated
biometric photo identification
solutions.
A global leader in the photobooth market for
instant photo ID, portraits and fun photographs
with an established network of nearly 28,000
photobooths offering market-leading photographic
quality and technology.
Services primarily aimed at the consumer market,
with photobooths typically located in high-footfall
locations such as supermarkets, shopping
centres and transport hubs that provides
convenient access.
Work closely with national institutions to ensure
compliance with government Photo ID standards
and security requirements.
Our operations
Photo.ME offers:
Integrated proprietary software ensuring all photo ID conform to
International Standards Organisation (ISO) and International Civil
Aviation Organisation (ICAO) regulations.
Secure digital Photo ID technology providing solutions to
governments seeking to improve and digitalise security ID to
combat fraud and security threats, including biometric data
capture, secure and direct transfer of data to government
servers and 3D facial image capture via our photobooths.
Agreements in place with governments for the direct and secure
upload of photographs from our photobooths to their servers for
official documents.
The Group pays the site owner a percentage of machine turnover
or a fixed fee or a combination of these metrics.
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ME Group plc Annual Report 2022
Wash.ME
G R O U P TOTA L V E N D I N G E S TAT E
10.8%
Unattended 24/7 laundry services
and launderettes.
Large-capacity, energy-saving rapid unattended
laundry services aimed at consumers and B2B market.
R E VO LU T I O N L AU N D RY U N I T S
I N O P E R AT I O N
Growing network of more than 4,750 Revolution units.
4,754
O P E R AT I O N S I N
12 countries
Austria, Belgium, China, France, Germany, Ireland,
Japan, Netherlands, Portugal, Spain, Switzerland,
United Kingdom
R E VO LU T I O N R E V E N U E 1
26.6%
2022: £56.7m
2021: £44.8m
1 For the 12 months ended 31 October
Key markets include France, the United Kingdom, the
Republic of Ireland, and Portugal.
Our operations
Revolution laundry services offer:
24/7 outdoor self-service machines, typically located on high-
footfall sites such as car parks, petrol forecourts, campsites and
university campuses.
Self-service launderette shops offer convenient and competitively
priced large-capacity, self-service laundry amenities, typically
located near town centres in France, Japan, Portugal, Republic of
Ireland and the United Kingdom.
The Group pays the site owner a percentage of machine turnover
or a fixed fee or a combination of these metrics.
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ME Group plc Annual Report 2022
Print.ME
Our business
Print.
G R O U P TOTA L V E N D I N G E S TAT E
10.9%
U N I T S I N O P E R AT I O N
4,785
O P E R AT I O N S I N
8 countries
Portugal, Germany, Spain, Japan, Belgium, France,
Netherlands, Switzerland
R E V E N U E 1
8.5%
2022: £10.7m
2021: £11.7m
1 For the 12 months ended 31 October
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High-quality digital printing kiosks
positioned in attractive high footfall
locations across Europe.
Our operations
Print.ME offers:
Integrated proprietary software Industry-leading technology
offers a wide range of printing formats (with multi-touch
technology for cropping and editing) and personalised products.
Products to print include vintage photos, personalised gifts,
calendars, announcement cards.
Fully integrated with major social media
networks providing consumers with
convenient, easy-to-use, reliable,
competitively priced, and high-quality
services from smartphones and
other devices for a seamless
customer experience.
The Group pays the site owner a
percentage of machine turnover or
a fixed fee or a combination of
these metrics.
ME Group plc Annual Report 2022
Feed.ME
O P E R AT I O N S I N
4 countries
Belgium, France, Japan, Switzerland
R E V E N U E F R O M S A L E O F
EQ U I P M E N T 1
52.4%
2022: £12.5m
2021: £6.3m
TOTA L R E V E N U E
£12.5m
1 For the 12 months ended 31 October
Vending equipment for the
food service market.
Our operations
Feed.ME offers:
Specialist high-end professional fresh fruit machines with proprietary
technologies to produce high-quality fruit juices.
Pizza vending equipment manufacturer offering consumers self-
service pizza 24/7 ready in four minutes, as well as pizza machines
aimed at the B2B hospitality market (restaurants and takeaways).
Vending equipment is sold to customers, backed by an external
leaser, with average contract length of 15 months for fruit juice
machines and five years for Pizza machines with tacit renewal).
Contracts typically includes a maintenance agreement for the Group
to service the equipment for the duration of the contract.
G R O U P TOTA L V E N D I N G E S TAT E
Other vending equipment
15.3%
U N I T S I N O P E R AT I O N
6,483
Safely entertaining thousands of
children on traditional or
interactive rides to enchant their
parents’ daily lives as well.
Units reliant on high footfall to
generate consumer demand,
and are usually situated at sites
where the Group has an existing
relationship with the site owner.
Reproduce all your private or
professional documents on your
way to work or while you are
shopping with the latest
technology photocopiers.
Operations benefit from
operating synergies which
include leveraging the same
650-strong field engineer and
maintenance network.
The Group pays the site owner a percentage of machine turnover
or a fixed fee or a combination of these metrics
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Strategic
Report
Chairman’s Statement
Business Model and Strategy
Five-year growth strategy
Outlook
Investment priorities by business area
Chief Executive’s Report
Innovation and diversification
Review of performance by geography
Section 172(1) statement
Principal risks
Sustainability Statement
Viability Statement
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ME Group plc Annual Report 2022 9
ME Group plc Annual Report 2022Strategic Report Strategic Report
Chairman’s Statement
2022 Overview
The Group delivered a strong
performance in the Period, driven
by the recovery across most of our
markets and principal business
areas. Most significant was the
resurgence in activity across our
photo ID and laundry services,
which was most evident in
Continental Europe, particularly
France, the UK and Germany.
Sir John Lewis OBE
Non-executive Chairman
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As a result of the positive trading momentum, the
Group performed better than initially anticipated
at the outset of FY 2022, which lead to the Board
revising its revenue and profit expectation on two
separate occasions during the Period. Total Group
revenue increased by 21.2% and EBITDA increased
by 41.6% compared to the prior 12 months to
31 October 2021.
Change of the Company name to
ME Group
In August, we announced the change of the
Company name to ME Group International plc, with
the new London stock market ticker ‘MEGP’. The
new Company name marked an important
milestone for the Group in its 60th year as a
publicly-listed company. Our new name better
reflects our innovation and diversification strategy,
as well as the evolution of our product offer today.
We look forward to the next exciting chapter of the
Group’s growth as we continue to innovate and
extend our product range to meet the needs of our
customers and consumers across the world.
Business model and growth strategy
We have a proven business model which benefits
from a dominant market position, with limited or
no competition, in many of the countries in which
we operate. Each day, millions of people see and
use our conveniently positioned instant service
machines as we strive to make people’s lives easier
every day around the world.
R E P O R T E D R E V E N U E
£259.8m
12 months to 31 October 2022
N E T C A S H P O S I T I O N
£34.0m
12 months to 31 October 2022
ME Group plc Annual Report 2022 Our growth strategy is focused on diversifying our
product portfolio, expanding the number of units
in operation and increasing the yield per unit. This
is underpinned by our disciplined approach to
minimising production and operational costs,
enabling us to capitalise on operating leverage.
Our long-standing partnerships with site owners
and utilisation of long-term contracts ensure
consistent and solid recurring revenue streams and
revenue visibility, year on year. These are
characteristics similar to those of an infrastructure
business which provide the Group with good
visibility and predictability on revenue streams. In
90% of cases, contracts are tacit renewals. We also
benefit from economies of scale through our
extensive machine network and the increasing
trend towards automation, where we have a depth
of expertise, which also presents significant barriers
to potential competitors.
Our five-year growth strategy is centred on five
core pillars to support the development of each of
the Group’s principal business areas – photo
identification (Photo.ME), laundry services (Wash.
ME), digital printing services (Print.ME) and food
vending equipment (Feed.ME) through:
1. Expansion into new geographic territories and
continue to build the Group’s international
presence including recently entered markets of
Italy, Finland and Australia.
2. Entering new market segments through securing
new partnerships with businesses such as
supermarkets and smaller retailers.
3. Ongoing new product and technology innovation
to meet the vending needs of consumers
through state-of-the-art user experience,
backed by the best technology, and an
omnichannel approach.
4. Continued expansion and diversification of
services and revenue growth through a multi-
service instant service offering and integration
of centralised operating systems.
5. Merger & Acquisition strategy focused on
enabling our growth strategy through bolt-on
acquisitions, which meet the Group’s return on
investment criteria, to extend our geographic
footprint, consolidate our market position and
increase the breadth of our services available
through our portfolio.
The Board believes this growth strategy will enable
the Group to continue to drive sustainable revenue
and profit performance over the next five years.
R E P O R T E D R E V E N U E
£259.8m
12 months to 31 October 2022
N E T C A S H P O S I T I O N
£34.0m
12 months to 31 October 2022
Unless there are major changes to the
macroeconomic environment,the Board
remains confident in the Group’s long-term
growth opportunities and its ability to
deliver its key strategic priorities.
Sir John Lewis OBE
Non-executive Chairman
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ME Group plc Annual Report 2022Strategic Report Strategic Report
Chairman’s Statement continued
Dividend
The strong performance delivered in FY 2022
continues to give the Board confidence in the
future performance of the Company.
When combined with the Interim Dividend of
2.6 pence and the Special Dividend of 6.5 pence,
this brings the total dividend for the year ended
31 October 2022 to 12.10 pence per Ordinary share.
In July, the Board announced that it was adopting
a distribution policy under which, for the
foreseeable future, it will pay annual dividends in
excess of 50% of its annual profits after tax subject
to market and capital requirements. This total will
be split between interim dividends (1/3)
(generally to be paid in the month of November)
and final dividends (2/3) (generally to be paid in
the month of May).
The Board declared an interim dividend for the six
months ended 30 April 2022 of 2.6 pence per
Ordinary share (the “Interim Dividend”), which
amounted to £9.84 million, paid to shareholders on
3 November 2022.
Subject to approval at the Company’s annual
general meeting on 28 April 2023, the Final
Dividend will be paid on 12 May 2023 to
shareholders listed on the register at the close of
business on 21 April 2023. The ex-dividend date will
be 20 April 2023.
The Board & Executive Team
There were two changes in the composition of the
Board of Directors. On 29 April 2022, Jean-Marcel
Denis stepped down from the Board as a Non-
Executive Director. I would like to extend my
sincere thanks and gratitude to Jean-Marcel for his
loyal service and continued support to both myself
and the Board.
At the same time, the Board was also pleased to
announce an additional return of £24.57 million
to shareholders by way of a special dividend of
6.5 pence per ordinary share (“Special Dividend”).
This was paid to shareholders on 1 September 2022.
On 13 May 2022 Sigieri Diaz Della Vittoria Pallavicini
resigned as an Independent Non-Executive
Director having joined the Group in June 2021.
I would like to extend my thanks to Sigieri and
wish him all the best in his future endeavours.
The Board has declared a final dividend of
3.00 pence per Ordinary share (“Final Dividend”)
(this does not exactly correspond to the 2/3 split
mentioned above since this year the Company paid
a special dividend which, when added to the
interim dividend, already exceeded 50% of PBT.
The Board of Directors has worked hard to refresh
its membership and believes it has a strong team
in place to continue supporting the leadership
team in delivering on the Group’s long-term
growth strategy.
12
ME Group plc Annual Report 2022Strategic Report The composition of the Executive Team has also
evolved. Christian Autié, has been appointed as
COO on 1 November 2022. Christian was previously
the Group’s Head of Asia where he held the role
for 5 years.
generation multi-service photobooths as well as
the continued expansion of our laundry
operations and food vending equipment
operations, whilst exploring further opportunities
in new and existing geographies.
Corporate responsibility
We remain committed to strengthening our
Sustainability activity to deliver our goals through
inventing eco-responsible local services to support
growth by integrating social, environmental, and
economic expectations into our strategy and
operations. Details of our Sustainability approach
and KPIs are available on the Group’s website
me-group.com.
Unless there are major changes to the
macroeconomic environment,the Board remains
confident in the Group’s long-term growth
opportunities and its ability to deliver its key
strategic priorities. For the 2023 financial year, the
Board expects the Group to achieve revenue
between £280 and £300 million, EBITDA between
£95 and £105 million and profit before tax between
£61 and 65 million.
Looking ahead
We have made great progress during FY 2022
during which most of our key markets continued to
recover from the post-COVID impacts, despite the
challenging backdrop that is facing so many sectors.
The Group remains highly cash generative and our
financial position remains strong, driven by good
momentum across the business, leaving the Group
well placed to withstand the current
macroeconomic headwinds. We are well positioned
to deliver on our strategic priorities as we enter
FY 2023 which includes the rollout of next-
Sir John Lewis OBE
Non-executive Chairman
28 February 2023
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ME Group plc Annual Report 2022Strategic Report Strategic Report
Business Model and Strategy
The Group benefits from a
dominant market position, with
limited or no competition, in
many of the countries in which
it operates.
We provide our consumers and our partners with
an excellent customer experience focused on
People, Service and Customer satisfaction. Each
day, millions of people see and use our conveniently
positioned machines as we strive to make people’s
lives easier every day around the world.
We have established and long-standing
partnerships with site owners and our long-term
contracts provide the Group with consistent, solid
year-on-year recurring revenue streams and
revenue visibility. The size of our machine network
enables the Group to leverage economies of scale
to expand its operations and benefit from the trend
towards increased automation, while presenting
significant barriers to potential competitors.
Our business strategy is focused on diversifying our
product portfolio, expanding the number of units in
operation, and increasing the yield per unit, while
minimising production and operational costs to the
Group, which enables it to capitalise on its
operating leverage.
VALU
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Innovation
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Our key strengths
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WTH STR AT E G Y
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ME Group plc Annual Report 2022Strategic Report
Key strengths
1.
Predictable and stable cash flows
Generated from existing network
to fund growth through product
innovation
2.Proven track record in technology
development and innovation
In-house development of proprietary
solutions and continuous focus on
product diversification
3.Long-term partnerships and
contracts with high-footfall
site owners
Machine portfolio positioned in
accessible locations (supermarkets,
shopping malls, transport hubs and
public administration buildings), with
circa. 90% tacit renewal
4.
International footprint and
diversity of services offered
Providing resilience through location
and service mix against geographic
trends and demand patterns
5.Competitively priced, high quality
services with a focus on
consumer experience
Meeting the increasing demand for
instant vending services on-the-go
through convenient, easy-to-use
reliable, value for money services
6.A market leader with more than
60 years of industry expertise
Providing leading brands and
household names in key territories
with expert know-how in autonomous
vending equipment
7.Established network of skilled
field engineers
Supporting growth across business
areas at limited additional cost
8.Value for all our stakeholders
Meeting the needs of customers and
consumers and delivering shareholder
value with growth and dividends
9.Corporate social responsibility
Focus on social commitment,
environmental footprint, and
responsibility towards society
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Strategic Report
Strategic Report
Five-year growth strategy
Our growth strategy is centred on four core
pillars to support the development of each of
the Group’s principal business areas – photo
identification, laundry services, digital printing
services and food vending equipment.
We will continue to diversify and expand our historical business
activities of photobooths and laundry activity alongside our newer
self-service food vending equipment activities.
Expansion into new
geographic territories
Continue to build the Group’s international
presence in recently entered markets of Italy,
Finland and Australia.
Entering new
market segments
Through securing new partnerships with
businesses such as supermarkets and
smaller retailers.
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ME Group plc Annual Report 2022Strategic Report Outlook
▪ The Group has set out its five-year growth
strategy, centered on five core pillars, to
support the development of each of the
Group’s principal business areas and continue
to drive sustainable revenue and profit
performance
▪ Execution of next-generation multi-service
photobooth rollout programme commenced
in Q1 FY 2023, to deploy approx. 10,000 units
by 2025, with an initial target of 3,000
machines installed in France by the end of
October 2023 in France
▪ Continued focus on deployment of Revolution
laundry units, with plans to accelerate
installations at a rate of approx. 80-90 per
month, alongside an increased focus on
developing cost and energy-saving models
▪ Increase in activity around the expansion of
Feed.ME business, targeting an increase in the
number of lease agreements for further fruit
juice vending equipment (in Japan) and pizza
vending equipment (in France)
Ongoing new product and
technology innovation
To meet the vending needs of consumers through
state-of-the-art user experience, backed by the
best technology, and an omnichannel approach.
Continued expansion and
diversification of services
Revenue growth through a multi-service instant
service offering and integration of
centralised operating systems.
Merger and
acquisition strategy
Focused on enabling our growth strategy through
bolt-on acquisitions, which meet the Group’s
return on investment criteria, to extend our
geographic footprint, consolidate our market
position and to increase the breadth of our
services available through our machines network.
1717
ME Group plc Annual Report 2022Strategic Report Strategic Report
Investment priorities by business area
Our Wash.ME business is our fastest-growing
business area.
Growth drivers
▪ Demand for convenient, high-capacity laundry
services at competitive prices
▪ Cost effective and energy efficient offering for the
consumer compared to at-home alternatives
Growth strategy
▪ Expansion of Revolution laundry services in target
territories through new and existing partnerships
with strategic site owners
▪ Continued innovation of laundry units, upgrading
existing machines and the commercialisation of
new formats attractive to new market segments,
with a focus on sustainability
▪ Continuing to increase laundry revenue as a
proportion of total Group revenue
KPIs
▪ Targeting an average installations of 80-90 units
per month
▪ Rollout of photovoltaic solar panels on Revolution
units across key territories, including France and
United Kingdom
▪ Planned investment in FY2023: £23.0 million
▪ Target returns: Approx. 18 months
Our Photo.ME business delivers stable cash flow
that supports the Group’s diversification strategy
and investment in new product development.
Growth drivers
▪ Consumer demand is primarily driven by
government requirements for official photo ID
documentation
▪ Government increasingly seeking improved and
digitalised photo ID security to combat fraud and
terrorist activity
▪ Increased consumer demand for multi-functional
instant services in a single location and via a
single machine
Growth strategy
▪ Commercialisation of multi-service next generation
photobooths to grow revenue contribution
▪ Longer-term opportunities to expand presence
in countries where self-taken ID photos are
not permitted
▪ Deploying proven identification security technologies
in existing and new territories
▪ Targeting new strategic partners for entry at high-
footfall locations including major supermarkets and
smaller retail shops and parks
▪ Pricing power through strong market position
and regulatory requirement for photo ID for
official documents
KPIs
▪ Roll out of next generation photobooths from
H1 2023, with the aim of deploying approx. 3,000
in FY 2023
▪ Planned investment in FY2023: £15-20 million
▪ Target returns: 18 months
▪ Plans to deploy a total of 10,000 next generation
machines by the end of FY 2025
18
ME Group plc Annual Report 2022Strategic Report Print.
Our Print.ME business provides convenient,
affordable and easy-to-use instant printing
services to consumers.
Our Feed.ME mainly sells pizzas and fruit juice
machines, backed by an external leaser,
typically with a maintenance agreement.
Growth driver
▪ Increased use of smartphones and digital sharing
across social media networks
Growth strategy
▪ Consider opportunities to extend digital kiosk
services offered through the Group’s instant-service
machine network
▪ Identify product partnership opportunities within
existing territories
KPIs
▪ 500 new kiosks to be installed in France to refresh
portfolio in France. Started in September 2022
▪ Target returns: 18-20 months
Growth driver
▪ Growth in demand for vending services within the
food sector, particularly for fresh juice and pizza, and
a wider range of products
Growth strategy focused on
▪ Expand presence in the self-service fruit juice
equipment market and offer a wider variety of
self-service fresh juice options in all territories where
the Group has an existing footprint
▪ Establish a larger presence in the pizza-vending
equipment market
▪ Building new partnerships with site owners to sell/
deploy food vending equipment to
KPIs
▪ Aim to become the food-vending equipment
market leader in the European market
1919
ME Group plc Annual Report 2022Strategic Report Strategic Report
Chief Executive’s Report
Business review
Our performance in FY 2022 showed
strong recovery particularly within
our photobooth operations. We have
continued to benefit from our
disciplined approach to cost
management and our ability to
increase pricing, as well as our
ongoing marketing activity, all of
which have underpinned the
recovery in performance.
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
20
The Group has delivered figures comparable to the
performance achieved in 2019. This is despite
some continued disruption from COVID-19 in the
Period, and the macro-economic challenges
impacting business.
We continue with a strategic focus on innovation,
R&D and diversification which remain important
factors in the Group’s long-term growth strategy,
ensuring the continued delivery of solutions and
services that can address ever-changing
consumer needs.
Financial performance
Reported revenue in the Period increased by 21.2%
to £259.8 million, compared with £214.4 million in
the prior 12 months ended 31 October 2021. This
performance was primarily driven by a strong
performance across Continental Europe and in the
UK & the Republic of Ireland The Group benefited
from a recovery in activity levels from Q2 onwards,
particularly for photobooths and laundry services,
as well as substantial price increases in Germany
and France during H2 2022.
Revenue for Continental Europe was up 22.6% and
operating profit up 73.3%, mainly driven by activity
in France. In the UK & Republic of Ireland, revenue
was up 41.9% and operating profit improved by
132.0%. Activity in Asia Pacific was more subdued,
due to pandemic restrictions remaining in place for
longer than in the Group’s other operating regions,
with revenue and operating profit both flat
year-on-year.
R E V E N U E
£259.8m
12 months to 31 October 2022
P R O F I T B E FO R E TA X
£53.4m
12 months to 31 October 2022
ME Group plc Annual Report 2022 We continue with a strategic focus on
innovation, R&D and diversification which
remain important factors in the Group’s
long-term growth strategy.
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
Profitability improved year-on-year across all
regions, benefiting from a recovery in demand, our
successful recent restructuring programme to
remove unprofitable machines, and an increase in
consumer pricing during the year. A breakdown of
performance by region is set out in the Review of
Performance by Geography.
Reported EBITDA (excluding associates) was
£92.2 million, an increase of 41.6% on the prior
12-month period, which delivered an EBITDA
margin of 35.5%.
Reported profit before tax increased by
£24.8 million (+86.7%) to £53.4 million
(2021: 28.6 million).
Capital expenditure in the Period was £38.2 million,
primarily related to Machines costs (£28.2m),
Plant and Machinery (£5.1m) and the rest is
Intangible assets (£1.7m Goodwill, £1.4m R&D and
£1.7m Other Intangibles).
Funding and liquidity
The Group continues to be highly cash
generative. At 31 October 2022, the Group had
gross cash of £136.2 million and a net cash balance
of £34.0 million. This is net of £0.7 million cash
investment in acquisitions and dividends paid
during the year which amounted to £35.5 million.
We did not have the benefit of any government
facilities in the Period.
The Group remains in a strong financial and
liquidity position to fund future growth whilst
continuing to navigate the broader
macroeconomic headwinds.
Innovation and diversification
We are proud of our track record in new product
development and our innovative approach,
supported by our team of 50 engineers located in
our R&D centres situated in France (primary facility)
and Vietnam. Our in-house R&D team is
continuously working on new product innovation to
meet ever-changing customer and consumer
needs, providing them with a range of instant
service equipment that is modern, convenient and
user-friendly.
Our approach to innovation and diversification is
focused on two key pillars:
1. A state-of-the-art user experience, backed by
the best proprietary technology, including the
design of new, intuitive, and modern user
interfaces across multiple product categories;
the integration of digital payment systems
across vending estate; and up-to-date
functionalities, through an aggregate of the best
of external technology providers
2. An omnichannel approach, leveraging digital
functionalities to enhance the user experience of
our brands and explore new business models,
including the use of a powerful CRM which
offers a customised experience to end users; the
launch of applications that connect to our
machines to offer mobile-to-machine features;
the remote management of our self-service
vending equipment through a cloud-based
infrastructure; multi-service functionality for the
next-generation machines; and centralised
operating system offers a seamless, connected
user experience for the consumer
21
R E V E N U E
£259.8m
12 months to 31 October 2022
P R O F I T B E FO R E TA X
£53.4m
12 months to 31 October 2022
ME Group plc Annual Report 2022Strategic Report Strategic Report
Chief Executive’s Report continued
Overview of principal
business areas
Below is an overview of the Group’s four principal
business areas: Identification (Photo.ME),
Laundry (Wash.ME), Kiosks (Print.ME) and Food
(Feed.ME). In addition, the Group operates other
vending equipment.
Photobooths and integrated biometric
identification solutions
Number of units
in operation
Percentage of total group
vending estate (number
of units)
Revenue
Capex
EBITDA
12 months to
31 Oct 2022
12 months to
31 Oct 2021
27,625
27,867
62.9%
63.6%
£154.3m
£123.2m
£3.0m
£5.0m
£54.2m
£36,4m
We saw a strong recovery in photo ID demand for
passports and other official documentation
restrictions were eased and consumers were able
to travel and socialise, as well as other products
delivered via our photobooth estate. Notably,
demand was strong in Continental Europe,
particularly France, from February onwards. The UK
showed a similar trend from May onwards, despite
the Government’s ongoing acceptance of home-
taken photos for official documents. The Asia
market was subdued due to covid restrictions.
We gradually and successfully implemented price
changes in H2 2022. The cost per use of our
photobooths increased from €6 to €8 in France
(10% of machines remained at €6 per use), and
from €8 to €10 in Germany and Austria, which did
not have an adverse impact on consumer demand.
Subsequently, similar price increases were
implemented across most of our operating markets
during the second half of the year. We anticipate
that the full benefit of these price increases will be
evident in FY 2023.
Revenue increased by 25.2% to £154.3 million (2021:
£123.2 million), driven largely by the increase in cost
per use implemented across the Group’s machine
estate in certain territories along with increasing
post-Covid demand. The average revenue per
machine (excluding VAT) increased to £5,586
per year (2021: £4,421 per year).
Subsequently, EBITDA was £54.2 million, and
represented 63.8% of Group EBITDA (excluding the
property sale). EBITDA was 35.1% of the revenue
during the Period.
Overall, this performance is a testament to the
resilience and long-term future of our
photobooth estate.
Capex in the Period decreased by 40.0% to
£3.0 million, reflecting a deferral of investment in
next-generation photobooths. The Group began
the rollout and installation of next-generation
photobooths during Q1 2023, initially with the
deployment of 50 units in France. It is the Group’s
aim to deploy approximately 3,000 next-
generation photobooths during FY 2023, with a
view of rolling out c.10,000 units over the next
three years. Consequently, the Group anticipates
that Photo.ME capex will be significantly higher
during FY 2023 in the range of £15.0 – £20.0 million.
Whilst this materially increases capex, we expect
our next-generation machines will achieve an
attractive return on investment within one year.
At 31 October 2022, the number of photobooths in
operation remained broadly flat at 27,625 units
(2021: 27,867). Photo.ME operations accounted
62.9% of the Group’s total vending units.
Growth strategy
Our photobooths meet the needs of consumers
who are required to have official photo ID for
documents such as passports and driving licences.
This quasi-compulsory service and its strong
market position give the Group pricing power for
this service. Increasingly governments are seeking
to improve and digitise photo ID security to combat
fraud and terrorist activity. In addition, consumers
are seeking multi-functional instant services
through a single vending machine.
Alongside deploying our proven identification
security technologies in existing and new countries
of operation, we are continuously innovating with
the aim of expanding the services available via our
next-generation photobooth. This includes fun
features and social media sharing functions
providing customers with additional, diversified
services. We are also targeting new strategic
partnerships which will enable us to operate at
22
ME Group plc Annual Report 2022 high-footfall locations, including supermarkets,
smaller retail shops and retail parks.
Strategy in action
Since February 2022, our face ID anti-spoofing
technology secured compliance recognition under
the international Biometrics Presentation Attack
Detection standards (ISO/IEC 30107-3) by Cabinet
Louis Reynolds (CLR), the French biometrics and
security technologies experts. This recognises the
Group’s anti-spoofing technology, which helps to
ensure that all ME Group photobooths are
biometrically secure and mitigative against “fake”
photo ID for official documents, as credible by
regulatory standards.
The Board continues to believe that there are
longer-term opportunities in the photo ID market
across both existing and new geographic markets.
Our new multiservice next-generation photobooth
will integrate the consumer journey into specific
omnichannel automated services.
Unattended Revolution laundry services
and launderettes
Total Laundry units
deployed (owned, sold and
acquisitions)
Total revenue from Laundry
operations
12 months to
31 Oct 2022
12 months to
31 Oct 2021
5,924
5,533
£61.8m
£54.2m
Total Laundry EBITDA
£29.1m
£22.6m
Revolution (excludes
Launderettes and B2B):
Number of Revolutions in
operation1
Percentage of total group
vending estate (number of
units)
Total revenue from
Revolutions
4,754
4,094
10.8%
9.3%
£56.7m
£44.8m
Revolution capex
£20.2m
£15.9m
1 There were 4,424 Revolution units in operation through the entirety
of the 12 months ended 31 October 2022 compared with 3,765 in
12 months ended 31 October 2021.
Total revenue from our laundry operations grew by
14.0% to £61.8 million, driven by an increase in the
number of Revolution units in operation. At
31 October 2022, the total number of laundry units
deployed (owned, sold) was up to 5,924.
La Wash, our Spanish B2B laundry service franchise
business, was sold in November 2021. La Wash
represented a minor part of the laundry business.
Following this disposal, we no longer operate B2B
laundry services except for a small level of activity
in Ireland.
23
ME Group plc Annual Report 2022Strategic Report Strategic Report
Chief Executive’s Report continued
Continued growth of Revolution
laundry operations
In line with our growth strategy, the Group installed
an average of 70 machines per month, primarily in
Continental Europe and the UK & Republic of
Ireland. As a result, the number of units in operation
grew by 16.1% to 4,754. Revolution laundry machines
accounted for 10.8% of the Group’s total estate by
number of machines (2021: 9.3%).
Revenue increased by 26.6% to £56.7 million, which
represented 21.8% of Group revenue. The average
revenue per machine (excluding VAT) was £12,816
per year (2021: £11,899 per year). EBITDA was
£29.1 million and contributed 34.3% of Group
EBITDA (excluding property sales). EBITDA was
47.1% of revenue in the Period.
Revolution capex increased to £20.2 million
(2021: £15.9 million) reflecting an increase in
production and installation costs, along with the
redeployment of selected machines to more
profitable locations. Additionally, the Group has
entered a period of machine refurbishment and
maintenance, the first since we launched our
laundry operations in 2012.
24
Growth strategy
Revolution laundry services remain a key growth
driver for the Group and revenue from this
business area is expected to continue to increase as
a proportion of total Group revenue.
Our strategy is to further expand our operations
through new and existing partnerships with site
owners in target territories to address consumer
demand for convenient and competitively priced
high-capacity laundry services. Our R&D teams will
also continue to innovate to improve and upgrade
our product range and commercialise new formats
aimed at specific market segments.
In FY 2023, we plan to invest approx. £23.0 million
in Wash.ME and our aim is to increase Revolution
installations to 80-90 units per month, targeting a
return on investment of approx. 18 months.
Strategy in action
During the Period the Group launched two newly
developed laundry machine formats – the
Revolution Compact V3 which offers a more
environmentally friendly solution by using less
energy and detergent, and the Revolution Flex
which offers a compact format that can be
deployed inside co-living locations.
We continue to innovate and over time we will
deploy lower-cost models which will offer
substantial savings in production costs and
flexibility of deployment, along with improved
energy efficiency features that aim to reduce water
and electricity consumption.
We have continued to deliver on our sustainability
commitment and reduce our impact on the
environment. To date, we have installed 223
Photovoltaic solar panels on Revolution units
primarily in France and expect to roll this out into
other geographies in time.
Our strategy to expand existing and secure new
long-term partnerships with site owners has
enabled us to expand our Revolution estate in the
key UK market and extend our footprint across
major, high-footfall locations bringing our laundry
services to even more existing and potential
customers. We have begun pilot testing of our new
indoor and outdoor “Flex” laundry machine format.
We believe there is a large-scale opportunity in the
European market for this compact machine format.
ME Group plc Annual Report 2022 High-quality digital printing services
Number of units
in operation
Percentage of total group
vending estate (number
of units)
Revenue
Capex
EBITDA
12 months to
31 Oct 2022
12 months to
31 Oct 2021
4,785
5,173
10.9%
11.8%
£10.7m
£1.3m
£3.6m
£11.7m
£0.5m
£3.4m
Our estate of digital printing kiosks offers a wide
range of competitively priced print formats and
personalised products. Our key markets are
France, where most machines are situated, the UK
and Switzerland.
At 31 October 2022 the Group had 4,785 kiosks in
operation, down 7.5% compared with the prior year.
Kiosks accounted for 10.9% of the total number of
vending units in operation.
Revenue decreased to £10.7 million from
£11.7 million in the prior year, due to a reduction in
the number of digital printing kiosks in operation,
following the removal of unprofitable machines.
Print.ME revenue represented 4.6% of Group
revenue. EBITDA was £3.6 million and contributed
4.2% of Group EBITDA in the Period.
The average revenue per machine (excluding VAT)
was £2,279 per year (2021: £2,146).
Capex for the Period was £1.3 million in line with
our strategy to focus our investment on expanding
our growing Wash.ME and Feed.ME businesses
during FY 2022. During the second half of the year,
this capex was invested in 500 new kiosks to
refresh our machine portfolio in France. The
replacement of machines began in H2 2022 and will
complete during H1 2023. The expected return on
investment is 18 months and the benefit is
expected to be evident in FY 2023.
Growth strategy
There remains demand for high-quality printing
services reflecting the increased use of
smartphones and digital sharing across social
media networks. Print.ME’s convenient, affordable
and easy-to-use instant printing services enable
consumers to print direct from smart devices.
The Group is considering opportunities to further
extend its digital kiosk services offered through its
instant-service machine network, as well as a focus
on identifying product partnership opportunities
within existing territories. Our next generation
photobooths are multifunctional and will have
similar functions as our digital printing kiosk, in line
with our innovation and diversification plan for
our service.
25
ME Group plc Annual Report 2022Strategic Report Strategic Report
Chief Executive’s Report continued
Vending equipment for the food
service market
Feed.ME business model is different from other
business area, it’s based mainly on sales and on a
smaller scale on operating machines in Japan
(214 orange juice machines). Capex are then
non-significant yet.
Our food vending equipment operations, which
further diversify our vending services, are the
Group’s newest business area. Activities are
focused on (i) self-service fresh fruit juice
equipment market and (ii) pizza vending machines
aimed at the B2B retail and hospitality markets.
The Group currently has such operations in
Belgium, France, Japan and Switzerland.
The Group sells its vending equipment to
customers, typically with a maintenance agreement
for the Group to service the equipment. Customers
typically (but not exclusively) choose to enter into a
sale and leaseback arrangement with a third-party
financing company for a period of 15 months for
fruit juice machines and five years for pizzas
machines. At the end of a sale and leaseback
contract, the Group has the option to buy the
machine back and to refurbish it. The machine can
then be sold again. The renewal rate for existing
customers is over 70%. The Group does not
operate food vending equipment in Japan except
for fresh fruit juice vending machines.
Revenue solely from the sale of equipment was
£9.9 million, adding other revenue (£2.6m), the
total revenue of Feed.ME is £12.5m which reflected
the good strategic progress made in the Period.
This business area contributed 4.8% of total
Group revenue.
EBITDA was £3.4 million and contributed 4.0% of
Group EBITDA (excluding the property sale).
Growth strategy
There is a growing demand for vending services
within the food sector, particularly for fresh fruit
juice and pizza. Our growth strategy is built around
new product innovation and is focused on three
key areas (i) expanding our presence in the self-
service fruit juice equipment market, (ii)
establishing a larger presence in the pizza-vending
equipment market, and (iii) building new
partnerships with site owners to sell or deploy
food vending equipment.
26
ME Group plc Annual Report 2022Strategic Report capacity kiosks. These new design machines, and
our new industrialisation process, have enabled us
to decrease production costs and optimise logistics
costs. The Group has started with the development
of a new pizza vending machine unit, offering a
smaller one-pizza format designed for more
compact locations.
Our strategy is to enhance our presence in the pizza
vending equipment market, with the aim of
becoming a leader in the European market. We are
also exploring new business models and
opportunities to accelerate expansion of our
presence in the growing food service vending
equipment market.
Other vending equipment
At 31 October 2022, the Group operated 6,483
(2021: 6,624) other vending units in addition to our
four principal business areas. This included 2,489
children’s rides (Amuse.ME), 3,456 photocopiers
(Copy.ME) and 538 other miscellaneous machines.
These machines are typically located in high-
footfall locations alongside the Group’s principal
activities, thereby benefiting from existing site
owner relationships and operating synergies. The
Group will continue to operate other vending units
where profitable.
Other vending equipment accounted for 15.3% of
the Group’s total vending estate by number of
units, down 0.2% compared to the previous year
and represented 2.0% of the total Group revenue.
Strategy in action
Fresh Fruit Juice equipment
Our new product innovation capabilities have
enabled us to further expand our presence in the
self-service fruit juice equipment market through
a wider variety of self-service fresh juice options.
We have installed new professional apple,
pineapple and grape juice vending machines in
France, Belgium and Japan, as part of our juice
wall concept. The orange juice vending model in
Japan continued to grow with very satisfying
results. There are now 214 machines active in
Japan which are operated by ME Group, the only
geography where the Group does operate food
vending equipment.
Following delays due to the pandemic, the Group’s
professional apple and pineapple machines were
installed across France and Belgium. Furthermore,
nine of the Group’s innovative ‘juice wall concept’
were deployed in the Period, which offers
consumers different fruit juice options.
Pizza vending equipment
Our pizza vending machines, which are sold to site
owners, offer consumers ready to eat pizza in four
minutes available 24 hours a day, seven days a
week. In line with our strategy, we accelerated the
rate of machine sales during the year to an average
of 20 machines per month in France. We have
started to deploy further machines in Spain,
Belgium and the Netherlands in the second half
of the year.
In May we announced a new technological
partnership with Digitiz.me, a ground-breaking
digital platform, enabling the Group to accelerate
development in the fast-growing connected food
vending market. Through this new partnership,
omnichannel software offering an all-in-one
complete solution will be rolled out across all
ME Group pizza vending equipment to offer
consumers an easy and integrated experience,
whilst also improving our ability to remotely
manage units. We believe this will revolutionise the
way our food vending machines function and
deliver value for our partners. The deployment of
this technology will start in H1 2023.
We continue to invest in new product innovation to
enhance our product range. In June, we launched
our second-generation pizza kiosk, which is aimed
at the independent pizziaolos market as well as
global hypermarket key accounts. In October, we
launched 64-pizza Muliquattro V3 and 96-pizza
27
ME Group plc Annual Report 2022Strategic Report Innovation and diversification
Central to the Group’s long-term growth strategy is a
strategic focus on innovation and diversification which
remain core to our business.
Our in-house R&D team is continually working on new-product innovation to meet ever-changing
customer and consumer needs, providing them with a range of instant-service equipment that is
modern, convenient and user-friendly.
Supported by a 50-strong R&D team, our approach to innovation and diversification is focused on
two key pillars:
1. A state-of-the-art user experience,
backed by the best technology
▪ Design of new, intuitive, and modern user
interfaces across product categories
▪ Integration of digital payment systems
▪ Up-to-date functionalities, through an
aggregate of the best of external
technology providers
2. An omnichannel approach, leveraging
digital functionalities to enhance user
experience of our brands and explore
new business models
▪ Use of a powerful CRM which offers a
customised experience to end users
▪ Launch of applications that connect to our
machines to offer mobile-to-machine features
▪ Remote management of our self-service
vending equipment through a cloud-based
infrastructure
Strategy in action
The Group’s bespoke liveness-detection
technology (with patent pending) was recognised
by CLR Labs in France as compliant under
international Biometrics Presentation Attack
Detection standards (ISO/IEC 30107-3).
ME Groups’ photobooths are biometrically
secured against morphing and ‘’fake’’ photo ID and
it mitigate consequently the risk of the identity
usurpations for official Id documents.
▪ March 2022 – Acquisition of Vip Box, the French
leader in the rental and sale of selfie stations for
private and professional events, strengthening
the Group’s market presence
28
ME Group plc Annual Report 2022Strategic Report Strategy in action
Strategy in action
▪ Launch of Revolution Compact V3 new outdoor
laundry unit, equipped with solar panels, using
less energy and less detergent
▪ More than 223 Photovoltaic solar panels
installed on Revolution units in France to reduce
the Group’s impact on the environment
▪ Launch of Revolution Flex, new indoor laundry
unit, offering a compact format that can be
deployed inside co-living locations
▪ Agreement signed with a major supermarket in
the UK, expanding Revolution estate across
market segment and providing laundry services
in additional major high footfall locations
Strategy in action
▪ May 2022 – ME Group partners with Digitz.me
▪ Further digitalisation of pizza kiosks through
providing omnichannel solution for pizza
vending estate and introducing new Boxpresso
connected e-fridge
▪ June 2022 – second generation pizza kiosks
launch to address the independent pizzaiolos
market and hypermarket global key accounts
▪ October 2022 – launched 64-pizza Muliquattro
V3 and 96-pizza capacity kiosks
centralised software platform, enabling remote
management of customer activity, integration
of real time inventory whilst supporting
cashless payment
29
ME Group plc Annual Report 2022Strategic Report Strategic Report
Review of performance by geography
Commentary on the Group’s financial performance is set
out below, in line with the segments as operated by the
Board and the management of the Group
These segmental breakdowns are consistent with the information prepared to support the Board’s
decision-making. Some commentary below relates to the performance of specific products in the
relevant geographies.
Vending units in operations
Continental Europe
UK & Republic of Ireland
Asia Pacific
Total
At October 2022
At October 2021
Number
of units
25,331
6,858
11,721
43,910
% of total
estate
Number
of units
% of total
estate
57.7%
15.6%
26.7%
100%
25,111
7,238
11,468
43,817
57.3%
16.5%
26.2%
100%
As expected, the total number of vending units in operation at 31 October 2022 increased slightly 0.2% to
43,910 compared with the prior year (2021: 43,817), reflecting the Group’s strategy to remove unprofitable
machines as part of the restructuring programme initiated in April 2021. This was compensated by the
number of new installations.
Key financials
The Group reports its financial performance based on three geographic regions of operation: (i) Continental
Europe; (ii) the UK & Republic of Ireland; and (iii) Asia Pacific.
Revenue by geographic region
Continental Europe
UK & Republic of Ireland
Asia Pacific
Total
Operating profit by geographic region
Continental Europe
UK & Republic of Ireland
Asia Pacific
Corporate costs
Total
12 months ended
31 October 2022
12 months ended
31 October 2021
£177.8m
£42.0m
£39.9m
£259.7m
£145.0m
£29.6m
£39.8m
£214.4m
12 months ended
31 October 2022
12 months ended
31 October 2021
£51.3m
£11.6m
£2.0m
£(8.1)m
£56.8m
£29.6m
£5.0m
£2.0m
£(7.3)m
£29.3m
The Group delivered a 21.2% increase in total revenue to £259.8 million driven by recovering markets, price
increase as well as the successful completion of the Group’s restructuring programme.
30
ME Group plc Annual Report 2022 Operating revenue evolution (last 12 months by quarter)
The table below provides a detailed breakdown of changes in operating revenue by geographic region and
business area for the Period, compared with the similar period in the 12 months ended 31 October 2022.
Operating revenue is sales revenue generated by vending units, less VAT. It excludes sales of machines and
parts and other ancillary revenue streams.
Continental Europe
Photo.ME
Print.ME
Wash.ME
Other Vending and Feed.ME
Total
UK & Republic of Ireland
Photo.ME
Print.ME
Wash.ME
Other Vending and Feed.ME
Total
Asia Pacific
Photo.ME
Print.ME
Wash.ME
Other Vending and Feed.ME
Total
Total
Photo.ME
Print.ME
Wash.ME
Other Vending and Feed.ME
Total
Nov 2021
to Jan 2022
Feb 2022
to Apr 2022
May 2022
to Jul 2022
Aug 2022
to Oct 2022
40.7%
(13.2%)
32.2%
(25.9%)
28.1%
85.5%
(17.8%)
49.4%
93.8%
63.2%
2.0%
(6.0%)
78.6%
524.0%
8.7%
31.4%
(13.4%)
37.5%
41.7%
29.3%
38.4%
(6.7%)
30.9%
2.8%
31.3%
127.3%
(73.8%)
39.3%
109.1%
81.6%
(28.1%)
(19.7%)
83.3%
71.6%
(22.8%)
18.7%
(11.6%)
33.3%
47.0%
20.9%
29.2%
5.0%
19.8%
4.3%
24.5%
76.4%
(78.6%)
32.0%
37.8%
52.3%
(5.1%)
(10.9%)
63.4%
(599.5%)
11.6%
25.3%
0.3%
22.7%
169.1%
26.0%
30.2%
0.2%
12.2%
(13.2%)
21.7%
26.4%
(73.6%)
19.9%
7.5%
20.4%
20.8%
(12.5%)
30.8%
910.5%
36.8%
27.7%
(4.0%)
14.2%
82.1%
23.7%
Total
33.4%
(4.2%)
21.9%
(9.3%)
25.7%
72.9%
(58.4%)
34.0%
46.7%
50.5%
(6.4%)
(12.5%)
60.5%
510.9%
3.6%
25.4%
(7.5%)
25.2%
76.9%
24.7%
31
ME Group plc Annual Report 2022Strategic Report Strategic Report
Performance by geography continued
Continental Europe
Continental Europe is the Group’s largest region by
both number of machines and contribution to
Group revenue.
Revenue increased 22.6% to £177.8 million driven
by a strong recovery in photobooth and laundry
activity throughout the Period. Kiosk demand
improved in Q3 and Q4. Operating revenue for
Photo.ME was up 33.6%, Wash.ME was up 12.2%
and Print.ME up 4.6%. Operating profit increased
by £21.7 million to £51.3 million.
France performed particularly strongly, benefiting
from the recovery in activity alongside an increase
in consumer pricing.
In April 2022, the Group sold an office building for
£7.1 million, which had a positive impact on the
region’s operating profit.
In November 2021 we sold La Wash, our Spanish
B2B laundry service franchise business at a loss of
£(0.5) million. This item was not included in
Continental Europe’s operating profit but was
reported in other net gains and losses, below
operating profit.
At 31 October 2022, 25,331 units were in operation
in Continental Europe which represented 57.7% of
the Group’s total estate. Continental Europe
contributed 68.5% of total Group revenue.
UK & Republic of Ireland
Revenue in the UK & the Republic of Ireland grew
by 41.9% to £42.0 million driven by a strong
recovery in photobooth and laundry activity in the
second half of the year, the Group’s key business
areas in the region. The significant increase in
demand for photo ID for passports and official
documents led to a 70.2% increase in Photo.ME
operating revenue in the Period. Wash.ME
performance was consistently strong, with
operating revenue growth delivered each quarter
which resulted in operating revenue for the year up
19.0%. The Group’s other vending equipment in the
region benefited from increased footfall matches in
the second half of the year, following the lifting of
pandemic restrictions.
Profitability in the region improved, with an
operating profit of £ 11.6 million, compared to
£5.0 million in the prior year. This performance
reflected the successful restructuring programme
in the region (completed in April 2021), which
included the removal of unprofitable machines and
bolstering of the management team in the region.
As at 31 October 2022, there were 6,858 units in
operation in the UK & Republic of Ireland, a
decrease of 5.3%, representing 15.6% of the
Group’s total vending estate.
Asia Pacific
The Group’s operations continued to be impacted
by extended COVID-19 restrictions which severely
limited consumer demand, notably in Japan and
China. This particularly affected photobooth
activity, our largest business area in the region,
with Photo.ME operating revenue down 6.5%
compared to the prior year. Our laundry operations
were more resilient with operating revenue up
50.0% year-on-year.
Despite these challenges, revenue in the region grew
slightly by 0.3% to £39.9 million whilst operating
profit was flat year-on-year at £2.0 million.
As at 31 October 2022, there were 11,721 units in
operation which represented 26.7% of the Group’s
total vending estate.
In October, Japan eased restrictions and since then
trading has started to rebound as anticipated.
Key performance Indicators (KPIs)
The Group measures its performance using
different types of indicators. The main objective
of these KPIs is to monitor the Group’s cash
generation, long-term profitability,
preservation of the value of its assets, and
of returns to shareholders.
12 months
ended 31
October
2022
12 months
ended 31
October
2021
£259.8m £214.4m
£53.4m £28.6m
(242)
679
660
657
Description
Relevance
Total Group
revenue at actual
rate of exchange
Group Profit
before tax
Increase in
number of
photobooths
Increase in
number of
Laundry units
(operated)
The increase in
number of
Revolutions is
a constant
priority and a
main driver
for growth
32
ME Group plc Annual Report 2022 33
ME Group plc Annual Report 2022Strategic Report Strategic Report
Section 172(1) statement
Directors are required to act in the way they consider, in
good faith, would most likely promote the success of the
company for the benefit of its members as a whole, whilst
also having regard, amongst other matters, to the factors
listed in Section 172(1) of the Companies Act 2006.
Consumers
How we engage
Senior management considers the needs
of the consumer and how to provide the
best-in-class service for the most
competitive price.
How this engagement influenced Board discussions and decision-making
A number of the changes we have made to our products are in
response to consumer needs. In making its decisions, the Board
pays regard to the need to balance consumer needs with customer
and commercial outcomes. Some examples of the product
changes include photobooths that are designed to allow easy
access and use for persons with disability.
Customers
How we engage
How this engagement influenced Board discussions and decision-making
Continual contact with customers
through customer-relation managers.
Feedback can be shared with the Executive Directors and
the Board.
Employees
How we engage
Regular briefings from UK management
as to how the Company is doing both
through personal meetings and through
email inviting questions from employees
▪ Regular HR briefings in the UK
▪ Updates and newsletters
▪ Whistleblowing service
The last 12 months have seen some of the measures brought in as
a result of the COVID-19 pandemic continue with the emergence
of the Omicron variant of COVID-19, not just for the benefit of
employees but also consumers, customers and the public at
large. The Company continues to monitor and follow
government guidance.
How this engagement influenced Board discussions and decision-making
The last 12 months have seen some of the measures brought in as a
result of the COVID-19 pandemic continue with the emergence of
the Omicron variant of COVID-19, not just for the benefit of
employees but also consumers, customers and the public at large.
The Company continues to monitor and follow government
guidance.
The Executive Directors and the CFO have regular weekly briefings
with senior management and through the medium of these
meetings are able to learn about employee concerns and views so
that they can be taken into account in making decisions which are
likely to affect their interests.
There are open forums for staff to come forward with any
queries. Consultations required by law are complied with
(e.g. in cases of redundancy).
The Company operates an executive share option scheme, and
rewards senior management with bonuses.
The Company encourages a common awareness on the part of all
employees of the financial and economic factors affecting the
performance of the Company is achieved through the regular
meetings referred to above.
34
ME Group plc Annual Report 2022 Employees continued
How we engage
Regular briefings from UK management
as to how the Company is doing both
through personal meetings and through
email inviting questions from employees
▪ Regular HR briefings in the UK
▪ Updates and newsletters
▪ Whistleblowing service
Partners and suppliers
How we engage
Regular engagement with suppliers and
partners, including through our:
▪ Supplier/procurement processes
engaged at the time of appointment
and during the relationship
▪ Regular monitoring and reviews of
financial and operating resilience
▪ Reporting on payment of suppliers
How this engagement influenced Board discussions and decision-making
The Board has ensured job retention where possible; one
example is where a reduction of hours was proposed as opposed
to further redundancies.
Although the CFO is a not a statutory director of the Company,
he regularly attends board meetings and interacts closely with the
Board, particularly the audit committee.
How this engagement influenced Board discussions and decision-making
The Executive Directors plus the CFO (and where necessary the
Non-executive Directors) review and approve material contracts
with suppliers and partners, joint ventures and acquisitions.
The Community and Environment
How we engage
How this engagement influenced Board discussions and decision-making
The Board relies on regular updates from
senior management who in turn rely on
direct or indirect feedback from
colleagues and customers, as well as
general observations on current best
practices and individual customer
recommendations. These provide useful
insights and guides to help shape the
Group’s activities.
Green Awareness
The Group is actively working to decrease energy use and demand
for natural resources.
Recycling Policy
The Group aims to recover, refurbish and re-sell its
electrical equipment.
Monitoring Power Consumption
▪ Automatic shutdown of units when not in use
▪ Remote telemetry reduces the number of service visits
and consumables
▪ Use of low-energy lamps
▪ Use of energy-efficient flat screen technology
Products
The development, use, and disposal of the Group’s products
represent a main area of both risk and opportunity. The Group
ensures that its products and services are designed to meet
existing legislation and increased customer expectations, including
environmental, health and safety and accessibility issues for
persons with disabilities.
To ensure products manufactured by KIS SAS (the Group’s
manufacturing subsidiary, based in France, which subcontracts this
function to third parties) consistently satisfy our stringent quality
requirements, ISO 9001 standard certification has been achieved.
35
ME Group plc Annual Report 2022Strategic Report Strategic Report
Section 172(1) statement continued
The Community and Environment continued
How we engage
How this engagement influenced Board discussions and decision-making
The Board relies on regular updates from
senior management who in turn rely on
direct or indirect feedback from
colleagues and customers, as well as
general observations on current best
practices and individual customer
recommendations. These provide useful
insights and guides to help shape the
Group’s activities.
The Revolution units are eco-friendly
▪ The built-in washing liquid pump provides the ideal quantity for
each washing cycle and reduces waste
▪ The highly concentrated washing liquid, free of phosphates,
colouring agents and preservatives, meets the French OCERT
standard. Ecological, effective at low-temperature and without
allergen, this washing liquid naturally perfumes the linen
▪ The boiler only heats the water when the dryer is not
in operation
▪ The energy-saving dryer reduces power consumption
▪ LED lights use less energy than standard lighting
▪ The launderette only requires 13KW (compared with 30KW
for a classical launderette)
They are also user-friendly
▪ The launderettes comply with CE standards and the new decree
N°2012-412 practical since 1st July 2012
▪ Accessibility for our disabled customers has been a priority in
the design of this launderette from the outset. The machines and
touchpads are located at the legally required height, thus
combining a beautiful design with easy access for our customers
▪ As an added service to the customer, a built-in pump releases a
specially designed neutral and mild washing liquid with a
pleasant fragrance. This also helps ensure the machines are kept
clean and tidy
▪ Equipped with high capacity professional washing machines
(8 and 18kg), the user can wash and dry large or heavy loads
such as duvets, blankets and pillows in the very fast time of
30 minutes per washing cycle
▪ Customers can enter their mobile number at the point of
payment and an SMS will be sent to alert them 5 minutes before
the end of the cycle
▪ This free service is convenient for customers who might use this
waiting time for shopping
▪ Thanks to the touch screen, the payment station is easy to use by
following the on-screen instructions
▪ Besides the coin and note acceptor, credit card payment is
available as an option. It is a service which facilitates the use of
the launderette and thus increases its broad use
They are also buyer-friendly
▪ Floor space used is less than 5m² – relatively little for a new
innovative service
▪ Low installation cost
▪ The launderette is delivered fully assembled and cabled, and can
be installed in half a day
▪ Thinner power cables (due to low power), thus cheaper
In consideration of global concerns regarding the disposal of waste
and increasing metal prices and landfill costs, we have focused
more attention on the re-use and recycling of our retired products.
Currently, more than 90% by weight of the materials used in our
photobooths, mostly steel and other metals, is recycled at the end
of their product lifecycle. In light of our concerns regarding
increased energy costs and man-made impact on climate change,
we have embraced technological advances by investing in
energy-saving improvements to our products, which are explained
further under “Environment” on page 48 et seq.
36
ME Group plc Annual Report 2022 The Community and Environment continued
How we engage
How this engagement influenced Board discussions and decision-making
The Board relies on regular updates from
senior management who in turn rely on
direct or indirect feedback from
colleagues and customers, as well as
general observations on current best
practices and individual customer
recommendations. These provide useful
insights and guides to help shape the
Group’s activities.
The needs of all our customers are important to us. This drives a
continuous review of our products and the development of
solutions to meet these needs. For example, we have improved
services offered to customers with disabilities, and complied with
the Equality Act 2010 by introducing on-screen instructions within
our photobooths for hard-of-hearing customers, and voice
instructions and carefully selected screen colours and font sizes for
customers with visual impairments. In addition, the development
of the universal photobooth enables access for wheelchair users.
Carbon footprint reduction – fleet:
▪ Cars are regularly serviced to ensure efficiency
▪ All drivers are asked to check tyre pressure once a week
(properly inflated tyres can boost car mileage)
▪ Generally cars are leased for no more than 48 months, as newer
cars tend to be more fuel efficient
▪ One of the criteria for new car orders is its level of CO₂ emissions
▪ Our regions are divided into specific areas and engineers must
live within their area of work. This ensures that the distance
driven to service machines is kept to an absolute minimum
▪ Other groups of drivers, such as commercial team
members, plan their journey ahead in order to cover their
territory efficiently
How this engagement influenced Board discussions and decision-making
The Remuneration Committee consulted with major investors and
external remuneration specialists before introducing, and then
updating, any changes to the implementation of the
remuneration policy. The Board reviews the Group’s dividend
policy and, following the outbreak of the COVID-19 pandemic,
the Board suspended its interim dividend, as the Board
considered this to be in the long-term interest of shareholders.
The Board is, however, recommending a final dividend for the
year ended 31 October 2022.
Involvement of the Chairman highlights the importance of
governance from the top down.
The AGM in particular provides a convenient forum for
shareholders to question the Board, give useful feedback and
make helpful suggestions. It is normally very well attended and
constructive. This was not the case for the AGM in respect of the
financial period 2019/2020 owing to the restrictions that were in
place owing to COVID-19, however, members were encouraged to
submit questions in advance of that AGM.
The Remuneration Committee takes advice from external
remuneration consultants to ensure that it is up to date with
market trends, expectations, and best practises.
Investors
How we engage
Comprehensive investor relations
programme including formal
presentations to investors and analysts
on the half-year and full-year results;
formal investor roadshows in the UK;
and an ongoing programme of one-to-
one meetings and group meetings with
institutional investors, fund managers
and analysts.
Meetings which relate to governance are
attended by the Chairman or another
Non-executive Director
▪ Annual Report and Annual General
Meeting (AGM)
▪ Corporate website and market
announcements
▪ Active consultation on remuneration
framework and policies
The Board relies on regular updates from senior management who in turn rely on direct or indirect
feedback from colleagues and customers, as well as general observation on current best practices and
individual customer recommendations. These provide useful insights and guides to help shape the
Group’s activities.
37
ME Group plc Annual Report 2022Strategic Report
Strategic Report
Principal risks
Similar to any business, the Group faces risks and
uncertainties that could impact the achievement
of the Group’s strategy.
These risks are accepted as inherent to the Group’s business. The Board recognises that the
nature and scope of these risks can change; it therefore regularly reviews the risks faced by the
Group as well as the systems and processes to mitigate them.
The table below sets out what the Board believes to be the principal risks and uncertainties,
their impact, and actions taken to mitigate them.
Economic
Nature of risk
COVID-19
Description and impact
Mitigation
COVID-19 has continued to cause
disruption to worldwide markets and
supply chains, including those that
ME Group operates within.
The Group continues to monitor the
COVID-19 situation closely and update its
practices in line with government
guidelines and other relevant guidance.
The pandemic cleaning regime continues,
to help reduce the risk of cross
contamination between the Company’s
customers.
Measures taken include providing
employees with face shields, surgical
masks, gloves, hand sanitiser. The cleaning
equipment additions such as SD90 and
DEW remain in use.
The Group focuses on maintaining the
characteristics and affordability of its
needs-driven products.
Like most businesses around the world,
the Group has had to face a significant
increase in supply chain and raw material
costs, however, its strong position in the
markets in which it operates gives the
Group significant pricing power.
The Group has no exposure to the invasion
of Ukraine by Russia.
The Group hedges its exposure to currency
fluctuations on transactions, as relevant.
However, by its nature, in the Board’s
opinion, it is very difficult to hedge against
currency fluctuations arising from
translation in consolidation in a cost-
effective manner.
Global economic
conditions
Economic growth has a major
influence on consumer spending.
A sustained period of economic
recession and a period of high inflation
could lead to a decrease in consumer
expenditure in discretionary areas.
Volatility of foreign
exchange rates
The majority of the Group’s revenue
and profit is generated outside the
UK, and the Group’s financial results
could be adversely impacted by an
increase in the value of sterling relative
to those currencies.
38
ME Group plc Annual Report 2022 Regulations
Nature of risk
Centralisation of
the production of
ID photos
Brexit
Description and impact
Mitigation
In many European countries where the
Group operates, if governments were
to implement centralised image
capture, for biometric passport and
other applications, or widen the
acceptance of self-made or home-
made photographs for official
document applications, the Group’s
revenues and profits could be affected.
The UK left the EU on 31 January 2020.
This has led to changes in the UK
regulations as modifications to
numerous arrangements between the
UK and other members of the EU and
EEA, affecting trade and customs
conditions, taxation, movements of
resources, among other things.
The Group has developed new systems
that respond to this situation, leveraging
3D technology in ID security standards,
and securely linking our booths to the
administration repositories. Solutions are
in place in France, Ireland, Germany,
Switzerland and the UK; discussions in
Belgium and the Netherlands.
Furthermore, the Group also ensures that
its ID products remain affordable and of
a high-quality.
The Board is continually reviewing the
potential impact on the Group’s operations
following the UK’s leaving the EU.
Any potential developments, including
new information and policy indications
from the UK Government and the EU, is
scrutinised with a view to enhancing the
Group’s ability to take appropriate action
targeted at managing and, where
possible, minimising adverse
repercussions of Brexit.
The business carried out post-transition
impact assessments to include all
customs documentation, licences,
permits, consents, certificates, rules of
origin, commodity codes, and delays at
the borders.
The Board foresees that in the short-term
the negative impact of the uncertainty
overshadowing the general UK
economy could spill over into the Group’s
UK operations.
39
ME Group plc Annual Report 2022Strategic Report Strategic Report
Principal risks continued
Strategic
Nature of risk
Description and impact
Mitigation
Identification of
new business
opportunities
The failure to identify new business
areas may impact the ability of the
Group to grow in the long-term.
Management teams constantly review
demand in existing markets and potential
new opportunities. The Group continues to
invest in research in new products and
technologies. Furthermore, the Group also
ensures that its ID products remain
affordable and of a high-quality.
Inability to deliver
anticipated benefits
from the launch of
new products
The realisation of long-term
anticipated benefits depends mainly
on the continued growth of the
laundry and food businesses and the
successful development of integrated
secure ID solutions.
The Group regularly monitors the
performance of its entire estate of
machines. New technology-enabled secure
ID solutions are heavily trialled before
launch and the performance of operating
machines is continually monitored.
Market
Nature of risk
Description and impact
Mitigation
Commercial
relationships
The Group has well-established,
long-term relationships with a number
of site-owners. The deterioration in
the relationship with, or ultimately the
loss of, a key account would have an
adverse, albeit contained, impact on
the Group’s results, bearing in mind
that the Group’s turnover is spread
over a large client base and none of the
accounts represent more than 2% of
Group turnover.
To maintain its performance, the
Group needs to have the ability to
continue trading in good conditions in
France and the UK, taking into account
the situation in these two countries.
The Group’s major key relationships are
supported by medium-term contracts. The
Group actively manages its site-owner
relationships at all levels to ensure a high
quality of service.
The Group continues to monitor the
situation in both the French and the
UK markets.
40
ME Group plc Annual Report 2022 Operational
Nature of risk
Reliance on foreign
manufacturers
Reliance on one
single supplier of
consumables
Reputation
Product and service
quality
Technological
Nature of risk
Failure to keep up
with advances in
technology
Cyber risk: Third
party attack on
secure ID data
transfer feeds
Description and impact
Mitigation
The Group sources most of its products
from outside the UK. Consequently, the
Group is subject to risks associated with
international trade.
Extensive research is conducted into
quality and ethics before the Group
procures products from any new country
or supplier. The Group also maintains very
close relationships with both its suppliers
and shippers to ensure that risks of
disruption to production and supply are
managed appropriately.
The Group currently buys all its paper
for photobooths from one single
supplier. The failure of this supplier
could have a significant adverse impact
on paper procurement.
The Board has decided to hold a
strategic stock of paper, allowing for
6-9 months’ worth of paper consumption,
to allow enough time to put in place
alternative solutions.
The Group’s brands are key assets of
the business. Failure to protect the
Group’s reputation and brands could
lead to a loss of trust and confidence.
This could result in a decline in our
customer base.
The Board recognises that the quality
and safety of both its products and
services are of critical importance and
that any major failure will affect
consumer confidence.
The protection of the Group’s brands in its
core markets is sustained with certain
unique features. The appearance of the
machine is subject to high maintenance
standards. Furthermore, the reputational
risk is diluted as the Group also operates
under a range of brands.
The Group continues to invest in its
existing estate, to ensure that it remains
contemporary, and in constant product
innovation to meet customer needs.
The Group also has a programme in place
to regularly train its technicians.
Description and impact
Mitigation
The Group operates in fields
where upgrades to new technologies
are critical.
The Group mitigates this risk by continually
focusing on R&D.
The Group operates an increasing
number of photobooths capturing
ID data and transferring these data
directly to government databases.
The Group undertakes an ongoing
assessment of the risks and ensures
that the infrastructure meets the
security requirements.
41
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement
Our approach to
sustainability
The Group recognises its responsibilities to the community and the
environment and that health, safety and environmental issues are integral
and important components of best practice in business management.
Our management of sustainability can influence our ability to create
long-term financial and non-financial values and impacts on our relationship
with shareholders and other stakeholders.
Principal Activities
We believe that effective management of
sustainability can reduce risks and help us identify
business opportunities.
We prioritise our sustainability activities based on
four main drivers:
▪ legal requirements and future policy trends;
▪ customer, employee and investor preferences
on sustainability;
▪ cost savings and business efficiency; and
▪ employee awareness and employer brand.
We aim at ensuring that our approach is consistent
with the directors’ duty to promote the success of
the Company, a legal requirement included in the
Companies Act 2006. This duty is based on the
principle of ‘enlightened shareholder value’.
How we manage sustainability
The Board is ultimately accountable for
sustainability. The Chief Operating Officer has
specific responsibility for risk management and
health, safety and environmental matters, with
delegated authority through line management.
The Group operates in highly differentiated national
markets with differing national laws, preferences
and cultures. As a result, operational direction and
management of sustainability lie primarily with
national business managers, who are best placed to
ensure compliance with national legislation and
market expectations. The Group Executive
Committee, who report to the Board, therefore take
a holistic approach to overseeing the sustainability
initiatives implemented at a national level and take
responsibility for ensuring that such initiatives are in
line with investor expectations, and for
consolidating the outcomes of such initiatives into
the five strategic areas, as further explained below.
Materiality matrix
The materiality analysis was carried out in accordance
with the spirit and the process of a sustainability
approach. That is to say through dialogue with our
internal and external stakeholders.
This matrix aims at prioritizing the main challenges
of the Group, with regard to its short- and long-
term ambitions and the expectations of its main
stakeholders. In total, more than 30 individual
interviews were conducted, prepared beforehand
by a questionnaire to be completed by the people
interviewed, in order to analyse the context of the
Group’s activity, current or suggested sustainability
best practices, as well as the risks, opportunities
and challenges.
In a second step, the results were validated by the
Group Executive Committee before being shared
during five workshops involving all of the Group’s
businesses at the national level. The last workshop
was organised with international managers. In total,
around 50 employees were mobilised.
This approach made it possible to analyse the risks
and opportunities in order to identify 25 issues
reflecting the economic, environmental, and social
impacts of our activities. These issues have been
classified into five strategic areas highlighting the
uniqueness of our activity. The last step consisted
of prioritizing the issues in the materiality matrix.
42
ME Group plc Annual Report 2022 Materiality matrix
l
s
r
e
d
o
h
e
k
a
t
s
e
h
t
r
o
F
T
N
A
T
R
O
P
M
I
Y
R
E
V
T
N
A
T
R
O
P
M
I
D
E
T
A
R
E
D
O
M
Pride of belonging/
recognition
Internal
communication
Optimisation of
the commercials
relationship with B2B
Sustainability of the
ID and Photo range
Brand
awareness
Our CSR
approach
Satisfaction
of users
Global Digtal
transition
Cybersecurity
Strength of the
network technicians
HR policy/Collaborative
management
Training policy
Onboarding
Attractiveness of the
employer brand
R&D
Circular economy
Increased flow
of consumers
Success of the
Food range
Growth of the
Laundromat range
Cloud operating
system
Optimisation of
products
Strategic axes
Services and clients
Operational innovation
CSR approach
HR and employees
Strategy and development
Key accounts
co-ordination
Financial
performance
International
development
For the business
M O D E R AT E D
I M P O R TA N T
V E R Y I M P O R TA N T
43
ME Group plc Annual Report 2022Strategic Report
Strategic Report
Sustainability Statement continued
Products
The development, use and disposal of
our products represent a main area of
both risk and opportunity. We ensure
that our products and services are
designed to meet existing legislation
and increased customer expectations,
including environmental, health and
safety, and accessibility issues.
To ensure products manufactured by KIS SAS (the
Group’s manufacturing subsidiary, based in France,
which subcontracts this function to third parties)
consistently satisfy our stringent quality
requirements, ISO 9001 standard certification has
been achieved.
Revolution laundry units are eco-friendly
▪ The built-in washing liquid pump provides the
ideal quantity for each washing cycle and
reduces waste
▪ The highly concentrated washing liquid, free of
phosphates, colouring agents and preservatives,
meets the French ECOCERT standard.
Ecological, effective at low-temperature and
without allergen, this washing liquid naturally
perfumes the linen
▪ The boiler only heats the water when the dryer
is not in operation
▪ The energy-saving dryer reduces power
consumption
▪ LED lights use less energy than standard lighting
▪ The launderette only requires 13KW (compared
with 30KW for a classical launderette)
▪ All new Revolution units are equipped with solar
panels which leads to a reduction of between
10% to 30% of electricity use per machine
The Group was awarded the CSR (corporate
social responsibility) prize at System U exhibition
in November 2021 for the Revolution
laundry machine.
Our laundry units are user-friendly
▪ The launderettes comply with CE standards
and the new decree N°2012-412 effective since
1 July 2012
▪ Accessibility for disabled customers has been a
priority in the design of our launderettes from
the outset. The machines and touchpads are
located at the legally required height, thus
combining a beautiful design with easy access
for our customers. (Not all launderettes are
accessible for disabled customers at present.)
▪ As an added service to the customer, a built-in
pump releases a specially designed neutral and
mild washing liquid with a pleasant fragrance.
This also helps ensure the machines are kept
clean and tidy
▪ Equipped with high-capacity professional
washing machines (8kg and 18kg), the user can
wash and dry large or heavy loads such as
duvets, blankets and pillows in just 30 minutes
per washing cycle, representing a 60% time-
saving for the user compared with home laundry
▪ Customers can enter their mobile number at
the point of payment and an SMS will be sent
to alert them five minutes before the end of
the cycle. This free service is convenient for
customers who might use this waiting time
for shopping
▪ Thanks to the touch screen, the payment station
is easy to use by following the on-screen
instructions
▪ Besides the coin and note acceptor, contactless
credit and debit card payment is available as an
option, which facilitates the use of the
launderette and thus increases its use
▪ Measures were taken to safeguard the interests
of customers and the community at large during
the pandemic, including enhanced cleaning
regimes and customer signage (further details
set on page 47)
They are also buyer-friendly
▪ Floor space used is less than 5m² – relatively
small for a new innovative service
▪ Low installation cost
▪ The launderette is delivered fully assembled and
cabled, and can be installed in half a day
▪ Thinner power cables (due to low power-
requirement), thus cheaper
44
ME Group plc Annual Report 2022 We are set to reduce the environmental
impact of our laundry units
▪ In consideration of global concerns regarding the
disposal of waste and increasing metal prices
and landfill costs, we have focused more
attention on the re-use and recycling of our
retired products
▪ In light of our concerns regarding increased
energy costs and man-made impact on climate
change, we have embraced technological
advances by investing in energy-saving
improvements to our products, which are
explained further under “Environment” below
Responding to customer needs
▪ Our customers’ needs are important to us. This
drives a continual review of our products and the
development of solutions to meet these needs.
For example, we have improved services offered
to customers with disabilities, and complied with
the Equality Act 2010 by introducing on-screen
instructions within our photobooths for hard-of-
hearing customers, and voice instructions and
carefully selected screen colours and font sizes
for customers with visual impairments. In
addition, the development of the universal
photobooth enables access for wheelchair users
Employees
The Company’s employees are a
valued, integral part of the business
and the Company’s ability to achieve
success in key business objectives.
As such, it is the Company’s policy to provide
colleagues with appropriate financial and other
information about the business to encourage
employee engagement, and to enthuse and inspire
its workforce through a network of media such as:
▪ business networking tools to encourage
synergies among colleagues and businesses,
sharing ideas and best practices;
▪ internal notification of vacancies and policy
updates; and
▪ monthly operational meetings for business
leaders across the Group to engage with
colleagues, providing business and local
updates. Encouraging interactive feedback to
ensure business leaders are kept informed of
the Group’s performance and of the financial
and economic factors affecting Company and
Group performance.
While it has adopted a decentralised Group
management approach, the Company nurtures a
common culture among its workforce throughout
the entire Group through openness, honesty and
the pursuit of a universal goal that focuses on core
corporate values.
45
ME Group plc Annual Report 2022Strategic Report
Strategic Report
Sustainability Statement continued
We do everything in our power to support and
protect human rights. As a responsible company
with operations across the world, we believe that
strong ethics and good business go hand-in-hand.
We commit to complying with the laws and
regulations of the countries in which we operate.
Equal opportunities and diversity
The Company is an equal opportunities employer
and is committed to ensuring equal career
opportunities for all its employees without
discrimination, and pursuing fair and equitable
policies and procedures for recruitment, training
and development. Full consideration is accorded to
all applications from persons with disabilities, with
due regard to their aptitudes and abilities.
The Company ensures that, wherever possible,
employees who develop a disability during their
engagement can continue their employment
through a supportive mechanism of retraining,
redeployment and reasonable adjustments where
practicable, enabling them to remain within the
Group. Opportunities for training, career
development and progression into and within the
Group do not operate to the detriment of persons
with disabilities.
Gender diversity
The table below shows the gender diversity of the
Group’s employees as of 31 October 2022 with
corresponding figures at 31 October 2021:
As at 31 October 2022
Total
Male
Female
The Board of ME Group
Senior managers in the
Group (excluding
directors of ME Group)
Employees
(excluding above)
8
20
5
14
1,055
875
Total
1,083
894
3
6
180
189
As at 31 October 2021
Total
Male
Female
The Board of ME Group
Senior managers in the
Group (excluding
directors of ME Group)
Employees
(excluding above)
10
18
7
15
3
3
995
831
164
Total
1,023
853
170
Health & safety
We are committed to ensuring that
customers, site owners and
employees are protected from risk
from products operated by the Group.
In addition to these moral and ethical
considerations, we believe that the
effective management of health and
safety are essential ingredients for
successful business performance.
Our commitment to the safety of our customers
and business partners is achieved through a
network of trained service operatives who routinely
service installed equipment on customers’ sites as
well as conducting periodic safety inspections and
tests. Customers and site owners can raise any
safety concerns directly through our call centres,
which immediately inform management and direct
an operative to the site within 24 hours.
New products from external suppliers are assessed
to ensure that they meet relevant safety standards
before being launched in the market. We work with
our suppliers where appropriate, sharing the benefit
of our many years’ experience of developing
products to the highest standards of safety.
Photobooth security is managed by a multipoint
locking system with either one or two security
padlocks depending on the model. Our
photobooths meet current electrical standards
through a declaration of conformity (DOC) and
Conformité Européene (CE) marking, confirming
Restriction of Hazardous Substances (RoHS2)
product compliance. Our experienced engineers
also test equipment regularly to ensure it meets
both Portable Appliance Testing (PAT) and
Amusement Device Inspection Procedures
Scheme (ADIPS) standards.
Children’s rides manufactured by Jolly Roger
(Amusement Rides) Limited, a Group subsidiary
company in the UK, which business has been
transferred to the Company, are produced in
accordance with industry guidance issued by the
British Amusement and Catering Trades
Association (BACTA) and conform to CE marking
confirming RoHS2 product compliance. This
supplements the various British, European and
International standards that apply to children’s
46
ME Group plc Annual Report 2022 routine service visits to reduce the risk of cross
contamination between customers.
As the pandemic is still a part of our lives we
continue to provide employees with PPE such as
face masks, face shields, hand sanitiser and gloves
as standard. Our COVID-19 risk assessment is
regularly reviewed.
The Group will continue to follow the government
advice regarding the pandemic and home working.
A new seating plan is in place to provide social
distancing across our offices.
In the UK, the Company is accredited under two
safe contractor schemes, one managed by Alcumus
and the other by Altius, and has also received an
Assured Vendor award. This accreditation is
reviewed annually and requires all Health and
Safety policies and procedures to be audited as
part of the scheme. This year the Company was
selected for a manual audit by Avetta where they
conduct an in-depth review which we passed.
ME Group UK has also been awarded PCI DSS
(Payment Card Industry Data Security Standard)
certification which, developed by the PCI Security
Standard Council, aims to reduce online fraud.
We recognise that all employees have an important
contribution to make in the ongoing development
and implementation of our health and safety
policies and procedures. This is reflected in the
representation from all levels of the business on
the Health and Safety Committee.
rides and ensures a minimum standard of quality
and safety. The Company is also a registered
inspection body within the UK of ADIPS Scheme
administered by BACTA and enables its qualified
operatives to inspect children’s rides and issue the
required safety certification.
Within the UK, the General Manager fully supports
the health and safety policy and ensures there is
provision on the agenda of regular senior executive
meetings to address health and safety matters.
Policies and procedures developed over the years
continue to be reviewed and adjusted as part of the
process of continual improvement and keeping
pace with legislative advances. Risk assessments
are regularly undertaken for any new tasks and all
are reviewed every 12 months.
To achieve the standard of health and safety
performance to which the Company aspires, we
believe that it is important to empower individuals
at all levels and equip them with the tools and skills
they require by providing relevant training and
information. The Company continues to improve its
employee-induction process following the
introduction of an alternative online training system
supplied by Essential Skillz in 2014 to teach and
refresh employee skills as required. This year the
platform enabled us to produce our own in-house
training for all our employees on the importance of
security awareness. As well as this, all regional
engineers underwent refresher training. The
Company continues to maintain its membership of
the British Safety Council and is also a member of
the CE Marking Association.
In addition to demonstrating our commitment to
best safety and environmental practice and
consistent improvement, these ongoing
partnerships enable us to access expert advice and
quality training resources to assist us in achieving
our goals.
Throughout the pandemic our front-line employees
have been our priority. Whilst many were
furloughed initially there was a skeleton crew
working to ensure our machines were kept up and
running where possible. In order for them to
achieve this we brought in two new cleaning
products in 2020 called SD90, a high performance
self-disinfectant coating for up to 90 days as well as
DEW, an antibacterial cleaner. Both products are
still being used across the business as part of our
47
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
Environment
The Company recognises its
responsibility towards the
environment and the impact of its
business activities. We integrate our
environmental impact into the core
business through our focus on circular
economy, reduction of resource
consumption and carbon footprint.
The main environmental risks to the business in this
area arise from increased potential legislation and
the rising cost of waste disposal. Energy
consumption, water scarcity, and rising car fuel
prices (for employees, suppliers, transportation and
final consumers) and raising awareness of the
climate crisis amongst consumers. are the main
potential climate risks to disrupt our business. The
Company has mitigated its exposure to these risks,
and the emissions which the business generates, by:
▪ reducing the amount of waste produced;
▪ the recovery, refurbishment and resale of
electrical equipment such as children’s rides
which promote the principle embodied in recent
legislation of reuse before recycling. This not
only generates cost savings but also creates a
source of income. Where possible, we
endeavour to embrace technological advances
to reduce the impact of our operations on the
environment. Such initiatives include:
- reducing the amount of waste produced;
- upgrading to certain of ME Group’s offices
through installing upgraded windows, doors
and roofing to improve insulation and energy
efficiency, as well as upgrading air
conditioning and heating systems as a step
towards lower energy usage; and
- 20% of the photobooths are reconditioned
every year and 50% of the new photobooths
are made up of reconditioned elements.
To go even further, 90% of the materials in
photobooths are recycled at the end of
their life.
Although we are not presently exposed to material
risks related to climate change, we are taking steps
to ensure that our energy use and demand for
natural resources are reduced wherever possible. In
addition to the examples highlighted above, the
Company operates a green fleet policy which
specifies that vehicles are sourced according to
practicality and environmental impact as defined
in terms of CO₂ emissions. This green fleet policy,
plus the above measures, constitutes the
principal measures taken by the Company during
the reporting period to increase the Company’s
energy efficiency.
Greenhouse gas (GHG) and
energy emissions
Reporting of GHG emissions
In accordance with the disclosure requirements for
listed companies, the table below shows the
Group’s greenhouse gas emissions for the current
and preceding financial year.
- introducing automatic shutdown (and restart)
of photobooths during closing hours which
saves approximately 30% of power
consumption on site;
The Group is required to report the emissions it is
responsible for (as defined below), and to provide
at least one ‘intensity ratio’ together with an
explanation of methodology used.
- using remote telemetry systems to minimise
the number of service visits and reduce
wastage of consumables;
- substituting old-technology lighting with new
low-energy lamps in all photobooths. The
latest generation Photobooth by Starck uses
the latest LED lighting which also eliminates
the hazardous waste associated with
fluorescent tubes;
- installing low energy LED lights in place of
old-technology lighting in ME Group’s
factories;
In the table on the right, the Group explains what
data has been included in this report and why. In
particular, the Group has not reported fugitive
emissions (which include leakages from refrigerants
used in air conditioning units, etc.) because no data
were available and, given the low number of such
units in the Group, management did not consider
such emissions to be material.
48
ME Group plc Annual Report 2022 Assessment parameters
Assessment parameters
Consolidation approach
The figures below are based on subsidiary companies owned by ME Group,
except for those non-material subsidiary companies (mainly new start-up
ventures) whose vending estate comprises less than 50 machines. This is because
it would not be practicable for the Company to include those subsidiary
companies in the data.
For those investments where the Group has less than 50% of the issued share
capital, the Group does not have operational control for day-to-day activities and
these entities are not included in the above figures.
Boundary summary
The Group has included vending estates which are owned by the Group even
though it does not directly control the operational use (i.e. period of operation) for
these assets.
Emission factor source
Department of Business, Energy & Industrial Strategy, 2016 GHG Conversion
Factors for Company Report (2016: DEFRA 2014).
Methodology
The Company followed the Greenhouse Gas Protocol Corporate Standard.
Materiality threshold
As mentioned above, subsidiary companies with less than 50 units of operating
equipment have been excluded, as have depots and other property units where
the total amount spent on heating, lighting and power is less than £50,000 per
annum per site. It would not be practicable for the Company to include sites
where the consumption is below this threshold.
Intensity ratio
As explained below.
In the tables below, the Group has not reported fugitive emissions (which include leakages from refrigerants
used in air conditioning units, etc.) because no data were available and, given the low number of such units
in the Group, management did not consider such emissions to be material.
Global (UK incl.)
Scope
1
2
3
Total
CO2 emissions items
Energy – Gas
Energy – Electricity
Use (machines operation)
Travel
Inputs for machine production
Car fleet
Purchasing for the Group
Inputs for machine user
Direct Waste
12 months ended
31 October 2022
12 months ended
31 October 2021
tons of CO2e
tons of CO2e
236
343
29,058
5,287
5,176
1,108
446
178
115
41,947
335
402
24,674
2,578
no data
no data
no data
no data
no data
27,989
Intensity ratio Per number of units of operating equipment
0.984
0.6627
49
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
Focus UK only (ME Group International plc and Jolly Roger (Amusement Rides) Limited)
Scope
1
2
3
Total
CO2 emissions items
Energy – Gas
Energy – Electricity
Use
Travel
Inputs for machine production
Amortisation
Purchasing for the Group
Inputs for machine user
Direct Waste
12 months ended
31 October 2022
12 months ended
31 October 2021
tons of CO2e
tons of CO2e
1
59
7,239
524
no data
no data
no data
no data
22
7,845
25
98
2,710
211
no data
no data
no data
no data
no data
3,044
Intensity ratio Per number of units of operating equipment
1.2973
0.5037
Methodology used:
▪ The data detailed in the table above represents
the emissions and energy used for which ME
Group is responsible and is incorporated by
reference in the Corporate Governance section
on pages 73 to 99.
▪ Data based on actual utilities invoices for Head
Office consumption
▪ Kilometres travelled by cars, multiplied by the
CO₂ emissions (by kilometre) for every car in the
Group fleet
▪ Theoretical consumption by machines,
multiplied by average number of machines for
each country of operation. Mainly it is the
partners who pay for the electricity consumed
by the Group’s operating machines, not the
Group. A theoretical consumption has therefore
been calculated based on an average hourly
consumption and an average number of hours
of uptime per day
▪ In order to provide data that can be easily
compared from one year to the next, the Group
has chosen to translate last year’s figures over a
12-month period by means of a 3:2 ratio
▪ 12 months ended 31 October 2022 compared
with the 12 months ended 31 October 2021
Non-financial information statement
▪ We are pleased to set out below where you can
find information relating to non-financial
matters in our Strategic Report, as required
under sections 414CA and 414CB of the
Companies Act 2006
Information
Section/Policy
Environmental
matters (including
the impact of the
company’s business
on the environment)
This is found above in the
Sustainability Statement.
The Company’s
employees
This is found above in the
Sustainability Statement.
Social matters
This is found above in the
Sustainability Statement.
Respect for
human rights
Anti-corruption and
anti-bribery matters
The Company followed
the Greenhouse Gas
Protocol Corporate
Standard.
The Company operates
an anti-bribery and
corruption policy. This
can be found on the
Company’s website
(https://me-group.com/).
50
ME Group plc Annual Report 2022 and Sirsa’s conclusions. Some new actions are
required particularly as regards reduction of
energy consumption, transportation of
machines, and social dialogue plus the support
of new data formalization
By way of reminder, the 2015 Paris Agreement
highlights the need to work together to reduce
greenhouse gas emissions in order to stay below
the +1.5°C mark at an international level
Whether on a personal or industrial level, it is
important to measure these emissions
accurately. This is where emissions Scopes 1, 2
and 3 come into play. In order to realize a good
measurement of the Group’s emission it is
important to go through the following:
Bilan Carbone© or Carbon footprint by
GHG protocol supported by GRI (based on
ISO 26000)
or Carbon Disclosure Project (CDP)
Scope 1 : direct emissions produced by the
company
Scope 2 : indirect emissions related to energy
consumption by the company
Scope 3 : the rest of the emission of CO2,
which today regulates the majority of
greenhouse gas emissions produced
upstream and downstream by companies,
including supply chain, purchasing, final clients
using our products or services and
their emissions
▪ The international scientific committee of Kelony
has granted the Group the Qualification of
Excellence “Kelony Assured” 2021 for the
progress made in the protection of personal
data as well as information assets in general,
above all the new process on data dedicated for
the B2B client, reinforcing our contractual and
commercial link in confidence
Steps taken in 2022
Throughout 2022, the Group carried
out work to continue structuring its
approach to sustainability that it had
initiated in 2021.
As a reminder, this work had allowed the
identification of more than 50 good practices, the
co-construction of the materiality matrix and the
purpose as well as the prioritization of the
indicators to be monitored regularly in order to
reduce the social, environmental impacts. and
societal aspects of the Group across its entire
geographical reach.
In 2022, the structuring of the approach was
carried out in consultation with several external
recognised for their expertise in CSR and in
particular for the quality of their methodology and
commitments: Montefiore Investissement,
EcoVadis, Sirsa, and Kelony.
▪ Sirsa validated the definition of a 2023/25
strategic plan based on five pillars: Suppliers,
Governance; carbon footprint; energy
consumption; and social dialogue with areas for
improvement, actions and defined KPIs
▪ “Sirsa/Reporting 21” as a reporting activity
branch of Sirsa, delivered a specific data
platform enabling the Company to manage
new data CSR throughout the Group,
collecting figures in order to reinforce the
Company’s commitment and has set up an
information-feedback platform to enable CSR
reporting around 25 priority indicators at the
international level
▪ Sirsa helped the Group to assess its carbon
footprint on scopes 1, 2 and 3 at the international
level. Furthermore, for its part, the Group has
initiated carbon offsetting through the Microsol
association in Guatemala, on an environmental
and societal project which covers 7 of the 17
SDGs – Sustainable Development Goals –
targeted by the UN for an amount of the
emission of 400 teq CO2 saved
▪ EcoVadis gave a rating of 53 out of 100 (bronze)
to the Group’s new approach to CSR and
indicated areas for improvement: Responsible
Purchasing; Environment; Ethics and Social &
Human Rights. The conclusion of the report
made some suggestions in line with Montefiore
51
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
Our three-year
sustainability plan
1
Integrating sustainability into ME Group’s
corporate strategy
2023
2024
2022
2025
Actions
▪ A group of CSR
▪ Integration of
referents was created
at the end of 2021
sustainability in the
risk management
chapter of the 2022
Annual Report
▪ Important
sustainability matters
will be discussed
during COMEX
meetings
▪ Annual audit by
Ecovadis on the
Group’s sustainability
performance
▪ The Company will
align its commitments
with and
communicate its
progress towards the
United Nations
Sustainable
Development Goals
(SDG)
▪ Annual audit by
Ecovadis on our
sustainability
performance
▪ Important
sustainability matters
will be discussed
during COMEX
meetings
▪ Official anti-
corruption statement
from the group and
national and
international
communication
KPIs
▪ 4 review meetings on
the sustainability
strategy between
referents
▪ 4 review meetings on
the sustainability
strategy between
referents
▪ 2 sustainability
▪ 2 sustainability
strategic meetings to
define the course and
readjustments
strategic meetings to
define the course and
readjustments
2
Carbon footprint
2022
Actions
2023
2024
2025
▪ Carbon footprint analysis with Reporting 21
52
ME Group plc Annual Report 2022 3
Energy consumption of the machine park
2022
Actions
24674 tons of CO2
(=81% of our global
carbon footprint)
2023
2024
2025
▪ Reporting of energy
consumption of
machines
▪ Integration of CSR in
the product design
process
▪ External audit on
areas for
improvement to
reduce our energy
consumption
▪ Discussion group on
the energy and
electricity
consumption of
machines
▪ Develop the areas for
▪ Reporting of energy
consumption of
machines
▪ Integration of CSR in
the product design
process
improvement
detected during the
1st discussion group in
2022: adaptation of
the number of cycles
and weight of linen,
shorten the rinsing
cycle, generalize the
Stop and Go device
on all machines, equip
all machines with
LEDs
▪ Integration of
sustainability in the
product design
process
KPIs
▪ (3%) tons of CO2
▪ (5%) tons of CO2
▪ (7%) tons of CO2
compared to 2021 for
the total machine park
compared to 2021 for
the total machine park
compared to 2021 for
the total machine park
▪ (5%) tons of CO2
▪ (7%) tons of CO2
▪ (10%) tons of CO2
compared to 2021 for
new machines
compared to 2021 for
new machines
compared to 2021 for
new machines
4
Offsetting our carbon footprint
2022
Actions
2023
2024
2025
▪ Investment in carbon offset projects (Microsol)
KPIs
▪ 400 Tons
compensated with
Microsol
▪ 600 tons
▪ 800 tons
compensated with
Microsol
compensated with
Microsol
▪ 1,000 tons
compensated with
Microsol
53
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
Our three-year sustainability plan continued
5
Renewable energies
2023
2022
Actions
▪ Laundry units with
solar panels represent
10% of the laundry
estate
KPIs
▪ Development of the
use of solar panels
across laundry units
▪ Create a customer
interview highlighting
the advantages of
solar panels from a
profitabil-ity and
communication point
of view
2024
2025
▪ Development of the
use of solar panels
across laundry units
▪ Testing of solar
heaters
▪ Development of the
use of solar panels
across laundry units
▪ Laundry units with
solar panels will
represent 11% of the
laundry estate
▪ Laundry units with
solar panels will
represent 12% of the
laundry estate
▪ Laundry units with
solar panels will
represent 13% of the
laundry estate
6
Transport of people
2023
2022
Actions
▪ Reduce the fuel
consumption of our
vehicles by setting up
an eco-driving and
safety competition
between technicians
in France
▪ Driver training with
the lowest eco-
driving ratings
2024
2025
▪ Replicate eco-driving
competition in 2 other
European countries
▪ Replicate eco-driving
competition in 4
other European
countries
KPIs
▪ (2%) litres of fuel
saved in France
▪ (2%) of trained French
drivers
▪ (4%) litres of fuel
▪ (7%) litres of fuel
saved in France and
Europe
saved in France and
Europe
▪ (5%) of French drivers
▪ (5%) of French drivers
trained + 2% of
European drivers
trained + 2% of
European drivers
54
ME Group plc Annual Report 2022 7
Transport of machinery, pieces and waste
2022
Actions
2023
2024
2025
▪ Think tank on the
relocation of the
production of
machines in relation
to the markets –
logistics optimization
work between
subsidiaries
▪ Creation of a “Green
logistics” policy
guaranteeing
maximum
optimization of the
transport of machines
and a reduction of
related emissions
▪ Transportation of
▪ Find a service
machines in France
and between
countries
▪ Transport of spare
pieces to be repaired
in France
▪ Transport of waste
between the
operating sites and KIS
KPIs
provider for waste
management at each
operating site to
relocate and re-duce
transport between
operating sites and
at KIS
▪ Implementation of
the “Iteca” project in
France to optimize
the repairs of
technicians by
ordering the right
spare pieces
▪ (5%) km traveled by
waste from operating
sites
▪ (10%) km traveled by
waste from operating
sites
▪ (15%) km traveled by
waste from operating
sites
55
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
ME Group International Plc
- TCFD Report
The Company recognises its responsibility towards the environment and the
impact of its business activities. Consideration of our environmental impact is
integrated into the core business through our focus on the circular economy,
reduction of resource consumption and carbon footprint as detailed in the
sustainability statement on pages 42 to 62
The Company is reporting for the first time on climate-related issues in line with the UK Listing Rule
9.8.6(8), the Task Force on Climate-related Financial Disclosures (“TCFD”) framework and the Companies
Act 2006. The Company’s disclosure is aligned to the four pillars of the TFCD below:
1. Governance
2. Strategy
3. Risk Management
4. Metrics and Targets.
TCFD Compliance Index
Recommended
disclosure
Governance
FY 22 Compliance
Description, location of disclosure progress to date
and reason for omission (if appropriate)
Disclosure of the Company’s governance around climate-related
risks and opportunities
a) Describe the
Board's oversight of
climate-related risks
and opportunities
Full
Full
b) Describe
management’s role in
assessing and
managing climate-
related risks and
opportunities
The Board is ultimately accountable for environmental
responsibility and exercises oversight of climate-related risks and
opportunities through:
▪ information received from senior management on any
significant matter;
▪ general observations on current best practices and individual
customer recommendations (among the 50 Best Practices
identified in 2021, some directly concern climate change: water,
energy and recycling for instance); and
▪ recommendations (if any) from major shareholders and
other stakeholders.
For further details of the Company’s integrated corporate
governance and organisational structure, and how climate is dealt
with within the governance and organisation structure, please see
the Corporate Governance section on pages 73 to 99.
As referenced on page 42, the Chief Operating Officer has
specific responsibility for risk management and health, safety
and environmental matters, with delegated authority through
line management.
The CSR Steering Committee comprises the Executive Director,
the Group Human Resources Director and the CSR and Internal
Communications Manager as well as a global network of CSR
representatives. The CSR Steering Committee makes
recommendations to the Executive Committee.
56
ME Group plc Annual Report 2022 Recommended
disclosure
FY 22 Compliance
Description, location of disclosure progress to date
and reason for omission (if appropriate)
Governance continued
b) Describe
management's role in
assessing and
managing climate-
related risks and
opportunities
Full
A more detailed overview of the Company’s corporate governance
and organisational structure is included within the Corporate
Governance section on pages 73 to 99.
The Group operates in highly differentiated national markets with
differing national laws, preferences and cultures. As a result,
operational direction and management of sustainability lie
primarily with national business managers, who are best placed to
ensure compliance with their national legislation and market
expectations. The Group Executive Committee, who report to the
Board, therefore take a holistic approach to overseeing
sustainability and take responsibility for assessing climate-related
risks and opportunities.
Strategy
Disclosure of the actual and potential impacts of climate-related risks and opportunities on
the Company's material business, strategy, and financial planning
a) Describe the
climate-related risks
and opportunities the
Company has
identified over the
short, medium and
long term
In progress, with
respect to whether
such risks are best
categorised as short,
medium or long term.
b) Describe the
impact of climate-
related risks and
opportunities on the
Company's
businesses, strategy
and financial planning
In progress, the
Company will continue
to enhance its
assessment of
climate-related issues
in order to understand
their impact on the
business financially, on
its strategy and
business model, as well
as on all stages of the
supply chain.
The Group, through its risk monitoring undertaken in accordance
with the Company’s corporate governance and organisational
structure, has identified: 1) Increased potential legislation (in
climate change area), 2) the increasing awareness of the climate
crisis amongst consumers. 3) energy consumption 4) rising car fuel
prices 5) water scarcity (due to the climate change) as potential
areas of future risk and opportunity. The Company has identified a
number of further key opportunity focus areas which are
explained in the Sustainability Statement on pages 42 to 62.
This strategy is particularly visible in the issues placed in the
Materiality Matrix, some of which are directly connected to
climate risks.
The Company is currently in the process of assessing further which
of the above should be appropriately categorised as a short,
medium or long term risks and opportunities, though would
acknowledge that each is likely to result in risks and opportunities
across the short, medium and long term in different ways.
Considering the need to react and adapt in the face of climate
change, the Company is well-equipped to meet these new
challenges. By launching its collective long-term transformation
initiative, the Company aims to improve its competitiveness,
performance, and resilience throughout its value chain. As part of
this transformation, it will continue to monitor short, medium and
long-term climate-related risks and opportunities to ensure full
disclosure in the future.
Although not presently exposed to material risks related to climate
change, the Company is taking steps to ensure that its use of natural
resources, such as energy and water, are reduced wherever
possible. The Company mitigates its exposure to these risks, and the
emissions which the business generates, by taking the actions
detailed in the Environment section on page 48 et seq.
The Company understands the wider impact of climate-related
issues on the whole business which is one of the reasons why the
Company adopted its new systemic sustainability approach. This
approach supports the Group’s growth strategy and operations by
integrating social, environmental, and economic expectations into
its strategy and operations.
In addition to the work undertaken to formulate the Group
Sustainability Materiality Matrix disclosed on page 43 above,
The Company will continue to further assess climate-related
issues in order to understand their impact on the business
financially, on its strategy and business model, as well as on all
stages of the supply chain.
57
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
ME Group International Plc - TCFD Report continued
Recommended
disclosure
FY 22 Compliance
Description, location of disclosure progress to date
and reason for omission (if appropriate)
Strategy continued
c) Describe the
resilience of the
Company's strategy,
taking into
consideration
different climate
scenarios, including a
2°C or lower scenario
Risk Management
Non-compliant.
As for the current reporting period, the Company did not perform
climate scenarios analysis. As it looks to the future, it will continue
to monitor climate-related risks and opportunities that impact its
operations and will also consider performing scenario analysis to
assess transition and physical risk when the state of climate-
related operations is sufficiently advanced to render such analysis
meaningful for long-term strategic planning.
Disclosure of how the Company identifies, assesses, and manages
climate-related risks.
Full
a) Describe the
Company's processes
for identifying and
assessing climate-
related risks.
b) Describe the
Company's processes
for managing
climate-related risks.
Full
Full
c) Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into
the Company's overall
risk management.
As per the Strategy disclosure, (a) above, the Company has
identified its main climate-related risks through its existing
governance framework. However, as per the Strategy disclosure at
b), we do not consider these to be material risks.
In relation to the identified risk of an increase in potential
legislation (including in relation to climate reporting), the Company
ensures its policies and procedures keep pace with legislative
advances as part of continual improvement. As part of this, the
Company has started the process of reporting on climate changed
related risks and mitigation actions and it is committed to
complying in full with the TCFD recommendations in future
reporting periods .
A broad range of economic, environmental and social risks
were considered and each risk was prioritised according to
its importance to the Company and in relation to its short and
long-term ambitions, and the expectations of our key stakeholders.
Given the nature of the Company’s business, it is not presently
exposed to material risks related to climate change. However,
steps are being taken to mitigate any exposure to the risks
highlighted above, and the emissions which the business
generates. Further details in relation to mitigating actions
are outlined in the Sustainability Statement to be found on
pages 42 to 62.
Since 2021, the Company has been integrating a systemic CSR
approach that involves all its business to help deliver its aim of
being carbon neutral by 2040. This systemic CSR approach and
focus on inventing eco-responsible local services together
supports the company’s growth strategy and operations by
integrating social, environmental, and economic expectations into
the Group’s strategy and operations.
The Company’s materiality matrix prioritises the main challenges
of the Group, with regard to its short and long-term ambitions. The
materiality analysis identified 25 issues classified into five strategic
areas: (i) operational innovation; (ii) strategy and development; (iii)
services and clients; (iv) HR and employees; and (v) CSR, with
sustainability of the ID and the Photo range ranking as very
important for stakeholders and the business.
For further details of the Company’s integrated corporate
governance and organisational structure, please see the Corporate
Governance section on pages 73 to 99.
The Company will continue to review its risk management
framework and the best way to effectively integrate climate-
related risks into its processes, considering how climate change
may interact with the Company’s Principal Risks whilst not being a
principal risk itself.
58
ME Group plc Annual Report 2022 Recommended
disclosure
Metrics and Targets
a) Disclose the
metrics used by the
Company to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process.
b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas
(GHG) emissions, and
the related risks.
In progress, as
appropriate metrics
kept under continual
review.
In progress in relation
to Scope 3
Full
c) Describe the
targets used by the
Company to manage
climate-related risks
and opportunities
and performance
against targets.
FY 22 Compliance
Description, location of disclosure progress to date
and reason for omission (if appropriate)
Disclosure of the Company's metrics and targets used to assess and manage relevant
climate-related risks and opportunities where such information is material.
The Company follows the Greenhouse Gas Protocol Corporate
Standard in calculating its Scope 1, Scope 2. See pages 49 and 50
for the assessment parameters and detailed methodology.
The Company is currently working to identify metrics in line with
its business strategy and risk management processes as
recommended and will consider whether additional metrics may
be developed and added over time (with the support of Sirsa data
reporting platform).
See page 50 for Scope 1 and Scope 2 emissions related to the
Company’s operations in line with the GHG Protocol methodology
and page 49 for the assessment parameters.
The Company has not reported fugitive emissions (which include
leakages from refrigerants used in air conditioning units, etc.)
because no data were available and, given the low number of such
units in the Company, management did not consider such
emissions to be material.
The Group’s current climate change strategy has been formulated
based on its Scope 1 and Scope 2 emissions. The Company does
not yet report Scope 3 emissions in full compliance with the TCFD
recommendations, as it is currently impracticable to collate this
data owing to its decentralised model, which increases the scale
and complexity of collating such data. The Group will keep the
appropriateness of collating Scope 3 emissions data under review
each year and will disclose to the market when it has determined
that collating such data is appropriate. The evolution will consist in
evaluating the scope 3, the indirect emissions upstream, the
downstream freight transport and distribution, the other
downstream indirect emissions and the other upstream indirect
emissions of the supply chain.
In line with our purpose “Create eco-responsible local services
that make everyday life easier”, the Company is aiming for carbon
neutrality by 2040. To achieve this, we have identified the
following materiality focus areas:
▪ Carbon footprint reduction
▪ Circular economy through eco-design and continuous
improvement of its machines
▪ Protection of natural resources through reduction of energy
and water consumption
▪ Reduction of paper consumption
More information on carbon emissions reduction targets can be
found in the section Our three-year sustainability plan of the
current report page 52 et seq.
Additionally, several KPIs have been identified relating to
(i) the Company’s circular economy, (ii) energy saving for
Photobooths, (iii) energy saving for laundry machines and
(iv) organic detergent. Further information is available on
me-group.com (Our approach and KPIs) and the Company’s
Sustainability Report.
59
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
ME Group International Plc - TCFD Report continued
Miscellaneous
a) Governance arrangements for assessing
and managing climate-related risks and
opportunities
The Group operates in a sector with a very low risk
regarding climate change but nonetheless decided
to initiate a CSR strategy supported by a Steering
Committee on behalf of the Executive Committee.
In 2022 Montefiore Investment made an audit to
evaluate the risks and opportunities of managing
CSR approach including climate change impacts in
the business model.
2022
▪ A group of CSR referents was created at the end
of 2021
2023
Actions
Integration of CSR in the risk management chapter
of the 2021 Annual Report
▪ Important CSR matters will be discussed during
COMEX meetings
▪ Annual audit by Ecovadis on our CSR
performance
▪ The company aligns its commitments and
communicates its progress towards the United
Nations Sustainable Development Goals (SDG)
KPIs
▪ 4 review meetings on the CSR strategy between
referents
▪ 2 CSR strategic meetings to define the course
and readjustments
2024
Actions
▪ Annual audit by Ecovadis on our CSR
performance
▪ Important CSR matters will be discussed during
COMEX meetings
▪ Official anti-corruption statement from the group
+ national and international communication
KPIs
▪ 4 review meetings on the CSR strategy between
referents
▪ 2 CSR strategic meetings to define the course
and readjustments
Carbon footprint
Actions :
▪ 2022 Carbon footprint analysis with SIRSA
▪ 2023 Carbon footprint analysis with SIRSA
▪ 2024 Carbon footprint analysis with SIRSA
b) The process for identifying,
assessing and managing climate-related
risks and opportunities
Therefor the company the company has
established a Materiality Matrix (created in 2021)
adjusted this year, and to do this has highlighted its
risks and opportunities. They have been discussed
and validated internally by several groups of
employees, businesses and external stakeholders.
Obviously, the risks associated with climate change
played a large part in this.
The result is that energy consumption, water
scarcity, and rising car fuel prices (for employees,
suppliers, transportation and final consumers) are
the main potential risks to disrupt our business.
c) How such process is integrated
into Me Group’s overall risk
management process
▪ First of all training and inform our staff and
executive people to CSR approach and share
our Best Practices relative to reduce energy
consumption, reduce water use, go to new
“green energy” as soon as possible on our
machines, and internally the way for hybrid and
finally electric vehicles
▪ Due to the impact and importance of our R&D
department in Grenoble, we organized
discussions groups of employees for suggestions
and ideas about “green solutions” to be
implemented and on the better understanding
of the Group’s approach to sustainability
▪ A data collection platform is being studied to
feed and make solid a set of 25 to 70 CSR
indicators and facilitate the monitoring of the
Group’s actions in favour of the climate. After a
few tests in 2022, it could be operational in
2023 and provide follow-up for the next few
years (platform supplier: SIRSA)
d) Principal climate-related risks and
opportunities for Me Group’s operations
and the applicable time periods
▪ Energy consumption : increase “green energy”
usage (directly and in our electric supplier
contract)
▪ Water scarcity:
- improve our laundry machine process
(Revolution is 30 litres less than the previous
model) and integrate “green energy”;
- in 2023: suggest an original calculation (to be
patented and registered in our 20 countries)
where we highlight and underline in public
60
ME Group plc Annual Report 2022 communication: the litres of water saved by
washing in our machines compared to the
washing done in individual machines at home.
▪ Rising car fuel prices:
- for employees: develop eco-driving for users
of fuel or hybrid vehicles;
- suppliers: dialogue and encouraging them to
change their vehicles; and
- final consumers: inform them of the good
usage of our machine comparing with other
mode of laundry (versus individual one).
e) The impact of such risks and
opportunities on Me Group’s business
model and strategy
▪ That depends on the higher or lower level of risk,
for water scarcity our business could be
impacted by a reduction or an increase, thereby
motivating people to use our machines rather
than their own (and this might be in accordance
with local authority information and guidance
given to the public)
▪ For fuel and its price, being located in shopping
centre areas is an opportunity because it allows
customers to combine various activities in the
course of a single trip to town
f) The resilience of Me Group’s business
model and strategy taking into account
different climate-related scenarios
R&D is an important part of the Group ME. It
supports the business and seeks to continually
innovate. From originating, recycling and
reintegrating a lot of components (20% to 50% of
a machine) has not only been compulsory but
has now become intrinsic to the way the Group
does business.
g) Targets used by the Company to
manage such risks and opportunities and
KPIs to assess the process of such risks
and opportunities, and any calculations on
which those KPIs are based
Energy consumption: increase “green energy”
usage
2022
▪ Laundromats with solar panels to represent 10%
of the estate
2023
Actions:
▪ Development of the use of solar panels on
laundry machines
▪ Communicate to potential and actual customers
the advantages of solar panels
KPIs:
▪ Laundromats with solar panels to represent 11%
of the estate
2024
Actions:
▪ Development of the use of solar panels on
laundries
▪ Testing of solar heaters
KPIs:
▪ Laundries with solar panels to represent 12% of
the estate
2025
Actions:
▪ Develop the use of solar panels in laundry
machines
KPIs:
▪ Laundromats with solar panels to represent 13%
of the estate
61
ME Group plc Annual Report 2022Strategic Report Strategic Report
Sustainability Statement continued
ME Group International Plc - TCFD Report continued
Compliance Statement
As this is the first year the Company has been
required to comply with these measures it has
identified where disclosures are not yet fully
consistent with the recommendations in the
Compliance column, on page 56 et seq.
The path to full disclosure in line with the TCFD
Recommendations is a complex process. Whilst the
Company is not able to fully disclose in line with all
the recommended disclosures, the Company is
working towards full disclosure and it has
implemented plans for how it intends to fully
comply with the recommendations in the future.
The Company believes that it has included in this
report climate-related financial disclosures
consistent with the TCFD Recommendations and
Recommended Disclosures as much as was
reasonably practicable so to do.
Year-one Progress and Next Steps
The Company recognises its responsibilities to the
community and the environment and also that
environmental issues are integral and important
components of best practice in business
management. In line with the disclosures made in
this table and the above compliance statement, it
intends to (i) enhance climate-related risks and
opportunities management, (ii) identify and
address areas of improvement year by year, and (iii)
set specific greenhouse gas emissions and financial
climate-related targets.
▪ Water scarcity:
- expand in 2023 the deployment of our
Revolution machines in our total estate k,
which is 30 litres per year less than the
previous model;
- 25 CSRV indicators via a robust data
collection platform valid for the next few
years; and
- display a “water saved for the planet” indicator.
It could become specific indicator for “water
saved” in 2023 to prove through an original
calculation (to be patented and registered in
our 20 countries) that lots of litres of water are
saved by washing in our machines compared
with washing done in domestic individual
washing machines.
▪ Rising car fuel prices:
- develop eco-driving for users of fuel or hybrid
vehicles inside the Group.
2023
Actions:
▪ Reduce the fuel consumption of our cars by
setting up an eco-driving and safety
competition between technicians in France
▪ Driver training with the lowest eco-driving ratings
KPIs:
▪ (2%) litres of fuel saved in France
▪ (2%) of trained French drivers
2024
Actions:
▪ Replicate the eco-driving competition in 2 other
European countries
KPIs:
▪ (4%) litres of fuel saved in France and Europe
▪ (5%) of French drivers trained + 2% of European
drivers
2025
Actions:
▪ Replicate the eco-driving competition in 4 other
European countries
KPIs:
▪ (7%) litres of fuel saved in France and Europe
▪ (5%) of French drivers trained + 2% of European
drivers
62
ME Group plc Annual Report 2022 Viability Statement
The Directors have assessed
the viability and prospects
of the Group in accordance
with the requirements of
the UK Corporate
Governance Code.
In doing so, the Directors have considered and
taken into account the Group’s present position
and the principal risks facing it, the latter being set
out in the Strategic Report. The Directors have
carried out their assessment by:
i.
ii.
iii.
considering the potential repercussions of
those principal risks at least annually as
well as the risk impact of each major event
or transaction;
examining the effectiveness of the actions
taken to mitigate the principal risks;
continually reviewing strategy and market
developments through regular executive
briefings; and
iv.
taking into account the Group’s operational
processes and financial resources.
Based on this robust assessment, the Directors
have a reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities over a five-year period to October 2027.
This assessment included stress tests on the future
performance and solvency for changes in the base
assumptions over the five years and also for the
principal risks facing the business in severe but
plausible combination scenarios together with the
effectiveness of any mitigating actions.
Consideration has also been given to the risk of
regional changes such as Brexit; however, the
Board believes that having diverse geographical
operations means that the Group is less susceptible
to the effects of regional changes.
The Directors decided that a five-year period is
appropriate for this assessment because it enables
a good level of confidence due to a number of
factors including: (i) the Group’s considerable
financial resources including the high cash
generation of its operations; (ii) the inherent
unlikelihood of all or even most of the identified
potential principal risks materialising
simultaneously; (iii) the length of major operating
contracts; (iv) the Group’s diverse geographical
operations plus its established business
relationships with many customers and suppliers in
countries throughout the world; and (v) its proven
track record in R&D development and its ability to
adapt to market trends.
The Directors have no reason to believe the Group
will not be viable over a longer period, however,
given the inherent uncertainty involved in looking at
longer time frames, the period over which the
Directors consider it possible to form a reasonable
expectation as to the Group’s longer-term viability
is five years.
The assessment of the prospects of the Group
includes the following factors that are identified as
having potentially a significant impact on the
Group’s results:
▪ Reliance on one single supplier: inflation/paper
price increase ; from 10 to 30% increase
(according to the scenarios) of paper price and
then consumption;
▪ Inflation/impact on spare parts price and fixed
costs and labour cost: from 5 to 20% increase in
average for spare parts; from 1 to 4% in average
for fixed costs and labour cost;
▪ Reliance on foreign customers: machine supply
issues (delivery shortage): from 10 to 30%
decrease in machine installations. This was
evaluated as such in 2022;
▪ Commercial relationships: potential loss of key
accounts: risk evaluated as being between 1 to
3% decrease in the revenue. Main contract of the
Group represents 2% of the revenue;
▪ Covid impact: risk evaluated as being between
1 to 5% decrease in the revenue. People are now
used to the pandemic and 5% was the last
impact noted; and
▪ Centralisation of the production of ID Booths:
The Company assumes that change in
regulations, introduction of selfies (as in UK)
will be partially compensated by ANTS or
assimilated and more specifically by the
improvement of machines’ performance:
No impact for the most likely scenario but 5%
revenue decrease in the lowest scenario.
Serge Crasnianski
Chief Executive Officer
28 February 2023
63
ME Group plc Annual Report 2022Strategic Report Corporate
Governance
Board of Directors & Company Secretary
Report of Directors
Corporate Governance
Statement of Directors’ Responsibilities
Directors’ Remuneration Report
Remuneration Policy Report
Annual Report on Remuneration
66
68
73
80
82
85
90
64
ME Group plc Annual Report 2022 65
ME Group plc Annual Report 2022Corporate Governance Board of Directors & Company Secretary
1
4
7
2
5
8
3
6
9
66
ME Group plc Annual Report 2022Corporate Governance 6. Emmanuel Olympitis
Non-executive Director
Emmanuel was appointed to the Board in 2009. He is the
Senior Independent Non-executive Director, Chairman of
the Remuneration Committee, and a member of the
Nomination and Audit Committees.
Previous directorships include China Cablecom Holdings
Limited (NASDAQ), Canoel International Energy Limited
(Canada), Matica plc, Secure Fortress plc, Bulgarian Land
Development plc, Norman 95 plc, Pacific Media plc
(Executive Chairman) and Bella Media plc (Chairman).
Early career in merchant banking and financial services,
including as Executive Director of Bankers Trust
International Ltd, Group Chief Executive of Aitken Hume
International plc, and Executive Chairman of Johnson &
Higgins Ltd.
7. Françoise Coutaz-Replan
Non-executive Director
Françoise was appointed to the Board in 2009 as Group
Finance Director and retired from that executive role in
August 2015. She is a Non-executive Director and was
appointed to the Audit Committee in October 2016.
Françoise joined KIS in 1991. The Board considers
Miss Coutaz-Replan to be independent.
8. Camille Claverie
Non-executive Director
Camille was appointed to the Board in June 2021. She has
previously held roles at Sagard, latterly as Principal, and at
Morgan Stanley and she is a Director at Montefiore
Investment where her responsibilities cover deal
origination, and execution and investment monitoring to
support companies and management teams in their
growth plans. The Board considers Ms Claverie to be
non-independent because she works for FPCI
Montefiore Investment IV which holds 11.18% of the
issued share capital of ME Group.
9. Del Mansi
Company Secretary
Del, a qualified solicitor, joined the Group in 2006.
He served as interim Company Secretary from April to
July 2008, and was appointed Group General Counsel in
2009, a role retained on being appointed Company
Secretary in May 2013.
Jean-Marcel Denis
Non-executive Director
Jean-Marcel was appointed to the Board in 2012.
He resigned as a director (and as chair of the audit
committee and a member of both the nomination
and remuneration committees) on 29 April 2022.
He remains as a consultant to the Group.
Sigieri Diaz Della Vittoria Pallavicini
Non-executive Director
Sigieri was appointed to the Board in June 2021.
He resigned as a director on 13 May 2022.
1. Sir John Lewis OBE
Non-executive Chairman
Sir John joined the Board in 2008 and was appointed
Chairman in 2010. He is Chairman of the Nomination
Committee and a member of the Audit and
Remuneration Committees. Until early 2019, Sir John was
a Consultant to Eversheds Sutherland LLP (as now is).
He is a Director of AIM market company, Prime People
plc, as well as various private companies. He was
previously a practising Solicitor and Partner in Lewis,
Lewis & Co which became part of Eversheds Sutherland
LLP (as now is) after a series of mergers. He served as
Chairman of Cliveden plc and Principal Hotels plc and as
Vice Chairman of John D Wood & Co plc and Pubmaster
Group Ltd.
2. Serge Crasnianski
Chief Executive Officer &
Deputy Chairman
Serge was appointed to the Board in 2009, having
previously served on the Board from 1990 to 2007 (as a
Non-executive Director until 1994, and from 1994 as an
Executive Director).
He is Chief Executive Officer, Deputy Chairman and
member of the Executive Committee. Serge founded
KIS in 1963.
3. Tania Crasnianski
Executive Director
Tania has been an independent legal adviser for the past
seven years and before that held the role of Head of
Global Investments at Stratford Capital between 2006
and 2014. She spent 12 years in the legal field; having
worked in that time as a Criminal Lawyer for SCP
Versini-Campinchi & Associés, Paris. Tania joined the
Group on 1 June 2020 as head of legal and general
secretary, and shortly thereafter took over the supervision
of the Group’s entities in Germany and Austria.
4. Jean-Marc Janailhac
Executive Director
Jean-Marc joined the Board in 2019. He was designated
Executive Director in July 2020. He was the first chairman
of Strategic Committee (now the Executive Committee)
that is responsible for reviewing and implementing
operational decisions across the Group until 31 October
2022. He chaired that committee until the 31 October
2022. Since 1 November 2022, he has responsibility for
overseeing M&A activities for ME Group.
He is a senior adviser of Macquarie Capital (Europe)
Limited, which he joined in 2016. In October 2010, he
was appointed a Non-executive Director of Athena
Investments A/S, a Danish company dedicated to
renewable energy (wind and solar) listed on Nasdaq
Copenhagen and included in the OMX Copenhagen
Small Cap Index, a role he retains.
5. René Proglio
Non-executive Director
René was appointed to the Board in June 2021, and
appointed chairman of the Audit Committee on
29 April 2022. He worked at Morgan Stanley for 17 years
and during that time he held senior roles, including as
Managing Director (2004-2007) and as Head of
Investment Banking (2008-2010). He was then country
head for France from 2010 to 2020, and he recently joined
PJT Partners as a Partner. Before this, he was a Partner at
Ernst & Young. He is a member of the Audit Committee.
The Board considers Mr Proglio to be independent.
67
ME Group plc Annual Report 2022Corporate Governance Report of Directors
The Directors submit to the
shareholders their report, the audited
consolidated financial statements of
the Group, and such audited financial
statements of ME Group International
plc as required by law for the year
ended 31 October 2022.
The Corporate Governance Statement and the
Corporate Responsibility Statement should be read
as forming part of this report. In this document,
references to the “Group”, the “Company”,
“ME Group”, “we”, or “our”, refer to ME Group
International plc, its subsidiary companies and,
where applicable, its associated undertakings, or
any of them as the context may require.
Principal Activities
The principal activities of the Group continue to
be the operation, sale, and servicing of a wide
range of instant-service equipment. The Group
operates coin-operated automatic photobooths
for identification and fun purposes, and a diverse
range of vending equipment, including digital
photo kiosks, laundry machines, and business
service equipment, and amusement machines.
The Company’s subsidiary and associated
undertakings are shown on pages 173 to 175. The
Group entered the self-service fresh fruit juice
equipment market in April 2019, with the
acquisition of SEMPA Sarl. In 2021, the Group
entered the pizza-vending market with the
acquisition of Resto’Clock, a French manufacturer
of pizza vending machines. Together, these
acquisitions have created a new business area:
vending equipment for the food service market
(Feed.ME). The Board believes this will continue
to develop as a key business area alongside
Identification (Photo.ME), Laundry (Wash.ME)
and Kiosks (Print.ME), and be a significant part of
the Group’s future growth strategy.
Results and dividends
The results for the year are set out in the Group
Statement of Comprehensive Income on page 110.
The Directors are recommending a final dividend
for the year ended 31 October 2022 of 3p per
ordinary share. The ex-dividend date will be
20 April 2023 and, if approved by shareholders at
the Company’s annual general meeting on 28 April
2023, the dividend will be paid on 12 May 2023 to
shareholders listed on the register at the close of
business on 21 April 2023. An interim dividend of
2.6p pence per share was paid for the year ended
31 October 2022 as was a special dividend of
6.5 pence per share.
Review of business and future
developments
The Strategic Report describes the activities of the
business during the year ended 31 October 2022,
recent events (including any important events
affecting the Group which have occurred since the
end of that period), and gives an indication of
likely future developments in the Group’s business.
A discussion of the key risks facing the Group and
an analysis of key performance indicators are
provided in the Strategic Report. The Strategic
Report also contains the Board’s Long-term
Viability Statement.
Research and development
The Group is committed to its research and
development programme in order to maintain its
introduction of innovative products to the market.
The expenditure incurred on the development of
new products is shown in notes 1.4 and 11 of the
financial statements.
Employees
Information on the Company’s employment
practices including: its policy regarding applications
for employment by persons with disabilities; the
continuing employment of employees who have
developed disabilities; and the training, career
development and promotion of persons with
disabilities employed by the Company, as well as
employee communication and involvement, is
contained within the Sustainability Statement on
pages 42 to 62, and which is deemed to form part
of this report.
Employee engagement
The senior management team has held several
internal consultations, and released internal
memoranda outlining the movement of the
business throughout the year including financial
updates, customer movements, benefit renewals,
and guidance on support, wellbeing,
whistleblowing and zero tolerance. These
communications also help to achieve a common
awareness on the part of all employees of the
financial and economic factors affecting the
performance of the Company.
The Board understands the importance of
considering the views of all stakeholders, including
its employees. The Executive Directors have regular
68
ME Group plc Annual Report 2022Corporate Governance meetings with all managers. These meetings
provide an opportunity for the Directors to learn
about the views of the employees at large, and to
report back to the Board as a whole so that in
making any decisions affecting the employees, the
Board can take those views and any decisions
made can take into account those employee views.
The Company operates an executive share option
scheme that was introduced in 2014 (itself
replacing an earlier similar scheme). Senior
members of staff receive annual bonuses
depending on personal performance and the
Group’s performance. The above sets out how
Directors have engaged with employees.
The Board understands the importance of
considering the views of all stakeholders, including
its employees.
Engagement with suppliers and others
The Executive Directors (and where necessary the
Non-executive Directors) meet suppliers,
customers and major shareholders, as do senior
management. This gives them an opportunity to
learn of their wishes and concerns, thereby
acquiring information to which they can have
regard when making strategic and other decisions.
Charitable Donations
The following is a list of charitable donations made
by Group companies in the financial year ended
31 October 2022 (all amounts are in €). These are
disclosed on a voluntary basis.
Me-Group GSS
10,000
2,000 Projet Togo: humanitarian project by students of Grenoble Business to finance
mosquito nets to fight against malaria in Togo.
2,000 L’Outil en Main: Association whose aim is to introduce young people from 9 years old
to manual and heritage trades, by retired people with real tools in real workshops.
2,000 Petits Frères des Pauvres: French association fighting against isolation and loneliness
of the elderly, especially the most deprived.
2,000 Les Robins de la Rue: Association whose mission is to provide help and support to
people in precarious situations in Bordeaux.
2,000 Care – Solidarité Ukraine: Setting up emergency distributions: food, water, hygiene
kits and also providing financial and psychosocial support to people affected by
the violence.
Me-Group France
7,000
7,000 Pref‘érence: Professional association Préfecture des Hauts-de-Seine.
69
ME Group plc Annual Report 2022Corporate Governance Report of Directors continued
Corporate responsibility
A summary of the Company’s approach to
corporate social responsibility and environmental
matters, including a report on the Group’s
greenhouse gas emissions for the 12 months ended
31 October 2022, can be found in the Sustainability
Statement on pages 42 to 62.
Board of Directors and their interests
The current Directors of the Company are:
Sir John Lewis OBE
Chairman, member of the Audit and Remuneration
Committees, and Chairman of the Nomination
Committee.
In addition, Mr Jean-Marcel Denis served as a
director from 1 November 2021 to 28 April 2022 and
Sigieri Diaz della Vittoria Pallavicini served as a
director from I November 2021 to 13 May 2022.
In addition to the powers conferred on the Directors
by law, the Company’s Articles of Association also
set out powers of the Directors; under these
powers, the Directors may, subject to any statutory
provision requiring prior shareholder approval,
exercise all powers of the Company to borrow
money, issue shares, appoint and remove Directors
and recommend dividends and pay interim
dividends. A copy of the Articles of Association can
be found on the Company’s website.
Serge Crasnianski
Chief Executive Officer and Deputy Chairman.
Jean-Marc Janailhac
Executive Director and chairman of the Executive
Committee that is responsible for reviewing and
implementing operational decisions across the
Group. He was a member of the audit and
remuneration committees from his appointment
in July 2019 until December 2020.
Tania Crasnianski
Executive Director.
Emmanuel Olympitis
Senior Independent Non-executive Director,
Chairman of the Remuneration Committee and a
member of the Nomination and Audit Committees.
Françoise Coutaz-Replan
Non-executive Director and a member of the
Audit Committee.
Camille Claverie
Non-independent Non-executive Director.
René Proglio
Independent Non-executive Director and member
of the Audit Committee.
The Directors who served during the year, with
their periods of tenure are listed below.
The following directors served throughout
the financial year ended 31 October 2022
Sir John Lewis, Serge Crasnianski, Jean-Marc
Janailhac, Tania Crasnianski, Emmanuel Olympitis,
Françoise Coutaz-Replan, René Proglio and
Camille Claverie.
Details of the Directors’ contracts, emoluments
and interests in shares and share options are given
in the Remuneration Report on pages 82 to 99.
Directors’ and Officers’ Liability Insurance
The Company maintained directors’ and officers’
liability insurance cover throughout the 12-month
period ended 31 October 2022. This insurance cover
extends to Directors and officers of subsidiary
undertakings and remains in force. Article 191 of the
Company’s Articles of Association allows the
indemnification of directors of the Company and
associated companies and of Directors of a
company that is the trustee of an occupational
pension scheme for employees of the Company or
an associated company against liability incurred by
them in certain situations, and would, if granted,
constitute a “qualifying indemnity provision” within
the meaning of Section 236 (1) of the Companies
Act 2006. No such indemnities have been granted.
Substantial shareholders
As of 23 February 2023, the Company had been
notified of the following disclosable interests in the
ordinary shares of the Company:
Major shareholders
Shareholder Name
(Director¹)
Serge Crasnianski1
FPCI Montefiore
Investment IV
Schroders PLC
FIL Ltd
% Voting Rights
Amount
36.47
11.39
11.20
9.94
137,866,791
42,263,556
42,367,002
37,581,073
1 Except for 63,750 ordinary shares for him by a nominee, the
remaining shares are registered in the name of Tibergest PTE LTD,
and Mr Crasnianski’s interest in those remaining shares is indirect.
Except for the above, the Company had not been advised of any
shareholders with interests of 3% or more in the issued ordinary
share capital of the Company as at such date.
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ME Group plc Annual Report 2022Corporate Governance Share capital
The issued share capital of the Company, plus
details of the movements in the Company’s issued
share capital during the year, is shown in note 20 of
the financial statements. Each ordinary share of the
Company carries one vote at general meetings of
the Company.
Report of Directors’ continued authority
to purchase shares
Pursuant to a resolution passed at its 2021 AGM
(held on 29 April 2022), the Company is authorised
to purchase its own shares in the market. The
Company will seek approval at the 2022 AGM (to be
held on 28 April 2023) to renew the authority for
the Company to make market purchases of up to
10% of its own ordinary shares at a maximum price
per share of not more than the higher of: (a) an
amount that is not more than 5% above the
average of the closing middle market quotations for
an ordinary share (derived from the London Stock
Exchange Daily Official List) for the five business
days immediately before the date on which that
ordinary share is contracted to be purchased; or
(b) the higher of the price of the last independent
trade or the highest current independent bid on
the London Stock Exchange. This authority will
expire on the earlier of 15 months from the passing
of the relevant special resolution or the conclusion
of the following AGM. The Company did not
repurchase any of its shares in the 12-month period
ended 31 October 2022.
Additional information
Where not provided elsewhere in the Report of the
Directors, the following provides the additional
information required to be disclosed in the Report
of the Directors. The structure of the Company’s
share capital, including the rights and obligations
attaching to the shares, is set out within note 20 to
the financial statements.
No person holds securities carrying special rights
with regards to control of the Company.
There are no restrictions on the transfer of
ordinary shares in the capital of the Company other
than certain restrictions that may from time to
time be imposed by law; for example, insider
trading law. In accordance with the Listing Rules of
the Financial Conduct Authority, certain employees
are required to seek the approval of the Company
to deal in its shares.
On a show of hands at a general meeting of the
Company, every holder of ordinary shares entitled
to vote and who is present in person or by proxy
shall have one vote and on a poll, every member
present in person or by proxy and entitled to vote
shall have one vote for every ordinary share held
(except as otherwise stated in Article 81 of the
Company’s Articles of Association). Any notice of
general meeting issued by the Company will
specify deadlines for exercising voting rights and in
appointing a proxy or proxies in relation to
resolutions to be passed at the general meeting. All
proxy votes are counted and the numbers for,
against or withheld in relation to each resolution are
announced at the general meeting and published
on the Company’s website after the meeting. Proxy
appointments and voting instructions must be
received by the Company’s registrars not less than
48 hours before a general meeting.
Under its Articles of Association, unless the Board
otherwise determines, no member shall be entitled
to vote in respect of any share unless all calls or
other sums presently payable by them in respect of
that share shall have been paid. The Company is
not aware of any agreements between
shareholders that may result in restrictions on the
transfer of shares or on voting rights.
The rules governing the appointment of Directors
are set out in the Corporate Governance Statement
on pages 73 to 99. The Company’s Articles of
Association may only be amended by a special
resolution at a general meeting of shareholders. The
Company is party to a number of agreements with
site owners (such as major supermarket chains),
which could be terminated by the site owners
following a change of control of the Company.
There are no agreements between the Company
and its Directors or employees which provide for
compensation for loss of office or employment
(whether through resignation, purported
redundancy or otherwise) that occurs because of
a takeover bid.
The Company is not aware of any contractual or
other agreements that are essential to its
business which ought to be disclosed in this
Report of the Directors.
Related-party transactions
Details of related-party transactions are set out in
note 27 to the financial statements.
71
ME Group plc Annual Report 2022Corporate Governance Report of Directors continued
Financial instruments
Details of the financial risk management objectives
and policies of the Group and exposure of the
Group to foreign exchange risk, interest rate risk
and liquidity risk are given in note 15 to the financial
statements.
Political donations
No member of the Group made any political
donations during the 12-month period ended
31 October 2022.
Corporate Governance
The Sustainability Statement shall be deemed to
form part of the Directors’ Report.
Going concern
In adopting the going concern basis for preparing
these financial statements, the directors have
considered the Group’s business activities,
together with factors likely to affect its future
development and performance, as well the
principal risks and uncertainties that could affect
the Group up to October 2027. The directors have
also considered the factors described under the
heading ‘Viability Statement’ as having potentially
a significant impact on the Group’s results.
Having reviewed forecasts, cash flow, financial
resources and financing arrangements and after
making enquiries, the Directors consider that
the Company and the Group have adequate
resources to remain in operation for the
foreseeable future. Accordingly, the Directors
continue to adopt the going concern basis in
preparing the financial statements.
Disclosure of information to the auditor
The Directors who held office at the date of
approval of this Report of the Directors confirm
that: As far as they are each aware, there is no
relevant audit information of which the
Company’s auditor (Mazars LLP) is unaware; and
each Director has taken all the steps that he or she
ought to have taken as a director to make himself
or herself aware of any relevant audit information
and to establish that the Company’s auditor is
aware of that information.
Controlling shareholder –
Relationship Agreement
The Company’s majority shareholder is Tibegest
PTE Ltd which owns 36.48 % of the issued share
capital of ME Group International plc. Tibergest
PTE Ltd is wholly owned by Mr Crasnianski.
Mr Crasnianski and Tibergest PTE Ltd have entered
into a Relationship Agreement with the Company
(the “Relationship Agreement”) to ensure that the
Group is capable of carrying on its business
independently, that transactions and arrangements
between the Group, Tibergest PTE Ltd and
Mr Crasnianski (and each of their associates) are at
arm’s length and on normal commercial terms, and
that at all times a majority of the Directors of the
Company shall be independent of Tibergest PTE
Ltd and Mr Crasnianski. Statement of Compliance
with UK Listing Rules, Rule 9.8.4 (14).
The Company has complied with, and so far as the
Company is aware, the controlling shareholder and
its associates have complied with the following
undertakings: (a) transactions have been conducted
at arm’s length and on normal commercial terms; (b)
neither the controlling shareholder nor any of its
associates will take action that would prevent the
Company from complying with the Listing Rules;
and (c) neither the controlling shareholder nor any of
its associates will propose or procure the proposal of
a shareholder resolution which is intended or
appears to be intended to circumvent the proper
application of the Listing Rules. So far as the
Company is aware, the controlling shareholder can
and does procure the compliance of its associates.
Annual general meeting
The Company’s AGM this year will be held on
28 April 2023 at the offices of Hudson Sandler LLP,
25 Charterhouse Square, London EC1M 6AE at
10 a.m. Notice of the AGM is sent to all shareholders
of the Company, as well as to persons nominated
by a shareholder of the Company to enjoy
information rights. The Notice convening the
meeting provides full details of all the resolutions to
be proposed, together with explanatory notes for
both the ordinary and special business. Hard copies
of this Annual Report are sent only to shareholders
who have requested or request a copy.
By order of the Board
Serge Crasnianskii
Chief Executive Officer
28 February 2023
72
ME Group plc Annual Report 2022Corporate Governance Corporate Governance
Statement of compliance
with the UK Corporate
Governance Code.
The Board has complied with the UK Corporate
Governance Code (2018 edition) (the “Code”)
except as set out in the table on page 74.
The Group’s business model and strategy
The Group’s business model and strategy are
summarised in the Strategic Report, and describe,
amongst other things, how the Company
generates and preserves value over the longer term
and the strategy for delivering the objectives of
the Company.
The Board
Board composition
At the start of the year under review until
13 May 2022, the Board comprised ten directors;
Mr Denis resigned as a director on 29 April 2022,
and Mr Pallavicini resigned as a director on
13 May 2022. The Directors who served throughout
the financial year ended on 31 October 2022 are:
Sir John Lewis, Serge Crasnianski, Tania Crasnianski,
Jean-Marc Janailhac, Manoli Olympitis, Françoise
Coutaz- Replan, René Proglio and Camille Claverie.
The Chairman
The Chairman has the overall responsibility for
managing the Board. The Chief Executive Officer
has responsibilities for strategy, operations and
results. The Chief Executive Officer has
responsibility for the day-to-day operation of the
Group. A clear division of responsibility exists, such
that no one individual or group of individuals can
dominate the Board’s decision-making process.
Throughout the year under review, Sir John Lewis
served as Chairman and Serge Crasnianski served
as Chief Executive Officer, Deputy Chairman and
member of the Executive Committee In the
Board’s opinion, even though Sir John Lewis has
been a Director since 2008 and Chairman since
2010, it is proposed that he remain in place for the
time being.
Director independence
The Board structure has not complied with the
Code provision that requires that at least half
the Board, excluding the chairman, should be
Non-executive Directors whom the Board
considers to be independent. The table overleaf
contains more details on this.
The Senior Independent Director
Emmanuel Olympitis has served as the Company’s
Senior Independent Non-executive Director
throughout the period.
Although Mr Olympitis has been a director since
December 2009, he is considered by the Board as
independent on the basis that he continues to
demonstrate total independence in his behaviour
and in his interaction with the rest of the Board.
Election of new Director
If a new Director were to be appointed, the Board
would ordinarily appoint someone whom it
believes has sufficient knowledge and experience
to fulfil the duties of a director. If this were not the
case, an appropriate training course would be
provided. An appropriate induction programme is
undertaken for all newly appointed Directors. All
Directors have access to the advice and services of
the Company Secretary. Any Director wishing to do
so in furtherance of his or her duties may take
independent advice at the Company’s expense.
All Directors are required to stand for re-election
every three years and newly appointed Directors
are subject to election by shareholders at the first
Annual General Meeting after their appointment.
However, in order to provide for stability and
continuity, and to avoid destabilising the Board, the
Directors have unanimously decided not to comply
with the Code’s recommendation that all Directors
seek annual re-election.
Directors’ conflicts of interest
During the year, Directors completed
questionnaires in respect of their interests. The
Board will continue to monitor and review actual or
potential conflicts of interest on a regular basis and
will consider whether or not it is appropriate to
authorise any such conflicts.
The Financial Reporting Council requires listed
companies incorporated in the UK to include in
their annual financial report: (i) a statement of how
they have applied the main principles set out in
the Code; and (ii) a statement as to whether they
have complied throughout the accounting period
with all relevant provisions set out in the Code.
The Directors consider that the Company has,
throughout the 12-month period ended
31 October 2022, complied with those provisions
of the Code that are applicable to it, except for
the following:
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ME Group plc Annual Report 2022Corporate Governance Corporate Governance continued
Point of non-compliance with Code
Reason for non-compliance
At least half the board, excluding the chair, should
be non-executive directors whom the board
considers to be independent.
For engagement with the workforce, one or a
combination of the following methods should
be used:
▪ Director appointed from the workforce;
▪ formal workforce advisory panel; and
▪ designated Non-executive Director.
There is no annual re-election of all directors.
Excluding the Executive Directors and Chairman, the Board comprised
six Non-executive Directors, four of whom are considered independent
by the Board. Strict compliance would have required an additional
independent non-executive director. The Board considers its
composition to be sufficiently close to the Code’s prescription on this
point to render its non-compliance in this regard inconsequential.
The Executive Directors meet regularly with the general managers of the
Group. This enables both sides to raise any matters of interest to either
side. The Non-executive Directors are always available should anyone not
be comfortable in dealing with the Executive Directors about anything.
Also, the whistle-blowing policy is in place as a further avenue should
anyone wish to use it. Therefore, the Board believes that given the size of
the Group and its resources, this is appropriate and additional measures
to engage are unnecessary and overly cumbersome.
The Board thinks this would distract the Board from its business, and that
continuity enables people with deep knowledge of the Company to make
more informed, effective and considered judgments.
Chairman has been in office for more than
nine years.
Sir John Lewis is considered by the Board to be an effective and engaged
chair. He has the full approval and confidence of the Board.
Open advertising and/or an external search
consultancy should generally be used for the
appointment of the Chair and Non-executive
Directors.
No open advertising or external search consultancy was used when the
Ms Crasnianski, Ms Claverie, Mr Diaz della Vittoria Pallavicini and Mr
Proglio were appointed directors in June 2021.It was considered
unnecessary given the high quality of the resumés of these appointees.
Non-executive Director to liaise with work force.
Mr Olympitis’s independence despite not
meeting the criteria set out by the Code which
raises a presumption against independence
where a director has served on the Board for
more than nine years from the date of their first
appointment.
Sir John Lewis is a member of the Audit
Committee.
The Remuneration Committee should have
delegated responsibility…for senior management.
It should review workforce remuneration and
related policies and the alignment of incentives
and rewards with culture, taking these into
account when setting the policy for Executive
Director remuneration.
Mr Crasnianski receives a pension contribution
equal to 15% of his basic remuneration. The Code
recommends that pension contribution rates for
executive directors, or payments in lieu, should
be aligned with those available to the workforce.
After due consideration, the Board concluded that it was in order for the
Executive Directors to liaise with the work force. If anyone felt
uncomfortable, for whatever reason, about liaising with the Executive
Directors there was recourse to the Non-executive Directors, as well as
recourse to the whistleblowing process.
Despite having been a Director for more than nine years, Mr Olympitis is
considered by the Board as independent on the basis that he continues
to demonstrate total independence in the opinion of the Board his
behaviour and in his interaction with the rest of the Board.
Under the predecessor to the Code, there was no restriction on the
Chairman of the Board being a member of the Audit Committee and
such membership in the case of Sir John Lewis, in the opinion of the
Board did not impede that committee’s functioning but enhanced it.
The Remuneration Committee thinks it is advisable that the Executive
Directors address remuneration of the senior management and
workforce pay polices in general as the former have most interaction with
them and are therefore best placed to make meaningful and equitable
assessments of their performance and remuneration levels.
Following a review of Mr Crasnianski’s pension provision and how this
compares with that of the general workforce, the Committee has agreed
to maintain the CEO’s current pension at 15% of salary going forward.
Given the diverse nature and geographies of the Company’s businesses
and employees, no single Group-wide pension plan operates and
therefore pension contribution rates vary across the Group with pension
levels not necessarily reflecting seniority.
1 The Code and associated guidance are available on the Financial Reporting Council website at https://www.frc.org.uk/getattachment/88bd8c45-50ea-4841-
95b0-d2f4f48069a2/2018-UK-Corporate-Governance-Code-FINAL.pdf.
74
ME Group plc Annual Report 2022Corporate Governance Board evaluation
The Chairman and Chief Executive Officer review
the performance of other Executive Directors. The
Chairman reviews the performance of the Chief
Executive, the other two Executive Directors and
each Non-executive Director. The Non-executive
Directors, led by the Senior Independent Non-
executive Director evaluate the performance of the
Chairman, taking into account the views of the
Executive Directors. During the year, the Chairman
meets with the Non-executive Directors without
the Executive Directors being present.
The Board undertakes an internal process to assess
the effectiveness of the Board during each financial
year, consisting of a confidential survey. Areas
identified in which there is considered to be room
for improvement are usually addressed by the
Board during the current year.
Operation of the Board
The Board is normally scheduled to meet in person
four or five times a year, with ad hoc meetings
(including by way of conference and video calls)
convened to deal with urgent matters. The Board
has a formal schedule of matters reserved to it for
decision. These include: the approval of the
financial statements; dividend policy; major
acquisitions, disposals and other transactions;
significant changes in accounting policies; the
constitution of Board Committees; risk
management; and Corporate Governance policy.
The Board has delegated various matters to
Committees, as detailed below. These Committees
of the Board meet regularly (the Nomination
Committee meets as required. The Committees
deal with specific aspects of the management of
the Company. The Board has delegated authority
to the Committees and they have defined terms
of reference; those of the Nomination, Audit and
Remuneration Committees are available on the
Company’s website (https://me-group.com/).
Decision-making relating to operational matters
is handled by the Executive Directors and
senior management.
Board and Committee papers are circulated in
advance of each meeting and are supplemented by
reports and presentations to ensure that Board
members are kept fully informed.
Regular communication between the Directors also
takes place outside the formal forum of Board and
Committee meetings.
The Board had five meetings during the year under
review. The Independent Directors meeting alone
had five meetings in that period.
The attendance of Directors at those meetings and
meetings of Board Committees is set out below:
J Lewis
S Crasnianski
T Crasnianski
J-M Janailhac
F Coutaz-Replan
J-M Denis
E Olympitis
C Claverie
S Diaz della Vittoria Pallavicini
R Proglio
Meeting of
Independent
Directors only3
Board2
Audit
committee
Remuneration
committee
Nomination
committee
5(5)
5(5)
5(5)
5(5)
4(5)
3(3)1
4(5)
5(5)
3(3)1
4(5)
5(5)
5(5)
5(5)
5(5)
5(5)
4(5)1
5(5)
5(5)
5(5)
5(5)
1 (1)
–
–
–
1 (1)
1 (1)
1 (1)
–
–
–
1(1)
–
–
–
–
0(1)1
1 (1)
–
–
–
0(0)
–
–
–
–
0(0)
0(0)
–
–
–
1 These represent full attendance for those meetings held whilst the respective individuals were members of the Board.
2 These represented the maximum number of meetings that these Directors were open to attend.
3 These do not include one meeting of a committee of the Independent Directors.
75
ME Group plc Annual Report 2022Corporate Governance Corporate Governance continued
Board committees
The Audit Committee
From 1 November 2021until 29 April 2022, this
comprised Jean-Marcel Denis (Committee
Chairman), Emmanuel Olympitis (Senior
Independent Director), Sir John Lewis (Chairman
of the Board), René Proglio and Françoise Coutaz-
Replan (the Group’s former Finance Director).
Since 29 April 2022 until now, the Audit Committee
comprised René Proglio (Committee Chairman),
Emmanuel Olympitis (Senior Independent
Director), Sir John Lewis (Chairman of the Board)
and Françoise Coutaz-Replan. The Board
considers that René Proglio, Emmanuel Olympitis,
Françoise Coutaz-Replan and Sir John Lewis have
(and during his membership of the committee,
Mr Denis had) suitable recent and relevant
financial experience to satisfy the requirements
of the Code.
Meetings are normally held at least twice a year.
One meeting was held during the year ended
31 October 2022. Other Directors, together with
the Chief Financial Officer and representatives of
the external auditor, are generally invited to
attend meetings.
External auditor
The Audit Committee aims to meet with the
external auditor, at least twice a year. On behalf of
the Board, the Committee reviews the Group’s
accounting and financial reporting practices, the
reports of the internal auditor (when one has been
in place) and external auditor, and compliance
with policies, procedures and applicable legislation.
In addition, the Committee monitors the
effectiveness of both the external and (when
applicable) internal audit functions and reviews
the Group’s internal financial control systems and
reporting processes, and risk management
procedures. The Committee considers the
appointment of the external auditor and makes a
recommendation on the audit fee to the Board; it
usually assesses the effectiveness of the external
auditor by means of an internal review process,
assisted by a confidential questionnaire; it sets a
policy for safeguarding the independence of the
external auditor; and reviews the external auditor’s
work outside of the audit itself, taking into account
the nature of the work, the amount of the fees and
whether it is appropriate for the external auditor to
carry out such work. Details of the audit and
non-audit fees are provided in note 4 to the
financial statements.
Mazars LLP has been the external auditor of the
Group since the Annual General Meeting in
October 2019. The audit partner is David Herbinet.
The Audit Committee is satisfied with the
effectiveness, objectivity and independence of the
external auditor. Accordingly, a resolution will be
proposed at the forthcoming Annual General
Meeting for Mazars LLP’s re-election as auditor for
the coming year. The Board is committed to putting
the audit contract out to tender at least once every
ten years. It conducted a tender process for the
external audit role in 2019 in which it invited three
firms to tender for the role of external auditor;
Mazars LLP was the successful tenderer.
The Audit Committee has obtained confirmation
from Mazars LLP that no non-audit services were
provided by Mazars LLP during the year. The
Audit Committee is satisfied that Mazars LLP
remains independent.
The Audit Committee does not believe that the
Group would benefit from a discrete internal audit
function as such because it obtains the internal as
well as external reassurances it requires from the
statutory audit. This audit is group-wide and
considered to be a more cost-effective approach.
(This is based on the Company’s experience when
it used to have an internal auditor.)
Key matters considered
In February 2023], the Committee met to review
this Annual Report and to receive the external
auditor’s update and report on its audit activity.
The Committee’s primary areas of focus have been:
▪ Risk of fraud in revenue recognition. There is a
presumption under the International Auditing
Standards that there is a significant risk of
fraud in the timing of revenue recognition
leading to the material misstatement of revenue
overall. This is because revenue is an area of
particular focus by users of financial statements
and can be subject to judgments as to when the
full risk and reward of the ownership of an asset
has passed.
Takings are an exact reflection of the cash
received at the bank. A daily double
reconciliation between the cash recorded and
the machine counters (cash and statistics) is
carried out.
76
ME Group plc Annual Report 2022Corporate Governance A cut-off calculation of the takings is made per
machine and enables the most accurate
possible turnover to be recorded each month.
This calculation has been unchanged for more
than 15 years and has been tested by successive
audits over this time.
▪ Management override of controls. Management
at various levels within an organisation are in a
unique position to perpetrate fraud because of
their ability to manipulate accounting records
and prepare fraudulent financial statements by
overriding controls that otherwise appear to be
operating effectively.
▪ Management has a read-only access in the
operational and accounting systems of the
Group. In no circumstances can a member of
management be allowed to make any payment.
There is a strict segregation of duties between
the payment preparing, the validation and then
the (double) payment signing. In total, each
payment involves four people.
▪ Recognition, valuation and impairment of
intangible assets, including goodwill (group).
There is a risk that intangible assets don’t meet
the recognition criteria to be recognised as
intangible assets. Due to its complex nature,
there is a further risk over the valuation of the
intangible assets.
Mazars’ audit of the Group’s Financial Statements
for the period ended 31 October 2020 was
reviewed by the FRC and irrespective of a number
of comments raised by the FRC during their review,
we remain comfortable with the level of quality
provided by Mazars and re-election of Mazars as
our auditor for 2023.
The Remuneration Committee
During the year period ended 31 October 2022,
the Remuneration Committee comprised
Mr Emmanuel Olympitis (Committee Chairman)
and Sir John Lewis (Chairman of the Board).
Mr Jean-Marcel Denis (Chairman of the Audit
Committee) was also a member until he resigned
as a director on 29 April 2022.
The Committee meets at least once per year. It met
once in the year ended 31 October 2022.
The Committee makes recommendations to the
full Board in respect of the Group’s remuneration
policy. The Committee also keeps under review the
remuneration of the Chairman and the Group’s
Executive Directors, to ensure that they are
rewarded fairly for their contribution. The
Committee also makes awards under the Executive
Share Option Scheme. The Committee’s Terms of
Reference are available on the Company’s website.
Valuation, allocation and Impairment of
Goodwill. The Goodwill recognition is deemed
as judgemental area by the audit team.
The Remuneration Report on pages 82 to 99
provides details of how the Committee applies the
directors’ remuneration principles of the Code.
1. The risk of error arising from the
appropriateness of the judgments and
assumptions used in the impairment test of
goodwill in particular discount rate, long term
growth rate and country risk adjustment.
2. Besides, the Group acquired one company
(Dreamakers) during the period.
▪ Investment in subsidiaries (parent company).
Investments in subsidiaries and associates are
stated at cost less impairment. Management
should review any indicators of impairment,and
perform an impairment assessment where
indicators have been identified.
▪ Going concern. There is a risk that the going
concern assumption has been inappropriately
applied in preparing the financial statements.
Further, the global pandemic, and other factors
including Brexit and the Russian invasion of
Ukraine, have resulted in a shortage of labour
and increasing energy and materials costs.
The Nomination Committee
During the year ended 31 October 2022, the
Nomination Committee comprised Sir John Lewis
(Committee Chairman), Emmanuel Olympitis.
Mr Jean-Marcel Denis was a member until his
resignation on 29 April 2022. The Chairman of the
Board would not chair the Remuneration
Committee when it addresses the appointment of
his or her successor. Thus the Committee is
compliant with the applicable provisions of the
Code which requires that a majority of members of
the Committee are independent non-executive
directors, and that its chairman should not chair the
committee when it is dealing with the appointment
of his or her successor.
The Committee, which meets as required, makes
recommendations to the Board on the
appointment of new directors. The Committee did
not meet in the year ended 31 October 2022.
77
ME Group plc Annual Report 2022Corporate Governance Corporate Governance continued
The Nomination Committee is committed to the
pursuit of diversity, including gender diversity,
throughout the business. Appointments to the
Board are made on merit, against objective criteria
and with due regard for the benefits of diversity on
the Board, including gender diversity. The
Nomination Committee does not commit to any
specific targets. The Group’s Diversity Policy also
recognises the benefits of diversity. The
Nomination Committee will ensure that its
development in this area is consistent with the
Group’s current and future requirements,
enhances Board effectiveness, and reflects the
Company’s UK listing and the international activity
of the Group.
Executive Committee
As part of actions to further stabilise executive
governance, the Group has taken the decision to
evolve what was the Strategic Committee into a
new Executive Committee. The Group believes this
is the correct Committee to provide coherence,
optimise synergies, share best practices and
support the Group’s succession process.
Led by key operational management, the Executive
Committee will provide sustainable management
and allow the Group to better plan for the future.
The Executive Committee will comprises:
▪ Serge Crasnianski, Chief Executive Officer and
Deputy Chairman
▪ Jean-Marc Janailhac, Executive Director
(Chair of the Executive Committee)
▪ Tania Crasnianski, Executive Director
▪ Stéphane Gibon, Chief Financial Officer
▪ Christian Autié, Chief Operating Officer
(Committee Chairman)
▪ Alessandro Reitelli, France and
Continental Europe
▪ Pascal Faucher, President KIS, Food Division
The Executive Committee will meet once a month
to decide all strategies, resources and Group
actions. Each member of the operational
management team will be responsible for, and in
charge of, implementing the decisions from within
their business area.
A larger Group Managers Committee will meet
every three months, gathering country
managers together with the Executive
Committee in order to discuss and review the
implementation of communication, decisions and
actions that have been decided by the Executive
Committee meetings.
Shareholder communication and
engagement
The Chief Executive Officer has regular meetings
with the Company’s major institutional
shareholders to help ensure, amongst others, that
the Board develops an understanding of the views
of major shareholders about the Company and
the Group.
The Chairman also meets with major shareholders
and has contact with them as and when required.
The Senior Independent Non-executive Director
and, where appropriate, other Non-executive
Directors, are also made available to meet with
major shareholders on request. Any pertinent
feedback arising from such meetings is reported to
the Board at its regular meetings and/or by
correspondence or dialogue.
In normal circumstances, private investors are
encouraged to attend the Annual General Meeting
and have the opportunity to question the Board.
All members of the Board usually attend the
Annual General Meeting. Shareholders are given
the opportunity to vote on each separate issue.
The number of proxy votes lodged is given at the
meeting after the vote on a show of hands for each
resolution and is published on the Company’s
website after the meeting.
Accountability and internal control
The Board is ultimately responsible for the Group’s
systems of internal control and risk management,
and for reviewing their effectiveness. This is
effected by receiving reports from the Audit
Committee following its review. The Board
confirms that it has reviewed the effectiveness of
the systems of internal control and risk
management for the year under review. The Board
is generally satisfied that such systems have
operated adequately throughout the period.
The system of internal control is designed to
manage, rather than eliminate, the risk of failure to
achieve business objectives. Such a system can,
however, provide only reasonable and not absolute
assurance against material misstatement or loss.
The Group has in place processes for identifying,
evaluating and managing the significant risks that
are applicable to the business. The Board regularly
reviews these processes.
78
ME Group plc Annual Report 2022Corporate Governance i. A detailed review of key financial reporting
judgments that have been discussed by
management
ii. Review and, where appropriate, challenge on
matters including: the consistency of, and any
changes to, significant accounting policies and
practices during the year; significant
adjustments arising as a result of the external
audit; the going concern assumption; and the
Company’s statement on internal control
systems, before endorsement by the Board
The above process, plus the review by the Audit
Committee of a comprehensive note that sets out
the details of the preparation, internal verification
and approval process for the Annual Report and
Accounts, provides comfort to the Board that the
Annual Report and Accounts, taken as a whole, are
fair, balanced and understandable, and give the
information necessary for shareholders to assess
the Group’s position and performance, business
model and strategy.
The Chief Executive Officer is ultimately
responsible for risk management. Executive
Managers of individual Group companies are
responsible for the identification, evaluation and
management of the key risks applicable to their
areas of responsibility. These risks are assessed on
a regular basis.
The Managers of Group companies are aware of
their responsibility to operate systems of internal
control that are effective and efficient for their
businesses, to provide reliable financial
information and to ensure compliance with local
laws and regulations.
The Group has a comprehensive budgeting system,
with an annual budget approved by the Board.
Actual results are reported monthly through the
Group’s financial systems, and variances are
reviewed. The Audit Committee receives reports
from the external auditor and reports its
conclusions to the Board.
A whistle-blowing procedure by which staff may
raise concerns about possible improprieties in
matters of financial reporting or other matters, was
in place throughout the year. The whistle-blowing
policy can be found on the Company’s website.
Internal control and risk management in
relation to the financial reporting process
The Group has a thorough assurance process in
place in respect of the preparation, verification and
approval of periodic financial reports.
This process includes:
▪ The involvement of qualified, professional
employees with an appropriate level of
experience (both in Group finance and
throughout the business)
▪ Formal sign-offs from appropriate business
segment Managing Directors and Finance
Directors
▪ Comprehensive review and, where appropriate,
challenge from key internal Group functions
▪ A transparent process to ensure full disclosure
of information to the external auditor
▪ Engagement of a professional and experienced
firm as external auditor
▪ Oversight by the Audit Committee, involving
(amongst other things):
79
ME Group plc Annual Report 2022Corporate Governance Statement of Directors’ Responsibilities
The Directors of the Company, who
are named on page 67, are responsible
for preparing the Annual Report, the
Report of the Directors and the
Group and Company financial
statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
financial statements for the Group and the
Company for each financial year. Under that law,
the Directors are required to prepare the Group
financial statements in accordance with UK-
adopted international accounting standards and
applicable law and have elected to prepare the
Company’s financial statements on the same basis.
Under company law, the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and
of their respective profit or loss for that period. In
preparing each of the Group and the Company’s
financial statements, the Directors are required to:
▪ Select suitable accounting policies and then
apply them consistently;
▪ Make judgments and accounting estimates that
The Directors have general responsibility for taking
such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic
Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility Statement of the Directors
in respect of the annual financial report
Each of the Directors of the Company, whose
names and functions are listed on page 67,
confirms that, to the best of his or her knowledge:
▪ The financial statements, prepared in accordance
with UK-adopted international accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of
the Company and the undertakings included in
the consolidation taken as a whole; and
are reasonable and prudent;
▪ The Strategic Report, which is incorporated into
▪ State whether they have been prepared in
accordance with UK-adopted international
accounting standards; and
▪ Prepare the financial statements on the
going-concern basis unless it is inappropriate to
presume that the Group and the Parent
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and the Group and
enable them to ensure that their financial
statements and the Directors’ Remuneration
Report comply with the Companies Act 2006 and
as regards the Group’s financial statements, Article
4 of the IAS Regulation.
the Report of the Directors, includes a fair
review of the development and performance of
the business and the position of the Company
and the undertakings included in the
consolidation taken as a whole, together with
a description of the principal risks and
uncertainties that they face.
Fair, balanced and understandable
In accordance with the principles of the UK
Corporate Governance Code, the Directors have
arrangements in place to ensure that the
information presented in the Annual Report is fair,
balanced and understandable; these are described
on pages 79 and 80.
The Board considers, on the advice of its Audit
Committee, that the Annual Report, taken as a
whole, is fair, balanced and understandable, and
provides the information necessary for
shareholders to assess the Company’s and the
Group’s position and performance, business
model and strategy.
80
ME Group plc Annual Report 2022Corporate Governance Significant accounting policies, critical
estimates and key judgments
Our significant accounting policies are set out on
pages 117 and following of the consolidated financial
statements and conform to UK-adopted
international accounting standards. These policies
and applicable estimation techniques have been
reviewed by the Directors who have confirmed
them to be appropriate for the preparation of the
2021/2022 consolidated financial statements.
Statement of Compliance with UK Listing
Rules, Rule 9.8.4(14)
The Company has in place a written and legally
binding agreement as required by Listing Rule
9.2.2ADR(1). If there were any Independent
Directors being elected or re-elected at the
Company’s annual general meeting to be held on
28 April 2023, their election/re-election would be
conducted in accordance with Listing Rules 9.2.2ER
and 9.2.2FR. In fact, no such elections/re-elections
are due under the Company’s Articles of
Association at the Company’s Annual General
Meeting to be held on 28 April 2023.
By order of the Board
Sir John Lewis OBE
Non-executive Chairman
28 February 2023
81
ME Group plc Annual Report 2022Corporate Governance Directors’ Remuneration Report
The Committee takes
an active interest in
shareholder views on our
executive Remuneration
Policy and is mindful of the
concerns of shareholders
and other stakeholders.
Dear Shareholder,
On behalf of the board, I am pleased to present
our Directors’ Remuneration Report which covers
the 12 months ended 31 October 2022.
Emmanuel Olympitis
Chairman of the
Remuneration
Committee
82
This report has been prepared in line with the
provisions of the Companies Act 2006 and
Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended). The report has
also been prepared in line with the
recommendations of the 2018 UK Corporate
Governance Code and the requirements of the
UKLA Listing Rules.
This report is divided into three sections being:
▪ This Annual Statement, which summarises the
work of the Committee, remuneration
outcomes in 2021/22 and how the
Remuneration Policy will be operated in
2022/23;
▪ The Remuneration Policy Report, which details
the Company’s Remuneration Policy (Policy)
for the remuneration of Executive and
Non-executive directors, which was approved
by shareholders at the 2020 AGM held on
30 April 2021; and
▪ The Annual Report on Remuneration, which
discloses details of the Committee, how the
Policy was implemented in the year ended
31 October 2022, and how the Policy will
operate for the year ending 31 October 2023.
The Annual Statement and Annual Report on
Remuneration will be subject to an advisory
shareholder vote at the AGM on 28 April 2023.
Work of the committee during the
12 months ended 31 October 2022
The Committee’s main activities during the period
were as follows:
▪ Agreeing the performance against the targets
for the 2021/2022 annual bonus awards;
▪ Agreeing the approach in respect of the
2020/2021 annual bonus awards and discussing
the proposals with our major shareholders;
▪ Agreeing the targets for the 2022/2023 annual
bonus; and
▪ Agreeing the award levels and performance
targets for the 2022 ESOS awards.
In addition, the Committee has sought to
ensure that the Policy and practices are
consistent with the six factors set out in
Provision 40 of the 2018 UK Corporate
Governance Code:
ME Group plc Annual Report 2022Corporate Governance
In the 12 months ended 31 October 2022, the
Committee’s work has largely been focused on
ensuring Executive Directors and senior
executives are appropriately incentivised and
rewarded in respect of the Company’s
continued growth post the Covid-19 pandemic.
Emmanuel Olympitis
Chairman of the Remuneration Committee
Clarity – The Policy is understood by our senior
executive team and we have sought to articulate it
clearly to our shareholders and representative
bodies (both on an ongoing basis and during
consultation when changes are being made).
Simplicity – The Committee is mindful of the need
to avoid overly complex remuneration structures
which can be misunderstood and deliver
unintended outcomes. Therefore, a key objective
of the Committee is to ensure that our executive
remuneration policies and practices are
straightforward to communicate and operate.
Risk – Our Policy has been designed to ensure that
inappropriate risk-taking is discouraged and will not
be rewarded via: (i) the balanced use of both short
and market value options which employ a blend of
financial, non-financial and share price hurdles;
(ii) the significant role played by equity in our
incentive plans; and (iii) malus/clawback provisions.
Predictability – Our incentive plans are subject to
individual caps, with our share plans also subject to
market standard dilution limits.
Proportionality – There is a clear link between
individual awards, delivery of strategy and our
long-term performance.
Alignment to culture – Our executive pay policies
are aligned to culture through the use of metrics in
both the annual bonus and share options that
measure how we perform against our KPIs and the
long-term performance of the share price.
Remuneration outcomes in 2021/22
The performance of the Group is summarised on
pages 5 to 9, and in the financial statements on
pages 117 to 175.
In respect of the annual bonus for the year ended
31 October 2022, the profit and strategic targets
were met in full. As a result, Mr Crasnianski received
a maximum bonus of 150% of salary. Also in
consequence of the performance against the
targets, and following a reallocation of some of
responsibilities following an internal group
reorganisation, Jean-Marc Janailhac received an
annual bonus of €200,000. As a further reflection
of these changes, Miss Tania Crasnianski was
eligible for a pro-rated bonus which equated to
20% of the maximum potential (based on 150% of
the salary she receives in Euros).
In respect of the annual bonus for the year ended
31 October 2021, shareholders will recall that
Mr Crasnianski and Mr Janailhac recommended to
the Remuneration Committee post year end that
no annual bonuses should be paid to them despite
the profit and strategic targets being met in full.
However, while the Remuneration Committee
accepted this recommendation, it agreed to review
and consider paying some or all of the bonuses that
would have been payable, after the announcement
of the 2022 interim results subject to ongoing
individual and Company performance, and only
after appropriate consultation with major
shareholders. Following this review, and as a result
of strong ongoing individual and Company
performance and a positive consultation exercise
with major shareholders following the
announcement of the 2022 interim results, the
Committee agreed to pay Mr Crasnianski all of the
150% of salary annual bonus that would have been
payable in respect of the year ended 31 October
2021. No bonus award was paid to Mr Janailhac in
respect of the year ended 31 October 2021 given
the reorganisation of responsibilities noted above.
No share options held by current Executive
Directors vested in the year ended 31 October
2022. However, as the EPS for the year ended
31 October 2022 was 10.26p as against a target
range of 9p to 11 p, of the ESOS awards granted on
27 August 2019 to Mr Crasnianski over 816,509
shares, 564,752 vested post year end following
audit completion. As at 31 October 2022, the
options had no intrinsic value as a result of the
share price at the end of the year being lower than
the exercise price of 101.4p.
83
ME Group plc Annual Report 2022Corporate Governance Directors’ Remuneration Report continued
Role
CEO
Name
Serge Crasnianski
Executive Director
Jean-Marc Janailhac
Executive Director
Tania Crasnianski
Salary from 1/11/2022
Salary from 1/11/2021
€
–
204,0002
230,0003
£
560,211
45,0002
50,000
€
–
216,000
230,000
£
560,211
45,000
50,000
1 Delivered in two parts, namely £45,000 p.a. and a Euro amount.
2 Note, following a change in Jean-Marc Janailhac’s role and after consultation with major shareholders, his salary paid in Euros was increased
from €216,000 to €420,000 p.a. from June 2022. It was subsequently reduced to €204,000 p.a. in October 2022 as a result of a reallocation of
some of his responsibilities following an internal group reorganisation. He also receives £45,000 under a contract with Photo-Me Limited.
3 Ms Crasnianski is paid €230,000 under a contract with ME Group GSS (previously known as Photo Me France SAS), and £50,000 under a
contract with Photo-Me Limited.
Implementation of the remuneration policy
for 2022/23
The Committee proposes to operate the Policy for
the year ending 31 October 2023 as follows:
Executive Director base salaries were not increased
from 1 November 2022. Executive Directors’
current base salaries, together with prior year
comparators (split between Euro and GBP where
salaries are split into two currencies) are as above:
▪ Benefit provision will be in line with the
approved Policy.
▪ Following a review of Mr Crasnianski’s pension
provision and how this compares with that of
the general workforce, the Committee has
agreed to maintain the CEO’s current pension at
15% of salary going forward. Given the diverse
nature and geographies of the Company’s
businesses and employees, no single Group-
wide pension plan operates and therefore
pension contribution rates vary across the
Group with pension levels not necessarily
reflecting seniority.
▪ The annual bonus for the year ending 31 October
2023 will continue to be capped at 150% of
salary, with targets based on pre-tax profit
growth (80% of the bonus) and a number of key
personal/strategic targets (20% of the bonus).
Only Mr Crasnianski and Miss Crasnianski will
participate in the annual bonus. The bonus
targets are currently considered to be
commercially sensitive and as such, the targets
and performance against the targets will be
disclosed retrospectively in next year’s
Directors’ Remuneration Report.
Use of discretion
In determining remuneration outcomes for the year
ended 31 October 2022, the Committee has not
exercised discretion except in determining the
bonus of Mr Janailhac for the year ended
31 October 2021 where, as described above,
downward discretion was applied following a
reallocation of some of his responsibilities following
an internal Group reorganisation.
Shareholder engagement
The Committee takes an active interest in
shareholder views on our executive Directors’
Remuneration Policy and is mindful of the
concerns of shareholders and other stakeholders.
During the year ended 31 October 2022, the
Remuneration Committee consulted with major
shareholders on the annual bonus award in respect
of the year ended 31 October 2021 and increased
salary level for Mr Janailhac (noting that it has
subsequently been reduced following a change in
responsibilities) and the Remuneration Policy more
generally and was pleased with the level of support
it received. The Committee hopes that
shareholders continue to support the
Remuneration Committee, and specifically the
Directors’ Remuneration Report for the year ended
31 October 2022 at the forthcoming AGM.
Yours faithfully,
Emmanuel Olympitis
Chairman of the Remuneration Committee
▪ Future grants of ESOS awards to Executive
Directors will be kept under review.
28 February 2023
84
ME Group plc Annual Report 2022Corporate Governance Remuneration Policy Report
A summary of the Policy approved
by shareholders at the 30 April 2021
AGM is set out below. The full Policy
is set out in the Annual Report 2020.
In order to align the interests of shareholders and
Executive Directors, a significant proportion of the
remuneration of Executive Directors is
performance-related, through an annual bonus
plan and the grant of share options.
The Committee’s Remuneration Policy for the
Executive Directors is to have regard to the
directors’ experience and the nature and
complexity of their work in order to provide a
competitive remuneration package that attracts,
retains and motivates high-calibre executives from
whom first-class performance is expected. The
Remuneration Policy is also intended to be
consistent with the Company’s business objectives,
risk profile and shareholder interests.
The Committee will ensure that the incentive
structures for Executive Directors and senior
managers will not raise environmental, social or
governance (“ESG”) risks by inadvertently
motivating irresponsible behaviour. More generally,
with regard to overall remuneration structures,
there is no restriction on the Committee that
prevents it from taking into account ESG matters,
nor do these remuneration structures encourage
inappropriate operational risk-taking.
Component Purpose and link to strategy Operation
Maximum
Performance measures
The Committee is guided
by the requirements of the
Company and prevailing
market levels
n/a
However, no Executive
Director will receive a base
salary increase in excess of
10% p.a., except to reflect
the fact that their salary
was set at a lower level
initially, with the intention
that the salary be increased
to a more market-reflective
level as the individual gains
experience (subject to
performance)
Benefits will not normally
be provided with a value
per Executive Director in
excess of £75,000 p.a.
n/a
Salary
Reflects the value of the
individual and their role
Normally reviewed
annually, effective 1 May
Reflects skills and
experience over time
Normally paid in cash;
pensionable
Provides an appropriate
level of basic fixed
income, avoiding
excessive risk arising
from over-reliance on
variable income
Comparison against
companies with similar
characteristics and
comparators taken into
account in review
Includes company car and
private medical insurance,
and may include an
overseas housing
allowance for a director
working outside of his or
her country of normal
residence
Other benefits may be
offered where
appropriate
Benefits
Provides insured
benefits to support the
individual and their
family during periods of
ill health or death
Gives allowances to
support individuals in
their relevant roles
Annual
Bonus
Incentivises delivery of
specific Company,
divisional and personal
annual goals
Maximum bonus only
payable for achieving
specified targets
Normally payable in cash;
non-pensionable
Up to 150% of base salary
p.a.
Committee has the
discretion to defer up to
50% of the bonus in
shares for three years
Performance is
assessed on an annual
basis, based on the
achievement of
objectives relating to
financial performance,
progress of strategic
priorities and/or
personal targets. The
specific measures
used in the bonus and
their weighting may
vary each year
depending on
business context and
strategy
Clawback provisions
are operated
85
ME Group plc Annual Report 2022Corporate Governance Remuneration Policy Report continued
Component Purpose and link to strategy Operation
Maximum
Performance measures
Pension
Provides competitive
retirement benefits
Defined contribution
Executive Directors may
be offered cash in lieu of
pension
Executive
Share
Option
Scheme
(ESOS)
Aligns Executive
Directors’ interests with
those of shareholders
Annual awards of market
value options may be
granted
Retention
The Committee reviews
the quantum of awards
annually and monitors the
continuing suitability of
the performance
measures
New Executive Directors:
Workforce aligned
n/a
Mr Crasnianski: Workforce
aligned from 1 January
2023
Up to 150% of base salary
p.a.
The Remuneration
Committee may set
such performance
conditions on awards
as it considers
appropriate (whether
financial or non-
financial; and whether
corporate, divisional
or individual)
Up to 25% of salary
vests at threshold,
increasing to 150%
vesting at maximum
Clawback provisions
are operated
Share
Ownership
Guidelines
Provides alignment of
interests between
Executive Directors and
shareholders
Non-
Executive
Directors
Provides fees reflecting
time commitments and
responsibilities, in line
with those provided by
similarly sized
companies
In employment: Executive
Directors are required to
build and maintain a
shareholding equivalent
to at least two years’ base
salary through the
retention of 50% of the
net-of-tax vested share
awards or through
open-market purchases
Post cessation: Executive
Directors will be required
to retain a shareholding
for two years post
cessation of employment
Cash fee paid on a
monthly basis; fees are
reviewed annually
Not entitled to participate
in any Group pension
scheme. No awards to be
granted under the annual
bonus or ESOS
No Non-executive
Director receives any
benefits in kind (other
than in respect of the
expenses relating to the
performance of that
individual’s duties, such as
travel to/from Board
meetings)
In employment: 200% of
salary
Post cessation: 100% of the
in-employment guideline
(or actual shareholding if
lower) excluding: (i) own
shares purchased/shares
currently held; and (ii)
shares vesting from any
share award granted prior
to the 2021 AGM
The Committee is guided
by market rates, time
commitments and
responsibility levels
n/a
However, aggregate annual
fees will not exceed
£750,000 or such other
figure as provided for in the
Company’s Articles of
Association from time to
time
The Board may request
that a Non-executive
Director undertake
services not within the
normal scope of his or her
role. Should this be the
case in the future, a
commercial rate would be
paid and full disclosure
would be provided in the
relevant Directors’
Remuneration Report
86
ME Group plc Annual Report 2022Corporate Governance Choice of performance measures
The Committee has given careful consideration to
the performance measures applicable to both the
annual bonus and the 2014 Executive Share
Option Scheme.
The choice of the performance metrics applicable
to the annual bonus scheme reflects the
Committee’s belief that any incentive
compensation should be appropriately challenging,
with the majority (or the entirety) linked to the
achievement of profit-related targets. The
Committee may also link a proportion of the
annual bonus to strategic and/or personal
objectives if it deems this appropriate with regard
to the Company’s key objectives. The earnings
per share (EPS) performance condition, applicable
to the 2014 Executive Share Option Scheme, was
selected by the Committee on the basis that it
incentivises the delivery of sustainable long-term
financial performance and rewards management
for growing the Company while retaining an
appropriate profit margin. The use of share
options retains a robust link between management
and shareholders by incentivising management to
deliver long-term growth in the Company’s share
price. The Committee retains discretion over the
use of other financial/share price-based
performance metrics and the calculation of EPS in
order to appropriately adjust for any material
one-off items including (but not limited to) major
acquisitions, changes in accounting policies and
major share issues.
The Committee operates the 2014 Executive
Share Option Scheme in accordance with the
scheme rules, the Listing Rules and HMRC
legislation. The Committee, consistent with
market practice, retains discretion over a number
of areas relating to the operation and
administration of the plan.
How employees’ pay is taken into account
The Committee is aware of the general pay and
conditions in the Group as a whole when
determining the directors’ Remuneration Policy
and its implementation. However, reflecting
standard practice, employees are not consulted in
the formulation of the policy.
How shareholders’ views are taken
into account
The Committee continues to take an active interest
in shareholder views on our executive Remuneration
Policy and is mindful of the concerns of shareholders
and other stakeholders. This is reflected in the voting
result at the AGM held on 30 April 2021, with 94.84%
shareholder support (of votes cast) in respect of the
Directors’ Remuneration Policy.
Approach to recruitment and promotions
The remuneration package for a new Executive
Director would be set in accordance with the terms
of the Company’s prevailing approved
Remuneration Policy at the time of appointment
and takes into account the skills and experience of
the individual, the market rate for a candidate of
that experience and the importance of securing the
relevant individual.
Service contracts will be subject to any mandatory
provisions of foreign laws where such laws govern a
director’s contract of employment providing that
the use of such foreign law is not deliberately used
to circumvent this policy.
The salary would be provided at such a level as
required to attract the most appropriate candidate,
and may be set initially at a below mid-market level
on the basis that it may progress towards the
mid-market level once expertise and performance
have been proven and sustained.
Consistent with Part 4 of the Large and Medium-
sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 as
amended, any caps contained within the policy for
fixed pay do not apply to new recruits, although the
Committee would not envisage exceeding these
caps in practice unless absolutely necessary.
The annual bonus potential would be limited to
150% of salary, and grants under the 2014 Executive
Share Option Scheme would be limited to 150% of
salary. In addition, the Committee may offer
additional cash and/or share-based elements to
replace deferred or incentive pay forfeited by an
executive leaving a previous employer. It would
seek to ensure, where possible, that these awards
would be consistent with awards forfeited, in
terms of vesting periods, expected value and
performance conditions.
87
ME Group plc Annual Report 2022Corporate Governance Remuneration Policy Report continued
For an internal Executive Director appointment,
any variable pay element awarded in respect of the
prior role may be allowed to pay out according to
its original terms.
exercisable for a period of six months (or 12 months
in the case of death). On a retirement, options vest
at the normal vesting date and remain exercisable
for a period of six months.
For external and internal appointments, the
Committee may agree that the Company will
meet certain relocation and/or incidental expenses,
as appropriate.
Fee structure and quantum for Non-executive
Director appointments will be based on the
prevailing Non-executive director fee policy.
Approach to leavers
No Executive Director has the benefit of provisions
in his or her service contract for the payment of
predetermined compensation in the event of a
termination of employment. It has been the
Committee’s general policy that the service
contracts of Executive Directors (none of which is
for a fixed term) should provide for termination of
employment by giving notice or by making a
payment of an amount equal to base salary (and in
the case of the CEO and other Executive Directors,
an additional amount equal to the cost of providing
any benefits for the period of notice) in lieu of any
unserved notice period. It is the Committee’s
general policy that no Executive Director should be
entitled to a notice period or payment on
termination of employment in excess of the levels
set out in his or her service contract. In determining
amounts payable on termination, the Committee
also considers, where it is able to do so, appropriate
adjustments to take into account accelerated
receipt and the Executive Director’s duty to
mitigate his or her loss. An annual bonus may be
payable with respect to the period of the financial
year served, although it will be prorated for time
served and paid at the normal pay-out date.
The treatment of any share awards granted to an
Executive Director will be determined based on the
relevant scheme rules.
The default treatment under the 2004 Executive
Share Option Scheme is that any outstanding
awards or unexercised options lapse on cessation
of employment. However, in certain prescribed
circumstances (e.g. death, ill health, disability,
redundancy or other circumstances at the
discretion of the Committee), “good leaver” status
is applied. In this scenario, other than in the case of
a retirement, any outstanding options will normally
be exercisable on the date of cessation and remain
The default treatment under the 2014 Executive
Share Option Scheme is that any outstanding
awards or unexercised options lapse on cessation
of employment. However, in certain prescribed
circumstances (e.g. death, injury, disability or other
circumstances at the discretion of the Committee),
“good leaver” status can be applied at the
discretion of the Committee or shall apply in
relation to HMRC tax-favoured options as relevant.
In this scenario, any outstanding options will
normally be exercisable on the date of cessation
and remain exercisable for a period of six months
(or 12 months in the case of death). Alternatively, in
the case of non-tax favoured options, the
Committee has the discretion to determine that
good leavers’ awards should continue to be
exercisable based on the normal timetable.
The extent to which outstanding option awards
become exercisable for good leavers will
depend on the satisfaction of any applicable
performance conditions (over a curtailed or full
performance period, as relevant). Time pro rating
of options will apply to good leavers’ awards
unless the Committee determines that time
prorating is inappropriate.
The Company has the power to enter into
settlement agreements with Directors and to pay
compensation to settle potential legal claims. In
addition, and consistent with market practice, in
the event of the termination of an Executive
Director, the Company may make a contribution
towards that individual’s legal fees and fees for
outplacement services as part of a negotiated
settlement. Any such fees will be disclosed as part
of the detail of termination arrangements. For the
avoidance of doubt, the policy does not include an
explicit cap on the cost of termination payments.
Service contracts
Details of the CEO’s and the other Executive
Directors’ service contracts are as follows:
Executive Director
Date of contract
Notice period
Serge Crasnianski¹
01/05/2010
12 months2
Jean-Marc Janailhac3
19/06/2020
and 12/12/2019
6 months
Tania Crasnianski
23/06/2021
12 months2
88
ME Group plc Annual Report 2022Corporate Governance External appointments
The Board may allow Executive Directors to accept
appropriate outside commercial Non-executive
Director appointments provided the aggregate
commitment is compatible with their duties as an
Executive Director. Whether or not the Executive
Director concerned may retain fees paid for these
services will be considered on a case-by-case basis,
and will be subject to approval by the Board.
All Non-executive Directors are appointed for
specified terms, subject to re-election at the AGM
immediately following their appointment, and
every three years thereafter. None of the Non-
executive Directors will ordinarily be entitled to
compensation upon termination of their
involvement with the Company. However, if a
Non-executive Director should be removed as a
result of a resolution duly proposed and resolved
by members of the Company during the non-
Executive Director’s normal term of appointment,
he or she will be entitled to compensation equal to
three months’ fees, and in the case of the chairman,
six months’ fees. The relevant appointment letter
and term dates of the Non-executive Directors are
set out below:
Director
Sir John Lewis4
Françoise Coutaz-Replan5
Jean-Marcel Denis6
Emmanuel Olympitis
Camille Claverie7
Sigieri Diaz della Vittoria Pallavicini8
René Proglio9
Appointment
letter date
03/07/2008
27/08/2015
01/03/2012
11/11/2009
23/06/2021
23/06/2021
23/06/2021
Year of last election
Expected year of
expiry of current
2021
2021
2021
2022
2022
2022
2022
2024
2024
n/a
2025
2025
n/a
2025
1 Mr Crasnianski’s contract is with Photo-Me Limited, a wholly-owned subsidiary of the Company. Mr Crasnianski’s services are also made. available
under a consultancy agreement with Photo-Me Limited and a third party that makes Mr Crasnianski’s services available to the Company.
2 Where served by the Company; six months, notice where served by the Director or where applicable their service company.
3 Appointed to the Board on 22 July 2019 as a Non-executive director, he became an Executive director on 27 in July 2020. Mr Janailhac’s services
are also made available under a consultancy agreement with Photo-Me Limited and a third party that makes Mr Janailhac’s services available to
the Company.
3a No Directors participate in any company pension schemes (noting that the CEO receives a cash salary supplement in lieu of pension).
4 Appointed Chairman on 26 July 2010.
5 First appointed to the Board as Group Finance Director on 24 September 2009, and resigned as Executive Director on 27 August 2015.
6 First appointed to the Board on 1 March 2012. Mr Denis’s contract was with Photo-Me Limited, a wholly-owned subsidiary of the Company.
Mr Denis’s services were made available under a consultancy agreement with Photo-Me Limited and a third party that made Mr Denis’s
services available to the Company. Mr Denis left the Board on 29 April 2022.
7 First appointed to the Board on 23 June 2021. Ms Claverie’s contract is with Photo-Me Limited, a wholly-owned subsidiary of the Company.
8 First appointed to the Board on 23 June 2021. Mr Pallavicini’s contract was with Photo-Me Limited, a wholly-owned subsidiary of the Company.
Mr Pallavicini left the Board on 13 May 2022.
9 First appointed to the Board on 23 June 2021, Mr Proglio’s services are made available under a consultancy agreement with Photo-Me Limited
and a third party that makes Mr Proglio’s services available to the Company.
89
ME Group plc Annual Report 2022Corporate Governance Annual Report on Remuneration
Implementation of the
Remuneration Policy
for the year ending
31 October 2023.
The Committee proposes to operate the Policy for
the year ending 31 October 2023 as follows:
▪ Executive Director base salaries were not
increased from 1 November 2022. Details of
the current salary levels are set out in the
Annual Statement.
▪ Benefit provision will be in line with the
approved Policy.
▪ Following a review of Mr Crasnianski’s pension
provision and how this compares to that of the
general workforce, the Committee has agreed
to maintain the CEO’s current pension at 15%
of salary going forward. Given the diverse
nature and geographies of the Company’s
businesses and employees, no single Group-
wide pension plan operates and therefore
pension contribution rates vary across the
Group with pension levels not necessarily
reflecting seniority.
▪ The annual bonus for the year ending 31 October
2023 will continue to be capped at 150% of
salary, with targets based on pre-tax profit
growth (80% of the bonus) and a number of key
personal/strategic targets (20% of the bonus).
Mr Crasnianski and Miss Crasnianski will
participate in the annual bonus. The bonus
targets are currently considered to be
commercially sensitive and as such, the targets
and performance against the targets will be
disclosed retrospectively in next year’s
Directors’ Remuneration Report.
▪ Future grants of ESOS awards to Executive
Directors will be kept under review.
Non-executive Directors
The fees for Non-executive Directors are reviewed at least once every three years although the last increase
was in 2018. Following a review of time commitments and market fee levels, Non-executive Director fee
levels were increased as follows (with prior year comparators also presented):
Non-executive Director
Role
Committee chairman
Sir John Lewis
Chairman
Emmanuel Olympitis
Senior Independent Director
Nomination
Committee
Remuneration
Committee
Françoise Coutaz-Replan
Non-executive Director
Camille Claverie1
Non-executive Director
–
–
1 November
2022
£
1 November
2021
£
145,000
132,000
67,500
55,000
47,500
44,000
01
01
René Proglio
Non-executive Director
Audit Committee
57,500
45,000
1 Ms Claverie has chosen not to receive any fee.
90
ME Group plc Annual Report 2022Corporate Governance Single total figure of remuneration (audited)
The detailed emoluments received by the Executive and Non-executive Directors for the 12 months ended 31 October
2022 and the 12 months ended 31 October 2021 are shown below:
Executive Directors
Year Months
Serge Crasnianski5
Jean-Marc Janailhac6
Tania Crasnianski7
2022
2021
2022
2021
2022
12
12
12
12
12
12
Non-executive Directors
Year Months
Sir John Lewis8
Françoise
Coutaz-Replan9
Jean-Marcel Denis10
Emmanuel Olympitis
Camille Claverie
Sigieri Diaz Pallavicini
René Proglio11
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
12
12
12
12
12
12
12
12
12
12
12
12
12
12
285,340
195,0296
245,333
88,9547
Salary/
Fees
£
132,000
108,900
44,000
37,400
29,895
42,075
55,000
46,750
0
0
24,231
14,250
45,316
14,250
Salary/
Fees
£
Benefits1
£
Bonus2
£
LTI3
£
Pension4
£
Total fixed
remuner
-ation
Total
Total
variable
remuner
-ation
560,212
18,774
840,318
476,180
16,498
840,318
0
–
–
–
–
–
84,032
1,503,336
663,018
840,318
71,427
1,404,423
564,105
840,318
–
–
–
–
455,191
285,340
169,851
195,0296
195,0296
0
303,931
245,333
58,598
88,9547
88,9547
–
–
–
–
–
169,851
0
58,598
0
Benefits1
£
Bonus2
£
LTI3
£
Pension4
£
Total fixed
remuner
-ation
Total
Total
variable
remuner
-ation
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
132,000
132,000
108,900
108,900
44,000
44,000
37,400
37,400
29,895
29,895
42,075
42,075
55,000
55,000
46,750
46,750
0
0
0
0
24,231
24,231
14,250
14,250
45,316
45,316
14,250
14,250
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1 Taxable benefits comprise the provision of private medical insurance and, where appropriate, an accommodation allowance.
2 Bonus is that awarded in respect of performance in the relevant financial year (see annual bonus section below).
3 The EPS for the year ended 31 October 2022 was 10.26p against a target range of 9p to 11p, therefore of the ESOS awards granted on 27 August 2019 to Mr
Crasnianski over 816,509 shares, 564,752 vested post year end following audit completion. As the share price at 31 October 2022 was lower than the exercise price
of 101.4p, no value is shown in the table above.
3a No Directors participate in any company pension schemes (noting that the CEO receives a cash salary supplement in lieu of pension).
4 The pension payment to Mr Crasnianski in the financial period ended 31 October 2022 represented 15% of base salary.
5 The emoluments of Mr Crasnianski shown above for the 12 months ended 31 October 2022 include fees totalling £405,969 (£396,834 for the 12 month-period
ended 31 October 2021), payable to a third party in respect of making available the services of Serge Crasnianski to the Company.
6 Mr Janailhac was paid partially in GBP (£45,000) and partially in euros which when converted amounted to £240,340 which were paid to a third party in respect of
making available the services of Mr Janailhac to the Company. The euro amounts have been translated at the exchange rate set out in note 11.
7 Ms Crasnianski was paid €230,000 under a contract with Photomaton France SAS, and £50,000 under a contract with Photo-Me Limited. The euro amount has
been translated at the exchange rate set out in note 11.
8 The emoluments of Sir John Lewis shown above include fees of £49,500 paid to a third party in respect of making available the services of Sir John Lewis to the
Company (£38,775 for the 12 month-period ended 31 October 2021).
9 Ms Coutaz-Replan stepped down as an Executive Director on 27 August 2015, and was appointed as a Non-executive Director on the same date.
10 The emoluments of Mr Denis shown above were paid to a third party in respect of making available the services of Mr Denis to the Company. Consultancy fees
paid to him post his stepping down from the Board totalled £5,145.
11 The emoluments of Mr Proglio shown above were paid to a third party in respect of making available the services of Mr Proglio to the Company.
12 Exchange rate: of €1.1775:£1
91
ME Group plc Annual Report 2022Corporate Governance Annual Report on Remuneration continued
Annual Bonus for the year ended 31 October 2022
Details of the performance against the profit before tax targets for the year ended 31 October 2022
annual bonuses is as follows:
Financial Targets (80% of Bonus Potential)
Executive
Group pre-tax profit between 100% and 105% of prior year
Group pre-tax profit 5% more but less than 10% higher that of prior year
Group pre-tax profit 10% or more than prior year
Prior year profit
Current year actual profit result
% of bonus payable (out of 120% of salary)
2021/22 Annual Bonus
(% of salary)
Committee discretion depending
on year-on-year growth
60%
120%
£28.6m
£53.4m
120% of salary
Personal/Strategic Targets (20% of Bonus Potential)
Details of performance against the personal/strategic targets are as follows:
Targets
Weighting
Committee Assessment
10% of salary
Met in full. Continued focus on new product
innovation and diversification of operations to meet
ever-changing consumer needs, with new products
launched and technology partnerships announced.
Strategic delivery
Continue to drive the expansion
of the Company’s business
activities – with particular
emphasis on identifying and
negotiating acquisitions
Branding
Deliver the ME Group corporate
brand roll out successfully and
on time
10% of salary
Succession
Devise and implement succession
management for senior colleagues
10% of salary
Met in full. ME Group corporate brand rolled out
across the majority of operations, the listed entity
name change was completed as planned to align to
the new corporate brand strategy and reflect
broader based concession offer.
Met in full. A detailed succession plan was
presented to the Board and its recommendations
were accepted in full. Following approval, a number
of senior hires and a reorganisation of a number of
roles and responsibilities have been completed to
good effect.
30% of salary
Following the Committee’s assessment of the financial and personal/strategic targets, the Committee
awarded Mr Crasnianski a maximum bonus of 150% of salary.
Also in consequence of the performance against the targets, and following a reallocation of some of
responsibilities following an internal group reorganisation, Jean-Marc Janailhac received an annual bonus of
€200,000. As a further reflection of these changes, Miss Tania Crasnianski was eligible for a pro-rated
bonus which equated to 20% of the maximum potential (based on 150% of the salary she receives in Euros).
92
ME Group plc Annual Report 2022Corporate Governance ESOS (Audited)
Scheme Interests Awarded In the Year (Audited)
The Company granted the following market value share option awards (exercise price of 68.73 pence
per share) to Executive Directors during the year ended 31 October 2022:
Executive Director
Number of ESOS Awards
Basis
Face Value1
Tania Crasnianski
100,000
137% of £50,000 salary
£68,730
1 Based on a share price of £0.6873 which was the average share price over the three days immediately prior to grant.
The EPS performance targets, with pro-rata vesting between targets, are as follows:
EPS 2024
Portion of option that becomes exercisable
10.5p
11p
11.5p
12p
12.5p
13p
Up to portion with an aggregate Exercise Price of no more than 25% of the Participant's Salary
Up to portion with an aggregate Exercise Price of no more than 50% of the Participant's Salary
Up to portion with an aggregate Exercise Price of no more than 75% of the Participant's Salary
Up to portion with an aggregate Exercise Price of no more than 100% of the Participant's Salary
Up to portion with an aggregate Exercise Price of no more than 125% of the Participant's Salary
Up to portion with an aggregate Exercise Price of no more than 150%
Between the
above points
On straight-line basis between the above
Directors’ interests in shares (audited)
According to the records kept by the Company, the Directors had interests in the share capital of the
Company as shown below. Between 31 October 2022 and the date of this report, Mr Crasnianski and
persons closely associated with him increased their interest to 137,948,596 ordinary shares of 0.5p of
the Company.
Beneficially owned at
Executive Director
31 October
2022
31 October
2021
ESOS
Awards1
ESOS
Awards²
Requirement
(% of salary)
Shareholding
(% of salary)³ Guideline
Serge Crasnianski4
137,866,791
108,837,410
816,509
1,000,000
200%
18,029%
Jean-Marc Janailhac
225,555
80,000
Tania Crasnianski
–
–
–
–
400,000
196,774
200%
200%
96%
0%
Yes
No
No
Beneficially owned at
Non-executive Director
31 October
2022
31 October
2021
ESOS
Awards1
ESOS
Awards²
Requirement
(% of salary)
Shareholding
(% of salary)³ Guideline
Sir John Lewis
25,000
25,000
Françoise
Coutaz-Replan5
200,000
200,000
Emmanuel Olympitis
45,000
45,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Options with no further performance conditions attached that have not been exercised.
2 Options with outstanding performance conditions attached.
3 Executive Directors are required to build and maintain a shareholding equivalent to at least 200% of base salary through the retention of 50%
of the net-of-tax vested share awards or through open-market purchases. Calculated using the closing share price on the last trading day in
October 2022 (92.8p) and current salary levels (based on an exchange rate of €1.1775: £1 where relevant). The shareholding guideline is calculated
using only beneficially owned shares.
4 Of the shares beneficially owned by Serge Crasnianski, 63,750 shares (2020: 63,750) were registered in his name, the balance in other names.
5 Françoise Coutaz-Replan stepped down as an Executive Director on 27 August 2015, continuing as a Non-executive Director.
93
ME Group plc Annual Report 2022Corporate Governance
Annual Report on Remuneration continued
Directors’ interests in share options (audited)
Details of outstanding share awards held by Directors are set out below.
Number of
options
As at
1 November
2021
Executive Director
Serge Crasnianski
27 August 2019
816,509
5 August 2021
1,000,000
Jean-Marc Janailhac
5 August 2021
400,000
Tania Crasnianski
5 August 2021
12 May 2022
Granted
during
period
Exercised
during
period
Lapsed
during
period
As at
31 October
2022
Exercise
price
Exercisable
from
Expiry
date
–
–
–
–
–
–
816,509
101.4p 27 August 221 27 August 26
1,000,000
77.5p 5 August 24
4 August 28
400,000
77.5p 5 August 24
27 August 28
Nil
96,774
77.5p 5 August 24
27 August 28
100,000
100,000
68.7p 12 May 25
11 May 29
1 Awards partially vested post year end following Remuneration Confirmation that the EPS targets were partially met. Full details will be set out
in next year’s Directors Remuneration Report.
Relative importance of the spend on pay
The following table sets out the percentage change in distributions to shareholders and employee
remuneration costs:
Special
Final for FY 2021
Total
Paid during FY 2022
Pence
per share
6.51,2
2.891,3
9.39
£’000
24,572
10,925
35,497
1 Based on the cash returned to shareholders through dividends, as shown in note 9 to the Financial Statements. The Company did not undertake
any buy-backs in the financial period ended 31 October 2022.
2 Paid on 1 September 2022
3 Paid 13 May 2022
94
ME Group plc Annual Report 2022Corporate Governance Wages and salaries
Social security costs
Share options granted to directors and employees
Post-employment benefit costs
– defined benefit schemes
– defined contribution schemes
– other post-employment costs
Total
1 Based on the figure shown in note 5 to the Financial Statements.
Group
2022
41,394
9,017
884
383
265
0
2021
38,920
7,491
493
251
447
0
51,943
47,602
TSR performance graph
The graph below shows the Company’s performance, measured by total shareholder return (TSR) (share
price growth plus dividends reinvested) compared with the performance of the FTSE SmallCap Index
(calculated on the same basis) from 1 May 2012. As the Company has been a constituent of the FTSE
SmallCap Index for all of the relevant period, this index is considered an appropriate form of “broad equity
market index” against which the Company’s performance should be compared.
Total shareholder return
600
500
400
300
200
100
0
30 April
2012
30 April
2013
30 April
2014
30 April
2015
30 April
2016
30 April
2017
30 April
2018
30 April
2019
30 April
2020
30 April
2021
30 April
2022
Source: Datastream ((cid:9)omson Reuters)
ME Group plc
FTSE SmallCap
95
ME Group plc Annual Report 2022Corporate Governance Annual Report on Remuneration continued
Percentage increase in the remuneration of the members of the Board
The table below shows the change in the salary, benefits and annual bonus for the members of the Board
who served in both the period just ended and the previous financial year in full, compared with the change
in remuneration for the UK employee population.
Year to 31 October 2022
Year to 31 October 2021
Base salary
Benefits Annual bonus Base salary
Benefits Annual bonus
Executive Directors
Serge Crasnianski
Jean-Marc Janailhac
Tania Crasnianski
Non-executive Directors
Sir John Lewis
Françoise Coutaz-Replan
Jean-Marcel Denis
Emmanuel Olympitis
René Proglio
Camille Claverie
UK Employee Population
18%
46%
176%
21%
18%
-29%
18%
218%
0%
11%
14%
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
0%
0%
100%
100%
N/A
N/A
N/A
N/A
N/A
N/A
16%
0%
27%
N/A
0%
0%
0%
0%
0%
0%
11%
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1%
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0%
CEO remuneration
The table below shows the total remuneration for the CEO over the same 10.5-year period as the TSR chart
above. All share awards are valued at the date of vesting.
CEO
2022 (12 months to 31 October 2022)
Serge Crasnianski
2021 (12 months to 31 October 2021)
Serge Crasnianski
2020 (18 months to 31 October 2020)
Serge Crasnianski
2019 (12 months to 30 April 2019)
Serge Crasnianski
2018 (12 months to 30 April 2018)
Serge Crasnianski
2017 (12 months to 30 April 2017)
Serge Crasnianski
2016 (12 months to 30 April 2016)
Serge Crasnianski
2015 (12 months to 30 April 2015)
Serge Crasnianski
2014 (12 months to 30 April 2014)
Serge Crasnianski
2013 (12 months to 30 April 2013)
Serge Crasnianski
2012 (12 months to 30 April 2012)
Serge Crasnianski
Total (£)
1,503,336
1,404,423
984,248
650,380
681,954
1,498,113
1,429,209
1,031,628
914,278
899,487
898,693
Annual
(% of max)
100%
100%
0%
0%
0%
100%
100%
100%
100%
100%
100%
Long-term
incentives
(% of max)1
69%
–
–
–
–
–
100%
–
–
–
–
1 Shows the number of share options that vested as a percentage of the maximum number of share options that could have vested. For the years
ended 30 April 2011 to 30 April 2019 (but excluding 2016), Serge Crasnianski did not have any outstanding share option awards that could have
vested in the relevant years. For the year ended 31 October 2022, partial vesting was achieved between the 9p and 11p target range in respect of
the 2020 ESOP awards.
2 Serge Crasnianski was appointed to the role of CEO on 3 July 2009, having previously served as a Non-executive Director from 6 May 2009.
The total remuneration figure shown includes all payments received following his appointment as CEO but excludes any fees paid (£5,429) for
performing the role of Non-executive Director.
96
ME Group plc Annual Report 2022Corporate Governance CEO pay ratio
The data shows how the CEO’s single figure remuneration for the period ended 31 October 2022 compares
with equivalent single figure remuneration for full-time equivalent UK employees, ranked at the 25th, 50th
and 75th percentile. The ratio for 2021 has been restated for the restatement of the CEO single figure for his
2021 bonus. The 2020 salary and total pay and benefits data (18 months) have been annualised to aid with
year on year comparison.
Period
Method
2022
2021
2020
Option A
Option A
Option A
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
58:1
74:1
44:1
53:1
58:1
30:1
42:1
41:1
24:2
No components of pay and benefits have been omitted for the purpose of the above calculations.
Option A was selected given that this method of calculation was considered to be the most statistically
robust approach in respect of gathering the required data for 2022.
The respective quartile salary and total pay and benefits numbers are as follows:
Period
2022
2021
2020
Salary
Total pay and benefits
25th
percentile
Median
75th
percentile
25th
percentile
Median
75th
percentile
£25,094
£26,662
£34,795
£25,847
£28,555
£36,189
£18,309
£23,533
£32,187
£18,858
£24,286
£34,336
£14,410
£21,185
£25,687
£14,825
£21,824
£28,579
Committee role and membership
The Remuneration Committee comprises two Non-executive Directors: Emmanuel Olympitis (Committee
Chairman, member of the Audit and Nomination Committees, and Senior Independent Director), and
Sir John Lewis (Chairman of the Board and the Nomination Committee, and member of the Audit and
Remuneration Committees). Jean-Marcel Denis (former Chairman of the Audit Committee and member of
the Nomination and Remuneration Committees) was also a member until he retired from the Board on
28 April 2022. The Board considers Mr Olympitis to be independent, and also considered Mr Denis to be
independent whilst he was a director. The Board also considers Sir John Lewis to have been independent
on his appointment as Chairman.
97
ME Group plc Annual Report 2022Corporate Governance Annual Report on Remuneration continued
Biographies of the members of the Committee are set out on page 67. Details of their membership of the
Committee and attendance at the meetings during the year are as follows.
Name
Position
Appointment date
Emmanuel Olympitis
Committee Chairman
11 November 2009
Sir John Lewis
Committee Member
3 July 2008
Jean-Marcel Denis
Committee Member
1 March 2012
1 Mr Denis retired from the Board and its committee on which he served on 28 April 2022.
Number of
Meetings attended
(Maximum possible)
1(1)
1(1)
0(1)1
It remains the Committee’s policy that it will meet on an ad hoc basis when the needs of the Company
require it. At the invitation of the Chairman, the CEO and other Executive Directors and Non-executive
Directors may attend meetings of the Committee, except when their own remuneration is under
consideration. No director is involved in determining his or her own remuneration. The Company Secretary
acts as the Secretary to the Committee. The members of the Committee can, where they judge it necessary
to discharge their responsibilities, obtain independent professional advice at the Company’s expense.
The Committee’s terms of reference are published in the “Investor Relations” section of the Company’s
website at https://me-group.com/
Payments to past Directors
Jean-Marcel received consultancy fees of £5,145 after he stepped down from the Board in April 2022 up to
31 October 2022.
Advisers
FIT Remuneration Consultants LLP advised the Committee during the period ended 31 October 2022 in
respect of the preparation of this Remuneration Report. Fees paid to FIT in respect of the year ended
31 October 2022 totalled £25,530 (exclusive of VAT). The Committee is satisfied that the advice provided by
FIT is objective and independent, and fees were charged based on time and material.
The Committee also receives advice from the CEO in relation to the remuneration of certain senior
executives, but not in relation to his own remuneration.
98
ME Group plc Annual Report 2022Corporate Governance Statement of shareholder voting
The table below shows the advisory vote on the 2020/21 Directors’ Remuneration Report at the 2022 AGM
Remuneration Report held on 29 April 2022 and the last binding vote on the Remuneration Policy at the
2021 AGM.
Total Votes
For
Total Votes
Against
%
Total Votes
Cast
(excluding
withheld)
% of total
votes cast/
issued
capital
%
Votes
Withheld1
194,717,356
82.16% 42,292,455
17.84% 237,009,811
64.62% 7,270,849
250,728,194
94.84% 13,636,756
5.16% 264,364,950
69.94%
13,044
Directors’ Remuneration
Report (excluding the
Remuneration Policy)
Directors’ Remuneration
Policy
1 A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘for’ and ‘against’ a resolution.
By order of the Board
Emmanuel Olympitis
Chairman of the Remuneration Committee
28 February 2023
99
ME Group plc Annual Report 2022Corporate Governance Financial
Statements
Independent auditor’s report to the
members of ME Group International plc
Group Statement of Comprehensive Income
Group Statement of Financial Position
Company Statement of Financial Position
Group Statement of Cash Flows
Company Statement of Cash Flows
Group Statement of Changes in Equity
Company Statements of Changes in Equity
Notes to the Financial Statements
Company Information & Advisers
Shareholder Information
102
110
111
112
113
114
115
116
117
177
178
100
ME Group plc Annual Report 2022 s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
101
ME Group plc Annual Report 2022Financial Statements
Independent auditor’s report to the
members of ME Group International plc
Opinion
We have audited the financial statements of
ME Group International plc (the ‘parent company’)
and its subsidiaries (together the ‘group’) for the
year ended 31 October 2022 which comprise the
Group Statement of Comprehensive Income, the
Group Statement of Financial Position, the
Company Statement of Financial Position, the
Group Statement of Cash Flows, the Company
Statement of Cash Flows, the Group Statement of
Changes in Equity and the Company Statement of
Changes in Equity, and notes to the financial
statements, including a summary of significant
accounting policies.
The financial reporting framework that has been
applied in their preparation is applicable law and
UK-adopted international accounting standards
and, as regards the parent company financial
statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion, the financial statements:
▪ give a true and fair view of the state of the
group’s and of the parent company’s affairs as at
31 October 2022 and of the group’s profit for the
year then ended;
▪ have been properly prepared in accordance with
UK-adopted international accounting standards
and,as regards the parent company financial
statements, as applied in accordance with the
provisions of the Companies Act 2006; and
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation of
the financial statements is appropriate.
Our audit procedures to evaluate the directors’
assessment of the group’s and the parent
company’s ability to continue to adopt the going
concern basis of accounting included but were not
limited to:
▪ Undertaking an initial assessment at the
planning stage of the audit to identify events or
conditions that may cast significant doubt on
the group’s and the parent company’s ability to
continue as a going concern;
▪ Making enquiries of the directors to understand
the period of assessment considered by them,
the assumptions they considered, including
consideration of events after balance sheet date,
and the implication of those when assessing the
group’s and the parent company’s future
financial performance;
▪ Assessing the appropriateness of the directors’
key assumptions in their cash flow forecasts, as
described in note 1.1, by reviewing supporting
and contradictory evidence in relation to these
key assumptions and assessing the directors’
consideration of severe but plausible scenarios;
▪ Testing the accuracy and functionality of the
model used to prepare the directors’ forecasts;
▪ have been prepared in accordance with the
requirements of the Companies Act 2006.
▪ Assessing the historical accuracy of forecasts
prepared by the directors;
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the “Auditor’s
responsibilities for the audit of the financial
statements” section of our report. We are
independent of the group and the parent company
in accordance with the ethical requirements that
are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to listed entities and public interest entities
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to
provide a basis for our opinion.
▪ Considering the consistency of the directors’
forecasts with other areas of the financial
statements and our audit, including the viability
statement; and
▪ Evaluating the appropriateness of the directors’
disclosures in the financial statements on
going concern.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or
collectively, may cast significant doubt on the
group’s and the parent company’s ability to
continue as a going concern for a period of at least
twelve months from when the financial statements
are authorized for issue.
102
ME Group plc Annual Report 2022Financial Statements Our responsibilities and the responsibilities of the
directors with respect to going concern are
described in the relevant sections of this report.
In relation to ME Group International plc’s reporting
on how it has applied the UK Corporate
Governance Code, we have nothing material to add
or draw attention to in relation to the directors’
statement in the financial statements about
whether the director’s considered it appropriate to
adopt the going concern basis of accounting.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the financial statements of the
current period and include the most significant
assessed risks of material misstatement (whether
or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team.
These matters were addressed in the context of
our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We summarise below the key audit matter in
forming our opinion above, together with an
overview of the principal audit procedures
performed to address this matter and our key
observations arising from those procedures.
This matter, together with our findings, was
communicated to those charged with governance
through our Audit Completion Report.
Recognition, valuation and impairment
of intangible assets including goodwill
(Group)
The Risk
Refer to note 1.4 (significant accounting policies),
note 1.1 (critical accounting estimates and key
judgements), note 29 (business combinations) and
note 11 (Goodwill and other intangible assets) to the
consolidated financial statements.
Intangible assets, including goodwill, represented
£32.4 million at 31 October 2022 and £35.1 million at
31 October 2021.
In the year ended 31 October 2022, in accordance
with IFRS 3 – Business Combinations and its
requirements on ‘measurement period’:
The group finalised the valuation of the intangible
assets recognised on the acquisition of one entity in
France and another in Australia resulting in increase
in other intangibles of £4.1 million and residual
being goodwill of £0.5 million.
Additionally, the group recognised on a provisional
basis £1.7 million of goodwill resulting from the
acquisition of one entity in France, where the
Purchase Price Allocation (PPA) has not been
finalised as at the year end.
The recognition and valuation of intangible assets
including the assessment of the recoverable value
of these assets is a key audit matter, given the high
degree of estimation and judgment required by
management. These include assumptions used in
finalising the provisional PPA during the
measurement period, identification and valuation
of additional intangible assets recognised,
assumptions regarding the future evolution of
trading, the determination of long-term growth
rates and discount rates applied to the appropriate
future cash flows.
How our scope addressed this matter
Our audit procedures included, but were not
limited to:
▪ For the acquisition in the year, we reviewed the
sale and purchase agreement and financial
information of the entity at the date of
acquisition to confirm the level of initial goodwill
that has been recognised in the year.
▪ In respect of the recognition of other intangible
assets arising from measurement period
adjustments, we obtained and reviewed
management expert’s report and engaged our
valuation experts to assess the proposed
purchase price allocation (PPA) adjustments,
including the review of the methodology and
key inputs used by management.
▪ In respect of impairment assessment
performed by management, we reviewed the
impairment testing process implemented by
group management, based on cash-flow
forecasts from the budget and five-year plan
presented to and approved by the Board. In
addition, we assessed management’s
identification of CGUs and allocation of
intangibles and goodwill, tested the
mathematical accuracy of the impairment
model, compared the accuracy of historical
forecasting to actual results and with the
103
ME Group plc Annual Report 2022Financial Statements Independent auditor’s report to the members of ME Group International plc continued
assistance of our valuation experts we
challenged key assumptions.
▪ We assessed the sensitivity of the impairment
test to changes in key assumptions.
Our observations
Based on our audit work performed, the
movements in intangible assets, including
goodwill, in the year and their carrying value
reflected in the financial statements is appropriate.
Overall, the key assumptions used by
management in their impairment assessment were
considered reasonable
We identified a number of audit adjustments and
internal control recommendations to strengthen
the group’s approach to goodwill recognition and
impairment assessments that were shared with the
Audit Committee.
Our application of materiality and an
overview of the scope of our audit
The scope of our audit was influenced by our
application of materiality. We set certain
quantitative thresholds for materiality. These,
together with qualitative considerations, helped us
to determine the scope of our audit and the nature,
timing, and extent of our audit procedures on the
individual financial statement line items and
disclosures and in evaluating the effect of
misstatements, both individually and on the
financial statements as a whole. Based on our
professional judgement, we determined materiality
for the financial statements as a whole as follows:
As part of designing our audit, we assessed the
risk of material misstatement in the financial
statements, whether due to fraud or error, and
then designed and performed audit procedures
Group materiality and Parent company materiality
Overall materiality
£2,200,000
Group
Parent company
£1,400,000
How we determined it
Our materiality has been determined
with reference to a benchmark of profit
before tax of which it represents 5%.
Materiality has been determined with
reference to a benchmark of net
assets, of which it represents 2%.
Rationale for benchmark
applied
We used profit before tax as, in our
view, this is the most relevant
measure of the financial performance
of the group.
We used net assets as, in our view, this
is the most relevant measure of the
performance of the company, being
the parent company of the group.
Performance materiality
Reporting threshold
Performance materiality is set to
reduce to an appropriately low level
the probability that the aggregate of
uncorrected and undetected
misstatements in the financial
statements exceeds materiality for the
financial statements as a whole.
Performance materiality is set to
reduce to an appropriately low level
the probability that the aggregate of
uncorrected and undetected
misstatements in the financial
statements exceeds materiality for
the financial statements as a whole.
We set performance materiality at
£1,550,000, which represents 70% of
overall materiality. This was based on
our risk assessments, together with
our assessment of the group’s overall
control environment
We set performance materiality at
£980,000, which represents 70% of
overall materiality.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £70,000 for the group and
£40,000 for the parent company, as well as misstatements below those amounts
that, in our view, warranted reporting on qualitative reasons. We also report to the
Audit Committee on disclosure matters that we identified during the course of
assessing the overall presentation of the financial statements
104
ME Group plc Annual Report 2022Financial Statements responsive to those risks. In particular, we looked
at where the directors made subjective
judgements, such as assumptions on significant
accounting estimates.
We tailored the scope of our audit to ensure that
we performed sufficient work to be able to give
an opinion on the financial statements as a
whole. We used the outputs of our risk
assessment, our understanding of the group and
the parent company, their environment, controls,
and critical business processes, to consider
qualitative factors to ensure that we obtained
sufficient coverage across all financial statement
line items.
Our group audit scope included an audit of the
group and parent company financial statements.
Based on our risk assessment, the eight most
significant entities within the group, representing
64% of the relevant materiality benchmark (profit
before tax) were subject to full scope audit which
was performed by the group audit team for two
entities and by component auditors for the other
entities. Where we relied on work performed by
component auditors, we issued audit
instructions, directed component audit teams,
reviewed component audit files and maintained
appropriate oversight throughout the audit. For
entities that did not subject to a full scope audit,
we performed specified audit procedures and
desktop analytical reviews.
At the parent company level, the group audit
team also tested the consolidation process and
carried out analytical procedures to confirm our
conclusion that there were no significant risks of
material misstatement of the aggregated
financial information.
Other information
The other information comprises the information
included in the annual report other than the
financial statements and our auditor’s report
thereon. The directors are responsible for the other
information. Our opinion on the financial
statements does not cover the other information
and, except to the extent otherwise explicitly stated
in our report, we do not express any form of
assurance conclusion thereon.
Our group audit scope included an audit of the
group and parent company financial statements.
Based on our risk assessment, the eight most
significant entities within the group representing
64% of the relevant materiality benchmark (profit
before tax) were subject to full scope audit which
was performed by the group audit team for two
entities and by component auditors for the other
entities. Where we relied on work performed by
component auditors, we issued audit instructions,
directed component audit teams, reviewed
component audit files and maintained appropriate
oversight throughout the audit. For entities that
did not subject to a full scope audit, we
performed specified audit procedures and
desktop analytical reviews.
We have nothing to report in this regard.
Opinions on other matters prescribed by
the Companies Act 2006
In our opinion, the part of the directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in
the course of the audit:
▪ the information given in the strategic report and
the directors’ report for the financial year for
which the financial statements are prepared is
consistent with the financial statements and
those reports have been prepared in
accordance with applicable legal requirements;
▪ the information about internal control and risk
management systems in relation to financial
reporting processes and about share capital
structures, given in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Guidance and
Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is
consistent with the financial statements and has
been prepared in accordance with applicable
legal requirements; and
▪ information about the parent company’s
corporate governance code and practices and
about its administrative, management and
supervisory bodies and their committees
complies with rules 7.2.2, 7.2.3 and 7.2.7 of the
FCA Rules.
105
ME Group plc Annual Report 2022Financial Statements Independent auditor’s report to the members of ME Group International plc continued
Matters on which we are required to report
by exception
In light of the knowledge and understanding of the
group and the parent company and their
environment obtained in the course of the audit,
we have not identified material misstatements
in the:
▪ Strategic report or the directors’ report; or
▪ Information about internal control and risk
management systems in relation to financial
reporting processes and about share capital
structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to
you if, in our opinion:
▪ adequate accounting records have not been
kept by the parent company, or returns
adequate for our audit have not been received
from branches not visited by us; or
▪ the parent company financial statements and
the part of the directors’ remuneration report to
be audited are not in agreement with the
accounting records and returns; or
▪ certain disclosures of directors’ remuneration
specified by law are not made; or
▪ we have not received all the information and
explanations we require for our audit; or
▪ a corporate governance statement has not been
prepared by the parent company
Corporate governance statement
The Listing Rules require us to review the directors’
statement in relation to going concern, longer-term
viability and that part of the Corporate Governance
Statement relating to ME Group International plc ‘s
compliance with the provisions of the UK
Corporate Governance Statement specified for
our review.
Based on the work undertaken as part of our audit,
we have concluded that each of the following
elements of the Corporate Governance
Statement is materially consistent with the
financial statements or our knowledge obtained
during the audit:
▪ Directors’ statement with regards the
appropriateness of adopting the going concern
basis of accounting and any material
uncertainties identified, set out on page 117;
▪ Directors’ explanation as to its assessment of
the entity’s prospects, the period this
assessment covers and why they period is
appropriate, set out on page 63;
▪ Directors’ statement on fair, balanced and
understandable, set out on page 79;
▪ Board’s confirmation that it has carried out a
robust assessment of the emerging and
principal risks, set out on page 63;
▪ The section of the annual report that describes
the review of effectiveness of risk management
and internal control systems, set out on page 78;
and
▪ The section describing the work of the audit
committee, set out on page 76.
Responsibilities of Directors
As explained more fully in the statement of the
directors’ responsibility set out on page 80, the
directors are responsible for the preparation of the
financial statements and for being satisfied that
they give a true and fair view, and for such internal
control as the directors determine is necessary to
enable the preparation of financial statements that
are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the group’s and the
parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the directors either intend to
liquidate the group or the parent company or to
cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
106
ME Group plc Annual Report 2022Financial Statements exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which our procedures are capable
of detecting irregularities, including fraud is
detailed below.
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements
in respect of irregularities, including fraud.
Based on our understanding of the group and the
parent company and their industry, we
considered that non-compliance with the following
laws and regulations might have a material effect
on the financial statements: employment and
tax legislation, health and safety regulation,
anti-money laundering regulation, FRC rules and
listing rules.
To help us identify instances of non-compliance
with these laws and regulations, and in identifying
and assessing the risks of material misstatement in
respect to non-compliance, our procedures
included, but were not limited to:
We also considered those laws and regulations that
have a direct effect on the preparation of the
financial statements, such as tax legislation,
pension legislation and the Companies Act 2006.
In addition, we evaluated the directors’ and
management’s incentives and opportunities for
fraudulent manipulation of the financial
statements, including the risk of management
override of controls, and determined that the
principal risks related to posting manual journal
entries to manipulate financial performance,
management bias through judgements and
assumptions in significant accounting estimates, in
particular in relation to recognition, valuation and
impairment of intangible assets, including goodwill,
valuation of investments (parent company level),
revenue recognition (which we pinpointed to the
manipulation of vending machine revenue, and
significant one-off transactions.
Our procedures in relation to fraud included but
were not limited to:
▪ Making enquiries of the directors and
management on whether they had knowledge
of any actual, suspected or alleged fraud;
▪ Gaining an understanding of the internal
controls established to mitigate risks related
to fraud;
▪ Gaining an understanding of the legal and
▪ Discussing amongst the engagement team the
regulatory framework applicable to the group
and the parent company, the industry in which
they operate, and the structure of the group,
and considering the risk of acts by the group and
the parent company which were contrary to the
applicable laws and regulations, including fraud;
▪ Inquiring of the directors, management and,
where appropriate, those charged with
governance, as to whether the group and the
parent company is in compliance with laws and
regulations, and discussing their policies and
procedures regarding compliance with laws
and regulations;
▪ Inspecting correspondence with relevant
regulatory authorities;
▪ Reviewing minutes of directors’ meetings in the
year; and
▪ Discussing amongst the engagement team the
laws and regulations listed above, and remaining
alert to any indications of non-compliance
risks of fraud;
▪ Addressing the risks of fraud through
management override of controls by
performing journal entry testing, including
consolidation journals;
▪ Reviewing accounting estimates for
management bias when making significant
judgements; and
▪ Reviewing accounting estimates and financial
statement disclosures for management bias; and
▪ The primary responsibility for the prevention
and detection of irregularities, including fraud,
rests with both those charged with governance
and management. As with any audit, there
remained a risk of non-detection of irregularities,
as these may involve collusion, forgery,
intentional omissions, misrepresentations or the
override of internal controls.
107
ME Group plc Annual Report 2022Financial Statements Independent auditor’s report to the members of ME Group International plc continued
As required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R,
these financial statements form part of the
ESEF-prepared annual report filed on the National
Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory
Technical Standard (‘ESEF RTS’). This auditor’s
report provides no assurance over whether the
annual report has been prepared using the single
electronic format specified in the ESEF RTS.
David Herbinet (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
London
28 February 2023
The risks of material misstatement that had the
greatest effect on our audit are discussed in the
“Key audit matters” section of this report.
A further description of our responsibilities is
available on the Financial Reporting Council’s
website at www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters which we are required
to address
Following the recommendation of the audit
committee, we were appointed by the directors on
3 September 2019 to audit the financial statements
for the period ending 31 October 2020 and
subsequent financial periods. The period of total
uninterrupted engagement is 3.5 years, covering the
years ending 2020 to 2022.
No non-audit services prohibited by the FRC’s
Ethical Standard were provided to the group or
theparent company and we remain independent of
the group and the parent company in conducting
our audit.
Our audit opinion is consistent with our additional
report to the audit committee.
Use of the audit report
This report is made solely to the company’s
members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the company
and the company’s members as a body for our
audit work, for this report, or for the opinions we
have formed.
108
ME Group plc Annual Report 2022Financial Statements
109
ME Group plc Annual Report 2022Financial Statements Group Statement of Comprehensive Income
For the 12 months ended 31 October 2022
31 October
2022
£’000
31 October
2021
£’000
Notes
Revenue
Cost of Sales
Gross Profit
Other Operating Income
Administrative Expenses
Operating Profit
Other net (losses)/gains
Finance Income
Finance Cost
Profit before Tax
Total Tax Charge
Profit for the year
3
4
4
6
6
3
7
259,780
(178,377)
81,403
7,916
214,404
(178,427)
81,353
317
(32,638)
(32,588)
56,681
(1,176)
–
(2,151)
53,354
(14,561)
38,793
829
829
1,151
(248)
903
1,732
40,525
38,793
–
38,793
40,525
–
40,525
29,335
1,998
177
(2,955)
28,555
(6,703)
21,852
(6,987)
(6,987)
560
(94)
466
(6,521)
15,331
21,713
139
21,852
15,192
139
15,331
5.78p
5.77p
10
10
10.26p
10.23p
Other Comprehensive Income
Items that are or may subsequently be classified to Profit and Loss:
Exchange Differences Arising on Translation of Foreign Operations
Total Items that are or may subsequently be classified to profit and loss
Items that will not be classified to profit and loss:
Remeasurement gains in defined benefit obligations and other post-employment
benefit obligations
Deferred tax on remeasurement gains
Total Items that will not be classified to profit and loss
Other comprehensive income/(expense) for the year net of tax
Total Comprehensive income for the year
Profit for the Year Attributable to:
Owners of the Parent
Non-controlling interests
Total comprehensive income attributable to:
Owners of the Parent
Non-controlling interests
Earnings per Share
Basic Earnings per Share
Diluted Earnings per Share
All results derive from continuing operations.
The notes on pages 117 to 175 are an integral part of these Group financial statements.
110
ME Group plc Annual Report 2022Financial Statements Group Statement of Financial Position
As at 31 October 2022
Assets
Goodwill
Other intangible assets
Property, plant & equipment
Investment property
Investment in associates
Financial instruments held at FVTPL
Other receivables
Non-Current Assets
Inventories
Other receivables
Current tax
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Translation and other reserves
Retained earnings
Equity attributable to owners of the Parent
Non-controlling interests
Total Shareholders’ funds
Liabilities
Financial liabilities
Post-employment benefit obligations
Deferred tax liabilities
Provisions
Non-current liabilities
Financial liabilities
Provisions
Current tax
Trade and other payables
Current liabilities
Total equity and liabilities
Group
31 October
2022
£’000
Notes
31 October
2021
(restated)
£’000
11
11
12
13
14
15
16
17
16
18
20
21
22
24
23
21
23
25
17,116
15,620
101,090
592
21
5,239
1,974
141,652
25,491
20,050
2,990
136,185
184,716
326,368
1,889
10,627
11,159
108,974
132,649
–
132,649
82,429
3,850
7,760
–
94,039
35,657
1,567
10,208
52,248
99,680
326,368
15,305
19,988
91,973
597
21
1,501
1,868
131,253
18,458
22,452
1,417
99,362
141,688
272,941
1,889
10,599
9,435
106,051
127,974
1,720
129,694
55,058
4,933
9,362
338
69,691
25,877
1,828
3,367
42,484
73,556
272,941
The notes on pages 117 to 175 are an integral part of these Group financial statements.
The accounts were approved by the Board on 28 February 2023 and signed on its behalf by:
Serge Crasnianski
Chief Executive Officer (Director)
Sir John Lewis OBE
Non-executive Chairman (Director)
Registration number: 00735438
111
ME Group plc Annual Report 2022Financial Statements
Company Statement of Financial Position
As at 31 October 2022
Assets
Other intangible assets
Property, plant & equipment
Investment in subsidiaries
Financial instruments held at FVTPL
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current tax
Current assets
Total assets
Equity
Share capital
Share premium
Translation and other reserves
Retained earnings
Total Shareholders’ funds
Liabilities
Financial liabilities
Non-current liabilities
Financial liabilities
Trade and other payables
Current liabilities
Total equity and liabilities
Company
31 October
2022
£’000
31 October
2021
£’000
Notes
11
12
14
15
17
16
18
20
21
21
25
5
15,364
44,468
789
60,841
1,830
23,142
13,321
1,205
39,498
100,340
1,899
10,627
2,728
68,743
83,987
741
741
1,060
14,552
15,612
100,340
–
10,933
46,901
1,292
59,125
1,492
19,454
4,002
583
25,531
84,656
1,889
10,599
2,207
46,405
61,100
1,727
1,727
830
20,999
21,829
84,656
The notes on pages 117 to 175 are an integral part of these financial statements.
The Company recognised a profit after tax for the period of £57,824,000 (2021: profit of £785,000).
The accounts were approved by the Board on 28 February 2023 and signed on its behalf by:
Serge Crasnianski
Chief Executive Officer (Director)
Sir John Lewis OBE
Non-executive Chairman (Director)
Registration number: 00735438
112
ME Group plc Annual Report 2022Financial Statements
Group Statement of Cash Flows
For the period ended 31 October 2022
Cash flow from operating activities
Profit before tax
Finance costs
Interest of lease liabilities
Finance income
Other gains
Operating profit
Amortisation and impairment of intangible assets
Depreciation and impairments of property,plant and equipment
Profit on sale of property, plant and equipment
Exchange differences
Movements in provisions
Other non cash items
Changes in working capital:
Inventories
Trade and other receivables
Trade and other payables
Cash generated from operations
Interest paid
Taxation paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of subsidiaries
Proceeds from disposal of subsidiaries
Investment in intangible assets
Proceeds from sale of intangible assets
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Investment in financial instruments
Interest received
Dividends received from associates
Net cash in investing activities
Cash flows from financing activities
Issue of ordinary shares to equity shareholders
Acquisition of minority interest
Repayment of principal of leases
Repayment of borrowings
Increase in borrowings
Decrease in assets held to maturity / held at amortised cost
Dividends paid to owners of the Parent
Net cash utilised in financing activities
Net interest / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange loss on cash and cash equivalents
Cash and cash equivalents at end of year
31 October
2022
£’000
31 October
2021
£’000
Notes
53,354
28,555
794
1,357
–
1,176
56,681
6,772
28,791
(7,490)
(594)
(809)
(432)
(7,033)
2,295
9,764
87,945
(2,151)
(10,895)
74,899
(739)
152
(2,486)
4
4
29
697
2,258
(177)
(1,998)
29,335
5,419
30,328
(368)
(355)
400
680
(1,847)
(5,780)
8,278
66,090
(2,956)
(9,269)
53,865
(10,133)
1,050
(2,529)
71
–
(32,670)
8,997
(26,376)
3,904
(4,450)
–
–
–
73
104
(31,125)
(33,907)
28
–
(2,985)
(6,196)
(24,622)
61,773
–
–
(4,600)
(22,365)
5,093
25
(35,497)
–
19
19
19
19
9
(7,499)
36,275
99,362
548
136,185
(21,847)
(1,889)
107,177
(5,926)
99,362
The notes on pages 117 to 175 are an integral part of these Group financial statements.
113
ME Group plc Annual Report 2022Financial Statements Company Statement of Cash Flows
For the period ended 31 October 2022
Cash flow from operating activities
Profit before tax
Finance costs
Interest of lease liabilities
Finance income
Dividends received
Other losses
Operating profit
Depreciation and impairments of property,plant and equipment
(Loss)/gain on sale of property, plant and equipment
Non cash movement in investment of subsidary
Other non cash items
Changes in working capital:
Inventories
Trade and other receivables
Trade and other payables
Cash (utilised in)/generated from operations
Interest paid
Taxation paid
Net cash (utilised in)/generated from operating activities
Cash flows from investing activities
Acquisition of subsidiaries
Proceeds from disposal of subsidiaries
Purchase of property, plant and equipment
Investment in intangible assets
Proceeds from sale of property, plant and equipment
Dividends received from associates and subsidaries
Net cash generated from/(utilised in) investing activities
Cash flows from financing activities
Issue of ordinary shares to equity shareholders
Repayment of principal of leases
Dividends paid to owners of the Parent
Net cash utilised in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 117 to 175 are an integral part of these Group financial statements.
31 October
2022
£’000
31 October
2021
£’000
Notes
57,111
–
209
(15)
(56,511)
914
1,708
2,123
(110)
2,956
(125)
(338)
(3,676)
(6,448)
(3,911)
(194)
(125)
(4,230)
–
–
(7,095)
(5)
450
56,511
49,862
28
(844)
(35,497)
(36,313)
9,319
4,002
13,321
2,050
36
247
(76)
–
311
2,568
3,436
31
–
(848)
(230)
5,455
(3,362)
7,049
(283)
(2,373)
4,394
(2,440)
1,050
(4,387)
–
450
76
(5,251)
–
(1,020)
–
(1,020)
(1,877)
5,879
4,002
114
ME Group plc Annual Report 2022Financial Statements Group Statement of Changes in Equity
For the period ended 31 October 2022
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Translation
reserve
£’000
Retained
earnings
£’000
1,889
10,599
1,781
14,533
83,379
–
–
21,713
Attributable
to owners of
the Parent
£’000
Non-
controlling
interests
£’000
Total
£’000
112,181
21,713
1,689
113,870
139
21,852
–
(6,879)
–
(6,879)
(108)
(6,987)
At 1 November 2020
Profit for the period
Other comprehensive
(expense)/income:
Exchange differences
Remeasurement losses in defined
benefit pension scheme and other
post-employment benefit obligations
Deferred tax on remeasurement gains
Total other comprehensive
(expense)/income
Total comprehensive (expense)/income
Transactions with owners of the Parent:
Share options
Dividends
Total transactions with owners of
the Parent
At 31 October 2021
At 1 November 2021
Profit for the period
Other comprehensive (expense)/income:
Exchange differences
Remeasurement losses in defined
benefit pension scheme and other
post-employment benefit obligations
Deferred tax on remeasurement gains
Total other comprehensive
(expense)/income
Total comprehensive (expense)/income
Transactions with owners of the Parent:
Shares issued in the period
Share options
Dividends
Acquisition of minority
Total transactions with owners of
the Parent
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,889
1,889
10,599
10,599
1,781
1,781
–
–
–
–
–
–
28
–
–
–
–
–
–
–
–
–
884
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
560
(94)
560
(94)
–
–
560
(94)
(6,879)
466
(6,879)
22,179
(6,413)
15,300
(108)
(6,521)
31
15,331
–
–
–
493
–
493
7,654
106,051
7,654
106,051
–
38,793
493
–
493
127,974
127,974
38,793
–
–
–
493
–
493
1,720
129,694
1,720
129,694
–
38,793
840
–
840
(11)
829
–
–
1,151
(248)
1,151
(248)
–
–
1,151
(248)
840
840
903
39,696
1,743
40,536
(11)
(11)
1,732
40,525
–
–
–
–
–
–
28
884
(35,497)
(35,497)
–
–
–
28
884
(35,497)
(1,276)
(1,276)
(1,709)
(2,985)
28
884
–
(36,773)
(35,861)
(1,709)
(37,570)
At 31 October 2022
1,899
10,627
2,665
8,494
108,974
132,649
–
132,649
The notes on pages 117 to 175 are an integral part of these Group financial statements
115
ME Group plc Annual Report 2022Financial Statements Company Statements of Changes in Equity
For the period ended 31 October 2022
At 1 November 2020
Profit for the period
Other comprehensive expense
Total other comprehensive expense
Total comprehensive income for the period
At 31 October 2021
At 1 November 2021
Profit for period
Other comprehensive gain
Total other comprehensive gain
Total comprehensive income
Transactions with owners of the Parent
Shares issued in the period
Capital contributions relating to share-based
payments (net)
Dividends
Total transactions with the Parent
At 31 October 2022
Share
capital
£’000
1,889
–
–
–
–
Share
premium
£’000
10,599
–
–
–
–
1,889
1,889
10,599
10,599
–
–
–
–
–
–
–
–
–
–
–
–
28
–
–
28
Other
reserves
£’000
2,207
–
–
–
–
2,207
2,207
–
–
–
–
–
521
–
521
1,899
10,627
2,728
Retained
earnings
£’000
45,632
785
(12)
(12)
773
46,405
46,405
57,824
11
11
Total
£’000
60,327
785
(12)
(12)
773
61,100
61,100
57,824
11
11
57,835
57,835
–
–
(35,497)
(35,497)
68,743
28
521
(35,497)
(34,976)
83,987
116
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements
For the 12 months ended 31 October 2022
General information
ME Group International plc (the “Company”) is a public
limited company incorporated and registered in England
and Wales and whose shares are quoted on the London
Stock Exchange, under the symbol MEGP. The registered
number of the Company is 735438 and its registered office
is at Unit 3B, Blenheim Rd, Epsom, KT19 9AP. The principal
activities of the Group continue to be the operation, sale,
and servicing of a wide range of instant-service
equipment. The Group operates coin-operated automatic
photobooths for identification and fun purposes, and a
diverse range of vending equipment, including digital
photo kiosks, laundry machines, and business service
equipment, and amusement machines.
Authorisation of the financial statements and statement
of compliance with IFRSs
The Group and the Company financial statements of ME
Group International plc (the “Company”) for the period
ended 31 October 2022 were authorised for issue by the
Directors on 27 February 2023 and the statements of
financial position were signed by S. Crasnianski, Chief
Executive Officer and J. Lewis, Non-executive Chairman.
The Company is a public limited company incorporated
and registered in England and Wales and whose shares are
quoted on the London Stock Exchange, under the symbol
MEGP. The registered number of the Company is 735438
and its registered office is at Unit 3B, Blenheim Rd, Epsom,
KT19 9AP. The principal activities of the Group are shown
on page 68.
The financial statements have been prepared in
accordance with UK-adopted international accounting
standards and in conformity with the requirements of the
Companies Act 2006.
Change of company name
On 1 August 2022 the Company changed its name from
Photo-Me International Plc to ME Group International Plc.
On the same date, the Company’s London Stock Exchange
symbol changed from PHTM to MEGP.
Accounting policies
1
The principal accounting policies adopted in the
preparation of the Group’s consolidated financial
statements and the Company’s individual financial
statements are set out below. The policies have been
consistently applied, unless otherwise stated, to all of the
statements presented. New standards adopted for this
financial period are shown in note 2 on page 127.
Basis of preparation
1.1
The consolidated financial statements have been
prepared in accordance with UK-adopted international
accounting standards under the historical cost convention
except for certain financial instruments held at FVTPL.
Going concern
The financial statements of the Group and the Parent
Company have been prepared on the going concern basis.
In reaching this conclusion, the Directors have reviewed
detailed budgets, which reflect, where applicable, the
current economic conditions, with regard to the level of
demand for the Group’s and Parent Company’s
produced equipment, the level of consumer confidence
including the potential prolonged impact of the COVID 19
pandemic and cash flow forecasts for at least the next
twelve months.
Directors assessed the Group’s and Parent Company’s
going concern by stress testing four scenarios and their
projected financial impact over a five-year period. The
Directors’ have used the five-year business plan in this
assessment which covers a period of 12 months for the
assessment of going concern and a period of five years for
the assessment of viability. The following scenarios
were tested:
Scenario 1:
The budget, elaborated with each country manager and
validated by the top management, which we consider as
the best scenario.
117
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Accounting policies continued
1
Scenario 2:
The “most likely scenario” is based on the budget, but with
the following sensitivities added:
▪ A 10% decrease in machine installations due to supply
chain issues,
▪ A 5% price increase in spare parts and consumables
▪ A 10% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 2% drop in revenue due to the ongoing COVID
pandemic.
▪ This scenario does not consider the potential impact of
new regulations regarding photo identification or
permission of selfies as official photos within the five
year forecast.
Scenario 3:
The “mild” scenario is based on the budget, but with the
following sensitivities:
▪ A 20% decrease in machine installations due to supply
chain issues,
▪ A 10% price increase in spare parts and consumables
▪ A 20% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 3% drop in revenue due to the ongoing COVID
pandemic.
▪ Revenue is reduced by 2% each year due to the
potential impact of new regulations regarding photo
identification or permission of selfies as official photos.
Scenario 4:
The “worst case” scenario is based on the budget, but with
the following sensitivities:
▪ A 30% decrease in machine installations due to supply
chain issues,
▪ A 20% price increase in spare parts and consumables
▪ A 30% increase in paper costs
▪ A 3% drop in total revenue due to loss of key accounts
▪ A 5% drop in revenue due to the ongoing COVID
pandemic.
▪ Revenue is reduced by 5% each year due to the
potential impact of new regulations regarding photo
identification or permission of selfies as official photos.
In all four scenarios, exchange rate assumptions are as per
the budget. The forecasts assume payment of dividends in
line with the groups policy.
In all four scenarios tested, the Group continues to comply
with its bank covenants and loan repayment terms and is
in a strong financial position after five years.
Management do not expect the Ukrainian conflict to have
any impact on the business. The group has no activity in
this region.
Management does not consider interest rate risk to be a
threat to the Group’s going concern, as all current debt is
at fixed rates and the forecasts indicate no requirement
for new debt facilities.
As a result, the cash flow projections indicate that the
Group and the Parent Company will remain within their
available banking facilities over the 12 months from signing
these financial statements. Additional information on
these facilities is provided in note 15.
Critical accounting estimates and key judgements
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately
below), that the Directors have made in the process of
applying the Group’s accounting policies and that have the
most significant effect on the amounts recognised in the
financial statements.
Development costs – notes 1.4 and 11.
1)
Management determine when the criteria for
capitalisation of development costs have been met
including commercial viability and ability to reliably
measure costs as an intangible asset based on discounted
expected cash flows. Judgement is required in
determining the practice for capitalising development
costs and is required in assessing whether the
development costs meet the criteria for capitalisation. This
judgement has been applied consistently year to year.
Application of IFRS16 to site agreements – note 1.7
2)
The Group operates vending units which are deployed
under a fee-paying agreement with the site owner. These
agreements vary widely in their terms and conditions. Due
to the high volume of such agreements, the accounting
impact is material to the Group. Management assesses, on
agreement-by-agreement basis, whether the criteria for
recognition as a lease under IFRS 16 has been met, which
requires judgement. This judgement has been applied
consistently year to year.
118
ME Group plc Annual Report 2022Financial Statements Group and Company
The following are areas of estimation uncertainty:
1)
Goodwill and other intangible assets – notes 1.4,
1.8 and 11
The recoverable amount of cash generating units (CGUs)
has been determined by management on a value in use
basis. These calculations require estimates by
management, including management’s expectations of
future growth in revenue, costs and profit margins, cash
flows and discount rates.
The carrying value of goodwill and intangible assets at the
period end were £17,116,000 and £15,620,000 respectively.
For both goodwill and intangible assets, we have used for
impairment tests the discounted cash flows method to
evaluate the asset value. Value in use was determined by
discounting the future cash flows of the CGU. Cash flows
include a forecast period of five years, based on actual
operating results, budgets and economic market research
with a terminal value based on a long-term growth rate
applied thereafter. The Growth rate assumption for all
CGUs was 1%.
WACC discount rates were calculated for each territory
and ranged between 9.7% and 14.2%. Further details of
impairment testing are disclosed in note 11.
Goodwill impairments are not reversed or adjusted.
2)
Useful lives and Impairment of property, plant and
equipment – notes 1.5, 1.8, 12 and 13
Management make estimates of the useful life of
property, plant and equipment as disclosed below in
notes 1.4 and 1.5. Technological developments and
regulatory changes can impact on the lives of the vending
estate. Management consider these factors in assessing
the useful lives of the assets.‘
Each of the Group’s vending machine units is considered a
standalone cash generating unit. The COVID 19 pandemic
negatively impacted the cash generation of vending units,
indicating potential impairment at that point in time.
Consequently, at 31 October 2020 each unit was subject to
impairment testing, based on each individual unit’s
projected EBITDA, as described in note 12. Impairment
charges were recognised where value in use of a unit was
lower than its carrying value.
At 31 October 2021 and 31 October 2022 all units were
subject to updated impairment tests and impairments
were updated accordingly. Where impairment tests
indicated a reduced level of impairment, the impairment
held was reduced, with care taken to ensure that the
closing net book value did not exceed what it would have
been had the original impairment never occurred. Further
details are disclosed in note 12.
The carrying value of property, plant and equipment at the
period end was £101,090,000.
Valuation of pension obligations – note 1.13 and 22
3)
The Group operates pension and other retirement and
post-employment schemes including both funded
defined benefit schemes, and defined contribution
schemes. The schemes’ assets and liabilities are valued
annually by third party actuaries, in accordance with IAS19.
Pension valuations are subject to estimation and
uncertainty due to the complex nature of actuarial
assumptions. Management reviews the appropriateness
of the actuaries’ assumptions each year as part of the
valuation process.
The carrying value of the Group’s pension and retirement
obligations at the period end was £3,850,000.
4)
Determination of discount rates for lease
accounting – notes 1.7 and 12
To calculate the value of right of use assets and lease
liabilities recognised in the Statement of Financial
Position, management must determine an appropriate
discount rate to apply to the cashflows of each lease
agreement. Discount rates are subject to uncertainty and
estimation as they are based on numerous external inputs
and assumptions.
Management determines discount rates using the Group’s
external cost of borrowing adjusted for timing of
borrowing, lease term, country and currency impacts. An
asset specific adjustment is also applied to tailor the
discount rate to the specific characteristic of the leased
asset. For the purpose of determining asset specific
adjustments leases have been organised into pools of
similar leased asset types.
Management obtained expert external advice on the
determination of appropriate discount rates for the year
ended 31 October 2022. The discount rates used range
between 0.05% and 2.29%.
Basis of consolidation
1.2
The Group consolidates the financial statements of the
Company and all of its subsidiaries, and includes
associates under the equity method, as at each year end.
119
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Accounting policies continued
1
Subsidiaries
Subsidiaries are all entities controlled by the Group. The
Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity. In assessing control, the Group
takes into consideration potential voting rights that are
currently exercisable. The acquisition date is the date on
which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the
consolidated financial statements from the date that
control commences until the date on which control ceases.
Losses applicable to non-controlling interests in a
subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to
have a negative balance.
If the business combination is achieved in stages, the
carrying value of the acquirer’s previously held interest in
the acquiree is re-measured to fair value at the acquisition
date, with such gains or losses arising from re-
measurement recognised in profit and loss.
Transactions eliminated on consolidation
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
eliminated. Unrealised gains arising from transactions with
equity-accounted investees are eliminated against the
investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no
evidence of impairment. Where necessary, subsidiaries’
accounting policies have been changed to ensure
consistency with the Group’s policies.
The principal subsidiaries affecting the results and
financial position of the Group are shown in note 28.
Changes in ownership of subsidiaries and loss of control
Changes in the Group’s interest in a subsidiary that do not
result in loss of control are accounted for as equity
transactions.
Where the Group loses control of a subsidiary, the assets
and liabilities are derecognised along with any related non
controlling interest and other components of equity. Any
resulting gain or loss is recognised in profit and loss. Any
interest retained in a subsidiary is measured at fair value
when control is lost.
The Group uses the acquisition method to account for
business combinations. Acquisition costs for business
combinations are expensed as incurred. The consideration
transferred for the acquisition of a subsidiary is the fair
value of the assets acquired, the liabilities incurred to the
former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable
assets acquired and liabilities and contingent liabilities
assumed in a business combination are initially measured
at their fair values on acquisition date. The Group
recognises any non-controlling interest in the acquiree on
an acquisition-by-acquisition basis, either at fair value or
at the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
Associates
Associates are those entities in which the Group has
significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to
exist when the Group holds between 20% and 50% of the
voting power of another entity.
Application of the equity method to associates and
joint ventures
Associates are accounted for using the equity method
(equity accounted investees) and are initially recognised at
cost. The Group’s investment includes goodwill identified
on acquisition, net of any accumulated impairment losses.
The consolidated financial statements include the Group’s
share of the total comprehensive income and equity
movements of equity accounted investees, from the date
that significant influence or joint control commences until
the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in an
equity accounted investee, the Group’s carrying amount is
reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has
incurred legal or constructive obligations or made
payments on behalf of an investee.
The principal associates affecting the results and financial
position of the Group are shown in note 28.
120
ME Group plc Annual Report 2022Financial Statements Non-controlling interests
Non-controlling interests represent the portion of results
for the period and net assets not held by the Group.
They are presented separately within the statement
of comprehensive income and the statement of
financial position.
The Group treats transactions with non-controlling
interests as transactions with equity owners of the Group.
When a non-controlling interest is acquired by the Group,
any difference between the consideration paid and the
accumulated value of the non-controlling interest is
recognised in equity. Gains or losses on disposal of
non-controlling interests are also recognised in equity.
companies and any related foreign exchange contracts
where settlement is neither planned nor likely to occur in
the foreseeable future. Such cumulative exchange
differences are released to the income statement on
disposal of the subsidiary or associate.
Intangible assets
1.4
Goodwill
Goodwill represents the excess of cost of an acquisition of
a subsidiary or associate over the fair value of the Group’s
share of net identifiable assets at the date of acquisition.
Goodwill on acquisition of associates is included in
investment in associates and impairments thereof in
administrative expenses in the income statement.
Foreign currency translation
1.3
The consolidated financial statements and the Company’s
own financial statements are presented in Sterling being
the functional and presentational currency of the Parent
Company and all values are shown in £’000 except
where indicated.
Goodwill is not amortised but is tested annually for
impairment or more frequently if events or changes in
circumstances indicate that the carrying amounts may be
impaired and is carried at cost less any impairment. On
disposals, goodwill is included in the calculation of gains or
losses on the sale of the previously acquired entity.
Transactions in foreign currencies are translated into the
respective functional currencies of the Group’s
subsidiaries at the exchange rate ruling on the date the
transaction is recorded. Monetary assets and liabilities
denominated in foreign currencies are translated using the
exchange rates ruling at 31 October. Exchange gains and
losses resulting from the above translation are reflected in
the income statement, except where they qualify as cash
flow hedges and are reflected in equity. There were no
qualifying cash flow hedges in 2022 or 2021.
Income statements of overseas entities are translated into
Sterling, at weighted average rates of exchange, as a
reasonable approximation to actual exchange rates at the
date of the transaction and their statements of financial
position are translated at the exchange rate ruling at
31 October. Exchange differences arising on the translation
of opening net assets are taken to equity, as is the
exchange difference on the translation of the income
statement between average and closing exchange rates.
For this purpose, net assets includes loans between group
For the purposes of impairment testing, goodwill is
allocated to cash-generating units. Each of these units
represents the Group’s investment in operating subsidiary.
Research and development expenditure
Research and Development costs are accounted for in line
with all relevant criteria as mandated by IAS 38 Intangible
Assets. Research expenditure is expensed as incurred.
Costs incurred in developing projects are capitalised as
intangible assets when it is considered that the
commercial viability of the project will be a success based
on discounted expected cash flows, and the costs can be
reliably measured. Other development costs are
expensed and are not recognised as assets.
Other intangible assets
Intangible assets (including research and development)
acquired as part of a business combination are capitalised
at fair value at the date of acquisition. Other intangibles
are capitalised at cost.
121
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Accounting policies continued
1
The policies applied to the Group’s intangible assets are summarised as follows:
Useful lives
Amortisation
Development costs
Finite
Software
Finite
Customer related
Finite
Patents and licences Droit au Bail
Finite
Indefinite
Straight-line basis,
with a maximum life
of three years, with
no residual value
Straight-line basis,
with a maximum life
of four years from
commencement of
commercial
production, with no
residual value
Customer related
intangible assets are
amortised over their
useful lives of
between three and
10 years on a
straight-line basis
with no residual
value
Patents and licence
assets are amortised
over their useful
lives of between
seven and 10 years
on a straight-line
basis with no
residual value
Not amortised but
subject to
impairment testing
annually
Internally generated
or acquired
Internally generated Acquired
Acquired
Acquired
Acquired
Investment property
1.6
Certain of the Group’s properties are classified as
investment properties; being held for long-term
investment and to earn rental income. Investment
properties are stated at cost and the building element is
depreciated to reduce cost to its estimated residual value
at rates between 3.33% and 8.33% on a straight-line basis.
Leases
1.7
The Group has arrangements across three main categories
that meet the definition of a lease under IFRS 16: site
agreements, property and motor vehicles. The Group
assesses whether a contract is or contains a lease at
inception of the contract. The Group recognizes a right-
ofuse asset and corresponding lease liability at the lease
commencement date, except for short term leases and
leases of low value. For these leases, the lease payments
are recognized as an operating expense on a straight-line
basis over the term of the lease.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liabilities
adjusted for any lease payments made at or before the
commencement date, plus any initial costs incurred. The
right-of-use assets are subsequently measured at cost less
accumulated depreciation and impairment losses. The
right-of-use assets are from the commencement date
depreciated over the shorter period of lease term and
useful life of the underlying asset. The estimated useful
lives of right-of-use assets are determined on the same
basis as those of property and equipment.
Amortisation of capitalised development costs are
included in the cost of sales. Amortisation of other
intangible assets categories is included in both the
cost of sales and administration expenses in the
income statement.
Property, plant and equipment
1.5
Property, plant and equipment is shown at cost, less
accumulated depreciation and any impairment.
Subsequent expenditure on property, plant and
equipment is capitalised, either as a separate asset, or
included in the cost of the asset, as appropriate, only when
it is probable that future economic benefits associated
with the item will flow to the Group and the cost can be
measured reliably. The carrying amount of any parts of the
assets that are replaced are derecognised. All other costs
are recognised in the income statement as an expense
as incurred.
Freehold land is not depreciated. Other assets are
depreciated on a straight-line basis, to reduce cost to the
estimated residual value over the estimated useful life of
the asset at the following rates:
Freehold buildings
Photobooths and
vending machines
Right of use assets
Plant, machinery,
furniture, fixtures and
motor vehicles
2% – 5% straight-line
10% – 33.33% straight-line
Depreciated over the lease
term.
12.5% – 33.33% straight-line.
The assets’ residual values and useful lives are reviewed at
each year end and adjusted, if appropriate.
Operating equipment assets are reviewed at least annually
for impairment testing.
122
ME Group plc Annual Report 2022Financial Statements The lease liabilities are initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the relevant
country discount rate. Lease Liabilities are adjusted for
certain re-measurement events, e.g. revised discount rate,
change in the lease term or change in future lease
payments resulting from a change in an index. Discount
rates are determined using the Group’s external cost of
borrowing adjusted for timing of borrowing, lease term,
country and currency impacts. An asset specific
adjustment is also applied to tailor the discount rate to the
specific characteristic of the leased asset. For the purpose
of determining asset specific adjustments leases have
been organised into pools of similar leased asset types.
Site agreements
The Group operates vending units which are deployed
under a fee-paying agreement with the site owner. These
agreements vary widely in their terms and conditions. The
Group examines, on an individual basis, the degree to
which these agreements meet the definition of a lease
under IFRS 16, with particular regard to the presence of an
identified asset with no substitution rights. While the
standard sets out the definition of a lease, judgement is
required in assessing the degree to which those criteria are
met, particularly with regard to the presence of an
identified asset with no substitution rights.
Non-IFRS16 leases
Some of the Group’s lease arrangements do not meet the
criteria for IFRS16 treatment (eg variable rent, site owners
have the control on the machine location or ME Group can
stop a contract with a short period notice at any time) and
are de facto accounted for as operating costs.
Impairment
1.8
For goodwill and intangible assets with indefinite lives, the
carrying value is reviewed annually for impairment or
more frequently if events or changes in circumstances
indicate that the carrying amounts may be impaired.
Other intangible assets and property, plant and
equipment are reviewed for impairment losses whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable. If the carrying
value of the asset is higher than the recoverable amount of
the asset an impairment loss is recognised. In carrying out
such impairment evaluations the recoverable amount is
the higher of the asset’s value in use or its fair value less
costs to sell. Assets that do not generate largely
independent cash inflows are grouped at the lowest level
for which separately identifiable cash flows exist (cash-
generating units) and the recoverable amount is
determined for the cash-generating unit (CGU). If
necessary, the carrying value is reduced by charging an
impairment loss in the income statement.
These impairments are shown under “Administrative
expenses” on the Statement of Comprehensive income.
Reversal of impairment
Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but so that it does not
exceed the carrying amount that would have been
determined had no impairment loss been recognised. No
impairment loss is reversed for goodwill or intangible
assets with indefinite lives.
Financial instruments
Financial assets
1.9
(i)
Classification of financial assets
Financial instruments are classified based on the Group’s
business model for managing financial assets and the
contractual cash flow characteristics of the financial asset.
Trade receivables
(a)
Trade receivables are initially measured at fair value,
and subsequently at their amortised cost as reduced
by appropriate allowances for estimated
irrecoverable amounts.
(b)
Financial assets held at amortised cost
Initially recognised at fair value and subsequently
measured at amortised cost using the effective interest
method. The amortised cost is reduced by any impairment
losses. Interest income, foreign exchange gains and losses
and impairments are recognised in the income statement.
Any gain or loss on derecognition is recognised in the
income statement.
Financial assets at fair value through profit or loss
(c)
Financial assets in this category are initially recorded and
subsequently valued at fair value, with changes in fair
value recognised in the income statement.
For investments designated as financial assets at fair value
through profit or loss, the fair values of quoted
investments are based on current bid prices. For unlisted
investments the Group uses various valuation techniques
to determine fair values.
123
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Accounting policies continued
Financial liabilities
Borrowings
1
(ii)
(a)
Borrowings are recorded initially at the fair value of the
consideration received net of directly attributable
transaction costs.
After initial recognition, borrowings are subsequently
measured at amortised cost using the effective interest
rate method. This method includes any initial issue costs
and discounts or premiums on settlement. Finance costs
on the borrowings are charged to the income statement
under the effective interest rate method.
Financial liabilities are derecognised when the obligation
under the liability is cancelled, discharged or has expired.
Trade and other payables
(b)
Trade payables are initially recorded at fair value and
subsequently recorded at amortised cost using the
effective interest rate method.
1.10 Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost includes costs incurred in bringing
inventories to their present location and condition. The
cost of work-in-progress and finished goods includes an
appropriate proportion of production overheads.
Finished goods also include operating equipment not
yet sited.
Raw materials and consumables are valued on a first-in
first-out basis or on an average cost basis where average
cost is not significantly different to first-in first-out due to
the fast turnaround of consumables. The Group uses
standard costs to value inventory and these standard
costs are regularly updated to reflect current prices.
Inventories are stated net of provisions for slow moving
and obsolete inventory based on expected future usage.
Cash and cash equivalents
1.11
Cash and cash equivalents are carried in the statements of
financial position at cost. Bank overdrafts are included
within borrowings in current liabilities in the statements of
financial position. For the purposes of the statements of
cash flows, cash and cash equivalents comprises cash on
hand, restricted and unrestricted deposits held at banks
and other highly liquid investments with an original
maturity of three months or less, less bank overdrafts.
124
Share capital
1.12
Shares of the Company are classified as equity.
Where the Company acquires its own equity share capital
(treasury shares), the consideration paid, including any
directly attributable incremental costs (net of tax relief), is
deducted from equity attributable to the Company’s
equity shareholders until the shares are either cancelled or
subsequently reissued. The amount is shown in equity as
treasury shares. Where such shares (the treasury shares)
are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs
and the related income tax effects, is included in equity
attributable to the Company’s equity holders.
Employee benefits
1.13
Pension obligations
Group companies have various pension schemes in
accordance with local conditions and practices in the
countries in which they operate.
The Company operates a defined benefit pension
scheme, which is closed to new entrants, with
contributions made by employees and the Company with
defined benefits being based upon the employee’s length
of service and final pensionable salary. The Company also
operates a defined contribution pension scheme.
Defined benefit scheme
Details of the pension schemes are included in note 22.
The net obligation for the Group’s defined benefit pension
schemes is calculated for each scheme separately by
estimating the future benefit that employees have earned
in the current and prior periods, discounting that amount
and deducting the fair value amount of plan assets. The
calculation is performed by independent actuaries using
the projected unit credit actuarial method. If this
calculation results in a potential asset for the Group, this
asset is only recognised to the present value of the
economic benefits available in the form of a refund of
contributions paid to the fund or reductions in future
contributions. In calculating the present value of any
economic benefit consideration is given to any minimum
funding requirements.
ME Group plc Annual Report 2022Financial Statements Termination benefits
Termination benefits are recognised in the income
statement in the period when the Group is demonstrably
committed to the termination of employment or to
provide termination benefits as a result of an offer made
to encourage voluntary redundancy.
Short-term employee benefits
The Group recognises a liability and an expense for
short-term employee benefits (such as holiday pay,
bonuses and profit sharing) where these obligations
contractually arise (for example, as a result of employment
contracts) or where a constructive obligation has arisen
from past practice.
Provisions
1.14
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to
settle the obligation and a reliable estimate can be made.
Provisions are discounted where the effect of the time
value of money is material.
Taxation
1.15
Tax expense for the current period comprises current and
deferred tax and is recognised in the income statement,
except to the extent that it relates to items recognised in
other comprehensive income or equity. The current tax
charge is calculated on the basis of the laws enacted or
substantively enacted at the statement of financial
position date in the countries where the Group operates.
Deferred tax is provided in full on temporary differences
arising between the tax base of assets and liabilities and
their carrying value in the accounts.
Deferred tax is measured on an undiscounted basis at the
tax rates that are expected to apply in future periods in
which the temporary difference will reverse, based on tax
rates and laws enacted or substantively enacted at the
year end.
Deferred tax assets are recognised to the extent that it
is probable that the future taxable profit, against which
the deductible temporary differences can be utilised, will
be available.
Re-measurement of the net liability, which comprises
actuarial gains and losses, the return on plan assets
(excluding interest) and the effects of any asset ceiling, are
recognised in other comprehensive income. The Group
determines the net interest expense (income) on the net
liability (asset) for the period by applying the discount rate
used to measure the defined benefit obligation at the
beginning of the period to the then net defined liability
(asset), taking into account changes in the period as a
result of contributions and pension benefits paid. Other
expenses are charged to profit and loss.
When plan benefits are changed or the plan curtailed, the
resulting change in benefit that relates to past service or
the gain or loss on curtailment is recognised in profit and
loss. Gains and losses on settlement of any plan are
recognised when settlement occurs.
Defined contribution scheme
Contributions to defined contribution schemes are
expensed as incurred.
Other post-employment benefits
In addition to the pension schemes noted above,
contracts of employment in certain Group companies
require provision to be made for employee retirements.
These provisions are based on local circumstances, length
of service and salaries of the employees concerned. They
are included in post-employment benefit obligations and
shown in note 22 as other retirement provisions.
Equity compensation benefits
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date of
grant, determined using the Black-Scholes model. The fair
value is expensed on a straight-line basis over the vesting
period, based on management’s estimate of the number
of shares that will eventually vest. The Group does not
have options with market conditions.
On exercise of the option the proceeds received are
allocated to share capital (nominal value of shares) and
share premium.
The grant by the Company of options over its equity
instruments (shares) to the employees of subsidiary
undertakings in the Group is treated as a capital
contribution. The fair value of the employee services
received, measured by reference to the grant date fair
value, is recognised over the investing period as an
increase to the investment in subsidiary undertakings with
a corresponding credit to other reserves in equity.
Details of equity compensation benefits are included in
note 20.
125
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Accounting policies continued
1
Deferred tax is provided, or an asset recognised, on
taxable temporary differences arising on investments in
subsidiaries and associates, except where the timing of the
reversal of the temporary difference can be controlled and
it is probable that the temporary difference will not
reverse in the foreseeable future.
Current tax assets and liabilities are measured at the
amounts expected to be recovered from, or paid to, the
taxation authorities, based on tax rates and laws that are
enacted or substantively enacted at year end.
▪ Revenue from the provision of services, principally
maintenance contracts, is recognised at the time the
service is delivered to the customer. Services are sold
on their own as stand-alone products with no
unbundling required. Revenue is the fair value of
consideration received or receivable and is measured
net of discounts, VAT and other sales-related taxes.
Revenue is recognised in a straight line manner over
the maintenance contract term. Payment is typically
due and received 30 days after the delivery of the
service is complete. Contract terms do not exceed one
year in length
1.16 Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief
Operating Decision Maker as required by IFRS 8 Operating
Segments. Details of the segments are shown in note 3.
1.18 Dividend distributions
Dividends to the Company’s shareholders are recognised
as a liability and deducted from shareholders’ equity in the
period in which the shareholders’ right to receive payment
is established.
1.19 Company investments
In the Company statement of financial position,
investments in subsidiaries and associates are stated at
cost less impairment. The Company reviews, at least
annually, the carrying value of investments and performs
an impairment exercise.
An impairment charge is made where there is evidence
that the carrying value exceeds the future cash flows of
the investment or where its carrying amount will not be
recovered from sale.
Revenue recognition
1.17
There are 3 types of revenue considering by the Group:
▪ Vending revenue from the operating machines is
recognised when the services are provided which is
when payment is received. Vending revenue is total
consideration received during the period including that
held in machines at the statement of financial position
date. There are no vending transactions requiring
unbundling of components. Revenue is the fair value of
consideration received or receivable and is measured
net of discounts, VAT and other sales-related taxes.
Payment is received immediately before the service is
delivered to the customer
▪ Revenue from the sale of equipment, spare parts and
consumables is recognised upon delivery of products
and acceptance, if applicable, by the customer.
Equipment, spare parts and consumables are sold on
their own and no unbundling is required for accounting
purposes. Revenue is the fair value of consideration
received or receivable and is measured net of
discounts, VAT and other sales-related taxes. Payment
is typically due and received 30 days after the delivery
of the product.
The Group offers a two year warranty on all machines
sold and is responsible for any repairs required in
that period
126
ME Group plc Annual Report 2022Financial Statements New standards, amendments and interpretations
2
New accounting standards
Adopted by the Group
The Group has adopted the following new standards and amendments for the first time in these financial statements
with no material impact.
▪ Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
▪ COVID-19-Related Rent Concessions beyond 20 June 2021 (Amendment to IFRS 16
Not yet adopted by the Group
Certain new accounting standards and interpretations have been published that are not mandatory for the current period
and have not been early adopted by the Group. These new standards and interpretations, which are not expected to have
a material effect on the Group, are set out below.
Description
Onerous Contracts Cost of Fulfilling a Contract (Amendments to IAS 37)
Annual Improvements to IFRS Standards 2018-2020
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3)
IFRS 17 Insurance Contracts
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
Definition of Accounting Estimate (Amendments to IAS 8)
Date required to be
adopted by the Group
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
Segmental analysis
3
IFRS 8 requires operating segments to be identified, based on information presented to the Chief Operating Decision
Maker (CODM) in order to allocate resources to the segments and monitor performance. The Group reports its segments
on a geographical basis: Asia Pacific, Continental Europe and United Kingdom & Ireland. The Group’s Continental Europen
operations are predominately based in Western Europe and, with the exception of the Swiss operations, use the Euro as
their domestic currency. The Board, being the CODM, believe that the economic characteristics of the European
operations, together with the fact that they are similar in terms of operations, use common systems and the nature of the
regulatory environment allow them to be aggregated into one reporting segment.
Segmental results are reported before intra-group transfer pricing charges.
Asia
Pacific
£’000
Continental
Europe
£’000
39,945
–
39,945
9,094
(7,136)
1,958
187,897
(10,058)
177,839
75,497
(24,234)
51,263
United
Kingdom
& Ireland
£’000
41,996
–
41,996
15,388
(3,868)
11,520
Corporate
£’000
–
–
–
(7,738)
(322)
(8,060)
12 months ended 31 October 2022
Total revenue
Inter segment sales
Revenue from external customers
EBITDA
Depreciation, amortisation and impairment
Operating profit/loss excluding associates
Operating profit
Other losses
Finance income
Finance costs
Profit before tax
Tax
Profit for the period
Capital expenditure (excluding Right of Use assets)
Non-current assets
4,218
24,870
20,056
90,932
9,522
25,054
1,359
796
Total
£’000
269,838
(10,058)
259,780
92,241
(35,560)
56,681
56,681
(1,176)
–
(2,151)
53,354
(14,561)
38,793
35,156
141,652
127
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
3
Segmental analysis continued
12 months ended 31 October 2021
Total revenue
Inter segment sales
Revenue from external customers
EBITDA
Depreciation, amortisation and impairment
Operating profit/loss excluding associates
Operating profit
Other gains
Finance income
Finance costs
Profit before tax
Tax
Profit for the period
Asia
Pacific
£’000
39,751
–
39,751
8,062
(6,024)
2,038
Continental
Europe
£’000
152,257
(7,248)
145,009
54,809
(25,174)
29,635
United
Kingdom
& Ireland
£’000
29,644
–
29,644
8,587
(3,643)
4,944
Corporate
£’000
–
–
–
(6,381)
(901)
(7,282)
Capital expenditure (excluding Right of Use assets)
Non-current assets
2,993
28,088
20,749
85,150
5,974
18,643
245
(1,419)
Inter-segment revenue mainly relates to sales of equipment.
Total revenue from external customers is analysed below:
Total
£’000
221,652
(7,248)
214,404
65,077
(35,742)
29,335
29,335
1,998
177
(2,955)
28,555
(6,703)
21,852
29,961
130,462
Total revenue from external customers
Sales of equipment, spare parts & consumables
Sales of services
Other sales
Vending revenue
Total revenue
There were no key customers in the period ended 31 October 2022 (2021: none).
Group
12 months
ended
31 October
2022
£’000
12 months
ended
31 October
2021
£’000
20,459
3,895
–
24,355
235,425
259,780
21,013
3,772
130
24,915
189,488
214,404
128
ME Group plc Annual Report 2022Financial Statements Profit for the period
4
Costs and overhead items charged/(credited) in arriving at profit for the period, include the following:
Amortisation, depreciation and impairment
Amortisation of previously capitalised research and development expenditure
Amortisation of intangible assets other than research and development
Impairment of/(reversal of impairment of) previously capitalised research
and development expenditure
Impairment of/(reversal of impairment of) intangible assets other than research
and development
Impairment of goodwill
Depreciation of property, plant and equipment and investment property
Depreciation of owned assets
Depreciation of right of use asset
Impairment of/(reversal of impairment of) owned property, plant and equipment
and investment property
Amortisation of previously capitalised research and development expenditure
– reflected in income statement in cost of sales
Amortisation of intangible assets other than research and development
– reflected in income statement in cost of sales
– reflected in income statement in administrative expenses
Short term and low value leases
– property
– plant and equipment
Inventory cost
Cost of inventories recognised as an expense
During the period the Group provided £288,000 in respect of obsolete stock (2021: £1,268,000).
31 October
2022
£’000
31 October
2021
£’000
2,955
3,664
1,396
(49)
153
(112)
–
–
6,772
25,774
6,445
(3,443)
28,776
3,602
582
5,419
28,767
4,420
(2,875)
30,312
2,955
1,396
3,394
272
6,621
1,181
(1,231)
1,346
31 October
2022
£’000
31 October
2021
£’000
945
825
1,770
6,580
6,580
537
888
1,425
8,537
8,537
129
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
4
Profit for the period continued
Other items
Research and development current period expenditure, not capitalized
Trade receivables impairment/(reduction of impairment) (note 15)
Net foreign exchange losses
Loss/(gain) on sale of property, plant and equipment
Direct expenses for investment properties generating rental income
31 October
2022
£’000
31 October
2021
£’000
1,724
(126)
630
(175)
–
1,463
850
689
(368)
12
Audit and non-audit services
The following fees for audit and non-audit services were paid or are payable to the Company’s auditor, Mazars (2021:
Mazars) and its associates.
Fees for the audit of the company and the group – Mazars LLP
Fees for the audit of the subsidiaries – other Mazars
Fees for the audit related services (interim review) – Mazars
Fees for the audit of the subsidiaries – Other firms
Fees for the audit of the prior year incurred in the year – other firms
31 October
2022
£’000
31 October
2021
£’000
313
39
50
84
486
–
486
232
192
–
83
507
–
507
In order to maintain the independence of the external auditors, the Board has determined policies as to what non-audit
services can be provided by the Company’s external auditors and the approval processes related thereto. This function is
performed by the Audit Committee. No such services were delivered in the year or in the previous year.
In addition to the audit fees payable to the Group’s auditor and its associates, certain Group subsidiaries are audited by
other firms.
Other operating income
Gain on disposal of property
Rental income from investment property (note 13)
Other small items of non-trading income
The Group generated a gain of £7,315,000 from the sale of an office property in France.
31 October
2022
£’000
31 October
2021
£’000
7,315
365
236
7,916
–
98
219
317
130
ME Group plc Annual Report 2022Financial Statements
Other gains and losses
Other gains and losses comprise of transactions relating to financial instruments held at FVTPL, other financial
instruments and the disposal of subsidiaries. They have been disclosed separately in order to improve a
reader’s understanding of the financial statements and are not disclosed within operating profit as they are
non-trading in nature.
Other gains and losses
(Loss)/gain on disposal of subsidiary
Fair value (loss)/gain on financial instrument held at FVTPL
(Loss)/gain on available for sale financial instruments
Other (losses)/gains
31 October
2022
£’000
31 October
2021
£’000
(459)
(330)
(20)
(367)
(1,176)
1,093
546
26
359
1,998
Period ended 31 October 2022
The Group incurred a loss on disposal of £459,000 from the disposal of its Spanish subsidiary La Wash Group, recognized
in other losses in the income statement.
Period ended 31 October 2021
The gain of £1,093,000 related to the disposal of the Group’s investments in Revolution Max Limited and Inox Limited,
previously subsidiary undertakings.
5
Employees
Employment costs
Wages and salaries
Social security costs
Share options granted to directors and employees
Post-employment benefit costs
– defined benefit schemes
– defined contribution schemes
31 October
2022
£’000
41,394
9,017
884
383
265
31 October
2021
£’000
38,920
7,491
493
251
447
51,943
47,602
131
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Employees continued
5
Number of employees
The average number of employees during the period (including executive directors) comprised:
Full – time
Part – time
UK : Full – time
UK : Part – time
Continental Europe : Full – time
Continental Europe : Part – time
Asia and rest of the world : Full – time
Asia and rest of the world : Part – time
Employees by category
Senior managers in the Group (excluding directors of ME Group)
Employees– Sales
Employees-Administration
Employees-Operating
Total
6
Finance income and costs
Finance income
Dividends received from investments
Other financial income
Finance costs
Bank loans and overdrafts at amortised cost
Interest on lease liabilities
31 October
2022
31 October
2021
996
121
1,117
159
4
688
24
149
93
1,117
860
113
973
103
0
625
35
132
78
973
As at
31 October
2022
As at
31 October
2021
27
110
191
789
1,117
31
113
184
645
973
31 October
2022
£’000
31 October
2021
£’000
–
–
–
(714)
(1,437)
(2,151)
104
73
177
(691)
(2,254)
(2,955)
132
ME Group plc Annual Report 2022Financial Statements
Taxation expense
7
Tax charges/(credits) in the statement of comprehensive income
Taxation
Current taxation
UK Corporation tax
– current period
– prior periods
Overseas taxation
– current period
– prior periods
Total current taxation
Deferred taxation
Origination and reversal of temporary differences
– current period – UK
– current period – overseas
Adjustments in respect of prior periods – UK
Adjustments in respect of prior periods – Overseas
Impact of change in rate
Total deferred tax
Tax charge in the income statement
Tax relating to items (credited)/charged to other components of comprehensive income
Corporation tax
Deferred tax
Tax charge in other comprehensive income
Total tax charge in the statement of comprehensive income
31 October
2022
£’000
31 October
2021
£’000
6,104
2,253
8,357
7,200
90
7,290
15,647
(150)
(961)
27
45
(47)
(1,086)
14,561
–
248
248
3,562
(259)
3,303
3,415
259
3,674
6,977
(301)
119
–
–
–
(181)
6,796
–
94
94
14,809
6,890
133
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Taxation expense continued
7
Reconciliation of total tax charge
The difference between the Group tax charge and the standard UK corporation tax rate of 19% (2021: 19%) is
explained below:
Profit before tax
Tax using the UK corporation tax rate of 19% (2021: 19%)
Effect of:
– non-taxable items
– overseas tax rates
– remeasurement of deferred tax for changes in tax rates
– losses not recognised in deferred tax (relieved)/incurred
– non-deductible expenses
– adjustments to tax in respect of prior periods
– foreign exchange movements
– other adjustments
Total tax charge
Effective tax rate
31 October
2022
£’000
53,354
10,137
31 October
2021
£’000
28,555
5,425
405
1,983
(47)
(1,053)
(98)
2,416
–
818
14,561
27.3%
63
354
648
–
–
213
–
6,703
23.8%
The Group tax charge of £14.8m (2021: £6.8m) corresponds to an effective tax rate of 27.7% (2021: 23.8%).
There will be an increase in the main rate of corporation tax in the UK from 19% to 25% from 1 April 2023. The deferred tax
assets and liabilities have been recognised based on the corporation tax rate at which they are anticipated to unwind.
The Group undertakes business in multiple tax jurisdictions.
Profits attributable to members of the parent company
8
The profit for the period, after tax, dealt with in the financial statements of the Parent Company is £57,824,000
(2021: £785,000), including dividends received from subsidiaries.
9
Dividends paid and proposed
31 October 2022
31 October 2021
pence
per share
£’000
pence
per share
£’000
Dividends Paid
Special dividend
Approved by the Board on 18 July 2022
6.50
24,572
Final
2021 approved at AGM held on 29 April 2022
Dividends Proposed
Interim Dividend
2022 approved by the board on 18 July 2022
2.89
9.39
2.60
2.60
10,925
35,497
9,829
9,829
–
–
–
–
–
–
–
–
–
–
134
ME Group plc Annual Report 2022Financial Statements
Period ended 31 October 2022 – Dividends paid
The Board proposed a final dividend of 2.89p per ordinary share in respect of the year ended 31 October 2021, which was
approved by shareholders at the Annual General Meeting held on 29 April 2022 and paid on 13 May 2022.
The Board also approved, at its 18 July meeting, a special dividend of 6.50p per ordinary share, which was paid on
1 September 2022.
Period ended 31 October 2022 – Proposed dividends not yet paid
The Board proposed an interim dividend of 2.60p per ordinary share for the six month period ended 30 April 2022. The
interim dividend was approved by the Board on 18 July 2022 and paid on 3 November 2022.
Period ended 31 October 2021
No dividends were paid in the year ended 31 October 2021.
Earnings per share
10
Basic earnings per share amounts are calculated by dividing net earnings attributable to shareholders of the Parent of
£38,793,000 (2021: £21,852,000) by the weighted average number of shares in issue during the period.
Diluted earnings per share amounts are calculated by dividing the net earnings attributable to shareholders of the Parent
by the weighted average number of shares outstanding during the period plus the weighted average number of shares
that would be issued on conversion of all the dilutive potential shares into shares. The Group has only one category of
dilutive potential shares being share options granted to senior staff, including directors, as detailed in note 20.
The earnings and weighted average number of shares used in the calculation are set out in the table below:
Basic earnings per share
Effect of dilutive share options
Diluted earnings per share
31 October 2022
31 October 2021
Weighted
average
number
of shares
‘000
378,052
1,048
Earnings
£’000
38,793
–
38,793
379,100
Earnings
per share
pence
10.26
(0.03)
10.23
Weighted
average
number
of shares
‘000
378,012
927
Earnings
£’000
21,852
–
21,852
378,938
Earnings
per share
pence
5.78
(0.01)
5.77
Potential shares (for example, arising from exercising share options) are treated as dilutive only when their conversion to
shares would decrease basic earnings per share or increase loss per share from continuing operations.
135
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Goodwill and other intangible assets
11
Goodwill
Group
Cost:
At 1 November 2020
Exchange differences
Additions
Disposals
At 31 October 2021
IFRS remeasurement
At 31 October 2021 (restated)
At 1 November 2021
Exchange differences
Additions
Disposals
At 31 October 2022
Impairment charges:
At 1 November 2020
Exchange differences
Disposals
Impairment charge in the period
At 31 October 2021
At 1 November 2021
Disposals
At 31 October 2022
Net book value:
At 31 October 2021
At 31 October 2022
£’000
19,246
(370)
4,685
(2,826)
20,735
(2,337)
18,398
18,398
204
1,652
(2,523)
17,731
5,478
(141)
(2,826)
582
3,093
3,093
(2,523)
615
15,305
17,116
In the period the purchase price allocation was completed for two acquisitions: Société Générale d’Equipement de
Restauration and Now Retail Group. Brand, patent and customer related intangible assets with a total value of £3,128,000
were identified and transferred from goodwill to intangible assets. A deferred tax liability of £791,000 was recognised in
respect of these intangible assets and added to the value of goodwill. Further details of the purchase price allocation are
provided in note 29.
Additions to and disposals of goodwill in the year are in relation to the following acquisitions of subsidiaries:
Additions
Dreamakers
Disposals:
Global Network Investment SL:
Cost
Impairment
Net book value
£’000
1,652
1,652
£’000
2,523
(2,523)
–
The assessment of the purchase price adjustments in relation to Dreamakers was still in progress at 31 October 2022.
Company
The Company has no goodwill.
136
ME Group plc Annual Report 2022Financial Statements Goodwill by segments
The table below shows the allocation of goodwill acquired through business combinations between segments.
The amount of impairment losses is recognised in Administrative costs.
Goodwill has been allocated for impairment testing purposes to nine (2021: nine) cash-generating units (CGUs); allocated
between geographical areas and activity in accordance with impairment testing in the prior period:
Carrying amount
UK & Ireland
CGU 1 – ME Group Ireland Supplies Limited
CGU 2 – Photo-Me Northern Ireland
Total UK & Ireland
Continental Europe
CGU 1 – ME Group France SAS
CGU 2 – ME Group Germany GmbH
CGU 3 – Sempa SARL
CGU 4 – KIS SAS1
CGU 5 – Dreamakers2
Total Continental Europe
Asia
CGU 1 – Nippon Auto-Photo Kabushiki Kaisha3
CGU 2 – Now Retail Group
Total Asia
Total
31 October
2022
£’000
31 October
2021
£’000
154
14
168
308
1,976
3,374
693
1,692
8,043
7,801
1,104
8,905
17,116
154
14
168
303
1,941
3,299
653
–
6,196
7,854
1,087
8,941
15,305
1 Europe CGU 4 includes goodwill from the acquisition of Resto’Clock, which was merged into KIS SAS on 31st May 2022.
2 This amount is converted at the closing balance FX rate when the amount in the previous table is converted at the FX rate at the date of acquisition
3 Asia CGU 1 includes goodwill from the acquisition of Photo Plaza Co Ltd, which was merged into Nippon Auto-Photo Kabushiki Kaisha on 15th March 2021.
The Group tests annually, for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amount of all CGUs has been determined on a value in use basis.
Value in use was determined by discounting the future cash flows of the CGU. Cash flows include a forecast period of
five years, based on actual operating results, budgets and economic market research with a terminal value based on a
long-term growth rate applied thereafter.
Key assumptions
Long-Term growth rate 1% (2021: 0% to 1%)
The Long-Term growth rate assumption for all Group CGUs was 1%. The Long-Term growth rate has been determined
based on a conservative basis for expected annual growth in EBITDA for each CGU and takes into account revenue,
volumes, selling prices and operating costs. It is based on past experience and expected future developments in
markets and operations, and for the current period taking into account in particular the COVID-19 pandemic and
economic conditions.
Discount rate 9.74%-14.24% (2021: 12.63%-14.50%)
The pre-tax discount rates applied to the cash flow forecasts for the CGUs are derived from the pre-tax weighted average
cost of capital for the Group adjusted for country specific risks, local risk free borrowing rates and local tax rates for the
specific country concerned.
The rates used are: United Kingdom 13.28%, (2021: 13.14%), Ireland 10.40% (2021: 13.39%), France 12.36% (2021: 13.05%),
Germany 11.16% (2021: 12.61%), Spain 14.24% (2021: 13.97%), Japan 10.65% (2021: 13.20%), Portugal 12.29% (2021: 14.50%),
Belgium 10.12% (2021: 13.14%), Netherlands 11.28% (2021: 12.63%), Switzerland 10.00% (2021: 12.67%) and Austria 9.74%
(2021: 12.96%). The Board is confident, overall, that these discount rates reflect the circumstances in each country, and are
in accordance with IAS 36.
137
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Goodwill and other intangible assets continued
11
Sensitivity to key assumptions
As at the measurement date, the recoverable amount of all cash-generating units, based on their value in use, is
significantly higher than the carrying amount relevant for the impairment test. After considering all key assumptions,
management considers that a reasonably pessimistic revision of key assumptions which can rationally be expected would
still cause the carrying amount of the cash-generating units to exceed their recoverable amount.
Other intangible assets – Group
Cost:
At 1 November 2020
Exchange differences
Additions external
Additions new subsidiary
Disposals
At 31 October 2021
IFRS remeasurement
At 31 October 2021 (restated)
At 1 November 2021
Exchange differences
Additions external
Additions new subsidiary
Disposals
At 31 October 2022
Amortisation:
At 1 November 2020
Exchange differences
Provided during the period
Transfer from property, plant and equipment
Disposals
At 31 October 2021
At 1 November 2021
Exchange differences
Provided during the period
Disposals
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Capitalised
development
costs
£’000
Other
intangible
assets
£’000
Total
£’000
12,919
(710)
1,802
–
(1,000)
13,011
–
13,011
13,011
(16)
1,418
–
(6,374)
8,039
9,243
(1,157)
1,284
758
–
10,128
10,128
(31)
3,108
(6,341)
6,864
3,676
2,883
1,175
23,036
35,955
(1,311)
727
7,644
(42)
30,054
3,128
33,182
33,182
(306)
1,068
98
(4,306)
29,736
13,246
(1,066)
3,553
386
(42)
16,077
16,077
(182)
3,664
(4,268)
15,291
9,790
17,105
14,445
(2,021)
2,529
7,644
(1,042)
43,065
3,128
46,193
46,193
(322)
2,486
98
(10,680)
37,775
22,489
(2,223)
4,837
1,144
(42)
26,205
26,205
(213)
6,772
(10,609)
22,155
13,466
19,988
15,620
Capitalised research and development expenditure is amortised over a maximum of four years, with no residual value.
Other intangible assets consist of software (£1,390,000), brands (£665,000), customer related assets (£11,181,000), patents
(£1,089,000) and Droit au Bail (£120,000).
138
ME Group plc Annual Report 2022Financial Statements Research and development
An impairment charge of £153,000 (2021: credit for reversal of impairment of £112,000) is recognised in the line “Costs of
sales”. The impairment charge was made against the intangible assets of KIS SAS (£49,000) and the Photo-Me (Shanghai)
Co Limited (£104,000). Impairment losses were due to a reduction in forecast cash generation of the affected subsidiaries.
Other intangible assets
No impairment charges or reversals were recognised in the year (2021: £3,602,000 impairment charge was recognised in
“Administrative expenses”).
Company
Cost:
At 1 November 2020
At 31 October 2021
Addition
At 31 October 2022
Amortisation:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Other
intangible
assets
£’000
776
776
5
781
776
776
776
0
0
5
Property, plant and equipment
12
Own work capitalised
Some of the Group’s subsidiaries manufacture vending equipment, which is then sold to the Group’s operating
companies and capitalised by them as fixed assets. The amount capitalised includes direct costs associated with the
manufacture of such items together with applicable overheads, but excludes general overheads and administration costs.
When relevant, profits made by the selling company are eliminated on consolidation.
139
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Property, plant and equipment continued
12
Group
Land &
Buildings
£’000
Photobooth
& vending
machines
£’000
Plant,
machinery,
furniture,
fixtures &
motor
vehicles
£’000
Right of Use
Land &
Buildings
£’000
Right of Use
Plant,
machinery,
furniture,
fixtures
£’000
Right of Use
Motor
vehicles
£’000
19,308
(1,359)
–
425
–
(313)
18,061
206
–
683
3
(3,650)
15,303
9,690
(798)
330
95
–
(56)
9,261
7
322
(86)
(2,510)
6,994
9,618
8,800
8,309
8,309
278,800
(17,747)
22,450
113
2,207
(20,991)
264,832
(644)
21,496
5,709
8
(14,477)
276,924
213,280
(13,922)
25,931
(4,167)
(1,144)
(18,960)
201,018
(1,439)
22,849
(2,650)
(14,477)
205,301
65,520
63,814
71,623
71,623
27,258
(1,481)
4
4,437
274
(2,362)
28,130
295
–
4,782
–
(3,042)
30,165
22,115
(1,597)
2,506
1,197
–
(1,114)
23,107
357
2,603
(707)
(1,862)
23,498
5,143
5,023
6,667
6,667
1,003
(49)
–
3,517
–
(71)
4,400
59
–
2,878
–
(2,328)
5,009
291
(14)
972
–
–
271
1,520
93
2,015
–
(1,470)
2,158
712
2,880
2,851
2,851
10,715
(520)
–
4,356
–
(976)
13,575
155
–
1,803
–
(1,047)
14,486
4,409
11
2002
–
–
(1,137)
5,285
23
2,619
–
(1,047)
6,880
6,306
8,290
7,606
7,606
4,814
(234)
–
1,868
–
(998)
5,450
102
–
2,617
–
(1,707)
6,462
1,828
(89)
1446
–
–
(901)
2,284
40
1,811
–
(1,707)
2,428
2,986
3,166
4,034
4,034
Total
£’000
341,898
(21,390)
22,454
14,716
2,481
(25,711)
334,448
173
21,496
18,472
11
(26,251)
348,349
251,613
(16,409)
33,187
(2,875)
(1,144)
(21,897)
242,475
(919)
32,219
(3,443)
(23,073)
247,259
90,285
91,973
101,090
101,090
Cost:
At 31 October 2020
Exchange difference
Additions internal
Additions external
Additions - new sub
Disposals
At 31 October 2021
Exchange difference
Additions internal
Additions external
Additions - new sub
Disposals
At 31 October 2022
Depreciation:
At 31 October 2020
Exchange difference
Provided during the period
Impairments
Transfers to intangibles
Disposals
At 31 October 2021
Exchange difference
Provided during the period
Impairments
Disposals
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Internal additions for photobooths and vending machines of £21,496,000 (2021: £22,450,000) relate to own work
capitalised, being equipment manufactured by the subsidiaries and capitalised by the group companies.
The Group and the Company test all significant operating equipment asset classes for impairment annually, or more
frequently if there are indications of impairment. Impairment reviews on operating equipment are all conducted on a
value in use basis.
The key assumptions for the value in use calculation were those regarding the discount rates, growth during the forecast
period. The estimated growth rates were based on historic performance trends and budgets. The growth rate used to
extrapolate cash flow projections beyond the period covered by the financial forecasts was 1% (2021: 0%– 1%). Pre-tax
discount rates ranging between 9.7% and 14.2% (2021: 12.6% to 14.5%) were applied to the cash flows.
At the current year end all units were subject to an updated impairment test and impairments updated accordingly. Where
impairment tests indicated a reduced level of impairment, the impairment held was reduced, with care taken to ensure that
140
ME Group plc Annual Report 2022Financial Statements the closing net book value did not exceed what it would have been had the original impairment never occurred. Impairments
or reversals of impairment to photobooths and vending machines were recognised in the following operating segments: Asia
Pacific – impairment charge of £1,603,000; Continental Europe – impairment reversal of (£1,405,000); and United Kingdom
– impairment reversal of (£2,848,000).
A reversal of impairment to land and buildings of (£86,000) was recognised in the United Kingdom operating segment.
Impairments or reversals of impairment to plant, machinery, furniture, fixtures and motor vehicles were recognised in the
following operating segments: Asia Pacific – impairment charge of £9,000; Continental Europe – impairment reversal of
(£563,000); and United Kingdom – impairment reversal of (£153,000).
Significant impairment charges were made against the Group’s property, plant and equipment during the pandemic
affected period, when the uncertain outlook and reduced trading indicated impairment. In the current and prior years, as the
pandemic restrictions has eased in most of our territories, the value in use of assets has increased and provisions have been
reversed where appropriate.
Company
Cost:
At 1 November 2020
Additions internal
Additions external
Additions right of use
Disposals external
At 31 October 2021
Additions internal
Additions external
Disposals external
At 31 October 2022
Depreciation:
At 31 October 2020
Provided during the period
Disposals external
At 31 October 2021
Provided during the period
Additions new subsidary
Disposals external
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Land &
Buildings
£’000
Photobooth
& vending
machines
£’000
–
–
–
–
–
–
572
–
–
42,530
3,226
193
–
(7,517)
38,432
5,063
430
(3,603)
Plant,
machinery,
furniture,
fixtures &
motor
vehicles
£’000
1,440
–
969
–
(128)
2,281
–
1,030
(150)
Right of Use
Land &
Buildings
£’000
Right of Use
Plant,
machinery,
furniture,
fixtures
£’000
Right of Use
Motor
vehicles
£’000
–
–
–
1,011
–
1,011
–
–
–
2,438
–
–
109
(649)
1,898
–
28
(427)
955
–
–
772
(312)
1,415
–
60
(361)
572
40,323
3,161
1,011
1,499
1,114
–
–
–
–
18
289
–
307
36,612
1,524
(7,128)
31,008
1,107
–
(3,347)
28,768
400
822
(35)
1,187
147
–
–
107
162
269
107
–
(66)
–
1,268
376
1,796
2,537
265
4,321
7,424
11,554
1,041
972
1,891
1,041
972
634
1,163
628
(649)
1,142
408
434
354
(290)
498
336
–
–
(427)
1,123
1,041
972
375
(361)
473
1,041
972
640
Total
£’000
47,363
3,226
1,162
1,892
(8,606)
45,037
5,635
1,548
(4,541)
47,679
38,609
3,435
(7,940)
34,104
2,123
289
(4,201)
32,315
7,158
10,933
15,364
Internal additions for photobooths and vending machines of £5,063,000 (2021: £3,226,000) relate to new equipment
produced by subsidiaries and equipment previously capitalised by the Group’s subsidiaries and sold to the parent.
141
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Investment property
13
Group
Cost:
At 1 November 2020
Exchange differences
At 31 October 2021
Exchange differences
At 31 October 2022
Depreciation:
At 1 November 2020
Exchange differences
Provided during the period
At 31 October 2021
Exchange differences
Provided during the period
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
£’000
13,660
(838)
12,822
230
13,052
13,008
(799)
16
12,225
220
15
12,460
652
597
592
The investment property is freehold and is stated at cost less depreciation and any impairment charges. The directors are
satisfied that the fair value of the Investment property is not less than its net book value.
Rental income from the investment property was £365,000 (2021: £98,000) (note 4).
Company
The Company has no investment property.
Investments in associates and subsidiaries
14
Investment in associates
Group
Cost:
At 1 November 2020
Exchange differences
Disposal (see note 4)
At 31 October 2021
Exchange differences
Disposal (see note 4)
Dividends
At 31 October 2022
£’000
57
(1)
(35)
21
(1)
–
–
20
142
ME Group plc Annual Report 2022Financial Statements
Name
At 31 October 2021
Country of
incorporation
Assets
£’000
Liabilities
£’000
Revenue
£’000
Share of
profit
£’000
Dividends
received
Interest
%
Globe Connect & Photomaton Maroc
Morocco
At 31 October 2022
Globe Connect & Photomaton Maroc
Morocco
90
90
90
90
69
69
70
70
–
–
–
–
–
–
–
–
–
–
–
–
–
50
50
50
Company
Costs:
At 1 November 2020
Addition
Disposal
At 31 October 2021
At 1 November 2021
Capital increase relating to share-based payment (net)
Disposal
At 31 October 2022
Provision:
At 1 November 2020
Impairment
Disposal
At 31 October 2021
At 1 November 2021
Impairment
Disposal
At 31 October 2022
Net book value:
At 1 November 2020
At 31 October 2021
At 31 October 2022
Associated
undertakings
£’000
Subsidiary
undertakings
£’000
41
–
(35)
6
6
–
–
6
3
3
–
6
6
–
6
48,119
2,953
(2,251)
48,821
48,821
521
(2,956)
46,386
2,623
1,548
(2,251)
1,920
1,920
–
(2)
Total
£’000
48,160
2,953
(2,286)
48,827
48,827
521
(2,956)
46,392
2,626
1,552
(2,251)
1,926
1,926
–
(2)
1,918
1,924
38
–
–
45,496
46,901
44,468
45,534
46,901
44,468
The net capital increase relating to share-based payments relates to share options in the parent company, ME Group
International plc, granted to employees of subsidiary undertakings of the Group. Refer to note 20 for further details on
the Group’s share option schemes.
The details of all the Group’s subsidiaries and associates are given in note 28.
143
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Financial instruments
15
Group Treasury
The Group has a centralised treasury function. The primary aim for this function is to manage liquidity and funding
arrangements and the Group’s exposure to associated financial and market risks, including credit risk, interest rate risk
and foreign currency risk. The general approach for Group Treasury is one of risk reduction within a framework of
delivering total shareholder return.
Treasury operations
Overview and policy
Treasury policy is set by the Board. Group treasury activities are subject to a set of controls appropriate for the magnitude
of the borrowing, investments and group-wide exposures. To date the treasury function has limited itself to obtaining
surplus cash from the subsidiaries and depositing this in bank accounts owned by the Group’s Treasury Company. The
Board has defined an investment strategy, amounts and types of products to which the surplus cash may be invested.
The Board monitors the performance of the Treasury function and is responsible for making changes to the personnel
and limits of authority of Treasury personnel.
The Board has provided written principles for overall risk management of the Treasury Function. It has also defined
policies and procedures covering such areas as foreign exchange risk, interest rate risk, credit risk, the use of derivative
instruments and investment of excess liquidity (surplus funds above the immediate and short–term operational funding
needs, such as working capital requirements). The key objectives for Group Treasury are to protect the principal value of
cash and cash equivalents, to concentrate cash at the centre to minimise external borrowings, and to maximise the return
on cash.
Liquidity risk
Liquidity risk is the risk that the Group will face in meeting its obligations in settling its financial liabilities. The Group’s
approach to managing liquidity risk is to ensure that it has sufficient funds to meet its liabilities when due without
incurring unacceptable losses. A material and sustained shortfall in the Group’s cash flow could undermine the Group’s
credit rating, impair major investor confidence and restrict the ability of the Group to raise new funds.
The Group maintained a satisfactory net cash position throughout the period and preceding periods as a result of cash
generation from the business.
During the current period and prior period surplus cash held by the operating subsidiaries, over and above balances
required for working capital management was transferred to Group Treasury. These funds were kept in their local
currency, or converted into sterling and kept in the Treasury Company bank accounts which are interest bearing.
The strong cash generation and retention from the business together with available credit resources, help mitigate
liquidity risk.
The Group may hold financial instruments (such as bank and other loans) to finance its day to day working capital
requirements, for capital expenditure, for corporate transactions (such as dividend payments to shareholders, share
buybacks, acquisitions), for the management of currency and interest rate exposure arising from its operations (which
may involve the use of derivatives and swaps) and for the temporary investment of short-term funds. No derivatives or
swaps have been used in the period ending 31 October 2022 (31 October 2021: none). With a satisfactory net cash position,
the Group largely finances its working capital and capital expenditure programmes from its own resources. In addition,
financial instruments such as trade receivables (amounts due from customers as a result of a sale) and trade payables
(arising from purchases of materials and services) arise from day-to-day trading.
The following notes describe the Group’s financial risk management policy and details on financial instruments.
144
ME Group plc Annual Report 2022Financial Statements Fair values of financial instruments by class
15(A)
There is no difference between the fair values and the carrying values of financial assets and financial liabilities held in the
Group’s or the Company’s statement of financial position.
The Group holds an investment in Max Sight Group Holdings Ltd, which as a listed company. This investment is valued at
level 1. The Group owns 109,972,500 Max Sight Group Holdings Ltd’s shares valued at 0,065 HKD per share as at
31 October 2022, giving a value at that date of £788,643.
On 27 October 2022, the Group subscribed to 500,000 convertible bonds in Energy Observer Developments SAS, a
privately held company. This investment is valued at level 3 as its value is linked to the equity value of Energy Observer
Developments SAS, which is not observable market data. At both the subscription date, 27 October 2022, and at the
reporting date, 31 October 2022, the investment is valued at is issue price of €5,000,000 (£4,300,335).
In the absence of observable relevant market data, the bond’s issue price is deemed to be the best measure of fair value.
There are no material Level 2 investments held by the Group or Company.
Financial instruments by category
The tables below show financial instruments by category for the Group
Group
At 31 October 2022
Assets per statement of financial position
Financial instruments held at FVTPL
Financial assets – held at amortised cost
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of financial position
Borrowings
Leases
Trade and other payables
Loans and
receivables
£’000
Fair value
through profit
or loss
£’000
Total
£’000
–
5,239
5,239
10,449
–
136,185
–
10,449
136,185
146,634 5,239
151,873
Other financial
liabilities at
amortised cost
£’000
Total
£’000
102,163
102,163
15,923
15,923
52,248 52,248
170,334
170,334
145
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
15(A)
Fair values of financial instruments by class continued
At 31 October 2021
Assets per statement of financial position
Financial instruments held at FVTPL
Financial assets – held at amortised cost
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of financial position
Borrowings
Leases
Trade and other payables
Company
At 31 October 2022
Assets per statement of financial position
Financial assets held at FVTPL
Financial assets – held at amortised cost
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of financial position
Leases
Trade and other payables
146
Loans and
receivables
£’000
Financial
instruments
£’000
–
24,320
99,362
124,826
1,501
–
–
1,501
Other financial
liabilities at
amortised cost
£’000
64,443
16,493
42,484
123,420
Total
£’000
1,501
24,320
99,362
125,183
Total
£’000
64,443
16,493
42,484
123,420
Loans and
receivables
£’000
Fair value
through profit
or loss
£’000
Total
£’000
– 789
789
23,142
–
23,142
13,321
–
13,321
36,463 789
37,251
Other financial
liabilities at
amortised cost
£’000
Total
£’000
1,801
1,801
14,551
14,551
16,352
16,352
ME Group plc Annual Report 2022Financial Statements At 31 October 2021
Assets per statement of financial position
Financial assets held at FVTPL
Financial assets – held at amortised cost
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of financial position
Leases
Trade and other payables
Loans and
receivables
£’000
Financial
instruments
£’000
Total
£’000
– 1,292
1,292
19,454
–
19,454
4,002
– 4,002
23,456 1,292
24,748
Other financial
liabilities at
amortised cost
£’000
Total
£’000
2,557
2,557
20,999 20,999
23,556
23,556
15(B)
Financial risk factors and financial risk management
Financial statement risk management
Overview
The Group and the Company are exposed to the following risks arising from financial instruments:
(i)
(ii)
(iii)
Credit risk
Liquidity risk
Market risk
Credit risk is the risk of financial loss to the Group and the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. It mainly arises on trade and other receivables and bank balances.
Liquidity risk arises from the Group and the Company having insufficient cash resources to meet its obligations as and
when they fall due for payment.
Market risk arises from changes in market prices, such as exchange rates, interest rates and equity prices that will
impact on the Group’s and the Company’s statement of comprehensive income or the value of its holding of
financial instruments.
Listed below are details of these risks, the Group’s objectives, policies and processes for measuring and monitoring risks
and the Group’s management of capital.
Risk Management Framework
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential risks for the Group. Information has been disclosed relating to the Parent Company only where
material risk exists.
There is a continuous process for identifying, evaluating and managing the key financial risks faced by the Group in line
with changing market conditions and the Group’s strategy. If necessary, the Group’s internal audit function may assist in
monitoring and assessing the effectiveness of controls and procedures. The Board retains responsibility for ensuring the
adequacy of systems for identifying and assessing significant risks, that appropriate control systems and other mitigating
actions are in place and that residual exposures are consistent with the Group’s strategy and objectives. Assessments are
conducted for all material entities.
147
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Financial statement risk management continued
15(B)
The Group may use derivatives to manage exchange or interest rate risk. Approval for their use is given by the Board and
the position is monitored constantly.
With regard to management of interest rate risk, the objectives are to lessen the impact of adverse interest rate
movements on earnings and shareholders’ funds and to ensure no breach of covenants. This is mainly achieved by
reviewing the mix of fixed and floating rate borrowings.
The Group’s liquidity risk management involves maintaining sufficient cash and cash equivalents and the availability of
funding through an adequate amount of committed credit facilities.
Credit risk
(i)
The Group has no significant concentrations of credit risk. Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions, and on outstanding trade and other receivables. Cash deposits are limited to high
credit quality financial institutions. The Group has policies in place to ensure that sales of products and services are made
to customers with an approved credit history.
Credit quality of financial assets
Individual Group companies have banking relationships with leading banks in the country in which the Group company
operates. Surplus cash is placed with Group Treasury bank accounts, as described above. The Group has procedures in
place to ensure that cash is placed with sound financial institutions.
The Group and the Company trade with a large number of customers, ranging from quoted companies and state
organisations to individual traders. Individual Group companies have credit control procedures in place before making
sales to new customers and levels of credit are reviewed in light of trading experience. The normal terms of trade are in
the range 30–90 days. The collection of outstanding receivables is monitored at both the Group and subsidiary level.
The Group and the Company make provisions against trade and other receivables, such provisions being based on the
previous credit history of the debtor and if the debtor is in receivership or liquidation.
The maximum credit risk for financial assets is the carrying value.
Trade receivables and other receivables are normally interest free. The normal terms of settlement for trade receivables
are between 30 and 90 days.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment
plan with the group, and a failure to make contractual payments for a period of greater than 120 days past due or an
impairment amount being required under the ECL model mandated by IFRS 9.
Under the Group’s operating model, most revenue is collected at the point of sale. Where credit terms are offered, the
Group has a strong record of debtor recovery.
Any balances that are more than 90 days past due date are provided for in their entirety. The only exceptions to this policy
are accounts where the Group has open work in progress or where technical issues are preventing the proper operation of
the vending unit in question.
148
ME Group plc Annual Report 2022Financial Statements Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating
profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
The Group does not require collateral in respect of trade and other receivables. The Group does not have trade receivable
and contract assets for which no loss allowance is recognised because of collateral.
The Directors have concluded that the credit risk of trade and other receivables has not increased significantly since initial
recognition. The Directors have come to this conclusion having considered micro and macro-economic factors including
Brexit, the Group’s knowledge of its customers, payment history of the customers and industry trends.
The ageing of net current trade receivables is as follows:
Current
Past due
– overdue 1-30 days
– overdue 31-60 days
– overdue 61 days
Total past due
Total trade receivables
Group
Company
31 October
2022
£’000
4,209
31 October
2021
£’000
7,061
–
39
1,630
1,669
5,878
–
1,280
1,370
2,650
9,711
31 October
2022
£’000
31 October
2021
£’000
12
–
5
8
13
25
(2)
–
65
(52)
13
11
The credit quality of trade receivables that are neither past due nor impaired is assessed on an individual basis, based on
credit ratings and experience. Management believes adequate provision has been made for trade receivables.
Liquidity risk
(ii)
The Group’s liquidity risk management involves maintaining sufficient cash and cash equivalents and the availability of
funding through an adequate amount of committed credit facilities. Trading forecasts indicate that the current facilities
provide more than sufficient liquidity headroom to support the business for the foreseeable future. The net cash position
at 31 October 2022 and 31 October 2021 has reduced liquidity risk for the Group.
The Group has adequate undrawn facilities and, having regard to the Group’s cash flow, it is considered that these
facilities provide adequate headroom for the Group’s needs. The facilities are generally reaffirmed by the banks annually.
These undrawn facilities, if used, will be subject to floating rates of interest and may be subject to the normal covenant
conditions attached to such borrowings.
Certain lending banks may impose loan covenants on borrowings, which are normal for these types of borrowings, and,
during the years to 31 October 2022 and 31 October 2021, the Group and the Company have comfortably complied with
such requirements.
The table below summarises the maturity profile of the Group’s and Company’s financial liabilities (including trade and
other payables) at 31 October 2022 and 31 October 2021 based on contractual undiscounted payments.
149
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
15(B)
Group contractual cash flows
Financial statement risk management continued
At 31 October 2022
Interest bearing loans and
borrowings and interest
free loans
Finance leases
Trade and other payables
At 30 October 2021
Interest bearing loans and
borrowings and interest free loans
Finance leases
Trade and other payables
Company contractual cash flows
At 31 October 2022
Finance leases
Trade and other payables
At 30 October 2021
Finance leases
Trade and other payables
Within
one year
£’000
29,799
5,858
52,248
87,905
20,120
5,757
42,484
68,361
Within
one year
£’000
1,060
14,552
15,612
830
20,999
21,829
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
25,678
2,568
–
19,523
2,513
–
16,735
2,503
–
10,158
2,481
–
271
102,164
–
–
15,922
52,248
28,246
22,036
19,238
12,639
271
170,334
17,770
2,556
–
13,593
2,141
–
7,381
2,082
–
20,326
15,734
9,463
4,410
2,071
–
6,481
1,169
1,887
–
64,443
16,493
42,484
3,056
123,420
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
185
–
185
361
–
361
185
–
185
361
–
361
185
–
185
361
–
361
185
–
185
361
–
361
Over
5 years
£’000
–
–
–
282
–
282
Total
£’000
1,801
14,552
16,353
2,557
20,999
23,556
Financial instruments held at amortised cost and held to maturity
These largely comprise of restricted bank deposit accounts where the cash acts as security against possible shortfalls in
Group’s UK pension fund obligations.
(iii)
Market risk
Foreign exchange risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the
local functional currency. In addition, the Group faces currency risks arising from monetary financial instruments held in
non-functional currencies. The income statement reflects the impact of realised and unrealised exchange differences on
trading items and monetary financial instruments (note 4).
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation
risk. The main currency translation risk relates to foreign operations whose functional currency is the Euro, Swiss Franc or
Japanese Yen. The investments are not hedged. The translation reserve reflects the exchange differences arising on
translation of the opening net assets and results of the foreign operation (note 20).
150
ME Group plc Annual Report 2022Financial Statements Operational foreign exchange exposure
Where possible, the Group tries to invoice in the local currency of the respective entity. If this is not possible, to mitigate
exposure, the Group endeavours to buy from suppliers and sell to customers in the same currency. The exposure relating
to receivables and payables denominated in the non-functional currency is normally less than 3 months as this is the
normal settlement period for these items.
Subject to the requirements of Group Treasury, as noted above, where possible, the Group tries to hold the majority of its
cash and cash equivalent balances in the local currency of the respective entity.
Monetary assets/liabilities
The Group continues to monitor exchange rates and buy or sell currencies in order to minimise the open exposure to
foreign exchange risk.
The Group may use derivative financial instruments mainly to reduce the risk of foreign exchange exposure on trading
items (sales or purchases in currencies other than the domestic currency of the company concerned) and interest rate
movements. The Group does not hold or issue derivative financial instruments for financial trading purposes.
Borrowings
At 31 October 2022 and 31 October 2021 the majority of the Group’s borrowings were denominated in Euros and held by
subsidiaries whose functional currency is the Euro.
Analysis monetary assets and liabilities by currency
Group
Sterling
£’000
Euro
£’000
Swiss
Franc
£’000
Japanese
Yen
£’000
Other
Currencies
£’000
Total
£’000
At 31 October 2022
Assets per statement of
financial position
Financial instruments held at FVTPL
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of
financial position
Borrowings and Leases
Trade and other payables
At 31 October 2021
Assets per statement of
financial position
Financial instruments held at FVTPL
Trade and other receivables
Cash and cash equivalents
Liabilities per statement of
financial position
Borrowings and Leases
Trade and other payables
789
2,152
15,781
18,722
1,802
9,109
10,911
4,450
15,708
105,910
126,068
110,801
37,149
147,950
–
139
5,236
5,375
435
2,300
2,735
–
3,002
7,694
10,696
4,944
3,170
8,114
–
1,023
1,564
2,587
104
520
624
Sterling
£’000
Euro
£’000
Swiss
Franc
£’000
Japanese
Yen
£’000
Other
Currencies
£’000
1,425
4,340
5,146
10,911
76
15,897
80,199
96,172
114,045
8,417
122,462
(29,652)
28,329
(1,323)
–
291
3,493
3,784
(1,637)
1,769
132
–
2,236
8,539
10,775
3,420
3,202
6,622
–
1,556
1,985
3,541
5,239
22,024
136,185
163,448
118,086
52,248
170,334
Total
£’000
1,501
24,320
99,362
125,183
(5,240)
767
(4,473)
80,936
42,484
123,420
151
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Financial statement risk management continued
15(B)
IFRS 7 sensitivity analysis
Sensitivity analysis has been performed on the Group’s Euro foreign exchange risk, as its most material foreign currency. A
10% strengthening of Euro against Sterling, at the Statement of Financial Position date, would have caused a £2,432,000
decrease in the Group’s net assets at that date (2021: £267,000 increase in net assets). A 10% weakening of Euro against
Sterling would have had the equal and opposite effect on the Group’s net assets.
Interest rate risk
Group
Net cash
Mainly non-interest bearing current accounts:
Cash at bank and in hand
Deposit accounts – generally interest bearing:
Bank deposit accounts
Restricted bank deposit accounts
Other items
Interest free and interest bearing loans
2022
Carrying
amount
£’000
2021
Carrying
amount
£’000
81,219
97,683
53,981
695
985
984
(102,163)
(64,443)
34,022
34,919
The above table shows which components of net debt are subject to interest. The Group has no exposure to floating rate
interest bearing debt and a change in interest rates will not have a material change on interest expense.
IFRS 7 sensitivity analysis
All of the Group’s debt is subject to fixed rates of interest, so interest payable charges would not be materially impacted
by a change in interest rates. Consequently, no sensitivity tables have been presented.
Details of the Group’s borrowings are shown in the table below. All loans are subject to fixed rates of interest. An increase
of 1% in the fixed rate of interest would result in an extra £1,022,000 (31 October 2021: £644,000) of interest expense.
Terms and debt repayment schedule
The table below shows the maturity profile and interest rates of the Groups borrowings at 31 October 2022 and
31 October 2021.
Group
Loans
Lease liabilities
Status
Currency
Interest
Rate
Year of
maturity
Fixed rate
Fixed rate
Euro 0.49% – 1.2%
2022-2026
Various
6,1% – 18.6%
Various
2022
Carrying
amount
£’000
102,163
15,923
118,086
2021
Carrying
amount
£’000
64,443
16,493
80,936
152
ME Group plc Annual Report 2022Financial Statements
Price risk
The Group and the Company are exposed to changes in prices on raw materials, consumables and finished goods
purchased from suppliers. Wherever possible, price rises are passed on to customers via sales price increases to help
manage this risk.
The Group’s other investments in equity securities are not listed, and are not material thus the Group does not have any
significant exposure to price risk on these equity investments.
Capital risk management
15(C)
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to
enhance long-term shareholder value, by investing in the business so as to improve the return on investment (by
increasing profits available for dividends) and by managing the capital gearing ratio (mixture of equity and debt).
The Group manages, and makes adjustments to, its capital structure in light of the prevailing risks and economic
conditions affecting its business activities. This may involve adjusting the rate of dividends, purchasing the Company’s
own shares, the issue of new shares and reviewing the level and type of debt. The Group manages its borrowings by
appraising the mix of fixed and floating rate borrowings and the mix of long-term and short-term borrowings. Details of
how the Group and subsidiaries are funded are shown below. There were no changes to the Group’s approach to capital
management during the period.
Group
The Group is funded by share capital and retained earnings; supplemented by external borrowing as required. The Group
has had a strong net cash position throughout the current and comparative period.
Subsidiary companies
Subsidiary companies are funded by share capital and retained earnings, and where applicable local borrowings by the
subsidiaries in appropriate currencies.
The capital structure of the Group is presented below.
Cash and cash equivalents
Borrowings
Net cash (excluding restricted deposits)
Equity
31 October
2022
£’000
136,185
(102,163)
34,022
132,649
31 October
2021
£’000
99,362
(64,443)
34,919
129,964
The Group has various borrowings and available facilities that contain certain external capital requirements (covenants)
that are considered normal for these types of arrangements. The Group remains comfortably within all such covenants.
153
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
16
Trade and other receivables
Non-current assets
Other receivables
Prepayments
Current assets
Gross trade receivables
Provision for trade receivables
Trade receivables
Amounts due from subsidiaries
Other receivables
Prepayments
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
1,974
–
1,974
6,865
(987)
5,878
1,784
84
1,868
10,587
(876)
9,711
–
–
2,597
11,549
20,024
5,282
7,458
22,451
–
–
–
–
101
(76)
25
21,525
354
1,238
23,142
115
(104)
11
17,020
127
2,296
19,454
All trade receivables arise from contracts with customers.
Non-current other receivables include deposits relating to operating sites and properties. Current other receivables
include deposits relating to operating sites and properties, indirect and other taxation and other receivables.
17
Inventories
Raw materials and consumables
Finished goods
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
18,774
6,717
25,491
14,271
4,187
18,458
1,066
764
1,830
999
493
1,492
The replacement value of inventories is not materially different from that stated above.
18
Cash and cash equivalents
Cash at bank and in hand
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
81,220
97,683
2,516
3,026
Deposit accounts (excluding restricted deposits)
53,980
695
9,829
–
Restricted deposit accounts
985
984
976
976
Cash and cash equivalents per statement of financial position
136,185
99,362
13,321
4,002
Cash and cash equivalents per cash flow comprise cash at bank and in hand and short-term deposit accounts with an
original maturity of less than three months, less bank overdrafts. The amounts placed in short-term deposit accounts
depend on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rate.
Cash at bank is generally interest free but may earn interest at the applicable daily bank floating deposit rate.
The restricted bank deposit accounts of £985,000 (2021: £984,000) are subject to restrictions and are not freely available
for use by the Group or Company.
154
ME Group plc Annual Report 2022Financial Statements 19
Net cash
Cash and cash equivalents per statement of financial position
Non-current borrowings
Current borrowings
Net Cash
Group
Company
31 October
2022
£’000
31 October
2021
£’000
136,185
(72,365)
(29,799)
34,021
99,362
(44,323)
(20,120)
34,919
31 October
2022
£’000
13,321
31 October
2021
£’000
4,002
–
–
–
–
13,321
4,002
Notes
18
21
21
At 31 October 2022, £985,000 of the total net cash (2021: £984,000) comprised bank deposit accounts that are subject to
restrictions and are not freely available for use by the Group and Company.
Net cash is a non-GAAP measure since it is not defined in accordance with IFRS but is a key indicator used by
management in assessing operational performance and financial position strength. The inclusion of items in net cash as
defined by the Group may not be comparable with other companies’ measurement of net cash/debt. The Group includes
in net cash, cash and cash equivalents and certain financial assets, mainly deposits, less current and non-current
borrowings outstanding excluding lease liabilities of £15,922,000 (2021: £16,493,000).
The tables below, which are not currently required by IFRS, reconcile the Group’s net cash to the Group’s statement of
cash flows.
Group
31 October 2022
Cash and cash equivalents per statement of
financial position and cash flow
Financial asset held at amortised cost
Non-current loans
Current loans
31 October 2021
Cash and cash equivalents per statement of
financial position and cash flow
Financial asset held at amortised cost
Non-current loans
Current loans
1 November
£’000
Exchange
differences
£’000
Other
movements
£’000
Cash flow
£’000
31 October
£’000
99,362
548
–
36,275
136,185
(44,323)
(20,120)
34,919
(310)
(255)
(17)
107,177
(5,926)
27,740
(27,740)
–
–
(55,473)
18,316
(882)
–
(72,366)
(29,799)
34,020
(1,889)
99,362
(39,444)
(45,434)
22,299
2,413
2,989
(524)
(3,295)
3,295
(0)
(3,997)
19,030
13,144
–
(44,323)
(20,120)
34,919
155
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Net cash continued
19
Company
31 October 2022
Cash and cash equivalents per statement of financial position and cash flow
Financial instrument held at amortised cost/held to maturity
31 October 2021
Cash and cash equivalents per statement of financial position and cash flow
Financial instrument held at amortised cost/held to maturity
1 November
£’000
Cash flow
£’000
31 October
£’000
4,002
–
4,002
5,879
–
5,879
9,319
9,319
(1,877)
(1,877)
13,321
–
13,321
4,002
–
4,002
20
Share capital and reserves
Share Capital
Allotted, issued and fully paid:
Ordinary shares of 0.5p each
At the beginning of the period
Issued in year – share options exercised
At the end of the period
31 October
2022
Number
31 October
2021
Number
31 October
2022
£’000
31 October
2021
£’000
378,011,637
377,992,637
40,000
19,000
378,051,637
378,011,637
1,889
–
1,889
1,889
–
1,889
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company.
Share options, which have been granted to senior staff, including directors, to purchase Ordinary shares of 0.5p each, are
as follows:
Date options
granted
09-Jul-15
13-Jul-16
21-Jul-17
At
31 October
2021
Exercise
price
761,000
133.33p
499,300
141.50p
260,000
157.00p
27-Aug-19
976,509
101.40p
4-Oct-19
1,000,000
93.30p
5-Oct-20
1,000,000
19-Apr-21
1,265,000
05-Aug-21
2,184,774
5-Oct-21
1,000,000
51.05p
61.40p
77.50p
61.10p
Granted
during
year
–
–
–
–
–
–
–
–
–
12-May-22
–
68,73p
2,225,000
Lapsed or
forfeited
during year
(761,000)
(50,000)
(260,000)
(30,000)
–
–
–
–
–
–
Exercised
during
year
At
31 October
2022
Exercise
price
Date from
which
exercisable
Last date
on which
exercisable
–
133.33p
09-Jul-18
08-Jul-22
449,300
141.50p
13-Jul-19
–
157.00p
21-Jul-20
12-Jul-23
21-Jul-24
946,509
101.40p
27-Aug-22
26-Aug-26
1,000,000
93.30p
4-Oct-22
4-Oct-26
–
–
–
–
–
–
1,000,000
(20,000)
1,245,000
51.05p
61.40p
5-Oct-23
5-Oct-27
19-Apr-24
19-Apr-28
(20,000)
2,164,774
77.50p
05-Aug-24
05-Aug-28
–
–
1,000,000
61.10p
5-Oct-24
5-Oct-28
2,225,000
68.73p
12-May-25
12-May-29
8,946,583
2,225,000
(1,101,000)
(40,000)
10,030,583
All options can be exercised, in normal circumstances, within a period of four years from the grant date, providing that the
performance criterion or performance condition has been achieved. The subscription price for all options is based upon
the average market price on the three days prior to the date of grant. Options are restricted, or may lapse, if the grantee
leaves the employment of the Group before the first exercise date.
All options are equity settled options.
Options granted after 2005 are covered by the new ME Group Executive Share Option Scheme. The vesting of options is
subject to an EPS-based performance condition relating to the extent to which the Company’s basic EPS for the third
financial year, following the date of grant, reaches a sliding scale of challenging EPS targets.
156
ME Group plc Annual Report 2022Financial Statements
Options are normally granted over shares worth up to 150% of a participant’s salary each year. In exceptional cases as part
of the terms of attracting senior management, options in excess of that number may be granted.
The weighted average exercise price of all options outstanding at 31 October 2022 is 75.98p (2021: 86.91p) and the
weighted average exercise price of options exercisable at 31 October 2022 is 105.54p (2021: 140.06p).
The weighted average share price for options exercised during the period ended 31 October 2022 was 96.35p
(31 October 2021: no options exercised).
The weighted average remaining years for options outstanding at the period-end date is 5.2 years (2021: 4.9 years).
Share-based payments
In accordance with IFRS 2 Share-based Payments, share options granted to senior management including directors after
November 2002 have been fair-valued and the Company has used the Black-Scholes option pricing model. This model
takes into account the terms and conditions under which the options were granted.
The following table lists the inputs to the model used for the years ended 31 October 2022 and 31 October 2021:
Date of grant
Vesting period
Share price volatility
Share price on date of grant
Option price
Expected term
Dividend yield
Risk free interest rate
Fair value
Date of grant
Vesting period
Share price volatility
Share price on date of grant
Option price
Expected term
Dividend yield
Risk free interest rate
Fair value
Date of grant
Vesting period
Share price volatility
Share price on date of grant
Option price
Expected term
Dividend yield
Risk free interest rate
Fair value
27 August
2019
3 years
32.5%
101.40p
103.00p
4 October
2019
3 years
32.59%
92.80p
93.30p
3.25 years
3.25 years
0.00%
0.00%
45.51p
19 April
2021
3 years
51.40%
63.20p
61.40p
3.98%
5 August
2021
3 years
77.50%
77.50p
77.50p
5 October
2020
3 years
31.64%
42.30p
93.30p
3.25 years
3.25 years
3.25 years
0.00%
0.00%
0.17%
34.89p
12 May
2022
3 years
49.91%
65.20p
68.73p
0.00%
0.15%
28.18p
5 October
2021
3 years
49.48%
65.50p
61.10p
3.25 years
3.25 years
4.43%
1.24%
25.17p
0.00%
0.56%
24.47p
157
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Share capital and reserves continued
20
The charge for share-based payments was £884,000 (2021: £493,000) and for the Company the charge is £321,000
(2021: £5,000).
Share price volatility is based on historical data.
Reserves
Group
Treasury shares (Group and Company)
In accordance with shareholders’ resolutions passed at Annual General Meetings, the Company may purchase its own
shares up to a maximum of 10% of the Ordinary shares in issue. At 31 October 2022 and 31 October 2021 the Company
held no shares in treasury.
Share premium
Share premium reserve is the cumulative value of the excess received for shares above their nominal value.
Other reserves
Other reserves mainly arise in subsidiaries, are generally not distributable, and arise as a result of local legislation regarding
capital maintenance.
Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries and associates. In accordance with the options allowed under IFRS 1, only exchange rate
differences arising on translation after the date of transition, 1 May 2004, are shown in this reserve. When an overseas
subsidiary or associate is disposed, the cumulative exchange difference relating to the entity disposed is recycled through
the statement of comprehensive income as part of the profit or loss on sale in finance revenue/cost and is shown as a
movement in other comprehensive income.
Company
Other reserves
The Company’s other reserves include £521,000 (2021: £201,000) arising on the redemption of the deferred shares and
£2,007,000 (2021: £2,006,000) relating to the fair value of options granted to employees of Group undertakings.
21
Financial liabilities
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
Non-current liabilities
Non-current instalments due on bank loans
72,365
44,323
Current liabilities
Current instalments due on loans
29,799
20,120
–
–
–
–
Bank loans bear fixed rates of interest. Margins are generally between 0.4% and 1.0%. Further details are provided in
note 15.
Lease liabilities
In addition to bank loans, the Group has lease liabilities of £15,922,000 (2021: £16,493,000).
The Company has lease liabilities of £1,801,000 (2021: £2,557,000).
158
ME Group plc Annual Report 2022Financial Statements The Group has arrangements across three main categories: site agreements, property and motor vehicles. The key
quantitative information regarding the lease portfolio is shown below:
Group
As at 31 October 2022
Number of lease agreements
Average lease term
Average remaining term (months)
Company
As at 31 October 2022
Number of lease agreements
Average lease term
Average remaining term (months)
The maturity profile of lease liabilities is shown below:
Site agreements
Property Motor vehicles
545
74
34
9
66
28
423
43
10
Site agreements
Property Motor vehicles
65
47
6
1
113
72
99
47
17
Group
At 31 October 2022
Leases
At 31 October 2021
Leases
Company
At 31 October 2022
Leases
At 31 October 2021
Leases
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
5,858
2,568
2,513
2,503
2,481
–
15,922
5,757
2,556
2,141
2,082
2,071
1,887
16,493
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
1,060
185
185
185
185
–
1,801
830
361
361
361
361
282
2,557
Post-employment benefit obligations
22
The Company and its principal subsidiaries operate pension and other retirement and post-employment schemes
including both funded defined benefit schemes, and defined contribution schemes.
Defined benefit plans
A defined benefit plan is a pension arrangement under which participating members receive a benefit at retirement. The
amount is determined by the plan rules and is dependent on such factors as age, years of service and pensionable pay
and is not dependent on contributions made by the Company or members. The income statement service cost, in
respect of defined benefit plans represents the increase in the defined benefit liability arising from pension benefits
accrued by members in the current period. The Company having such plans is exposed to investment and other
experience risks and may need to make additional contributions where it is estimated that the benefits will not be
covered by the assets of the plan.
The Group’s and the Company’s policy is to recognise actuarial gains and losses immediately each year in the statement
of changes in equity, under other comprehensive income. These comprise the impact on the defined benefit liability of
changes in demographic and financial assumptions compared with the start of the year, actual experience being different
to those assumptions and the return on plan assets above the amount included in net pension interest.
Defined contribution plans are arrangements in which the benefits paid to participants are linked to the amount of
contributions paid and the performance of the scheme. Such plans are independent of the Company and the Group and
the Company and the Group have no exposure to investment and experience risks. The income statement charge for
these plans represents the contributions paid by the Group based on a percentage of employees’ pay.
159
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Post-employment benefit obligations continued
22
The Group’s and the Company’s defined benefit pension schemes are included in the statement of financial position
under employment benefit obligations, as are other overseas retirement provisions.
The amounts charged to profit and loss for all post-employment benefits are shown in note 5.
The amount shown in the statement of financial position is detailed as follows:
Employment benefit obligations
Defined benefit schemes
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
3,692
158
3,850
4,425
508
4,933
–
–
–
–
–
–
ME Group International plc defined benefit pension scheme
The Company operates a final salary defined benefit scheme in the UK for some long-serving employees, which is funded
by contributions from the Company and by members of the scheme. This pension scheme (the Photo-Me International
plc Pension and Life Assurance Fund) is closed to new entrants. The defined benefits are based upon then employee’s
length of service and final pensionable salary.
The actuarial valuation of the UK Pension scheme has revealed a surplus at 31 October 2022, 31 October 2021, 31 October
2020, 30 April 2019, 30 April 2018 and 30 April 2017. This surplus has not been recognised as an asset, in accordance with
IFRIC 14, as in the future the surplus will not be recovered by a reduction in future contributions to the scheme. The
scheme has been closed to new members for over 30 years.
The Fund is administered by a corporate Trustee, with Trustee Directors, which is legally separate from the Company. The
Trustee Directors include representatives of both the Company and Fund members. The Trustee Directors are required
by law to act in the interest of all relevant beneficiaries and are responsible for the investment policy with regard to the
assets plus the day to day administration of the benefits.
The level of benefits provided by the Fund depends on a member’s length of service and salary at date of leaving or
retiring from the Fund. Annual pension increases between leaving the Fund and retirement are linked to increases in the
Retail Prices Index (RPI). After retirement, annual pension increases are at 3.0% per annum for pension accrued before
April 1997 and in line with increases in the RPI, up to a maximum of 5.0% pa, for pension accrued from April 1997.
The benefit payments are from a trustee administered fund containing assets held in trust and governed by UK
regulations and practice. The amount of Company contributions is decided jointly by the Trustee Directors and the
Company.
The Fund’s investment strategy is decided by the Trustee Directors, in consultation with the Company. The Trustee
Directors exercise their powers of investment (or delegation where these powers have been delegated to a fund
manager) in a manner calculated to ensure the security, quality, liquidity and profitability of the portfolio as a whole. In
order to avoid an undue concentration of risk a spread of assets is held. The diversification is both within and across asset
classes. The assets are invested in a manner appropriate to the nature and duration of the expected future retirement
benefits payable under the Fund. Day to day selection of stocks is delegated to fund managers appointed by the Trustee
Directors. As regards the review and selection of their fund managers, the Trustee Directors take expert advice.
Profile of the Fund
The defined benefit obligation includes benefits for deferred pensioners and current pensioners. The defined benefit
obligation is broadly split 99%/1% between pensioners and deferred members.
The defined benefit obligation for certain current pensioners is backed by insurance policies. A corresponding asset equal
to the defined benefit obligation is included in this note in respect of these members.
160
ME Group plc Annual Report 2022Financial Statements The Fund duration is an indicator of the weighted-average time until benefit payments are made. For the Fund as a whole,
the duration is around 9 years.
Funding requirements
UK legislation requires that pension schemes are funded prudently. The most recent triennial funding valuation of the
Fund was carried out by a qualified actuary with an effective date of 1 June 2021. At this date the Fund had a funding level
of 102% and a surplus of approximately £0.2 million on a technical provisions basis. This basis uses actuarial assumptions
adopted by the Trustee Directors of the Fund that are consistent with the Fund continuing on an ongoing basis with
support from the Company.
The last active member ceased employment with the Company in 2020 so contributions are no longer required in respect
of the accrual of benefits in the Fund.
Risks associated with the Fund
The fund exposes the Company to a number of risks, the most significant of which are described below.
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields;
if assets underperform this yield, this will create a deficit.
Changes in bond yields A decrease in corporate bond yields will increase the value placed on the Fund’s liabilities for
Inflation risk
Life expectancy
IAS 19, although this will be partially offset by an increase in the value of the Fund’s bond
holdings and insurance policies backing pensions in payment.
Some of the Fund’s benefit obligations are linked to inflation, and higher inflation will lead to
higher liabilities (although, in most cases, caps on the level of inflationary increases are in
place to protect against extreme inflation). In addition, increases in expected inflation will be
offset by an increase in the value of the Fund’s index-linked bond holdings and insurance
policies backing pensions in payment.
The majority of the Fund’s obligations are to provide benefits for the life of the member, so
increases in life expectancy will result in an increase in the liabilities. Increases in life
expectancy will be partially offset by an increase in the value of the insurance policies
backing pensions in payment.
Reconciliation of the movement in the present value of the defined benefit obligation
Present value of defined benefit obligation at beginning of the period
Current service cost
Interest cost
Actuarial losses/(gains) on fund liabilities arising in demographic assumptions
Actuarial losses/(gains) from changes in financial assumptions
Actuarial losses/(gains) on liabilities from experience
Benefits paid
Present value of defined benefit obligation at end of the period
Reconciliation of the movement in the fair value of plan assets
Fair value of plan assets at beginning of the period
Interest income on fund assets
Remeasurement gains on assets
Benefits paid
Fair value of plan assets at end of the period
31 October
2022
£’000
5,788
31 October
2021
£’000
6,267
–
107
67
(1,332)
84
(350)
4,364
–
98
(8)
(151)
(79)
(339)
5,788
31 October
2022
£’000
31 October
2021
£’000
6,641
123
(1,645)
(350)
4,769
7,040
110
(170)
(339)
6,641
161
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Post-employment benefit obligations continued
22
Amount to be recognised in the statement of financial position
Present value of funded obligations
Fair value of scheme assets
Net surplus
Effect of limit of recognition of an asset
Amount recognised in statement of financial position
Amount recognised in profit and loss
Amount recognised in profit and loss
Current service cost
Interest on net defined liability/(asset)
Total charge
Pension expense recognised in profit and loss
Remeasurement in Other Comprehensive Income
Return on Scheme assets in excess of that recognised in net interest
Actuarial losses due to changes in financial assumptions
Actuarial losses/(gains) due to changes in demographic assumptions
Actuarial losses/(gains) on liabilities arising from experience
Adjustment due to the asset ceiling
Total expense/(income) amount recognised in Other Comprehensive Income
Total expense amount recognised in Comprehensive Income
The amounts shown above are included in staff costs (note 5) and in administrative expenses.
An analysis of the assets of the plan is as follows:
Bonds and insurance policies
Other
31 October 2022
31 October 2021
£’000
4,704
65
4,769
%
99
1
100
£’000
6,628
13
6,641
There were no financial instruments of the Company included in the plan assets (2021: none) and there were no property
assets occupied by the Company (2021: none).
Principal actuarial assumptions
Discount rate for scheme liabilities
Rate for increase in salaries
Price inflation
Pension increases
162
31 October
2022
31 October
2021
4.9
n/a
3.1
3.0
1.9
n/a
3.3
3.2
31 October
2022
£’000
31 October
2021
£’000
4,364
4,769
(405)
405
–
5,788
6,641
(853)
853
–
31 October
2022
£’000
31 October
2021
£’000
–
–
–
–
1,645
(1,332)
67
84
(464)
–
–
–
–
–
–
170
(151)
(8)
(79)
68
–
–
%
100
–
100
ME Group plc Annual Report 2022Financial Statements
The mortality tables used for 2022 are S3NXA Light tables for males and S3NXA All lives for females, with CMI 2021
projections and a long-term rate of improvement of 1.25% pa. The mortality tables used for 2021 were also S3NXA Light
tables, but with CMI 2020 projections and a long term rate of improvement of 1.25% pa. The mortality assumptions allow
for expected future improvements in mortality rates.
Salary increases are not relevant to the valuation as the scheme has been closed to new entrants for 30 years, so all
members are now retired.
Male currently aged 65
Female currently aged 65
Male currently aged 45
Female current aged 45
Fair value of defined benefit obligation
Fair value of assets
Surplus/(deficit)
Experience gains/(losses) on fund assets
Experience (losses)/gains on plan liabilities
31 October 2022
23.8 years (age 88.8)
25.1 years (age 90.1)
25.0 years (age 90.0)
26.5 years (age 91.5)
31 October 2021
23.3 years (age 88.3)
24.6 years (age 89.6)
24.5 years (age 89.5)
26.0 years (age 91.0)
2022
£’000
4,364
4,769
405
2022
£’000
(1,645)
(84)
2021
£’000
5,788
6,641
853
2021
£’000
(170)
79
2020
£’000
6,267
7,040
773
2020
£’000
622
(67)
2019
£’000
5,940
6,675
735
2019
£’000
160
9
2018
£’000
5,947
6,657
710
2018
£’000
(409)
87
Liabilities for 2022, 2021, 2020, 2019 and 2018 relate to gains/(losses) in respect of liability experience only, and excludes
any change in liabilities in respect of changes to the actuarial assumptions used.
Sensitivity to key assumptions
The key assumptions used for the IAS 19 valuation are: discount rate, inflation rate and mortality. If different assumptions
were used, this could have a material effect on the results disclosed. The table below shows the sensitivity to the key
assumptions noted above.
Period ended 31 October 2022
As reported
Following a 0.1% decrease in the discount rate
Following a 0.1% increase in the inflation assumption
Following an increase in the life expectancy of one year
Plan
assets
£’000
4,769
4,780
4,771
4,891
Defined
benefit
obligation
£’000
4,364
4,400
4,376
4,579
Surplus
£’000
405
380
395
315
The sensitivity information shown above has been prepared using the same method as adopted when adjusting the
results of the latest valuation to the statement of financial position data. This is the same approach as has been adopted
in previous years.
Overseas pension schemes
The Group’s Swiss subsidiary, ME Group Switzerland AG participates in funded multi-employer pension schemes.
A guaranteed return for such employees’ schemes is mandated by the Swiss state. An actuarial valuation was performed
at 31 October 2022 and 31 October 2021 by independent actuaries.
163
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Post-employment benefit obligations continued
22
Reconciliation of the movement in the present value of the defined benefit obligation
Present value of defined benefit obligation at start of the period
Exchange difference
Contribution by members
Current service cost
Past service cost
Interest cost
Remeasurement gains on plan liabilities
Prepaid risk premiums
Benefits paid
Administration costs
Present value of defined benefit obligation at end of the period
Fair value of plan assets at start of the period
Exchange difference
Contributions by company and members
Expected return on plan assets
Remeasurement gain on plan assets
Benefits paid
Prepaid risk premiums
Fair value of plan assets at end of the period
Net liability at start of the period
Exchange difference
Decrease in liability
Net liability at end of the period
Amounts recognised in comprehensive income
Amount recognised in profit and loss
Amounts recognised in comprehensive income
Current service cost
Past service cost
Administrative expenses
Net pension interest
Total charge
Amount recognised in other comprehensive income
Loss/(gains) on scheme assets
Actuarial gains on defined benefit obligation
Total amount recognised in other comprehensive income
Total amount recognised in profit and loss and other comprehensive income
164
31 October
2022
£’000
3,621
275
36
172
(29)
8
(658)
(38)
(491)
2
2,898
31 October
2021
£’000
4,792
(329)
37
214
–
8
(436)
–
(667)
2
3,621
31 October
2022
£’000
31 October
2021
£’000
3,113
245
178
9
(276)
(491)
(38)
2,740
3,615
(190)
183
6
166
(667)
–
3,113
31 October
2022
£’000
31 October
2021
£’000
508
30
(380)
158
1,177
(138)
(531)
508
31 October
2022
£’000
31 October
2021
£’000
172
(29)
2
(1)
144
276
(658)
(382)
(238)
214
–
2
2
218
(166)
(436)
(602)
(384)
ME Group plc Annual Report 2022Financial Statements
Cash
Equities & debt instruments
Other
Total plan assets
Principal actuarial assumptions
Discount rate
Expected return on plan assets at end of year
Rate of increase in salaries
Price inflation
31 October 2022
30 October 2021
£’000
27
1,863
849
2,740
%
1
68
31
100
£’000
31
2,117
965
3,113
%
1
68
31
100
31 October
2022
%
31 October
2021
%
2.40
n/a
1.20
1.00
0.30
n/a
1.20
1.00
The normal retirement age for males is between 60 – 65 years and for females between 59 – 64 years for both 2022
and 2021.
The mortality tables used in 2022 and 2021 were the BVG 2020 GT tables
The mortality tables used in 2020, 2019 and 2018 were the BVG 2015 GT tables.
History of assets, liabilities and actuarial gains and losses
Present value of defined benefit obligation
Fair value of assets
Deficit
Experience (losses)/gains on plan liabilities
– as a percentage of the present value of plan liabilities
Remeasurement gains/(losses) on plan assets
– as a percentage of the present value of plan assets
2022
£’000
2,898
2,740
(158)
2022
£’000
658
(23%)
(276)
(10%)
2021
£’000
3,621
3,113
(508)
2021
£’000
436
(12%)
166
5%
2020
£’000
4,792
3,615
(1,177)
2020
£’000
(93)
2%
(69)
(2%)
2019
£’000
4,144
3,087
(1,057)
2019
£’000
(144)
3%
96
3%
2018
£’000
3,826
2,894
(932)
2018
£’000
131
3%
(78)
(3%)
Sensitivity to key assumptions
The key assumptions used for the IAS 19 valuation are: discount rate, inflation rate and mortality.
If different assumptions were used, this could have a material effect on the results disclosed.
The table below shows the sensitivity to the key assumptions noted above.
Defined benefit obligation as reported
Defined benefit obligation
– with discount rate – 0.25%
– with discount rate 0.25%
– with salary decrease – 0.25%
– with salary increase 0.25%
– with life expectancy 1 year
– with life expectancy – 1 year
Defined
benefit
obligation
£’000
2,898
2,989
2,812
2,971
2,829
2,929
2,865
Increase/
(decrease) in
defined benefit
obligation
£’000
–
91
(85)
73
(69)
31
(33)
165
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Post-employment benefit obligations continued
22
The Group’s best estimate for contributions to be paid by the company next year to the scheme is £133,000
(2021: £142,000).
The amount recognised in the income statement for this scheme was £144,000 (2021: £218,000).
Overseas post-employment benefit obligations
Provisions for obligations to make termination payments on retirement, to employees who are not members of the
pension and retirement schemes, are as follows:
▪ The Group’s Japanese subsidiary undertaking, Nippon Auto–Photo K.K, has an unfunded post-employment
retirement provision based on an employee’s length of service with the company and their current salary. The
allowance is paid to an employee when they leave the company. This has been provided for in full within the accounts.
Nippon Auto –Photo K.K, agreed with the employees that 50 % of the liability for the retirement provision will be paid
in cash to an independently controlled defined contribution scheme, with the balance to be met by the company
when the employee leaves. The provision were valued by an independent actuary using the Projected Unit Credit
Method at 31 October 2022 and 31 October 2021. This actuarial valuation incorporated the following principal
assumptions in arriving at the present value of the obligations:
Discount rate
Rate of increase in salaries
Retirement age
Mortality table
31 October 2022
31 October 2021
0.49%
0%
60 years
0.23%
0%
60 years
Standard mortality rates under
defined benefit corporation
pension plan (the 22nd Life
Table for male & female)
Standard mortality rates under
defined benefit corporation
pension plan (the 22nd Life
Table for male & female)
▪ To meet the legal obligations within France, the Group’s subsidiary undertakings have unfunded retirement
provisions, which were valued by an independent actuary using the Projected Unit Credit Method at 31 October 2022
and 31 October 2021. This actuarial valuation incorporated the following principal assumptions in arriving at the
present value of the obligations:
Discount rate
Rate of increase in salaries
Retirement age
Inflation rate
Mortality table
31 October 2022
31 October 2021
4.00%
2.00%
62-67 years
2.00%
TGH/TGF 05
0.65%
1.75%
62-67 years
1.75%
TGH/TGF 05
166
ME Group plc Annual Report 2022Financial Statements Provisions
23
Group
At 31 October 2020
Exchange differences
Charged to income statement
At 31 October 2021
Amount shown as current liability
Amount shown as non-current liability
At 31 October 2021
Exchange differences
Utilised and other movements
Charged to income statement
At 31 October 2022
Amount shown as current liability
Amount shown as non-current liability
Deferred taxation
24
Deferred tax comprises:
Temporary differences relating to property, plant and equipment
Other temporary differences in recognising revenue and expense
items in other periods for taxation purposes:
– capitalised development costs
– post-employment benefit provisions
– losses
– acquisition related intangibles
– other short-term temporary differences
The closing balance comprises:
Deferred tax assets
Deferred tax liabilities
Employee
related
claims
£’000
Product
warranties
£’000
349
84
255
688
688
–
688
3
(453)
–
238
238
99
(10)
675
764
426
338
764
7
(338)
202
635
635
–
Other
£’000
814
(176)
77
714
714
–
714
18
(760)
722
694
694
Total
£’000
1,262
(103)
1,007
2,166
1,828
338
2,166
28
(1,551)
924
1,567
1,567
–
Group
Company
31 October
2022
£’000
187
31 October
2021
(restated)
£’000
31 October
2022
£’000
31 October
2021
£’000
140
(907)
(732)
1,015
(1,243)
–
5,020
2,781
7,760
(1,982)
9,742
7,760
514
99
30
4,740
3,049
8,571
(833)
9,454
8,571
–
–
–
–
(41)
(948)
(948)
(948)
–
–
–
–
–
(732)
(732)
–
(732)
167
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Deferred taxation continued
24
The movements on deferred taxation during the period were as follows:
Opening balance
Exchange differences
Adjustments for prior periods
Arising on acquisition of subsidiary
Post-employment benefit provisions
Charge/(credit) for the period in income statement
Amounts (credited)/charged to other comprehensive income
Other
Closing balance
IFRS remeasurement
Closing balance (restated)
Group
Company
31 October
2022
£’000
9,362
(137)
82
31 October
2021
(restated)
£’000
6,058
98
–
–
2,362
248
(1,169)
–
(626)
7,760
–
7,760
98
(181)
136
–
8,571
791
9,362
31 October
2022
£’000
31 October
2021
£’000
(732)
–
–
–
–
(216)
–
–
(948)
–
(948)
(670)
–
–
–
–
(62)
–
–
(732)
–
(732)
Temporary differences associated with Group investments
Unremitted earnings of overseas affiliates
No deferred tax liability has been recognised on the unremitted earnings of overseas subsidiaries as no tax is expected to
be payable on them in the foreseeable future based on current legislation or where the Group is able to control
remittance of earnings and it is possible that such earnings will not be remitted in the foreseeable future.
Unrecognised deferred tax assets
Unrecognised deferred tax assets amounting to nil (2021: £3,012,000) arising on temporary differences in respect of
unrelieved tax losses and other temporary differences have not been recognised, as their future economic benefit
is uncertain.
The expiry dates of unrelieved tax losses are as follows:
Expiring in less than one year
Expiring between two and 20 years
No expiry date
Group
31 October
2022
£’000
31 October
2021
£’000
–
–
–
–
2,713
299
3,012
The Group has an unrecognised deferred tax asset on gross capital losses of £3,756,000 (2021: £3,756,000), of which
£3,627,000 (2021: £3,627,000) relate to the Company, which have not been recognised as their future economic benefit is
not certain.
Factors that may affect future tax charges
There will be an increase in the main rate of corporation tax in the UK from 19% to 25% from 1 April 2023. The deferred tax
assets and liabilities have been recognised based on the corporation tax rate at which they are anticipated to unwind.
168
ME Group plc Annual Report 2022Financial Statements 25
Trade and other payables
Amounts shown as current liabilities
Trade payables
Amounts owed to subsidiaries
Other taxes and social security costs
Other payables
Accruals and deferred income
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
29,364
24,599
–
4,176
11,081
7,627
–
3,820
7,232
6,833
52,248
42,484
3,207
8,736
736
64
1,808
14,552
3,624
15,030
871
62
1,412
20,999
Capital commitments and contingent liabilities
26
Contingent liabilities
The Company and subsidiary undertakings have given guarantees in the normal course of business to third parties,
including to the Group’s bankers. No losses are expected from guarantees given by the Company and subsidiary
undertakings.
In the opinion of the Directors, adequate provision has been made for claims and legal disputes and the Directors
therefore consider that no contingent liability for litigation exists.
The Group has no contingent liabilities with regard to its interest in the associated undertakings (2021: none).
Related parties
27
The Group’s related parties are its associated undertakings, subsidiary undertakings and its key management personnel,
which comprises the Board of Directors.
The following transactions were carried out with related parties:
Directors’ compensation
Salaries and other short-term employee benefits excluding
long-term incentives and pension contributions
Share-based payment charge
Group
Company
31 October
2022
£’000
31 October
2021
£’000
31 October
2022
£’000
31 October
2021
£’000
1,315
246
1,561
1,110
127
1,237
–
–
–
–
–
–
The remuneration of the directors, both executive and non-executive, of the Company, who are the key management
personnel of the Group, is set out in the table above. These figures include amounts payable to third party companies for
services of the directors. Certain executive directors, with UK salaries, are entitled to join the Company’s Group Personal
Pension Plan, to which the Company contributes 5% of their basic salaries. The charge for the period in respect of this was
£nil (2021: £nil). No director who served during the year was a member of the Company’s defined benefit pension scheme
(2021: none).
Directors of the Company control 36.60% of the Ordinary shares of the Company.
169
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Related parties continued
27
Company
Transactions with subsidiaries:
Purchases
Amounts owed by subsidiaries
Amounts owed to subsidiaries
Other items:
Intercompany fees charged by/(received from) subsidiaries
Property, plant and equipment acquired from subsidiaries
Dividend income
– from subsidiaries
31 October
2022
£’000
31 October
2021
£’000
36
22,371
8,736
6,388
5,635
20
18,279
15,030
1,646
3,226
56,511
–
Group undertakings
28
This disclosure is made in accordance with Section 409 of the Companies Act 2006 and the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008, as amended by the Companies, Partnerships and
Groups (accounts and reports) Regulations 2015. A full list of subsidiary undertakings and associated undertakings
(showing country of incorporation, which is also the main trading location of the company, and the effective percentage of
equity shares held) at 31 October 2022 is shown below. Unless indicated otherwise the equity shares held are in the form
of ordinary shares or common stock.
Principal group undertakings which affect the financial statements of the Group are highlighted in bold. Together with the
parent company, ME Group International plc, these companies contributed over 90% of the Group’s revenue and
operating profit.
Principal
Activity
Group
interest
Registered office address
Country of
incorporation
Company name
UK & Ireland
Jolly Roger (Amusement Rides) Limited Dormant
MgInvest Investments Limited
ME Group International Limited
Photo-Me (Retail) Limited
Photo-Me Limited
Photo-Me Trustee Company Limited
Xpand Investments Limited
Power-Me Limited
ME Group Ireland Supplies Limited
100%
Investment 100%*
100%
Dormant
Dormant
100%
Corporate 100%
Dormant
100%
Investment 100%
Dormant
100%
Operations 100%
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit 3B, Blenheim Road, Epsom, KT19 9AP
Unit A4, Alexander House, Tallaght Cross East,
Tallaght, Dublin 24
UK
UK
UK
UK
UK
UK
UK
UK
Republic of
Ireland
Continental Europe
ME Group Austria G.m.b.H.
Prontophot Belgium NV
Photo-Me Czech Republic s.p.o.l. s.r.o. Dormant
Operations 100%
Operations 100%
100%*
Me-Group SPC Finland Oy
Operations 100%
KIS SAS
ME Group France
Production 100%*
Operations 100%*
170
Industriestraße 7/K01 L/10, 2100 Korneuburg Austria
Boulevard Paepsem 8a, 1070 Anderlecht
Husova 2117, 256 01 Benešov
Unit 3B Blenheim Road, Epsom, United
Kingdom. KT19 9AP
7 Rue Jean-Pierre Timbaud, 38130 Echirolles
8 rue Auber 75009, Paris
Belgium
Czech
Republic
Finland
France
France
ME Group plc Annual Report 2022Financial Statements
Principal
Activity
Group
interest
Registered office address
Country of
incorporation
Operations 100%*
73 D rue du Général Mangin, 38000 Grenoble France
Company name
Sempa SARL
ME Group GSS
SCI Immobilière du 21
Dreamaker
ME Group Germany G.m.b.H.
Me-Group Italia Srl
Kis Italia Srl
Prontophot Holland B.V
KIS Poland s.p.z.o.o.
ME Group Portugal LDA
Corporate 100%
100%*
Property
Operations 100%
Operations 100%
Operations 100%
Dormant
100%
Operations 100%
Operations 100%
Operations 100%
ME Group Spain Solutions
Operations 100%
ME Group Switzerland AG
Asia & ROW
ME Group Australia Pty Ltd
Operations 100%
Operations 100%
Now Retail Group Pty Ltd
Operations 100%
Photo-Me (Shanghai) Co Limited
Operations 100%*
Photo-Me Beijing Co Limited
Operations 100%*
Photo-Me Chengdu Co Limited
Dormant
100%*
Nippon Auto-Photo Kabushiki Kaisha
Operations 100%
Photo-Me Korea Company Limited
Operations 100%*
Photomatico (Singapore) Pte Limited
KIS Technology Company Limited
Operations 100%
100%
Dormant
Photomaton Maroc SARL
Operations 50%
* Investments in subsidiaries not owned directly by ME Group International plc.
8 rue Auber 75009, Paris
7 Rue Jean-Pierre Timbaud, 38130 Echirolles
80 route des Lucioles 06560 Valbourne
Gervinusstraße 15-17, 60322 Frankfurt
am Main
Roma (RM) Via Lovanio 1, CAP 00198
Milano, Via Tiziano 32, CAP 20145
Loonseweg 14, 5527 AC Hapert
ul. Targowa 46/5, 03-733 Warszawa
Industrial do Carvalhinho – Fracção K
2860-579 MOITA
28224 – Pozuelo de Alarcón (Madrid),
Calle de las Dos Castillas, 33, Ático 7
Sonnentalstrasse 5, 8600Dübendorf
France
France
France
Germany
Italy
Italy
Netherlands
Poland
Portugal
Spain
Switzerland
China
China
Australia
Australia
4/24 Philip Street, Hawthorne,
Queensland 4171
Level 9, 123 Albert Street, Brisbane,
Queensland 4000
Room 1102 Tongyong Tower, No. 1346 Gong he
Xin Road, Zha bei District, Shanghai 200070
Room 1124, Ocean Natural Xintiandi, No.106
East Majiapu Road, Fengtai District,
Beijing 100000
Room 1124, Ocean Natural Xintiandi, No.106
East Majiapu Road, Fengtai District,
Beijing 100000
Room 1302, Atlas Tower Roppongi, Roppongi
7-7-13,Minato-Ku, 106 0032
Room #203-1, Daeryung techno town 1st,
Gasan Digital 2 ro 18, Geumcheon-gu, Seoul,
08592
26 Sin Ming Lane, Singapore 573971
P.1003, Ford Thang Long Building, 105 Lang Ha,
Lang Ha Street, Ba Dinh district, Hanoi
131 Bd D’Anfares Azur Sidi Belyout,/Casablanca Morocco
Japan
Korea
China
Singapore
Vietnam
Photo-Me CR.s.p.o.l.s.r.o. is owned 20% by ME Group International plc and 80% by ME Group Austria G.m.b.H.
The results of the Group’s subsidiaries and associates are consolidated for the period ended 31 October 2022.
Certain subsidiaries and associates have a different statutory year end, sometimes due to legal requirements in the
country concerned.
171
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Group undertakings continued
28
The parent company, Me Group International Plc, has issued guarantees under section 479C of the Companies Act 2006,
which exempts the following subsidiaries from the requirements relating to the audit of individual accounts by virtue of
parental guarantee:
▪ Jolly Roger (Amusement Rides) Limited;
▪ Photo-Me (Retail) Limited;
▪ Xpand Investments Limited;
▪ Mginvest Investments Limited; and
▪ Photo-Me Limited.
Business combinations
29
Dreamakers
On 31 March 2022 the Group acquired 100% of the issued share capital of Dreamakers for a consideration of €3,900,000
(£3,274,000), obtaining control of the company on that date.
Dreamakers, which operates under the trading name ‘VIP BOX’, is a France based, market leader in the rental and sale
of selfie stations for private and professional events. This acquisition supports the Group’s strategic aim of product
diversification.
The acquisition was funded from the Group’s cash resources.
Deferred consideration
Of the total consideration, €600,000 (£504,000) is deferred and contingent on future performance. The deferred
payment will be due 12 months from the acquisition date. The value will be determined based on Dreamakers’ profit
before tax over the 12 months following the acquisition date.
Management expects Dreamakers to meet the maximum profit before tax target, so have accrued the maximum
contingent consideration value of €600,000 and included this amount in the total consideration.
Acquired assets and liabilities
The purchase price allocation, including determination of the fair value of intangible assets recognised on consolidation
has not been finalised.
Goodwill has been calculated using the provisional fair values of the assets and liabilities acquired, with a value of
£1,652,000 recognised in the Group’s Statement of Financial Position, pending valuation of assets and liabilities acquired.
Pending receipt of the final valuations of the assets acquired, in accordance with IFRS3, the accounts will be adjusted
retrospectively within the measurement period of no more than one year from the acquisition date.
172
ME Group plc Annual Report 2022Financial Statements The provisional fair values of the assets and liabilities acquired, cash outlay on acquisition and results of the acquired
business included in Group results in the year ended 31 October 2022 are shown in the table below.
Property, plant and equipment
Total non-current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total current assets
Trade and other payables
Total current liabilities
Total liabilities
Total identifiable net assets excluding goodwill
Goodwill
Total identifiable net assets acquired
Satisfied by:
Cash
Deferred consideration
Total consideration
Cash consideration per cashflow:
Cash consideration
Net cash acquired
Initial cash outlay on purchase of subsidiaries
Revenue
Profit before tax
£’000
121
121
47
372
2,031
2,450
949
949
949
1,622
1,652
3,274
2,770
504
3,274
2,770
(2,031)
739
1,756
71
Société Générale d’Equipement de Restauration (SGER)
On 30 June 2021 the Group acquired 100% of the issued share capital of SGER for a consideration of €3,489,000
(£2,948,000), obtaining control of the company on that date.
SGER, which operates under the trading name ‘Resto’clock’, is a France based, market leader in pizza vending equipment.
This acquisition supports the Group’s strategic aim of diversification and becoming a European market leader in food
vending equipment. The acquisition was funded from the Group’s cash resources.
Due to the proximity of the transaction to the prior period reporting date, the purchase price allocation, including
determination of the fair value of intangible assets recognised on consolidation, had not been finalised when the prior
period financial statements were approved.
With the purchase price allocation now complete, the Group has during the period adjusted the provisional amounts that
were recorded in the prior period financial statements by increasing intangible assets by € 2,491,000 (£2,142,000) and
reducing goodwill by the same amount (see note 11).
173
ME Group plc Annual Report 2022Financial Statements Notes to the Financial Statements continued
For the 12 months ended 31 October 2022
Business combinations continued
29
As part of the purchase price allocation, the Group has recognised separately identifiable acquired intangible assets in
accordance with IAS38 and had their fair values assessed by an independent expert.
The fair value adjustments in respect of acquired intangible assets are due to the recognition of €99,000 (£85,000) in
respect of SGER’s order backlog at the acquisition date; €1,398,000 (£1,202,000) in respect of the patents over SGER’s
proprietary technology which underpin its future cash generation; and €994,000 (£855,000) in respect of the
‘Resto’clock’ brand, which has been in existence for over 25 years.
There is a small balance of residual goodwill of €806,000 (£693,000) which we consider is attributable to SGER’s
acquired workforce.
A deferred tax liability of €629,000 (£541,000), in respect of the patent intangible asset, has been recognised and
reflected in the adjusted goodwill value.
Now Retail Group (NRG)
On 3 September 2021 the Group acquired 100% of the issued share capital of Now Retail Group Pty Ltd for a
consideration of AUD 3,504,000 (£1,913,000), obtaining control of the company on that date.
Now Retail Group is an Australian owner and operator of automated retail units, with a focus on health, beauty and
consumer electronics products. This acquisition supports the Group’s strategic aims of geographic and product
diversification. The acquisition was funded from the Group’s cash resources.
Due to the proximity of the transaction to the prior period reporting date, the purchase price allocation, including
determination of the fair value of intangible assets recognised on consolidation, had not been finalised when the prior
period financial statements were approved.
With the purchase price allocation now complete, the Group has during the period adjusted the provisional amounts that
were recorded in the prior period financial statements by increasing intangible assets by AUD 1,777,000 (£987,000) and
reducing goodwill by the same amount (see note 11).
As part of the purchase price allocation, the Group has recognised separately identifiable acquired intangible assets in
accordance with IAS38 and had their fair values assessed by an independent expert.
The fair value adjustments in respect of acquired intangible assets are due to the recognition of AUD 1,352,000 (£751,000)
in respect of NRG’s non contractual customer relationships; AUD 226,000 (£126,000) in respect of contractual customer
relationships; and AUD 199,000 (£110,000) in respect of brand related assets.
There is a balance of residual goodwill of AUD 2,015,000 (£1,104,000) which we consider is attributable to NRG’s
acquired workforce.
174
ME Group plc Annual Report 2022Financial Statements Other changes to the composition of the Group
Disposal of La Wash Group
On 8 April 2022, the group disposed of its Spanish B2B laundry business La Wash Group. This was for consideration of
£152,000. The group incurred a loss of £459,000 which has been recognised in other losses in the income statement.
Acquisition of non-controlling interest in SCI du Lotissement d’Echirolles
The Group owned 61% of SCI Lotissement d’Echirolles (SCI), with the remaining 39% previously being held by a third party
non-controlling interest.
In April 2022, the Group acquired the remaining 39% from the non-controlling interest increasing its ownership of SCI to
100%. The consideration paid for the non-controlling interest was €3,554,000 (£2,985,000).
In accordance with IAS27 this acquisition was accounted for as an equity transaction, reducing the Group’s equity by
€3,554,000 (£2,985,000).
30
Period summary
Income statement (unaudited)
Revenue
UK & Ireland
Continental Europe
Asia
Total revenue
Operating profit
Net finance (cost)/income & Other gains
Profit before taxation
Taxation
Profit after taxation
Attributable to:
– equity owners of the Parent
– Non-controlling interests
Earnings per share – Basic
Earnings per share – Diluted
Dividends – interim
Dividends – final
Dividends – special
Total dividends
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
41,996
177,839
39,945
259,780
56,681
(3,327)
53,354
(14,561)
38,793
38,793
–
38,793
10.26p
10.23p
2,60p
0.00p
0.00p
2.60p
29,644
145,009
39,751
214,404
29,335
(780)
28,555
(6,703)
21,852
21,713
139
21,852
5.78p
5.72p
0.00p
2,89p
6,50p
9.39p
54,623
195,230
60,392
310,245
3,317
(2,825)
492
(2,844)
(2,352)
(2,305)
(47)
(2,352)
(0.62)p
(0.62)p
0.00p
0.00p
0.00p
0.00p
52,919
130,661
44,538
228,118
42,739
(146)
42,593
(11,314)
31,279
31,226
53
31,279
8.27p
8.26p
3.71p
4.73p
0.00p
8.44p
63,707
121,134
44,973
229,814
46,106
4,069
50,175
(9,889)
40,286
40,134
152
40,286
10.64p
10.60p
3.71p
4.73p
0.00p
8.44p
175
ME Group plc Annual Report 2022Financial Statements
Notes to the Financial Statements continued
Period summarcontinued
30
Statements of financial position
Intangible assets
Property, plant and equipment
Other non-current investments
Other non-current assets
Current assets
Assets held for sale
Total assets
Share capital
Share premium
Reserves
Equity of the Parent
Non-controlling interests
Total equity
Total non-current liabilities
Total current liabilities
Total equity and liabilities
Net cash
2022
£’000
32,736
101,090
21
7,805
184,716
–
326,368
1,889
10,627
120,133
132,649
–
132,649
94,039
99,680
326,368
34,021
2021
£’000
34,502
91,973
21
3,966
141,688
–
272,150
1,889
10,599
115,486
127,974
1,720
129,694
68,900
73,556
272,150
34,919
2020
£’000
32,739
90,937
57
3,743
2019
£’000
41,816
95,353
415
5,693
2018
£’000
27,395
93,232
1,583
10,047
139,760
128,723
106,652
–
267,237
1,889
10,599
99,693
112,181
1,689
113,870
52,968
100,399
267,237
21,877
–
–
272,000
238,909
1,889
10,588
129,500
141,977
1,870
143,847
64,450
63,703
1,887
10,366
131,004
143,257
1,553
144,810
35,959
58,140
272,000
238,909
16,338
26,688
Note: The figures above have been extracted from the accounts for the relevant period and have not been adjusted for
changes in accounting policies as a result of adoption of new accounting standards.
Financial & operating statistics
Capital expenditure – photobooth &
vending machines £’000
Capital expenditure – research &
development £’000
EBITDA £’000
EBITDA % of revenue
Number of vending sites
2022
2021
2020
2019
2018
27,205
22,563
38,435
24,938
35,588
1,418
92,241
35.5%
1,802
65,077
30.4%
2,296
87,313
28.1%
43,900
43,800
44,500
1,631
69,705
30.6%
47,000
2,510
70,981
30.9%
47,000
176
ME Group plc Annual Report 2022Financial Statements
Company Information & Advisers
Registered in England and Wales
Number 735438
Registered Office
Unit 3B
Blenhiem Road
Epsom
KT19 9AP
Tel:
Web:
e-mail:
44 (0)1372 453399
https://me-group.com/
ir@photo-me.com
Auditor
Mazars LLP
30 Old Bailey,
London,
United Kingdom,
EC4M 7AU
Brokers
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
finnCap Limited
1 Bartholomew Close
London
EC1A 7BL
Berenberg
60 Threadneedle Street
London
EC2R 8HP
Bankers
BNP PARIBAS
Centre d’affaires Arc Alpin Entreprises
60 rue Lavoisier – Innovallée BP28
38334 Saint Ismier Cedex
France
Lloyds Bank plc
25 Gresham Street
London
EC2V 7HN
177
ME Group plc Annual Report 2022Financial Statements Shareholder Information
For the 12 months ended 31 October 2022
Analysis of registered shareholdings at 28 February 2022
Category
Individuals
Nominees
Other corporate bodies
Total
Size of holding:
1 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 500,000
500,001 – 1,000,000
1,000,001 and above
Total
Number of
holdings
Number of
Ordinary shares
1,738
317
38
7,195,811
365,080,151
5,735,675
2,093
378,051,637
Number of
holdings
Number of
Ordinary shares
1,065
512,077
743
167
64
21
33
2,254,808
5,918,347
14,951,936
16,328,506
338,045,963
2,093
378,051,637
%
Ordinary
share capital
1.90%
96.58%
5.52%
100%
%
Ordinary
share capital
0.14%
0.61%
1.61%
4.22%
4.56%
88.90%
100%
178
ME Group plc Annual Report 2022Financial Statements Investor relations website
Investor relations information, including share price, is available through the Company’s website https://me-group.com/
Transfer office and registration services
Link Group act on behalf of the Company. All shareholder enquiries, notifications of change of address, dividend
mandates, etc. should be referred to them at:
Link Group
10th floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel:
Overseas Tel: 00 44 371 664 0391
0371 664 0300
Link Group also offer a range of shareholder information online at www.capitashareportal.com
The Register of directors’ interests is maintained at the Registered Office at Epsom.
Copies of the Annual Report should be requested from:
ME Group International plc
Unit 3B
Blenheim Road
Epsom
KT19 9AP
Tel
e-mail:
44 (0)1372 453399
ir@photo-me.com
Financial Calendar
Annual General Meeting
28 April 2023
Half year results
(to 30 April 2023)
Full year results
(to 31 October 2023)
Announcement in July 2023
Announcement in February 2024
ME Group International plc
Unit 3B Blenheim Road, Epsom KT19 9AP
T +44(0)1372 453399 F +44(0)1372 451044 W https://me-group.com/
179
ME Group plc Annual Report 2022Financial Statements Notes
180
ME Group plc Annual Report 2022 Designed and produced by Invicomm
www.invicomm.com
Photo-Me International plc
Unit 3B Blenheim Road, Epsom KT19 9AP
T +44(0)1372 453399 F +44(0)1372 451044 W www.photo-me.com