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MEGroup International plc
Annual Report 2023
The next
generation
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Who we are
We are an international market leader in
automated instant-service equipment with
operations across 18countries.
What we do
We operate, sell and service a wide range of
instant-vending equipment primarily aimed
at theconsumermarket, with technological
innovation at its core.
Our purpose
Inventing eco-responsible local services that
makeeveryday life easier.
Our Vision
To be the market leader and go-to instant-service
technology provider across all of our key markets,
andto contribute positively and responsibly to our
localities, communities and the environment.
Our Mission
To enhance our ability to service the needs of
consumers’ everyday lives across multiple different
touch-points through innovative products and
digital transformation.
Our Values
Supported by the strength of our people, a strong
cohesion between teams, and
social commitment,
our aim is to meet end-consumer needs in terms
of efficiency and reliability as well as to provide site
owners with the services they need to make their
sites attractive.
Contents
Strategic report
Business at a Glance 4
Our business model 6
Growth strategy in action 8
Our business 10
Chairman’s statement 18
Chief Executive’s report 22
Innovation and diversification 30
Review of performance bygeography 32
Section 172(1) statement 34
Principal risks 38
Sustainability at MEGroup 42
Specific sustainability metricsand reporting 52
Viability statement 66
CorporateGovernance
Board of Directors and Company Secretary 70
Report of Directors 72
Corporate governance 78
Statement of Directors’ Responsibilities 88
Directors’ RemunerationReport 90
Remuneration PolicyReport 94
Annual report on Remuneration 100
FinancialStatements
Independent auditor’s report to themembers of
ME Group International plc 110
Group Statement of Comprehensive Income 118
Group Statement of Financial Position 119
Company Statement of Financial Position 120
Group Statement of Cash Flows 121
Company Statement of Cash Flows 122
Group Statement of Changes in Equity 123
Company Statement of Changes in Equity 124
Notes to the Financial Statements 125
Company Information & Advisers 188
Shareholder Information 189
Summary of 2023
Highlights
A year of record financial
performance
Next-generation
photobooth rollout
underway, modernising
and digitalising
photobooth estate
Market leader in Japan,
following photobooth
acquisition
Creation of further
shareholder value
through dividends and
share buyback
programme
Continued expansion
oflaundry operations
Return to the FTSE 250
Index on the London
Stock Exchange
1
EBITDA is profit before depreciation, amortisation, other net gains / (losses) and finance cost and income.
2
Net cash excludes investments in convertible bonds (£4.7m) and lease liabilities (£13.3 million). See note 20 for details of net cash.
3
Interim Dividend paid on 23 November 2023 (£11.2 million). Recommended Final Dividend will be paid on 23 May 2024, subject to approval
at the AGM.
4
The total dividend per ordinary share of 12.70p in respect of FY 2022 included special dividends totalling 7.10p per share (£26.8 million).
5
2022 cash generated from operations has been restated by +£3.8m due to a reclassification from debtors to intangibles assets. See note 11
for details.
REVENUE
GROSS CASH
EBITDA
1
NET CASH
2
PROFIT BEFORE TAX
TOTAL DIVIDENDS PER ORDINARY SHARE
3/4
Key financials
for the 12 months ended 31 October 2023
2023: £297.7m 2023: £111.1m
2022: £259.8m
2022: £136.2m
2023: £106.6m 2023: £33.9m
2022: £92.2m 2022: £34.0m
2023: £67.1m
2022: £53.4m
EARNINGS PER SHARE
2
2023: 13.31p
2022: 10.23p
2023: 7.39p
CASH GENERATED FROM OPERATIONS
5
2023: £104.7m
2022: £91.7m
2022
4
: 12.7p
MEGroup plc Annual Report 2023
1
Strategic
report
Business at a Glance 4
Our business model 6
Growth strategy in action 8
Our business 10
Chairman’s statement 18
Chief Executive’s report 22
Innovation and diversification 30
Review of performance bygeography 32
Section 172(1) statement 34
Principal risks 38
Sustainability at MEGroup 42
Specific sustainability metricsand reporting 52
Viability statement 66
MEGroup plc Annual Report 2023
2
We have been working to improve the user
experience within our our apps and machines
to simplify navigation, and boost overall
efficiency for our customers.
MEGroup plc Annual Report 2023
3
Our business services
Unattended laundry services
and launderettes
Vending equipment for
thefood service market
High-quality digital
printing kiosks
Photobooths and
integratedbiometric
identification solutions
Business
at a Glance
UK & Republic of Ireland
6,297
MACHINES IN OPERATION
16.2%
OF TOTAL GROUP REVENUE
Continental Europe
26,232
MACHINES IN OPERATION
68.9 %
OF TOTAL GROUP REVENUE
Photo
Print
Feed
Wash
MEGroup plc Annual Report 2023
4
Strategic Report
VENDING UNITS
IN OPERATION
47,566
R&D CENTRES
2
France and Vietnam, supported by
ateam of more than 50 engineers
OPERATIONS IN
18 countries
Australia, Austria, Belgium, China, Finland, France, Germany, Ireland,
Italy, Japan, Morocco, Netherlands, Portugal, Singapore, Spain,
Switzerland, United Kingdom and Vietnam
3
CORE GEOGRAPHIES
Continental Europe, UK & Republic of Ireland and Asia Pacific
Asia Pacific
15,037
MACHINES IN OPERATION
14.9 %
OF TOTAL GROUP REVENUE
MEGroup plc Annual Report 2023
5
Our business model
Technological innovation and
digital transformation sit at
thecore of our business
strategy. This 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; this
enablesit to capitalise on
itsoperating leverage.
We provide our partners and our end-consumers
with an excellent customer experience focused
on people, service and customer satisfaction.
Each day, millions of people see and use our
conveniently-positioned machines and technology
as we strive to make people’s lives easier every
day around the world.
We have long-standing established partnerships
with site owners and our long-term contracts
provide the Group with consistent, solid year-
on-year recurring revenue streams and revenue
visibility. We operate most of our vending
equipment and pay the site owner a percentage
of the machine turnover or a fixed fee, or a
combination of these.
The Group benefits from a dominant market
position, with limited or no competition, in many
of the countries in which it operates. The size of
our machine network enables us to leverage
economies of scale to expand our operations
and benefit from the trend towards increased
automation while presenting significant barriers
topotential competitors.
Predictable and stable
cash flows
Generated from existing network
tofund growth through
productinnovation
International footprint and
diversity of services offered
Providing resilience through location
and service mix against geographic
trends and demand patterns
Established network of
skilled field engineers
Supporting growth across business
areas at limited additional cost
Industry-leading
technological capabilities
and proven track record
In-house R&D developing
proprietary solutions and
continuous product diversification,
offering best-in-class user
experience and operations
management, underpinned by
instant-service vending know-how
Competitively priced,
high-quality services with
afocus on consumer
experience
Meeting the increasing demand for
instant-vending service on the go
through convenient easy-to-use
reliable, value-for-money services
Value for all our
stakeholders
Meeting the needs of customers
and consumers and delivering
shareholder value through growth
and dividends
Long-term partnerships
and contracts with
high-footfall site owners
Machine portfolio positioned in
accessible locations with c.90%
tacit renewal, such as
supermarkets,shopping centres
and transport hubs
A market leader with more
than 60 years of industry
experience
Providing leading brands and
household names in key territories with
expert know-how in autonomous
vending equipment
Sustainability
Focus on social commitment,
environmental footprint and
responsibility towards society
Our key strengths
The Group’s business model and market-leading position benefit from:
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MEGroup plc Annual Report 2023
6
Strategic Report
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Innovation,
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Wash
Feed
Photo
MEGroup plc Annual Report 2023
7
We are pleased to outline
progress in FY 2023 on
delivery of our growth
strategy against each of the
five key pillars aimed at
supporting the development
of the Group’s principal
business areas.
Growth strategy in action
Our growth strategy is centred on five key pillars to
support the development of the Group’s principal
business areas: photobooths, laundry services,
digital printing and food vending equipment.
1.
Expansion into
new geographic
territories
Continue to build the
Group’s international
presence in recently
enteredmarkets of Italy,
Finland and Australia.
Progress in FY 2023
The Group has continued
to drive expansion
of operations in new
geographic territories. In
Australia we have around
11 photobooths installed
across Sydney and
Melbourne, our pilot cities.
Whilst expansion in Australia
remains at an early test
phase, we continue to look
at how we can best grow our
operations and believe there
is a significant opportunity
in the region
2.
Entering new
market segments
Through securing new
partnerships with businesses
such as supermarkets and
smaller retailers.
Progress in FY 2023
Our partners and site
owners remain a valuable
route for us to grow our
business by entering new
market segments. We
launched new partnerships
with Central Co-op and
Morrisons, two major
supermarket chains in the
UK, enabling us to offer
conveniently accessible
laundry services to
consumers at those sites.
MEGroup plc Annual Report 2023
8
Strategic Report
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.
Progress in FY 2023
The Group is well underway
with the deployment of
modernisation software
across its photobooth
estate. This new proprietary
software provides us with
the ability to deploy new
functionality and services,
as well as update interfaces,
remotely. Further details are
disclosed further down in
this report.
5.
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
increase the breadth of our
services available through
our machine network.
Progress in FY 2023
In October our Japanese
subsidiary, MEGroup
Japan K.K., completed
the acquisition of the
automated-photobooth
business from FUJIFILM
Corporation. The acquired
photobooths have been fully
integrated into the Group’s
operations, benefitting from
wider operational synergies,
and consequently the Group
is positioned as a market
leader for photobooths
across Japan.
4.
Continued
expansion and
diversification
ofservices
Revenue growth through a
multi-service instant-service
offering and integration
of centralised operating
systems.
Progress in FY 2023
The Group has rolled out a
number of next generation
photobooths, predominantly
across France, as part of
our strategy to introduce a
multi-service offering across
its operations. Machines are
being installed at a rate of
around 180 per month with
ambitions to increase to 250
new installations per month
during 2024.
We are pleased to have made solid
progress against our five-year plan
to2027, driving forward a number
ofinitiatives as part of this
mid-termroadmap.
MEGroup plc Annual Report 2023
9
A global leader in the photobooth
market for instant photo ID,
portraits and fun photographs.
Ourservices are primarily aimed
atthe consumer market, with
machines typically located in
convenient, high-footfall locations
such as travel hubs, shopping
centres and supermarkets.
The business generates stable
cashflow which supports the
Group’s diversification strategy
andinvestment in new
productdevelopment.
Photobooths with
integrated biometric photo
identification solutions
Photo
GROUP TOTAL VENDING ESTATE
PHOTOBOOTH UNITS IN OPERATION
30,762
OPERATIONS IN
18 countries
Australia, Austria, Belgium, China, Finland,
France, Germany, Ireland, Italy, Japan, Morocco,
Netherlands, Portugal, Singapore, Spain,
Switzerland, United Kingdom, Vietnam
VENDING REVENUE
1,2
11.8%
2023: £172.5m 2022: £154.3m
EBITDA
1
14.0%
2023: £61.8m 2022: £54.2m
1
For the 12 months ended 31 October 2023
2
Excludes revenue from the sales of machines,
equipment and services
Our business
64.7%
Strategic Report
MEGroup plc Annual Report 2023
10
Our photobooths offer
▪ Integrated proprietary software to conform to
International Standards Organisation (ISO) and
International Civil Aviation Organisation (ICAO) photo
ID regulations
▪ Secure digital photo ID technology to improve and
digitalise security ID, working closely with national
institutions to ensure compliance with Photo ID standard
and security requirements, offering secure integrated
solutions including biometric data capture, secure and
direct transfer of data and 3D facial image capture
▪ Portraits and fun photos provide fun user
experiencessuch as beautifying, vintage, portrait
editing features, video capture etc
The Group pays the site owner a percentage of machine
turnover or a fixed fee or a combination of these.
Growth drivers
▪ Demand for photo ID required for official
documentation
▪ Government need for digitalised photo ID and security
to combat fraud and criminal activity
▪ Consumer demand for multi-functional instant services
via a single machine
Our next-generation photobooth marks the
start of our journey to modernising and
modularising our photobooth estate. It offers
consumers a multi-functional booth providing
a range of services, alongside our core photo
ID product offering.
Next generation
photobooths
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
▪ Deployment of proven photo ID 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
Growth targets
▪ Continued roll out of next generation photobooths in
2024, with the aim of deploying approx. 3,000
▪ Planned investment in FY2024: £15-20 million for next
generation photobooth rollout and machine upgrades
▪ Target returns: 18 months
▪ Plans to deploy a total of 8,000 next generation
machines by the end of FY 2025
Features include:
▪ Photo ID for official documentation with secure
upload technology
▪ User personalisation services, using A1 and photo
filter technology for fun images
▪ ‘Mobile to print’ functionality for photograph
Powered by technological digitlisation:
▪ New, cloud-based proprietary software
Deployment strategy:
▪ 547 installed in FY 2023
▪ Plans to install 3,000 in FY 2024
▪ Target of 8,000 installed by end of FY 2025
Capex:
▪ £8.9 million invested in FY 2023
▪ Planned investment in FY2024: £15-20 million
▪ Target return on investment: 18 months
MEGroup plc Annual Report 2023
11
Convenient, affordable and
easy-to-use instant-printing
services for consumers, positioned
in attractive high footfall locations
across Europe.
GROUP TOTAL VENDING ESTATE
UNITS IN OPERATION
4,734
OPERATIONS IN
8 countries
Belgium, France, Germany, Japan, Netherlands,
Portugal, Spain and Switzerland
VENDING REVENUE
1,2
5.6%
2023: £11.3m 2022: £10.7m
EBITDA
1
16.7%
2023: £4.2m 2022: £3.6m
1
For the 12 months ended 31 October 2023
2
Excludes revenue from the sales of machines,
equipment and services
10.0%
High-quality digital
printing kiosks
Print
Our business continued
Strategic Report
MEGroup plc Annual Report 2023
12
Our digital printing offer
▪ Industry-leading technology offering a wide range of
printing formats and personalised products. Our kiosks
enable easy, competitively-priced, high-quality digital
printing from smartphones
▪ State-of-the-art kiosks which are fully integrated with
major social media networks providing consumers with
convenient, easy-to-use, reliable and high-quality
services 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.
Growth drivers
▪ Increased use of smartphones and digital sharing
across social media networks
▪ Growing demand for convenient, high-quality
printingservices
ther vending equipment typically situated
athigh-footfall sites where the Group has
anexisting relationship with the site owner
andcan benefit from operating synergies,
such asusing its field engineer and
maintenance network.
Our operations include:
Self-service traditional amusement and interactive rides
offering safe entertainment for children.
Photocopiers which enable consumers to reproduce
physical documents, safely and securely, using the
latesttechnology.
The Group pays the site owner a percentage of machine
turnover or a fixed fee or a combination of these.
Other vending
equipment
Growth strategy
▪ Opportunities to extend digital kiosk services offered
through the Group’s instant-service machine network
▪ Product partnership and expansion opportunities
within existing territories
Growth targets
▪ A second range of 500 new kiosks to be installed in
France to refresh portfolio in France in 2024
▪ Target returns: 18-20 months
GROUP TOTAL VENDING ESTATE
UNITS IN OPERATION
6,055
13.6%
MEGroup plc Annual Report 2023
13
Growing network of large-
capacity unattended laundry
services, offering a range of
machine formats for partners
andend consumers.
Unattended 24/7 laundry
services and laundrettes
Wash
GROUP TOTAL VENDING ESTATE
UNITS IN OPERATION
5,533
OPERATIONS IN
12 countries
Austria, Belgium, China, France, Germany, Ireland,
Japan, Netherlands, Portugal, Spain, Switzerland
and United Kingdom
REVOLUTION VENDING REVENUE
1,2
34.2%
2023: £76.1m 2022: £56.7m
EBITDA
1
35.7%
2023: £39.5m 2022: £29.1m
1
For the 12 months ended 31 October 2023
2
Excludes revenue from the sales of machines,
equipment and services
11.6%
Our business continued
Strategic Report
MEGroup plc Annual Report 2023
14
Our laundry operations
▪ Revolution unattended laundry services offer
24/7outdoor self-service laundry machines,
typicallylocated on high footfall sites, providing
accessto large-capacity and energy-saving
rapidlaundry services
▪ Self-service launderette shops offer convenient and
competitively-priced large-capacity, self-service
laundry amenities, typically located near town centres
The Group pays the site owner a percentage of machine
turnover or a fixed fee or a combination of these.
Growth drivers
▪ Demand for convenient, high-capacity laundry services
at competitive prices
▪ Cost-effective and energy-efficient service compared
with domestic alternatives
▪ Compact machine formats present attractive option
for space-sensitive site owners and consumers
Growth strategy
▪ Expansion of Revolution laundry services in target
territories through new and existing partnerships with
strategic site owners, increasing laundry revenue as a
proportion of total Group revenue
▪ Continued innovation of laundry units, upgrading
existing machines and commercialisation of new
formats for new market segments
▪ Key focus on sustainability and cost savings of water
and electricity
Growth targets
▪ Targeting an average installations of 80-90 units
permonth in FY 2024
▪ Rollout of photovoltaic solar panels on Revolution
unitsacross key territories, including France and
UnitedKingdom
▪ Planned investment in FY2024: £26.0 million
▪ Target returns: Approx. 18 months
MEGroup plc Annual Report 2023
15
Primarily sells fruit juice and pizza
machines, typically with a
maintenance agreement.
In addition, the Group operates a
small number of fresh orange juice
vending machines in Japan.
Vending equipment
forthefood and juice
servicemarket
Feed
GROUP TOTAL VENDING ESTATE
UNITS IN OPERATION
441
OPERATIONS IN
5 countries
Belgium, France, Japan, Switzerland, Australia
REVENUE
1
8.0%
2023: £13.5m 2022: £12.5m
EBITDA
1
11.8%
2023: £3.8m 2022: £3.4m
1
For the 12 months ended 31 October 2023
0.8%
Our business continued
Strategic Report
MEGroup plc Annual Report 2023
16
Our vending operations
▪ 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)
▪ Multiple vending machine formats providing range of
applications and use of space
Contracts typically include a maintenance agreement for
the Group to service the equipment for the duration of
the contract.
Growth drivers
▪ A new salesforce reinforced by MEGroup France team
will drive significant growth in pizza-vending
equipment sales to B2B market
▪ Technical issues were resolved in 2023. This should help
the Group to accelerate the sales in 2024
Growth strategy
▪ 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 across new and existing territories
▪ Developing partnerships with new and existing site
owners to sell / deploy food vending equipment,
benefitting from synergies where other units are
already deployed
Growth targets
▪ Aim to become the food-vending equipment market
leader in the European market
A catering service for the hotel industry,
givescustomers the chance to enjoy a full
meal on the spot at any time, quickly and
atalow price
The connected
fridge
Features include:
▪ All-in-one fridge + reheating system on less than
1m² of floor space
▪ Electronic payment
▪ Intelligent detection system with quick and easy
product registration
Green technology:
▪ Clean SmartScale technology (without polluting
RFID chips) and optimised stock management to
limit deliveries and waste.
MEGroup plc Annual Report 2023
17
Chairman’s statement
REPORTED REVENUE
£297.7m
12 months ended 31 October 2023
CASH GENERATED FROM OPERATIONS
£104.7m
As at 31 October 2023
The Group’s operations are highly
cash-generative, with these cash flows
used to fund growth through product
innovation and expansion, and in turn
driving value to our shareholders
through growth and dividends
MEGroup plc Annual Report 2023
18
Strategic Report
2023 Overview
I am pleased to report that the Group delivered
a record financial performance in FY 2023, with
strong growth delivered against the prior year,
particularly across the Group’s core Photobooth
and Laundry operations. This reflected the positive
trading momentum achieved throughout the year
with growth achieved across all of MEGroup’s key
business areas and key territories, with activity
supported by strong consumer demand for our
automated services.
For the 12 months ended 31 October 2023, the
Group delivered robust revenue growth of 14.6%,
EBITDA growth of 15.6% and a 25.7% increase in
profit before tax. In FY 2023, Group EBITDA also
surpassed £100 million for the first time, reaching
£106.6 million, with profit before tax increasing by
£13.7 million to £67.1 million, reflecting the Group’s
focus on delivering growth profitably across its
global vending estate.
Today, MEGroup has a dominant market position
in most of the markets in which it operates, with
its long-term customer contracts supporting
good predictability and visibility on its revenue
streams.The Group’s operations are highly
cash-generative, with these cash flows used
to fund growth through product innovation
and expansion, and in turn driving value to our
shareholders through growth and dividends.
Strategic progress
We have continued to make good progress
against our growth strategy. Our technological
innovation expertise is supporting the
diversification of our product portfolio and the
Group’s digital transformation, as we modernise
our vending estate and our organisation. This
underpins our continued focus on expanding
the number of units in operation and increasing
the yield per unit, while reducing production and
operational costs to the Group. This enables us to
capitalise on the Group’s operating leverage.
Our growth strategy is focused on five core pillars:
1. Expansion into new
geographicterritories
2. Entering new market segments
3. Ongoing new product and
technologyinnovation
4. Continued expansion and
diversification of services
andrevenuegrowth
5. Merger & Acquisition
Progress was achieved across these pillars, notably
with the deployment of our next generation
photobooth, integrated with ournewly developed
proprietary software. Wealso cemented our
presence in the Japanesephotobooth market,
positioning the Group as market leader in the
country, followingour photobooth acquisition.
Further details on our progress are set out in the
Chief Executive’s Report.
We continue to explore a plethora of potential
opportunities that will help us to meet our growth
ambitions and we remain confident in the Group’s
ability to achieve these and drive attractive levels
of returns for our shareholders.
Entry into the FTSE 250 Index
In June, we were delighted to be informed that the
Group had been included as a constituent of the
FTSE 250 Index, following a review by global index
provider FTSE Russell. Our return to the FTSE 250
marked an important corporate milestone
demonstrating the journey that the Group has
been on to expand and diversify its operations
through technological innovation.
Sir John Lewis OBE
Non-executive Chairman
MEGroup plc Annual Report 2023
19
The Board & Executive Team
Post period-end, on 2 November 2023, we
announced that Jean-Marc Janailhac who had
been an Executive Director of the Company
since July 2020, would be stepping down from
his executive role. We are delighted, however,
that Jean-Marc continues to sit on the Board this
time in his original capacity as a Non-executive
Director. I would like to take this opportunity to
thank him for his valuable contribution to the
Company as an Executive Director and I am
pleased he will continue to work closely with me
and the Board in his previous role.
The Board of Directors continues to believe that it
has a strong team in place to continue supporting
the leadership team in delivering on the Group’s
long-term growth strategy.
I would like to thank my Board colleagues, the
executive team, and every employee across
the Group for their continued dedication,
commitment, and hard work.
Shareholder returns and dividend
Share buyback
As a Group, we are committed to creating
shareholder value wherever we can and as a
Board we look to explore opportunities that
reward our shareholders. In August, we announced
the launch of a Share Buyback Programme to run
until the Company’s next Annual General Meeting.
As at 31 October 2023 the Company held 1,260,534
shares, with an average value of 156p per share,
at a cost of £1,969,000. It is the aim that the
Buyback Programme will reduce the Company’s
share capital and in turn drive an increase in the
earnings per share and consequently the yield for
all shareholders.
Dividends
Under the Company’s current distribution policy, it
will look to pay annual dividends in excess of 55%
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).
Chairman’s statement continued
MEGroup plc Annual Report 2023
20
Strategic Report
The Board declared an interim dividend for the
six months ended 30 April 2023 of 2.97 pence per
Ordinary share (the “Interim Dividend”), which
amounted to £11.2 million, paid to shareholders on
23 November 2023 to shareholders on the register
on 3 November 2023.
The Board has recommended a final dividend for
the year ended 31 October 2023 of 4.42 pence per
Ordinary share (“Final Dividend”) amounting to
£16.6 million. Combined with the Interim Dividend,
this brings the total dividend for the year ended
31 October 2023 to 7.39 pence per Ordinary share
(£27.9 million).
Subject to approval at the Company’s annual
general meeting on 26 April 2024, the Final
Dividend will be paid on 23 May 2024 to
shareholders listed on the register at the close of
business on 26 April 2024. The ex-dividend date
will be 25 April 2024.
Sustainability
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 at
me-group.com.
Looking ahead
Laundry is a key part of our growth strategy and
we continue to invest to expand our portfolio
and build on new and existing partnerships, to
further extend our convenient laundry services in
high footfall destinations. We are also improving
the user experience, through the launch of our
consumer App for our laundry services, which
delivers better marketing insight. In the year
ahead, we plan to install an average of 80-90
Revolution laundry machine per month, with a
particular focus on expansion in France and the
United Kingdom.
The photobooth market remains robust, and even
though it is a mature market, turnover and the
number of transactions has stayed stable from
year-to-year.
Within the Group, 70% of the photobooth market
is based on the requirement for official photos
(driving licences, passports, ID photos, etc.),
unofficial photos (universities, schools, sports clubs
etc) and, to a lesser extent, fun products.
The Group does not foresee a drop in demand for
official photos in the short- or medium-term. The
Group is securing this market as much as possible
by developing agreements with administrations
and regulatory bodies (ANTS in France, HMPO in
the UK and MY NUMBER in Japan) and by trying
to replicate this same model in other countries
and by extending it to all official needs (passports,
identity cards and driving licences). The demand
for official photos is helped by the continual
introduction of new legislation (for example, the
compulsory renewal of ‘old pink driving licences’ in
France and the My Number campaign in Japan).
At the same time, the Group is working on a
range of additional, more entertaining offers in
photobooths that could attract other consumers.
The Group has proven to be resilient, despite
the ongoing macroeconomic headwinds. It
remains highly cash generative, and our financial
position remains strong, driven by good trading
momentum across the business. This supports
the Board’s confidence in the Company’s ability
to make further strategic progress in FY 2024
andbeyond.
The Board expects the Group to achieve
continuedrevenue and earnings growth in the
financial year ahead, building on the success of
FY 2023, subject to any major changes to the
macroeconomic environment.
Sir John Lewis OBE
Non-executive Chairman
27 February 2024
Engagement is crucial to ensuring that Directors
fully understand stakeholder needs and can make
well-informed decisions.
MEGroup plc Annual Report 2023
21
Chief Executive’s report
EBITDA
£106.6m
12 months ended 31 October 2023
PROFIT BEFORE TAX
£67.1m
12 months ended 31 October 2023
We are pleased to report a year of
record financial performance during
which we continued to make good
strides in delivering on our long-term
growth strategy. We have reported
strong revenue and profit growth
acrossall of our business areas and
geographic regions.
MEGroup plc Annual Report 2023
22
Strategic Report
Business review
Our continued focus on technological innovation
and diversification, underpinned by our in-house
R&D capabilities, enables us to meet the needs
of end-users internationally. This, alongside the
global footprint of our operations, well positions us
on the international stage as a leading operator in
instant service vending.
Financial performance
Total revenue increased by 14.6% to £297.7 million
(2022: £259.8 million), with strong growth delivered
in each of our geographic regions.
By geography, our largest region, Continental
Europe, reported revenue growth of 15.4%, due
toa continued strong performance in France.
In the UK & Republic of Ireland, revenue was up
14.8%, and in Asia Pacific operating revenue
wasup 11.0%.
Each of our principal business areas delivered
operating revenue growth year-on-year
compared with the same period in FY 2022.
Our laundry operations performed particularly
strongly, up 32.0%, photobooth operations grew
by 11.8%, digital printing by 5.6% and Other
Vending Equipment and Feed.ME operating
revenue was up 30.8% on FY 2022.
As a result of the above, EBITDA (excluding
associates) was £106.6 million, an increase of
15.6%, which delivered an EBITDA margin of
35.8%. Reported profit before tax was up 25.7% to
£67.1 million (2022: £53.4 million), with all regions
reporting growth.
The Group’s corporation tax charge for the year
was £16.4 million, resulting in an effective tax
rate of 24.5%. Tax charge for the prior year was
£14.6 million, an effective tax rate of 27.3%.
Capital expenditure was £53.5 million, primarily
related to laundry (£24.7 million), photobooths
(£8.9 million), kiosks (£3.1 million), plant, machinery
and vehicles (£6.3 million) and the acquisition of a
photobooth business in Japan (£4.8 million).
The Group remains well capitalised and in a strong
financial position, with net cash of approximately
£33.9 million.
During the year ended 31 October 2023, the Group
repurchased 1,260,534 of its ordinary shares
and also paid dividends totaling £23.4 million
(comprising the interim dividend for 2022 of
£9.8 million, the final dividend for 2022 of
£11.3 million and a special dividend for 2022 of
£2.3 million). In November 2023, the Company
paid its announced interim dividend for 2023,
totaling £11.2 million.
Further details of the Group’s performance by
business area and geographic region are set
outoverleaf.
Serge Crasnianski
Chief Executive Officer & Deputy Chairman
MEGroup plc Annual Report 2023
23
Overview of principal
businessareas
Below is an overview of the Group’s four principal
business areas: photobooth (Photo.ME), digital
printing (Print.ME), laundry (Wash.ME) and food
(Feed.ME). In addition, the Group operates Other
Vending Equipment.
Photo
Photobooths and secure integrated
biometric photo ID solutions
12 months to
31Oct 2023
12 months to
31Oct 2022
Number of units
inoperation
30,762 27,625
Percentage of total group
vending estate (number
ofunits)
64.7% 62.9%
Revenue £172.5m £154.3m
Capex £8.9m £3.0m
EBITDA £61.8m £54.2m
Our photobooth operations, our largest business
area by number of units, revenue and EBITDA
contribution, continued to perform strongly
throughout the financial year.
Revenue increased by 11.8% to £172.5 million
(2022: £154.3 million). This performance was
supported by continued demand of official
photo ID, the continued expansion of the estate
both organically and through acquisition, and
annualised benefits of FY 2022 price increases
implemented in certain locations, particularly
France, Germany and Austria. The average
revenue per machine (excluding VAT) increased
to £5,908 per year (2022: £5,586 per year).
Subsequently, EBITDA was up 14.0% at
£61.8 million and represented 58.0% of total
Group EBITDA. EBITDA was 35.8% of photobooth
revenue during the Period.
Capex increased from £3 million to £8.9 million,
reflecting investment in the rollout of next
generation photobooths, with 547 installed
in France and Germany in FY 2023. While
deployment of the machines was slower than
initially expected, due to supplier delays, these
short-term challenges have been resolved. At the
year-end we were installing approximately 180
next-generation units per month. In addition, a
programme to upgrade our existing photobooth
estate with new proprietary software and
functionalities is underway.
At 31 October 2023, the number of photobooths
in operation was 30,762, an 11.4% increase on the
prior year (2022: 27,625), reflecting the ongoing
expansion programme as we continue to rollout
units in existing and new territories. This represents
64.7% of the Group’s total vending units.
Growth strategy and progress
We believe that there are a number of long-
term growth drivers in place which underpin our
continued expansion. Demand for photo ID for
the use in official documentation, including driving
licences and passports, Government requirements
for digitalised photo ID and security to combat
fraud, and consumers increasingly requesting
multi-functional instant services are all factors
underpinning the continued growth of Photo.
ME. There continues to be a compelling case for
the Group to grow its photobooth business and
benefit from industry trends and widespread
consumer demand.
Our next-generation photobooth was developed
by the Group’s in-house R&D team and
offers range of new functionalities, focused
around enhancing the user experience. These
new features include ‘Mobile to Print’, user
personalisation services using AI and photo
filters. The Group expects other new functions
will be added over time. The Group aims to
install 3,000 next-generation machines in FY
2024, and approximately 8,000 next-generation
photobooths by the end of FY 2025.
At the same time, the Group is modernising the
hardware of its existing photobooth estate and
intends to install its new proprietary software
at a rate of around 200 machines per month.
This proprietary software enables the Group’s
engineers to quickly and cost-effectively upgrade
Chief Executive’s report continued
MEGroup plc Annual Report 2023
24
Strategic Report
each machine, remotely rather than needing to
physically visit the machines.
In October 2023, the Company’s Japanese
subsidiary, MEGroup Japan K.K., acquired
the automated-photobooth business owned
and operated by two subsidiaries of FUJIFILM
Corporation (formerly FUJIFILM Co., Ltd) in
Japan for an initial consideration of £4.8 million
(Japanese Yen 873 million), funded by a local loan
facility. This added 3,548 traditional photobooths,
located in high-footfall locations such as travel
hubs and shopping centres throughout Japan,
delivering official photo ID for consumers,
including for the government’s social security
and taxation photo ID card scheme. The acquired
photobooths were fully integrated into the
Group’s operations in Japan in October 2023 and
will benefit from operational synergies under
the Group’s ownership. Further details of the
Japan acquisition are detailed in the Review of
Performance by Geography section.
Following the Group’s entry into the Australian
market through a small acquisition in 2021,
the Group is trialling 11 photobooths in across
Sydney and Melbourne, as part of our ongoing
diversification strategy as we build our presence
in both new and existing markets. Whilst this is at
an early stage in terms of building out the market,
the Group is exploring how best to drive forward
expansion and remains excited by the prospects
for the Australian market.
The Board continues to believe that there are
longer-term opportunities in the photo ID market
across both existing and new geographic markets.
Planned photobooth investment in FY 2024 is
between £15 million and £20 million, with a target
return on investment in approximately 18 months.
Wash
Unattended Revolution laundry services
and laundrettes
12 months to
31Oct 2023
12 months to
31Oct 2022
Total Laundry units
deployed (owned, sold
andacquisitions)
6,870 5,924
Total revenue from
Laundry operations
£81.6m £61.8m
Total Laundry EBITDA
£39.5m £29.1m
Revolution
– Number of Revolutions
in operation
5,533 4,754
– Percentage of total
group vending estate
(number of units)
11.6% 10.8%
– Total revenue from
Revolutions
£76.1m £56.7m
– Revolution capex
£24.7m £20.2m
Total revenue from our laundry operations grew
by 32.0% to £81.6 million as we continued to
expand our estate of Revolution laundry units,
generating a higher level of turnover from this
business. At 31 October 2023, the total number of
laundry units deployed (owned, sold) was up 16.0%
to 6,870. Total laundry EBITDA increase by 35.7%
to £39.5 million.
Growth of Revolution laundry operations
The total number of Revolution units in operation
grew 16.4% to 5,533, as the Group continued to roll
out new machines at a rate of 65 per month, with
more than 780 machines installed during the year.
Revolution laundry machines accounted for 11.6%
of the Group’s total estate by number of machines
(2022: 10.8%).
MEGroup plc Annual Report 2023
25
Revenue increased by 34.2% to £76.1 million,
which represented 25.6% of Group revenue, driven
by a combination of higher demand and more
machines in operation. The average revenue per
machine (excluding VAT) was £14,793 per year
(2022: £12,816 per year).
EBITDA was £39.5 million and contributed 37.1%
of Group EBITDA. EBITDA from Revolution was
48.4% of revenue.
Wash.ME remains our fastest growing and
highest margin business area and we continued
to invest to deliver our expansion plans. As a
result, Revolution capex increased to £24.7 million
(2022:£20.2 million) reflecting the continued rollout
of units across our core territories. Furthermore,
the Group has entered a period of machine
refurbishment and maintenance, the first since
laundry operations were launched in 2012.
Growth strategy and progress
A key part of our growth strategy for the laundry
business is expanding operations through new
and existing partners in target territories, as a
means of meeting consumer demand by offering
convenient, competitively priced and high-
capacity laundry services. We announced a new
strategic partnership with leading supermarket
chain Co-op, in the UK, to position Revolution
units at sites in selected parts of the country.
The partnership will allow us to position laundry
services at an increasing number of high footfall
locations across the UK, offering convenient
laundry services to consumers at those sites. We
see this as a mutually beneficial relationship where
we build a destination for consumers looking for
high-capacity laundry facilities while shopping.
As well as entering new market segments through
strategic partnerships, the Group continues to
deliver innovative solutions to drive forward
the service offering available under Wash.ME.
Alternative machine formats continue to prove
popular with different types of users. We see good
potential for our ‘Flex’ units, a compact format
that can fit into smaller spaces, and believe there
to be a long-term opportunity to address the
Chief Executive’s report continued
MEGroup plc Annual Report 2023
26
Strategic Report
domestic market and at-home laundry needs.
Whilst this is at an early stage, we will continue to
monitor the opportunity and update in due course.
In June, the Group began rolling out a new
consumer App aimed at laundry services as a
means of improving the user experience as well
as providing better marketing insights on the
Group’s end-consumers. It remains a focus for us
to improve the App and work towards rolling this
out more widely across our operations.
The Group plans to install an average of 80-90
laundry machines per month in FY 2024. In
addition, photovoltaic solar panels on being
installed on Revolution laundry machines rollout
across key territories, including France and the
United Kingdom.
Planned laundry investment in FY 2024 will be
£22.0 million to £30.0 million, with a with a target
return on investment in approximately 18 months.
Print
High-quality digital printing services
12 months to
31Oct 2023
12 months to
31Oct 2022
Number of units
inoperation
4,734 4,785
Percentage of total group
vending estate (number
ofunits)
10.0% 10.9%
Revenue £11.3m £10.7m
Capex £3.1m £1.3m
EBITDA £4.2m £3.6m
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 2023 the Group had 4,734 kiosks in
operation, a reduction of 1.1% compared with the
prior year. These accounted for 10.0% of the total
number of vending units in operation.
Revenue increased to £11.3 million from
£10.7 million in the prior year, reflecting increased
demand from new digital kiosks, replacing 413
old machines. Revenue represented 4.1% of
Group revenue.
The average revenue per machine (excluding VAT)
was £2,374 per year (2022: £2,279).
EBITDA was £4.2 million which represented 3.9%
of Group EBITDA. EBITDA was 37.2% of Print.ME
revenue in the period.
Capex was £3.1 million, a significant increase
on the prior year reflecting an investment
programme to replace some existing machines,
and deployment of 500 new kiosks.
Growth strategy and progress
In recent years, we have focused more investment
towards the Print.ME business as demand for
high-quality digital printing services remains
robust. This, paired with the increasing use of
smartphones and demand for social media
MEGroup plc Annual Report 2023
27
sharing, presents a long-term opportunity for our
digital printing services. The Group is forecasting
c.£3.0 million of capex in FY 2024. As part of the
growth strategy for this business area, the Group
continues to explore opportunities to extend
the services offered through its wider vending
estate including digital printing services. Our
next-generation photobooths, currently being
deployed, offers this functionality as part of the
multi-service offering.
Feed
Vending equipment for the
foodservicemarket
Feed.ME activities are focused on two areas,
self-service fresh fruit juice equipment market
andpizza vending machines aimed at the
B2B retail and hospitality markets. The Group
currentlyhas operations in Belgium, France,
Japanand Switzerland.
The Feed.ME business model is primarily based
on the sale of vending equipment. Customers
frequently, but under no obligation, sell the
vending equipment back to the Group at a later
date. The equipment is then refurbished and re-
sold, generating repeat revenue for the Group.
The Group also sells maintenance agreements,
under which it services vending equipment for an
agreed period of time.
Technical adjustments to our pizza vending
machine led the Group to move manufacture
of this machine in-house during the
commercialisation phase. This enabled us to
increase production to 30 machines per month
and ensures that our R&D team are on hand to
support and have oversight of quality control and
cost efficiencies.
On a smaller scale, the Group operates fruit
juice machines in Japan. During the year we
reinstated our B2B vending operations aimed
at end markets such as the hospitality sector.
At 31 October 2023, the Group had 441 freshly
squeezed-orange-juice vending machines
in operation, which includes fulfilment of the
oranges for the machines.
Chief Executive’s report continued
MEGroup plc Annual Report 2023
28
Strategic Report
Revenue from the sale of equipment, consumables
and services was £8.9 million. Combined with
other revenue (£4.6 million), the total revenue of
Feed.ME was £13.5 million (2022: £12.5 million).
This business area contributed 4.5% of total
Grouprevenue.
A review following the technical issues experienced
with the pizza machines, which have slowed
progress in this business area, has resulted in
an impairment of goodwill and intangibles of
£2.6 million related to the acquisition of the pizza
vending machine manufacturer (Resto’Clock) in
2021. The group will continue to sell pizza vending
equipment, with the target of relaunching this
division and improving profitability.
EBITDA was £3.8 million and contributed 3.6 %
ofGroup EBITDA.
Growth strategy and progress
The food service sector remains an attractive
proposition for the Group. We remain focused on
growing our fruit juice vending machine operations
in Japan and we plan to increase the production
of our pizza vending machines, with the aim of
selling more than 15 per month.
The Group’s aim is to become the food vending
equipment market leader in Europe.
Other vending equipment
At 31 October 2023, the Group operated 6,055
(2022: 6,483) other vending units in addition to its
four principal business areas. These included 2,356
children’s rides (Amuse.ME), 3,374 photocopiers
(Copy.ME) and 325 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.
Amuse.ME units are mostly situated in the United
Kingdom and the Netherlands. Copy.ME units are
mostly situated in France. The Group will continue
to operate other vending units where profitable.
Other vending equipment accounted for 13.6%
of the Group’s total vending estate by number of
units, down 1.7% compared with the previous year
and represented 4.0% of the total Group revenue.
MEGroup plc Annual Report 2023
29
We are continually looking at ways to create
or evolve service offerings through our vending
estate that meet the changing needs of
consumers both across our existing and new
markets. Our in-house team develops and tests
new technologies, products, and functionality
before these enter the commercialisation phase
and are deployed within our vending estate.
In recent years, innovation has been primarily
focused on key initiatives to digitally transform
the Group, improve operational efficiencies and
enhance the end-user experience.
This digital transformation through the
modernisation and modularisation of our vending
estate will enable the Group to be more agile
and operationally efficient. It will support the
swift deployment of software upgrades and new
services across our machine estate, whilst also
enabling us to enhance consumer engagement
through targeted marketing campaigns.
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
▪ Multi-service functionality for the next-
generation machines. Centralised
operating system offering operational
efficiencies and aseamless, connected
user experience for theconsumer
Innovation and diversification
Continuous technological innovation
and diversification of operations are
central to the Group’s growth strategy,
driven by our dedicated 50-strong
R&Dteam, most of whom work at our
primary R&D facility in France.
MEGroup plc Annual Report 2023
30
Strategic Report
Innovation in action
New proprietary software
Our new proprietary software developed by the
in-house R&D team is at the centre of the Group’s
digital transformation, which is initially being
rolled out for photobooths. This software is fitted
as standard on all next-generation photobooths
beinginstalled and, over the coming years, the
Group aims to retrofit this software across its existing
photobooth estate.
At the touch of a button, the Group will be able to
remotely run a software upgrade for each photobooth,
giving it the ability to deploy new functionality and
services quickly and cost-effectively.. It will allow the
Group to remotely update the consumer interface and
enhance the end-user experience.
Previously, software updates were implemented
manually by an engineer on site.
Enhanced user experience
Our next-generation photobooth offers a redesigned
user experience (UI and UX) to support greater digital
functionality. This includes visual enhancements
to the user interface as well as a more efficient
consumer interaction, such as a reduction in the
number of clicks required during user interaction.
Additionally, users will be able to provide feedback on
their experience via a QR code on each machine.
Ongoing digitalisation driving
operationalefficiencies
We are currently working to develop several new
initiatives to centralise back-office processes aimed
at driving operational efficiencies. These include:
▪ A new application for field engineers offering
centralised route planning
▪ Real-time telematics to monitor the
operationalperformance of each machine
andreduce downtime
▪ A new CRM tools to support the Group’s sales team
function, due to go live by the end of 2024
▪ Applications to enhance engagement with end
user and support marketing campaigns, with new
store locator launched in June 2024
▪ Launch of end-user App in the first half of 2024
MEGroup plc Annual Report 2023
31
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
At October 2023 At October 2022
Number
of units
% of total
estate
Number
of units
% of total
estate
Continental Europe
26,232 55.1% 25,331 57.7%
UK & Republic of Ireland 6,297 13.2% 6,858 15.6%
Asia Pacific 15,037 31.6% 11,721 26.7%
Total 47,566 100% 43,910 100%
The total number of vending units in operation at 31 October 2023 increased by 8.3% to 47,566
(2022: 43,910), mainly due to the acquisition of a photobooth business in Japan, which was completed in
September 2023.
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
12 months ended
31 October 2023
12 months ended
31 October 2022
Continental Europe
£205.2m £177.8m
UK & Republic of Ireland £48.2m £42.0m
Asia Pacific £44.3m £39.9m
Total £297.7m £259.7m
Operating profit by geographic region
12 months ended
31 October 2023
12 months ended
31 October 2022
Continental Europe
£62.6m £51.3m
UK & Republic of Ireland £12.4m £11.6m
Asia Pacific £4.3m £2.0m
Corporate costs £(11.8)m £(8.1)m
Total £67. 5m £56.8m
Total revenue increased by 14.6% to £297.7 million, reflecting the strong year-on-year performance in all
three geographic areas from higher consumer demand for the Group’s instant-service machines and, to a
lesser extent, the year-on-year benefit of end consumer pricing rises implemented during 2022.
Review of performance
bygeography
MEGroup plc Annual Report 2023
32
Strategic Report
Continental Europe
Continental Europe is the Group’s largest region
by both number of machines and contribution to
Grouprevenue.
Revenue increased 15.4% to £205.2 million
(2022: £177.8 million), reflecting a strong
performance and revenue growth across
all business areas, notably laundry and
photoboothoperations.
Total operating revenue increased by 18.7% year-
on-year, primarily driven by Wash.ME, which grew
by 28.2% and Photo.ME, which grew by 16.1%. Wash.
ME delivered consistent quarter-on-quarter growth
reflecting continued expansion of operations, with
a further 779 laundry units deployed, of which 491
were installed in France. Photobooth operations
benefited from higher consumer demand and
the rollout of 547 next-generation photobooths,
alongside consumer price increases implemented
across France (from €6 to €8) and Germany (€8
to €10) during FY 2022. The Group’s other business
areas saw strongest year-on-year revenue growth
in Q1 2023 and Q2 2023, which reflects the recovery
of operations in FY 2023 compared with FY 2022
which was still impacted by the pandemic.
Operating profit grew significantly to £62.6 million,
an increase of 22.0%.
At 31 October 2023, 26,232 units were in operation
in Continental Europe which represented 55.1%
of the Group’s total estate. Continental Europe
contributed 68.9% of total Group revenue.
UK & Republic of Ireland
Revenue grew by 14.8% to £48.2 million, reflecting
further expansion in the number of laundry units
and demand for laundry services, with Wash.ME
operating revenue up 45.7%. Photo.ME operating
revenue was up 2.2%, and Other Vending and
Feed.ME operations were up5.8%.
In the UK and Republic of Ireland, the Group has
strategic relationships in retail sectors, leading
shopping centres, supermarkets and forecourts.
Wehave over 3,000 photobooths and 1,300
laundry units sited across this region with key
partners including Tesco, Morrisions, Co-op,
Musgraves, BWG, Circle K and Applegreen. The
Group remains focused on growing its vending
estate within these key accounts, which will provide
it with the opportunity to continue building market
share in the UK & Republic of Ireland.
Operating profit grew by 6.9% to £12.4 million
(2022: £11.6 million).
As at 31 October 2023, there were 6,297 units
in operation in the UK & Republic of Ireland,
a decrease of 8.2%, due to the loss of two key
accounts in 2023. This segment represented 13.2%
of the Group’s total vending estate.
Asia Pacific
Revenue increased by 11.0% to £44.3 million,
driven by a 5.4% increase in photobooth operating
revenue, and a 53.5% in revenue from Other
Vending and Feed.ME operations which mainly
related to the successful expansion of freshly
squeezed orange juice vending operations in
Japan. Asia Pacific continues to be the only
market in which the Group operates fresh fruit
juice vending machines, with 441 orange juice
machines installed by 31 October 2023.
Operating profit in the region more than doubled
to £4.3million (2022: £2.0 million).
As set out above, the Group acquired 3,548
photobooths in Japan at the end of the financial
year for £4.8 million. As a consequence, the Group
became the market-leading photobooth operator
in the Japanese market. To date, this acquisition
has performed in line with expectations and is
expected to increase Asia Pacific revenue by 20% to
30% and to add approximately £2.2 million in profit
in FY 2024.
As at 31 October 2023, there were 15,037 units in
operation in Asia Pacific, which represented 31.6%
of the Group’s total vending estate. The region
contributed 14.9% of total Group revenue.
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.
Performance
Description Relevance
12 months
ended 31
October
2023
12 months
ended 31
October
2022
Total Group
revenue at
actual rate of
exchange
£297.7m £259.8m
Group Profit
before tax
£67.1m £53.4m
Increase in
number of
photobooths
3,137 (242)
Increase in
number of
Laundry units
(operated)
The increase in
number of
Revolutions is
aconstant
priority and a
main driver
forgrowth
779 660
MEGroup plc Annual Report 2023
33
Section 172(1) statement
Directors are required to act in the way
they consider, in good faith, would be
most likely to promote the success of
the company for the benefit of its
members as a whole, and in doing
sohave regard, amongst other matters,
to the factors listed in section 172(1) (a)
to (f) of the Companies Act 2006.
Engagement therefore is crucial to ensuring
that Directors fully understand stakeholder
needs and can make well-informed decisions
that have addressed differing and sometimes
conflicting priorities. Our overview of stakeholder
engagement that has taken place during the year
can be found on pages 36 to 37.
The following pages comprise our section 172(1)
statement in which we explain how the Board has
fulfilled its duty in section 172 whilst having regard
to the matters set out in that section.
How the directors fulfil their duty under
Section 172(1) of the Companies Act 2006:
Diverse set of skills, knowledge
andexperience
The Board has a diverse set of skills, knowledge
and experience which help the Directors to make
informed decisions that promote the long-term
success of the Company whilst considering the
needs of the Company’s stakeholders.
Further information on the Board’s composition,
including the skills and experience of the individual
Directors appears on pages 70 to 71.
Board information and monitoring
The Board receives detailed papers and in-person
updates from management which they question
challenge and debate, to ensure conflicting views
are carefully considered.
Management also gives regular updates on the
progress of the implementation of actions and
decisions to allow the Board to review and if
appropriate, course-correct, as situations (and
stakeholder priorities) inevitably evolve.
Further information on the Board’s activities can
be found on pages 78 to 86.
Board discussion
All Directors are expected to constructively
challenge and contribute to discussions, as well
asoffer additional perspectives, advice and
strategic guidance.
Further information can be found within
the Division of Responsibilities and Meeting
Attendance section on page 80.
Strategic direction and culture
The Board is responsible for setting the strategic
direction, values and culture of the Company. It
sets the tone of how business is done throughout
the Group. Stakeholder considerations are central
to decision-making at all levels of the Group.
Further information on corporate strategy can be
found on pages 6 to 17.
MEGroup plc Annual Report 2023
34
Strategic Report
These matters permeate the entire range and gamut of the Directors’ considerations, deliberations and
actions. The table below outlines other main areas of this report which detail how the Directors have had
regard to the section 172(1) limbs.
Section 172 duty Where you can find more information
(a) The likely consequence of any decisions in
the long term
Our Business Model: pages 6 to 7
Strategic Report: pages 2 to 67
Stakeholder Engagement: pages 36 to 37
Principal risks (primarily steps taken in mitigation): pages 38 to 40
(b)The interests of the Company’s employees
Stakeholder Engagement: pages 36 to 37
Remuneration Committee Report: pages 90 to 107
(c) The need to foster the Company’s
businessrelationships with suppliers,
customers and others
Our Business Model: pages 6 to 7
Stakeholder Engagement: pages 36 to 37
(d) The impact of the Company’s operations
on the community and the environment
Strategic Report: pages 2 to 67
Sustainability statement; pages 42 to 50
TCFD Report: pages 59 to 65
Also, visit: https://me-group.com/our-ambition/
(e) The desirability of the Company
maintaining a reputation for high standards
of business conduct
Our Business Model: pages 6 to 7
TCFD: pages 59 to 65
Risk Management: page 86
Audit Committee Report: pages 83 to 84
(f) the need to act fairly as between
members of the Company
Stakeholder Engagement: pages 36 to 37
The Board has a diverse set of skills, knowledge
and experience which help the Directors to make
informed decisions that promote the long-term
success of the Company whilst considering the
needs of the Company’s stakeholders.
MEGroup plc Annual Report 2023
35
Stakeholder Engagement
Consumers
How we engage How this engagement influenced Board discussions and decision-making
Senior management considers the needs of
the consumer and how to provide the
best-in-class service for the most
competitive price.
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 How this engagement influenced Board discussions and decision-making
Briefings from management as to how the
Company is doing
The Executive Directors and the CFO* have regular 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.
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.
Shareholders
How we engage How this engagement influenced Board discussions and decision-making
Regular engagement by the Chairman
andSenior/Independent Director with
majorshareholders.
In July 2022, the Company announced it was adopting a new distribution
policy under which for the foreseeable future it would pay annual
dividends in excess of 50% of its annual profits after tax subject to market
and capital requirements. This total would 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).
In August 2023, with members’ approval, the Company embarked on a
share buyback programme which is still ongoing. As at 31 October 2023,
the Company had repurchased 1,260,534 ordinary shares of 0.5p each all
of which are held in treasury.
* 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.
Section 172(1) statement continued
MEGroup plc Annual Report 2023
36
Strategic Report
Partners and suppliers
How we engage How this engagement influenced Board discussions and decision-making
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
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 the
Executive Team who in turn rely on direct or
indirect feedback from senior management
and other 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.
See Sustainability Statement: pages 42 to 50
Investors
How we engage How this engagement influenced Board discussions and decision-making
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 Remuneration Committee consults with major investors and external
remuneration specialists before introducing, and then updating, any
changes to the implementation of the remuneration policy. In
discharging its duties, the Remuneration Committee takes advice from
external remuneration consultants to ensure that it is up to date with
market trends, expectations and best practises.
The Board reviews the Group’s dividend.
Involvement of the Chairman including his meeting with major
shareholders 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.
MEGroup plc Annual Report 2023
37
Principal risks
These risks are accepted as inherent to the Group’s business. The Board recognises that the nature and
scope of these risks can change; it therefore regularly reviews the risks faced by the Group as well as the
systems and processes to mitigate them.
The table below sets out what the Board believes to be the principal risks and uncertainties, their impact,
and actions taken to mitigate them.
Economic
Nature of risk Description and impact Mitigation
Global economic
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.
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 and other conflict 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. Current and imminent global
events (including upcoming elections in
both the UK the US) could well cause
currency volatility.
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.
Regulatory
Nature of risk Description and impact Mitigation
Centralisation of
theproduction of
IDphotos
In many European countries where the
Group operates, if governments were to
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 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.
Furthermore, the Group also ensures that its
IDproducts remain affordable and of a
high-quality.
As with any business, the Group faces risks
and uncertainties that could impact the
achievement of the Group’s strategy.
MEGroup plc Annual Report 2023
38
Strategic Report
Strategic
Nature of risk Description and impact Mitigation
Identification of new
business opportunities
The failure to identify new business areas.
This 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. Failure in
this regard could lead to a lack of
competitiveness.
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.
Operational
Nature of risk Description and impact Mitigation
Reliance on foreign
manufacturers
The Group sources most of its products
from outside the UK. Consequently, the
Group is subject to risks associated with
international trade. This could impact
competitiveness and profitability.
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.
Reputation
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 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.
Product and service
quality
The Board recognises that the quality and
safety of both its products and services
are of critical importance and that any
major failure could affect consumer
confidence and the Group’s
competitiveness.
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.
MEGroup plc Annual Report 2023
39
Technological
Nature of risk Description and impact Mitigation
Failure to keep up with
advances in
technology
The Group operates in fields where
upgrades to new technologies are critical.
Failure to exceed or keep in step could
result in a lack of ability to compete.
The Group mitigates this risk by continually
focusing on R&D.
Cyber risk: Third party
attack on secure ID
data transfer feeds
The Group operates an increasing number
of photobooths capturing ID data and
transferring these data directly to
government databases. The rising threat
of cybercrime could lead to business
disruption as well as to data breaches.
The Group undertakes an ongoing assessment
of the risks and ensures that the infrastructure
meets the security requirements.
Enviromental
Nature of risk Description and impact Mitigation
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
The rising costs associated with
compliance with such increased demands
could impact on overall profitability.
Reducing the amount of waste produced; and
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.
Principal risks continued
MEGroup plc Annual Report 2023
40
Strategic Report
MEGroup plc Annual Report 2023
41
Non-financial and sustainability
information statement
At MEGroup, sustainability is not just a concept,
but the core of our operations. Ourjourney
encompasses everything from innovative
photobooths to our environmentally friendly
self-service laundry machines and other instant-
vending equipment, which all aim to make
everyday life easier.
We are committed to weaving sustainable
practices into the fabric of our business,
understanding its critical importance to us, our
customers, our employees, and the planet at large.
Our strategy for managing sustainability
is twofold: mitigating risks and uncovering
business opportunities. Our efforts are guided
by four principal factors. First, adherence to
legal requirements and staying ahead of future
policy trends is crucial. Secondly, we consider
the attitudes of our customers, employees, and
investors. Thirdly, we focus on cost savings and
enhancing business efficiency. And, finally, we
concentrate on fostering employee awareness
and strengthening our employer brand.
Central to our mission is aligning our approach
to sustainability with the Directors’ duty to drive
the progress of the Company, as mandated
by the Companies Act 2006. This duty aligns
with the principle of ‘enlightened shareholder
value’, ensuring we remain forward-thinking and
responsible in our sustainable endeavours.
Stakeholder engagement
Engaging with our stakeholders is key to our
sustainability journey. We maintain an open
dialogue with employees, customers, suppliers,
and investors, ensuring that our sustainability
strategies are well-informed and inclusive.
Strategic sustainability focus areas
In March 2023, following extensive engagement
with internal and external stakeholders, we
identified 25 key material topics for MEGroup.
Details of the assessment methodology can be
found in the Specific Sustainability Metrics and
Reporting section on page 52.
These material topics fall into five strategic focus
areas: operational innovation; strategy and
development; services and customers; HR and
employees; and communities and corporate
socialresponsibility.
Sustainability at MEGroup
Information Section/policy
Environmental matters (including the impact of the
company’s business on the environment)
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 2023, can be found in the Sustainability
Statement on page 44.
The Company’s employees
Social matters
Respect for human rights
Anti-corruption and anti-bribery matters The Company operates an anti-bribery and corruption
policy.This can be found on the Company’s website
(https://me-group.com)
MEGroup plc Annual Report 2023
42
Strategic Report
Quality assurance
Our commitment to quality is evidenced
by our subsidiary KIS SAS’s achievement
ofISO 9001 certification. This was
recognised in November 2021 when we
received the sustainability prize at the
System U exhibition.
Environmental impact mitigation
To address global waste disposal concerns,
MEGroup focuses on recycling and reuse
of decommissioned products. We are
continuously investing in energy-efficient
enhancements in response to rising energy
costs and climate change concerns as
detailed in our sustainability report.
Accessibility and enhanced services
Our units, compliant with CE standards
and the 2012 decree, are designed for
accessibility, featuring appropriately
positioned machines and touchpads.
Theyoffer high-capacity laundry
machines that cut washing time by 60%,
accommodating large items efficiently.
Additionally, consumers benefit from SMS
alerts, adding to the convenience. (Not all
laundry units are accessible for disabled
customers at present).
Case study
MEGroup’s Revolution laundry units
– eco-innovation in action
MEGroup’s Revolution laundry units
blend eco-performance with advanced
technology, to significantly reduce
environmental impact while providing
outstanding laundry services.
Environmentally friendly technology
Central to these units are precision washing
liquid pumps, dispensing an exact amount
of eco-friendly detergent per cycle. This
detergent adheres to the strict French
ECOCERT standard, and is free from
phosphates, colourants, and preservatives,
ensuring safety, an allergen-free experience,
and efficiency at lower temperatures
Energy efficiency and solar
energyutilisation
In addition, Revolution laundry units have
been designed to reduce energy usage.
The units’ boilers heat water only when the
dryers are off, conserving energy. The dryers
significantly reduce power use, and LED
lighting further cuts energy consumption.
With a power requirement of just 13KW –
less than half that of traditional models
– these units are extremely efficient. We
have incorporated solar panels in new
unitswhichreduces electricity use by
10-30% per machine.
1. Operational innovation
MEGroup’s dedication to operational innovation is deeply rooted in our commitment
to sustainability and efficiency. This philosophy is reflected in our approach to product
development,especially seen in our Revolution laundry units. These units are designed with a
range of eco-friendly features that showcase our dedication both to environmental protection
andmeeting consumer needs.
MEGroup plc Annual Report 2023
43
2. Strategy and development
MEGroup’s strategy and development are closely tied to its sustainability objectives. We have integrated
sustainability into our corporate strategy, recognising that effective management of sustainability
can reduce risks and unlock new business opportunities. This integration is evident in the development
of products such as our Revolution laundry units, which are not only environmentally friendly but also
cater to customer needs and preferences. The strategic focus on sustainability is also reflected in the
Company’s four-year sustainability plan, which includes commitments to reduce its carbon footprint
and energy consumption, and engage in social dialogue, demonstrating a comprehensive approach to
sustainable business development.
2022 2023 2024 2025 2026
Actions
▪ Integration of
sustainability in the
Company’s risk
management
framework, as
disclosed in the
2022 Annual Report
▪ Important
sustainability to be
matters discussed
during Executive
Team
meetings.
▪ Annual audit by
Ecovadis on the
Group’s
sustainability
performance
▪ The Company to
align its
commitments with
– and communicate
its progress towards
– the United
Nations Sustainable
Development Goals
(SDGs)
▪ Annual audit by
Ecovadis on our
sustainability
performance
▪ Important
sustainability
matters will be
discussed during
Executive Team
meetings.
▪ Official anti-
corruption
statement from the
Group and national
and international
communication
▪ For the French
company, answer to
CSRD requirements
▪ Annual audit by
Ecovadis on our
sustainability
performance, open
to all the European
subsidiaries
▪ Important
sustainability
matters will be
discussed during
Executive Team
meetings.
▪ Official anti-
corruption
statement from the
Group and national
and international
communication to
be signed by 20% of
major partners
▪ Annual audit by
Ecovadis on our
sustainability
performance to all
the subsidiaries
▪ Important
sustainability
matters will be
discussed during
Executive Team
meetings.
▪ Official anti-
corruption
statement from the
Group and national
and international
communication to
be signed by 50% of
major partners
KPIs
▪ Four review
meetings on the
sustainability
strategy
▪ Two sustainability
strategic meetings
to define the course
and readjustments
▪ Four review
meetings on the
sustainability
strategy
▪ Two sustainability
strategic meetings
to define the course
and readjustments
▪ Four review
meetings on the
sustainability
strategy
▪ Two sustainability
strategic meetings
to define the course
and readjustments
▪ Four review
meetings on the
sustainability
strategy
▪ Two sustainability
strategic meetings
to define the course
and readjustments
In managing our sustainability efforts, we focus on tangible goals and effective strategies. Our product
development, particularly in Revolution laundry units, is guided by environmental principles, including
reducing water and energy consumption. We respond to customer needs by innovating our products,
ensuring they not only meet customers’ expectations for convenience and entertainment but also for
environmental performance.
Sustainability at MEGroup continued
MEGroup plc Annual Report 2023
44
Strategic Report
3. Services and customers
We take a holistic approach to engagement
across departments within the Group and with
customers. Our operations and management of
sustainability are tailored to meet the specific
needs of different national markets and to comply
with relevant national legislation and market
expectations. This decentralised approach
enables us to respond effectively to customer
needs. Examples of this include our adaptation
of photobooths for consumers with disabilities
and the integration of environmentally friendly
features in laundry units. Customer-centric
innovations like the SMS alert system in laundry
units further highlight our commitment to
enhancing customer experience while maintaining
sustainable practices.
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 consumers 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 consumers with
visual impairments. In addition, the
development of the universal photobooth
enables access for wheelchair users.
4. HR and employees
Our workforce is a key factor in MEGroup’s success
and the achievement of our sustainability goals.
We foster employee engagement through various
means, such as business networking tools, internal
communication of policy updates, and operational
meetings, and we encourage employee feedback.
We do everything in our power to support and
protect human rights. As a responsible company
with international operations, 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.
While MEGroup has a decentralised management
approach, we nurture a common culture among
our workforce throughout the entire Group through
openness, honesty and the pursuit of a universal
goal that focuses on core corporate values.
The Company’s commitment to equal
opportunities and diversity is evident through
our policies and practices, ensuring a supportive
and inclusive work environment for all employees,
including those with disabilities.
Equal opportunities and diversity
MEGroup is an equal opportunities employer.
We are committed to ensuring equal career
opportunities for all our employees without
discrimination and pursuing fair and equitable
policies and procedures for recruitment,
training and development. We ensure that full
consideration is given to all applications from
those with disabilities, with due regard to their
aptitudes and abilities.
We ensure that, wherever possible, employees
who develop a disability during their engagement
can continue their employment through 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 people
with disabilities.
MEGroup plc Annual Report 2023
45
Gender diversity
The table below shows the gender diversity of the Group’s employees as at 31 October 2023 with
corresponding figures at 31 October 2022:
As at 31 October 2023
Total Male Female
The Board of MEGroup
8 5 3
Senior managers in the Group (excluding directors of MEGroup) 23 17 6
Employees (excluding above) 1,151 960 191
Total 1,183 983 200
As at 31 October 2022
Total Male Female
The Board of MEGroup
8 5 3
Senior managers in the Group (excluding directors of MEGroup) 20 14 6
Employees (excluding above) 1,055 875 180
Total 1,083 894 189
For more on gender diversity, please refer to the Corporate Governance section on page 78.
Sustainability at MEGroup continued
MEGroup plc Annual Report 2023
46
Strategic Report
5. Communities andCSR
Our commitment to the communities we
serve is delivered through a wide range of
initiatives in the field of corporate social
responsibility (‘CSR’) that extend beyond
environmental concerns to encompass
community engagement and customer
well-being. The Company’s commitment
to CSR is not only a response to legal
requirements but also a reflection of
its dedication to ethical practices and
making a positive impact.
Case study
Revolution Pizzas: donating food,
cutting waste, avoiding emissions
Inflation and the rising cost of energy in
the UK is pushing the price of food ever
higher. This is particularly impacting
lower-income individuals and families
across the country. At the same time,
foodwaste is having a negative impact on
the environment.
Recognising these two issues, our
Revolution Pizza team in the UK partnered
with FareShare, an organisation that
redistributes surplus food and drink
from the food industry to charities
and community groups supporting
vulnerable people. Our collaboration
began in November 2023 and in just two
months we donated 0.6 tonnes of food,
the equivalent of 1,423 meals. The food
was received by 28 separate charities
and community groups dedicated to
supporting the homeless, those on low
or no income, children, young people,
families and older people.
In addition to providing much needed
food for some of the most vulnerable
in the UK today, through our donations
wehave avoided 1.2 tonnes of
embeddedCO
2e and 1.6m litres of
watergoing to waste.
We will be continuing with this partnership
in 2024.
MEGroup plc Annual Report 2023
47
Health and safety
Health and safety are fundamental to
MEGroup’s operational philosophy,
extending to consumers, customers
and employees. We recognise that
safeguarding stakeholders from
risksrelated to our products and
services is not only ethically as well
aslegally essential but also key to
ourbusiness success.
Customer health and safety
We prioritise our customers’ safety by
maintaininga network of trained service
engineers. These professionals regularly service
and inspect equipment at customer sites, with a
commitment to respond to safety concerns within
24 hours of a report.
All new products from external suppliers are
subjected to thorough safety assessments to
ensure they meet relevant standards before their
introduction to the market. Our photobooths,
designed with a focus on security, feature a
multipoint locking system and adhere to electrical
standards, including DOC and CE markings for
RoHS2 compliance. These photobooths undergo
regular testing to meet Portable Appliance
Testing (PAT) and Amusement Device Inspection
Procedures Scheme (ADIPS) standards.
For children’s rides, previously under Jolly
Roger (Amusement Rides) Limited, we comply
with British Amusement and Catering Trades
Association (BACTA) guidelines and ensure RoHS2
CE marking. As a registered inspection body in the
UK, we are authorised to issue safety certifications
for these rides.
Employee health and safety
The well-being of our employees is paramount.
Our health and safety policies and procedures are
regularly reviewed and updated to reflect current
legislation and best practices. We perform risk
assessments for new tasks and annual reviews for
ongoing compliance and improvement.
Since the introduction of the Essential Skillz online
training system in 2014, we have consistently
updated our employee induction process,
including training modules on security awareness
and refresher courses for regional engineers.
MEGroup UK is accredited under two safe
contractor schemes by Alcumus and Altius and has
received an Assured Vendor award. We undergo
annual health and safety audits, including external
reviews by bodies like Avetta, and have achieved
PCI DSS certification to mitigate online fraud risks.
Collaborative approach to health
andsafety
Our health and safety management involves
collaborative efforts from all workforce levels,
with a diverse Health and Safety Committee
driving comprehensive coverage and continual
improvement in our practices.
Sustainability at MEGroup continued
MEGroup plc Annual Report 2023
48
Strategic Report
Environmental stewardship
MEGroup recognises the
responsibility it bears towards
environmental protection, and it is
aware of the impact that its
businessactivities have on our
planet. Our approach to
environmental protection is not
justabout compliance; it’s about
leadership and innovation.
We are dedicated to integrating environmental
considerations into the core of our operations,
focusing on the circular economy, resource-
consumption reduction, and minimising our
carbon footprint.
Navigating environmental challenges
In a world where environmental concerns
increasingly influence legislation and consumer
behaviour, we understand the challenges posed by
waste disposal costs, energy consumption, water
scarcity, and the rising costs of fuel. These factors
not only impact our operations but also resonate
deeply with our stakeholders. To address these
challenges, we have embraced several strategies:
▪ Waste Reduction Initiatives – We prioritise
reducing waste generation across all our
processes
▪ Resource Recovery and Reuse – Embodying
theprinciple of ‘reuse before recycle,’ we
refurbish and resell electrical equipment
suchasphotobooth cameras and printers.
Thispractice not only aligns with recent
environmental legislation but also creates
asecondary income stream
▪ Technological Innovations – We continually
adopt new technology to reduce our
environmental impact. Initiatives include:
- Implementing automatic shutdown and
restart in photobooths, saving about 30%
ofpower consumption
- Using remote telemetry systems to reduce
service visits and consumable waste
- Replacing traditional lighting with low-energy
LED lamps in photobooths and factories,
eliminating hazardous waste and cutting
energy usage
- Upgrading infrastructure in our offices with
improved insulation and more efficient air
conditioning and heating systems
Proactive climate change mitigation
Though not significantly exposed to climate-
related risks currently, we are proactive in
reducing energy use and curbing our demand
for natural resources. We operate a ‘green fleet
policy,’ ensuring our vehicles are chosen based
onenvironmental impact, primarily CO₂ emissions.
This policy, combined with the measures outlined,
underscores our commitment to increasing
energyefficiency.
MEGroup plc Annual Report 2023
49
Sustainability governance
Our governance structure places
sustainability at its core. The Board,
with the Chief Operating Officer
taking a leading role, oversees our
sustainability strategies, ensuring
alignment with our corporate
objectives. We have established clear
roles and responsibilities, ensuring
every team member contributes to
our sustainability goals.
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 Executive Team, 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.
ESG-related policies
MEGroup has a certain number of key ESG-
related policies in place. These are detailed below.
Additional policies – particularly those relating
to our environmental performance – are under
consideration for introduction.
We have a formal process for the development
and approval of policies. When a policy is updated
or a new policy is created, the initial work is
undertaken by the appropriate department, which
then seeks the input from relevant internal or
external stakeholders to ensure that our policies
are robust. All sustainability-related policies are
submitted to the Sustainability Task Force for
approval. The CFO and/or COO then reviews and
approves all policies before they are finalised and
socialised across the business to ensure broad
awareness and full compliance.
Equality, diversity and inclusion statement
This statement outlines MEGroup’s desire to
create a diverse workforce and an inclusive
workplace. We operate a zero-tolerance approach
to any form of discrimination, and we are
committed to providing equal opportunities to all
current and prospective employees regardless of
age, disability, sex, sexual orientation, pregnancy/
maternity, race or ethnicity, religion or belief,
gender identity or marital status. The statement
outlines the steps we take to ensure that we create
a diverse and inclusive culture. These include:
diversity and inclusion training, with unconscious
bias training for all line managers; establishing
employee representative groups; training our
recruiters; recognising holidays for each religious
group or culture; and promoting pay equity.
Anti-corruption and bribery policy
This detailed policy covers our commitment to
ensuring MEGroup – and every employee and
associated person– comply fully with the Bribery
Act 2010. The policy contains details of how a
potential; act of bribery or corruption can be
reported and the steps that MEGroup will take to
investigate and respond.
Whistleblowing policy
MEGroup’s Whistleblowing Policy provides details
of how an employee can report any potential
act of wrongdoing or an act that contravenes
our ethical practices. The policy ensures that
employees are able to make such a report in
complete confidence, anonymously and without
any fear of reprisal. It also provides details of the
steps we will take to investigate and respond to
any report we receive.
Diversity policy
Our Diversity Policy acknowledges that Board
diversity, that is not restricted to gender alone,
can aid the effectiveness of the Board. The policy
commits us to making Board appointments on
merit, Board composition, skills, background and
experience. It also commits us to disclosing the
composition and structure of the board annually in
our Annual Report.
Sustainability risk management
We acknowledge the challenges in our
sustainability journey. Managing environmental
impacts, while maintaining high safety standards,
requires diligent effort. Our risk management
strategies are robust and designed to navigate
these challenges effectively.
Sustainability metrics and reporting
Our commitment to transparency is evident in
our detailed sustainability metrics and reporting.
We track greenhouse gas emissions, energy
consumption, and other key indicators, presenting
them in a clear and accessible format.
Sustainability at MEGroup continued
MEGroup plc Annual Report 2023
50
Strategic Report
We are committed to weaving sustainable
practices into the fabric of our business,
understanding its critical importance to us,
ourcustomers, our employees, and the planet
atlarge.
MEGroup plc Annual Report 2023
51
1. Materiality assessment
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 prioritising 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
Executive Team 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 involved.
This approach made it possible to analyse the risks
and opportunities and 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 prioritising the issues in the
materiality matrix.
Specific sustainability
metricsand reporting
MEGroup plc Annual Report 2023
52
Strategic Report
Materiality matrix
Pride of
belonging/recognition
Internal
communication
HR policy/Collaborative
management
Training policy
Onboarding
Brand
awareness
MODERATED IMPORTANT VERY IMPORTANT
MODERATED IMPORTANT VERY IMPORTANT
For the business
For the stakeholders
Sustainability of the
ID and Photo range
Key accounts
co-ordination
Financial
performance
International
development
Optimisation of
products
Cloud operating
system
R&D
Cybersecurity
Global Digtal
transition
Satisfaction
of users
Our CSR
approach
Attractiveness of the
employerbrand
Circular economy
Optimisation of
the commercials
relationshipwithB2B
Strength of the
network technicians
Increased flow
of consumers
Growth of the
Laundromat range
Success of the
Food range
Strategic axes
Services and clients
Operational innovation
CSR approach
HR and employees
Strategy and development
MEGroup plc Annual Report 2023
53
2. Greenhouse gas (GHG) and energy consumption
Reporting 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.
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.
The table below explains what data we have included in this report and why.
Assessment parameters MEGroup comments
Consolidation approach
The figures below are based on subsidiary companies owned by MEGroup, except for
those non-material subsidiary companies 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.
Fugitive emissions 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.
Intensity ratio The GHG intensity ratio is calculated as the total GHG emissions in tons of CO
2e (including
Scope 1, 2, and 3 based on the availability of the data) per unit of operating equipment.
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
54
Strategic Report
Global GHG emissions (UK incl.)
Breakdown of GHG emissions
12 months ended
31 October 2023
12 months ended
31 October 2022
Emissions scope
tons of CO2e tons of CO2e
Scope 1
Energy – Gas 241 332
Scope 2 Energy – Electricity 360 300
Scope 3 Use 3,573 7,239
Scope 3 Travel – 524
Scope 3 Inputs for machine production – –
Scope 3 Car fleet 241 –
Scope 3 Purchasing for the Group – –
Scope 3 Inputs for machine user – –
Scope 3 Direct Waste 43 37
UK and offshore total 4,458 7,908
UK and offshore
intensity ratio
Per number of units of operating equipment 0.71 1.15
Scope 1
Energy – Gas 295 232
Scope 2
Energy – Electricity 376 598
Scope 3 Use – –
Scope 3 Travel 107,461 –
Scope 3 Inputs for machine production 5,475 5,176
Scope 3 Car fleet 3,457 –
Scope 3 Purchasing for the Group 472 446
Scope 3 Inputs for machine user 188 178
Scope 3 Direct Waste 79 78
Overseas total 117,803 6,708
Overseas
intensity ratio
Per number of units of operating equipment 2.85 0.18
Scope 1 Energy – Gas 536 564
Scope 2 Energy – Electricity 736 898
Scope 3 Use 28,852 29,058
Scope 3 Travel 107,461 5,287
Scope 3 Inputs for machine production 5,475 5,176
Scope 3 Car fleet 3,698 1,108
Scope 3 Purchasing for the Group 472 446
Scope 3 Inputs for machine user 188 178
Scope 3 Direct Waste 122 115
Group total 122,261 14,616
Group intensity
ratio
Per number of units of operating equipment 2.57 0.97
During the year ended 31 October 2023, the Company used emissions equal to 122 261 tonnes of carbon
dioxide resulting from the purchase of electricity, heat, steam or cooling by the company for its own use,
as well as indirect emissions (including emissions from business traveling, car fleet, supply chain, etc).
MEGroup plc Annual Report 2023
55
Energy consumption
During the year ended 31 October 2023, the Company’s energy consumption was equal to 142,854.3 MWh
resulting from the purchase of electricity, heat, steam or cooling by the company for its own use.
12 months ended
31 October 2023
12 months ended
31 October 2022
Type of energy consumed
tons of CO2e tons of CO2e
Gas
1,031.8 4.7
Electricity HQ 10.7 128.4
Electricity Machines 15,324.6 14,232.0
Heat – –
Cooling – –
Other type of fuel (petrol & diesel for cars) 1,034.3 1,223.3
UK and offshore total 17,401.4 15,588.3
Gas 987.7 1,247.5
Electricity HQ 1,209.8 1,317.8
Electricity Machines 108,429.1 99,579.0
Heat
– –
Cooling
– –
Other type of fuel (petrol & diesel for cars) 14,826.2 12,928.3
Overseas total 125,452.9 115,072.6
Gas 2,019.5 1,252.2
Electricity HQ 1,220.6 1,446.3
Electricity Machines 123,753.8 113,811.0
Heat – –
Cooling – –
Other type of fuel (petrol & diesel for cars) 15,860.5 14,151.6
Group total 142,854.3 130,660.9
Methodology used to calculate energy and GHG emissions data:
▪ 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 78 to 86
▪ 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
▪ 12 months ended 31 October 2023 compared with the 12 months ended 31 October 2022
▪ Indirect (Scope 3) GHG emissions in the categories ‘Energy – gas’ and ‘Energy – electricity’ have been
corrected due to improvements in the calculation methodology. The difference between the corrected
total GHG emissions and those published in the Annual Report for FY2022 is less than 3%. The intensity
ratio was recalculated accordingly.
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
56
Strategic Report
GHG targets for 2024-2026
Carbon footprint
Management have engaged Reporting 21, an independent expert in sustainability data capture and
analysis. Their work will help the Group better understand its carbon footprint, give management access
to clear data and aid the creation of plans and targets moving forward.
Energy consumption of the machine park
2022 2023 2024 2025 2026
Actions
24,674 tons of CO
2
(=81% of our global
carbon footprint)
▪ Discussion group on
the energy and
electricity
consumption of
machines
▪ Develop the areas
for 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
▪ 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
▪ 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
▪ 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
KPIs
▪ (3%) tons of CO
2
compared to 2021
for the total
machine park
▪ (5%) tons of CO
2
compared to 2021
for new machines
▪ (5%) tons of CO
2
compared to 2021
for the total
machine park
▪ (7%) tons of CO
2
compared to 2021
for new machines
▪ (7%) tons of CO
2
compared to 2021
for the total
machine park
▪ (10%) tons of CO
2
compared to 2021
for new machines
▪ (7%) tons of CO
2
compared to 2021
for the total
machine park
▪ (10%) tons of CO
2
compared to 2021
for new machines
Offsetting our carbon footprint
2022 2023 2024 2025 2026
Actions
Investment in carbon offset projects
KPIs
▪ 400 Tons
compensated with
Microsol
▪ 600 tons
compensated with
Microsol
Going4Zero
▪ 800 tons
compensated
▪ 1,000 tons
compensated
▪ 1,200 tons
compensated
MEGroup plc Annual Report 2023
57
Renewable energies
2022 2023 2024 2025 2026
Actions
Laundry units with
solar panels represent
10% of the laundry
estate
▪ 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
▪ Development of the
use of solar panels
across laundry units
▪ Testing of solar
heaters
▪ Development of the
use of solar panels
across laundry units
▪ Development of the
use of solar panels
across laundry units
KPIs
▪ Laundry units with
solar panels will
represent 11% of the
laundry estate
▪ Laundry units with
solar panels will
represent 20% of
the laundry estate
▪ Laundry units with
solar panels will
represent 25% of
the laundry estate
▪ Laundry units with
solar panels will
represent 30% of
the laundry estate
Transport of people
2022 2023 2024 2025 2026
Actions
▪ Driver training with
the lowest
eco-driving ratings
10% French drivers
▪ Driver training with
the lowest
eco-driving ratings
20% French drivers
+ 5% European
drivers
▪ Driver training with
the lowest
eco-driving ratings
25% French drivers
+ 10% European
▪ Driver training with
the lowest
eco-driving ratings
30% French driver
+15% European
KPIs
▪ (2%) litres of fuel
saved in France
▪ (2%) of trained
French drivers
▪ (4%) litres of fuel
saved in France and
Europe at constant
scope
▪ (5%) of French
drivers trained + 2%
of European drivers
at constant scope
▪ (7%) litres of fuel
saved in France and
Europe at constant
scope
▪ (5%) of French
drivers trained + 2%
of European drivers
at constant scope
▪ (7%) litres of fuel
saved in France and
Europe at constant
scope
▪ (5%) of French
drivers trained + 2%
of European drivers
at constant scope
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
58
Strategic Report
3. TCFD report
MEGroup acknowledges the
significance of climate change and
its impact on the environment and
society. Mitigating climate risks
andreducing our carbon footprint
are integral responsibilities for
everybusiness.
As a company, we are at the early stages of our
journey towards becoming a carbon-neutral
enterprise. Although climate risks are currently
perceived as relatively low for MEGroup, we
are proactively taking steps to minimise our
footprint, and manage and mitigate our impact
on the climate to contribute positively to the
environment and society.
The Company is reporting 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 five pillars of TFCD below:
▪ Governance – explanation of the TCFD
framework and its significance for MEGroup
▪ Strategy – discussion on the impact of climate-
related risks and opportunities on MEGroup’s
business strategy and financial planning
▪ Risk Management – description of processes
for identifying, assessing, and managing
climate-related risks
▪ Metrics and Targets – detailed metrics and
targets used to assess and manage climate-
related risks and opportunities, including
GHGemissions data and energy
consumptionfigures
MEGroup plc Annual Report 2023
59
Compliance statement andprogress
In our second year of TCFD reporting for FY2023, MEGroup acknowledges that it is not fully compliant
with all the TCFD recommended disclosers. Despite the identified gaps, we are committed to
achieving full disclosure in the coming three years. We have established preliminary deadlines for
each of the recommended disclosures in the TCFD Compliance Index table. Detailed disclosures are
also provided in the TCFD Disclosures table. Recognising the importance of environmental issues in
business management, we are dedicated to enhancing the management of climate-related risks and
opportunities, setting specific greenhouse gas emissions and financial climate-related targets.
TCFD compliance index
Recommended disclosure
FY 2023
Compliance
Steps to be undertaken to achieve full
compliance
Commitment to full
compliance
Governance
a) Describe the Board’s
oversight of climate-
related risks and
opportunities
Full – –
b) Describe management’s
role in assessing and
managing climate-related
risks and opportunities
Full – –
Strategy
a) Describe the climate-
related risks and
opportunities the
Company has identified
over the short, medium
and long term
Partial (In progress) Conduct deep-dive analysis of identified
risks and opportunities in respect of its
influence over the short, medium and
long term.
FY2025
b) Describe the impact of
climate-related risks and
opportunities on the
Company’s businesses,
strategy and financial
planning
Partial (In progress) Enhance assessment of climate-related
risks and opportunities 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.
FY2025
c) Describe the resilience of
the Company’s strategy,
taking into consideration
different climate scenarios,
including a 2°C or lower
scenario
Non-compliant Currently, our company has not
conducted climate resilience testing
under different scenarios due to
resource constraints, the novelty of
climate risks within our strategic
framework, and their relatively low
materiality compared to other risks
influencing the business. Insufficient
qualified resources and the absence of
an integrated strategy for climate risk
management have contributed to this
delay. However, we acknowledge the
importance of incorporating climate
resilience into our risk management
practices. As part of our commitment to
continuous improvement, we intend to
allocate resources, enhance our
expertise, and integrate climate
resilience testing into our strategic
framework in the future, with the
intention of reporting on the results.
FY2026
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
60
Strategic Report
Recommended disclosure
FY 2023
Compliance
Steps to be undertaken to achieve full
compliance
Commitment to full
compliance
Risk management
a) Describe the Company’s
processes for identifying
and assessing climate-
related risks.
Full – –
b) Describe the Company’s
processes for managing
climate-related risks.
Full – –
c) Describe how processes
for identifying, assessing,
and managing climate-
related risks are integrated
into the Company’s overall
risk management.
Partial (In progress) 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.
FY 2025
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.
Partial (In progress) 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).
FY 2025
b) Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse gas
(GHG) emissions, and the
related risks.
Full – –
c) Describe the targets
used by the Company to
manage climate-related
risks and opportunities
and performance against
targets.
Full – –
TCFD Disclosures
Recommended disclosure
FY 2023
Compliance
Description, location of disclosure progress to date and reason
foromission (if appropriate)
Governance 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
The Board is ultimately accountable for environmental responsibility
and exercises oversight of climate-related risks and opportunities
through:
▪ information received from senior management quarterly 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
Climate-related risks and opportunities were not deemed material for
business in FY 2023. Consequently, they were not integrated into our
strategic planning and financial considerations. It’s important to note
that our governance framework dictates that should any climate-
related issues emerge as material concerns, they will be duly
considered by the Board. This approach ensures that our decision-
making remains aligned with our commitment to effective risk
management and responsible governance practices.
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 78 to 86.
MEGroup plc Annual Report 2023
61
Recommended disclosure
FY 2023
Compliance
Description, location of disclosure progress to date and reason
foromission (if appropriate)
Governance Disclosure of the Company’s governance around climate-related risks and opportunities
b) Describe management’s
role in assessing and
managing climate-related
risks and opportunities
Full
The Chief Operating Officer has specific responsibility for risk
management and health, safety and environmental matters, with
delegated authority through line management.
The
Sustainability Task Force
comprises the Group Human Resources
Director and a global network of CSR representatives. The
Sustainability
Task Force makes recommendations to the Executive
Team.
A more detailed overview of the Company’s corporate governance and
organisational structure is included within the Corporate Governance
section on pages
78 to 86.
The Group operates in very different 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 Executive
Team, 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
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 58.
The Company has set out below the initial categorisation
ofshort-,
medium- or long-term risks and opportunities, although these remain
under review by the Company on an ongoing basis.
Type of
climate risk Risk Impact timeline
Transitional
risks
Increased potential
legislation (in climate
change area)
Short-term (1-3 years)
The increasing
awareness of the
climate crisis amongst
consumers
Short-term (1-3 years)
Rising car fuel prices Mid-term (3-10 years)
Physical
risks
Water scarcity (due to
the climate change
Mid-term (3-10 years)
The Company has identified its main climate-related risks through its
existing governance framework. However, we do not consider these to
be material risks.
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.
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
62
Strategic Report
Recommended disclosure
FY 2023
Compliance
Description, location of disclosure progress to date and reason
foromission (if appropriate)
Strategy
Disclosure of the actual and potential impacts of climate-related risks and opportunities on the
Company’s material business, strategy, and financial planning
b) Describe the impact of
climate-related risks and
opportunities on the
Company’s businesses,
strategy and financial
planning
In progress
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 49
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 53, 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.
c) Describe the resilience of
the Company’s strategy,
taking into consideration
different climate scenarios,
including a 2°C or lower
scenario
Non-compliant
In the current reporting period, the Company did not conduct a climate
scenario analysis. As we look to the future, we are committed to
monitoring climate-related risks and opportunities that impact our
operations. Specifically, we plan to conduct a scenario analysis within
the next three years while working on reducing energy consumption
and gradually transitioning to renewable energy sources to lower our
carbon footprint.
Risk Management Disclosure of how the Company identifies, assesses, and manages climate-related risks.
a) Describe the Company’s
processes for identifying
and assessing climate-
related risks.
Full
The Company has identified its main climate-related risks through its
existing governance framework. 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.
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.
b) Describe the Company’s
processes for managing
climate-related risks.
Full
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 58.
c) Describe how processes
for identifying, assessing,
and managing climate-
related risks are integrated
into the Company’s overall
risk management.
In progress Since 2021, the Company has been integrating a systemic sustainability
approach in the Company’s strategy that involves all its business to
help deliver its aim of being carbon neutral by 2040. This systemic
environmental 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 which is updated annually 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 customers; (iv) HR and
employees; and (v) communities and 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 78 to 86.
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.
MEGroup plc Annual Report 2023
63
Recommended disclosure
FY 2023
Compliance
Description, location of disclosure progress to date and reason
foromission (if appropriate)
Metrics and Targets
Disclosure of the Company’s metrics and targets used to assess and manage relevant climate-
related risks and opportunities where such information is material.
a) Disclose the metrics
used by the Company to
assess climate-related
risks and opportunities in
line with its strategy and
risk management process.
In progress The Company follows the Greenhouse Gas Protocol Corporate
Standard in calculating its Scope 1, Scope 2. See pages 54 and 56 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).
b) Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse gas
(GHG) emissions, and the
related risks.
Full See page 55 for Scope 1 and Scope 2 emissions related to the
Company’s operations in line with the GHG Protocol methodology and
page 54 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 Scope 3 emissions are calculated based on the
data obtain from third parties (suppliers, partners), 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. We are planning to improve completeness and accuracy
of scope 3 emissions in line with best practice and estimation
techniques in the coming 3 years.
c) Describe the targets
used by the Company to
manage climate-related
risks and opportunities
and performance against
targets
Full
In line with our purpose “Create eco-responsible local services that
make everyday life easier”, 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
on our four-year sustainability plan of the current report
pages 57 to 58
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.
We are using the following KPIs to track progress on reduction of GHG
emissions:
- Laundry units with solar panels
- tons of CO
2 for the total machine park
- tons of CO
2 for new machines
- tons of CO
2 compensated
- litres of fuel saved
More information on carbon emissions reduction targets can be found
in the section on our four-year sustainability plan of the current report
pages 57 to 58
et seq
.
Further information is available on me-group.com (Our approach
andKPIs).
Specific sustainability metricsand reporting continued
MEGroup plc Annual Report 2023
64
Strategic Report
Supplementary information
forTCFD disclosure
Governance of climate-related risks
andopportunities
Despite its low risk in the climate change sector,
ME Group has established a robust environmental
strategy overseen by a Steering Committee
under the Board and Executive Team. Key actions
include forming an environmental group in
late 2021, integrating sustainability in our 2021
Annual Report’s risk management chapter, and
undergoing annual environmental performance
audits by Ecovadis. We align our efforts with the
United Nations Sustainable Development Goals
(SDG) and hold regular sustainability strategy
review meetings.
Process for managing climate-related
risks and opportunities
We use the MEGroup materiality matrix – first
created in 2021 and adjusted annually – to
identify and manage climate-related risks and
opportunities. This involves discussions validated
by employee groups, businesses, and external
stakeholders. Key focus areas include energy
consumption, water scarcity, and the impact of
rising fuel prices.
Integration into overall risk management
Our risk management strategy includes training
staff in environmental practices, adopting
best practices for reducing energy and water
consumption, switching to green energy, and
exploring hybrid and electric vehicles. Our R&D
department in Grenoble, France plays a key role
indeveloping green solutions.
Principal climate-related risks
andopportunities
We focus on increasing green energy usage,
improving water efficiency in our laundry
machines, and addressing the impact of rising
fuel prices. Our strategic locations in shopping
centres offer a combined activity advantage
forcustomers.
Impact on business model and strategy
Our business model adapts to varying levels of
risk, particularly in water scarcity and fuel price
fluctuations. We aim to encourage the use of our
machines through public information and local
authority guidance.
Resilience of business model
R&D is vital in our strategy, focusing on
manufacturing innovation, recycling, and
reintegration of machine components. Legal
obligations in certain jurisdictions are also a
keyconsideration.
Targets and KPIs for managing risks
andopportunities
Our targets include increasing the percentage
of laundry units with solar panels annually and
expanding the deployment of our Revolution
machines. We also aim to reduce fuel consumption
through eco-driving initiatives and competitions
among our technicians.
Compliance statement and progress
In our second year of TCFD compliance, we
acknowledge gaps but are committed to
achieving full disclosure. For each of the TCFD
requirements, we identified the status of
compliance as of FY2023 and indicated our plans
and timeframe toward becoming fully compliant.
We recognize the importance of environmental
issues in business management and are dedicated
to enhancing the management of climate-
related risks and opportunities, setting specific
greenhouse gas emissions, and financial climate-
related targets.
MEGroup plc Annual Report 2023
65
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. considering the potential repercussions of
those principal risks at least annually as well
as the risk impact of each major event or
transaction;
ii. examining the effectiveness of the actions
taken to mitigate the principal risks;
iii. 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 2028.
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 gives 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.
To stress test the viability of the Group, the
Directors tested four scenarios and their projected
financial impact over a five-year period. The four
scenarios, and the assumptions used in each, are
detailed opposite:
In all four scenarios, exchange rate assumptions
are as per the budget. The forecasts assume
payment of dividends commensurate with results
and the Group’s dividend 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.
Brexit impact was considered by management to
have no significant impact on the business of the
Group, nor will the Ukrainian or Israeli conflicts, as
the Group has no activity in these regions.
Management does not consider interest rate risk
to be a threat to the Group’s viability, 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.
Serge Crasnianski
Chief Executive Officer
27 February
2024
Viability statement
The Directors have assessed the viability and
prospects of the Group in accordance with the
requirements of theUK Corporate Governance Code.
MEGroup plc Annual Report 2023
66
Strategic Report
Scenario 1:
The budget, elaborated with each country manager and validated by the top management,
which we consider as the best scenario.
Scenario 2:
The “most likely scenario” is based on the budget, but with the following sensitivities added:
▪ A 5% decrease in machine installations due to supply chain issues
▪ A 5% price increase in spare parts and consumables
▪ A 1% increase in labour costs
▪ A 5% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 1% drop in revenue due to the potential impact of a future pandemic or other global event
▪ 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 added:
▪ A 10% decrease in machine installations due to supply chain issues,
▪ A 10% price increase in spare parts and consumables
▪ A 2% increase in labour costs
▪ A 10% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 3% drop in revenue due to the potential impact of a future pandemic or other global event
▪ Revenue is reduced by 3% 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 added:
▪ A 30% decrease in machine installations due to supply chain issues,
▪ A 15% price increase in spare parts and consumables
▪ A 3% increase in labour costs
▪ A 15% increase in paper costs
▪ A 3% drop in total revenue due to loss of key accounts
▪ A 5% drop in revenue due to the potential impact of a future pandemic or other global event
▪ 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 tested, the Group continues to comply
with its bank covenants and loan repayment terms and is
in a strong financial position after five years
MEGroup plc Annual Report 2023
67
Corporate
Governance
Board of Directors and Company Secretary 70
Report of Directors 72
Corporate governance 78
Statement of Directors’ Responsibilities 88
Directors’ RemunerationReport 90
Remuneration PolicyReport 94
Annual report on Remuneration 100
MEGroup plc Annual Report 2023
68
Artifical Intelligence is helping to transform
our business by automating tasks, enhancing
decision-making, optimising processes, and
personalising customer experiences.
MEGroup plc Annual Report 2023
69
Board of Directors
and Company Secretary
1
4
7
2
5
8
3
6
9
MEGroup plc Annual Report 2023
70
Corporate Governance
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 (International) LLP (as now is).
He is a Director of Macdonald and Company Holdings Ltd
(previously the AIM market company, Prime People plc), as well
as various private companies. He was previously a practising
Solicitor and senior partner in Lewis, Lewis & Co which became
part of Eversheds Sutherland (International) 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 Team. Serge founded KIS in 1963.
3. Tania Crasnianski
Executive Director
Tania, the daughter of the CEO, Serge Crasnianski, was
appointed to the Board in June 2021. Prior to that, Tania had
been an independent legal adviser for 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. Tania is also a
member of the Executive Team.
4. Jean-Marc Janailhac
Non-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 Team) that is
responsible for reviewing and implementing operational
decisions across the Group until 31 October 2022. He chaired
that committee until 31 October 2022. He returned to being a
Non-executive Director on 1 November 2023.
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. The Board considers
Mr Proglio to be independent.
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. Since then she has been 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 Partner 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.
Company Secretary
Del Mansi
Company Secretary
The company secretary is Del Mansi, a qualified solicitor, who
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.
The current Directors of the Company,
allofwhom served throughout the year
ended31 October 2023, are:
MEGroup plc Annual Report 2023
71
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 2023.
The Corporate Governance Statement, the
Corporate Responsibility Statement and the
Sustainability Statement should be read as
forming part of this report. In this document,
references to the “Group”, the “Company”,
“ME Group”, “we”, or “our” and cognates, refer
to ME Group International plc, its subsidiary
companies and, where applicable, its associated
undertakings, or any of them as the context
mayrequire.
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 declare interim
dividends. A copy of the Articles of Association can
be found on the Company’s website.
Details of the Directors’ contracts, emoluments
and interests in shares and share options are given
in the Remuneration Report on pages 90 to 107.
Directors’ and Officers’ Liability Insurance
The Company maintained directors’ and officers’
liability insurance cover throughout the 12-month
period ended 31 October 2023. 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.
Results and dividends
The results for the year are set out in the Group
Statement of Comprehensive Income on page 118.
The Directors are recommending a final dividend
for the year ended 31 October 2023 of 4.42 pence
per ordinary share. The ex-dividend date will be
25 April 2024 and, if approved by shareholders at
the Company’s AGM on 26 April 2024, the dividend
will be paid on 23 May 2024 to shareholders
listed on the register at the close of business on
26 April 2024. An interim dividend of 2.97 pence per
share was paid for the year ended 31 October 2023.
Review of business and future
developments
The Strategic Report describes the activities of the
business during the year ended 31 October 2023
as well as 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.
MEGroup plc Annual Report 2023
72
Corporate Governance
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 50.
Employee engagement
The Board understands the importance of
considering the views of all stakeholders, including
its employees.
The senior management team has held
several internal consultations and released
internal memoranda outlining the movement
of the business throughout the year. 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 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. Subject
to shareholder approval at the AGM to be held on
26 April 2024, the Company intends to introduce a
new executive share option scheme based closely
on the existing one.
Engagement with suppliers, customers
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.
Corporate responsibility, greenhouse gas
emissions, energy consumption and
energy efficiency action.
A summary of the Company’s approach to
corporate social responsibility and environmental
matters, including a report on the Group’s
greenhouse gas emissions, energy consumption
and energy efficiency action for the 12 months
ended 31 October 2023, can be found in the
Sustainability Statement on pages 42 to 50.
Interests in voting rights
Information provided to the Company pursuant
to the Financial Conduct Authority’s DTRs
is published on a Regulatory Information
Service and on the Company’s website. As at
31 October 2023, the following information has
been received, in accordance with DTR 5, from
holders of notifiable interests in the Company’s
issued share capital.
The information provided below was correct at
the date of notification; however, the date it was
received may not have been within the current
financial year. It should be noted that these
holdings are likely to have changed since the
Company was notified. However, notification of
any change is not required until the next notifiable
threshold is crossed.
Shareholder Name
% Voting
Rights
Number of
shares
Serge Crasnianski
1
36.64 137,803,041
FCPI Montefiore Investment IV 12.01 45,355,481
Schroders plc 10.50 39,693,875
FIL Ltd 8.34 31,343,390
Premier Miton Group plc 4.87 18,398,718
Norges Bank 2.65 10,000,845
1
Except for 63,750 ordinary shares of 0.5p each held in
Mr Crasnianski’s own name, the remaining shares are owned
through a nominee by Tibergest PTE LTD, a person closely
associated with Mr Crasnianski, 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.
As at 19 February 2024, the following changes had
been notified to the Company:
▪ On 8 January 2024, Schroders plc notified the
Company that its holding of total voting rights in
the Company was 45,808,015 representing
10.08% of the Company’s total voting rights.
▪ On 9 January 2024, FIL Limited notified the
Company that its holding of total voting rights in
the Company was 14,930,258 representing
3.96% of the Company’s total voting rights.
MEGroup plc Annual Report 2023
73
Report of Directors’ continued authority
to purchase shares
Pursuant to a resolution passed at a general
meeting (held on 18 August 2023), the Company
is authorised to purchase its own shares in the
market. Although post the upcoming AGM on
26 April 2024, the Company will not be continuing
the share buyback authorised by members
at a general meeting in August 2023, it shall
seek approval at the 2024 AGM (to be held on
26 April 2024) 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 repurchased 1,260,534 ordinary
shares of 0.5p each in the 12-month period ended
31 October 2023. These shares are held by the
Company in treasury.
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 21 to
the financial statements.
▪ On 23 January 2024, Norges Bank notified the
Company that its holding of total voting rights in
the Company was 11,275,000 representing
2.99% of the Company’s total voting rights.
The number of voting rights in the Company has
been reducing (and may continue to do so until
the 2024 AGM) as a result of the buyback of shares
approved by members at a general meeting on
18 August 2023. Taking the total number of voting
rights as at close of business on 19 February 2024
(376,136,253), the percentage of voting rights
as at that date using the above data would be
recast as follows: Serge Crasnianski (36.53%); FCPI
Montefiore Investment IV (12.0%); Schroders plc
(12.18%); Premier Miton Group plc (4.89%); FIL Ltd
(3.97%); and Norges Bank (3.00%).
Share option grants to PDMRs
On 4 April 2023, Tania Crasnianski, an Executive
Director, and Stéphane Gibon, Chief Financial
Officer (non-Board), were each granted an option
over 100,000 and 150,000 Ordinary Shares of
0.5p each of the Company respectively, under the
Company’s Executive Share Option Scheme (2014);
in each case, the performance conditions attached
to the options relate to 2025 earnings per share
(“EPS”). There were no other notifications to the
Company under article 19 of the Market Abuse
Regulation in the year ended 31 October 2023.
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 21
of the financial statements. Each ordinary share
of the Company carries one vote at each annual
general meeting (AGM) and general meetings of
the Company.
Report of Directors continued
MEGroup plc Annual Report 2023
74
Corporate Governance
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 an AGM or 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 AGM or 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 AGM
or general meeting. All proxy votes are counted
and the numbers for, against or withheld in
relation to each resolution are announced at the
AGM or 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 an AGM or 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 78 to 86. The Company’s
Articles of Association may only be amended by a
special resolution at an AGM or 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 28 to the financial statements.
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 16 to the
financial statements.
Political donations
No member of the Group made any political
donations during the 12-month period ended
31October 2023.
Important events post balance sheet date
On 23 November 2023 the Group paid an
interim dividend in respect of the year ended
31 October 2023 of 2.97 pence per ordinary share,
totalling £11,240,000.
MEGroup plc Annual Report 2023
75
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.
AGM 2024
The Company’s AGM this year will be held on
26 April 2024 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 Crasnianski
Chief Executive Officer
27 February 2024
On 14 November 2023, the Group converted
100,000 of the 500,000 convertible bonds held
in Energy Observer Developments SAS to 125
ordinary shares of the same company. The Board
have no plans to convert the remaining 400,000
convertible bonds held by the Group to shares.
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 2028.
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.
The Directors have stress-tested the Group’s
goingconcern status by assessing several
differentscenarios. Full details of the scenarios
tested and assumptions used are provided in
the‘Viability Statement’ and in note 1.1 of 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 Tibergest
PTE Ltd which owns 36.64% of the issued share
capital of ME Group International plc (and as
of 19 February 2024, 36.41% of its total voting
rights). 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
Report of Directors continued
MEGroup plc Annual Report 2023
76
Corporate Governance
MEGroup plc Annual Report 2023
77
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 79.
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
The Directors who served throughout the financial
year ended on 31 October 2023 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 Team. 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. The Board
considers Sir John to be a non-independent director.
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. (In doing so, the
Board would continue to encourage and give
consideration to candidates from a diverse range
of backgrounds and experiences as mentioned
under the heading Equality, Diversity and Inclusion
below.) 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 AGM 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.
MEGroup plc Annual Report 2023
78
Corporate Governance
TheDirectors consider that the Company has, throughout the 12-month period ended 31October2023,
complied with those provisions ofthe Codethat are applicable to it, except for thefollowing:
Point of non-compliance with Code Reason for non-compliance
Less than half the board, excluding the
chair, are Non-executive Directors
whom the board considers to be
independent.
Excluding the Chairman, the Board comprised two Executive Directors and
five
Non-executive Directors, three 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.
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.
▪ (But none is used.)
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.
There is no annual re-election of
alldirectors.
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.
Non-executive Director do not
liaise
with work force as a matter of routine.
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.
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.
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.
Sir John Lewis is a member of the
AuditCommittee.
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 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.
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.
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.
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://media.frc.org.uk/documents/UK_
Corporate_Governance_Code_2018.pdf.
MEGroup plc Annual Report 2023
79
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. A committee of the Independent
Directors meeting alone had one meeting in
thatperiod.
The attendance of Directors at those meetings and
meetings of Board Committees is set out below:
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.
Under the guidance and supervision of the
Company Secretary, the Board undertakes an
internal process to assess the effectiveness of the
Board during each financial year. This consists
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.
Board
Meeting of
Independent
Committee only
Audit
committee
Remuneration
committee
Nomination
committee
J Lewis
4(4) 1(1) 3 (3) 2(2) 0(0)
S Crasnianski 4(4) – – – –
T Crasnianski 4(4) – – – –
J-M Janailhac 4(4) – – – –
F Coutaz-Replan 4(4) – 3 (3) – –
E Olympitis 4(4) 1(1) 3 (3) 2(2) 0(0)
C Claverie 4(4) – – – –
R Proglio 4(4) – 3 (3) – –
Corporate governance continued
MEGroup plc Annual Report 2023
80
Corporate Governance
▪ None of the Board members was from an ethnic
minority background as defined under the
Listing Rules, although the Board is comprised
of individuals from four odifferent nationalities.
The Board would point out the following by way
of explanation and important context:
- The Board is relatively small and consists of
two Executive Directors, one of whom is a
woman, and five Non-executive Directors, of
whom two are women. (The roles of Chief
Marketing Officer and Head of HR are not
board level positions at the Company, but if
they were (as is common in other
organisations), we would well exceed the 40%
target set by the Listing Rules.)
- The composition of the Board has remained
relatively steady over the last few years.
Thatis by design: the Group has undergone
significant changes, making consistency
andclarity of thought at Board level
vitallyimportant
- The Board comprises 37.5% female members,
representing (i) two Non-executive Directors
one of whom sits on the audit committee and
(i) one Executive Director, who is head of legal
and general secretary, and is also responsible
for supervising the Group’s entities in
Germany and Austria. As mentioned above,
this is higher than the 33% target set by the
30% Club Investor Group and is close to 40%
- It is important to recognise that the Group has
a large presence in, and the Company draws
many of its leaders from, countries where the
cultural and legal approach to ensuring
Diversity & Inclusion is very different. For
example, in France and Germany asking
candidates and employees to disclose their
ethnicity can amount to a criminal offence,
and it is counter-cultural to suggest the
introduction of targets or quotas for
improvingrepresentation. Whilst the
Company and the Board will continue to strive
for improvement, it must do so in a way that
remains respectful of, and sensitive to,
differing expectations in our main markets
and the rule of law in other jurisdictions
- As an equal opportunities employer, the
Company is committed to providing equal
career opportunities for all its employees
without discrimination, and pursuing fair and
equitable policies and procedures for
recruitment, training and development. It gives
full consideration to all applications from
Equality, diversity and inclusion
Our commitment
The Board of MEGroup is a supporter of gender
and ethnic diversity as part of the Company’s
commitment to diversity and inclusion in the
broadest sense.
We are committed to attracting and retaining the
best people who reflect the diverse experiences
and characteristics of the customers we serve.
This is central to our core values, which include a
commitment to the following ethics driving our
behaviour: courage, creativity, solidarity, eco-
responsibility and commitment. This encompasses,
but goes beyond, gender and ethnic diversity.
For example, we are focussed on supporting
those people who may be disadvantaged or
marginalised in connection with their educational
background, socio-economic background or caring
responsibilities, as well as characteristics which are
protected under equality law.
The Company has long been – and remains
– an equal opportunities employer. It has
had embedded a comprehensive equality,
diversity and inclusion policy in place the latest
revision ofwhich was made in 2022 (but which
originates as far back as 2011) covering the
entire employment lifecycle and emphasising
our commitments and expected behaviours. A
statement by the Company on its approach to this
topic can be found here: https://me-group.com/
company-documents/.
The Board considers it a matter of the utmost
importance in the best interests for shareholders
to fill positions with the best possible candidates
regardless of their gender, ethnic origin or other
attributes. It believes this is what investors want.
Listing rules: board targets regarding
gender and ethnicity
As at 31 October 2023 (the Company’s chosen
reference date for reporting under Listing Rule
9.6.8 R (9)(a)):
▪ 37.5% of the Board consisted of women. None of
the Chair, CEO, SID, and CFO (the last of which is
not a statutory board position) is a woman,
although from 2009 to 2015 the CFO (that office
being then a statutory board position) was a
woman. Whilst this falls short of the ‘40%’ and
‘senior position’ targets set out in the Listing
Rules, it exceeds the 33% target set by the
Hampton-Alexander Review and the 30% Club
Investor Group in their widely adopted guidance.
It also represents material compliance as the
2.5% shortfall represents less than one person
owing to the numbers on our Board
MEGroup plc Annual Report 2023
81
of employees’ behaviour and sets out steps the
Company is taking to ensure an inclusive culture.
The ED&I Policy deliberately takes a broad and
ambitious approach to diversity and commits
to trying to ensure that recruitment, promotion
and retentionprocedures do not result in less
favourable treatment because of someone’s
disability, gender, gender identity or gender
reassignment status, marital status, race, racial
group, ethnic or national origin, or nationality,
religion or belief, sexual orientation, age, civil
partnership status, pregnancy or maternity,
paternity, educational background, socio-
economic background, caring responsibilities,
part-time status or fixed-term status.
The ED&I policy is shared with all our workers
on the UK HR system available to all UK
employees via self-service and easy access
on laptops and mobile phones; it requires
acknowledgement. There is an Equality and
Diversity training programme which can be
rolled out to all employees in the UK through our
WorkWize training portal. The ED&I Policy also
dedicates a section specifically to the ways in
which the Company seeks to ensure inclusion of
disabled people, to give tangible examples of
theCompany’s approach and to showcase its
focus on disability inclusion.
We are asked to report on the results of the ED&I
Policy in the reporting period. It is difficult to
point to quantitative evidence of improvements
in concepts like inclusion which are inherently
difficult to measure, especially where progress on
such matters is inevitably incremental. However,
we are encouraged to actively follow this policy
to create a more inclusive workplace, which
helps the business attract candidates with a
wide range of skills from diverse backgrounds.
We believe that this helps keep the Company
successful, andthatour employees are motivated
and reassured by the fact that we are an equal
opportunities employer.
We are also required to report on the gender
and ethnicity data in relation to our Board and
executive management in tables prescribed under
the Listing Rules. These are set out below. We
collected this information by asking each member
of the Board and executive management,
where permitted by law to do so, to complete
a questionnaire to confirm which of the below
categories describes them.
persons with protected characteristics and
more broadly from a diverse range of
backgrounds, with due regard to their
aptitudes and abilities. Indeed, we have a
paragraph stated on all our job postings as
follow ‘As an equal opportunity’s employer,
ME Group is committed to the equal treatment
of all current and prospective employees and
does not condone discrimination on the basis
of age, disability, sex, sexual orientation,
pregnancy and maternity, race or ethnicity,
religion or belief, gender identity, or marriage
and civil partnership.’
We aspire to have a diverse and inclusive
workplace and strongly encourage suitably
qualified applicants from a wide range of
backgrounds to apply and join our Company.
The Board recognises the risks of applying hard
short-term targets, which can give rise to a
perception of an uneven playing field, and which
can discourage qualified applicants and existing
employees from seeking positions.
However, the Board will continue to encourage and
give consideration to candidates from a diverse
range of backgrounds and experiences when
seeking out the best talent whenever a position
comes up to be filled. The Board does not believe
that positions should be created for the ad hoc
purpose of meeting quotas, and therefore another
reason for not meeting the 40% level stipulated
by the Listing Rule and other targets set out in
the Listing Rules is simply that positions have not
arisen requiring to be filled partly as a result of the
Group’s relatively low turnover of officers.
More broadly, the Board actively supports the
roll-out of initiatives under the Equality, Diversity,
and Inclusion Policy, referred to below, to
broadenthe diversity of the Company’s workforce,
and to ensure the Company’s culture is as inclusive
as possible.
We collected the data which informs this part
of our report by questionnaires sent to all the
relevant persons and which were adapted to
ensure compliance with local laws.
Equality, diversity and inclusion policy
The Board supported the Company’s embedding
of its comprehensive Equality, Diversity and
Inclusion Policy (ED&I Policy) in July 2022. The
ED&I Policy applies to anyone who works
in the Company, including the Board (and
its committees). It seeks to emphasise the
Company’s commitments to equality, diversity
and inclusion (ED&I), sets expectations in respect
Corporate governance continued
MEGroup plc Annual Report 2023
82
Corporate Governance
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 and external
auditor, and compliance with policies, procedures
and applicable legislation. In addition, the
Committee monitors the effectiveness of both the
external and 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.
Board committees
Audit Committee
This comprised René Proglio (Committee
Chairman), Emmanuel Olympitis (Senior
Independent Director), Sir John Lewis (Chairman
of the Board), and Françoise Coutaz-Replan (the
Group’s former Finance Director). The Board
considers that René Proglio, Emmanuel Olympitis,
Françoise Coutaz-Replan and Sir John Lewis have
suitable recent and relevant financial experience
to satisfy the requirements of the Corporate
Governance Code (2018 edition).
Meetings are normally held at least twice a year.
Three meetings were held during the year ended
31 October 2023. Other Directors, together with
the Chief Financial Officer (currently a non-Board
position) and representatives of the external
auditor are generally invited to attend meetings.
Table for reporting on gender identity or sex
Number of
Board members % of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair
Number in
executive
management
(plus company
secretary)
% of executive
management
(plus company
secretary)
Men
5 62.5 3 4 66.7
Women 3 37.5 – 2 33.3
Not specified/prefer not to say – – – – –
Table for reporting on ethnic background
Number of
Board members % of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair
Number in
executive
management
(plus company
secretary)
% of executive
management
(plus company
secretary)
White British or other White
(including minority – white
groups)
2 25% – 1 16.7
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British – – – – –
Black/African/Caribbean/
BlackBritish
– – – – –
Other ethnic group,
includingArab
– – – – –
Not specified/prefer not to say – – – – –
Notes
1.
Data were acquired by using questionnaires seeking the information required by the Listing Rules. Having sought legal advice, the Company
was informed that it could not lawfully ask questions around ethnicity to French nationals therefore it did not do so.
2
The Board consists of French Greek, German, Swiss and UK nationals. The Executive Management (which the Company calls its Executive
Team) comprises French, Swiss and German nationals.
MEGroup plc Annual Report 2023
83
Impairment of PPE and tangible assets
Management performs impairment tests if there
is an impairment trigger. Assets are tested at
the level of the cash generating units (“CGUs”)
definedby the Group, being each vending machine.
An impairment loss is recognised if the net book
value of an asset or cash-generating unit is higher
than its recoverable value. If the main machine
(laundry or photobooth) on the site is impaired, all
installation costs on the site are impaired. On our
Japanese entity’s impairment, the methodology is
simpler, comparison is made between EBITDA vs
the carrying amount of the vending machine.
For other than vending equipment PPE,
management assesses the functionality and
writes-off any machine if there is any indicator of
impairment. This is done at least once a year for
tangible assets.
Recognition, valuation and impairment of
intangible assets, including goodwill.
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.
Goodwill recognition is deemed as a judgmental
area by the audit team. 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. Besides, the Group
acquired one company (Fujifilm) during the period.
Remuneration Committee
During the year period ended 31 October 2023,
the Remuneration Committee comprised Mr
Emmanuel Olympitis (Committee Chairman) and
Sir John Lewis (Chairman of the Board).
The Committee meets at least once per year. It
met twice in the year ended 31 October 2023.
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 (the Chairman would not
play a part in deciding his own remuneration),
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.
The Remuneration Report on pages 90 to 107
provides details of how the Committee applies the
directors’ remuneration principles of the Code.
Mazars LLP has been the external auditor of the
Group since the AGM 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 AGM 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.
Key matters considered
In February 2024, the Committee met to review
this Annual Report and to receive the external
auditor’s update and report on its audit activity.
In February 2024, 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 were:
Management override of controls
In all entities, 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. Due to the unpredictable way in which
such override could occur, we consider there to be
a risk of material misstatement due to fraud and
thus a significant risk on all audits.
Revenue recognition
There is a presumed risk of fraud in the financial
reporting relating to revenue recognition which we
consider to be a significant risk on all audits.
Going concern
There is a risk that the going concern assumption
has been inappropriately applied in preparing the
financial statements.
Investment in subsidiaries
Investments in subsidiaries and associates are
stated at cost less impairment. Management
should review any indicators of impairment at
least annually, and perform an impairment
assessment where indicators have been identified.
Corporate governance continued
MEGroup plc Annual Report 2023
84
Corporate Governance
Executive Team
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 Team. 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 Team will provide sustainable
management and allow the Group to better plan
for the future.
The Executive Team comprises:
▪ Serge Crasnianski, Chief Executive Officer,
Deputy Chairman
▪ Tania Crasnianski, Executive Director
▪ Stéphane Gibon, Chief Financial Officer
▪ Christian Autié, Chief Operating Officer
(Chairman of the Executive Team)
▪ Charlotte Delbès, Chief Marketing Officer
The Executive Team 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
periodically, gathering country managers together
with the Executive Team in order to discuss and
review the implementation of communication,
decisions and actions that have been decided by
the Executive Team 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.
Nomination Committee
During the year ended 31 October 2023, the
Nomination Committee comprised Sir John Lewis
(Committee Chairman and member of the Audit
and Remuneration Committees) and Emmanuel
Olympitis (Senior Independent Director,
member of the Audit Committee and Chair of
the Remuneration Committee). The Chairman
of the Board would not chair the Nomination
Committee when it addresses the appointment
of his 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 2023
but its members speak frequently even in the
absence of formal meetings in order to keep board
composition under review and to ensure that a
proper succession plan is in place at all times.
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, therefore. 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.
During the year ended 31 October 2023, no
vacancies for the Board arose, therefore no
appointments were required. As turnover of
Board members is low, as mentioned above,
the Nomination Committee has not set any
targets but as and when vacancies do arise,
the Nomination Committee and the Board
are committed to giving consideration to all
interestedand available candidates regardless
ofage, disability, sex, sexual orientation,
pregnancy and maternity, race or ethnicity,
religion or belief, gender identity, or marital or
civilpartnership status.
MEGroup plc Annual Report 2023
85
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):
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. In connection with
the audit for year ended 31 October 2023, the
above process and review did not result in any
adverse findings, and the Audit Committee found
the process and associated controls sufficient and
adequate for their purpose.
In normal circumstances, private investors are
encouraged to attend the AGM and have the
opportunity to question the Board. All members of
the Board usually attend the AGM. 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.
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
Corporate governance continued
MEGroup plc Annual Report 2023
86
Corporate Governance
MEGroup plc Annual Report 2023
87
Statement of Directors’
Responsibilities
The Directors of the Company, whose names
and respective functions are set out on
page71 (and are deemed to be included in this
statement), are responsible for preparing
theAnnual Report and the 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
are reasonable and prudent;
▪ State whether they have been prepared in
accordance with UK-adopted international
accounting standards, subject to any material
departures disclosed and explained in the Group
and
Company financial statements respectively;
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 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 71,
confirms that, to the best of his or her knowledge:
▪ The financial statements, which have been
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
MEGroup plc Annual Report 2023
88
Corporate Governance
the undertakings included in the consolidation
taken as a whole; and
▪ The Strategic Report and Report of Directors in
the Annual Report include 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 page 86.
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.
Significant accounting policies, critical
estimates and key judgments
Our significant accounting policies are set out on
pages 125 to 134 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
2022/2023 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). As one independent Non-executive
Director, Françoise Coutaz-Replan, is being
proposed for re-election at the Company’s AGM
to be held on 26 April 2024, her re-election will
be conducted in accordance with Listing Rules
9.2.2ER and 9.2.2FR.
By order of the Board
Sir John Lewis OBE
Non-executive Chairman
27 February 2024
MEGroup plc Annual Report 2023
89
Directors’
RemunerationReport
In the 12 months ended 31 October 2023, the
Committee’s work has largely been focused
on reviewing the Directors’ Remuneration
Policy in advance of the 2024 AGM to
ensure that Executive Directors and
seniorexecutives remain appropriately
incentivised and rewardedin respect of
theCompany’sperformance.
MEGroup plc Annual Report 2023
90
Corporate Governance
Annual Statement
Dear Shareholder,
On behalf of the board, I am pleased to present
ourDirectors’ Remuneration Report which covers
the12 months ended 31 October 2023.
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
2022/23 and how the Remuneration Policy will be
operated in 2023/24;
The Remuneration Policy Report, which details the
Company’s proposed Policy for the remuneration
of Executive and Non-executive Directors. As the
current Policy was last approved by shareholders
at the 2021 AGM, a new Policy with no material
changes to the current Policy, will be put to a
shareholder vote at the 2024 AGM; and
The Annual Report on Remuneration, which
discloses details of the Committee, how the
Policy was implemented in the year ended
31October 2023, and how the Policy will operate
for the year ending 31 October 2024.
The new Remuneration Policy will be subject
to a binding shareholder vote and the Annual
Statement and Annual Report on Remuneration
will be subject to an advisory shareholder vote at
the AGM on 26 April 2024.
In addition, following a review of long-term
incentive provision and noting that the Company’s
existing long-term incentive arrangement (the
Photo-Me Executive Share Option Scheme 2014)
is reaching the end of its ten-year-shareholder-
approved life, the Committee concluded that,
subject to shareholder approval, the existing
scheme should be renewed and updated to
govern future grants under the name of the
MEGroup Executive Share Option Scheme
(2024). The terms of the new scheme materially
continue with the main features of the existing
scheme savefor developments to align to the
new Directors’ Remuneration Policy (including
enhanced malus and clawback provisions) and
introducing scope for French tax-favoured options
to qualifying employees.
Work of the committee during the
12months ended 31 October 2023
The Committee’s main activities during the period
were as follows:
▪ Agreeing the performance against the targets
for the 2022/2023 annual bonus awards;
▪ Agreeing the approach in respect of the
2023/2024 annual bonus awards;
▪ Agreeing the targets for the 2023/2024
annualbonus;
▪ Agreeing the award levels and performance
targets for the 2023 ESOS awards; and
▪ Reviewing the Directors’ Remuneration Policy
given that the current Policy is reaching the end
of its shareholder approved term.
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:
Clarity – The current and proposed 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
material changes are being made).
Emmanuel Olympitis
Chairman of the Remuneration Committee
MEGroup plc Annual Report 2023
91
of the target set, and the performance against
those targets are set out in the Annual Report
onRemuneration.
Based on an EPS for the year ended
31 October 2023 of 13.40p against a target
range of 8p to 10.5p, ESOS awards granted
on 5 August 2021 are expected to vest in
full on 5 August 2024. Details of the awards
vesting, and their pre-tax intrinsic value as at
31 October 2023, are detailed in the Annual Report
on Remuneration.
Implementation of the remuneration
policy for 2023/24
The Committee proposes to operate the Policy for
the year ending 31 October 2024 as follows:
▪ Executive Directors’ current base salaries,
together with prior year comparators (split
between Euro and GBP where salaries are split
into two currencies) are as follows:
▪ Benefit provision will be in line with the
approvedPolicy
▪ Mr Crasnianski’s pension provision will continue
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. Miss Tania Crasnianski does not receive
a pension provision
▪ The annual bonus for the year ending
31 October 2024 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
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 current and proposed 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-term incentives and
market value share 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 2022/23
The performance of the Group is summarised on
page 1 , and in the financial statements on pages
118 to 186.
In respect of the annual bonus for the year ended
31 October 2023, performance against the profit
and strategic targets resulted in bonus awards
of 150% of salary for Mr Crasnianski and 20% of
salary for Miss Tania Crasnianski. Further details
Directors’ Remuneration Report continued
Salary from 1/11/2023 Salary from 1/11/2022
Role Name € £ € £
CEO Serge Crasnianski – 560,211 – 560,211
Executive Director Tania Crasnianski
1
290,000 50,000 230,000 50,000
1
Ms Crasnianski is paid €290,000 (increased from €230,000 from 1 January 2023, following a review by the Committee, to reflect additional
responsibilities and increased experience in the role since her appointment) under a contract with MEGroup GSS (previously known as
Photo Me France SAS), and £50,000 under a contract with Photo-Me Limited.
MEGroup plc Annual Report 2023
92
Corporate Governance
(20%of the 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
Use of discretion
In determining remuneration outcomes for the
year ended 31 October 2023, theCommittee has
not exercised discretion.
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.
This is reflected in the Company’s voting
results at the 2021 AGM (approval of the
current Remuneration Policy) and more recent
AGMs in respect of the Annual Statement
and Remuneration Report resolutions which
were supported by a significant majority
of shareholders. The Committee hopes
that shareholders continue to support the
Remuneration Committee, and specifically the
resolutions in respect of the new Remuneration
Policy, the Annual Statement and Annual Report
on Remuneration, and renewal of the 2014 ESOP
at the AGM on 26 April 2024.
Yours faithfully,
Emmanuel Olympitis
Chairman of the Remuneration Committee
27 February 2024
MEGroup plc Annual Report 2023
93
Remuneration
PolicyReport
The following Remuneration Policy will
be put to shareholders for approval at
the AGM to be held on 26 April 2024.
Other than an enhancement to the withholding
(malus) and recovery (clawback) triggers
(references to reputational damage and corporate
failure have been added) and the addition
of Committee discretion to adjust formulaic
outcomes in respect of the annual bonus and
long-term incentives in line with best and market
practice, there are no proposed changes to the
Remuneration Policy approved by shareholders at
the 2021 AGM.
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.
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 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.
MEGroup plc Annual Report 2023
94
Corporate Governance
Component
Purpose and link to
strategy Operation Maximum
Performance
measures
Salary
Reflects the value of
the individual and
their role
Reflects skills and
experience over time
Provides an
appropriate level of
basic fixed income,
avoiding excessive risk
arising from
over-reliance on
variable income
Normally reviewed
annually, effective 1
May
Normally paid in cash;
pensionable
Comparison against
companies with
similar characteristics
and comparators
taken into account in
review
The Committee is
guided by the
requirements of the
Company and
prevailing market
levels
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)
N/A
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
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 will not
normally be provided
with a value per
Executive Director in
excess of £75,000 p.a.
N/A
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
Committee has the
discretion to defer up
to 50% of the bonus in
shares for three years
Up to 150% of base
salary p.a.
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
Withholding and
recovery provisions
are operated
Pension
Provides competitive
retirement benefits
Defined contribution
Executive Directors
may be offered cash in
lieu of pension
Workforce aligned
(noting that no single
Groupwide pension
plan operates and
therefore pension
contribution rates
vary across the Group
with pension levels not
necessarily reflecting
seniority)
N/A
MEGroup plc Annual Report 2023
95
Component
Purpose and link to
strategy Operation Maximum
Performance
measures
Executive Share
Option Scheme (ESOS)
Aligns Executive
Directors’ interests
with those of
shareholders
Retention
Annual awards of
market value options
may be granted
The Committee
reviews the quantum
of awards annually
and monitors the
continuing suitability
of the performance
measures
Awards vest after
three years and a two
year post vesting
holding period will
operate
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)
EPS (based on sliding
scale vesting targets)
is currently the sole
performance metric
used.
Up to 25% of salary
vests at threshold,
increasing to 150%
vesting at maximum
Withholding and
recovery provisions
are operated
Share Ownership
Guidelines
Provides alignment of
interests between
Executive Directors
and shareholders
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
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
Non-executive
Directors
Provides fees
reflecting time
commitments and
responsibilities, in line
with those provided by
similarly sized
companies
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)
The Committee is
guided by market
rates, time
commitments and
responsibility levels
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
N/A
Remuneration Policy Report continued
MEGroup plc Annual Report 2023
96
Corporate Governance
Withholding and recovery provisions
The Committee operates withholding (malus) and
recovery (clawback) provisions. If, at any point
before the third anniversary of the date that a
bonus was paid or an option becomes exercisable,
it is discovered that there has been: (i) a material
misstatement of the Company’s financial results,
(ii) an error of calculation (including on account of
inaccurate or misleading information); (iii) serious
misconduct on the part of the Director in question;
(iv) serious reputational damage caused by the
Director in question; or (v) corporate failure, the
Committee may invoke the withholding and
recovery provisions by way of a reduction in the
amount of any future bonus, existing options or
future share awards and/or a requirement to
make a cash payment.
Committee discretion
The Committee retains discretion to adjust the
level of incentive awards (i.e. annual bonus awards
and/or ESOS vesting) either up or down from
that which would otherwise result (for example,
that would otherwise result by reference to
formulaic outcomes alone). The Committee
would only exercise such discretion in exceptional
circumstances and in its exercise may have regard
to corporate and personal performance.
Choice of performance measures
The Committee has given careful consideration
to the performance measures applicable to
both the annual bonus and the 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 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 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 the Executive Directors’
Remuneration Policy relates to the Group
The Remuneration Policy described above
provides an overview of the structure that
operates for most senior executives in the
Group. Employees below executive level have
a lower proportion of their total remuneration
made up ofincentive-based remuneration, with
remuneration driven by market comparators
and the impact of the role of the employee in
question. Long-term incentives are reserved for
those judged as having the greatest potential
to influence the Group’s earnings’ growth and
share-price performance.
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 current
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.
MEGroup plc Annual Report 2023
97
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.
Pension provision will be in line with the
Company’s prevailing approved Remuneration
Policy at the time of appointment.
Consistent with Part 4 of the Large and Medium-
sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 as
amended, the cap on benefit provisions does not
apply to new recruits, although the Committee
would not envisage exceeding this caps in practice
unless absolutely necessary.
The annual bonus potential would be limited to
150% of salary, and grants under the 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.
For an internal Executive Director appointment,
any variable pay element awarded in respect of
Reward scenarios
the prior role may be allowed to pay out according
to its original terms.
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
Remuneration Policy Report continued
The scenarios in the above graphs for the Executive Directors are based on the following:
Director Minimum On-target Maximum
Maximum with share
price
Fixed pay Current base salary levels (using a €1.1489:£1 Exchange rate for Tania Crasnianski)
Estimated value of benefits (CEO only)
15% of salary pension (CEO only)
Annual bonus
150% of salary max
0% 50% of maximum 100% of maximum 100% of maximum
ESOS
1
150% of salary max
0% 50% of the value assumed
at the maximum
30% of 150%
of salary
2
Assumes a 50% share
price growth
1
This is the maximum award level permitted. The Committee will determine the extent to which ESOS awards will be granted to Executive
Directors and the award levels and the treatment of the shares under award at exercise.
2
Based on 30% of the face value of the maximum ESOS awards that may be granted.
Other DirectorCEO
100%
55%
38%
35%
35%
48%
44%
10%
14%
21%
664k
£1,210k
£1,757k
£1,925k
Minimum
On-target
Maximum
Maximum with
share price
growth
Minimum
On-target
Maximum
Maximum
100%
51%
34%
31%
38%
51%
46%
11%
14%
23%
£302k
£597k
£892k
£983k
Minimum
On-target
Maximum
Maximum with
share price
growth
Salary, pension
andbenefits
Annual bonus
ESOS
MEGroup plc Annual Report 2023
98
Corporate Governance
account accelerated receipt and the Executive
Director’s duty to mitigate his or her loss.
An annual bonus may be payable for a good leaver
(e.g. death, ill health, disability, redundancyor other
circumstances at the discretion of the Committee)
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 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 Executive Directors’ service
contracts are as follows:
Executive Director
Date of
contract
Notice
period
Serge Crasnianski¹ 01/05/2010 12 months
2
Tania Crasnianski 23/06/2021 12 months
2
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:
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.
Director
Appointment
letter date
Year of last
election
Expected year of
expiry of current
Sir John Lewis
3
03/07/2008 2021 2024
Françoise Coutaz-Replan
4
27/08/2015 2021 2024
Emmanuel Olympitis 11/11/2009 2022 2025
Camille Claverie
5
23/06/2021 2022 2025
René Proglio
6
23/06/2021 2022 2025
Jean-Marc Janailhac
7
01/11/2023 2022 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 Chairman on 26 July 2010.
4
First appointed to the Board as Group Finance Director on 24 September 2009, and resigned as an Executive Director on 27 August 2015.
MissCoutaz-Replan has remained as a Non-executive Director since that date.
5
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.
6
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.
7
Appointed to the Board on 22 July 2019 as a Non-executive Director, he became an Executive Director on 27 July 2020 and reverted to being a
Non-executive Director on 1 November 2023.
MEGroup plc Annual Report 2023
99
Annual report on
Remuneration
The Committee proposes to operate the Policy for
the year ending 31 October 2024 as follows:
▪ Executive Director base salaries were not
increased from 1 November 2023. Details of
thecurrent salary levels are set out in the
AnnualStatement
▪ Benefit provision will be in line with the
approvedPolicy
▪ Mr Crasnianski’s pension provision will continue
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.Miss Tania Crasnianski does not receive
apension provision
▪ The annual bonus for the year ending
31 October 2024 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). 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, the last increase
having taken place in 2022. Current Non-executive
Director fee levels are as follows (with prior year
comparators also presented):
Implementation of the
RemunerationPolicy for the
yearending 31 October 2024.
Non-executive Director Role Committee chairman
1 November
2023
£
1 November
2022
£
Sir John Lewis Chairman Nomination
Committee
145,000 145,000
Emmanuel Olympitis Senior Independent Director Remuneration
Committee
67,500 67,500
Françoise Coutaz-Replan Non-executive Director – 47,500 47,500
Camille Claverie
1
Non-executive Director – –
1
–
1
René Proglio Non-executive Director Audit Committee 57,500 57,500
Jean-Marc Janailhac Non-executive Director – 45,000 –
1
Ms Claverie has chosen not to receive any fee.
MEGroup plc Annual Report 2023
100
Corporate 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 2023 and the 12 months ended 31 October 2022 are shown below:
Executive Directors Year
Salary/
Fees
£
Benefits
1
£
Bonus
2
£
LTI
3
£
Pension
4
£ Total
Total fixed
remuner
-ation
Total
variable
remuner
-ation
Serge Crasnianski
5
2023 560,212 23,183 840,318 771,800 84,032 2,279,545 667,427 1,612,118
2022 560,212 18,774 840,318 0 84,032 1,503,336 663,018 840,318
Jean-Marc Janailhac
6
2023 222,564 – – 308,720 – 531,284 222,564 308,720
2022 285,340 – 169,851 – – 455,191 285,340 169,851
Tania Crasnianski
7
2023 293,716 – 60,058 74,690 – 428,464 293,716 134,748
2022 245,333 – 58,598 – – 303,931 245,333 58,598
Non-executive Directors Year
Salary/
Fees
£
Benefits
1
£
Bonus
2
£
LTI
3
£
Pension
4
£ Total
Total fixed
remuner
-ation
Total
variable
remuner
-ation
Sir John Lewis
8
2023 145,000 – – – – 145,000 145,000 –
2022 132,000 – – – – 132,000 132,000 –
Françoise Coutaz-Replan
9
2023 47,500 – – – – 47,500 47,500 –
2022 44,000 – – – – 44,000 44,000 –
Jean-Marcel Denis
10
2023 – – – – – – – –
2022 29,985 – – – 29,985 29,985 –
Emmanuel Olympitis 2023 67,500 – – – – 67,500 67,500 –
2022 55,000 – – – – 55,000 55,000 –
Camille Claverie 2023 – – – – – – – –
2022 – – – – – – – –
René Proglio
11
2023 57,500 – – – – 57,500 57,500 –
2022 57,500 – – – – 57,500 57,500 –
1
Taxable benefits comprise the provision of private medical insurance and, where appropriate, an accommodation allowance.
2
The annual bonus for 2023 is in respect of the year ended 31 October 2023 (see annual bonus section below) while the annual bonus for 2022 is in respect of the
year ended 31 October 2022.
3
The EPS for the year ended 31 October 2023 was 13.40p against a target range of 8p to 10.5p, therefore of the ESOS awards granted on 5 August 2021 to
Executive Directors will vest post year end (see Scheme Interests Vesting Based on Performance to 31 October section below).
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 was shown in the table for 2022 above.
4
The pension payment to Mr Crasnianski in the financial period ended 31 October 2023 represented 15% of base salary which was paid as a salary supplement.
Mr Janailhac and Miss Tania Crasnianski do not receive pension provision.
5
The emoluments of Mr Crasnianski shown above for the 12 months ended 31 October 2023 include fees totalling £405,969 (£405,969 for the 12 month-period
ended 31 October 2022), 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 12.
7
Ms Crasnianski was paid €280,000 (increased from €230,000 from 1 January 2023 to reflect additional responsibilities and increased experience in the role since
appointment) under a contract with MEGroup GSS (formerly called 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 12.
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 (£49,500 for the 12 month-period ended 31 October 2022).
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. Mr Denis left the
Board on 29 April 2022.
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 €1.1489: £1.
MEGroup plc Annual Report 2023
101
Annual Bonus for the year ended 31 October 2023
Details of the performance against the profit before tax targets for the year ended 31 October 2023
annualbonuses is as follows:
Financial Targets (80% of Bonus Potential)
Executive
2021/22 Annual Bonus
(% of salary)
Group pre-tax profit between 100% and 105% of prior year Committee discretion depending
on year-on-year growth
Group pre-tax profit 5% more but less than 10% higher that of prior year 60%
Group pre-tax profit 10% or more than prior year 120%
Prior year profit £53.4m
Current year actual profit result £67.1m
% of bonus payable (out of 120% of salary) 120% of salary
Personal/Strategic Targets (20% of Bonus Potential)
Details of performance against the personal/strategic targets are as follows:
Serge Crasnianski & Tania Crasnianski
Targets Weighting Committee Assessment
Continue to drive the expansion of
the Company’s business activities
through identifying and negotiating
acquisitions
10% of salary Met in full. During the period, the Group significantly
extended its presence inJapanthrough the
acquisition of 3,548 photobooths acquired from
FUJI in September 2023, positioning the Group as
the leading operator in the Japanese photobooth
market, with over 15,000 machines in operation
today
Actively invest in R&D to drive
technological innovation to further
diversify and expand the breadth of
products and services offered
10% of salary Met in full. The Committee noted the significant R&D
investment during the year to drive technological
innovation, particularly in respect of the next
generation in Photobooths, which offer a range of
new functionalities, focused around enhancing the
user experience. These new features include ‘Mobile
to Print’, user personalisation services using AI and
photo filters. The Group expects other new functions
will be added over time
Continue to make material progress
against the delivery of Company’s
sustainability strategy
10% of salary Met in full. The Committee noted significant
progress made in the year under review across the
Group – at our head office, at our R&D centre in
France, and at our other sites – to reduce industrial
waste, limit packaging, favour local suppliers, and
reduce water and energy consumption
30% of salary
Following the Committee’s assessment of the financial and personal/strategic targets, the Committee
awarded:
▪ Mr Crasnianski a bonus of 150% of salary based on performance against both the financial targets
(80% of bonus potential) and the personal/strategic targets (20% of bonus potential)
▪ Miss Tania Crasnianski a bonus of 30% of salary (i.e. 20% of bonus potential) reflecting progress made
against her strategic targets (she was not eligible to receive a bonus against the pre-tax profit targets
for the year ended 31 October 2023)
Annual report on Remuneration continued
MEGroup plc Annual Report 2023
102
Corporate Governance
ESOS (Audited)
Scheme Interests Vesting Based on Performance to 31 October 2023 (Audited)
Executive Director Granted Vesting (100%)
1
Pre-tax Intrinsic Gain at
31 October 2023
2
Serge Crasnianski 1,000,000 1,000,000 £771,800
Jean-Marc Janailhac 400,000 400,000 £308,720
Tania Crasnianski 96,774 96,774 £74,690
1
EPS for the year ended 31 October 2023 was 13.40
pence compared against a target range of 8p to 10.5p.
2
Based on the 3 month average share price to 31 October 2023 of 154.68p less the 77.5p exercise price.
Scheme interests awarded in the year (Audited)
The Company granted the following market value share option awards (exercise price of 126.7 pence
pershare) to Executive Directors during the year ended 31 October 2023:
Executive Director Date of grant
Number of ESOS
Awards Basis Face Value
1
Tania Crasnianski 4 April 2023 100,000 Fixed number
ofshares
£126,700
1
Based on a share price of £1.267 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 2025 Portion of option that becomes exercisable
14.5p Up to portion with an aggregate Exercise Price of no more than 25% of the Participant's Salary
15p Up to portion with an aggregate Exercise Price of no more than 50% of the Participant's Salary
15.5p Up to portion with an aggregate Exercise Price of no more than 75% of the Participant's Salary
16p Up to portion with an aggregate Exercise Price of no more than 100% of the Participant's Salary
16.5p Up to portion with an aggregate Exercise Price of no more than 125% of the Participant's Salary
17p 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.
Beneficially owned at
Executive Director
31 October
2023
31 October
2022
ESOS
Awards
1
ESOS
Awards²
Requirement
(% of salary)
Shareholding
(% of salary)³ Guideline
Serge Crasnianski
4
137,803,041 137,803,041 1,564,752 – 200% 34,487% Yes
Jean-Marc Janailhac 225,555 225,555 400,000 – 200% 113% No
Tania Crasnianski – – 96,774 200,000 200% 0% No
Beneficially owned at
Non-executive Director
31 October
2023
31 October
2022
Sir John Lewis 25,000 25,000
Françoise
Coutaz-Replan
5
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 2023 (140.2p) and current salary levels (based on an
exchange rate of €1.1489: £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
(2022: 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.
MEGroup plc Annual Report 2023
103
Directors’ interests in share options (audited)
Details of outstanding share awards held by Directors are set out below.
Executive Director
Number of
options as at 1
Nov 2022
Granted
during
period
Exercised
during
period
Lapsed
during
period
As at
31 Oct 2023
Exercise
price
Exercisable
from Expiry date
Serge Crasnianski
27 August 2019 816,509 – – 251,757 564,752 101.4p 27 Aug 22 27 Aug 26
5 August 2021 1,000,000 – – – 1,000,000
1
77.5p 5 Aug 24 4 Aug 28
Jean-Marc Janailhac
5 August 2021 400,000 – – – 400,000
1
77.5p 5 Aug 24 4 Aug 28
Tania Crasnianski
5 August 2021 96,774 – – – 96,774
1
77.5p 5 Aug 24 4 Aug 28
12 May 2022 100,000 – – – 100,000 68.7p 12 May 25 11 May 29
4 April 2023 – 100,000 – – 100,000 126.7p 4 Apr 26 3 Apr 30
1
See the Scheme Interests Vesting Based on Performance to 31 October 2023 (Audited) section above.
Relative importance of the spend on pay
The following table sets out the percentage change in distributions to shareholders and
employee remuneration costs:
Paid during FY 2022
Pence
per share £’000
Interim (paid 3 November 2022) 2.6 9,829
Final for FY 2022 (paid 12 May 2023) 3 11,345
Special (paid 19 May 2023) 0.6 2,269
Total 6.2 23,433
1
Based on the cash returned to shareholders through dividends, as shown in note 9 to the Financial Statements. The Company purchased
1,260,534 of its own shares into treasury in the financial period ended 31 October 2023, returning a further £1,969,000 to shareholders.
Group (£’000)
2023 2022
Total employee remuneration costs 56,864 51,943
1
Based on the figure shown in note 5 to the Financial Statements
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 2013. As the Company has been a constituent of the
FTSE SmallCap Index for much 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.
Annual report on Remuneration continued
MEGroup plc Annual Report 2023
104
Corporate Governance
Total shareholder return
ME Group plc FTSE SmallCap
FTSE 250
Source: Datastream (omson Reuters)
0
100
200
300
400
500
600
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
30 April
2023
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. Comparative numbers for the year to 31 October 2022
and the year to 31 October 2021 are also presented.
Year to 31 October 2023 Year to 31 October 2022 Year to 31 October 2021
Base
salary Benefits
Annual
bonus
Base
salary Benefits
Annual
bonus
Base
salary Benefits
Annual
bonus
Executive Directors
Serge Crasnianski 0% 23% 0% 18% 14% 0% 0% 0% 0%
Jean-Marc Janailhac (22%) 0% 0% 46% 0% 100% 27% 0% 0%
Tania Crasnianski 20% 0% 2% 176% 0% 100% N/A N/A N/A
Non-executive Directors
Sir John Lewis 10% N/A N/A 21% N/A N/A 0% N/A N/A
Françoise Coutaz-Replan 8% N/A N/A 18% N/A N/A 0% N/A N/A
Jean-Marcel Denis N/A N/A N/A -29% N/A N/A 0% N/A N/A
Emmanuel Olympitis 23% N/A N/A 18% N/A N/A 0% N/A N/A
René Proglio 0% N/A N/A 218% N/A N/A 0% N/A N/A
Camille Claverie N/A N/A N/A 0% N/A N/A 0% N/A N/A
UK Employee Population 1% 26% 60% 11% 0% 16% 11% 1% 16%
MEGroup plc Annual Report 2023
105
CEO remuneration
The table below shows the total remuneration for the CEO over the same 10.5-year period as the TSR
chart on the previous page. All share awards are valued at the date of vesting.
CEO Total (£)
Annual
(% of max)
Long-term
incentives
(% of max)
1
2023 (12 months to 31 October 2023) Serge Crasnianski 2,279,545 100% 100%
2022 (12 months to 31 October 2022) Serge Crasnianski 1,503,336 100% 69%
2021 (12 months to 31 October 2021) Serge Crasnianski 1,404,423 100% –
2020 (18 months to 31 October 2020) Serge Crasnianski 984,248 0% –
2019 (12 months to 30 April 2019) Serge Crasnianski 650,380 0% –
2018 (12 months to 30 April 2018) Serge Crasnianski 681,954 0% –
2017 (12 months to 30 April 2017) Serge Crasnianski 1,498,113 100% –
2016 (12 months to 30 April 2016) Serge Crasnianski 1,429,209 100% 100%
2015 (12 months to 30 April 2015) Serge Crasnianski 1,031,628 100% –
2014 (12 months to 30 April 2014) Serge Crasnianski 914,278 100% –
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.
CEO pay ratio
The data shows how the CEO’s single figure remuneration for the year ended 31 October 2023 compares
with equivalent single figure remuneration for full-time equivalent UK employees, ranked at the 25th, 50th
and 75th percentile. The 2020 salary and total pay and benefits data (18 months) have been annualised to
aid with year on year comparison.
Period Method
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2023 Option A 80:1 71:1 57:1
2022 Option A 58:1 53:1 42:1
2021 Option A 74:1 58:1 41:1
2020 Option A 44:1 30:1 24:1
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 2023.
The respective quartile salary and total pay and benefits numbers are as follows:
Salary Total pay and benefits
Period
25th
percentile Median
75th
percentile
25th
percentile Median
75th
percentile
2023 £26,599 £29,217 £35,000 £28,652 £31,970 £39,991
2022 £25,094 £26,662 £34,795 £25,847 £28,555 £36,189
2021 £18,309 £23,533 £32,187 £18,858 £24,286 £34,336
2020 £14,410 £21,185 £25,687 £14,825 £21,824 £28,579
Annual report on Remuneration continued
MEGroup plc Annual Report 2023
106
Corporate Governance
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
Committees). The Board considers Mr Olympitis to be independent, and also considers Sir John Lewis to
have been independent on his appointment as Chairman.
Biographies of the members of the Committee are set out on page 71. Details of their membership of the
Committee and attendance at the meetings during the year are as follows.
Name Position Appointment date
Number of
Meetings attended
(Maximum possible)
Emmanuel Olympitis Committee Chairman 11 November 2009 2 (2)
Sir John Lewis Committee Member 3 July 2008 2 (2)
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
No payments were made to past Directors.
Advisers
FIT Remuneration Consultants LLP advised the Committee during the period ended 31 October 2023 in
respect of the preparation of this Remuneration Report and the renewal of the ESOS at the forthcoming
AGM. Fees paid to FIT in respect of the year ended 31 October 2023 totalled £53,083 (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.
Statement of shareholder voting
The table below shows the advisory vote on the 2021/22 Directors’ Remuneration Report at the 2023 AGM
held on 28 April 2023 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
Withheld
1
Directors’ Remuneration
Report (excluding the
Remuneration Policy)
269,821,992 91.19% 26,068,419 8.81% 296,043,584 78.29% 153,173
Directors’ Remuneration
Policy
250,728,194 94.84% 13,636,756 5.16% 264,364,950 69.94% 13,044
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
27 February 2024
MEGroup plc Annual Report 2023
107
Financial
Statements
Independent auditor’s report to the
members of ME Group International plc 110
Group Statement of Comprehensive Income 118
Group Statement of Financial Position 119
Company Statement of Financial Position 120
Group Statement of Cash Flows 121
Company Statement of Cash Flows 122
Group Statement of Changes in Equity 123
Company Statement of Changes in Equity 124
Notes to the Financial Statements 125
Company Information & Advisers 188
Shareholder Information 189
MEGroup plc Annual Report 2023
108
Augmented Reality in our photobooths
adds digital overlays, enhancing the users’
viewwith makeup, filters or bespoke
backdrops, creating better identification
orprofessional pictures.
MEGroup plc Annual Report 2023
109
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 2023 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 2023 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
▪ have been prepared in accordance with the requirements of the Companies Act 2006.
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.
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 and the implication of those when assessing the group’s and the parent
company’s future financial performance;
▪ Challenging 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;
▪ Assessing the historical accuracy of forecasts prepared by the directors;
ME Group plc Annual Report 2023
110
Financial Statements
▪ Considering the consistency of the directors’ forecasts with other areas of the financial statements
and our audit; 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.
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.
Key Audit Matter How our scope addressed this matter
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 30
(business combinations) and note 11 (Goodwill and other
intangible assets) to the consolidated financial statements.
Intangible assets, including goodwill, represented
£31.9 million at 31 October 2023 and £32.8 million at
31 October 2022.
In the year ended 31 October 2023, 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
resulting in an increase in other intangibles of £0.9 million
and residual goodwill of £0.8 million.
▪ Additionally, the group recognised on a provisional basis
£3.3 million of goodwill resulting from the acquisition of one
entity in Japan, where the Purchase Price Allocation (PPA)
has not been finalised at the date of this report.
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 at the date
of acquisition of the entity acquired to confirm the level of
initial goodwill 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 the 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, reviewed the accuracy
of historical forecasting to actual results and with the
assistance of our valuation experts we challenged key
assumptions.
▪ We assessed the sensitivity of the impairment test to
changes in key assumptions.
ME Group plc Annual Report 2023
111
Key Audit Matter How our scope addressed this matter
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.
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 consolidated financial
statements are appropriate. Overall, the key assumptions
used by management in their impairment assessment were
considered reasonable.
The prior year balance for Intangible assets was restated to
correct a classification error of £3.8m, previously showing in
“Other debtors”. There was no impact on the Group
Statement of Comprehensive Income or Total shareholders’
funds in the current year or in the prior year.
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:
Group materiality and Parent company materiality
Key Audit Matter Group Parent company
Overall materiality £3,250,000
£1,720,000
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
provides us with the most relevant
performance measure of the group.
We used net assets as, in our view, this
provides us with the most relevant
performance measure of the company,
being primarily the parent company of
thegroup.
Performance materiality 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
£2,275,000, which represents 70% of overall
materiality. This was based on our risk
assessments, together with our assessment
of the group’s overall control environment.
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
£1,205,000, which represents 70% of
overallmateriality.
Reporting threshold We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above £97,000 for the group and £52,000 for the parent
company, which is set at 3% of overall materiality, as well as misstatements below those
amounts that, in our view, warranted reporting on qualitative reasons. We also reported to
the Audit Committee disclosure matters that we identified during the course of assessing
the overall presentation of the financial statements.
Independent auditor’s report to the members
ofME Group International plc continued
ME Group plc Annual Report 2023
112
Financial Statements
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 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 86% 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 we 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 responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the course of audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
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;
ME Group plc Annual Report 2023
113
▪ 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.
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 76;
▪ 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 66;
▪ Directors’ statement on fair, balanced and understandable, set out on page 89;
▪ Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks,
set out on page 38;
▪ The section of the annual report that describes the review of effectiveness of risk management and
internal control systems, set out on page 86; and;
▪ The section describing the work of the audit committee, set out on page 83.
Independent auditor’s report to the members
ofME Group International plc continued
ME Group plc Annual Report 2023
114
Financial Statements
Responsibilities of Directors
As explained more fully in the statement of the directors’ responsibility set out on page 88, 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 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 and anti-money
laundering regulation.
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:
▪ Gaining an understanding of the legal and 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.
ME Group plc Annual Report 2023
115
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, 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;
▪ Discussing amongst the engagement team the risks of fraud;
▪ Addressing the risks of fraud through management override of controls by performing journal entry
testing, including consolidation journals;
▪ Reviewing accounting estimates and financial statement disclosures for management bias; and
▪ Reviewing transaction outside of normal course of business.
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.
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 4.5 years, covering the
years ending 2020 to 2023.
No non-audit services prohibited by the FRC’s Ethical Standard were provided to the group or the parent
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
Independent auditor’s report to the members
ofME Group International plc continued
ME Group plc Annual Report 2023
116
Financial Statements
company and the company’s members as a body for our audit work, for this report, or for the opinions we
have formed.
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
27 February 2024
ME Group plc Annual Report 2023
117
Notes
31October
2023
£’000
31October
2022
£’000
Revenue 3 2 9 7, 6 62 259,780
Cost of Sales (19 5,01 7) (178, 37 7)
Gross Profit 102 ,6 4 5 81 , 4 03
Other Operating Income 4 194 7, 9 1 6
Administrative Expenses (35,351) (32,638)
Share of Post-Tax Profits from Associates 15 14 –
Operating Profit 67, 5 0 2 56,6 81
Other net gains/(losses) 4 701 (1 ,176)
Finance Income 6 1,4 01 –
Finance Cost 6 (2 ,537) (2 ,15 1)
Profit before Tax 3 67 ,067 5 3, 35 4
Total Tax Charge 7 (1 6,401) (14 , 561)
Profit for the year 50 ,666 38,793
Other Comprehensive Income
Items that are or may subsequently be classified to Profit and Loss:
Exchange Differences Arising on Translation of Foreign Operations 454 829
Total Items that are or may subsequently be classified to profit and loss 4 54 829
Items that will not be classified to profit and loss:
Remeasurement (loss)/gains in defined benefit obligations and other
post-employment benefit obligations (2 20) 1 ,15 1
Deferred tax on remeasurement loss/(gains) 48 (248)
Total Items that will not be classified to profit and loss (1 7 2) 903
Other comprehensive income for the year net of tax 2 82 1, 732
Total Comprehensive income for the year 50, 9 48 4 0, 525
Profit for the Year Attributable to:
Owners of the Parent 50,666 3 8, 7 93
Non-controlling interests – –
50,666 3 8, 7 93
Total comprehensive income attributable to:
Owners of the Parent 50, 94 8 40, 52 5
Non-controlling interests – –
50, 94 8 40, 52 5
Earnings per Share
Basic Earnings per Share 10 13.4 0p 1 0. 26p
Diluted Earnings per Share 10 13. 31p 10. 23p
All results derive from continuing operations.
The notes on pages125 to 186 are an integral part of these consolidated financial statements.
Group Statement of Comprehensive Income
For the 12 months ended 31October 2023
ME Group plc Annual Report 2023
118
Financial Statements
Notes
31October
2023
£’000
31 October
2022
(Restated)
£’000
Assets
Goodwill 11 18,888 1 6, 320
Other intangible assets 11 1 7, 8 2 2 20, 218
Property, plant & equipment 12 1 1 8 ,1 24 101,090
Investment property 13 – 592
Investment in associates 15 35 21
Financial instruments held at FVTPL 16 5,886 5 , 2 39
Other receivables 17 3 ,00 5 1, 973
Non-Current Assets 163,760 145, 453
Inventories 18 32, 501 25 ,49 1
Trade and other receivables 17 16,62 3 16 ,267
Current tax 7 ,962 2,99 0
Cash and cash equivalents 19 111,091 1 36 ,1 85
Current assets 168, 177 180,9 33
Non-Current Assets Classified as Held for Sale 14 5 85 –
Total assets 332, 52 2 326 , 3 86
Equity
Share capital 21 1, 891 1 ,889
Share premium 11,0 83 10,627
Treasury shares 21 (1,969) –
Translation and other reserves 11,9 58 11 ,1 59
Retained earnings 136 ,025 1 0 8 , 9 74
Total Shareholders’ funds 158,988 132,6 49
Liabilities
Financial liabilities 22 5 8 , 4 47 82 , 429
Post-employment benefit obligations 23 4,06 3 3, 850
Deferred tax liabilities 25 8,56 6 7,778
Non-current liabilities 7 1 ,076 94 ,057
Financial liabilities 22 32,063 35 ,657
Provisions 24 1,884 1, 567
Current tax 10,590 10, 20 8
Trade and other payables 26 5 7, 92 1 52 , 24 8
Current liabilities 102, 45 8 99,680
Total equity and liabilities 332, 52 2 326, 3 86
The notes on pages125 to 186 are an integral part of these consolidated financial statements.
The accounts were approved by the Board on 27February 2024 and signed on its behalf by:
Serge Crasnianski Sir John Lewis OBE
Chief Executive Officer Non-executive Chairman
Registration number: 00735438
Group Statement of Financial Position
As at 31October 2023
ME Group plc Annual Report 2023
119
Notes
31October
2023
£’000
31 October
2022
£’000
Assets
Intangible assets 11 3 5
Property, plant & equipment 12 16,329 15,364
Investment in subsidiaries 15 44,616 44,468
Financial instruments held at FVTPL 16 1,145 789
Deferred tax assets 25 – 215
Other receivables 17 981 –
Non-current assets 63,074 60,841
Inventories 18 1,793 1,830
Trade and other receivables 17 32,662 23,142
Current tax 1,806 1,205
Cash and cash equivalents 19 3,344 13,321
Current assets 39,605 39,498
Total assets 102,679 100,340
Equity
Share capital 21 1,891 1,889
Share premium 11,083 10,627
Treasury shares 21 (1,969) –
Translation and other reserves 3,073 2,728
Retained earnings 70,504 68,743
Total Shareholders’ funds 84,581 83,987
Liabilities
Financial liabilities 22 1,026 741
Deferred tax liabilities 25 672 –
Non-current liabilities 1,698 741
Financial liabilities 22 609 1,060
Trade and other payables 26 15,791 14,552
Current liabilities 16,400 15,612
Total equity and liabilities 102,679 100,340
The notes on pages125 to 186 are an integral part of these financial statements.
The company recognised a profit after tax for the period of £25,196,000 (2022:£57,824,000).
The accounts were approved by the Board on 27 February 2024 and signed on its behalf by:
Serge Crasnianski Sir John Lewis OBE
Chief Executive Officer Non-executive Chairman
Registration number: 00735438
Company Statement of Financial Position
As at 31October 2023
ME Group plc Annual Report 2023
120
Financial Statements
Notes
31October
2023
£’000
31 October
2022
(restated)
£’000
Cash flow from operating activities
Profit before tax 67,067 53 , 354
Finance costs 1, 286 794
Interest of lease liabilities 1, 251 1, 357
Finance income (1,401) –
Other net (gains)/losses (70 1) 1 ,17 6
Operating profit 67, 5 0 2 56 ,681
Amortisation and impairment of intangible assets 4 6, 58 6 6,7 72
Depreciation and impairments of property, plant and equipment 4 32, 552 28,7 91
Loss/(gain) on sale of property, plant and equipment and intangible assets 555 (7 ,4 90)
Exchange differences (1 2 9) (5 9 4)
Movements in provisions 362 (8 09)
Other non cash items (33) (432)
Changes in working capital:
Inventories (7 ,010) (7, 0 3 3)
Trade and other receivables (1, 387) 6,078
Trade and other payables 5,673 9,76 4
Cash generated from operations 104 ,67 1 91 ,7 28
Net interest paid (1 ,136) (2 ,1 51)
Taxation paid (20,203) (10 , 89 5)
Net cash generated from operating activities 83, 332 78 ,682
Cash flows from investing activities
Acquisition of subsidiaries 30 (4 , 7 9 0) (73 9)
Proceeds from disposal of subsidiaries 209 152
Purchase of intangible assets (3,798) (6 , 269)
Proceeds from sale of intangible assets – 71
Purchase of property, plant and equipment (4 5 , 8 4 2) (32,670)
Proceeds from sale of property, plant and equipment 1, 539 8 ,9 97
Investment in financial instruments – (4 ,4 50)
Net cash utilised in investing activities (52,682) (34,908)
Cash flows from financing activities
Issue of ordinary shares to equity shareholders 458 28
Acquisition of minority interest – (2 ,9 85)
Purchase of treasury shares (1,969) –
Repayment of principal of leases (5, 8 57) (6 ,1 9 6)
Repayment of borrowings 20 (30 ,960) (24,622)
New borrowings drawn 20 4,817 61 ,7 73
Dividends paid to owners of the Parent 9 (23,443) (35 ,497)
Net cash utilised in financing activities (56 ,95 4) (7, 4 9 9)
Net (decrease)/increase in cash and cash equivalents (2 6 , 3 0 4) 36 , 275
Cash and cash equivalents at beginning of year 136, 185 9 9, 362
Exchange gain on cash and cash equivalents 1, 210 548
Cash and cash equivalents at end of year 111,091 136 ,1 8 5
The notes on pages125 to 186 are an integral part of these consolidated financial statements.
Group Statement of Cash Flows
For the period ended 31October 2023
ME Group plc Annual Report 2023
121
Notes
31October
2023
£’000
31October
2022
£’000
Cash flow from operating activities
Profit before tax 26,634 57,111
Interest of lease liabilities 167 209
Finance income (91) (15)
Dividends received (25,000) (56,511)
Other net (gains)/losses (356) 914
Operating profit 1,354 1,708
Amortisation and impairment of intangible assets 2 –
Depreciation and impairments of property, plant and equipment 4,213 2,123
Loss/(gain) on sale of property, plant and equipment 182 (110)
Non cash movement in investment of subsidary – 2,956
Other non cash items 204 (125)
Changes in working capital:
Inventories 38 (338)
Trade and other receivables (10,501) (3,676)
Trade and other payables 1,239 (6,448)
Cash utilised in operations (3,269) (3,911)
Interest paid 69 (194)
Taxation paid (1,338) (125)
Net cash utilised in operating activities (4,538) (4,230)
Dividends received from investments in financial instruments 42 –
Purchase of property, plant and equipment (5,024) (7,095)
Purchase of intangible assets – (5)
Proceeds from sale of property, plant and equipment 229 450
Dividends received from associates and subsidaries 25,000 56,511
Net cash generated from investing activities 20,247 49,862
Cash flows from financing activities
Issue of ordinary shares to equity shareholders 458 28
Purchase of treasury shares (1,969) –
Repayment of principal of leases (731) (844)
Dividends paid to owners of the Parent 9 (23,443) (35,497)
Net cash utilised in financing activities (25,685) (36,313)
Net (decrease)/increase in cash and cash equivalents (9,977) 9,319
Cash and cash equivalents at beginning of year 13,321 4,002
Cash and cash equivalents at end of year 3,345 13,321
The notes on pages125 to 186 are an integral part of these consolidated financial statements.
Company Statement of Cash Flows
For the period ended 31October 2023
ME Group plc Annual Report 2023
122
Financial Statements
Share
capital
£’000
Share
premium
£’000
Treasury
shares
£’000
Other
reserves
£’000
Translation
reserve
£’000
Retained
earnings
£’000
Attributable
to owners of
the Parent
£’000
Non-
controlling
interests
£’000
Total
£’000
At 1November 2021 1,8 89 10, 599 – 1 ,781 7 ,654 106,051 1 2 7, 9 7 4 1 ,7 20 129,694
Profit for the period – – – – – 38 , 793 38 ,7 93 – 38 ,7 93
Other comprehensive
income/(expense):
Exchange differences – – – – 8 40 – 8 40 (11) 829
Remeasurement gains in
defined benefit pension
scheme and other
post-employment
benefitobligations – – – – – 1,1 5 1 1,1 5 1 – 1 ,1 5 1
Deferred tax on
remeasurement gains – – – – – (248) (24 8) – (24 8)
Total other comprehensive
income/(expense) – – – – 8 40 903 1 , 74 3 (1 1) 1,7 32
Total comprehensive
income/(expense) – – – – 8 40 39,696 40, 536 (11) 40, 52 5
Transactions with owners
ofthe Parent:
Shares issued in the period
(note21) – 28 – – – – 28 28
Share options (note21) – – – 8 84 – – 88 4 – 88 4
Dividends (note9) – – – – – (35 ,497) (35 ,497) – (35 ,497)
Acquisition of minority – – – – – (1 , 2 76) (1 , 2 76) (1 ,7 09) (2 ,9 8 5)
Total transactions with
owners of the Parent – 28 – 8 84 – (36 ,7 7 3) (35 , 86 1) (1 ,7 09) (3 7, 57 0)
At 31October 2022 1, 889 10,627 – 2,66 5 8, 494 108,974 132 ,6 49 – 132 ,649
At 1November 2022 1 ,88 9 10,627 – 2 ,6 65 8, 494 108,974 1 32 ,649 – 132 ,6 49
Profit for the period – – – – – 50,666 50,666 – 50,666
Other comprehensive
income/(expense):
Exchange differences – – – – 454 – 454 – 45 4
Remeasurement losses in
defined benefit pension
scheme and other
post-employment
benefitobligations – – – – – (2 20) (2 2 0) – (2 2 0)
Deferred tax on
remeasurement losses – – – – – 4 8 48 – 48
Total other comprehensive
income/(expense) – – – – 454 (17 2) 282 – 282
Total comprehensive income – – – – 454 5 0, 494 50,9 4 8 – 5 0,9 4 8
Transactions with owners
ofthe Parent:
Shares issued in the period
(note21) 2 456 – – – – 45 8 – 458
Purchase of treasury shares
(note21) – – (1,969) – – – (1,969) – (1,969)
Share options (note21) – – – 345 – – 3 45 – 345
Dividends (note9) – – – – – (23,443) (23,443) – (23,443)
Total transactions with
owners of the Parent 2 456 (1,969) 3 45 – (23,443) (24,609) – (24, 609)
At 31October 2023 1, 891 11,0 83 (1,969) 3,010 8 ,948 136 ,025 158,988 – 158,988
The notes on pages125 to 186 are an integral part of these consolidated financial statements
Group Statement of Changes in Equity
For the period ended 31October 2023
ME Group plc Annual Report 2023
123
Share
capital
£’000
Share
premium
£’000
Treasury
shares
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
£’000
At 1November 2021 1,889 10,599 – 2,207 46,405 61,100
Profit for the period – – – – 57,824 57,824
Other comprehensive income – – – – 11 11
Total comprehensive income – – – – 11 11
Total comprehensive income – – – – 57,835 57,835
Transactions with owners of
theParent
Shares issued in the period (note21) – 28 – – – 28
Capital contributions relating to
share-based payments (net) – – – 521 – 521
Dividends (note9) – – – – (35,497) (35,497)
Total transactions with the Parent – 28 – 521 (35,497) (34,948)
At 31October 2022 1,889 10,627 – 2,728 68,743 83,987
At 1November 2022 1,889 10,627 – 2,728 68,743 83,987
Profit for period – – – – 25,196 25,196
Other comprehensive income – – – – 7 7
Total other comprehensive income – – – – 7 7
Total comprehensive income – – – – 25,203 25,203
Transactions with owners of
theParent
Shares issued in the period (note21) 2 456 – – – 458
Purchase of treasury shares (note21) – – (1 969) – – (1,969)
Share options (note 21) – – – 345 – 345
Dividends (note9) – – – – (23,443) (23,443)
Total transactions with the Parent 2 456 (1,969) 345 (23,443) (24,609)
At 31October 2023 1,891 11,083 (1,969) 3,073 70,504 84,581
The notes on pages 125 to 186 are an integral part of these consolidated financial statements.
Company Statement of Changes in Equity
For the period ended 31October 2023
ME Group plc Annual Report 2023
124
Financial Statements
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 2023 were authorised for issue
by the directors on 21 February 2024 and the statements
of financial position were signed by S. Crasnianski, Chief
Executive Officer and J. Lewis, Non-executive Chairman.
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.
1 Accounting policies
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 135.
1.1 Basis of preparation
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, share-based payments and defined benefit
pension obligations that have been measured at
fair value.
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 of the Group and all values
are shown in £’000 except where indicated. Further
details are provided in note 1.3.
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
manufactured products, the level of consumer
confidence 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.
Scenario 2:
The “most likely scenario” is based on the budget, but
with the following sensitivities added:
▪ A 5% decrease in machine installations due to supply
chain issues
▪ A 5% price increase in spare parts and consumables
▪ A 1% increase in labour costs
▪ A 5% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 1% drop in revenue due to the potential impact of a
future pandemic or other global event.
▪ 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.
Notes to the Financial Statements
For the 12 months ended 31 October 2023
ME Group plc Annual Report 2023
125
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
1 Accounting policies continued
Scenario 3:
The “mild” scenario is based on the budget, but with the
following sensitivities added:
▪ A 10% decrease in machine installations due to supply
chain issues,
▪ A 10% price increase in spare parts and consumables
▪ A 2% increase in labour costs
▪ A 10% increase in paper costs
▪ A 1% drop in total revenue due to loss of key accounts
▪ A 3% drop in revenue due to the potential impact of a
future pandemic or other global event.
▪ Revenue is reduced by 3% 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 added:
▪ A 30% decrease in machine installations due to supply
chain issues,
▪ A 15% price increase in spare parts and consumables
▪ A 3% increase in labour costs
▪ A 15% increase in paper costs
▪ A 3% drop in total revenue due to loss of key accounts
▪ A 5% drop in revenue due to the potential impact of a
future pandemic or other global event.
▪ 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 commensurate with results and the Group’s
dividend 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 .
Brexit impact was considered by management to have
no significant impact on the business of the Group, nor
will the Ukrainian or Israeli conflicts, as the Group has no
activity in these regions.
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 16.
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.
1) Development costs – notes 1.4 and 11.
Judgement is required to determine whether
development expenditure meets the criteria for
capitalization as an intangible asset, in accordance with
IAS38. Specifically, management must determine that it
is probable that future economic benefits that are
attributable to the asset will flow to the Group, and that
the cost of the asset can be reliably measured.
Management assesses whether an asset under
development will be a commercial success, and therefore
generate economic benefit, through the use of
discounted cashflow analysis. This judgement has been
applied consistently year to year.
2) Application of IFRS16 to site agreements – note 1.7
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. 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. This judgement has
been applied consistently year to year .
ME Group plc Annual Report 2023
126
Financial Statements
Group and Company
The following are areas of estimation uncertainty:
1) Goodwill and other intangible assets – notes 1.4,
1.8 and 11.
Impairment
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 £18,888,000 and £17,822,000
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% (2022: 1%).
WACC discount rates were calculated for each territory
and ranged between 9.7% and 15.2% (2022: 9.74%-14.24%).
Further details of impairment testing, including
assumptions and sensitivities, are disclosed in note 11.
Goodwill impairments are not reversed or adjusted.
Purchase price allocation (PPA)
In accordance with IFRS, purchase price allocation is
completed within one year of the acquisition date.
Resulting adjustments to prior year balances are
shown as an opening balance remeasurement in the
current year.
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, since 31 October 2020 each unit has been
subject to annual impairment testing, based on each
individual unit’s projected EBITDA, as described in note 12.
Impairment charges are recognised where value in use of
a unit is lower than its carrying value.
Where impairment tests indicated a reduced level of
impairment, the impairment balance is reduced, with
care taken to ensure that the closing net book value does
not exceed what it would have been had the original
impairment never occurred.
Further details, including assumptions and sensitivities,
are disclosed in note 12.
The carrying value of property, plant and equipment at
the period end was £118,124,000.
3) Valuation of pension obligations – note 1.13 and 23
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 £4,063,000.
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 .
ME Group plc Annual Report 2023
127
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
1 Accounting policies continued
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 2023. The discount rates used range
between 1.13% and 4.84%.
1.2 Basis of consolidation
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.
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.
The principal subsidiaries affecting the results and
financial position of the Group are shown in note 29.
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.
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
remeasurement 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.
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 .
ME Group plc Annual Report 2023
128
Financial Statements
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 Group’s share of post-tax profits from associates is
recognized within operating profit in the group statement
of comprehensive income. This policy is employed as the
Group’s only associate investment, Photomaton Maroc, is
engaged in the same principal activity as the Group, so
the investment is deemed to be part of the Group’s
operating activities.
The principal associates affecting the results and
financial position of the Group are shown in note 29.
1.3 Foreign currency translation
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.
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 2023 or 2022.
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
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.
1.4 Intangible assets
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.
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.
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.
Development costs that do not meet the capitalization
requirements of IAS 38 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 .
ME Group plc Annual Report 2023
129
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
1 Accounting policies continued
The policies applied to the Group’s intangible assets are summarised as follows:
Research and
development costs Software Customer related Patents and licences Droit au Bail
Useful lives Finite Finite Finite Finite Indefinite
Amortisation Straight-line basis,
with a maximum life
of four years from
commencement of
commercial
production, with no
residual value
Straight-line basis,
with a maximum life
of three years, with
no residual value
Customer related
intangible assets
are amortised over
their useful lives of
between three and
ten years on a
straight-line basis
with no residual
value
Patents and licence
assets are
amortised over their
useful lives of
between seven and
ten years on a
straight-line basis
with no residual
value
Not amortised
regularly, but
subject to
impairment testing
Internally generated
or acquired
Internally
generated
Acquired Acquired Acquired Acquired
Droit au bail, which occur in France, are rights to occupy a
space to site vending 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.
1.5 Property, plant and equipment
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 2% – 5% straight-line
Photobooths and
vending machines
10% – 33.33% straight-line
Right of use assets Depreciated over the lease term
Plant, machinery,
furniture, fixtures
and motor vehicles
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.
1.6 Investment property
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 at rates between 3.33% and 8.33% on a
straight-line basis.
1.7 IFRS16 leases
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-of-use 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.
ME Group plc Annual Report 2023
130
Financial 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 (e.g. 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
1.8 Impairment
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 inflows 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 .
1.9 Financial instruments
(i) Financial assets
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.
(a) Trade receivables
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.
(c) Financial assets at fair value through profit or loss
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. Investments in convertible bonds are
valued on a discounted cashflow basis and by
reference to the issuing company’s equity value,
where necessary.
ME Group plc Annual Report 2023
131
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
1 Accounting policies continued
(ii) Financial liabilities
(a) Borrowings
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.
(b) Trade and other payables
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.
1.11 Cash and cash equivalents
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.
1.12 Share capital and reserves
Share capital
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.
Share premium
Any excess received for shares issued over their nominal
value is recorded in the share premium account.
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.
Other reserves
Other reserves include the share options reserve, which is
used to accrue the expected fair value of options issued,
in accordance with IFRS 2.
The other reserve accounts included mainly arise in
subsidiaries, are generally not distributable, and arise as
a result of local legislation regarding capital
maintenance.
1.13 Employee benefits
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 .
ME Group plc Annual Report 2023
132
Financial Statements
Defined benefit scheme
Details of the pension schemes are included in note 23.
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.
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 23 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 21.
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.
1.14 Provisions
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.
1.15 Taxation
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 .
ME Group plc Annual Report 2023
133
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
1 Accounting policies continued
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.
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.
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.
1.17 Revenue recognition
There are 3 types of revenue considered 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
▪ 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.
1.18 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.
1.20 Non-current assets classified as held
for sale
The Group classifies a non-current asset (or disposal
group) as held for sale if its carrying amount will be
recovered principally through a sale transaction rather
than through continuing use.
Non-current assets transferred to held for sale are
recognised at the lower of their carrying amount and fair
value less costs to sell and presented separately on the
Statement of Financial Position. Non-current assets
classified as held for sale are not depreciated .
ME Group plc Annual Report 2023
134
Financial Statements
2 New standards, amendments and interpretations
New accounting standards
Adopted by the Group
The Group has adopted the following new standards and amendments for the first time in these financial statements
with no material impact.
▪ Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
▪ Annual Improvements to IFRS Standards 2018-2020
▪ Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
▪ Reference to the Conceptual Framework (Amendments to IFRS 3)
Not yet adopted by the Group
Certain new accounting standards and interpretations have been published that are not mandatory for the current
period and have not been early adopted by the Group. These new standards and interpretations, which are not
expected to have a material effect on the Group, are set out below.
Description
Date required to be
adopted by the Group
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) 1 January 2023
Definition of Accounting Estimate (Amendments to IAS 8) 1 January 2023
IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising 1 January 2023
3 Segmental analysis
IFRS 8 requires operating segments to be identified, based on information presented to the Chief Operating Decision
Maker (CODM) in order to allocate resources to the segments and monitor performance. The Group reports its segments
on a geographical basis: Asia Pacific, Continental Europe and United Kingdom & Ireland. The Group’s Continental
European operations are predominately based in Western Europe and, with the exception of the Swiss operations, use
the Euro as their domestic currency. The Board, being the CODM, believe that the economic characteristics of the
European operations, together with the fact that they are similar in terms of operations, use common systems and the
nature of the regulatory environment allow them to be aggregated into one reporting segment.
Segmental results are reported before intra-group transfer pricing charges.
31 October 2023
Asia
Pacific
£’000
Continental
Europe
£’000
United
Kingdom
& Ireland
£’000
Corporate
£’000
Total
£’000
Total revenue 44,332 211,432 48,183 – 303,947
Inter segment sales – (6,275) (10) – (6,285)
Revenue from external customers 44,332 205,157 48,173 – 297,662
EBITDA 9,475 90,109 18,545 (11,490) 106,639
Depreciation and amortisation (5,126) (26,079) (6,785) (355) (38,345)
(Impairment)/reversal of impairment (37) (1,395) 639 – (793)
Operating profit/(loss) 4,312 62,635 12,399 (11,844) 67,502
Operating profit – – – – 67,502
Other net gains – – – – 701
Finance income – – – – 1,401
Finance costs – – – – (2,537)
Profit before tax – – – – 67,067
Tax – – – – (16,401)
Profit for the period – – – – 50,666
Capital expenditure (excluding Right of Use assets) 8,846 37,494 7,380 733 54,453
Non-current assets 28,134 107,994 26,508 1,124 163,760
ME Group plc Annual Report 2023
135
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
3 Segmental analysis continued
31 October 2022
Asia
Pacific
£’000
Continental
Europe
£’000
United
Kingdom
& Ireland
£’000
Corporate
£’000
Total
£’000
Total revenue 39,945 187,897 41,996 – 269,838
Inter segment sales – (10,058) – – (10,058)
Revenue from external customers 39,945 177,839 41,996 – 259,780
EBITDA 9,094 75,497 15,388 (7,738) 92,241
Depreciation and amortisation (5,421) (26,153) (6,954) (322) (38,850)
(Impairment)/reversal of impairment (1,715) 1,919 3,086 – 3,290
Operating profit/(loss) 1,958 51,263 11,520 (8,060) 56,681
Operating profit – – – – 56,681
Other net losses – – – – (1,176)
Finance income – – – – –
Finance costs – – – – (2,151)
Profit before tax – – – – 53,354
Tax – – – – (14,561)
Profit for the period – – – – 38,793
Capital expenditure (excluding Right of Use assets)
(restated – see note 11) 4,218 23,839 9,522 1,359 38,939
Non-current assets (restated – see note 11) 24,870 94,742 25,045 796 145,453
Inter-segment revenue mainly relates to sales of equipment.
The Parent Company is domiciled in the UK. Total revenue from external customers is as follows:
Group
31 October
2023
£’000
31 October
2022
£’000
Total revenue from external customers
Sales of equipment, spare parts & consumables 18,724 20,459
Sales of services 3,615 3,895
22,339 24,355
Vending revenue 275,323 235,425
Total revenue 297,662 259,780
There were no key customers in the period ended 31 October 2023 (2022: none).
ME Group plc Annual Report 2023
136
Financial Statements
4 Profit for the period
Costs and overhead items charged/(credited) in arriving at profit for the period, include the following:
31 October
2023
£’000
31 October
2022
£’000
Amortisation, depreciation and impairment
Amortisation of previously capitalised research and development expenditure:
– reflected in income statement in cost of sales 930 2,955
Amortisation of intangible assets other than research and development:
– reflected in income statement in cost of sales 3,275 3,394
– reflected in income statement in administrative expenses 235 272
(Reversal of impairment of)/impairment of previously capitalised research and
development expenditure – 153
Impairment of/(reversal of impairment of) intangible assets other than research
and development 1,445 –
Impairment of goodwill 701 –
6,586 6,772
Depreciation of property, plant and equipment and investment property
Depreciation of owned assets 27,860 25,774
Depreciation of right of use assets 6,045 6,445
Impairment of/(reversal of impairment of) owned property, plant and equipment and
investment property (1,353) (3,443)
32,552 28,776
Short term and low value leases
– property 913 945
– plant and equipment 1,095 825
2,008 1,770
Inventory cost
Cost of inventories recognised as an expense 4,098 6,580
Provisions charged against obsolete inventory 572 288
4,670 6,868
31 October
2023
£’000
31 October
2022
£’000
Other items
Research and development current period expenditure, not capitalized 1,725 1,724
Trade receivables impairment/(reduction of impairment) (note 17) 604 (126)
Net foreign exchange losses 764 630
Loss/(Gain) on sale of property, plant and equipment 555 (175)
ME Group plc Annual Report 2023
137
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
4 Profit for the period continued
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
(2022: Mazars) and its associates.
31 October
2023
£’000
31 October
2022
£’000
Fees for the audit of the company and the group – Mazars LLP 397 313
Fees for the audit of the subsidiaries – other Mazars 120 39
Fees for audit related services (interim review) – Mazars 50 50
Non audit related services – Mazars – –
Fees for the audit of the subsidiaries – Other firms 50 84
617 486
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. Such services will only be approved if there are clear efficiencies and added value
benefits to the Company.
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
31 October
2023
£’000
31 October
2022
£’000
Gain on disposal of property – 7,315
Rental income from investment property (note 13) 79 365
Other small items of non-trading income 115 236
194 7,916
In the prior year, the Group generated a gain of £7,315,000 from the sale of an office property in France.
Administrative expenses
Note
31October
2023
£’000
31October
2022
£’000
Employment costs 5 20,619 19,840
Depreciation of owned assets 12 836 834
Impairment of owned property, plant and equipment 12 2,146 –
Foreign exchange loss 959 355
Legal, audit and professional fees 4,147 4,022
Travel and entertaining costs 1,146 959
Other administrative costs 5,498 6,628
35,351 32,638
ME Group plc Annual Report 2023
138
Financial Statements
Other net gains/(losses)
Other gains and losses comprise of profits arising on financial instruments held at FVTPL and profit on 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.
31 October
2023
£’000
31 October
2022
£’000
Other net gains/(losses)
Gain/(Loss) on disposal of subsidiary 57 (459)
Fair value gain/(loss) on financial instrument held at FVTPL 586 (350)
Other gain/(loss) 58 (367)
701 (1,176)
Period ended 31 October 2023
The Group generated a profit on disposal of £57,000 from the disposal of its Korean subsidiary Photo-ME Korea
Company Limited, recognized in other net gains/(losses) in the income statement.
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 net gains/(losses) in the income statement.
5 Employees
Employment costs
31 October
2023
£’000
31 October
2022
£’000
Wages and salaries 45,723 41,394
Social security costs 10,178 9,017
Share options granted to directors and employees 345 884
Post-employment benefit costs
– defined benefit schemes 417 383
– defined contribution schemes 201 265
56,864 51,943
Number of employees
The average number of employees during the period (including executive directors) comprised:
31 October
2023
31 October
2022
Full – time 1,053 996
Part – time 140 121
1,193 1,117
UK : Full – time 154 159
UK : Part – time 3 4
Continental Europe : Full – time 730 688
Continental Europe : Part – time 29 24
Asia and rest of the world : Full – time 169 149
Asia and rest of the world : Part – time 108 93
1,193 1,117
ME Group plc Annual Report 2023
139
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
5 Employees continued
Employees by category
As at
31 October
2023
As at
31 October
2022
Senior managers in the Group (excluding directors of ME Group) 21 27
Employees – Sales 136 110
Employees – Administration 194 191
Employees – Operating 842 789
Total 1,193 1,117
The cost of sales employees and operating employees are recognised in the income statement in Cost of Sales. The cost
of administration employees is recognised in the income statement in Administrative Expenses. The cost of senior
managers is recognised in the income statement in either Cost of Sales or Administrative Expenses, dependent on the
function they perform.
6 Finance income and costs
31 October
2023
£’000
31 October
2022
£’000
Finance income
Interest income 1,401 –
1,401 –
Finance costs
Bank loans and overdrafts at amortised cost (1,168) (714)
Interest on lease liabilities (1,251) (1,437)
Other finance costs (119) –
(2,537) (2,151)
Interest income, interest cost on bank loans and overdrafts and interest on lease liabilities are all recognised on an
effective interest rate basis.
Interest income is earned on short term deposits. Group earned interest on deposits at rates between 2.90% and 2.93%
in the year (2022: 1.14% to 1.80%).
ME Group plc Annual Report 2023
140
Financial Statements
7 Taxation expense
Tax charges/(credits) in the statement of comprehensive income
31 October
2023
£’000
31 October
2022
£’000
Taxation
Current taxation
UK Corporation tax
– current period 9,833 6,104
– prior periods (1,068) 2,253
8,765 8,357
Overseas taxation
– current period 6,916 7,200
– prior periods (212) 90
6,704 7,290
Total current taxation 15,469 15,647
Deferred taxation
Origination and reversal of temporary differences
– current period – UK 677 (150)
– current period – overseas (663) (961)
Adjustments in respect of prior periods – UK 843 27
Adjustments in respect of prior periods – Overseas – 45
Impact of change in rate 75 (47)
Total deferred tax 932 (1,086)
Tax charge in the income statement 16,401 14,561
Tax relating to items (credited)/charged to other components of comprehensive income
Corporation tax – –
Deferred tax (48) 248
Tax charge in other comprehensive income (48) 248
Total tax charge in the statement of comprehensive income 16,353 14,809
ME Group plc Annual Report 2023
141
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
7 Taxation expense continued
Reconciliation of total tax charge
The difference between the Group tax charge and the standard UK corporation tax rate of 22.5% (2022: 19%) is
explained below:
31 October
2023
£’000
31 October
2022
£’000
Profit before tax 67,067 53,354
Tax using the weighted average UK corporation tax rate of 22.5% (2022: 19%) 15,090 10,137
Effect of:
– non-taxable items 449 405
– overseas tax rates 580 1,983
– remeasurement of deferred tax for changes in tax rates 75 (47)
– losses not recognised in deferred tax (relieved)/incurred – (1,053)
– non-deductible expenses 8 (98)
– adjustments to tax in respect of prior periods (436) 2,416
– foreign exchange movements – –
– other adjustments 635 818
Total tax charge 16,401 14,561
Effective tax rate 24.5% 27.3%
The Group tax charge of £16.4m (2022: £14.6m) corresponds to an effective tax rate of 24.5% (2022: 27.3%).
The UK Corporation Tax rate increased from 19% to 25% with effect from 1 April 2023. The weighted average UK
Corporation Tax rate for the year ended 31 October 2023 was 22.5%.
The Group undertakes business in multiple tax jurisdictions.
8 Profits attributable to members of the parent company
The profit for the period, after tax, dealt with in the financial statements of the Parent Company is £25,196,000
(2022: £57,824,000), including dividends received from subsidiaries.
ME Group plc Annual Report 2023
142
Financial Statements
9 Dividends paid and proposed
31 October 2023 31 October 2022
pence
per share £’000
pence
per share £’000
Dividends Paid
Special dividend
Approved by the Board on 18 July 2022 – – 6.50 24,572
Final
2021 approved at AGM held on 29 April 2022 – – 2.89 10,925
Interim Dividend
2022 approved by the board on 18 July 2022 2.60 9,829 – –
Final
2022 approved at AGM held on 28 April 2023 3.00 11,345 – –
Special dividend
2022 approved by the board on 20 April 2023 0.60 2,269 – –
6.20 23,443 9.39 35,497
Dividends Proposed
Interim Dividend
2022 approved by the board on 18 July 2022 – – 2.60 9,829
Interim Dividend
2023 approved by the board on 11 July 2023 2.97 11,240 – –
2.97 11,240 2.60 9,829
Period ended 31 October 2023 – Dividends paid in the period
The Board approved an interim dividend of 2.60p per ordinary share for the six month period ended 30 April 2022, at its
18 July 2022 meeting. The interim dividend was paid on 3 November 2022.
The Board proposed a final dividend of 3.00p per ordinary share in respect of the year ended 31 October 2022, which
was approved by shareholders at the Annual General Meeting held on 28 April 2023 and paid on 12 May 2023.
The Board also approved, at its 20 April 2023 meeting, a special dividend of 0.60p per ordinary share, which was paid
on 19 May 2023.
Period ended 31 October 2023 – Proposed dividends not yet paid in the period
The Board approved an interim dividend of 2.97p per ordinary share for the six month period ended 30 April 2023, at its
11 July 2023 meeting. The interim dividend was paid on 23 November 2023.
Period ended 31 October 2022 – Dividends paid in the period
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 in the period
The Board approved an interim dividend of 2.60p per ordinary share for the six month period ended 30 April 2022, at its
18 July 2022 meeting. The interim dividend was paid on 3 November 2022.
ME Group plc Annual Report 2023
143
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
10 Earnings per share
Basic earnings per share amounts are calculated by dividing net earnings attributable to shareholders of the Parent of
£50,666,000 (2022: £38,793,000) 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 21.
The earnings and weighted average number of shares used in the calculation are set out in the table below:
31 October 2023 31 October 2022
Earnings
£’000
Weighted
average
number
of shares
‘000
Earnings
per share
pence
Earnings
£’000
Weighted
average
number
of shares
‘000
Earnings
per share
pence
Basic earnings per share 50,666 378,110 13.40 38,793 378,052 10.26
Effect of dilutive share options – 2,490 (0.09) – 1,048 (0.03)
Diluted earnings per share 50,666 380,600 13.31 38,793 379,100 10.23
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.
11 Goodwill and other intangible assets
Goodwill
Group
£’000
Cost:
At 1 November 2021 18,398
Exchange differences 204
Additions 1,652
Disposals (2,523)
At 31 October 2022 17,731
IFRS remeasurement (796)
At 1 November 2022 (restated) 16,935
Exchange differences 3
Additions 3,268
At 31 October 2023 20,206
Impairment charges:
At 1 November 2021 3,093
Exchange differences 45
Disposals (2,523)
At 31 October 2022 615
At 1 November 2022 615
Exchange differences 2
Impairment charge in the period 701
At 31 October 2023 1,318
Net book value:
At 1 November 2021 15,305
At 1 November 2022 (restated) 16,320
At 31 October 2023 18,888
ME Group plc Annual Report 2023
144
Financial Statements
IFRS remeasurements represent the finalisation of purchase price allocation on acquisitions.
In the period the purchase price allocation was completed for Dreamakers. Brand and customer related intangible
assets with a total value of £814,000 were identified and transferred from goodwill to intangible assets. A deferred tax
liability of £18,000 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 30.
Additions to goodwill in the year are in relation to the following business combination:
Additions: £’000
Fujifilm Imaging Systems Co. Ltd 3,268
The assessment of the purchase price adjustments in relation to Fujifilm Imaging Systems Co. Ltd was still in progress at
the date of publishing these financial statements.
Company
The Company has no goodwill.
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 (2022: nine) cash-generating units (CGUs)
31 October
2023
£’000
31 October
2022
(Restated)
£’000
Carrying amount
UK & Ireland
CGU 1 – ME Group Ireland Supplies Limited 154 154
CGU 2 – Photo-ME Northern Ireland 14 14
Total UK & Ireland 168 168
Continental Europe
CGU 1 – ME Group France SAS 312 308
CGU 2 – ME Group Germany GmbH 2,005 1,976
CGU 3 – Sempa SARL 3,423 3,374
CGU 4 – Pizza vending division (formerly SGER) – 693
CGU 5 – Dreamakers 925 896
Total Continental Europe 6,665 7,247
Asia
CGU 1 – ME Group Japan
1
11,016 7,801
CGU 2 – Now Retail Group 1,039 1,104
Total Asia 12,055 8,905
Total 18,888 16,320
1
Asia CGU 1 includes goodwill from the acquisition of Photo Plaza Co Ltd, which was merged into ME Group Japan on 15th March 2021. Asia CGU 1 also includes
goodwill generated by the acquisition of the photobooth division of Fujifilm Imaging Systems Co. Ltd on 30 September 2023. This is because Asia CGU1 acquired
the trade, assets and liabilities of the business, as opposed to acquiring the share capital of a new subsidiary.
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.
ME Group plc Annual Report 2023
145
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
11 Goodwill and other intangible assets continued
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.
As a result of the impairment tests, the goodwill relating to the pizza vending division (formerly SGER) was fully impaired
(£701,000). This is due to a reduction in forecast cash generation.
Key assumptions for impairment tests of goodwill and other intangible assets
Growth rate 1% (2022: 1%)
The Growth rate assumption for all Group CGUs was 1%. The 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, operations and
economic conditions.
Discount rate 9.7%-15.2% (2022: 9.74%-14.24%)
The post-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 changes in discount rate assumptions from the prior year reflect the
change in economic conditions, in each territory, over the period.
The rates used are: United Kingdom 14.1%, (2022: 13.3%), Ireland 13.0% (2022: 10.4%), France 12.8% (2022: 12.4%),
Germany 11.6% (2022: 11.2%), Spain 14.8% (2022: 14.2%), Japan 11.0% (2022: 10.7%), Portugal 15.2% (2022: 12.3%), Belgium
13.2% (2022: 10.1%), Netherlands 11.7% (2022: 11.3%), Switzerland 9.7% (2022: 10.0%), Austria 12.7% (2022: 9.7%) and
Australia 13.5% (2022 n/a). The Board is confident, overall, that these discount rates reflect the circumstances in each
region, and are in accordance with IAS 36.
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. The headroom
of recoverable amount over carrying value, across all CGUs is £704,443,000.
Discount rate
A 1% increase in the discount rate assumption for each territory would not generate any additional impairments.
Headroom across all CGUs would be reduced by £66,110,000.
Growth rate
A 1% decrease in the growth rate assumption for each territory would not generate any additional impairments.
Headroom across all CGUs would be reduced by £45,769,000.
Future growth in revenue, costs and profit margins
CGUs were subjected to an impairment test under a worst case scenario, with decreased revenue and increased costs.
The details of the sensitivity assumptions used are disclosed in the going concern section of the accounting policies
(note 1.1 Basis of preparation). In this worst case scenario, two further CGUs would be impaired: Asia CGU 1 £1,331,000
and Asia CGU 2 £243,000. Headroom across the remaining unimpaired CGUs would be reduced by £263,703,000 .
ME Group plc Annual Report 2023
146
Financial Statements
Other intangible assets – Group
Capitalised
development
costs
£’000
Software
£’000
Brands
£’000
Customer
related
£’000
Patents
£’000
Droit
au Bail
£’000
Total
£’000
Cost:
At 1 November 2021 13,011 3,079 2,233 22,842 1,656 3,372 46,193
Exchange differences (16) 4 (122) (262) 13 61 (322)
Additions 1,418 908 – 40 – 120 2,486
Additions new subsidiary – – – 98 – – 98
Transfers (26) (1,256) 1,282 – – –
Disposals (6,374) (110) – (4,027) (169) – (10,680)
At 31 October 2022 8,039 3,855 855 19,973 1,500 3,553 37,775
IFRS remeasurement – – 425 389 – – 814
Correction of error - reclassification 3,783 – – – – – 3,783
At 1 November 2022 (restated) 11,822 3,855 1,280 20,362 1,500 3,553 42,372
Exchange differences (95) (17) 11 (274) 27 52 (296)
Additions 2,337 437 – – – 39 2,813
Additions work in progress 985 – – – – – 985
Additions new subsidiary – 49 – – – – 49
Transferred to property, plant
and equipment (note 12) – – – (120) – (24) (144)
Disposals – (163) – (6) – (37) (206)
At 31 October 2023 15,049 4,161 1,291 19,962 1,527 3,583 45,573
Amortisation:
At 1 November 2021 10,128 2,531 – 10,063 111 3,372 26,205
Exchange differences (31) – 2 (256) 11 61 (213)
Provided during the period 2,955 248 188 2,918 309 – 6,618
Impairment charge 153 – – – – – 153
Transfers – (26) – 26 – – –
Disposals (6,341) (288) – (3,960) (20) – (10,609)
At 31 October 2022 6,864 2,465 190 8,791 411 3,433 22,154
At 1 November 2022 6,864 2,465 190 8,791 411 3,433 22,154
Exchange differences (105) 4 6 (88) 13 50 (120)
Provided during the period 930 473 190 2,673 174 – 4,440
Impairment charge – – 577 57 811 – 1,445
Transferred to property, plant
and equipment (note 12) – – – (23) – – (23)
Disposals – (104) – (4) – (37) (145)
At 31 October 2023 7,689 2,838 963 11,406 1,409 3,446 27,751
Net book value:
At 1 November 2021 2,883 548 2,233 12,779 1,545 – 19,988
At 31 October 2022 (restated) 4,958 1,390 1,090 11,571 1,089 120 20,218
At 31 October 2023 7,360 1,323 328 8,556 118 137 17,822
The opening balance of capitalised development costs at 1 November 2022 has been restated by £3,783,000 to correct
an error in the prior year financial statements. The adjustment represents the value of work in progress which had
previously been reported in prepayments under trade and other receivables. A corresponding adjustment has been
made to reduce the opening balance of prepayments (note 17) by the same value .
ME Group plc Annual Report 2023
147
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
11 Goodwill and other intangible assets continued
The restatement is reflected in the group statement of financial position at 31 October 2022 as an increase in
intangible assets and a decrease in trade and other receivables. The group statement of cashflows for the year
ended 31 October 2022 has been restated by increasing cash generated from operations by £3,783,000 (movement
in trade and other receivables) and increasing net cash utilised in investing activities by the same amount (purchase
of intangible assets). This restatement had no impact on the group’s total assets, total Shareholders’ funds,
statement of comprehensive income and earnings per share for the current or prior year. There was no impact on the
consolidated statement of financial position at 1 November 2021.
Capitalised research and development expenditure is amortised over a maximum of four years, with
no residual value.
Impairment charges
Impairment charges were recognised in the year against the following categories of intangibles assets: brands
(£577,000); customer related (£57,000); and patents (£811,000).
All impairments charges were made against the intangible assets of KIS SAS and related to the pizza vending division
(formerly SGER) CGU. The impairment charges were recognised in the line “Administrative expenses”. Impairment
charges were due to a reduction in forecast cash generation of the pizza vending division.
In 2022 a £153,000 impairment charge was recognised against capitalised development costs, in the line “Costs of sales”.
Company
Customer
related
£’000
Cost:
At 1 November 2021 776
Addition 5
At 31 October 2022 781
At 31 October 2023 781
Amortisation:
At 1 November 2021 776
At 31 October 2022 776
Amortisation 2
At 31 October 2023 778
Net book value:
At 1 November 2021 0
At 31 October 2022 5
At 31 October 2023 3
ME Group plc Annual Report 2023
148
Financial Statements
12 Property, plant and equipment
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
Total
£’000
Cost:
At 31 October 2021 18,061 264,832 28,130 4,400 13,575 5,450 334,448
Exchange difference 206 (644) 295 59 155 102 173
Additions 683 27,205 4,782 2,878 1,803 2,617 39,968
Additions – new subsidiary 3 8 – – – – 11
Disposals (3,650) (14,477) (3,042) (2,328) (1,047) (1,707) (26,251)
At 31 October 2022 15,303 276,924 30,165 5,009 14,486 6,462 348,349
Exchange difference (63) (891) 381 123 352 157 59
Additions 400 39,122 6,320 639 421 2,456 49,358
Additions – new subsidiary – 1,496 – – – – 1,496
Transfer from intangible assets – 16 128 – – – 144
Transfers 8 481 (489) – – – (0)
Disposals (116) (17,355) (3,158) – (2,419) (1,348) (24,396)
At 31 October 2023 15,532 299,793 33,347 5,771 12,840 7,727 375,010
Depreciation:
At 31 October 2021 9,261 201,018 23,107 1,520 5,285 2,284 242,475
Exchange difference 7 (1,439) 357 93 23 40 (919)
Provided during the period 322 22,849 2,603 2,015 2,619 1,811 32,219
Impairments/(reversal of impairments) (86) (2,650) (707) – – – (3,443)
Disposals (2,510) (14,477) (1,862) (1,470) (1,047) (1,707) (23,073)
At 31 October 2022 6,994 205,301 23,498 2,158 6,880 2,428 247,259
Exchange difference (66) (1,268) 297 88 281 99 (569)
Provided during the period 348 24,556 2,940 1,454 2,384 2,207 33,889
Impairments/(reversal of impairments) 6 (304) (1,055) – – – (1,353)
Transfer from intangible assets – 1 22 – – – 23
Disposals (47) (16,576) (1,973) – (2,419) (1,348) (22,363)
At 31 October 2023 7,235 211,710 23,729 3,700 7,126 3,386 256,886
Net book value:
At 1 November 2021 8,800 63,814 5,023 2,880 8,290 3,166 91,973
At 31 October 2022 8,309 71,623 6,667 2,851 7,606 4,034 101,090
At 31 October 2023 8,298 88,082 9,617 2,071 5,714 4,341 118,124
To improve presentation and understandability, additions previously presented as internal additions have now been
included in the additions external line. The comparative figures have been reclassified to aid comparability. Additions
with a value of £21,496,000 which were presented as additions internal in the photobooth & vending machines category
in the prior year audited financial statements, are now presented as additions external.
ME Group plc Annual Report 2023
149
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
12 Property, plant and equipment continued
Impairment
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. Value in use is determined by discounting the expected cashflows of an asset over the remainder of
its useful economic life.
At the current year end all photobooth and vending machine 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 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 £37,000; Continental Europe – impairment reversal of
(£44,000); and United Kingdom – impairment reversal of (£297,000).
An impairment charge to land and buildings of £6,000 was recognised in the United Kingdom operating segment. This
relates to the impairment of vending machines whereby the site that the machine is located is impaired as well as the
equipment. The impairment was due to a reduction in forecast cash generation of the vending machine.
Reversals of impairment to plant, machinery, furniture, fixtures and motor vehicles were recognised in the following
operating segments: Continental Europe (£706,000) and United Kingdom (£349,000).
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.
Key assumptions
The key assumptions for the value in use calculation are discount rates and growth rates during the forecast period.
Growth rate 0% (2022: 1%)
The Growth rate assumption used for all territories was 0%. This assumption is based on past experience and expected
future developments in markets, operations and economic conditions.
Discount rate 9.7%-15.2% (2022: 9.74%-14.24%)
The post-tax discount rates applied to the cash flow forecasts of each asset 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 changes in discount rate assumptions from the prior year reflect the
change in economic conditions, in each territory, over the period.
The rates used are: United Kingdom 14.1%, (2022: 13.3%), Ireland 13.0% (2022: 10.4%), France 12.8% (2022: 12.4%),
Germany 11.6% (2022: 11.2%), Spain 14.8% (2022: 14.2%), Japan 11.0% (2022: 10.7%), Portugal 15.2% (2022: 12.3%), Belgium
13.2% (2022: 10.1%), Netherlands 11.7% (2022: 11.3%), Switzerland 9.7% (2022: 10.0%), Austria 12.7% (2022: 9.7%) and
Australia 13.5% (2022 n/a). The Board is confident, overall, that these discount rates reflect the circumstances in each
region, and are in accordance with IAS 36.
Sensitivity to key assumptions
Discount rate
A 1% increase in the discount rate assumption for each territory would increase the impairment charge by £177,000.
Growth rate
A 1% reduction in the growth rate assumption (negative growth rate of -1%), would increase the impairment charge
by £154,000 .
ME Group plc Annual Report 2023
150
Financial Statements
Company
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
Total
£’000
Cost:
At 1 November 2021 – 38,432 2,281 1,011 1,898 1,415 45,037
Additions – 5,493 1,030 – 28 60 6,611
Transferred from subsidiary 572 – – – – – 572
Disposals external – (3,603) (150) – (427) (361) (4,541)
At 31 October 2022 572 40,323 3,161 1,011 1,499 1,114 47,679
Additions – 3,769 1,255 – – 570 5,594
Disposals external – (1,748) (366) – (787) (258) (3,159)
At 31 October 2023 572 42,343 4,050 1,011 712 1,426 50,114
Depreciation:
At 1 November 2021 – 31,008 1,187 269 1,142 498 34,104
Provided during the period 18 1,107 147 107 408 336 2,123
Transferred from subsidiary 289 – – – – – 289
Disposals external – (3,347) (66) – (427) (361) (4,201)
At 31 October 2022 307 28,768 1,268 376 1,123 473 32,315
Provided during the period 17 3,462 14 106 289 325 4,213
Disposals external – (1,620) (83) – (782) (258) (2,744)
At 31 October 2023 324 30,610 1,198 482 630 540 33,785
Net book value:
At 1 November 2021 – 7,424 1,094 742 756 917 10,933
At 31 October 2022 265 11,554 1,892 635 376 641 15,364
At 31 October 2023 248 11,733 2,851 529 82 886 16,329
To improve presentation and understandability, additions previously presented as internal additions have now been
included in the additions external line. The comparative figures have been reclassified to aid comparability. Additions
with a value of £5,063,000 which were presented as additions internal in the photobooth & vending machines category
in the prior year audited financial statements, are now presented as additions external.
ME Group plc Annual Report 2023
151
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
13 Investment property
Group
£’000
Cost:
At 1 November 2021 12,822
Exchange differences 230
At 31 October 2022 13,052
Exchange differences 190
Transfer to non current assets held for sale (13,242)
At 31 October 2023 –
Depreciation:
At 1 November 2021 12,225
Exchange differences 220
Provided during the period 15
At 31 October 2022 12,460
Exchange differences 181
Provided during the period 16
Transfer to non current assets held for sale (12,657)
At 31 October 2023 –
Net book value:
At 1 November 2021 597
At 31 October 2022 592
At 31 October 2023 –
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 £79,000 (2022: £365,000) (note 4).
In the year, management committed to selling the investment property, with the sale expected to complete in the first
half of financial year 2024. Accordingly, the property was transferred from investment property to non-current assets
held for sale. See note 14 for more details.
Company
The Company has no investment property.
14 Non-current assets classified as held for sale
31 October
2023
£’000
31 October
2022
£’000
Property classified as held for sale 585 –
The non-current asset classified as held for sale is an office building located in Grenoble, France. The Group previously
rented out the office building but now intends to dispose of the property.
Management are fully committed to the sale of the property, have been actively marketing it for sale and expect to
complete the disposal within 12 months of the reporting date.
The non-current asset classified as held for sale is included in the Continental Europe operating segment.
ME Group plc Annual Report 2023
152
Financial Statements
15 Investments in associates and subsidiaries
Investment in associates
Group
In the current and prior year, the Group held investments in only one associate, Photomaton Maroc. This associate
company is incorporated in Morocco and its registered address is 131 Bd D’Anfares Azur Sidi Belyout, Casablanca.
£’000
Cost:
At 1 November 2021 21
Exchange differences (1)
At 31 October 2022 20
Exchange differences 1
Share of profit 14
At 31 October 2023 35
Name
Assets
£’000
Liabilities
£’000
Revenue
£’000
Profit
£’000
Dividends
received
Share of
Interest
%
At 31 October 2022 90 70 – – – 50
90 70 – – – 50
At 31 October 2023 141 106 – 14 – 50
141 106 – 14 – 50
Company
Associated
undertakings
£’000
Subsidiary
undertakings
£’000
Total
£’000
Costs:
At 1 November 2021 6 48,821 48,827
Capital increase relating to share-based payment (net) – 521 521
Disposal – (2,956) (2,956)
At 31 October 2022 6 46,386 46,392
At 1 November 2022 6 46,386 46,392
Capital increase relating to share-based payment (net) – 148 148
At 31 October 2023 6 46,534 46,540
Provision:
At 1 November 2021 6 1,920 1,926
Disposal – (2) (2)
At 31 October 2022 6 1,918 1,924
At 1 November 2022 6 1,918 1,924
At 31 October 2023 6 1,918 1,924
Net book value:
At 1 November 2021 – 46,901 46,901
At 31 October 2022 – 44,468 44,468
At 31 October 2023 – 44,616 44,616
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 21 for further details on
the Group’s share option schemes.
The details of all the Group’s subsidiaries and associates are given in note 29.
ME Group plc Annual Report 2023
153
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16 Financial instruments
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 2023 (31 October 2022: 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.
ME Group plc Annual Report 2023
154
Financial Statements
16(a) Fair values of financial instruments by class
Generally, there is no material 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. However, given the sharp
increase in market interest rates since the Group last financed its fixed rate debt, the fair value of the groups loans
liabilities could differ from its carrying value. The estimated fair value of the Groups fixed rate debt at the reporting date
is £77,423,000, which is £249,000 higher than its carrying value.
Financial instruments held at fair value – Level 1
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 0,099 HKD per share as at
31 October 2023, giving a value at that date of £1,145,118.
This financial instrument is valued at the reporting date by reference to quoted market prices.
Financial instruments held at fair value – Level 2
There are no material Level 2 investments held by the Group or Company.
Financial instruments held at fair value – Level 3
The Group holds 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 31 October 2023 the investment is valued at £4,741,310.
This financial instrument is valued at the reporting date using discounted cashflow analysis, for the bond cashflows,
and by reference to the latest equity valuation of the issuing company. The key unobservable inputs to the valuation
calculation are the discount rate of 5% and the equity valuation of Energy Observer Developments SAS. The equity
valuation used was based on a recent fund raising by the issuing company. This, in effect, gave an external, arms-length
valuation as new investors were purchasing equity based on their valuation of the company.
Sensitivity to key unobservable inputs
Discount rate
A 1% increase in the discount rate used to value the convertible bond would result in a decrease in valuation of £33,000.
Equity valuation
A 20% decrease in the equity value of Energy Observer Developments SAS would result in a decrease in valuation
of £205,000.
Movement in level 3 financial instruments value
The following table presents the changes in level 3 financial instruments for the years ended 31 October 2022 and
31 October 2023.
Convertible
Bond
£’000
At 31 October 2021 –
Addition 4,450
At 31 October 2022 4,450
Fair value gain recognised in other gains/(losses) 226
Foreign exchange movement recognised in other comphrensive income 65
At 31 October 2023 4,741
No assets or liabilities were transferred between levels 1, 2 and 3 in the year .
ME Group plc Annual Report 2023
155
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16(a) Fair values of financial instruments by class continued
Financial instruments by category
The tables below show financial instruments by category for the Group
At 31 October 2023
Amortised
Cost
£’000
Fair Value
Through
Profit & Loss
£’000
Total
£’000
Assets per statement of financial position
Financial instruments held at FVTPL – 5,886 5,886
Financial assets – held at amortised cost:
Trade and other receivables 11,286 – 11,286
Cash and cash equivalents 111,091 – 111,091
122,377 5,886 128,263
Other financial
liabilities at
amortised cost
£’000
Total
£’000
Liabilities per statement of financial position
Borrowings 77,174 77,174
Leases 13,336 13,336
Trade and other payables 57,921 57,921
148,431 148,431
At 31 October 2022
Amortised
Cost
£’000
Fair Value
Through
Profit & Loss
£’000
Total
£’000
Assets per statement of financial position
Financial instruments held at FVTPL – 5,239 5,239
Financial assets – held at amortised cost:
Trade and other receivables 10,475 – 10,475
Cash and cash equivalents 136,185 – 136,185
146,660 5,239 151,899
Other financial
liabilities at
amortised cost
£’000
Total
£’000
Liabilities per statement of financial position
Borrowings 102,163 102,163
Leases 15,923 15,923
Trade and other payables 52,248 52,248
170,334 170,334
ME Group plc Annual Report 2023
156
Financial Statements
Company
At 31 October 2023
Amortised
Cost
£’000
Fair Value
Through
Profit & Loss
£’000
Total
£’000
Assets per statement of financial position
Financial assets held at FVTPL – 1,145 1,145
Financial assets – held at amortised cost:
Trade and other receivables 33,001 – 33,001
Cash and cash equivalents 3,344 – 3,344
36,346 1,145 37,491
Other financial
liabilities at
amortised cost
£’000
Total
£’000
Liabilities per statement of financial position
Leases 1,635 1,635
Trade and other payables 15,791 15,791
17,426 17,426
At 31 October 2022
Amortised
Cost
£’000
Fair Value
Through
Profit & Loss
£’000
Total
£’000
Assets per statement of financial position
Financial assets held at FVTPL – 789 789
Financial assets – held at amortised cost:
Trade and other receivables 23,142 – 23,142
Cash and cash equivalents 13,321 – 13,321
36,463 789 37,252
Other financial
liabilities at
amortised cost
£’000
Total
£’000
Liabilities per statement of financial position
Leases 1,801 1,801
Trade and other payables 14,552 14,552
16,353 16,353
ME Group plc Annual Report 2023
157
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16(b) Financial statement risk management
Financial risk factors and financial risk management
Overview
The Group and the Company are exposed to the following risks arising from financial instruments:
(i) Credit risk
(ii) Liquidity risk
(iii) 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.
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.
(i) Credit risk
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 .
ME Group plc Annual Report 2023
158
Financial Statements
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 are normally interest free. The normal terms of settlement 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.
The Group applies the simplified ECL model to its impairments of trade receivables and contract assets.
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.
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.
ME Group plc Annual Report 2023
159
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16(b) Financial statement risk management continued
The ageing of net current trade receivables is as follows:
Group
31 October 2023 31 October 2022
Gross
trade
receivables
£’000
Provision
for trade
receivables
£’000
Net
Trade
Receivables
£’000
Gross
trade
receivables
£’000
Provision
for trade
receivables
£’000
Net
Trade
Receivables
£’000
Current 3,847 – 3,847 4,209 – 4,209
Past due
– overdue 1-30 days – – – – – –
– overdue 31-60 days 289 – 289 39 – 39
– overdue 61 days 2,378 (1,326) 1,052 2,617 (987) 1,630
Total past due 2,667 (1,326) 1,341 2,656 (987) 1,669
Total trade receivables 6,514 (1,326) 5,188 6,865 (987) 5,878
Company
31 October 2023 31 October 2022
Gross
trade
receivables
£’000
Provision
for trade
receivables
£’000
Net
Trade
Receivables
£’000
Gross
trade
receivables
£’000
Provision
for trade
receivables
£’000
Net
Trade
Receivables
£’000
Current 24 – 24 12 – 12
Past due
– overdue 1-30 days – – – – – –
– overdue 31-60 days 1 – 1 5 – 5
– overdue 61 days 22 (22) – 83 (76) 8
Total past due 23 (22) 1 89 (76) 13
Total trade receivables 47 (22) 25 101 (76) 25
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.
Company – expected credit losses on intercompany balances
Intercompany balances with subsidiaries are repayable on demand. At the reporting date, each intercompany
counterparty is assessed to determine whether it has sufficient accessible highly liquid assets to cover the intercompany
debtor owed to the parent company. If this analysis determines that intercompany balance is not fully recoverable at
the reporting date, management will set a recovery strategy and estimate the expected credit loss on the debtor. No
provision was recognised against the Company’s intercompany receivables in the year (2022: nil).
(ii) Liquidity risk
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 2023 and 31 October 2022 has reduced liquidity risk for the Group.
The Group has undrawn facilities totalling 2 million euros and having regard to the Group’s cash flow, it is considered
that the 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 .
ME Group plc Annual Report 2023
160
Financial Statements
Some of the groups loans are subject to covenants and, during the years to 31 October 2023 and 31 October 2022, the
Group and the Company have comfortably complied with such requirements. The nature of the covenants are ratio of
EBITDA to debt, ratio of debt to equity, ratio of net interest to EBITDA, free cashflow and profit 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 2023 and 31 October 2022 based on contractual undiscounted payments.
Group contractual cash flows
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
At 31 October 2023
Interest bearing loans and borrowings
and interest free loans 27,676 20,663 17,655 10,819 771 976 78,560
Finance leases 6,243 4,061 2,376 1,462 1,026 1,331 16,499
Trade and other payables 57,921 – – – – – 57,921
91,840 24,724 20,031 12,281 1,797 2,307 152,980
At 30 October 2022
Interest bearing loans and borrowings
and interest free loans 30,412 26,272 19,904 16,939 10,211 271 104,009
Finance leases 6,235 4,610 2,643 1,552 1,116 1,411 17,568
Trade and other payables 52,248 – – – – – 52,248
87,905 28,246 22,036 19,238 12,639 271 170,334
Company contractual cash flows
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
At 31 October 2023
Finance leases 709 597 355 162 149 – 1,971
Trade and other payables 15,791 – – – – – 15,791
16,500 597 355 162 149 – 17,762
At 30 October 2022
Finance leases 320 489 377 169 162 149 1,665
Trade and other payables 14,552 – – – – – 14,552
15,612 185 185 185 185 – 16,353
Financial instruments held at amortised cost
These largely comprise of restricted bank deposit accounts where the cash acts as security against possible shortfalls in
Group’s UK pension fund obligation.
(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 21).
ME Group plc Annual Report 2023
161
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16(b) Financial statement risk management continued
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 2023 and 31 October 2022 the majority of the Group’s borrowings were denominated in Euros and held by
subsidiaries whose functional currency is the Euro.
Analysis of monetary assets and liabilities by currency – Group
At 31 October 2023
Sterling
£’000
Euro
£’000
Swiss
Franc
£’000
Japanese
Yen
£’000
Other
Currencies
£’000
Total
£’000
Assets per statement of financial position
Financial instruments held at FVTPL 1,145 4,741 – – – 5,886
Trade and other receivables 1,406 6,968 173 2,210 529 11,286
Cash and cash equivalents 17,769 77,828 6,198 8,200 1,096 111,091
20,320 89,537 6,371 10,410 1,625 128,263
Liabilities per statement of financial position
Borrowings and Leases 1,635 80,351 296 8,194 34 90,510
Trade and other payables 8,426 42,437 2,415 3,995 648 57,921
10,061 122,788 2,711 12,189 682 148,431
At 31 October 2022
Sterling
£’000
Euro
£’000
Swiss
Franc
£’000
Japanese
Yen
£’000
Other
Currencies
£’000
Total
£’000
Assets per statement of financial position
Financial instruments held at FVTPL 789 4,450 – – – 5,239
Trade and other receivables 2,152 11,925 139 3,002 1,023 18,241
Cash and cash equivalents 15,781 105,910 5,236 7,694 1,564 136,185
18,722 122,285 5,375 10,696 2,587 159,665
Liabilities per statement of financial position
Borrowings and Leases 1,802 110,801 435 4,944 104 118,086
Trade and other payables 9,109 37,149 2,300 3,170 520 52,248
10,911 147,950 2,735 8,114 624 170,334
ME Group plc Annual Report 2023
162
Financial Statements
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 £2,906,000 decrease in the Group’s net assets at that date (2022: £2,432,000 decrease 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
2023
Carrying
amount
£’000
2022
Carrying
amount
£’000
Net cash
Mainly non-interest bearing current accounts:
Cash at bank and in hand 70,669 81,219
Deposit accounts – generally interest bearing:
Bank deposit accounts 40,422 53,981
Restricted bank deposit accounts – 985
Other items
Interest free and interest bearing loans (77,174) (102,164)
33,917 34,021
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. A
theoretical increase of 1% in the fixed rate of interest would result in an extra £772,000 (31 October 2022: £1,022,000) of
interest expense. This sensitivity is purely illustrative as the Groups debt is not subject to an interest rate risk.
Terms and debt repayment schedule
The table below shows the maturity profile and interest rates of the Groups borrowings at 31 October 2023 and
31 October 2022.
Group Status Currency
Interest
Rate
Year of
maturity
2023
Carrying
amount
£’000
2022
Carrying
amount
£’000
Loans Fixed rate Euro 0,28% – 1,57% 2023-2027 69,975 97,978
Loans Fixed rate Japanese Yen 0,54% – 1,15% 2024-2030 7,199 4,186
Lease liabilities Fixed rate Various 6,1% – 18.6% 2023-2033 13,336 15,922
90,510 118,086
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 investment in listed equity securities is not material thus the Group does not have any significant exposure
to price risk on these equity investments.
The Group’s investment in convertible bonds, which is linked to the equity of a privately held company, does not expose
it to a material price risk .
ME Group plc Annual Report 2023
163
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
16(c) Capital risk management
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.
31 October
2023
£’000
31 October
2022
£’000
Cash and cash equivalents 111,091 136,185
Borrowings (77,174) (102,164)
Net cash (excluding restricted deposits) 33,917 34,021
Equity 158,988 132,649
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.
17 Trade and other receivables
Group Company
31 October
2023
£’000
31 October
2022 (restated)
£’000
31 October
2023
£’000
31 October
2022
£’000
Non-current assets
Other receivables 3,005 1,974 981 –
3,005 1,974 981 –
Current assets
Gross trade receivables 6,514 6,865 47 101
Provision for trade receivables (1,326) (987) (22) (76)
Trade receivables 5,188 5,878 25 25
Amounts due from subsidiaries – – 31,947 21,525
Other receivables 3,093 2,623 49 354
Prepayments 8,342 7,766 642 1,238
16,623 16,267 32,662 23,142
The balance of prepayments at 1 November 2022 has been restated by a reduction of £3,783,000 to correct an error in
the prior year financial statements. The adjustment represents the value of capitalised development work in progress
which had previously been reported in prepayments but has now been reclassified to other intangible assets.
A corresponding adjustment has been made to increase the opening balance of capitalised development costs in other
intangibles assets (note 11) by the same value.
ME Group plc Annual Report 2023
164
Financial Statements
Non-current other receivables include restricted deposits related to pension schemes, which in previous years were
included in cash and cash equivalents. Following a change in accounting policy, the respective deposits are now
classified as non-current receivables. The value of restricted deposits at the reporting date was £990,000 for the Group
and £981,000 for the Company.
All trade receivables arise from contracts with customers.
Current other receivables include deposits relating to operating sites and properties, indirect and other taxation and
other receivables.
18 Inventories
Group Company
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Raw materials and consumables 25,484 18,774 1,249 1,066
Finished goods 7,017 6,717 543 764
32,501 25,491 1,793 1,830
The replacement value of inventories is not materially different from that stated above.
19 Cash and cash equivalents
Group Company
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Cash at bank and in hand 70,669 81,220 3,344 2,516
Deposit accounts (excluding restricted deposits) 40,422 53,980 – 9,829
Restricted deposit accounts – 985 – 976
Cash and cash equivalents per statement of financial position 111,091 136,185 3,344 13,321
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.
The Group earned interest on deposits at rates between 2.90% and 2.93% in the year (2022: 1.14% to 1.80%). Cash at
bank is generally interest free but may earn interest at the applicable daily bank floating deposit rate.
20 Net cash
Group Company
Notes
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Cash and cash equivalents per statement of financial position 19 111,091 136,185 3,344 13,321
Non-current borrowings 22 (50,137) (72,365) – –
Current borrowings 22 (27,037) (29,799) – –
Net Cash 33,917 34,021 3,344 13,321
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 £13,336,000 (2022: £15,922,000) .
ME Group plc Annual Report 2023
165
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
20 Net cash continued
Reconciliation of movement in liabilities arising from financing activities
Group
Non cash movements Cash movements
1 November
£’000
Exchange
differences
£’000
New lease
liabilities
£’000
Other
movements
£’000
Repayment
of liabilities
£’000
New
loans
£’000
31 October
£’000
31 October 2023
Non-current loans 72,365 778 – (25,243) (744) 2 981 50,137
Non-current lease liabilities 10,064 157 657 (2,568) – – 8,310
Non-current liabilities arising from
financing activities 82,429 935 657 (27,811) (744) 2,981 58,447
Current loans 29,799 375 – 25,243 (30,216) 1,836 27,037
Current lease liabilities 5,858 (4) 2,462 2,568 (5,858) – 5,026
Current liabilities arising from
financing activities 35,657 371 2,462 27,811 (36,074) 1,836 32,063
Total liabilities arising from
financing activities 118,086 1,306 3,119 – (36,818) 4,817 90,510
31 October 2022
Non-current loans 44,323 309 – (27,740) (1,270) 56,743 72,365
Non-current lease liabilities 10,735 135 2,189 (2,556) (439) – 10,064
Non-current liabilities arising from
financing activities 55,058 444 2,189 (30,296) (1,709) 56,743 82,429
Current loans 20,120 261 – 27,740 (23,352) 5,030 29,799
Current lease liabilities 5,757 (41) 3,343 2,556 (5,757) – 5,858
Current liabilities arising from
financing activities 25,877 220 3,343 30,296 (29,109) 5,030 35,657
Total liabilities arising from
financing activities 80,935 664 5,532 – (30,818) 61,773 118,086
Company
1 November
£’000
New lease
liabilities
£’000
Repayment
of liabilities
£’000
Other
movements
£’000
31 October
£’000
31 October 2023
Non-current lease liabilities 741 358 - (73) 1,026
Current lease liabilities 1,060 212 (731) 68 609
Total liabilities arising from financing activities 1,801 570 (731) (5) 1,635
31 October 2022
Non-current lease liabilities 1,727 36 (14) (1,008) 741
Current lease liabilities 830 52 (830) 1,009 1,060
Total liabilities arising from financing activities 2,557 88 (844) – 1,801
ME Group plc Annual Report 2023
166
Financial Statements
21 Share capital and reserves
Share Capital
31 October
2023
Number
31 October
2022
Number
31 October
2023
£’000
31 October
2022
£’000
Allotted, issued and fully paid:
Ordinary shares of 0.5p each
At the beginning of the period 378,051,637 378,011,637 1,889 1,889
Issued in year – share options exercised 403,242 40,000 2 –
At the end of the period 378,454,879 378,051,637 1,891 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
At
31 October
2022
Exercise
price
Granted
during
year
Lapsed or
forfeited
during year
Exercised
during
year
At
31 October
2023
Date from
which
exercisable
Last date
on which
exercisable
13-Jul-16 499,300 141.50p – (309,694) (189,606) – 13-Jul-19 12-Jul-23
27-Aug-19 946,509 101.40p – (251,757) (100,000) 594,752 27-Aug-22 26-Aug-26
4-Oct-19 1,000,000 93.30p – (1,000,000) – – 4-Oct-22 4-Oct-26
5-Oct-20 1,000,000 51.05p – (1,000,000) – – 5-Oct-23 5-Oct-27
19-Apr-21 1,245,000 61.40p – (320,000) – 925,000 19-Apr-24 19-Apr-28
05-Aug-21 2,164,774 77.50p – (251,364) (113,636) 1,799,774 05-Aug-24 05-Aug-28
5-Oct-21 1,000,000 61.10p – (1,000,000) - – 5-Oct-24 5-Oct-28
12-May-22 2,225,000 68,73p – (475,000) – 1,750,000 12-May-25 12-May-29
04-Apr-23 – 126,70p 2,039,947 (100,000) – 1,939,947 04-Apr-26 04-Apr-30
10,080,583 2,039,947 (4,707,815) (403,242) 7,009,473
All options can be exercised, in normal circumstances, within a period of four years from the exercise of option date,
providing that the performance criterion or performance condition has been achieved. The subscription price for all
options is based upon the average market price on the three days prior to the date of grant. Options are restricted, or
may lapse, if the grantee leaves the employment of the Group before the first exercise date.
All options are equity settled options.
Options granted after 2005 are covered by the new ME Group Executive Share Option Scheme. The vesting of options is
subject to an EPS-based performance condition relating to the extent to which the Company’s basic EPS for the third
financial year, following the date of grant, reaches a sliding scale of challenging EPS targets.
Options are normally granted over shares worth up to 150% of a participant’s salary each year. In exceptional cases as
part of the terms of attracting senior management, options in excess of that number may be granted.
The weighted average exercise price of all options outstanding at 31 October 2023 is 88.83p (2022: 75.98p) and the
weighted average exercise price of options exercisable at 31 October 2023 is 101.40p (2022: 105.54p).
The weighted average share price for options exercised during the period ended 31 October 2023 was 154.43p
(31 October 2022: 96.35p).
The weighted average remaining years for options outstanding at the period-end date is 5.2 years (2022: 5.2 years).
ME Group plc Annual Report 2023
167
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
21 Share capital and reserves continued
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 2023 and 31 October 2022:
Date of grant
27 August
2019
4 October
2019
5 October
2020
Vesting period 3 years 3 years 3 years
Share price volatility 32.5% 32.59% 31.64%
Share price on date of grant 101.40p 92.80p 42.30p
Option price 103.00p 93.30p 93.30p
Expected term 3.25 years 3.25 years 3.25 years
Dividend yield 0.00% 3.98% 0.00%
Risk free interest rate 0.00% 0.00% 0.00%
Fair value 45.51p 41.99p 22.97p
Date of grant
19 April
2021
5 August
2021
5 October
2021
Vesting period 3 years 3 years 3 years
Share price volatility 51.40% 77.50% 49.48%
Share price on date of grant 63.20p 77.50p 65.50p
Option price 61.40p 77.50p 61.10p
Expected term 3.25 years 3.25 years 3.25 years
Dividend yield 0.00% 0.00% 0.00%
Risk free interest rate 0.17% 0.15% 0.56%
Fair value 34.89p 28.18p 24.47p
Date of grant
12 May
2022
4 April
2023
Vesting period 3 years 3 years
Share price volatility 49.91% 52.91%
Share price on date of grant 65.20p 127.40p
Option price 68.73p 126.70p
Expected term 3.25 years 3.25 years
Dividend yield 4.43% 4.40%
Risk free interest rate 1.24% 3.35%
Fair value 25.17p 59.25p
The charge for share-based payments is £345,000 (2022: £884,000) and for the Company the charge is £197,000
(2022: £321,000).
Share price volatility is based on historical data .
ME Group plc Annual Report 2023
168
Financial Statements
Reserves
Group
Treasury shares (Group and Company)
In accordance with shareholders’ resolutions passed at the Annual General Meeting on 18 August 2023, the Company
may purchase its own shares up to a maximum of 10% of the Ordinary shares in issue. In the year ended 31 October
2023 the Company purchased, on various dates and at various prices, 1,260,534 shares at a combined cost of
£1,969,000 including £23,000 transaction costs and is holding these shares as treasury shares (2022: no shares
purchased or held in treasury). At 31 October 2023 the number of shares held in treasury was 1,260,534, representing
0.1% of the Ordinary issued share capital (2022: nil). The treasury shares have no voting or dividend rights.
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 other net gains/(losses)
and is shown as a movement in other comprehensive income.
Company
Other reserves
The Company’s other reserves £2,673,000 (2022: £2,007,000) relating to the fair value of options granted to employees
of Group undertakings.
22 Financial liabilities
Group Company
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Non-current liabilities
Non-current instalments due on bank loans 50,137 72,365 – –
Current liabilities
Current instalments due on loans 27,037 29,799 – –
Bank loans bear fixed rates of interest. Margins are generally between 0.4% and 1.0%. Further details are provided in
note 16.
ME Group plc Annual Report 2023
169
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
22 Financial liabilities continued
Lease Liabilities
In addition to bank loans, the Group has lease liabilities of £13,336,000 (2022: £15,922,000).
The Company has lease liabilities of £1,971,000 (2022 £1,665,000).
The Group has lease arrangements across three main categories: site agreements, property and motor vehicles.
The key quantitative information regarding the lease portfolio is shown below:
Group
Site
agreements Property
Motor
vehicles
As at 31 October 2023
Number of lease agreements 618 9 507
Average lease term (months) 80 74 41
Average remaining term (months) 50 41 22
Group
Site
agreements Property
Motor
vehicles
As at 31 October 2022
Number of lease agreements 545 9 423
Average lease term (months) 74 66 43
Average remaining term (months) 34 28 10
Company
Site
agreements Property
Motor
vehicles
As at 31 October 2023
Number of lease agreements 44 1 124
Average lease term (months) 52 113 45
Average remaining term (months) 6 60 21
Company
Site
agreements Property
Motor
vehicles
As at 31 October 2022
Number of lease agreements 65 1 99
Average lease term (months) 47 113 47
Average remaining term (months) 6 72 17
ME Group plc Annual Report 2023
170
Financial Statements
The maturity profile of lease liabilities is shown below:
Group
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
At 31 October 2023
Leases 5,026 2,107 2,092 2,071 2,038 1 13,336
At 31 October 2022
Leases 5,858 2,568 2,513 2,503 2,480 – 15,922
Company
Within
one year
£’000
Year 2
£’000
Year 3
£’000
Year 4
£’000
Year 5
£’000
Over
5 years
£’000
Total
£’000
At 31 October 2023
Leases 609 256 256 256 256 – 1,635
At 31 October 2022
Leases 1,060 185 185 185 186 – 1,801
23 Post-employment benefit obligations
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.
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.
ME Group plc Annual Report 2023
171
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
23 Post-employment benefit obligations continued
The amount shown in the statement of financial position is detailed as follows:
Group Company
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Overseas employment benefit obligations 3,847 3,692 – –
Defined benefit schemes 216 158 – –
4,063 3,850 – –
ME Group International plc defined benefit pension scheme
The Company runs a defined benefit pension scheme, the Photo-ME International Plc Pension and Life Assurance Fund
(the “Fund”). This note covers the pension obligations provided from the Fund.
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% pa for pension accrued before April 1997
and in line with increases in the Retail Prices Index (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.
The actuarial valuation of the UK Pension scheme has revealed a surplus at 31 October 2023 and at each financial
statement date since 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.
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.
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 8 years.
ME Group plc Annual Report 2023
172
Financial Statements
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
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.
Inflation risk 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.
Life expectancy 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
31 October
2023
£’000
31 October
2022
£’000
Present value of defined benefit obligation at beginning of the period 4,364 5,788
Current service cost – –
Interest cost 206 107
Actuarial (gains)/losses on fund liabilities arising in demographic assumptions (70) 67
Actuarial (gains) from changes in financial assumptions (225) (1,332)
Actuarial (gains)/losses on liabilities from experience (268) 84
Benefits paid (322) (350)
Present value of defined benefit obligation at end of the period 3,685 4,364
Reconciliation of the movement in the fair value of plan assets
31 October
2023
£’000
31 October
2022
£’000
Fair value of plan assets at beginning of the period 4,769 6,641
Interest income on fund assets 226 123
Remeasurement (losses) on assets (672) (1,645)
Benefits paid (322) (350)
Fair value of plan assets at end of the period 4,001 4,769
ME Group plc Annual Report 2023
173
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
23 Post-employment benefit obligations continued
Amount to be recognised in the statement of financial position
31 October
2023
£’000
31 October
2022
£’000
Present value of funded obligations 3,685 4,364
Fair value of scheme assets 4,001 4,769
Net surplus (316) (405)
Effect of limit of recognition of an asset 316 405
Amount recognised in statement of financial position – –
Amount recognised in profit and loss
31 October
2023
£’000
31 October
2022
£’000
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 672 1,645
Actuarial (gains) due to changes in financial assumptions (225) (1,332)
Actuarial (gains)/losses due to changes in demographic assumptions (70) 67
Actuarial (gains)/losses on liabilities arising from experience (268) 84
Adjustment due to the asset ceiling (109) (464)
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:
31 October 2023 31 October 2022
£’000 % £’000 %
Bonds and insurance policies 3,892 97 4,704 99
Other 109 3 65 1
4,001 100 4,769 100
There were no financial instruments of the Company included in the plan assets (2023: none) and there were no
property assets occupied by the Company (2022: none).
Principal actuarial assumptions
31 October
2023
%
31 October
2022
%
Discount rate for scheme liabilities 5.6 4.9
Rate for increase in salaries n/a n/a
Price inflation 3.2 3.1
Pension increases 3.0 3.0
ME Group plc Annual Report 2023
174
Financial Statements
The mortality tables used for 2023 are S3NXA Light tables for males and S3NXA All lives for females, with CMI 2022
projections and a long-term rate of improvement of 1.25% pa. The mortality tables used for 2022 were also S3NXA Light
tables, but with CMI 2021 projections and a long term rate of improvement of 1.25% pa. The mortality assumptions allow
for expected future improvements in mortality rates.
31 October 2023 31 October 2022
Male currently aged 65 23.3 years (age 88.3) 23.8 years (age 88.8)
Female currently aged 65 24.7 years (age 89.7) 25.1 years (age 90.1)
Male currently aged 45 24.5 years (age 89.5) 25.0 years (age 90.0)
Female current aged 45 26.1 years (age 91.1) 26.5 years (age 91.5)
History of asset values, defined benefit obligation and surplus/deficit in fund
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Fair value of defined benefit obligation 3,685 4,364 5,788 6,267 5,940
Fair value of assets 4,001 4,769 6,641 7,040 6,675
Surplus/(deficit) 316 405 853 773 735
History of experience gains and losses
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Experience gains/(losses) on fund assets (672) (1,645) (170) 622 160
Experience (losses)/gains on plan liabilities 268 (84) 79 (67) 9
Liabilities for 2023, 2022, 2021, 2020 and 2019 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 2023
Plan
assets
£’000
Defined
benefit
obligation
£’000
Surplus
£’000
As reported 4,001 3,685 316
Following a 0.1% decrease in the discount rate 4,009 3,714 295
Following a 0.1% increase in the inflation assumption 4,002 3,694 308
Following an increase in the life expectancy of one year 4,120 3,918 202
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 2023 and 31 October 2022 by independent actuaries.
ME Group plc Annual Report 2023
175
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
23 Post-employment benefit obligations continued
Reconciliation of the movement in the present value of the defined benefit obligation
31 October
2023
£’000
31 October
2022
£’000
Present value of defined benefit obligation at start of the period 2,898 3,621
Exchange difference 136 275
Contribution by members 33 36
Current service cost 126 172
Past service cost (18) (29)
Interest cost 71 8
Remeasurement gains on plan liabilities (56) (658)
Prepaid risk premiums (36) (38)
Benefits paid (225) (491)
Administration costs 1 2
Present value of defined benefit obligation at end of the period 2,930 2,898
31 October
2023
£’000
31 October
2022
£’000
Fair value of plan assets at start of the period 2,740 3,113
Exchange difference 127 245
Contributions by company and members 166 178
Expected return on plan assets 67 9
Remeasurement losses on plan assets (125) (276)
Benefits paid (225) (491)
Prepaid risk premiums (36) (38)
Fair value of plan assets at end of the period 2,714 2,740
31 October
2023
£’000
31 October
2022
£’000
Net liability at start of the period 158 508
Exchange difference 8 30
Increase/(decrease) in liability 49 (380)
Net liability at end of the period 216 158
ME Group plc Annual Report 2023
176
Financial Statements
Amounts recognised in comprehensive income
31 October
2023
£’000
31 October
2022
£’000
Amount recognised in profit and loss:
Amounts recognised in comprehensive income:
Current service cost 127 172
Past service cost (18) (29)
Administrative expenses 1 2
Net pension interest 4 (1)
Total charge 114 144
Amount recognised in other comprehensive income:
Loss on scheme assets 125 276
Actuarial gains on defined benefit obligation (56) (658)
Total amount recognised in other comprehensive income 68 (382)
Total amount recognised in profit and loss and other comprehensive income 182 (238)
31 October 2023 30 October 2022
£’000 % £’000 %
Cash 27 1 27 1
Equities & debt instruments 1,954 68 1,863 68
Other 733 31 849 31
Total plan assets 2,714 100 2,740 100
Principal actuarial assumptions
31 October
2023
%
31 October
2022
%
Discount rate 2.00 2.40
Expected return on plan assets at end of year n/a n/a
Rate of increase in salaries 1.20 1.20
Price inflation 1.00 1.00
The normal retirement age for males is between 60 – 65 years and for females between 59 – 64 years for both 2023
and 2022.
The mortality tables used in 2023, 2022 and 2021 were the BVG 2020 GT tables
The mortality tables used in 2020, 2019 and 2018 were the BVG 2015 GT tables.
ME Group plc Annual Report 2023
177
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
23 Post-employment benefit obligations continued
History of assets, liabilities and actuarial gains and losses
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Present value of defined benefit obligation 2,930 2,898 3,621 4,792 4,144
Fair value of assets 2,714 2,740 3,113 3,615 3,087
Deficit (216) (158) (508) (1,177) (1,057)
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Experience (losses)/gains on plan liabilities 56 658 436 (93) (144)
– as a percentage of the present value of plan liabilities (2%) (23%) (12%) 2% 3%
Remeasurement gains/(losses) on plan assets (125) (276) 166 (69) 96
– as a percentage of the present value of plan assets (5%) (10%) 5% (2%) 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
£’000
Increase/
(decrease) in
defined benefit
obligation
£’000
Defined benefit obligation as reported 2,930 –
Defined benefit obligation – with discount rate – 0.25% 3,019 89
– with discount rate 0.25% 2,846 (84)
– with salary decrease – 0.25% 3,002 72
– with salary increase 0.25% 2,863 (67)
– with life expectancy 1 year 2,964 34
– with life expectancy – 1 year 2,894 (36)
The Group’s best estimate for contributions to be paid by the company next year to the scheme is £140,000
(2022: £133,000).
The amount recognised in the income statement for this scheme was £114,000 (2022: £144,000).
ME Group plc Annual Report 2023
178
Financial Statements
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, ME Group Japan, 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. ME Group
Japan, 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 2023 and 31 October 2022. This actuarial valuation incorporated the following principal assumptions in
arriving at the present value of the obligations:
31 October
2023
31 October
2022
Discount rate 0.95% 0.49%
Rate of increase in salaries 0% 0%
Retirement age 60 years 60 years
Mortality table 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)
Expenses relating to the Japanese post-employment benefit obligation were recognised in following sections of the
statement of comprehensive income:
▪ Administration expenses £65,000 (2022: £55,000)
▪ Remeasurement gains in other comprehensive income £1,000 (2022: £7,000)
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 2023 and
31 October 2022. This actuarial valuation incorporated the following principal assumptions in arriving at the present
value of the obligations:
31 October
2023
31 October
2022
Discount rate 3.80% 4.00%
Rate of increase in salaries 2.00% 2.00%
Retirement age 62-67 years 62-67 years
Inflation rate 2.00% 2.00%
Mortality table TGH/TGF 05 TGH/TGF 05
Expenses relating to the French post-employment benefit obligation were recognised in following sections of the
statement of comprehensive income:
▪ Administration expenses £16,000 (2022: £1,000)
▪ Finance cost £102,000 (2022: £21,000)
▪ Remeasurement losses in other comprehensive income £151,000 (2022: remeasurement gain of £748,000)
ME Group plc Annual Report 2023
179
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
24 Provisions
Group
Employee
related
claims
£’000
Product
warranties
£’000
Other
£’000
Total
£’000
At 31 October 2021 688 764 714 2,166
Exchange differences 3 7 18 28
Utilised and other movements (453) (338) (760) (1,551)
Charged to income statement – 202 722 924
At 31 October 2022 238 635 694 1,567
Amount shown as current liability 238 635 694 1,567
Amount shown as non-current liability – – – –
At 31 October 2022 238 635 694 1,567
Exchange differences 5 4 (1) 8
Utilised and other movements (49) (52) (522) (623)
Reclassifications – 314 (314) –
Charged to income statement 78 – 854 932
At 31 October 2023 272 901 711 1,884
Amount shown as current liability 272 901 711 1,884
Amount shown as non-current liability – – – –
Other provisions include amounts for unresolved claims made against the Group by suppliers.
25 Deferred taxation
Deferred tax comprises:
Group Company
31 October
2023
£’000
31 October
2022 (restated)
£’000
31 October
2023
£’000
31 October
2022
£’000
Temporary differences relating to property, plant and equipment 2,089 187 702 (907)
Other temporary differences in recognising revenue and expense
items in other periods for taxation purposes:
– capitalised development costs 1,030 1,015 – –
– post-employment benefit provisions (1,254) (1,243) – –
– acquisition related intangibles 4,407 5,038 – –
– other short-term temporary differences 2,294 2,781 (30) (41)
8,566 7,778 672 (948)
The closing balance comprises:
Deferred tax assets (1,020) (1,982) (30) (948)
Deferred tax liabilities 9,586 9,760 702 –
8,566 7,778 672 (948)
ME Group plc Annual Report 2023
180
Financial Statements
The movements on deferred taxation during the period were as follows:
Group Company
31 October
2023
£’000
31 October
2022 (restated)
£’000
31 October
2023
£’000
31 October
2022
£’000
Opening balance 7,778 9,362 (948) (732)
Exchange differences (92) (137) – –
Adjustments for prior periods – 82 – –
Post-employment benefit provisions (52) 248 – –
Charge/(credit) for the period in income statement 932 (1,169) 1,620 (216)
Other – (626) – –
Closing balance 8,566 7,760 672 (948)
IFRS remeasurement – 18 – –
Closing balance 8,566 7,778 672 (948)
The IFRS remeasurement relates to deferred tax on intangible assets identified by purchase price allocation. Refer to
note 11 for details of the IFRS remeasurement.
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
The Group has no unrecognised deferred tax assets.
Factors that may affect future tax charges
The UK Corporation Tax rate increased from 19% to 25% with effect from 1 April 2023. The deferred tax assets and
liabilities have been recognised based on the respective corporation tax rates at which they are anticipated to unwind
in each jurisdiction.
26 Trade and other payables
Group Company
31 October
2023
£’000
31 October
2022
£’000
31 October
2023
£’000
31 October
2022
£’000
Amounts shown as current liabilities
Trade payables 33,393 29,364 2,246 3,207
Amounts owed to subsidiaries – – 9,448 8,736
Other taxes and social security costs 2,631 4,176 814 736
Other payables 11,185 11,081 – 64
Accruals and deferred income 10,713 7,627 3,284 1,808
57,921 52,248 15,791 14,552
27 Capital commitments and contingent liabilities
Contingent liabilities
The Company has given guarantees in the normal course of business to the Group’s bankers . No losses are expected
from guarantees given by the Company.
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 (2022 none).
ME Group plc Annual Report 2023
181
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
28 Related parties
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
Group Company
31 October
2023
£’000
31 October
2022
Represented
1
£’000
31 October
2023
£’000
31 October
2022
£’000
Salaries, director fees, short term benefits and short term bonuses 2,318 2,485 – –
Share-based payment charge 136 246 – –
2,454 2,731 – –
1
2022 figure for directors’ salaries, fees, short term benefits and bonuses was incorrectly presented as £1,315,000 in the prior year financial statements, due to
error. The comparative figure has been represented to show the correct figure.
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. The figures exclude pension related costs and any long-term incentive costs.
Directors of the Company control 36.54% of the Ordinary shares of the Company.
Company
31 October
2023
£’000
31 October
2022
£’000
Transactions with subsidiaries:
Purchases 74 36
Amounts owed by subsidiaries 31,947 22,371
Amounts owed to subsidiaries 9,448 8,736
Other items:
Intercompany fees charged by/(received from) subsidiaries 5,255 6,388
Property, plant and equipment
acquired from subsidiaries 3,189 5,635
Dividend income
– from subsidiaries 25,000 56,511
29 Group undertakings
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 2023 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.
ME Group plc Annual Report 2023
182
Financial Statements
Company name
Principal
Activity
Group
interest Registered office address
Country of
incorporation
UK & Ireland
Jolly Roger (Amusement Rides) Limited In liquidation 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
MgInvest Investments Limited In liquidation 100%
1
Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
ME Group International Limited Dormant 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
Photo-ME (Retail) Limited In liquidation 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
Photo-ME Limited Corporate 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
Photo-ME Trustee Company Limited Dormant 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
Xpand Investments Limited In liquidation 100% Unit 3B, Blenheim Road, Epsom, KT19 9AP UK
ME Group Ireland Supplies Limited Operations 100% Unit A4, Alexander House, Tallaght Cross East,
Tallaght, Dublin 24
Republic of
Ireland
Continental Europe
ME Group Austria G.m.b.H. Operations 100% Industriestraße 7/K01 L/10, 2100 Korneuburg Austria
Prontophot Belgium NV Operations 100% Boulevard Paepsem 8a, 1070 Anderlecht Belgium
Photo-ME Czech Republic s.p.o.l. s.r.o. Dormant 100%
1
Husova 2117, 256 01 Benešov Czech
Republic
Me-Group SPC Finland Oy Operations 100% Unit 3B Blenheim Road, Epsom, UNITED
KINGDOM. KT19 9AP
Finland
KIS SAS Production 100%
1
7 Rue Jean-Pierre Timbaud, 38130 Echirolles France
ME Group France Operations 100%
1
8 rue Auber 75009, Paris France
Sempa SARL Operations 100%
1
73 D rue du Général Mangin, 38000 Grenoble France
ME Group GSS Corporate 100% 8 rue Auber 75009, Paris France
SCI Immobilière du 21 Property 100%
1
7 Rue Jean-Pierre Timbaud, 38130 Echirolles France
Dreamaker Operations 100% 80 route des Lucioles 06560 Valbourne France
ME Group Germany G.m.b.H. Operations 100% Gervinusstraße 15-17, 60322 Frankfurt am Main Germany
Me-Group Italia Srl Operations 100% Roma (RM) Via Lovanio 1, CAP 00198 Italy
Kis Italia Srl Dormant 100% Milano, Via Tiziano 32, CAP 20145 Italy
Prontophot Holland B.V Operations 100% Loonseweg 14, 5527 AC Hapert Netherlands
KIS Poland s.p.z.o.o. Operations 100% ul. Targowa 46/5, 03-733 Warszawa Poland
ME Group Portugal LDA Operations 100% Industrial do Carvalhinho – Fracção K 2860-579
MOITA
Portugal
ME Group Spain Solutions Operations 100% 28224 – Pozuelo de Alarcón (Madrid), Calle de
las Dos Castillas, 33, Ático 7
Spain
ME Group Switzerland AG Operations 100% Sonnentalstrasse 5, 8600Dübendorf Switzerland
Asia & ROW
ME Group Australia Pty Ltd Operations 100% 4/24 Philip Street, Hawthorne, Queensland 4171 Australia
Now Retail Group Pty Ltd Operations 100% Level 9, 123 Albert Street, Brisbane, Queensland
4000
Australia
Photo-ME (Shanghai) Co Limited Operations 100%
1
Room 1102 Tongyong Tower, No. 1346 Gong he
Xin Road, Zha bei District, Shanghai 200070
China
Photo-ME Beijing Co Limited Operations 100%
1
Room 1124, Ocean Natural Xintiandi, No.106
East Majiapu Road, Fengtai District,
Beijing 100000
China
Photo-ME Chengdu Co Limited Dormant 100%
1
Room 1124, Ocean Natural Xintiandi, No.106
East Majiapu Road, Fengtai District,
Beijing 100000
China
ME Group Japan Operations 100% Room 1302, Atlas Tower Roppongi, Roppongi
7-7-13,Minato-Ku, 106 0032
Japan
Photomatico (Singapore) Pte Limited Operations 100% 26 Sin Ming Lane, Singapore 573971 Singapore
KIS Technology Company Limited Dormant 100% P.1003, Ford Thang Long Building, 105 Lang Ha,
Lang Ha Street, Ba Dinh district, Hanoi
Vietnam
Photomaton Maroc SARL Operations 50% 131 Bd D’Anfares Azur Sidi Belyout,/Casablanca Morocco
1
Investments in subsidiaries not owned directly by ME Group International plc.
ME Group plc Annual Report 2023
183
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
29 Group undertakings continued
The following companies were in liquation at 31 October 2023
▪ Jolly Roger (Amusement Rides) Limited;
▪ Photo-ME (Retail) Limited;
▪ Xpand Investments Limited; and
▪ Mginvest Investments Limited.
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 2023. Certain
subsidiaries and associates have a different statutory year end, sometimes due to legal requirements in the country
concerned.
The following companies are exempt from the requirements of the Companies Act 2006 relating to the audit of
individual accounts for the year ended 31 October 2023 by virtue of Section 479A of the Companies Act 2006:
▪ Photo-ME Limited.
30 Business combinations
Acquisition of the photobooths business of Fujifilm Imaging Systems Co. Ltd.
On 30 September 2023 the Group completed the acquisition of 100% of the photobooths business of Fujifilm Imaging
Systems Co. Ltd (Fujifilm) for an initial consideration of JPY 905,961,000 (£4,971,000), obtaining control of the business
on that date.
Fujifilm is a Japanese photobooth owner and operator and the acquisition of its photobooths division adds a further
3,548 photobooth units to the Group’s existing operations in Asia Pacific. This acquisition is in line with the Group’s
strategy to expand the number of units in operation.
The acquisition was funded by a new loan facility taken by the Group’s Japanese subsidiary, ME Group Japan.
In accordance with IFRS 3, this transaction meets the definition of a business combination so has been accounted for
using the acquisition method.
Acquisition-related expenses of £146,000 have been recognised in the Group’s statement of comprehensive income.
Deferred consideration
A portion of the total consideration is deferred and is contingent on the total number of photobooth units that are
acquired. Post-closing there follows a six month period during which further units may be transferred to the Group, in
addition to the 3,548 units transferred at the closing date, and subject to a maximum number of 3,806. The total
consideration increases in proportion with the number of photobooths acquired, up to a maximum value of JPY
996,000,000 (£5,466,000).
As at the reporting date, management’s best estimate of the deferred consideration to be paid is JPY 40,039,000
(£220,000). This amount has been accrued and included in the total estimated consideration value of JPY 946,000,000
(£5,191,000).
Acquired assets and liabilities
Due to the proximity of the transaction to the reporting date, 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
£3,268,000 recognised in the Group’s Statement of Financial Position.
ME Group plc Annual Report 2023
184
Financial Statements
Pending receipt of the final valuations of the assets acquired, in accordance with IFRS 3, the accounts will be adjusted
retrospectively within the measurement period of no more than one year from the acquisition date.
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 2023 are shown in the table below.
£’000
Property, plant and equipment 1,503
Intangible assets 49
Total non-current assets 1,552
Inventory 305
Trade and other receivables 301
Cash and cash equivalents 181
Total current assets 787
Trade and other payables 416
Total current liabilities 416
Total liabilities 416
Total identifiable net assets excluding goodwill 1,923
Goodwill 3,268
Total identifiable net assets acquired 5,191
Satisfied by:
Cash 4,971
Deferred consideration 220
Total consideration 5,191
Cash consideration per cashflow:
Cash consideration 4,971
Net cash acquired (181)
Initial cash outlay on purchase of subsidiaries 4,790
Revenue 1,176
Profit before tax 307
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. Acquisition-related expenses of £14,000
were recognised in the Group’s statement of comprehensive income.
Acquisition-related expenses of £14,000 were recognised in the Group’s statement of comprehensive income.
Due to the proximity of the transaction to the prior period reporting date, the purchase price allocation, including
determination of the fair value of intangible assets recognised on consolidation, had not been finalised when the prior
period financial statements were approved.
With the purchase price allocation now complete, the Group has during the period adjusted the provisional amounts
that were recorded in the prior period financial statements by increasing intangible assets by €929,000 (£814,000) and
reducing goodwill by the same amount (see note 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.
ME Group plc Annual Report 2023
185
Notes to the Financial Statements continued
For the 12 months ended 31 October 2023
30 Business combinations continued
The fair value adjustments in respect of acquired intangible assets are due to the recognition of €255,000 (£223,000) in
respect of Dreamakers’ marketing database; €190,000 (£166,000) in respect of contractual customer relationships and
order backlog; and €484,000 (£425,000) in respect of brand related assets.
The balance of residual goodwill is €1,060,000 (£929,000).
A deferred tax liability of €21,000 (£18,000), in respect of the order backlog intangible asset, has been recognised and
reflected in the adjusted goodwill value.
Other changes to the composition of the Group
Disposal of Photo-ME Korea
On 30 November 2022 the group disposed of its South Korean subsidiary, Photo-ME Korea Company Limited. This was
for consideration of £209,000. The group generated a profit of £57,000 which has been recognised in other gains in the
income statement.
31 Events after the statement of financial position date
On 23 November 2023 the Group paid its interim dividend in respect of the six month period ended 30 April 2023 of
2.97 pence per ordinary share, totalling £11,240,000.
On 14 November 2023, the Group converted 100,000 of the 500,000 convertible bonds held in Energy Observer
Developments SAS to 125 ordinary shares of the same company. The remaining 400,000 convertible bonds held by the
Group will not be converted to shares.
32 Period summary
Income statement (unaudited)
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Revenue
UK & Ireland 48,173 41,996 29,644 54,623 52,919
Continental Europe 205,157 177,839 145,009 195,230 130,661
Asia 44,332 39,945 39,751 60,392 44,538
Total revenue 297,662 259,780 214,404 310,245 228,118
Operating profit 67,502 56,681 29,335 3,317 42,739
Net finance (cost)/income & Other gains (435) (3,327) (780) (2,825) (146)
Profit before taxation 67,067 53,354 28,555 492 42,593
Taxation (16,401) (14,561) (6,703) (2,844) (11,314)
Profit after taxation 50,666 38,793 21,852 (2,352) 31,279
Attributable to:
– Equity owners of the Parent 50,666 38,793 21,713 (2,305) 31,226
– Non-controlling interests – – 139 (47) 53
50,666 38,793 21,852 (2,352) 31,279
Earnings per share – Basic 13.40p 10.26p 5.78p (0.62)p 8.27p
Earnings per share – Diluted 13.31p 10.23p 5.72p (0.62)p 8.26p
Dividends – interim 2.97p 2.60p 0.00p 0.00p 3.71p
Dividends – final 4.42p 3.00p 2.89p 0.00p 4.73p
Dividends – special 0.00p 7.10p 0.00p 0.00p 0.00p
Total dividends 7.39p 12.70p 2.89p 0.00p 8.44p
ME Group plc Annual Report 2023
186
Financial Statements
Statements of financial position
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Intangible assets 36,710 32,736 34,502 32,739 41,816
Property, plant and equipment 118,124 101,090 91,973 90,937 95,353
Other non-current investments 35 21 21 57 415
Other non-current assets 8,891 7,805 3,966 3,743 5,693
Current assets 168,177 184,716 141,688 139,760 128,723
Assets held for sale 585 - - - -
Total assets 332,522 326,368 272,150 267,237 272,000
Share capital 1,891 1,889 1,889 1,889 1,889
Share premium 11,083 10,627 10,599 10,599 10,588
Treasury shares (1,969) - - - -
Reserves 147,983 120,133 115,486 99,693 129,500
Equity of the Parent 158,988 132,649 127,974 112,181 141,977
Non-controlling interests - - 1,720 1,689 1,870
Total equity 158,988 132,649 129,694 113,870 143,847
Total non-current liabilities 71,076 94,039 68,900 52,968 64,450
Total current liabilities 102,458 99,680 73,556 100,399 63,703
Total equity and liabilities 332,522 326,368 272,150 267,237 272,000
Net cash 33,917 34,021 34,919 21,877 16,338
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
2023 2022 2021 2020 2019
Capital expenditure – photobooth
& vending machines £’000 39,122 27,205 22,563 38,435 24,938
Capital expenditure – research
& development £’000 2,337 1,418 1,802 2,296 1,631
EBITDA £’000 106,639 92,241 65,077 87,313 69,705
EBITDA % of revenue 35.8% 35.5% 30.4% 28.1% 30.6%
Number of vending sites 47,600 43,900 43,800 44,500 47,000
ME Group plc Annual Report 2023
187
Registered in England and Wales
Number 735438
Registered Office
Unit 3B
Blenhiem Road
Epsom
KT19 9AP
Tel: + 44 (0)1372 453399
Web: https://me-group.com/
e-mail: ir@me-group.com
Auditor
Mazars LLP
30 Old Bailey
London
EC4M 7AU
Brokers
Berenberg
60 Threadneedle Street
London
EC2R 8HP
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Bankers
Lloyds Bank plc
25 Gresham Street
London
EC2V 7HN
Santander UK plc
2 Triton Square
Regent’s Place
London
NW1 3AN
Financial Public Relations
Hudson Sandler LLP
25 Charterhouse Square
Barbican
London
EC1M 6AE
Registrars
Link Group
10th floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Company Information & Advisers
ME Group plc Annual Report 2023
188
Financial 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: 0371 664 0300
Overseas Tel: 00 44 371 664 0391
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 44 (0)1372 453399
e-mail: ir@me-group.com
Financial Calendar
Annual General Meeting 26 April 2024
Half year results Announcement in July 2024
(to 30 April 2024)
Full year results Announcement in February 2025
(to 31 October 2024)
ME Group International plc
Unit 3B
Blenheim Road
Epsom
KT19 9AP
Tel: +44 (0)1372 453399
Fax: +44 (0)1372 451044
Web: https://me-group.com/
Shareholder Information
ME Group plc Annual Report 2023
189
ME Group plc Annual Report 2023
190