TIDMPARK

RNS Number : 3449J

Park Group PLC

04 December 2018

4 December 2018

Park Group plc

("Park" the "Company" or the "Group")

HALF YEAR RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2018

A good performance, in line with expectations

Park is the UK's leading multi-retailer redemption product provider to corporate and consumer markets. Sales are delivered through innovative leading edge digital channels, a direct sales force and a network of agents. Park's business is highly seasonal; the first half of the year sees an expected loss with the bulk of annual revenues and profit generated in the second half of the year.

Financial Highlights

   --      Billings increased by 3.3% to GBP109.0m (H1 2017: GBP105.5m) 

-- Park revenue* of GBP27.4m (H1 2017: GBP30.6m) reflecting some low margin business not being repeated

   --      Seasonal operating losses reduced to GBP2.3m (H1 2017: GBP2.6m loss) 

-- Pre-tax losses reduced to GBP1.5m (H1 2017: GBP1.9m loss) after interest receipts of GBP0.8m (H1 2017: GBP0.7m)

   --      Dividend raised by 5% to 1.05p (H1 2017: 1.0p) 

-- Cash balances, including cash held in trust, at 30 September of GBP212.4m (H1 2017: GBP199.6m); average cash balances of GBP175.4m (H1 2017: GBP166.1m)

* 2017 restated following adoption of IFRS15, which requires some revenues to be reported on a 'net' basis, as outlined in our IFRS15 transition document

Operational Highlights

   --      Corporate and Consumer businesses performed well in the first half 
   --      Profitability enhanced following some low margin business not being repeated 

-- New major retailer partners added to portfolio since the beginning of the first half have included Arcadia, Fat Face and The Entertainer

-- Order book comfortably ahead of comparative period, reflecting strong Corporate orders and stable Consumer orders as previously guided

   --      Operational efficiency improvements leading to an improved customer experience 
   --      Tim Clancy appointed as Chief Financial Officer in August 

Four pillars of our strategic business plan announced, with initial actions being implemented:

   1.   We will focus on our multi-retailer redemption proposition; 

-- separating hamper production from the core business as a step towards simplifying our product range

   2.   We will be easier to work with for all of our customers (consumer, businesses and retailers); 

-- maximising our use of industry infrastructure and technology to launch a virtual prepaid card

   3.   We will be more efficient and effective; 

-- moving to new offices in Liverpool city centre to enable optimal use of assets and attract talent

   4.   We will broaden our customer appeal to drive growth; 

-- launching a new product targeting a GBP2 billion market with a broader demographic and in which we currently do not compete

Laura Carstensen, Chairman, commented:

"Park performed well in the first half, consistent with our expectations for the year as a whole and we are encouraged by our order book which is ahead of the same time last year overall.

"We are excited to announce the principal pillars of our new strategic business plan and the initial actions we are undertaking to deliver it. We continue to be encouraged by the future opportunities for Park and are optimistic about how the plan will enhance these opportunities further and accelerate our future growth trajectory."

Park will host a presentation for analysts at MHP Communications' offices (6 Agar Street, London, WC2N 4HN) at 9.30am this morning.

If you would like to attend, please contact MHP on 020 3128 8193 or parkgroup@mhpc.com.

A video of the presentation will be available on Park's website later today.

For further information please contact:

 
 Park Group plc         Arden Partners plc     MHP Communications 
 
   Ian O'Doherty          Paul Shackleton        Reg Hoare 
   Tim Clancy             Steve Douglas          Katie Hunt 
   Stephen Miller         Benjamin Cryer         Patrick Hanrahan 
                                                 Charles Hirst 
 
   Tel: 0151 653 1700     Tel: 020 7614 5920     Tel: 020 3128 8193 
 

Business review for the six months ended 30 September 2018

Introduction

Park performed well in the first half, consistent with our expectations for the year as a whole. As we are a seasonal business with approximately a quarter of our revenue reported in the first half, and three quarters of revenue reported in the second half (commencing 1 October), we have as expected reported a loss, albeit a reduced loss compared to the first half of the prior year.

Although the first half is a quieter period, within the business our team has been very busy developing our strategic business plan for the next stage of Park's growth. This work is being led by our Chief Executive Ian O'Doherty, who joined us in January 2018. All the work has been informed by in depth product research conducted on the Group's behalf with its customers and staff.

The research project reinforced our confidence in the long-term growth opportunity for Park, the robustness of demand for our products and services, and the high regard in which we are held by customers. However, it also identified that we have the opportunity to improve our products and tap into potential enhanced demand when these improvements are delivered.

In the strategy section below, we set out the plan that the Board has approved, and which is now being implemented. A number of important projects are already being undertaken, which are intended to enhance Park's operating and financial performance in future years.

Results for the half year

This reporting period represents Ian's first full period managing the business. These results are also Park's first in which we are required to present them under a new accounting standard known as 'IFRS15 - Revenue from contracts with customers'. In the simplest terms, this change requires us to report revenue on a 'net' basis rather than 'gross' for some products but does not impact billings, and we have restated prior years to provide a like for like comparative. This does not change the profitability of the business model nor impact on cash flow. The following numbers for the period are presented on this basis and note 1 to the half year results below sets out further details of the impact of adopting IFRS15 on the financial information being presented.

Billings increased 3.3% in the six months to 30 September 2018 to GBP109.0m (H1 2017: GBP105.5m) while Park revenue was down 10.3% at GBP27.4m (H1 2017: GBP30.6m) as a result of some low margin business not being repeated. This is reflected in reduced operating losses of GBP2.3m (H1 2017: loss GBP2.6m). Losses would have been GBP0.3m lower still but for the fees that are being incurred for the strategy work currently underway, including the market research project referred to above. Interest receipts were GBP0.8m (H1 2017: GBP0.7m) on average cash balances of GBP175.4m (H1 2017: GBP166.1m) producing a reduced pre-tax loss of GBP1.5m (H1 2017: loss GBP1.9m). Total cash balances, including cash held in trust at 30 September 2018, were GBP212.4m (H1 2017: GBP199.6m).

Interim dividend

The Board has declared an interim dividend of 1.05p per share, a 5% increase on the comparative period (H1 2017: 1.00p). The dividend will be paid on 8 April 2019 to shareholders on the register on 1 March 2019. Park's dividend policy is linked to the cash we generate and business performance. It is noteworthy that the total dividend has more than doubled over the last eight years, reflecting the success of Park and our confidence in the future. The Board will keep our dividend policy under review as the business develops.

Strategy and business plan

Background

Our comprehensive review of the business has been intended to ensure that we have the right strategy and business plan in place for the future, in order to strengthen both Park's market position and take advantage of the growth opportunities we see. This is in the context of two major market themes in our industry - first, we believe the market has become more competitive and, secondly and importantly, we believe Park could grow faster if the right product and service offerings are made available to a wider customer base, whether consumers, corporates or retailers.

Market research project

The review included a wide ranging survey of the market (analysing customers' and staff attitudes and behaviours), and an in-depth analysis of the operations and platform we will require to deliver the plan. The main findings were as follows:

   --     Park is well regarded by its customers which provides opportunities to do more with them 
   --     There is a lot of opportunity to improve our products and meet latent demand for them 
   --     It is not as easy as it should be to find, buy and gift our products 
   --     Format confusion (i.e. between paper, plastic and digital) has been suppressing demand 
   --     The product experience can be improved to make it easier to give and use 
   --     There is a requirement for a more relevant and curated retailer cohort 
   --     We need to enhance the service and products we provide to our retailer partners 

Our new strategic business plan

Having completed the review and considered the research findings, today we announce the principal pillars of our new strategic business plan and the initial actions we are undertaking to deliver it. The four pillars are:

1. We will focus on our multi-retailer redemption proposition - with a simplified product range and refined branding;

2. We will be easier to work with for all our customers (consumers, businesses and retailers) - by making full use of available technologies to access our products and services;

3. We will be more efficient and effective - by optimising the use of our operating assets including facilities, technology and infrastructure; and,

4. We will broaden our customer appeal to drive growth - we believe there is a broader market to be targeted than our existing one if we have the right product and branding in place.

The initial actions to deliver the strategy will include the following:

1. We will separate our hamper production from the core business - which will enable us to simplify our product range and refine our branding;

2. We will maximise our use of industry infrastructure and technology - which will enhance our virtual prepaid product range;

3. We will move to new fit-for-purpose offices* - which would help to unify our teams, attract top class talent, cement our culture, and enable more efficient working; and,

4. We will launch a new consumer product and distribution - as our core offering is attractive to a much wider demographic than it currently reaches.

We will make further announcements as we roll out the above actions in the coming weeks and months, subject to how quickly we can reach agreements with relevant third parties.

* Glenbrook, the leading North West property development and investment firm, has been appointed as our adviser.

Divisional review

All our business lines traded well in the first half. Analysed by Market, Corporate billings of GBP74.7m were 1% ahead of last year despite not continuing a low margin product through our intermediary channel (which contributed GBP6.3m of billings in the prior half year). Corporate revenue of GBP20.6m (adjusted for IFRS15) is also down on last year for the same reason (H1 2017: GBP24.8m) but segmental profit of GBP2.4m was GBP0.3m ahead of the comparative period due to an improved mix of products generating higher gross margin. Our Consumer business billings of GBP34.3m were 9% above the comparative period reflecting some growth but mainly due to earlier despatches than in the prior year. Consumer revenue of GBP6.8m (adjusted for IFRS15) was GBP1.0m above last year (also reflecting the timing of despatches) producing a reduced segmental loss of GBP3.1m versus a loss of GBP3.4m in the first half of the prior year.

We announced in July some major new customer signings that boost the opportunities for our customers and clients across the UK. These included Arcadia Group Ltd. (which owns high street brands such Topshop, Topman and Miss Selfridge), Office Outlet (formerly Staples Inc.), Jaeger, Austin Reed, DJM Music, Fat Face, and TK Maxx. More recently we have also added the national toy retailer 'The Entertainer' to our portfolio. These new additions, mean Park's gift vouchers are now accepted by more than 175 national brands and over 20,000 high street stores across the UK.

During the period we have initiated a number of important projects, many of them driven by the new strategic business plan and focused on investing in our people and facilities and enhancing our culture and working environment. For example, we have invested in our IT infrastructure and team, modernised our human resources policies and practices, reviewed our incentivisation arrangements, and undertaken our first employee engagement survey.

We have also launched a number of new customer initiatives - including extended self-service for our Christmas savers, the first Sun Life TV advertisements, and our new Shout! social employee recognition system which has been well received by corporate customers.

Board and management

We were pleased to appoint Tim Clancy as Chief Financial Officer with effect from August 2018, to succeed Martin Stewart. Tim has a great deal of board level experience in businesses and sectors which are extremely relevant to Park.

We have also made important appointments to our senior management team to strengthen our platform and ensure we are fit for future growth as we implement the new strategic plan, particularly in the area of operations and technology. We will continue to strengthen the team further through recruitment and training.

Outlook

Overall our outlook for underlying trading for the second half and the year as a whole is unchanged, allowing for the limited impact on profits of IFRS15.

Our order book forecast is ahead of last year, reflecting strong orders in our Corporate business and broadly stable orders for our Consumer business in line with our expectation at the time of our full year results in June 2018. Cash balances, including monies held in trust, are ahead of last year reflecting growth in the business.

In summary, we continue to be encouraged by the opportunities for Park and are optimistic about how the strategic plan will enhance these opportunities further and accelerate our future growth trajectory.

Laura Carstensen, Chairman

PARK GROUP PLC

PARK GROUP PLC

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE HALF YEAR TO 30 SEPTEMBER 2018

 
                                                                  Restated    Restated 
                                                  Half Year      Half Year     Year to 
                                      Notes     to 30.09.18    to 30.09.17    31.03.18 
                                                    GBP'000        GBP'000     GBP'000 
 
 Billings                                           108,964        105,463     412,786 
                                             --------------  -------------  ---------- 
 
 Revenue 
 
   *    Goods                                        15,155         20,262      69,118 
 
   *    Services                                     12,217         10,260      41,864 
 
   *    Other                                            23             30          72 
                                             --------------  -------------  ---------- 
                                                     27,395         30,552     111,054 
 
 Cost of sales                                     (21,074)       (24,616)    (79,628) 
                                             --------------  -------------  ---------- 
 
 Gross profit                                         6,321          5,936      31,426 
 Distribution costs                                   (637)          (616)     (3,002) 
 Administrative expenses                            (7,988)        (7,908)    (17,107) 
                                             --------------  -------------  ---------- 
 Operating (loss)/profit                            (2,304)        (2,588)      11,317 
 
 Finance income                                         778            666       1,274 
 
 Finance costs                                            -              -         (4) 
                                             --------------  -------------  ---------- 
 (Loss)/profit before taxation                      (1,526)        (1,922)      12,587 
 
 Taxation                              2                290            365     (2,398) 
                                             --------------  -------------  ---------- 
 
 (Loss)/profit for the period 
  attributable to equity holders 
  of the parent                                     (1,236)        (1,557)      10,189 
                                             --------------  -------------  ---------- 
 
 (Loss)/earnings per share             3 
 - basic (p)                                         (0.67)         (0.84)        5.50 
 - diluted (p)                                       (0.67)         (0.84)        5.48 
 

All activities derive from continuing operations.

PARK GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR TO 30 SEPTEMBER 2018

 
                                                                 Restated   Restated 
                                                  Half Year     Half Year    Year to 
                                                to 30.09.18   to 30.09.17   31.03.18 
                                                    GBP'000       GBP'000    GBP'000 
 
 (Loss)/profit for the period                       (1,236)       (1,557)     10,189 
 Other comprehensive income 
 Items that will not be reclassified to 
  profit or loss: 
  Remeasurement of defined benefit pension 
  schemes                                                 -             -      1,142 
 Deferred tax on defined benefit pension 
  schemes                                                 -             -      (194) 
                                                          -             -        948 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Foreign exchange translation differences                 -          (24)       (20) 
 
 Other comprehensive income for the period 
  net of tax                                              -          (24)        928 
                                               ------------  ------------  --------- 
 
 Total comprehensive income for the period 
  attributable to equity holders of the 
  parent                                            (1,236)       (1,581)     11,117 
                                               ------------  ------------  --------- 
 
 
 
 
 

PARK GROUP PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2018

 
                                                                      Restated    Restated 
                                                          30.09.18    30.09.17    31.03.18 
                                                           GBP'000     GBP'000     GBP'000 
 Assets 
 Non-current assets 
 Goodwill                                                    2,185       2,202       2,185 
 Other intangible assets                                     2,218       2,549       2,278 
 Property, plant and equipment                               7,607       7,691       7,684 
 Retirement benefit asset                                    3,047       1,827       2,721 
                                                            15,057      14,269      14,868 
                                                        ----------  ----------  ---------- 
 Current assets 
  Inventories                                               18,596      23,127       3,808 
 Trade and other receivables                                10,841      11,396      10,917 
 Tax receivable                                              1,271       1,224         195 
 Other financial assets                                          -           -         200 
 Monies held in trust                                      179,895     194,240      86,992 
 Cash and cash equivalents                                  34,544       7,760      40,311 
                                                           245,147     237,747     142,423 
                                                        ----------  ----------  ---------- 
 Total assets                                              260,204     252,016     157,291 
                                                        ----------  ----------  ---------- 
 Liabilities 
 Current liabilities 
 Trade and other payables                                (192,209)   (191,880)    (94,592) 
 Provisions                                               (60,008)    (58,138)    (48,012) 
                                                        ----------  ----------  ---------- 
                                                         (252,217)   (250,018)   (142,604) 
                                                        ----------  ----------  ---------- 
 Non-current liabilities 
 Deferred tax liability                                      (662)       (194)       (662) 
 Retirement benefit obligation                                   -       (625)           - 
                                                        ----------  ----------  ---------- 
                                                             (662)       (819)       (662) 
                                                        ----------  ----------  ---------- 
 Total liabilities                                       (252,879)   (250,837)   (143,266) 
                                                        ----------  ----------  ---------- 
 Net assets                                                  7,325       1,179      14,025 
                                                        ----------  ----------  ---------- 
 Equity attributable to equity holders of the parent 
 Share capital                                               3,723       3,711       3,711 
 Share premium                                               6,373       6,137       6,137 
 Retained earnings                                         (2,460)     (8,358)       4,488 
 Other reserves                                              (311)       (311)       (311) 
                                                        ----------  ----------  ---------- 
 Total equity                                                7,325       1,179      14,025 
                                                        ----------  ----------  ---------- 
 

PARK GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                                         Share      Share       Other    Retained       Total 
                                       capital    premium    reserves    earnings      equity 
                                       GBP'000    GBP'000     GBP'000     GBP'000     GBP'000 
 
 Audited balance at 1 April 
  2018 as originally reported            3,711      6,137       (311)       8,320      17,857 
 Restatement due to adoption 
  of IFRS15                                  -          -           -     (3,832)     (3,832) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Unaudited restated balance 
  at 1 April 2018                        3,711      6,137       (311)       4,488      14,025 
 
 Total comprehensive income 
  for the period 
 Loss                                        -          -           -     (1,236)     (1,236) 
 Total comprehensive income 
  for the period                             -          -           -     (1,236)     (1,236) 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 Transactions with owners, 
  recorded directly in equity 
 Equity settled share-based 
  payment transactions                       -          -           -        (41)        (41) 
 Exercise of share options                   9        236           -           -         245 
 LTIP shares awarded                         3          -           -         (3)           - 
 Dividends                                   -          -           -     (5,668)     (5,668) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total contributions by and 
  distribution to owners                    12        236           -     (5,712)     (5,464) 
                                     ---------  ---------  ----------  ----------  ---------- 
 
   Balance at 30 September 2018          3,723      6,373       (311)     (2,460)       7,325 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 
   Audited balance at 1 April 
   2017 as originally reported           3,687      6,137       (311)       2,912      12,425 
 Restatement due to adoption 
  of IFRS15                                  -          -           -     (3,612)     (3,612) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Unaudited restated balance 
  at 1 April 2017                        3,687      6,137       (311)       (700)       8,813 
 
 Total comprehensive income 
  for the period 
 Loss as restated                            -          -           -     (1,557)     (1,557) 
 
 Other comprehensive income 
 Foreign exchange translation 
  adjustments                                -          -           -        (24)        (24) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total other comprehensive 
  income                                     -          -           -        (24)        (24) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total comprehensive income 
  for the period                             -          -           -     (1,581)     (1,581) 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 Transactions with owners, 
  recorded directly in equity 
 Equity settled share-based 
  payment transactions                       -          -           -       (683)       (683) 
 LTIP shares awarded                        24          -           -        (24)           - 
 Dividends                                   -          -           -     (5,370)     (5,370) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total contributions by and 
  distribution to owners                    24          -           -     (6,077)     (6,053) 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 Balance at 30 September 2017            3,711      6,137       (311)     (8,358)       1,179 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 
   Audited balance at 1 April 
   2017 as originally reported           3,687      6,137       (311)       2,912      12,425 
 Restatement due to adoption 
  of IFRS15                                  -          -           -     (3,612)     (3,612) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Unaudited restated balance 
  at 1 April 2017                        3,687      6,137       (311)       (700)       8,813 
 
 Total comprehensive income 
  for the year 
 Profit as restated                          -          -           -      10,189      10,189 
 
 Other comprehensive income 
 Remeasurement of defined 
  benefit pension schemes                    -          -           -       1,142       1,142 
 Tax on defined benefit pension 
  schemes                                    -          -           -       (194)       (194) 
 Foreign exchange translation 
  adjustments                                -          -           -        (20)        (20) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total other comprehensive 
  income                                     -          -           -         928         928 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total comprehensive income 
  for the year                               -          -           -      11,117      11,117 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 Transactions with owners, 
  recorded directly in equity 
 Equity settled share-based 
  payment transactions                       -          -           -       (620)       (620) 
 Tax on equity settled share-based 
  payment transactions                       -          -           -          85          85 
 LTIP shares awarded                        24          -           -        (24)           - 
 Dividends                                   -          -           -     (5,370)     (5,370) 
                                     ---------  ---------  ----------  ----------  ---------- 
 Total contributions by and 
  distribution to owners                    24          -           -     (5,929)     (5,905) 
                                     ---------  ---------  ----------  ----------  ---------- 
 
 Balance at 31 March 2018                3,711      6,137       (311)       4,488      14,025 
                                     ---------  ---------  ----------  ----------  ---------- 
 

PARK GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR TO 30 SEPTEMBER 2018

 
                                                                      Restated    Restated 
                                                      Half Year      Half Year     Year to 
                                          Notes     to 30.09.18    to 30.09.17    31.03.18 
                                                        GBP'000        GBP'000     GBP'000 
 Cash flows from operating activities 
 Cash generated from/(used in) 
  operations                                4             4,053       (20,168)      10,540 
 Interest received                                          569            572       1,271 
 Interest paid                                                -              -         (4) 
 Tax paid                                                 (786)        (1,284)     (2,537) 
                                                 --------------  -------------  ---------- 
 Net cash generated from/(used 
  in) operating activities                                3,836       (20,880)       9,270 
                                                 --------------  -------------  ---------- 
 
 Cash flows from investing activities 
 Proceeds from sale of property, 
  plant and equipment                                         -              1           1 
 Purchase of intangible assets                            (307)          (244)       (361) 
 Purchase of property, plant and 
  equipment                                               (230)          (329)       (659) 
 Net cash used in investing activities                    (537)          (572)     (1,019) 
                                                 --------------  -------------  ---------- 
 
 Cash flows from financing activities 
 Proceeds from exercise of share 
  options                                                   245              -           - 
 Dividends paid to shareholders                         (5,307)        (4,515)     (5,370) 
                                                 --------------  -------------  ---------- 
 Net cash used in financing activities                  (5,062)        (4,515)     (5,370) 
                                                 --------------  -------------  ---------- 
 Net (decrease)/increase in cash 
  and cash equivalents                                  (1,763)       (25,967)       2,881 
                                                 --------------  -------------  ---------- 
 Cash and cash equivalents at 
  beginning of period                                    34,243         31,362      31,362 
                                                 --------------  -------------  ---------- 
 
 Cash and cash equivalents at 
  end of period                                          32,480          5,395      34,243 
                                                 --------------  -------------  ---------- 
 
 Cash and cash equivalents comprise: 
 Cash                                                    34,544          7,760      40,311 
 Bank overdrafts                                        (2,064)        (2,365)     (6,068) 
                                                 --------------  -------------  ---------- 
                                                         32,480          5,395      34,243 
                                                 --------------  -------------  ---------- 
 
 

PARK GROUP PLC

SEGMENTAL REPORTING

FOR THE HALF YEAR TO 30 SEPTEMBER 2018

 
                                                     Restated    Restated 
                                     Half Year      Half Year     Year to 
                                   to 30.09.18    to 30.09.17    31.03.18 
                                       GBP'000        GBP'000     GBP'000 
 Billings 
 Consumer                               34,257         31,433     224,542 
 Corporate                              74,707         74,030     188,244 
                                 -------------  -------------  ---------- 
 
 External billings                     108,964        105,463     412,786 
                                 -------------  -------------  ---------- 
 
 Consumer                                    -              -           - 
 Corporate                              21,846         20,862     140,751 
 Elimination                          (21,846)       (20,862)   (140,751) 
                                 -------------  -------------  ---------- 
                                                                        - 
 Inter-segment billings                      -              -           - 
                                 -------------  -------------  ---------- 
 
 Consumer                               34,257         31,433     224,542 
 Corporate                              96,553         94,892     328,995 
 Elimination                          (21,846)       (20,862)   (140,751) 
                                 -------------  -------------  ---------- 
 
 Total billings                        108,964        105,463     412,786 
                                 -------------  -------------  ---------- 
 
 Revenue 
 Consumer                                6,785          5,766      58,601 
 Corporate                              20,610         24,786      52,453 
                                 -------------  -------------  ---------- 
 
 External revenue                       27,395         30,552     111,054 
                                 -------------  -------------  ---------- 
 
 Consumer                                    -              -           - 
 Corporate                               5,632          5,373      39,462 
 Elimination                           (5,632)        (5,373)    (39,462) 
                                 -------------  -------------  ---------- 
 
 Inter-segment revenue                       -              -           - 
                                 -------------  -------------  ---------- 
 
 Consumer                                6,785          5,766      58,601 
 Corporate                              26,242         30,159      91,915 
 Elimination                           (5,632)        (5,373)    (39,462) 
                                 -------------  -------------  ---------- 
 
 Total revenue                          27,395         30,552     111,054 
                                 -------------  -------------  ---------- 
 
 
 Operating (loss)/profit 
 Consumer                              (3,085)        (3,382)       6,822 
 Corporate                               2,423          2,085       7,123 
 All other segments                    (1,642)        (1,291)     (2,628) 
                                 -------------  -------------  ---------- 
 (Loss)/profit before interest         (2,304)        (2,588)      11,317 
                                 -------------  -------------  ---------- 
 
 

NOTES TO THE HALF YEAR RESULTS

(1) Basis of preparation

With effect from 1 April 2018 the Group has adopted IFRS15, Revenue from Contracts with Customers and IFRS9, Financial Instruments. In respect of IFRS15, the Group has applied the full retrospective approach when transitioning to the new standard and as a consequence the date of transition to IFRS15 was 1 April 2014. The Group has prepared its opening balance sheet as at that date. The effects of adopting IFRS15 have been set out in the Group's transition document which can be found on our website at www.parkgroup.co.uk. The adoption of IFRS9 has not had a material impact on the financial statements and no restatements have been made in respect of prior periods.

The financial information in this interim report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and the AIM rules of the London Stock Exchange and on the basis of the accounting policies described in Park Group plc's annual report and accounts for the year ended 31 March 2018, other than those in relation to revenue which can be found in the transition document. These accounting policies have been based on the current standards and interpretations expected to be effective at 31 March 2019. The Group does not expect there to be a significant impact on the results from standards, amendments or interpretations which are available for early adoption but which have not yet been adopted.

The comparative figures set out in the interim financial statements for the half year to 30 September 2017 have been restated to reflect the revised accounting policies. The figures in respect of the year to 31 March 2018 have been extracted from the audited 2018 financial statements and then adjusted for IFRS15 restatements. As described in Park Group's annual report and accounts for the year ended 31 March 2018 the adoption of IFRS15 has led to significantly lower revenues, an immaterial movement in operating profit and a reduced net asset position for all periods covered by the transition document. For periods covered by this interim report, these amounts have been restated as follows:

 
                                          Half Year     Year to 
                                                 to    31.03.18 
                                           30.09.17     GBP'000 
                                            GBP'000 
 Revenue as originally reported              74,703     296,188 
 Restatement due to adoption of IFRS15     (44,151)   (185,134) 
 Revenue as restated                         30,552     111,054 
                                         ----------  ---------- 
 
 Operating (loss)/profit as originally 
  reported                                  (2,237)      11,589 
 Restatement due to adoption of IFRS15        (351)       (272) 
 Operating (loss)/profit as restated        (2,588)      11,317 
                                         ----------  ---------- 
 
 Net assets as originally reported            5,075      17,857 
 Restatement due to adoption of IFRS15      (3,896)     (3,832) 
 Net assets as restated                       1,179      14,025 
                                         ----------  ---------- 
 

The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value. In addition, this interim financial report does not comply with IAS34 Interim Financial Reporting, which is not currently required to be applied under AIM rules.

The directors are of the opinion that the financial information should be prepared on a going concern basis, in the light of current trading and the forecast positive cash balances for the foreseeable future.

The financial information included in this interim financial report for the six months ended 30 September 2018 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and is unaudited. A copy of the Group's statutory accounts for the year ended 31 March 2018, on which the auditors gave an unqualified opinion and did not make a statement under section 498 of the Companies Act 2006, has been filed with the registrar of companies.

(2) Taxation

The taxation credit for the six months to 30 September 2018 has been calculated using an overall effective tax rate of 19.0 per cent which has been applied to the taxable income (half year to 30 September 2017 - 19.0 per cent).

(3) Earnings per share

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.

The calculation of basic and diluted EPS is based on the following figures:

 
                                                            Restated       Restated 
                                          Half Year        Half Year        Year to 
                                        to 30.09.18      to 30.09.17       31.03.18 
                                            GBP'000          GBP'000        GBP'000 
 Earnings 
 Total (loss)/earnings for period           (1,236)          (1,557)         10,189 
                                    ---------------  ---------------  ------------- 
 
                                          Half Year        Half Year        Year to 
                                        to 30.09.18      to 30.09.17       31.03.18 
 Weighted average number of 
  shares 
 Basic EPS - weighted average 
  number of shares                      185,709,925      184,979,921    185,268,587 
 Diluting effect of employee 
  share options                                   -                -        601,293 
                                    ---------------  ---------------  ------------- 
 Diluted EPS - weighted average 
  number of shares                      185,709,925      184,979,921    185,869,880 
                                    ---------------  ---------------  ------------- 
 
 Basic EPS 
 Weighted average number of 
  ordinary shares in issue              185,709,925      184,979,921    185,268,587 
                                    ---------------  ---------------  ------------- 
 EPS (p)                                     (0.67)           (0.84)           5.50 
                                    ---------------  ---------------  ------------- 
 
 Diluted EPS 
 Weighted average number of 
  ordinary shares                       185,709,925      184,979,921    185,869,880 
                                    ---------------  ---------------  ------------- 
 EPS (p)                                     (0.67)           (0.84)           5.48 
                                    ---------------  ---------------  ------------- 
 

(4) Reconciliation of net (loss)/profit to net cash inflow/(outflow) from operating activities

 
                                                          Restated       Restated 
                                          Half Year      Half Year           Year 
                                        to 30.09.18    to 30.09.17    to 31.03.18 
                                            GBP'000        GBP'000        GBP'000 
 Net (loss)/profit                          (1,236)        (1,557)         10,189 
 Adjustments for: 
 Tax                                          (290)          (365)          2,398 
 Interest income                              (778)          (666)        (1,274) 
 Interest expense                                 -              -              4 
 Research and development tax 
  credit                                          -              -          (121) 
 Depreciation and amortisation                  675            703          1,428 
 Impairment of goodwill                           -              -             17 
 Profit on sale of property, 
  plant and equipment                             -            (1)            (1) 
 Decrease in other financial 
  assets                                        200            200              - 
 Increase in inventories                   (14,788)       (20,496)        (1,176) 
 Decrease/(increase) in trade 
  and other receivables                         284        (2,065)        (1,678) 
 Increase in trade and other 
  payables                                  101,260        104,335          4,197 
 Increase in provisions                      11,996         11,973          1,848 
 Increase in monies held in 
  trust                                    (92,903)      (111,223)        (3,974) 
 Increase in retirement benefit 
  asset                                       (326)          (299)          (676) 
 Translation adjustment                           -           (24)           (20) 
 Taxes paid on share-based payments               -              -          (851) 
 Share-based payments                          (41)          (683)            230 
 Net cash inflow/(outflow) from 
  operating activities                        4,053       (20,168)         10,540 
                                      -------------  -------------  ------------- 
 

(5) Approval

This statement was approved by the board on 3 December 2018.

(6) Reports

A copy of this announcement will be available on the Company's website from today www.parkgroup.co.uk and will be mailed to shareholders on or before 20 December 2018. Copies will also be available for members of the public at the Company's registered office - Valley Road, Birkenhead CH41 7ED and also at the offices of the Company's registrars, Computershare Investor Services PLC, P O Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR TIBFTMBIMMMP

(END) Dow Jones Newswires

December 04, 2018 02:01 ET (07:01 GMT)

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