RNS Number:2965J
Park Group PLC
06 December 2007
PARK GROUP PLC
INTERIM RESULTS FOR THE HALF YEAR
ENDED 30 SEPTEMBER 2007
Strictly embargoed until 07.00 on 6 December 2007
Summary Half Year Half Year Year to
to 30.09.07 to 30.09.06 31.03.07
Revenue #31.3m #31.4m #305.2m
(Loss)/profit before taxation from
continuing operations #(3.9)m #(2.9)m #10.1m
(Loss)/profit attributable to
equity holders #(3.4)m #(2.2)m #4.2m
Dividend per share 0.40p 0.40p 1.1p
(Loss)/earnings per share (2.06)p (1.32)p 2.58p
* Successful move to AIM, trading commenced on 26 October 2007
* Results for Christmas 2007 in line with expectations and Christmas 2008
orders currently 30% above same date last year
* Measures implemented to improve customer security and service following
discussions with Government and regulatory bodies
* Closure of our lending division completed leaving the group focused on
profitable and cash generative Christmas savings and voucher business
* Acquisition of Home Farm Hampers cleared by the OFT on 24 August 2007
and now completed, adding 5,900 agents with 13,000 customers
* Corporate incentive voucher revenue 12.7% up
* Interim dividend maintained at 0.4p
Peter Johnson, Executive Chairman, commented: 'Our marketing campaign for
Christmas 2008 began during the last week in September and responses and orders
are currently more than 30% higher than at the same time last year. This
demonstrates the popularity of our product, the strength of the Park brand, and
that the work we have done to introduce improved protection for our customers
has helped to restore confidence in the industry. We expect these measures to
contribute to an improved performance for Park in the next financial year and
beyond.'
For further information, please contact:
Peter Johnson,
Executive Chairman Jeremy Carey Alex Borrelli
Chris Houghton,
Group Managing Director John West Shore Capital
Park Group plc Tavistock Communications Tel: 020 7408 4090
Tel: 0151 653 1700 Tel: 020 7920 3150
CHAIRMAN'S STATEMENT
Following shareholder approval given at the Extraordinary General Meeting on 25
September 2007, our shares began trading on the Alternative Investment Market
(AIM) on 26 October 2007 and I am pleased to report our first set of interims as
an AIM company.
We have been working hard alongside Government and regulatory bodies over the
reported period to provide enhanced protection for our customers as part of a
reform of the way the Christmas savings industry works. On 6 June 2007 we became
founder members of the Christmas Prepayments Association Limited and on 13
August 2007 we introduced a trust account arrangement which provides added
protection for both customers and the business.
Park's business has traded successfully for 40 years and has during that period
grown to become the clear leader in our niche sector. During the half year under
review we have re-engineered our operations to create improved security for all
of our stakeholders. We strive to provide our customers with value for money
products and services which compete with the products offered by much larger
organisations in the wider market. I believe that our growth in recent years is
testimony to the fact that we offer our customers good value and excellent
customer service. The interim results reflect the expected impact on our
business of the failure of Farepak in October last year and the consequential
loss of customer confidence in the sector. The Board remains very confident of
the underlying strength of the business and is encouraged by the early
indications for Christmas 2008 that show promising signs of recovery. Orders for
next year are currently standing more than 30% ahead of last year at the same
time.
Revenue for the first half of the year to 30 September 2007 was #31.3m,
marginally below last year's #31.4m. Due to the seasonality of our business the
majority of our revenue occurs in the second half and we traditionally report a
loss in the first half. The revenue in the first half is predominantly sales of
vouchers to corporate customers. The loss before taxation for continuing
operations for the half year to 30 September 2007 amounted to #3.9m which was
#1m higher than the previous year reflecting increased promotional costs, the
cost of dealing with the aftermath of the Farepak collapse and lower interest
receipts.
Our corporate voucher business continues to perform well, with sales to the
incentive market 12.7% above the same period last year.
We have now completed the closure of our lending division leaving the group
focused on our profitable and cash generative Christmas savings and voucher
business. The strong cash flow and established business provides an ideal
platform for future development.
I am pleased to announce an unchanged interim dividend of 0.4p. This will be
payable on 7 April 2008 to shareholders on the register at close of business on
7 March 2008.
Operational Review
Christmas savings revenue for the first half of the year amounted to #3.3m which
was 20% lower than the corresponding period last year (2006: #4.1m). This
reduction is the result of lower levels of orders for Christmas 2007 than in the
prior year, due to the factors described above.
The number of agents trading for Christmas 2007 has also reduced to 94,000 from
116,000 at the same time last year with customer numbers reducing to 399,000
from 617,000 last year. Pleasingly however, average customer orders have
increased by 3.9% to #356.
Our production and distribution operations have worked well this year and
delivery of product for Christmas 2007 has now almost been completed.
This year we have introduced enhancements to our web service, balance enquiry
and payment services via Interactive Voice Recognition, which have improved
customer service and will help to reduce administration costs.
In May of this year we launched our online magazine 'myparkmag' which is now
receiving some 100,000 'unique visits' per month. We are continuing to develop
the site and add more interesting features and functionality for our customers
benefit. This year we have 44,000 agents registered to deal online. This amounts
to 42% of the total number of agents. Our online voucher shop
www.highstreetvouchers.com continues to attract increasing volumes of
business with a 119% increase in revenue and 144% increase in orders processed
to the half year. Customers use this site to order vouchers for immediate
delivery. Overall we are well positioned to capture the readiness and desire of
consumers to trade online.
Revenue generated from the sale of vouchers to corporate customers increased
2.7%, to #28.0m, when compared to the corresponding period last year. Revenue
from the incentive market increased by 12.7% to #20.4m. This growth was offset
by lower revenue generation from the bingo and credit markets. Our sales team
has continued to work well and have increased our customer base by 34%.
On 7 March 2007 we acquired a small hamper business, Home Farm Hampers Limited
from Findel plc for a cash consideration of #0.3m. This acquisition was reviewed
by the Office of Fair Trading under powers conferred by the Enterprise Act 2002.
The acquisition was cleared by the OFT on 24 August 2007. Home Farm has
currently added 5,900 agents with 13,000 customers. The current order value is
#6.8m for Christmas 2007.
Cash balances have been lower this year than last, reflecting the reduced level
of orders and resulting customer prepayments. Interest receipts have
consequently reduced by 20% to #1.2m from #1.5m last year.
Outlook
I would like to thank the customers who have remained with us during a difficult
12 months and our staff who work hard to improve the service we offer to our
customers. We have made major progress in improving both the security and
service we provide to our customers. Our marketing campaign for Christmas 2008
began during the last week in September and responses and orders are currently
more than 30% higher than at the same time last year. This demonstrates the
popularity of our product, the strength of the Park brand, and that the work we
have done to introduce improved protection for our customers has helped to
restore confidence in the industry. We expect these measures to contribute to an
improved performance for Park in the next financial year and beyond.
Peter Johnson
Chairman
6 December 2007
PARK GROUP PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR
TO 30 SEPTEMBER 2007
Half Year Half Year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Continuing operations
Revenue 31,295 31,404 305,216
Cost of sales (32,307) (32,218) (287,430)
-------- -------- --------
Gross (loss)/profit (1,012) (814) 17,786
Distribution costs (224) (199) (2,993)
Administrative expenses (3,915) (3,421) (7,988)
-------- -------- --------
Operating (loss)/profit (5,151) (4,434) 6,805
Finance income 1,242 1,514 3,319
Finance costs (1) - (3)
------- ------- -------
(Loss)/profit before taxation (3,910) (2,920) 10,121
Taxation 1,096 871 (3,492)
--------- -------- -------
(Loss)/profit from continuing (2,814) (2,049) 6,629
operations
Discontinued operations
Loss from discontinued operations (584) (130) (2,384)
after taxation
-------- ------- ------
(Loss)/profit for the period (3,398) (2,179) 4,245
attributable to equity -------- ------- ------
holders of the parent
(Loss)/earnings per share (see note 5)
- basic - continuing operations (1.70)p (1.24)p 4.03p
- basic - total (2.06)p (1.32)p 2.58p
- diluted - continuing operations (1.70)p (1.24)p 4.00p
- diluted - total (2.05)p (1.31)p 2.56p
PARK GROUP PLC
UNAUDITED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE HALF
YEAR TO 30 SEPTEMBER 2007
Half Year Half Year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
(Loss)/profit for the period (3,398) (2,179) 4,245
Actuarial losses on defined benefit
pension scheme - - (419)
Deferred tax on actuarial losses on
defined benefit pension scheme - - 126
-------- -------- --------
Net losses not recognised in income - - (293)
statement -------- -------- --------
Total recognised (expense)/income for
the period attributable to equity hol (3,398) (2,179) 3,952
ders of the parent -------- -------- --------
PARK GROUP PLC
UNAUDITED GROUP BALANCE SHEET
As at As at As at
30.09.07 30.09.06 31.03.07
#'000 #'000 #'000
Assets
Non-current assets
Goodwill 1,513 1,763 1,513
Other intangible assets 1,317 2,064 1,639
Investments 2 2 2
Investment property 277 - -
Property, plant and equipment 4,482 5,165 4,823
Deferred tax assets 1,744 2,714 1,835
-------- -------- --------
9,335 11,708 9,812
-------- -------- --------
Current assets
Inventories 8,055 10,648 447
Loans and receivables 301 1,850 1,382
Trade and other receivables 9,212 7,387 5,917
Current tax assets 1,468 1,620 -
Cash and cash equivalents 4,038 120,512 12,192
Monies held in trust 72,835 - -
Assets held for sale 700 700 815
-------- -------- --------
96,609 142,717 20,753
-------- -------- --------
-------- -------- --------
Total assets 105,944 154,425 30,565
-------- -------- --------
Liabilities
Current liabilities
Trade and other payables (117,701) (171,118) (39,395)
Current tax liabilities (280) - (350)
Provisions (23,906) (20,588) (22,077)
-------- -------- --------
(141,887) (191,706) (61,822)
-------- -------- --------
Non-current liabilities
Retirement benefit obligation (2,252) (1,766) (2,246)
-------- -------- --------
(2,252) (1,766) (2,246)
-------- -------- --------
-------- -------- --------
Total liabilities (144,139) (193,472) (64,068)
-------- -------- --------
-------- -------- --------
Net liabilities (38,195) (39,047) (33,503)
Shareholders' equity -------- -------- --------
Share capital 3,301 3,293 3,301
Share premium account 1,070 1,030 1,070
Retained earnings (42,566) (43,370) (37,874)
-------- -------- --------
Total equity attributable to equity (38,195) (39,047) (33,503)
holders of the parent -------- -------- --------
PARK GROUP PLC
UNAUDITED GROUP CASH FLOW STATEMENT
Half Year Half Year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Cash flows from operating activities
(note 6)
Cash (used in)/generated from operations (7,694) 102,808 (6,710)
Interest received 927 1,197 3,323
Interest paid (1) - (3)
Tax (paid)/received (97) 117 (186)
Net cash (used in)/generated from -------- -------- --------
operating activities (6,865) 104,122 (3,576)
-------- -------- --------
Cash flows from investing activities
Net proceeds from sale of home collected - 8,090 6,136
credit business
Proceeds from sale of non core property 128 - 1,571
Proceeds from sale of property, plant and - 1 1
equipment
Purchase of property, plant and equipment (219) (638) (365)
Purchase of intangible assets (27) - (808)
Cash acquired from business combinations - - 878
Net cash (used in)/generated from investing -------- -------- --------
activities (118) 7,453 7,413
-------- -------- --------
Cash flows from financing activities
Net proceeds from issue of ordinary share - 14 62
capital
Dividends paid to shareholders (1,171) (1,181) (1,811)
-------- -------- --------
Net cash used in financing activities (1,171) (1,167) (1,749)
-------- -------- --------
-------- -------- --------
Net (decrease)/increase in cash and cash (8,154) 110,408 2,088
equivalents -------- -------- --------
Cash and cash equivalents at beginning of 12,192 10,104 10,104
period -------- -------- --------
Cash and cash equivalents at end of period 4,038 120,512 12,192
-------- -------- --------
Cash and cash equivalents comprise:
Cash 4,038 120,512 12,192
-------- -------- --------
PARK GROUP PLC
UNAUDITED SEGMENTAL REPORTING FOR THE HALF YEAR TO 30 SEPTEMBER 2007
Half Year Half Year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Continuing operations
Revenue
Christmas Savings 3,302 4,145 216,790
Corporate Vouchers 27,993 27,259 88,426
-------- -------- --------
External revenue 31,295 31,404 305,216
Christmas Savings - 2 -
Corporate Vouchers 1 35 53
Elimination (1) (37) (53)
-------- -------- --------
Inter-segment revenue - - -
Christmas Savings 3,302 4,147 216,790
Corporate Vouchers 27,994 27,294 88,479
Elimination (1) (37) (53)
-------- -------- --------
Total revenue 31,295 31,404 305,216
Results
Christmas Savings (3,469) (3,468) 5,436
Corporate Vouchers (296) (136) 3,235
Unallocated (1,386) (830) (1,866)
-------- -------- --------
(Loss)/profit before interest (5,151) (4,434) 6,805
-------- -------- --------
NOTES TO THE ACCOUNTS
(1) Basis of preparation
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 & Accounts for the year
ended 31 March 2007. These accounting policies have been based on the current
standards and interpretations expected to be effective at 31 March 2008. 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 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.
Comparatives have been represented with respect to discontinued and continuing
operations in accordance with IFRS 5.
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
existing bank facilities available to the group.
The financial information included in this interim financial report for the six
months ended 30 September 2007 does not constitute statutory accounts as defined
in section 240 of the Companies Act 1985 and is unaudited, but subject to a
review opinion. The comparative figures for 2006 were also subject to a review
opinion. A copy of the group's statutory accounts for the year ended 31 March
2007, on which the auditors gave an unqualified opinion and did not make a
statement under section 237 of the Companies Act 1985, has been filed with the
Registrar of Companies.
(2) Monies held in trust
On 13 August 2007 a declaration of trust constituted Park Prepayments Protection
Trust to hold agents' prepayments. Park Prepayments Trustee Company Limited, as
trustee of the trust, holds this money on behalf of the agents. The conditions
of the release of this money to the group are detailed in the trust deed, which
is available at www.getpark.co.uk.
(3) Discontinued Operations
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Revenue 569 7,040 9,984
Expenses (1,434) (7,635) (13,918)
-------- -------- --------
Loss before taxation (865) (595) (3,934)
Taxation 281 465 1,550
-------- -------- --------
Loss from discontinued (584) (130) (2,384)
operations -------- -------- --------
During the six months to 30 September 2007 the group announced that it was to
close the majority of its cash lending division, comprising Imagine Finance and
Cash Reserve. Both the previous half year's and full year's figures have been
amended to include the results of these operations. Prior year
discontinued operations also include amounts in respect of the former home
collected credit business that was sold in July 2006.
Cash flows from discontinued operations
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Net cash flows from operating 1,741 (718) (2,500)
activities
Net cash flows from investing - 8,090 6,136
activities
Net cash flows from financing - - -
activities
-------- -------- --------
1,741 7,372 3,636
-------- -------- --------
(4) Taxation
The taxation credit for the six months to 30 September 2007 has been calculated
using an overall effective tax rate of 28 per cent (half year to 30 September
2006 - 27.38 per cent).
(5) Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
For diluted earnings per share, 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 earnings per share is based on the
following figures:
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Earnings
(Loss)/earnings after tax - continuing 2,814) (2,049) 6,629
operations
Loss from discontinued operations (584) (130) (2,384)
-------- -------- --------
Total (loss)/earnings for period (3,398) (2,179) 4,245
-------- -------- --------
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
Weighted average number of shares
Basic eps - weighted average number of 165,064,410 164,641,880 164,787,370
shares
Diluting effect of employee share 674,946 1,073,732 883,734
options -------- -------- --------
Diluted eps - weighted average number 165,739,356 165,715,612 165,671,104
of shares -------- -------- --------
Half year Half year Year to
to 30.09.07 to 30.09.07 31.03.07
Basic (loss)/earnings per share
Weighted average number of shares in 165,064,410 164,641,880 164,787,370
issue
Continuing operations (pence) (1.70) (1.24) 4.03
Discontinued operations (pence) (0.36) (0.08) (1.45)
-------- -------- -------
Total (pence) (2.06) (1.32) 2.58
-------- -------- -------
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
Diluted (loss)/earnings per share
Weighted average number of shares in 165,739,356 165,715,612 165,671,104
issue
Continuing operations (pence) (1.70) (1.24) 4.00
Discontinued operations (pence) (0.35) (0.07) (1.44)
-------- -------- -------
Total (pence) (2.05) (1.31) 2.56
-------- -------- -------
(6) Reconciliation of net (loss)/profit to net cash (outflow)/inflow from
operating activities:
Half year Half year Year to
to 30.09.07 to 30.09.06 31.03.07
#'000 #'000 #'000
Net (loss)/profit (3,398) (2,179) 4,245
Adjustments for:
Tax on continuing operations (1,096) (871) 3,492
Tax on discontinued operations (281) (465) (1,550)
Interest income (1,242) (1,514) (3,319)
Interest expense 1 - 3
Depreciation and amortisation 640 733 1,353
Impairment of goodwill - 459 459
Profit on sale of other assets held for (21) - ( 96)
sale
Profit on sale of property, plant and - (99) -
equipment
Decrease/(increase) in net loan book 1,081 (117) (720)
(Increase)/decrease in inventories (7,608) (9,674) 528
(Increase)/decrease in trade and other re (2,952) (943) 862
ceivables
Increase/(decrease) in trade and other 78,155 117,504 (14,769)
payables
Increase in provisions 1,829 - 2,741
Increase in monies held in trust (72,835) - -
Increase/(decrease) in retirement benefit 6 (50) 12
obligation
Share-based payments 27 24 49
-------- -------- -------
Net cash (outflows)/inflows from (7,694) 102,808 (6,710)
operating activities -------- -------- -------
(7) Approval
This statement was approved by the board on 6 December 2007.
(8) Reports
A copy of this announcement will be mailed to shareholders on 16 January 2008
and copies will 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.
Independent review report to Park Group plc
Introduction
We have been engaged by Park Group plc ("the Company") to review the condensed
set of financial statements in the half-yearly report for the six months ended
30 September 2007 which comprises income statement, statement of recognised
income and expenses, balance sheet, cash flow statement and the related
explanatory notes. We have read the other information contained in the
half-yearly report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half-yearly report in
accordance with the AIM Rules.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly report has been prepared in
accordance with the recognition and measurement requirements of IFRSs as adopted
by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly report for the
six months ended 30 September 2007 is not prepared, in all material respects, in
accordance with the recognition and measurement requirements of IFRSs as adopted
by the EU and the AIM Rules.
KPMG Audit Plc
Chartered Accountants
Liverpool
6 December 2007
This information is provided by RNS
The company news service from the London Stock Exchange
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