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Park Group PLC  -  PKG   

Half-year Report

Released 07:00 29-Nov-2016

RNS Number : 3584Q
Park Group PLC
29 November 2016
 

 

 

 

PARK GROUP PLC

('Park' or 'the Company' or 'the Group')

 

INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2016

 

29 November 2016

 

Park Group is the UK's leading multi-retailer, gift voucher and prepaid gift card business focussed on the corporate and consumer markets. Park's business is generally seasonal and the first half of the year is traditionally loss making with the bulk of annual revenues generated in the second half.

 

 

Summary

Half Year  

 

Half Year  

Year to  


to 30.09.16  

to 30.09.15  

31.03.16  


£'000  

£'000  

£'000  





Customer billings

98,273  

92,795  

385,031  





Revenue

72,446  

72,083  

302,545  

Operating (loss)/profit

(1,585) 

(2,170) 

10,400  

(Loss)/profit before taxation

(760) 

(1,404) 

11,857  

(Loss)/profit for the period

(608) 

(1,123) 

9,688  

Dividend per share

0.95p

0.85p

2.75p

(Loss)/earnings per share

(0.33)p

(0.62)p

5.28p

 

 

Key points: Financial

 

·      Billings increased 5.9 per cent to £98.3m (2015 - £92.8m)

 

·      Seasonal pre-tax loss reduced to £0.8m (2015 - loss £1.4m)

 

·      Interest receipts rose by 7.7 per cent

 

·      Dividend raised 11.8 per cent to 0.95 p per share (2015 - 0.85 p per share)

 

·      Cash balances peaked at record £217m (2015 - £206m)

 

 

Key points: Operations 

 

·      Further good growth across the Group  

 

·      Corporate billings grew 4.0 per cent at £68.7m (2015 - £66.0m)

 

·      Consumer billings increased 10.5 per cent to £29.6m (2015 - £26.8m)  

 

·      Order books running well ahead of comparable period last year

 

·      New products making a significant impact 

 

·      Fisher Moy International Limited, acquired after period end, expected to be earnings enhancing in first full year of ownership

 

 

Laura Carstensen, non-executive Chairman, commented:

 

"The second half has started well and trading is in line with expectations.  With record cash balances, a debt free balance sheet and order books again ahead of the comparable period last year, we are confident in our positive outlook for the business."

 

 

 

Enquiries:

 

Park Group plc

 

Arden Partners plc

Tavistock

Chris Houghton

Martin Stewart

Steve Douglas

Benjamin Cryer

 

Jeremy Carey

Andrew Dunn

 

Tel: 0151 653 1700

Tel: 020 7614 5917

Tel: 020 7920 3150

 

 

 

 

INTERIM STATEMENT 2016

I am pleased to report that Park Group has delivered another solid performance, with the results for the six months to 30 September 2016 once again showing maintained momentum from previous financial periods.

Park's proactive strategy of investing to expand marketing and product development is driving this consistent performance, allowing us to deliver constantly updated, innovative products and services that resonate well with our corporate and consumer customers. Alongside our commitment to the highest standards in customer service, innovation is equally ingrained in our business and we will remain agile in these fields to enable us to continue to deliver the quality products and services that our diversifying customer base has come to expect from us.

Financial highlights

The seasonality of Park's business means that the first half of the year, although always extremely busy and important in terms of securing orders, is traditionally loss making. The period ended well, with order books across the Group ahead of the same period last year. Over 85 per cent of sales to consumers are dispatched and invoiced in the October to December period, principally from orders taken in the first few months of the calendar year.

 

The financial performance in the first half of the year delivered further growth in billings and revenue in both the consumer and corporate sides of our business.  In the six months to 30 September 2016 total billings grew 5.9 per cent to £98.3m (H1 2015 - £92.8m) while revenue increased 0.5 per cent to £72.4m (H1 2015 - £72.1m).

 

The operating loss for the first half reduced to £1.6m (H1 2015 - loss £2.2m) while interest receipts advanced 7.7 per cent to £0.83m (H1 2015 - £0.77m) reflecting higher cash balances. The pre-tax loss reduced to £0.8m (H1 2015 - loss £1.4m). Total cash balances including cash held in trust at 30 September were £198.7m (H1 2015 - £178.9m). This increase is due to the cash retention from prior year profits and improved working capital arising from increased levels of trading.  Balances continued to rise after the period end, peaking at a record £217m (2015 - £206m) at the beginning of November.  

 

The board has declared an increased interim dividend of 0.95 p per share (H1 2015 - 0.85 p per share). The dividend will be paid on 6 April 2017 to shareholders on the register on 3 March 2017.

 

Acquisition

In October, soon after the period end, Park completed the cash purchase of Fisher Moy International Limited (FMI), a specialist in corporate employee and customer engagement products and programmes. The acquisition is expected to be earnings enhancing in the first full year of ownership. FMI, a business we have worked with many times in the past and know well, will enhance further Park's position as a leading provider of reward and incentivisation programmes to the corporate market. In turn, its status as part of Park Group is also expected to assist FMI in targeting increasingly larger businesses.

 

The integration of the business into Park Group is progressing well and its performance is consistent with management expectations.

 

We continue to monitor our sectors closely for appropriate acquisition opportunities which can enhance our customer offering or technological capabilities.

 

Operations

The corporate business made further good progress supplying a wide range of gift cards, vouchers and digital reward products, as well as bespoke online systems enabling businesses to motivate and incentivise their employees and customers. Billings in the first half of the year were 4.0 per cent above the prior year at £68.7m (H1 2015 - £66.0m). Growth was achieved from new client wins, product innovation and the strength and breadth of the existing customer base. Our corporate business reached over 28,000 businesses last year in the circa £5bn voucher and gift card market (Source: UK Gift Card and Voucher Association).   

A feature of the first half performance was the ongoing strong demand from the incentive sector, where Park's products continue to secure new business and increase market share. In previous years, our results have been negatively affected by exposure to the credit sector and we have sought to mitigate this effect by successfully building sales in other sectors. Due to this altered focus, sales to the credit sector now represent less than one per cent of our total business and no longer influence Park's overall performance.

In June, we launched 'Evolve', offering instant rewards through a branded on-line platform. This innovative and cost-effective digital product allows corporate users to create and control web and smart device based programmes for their customers and staff. Over 40 businesses have already used the system and a strong pipeline of activity gives good reason for optimism.  'Engage', our scheme management portal, launched last year, has also been well received. 'Engage' allows corporate users to create and control web or smart device based programmes for their customers or staff.

Park's relationship with MasterCard continues to develop well. Customers can now use the 'Anywhere' and 'Online' prepaid cards at outlets that accept MasterCard. These products are very attractive to Park's customers, as they broaden the choice of retailers for our customers, half of whom, our research shows, do not have a credit card.

The consumer business, offering a range of vouchers, prepaid gift products and hampers, has also performed well with orders for Christmas 2016 running c 4 per cent above the level of the comparable period last year. Billings in the first half of the year increased 10.5 per cent to £29.6m (H1 2015 - £26.8m).  The success of the 'Combi' card was a feature of these first half results. 'Combi' gives customers two cards: one is our market leading Love2shop card and the other is for national retailers previously unavailable to them, including Asda, Morrisons, Primark and Sainsbury's, with Amazon and Tesco also joining the programme this year.

 

As part of our commitment to customer service enhancement, we have also improved our website functionality and developed a new mobile app to offer our customers increased flexibility and control over their accounts.

 

The marketing campaign in the consumer business for the 2017 festive season commenced in September and will run for five months. The campaign is performing well and the value of orders placed so far for next year is very encouraging.

 

Board

John Dembitz, our longest serving independent director, stepped down from the board in June as he was approaching the nine year limit for non-executive directors, set out in corporate governance guidelines. On behalf of the board, I would like to thank John for his valuable contribution to the development of the Company and we wish him well in his future endeavours.

In September, we welcomed John Gittins to the board as a non-executive director and Chair of the Audit Committee. John brings a strong track record of relevant experience, spanning more than 20 years as a Chief Financial Officer across a number of sectors and territories.  We look forward to working with John and are confident that we will benefit from his extensive experience and expertise.

We are also pleased to announce that Michael de Kare-Silver has accepted the role of Senior Independent Director and the appointment will take effect today.

Outlook

The second half has started well and trading is in line with expectations.  With record cash balances, a debt free balance sheet and order books again ahead of the comparable period last year, we are confident in our positive outlook for the business.

 

Laura Carstensen 

Chairman

29 November 2016

 

 

 

 

 

PARK GROUP PLC

 

CONSOLIDATED INCOME STATEMENT

FOR THE HALF YEAR TO 30 SEPTEMBER 2016

 

 


 

Notes

Unaudited 

Half Year 

to 30.09.16 

Unaudited 

Half Year 

to 30.09.15 

Audited 

Year to 

31.03.16 



£'000 

£'000 

£'000 






Billings


98,273 

92,795 

385,031 






Revenue


72,446 

72,083 

302,545 






Cost of sales


(66,525)

(66,972)

(274,060)






Gross profit


5,921 

5,111 

28,485 

Distribution costs


(599)

(485)

(2,909)

Administrative expenses


(6,907)

(6,796)

(15,176)

Operating (loss)/profit


(1,585)

(2,170)

10,400 






Finance income


825 

766 

1,523 






Finance costs


(66)

(Loss)/profit before taxation


(760)

(1,404)

11,857 






Taxation

2

152 

281 

(2,169)






(Loss)/profit for the period attributable to equity holders of the parent


(608)

(1,123)

9,688 






(Loss)/earnings per share

3




- basic (p)


(0.33)

(0.62)

5.28 

- diluted (p)


(0.33)

(0.62)

5.18 

 

 

All activities derive from continuing operations.

 

 

 

PARK GROUP PLC

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR TO 30 SEPTEMBER 2016


Unaudited 

Half Year 

Audited 

Year to 


to 30.09.15 

31.03.16 


£'000 

£'000 





(Loss)/profit for the period

(1,123)

9,688 

Other comprehensive income




Items that will not be reclassified to profit or loss:

Remeasurement of defined benefit pension schemes

533 

Deferred tax on defined benefit pension schemes

(96)


437 

Items that may be reclassified subsequently to profit or loss:



Foreign exchange translation differences

(18)

(21)




Other comprehensive income for the period net of tax

(18)

416 




Total comprehensive income for the period attributable to equity holders of the parent

(1,141)

10,104 













 

 

 

PARK GROUP PLC

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2016



Unaudited 

30.09.16 

Restated 

Unaudited 

30.09.15 

Audited 

31.03.16 



£'000 

£'000 

£'000 

Assets





Non-current assets





Goodwill


1,320 

1,320 

1,320 

Other intangible assets


2,916 

2,928 

3,036 

Property, plant and equipment


7,961 

8,108 

8,003 

Retirement benefit asset


1,367 

1,297 

1,390 



13,564 

13,653 

13,749 

Current assets

Inventories


14,447 

11,888 

2,182 

Trade and other receivables


8,534 

9,614 

8,729 

Tax receivable


252 

Other financial assets


500 

Monies held in trust


169,411 

167,035 

75,219 

Cash and cash equivalents


32,560 

16,385 

32,735 



225,204 

204,922 

119,365 

Total assets


238,768 

218,575 

133,114 

Liabilities





Current liabilities





Trade and other payables           


(179,829)

(168,218)

(79,022)

Tax payable


(394)

(1,019)

Provisions        


(56,319)

(52,703)

(44,767)



(236,148)

(221,315)

(124,808)

Non-current liabilities





Deferred tax liability


(181)

(273)

(181)

Retirement benefit obligation


(1,378)

(2,339)

(1,700)



(1,559)

(2,612)

(1,881)

Total liabilities


(237,707)

(223,927)

(126,689)

Net assets/( liabilities)


1,061 

(5,352)

6,425 

Equity attributable to equity holders of the parent





Share capital


3,674 

3,674 

3,674 

Share premium


6,132 

6,132 

6,132 

Retained earnings


(8,434)

(14,847)

(3,070)

Other reserves


(311)

(311)

(311)

Total equity


1,061 

(5,352)

6,425 



 

 

PARK GROUP PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Share capital

Share

 premium

 

Other 

reserves 

 

Retained 

earnings 

Unaudited

Total 

equity 


£'000

£'000

£'000 

£'000 

£'000 







Balance at 1 April 2016

3,674

6,132

(311)

(3,070)

6,425 







Total comprehensive income for the period






Loss

-

-

(608)

(608)

Other comprehensive income






Foreign exchange translation adjustments

-

-

(37)

(37)

Total other comprehensive income

-

-

(37)

(37)

Total comprehensive income for the period

-

-

 

(645)

(645)







Transactions with owners, recorded directly in equity






Equity settled share-based payment transactions

-

-

333 

333 

Dividends

-

-

(5,052)

(5,052)

Total contributions by and distribution to owners

 

-

 

-

 

 

(4,719)

 

(4,719)

 

Balance at 30 September 2016

3,674

6,132

 

(311)

(8,434)

1,061 

 

 

Balance at 1 April 2015

3,650

6,132

 

 

(311)

(9,638)

(167)







Total comprehensive income for the period






Loss

-

-

(1,123)

(1,123)







Other comprehensive income






Foreign exchange translation adjustments

-

-

(18)

(18)

Total other comprehensive income

-

-

(18)

(18)

Total comprehensive income for the period

-

-

 

(1,141)

(1,141)







Transactions with owners, recorded directly in equity






Equity settled share-based payment transactions

-

-

336 

336 

LTIP shares awarded

24

-

(24)

Dividends

-

-

(4,380)

(4,380)

Total contributions by and distribution to owners

 

24

 

-

 

 

(4,068)

 

(4,044)

Balance at 30 September 2015

3,674

6,132

 

(311)

(14,847)

 (5,352)

 

 

Balance at 1 April 2015

3,650

6,132

 

 

(311)

(9,638)

(167)







Total comprehensive income for the year






Profit

-

-

9,688 

9,688 







Other comprehensive income






Remeasurement of defined benefit pension schemes

-

-

 

533 

533 

Tax on defined benefit pension schemes

-

-

(96)

(96)

Foreign exchange translation adjustments

-

-

(21)

(21)

Total other comprehensive income

-

-

416 

416 

Total comprehensive income for the year

-

-

 

10,104 

10,104 







Transactions with owners, recorded directly in equity






Equity settled share-based payment transactions

-

-

868 

868 

LTIP shares awarded

24

-

(24)

Dividends

-

-

(4,380)

(4,380)

Total contributions by and distribution to owners

24

-

(3,536)

(3,512)







Balance at 31 March 2016

3,674

6,132

     (311)

(3,070)

6,425 

 

 

 

PARK GROUP PLC

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR TO 30 SEPTEMBER 2016

 


Notes

Unaudited 

Half Year 

to 30.09.16 

Restated 

Unaudited 

Half Year 

to 30.09.15 



£'000 

 £'000 

Cash flows from operating activities




Cash generated from/(used in) operations

4

5,605 

(6,879)

12,184 

Interest received


625 

516 

Interest paid


Tax paid


(1,119)

(760)

(2,490)

Net cash generated from /(used in) operating activities


5,111 

(7,123)

11,033 






Cash flows from investing activities




Sale of investment property and assets held for sale


42 

Proceeds from sale of investments


Purchase of intangible assets


(239)

(127)

Purchase of property, plant and equipment


(304)

(289)

Net cash used in investing activities


(543)

(365)

(1,074)






Cash flows from financing activities




Dividends paid to shareholders


(4,123)

(3,885)

(4,380)

Net cash used in financing activities


(4,123)

(3,885)

(4,380)

Net increase /(decrease) in cash and cash equivalents


445 

(11,373)

5,579 

Cash and cash equivalents at beginning of period


28,817 

23,238 

23,238 






Cash and cash equivalents at end of period


29,262 

11,865 

28,817 






Cash and cash equivalents comprise:




Cash


32,560 

16,385 

Bank overdrafts


(3,298)

(4,520)

(3,918)



29,262 

11,865 

28,817 






 

 

 

PARK GROUP PLC

 

 

SEGMENTAL REPORTING

FOR THE HALF YEAR TO 30 SEPTEMBER 2016

 


Unaudited 

Half Year 

to 30.09.16 

Unaudited 

Half Year 

to 30.09.15 

Audited 

Year to 

31.03.16 


£'000 

 £'000 

£'000 

Billings

 




Consumer

29,564 

26,753 

211,522 

Corporate

68,709 

66,042 

173,509 





External billings

98,273 

92,795 

385,031 





Consumer

Corporate

21,123 

18,501 

143,152 

Elimination

(21,123)

(18,501)

(143,152)




-

Inter-segment billings





Consumer

29,564 

26,753 

211,522 

Corporate

89,832 

84,543 

316,661 

Elimination

(21,123)

(18,501)

(143,152)





Total billings

98,273 

92,795 

385,031 





Revenue

 




Consumer

24,042 

22,379 

173,045 

Corporate

48,404 

49,704 

129,500 





External revenue

72,446 

72,083 

302,545 





Consumer

Corporate

21,123 

18,501 

143,152 

Elimination

(21,123)

(18,501)

(143,152)





Inter-segment revenue





Consumer

24,042 

22,379 

173,045 

Corporate

69,527 

68,205 

272,652 

Elimination

(21,123)

(18,501)

(143,152)





Total revenue

72,446 

72,083 

302,545 









Operating (loss)/profit

 




Consumer

(1,349)

(1,894)

6,823 

Corporate

1,095 

1,156 

6,013 

All other segments

(1,331)

(1,432)

(2,436)

(Loss)/profit before interest

(1,585)

(2,170)

10,400 





 

 

 

 

NOTES TO THE INTERIM RESULTS

 

 

(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 and accounts for the year ended 31 March 2016.  These accounting policies have been based on the current standards and interpretations expected to be effective at 31 March 2017.  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.

 

IFRS 15 Revenue from Contracts with Customers, which was released on 28 May 2014, has recently been endorsed by the EU.  The Group is still considering the impact of this standard on its financial statements including the timing of revenue recognition, income in respect of vouchers and balances on cards which will never be spent and whether revenue should be presented on a gross or net basis in respect of certain revenue streams.

 

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 IAS 34 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 2016 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 2016, 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 2016 has been calculated using an overall effective tax rate of 20.0 per cent which has been applied to the taxable income (half year to 30 September 2015 - 20.0 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:

 


Half Year 

to 30.09.16 

Half Year 

to 30.09.15 

Year to

31.03.16


£'000 

£'000 

£'000

Earnings




Total (loss)/earnings for period

(608)

(1,124)

9,688

 

 

 

 

Half Year 

to 30.09.16 

 

 

Half Year 

to 30.09.15 

 

Year to

 31.03.16

Weighted average number of shares




Basic eps - weighted average number of shares

183,706,277 

182,567,069 

183,658,227

Diluting effect of employee share options

3,544,265

Diluted eps - weighted average number of shares

183,706,277 

182,567,069 

187,202,492





Basic eps




Weighted average number of ordinary shares in issue

183,706,277 

182,567,069 

183,658,227

Eps (p)

(0.33)

(0.62)

5.28





Diluted eps




Weighted average number of ordinary shares

183,706,277 

182,567,069 

187,202,492

Eps (p)

(0.33)

(0.62)

5.18

 

 

(4) Reconciliation of (loss)/profit for the period to cash generated from/(used in) operations

 


Half Year 

to 30.09.16 


Half Year 

to 30.09.15 


Year 

to 31.03.16 


£'000 


£'000 


£'000 

(Loss)/profit for the period

(608)


(1,123)


9,688 

Adjustments for:






Tax

(152)


(281)


2,169 

Interest income

(825)


(766)


(1,523)

Interest expense



66 

Research and development tax credit



(46)

Depreciation and amortisation

705 


693 


1,382 

Impairment of other intangibles



13 

Profit on sale of assets held for sale


(3)


(4) 

Profit on sale of other investment


(2)


(1) 

Decrease in other financial assets

500 


500 


(Increase)/decrease in inventories

(12,265)


(8,702)


1,004 

Decrease in trade and other receivables

395 


1,847 


2,599 

Increase in trade and other payables

100,498 


92,729 


4,634 

Increase in provisions

11,552 


9,517 


1,581 

Increase in monies held in trust

(94,192)


(101,307)


(9,491)

Decrease in retirement benefit obligation

(299)


(299)


(497)

Translation adjustment

(37)


(18)


(21)

Share-based payments

333 


336 


631 

Cash generated from/(used in) operations

5,605 


(6,879)


12,184 

 

 

(5) Restatement of prior period figures

At 30 September 2015 whilst the group did not have a bank overdraft, it did have a cashbook overdraft due to the timing of unpresented cheques. This was incorrectly netted off cash and cash equivalents, rather than being shown as "Bank overdraft" within trade and other payables.  Previously reported figures have been restated as follows:

 


 

As reported at 

30 September 2015 

£'000 

 

Reclassification of 

cash book overdraft 

£'000 

Balance as restated at 

30 September 2015 

£'000 





Cash and cash equivalents

11,865 

4,520 

16,385 

Trade and other payables

(163,698)

(4,520)

(168,218)

 

 

(6) Approval

This statement was approved by the board on 29 November 2016.

 

 

(7) 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 19 December 2016.  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
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