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Sector
Industrials
Size
Small Cap
Market Cap £71.7m
Enterprise Value £51.2m
Revenue £106.9m
Position in Universe 1150th / 1826

Park Group PLC - Half-year Report

Tue 29th November, 2016 7:00am
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 oneper 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 OFCHANGES 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


-

9

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
The company news service from the London Stock Exchange
END
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