Half Yearly Report

('Park' or 'the Company')

09 December 2010

Park Group plc is the UK's leading multi-redemption voucher and prepaid card business focussed on the corporate gift voucher and Christmas savings markets. The company is a leader in its field with a strong sales and service culture utilising internet technology to broaden its product offering to its very large customer base. 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.

Key points: Financial

Key points: Operations

Peter Johnson, Chairman, commented:

"The strong performance of the first period is being maintained with both the Christmas savings and corporate businesses trading ahead of last year. The company is well positioned to move ahead strongly benefiting from its innovative and attractive product ranges coupled with the exciting opportunities offered by flexecash®, the new prepaid card"

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CHAIRMAN'S INTERIM STATEMENT

I am pleased to report that Park delivered an excellent result for the six months to 30 September 2010 with both revenue and profit ahead of the equivalent period last year. Our strategy of investing to expand marketing and product development is driving performance, backed by opportunistic acquisition which broadens not only our market penetration but also our product offering. Park's use of internet technology is a vital component of this success.

Trading results

Results for the continuing operations for the six months to 30 September 2010

The board is pleased to declare an interim dividend of 0.5 pence per share (2009: 0.44 pence). It will be paid on 6 April 2011 to shareholders on the register on 4 March 2011. When added to the final dividend of 0.88 pence, declared last June, it represents a yield of approximately 5 per cent on a share price of 29 pence. This dividend yield on Park shares is also at what the board believes to be an attractive level for investors considering the growth opportunities that Park currently has through the new flexecash® card system.

Corporate activity

At the end of September we announced the sale of our Dock Road North site to a major house builder for a cash consideration of £1.815 million. After the period end we completed the acquisition of the brand names, customer and agent databases of Dublin based Celtic Hampers and Family Hampers for a cash consideration of up to €1 million, dependent on the businesses meeting certain performance criteria. The businesses do not currently offer vouchers, providing Park with an excellent platform from which to broaden its Christmas savings range by launching its market leading vouchers into the Republic of Ireland, as well as offering a springboard into the Eurozone. We do not expect the current turbulence in the Irish economy to affect the prospects of the acquired business.

Operational review

Our corporate business delivered strong performance with sales up 51 per cent to £45.1 million (2009: £29.9 million). This result accelerates the growth of previous years and is attributable to the strength and quality of our sales team who continue to provide innovative solutions to meet customer needs. We have introduced a range of new solutions for customers including reloadable cards for staff incentive schemes and cards tailored to a restricted range of retailers; sectors targeted include jewellery, toys, fashion and technology. In October last year we won a number of Love2shop gift voucher contracts. These long term contracts made a significant contribution to the results for the period under review. Corporate new business was up with an increase in the number of clients of over 5 per cent compared with the equivalent period last year.

The Christmas savings business achieved an impressive result with sales rising 37 per cent to £5.8 million. The number of agents trading increased to 110,000 from 109,000 last year and customer numbers increased to 410,000 from 400,000. Orders are substantially complete for Christmas 2010 and are currently 9 per cent above last year's amount; furthermore average customer order values increased to £401 from last year's average of £375. Highstreetvouchers.com our online gift voucher retailer, has continued to grow robustly during the period and has generated sales of £2.7 million in the half year, an increase of 75 per cent over the comparable period last year. This portal is also attractive to overseas customers who are placing orders for delivery to UK friends and family.

The campaign for Christmas 2011 is progressing well at this early stage, with improved conversion rates and raised efficiency in a turbulent media market.

In June we launched flexecash®, Park's prepaid card. It is being introduced progressively to all of our markets. In the period to the end of September cards were being supplied to 51 corporate customers with a total value of £0.5 million. Since this achievement, sales have accelerated. Currently £14 million of cards have been sold and that figure continues to build. The early indications are very encouraging and justify the substantial development cost, meticulous planning and preparation involved in delivering this innovative product.

Outlook

The first half's strong performance is being maintained with both the Christmas savings and corporate businesses trading ahead of last year. The Company is well positioned to move forward, benefiting from its innovative and attractive product ranges coupled with the exciting opportunities offered by flexecash®, the new prepaid card. In addition the recent acquisition in Ireland, which brings the Company into the Eurozone, should provide opportunities for building international sales.

Overall we look forward with confidence to delivering another period of sound performance.

Peter Johnson

Chairman

9 December 2010

PARK GROUP PLC

UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR

TO 30 SEPTEMBER 2010

PARK GROUP PLC

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR TO 30 SEPTEMBER 2010

PARK GROUP PLC

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

PARK GROUP PLC

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

PARK GROUP PLC

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

PARK GROUP PLC

UNAUDITED SEGMENTAL REPORTING FOR THE HALF YEAR TO 30 SEPTEMBER 2010

Note: Elimination of revenue represents intra-group sales of vouchers, sold by the corporate voucher business to the Christmas savings business.

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 2010. These accounting policies have been based on the current standards and interpretations expected to be effective at 31 March 2011. 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.

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 2010 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 2010, 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) Other operating income

As announced in August, Park Group plc received an amount of £1,891,000 from HM Revenue and Customs (HMRC) in settlement of a 'Fleming' claim in respect of an over declaration of output tax arising from the VAT accounting treatment of commissions paid to agents. The claim covered the period 1978 to 1996. Park also received a further net amount of £345,000 in respect of a VAT refund in respect of the years post 1996 net of clawed back input VAT previously repaid to us, in connection with flotation costs. Statutory interest of £2,547,000 was received in respect of both of these claims and professional fees of £365,000 were incurred.

For taxation purposes the amounts received in respect of the over declaration of output tax for prior years has not been treated as taxable income.

(3) Taxation

The taxation credit for the six months to 30 September 2010 has been calculated using an overall effective tax rate of 29.0 per cent which has been applied to the taxable income (half year to 30 September 2009 - 29.0 per cent). 

(4) 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:

(5) Assets held for sale

We announced on 30 September the unconditional sale of our Dock Road North site, which is held as 'Assets held for sale' with a value of £725,000 in these interim statements, for a cash consideration of £1,815,000. The sale was completed on 28 October 2010 and therefore the profit on sale will be reflected in the accounts for the full year to 31 March 2011.  

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

(7) Approval

This statement was approved by the board on 8 December 2010.

(8) 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 10 January 2011. 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.