20th Dec 2006 07:01
Park Group PLC20 December 2006 NEWS RELEASE INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2006 20 December 2006 Summary Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 Revenue £34.8m £24.5m £233.4m(Loss)/profit before taxationfrom continuing operations £(4.9)m £(4.6)m £2.0m Loss attributable to equity holders £(2.2)m £(5.6)m £(17.5)mDividend per share 0.40p 0.36p 1.1pLoss per share - - (10.64)p * Strong growth in all areas of the business * Revenue up 42.1% to £34.8 million * Corporate voucher sales up 35% year on year * Cash savings order book up 26% at £210 million * 58.6% increase in cash balances; £120 million at half year end * Interim dividend up 11% to 0.40p * Debt free balance sheet Peter Johnson, Chairman, commented: 'I would like to thank all our customers andstaff who remained loyal to the Group throughout an unprecedented period ofmedia attention as a result of Farepak. I have already said publicly that 'onebad apple does not make the whole barrel bad' and I would like to reiterate thiscomment." We are very satisfied with the robust growth across the Group achieved in thefirst six months of the year coupled with the continuing drive to reduceoverheads. The Board is confident that the Group is on track for a satisfactoryyear which will be in line with market expectations." Enquiries: Peter Johnson, Executive ChairmanChris Houghton, Group Managing Director Park Group plc - Tel: 0151 653 1700 Issued on behalf of Park Group plc by Tavistock Communications Limited (ContactJeremy Carey, John West, tel: 020 7920 3150) CHAIRMAN'S STATEMENT Against a backdrop of heightened media attention surrounding the Christmassavings industry, I am pleased to report that in our 40th year of trading ourinterim results show strong progress. Our revenue has increased by 42.1% to£34.8 million for the half year to 30 September 2006, with all of our continuingoperations showing a significant advance in revenue against the previous year. The seasonality of our business, with the majority of our Christmas basedturnover occurring in the second half, means that we traditionally report a lossin the first half. The loss before tax from continuing operations for the halfyear to 30 September 2006 was £4.9 million, 7.1% higher than the previous year,largely reflecting the increased level of overhead and promotional activitysupporting a much larger business than the prior year. Our Agency Christmasorder book shows a 25.7% growth year on year, which will see this season's salesgrow to £210 million, some £43 million above that achieved last year. We have now largely completed the closure of our home collected credit businesswhich was announced with last year's results and at the half year £1.4 millionof the impairment provision has been released back to profit, leaving a lossattributable to shareholders of £2.2 million, an improvement over the £5.6million loss reported in the corresponding period last year. Following a successful first half I am pleased to announce an increase in theinterim dividend to 0.40p from 0.36p last year. This will be payable on 10 April2007 to shareholders on the register at the close of business on 7 March 2007. We have an extremely strong cash flow evidenced by the 58.6% increase in cashbalances which amounted to over £120 million at the half year. Cash balancespeaked at £151 million during November and the Group will retain significantcash balances throughout the year. OPERATIONAL REVIEW Cash Savings Division The external revenue of this division to 30 September 2006 was 33.6% higher thanthe previous period at £31.4 million. The seasonal operating loss reported bythis business increased to £4.3 million from £3.9 million as increased operatingcosts associated with the management of a larger customer database werepartially offset by increased corporate voucher revenues. Orders for Christmas 2006 in our Park and Country brands finished 9.6% higherthan the previous year. With the acquisition of the Family Hamper business inFebruary 2006, our current order position shows a pleasing 25.7% growth year onyear. The acquisition of 'Family' has been a great success. The timing of thisacquisition suited our operational planning and we were well prepared for theproduction and distribution of product to our new customers. During the first half of the year we have continued to develop the service weoffer to our customers and have enhanced our on-line systems which are provingto be popular with our customers. This year over 25% of our customers tradedwith us via the web compared with 9% in the previous year. We have been operating the www.highstreetvouchers.com web site for the past 12months. During that period we have been refining our operating and productionprocesses and have achieved £1.4 million turnover via this route. The Internet is providing a number of opportunities to improve communicationwith customers and add new products and services to enhance the already highstandard of customer service and satisfaction. We now have 116,000 agents (35%up on 2005) serving 617,000 customers, again a healthy increase on last year.Our recruitment campaign for Christmas 2007 began in September and initialresponses to our television commercial have been encouraging. In particular,enquiries via the Internet have been at an all time high. Our corporate voucher business has continued to increase market share withturnover increasing by 34.9% to £29m at the half year. The continued developmentof our 'Love2reward' brand has resulted in sales to the incentive marketincreasing by 57.9% year-on-year. Our 'Love2travel' voucher which is redeemed via our ATOL bonded travel agency isprogressing well with turnover to the corporate market more than doublingyear-on-year. The travel voucher is also sold via our Christmas catalogues wherevolumes are increasing and orders for delivery this Christmas are up 191.0%compared with last year. Cash Lending Division Following the announcement of the disposal of our home collected credit businessin July of this year, our lending activity has been greatly reduced. We continueto operate a small monthly direct debit loan book and loan broking business,Imagine Finance. During the first half of the year turnover for the continuing operationincreased by 237.7% to £3.4 million from £1.0 million at the same stage lastyear. The division incurred an increased operating loss of £2.1 million at thehalf year from £1.6 million last year after writing off £0.5 million of goodwillassociated with the acquisition of Imagine Finance. In order to reduce costs and improve efficiency, we have taken the decision torestructure Imagine Finance. These changes will improve our service andperformance from this business in the future. Farepak On 13 October 2006 Farepak Food and Gifts Limited, our largest competitor in theChristmas Savings market, was placed into administration, resulting in the lossof the Christmas savings of its c.130,000 customers. The Department of Trade and Industry promoted a goodwill gesture, co-ordinatedby the Family Fund Charity, to provide some value to those affected in time forChristmas. We donated £1 million of High Street Gift Vouchers to the Fund, whichwas positively received by all involved, and the Fund eventually raised £6.8million. The Fund has been despatched by us to Farepak agents in the form of ourHigh Street Gift Vouchers. The circumstances surrounding the collapse are currently being investigated bythe Department of Trade and Industry and potential new regulation of theindustry is being investigated by the Office of Fair Trading and FinancialServices Authority. We have taken proactive steps to reassure customers and finda workable solution to regulation. As an initial step we have created 3subsidiaries outside the Group's banking guarantee structure to ensure thatcustomers payments are ring fenced and will only be used for the supply of goodsand services to those customers. This action has been taken pending any newregulatory changes and is intended to reassure our customers. The failure of Farepak has reinforced our position as market leaders in theChristmas savings industry. This, with the steps we have taken to furtherdemonstrate the security of customers funds with Park, will provide the basisfrom which we will improve our service offering and exploit the new routes tomarket that now exist, enabling us to reach more customers and add new products. AIM We are in the process of changing our Memorandum and Articles of Association inpreparation for a move to the AIM market. It is anticipated that anExtraordinary General Meeting will be called early in the New Year to approvethe change in Articles which will be followed by the proposal to move to AIMfollowing the publication of our Report and Accounts for the year ending 31March 2007. Outlook I would like to thank all our customers and staff who remained loyal to theGroup throughout an unprecedented period of media attention as a result ofFarepak. I have already said publicly that 'one bad apple does not make thewhole barrel bad' and I would like to reiterate this comment. We are verysatisfied with the robust growth across the Group achieved in the first sixmonths of the year coupled with the continuing drive to reduce overheads. TheBoard is confident that the Group is on track for a satisfactory year which willbe in line with market expectations. Peter JohnsonChairman20 December 2006 PARK GROUP PLC CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR TO 30 SEPTEMBER 2006 Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 £'000 £'000 £'000Continuing operations Revenue 34,819 24,499 233,415Cost of sales (37,024) (26,517) (222,664) --------- --------- ---------Gross (loss)/profit (2,205) (2,018) 10,751Distribution costs (199) (142) (1,942)Administrative expenses (3,989) (3,271) (8,775) --------- --------- --------- Operating (loss)/profit (6,393) (5,431) 34 Finance income 1,514 884 1,948Finance costs - (10) (12) --------- --------- ---------(Loss)/profit before taxation (4,879) (4,557) 1,970 --------- --------- ---------Taxation 1,336 1,591 (317)(Loss)/profit from continuing operations (3,543) (2,966) 1,653 --------- --------- --------- Discontinued operations Profit/(loss) from discontinued operations after taxation 1,364 ( 2,620) (19,141) --------- --------- ---------Loss for the period attributable to equity (2,179) (5,586) (17,488)holders of the parent --------- --------- --------- Loss per share (see note 3) - basic - - (10.64)p- diluted - - (10.57)p PARK GROUP PLC STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE HALF YEAR TO 30 SEPTEMBER 2006 Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 £'000 £'000 £'000 Loss for the period (2,179) (5,586) (17,488) Actuarial losses on defined benefit pension scheme - - (291)Deferred tax on actuarial losses on defined benefit pension scheme - - 87 --------- --------- ---------Net losses not recognised in income statement - - (204) --------- --------- --------- Total recognised expense for the period attributable to equity holders of the parent (2,179) (5,586) (17,692) --------- --------- --------- PARK GROUP PLC GROUP BALANCE SHEET As at As at As at 30.09.06 30.09.05 31.03.06 £'000 £'000 £'000Assets Non-current assets Goodwill 1,763 2,993 2,222Other intangible assets 2,064 1,097 2,030Investments 2 2 2Investment property - 1,494 -Property, plant and equipment 5,165 5,408 5,160Deferred tax assets 2,714 7,675 2,649 --------- --------- --------- 11,708 18,669 12,063 --------- --------- ---------Current assets Loans and receivables 1,850 15,414 1,732Inventories 10,648 8,182 974Trade and other receivables 7,387 9,858 7,113Current tax assets 1,620 1,464 466Cash and cash equivalents 120,512 75,976 10,104Assets held for sale 700 700 7,492 --------- --------- --------- 142,717 111,594 27,881 --------- --------- --------- --------- --------- ---------Total assets 154,425 130,263 39,944 --------- --------- --------- Liabilities Current liabilities Trade and other payables (171,118) (151,692) (54,481) Provisions (20,588) - (19,336) --------- --------- --------- (191,706) (151,692) (73,817) --------- --------- ---------Non-current liabilities Retirement benefit obligation (1,766) (1,643) (1,815) Deferred tax liability - (24) - --------- --------- --------- (1,766) (1,667) (1,815) -------- --------- --------- --------- --------- ---------Total liabilities (193,472) (153,359) (75,632) --------- --------- ---------Net liabilities (39,047) (23,096) (35,688) --------- --------- ---------Shareholders' equity Share capital 3,293 3,283 3,291Share premium account 1,030 969 1,018Retained earnings (43,370) (27,348) (39,997) --------- --------- ---------Total equity attributable to equity holders of (39,047) (23,096) (35,688)the parent --------- --------- --------- PARK GROUP PLC GROUP CASH FLOW STATEMENT Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 £'000 £'000 £'000Cash flows from operating activities (note 4) Cash generated from operations 102,808 72,969 6,834Interest received 1,197 678 1,951 Interest paid - (10) (12)Tax received/(paid) 117 (906) (1,281) --------- --------- ---------Net cash generated from operating activities 104,122 72,731 7,492 --------- --------- --------- Cash flows from investing activities Proceeds from sale of property, plant and equipment 1 - -Proceeds from sale of assets held for sale 8,090 - -Purchase of property, plant and equipment (638) (162) (467)Purchase of intangible assets - (120) 134 --------- --------- ---------Net cash generated/(used) in investing activities 7,453 (282) (333) --------- --------- --------- Cash flows from financing activities Net proceeds from issue of ordinary share capital 14 - 57Dividends paid to shareholders (1,181) (1,167) 1,806) --------- --------- ---------Net cash used in financing activities (1,167) (1,167) (1,749) --------- --------- -------- --------- --------- ---------Net increase in cash and cash equivalents 110,408 71,282 5,410 --------- --------- --------- Cash and cash equivalents at beginning of period 10,104 4,694 4,694 --------- --------- --------- Cash and cash equivalents at end of period 120,512 75,976 10,104 --------- --------- --------- Cash and cash equivalents comprise: Cash 120,512 75,976 10,104 --------- --------- --------- PARK GROUP PLC SEGMENTAL REPORTING FOR THE HALF YEAR TO 30 SEPTEMBER 2006 Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 £'000 £'000 £'000Continuing operations Revenue Cash savings 31,371 23,478 230,223Cash lending 3,448 1,021 3,192 --------- --------- ---------External revenue 34,819 24,499 233,415 Cash savings 45 314 2,198Cash lending - - -Elimination (45) (314) (2,198) --------- --------- ---------Inter-segment revenue - - - Cash savings 31,416 23,792 232,421Cash lending 3,448 1,021 3,192Elimination (45) (314) (2,198) --------- --------- ---------Total revenue 34,819 24,499 233,415 Results Cash savings (4,265) (3,856) 3,512Cash lending (2,128) (1,575) (3,478) --------- --------- ---------(Loss)/profit before interest (6,393) (5,431) 34 Notes (1) Basis of preparation The financial information in this interim report has been prepared in accordancewith the Listing Rules of the Financial Services Authority and on the basis ofthe accounting policies described in Park Group plc's Annual Report & Accountsfor the year ended 31 March 2006. These accounting policies have been based onthe current standards and interpretations expected to be effective at 31 March2007. The group does not expect there to be a significant impact on the resultsfrom standards, amendments or interpretations which are available for earlyadoption but which have not yet been adopted. The financial statements have been prepared under the historical cost conventionexcept for share-based payment charges which are measured at fair value,property assets held for sale which are measured at fair value less costs tosell and loan receivables which are measured using the measurement rules as setout in IAS39. In addition this interim financial report does not comply withIAS34 Interim Financial Reporting, which is not currently required to be appliedunder the Listing Rules. The financial information included in this interim financial report for the sixmonths ended 30 September 2006 does not constitute statutory accounts as definedin section 240 of the Companies Act 1985 and is unaudited, but subject to areview opinion. The comparative figures for 2005 were also subject to a reviewopinion. A copy of the group's statutory accounts for the year ended 31 March2006, on which the auditors gave an unqualified opinion and did not make astatement under section 237 of the Companies Act 1985, has been filed with theRegistrar of Companies. (2) Taxation The taxation credit for the six months to 30 September 2006 has been calculatedusing an overall effective tax rate of 27.38 per cent (year to 31 March 2006 -16.09 per cent). (3) Earnings per share As in previous years the board considers it misleading, due to the seasonalnature of the business, to include in the half year statement earnings per shareinformation. (4) Reconciliation of loss to net cash inflow from operating activities: Half Year Half Year Year to to 30.09.06 to 30.09.05 31.03.06 £'000 £'000 £'000Net loss (2,179) (5,586) (17,488)Adjustments for: Tax on continuing operations (1,336) (2,439) 317Tax on discontinued operations - - 3,733Interest income (1,514) (884) (1,948)Interest expense - 10 12Depreciation and amortisation 733 646 1,750Impairment of goodwill 459 - 2,194Profit on sale of property, plant and equipment (99) - -(Increase)/decrease in net loan book (117) 1,021 9,385Increase in inventories (9,674) (7,497) (289)Increase in trade and other receivables (943) (4,726) (1,902)Increase in trade and other payables 117,504 92,376 11,113(Decrease)/increase in retirement benefit (50) 20 (99)obligation Share-based payments 24 28 56 --------- --------- ---------Net cash inflows from operating activities 102,808 72,969 6,834 --------- --------- --------- (5) Approval This statement was approved by the board on 19 December 2006. (6) Reports A copy of this announcement will be mailed to shareholders on 22 January 2007and copies will be available for members of the public at the company'sregistered office - Valley Road, Birkenhead CH41 7ED and also at the offices ofthe company's registrars, Computershare Investor Services PLC, P O Box 82, ThePavilions, Bridgwater Road, Bristol BS99 7NH. Independent review report to Park Group plc Introduction We have been engaged by the company to review the financial information set outon pages 5 to 11 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin 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 forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. KPMG Audit PlcChartered AccountantsLiverpool20 December 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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