6th Dec 2007 07:01
Park Group PLC06 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 fromcontinuing operations £(3.9)m £(2.9)m £10.1m(Loss)/profit attributable toequity holders £(3.4)m £(2.2)m £4.2mDividend 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 forChristmas 2008 began during the last week in September and responses and ordersare currently more than 30% higher than at the same time last year. Thisdemonstrates the popularity of our product, the strength of the Park brand, andthat the work we have done to introduce improved protection for our customershas helped to restore confidence in the industry. We expect these measures tocontribute to an improved performance for Park in the next financial year andbeyond.' For further information, please contact:Peter Johnson,Executive Chairman Jeremy Carey Alex BorrelliChris Houghton,Group Managing Director John West Shore CapitalPark Group plc Tavistock Communications Tel: 020 7408 4090Tel: 0151 653 1700 Tel: 020 7920 3150 CHAIRMAN'S STATEMENT Following shareholder approval given at the Extraordinary General Meeting on 25September 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 asan AIM company. We have been working hard alongside Government and regulatory bodies over thereported period to provide enhanced protection for our customers as part of areform of the way the Christmas savings industry works. On 6 June 2007 we becamefounder members of the Christmas Prepayments Association Limited and on 13August 2007 we introduced a trust account arrangement which provides addedprotection for both customers and the business. Park's business has traded successfully for 40 years and has during that periodgrown to become the clear leader in our niche sector. During the half year underreview we have re-engineered our operations to create improved security for allof our stakeholders. We strive to provide our customers with value for moneyproducts and services which compete with the products offered by much largerorganisations in the wider market. I believe that our growth in recent years istestimony to the fact that we offer our customers good value and excellentcustomer service. The interim results reflect the expected impact on ourbusiness of the failure of Farepak in October last year and the consequentialloss of customer confidence in the sector. The Board remains very confident ofthe underlying strength of the business and is encouraged by the earlyindications for Christmas 2008 that show promising signs of recovery. Orders fornext year are currently standing more than 30% ahead of last year at the sametime. 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 themajority of our revenue occurs in the second half and we traditionally report aloss in the first half. The revenue in the first half is predominantly sales ofvouchers to corporate customers. The loss before taxation for continuingoperations for the half year to 30 September 2007 amounted to £3.9m which was£1m higher than the previous year reflecting increased promotional costs, thecost of dealing with the aftermath of the Farepak collapse and lower interestreceipts. Our corporate voucher business continues to perform well, with sales to theincentive market 12.7% above the same period last year. We have now completed the closure of our lending division leaving the groupfocused on our profitable and cash generative Christmas savings and voucherbusiness. The strong cash flow and established business provides an idealplatform for future development. I am pleased to announce an unchanged interim dividend of 0.4p. This will bepayable on 7 April 2008 to shareholders on the register at close of business on7 March 2008. Operational Review Christmas savings revenue for the first half of the year amounted to £3.3m whichwas 20% lower than the corresponding period last year (2006: £4.1m). Thisreduction is the result of lower levels of orders for Christmas 2007 than in theprior year, due to the factors described above. The number of agents trading for Christmas 2007 has also reduced to 94,000 from116,000 at the same time last year with customer numbers reducing to 399,000from 617,000 last year. Pleasingly however, average customer orders haveincreased by 3.9% to £356. Our production and distribution operations have worked well this year anddelivery of product for Christmas 2007 has now almost been completed. This year we have introduced enhancements to our web service, balance enquiryand payment services via Interactive Voice Recognition, which have improvedcustomer service and will help to reduce administration costs. In May of this year we launched our online magazine 'myparkmag' which is nowreceiving some 100,000 'unique visits' per month. We are continuing to developthe site and add more interesting features and functionality for our customersbenefit. This year we have 44,000 agents registered to deal online. This amountsto 42% of the total number of agents. Our online voucher shopwww.highstreetvouchers.com continues to attract increasing volumes ofbusiness with a 119% increase in revenue and 144% increase in orders processedto the half year. Customers use this site to order vouchers for immediatedelivery. Overall we are well positioned to capture the readiness and desire ofconsumers to trade online. Revenue generated from the sale of vouchers to corporate customers increased2.7%, to £28.0m, when compared to the corresponding period last year. Revenuefrom the incentive market increased by 12.7% to £20.4m. This growth was offsetby lower revenue generation from the bingo and credit markets. Our sales teamhas 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 Limitedfrom Findel plc for a cash consideration of £0.3m. This acquisition was reviewedby 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 hascurrently 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 levelof orders and resulting customer prepayments. Interest receipts haveconsequently 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 difficult12 months and our staff who work hard to improve the service we offer to ourcustomers. We have made major progress in improving both the security andservice we provide to our customers. Our marketing campaign for Christmas 2008began during the last week in September and responses and orders are currentlymore than 30% higher than at the same time last year. This demonstrates thepopularity of our product, the strength of the Park brand, and that the work wehave done to introduce improved protection for our customers has helped torestore confidence in the industry. We expect these measures to contribute to animproved performance for Park in the next financial year and beyond. Peter JohnsonChairman6 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 £'000Continuing operationsRevenue 31,295 31,404 305,216 Cost of sales (32,307) (32,218) (287,430) -------- -------- --------Gross (loss)/profit (1,012) (814) 17,786Distribution 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) 6,629operations Discontinued operations Loss from discontinued operations (584) (130) (2,384)after taxation -------- ------- ------(Loss)/profit for the period (3,398) (2,179) 4,245attributable 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 benefitpension scheme - - (419)Deferred tax on actuarial losses ondefined benefit pension scheme - - 126 -------- -------- --------Net losses not recognised in income - - (293)statement -------- -------- -------- Total recognised (expense)/income forthe 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 £'000AssetsNon-current assetsGoodwill 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 assetsInventories 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 -------- -------- --------LiabilitiesCurrent liabilitiesTrade 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 liabilitiesRetirement 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 6,136credit business Proceeds from sale of non core property 128 - 1,571 Proceeds from sale of property, plant and - 1 1equipment 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 62capitalDividends 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 2,088equivalents -------- -------- -------- Cash and cash equivalents at beginning of 12,192 10,104 10,104period -------- -------- -------- 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 53Elimination (1) (37) (53) -------- -------- --------Inter-segment revenue - - - Christmas Savings 3,302 4,147 216,790Corporate Vouchers 27,994 27,294 88,479Elimination (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 preparationThe financial information in this interim report has been prepared in accordancewith the International Financial Reporting Standards as adopted by the EU andthe AIM rules of the London Stock Exchange and on the basis of the accountingpolicies described in Park Group plc's Annual Report & Accounts for the yearended 31 March 2007. These accounting policies have been based on the currentstandards and interpretations expected to be effective at 31 March 2008. Thegroup does not expect there to be a significant impact on the results fromstandards, amendments or interpretations which are available for early adoptionbut which have not yet been adopted. The financial statements have been prepared under the historical costconvention, as modified by the accounting for financial instruments at fairvalue. In addition this interim financial report does not comply with IAS34Interim Financial Reporting, which is not currently required to be applied underAIM Rules. Comparatives have been represented with respect to discontinued and continuingoperations in accordance with IFRS 5. The directors are of the opinion that the financial information should beprepared on a going concern basis, in the light of current trading and theexisting bank facilities available to the group. The financial information included in this interim financial report for the sixmonths ended 30 September 2007 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 2006 were also subject to a reviewopinion. A copy of the group's statutory accounts for the year ended 31 March2007, 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) Monies held in trustOn 13 August 2007 a declaration of trust constituted Park Prepayments ProtectionTrust to hold agents' prepayments. Park Prepayments Trustee Company Limited, astrustee of the trust, holds this money on behalf of the agents. The conditionsof the release of this money to the group are detailed in the trust deed, whichis 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 9,984Expenses (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 yeardiscontinued operations also include amounts in respect of the former homecollected 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)activitiesNet cash flows from investing - 8,090 6,136activitiesNet cash flows from financing - - -activities -------- -------- -------- 1,741 7,372 3,636 -------- -------- -------- (4) TaxationThe taxation credit for the six months to 30 September 2007 has been calculatedusing an overall effective tax rate of 28 per cent (half year to 30 September2006 - 27.38 per cent). (5) Earnings per shareBasic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary sharesoutstanding during the period. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The calculation of basic and diluted earnings per share is based on thefollowing 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) 6,629operationsLoss 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 31.03.07Weighted average number of sharesBasic eps - weighted average number of 165,064,410 164,641,880 164,787,370sharesDiluting effect of employee share 674,946 1,073,732 883,734options -------- -------- --------Diluted eps - weighted average number 165,739,356 165,715,612 165,671,104of shares -------- -------- -------- Half year Half year Year to to 30.09.07 to 30.09.07 31.03.07Basic (loss)/earnings per shareWeighted average number of shares in 165,064,410 164,641,880 164,787,370issueContinuing operations (pence) (1.70) (1.24) 4.03Discontinued 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 shareWeighted average number of shares in 165,739,356 165,715,612 165,671,104issueContinuing operations (pence) (1.70) (1.24) 4.00Discontinued 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 fromoperating 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) 4,245Adjustments for:Tax on continuing operations (1,096) (871) 3,492Tax on discontinued operations (281) (465) (1,550)Interest income (1,242) (1,514) (3,319)Interest expense 1 - 3Depreciation and amortisation 640 733 1,353Impairment of goodwill - 459 459Profit on sale of other assets held for (21) - ( 96)saleProfit on sale of property, plant and - (99) -equipmentDecrease/(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) 862ceivablesIncrease/(decrease) in trade and other 78,155 117,504 (14,769)payablesIncrease in provisions 1,829 - 2,741Increase in monies held in trust (72,835) - -Increase/(decrease) in retirement benefit 6 (50) 12obligationShare-based payments 27 24 49 -------- -------- -------Net cash (outflows)/inflows from (7,694) 102,808 (6,710)operating activities -------- -------- ------- (7) ApprovalThis statement was approved by the board on 6 December 2007. (8) ReportsA copy of this announcement will be mailed to shareholders on 16 January 2008and 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 Park Group plc ("the Company") to review the condensedset of financial statements in the half-yearly report for the six months ended30 September 2007 which comprises income statement, statement of recognisedincome and expenses, balance sheet, cash flow statement and the relatedexplanatory notes. We have read the other information contained in thehalf-yearly report and considered whether it contains any apparent misstatementsor material inconsistencies with the information in the condensed set offinancial statements. This report is made solely to the Company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the Companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The half-yearly report is the responsibility of, and has been approved by, thedirectors. The directors are responsible for preparing the half-yearly report inaccordance with the AIM Rules. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the EU. The condensed set offinancial statements included in this half-yearly report has been prepared inaccordance with the recognition and measurement requirements of IFRSs as adoptedby the EU. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset 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 ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly report for thesix months ended 30 September 2007 is not prepared, in all material respects, inaccordance with the recognition and measurement requirements of IFRSs as adoptedby the EU and the AIM Rules. KPMG Audit PlcChartered Accountants Liverpool 6 December 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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