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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Park Grp. | LSE:PKG | London | Ordinary Share | GB0006710643 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 79.00 | 76.50 | 81.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPKG
RNS Number : 8739H
Park Group PLC
13 June 2017
NEWS RELEASE
PARK GROUP PLC
("Park", "Park Group" or "the Company")
13 June 2017
Preliminary Results for the Year Ended 31 March 2017
Summary
Park Group is the UK's leading provider of value-added prepaid gift, reward and savings products, to corporate and consumer markets. Sales are delivered through innovative leading edge digital channels, a direct sales force and a network of agents.
Financial highlights
-- 4.6 per cent rise in operating profit to GBP10.9m (2016 - GBP10.4m) -- 4.2 per cent growth in profit before tax to GBP12.4m (2016 - GBP11.9m) -- 5.1 per cent advance in billings to GBP404.5m (2016 - GBP385.0m)
-- Proposed final dividend raised to 1.95p per share (2016 - 1.90p) making a total dividend for the year up 5.5 per cent to 2.90p per share (2016 - 2.75p per share)
-- Total cash balances peaked at GBP217m (2016 - GBP206m). Year end cash balance was GBP31.4m (2016 - GBP28.8m) with a further GBP83.0m (2016 - GBP75.2m) of monies held in trust
Operational highlights
-- Ongoing delivery against strategy - Maintained the growth of the first half and delivered another positive trading performance for the year as a whole
-- Focus on technology continues - Over 90 per cent of total orders now taken online, compared with just 10 per cent in 2008
Corporate business
-- Another strong performance with billings rising by 6.3 per cent to GBP187.7m (2016 - GBP176.7m)
-- 'Evolve' digital reward platform (launched in June 2016) proving successful, with over 165 corporate clients using the web portal to date. Post period end, the platform's reach was expanded to service international customers (Love2shop Worldwide, launched May 2017).
-- Acquisition of Fisher Moy International (FMI) in October 2016 provided a good fit and integration of this business is progressing well
Consumer business
-- Billings within the consumer business increased by 4.0 per cent to GBP216.8m (2016 - GBP208.4m)
-- Number of customer accounts grew by 6.3 per cent to over 168,000 (2016 - 158,000) and customer numbers rose to 431,000 (2016 - 429,000) while the average customer order value improved 3.9 per cent to GBP508 (2016 - GBP489).
-- New mobile app for Christmas savings customers launched
-- Park is now a licensed issuer of Mastercard products - allows Park to issue products faster and with greater flexibility, whilst operating more efficiently
-- Orders for Christmas 2017 are again ahead of the previous year at this stage in the cycle
CEO Succession
-- Chris Houghton, Park's Chief Executive Officer, has indicated his intention to retire. A comprehensive process will be put in place to appoint a suitable successor.
Laura Carstensen, Chairman, commented: "The current year has started well as we have, again, maintained the progress of the previous period. The outlook for our corporate and consumer businesses is positive, with order books ahead of their position at the same time last year. We will continue to deliver against our strategy, focusing on excellent customer service and product innovation, to grow our customer bases and broaden the range of products and services we can offer to them."
For further information please contact:
Hot Features
Premium
Park Group plc Arden Partners Tavistock Communications
plc
Chris Houghton Steve Douglas Andrew Dunn
Martin Stewart Benjamin Cryer Jeremy Carey
Sophie Praill
Tel: 0151 653 Tel: 020 7614 Tel: 020 7920
1700 5920 3150
Chairman's Statement
I am delighted to announce another good set of results from Park with pleasing performances from both the corporate and consumer businesses.
Park's corporate business has grown over a comparatively short period to be one of the UK's leading providers of multi-redemption gift cards, vouchers and digital reward propositions. This division supplies approximately 31,000 businesses with a range of products and services, often tailor-made. These are used to reward and motivate each client business' own employees and customers.
The consumer business provides customers with a reliable, effective and convenient way to budget for the festive season over a 45 week period. Today it offers its 431,000 customers a range of gifts and multi retailer gift cards and vouchers, which can be used at thousands of high street outlets and online, as well as more traditional products, thereby helping to deliver a more stress-free Christmas to hundreds of thousands of families.
Our objective is to be the pre-eminent provider of value-added prepaid gift, reward and savings products to both the corporate and consumer markets, meeting customers' needs with high quality service and the products they want. In pursuit of this objective, Park has transformed itself over recent years, as it has seized the opportunities presented by technology, to innovate in line with changing markets and customer demands. Today, over 90 per cent of new customer orders for Christmas 2017 have been taken online, compared with 80 per cent last year and just 10 per cent in 2008. By ceaselessly investing in innovation and keeping pace with the digital revolution, Park is now well placed to reap the rewards of the world-class digital platforms it has developed.
The Group's strategy has been to generate organic growth in its core businesses through innovation and excellent customer service, but alongside this strategy, Park also carefully examines potential best-fit acquisitions which can add capabilities to enhance its offering, or to open up new geographies or markets. This was demonstrated in October 2016, as Park successfully completed the cash purchase of Fisher Moy International, a specialist in employee and customer engagement products and programmes.
Financial performance
Park Group's profit before taxation rose by 4.2 per cent in the year to 31 March 2017, reaching GBP12.4m (2016 - GBP11.9m) while operating profit grew to GBP10.9m (2016 - GBP10.4m). Total billings increased by 5.1 per cent to GBP404.5m (2016 - GBP385.0m) while revenue was also ahead at GBP310.9m (2016 - GBP302.5m). Billings, as highlighted in previous reports, is a more appropriate measure of the level of activity of the Group than revenue.
Park is a cash generative business with a strong, debt free balance sheet. The amount of cash held by the Group increased, but returns from that cash were below last year's level as money market rates reduced. As a result, finance income was at a similar level to last year at GBP1.5m (2016 - GBP1.5m).
Dividend
The board is recommending raising the final dividend to 1.95p per share (2016 - 1.90p) making a total dividend for the year of 2.90p per share (2016 - 2.75p) up 5.5 per cent. Park has a progressive dividend policy with increases linked to cash generation and general business performance. It is noteworthy that the total dividend has more than doubled over the last seven years, reflecting the board's confidence in the business' performance and the position and success of Park's offering in each market. Shareholder approval will be sought at the Annual General Meeting (AGM) to be held on 21 September 2017 to pay the final dividend on 2 October 2017 to shareholders on the register on 25 August 2017. The ordinary shares will be marked ex-dividend on 24 August 2017 as a consequence.
Corporate and social responsibility
Park is committed to the support and development of its local communities in Birkenhead and the Wirral and is proud to be a founder patron of the Wirral Youth Zone, which opened in April 2017 and is known locally as 'The Hive.' The Hive offers a wide range of activities for young people aged between eight and 19 years (25 for those with a disability) including: dance, sport, fitness, music, media, life skills and enterprise. In addition, the Hive has been approached with offers of work and personal development opportunities within Park. We offer apprenticeships to our local communities, remain a regular contributor to local charities and are a long-term supporter of All Together Now, a free newspaper for people with disabilities, from across the North West of England and North Wales.
During the year we have also implemented an employee intensive driver awareness course, which has garnered awards from Wirral Borough Council in 'Best Business' and 'Best Individual' categories, and implemented a cycle to work scheme to boost our employees' health and reduce our carbon footprint. During the period we have also taken steps to raise awareness of mental health issues and have implemented specialist training within our workforce.
Chief Executive Officer succession
After more than thirty years of service, leading the business through a successful evolution of its customer offering, Chris Houghton, our Chief Executive Officer, has indicated his intention to retire. A comprehensive process will begin immediately to appoint his successor and Chris has indicated that he will remain in the role until a suitable successor has been identified, appointed and is in place. Whilst there is no retirement date to report as yet, I can confirm that he will remain as Chief Executive Officer for at least a year from today. This timeframe allows the Company to instigate a well-planned and orderly handover period.
People
Park's success depends on its people. They are motivated by a desire to be best in class, delivering excellence to customers and value to our shareholders, while building a business that holds integrity, respect, innovation and service excellence as its core values. Their commitment and dedication is greatly appreciated and I would like to thank them on behalf of the Park board.
Outlook
The current year has started well as we have, again, maintained the progress of the previous period. The outlook for our corporate and consumer businesses is positive, with order books ahead of their position at the same time last year.
We will continue to deliver against our strategy, focusing on excellent customer service and product innovation, to grow our customer bases and broaden the range of products and services we can offer to them.
Park has developed world-class, successful platforms which are digital, adaptive, scalable and growing in popularity. This gives us confidence in our ability to deliver another strong performance in the current year.
Laura Carstensen
Chairman
13 June 2017
Chief Executive's Review
Introduction
This has been another year of progress across Park's wide range of specialist products and services. The Company has maintained its growth record and delivered further steady increases in the key metrics of billings, profit and cash generation. Park's businesses, serving both the consumer and corporate sectors, have continued to expand their customer bases while maintaining extremely high levels of service and introducing innovative new products.
Continuing focus on technology
Park's progress has been characterised by the successful manner in which the Group has embraced new technologies to enable it to develop and deliver state-of-the-art digital products and services to its customers. Our consumer savings business now serves its hundreds of thousands of customers principally through the internet and mobile telephony.
Many customers no longer want to speak to a sales assistant or call centre, but prefer to self-serve and manage the enquiry and order management process themselves, at a time of day or night which suits them. Although the degree of voice contact with customers is diminishing, Park continues to gauge their interest and concerns through focus groups and many other feedback mechanisms. These are essential elements of our marketing process and ensure that customer preferences and reactions are collated and well understood. A highly effective medium for communicating with users and assessing concerns, Park's 'Ask Wanda' virtual assistant, holds some 500 answers to possible customer questions covering a wide range of topics. Our customer communications have now been expanded to include 'Live Chat' which enables enquirers to receive responses, not just from us but also other customers, in real time.
Customer interaction with Park has changed dramatically over the past decade. Previously, a consumer customer would perhaps see one of our television advertisements and respond by telephoning to request a brochure. This may have led to a sale or possibly just a request for further information. Today, with the advances in digital connectivity, many prospective customers respond immediately to our television advertising by logging on to Park's websites, selecting products and placing orders, while also perhaps setting up a direct debit for future payments and confirming delivery arrangements. The complete selection and order process can now be completed within minutes using a digital device from anywhere in the world.
Social media continues to be a significant and growing component of our communication with customers and visitors to our web sites. Facebook remains the most popular channel and we now have over 100,000 followers compared with 72,000 12 months ago. Facebook provides an effective communication tool while also providing excellent market research as we monitor, review and respond to user comment and reaction. In addition, it gives us early warning of any issues that require attention, should they arise in user discussions. During the year, approximately GBP5m of orders were generated by Park's Facebook page alone and we will continue to develop social media channels to build on this success.
The corporate business provides customised incentive and reward schemes to its thousands of customers using advanced digital technologies. The programmes provided allow users to manage their rewards via mobile devices, giving them easy access and real time updates on their spending and cash balances.
Park's annual capital expenditure on IT runs at approximately GBP600,000 with a total spend, including technical support, in the region of GBP3.6m. This is a significant investment and commitment for a business of our size. The Company has had its ISO27001 accreditation renewed; meaning that we meet this international standard describing best practice for an information security management system.
One of the most significant advances in Park's history was the introduction in 2010 of the flexecash(R) prepaid card. This innovative product represented a major step forward for the business and moved it into areas which previously had not been accessible. Since launch, flexecash(R) cards have had over GBP527m of value loaded, with 98 brands accepting the card through 13,000 UK outlets. The card is available alongside the Love2shop voucher, which is supported by 168 brands at 20,000 outlets. In Ireland, 48 brands with a total of 566 stores accept the voucher.
Technology does not stand still and Park has utilised the latest advances to move the flexecash(R) concept even further forward, through the development of e-codes, which provide a digital representation of a flexecash(R) card. These 14 character digital codes deliver a totally encrypted and unique path to provide customers with the means to make instant purchases from our website. We believe that digital products, such as e-codes, account for only some five per cent of the business to business (B2B) incentive and reward market at the moment. The growth potential is therefore very exciting and Park has the technology, systems and products to capitalise on this opportunity.
A further important development has been the online acceptance of flexecash(R). New retailers who accept our cards online currently include Argos.co.uk and Virgin Experiences.
Aside from the benefits our technological innovations are bringing to our corporate and consumer customers and the increasing levels of business this generates, a further advantage of Park's transition into a modern, digital business, has been in allowing us to operate much more efficiently and keep tighter control of costs. The cost to us of opening a new account is now close to half that of 2011, while the cost of servicing a retained account has fallen some 70 per cent during the same time frame.
Park utilises the cutting edge of modern technology to maintain a successful heritage which has always been based on understanding our customers and delivering outstanding service to them. We remain committed to keeping pace with technology as it evolves and will continue to look for ways to better serve our customers.
Strategy
Park's growth and success is based on its delivery against a consistent strategy, which has remained broadly unchanged over recent years:
-- to enhance our retailer proposition; -- to grow our multichannel offering; -- to expand the customer base; and, -- to develop and exploit our infrastructure.
Our overall strategic priority is to generate organic growth from expanding our customer base via product enhancement and new product development, as well as entering new markets that fit our core proposition of being a leading value-added prepaid savings, gifts and reward product provider. We will also carefully consider acquisition opportunities as they arise, provided they meet our strict market and financial objectives.
The acquisition of Fisher Moy International (FMI) in October 2016 met our strategic objectives, providing a good fit with our corporate business and integration of this business is progressing well. FMI is a strategic brand engagement consultancy with over 30 years' experience. It works with a number of blue-chip clients including Close Brothers, Huawei, Inchcape, Logitech and LV. Specialising in the creation of events, roadshows and conferences, as well as targeted incentive and reward schemes, FMI helps businesses to communicate more closely with customers and employees. The acquisition will give Park the opportunity to engage with a wide range of public companies to offer our extensive range of incentive and reward products, as well as offering a physical presence in the South of England. Also, FMI's status as part of Park, a publicly quoted business with a long and successful track record, should also add the prestige, comfort and transparency necessary for FMI to target increasingly larger corporate clients.
Corporate business
The corporate business, under the brand Love2shop Business Services, is the UK's largest provider of multi-redemption gift cards, vouchers and digital reward propositions, principally to the incentive and reward markets. Love2shop Business Services offers an innovative and sophisticated range of reward solutions and on-line programme management systems that are used to motivate, retain, reward and recognise employees and customers. The UK Gift Card & Voucher Association, an independent trade body, estimates that the market for its members' products has achieved double digit growth over the past five years, and is now estimated to be worth over GBP5.6bn per year, with the B2B element of the market estimated to represent 54 per cent of the total.
Park's reward and incentivisation products, unlike its competitors, are processed on its own flexecash(R) processing network, which is linked to many of the UKs best-known retailers. This gives tremendous flexibility and we have developed a comprehensive suite of cards and digital codes, which vary depending upon clients' individual requirements - be that branding, remote value activation, the ability to exchange value for on-line spending, options to redeem value for holidays, or cards that allow users to add their own funds at a discount, amongst many other alternatives. This in-house innovation, capability and associated flexibility has enabled us to grow significantly over the last few years.
Our corporate business serves over 31,000 organisations, supplying programmes and products to reward and incentivise staff and customers alike. Park treats each corporate customer as a unique entity, understanding that all businesses and end recipients are different. A product which works well for one customer does not necessarily work for another. We therefore always aim to provide as much reward choice and flexibility as possible and can match bespoke programmes to specific client requirements.
During the year
The corporate business delivered another strong performance with encouraging advances in billings and profit. Billings increased by 6.3 per cent to GBP187.7m (2016 - GBP176.7m) and operating profit rose by 20.6 per cent to GBP7.2m (2016 - GBP6.0m).
One of Love2shop Business Services' KPIs is client retention. During the year under review, client retention improved from 83 per cent last year to an impressive 86 per cent. The majority of corporate customers have been with Park for many years, others may be new to the business and perhaps only require a particular scheme for a single occasion. Major new clients joining Park during the year included Akzo Nobel, EDF, Office For National Statistics, Royal & Sun Alliance and Scottish Power.
The acquisition of FMI in October provides an exciting opportunity for our corporate operations. FMI has already led to some early stage new opportunities for Park and we look forward to fully integrating the business and driving the enlarged Group forward.
Product development
Product development within the corporate business concentrates on devising new, sophisticated applications to meet increasing customer demand. Our 'Evolve' platform was launched in June 2016 and has been very well received, with over 165 clients using the web portal to date. 'Evolve' is a digital reward medium that provides instant and branded digital reward codes to customers and employees alike. It provides an easy, quick, totally branded and cost effective reward solution to businesses that are looking to reward their employees or customers, who might be on the move or in remote locations. The recipient is offered an expansive range of reward options to choose from, including retailer e-codes, physical cards, holidays and merchandise. A number of major organisations including Travis Perkins and Vodafone are already on board, with many more in the pipeline. 'Evolve' represents mainly new business, although there are some customers who have chosen to migrate from physical cards and vouchers to this digital platform.
A further milestone for 'Evolve' was achieved in May 2017, after the year end, as we expanded its capabilities and began to offer our rewards products to a global audience, via the establishment of 'Love2shop Worldwide.' This will allow Park to provide its reward, recognition, benefits and wellbeing services to the worldwide employee and customer engagement markets. Phase one of the launch will allow digital reward codes to be exchanged by intended recipients for a vast array of country-specific rewards. These include vouchers, gift cards, physical gifts, holidays, experiences, e-codes, music downloads, e-books and much more. This new international service will be offered immediately to Park's existing UK corporate clients who have employees and customers overseas, before meeting wider market demand and actively promoting the service in new territories during phase two of the rollout.
'Everyday Benefits', our employee voluntary benefit product, continues to expand its offering. The launch of an enhanced 'Everyday Benefits' package has been successful with an encouraging level of sales. The range has been extended to include named gift cards, dining out, days out and cinema ticket offers, amongst a broad range of other benefit options.
Love2shop Holidays, Park's full service travel agency provides another avenue of redemption for the Love2shop brand. The business has continued to grow during the year with bookings and revenue increasing by over 10 per cent. The operation is now able to provide its service online, which will further boost its appeal.
Consumer business
Park has been helping families prepare and budget for Christmas for decades, allowing them to save in a secure, controlled and structured way, free of last minute financial concerns. This long-established process of regular payments, allows customers to plan and prepare for their Christmas expenditure over many months and they appreciate the way the programme smooths their spending and overcomes any uncertainty or short term financial worry. Our consumer business therefore has an excellent record of delivering growth, even in uncertain times.
Customers purchase gift cards, vouchers, hampers or other gift products through a 45-week installment plan, with everything delivered in time for Christmas. While the structure of the process has changed little over the years, the range of products and the ways in which customers interact with Park have developed beyond all recognition.
Each Christmas marketing campaign includes a carefully targeted television advertising and wider marketing programme, which commences more than a year in advance of the festive season and peaks in the first calendar quarter. The campaign is carefully structured to deliver optimum value and a significant element of Park's promotional effort is now through the digital channels of text and email, which are highly effective, inexpensive and offer much more targeted channels of communication. This digital focus, combined with television advertising and a reduction in the use of less effective, more traditional media, has proved most successful and has delivered good growth in customer numbers.
The ever increasing use of digital technology is providing customers with a fast, efficient and user friendly interface with Park, while also positioning the business at the leading edge of internet usage.
During the year
The consumer business grew in the year under review, reflecting the quality of its existing product ranges and the successful introduction of new products. Billings within the consumer business increased by 4.0 per cent to GBP216.8m (2016 - GBP208.4m) while operating profit reduced 5.3 per cent to GBP6.5m (2016 - GBP6.8m) reflecting changes in product mix, continued investment in our product range and services, as well as increased voucher print costs. The number of customer accounts increased by 6.3 per cent to over 168,000 (2016 - 158,000) and customer numbers increased to 431,000 (2016 - 429,000) while the average customer order value improved 3.9 per cent to GBP508 (2016 - GBP489).
The increasing consumer use of the internet and handheld devices, coupled with our focus on the development of technology and digital channels, continues to revolutionise ordering behaviour. Over the past year, approximately 49 per cent of completed orders were placed via the Company's websites, an increase of over two per cent above the level of the previous year.
In the year to 31 March 2017 close to 80 per cent of new customer orders for Christmas 2016 were placed online with 20 per cent by phone or post. This compares with 2008 when only 10 per cent came via the internet with the balance placed manually. In 2008 Park received approximately 260,000 customer interactions via the internet and all were through desktop computers. In 2017 the number of interactions has grown to 3.3m and the desktop share has fallen to 17 per cent. Mobile telephony is now the most popular means of communication with Park, comprising 69 per cent of orders, with 14 per cent attributable to tablet users.
Our Irish business continued to make progress and introduced the Love2shop Mastercard during the year which was well received, with orders in the territory rising by 8.7 per cent.
Total orders for Christmas 2017 are again ahead of last year at this stage in the cycle.
Product development
In January we launched a mobile application (app) for Christmas savings customers, reflecting their preference for this means of communication. The app has been very well received during its test marketing phase and is already generating new business. The app is a platform for the long term and we believe it will deliver sustainable growth.
Park's relationship with Mastercard continues to strengthen. Park's 'Your Choice' card (formerly the 'Anywhere' card) is a Mastercard which allows users to make purchases from any retailer, including online retailers, that accepts Mastercard, not just those that accept the Love2shop brand. Because the card offers the freedom to shop at an expanded number of outlets, customers are prepared to pay a small premium for a preloaded 'Your Choice' card.
In January 2017, Park became a licensed issuer of Mastercard products. This was an important strategic development as it now allows Park to be fully responsible for end-to-end settlement with Mastercard, without the need to involve external programme managers or issuing banks, giving us the ability to react rapidly and flexibly in servicing customer requirements, as well as operating more efficiently ourselves. The first product to be offered was a digital card issued to customers for online use at a select number of retail outlets, including John Lewis, Argos and Debenhams. Our intention is to expand the offering later this year to include physical cards, for use at any retailer accepting Mastercards, both online and in-store.
Summary
This has been another year of progress as our strategy continues to bear fruit and drive consistent growth across the Group. The purchase of FMI reflects our interest in making the right acquisition when the opportunity arises and this acquisition is already generating additional opportunities for us. Product development, innovation and customer service remain at the heart of Park Group's operations and are arguably more important today than at any time in our 50 year history.
Our corporate and consumer businesses have delivered another year of growth and both operations are well positioned to make further advances in the current year. The speed of technical advance in our marketplace is rapid and our information technology teams are at the forefront of innovation, ensuring that customers can interact with Park using the latest internet and digital developments.
Park looks forward with confidence as we continue to develop exciting new products and platforms, enabling us to expand into new markets and we are in a strong position to capitalise on future opportunities as they arise.
Chris Houghton
Chief Executive Officer
13 June 2017
Financial Review
Profit from operations
The group's operations are divided into two operating segments:
-- consumer, which represents the group's sales to consumers, utilising its Christmas savings offering; and
-- corporate, comprising the group's sales to businesses, offering primarily sales of the Love2shop voucher, flexecash(R) cards and other retailer vouchers to businesses for use as staff and customer rewards/incentives, marketing aids and prizes and all online sales.
All other segments comprise central costs and property costs.
Billings have increased when compared to the prior year by 5.1 per cent to GBP404.5m, with revenue increasing on the same basis by 2.8 per cent to GBP310.9m. The increase in revenue is smaller than the increase in billings year on year, due to the higher proportion of billings arising from flexecash(R) cards. Revenue earned from the sale of flexecash(R) cards is recognised differently from all other customer billings, as explained below.
Revenue and margin from sales of Love2shop vouchers and flexecash(R) cards are generated from both operating segments. Operating profit is detailed below:
2017 2016 Change
GBP'000 GBP'000 GBP'000
------------------- -------- -------- --------
Consumer 6,460 6,823 (363)
------------------- -------- -------- --------
Corporate 7,231 5,997 1,234
------------------- -------- -------- --------
All other segments (2,810) (2,420) (390)
------------------- -------- -------- --------
Operating profit 10,881 10,400 481
------------------- -------- -------- --------
Operating profit for the year ended 31 March 2017 has increased by GBP0.5m to GBP10.9m.
In the consumer business, customer billings have increased by 4.0 per cent to GBP216.8m. Revenue has also increased by 2.5 per cent to GBP174.2m. The increase in billings of GBP8.4m primarily reflects the higher level of customer prepayment orders fulfilled for Christmas 2016 at GBP214.3m (Christmas 2015 - GBP205.4m), offset by a reduction in income from warehousing and repackaging activities of GBP0.5m. Billings in respect of flexecash(R) cards totalled GBP43.6m (2016 - GBP38.9m). Operating profit at GBP6.5m has decreased by GBP0.4m from that achieved in the prior year. This is due to a change in the product mix for prepayment customers to lower margin products which offset the gains made in the overall billings growth accompanied with the loss of income from warehousing and repackaging activities.
In the corporate business, customer billings have increased by GBP11.1m (6.3 per cent) in the year to GBP187.7m. Revenue has increased by 3.1 per cent to GBP136.7m. Growth in billings in the incentive sector was again strong, up GBP9.7m (8.7 per cent) in the year with online sales up GBP1.6m (6.6 per cent) at GBP25.5m. The improvement in operating profit of GBP1.2m to GBP7.2m reflects the growth in billings and a small improvement in margin arising from a change in the product mix. Billings in respect of flexecash(R) cards totalled GBP62.0m (2016 - GBP51.7m).
The increased costs in other segments of GBP0.4m over the amount for the prior year arises from Mastercard issuer start up costs GBP0.2m and increased salary costs of GBP0.2m.
Finance income
Finance income declined slightly to GBP1.47m from GBP1.52m. Average total cash held by the group, including cash held in trust during the year increased by 11 per cent to GBP155m (2016 - GBP140m), however the yield achieved on this higher cash balance was adversely affected by a further decline in interest rates.
Taxation
The effective tax rate for the year was 19.9 per cent (2016 - 18.3 per cent) of profit before tax. The lower rate in the prior year was due to the release of an overprovision made in respect of earlier years.
Earnings per share
Basic earnings per share (EPS) increased to 5.38p from 5.28p.
Dividends
The board has recommended a final dividend of 1.95p per share. An interim dividend of 0.95p per share was paid on 6 April 2017. Subject to approval of the final dividend at the AGM, the total dividend for 2017 will be 2.90p per share representing an increase of 5.5 per cent over the prior year.
Cash flows
Cash flows from operating activities, at GBP9.9m, were GBP2.3m lower than the prior year. The prior year cash flows benefited from an improved working capital inflow from inventory, receivables and payables, offset by timing differences on the movement of monies from cash held in trust. In addition, the growth of cash held in the E money Trust of GBP4.9m (2016 - GBP4.2m) was also higher.
At the end of March 2017 GBP34.2m (2016 - GBP32.7m) of cash and cash equivalents was held by the group. This was GBP1.5m higher than the prior year. The prior year balance was depressed by GBP2.0m, as monies held within the Park Prepayments Trustee Company Limited in respect of the Christmas 2016 season was not received by the group until 1 April 2016.
An amount of GBP0.2m (2016 - GBP0.5m) was held as deposits with a maturity period of greater than three months but less than 12 months. In addition, GBP59.0m (2016 - GBP56.1m) was held by the Park Prepayments Trustee Company Limited. The trust holds payments received in respect of orders for delivery the following Christmas. The conditions for the release of this money to the group are detailed in the trust deed, which is available at www.getpark.co.uk. In addition, at 31 March 2017, the group held GBP24.0m (2016 - GBP19.1m) of cash in the Park Card Services Limited E money Trust (PCSET) to support the e-money float in accordance with regulatory requirements.
The total amount of cash and deposits net of any overdraft position held by the group combined with the monies held in trust has increased in the year to GBP114.6m from GBP104.5m as at 31 March 2016. These total balances peaked at just under GBP217m in the year, representing an increase of over GBP11m from last year. This was due to the higher level of cash receipts into the Park Prepayments Protection Trust (PPPT) in respect of the consumer business and the growth in the corporate business.
Provisions
At the year end, provisions had increased to GBP46.2m from GBP44.8m. This was mainly due to an increase in the amounts provided in respect of flexecash(R) cards of GBP2.1m offset by a decrease in the provision for unspent vouchers of GBP0.7m. The value of unspent vouchers included in the provision, arises primarily from sales in the corporate business.
Accounting policies
Revenue recognition
Revenue from cards is recorded differently to revenue from paper vouchers and comprises the fees earned based on customer billings, recognised when the value loaded on the card has been redeemed. Where cards are sold to businesses for onward gifting to consumers with no right of redemption, revenue also includes an estimate of projected balances remaining on the card at expiry. The total amount included in this year's income statement as revenue from flexecash(R) cards is GBP12.8m (2016 - GBP8.8m).
Pensions
The group continues to operate two defined benefit pension schemes, where pensions at retirement are based on service and final salary. These schemes are now closed to future accrual of benefit arising from service with the group. These schemes have a net pension surplus of GBP0.9m based on the valuation under IAS19 performed at 31 March 2017 (2016 - deficit of GBP0.3m).
The group has recognised an income of GBP1,000 (2016 - cost of GBP146,000) in the income statement. In addition the group has recognised re-measurements in the statement of comprehensive income (SOCI) of a gain of GBP0.5m (2016 - gain of GBP0.4m) net of tax.
In the year ended 31 March 2017, contributions by the group to the schemes totalled GBP0.7m (2016 - GBP0.7m). The latest actuarial valuations performed as at 31 March 2013 indicated that one scheme had a technical provisions deficit (reflecting the liabilities to pay pension benefits in relation to past service as they fall due) of GBP3.8m and one had a surplus on the same basis of GBP0.6m. The triannual actuarial valuation as at 31 March 2016 is due to finalised shortly. Future group contributions to the scheme that is in deficit are expected to be GBP0.7m per annum.
Martin Stewart
Group Finance Director
13 June 2017
Risk factors
Financial risks
Risk area Potential impact Mitigation
------------------ ------------------------- -----------------------------
Group funding The group, like The group manages
many other companies, its capital to safeguard
depends on its ability its ability to operate
to continue to service as a going concern.
its debts as they Whilst the group
fall due and to has net current liabilities,
have access to finance it has access to
where this is necessary. funds for working
capital from the
PPPT for a defined
period in the year,
although the group
has not used this
facility in either
of the last two years.
This enables it to
operate without bank
borrowings.
In addition the group
has a high level
of visibility of
future revenue streams
from its consumer
business. The funding
requirements of the
business are continually
reforecast to ensure
that sufficient liquidity
exists to support
its operations and
future plans.
------------------ ------------------------- -----------------------------
Treasury risks The group has significant The group treasury
funds on deposit policy ensures that
and as such is exposed funds are only placed
to interest rate with and spread between
risk, counterparty high quality counterparties
risk and exchange and where appropriate
rate movements following any exchange rate
the commencement exposure is managed
of operations in to minimise any potential
Ireland. impact.
------------------ ------------------------- -----------------------------
Banking system Disruption to the The group seeks wherever
banking system would possible to offer
adversely impact the widest possible
on the group's ability range of payment
to collect payments options to customers
from customers and to reduce the potential
could adversely impact of failure
affect the group's of a single payment
cash position. route.
------------------ ------------------------- -----------------------------
Pension funding The group may be The group's pension
required to increase schemes are closed
its contributions to future benefit
to cover any funding accrual related to
shortfalls. service. Funding
rates are in accordance
with the agreements
reached with the
trustees after consultation
with the scheme actuary.
------------------ ------------------------- -----------------------------
Financial services The business model The group has a regulatory
and other market may be compromised team that monitors
regulation by changes in existing and enforces compliance
regulation or by with existing regulations
the introduction and keeps the group
of new regulation. up to date with impending
Possible new regulation regulation. The group
could include a shares the objectives
requirement to ring of Government in
fence funds for treating customers
vouchers sold to fairly and in the
consumers. This protection of customer
could adversely prepayments. The
affect the group's group operates a
cash position. number of trusts
to safeguard funds
held on behalf of
customers. In the
event of new regulation
being introduced
that requires additional
cash to be segregated,
the group has access
to other potential
sources of funds,
if required.
------------------ ------------------------- -----------------------------
Credit risks Failure of one or Customers are given
more customers and an appropriate level
the risk of default of credit based on
by credit customers their trading history
due to reduced economic and financial status,
activity. a prudent approach
is adopted towards
credit control.
Credit insurance
is used in the majority
of cases where customers
do not pay in advance.
------------------ ------------------------- -----------------------------
Operational risks
Risk area Potential impact Mitigation
---------------------- --------------------------- ------------------------------
Business continuity Failure to provide The group plans
and IT systems adequate service and tests its business
levels to customers, continuity procedures
retail partners in preparation for
or other suppliers, catastrophic events
resulting in a and for the existence
failure to maintain of counterfeit vouchers
services that generate or cards.
revenue.
Our focus is on
There is a risk the elimination
that an attack of any single point
on our infrastructure of failure in our
by an individual IT systems. Our
or group could critical infrastructure
be successful and has been designed
impact the availability to prevent unauthorised
of critical systems. access and reduce
the likelihood and
impact of a successful
attack.
The group maintains
three separate data
centres in relation
to its core infrastructure
to ensure that service
is maintained in
the event of a disaster
at its primary data
centre. Developed
software is extensively
tested prior to
implementation.
We also manage the
risk of malicious
attacks on our infrastructure
by continuously
monitoring our systems.
---------------------- --------------------------- ------------------------------
Loss of key management The group depends Existing key appointments
on its directors are rewarded with
and key personnel. competitive remuneration
The loss of the packages including
services of any long term incentives
directors or other linked to the group's
key employees could performance and
damage the group's shareholder return.
business, financial
condition and results.
---------------------- --------------------------- ------------------------------
Relationships with The group is dependent The group has a
high street and upon the success dedicated team of
online retailers of its Love2shop managers whose role
voucher and flexecash(R) it is to ensure
card. These products that the group's
only operate provided products have a
the participating full range of retailers.
retailers continue They also work closely
to accept them with all retailers
as payment for to promote their
goods or services businesses to Park's
provided. The failure customers who utilise
of one or more Park's vouchers
participating retailers and cards to drive
could make these forward incremental
products less attractive sales to their retail
to customers. outlets. Contracts
which provide minimum
notice periods for
withdrawal are in
place with all retailers
and are designed
to mitigate any
potential impact
on Park's business.
---------------------- --------------------------- ------------------------------
Failure of the The failure of Wherever possible
distribution network the distribution the group seeks
network during to utilise a wide
the Christmas period, range of geographically
for example a Post spread carriers
Office strike, to mitigate the
road network disruption failure of a single
or fuel shortages operator.
could adversely
impact the results
and reputation
of Park's brands.
---------------------- --------------------------- ------------------------------
Brand perception Adverse market Ongoing investment
and reputation perception in relation in television advertising.
to the group's Operation of a process
products or services, of continual review
for example, following of all marketing
the collapse of material and websites
a competitor. This to promote transparency
could result in to customers.
a downturn in demand
for its products Extensive testing
and services. and rigorous internal
controls exist for
all group systems
to maintain continuity
of online customer
service.
---------------------- --------------------------- ------------------------------
Promotional activity The success of Detailed management
the group's annual processes that are
promotional campaign designed to optimise
is essential to the cost of recruiting
ensure the continued are in place. The
recruitment of effectiveness of
customers. Failure each individual
to recruit would television advert
result in loss is assessed separately
of revenue to the and future plans
group. Promotional amended where appropriate.
activity must also
be
cost effective.
---------------------- --------------------------- ------------------------------
Competition Loss of margins The group has a
or market share broad base of customers
arising from increased and no single customer
activity from competitors. represents more
than 3 per cent
of total customer
billings.
Significant resources
are dedicated to
developing and maintaining
strong relationships
with customers and
to developing new
and innovative products
which meet their
precise needs.
---------------------- --------------------------- ------------------------------
Park Group plc
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR TO 31 MARCH 2017
2017 2016
GBP'000 GBP'000
Billings 404,512 385,031
---------- ----------
Revenue 310,927 302,545
Cost of sales (280,758) (274,060)
---------- ----------
Gross profit 30,169 28,485
Distribution costs (2,940) (2,909)
Administrative expenses (16,348) (15,176)
---------- ----------
Operating profit 10,881 10,400
Finance income 1,472 1,523
Finance costs (2) (66)
---------- ----------
Profit before taxation 12,351 11,857
Taxation (2,452) (2,169)
---------- ----------
Profit for the year attributable
to equity holders of the parent 9,899 9,688
---------- ----------
Earnings per share (see note
7)
: basic 5.38p 5.28p
: diluted 5.29p 5.18p
Park Group plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR TO 31 MARCH 2017
2017 2016
GBP'000 GBP'000
Profit for the year 9,899 9,688
Other comprehensive income
Items that will not be reclassified
to profit or loss:
Remeasurement of defined benefit
pension schemes 572 533
Deferred tax on defined benefit
pension schemes (97) (96)
-------- --------
475 437
-------- --------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (28) (21)
Other comprehensive income for the
year net of tax 447 416
-------- --------
Total comprehensive income for the
year attributable to equity holders
of the parent 10,346 10,104
-------- --------
Park Group plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017
As at As at
31.03.17 31.03.16
GBP'000 GBP'000
Assets
Non-current assets
Goodwill 2,202 1,320
Other intangible assets 2,682 3,036
Property, plant and
equipment 7,688 8,003
Retirement benefit
asset 1,827 1,390
14,399 13,749
---------- ----------
Current assets
Inventories 2,632 2,182
Trade and other receivables 9,096 8,729
Other financial assets 200 500
Monies held in trust 83,018 75,219
Cash and cash equivalents 34,236 32,735
129,182 119,365
---------- ----------
Total assets 143,581 133,114
---------- ----------
Liabilities
Current liabilities
Trade and other payables (82,602) (79,022)
Tax payable (1,272) (1,019)
Provisions (46,164) (44,767)
---------- ----------
(130,038) (124,808)
---------- ----------
Non-current liabilities
Deferred tax liability (194) (181)
Retirement benefit
obligation (924) (1,700)
---------- ----------
(1,118) (1,881)
---------- ----------
Total liabilities (131,156) (126,689)
---------- ----------
Net assets 12,425 6,425
---------- ----------
Equity attributable
to equity holders
of the parent
Share capital 3,687 3,674
Share premium 6,137 6,132
Retained earnings 2,912 (3,070)
Other reserves (311) (311)
Total equity 12,425 6,425
---------- ----------
Park Group plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained Total
capital Premium reserves earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2016 3,674 6,132 (311) (3,070) 6,425
Total comprehensive income
for the year
Profit - - - 9,899 9,899
Other comprehensive income
Remeasurement of defined
benefit pension schemes - - - 572 572
Tax on defined benefit
pension schemes - - - (97) (97)
Foreign exchange translation
adjustments - - - (28) (28)
--------- --------- ----------- ----------- --------
Total other comprehensive
income - - - 447 447
--------- --------- ----------- ----------- --------
Total comprehensive income
for the year - - - 10,346 10,346
--------- --------- ----------- ----------- --------
Transactions with owners,
recorded directly in equity
Equity settled share-based
payment transactions including
tax - - - 701 701
Exercise of share options - 5 - - 5
LTIP shares awarded 13 - - (13) -
Dividends - - - (5,052) (5,052)
--------- --------- ----------- ----------- --------
Total contributions by
and distribution to owners 13 5 - (4,364) (4,346)
--------- --------- ----------- ----------- --------
Balance at 31 March 2017 3,687 6,137 (311) 2,912 12,425
--------- --------- ----------- ----------- --------
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
--------- --------- ----------- ----------- --------
Other reserves relate to the acquisition of a minority interest in a subsidiary.
Park Group plc
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR TO 31 MARCH 2017
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 9,903 12,184
Interest received 1,540 1,405
Interest paid (1) (66)
Tax paid (2,258) (2,490)
-------- --------
Net cash generated from operating
activities 9,184 11,033
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 1 -
Sale of investment property and
assets held for sale - 43
Proceeds from sale of investments - 9
Purchase of intangible assets (370) (599)
Purchase of property, plant and
equipment (347) (527)
Purchase of investments in subsidiaries (876) -
Net cash used in investing activities (1,592) (1,074)
Cash flows from financing activities
Proceeds from exercise of share
options 5 -
Dividends paid to shareholders (5,052) (4,380)
Net cash used in financing activities (5,047) (4,380)
-------- --------
Net increase in cash and cash
equivalents 2,545 5,579
-------- --------
Cash and cash equivalents at beginning
of period 28,817 23,238
-------- --------
Cash and cash equivalents at end
of period 31,362 28,817
-------- --------
Cash and cash equivalents comprise:
Cash 34,236 32,735
Bank overdrafts (2,874) (3,918)
-------- --------
31,362 28,817
-------- --------
NOTES TO THE PRELIMINARY RESULTS
(1) Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS's) as adopted by the European Union (EU) including International Financial Reporting Interpretations Committee (IFRIC) interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Park Group plc is incorporated and domiciled in the United Kingdom. The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value where required by IAS 39 Financial Instruments: Recognition and Measurement. The Group and Company financial statements are presented in sterling and all values are rounded to the nearest thousand (GBP'000) except where otherwise stated.
The accounting policies have been applied consistently to all periods presented in these financial statements and by all Group entities.
(2) Going concern
The Group's business activities, together with factors likely to affect its future development, performance and position, are set out in the Chief Executives Review. The financial position of the Group, its cash flows, liquidity and solvency position and financial risks are described in the Financial Review.
The Group's forecasts and projections, taking into account reasonably possible changes in trading performance and customer behaviour, show that the Group has sufficient financial resources to fund the business for the foreseeable future despite the Group's net current liabilities. Funds are available for working capital purposes as permitted under the terms of the PPPT. The Group's working capital requirements are dependent upon a continuing level of prepaid sales to corporate customers and, at certain times during the year, amounts drawn from the PPPT to meet its working capital requirements. The Group's positive cash flow from its ongoing customer base, together with the capability to drawdown funds from the PPPT at certain times of the year, enables it to operate without reliance on any external funding. The Group continues to trade profitably and early indications for growth in the current year are positive. Accordingly, the directors continue to adopt the going concern basis in preparing the consolidated financial statements.
(3) Changes to International Financial Reporting Standards
Interpretations and standards which became effective during the year
The following accounting standards and interpretations, that are relevant to the Group, became effective during the period:
IAS 16 & Clarification of Acceptable Methods 1 Jan
IAS 38 of Depreciation and Amortisation 2016
(amendment)
IAS 27 Equity Method in Separate Financial 1 Jan
Statements (amendment) 2016
IAS 1 Disclosure Initiative (amendment) 1 Jan
2016
IFRS 10, Investment Entities: Applying
IFRS 12 the Consolidation Exception (amendment) 1 Jan
& IAS 28 2016
Adoption of these amendments and interpretations to standards has not had a material impact upon the group's financial performance or position.
Interpretations and standards which have been issued and are not yet effective
The following standards have been adopted by the EU but are not yet effective for the year ended 31 March 2017 and have not been applied in preparing the financial statements. Those standards that have relevance to the Group are mentioned below:
Effective
from:
IAS 7 Disclosure Initiative (amendment) 1 Jan
2017
IAS 12 Recognition of Deferred Tax Assets 1 Jan
for Unrealised Losses (amendment) 2018
IFRS 2 Classification and measurement
of share based payment transactions 1 Jan
2018
IFRS 9 Financial Instruments 1 Jan
2018
IFRS 16 Leases 1 Jan
2019
The directors anticipate that the adoption of these standards and interpretations in future periods will not have a material impact on the financial statements when the relevant standards and interpretations come into effect.
IFRS 15 Revenue from Contracts with Customers was adopted by the EU in September 2016. The board of directors is still considering the impact of this standard on the Group's 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 recognised on a gross or net basis in respect of certain revenue streams.
(4) Accounting policies
The financial information in this preliminary announcement has been prepared in accordance with the accounting policies described in the annual report and accounts for the year ended 31 March 2016. The annual report and accounts for the year ended 31 March 2016 can be found on our website at www.parkgroup.co.uk.
(5) Segmental analysis
All other segments are those items relating to the corporate activities of the Group which it is felt cannot be reasonably allocated to either business segment.
The amount included within the other segments/elimination column reflects vouchers sold by the corporate segment to the consumer segment. They have been included in other segments/elimination so as to show the total revenue for both segments.
At the beginning of the period under review, the business and assets of MaximB2B Limited were transferred to our corporate business. Segmental figures for billings, revenue and profit have been adjusted in the prior year to reflect the fact that this business is now solely within the corporate segment.
All
All other other Restated
segments/ 2017 segments/ 2016
Consumer Corporate elimination Total Consumer Corporate elimination Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Billings
External
billings 216,771 187,741 - 404,512 211,522 173,509 - 385,031
Inter-segment
billings - 148,066 (148,066) - - 143,152 (143,152) -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total billings
as reported
at 31 March
2016 211,522 316,661 (143,152) 385,031
Reclassification
of MaximB2B (3,170) 3,170 - -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total billings 216,771 335,807 (148,066) 404,512 208,352 319,831 (143,152) 385,031
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Revenue
External
revenue 174,184 136,743 - 310,927 173,045 129,500 - 302,545
Inter-segment
revenue - 148,066 (148,066) - - 143,152 (143,152) -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total revenue
as reported
at 31 March
2016 173,045 272,652 (143,152) 302,545
Reclassification
of MaximB2B (3,170) 3,170 - -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total revenue 174,184 284,809 (148,066) 310,927 169,875 275,822 (143,152) 302,545
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Inter-segment sales are entered into under normal
arm's length commercial terms and conditions.
Result
Segment
operating
profit/(loss)
as reported
at 31 March
2016 6,823 6,013 (2,436) 10,400
Reclassification
of MaximB2B - (16) 16 -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Segment
operating
profit/(loss) 6,460 7,231 (2,810) 10,881 6,823 5,997 (2,420) 10,400
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Finance
income 1,472 1,523
Finance
costs (2) (66)
--------- ------------------------
Profit
before
taxation 12,351 11,857
Taxation (2,452) (2,169)
--------- ------------------------
Profit 9,899 9,688
--------- ------------------------
(6) Taxation 2017 2016
GBP'000 GBP'000
Charge for the year
- current and deferred 2,452 2,169
--------- ---------
Comments on the effective tax rate can be found in the Financial Review.
(7) Earnings per share
The calculation of basic and diluted EPS is based on the profit on ordinary activities after taxation of GBP9,899,000 (2016 - GBP9,688,000) and on the weighted average number of shares, calculated as follows:
2017 2016
Basic EPS - weighted average
number of shares 183,905,844 183,658,227
Diluting effect of employee
share options 3,331,939 3,544,265
------------ ------------
Diluted EPS - weighted average
number of shares 187,237,783 187,202,492
------------ ------------
(8) Reconciliation of net profit to net cash inflow from operating activities
2017 2016
GBP'000 GBP'000
Net profit 9,899 9,688
Adjustments for:
Tax 2,452 2,169
Interest income (1,472) (1,523)
Interest expense 2 66
Research and development
tax credit - (46)
Depreciation and amortisation 1,405 1,382
Impairment of other intangibles - 13
-------- --------
Profit on sale of investments - (1)
Profit on sale of assets
held for sale - (4)
Decrease in other financial
assets 300 -
(Increase)/decrease in
inventories (448) 1,004
Decrease in trade and other
receivables 12 2,599
Increase in trade and other
payables 4,153 4,634
Increase in provisions 1,397 1,581
Increase in monies held
in trust (7,797) (9,491)
Decrease in retirement
benefit obligation (641) (497)
Translation adjustment (28) (21)
Share-based payments 669 631
-------- --------
Net cash inflow from operating
activities 9,903 12,184
-------- --------
(9) Responsibility Statement
To the best of each director's knowledge:
-- the financial statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Company and the undertakings included in the
consolidation taken as a whole; and
-- the management report includes a fair review
of the development and performance of the business
and the position of the issuer and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal
risks and uncertainties that they face.
(10) The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 March 2017 or 2016 but is derived from those accounts.
Statutory accounts for 2016 have been delivered to the registrar of companies. The auditor, Ernst & Young LLP, has reported on the 2016 accounts; the report (i) was unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for 2017 will be delivered to the registrar of companies following the AGM. The auditors have reported on these accounts; their report is unqualified and does not include a statement under either section 498(2) or (3) of the Companies Act 2006.
The annual report will be posted to shareholders on or before 28 July 2017 and will be available from that date on the Group's website: www.parkgroup.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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