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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 : 0447R
Park Group PLC
12 June 2018
12 June 2018
PARK GROUP PLC
("Park", "Park Group" or "the Group")
Preliminary Final Results for the Year Ended 31 March 2018
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
-- 6.5 per cent rise in operating profit to GBP11.6m (2017 - GBP10.9m) -- 4.1 per cent growth in profit before tax to GBP12.9m (2017 - GBP12.4m) -- 2.0 per cent advance in billings to GBP412.8m (2017 - GBP404.5m)
-- Proposed final dividend raised to 2.05p per share (2017 - 1.95p) making a total dividend for the year up 5.2 per cent to 3.05p per share (2017 - 2.90p per share)
-- Total cash balances peaked at GBP229m (2017 - GBP217m). Year end cash balance was GBP40.3m (2017 - GBP34.2m) with a further GBP87.0m (2017 - GBP83.0m) of monies held in trust
Operational highlights
-- Ongoing delivery against strategy and another positive trading performance for the year as a whole
-- Enhanced the capabilities of the flexecash(R) concept by developing digital e-codes
Corporate business
-- During the year, the Corporate business delivered an increase in billings to GBP188.2m (2017 - 187.7m) and operating profit also rose to GBP7.4m (2017 - GBP7.2m)
-- The 'Evolve' platform, the client-branded digital reward platform launched in 2016, continues to drive traction in corporate markets, with more than 317 clients using the web portal to date
-- Full integration of FMI, progressed during 2017, providing an exciting opportunity to build out Corporate operations
Consumer business
-- Billings within the Consumer business increased by 3.6 per cent to GBP224.5m (2017 - GBP216.8m), while operating profit increased by 6.1 per cent to GBP6.9m (2017 - GBP6.5m)
-- Customer numbers increased to 436,000 (2017 - 431,000), while the average customer order value improved 2.6 per cent to GBP521 (2017 - GBP508)
-- Orders for Christmas 2018 are at a similar level to the previous year at this stage in the cycle.
CEO Succession
Following the announcement that former Chief Executive Officer (CEO) Chris Houghton was to retire after more than 30 years at Park Group, Ian O'Doherty was appointed as CEO in February 2018. Ian brings with him a wealth of experience and knowledge from blue-chip business, strategic and operational excellence, as well as sharing the values of the Group.
Laura Carstensen, Chairman, commented: "Our commitment to growth is as strong as ever and we have started the year well. As a Group we are at an exciting point in our development and have some great opportunities to build on our legacy and on the success of another solid set of results with billings and pre-tax profits both continuing to increase along with total dividends."
For further information please visit http://www.parkgroup.co.uk/ or contact:
Hot Features
Premium
Park Group plc Arden Partners plc Tavistock
Ian O'Doherty Steve Douglas Jeremy Carey
Martin Stewart Benjamin Cryer Simon Hudson
Sophie Praill
Tel: 0151 653 1700 Tel: 020 7614 5920 Tel: 020 7920 3150
The information contained within this announcement is deemed by Park Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Chairman's Statement
Introduction
As a Group we are at an exciting point in our development and have some significant opportunities to build on our legacy and on the success of another solid set of results, with billings and pre-tax profits both continuing to increase along with total dividends (paid and proposed).
At Park we are used to adapting to and capitalising on fast-changing markets and we are ambitious under a strong and refreshed leadership team to continue to grow by winning still more consumers and businesses over to the Park way of saving, motivating and rewarding - everything prepaid.
Financial performance and dividends
Park Group's profit before taxation rose by 4.1 per cent in the year to 31 March 2018, reaching GBP12.9m (2017 - GBP12.4m) while operating profit grew to GBP11.6m (2017 - GBP10.9m). Total billings increased by 2.0 per cent to GBP412.8m (2017 - GBP404.5m) while revenue was GBP296.2m (2017 - GBP310.9m).
Billings is a more meaningful measure of the level of activity of the Group than revenue. This is due to our revenue from prepaid cards being reported on a 'net' basis and our Love2shop vouchers on a 'gross' basis. This year we have had some one off costs associated with the changes to our senior management, but following an extensive recruitment process and well executed transition, we are confident we have the right people in place with the resources and experience to drive our continued growth.
Park is a cash generative business with a strong, debt free balance sheet.
In light of yet another solid year, the board is recommending raising the final dividend to 2.05p per share (2017 - 1.95p) making a total dividend for the year of 3.05p per share (2017 - 2.90p) up 5.2 per cent.
It is noteworthy that the total dividend has more than doubled over the last eight years, reflecting the board's confidence in the business' performance and the position and success of Park's offering in each market. As our investors know, Park Group's dividend policy is linked to the cash we generate, as well as business performance.
Shareholder approval will be sought at the Annual General Meeting (AGM) to be held on 25 September 2018 to pay the final dividend on 1 October 2018 to shareholders on the register on 24 August 2018. The ordinary shares will be marked ex-dividend on 23 August 2018 as a consequence.
Chief Executive Officer succession
During the year under review, following the announcement that our former Chief Executive Officer (CEO) Chris Houghton was to retire after more than 30 years at Park Group, we embarked on a rigorous nationwide search to help us fulfil our ambitions for the Group.
Our new CEO, Ian O'Doherty, brings with him a wealth of experience and knowledge from blue-chip business, and I know from our close collaboration so far that he brings strategic and operational excellence, as well as sharing our values as a Group.
I am confident that Ian and the team he is building will help us continue to deliver Park Group's diverse range of services with the IRIS core values our customers have come to expect, whilst committing to innovation and service excellence in everything we do.
As a Group, a team, we are all focused on making Park Group an exemplar Group in its field and that means being a business that people respect, want to work for and do business with.
This means we will not compromise on our integrity, and we will continue to ensure that people trust us as a business that does what it says it does, and delivers on its promises.
It also means being known for the positive influence we have as a business on people's lives whether that be our employees, customers, shareholders, trading partners or the many communities in which we operate.
Other board changes
Gary Woods stepped down from the board in March 2018 after 38 years' service whilst Martin Stewart will also leave the Group in August 2018. Martin will be replaced by Mr Tim Clancy as Group Finance Director, who will join us in August 2018. The board would like to thank Gary and Martin for their excellent contribution in building the Park business.
Our business and our people
'Seamless transition' is easy to say but can often be difficult to deliver. However, I believe the outstanding collaboration of our former and current leadership team during this year and the dedicated and committed way in which our leadership - old and new - have transitioned responsibilities has been genuinely inspiring.
It gives the board confidence - and it has given our stakeholders, partners and people confidence - that we are in a strong, secure position as a Group. Not only to ensure continuity, but to drive better, new ways of working and to innovate and improve the way we deliver our class-leading products and services.
As a business we're expecting to make a lot more noise about the services we're delivering to consumer and corporate clients in 2018 and beyond, to champion our successes in business performance and innovation, and to showcase the contribution we're making to the northwest regional economy.
As well as focusing on making us the very best business we can be, one of Ian O'Doherty's strengths is galvanising a business around a clear strategy, rooted in a supportive culture and a set of core values. And this is something we as a board are excited about helping to deliver.
There's no doubt that we have dedicated and loyal people right through our teams and having everyone pulling together for our shared, common goals can only help us with our growth ambitions. I would like to pass on the thanks of the board to everyone who makes Park the Group that it is.
Our social responsibility
Charitable causes and social responsibility - for our people, stakeholders, customers and communities - will remain high on our list of priorities, and we will continue to find ways to give back to the region that has given us a 'licence to operate' and enabled us to be successful.
As well as contributing to very important local projects here on the Wirral, like 'The Hive', a local youth zone helping young people to learn, to flourish and to grow, as well as a range of other projects, we still feel we have much to do in terms of our social responsibility.
Our outlook
Our commitment to growth is as strong as ever and we have started the year well by ensuring we're delivering against our strategies, focusing on customer service excellence and working closely together.
Laura Carstensen
Chairman
12 June 2018
Chief Executive's Review
Introduction
Park has a rich legacy of innovation, business achievement and strong financial performance. This year has seen progress in all three of these areas. Building on the success of these latest results, we remain in a position for growth and we have continuing ambitions to lead the markets in which we operate.
The year under review has seen considerable change in our leadership team, including my own appointment as CEO, the appointment of a new Group Finance Director to succeed Martin Stewart in August 2018, and the appointment, to a newly created position, of a Chief Information Officer (non-board). These changes, we believe, will provide an opportunity for the Group to build on the successes of those who have driven the business to this point.
Without doubt, this is an exciting time for the Group.
Business performance
Solid billings, profits and cash generation have been the cornerstone of our business for many years, and our focus on delivering these continues. The overall financial position of the Group remains solid, with cash balances and order books again ahead of their positions at the same time last year.
We're also delivering in many other areas, including innovation. For example downloads of the Park Savings app, launched last year, continue to grow as the number of consumer customers using this new functionality rises. Innovations like this - centred on making things better and simpler for our customers - remain an important part of our growth plans.
Our Consumer business
Park's legacy of helping families prepare and budget for Christmas has been well-regarded for decades and, yet again, we've seen continued positive momentum and performance in the Consumer business this year as we celebrated another solid Christmas period. As well as allowing our customers to save in a secure, controlled and structured way, free of last minute financial concerns, our Consumer business remains a robust revenue driver for our business.
The increasing consumer use of the internet and mobile devices, coupled with our focus on the development of technology and digital channels, continues to revolutionise ordering behaviour. The number of new accounts ordering online in the year was 72.2 per cent of the total new accounts (2017 - 65.7 per cent).
Billings within the Consumer business increased by 3.6 per cent to GBP224.5m (2017 - GBP216.8m), while operating profit increased by 6.1 per cent to GBP6.9m (2017 - GBP6.5m). Customer numbers increased to 436,000 (2017 - 431,000), while the average customer order value improved 2.6 per cent to GBP521 (2017 - GBP508).
Park's relationship with Mastercard continues to strengthen. Park's 'Your Choice' card (formerly the 'Anywhere' card) is a Mastercard which offers the freedom to shop at an expanded number of outlets. Customers are prepared to pay a premium for a preloaded 'Your Choice' card and this is proving popular, with 40,000 customers utilising this innovative, new product over the period.
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 127,000 followers compared with 100,000 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. During the year, approximately GBP4m of orders were generated by Park's Facebook page alone and we will continue to develop social media channels to build on this success.
We want to build on the success of this period in our consumer business, and we will put even more focus on our growing customer base - hundreds of thousands of families and companies - by committing ourselves to delivering excellent service through digital, self-serve and traditional channels.
Our Corporate business
The Corporate business, under the brand Love2shop Business Services, remains the UK's largest provider of multi-redemption gift cards, vouchers and digital reward propositions, principally to the incentive and reward markets. It now serves over 34,000 organisations, supplying programmes and products to reward and incentivise staff and customers alike. Love2shop Business Services offers businesses, from major corporations to SMEs, 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. Incentives and rewards for businesses is an ever-growing multibillion pound market, and we will work to ensure we're front of mind for organisations when it comes to these types of propositions. We believe our flexibility, scale, product suite and capabilities, particularly through our own flexecash(R) processing network, set us apart from our competitors.
During the year, the Corporate business delivered an increase in billings to GBP188.2m (2017 - GBP187.7m) and operating profit also rose to GBP7.4m (2017 - GBP7.2m). Our hightstreetvouchers.com website had a good year with sales topping GBP30m (2017 - GBP26m) and with the full integration of FMI, which has continued to progress during the year, we have an exciting opportunity to build out our Corporate operations.
Product development within the Corporate business concentrates on devising new, sophisticated applications to meet increasing customer demand. Our 'Evolve' platform, the client-branded digital reward platform we launched in 2016, continues to drive traction in our corporate markets, with more than 317 clients using the web portal to date.
During this period, we have leveraged the 'Evolve' capabilities still further, by beginning to offer our reward products to a global audience via 'Love2shop Worldwide'. This capability is now being used by over 40 UK based businesses that may have employees or customers in other countries. Thousands of redemptions have already been processed for individuals based in UK, India, Germany, Italy, France and Spain to name a few.
A number of large new organisations were recruited during the year, with more in the pipeline.
Investing in new technology
Park's annual capital expenditure on IT is approximately GBP0.7m with a total spend, including technical support, in the region of GBP3.8m. This is a significant investment and commitment for a business of our size. One of the most significant technological 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 GBP652m of value loaded, with 97 brands accepting the card through more than 14,000 UK outlets. The card is available alongside the Love2shop voucher, which is supported by 175 brands at 20,000 outlets.
Park has capitalised further on the latest advances in this space to expand the capabilities of the flexecash(R) concept by developing 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. Digital products are the fastest growing product area in the UK gift card and voucher market and in 2017 9 per cent of reported sales were attributable to these products. In the B2B market, they are growing at an even faster rate and now represent 16 per cent of the market with further significant growth anticipated.
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.
Our people
We will focus on doing the very best for our people; providing them with the necessary tools and support to succeed. We want engaged employees, working together with clarity, purpose and drive to contribute to our growth plans.
Having spent the last six months reviewing the business, I can say that the experience and ambition of our people is impressive, and, through them, we have the capabilities to grow and to achieve more. Add to that an ambitious, motivated and strategic new leadership team, and we're confident of building on the great history of this Group. Our focus now is on structuring our team to succeed, and on building a culture that enables us to deliver on - and hopefully exceed - our customers' expectations every single time.
Our future
Park's focus on enhancing retailer propositions; growing multi-channel offerings; expanding our customer base and exploiting our scale and infrastructure, remain key to ensuring our business retains its buoyancy and market position. We have the tools and resources to go about our business with confidence. Together, we remain committed to keeping Park Group a business that people are proud to work for and want to do business with and a business that delivers for the many thousands of customers that place their trust in us.
Ian O'Doherty
Chief Executive Officer
12 June 2018
Financial Review
Profit from operations
The Group's operations are divided into two principal operating segments:
-- Consumer - which represents sales to consumers, utilising its Christmas savings offering; and
-- Corporate - comprising sales to businesses, offering primarily sales of the Love2shop voucher, flexecash(R) cards and e-codes in addition to other retailer vouchers. Sales are achieved via a direct sales force and online via the Group's websites. These products are used as staff and customer rewards/incentives, marketing aids and prizes.
All other segments comprise central costs and property costs.
Billings have increased when compared to the prior year by 2.0 per cent to GBP412.8m. Revenue has fallen by 4.7 per cent to GBP296.2m reflecting the increasing popularity of prepaid cards (flexecash(R) and Mastercard) issued by us. Billings attributable to these cards total GBP130.1m in the year (2017 - GBP105.7m) whereas revenue in the year was GBP13.5m (2017 - GBP12.1m).
Revenue earned from the sale of prepaid cards issued by Park is recognised differently from all other customer billings, as explained in our accounting policies.
Revenue and margin from sales of Love2shop vouchers and flexecash(R) cards/codes are generated from both operating segments. Operating profit increased by GBP0.7m to GBP11.6m and is detailed below:
2018 2017 Change
GBP'000 GBP'000 GBP'000
------------------- -------- -------- --------
Consumer 6,851 6,460 391
------------------- -------- -------- --------
Corporate 7,366 7,231 135
------------------- -------- -------- --------
All other segments (2,628) (2,810) 182
------------------- -------- -------- --------
Operating profit 11,589 10,881 708
------------------- -------- -------- --------
Consumer
In the Consumer business, customer billings have increased by 3.6 per cent to GBP224.5m. Revenue has decreased by 3.4 per cent to GBP168.3m, primarily due to increased value loaded onto prepaid cards, principally our own Mastercard products which totalled GBP20.7m.
The increase in billings of GBP7.8m primarily reflects the higher level of customer prepayment orders fulfilled for Christmas 2017 at GBP222.2m (Christmas 2016 - GBP214.1m). Billings in respect of flexecash(R) cards totalled GBP40.8m (2017 - GBP43.8m).
Operating profit at GBP6.9m has increased by GBP0.4m from that achieved in the prior year. This is due to the increased level of billings and a marginal improvement in margin earned as a result of a change in the mix of products sold.
Corporate
In the Corporate business customer billings have increased once more, by GBP0.5m in the year to GBP188.2m. Revenue is down by 6.5 per cent to GBP127.9m and this was also due to increased value loaded onto prepaid cards (flexecash(R) and Mastercard), which totalled GBP69.2m (2017 - GBP61.9m).
Operating profit improved by 1.9 per cent to GBP7.4m (2017 - GBP7.2m) reflecting the higher level of billings and an improved mix of products sold, principally flexecash(R) cards.
During 2018 and beyond, we will embark with renewed focus on plans to drive growth in billings in the incentive sector, which was marginally below expectations at GBP116.2m predominantly due to the later than expected roll out of a significant contract with a client in our Corporate business.
All other segments
The reduction in costs reported in other segments, of GBP0.2m, is mainly attributable to a reduction in the cost of management incentives recorded in the statement of profit or loss of GBP0.4m. This has been offset by GBP0.2m of costs associated with the changes to the senior management team and directors in the year.
Finance income
Finance income declined slightly to GBP1.27m from GBP1.47m. Average total cash held by the Group, including cash held in trust during the year increased by over 6 per cent to GBP165m (2017 - GBP155m), however the yield achieved on this higher cash balance continued to decline in spite of the increase in base rates, due to deposits placed prior to this increase being reflected in bank deposit rates.
Taxation
The effective tax rate for the year was 19.1 per cent (2017 - 19.9 per cent) of profit before tax. The decrease in tax rate is due to the reduction in the basic rate of corporation tax from 20 per cent to 19 per cent in the year.
Earnings per share
Basic earnings per share (EPS) increased to 5.62p from 5.38p in 2017, up 4.5 per cent.
Dividends
The board has recommended a final dividend of 2.05p per share. An interim dividend of 1.00p per share was paid on 6 April 2018. Subject to approval of the final dividend at the AGM, the total dividend for 2018 will be 3.05p per share representing an increase of 5.2 per cent over the prior year.
Cash flows
Cash flows from operating activities, at GBP10.5m, were GBP0.6m higher than the prior year. There was a slight deterioration in working capital due to increased stock levels of GBP1.2m and receivables of GBP1.8m. In addition, the prior year cash inflows were boosted by GBP2m of cash received in April 2016 from the Park Prepayment Trustee Company Limited in respect of Christmas 2015. Growth in the Park Card Services Limited E money Trust (PCSET) and ring fenced funds was GBP2.9m (2017 - GBP4.9m).
At the end of March 2018 GBP40.3m (2017 - GBP34.2m) of cash and cash equivalents was held by the Group. This was GBP2.8m higher than the prior year.
In addition, GBP60.0m (2017 - GBP59.0m) 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.
Also, at 31 March 2018, the Group held GBP25.9m (2017 - GBP24.0m) of cash in the PCSET to support the e-money float in accordance with regulatory requirements and held GBP1.0m of other ring fenced funds (2017 - GBPnil).
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 by 5.9 per cent to GBP121.4m from GBP114.6m. These total balances peaked at just under GBP229m in the year, representing an increase of over GBP12m from last year. This was principally due to the higher level of cash receipts into the Park Prepayments Protection Trust (PPPT) in respect of the Consumer business.
Provisions
At 31 March 2018, provisions had increased to GBP48.0m from GBP46.2m. This was mainly due to an increase in the amounts provided in respect of flexecash(R) cards of GBP1.2m and for unspent vouchers of GBP0.6m. The value of unspent vouchers included in the provision, arises primarily from sales in the Corporate business.
Accounting policies
Revenue recognition
Revenue from prepaid 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.
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 GBP2.7m based on the valuation under IAS19 performed at 31 March 2018 (2017 - surplus of GBP0.9m).
The Group has recognised interest income of GBP32,000 (2017 -GBP1,000) in the statement of profit or loss in respect of the pension schemes. In addition, the Group has recognised a re-measurement gain in the statement of comprehensive income (SOCI) of GBP0.9m (2017 - GBP0.5m) net of tax.
In the year ended 31 March 2018, contributions by the Group to the schemes totalled GBP0.7m (2017 - GBP0.7m). The latest triannual scheme funding reports, performed as at 31 March 2016, 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 GBP1.9m and one had a surplus on the same basis of GBP0.9m. Future Group contributions to the scheme that is in deficit have been agreed with the Trustee at GBP0.4m for 2018/19, with no further contributions to the scheme after that date. The next triannual valuation will be undertaken as at 31 March 2019 when the positions will be reassessed.
Martin Stewart
Group Finance Director
12 June 2018
Risk factors
Financial risks
Risk area Potential impact Mitigation
------------------------ --------------------------------- ------------------------------------
Group funding The Group, like many The Group manages its capital
other companies, depends to safeguard its ability
on its ability to continue to operate as a going concern.
to service its debts The Group has access to
as they fall due and funds for working capital
to have access to finance from the PPPT for a defined
where this is necessary. 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 policy
funds on deposit and ensures that funds are
as such is exposed to only placed with and spread
interest rate risk, counterparty between high quality counterparties
risk and exchange rate and where appropriate any
movements. exchange rate exposure
is managed, utilising forward
contracts, to minimise
any potential impact. Some
funds are placed on fixed
term deposits to mitigate
interest rate fluctuations.
------------------------ --------------------------------- ------------------------------------
Banking system Disruption to the banking The Group seeks wherever
system would adversely possible to offer the widest
impact on the Group's possible range of payment
ability to collect payments options to customers to
from customers and could reduce the potential impact
adversely affect the of failure of a single
Group's cash position. payment route.
------------------------ --------------------------------- ------------------------------------
Pension funding The Group may be required The Group's pension schemes
to increase its contributions are closed to future benefit
to cover any funding accrual related to service.
shortfalls. Funding rates are in accordance
with the agreements reached
with the trustees after
consultation with the scheme
actuary.
------------------------ --------------------------------- ------------------------------------
Financial services and The business model may The Group has a regulatory
other market regulation be compromised by changes team that monitors and
in existing regulation enforces compliance with
or by the introduction existing regulations and
of new regulation. Possible keeps the Group up to date
new regulation could with impending regulation.
include a requirement The Group shares the objectives
to ring fence funds for of Government in treating
vouchers sold to consumers. customers fairly and in
This would adversely the protection of customer
affect the Group's cash prepayments. The Group
position. operates a 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 potentially has
access to other sources
of funds, if required.
------------------------ --------------------------------- ------------------------------------
Credit risks Failure of one or more Customers are given an
customers and the risk appropriate level of credit
of default by credit based on their trading
customers due to reduced history and financial status,
economic 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 Failure to provide adequate The Group plans and tests its
continuity service levels to customers, business continuity procedures
and IT systems retail partners or other in preparation for catastrophic
suppliers, resulting in a events and for the existence
failure to maintain services of counterfeit vouchers or cards.
that generate revenue.
Our focus is on the elimination
There is a risk that an attack of any single point of failure
on our infrastructure by in our IT systems. Our critical
an individual or Group could infrastructure has been designed
be successful and impact to prevent unauthorised access
the availability of critical and reduce the likelihood and
systems. 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.
The General Data Protection
Regulations (GDPRs) came into
force on 25 May 2018. The Group
had a project to review its
policies and procedures in the
light of the requirements of
the GDPRs and make changes accordingly.
----------------- ------------------------------------- ----------------------------------------
Loss of key The Group depends on its Existing key appointments are
management directors and key personnel. rewarded with competitive remuneration
The loss of the services packages including long term
of any directors or other incentives linked to the Group's
key employees could damage performance and shareholder
the Group's business, financial return.
condition and results.
----------------- ------------------------------------- ----------------------------------------
Relationships The Group is dependent upon The Group has a dedicated team
with high the success of its Love2shop of managers whose role
street and voucher and flexecash(R) it is to ensure that the Group's
online retailers card. These products only products have a full range
operate provided the participating of retailers. They also work
retailers continue to accept closely with all retailers to
them as payment for goods promote their businesses to
or services provided. The Park's customers who utilise
failure of one or more participating Park's vouchers and cards to
retailers could make these drive forward incremental sales
products less attractive to their retail outlets. Contracts
to customers. 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 failure of the distribution Wherever possible the Group
the distribution network during the Christmas seeks to utilise a wide range
network period, for example a Post of geographically spread carriers
Office strike, road network to mitigate the failure of a
disruption or fuel shortages single operator.
could adversely impact the
results and reputation of
Park's brands.
----------------- ------------------------------------- ----------------------------------------
Brand perception Adverse market perception Ongoing investment in television
and reputation in relation to the Group's advertising. Operation
products or services, for of a process of continual review
example, following the collapse of all marketing material and
of a competitor. This could websites to promote transparency
result in a downturn in demand to customers.
for its products and services.
Extensive testing and rigorous
internal controls exist
for all Group systems to maintain
continuity of online customer
service.
----------------- ------------------------------------- ----------------------------------------
Promotional The success of the Group's Detailed management processes
activity annual promotional campaign that are designed to optimise
is essential to ensure the the cost of recruiting are in
continued recruitment of place. The effectiveness of
customers. Failure to recruit each individual television advert
would result in loss of revenue is assessed separately and future
to the Group. Promotional plans amended where appropriate.
activity must also be cost
effective.
----------------- ------------------------------------- ----------------------------------------
Competition Loss of margins or market The Group has a broad base of
share arising from increased customers 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 STATEMENT OF PROFIT OR LOSS
FOR THE YEAR TO 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Billings 412,786 404,512
---------- ----------
Revenue 296,188 310,927
Cost of sales (264,490) (280,758)
---------- ----------
Gross profit 31,698 30,169
Distribution costs (3,002) (2,940)
Administrative expenses (17,107) (16,348)
---------- ----------
Operating profit 11,589 10,881
Finance income 1,274 1,472
Finance costs (4) (2)
---------- ----------
Profit before taxation 12,859 12,351
Taxation (2,450) (2,452)
---------- ----------
Profit for the year attributable to equity
holders of the parent 10,409 9,899
---------- ----------
Earnings per share (see note 7)
: basic 5.62p 5.38p
: diluted 5.60p 5.29p
Park Group plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR TO 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Profit for the year 10,409 9,899
Other comprehensive income
Items that will not be reclassified to profit
or loss:
Remeasurement of defined benefit pension
schemes 1,142 572
Deferred tax on defined benefit pension schemes (194) (97)
-------- --------
948 475
-------- --------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (20) (28)
Other comprehensive income for the year net
of tax 928 447
-------- --------
Total comprehensive income for the year attributable
to equity holders of the parent 11,337 10,346
-------- --------
Park Group plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018
As at As at
31.03.18 31.03.17
GBP'000 GBP'000
Assets
Non-current assets
Goodwill 2,185 2,202
Other intangible assets 2,278 2,682
Property, plant and equipment 7,684 7,688
Retirement benefit asset 2,721 1,827
14,868 14,399
-------------------- ----------
Current assets
Inventories 3,808 2,632
Trade and other receivables 10,872 9,096
Other financial assets 200 200
Monies held in trust 86,992 83,018
Cash and cash equivalents 40,311 34,236
142,183 129,182
-------------------- ----------
Total assets 157,051 143,581
-------------------- ----------
Liabilities
Current liabilities
Trade and other payables (89,816) (82,602)
Tax payable (704) (1,272)
Provisions (48,012) (46,164)
-------------------- ----------
(138,532) (130,038)
-------------------- ----------
Non-current liabilities
Deferred tax liability (662) (194)
Retirement benefit obligation - (924)
-------------------- ----------
(662) (1,118)
-------------------- ----------
Total liabilities (139,194) (131,156)
-------------------- ----------
Net assets 17,857 12,425
-------------------- ----------
Equity attributable to equity holders
of the parent
Share capital 3,711 3,687
Share premium 6,137 6,137
Retained earnings 8,320 2,912
Other reserves (311) (311)
Total equity 17,857 12,425
-------------------- ----------
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 2017 3,687 6,137 (311) 2,912 12,425
Total comprehensive income for
the year
Profit - - - 10,409 10,409
Other comprehensive income
Remeasurement of defined benefit
pension schemes - - - 1,142 1,142
Tax on defined benefit pension
schemes - - - (194) (194)
Foreign exchange translation adjustments - - - (20) (20)
--------- --------- ----------- ----------- --------
Total other comprehensive income - - - 928 928
--------- --------- ----------- ----------- --------
Total comprehensive income for
the year - - - 11,337 11,337
--------- --------- ----------- ----------- --------
Transactions with owners, recorded
directly in equity
Equity settled share-based payment
transactions including tax - - - (620) (620)
Tax on equity settled share-based
payment transactions - - - 85 85
LTIP shares awarded 24 - - (24) -
Dividends - - - (5,370) (5,370)
--------- --------- ----------- ----------- --------
Total contributions by and distribution
to owners 24 - - (5,929) (5,905)
--------- --------- ----------- ----------- --------
Balance at 31 March 2018 3,711 6,137 (311) 8,320 17,857
--------- --------- ----------- ----------- --------
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 - - - 670 670
Tax on equity settled share-based
payment transactions - - - 31 31
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
--------- --------- ----------- ----------- --------
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 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 10,540 9,903
Interest received 1,271 1,540
Interest paid (4) (1)
Tax paid (2,537) (2,258)
-------- --------
Net cash generated from operating
activities 9,270 9,184
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment 1 1
Purchase of intangible assets (361) (370)
Purchase of property, plant and
equipment (659) (347)
Purchase of investments in subsidiaries - (876)
Net cash used in investing activities (1,019) (1,592)
Cash flows from financing activities
Proceeds from exercise of share
options - 5
Dividends paid to shareholders (5,370) (5,052)
Net cash used in financing activities (5,370) (5,047)
-------- --------
Net increase in cash and cash equivalents 2,881 2,545
-------- --------
Cash and cash equivalents at beginning
of period 31,362 28,817
-------- --------
Cash and cash equivalents at end
of period 34,243 31,362
-------- --------
Cash and cash equivalents comprise:
Cash 40,311 34,236
Bank overdrafts (6,068) (2,874)
-------- --------
34,243 31,362
-------- --------
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 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. Whilst funds are available for working capital purposes as permitted under the terms of the PPPT, the Group does not envisage accessing these funds in the period covered by these forecasts. The Group's working capital requirements are dependent upon a continuing level of prepaid sales to corporate customers. The Group's positive cash flow from its ongoing customer base enables it to operate without reliance on any external funding, and the ability to drawdown funds from the PPPT at certain times of the year provides further headroom. 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 7 Disclosure Initiative (amendment) 1 Jan 2017
IAS 12 Recognition of Deferred Tax Assets for 1 Jan 2017
Unrealised Losses (amendment)
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 accounting
period beginning
on or after:
IFRS 2 Classification and measurement of share
based payment transactions (amendments) 1 Jan 2018
IFRIC 22 Foreign currency transactions and advances 1 Jan 2018
considerations
IFRIC 23 Uncertainty over Income Tax Treatment 1 Jan 2019
IFRS 9 Financial Instruments 1 Jan 2018
IFRS 15 Revenue from Contracts with Customers 1 Jan 2018
IFRS 16 Leases 1 Jan 2019
The directors anticipate that the adoption of IFRS2, IFRIC22 and IFRIC23 in future periods will not have a material impact on the financial statements when the relevant standards and interpretations come into effect. The directors are still currently assessing the impact of IFRS9 and IFRS16.
IFRS 15 Revenue from Contracts with Customers
IFRS15 introduces a new five-step approach to measuring and recognising revenue from contracts with customers and has been adopted by the group with effect from 1 April 2018. Under IFRS15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
Management are continuing to assess the impact of IFRS15 and have reached initial conclusions on all key implementation issues. Based on the work completed to date the key impacts are expected to be as follows:
Principal and Agent
Under IFRS15, an entity is a principal (and records revenue on a gross basis) if it controls the promised good or service before transferring it to the customer. An entity is an agent (and records as revenue the net amount that it retains for its agency services) if its role is to arrange for another entity to provide the good or service.
The group earns fees from redeemers of its vouchers and cards and as such acts as an agent of the redeemer. Under IFRS15 these fees will be shown as revenue. Under current accounting policies the group records its revenue gross for vouchers, based on the face value of the voucher less any rebates or discounts.
Timing of revenue recognition
Under IFRS15, the group will recognise revenue from its vouchers and cards at the point at which the customer has fully exercised its right to future goods and services. This is usually when the voucher or card has been redeemed with another entity. Under current accounting policies the group recognises revenue for vouchers at the date on which the voucher is received by customers.
Vouchers and cards may be partially or fully redeemed, and the unused amount (ie the amount attributable to a customer's unexercised rights to future goods or services) is often referred to as breakage. Under IFRS15 where the group expects to be entitled to a breakage amount, it will recognise the expected breakage as revenue in proportion to the pattern of rights exercised by the customer. Under current accounting policies the group recognises breakage at the date on which the voucher or card is received by customers, except where the customer has the right of redemption for cash, where no breakage is recognised until the card has expired and the right of redemption has lapsed. Because breakage amounts represent a form of variable consideration, when estimating any breakage amount, an entity considers the constraint on variable consideration. That is, the group will not recognise any estimated breakage amounts until it is highly probable that a significant revenue reversal will not occur. If the group cannot determine whether breakage will occur, it will not recognise any amounts as breakage until the likelihood of the customer exercising its rights becomes remote. This may be the case when the group first begins to sell gift cards and has no history of breakage patterns.
Presentation and disclosure
The presentation and disclosure requirements of IFRS15 represent a significant change from current practice and will increase the volume of disclosures required in the notes to the financial statements.
The changes to presentation, disclosures and timing of recognition that are expected, are shown below:
Revenue recognition
--------- ---------------------------------------------------------------------------
2018 Point of revenue
Billings Gross or net recognition Breakage recognised
------------ --------- ------------------ ----------------------- ------------------------------
GBPm Existing IFRS15 Existing IFRS15 Existing IFRS15
------------ --------- --------- ------- --------- ------------ ------------ ----------------
Principal revenue streams impacted by IFRS15
----------------------------------------------------------------------------------------------------------------------
Date on Date on
which which Date on Date on
voucher voucher which which voucher
is is redeemed voucher is redeemed
received by customer is by customer
by received
Love2shop vouchers 212.2 Gross Net customer by
customer
------------------------------ --------- --------- ------- --------- ------------ ------------ ----------------
When
amounts When When amounts
are amounts are deducted
deducted are from card
from deducted (when customer
card from card spends
End user (when (when When value card)
has no customer customer is loaded
flexecash(R) right spends spends onto card
prepaid of 44.0 Net Net card) card)
card redemption
---------------- ------------ --------- --------- ------- --------- ------------ ------------ ----------------
Principal revenue streams where IFRS15 has no impact
----------------------------------------------------------------------------------------------------------------------
When
amounts When
are amounts
deducted are
from deducted When end When end
card from card users users right
flexecash(R) (when (when right of redemption
and Mastercard End user customer customer of for cash
prepaid has right spends spends redemption ceases
card of 86.2 Net Net card) card) for cash
redemption ceases
---------------- ------------ --------- --------- ------- --------- ------------ ------------ ----------------
Date on Date on
which which
goods goods
Third party received received
issued by by customer
vouchers/cards 54.9 Gross Gross customer N/a N/a
---------------- ------------ --------- --------- ------- --------- ------------ ------------ ----------------
Date on Date on
which which
goods goods
received received
by by customer
Hampers/other 15.5 Gross Gross customer N/a N/a
---------------- ------------ --------- --------- ------- --------- ------------ ------------ ----------------
The group plans to apply the full retrospective approach when transitioning to the new standard which will result in restated comparatives for prior years on the basis that IFRS15 had always applied.
The group is in the process of quantifying the financial impacts of the above adjustments which are expected to result in the reporting of significantly lower revenues, an immaterial reduction in operating profit and a reduced net asset position at transition.
(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 2017. The annual report and accounts for the year ended 31 March 2017 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.
All other All other
segments/ 2018 segments/ 2017
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 224,542 188,244 - 412,786 216,771 187,741 - 404,512
Inter-segment
billings - 140,751 (140,751) - - 148,066 (148,066) -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total billings 224,542 328,995 (140,751) 412,786 216,771 335,807 (148,066) 404,512
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Revenue
External
revenue 168,319 127,869 - 296,188 174,184 136,743 - 310,927
Inter-segment
revenue - 140,751 (140,751) - - 148,066 (148,066) -
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Total revenue 168,319 268,620 (140,751) 296,188 174,184 284,809 (148,066) 310,927
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Inter-segment sales are entered into under normal arm's length commercial
terms and conditions.
Result
Segment operating
profit/(loss) 6,851 7,366 (2,628) 11,589 6,460 7,231 (2,810) 10,881
--------- ---------- ------------- --------- --------- ---------- ------------- ---------
Finance income 1,274 1,472
Finance costs (4) (2)
-------- --------
Profit before
taxation 12,859 12,351
Taxation (2,450) (2,452)
-------- --------
Profit 10,409 9,899
-------- --------
(6) Taxation 2018 2017
GBP'000 GBP'000
Charge for the year - current
and deferred 2,450 2,452
--------- ---------
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 GBP10,409,000 (2017 - GBP9,899,000) and on the weighted average number of shares, calculated as follows:
2018 2017
Basic EPS - weighted average number
of shares 185,268,587 183,905,844
Diluting effect of employee share
options 601,293 3,331,939
------------ ------------
Diluted EPS - weighted average number
of shares 185,869,880 187,237,783
------------ ------------
(8) Reconciliation of net profit to net cash inflow from operating activities
2018 2017
GBP'000 GBP'000
Net profit 10,409 9,899
Adjustments for:
Tax 2,450 2,452
Interest income (1,274) (1,472)
Interest expense 4 2
Research and development tax credit (121) -
Depreciation and amortisation 1,428 1,405
Impairment of goodwill 17 -
-------- --------
Profit on sale of other intangibles
and property, plant and equipment (1) -
Decrease in other financial assets - 300
Increase in inventories (1,176) (448)
(Increase)/decrease in trade and
other receivables (1,773) 12
Increase in trade and other payables 4,020 4,153
Increase in provisions 1,848 1,397
Increase in monies held in trust (3,974) (7,797)
Decrease in retirement benefit
obligation (676) (641)
Translation adjustment (20) (28)
Taxes paid on share-based payments (851) -
Share-based payments 230 669
-------- --------
Net cash inflow from operating
activities 10,540 9,903
-------- --------
(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 2018 or 2017 but is derived from those accounts.
Statutory accounts for 2017 have been delivered to the registrar of companies. The auditor, Ernst & Young LLP, has reported on the 2017 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 2018 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 6 August 2018 and will be available from that date on the Group's website: www.parkgroup.co.uk.
-ends
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR FMGMVMZFGRZG
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June 12, 2018 02:01 ET (06:01 GMT)
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