Delivering Growth
Delivering Growth through... Partnerships Innovation Delivery Strength Contents Highlights 1 Chairman s Statement 2 Unaudited Consolidated Income Statement 4 Unaudited Consolidated Statement of Comprehensive Income 4 Unaudited Consolidated Statement of Financial Position 5 Unaudited Consolidated Statement of Changes in Equity 6 Unaudited Consolidated Statement of Cash Flows 8 Unaudited Segmental Reporting 9 Notes to the Accounts 10
1 Highlights Operational highlights > > Corporate and consumer businesses billings well ahead of last year. Corporate increased 11 per cent to 46.2m (2011 41.8m) while consumer rose 24 per cent to 8.5m (2011 6.8m) > > flexecash prepaid card maintaining rapid sales growth, over 140m of value loaded since its launch in 2010 > > Christmas savings agents increased to 122,000 (2011 114,000) > > Average consumer order value well ahead of last year at 430 (2011 416) > > New transactional websites launched to cater for increasing smart phone and tablet computer usage Financial highlights > > Customer billings rose 12 per cent to 54.6m (2011 48.6m) > > Revenue increased 2 per cent to 46.9m (2011 46.0m). Billings are higher than revenue as a result of accounting treatment of our very successful flexecash prepaid card > > Pre-tax loss improved to 4.1m (2011 loss 4.4m) > > 28 per cent uplift in finance income to 1.1m (2011 0.8m) > > Interim dividend raised 5 per cent to 0.55p per share (2011 0.525p) > > Total cash balances peaked at 170m (2011 152m) Interim dividend raised by 5 per cent Total cash balances peak at 170m
2 Chairman s Statement I am pleased to report that Park has delivered another set of excellent first half results with strong performances across the company in the six months to 30 September 2012. With product innovation at the heart of our business, these results demonstrate both the effectiveness of our offer and also our success in using technology to provide the highest levels of service and support to our growing customer base. Whilst the economic background remains challenging for most sectors, it is particularly encouraging that Park has maintained its growth record over the past few difficult years. We continue to work very closely with our customers, encouraging feedback, to ensure that value and service are at the forefront of our offering. It is this close relationship which has contributed significantly to the strength of our business. Trading results Park is a seasonal business which is usually loss making in the first half, as over three quarters of our revenue is generated in the second half of the year. Nevertheless the first half performance is important as it lays the foundation for the full year s result as orders are secured during the period; but not despatched and invoiced until the second half. In the six months to 30 September 2012 customer billings increased by 12.4 per cent reaching 54.6m (2011 48.6m) while revenue rose 1.9 per cent to 46.9m (2011 46.0m). Billings are higher than revenue as a result of the accounting treatment of our very successful flexecash prepaid card, launched in June 2010. Revenue from the flexecash family of products is the margin on customer billings, predominantly recognised after the value loaded on the card has been redeemed. This accounting treatment does not affect the level of margin contribution or profit, but does delay when it is recognised in our accounts. The operating loss for the period before finance income was 5.2m (2011 loss 5.2m) while at the pre-tax level the loss improved to 4.1m (2011 loss 4.4m). Finance income increased by 27.5 per cent to 1.1m (2011 0.8m). Cash held in trust at the period end was 132.6m (2011 119.5m) with total cash balances peaking at 170m (2011 152m) during November. Dividend The interim dividend is being increased by 4.8 per cent to 0.55p per share (2011 0.525p per share) and will be paid on 8 April 2013 to shareholders on the register on 8 March 2013. Park s total dividend payment last year was 2.0p per share which included a final dividend of 1.475p per share. Shareholding In the statement accompanying the results for the last financial year, which we announced on 12 June 2012, I commented that the time had come for me to change my role from executive chairman to non-executive. Subsequently, on 17 October 2012, we reported that my beneficial interest in the ordinary share capital of the company had been reduced from 65.48 per cent to 29.95 per cent. These shares were placed with a number of leading institutional investors and four have each disclosed an interest in over five per cent of Park s ordinary share capital. This broadening of Park s investor base is positive for the company and has created greater liquidity in the shares, which should not only make it easier to deal in them but also help to attract new investors. Operational review The corporate business delivered another sound performance supplying vouchers and prepaid cards to thousands of customers across the UK. Billings in the period rose 10.5 per cent to 46.2m (2011 41.8m) while revenue was lower at 38.7m (2011 39.4m). The widening gap between billings and revenue reflects the success of the flexecash range of products and the way we are required to recognise profit from this source in the accounts. We continue to drive business through innovation and developing schemes to fit the needs of our broad customer base. The high street retail market in the UK remains volatile and shows little sign of sustained improvement. Clearly that places additional pressure on our management teams to deliver value and quality to customers and retail partners.
3 The consumer business with its range of savings products in the UK and Ireland also had a very good first half with billings rising by 24.1 per cent to 8.5m (2011 6.8m); revenues were ahead by a similar percentage reaching 8.3m (2011 6.7m). The second half is always very much stronger as customers orders for vouchers, hampers or other gift products purchased through a 45 week instalment plan are despatched, with everything delivered in time for Christmas. The level of orders placed in the first half for delivery later in the year is five per cent ahead of the level of 12 months ago and indicates an encouraging outturn for the year as a whole. The number of UK agents trading for Christmas 2012 has increased to 122,000 from 114,000 last year and customer numbers have risen to 423,000 from 415,000. Average customer order values to date have increased to 430 from last year s level of 416. The success of flexecash, our prepaid card, is a very significant and fast growing influence on the future direction of Park. Customer acceptance of the product is high and we are launching it into new markets, specialist areas, or tailored to meet individual customer needs. The flexibility of the product is enormous; our development and marketing teams work with customers to devise and deliver new applications that allow them to access previously unavailable markets. flexecash continues to have a transformational effect on Park s business. The value loaded on to flexecash cards this year is 140 per cent above the same time last year, demonstrating the exciting progress that is being made in the development of this product and the markets it serves. The total value loaded on to cards since launch is now over 140m. The majority of flexecash business is incremental not substitutional, as demand for our more traditional products is holding up well. In August we announced that topcashback, one of the UK s leading consumer retail cashback sites, is to begin offering flexecash cards to its 1.5m members, making it the first cashback website to offer Park s platform. This is another instance where Park has capitalised on a new business opportunity created by flexecash. Park s innovative and extensive use of technology continues apace and during the period the company achieved ISO 27001 accreditation. This very important and internationally recognised standard identifies those businesses that have developed best-in-class information security management systems. A further development has been in the area of mobile phone technology where we have launched a number of transactional sites to cater for increasing smart phone and tablet computer usage. Our web-based gift voucher retailer, www.highstreetvouchers.com, has maintained its rapid growth with revenue rising by 24.2 per cent to 4.6m (2011 3.7m) in the period. Corporate customers are also ordering directly via the internet and in the first half 7.0m was processed, 37.0 per cent above last year s level. The overall impact of the internet is apparent across the company and we anticipate that over 100m of orders will be booked online in the current financial year. Outlook The strong performance of the first half is being maintained across the company with orders well ahead of the equivalent period last year. The innovation, drive and enthusiasm within Park is delivering exciting new products and applications, none more so than flexecash, which is taking the company into product and customer areas which were previously closed to us. The combination of technological advances and marketing initiatives, together with the bedrock of our traditional business, gives us real confidence in the continued growth of Park. Peter Johnson Non-executive Chairman 18 December 2012
4 Unaudited Consolidated Income Statement for the half year to 30 September 2012 Notes Billings 54,614 48,583 328,965 Revenue 46,940 46,043 279,025 Cost of sales (46,078) (46,173) (257,283) Gross profit/(loss) 862 (130) 21,742 Distribution costs (290) (230) (2,638) Administrative expenses (5,748) (4,868) (12,245) Operating (loss)/profit (5,176) (5,228) 6,859 Finance income 1,063 834 1,725 Finance costs (2) (2) (Loss)/profit before taxation (4,113) (4,396) 8,582 Taxation 2 987 1,143 (2,066) (Loss)/profit for the period (3,126) (3,253) 6,516 Attributable to: Equity holders of the parent (3,075) (3,253) 6,565 Minority interest (51) (49) (Loss)/earnings per share 3 basic diluted All activities derive from continuing operations. (3,126) (3,253) 6,516 (1.83)p (1.94)p 3.91p (1.77)p (1.87)p 3.76p Unaudited Consolidated Statement of Comprehensive Income for the half year to 30 September 2012 (Loss)/profit for the period (3,126) (3,253) 6,516 Other comprehensive income: Actuarial losses on defined benefit pension plans (310) Deferred tax on actuarial losses on defined benefit pension plans 108 Foreign exchange translation differences 22 52 Other comprehensive income for the period, net of tax 22 (150) Total comprehensive income for the period (3,104) (3,253) 6,366 Attributable to: Equity holders of the parent (3,053) (3,253) 6,415 Minority interest (51) (49) (3,104) (3,253) 6,366
Unaudited Consolidated Statement of Financial Position as at 30 September 2012 5 30.09.12 Restated 30.09.11 Assets Non-current assets Goodwill 1,369 1,407 1,369 Other intangible assets 3,992 4,285 4,291 Investments 8 2 8 Investment property 254 259 257 Property, plant and equipment 8,926 9,054 9,020 Trade and other receivables 1,177 628 14,549 16,184 15,573 Current assets Inventories 13,003 11,636 1,941 Trade and other receivables 10,786 10,473 7,256 Tax receivable 10 Monies held in trust 132,562 119,498 46,882 Cash and cash equivalents 3,549 3,242 9,211 159,910 144,849 65,290 Total assets 174,459 161,033 80,863 Liabilities Current liabilities Trade and other payables (161,746) (150,066) (59,385) Tax payable (103) (2,248) Provisions (34,026) (34,457) (33,025) (195,772) (184,626) (94,658) Non-current liabilities Deferred tax liability (21) (20) (21) Retirement benefit obligation (1,618) (1,856) (1,884) (1,639) (1,876) (1,905) Total liabilities (197,411) (186,502) (96,563) Net liabilities (22,952) (25,469) (15,700) Equity attributable to equity holders of the parent Share capital 3,387 3,361 3,361 Share premium 1,638 1,638 1,638 Retained earnings (27,877) (30,468) (20,650) Minority interests (100) (49) Total equity (22,952) (25,469) (15,700)
6 Unaudited Consolidated Statement of Changes in Equity Share capital Share premium Retained earnings Total parent equity Minority interest Total equity Balance at 1 April 2012 3,361 1,638 (20,650) (15,651) (49) (15,700) Total comprehensive income for the period Loss (3,075) (3,075) (51) (3,126) Other comprehensive income Foreign exchange translation adjustments 22 22 22 Total other comprehensive income 22 22 22 Total comprehensive income for the period (3,053) (3,053) (51) (3,104) Transactions with owners, recorded directly in equity Equity settled share-based payment transactions (794) (794) (794) LTIP shares awarded 26 26 26 Dividends (3,380) (3,380) (3,380) Total contributions by and distribution to owners 26 (4,174) (4,148) (4,148) Balance at 30 September 2012 3,387 1,638 (27,877) (22,852) (100) (22,952) Restated balance at 1 April 2011 3,361 1,638 (24,459) (19,460) (19,460) Total comprehensive income for the period Loss (3,253) (3,253) (3,253) Total comprehensive income for the period (3,253) (3,253) (3,253) Transactions with owners, recorded directly in equity Equity settled share-based payment transactions 100 100 100 Dividends (2,856) (2,856) (2,856) Total contributions by and distribution to owners (2,756) (2,756) (2,756) Restated balance at 30 September 2011 3,361 1,638 (30,468) (25,469) (25,469)
Unaudited Consolidated Statement of Changes in Equity continued 7 Share capital Share premium Retained earnings Total parent equity Minority interest Total equity Restated balance at 1 April 2011 3,361 1,638 (24,459) (19,460) (19,460) Total comprehensive income for the period Profit 6,565 6,565 (49) 6,516 Other comprehensive income Actuarial losses on defined benefit pension plans (310) (310) (310) Tax on other comprehensive income 108 108 108 Foreign exchange translation adjustments 52 52 52 Total other comprehensive income (150) (150) (150) Total comprehensive income for the period 6,415 6,415 (49) 6,366 Transactions with owners, recorded directly in equity Equity settled share-based payment transactions 250 250 250 Dividends (2,856) (2,856) (2,856) Total contributions by and distribution to owners (2,606) (2,606) (2,606) Balance at 31 March 2012 3,361 1,638 (20,650) (15,651) (49) (15,700)
8 Unaudited Consolidated Statement of Cash Flows for the half year to 30 September 2012 Notes Cash flows from operating activities Cash (used in)/generated from operations 4 (3,775) (762) 6,180 Interest received 572 556 1,695 Interest paid (2) (2) Tax paid (1,271) (820) (1,774) Net cash (used in)/generated from operating activities (4,474) (1,028) 6,099 Cash flows from investing activities Proceeds from sale of assets previously held for sale 628 235 602 Proceeds from sale of investments 17 Purchase of intangible assets (142) (206) (710) Purchase of property, plant and equipment (231) (463) (741) Purchase of investments (8) Net cash generated from/(used in) investing activities 255 (434) (840) Cash flows from financing activities Dividends paid to shareholders (1,443) (2,104) (2,856) Net cash used in financing activities (1,443) (2,104) (2,856) Net (decrease)/increase in cash and cash equivalents (5,662) (3,566) 2,403 Cash and cash equivalents at beginning of period 9,211 6,808 6,808 Cash and cash equivalents at end of period 3,549 3,242 9,211 Cash and cash equivalents comprise: Cash 3,549 3,242 9,211
Unaudited Segmental Reporting for the half year to 30 September 2012 9 Billings Consumer 8,459 6,819 187,193 Corporate 46,155 41,764 141,772 External billings 54,614 48,583 328,965 Consumer Corporate 6,704 5,452 141,050 Elimination (6,704) (5,452) (141,050) Inter-segment billings Consumer 8,459 6,819 187,193 Corporate 52,859 47,216 282,822 Elimination (6,704) (5,452) (141,050) Total billings 54,614 48,583 328,965 Revenue Consumer 8,284 6,681 174,286 Corporate 38,656 39,362 104,739 External revenue 46,940 46,043 279,025 Consumer Corporate 6,704 5,452 141,050 Elimination (6,704) (5,452) (141,050) Inter-segment revenue Consumer 8,284 6,681 174,286 Corporate 45,360 44,814 245,789 Elimination (6,704) (5,452) (141,050) Total revenue 46,940 46,043 279,025 Results Consumer (3,121) (3,758) 4,138 Corporate (1,086) (749) 4,865 All other segments (969) (721) (2,144) (Loss)/profit before interest (5,176) (5,228) 6,859
10 Notes to the Accounts 1 Basis of preparation The financial information in this interim report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and the AIM rules of the London Stock Exchange and on the basis of the accounting policies described in s annual report and accounts for the year ended 31 March 2012. These accounting policies have been based on the current standards and interpretations expected to be effective at 31 March 2013. The group does not expect there to be a significant impact on the results from standards, amendments or interpretations which are available for early adoption but which have not yet been adopted. The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value. In addition, this interim financial report does not comply with IAS34 Interim Financial Reporting, which is not currently required to be applied under AIM rules. The directors are of the opinion that the financial information should be prepared on a going concern basis, in the light of current trading and the forecast positive cash balances for the foreseeable future. The financial information included in this interim financial report for the six months ended 30 September 2012 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006, and is unaudited. A copy of the group s statutory accounts for the year ended 31 March 2012, on which the auditors gave an unqualified opinion and did not make a statement under section 498 of the Companies Act 2006, has been filed with the registrar of companies. 2 Taxation The taxation credit for the six months to 30 September 2012 has been calculated using an overall effective tax rate of 24.0 per cent which has been applied to the taxable income (half year to 30 September 2011 26.0 per cent).
11 3 Earnings per share Basic earnings per share (eps) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For diluted eps, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The calculation of basic and diluted eps is based on the following figures: Earnings Total (loss)/earnings for period (3,075) (3,253) 6,565 Weighted average number of shares Basic eps weighted average number of shares 168,334,282 168,030,990 168,030,990 Diluting effect of employee share options 5,526,481 6,314,457 6,802,106 Diluted eps weighted average number of shares 173,860,763 174,345,447 174,833,096 Basic earnings per share Weighted average number of ordinary shares in issue 168,334,282 168,030,990 168,030,990 Eps (pence) (1.83) (1.94) 3.91 Diluted earnings per share Weighted average number of ordinary shares 173,860,763 174,345,447 174,833,096 Eps (pence) (1.77) (1.87) 3.76
12 Notes to the Accounts continued 4 Reconciliation of net (loss)/profit to net cash (outflow)/inflow from operating activities Net (loss)/profit (3,126) (3,253) 6,516 Adjustments for: Tax (987) (1,143) 2,066 Interest income (1,063) (834) (1,725) Interest expense 2 2 Depreciation and amortisation 768 724 1,537 Impairment of goodwill 38 Increase in inventories (11,062) (10,311) (616) Increase in trade and other receivables (3,045) (3,476) (342) Increase in trade and other payables 100,431 97,191 7,262 Increase/(decrease) in provisions 1,001 394 (1,038) Increase in monies held in trust (85,680) (79,891) (7,275) Decrease in retirement benefit obligation (266) (265) (547) Translation adjustment 22 52 Share-based payments (768) 100 250 Net cash (outflow)/inflow from operating activities (3,775) (762) 6,180 5 Restatement of prior period figures As detailed in the financial statements for the year to 31 March 2012, the Government s change in the statutory indexation measure in respect of index-linked retirement benefits to CPI rather than RPI, led to a prior period adjustment in the financial statements to 31 March 2011 to reflect this change. This adjustment is also reflected in these interim statements in the prior period statement of financial position. 6 Approval This statement was approved by the board on 17 December 2012.
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www.parkgroup.co.uk www.getpark.co.uk www.parkchristmas.ie www.highstreetvouchers.com www.love2reward.co.uk www.love2reward.ie www.flexecash.com www.love2choose.co.uk www.flexesaver.co.uk Valley Road, Birkenhead Merseyside CH41 7ED info@parkgroup.co.uk