TIDMPARK
RNS Number : 8895B
Park Group PLC
12 June 2019
12 June 2019
PARK GROUP PLC
("Park", "Park Group" or "the Group")
Preliminary Final Results for the Year Ended 31 March 2019
Summary
Park Group plc, the UK's leading multi-retailer redemption
product provider to corporate and consumer markets, today announces
its final results for the financial year ended 31 March 2019. These
are Park's first annual results presented under a new accounting
standard (IFRS 15 Revenue from Contracts with Customers), with 2018
comparatives restated accordingly.
Financial highlights
-- Billings increased 3.4 per cent to GBP426.9m (2018 - GBP412.8m)
-- Revenue decreased marginally to GBP110.4m (2018 restated - GBP111.1m)
-- Total cash balances, including monies held in trust and
deposits were GBP134.0m (2018 - GBP121.4m)
-- Adjusted* operating profit of GBP10.9m (2018 restated - GBP11.3m)
-- Adjusted* profit before tax of GBP12.5m (2018 restated - GBP12.6m)
-- Adjusted* earnings per share of 5.43p (2018 restated - 5.50p)
-- Proposed final dividend raised to 2.15p per share (2018 -
2.05p) making a total dividend for the year up 4.9 per cent to
3.20p per share (2018 - 3.05p). Dividend levels continue to grow,
despite investment during a period of transformation, reflecting
the board's confidence.
*before GBP1.21m of exceptional items related to the impairment
of our land and buildings
Statutory results
-- Operating profit of GBP9.7m (2018 restated - GBP11.3m)
-- Profit before tax of GBP11.3m (2018 restated - GBP12.6m)
-- Earnings per share of 4.78p (2018 restated - 5.50p)
Operational highlights
-- Corporate:
- Good growth in billings of 8.1 per cent to GBP194.8m (2018 - GBP180.2m)
- Revenues from new clients who were billed more than GBP100,000 increased fivefold
- Park's own brand products grew from 85 per cent of total billings to 89 per cent
-- Consumer:
- Record volume of new customer accounts for Christmas 2018
- Significant 83 per cent increase in web users interacting via a mobile device last year
Implementation of the strategic business plan
-- Strengthened our management team through important senior appointments
-- Signed a lease for our new offices in Liverpool city centre
-- Separated the hampers business, under a new discrete management team
-- Invested significantly in technology to enhance scalability, resilience and efficiency
-- Continued to work on the development of a new product
Ian O'Doherty, Chief Executive Officer, commented:
"Park delivered another good performance last year, continuing
to build upon our position as the UK's leading multi-retailer
redemption product provider to the corporate and consumer
markets.
"Our outlook for the current financial year is unchanged, as we
anticipate continued good growth in our Corporate business to be
partially offset by a slower Consumer Christmas savings market.
"In summary, we are pleased with the considerable progress that
we are making and we are confident that delivery of the strategic
business plan will lay the foundations for strong and sustained
growth in future years."
Please follow the link below to access a short video of Ian
O'Doherty, Chief Executive Officer, summarising the results.
http://bit.ly/PARK_FY19
Park will host a presentation for analysts at MHP
Communications' offices (6 Agar Street, London, WC2N 4HN) at 9.30am
this morning.
If you would like to attend, please contact MHP on 020 3128 8193
or parkgroup@mhpc.com.
For further information please visit http://www.parkgroup.co.uk/
or contact:
Park Group plc Liberum MHP Communications
(NOMAD and broker)
Ian O'Doherty, CEO Richard Crawley Reg Hoare
Tim Clancy, CFO Jamie Richards Katie Hunt
Patrick Hanrahan
Charles Hirst
Tel: 0151 653 1700 Tel: 020 3100 2251 Tel: 020 3128 8193
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").
Notes to Editors:
Park is the UK's leading multi-retailer redemption product
provider to corporate and consumer markets. Park is dedicated to
providing its new and existing customers access to its offering
through easy to use products, supported by intuitive and innovative
digital platforms combined with its sales and customer services
teams. As part of its strategic plan the company has pledged to put
digital first, exploring technology solutions to broaden its
physical and virtual payment capabilities. Park recently unveiled
its new Love2Shop app, which gives consumers access to one
integrated mobile platform.
Consumers can access Park's multi-retailer redemption product
directly or via its leading Christmas Savings offering, which
currently helps over 426,000 families budget for Christmas. Park
also provides around 37,000 business customers with market-leading
incentive, recognition and rewards options for an estimated 2
million recipients through 189 retail partners with over 25,000
outlets.
Park Group plc's shares are traded on AIM, a market operated by
the London Stock Exchange.
For further information on Park Group please visit:
www.parkgroup.co.uk
The Park Prepayments Protection Trust is designed to increase
protection for customers' prepayments. The Trust has three
directors, two of whom are independent of Park. Details of the
trust are set out here:
https://www.getpark.co.uk/CORPORATE/declaration.pdf
Business and Operating Review
Introduction
Park delivered another good performance last year, continuing to
build upon our position as the UK's leading multi-retailer
redemption product provider to the corporate and consumer
markets.
In December 2018, at the time of Park's half year results, we
announced our new strategic business plan and the initial actions
we were undertaking to deliver it. We are pleased to report that we
have already made tangible progress in delivering the initial
actions, in terms of investment in our people, premises and
technology. This investment is establishing a more robust and
scalable business model that will strengthen our ability to take
advantage of the growth opportunities in our markets.
Overall, we are confident that the steps we are taking will
strengthen the group's proposition for consumers, businesses and
retailers alike, and ensure we are able to capitalise on
opportunities in the fast-evolving markets that we serve.
Importantly our plan will significantly improve the efficiency of
our operations, leading to enhanced profitability in future years
following the investments we are making in the current financial
year.
Results for the year
These are Park's first annual results presented under a new
accounting standard (IFRS 15 Revenue from Contracts with Customers)
which, in summary, requires us to report revenue on a 'net' rather
than 'gross' basis for Love2shop vouchers. Furthermore, the
standard leads to a deferment of revenue and operating profit in
respect of multi-retailer redemption products. The accounting
treatment does not impact billings, change the underlying
profitability of the business model or impact reported or future
cash flows. All figures for the year are presented on an IFRS15
basis, with the prior years restated accordingly.
Billings* increased by 3.4 per cent in the year to 31 March 2019
to GBP426.9m (2018 - GBP412.8m), despite not repeating a low margin
product through our intermediary channel (which contributed GBP6.2m
of billings in the prior year). Revenue decreased marginally by 0.6
per cent to GBP110.4m (2018 restated - GBP111.1m) reflecting good
growth from our Corporate business, notwithstanding the removal of
the aforementioned product, and a stable performance from our
Consumer business. This was offset by a higher proportion of
revenues being deferred to the current financial year than in prior
years due to a change in our revenue mix.
Operating profit for the year was GBP9.7m (2018 restated -
GBP11.3m). Interest receipts were GBP1.6m (2018 - GBP1.3m) on
average cash balances (including cash held in trust) of GBP174.0m
(2018 - GBP165.0m), after which profit before tax was GBP11.3m
(2018 restated - GBP12.6m). Underlying profit before tax was
GBP12.5m (2018 restated - GBP12.6m) before an exceptional charge of
GBP1.2m relating to the impairment of our land and buildings (2018
- no exceptional items). Total cash balances, including monies held
in trust and bank deposits, at 31 March 2019 were GBP134.0m (2018 -
GBP121.4m).
Dividend
The Board is recommending a final dividend of 2.15p, a 4.9 per
cent increase on the prior year (2018 - 2.05p), which together with
the interim dividend of 1.05p per share (2018 - 1.00p) gives a
total dividend of 3.20p (2018 - 3.05p), a 4.9 per cent increase
compared to the prior year. Dividend levels continue to grow,
despite investment and a period of transformation, reflecting the
Board's confidence.
The final dividend will be payable on 1 October 2019 to
shareholders on the register on 23 August 2019, with an ex-dividend
date of 22 August 2019.
Park's dividend policy is linked to the cash we generate and
business performance. It is noteworthy that the total dividend has
more than doubled over the last nine years, reflecting this. The
Board will keep Park's dividend policy under review as the business
develops, including considering bringing forward payment and record
dates.
Divisional review
We continue to operate in dynamic and growing markets, serving
customers in both corporate and consumer channels. There has been
an encouraging rate of growth in the UK gift card market during the
calendar year 2018, with growth in the second half at 12 per
cent**. Key market trends include strong growth in the B2B segment,
a significant shift towards digital, an increase in experiences as
well as product and demand for more personalisation.
This industry growth and key trends are aligned to our strategic
plans and these reinforce our decision to invest in the future of
Park.
**Source: UK Gift Card and Voucher Association
Corporate (47 per cent of group revenue in the year ended 31
March 2019)
Park's Corporate business provides around 37,000 business
customers with market-leading incentive, recognition and rewards
options for an estimated 2m recipients through 189 retail partners
with over 25,000 outlets.
Corporate billings of GBP194.8m were 8.1 per cent ahead of the
prior year (2018 restated - GBP180.2m) despite not continuing a low
margin product through our intermediary channel (which contributed
GBP6.2m of billings in the prior year). Corporate revenue was
GBP51.5m (2018 restated - GBP49.8m) representing growth of 3.4 per
cent, despite GBP6.2m of low margin business in the prior year
which has not been repeated and a higher proportion of revenues
being deferred in to the current financial year due to the greater
proportion of revenues being generated through cards and e-codes.
These trends were also reflected in a segmental profit which
increased by GBP1.1m to GBP7.8m (2018 restated - GBP6.7m), with an
underlying improvement in the mix of products towards those
generating higher gross margin, offset by a greater proportion
deferred in to the current financial year.
The strong underlying performance from our Corporate business
was driven through a combination of sales growth and a more
profitable product mix, including:
-- A concerted marketing effort to recruit larger businesses saw
billings derived from new clients who were billed more than
GBP100,000 increase from GBP2m in 2017/18 to GBP10m in 2018/19.
-- Greater emphasis on account management also resulted in a
growth of sales from established customers despite the removal of
some low margin single store products in favour of Park's higher
margin multi-retailer redemption products.
-- Park's own brand products grew from 85 per cent of total
billings to 89 per cent, with profit further enhanced by a shift
from paper vouchers to cards and e-codes.
Consumer (53 per cent of group revenue in the year ended 31
March 2019)
Consumers can access Park's multi-retailer redemption product
directly from our website highstreetvouchers.com or via our leading
Christmas savings offering, which currently helps over 428,000
families budget for Christmas.
Our Consumer business billings were GBP232.1m compared to
GBP232.6m in the prior year. Consumer revenue was GBP58.9m (2018
restated - GBP61.3m) which produced a segmental profit of GBP6.8m
versus GBP7.2m (restated) in the prior year.
Park achieved a record volume of new customer accounts for
Christmas 2018, whilst also implementing a number of initiatives to
improve the customer experience, attract customers into the
business and provide them with an attractive range of spending
options. This was a good performance given the evolving Christmas
savings market, where consumers are engaging less through
traditional channels and more through digital channels.
In terms of improving the customer experience, the expansion of
the 'self-serve' functionality of our website and app has given
customers greater flexibility in managing their payments and orders
directly, which has led to a doubling of 'self' management of
orders compared to the prior year. In addition, enhancements to our
mobile user experience mean that 83 per cent of customers now
choose to interact with us via phone or tablet. Overall, the
strength of our customers' experience is demonstrated by our 9.8/10
Trustpilot Score.
To attract more customers into the business, and to respond to
how TV viewing habits have changed, we have broadened our marketing
into several new channels including digital and social media. We
have also launched a comprehensive review of our media buying and
creative agencies in order to further refine the customer
proposition and increase our future marketing efficiency.
We have continued to improve the range of spending options for
our customers with over 70 online retailers and more than 20
restaurants and experiences added to our Love2shop gift card in the
last year, whilst sales of the Your Choice Mastercard, which can be
spent in-store and online, have grown very strongly.
As the market continues to evolve, we expect to realise the
benefits of these initiatives for Christmas 2020.
Progress with our strategic business plan
In December 2018, we set out our new strategic business plan; it
aims to build on the high regard in which Park is held by existing
customers to capture more of the available market in the future.
The plan has been designed to deliver this through improving the
customer experience, simplifying our offer, making our products and
services available to a wider customer base, and developing our
digital platforms to meet the needs of our customers both now and
in the future.
The four principal pillars of the new strategic business plan
are set out below, alongside the progress we have made in
delivering the initial steps in the plan:
1. Productivity: we will be more efficient and effective
Progress to date:
-- We have signed a lease for our new offices in Liverpool city
centre, which we believe will ensure a modern, collaborative
working culture as well as helping us to retain and attract
talented staff. We expect to move in during late summer 2019.
-- Investment in our technology has already enhanced our
capabilities, capacity, functionality and performance to benefit
our customers.
2. Appeal: we will broaden our customer appeal
Progress to date:
-- We have continued to work on the development of a new
product, in order to target currently untapped demand from a
broader audience.
-- Having completed much of the work to develop the product
concept, we expect to move to a phase of comprehensive market
testing during the second half of the year. We will update further
on this later in the year.
3. Clarity: we will focus on our multi-retailer redemption proposition
Progress to date:
-- We have separated the hamper business, under a new discrete management team.
-- We have further simplified our product range by reducing the
number of Love2shop flexecash(R) schemes available whilst
maintaining customer choice.
-- We have made good progress with migrating customers from
paper vouchers to card sales, through a phased approach of offering
fewer paper products through our catalogues and encouraging both
Christmas savers and corporate accounts to make the switch.
-- We have commenced a review of our brand architecture and will
communicate the results of this review later in the year.
4. Experience: we will be easier to work with for all of our customers
Progress to date:
-- We continue to drive product and customer innovation, by
anchoring the organisation on digital, having put in place new
personalised e-delivery, an enhanced app capability and a new
mobile digital enablement agreement with Mastercard.
-- We have selected a new Enterprise Resource Planning (ERP)
system, Microsoft Dynamics 365, which will give us the scalability,
resilience and efficiency required for a more seamless and
automated back office support functions across the business.
Investing in our people to deliver growth
Board succession planning
We were pleased to confirm in April 2019 that our Chairman,
Laura Carstensen, will continue in her role for a further three
years, ensuring she will remain fully involved in guiding the
executive directors and management team as they deliver the
strategic business plan.
Following six years' as a non-executive director, Michael de
Kare-Silver intends to retire by rotation from the Board at the
time of the group's AGM in September 2019. We are actively seeking
a new independent non-executive director and will provide a further
update in due course. We thank Michael for his significant
contribution during his tenure, most recently during a period of
great change for the group in terms of its leadership and
strategy.
As previously reported, Tim Clancy became Chief Financial
Officer (CFO) during the financial year, and his extensive board
level experience in businesses and sectors which are extremely
relevant to Park has already brought benefits to the business.
Enhancing our management team
To support the effective implementation of our new strategic
plan, we have broadened and enhanced our management team including
a number of newly created roles to help deliver the strategic
business plan and future growth: these appointments included a new
Chief Information Officer (CIO), to drive our technology strategy;
a Chief Transformation Officer (CTO), to help execute the changes
we are making; and a new Human Resources Director, to ensure we
attract, nurture and retain great talent.
Investing in our people
We would like to thank all our employees, whose experience,
ambition and dedication to delivering on our customers'
expectations are at the heart of our success. We are highly
focussed on doing the very best for our people; by providing them
with the necessary tools, support, training and development
opportunities to succeed and by establishing a strong culture that
supports them in working together with clarity and purpose as we
deliver our growth plans.
Outlook
Our outlook for the current financial year is unchanged, as we
anticipate continued good growth in our Corporate business to be
partially offset by a slower Consumer Christmas savings market.
As we stated in our trading update in April 2019, we expect
additional costs (net of initial expected cost savings) of GBP2.0m
associated with implementing the strategic business plan in the
current financial year, which will supress profitability this
financial year (19/20). These costs (which are both one off and
recurring) relate to running two sites as we transition to the new
offices, as well as additional technology and marketing
investment.
This investment and the transformation we are undertaking are
expected to result in enhanced future growth prospects and a more
robust and scalable business model, putting us in a much stronger
position.
In summary, we are pleased with the considerable progress that
we are making and we are confident that delivery of the strategic
business plan will lay the foundations for strong and sustained
growth in future years.
Laura Carstensen, Chairman
Ian O'Doherty, Chief Executive
12 June 2019
* See page 26 in accounting policies for a reconciliation of
billings to revenue
Financial Review
With effect from 1 April 2018 the group adopted IFRS15. The
group applied the full retrospective approach when transitioning to
the new standard. The adoption of IFRS15 does not impact billings
to external customers or clients or cash flow, nor does it change
the overall profitability of the business model. However, it has
led to the group recognising significantly lower revenues, a
relatively small deferment in operating profit and a reduced net
asset position for all restated periods.
Billings and Revenue
The group's products are split into the following
categories:
-- Multi-retailer redemption products - Love2shop vouchers,
flexecash(R) cards, Mastercards and e-codes
-- Single retailer redemption products - third party retailer vouchers, cards and e-codes
-- Other - hampers, merchandise and consultancy fees
For multi-retailer redemption products, billings are the gross
value of goods and services shipped and invoiced to customers
during the year. Revenue for multi-retailer redemption products is
the net service fee received on redemption, cardholder fees and
breakage which are recognised when multi-retailer redemption
products are redeemed.
For single retailer redemption products and other, both billings
and revenue are the gross value of goods and services shipped and
invoiced to customers during the year.
Further details can be found in accounting policies on pages 20
to 26.
Billings* 2019 2018 Change
GBPm GBPm %
Multi-retailer redemption
products 362.4 340.9 +6.3
Single retailer redemption
products 50.8 57.5 -11.7
Other 13.7 14.4 -4.9
Total 426.9 412.8 +3.4
Multi-retailer redemption product billings includes billings in
respect of e-codes which are capable of being converted into either
multi-retailer redemption products or single retailer redemption
products. Revenue figures below reflect the product into which the
e-code is converted by the cardholder.
Revenue Restated
2019 2018 Change
GBPm GBPm %
Multi-retailer redemption
products 41.1 36.1 +13.9
Single retailer redemption
products 55.6 60.6 -8.2
Other 13.7 14.4 -4.8
Total 110.4 111.1 -0.6
The value of multi-retailer billings has increased by 6.3 per
cent reflecting the strategy to promote the group's own brand
product. The mix of multi-retailer redemption products increased
from 82.7 per cent to 84.9 per cent due to the increased volume and
the strategic curtailment of some low margin single retailer
business.
Revenue decreased marginally by 0.6 per cent to GBP110.4m due to
not repeating some low margin single retailer redemption product
business offset by a greater volume of multi-retailer redemption
products with an increased mix of higher value card revenue.
Profit from operations
The group's operations are divided into two principal operating
segments:
-- Consumer - which represents sales to consumers, utilising the
group's Christmas savings offering and our website,
highstreetvouchers.com; and
-- Corporate - comprising sales to businesses, offering
primarily sales of the Love2shop voucher, flexecash(R) cards,
Mastercards and e-codes in addition to other retailer vouchers.
All other segments comprise central costs and property costs
which are shown separately in order to give a more meaningful view
of divisional performance.
Restated
2019 2018 Change
GBP'000 GBP'000 GBP'000
------------------- -------- -------- --------
Consumer 6,809 7,246 (437)
------------------- -------- -------- --------
Corporate 7,789 6,700 1,089
------------------- -------- -------- --------
All other segments (4,866) (2,629) (2,237)
------------------- -------- -------- --------
Operating profit 9,732 11,317 (1,585)
------------------- -------- -------- --------
Consumer
In the Consumer business, customer billings have decreased
marginally by 0.2 per cent from GBP232.6m to GBP232.1m. Billings
for Christmas savers were down marginally but this was offset by
stronger other Consumer billings, derived through the
hightstreetvouchers.com website. Revenue has decreased by 3.9 per
cent to GBP58.9m (2018 restated - GBP61.3m), primarily due to more
deferred revenue as a consequence of a higher card mix and slower
redemption of paper vouchers.
The mix of card billings increased in Consumer from 41.9 per
cent in the prior year to 44.4 per cent in 2018/19 with a billings
value of GBP98.9m (2018 - GBP93.2m). Card revenue increased
marginally to GBP37.5m from GBP37.0m with more multi-retailer
redemption products on a net basis.
Operating profit was GBP6.8m, a decrease of GBP0.4m (6.0 per
cent) from the GBP7.2m achieved in the prior year. This was
primarily due to a reduction in revenue as noted above.
Corporate
In the Corporate business customer billings have increased
strongly by 8.1 per cent, from GBP180.2m to GBP194.8m. This growth
was driven by multiple new clients, with two new large clients
accounting for GBP7.9m of billings in 2018/19. Corporate revenue
grew by 3.4 per cent over the prior year, from GBP49.8m to
GBP51.5m. Additional volume was offset by greater multi-retailer
redemption product reported on a net basis and more revenue
deferred due to a higher card mix, which grew from 43.1 per cent to
51.8 per cent. Overall our customer incentive market grew but this
was offset by a reduction in the intermediary channel where we did
not repeat some low margin business from the previous year.
Operating profit improved by 16.3 per cent to GBP7.8m (2018
restated - GBP6.7m) reflecting the higher level of billings and an
improved mix of products sold, principally flexecash(R) cards.
All other segments
Central and property costs increased by 85.1 per cent from
GBP2.6m to GBP4.9m. This includes the impairment of the Valley Road
site at GBP1.2m and GBP0.5m of development costs attributable to
the new strategic business plan including the use of consultants
and a customer research exercise (2018 - no impairment or
development costs). These development costs will continue at a
lower level in the current financial year together with additional
costs of implementing the revised strategy. Additional payroll
costs of GBP0.5m were incurred relating to the new management
team.
Reconciliation of adjusted to statutory profit measures
The Board believes that adjusted profit (excluding impairment)
is the best measure of the underlying performance of the group.
Operating Profit Profit
2019 profit before for the
tax year
GBP'000 GBP'000 GBP'000
Profit before exceptional item 10,942 12,514 10,092
Impairment of property, plant and
equipment (1,210) (1,210) (1,210)
---------- -------- ---------
Statutory profit 9,732 11,304 8,882
---------- -------- ---------
2018
Statutory profit 11,317 12,587 10,188
---------- -------- ---------
Impairment of the Valley Road site
In December 2018, the group announced its intention to relocate
the majority of the workforce to a new head office location in
central Liverpool. A small number of staff will remain at Valley
Road and the Board are currently considering options for the site
that could include the sale of the site and lease-back of areas
which are still required. Following a review of the value of land
and buildings at Valley Road, undertaken with our property
consultants, we have decided to reduce the book value of the site
by GBP1.2m to GBP5.0m.
Finance income
Finance income increased by 23.8 per cent to GBP1.6m from
GBP1.3m. Average total cash held by the group, including cash held
in trust during the year increased by over 5 per cent to GBP174m
(2018 - GBP165m), and the yield achieved on this higher cash
balance improved due to the increase in base rates.
Taxation
The effective tax rate for the year was 21.4 per cent (2018 -
19.1 per cent) of profit before tax. The increase compared to the
prior year was primarily due to the fact that the impairment charge
in respect of the Valley Road site did not attract tax relief.
Earnings per share
Basic earnings per share (EPS) fell by 13.1 per cent from 5.50p
(restated) in 2018 to 4.78p. Excluding the exceptional impairment
charge basic EPS is 5.43p (2018 restated - 5.50p), down 1.3 per
cent.
Dividends
The Board has recommended a final dividend of 2.15p per share.
An interim dividend of 1.05p per share was paid on 8 April 2019.
Subject to approval of the final dividend at the AGM, the total
dividend for 2019 will be 3.20p per share representing an increase
of 4.9 per cent over the prior year.
Cash flows and treasury
Cash flows from operating activities were GBP6.9m, GBP3.7m (34.8
per cent) lower than the prior year, due to an increase in monies
held in trust, offset by a cash inflow in respect of working
capital. Monies in trust grew from GBP87.0m in 2018 to GBP99.3m.
This growth was primarily in the Park Card Services Limited E money
Trust (PCSET) to support the e-money float in accordance with
regulatory requirements. This increased by GBP10.7m to GBP36.6m due
to higher levels of card business.
In addition, GBP60.9m (2018 - GBP60.1m) 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.
Also, at 31 March 2019, the group held GBP1.8m of other ring
fenced funds (2018 - GBP1.0m).
At the end of March 2019 GBP36.9m (2018 - GBP40.3m) of cash was
held by the group. This was GBP3.4m (8.5 per cent) lower than the
prior year due to higher funds held as monies in trust.
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 10.4 per cent to GBP134.0m from
GBP121.4m. These total balances peaked at just under GBP236m in the
year, representing an increase of over GBP7m from the prior year.
This was principally due to the higher level of cash receipts into
the PCSET due to higher Corporate card business.
Trade and other payables
Included within trade and other payables is deferred income in
respect of multi-retailer redemption products (vouchers, cards and
e-codes). Revenue is deferred for service fees and breakage, net of
discount. The amount of revenue deferred at March 2019 has
increased to GBP7.0m from GBP5.8m in the prior year due to an
increase in card mix, an increase in final quarter billings and
slower redemption of paper vouchers. The increase in card mix,
where breakage levels are higher, has resulted in greater deferred
revenue. A shift to card schemes with higher levels of breakage has
further increased deferred revenue.
Provisions
At 31 March 2019, provisions had increased to GBP58.3m from
GBP48.0m. This was mainly due to an increase in the amounts
provided in respect of flexecash(R) cards of GBP9.8m and for
unspent vouchers of GBP0.4m. The value of unspent vouchers included
in the provision, arises primarily from sales in the Corporate
business.
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 GBP1.9m based on the valuation under IAS19
performed at 31 March 2019 (2018 - surplus of GBP2.7m).
Following a High Court ruling in October 2018 the group is
required to equalise Guaranteed Minimum Payments (GMPs) for men and
women. Our actuaries have calculated that the expected impact of
this for the group is GBP0.3m and this has been recognised in the
statement of profit or loss.
The group has recognised interest income of GBP73,000 (2018 -
GBP32,000) in the statement of profit or loss in respect of the
pension schemes. In addition, the group has recognised a
re-measurement loss in the statement of comprehensive income (SOCI)
of GBP0.8m (2018 - gain of GBP0.9m) net of tax.
In the year ended 31 March 2019, contributions by the group to
the schemes totalled GBP0.5m (2018 - 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 GBP0.5m for the year
to March 2019, 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.
Tim Clancy
Chief Financial Officer
12 June 2019
* See page 26 in accounting policies for a reconciliation of
billings to revenue
Risk Factors
Financial risks
Risk area Potential impact Mitigation
------------------------------------- ------------------------------------ -------------------------------------
Group funding The Group, like many other The Group manages its capital to
companies, depends on its ability to safeguard its ability to operate as a
continue to service its debts going concern. The
as they fall due and to have access Group has access to funds for working
to finance where this is necessary. capital from the Park Prepayments
Protection Trust (PPPT)
for a defined period in the year,
although the Group has not used this
facility in either
of the last two years and is not
forecasting to do so.
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. The Group will arrange
bank facilities to assist with
liquidity management if necessary.
------------------------------------- ------------------------------------ -------------------------------------
Treasury risks The Group has significant funds on The Group treasury policy ensures
deposit and as such is exposed to that funds are only placed with, and
interest rate risk, counterparty spread between, high
risk and exchange rate movements. quality counterparties and where
appropriate any 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 system The Group seeks, wherever possible,
would adversely impact on the to offer the widest possible range of
Group's ability to collect payment options
payments from customers and could to customers to reduce the potential
adversely affect the Group's cash impact of failure of a single payment
position. route.
------------------------------------- ------------------------------------ -------------------------------------
Pension funding The Group may be required to The Group's pension schemes are
increase its contributions to cover closed to future benefit accrual
any funding shortfalls. related to service. Funding
rates are in accordance with the
agreements reached with the trustees
after consultation with
the scheme actuary.
------------------------------------- ------------------------------------ -------------------------------------
Financial services and other market The business model may be The Group has a regulatory team that
regulation compromised by changes in existing monitors and enforces compliance with
regulation or by the introduction existing regulations
of new regulation. Possible new and keeps the Group up to date with
regulation could include a impending regulation. The Group
requirement to ring fence funds shares the objectives
for vouchers sold to consumers. This of Government in treating customers
would adversely affect the Group's fairly and in the protection of
cash position. customer prepayments.
The Group 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 and Customers are given an appropriate
the risk of default by credit level of credit based on their
customers due to reduced trading history and financial
economic activity. status, 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 and IT systems Failure to provide adequate service The Group plans and tests its
levels to customers, retail partners business continuity procedures in
or other suppliers, preparation for catastrophic
resulting in a failure to maintain events and for the existence of
services that generate revenue. counterfeit vouchers or cards.
There is a cyber risk to our Our focus is on the elimination of
business which means that there is a any single point of failure in our IT
risk that an attack on our systems. Our critical
infrastructure by an individual or infrastructure has been designed to
group could be successful and impact prevent unauthorised access and
the availability of reduce the likelihood
critical systems. 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.
The Group has decided to upgrade its
IT systems by implementing a new
Enterprise Resource
Planning (ERP) system, Microsoft
Dynamics, which will provide
scalability, resilience and
efficiency.
------------------------------------- ------------------------------------ -------------------------------------
Loss of key management The Group depends on its directors Existing key appointments are
and key personnel. The loss of the rewarded with competitive
services of any directors remuneration packages including long
or other key employees could damage term incentives linked to the Group's
the Group's business, financial performance and shareholder return.
condition and results.
------------------------------------- ------------------------------------ -------------------------------------
Relationships with high street and The Group is dependent upon the The Group has a dedicated team of
online retailers success of its Love2shop voucher and managers whose role it is to ensure
flexecash(R) card. These that the Group's products
products only operate provided the have a full range of retailers. They
participating retailers continue to also work closely with all retailers
accept them as payment to promote their
for goods or services provided. The businesses to Park's customers who
failure of one or more participating utilise Park's vouchers and cards to
retailers could make drive forward incremental
these products less attractive to sales to their retail outlets.
customers. 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 distribution network The failure of the distribution Wherever possible the Group seeks to
network during the Christmas period, utilise a wide range of
for example a Post Office geographically spread carriers
strike, road network disruption or to mitigate the failure of a single
fuel shortages could adversely operator.
impact the results and reputation
of Park's brands.
------------------------------------- ------------------------------------ -------------------------------------
Brand perception and reputation Adverse market perception in Operation of a process of continual
relation to the Group's products or review of all marketing media,
services, for example, following material and websites to
the collapse of a competitor. This promote transparency to customers.
could result in a downturn in demand Extensive testing and rigorous
for its products and internal controls exist for all group
services. systems to maintain continuity
of online customer service.
Our brand strategy has been
thoroughly reviewed.
------------------------------------- ------------------------------------ -------------------------------------
Promotional activity The success of the Group's annual Detailed management processes that
promotional campaign is essential to are designed to optimise the cost of
ensure the continued recruiting customers
recruitment of customers. Failure to are in place.
recruit would result in loss of
revenue to the Group.
Promotional activity must also be
cost effective.
Competition Loss of margins or market share The Group has a broad base of
arising from increased activity from customers and no single customer
competitors. represents more than 4 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.
------------------------------------- ------------------------------------ -------------------------------------
Brexit The Group currently takes advantage There is a project in place to plan
of the FCA's passporting regime to for a hard Brexit, to clarify
issue regulated cards processes and procedures
in Ireland. There is a risk that the in the scenario of no longer being
Group will be unable to issue cards able to issue and maintain cards
in Ireland after within the ROI.
the revised Brexit deadline.
------------------------------------- ------------------------------------ -------------------------------------
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR TO 31 MARCH 2019
Restated*
2019 2018
GBP'000 GBP'000
Billings 426,901 412,786
--------- ----------
Revenue
* Goods - Single retailer redemption products 55,624 60,621
* Other goods 7,511 8,497
* Services - Multi-retailer redemption products 41,111 36,087
* Other services 6,119 5,777
* Other 29 72
--------- ----------
110,394 111,054
Cost of sales (79,117) (79,628)
--------- ----------
Gross profit 31,277 31,426
Distribution costs (2,934) (3,002)
Administrative expenses (17,401) (17,107)
--------- ----------
Operating profit before exceptional item 10,942 11,317
Impairment of property, plant and equipment (1,210) -
--------- ----------
Operating profit 9,732 11,317
Finance income 1,572 1,274
Finance costs - (4)
--------- ----------
Profit before taxation 11,304 12,587
Taxation (2,422) (2,399)
--------- ----------
Profit for the year attributable to equity
holders of the parent 8,882 10,188
--------- ----------
Earnings per share (see note 8)
: basic 4.78p 5.50p
: diluted 4.77p 5.48p
* Restated for implementation of IFRS15, see revenue recognition
accounting policy
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR TO 31 MARCH 2019
Restated*
2019 2018
GBP'000 GBP'000
Profit for the year 8,882 10,188
Other comprehensive (expense)/income
Items that will not be reclassified to profit
or loss:
Remeasurement of defined benefit pension
schemes (1,009) 1,142
Deferred tax on defined benefit pension schemes 172 (194)
-------- ----------
(837) 948
-------- ----------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences (3) (20)
Other comprehensive (expense)/ income for
the year net of tax (840) 928
-------- ----------
Total comprehensive income for the year attributable
to equity holders of the parent 8,042 11,116
-------- ----------
* Restated for implementation of IFRS15, see revenue recognition
accounting policy
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH
2019
Restated* Restated*
As at As at As at
31.03.19 31.03.18 01.04.17
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 2,168 2,185 2,202
Other intangible assets 2,295 2,278 2,682
Property, plant and equipment 6,216 7,684 7,688
Deferred tax assets - 237 654
Retirement benefit asset 1,927 2,721 1,827
12,606 15,105 15,053
-------------------- -------------------- ----------
Current assets
Inventories 4,574 3,808 2,632
Trade and other receivables 12,582 10,917 9,236
Other financial assets 200 200 200
Monies held in trust 99,251 86,992 83,018
Cash 36,868 40,311 34,236
153,475 142,228 129,322
-------------------- -------------------- ----------
Total assets 166,081 157,333 144,375
-------------------- -------------------- ----------
Liabilities
Current liabilities
Trade and other payables (89,952) (94,592) (87,201)
Tax payable (580) (704) (1,272)
Provisions (58,286) (48,012) (46,164)
-------------------- -------------------- ----------
(148,818) (143,308) (134,637)
-------------------- -------------------- ----------
Non-current liabilities
Deferred tax liability (553) - -
Retirement benefit obligation - - (924)
-------------------- -------------------- ----------
(553) - (924)
-------------------- -------------------- ----------
Total liabilities (149,371) (143,308) (135,561)
-------------------- -------------------- ----------
Net assets 16,710 14,025 8,814
-------------------- -------------------- ----------
Equity attributable to equity holders
of the parent
Share capital 3,727 3,711 3,687
Share premium 6,470 6,137 6,137
Retained earnings 6,824 4,488 (699)
Other reserves (311) (311) (311)
Total equity 16,710 14,025 8,814
-------------------- -------------------- ----------
* Restated for implementation of IFRS15, see revenue recognition
accounting policy
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 2018 3,711 6,137 (311) 4,488 14,025
Total comprehensive income for
the year
Profit - - - 8,882 8,882
Other comprehensive expense
Remeasurement of defined benefit
pension schemes - - - (1,009) (1,009)
Tax on defined benefit pension
schemes - - - 172 172
Foreign exchange translation adjustments - - - (3) (3)
--------- --------- ---------- ---------- --------
Total other comprehensive expense - - - (840) (840)
--------- --------- ---------- ---------- --------
Total comprehensive income for
the year - - - 8,042 8,042
--------- --------- ---------- ---------- --------
Transactions with owners, recorded
directly in equity
Equity settled share-based payment
transactions - - - 11 11
Tax on equity settled share-based
payment transactions - - - (45) (45)
Exercise of share options 12 333 - - 345
LTIP shares awarded 4 - - (4) -
Dividends - - - (5,668) (5,668)
--------- --------- ---------- ---------- --------
Total contributions by and distribution
to owners 16 333 - (5,706) (5,357)
--------- --------- ---------- ---------- --------
Balance at 31 March 2019 3,727 6,470 (311) 6,824 16,710
--------- --------- ---------- ---------- --------
Balance at 1 April 2017 as originally
reported 3,687 6,137 (311) 2,912 12,425
Restatement due to adoption of
IFRS15 (see revenue recognition
policy) - - - (3,611) (3,611)
--------- --------- ---------- ---------- --------
Restated balance at 1 April 2017 3,687 6,137 (311) (699) 8,814
Total comprehensive income for
the year
Profit as restated - - - 10,188 10,188
Other comprehensive income/(expense)
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 - - - 11,116 11,116
--------- --------- ---------- ---------- --------
Transactions with owners, recorded
directly in equity
Equity settled share-based payment
transactions - - - (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) 4,488 14,025
--------- --------- ---------- ---------- --------
Other reserves relate to the acquisition of a minority interest
in a subsidiary.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR TO 31 MARCH 2019
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 6,874 10,540
Interest received 1,497 1,271
Interest paid - (4)
Tax paid (1,576) (2,537)
-------- --------
Net cash generated from operating
activities 6,795 9,270
Cash flows from investing activities
Proceeds from sale of property,
plant and equipment - 1
Purchase of intangible assets (781) (361)
Purchase of property, plant and
equipment (371) (659)
Net cash used in investing activities (1,152) (1,019)
Cash flows from financing activities
Proceeds from exercise of share
options 345 -
Dividends paid to shareholders (5,668) (5,370)
Net cash used in financing activities (5,323) (5,370)
-------- --------
Net increase in cash and cash equivalents 320 2,881
-------- --------
Cash and cash equivalents at beginning
of period 34,243 31,362
-------- --------
Cash and cash equivalents at end
of period 34,563 34,243
-------- --------
Cash and cash equivalents comprise:
Cash 36,868 40,311
Bank overdrafts (2,305) (6,068)
-------- --------
34,563 34,243
-------- --------
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 Business and Operating 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 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:
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 1 Jan 2018
advances considerations
IFRS 9 Financial Instruments 1 Jan 2018
IFRS 15 Revenue from Contracts with Customers 1 Jan 2018
The impact of IFRS15 on the financial statements is shown
below.
The adoption of IFRS9 has had an immaterial impact on the
Group's financial performance or position.
Adoption of the remaining amendment and interpretation 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 2019 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:
IFRIC 23 Uncertainty over Income Tax Treatment 1 Jan 2019
IFRS 16 Leases 1 Jan 2019
IFRS 16 replaces IAS 17 Leases. It will become effective for the
Group from 1 April 2019 and the Group has decided to take a
modified retrospective approach to implementation of the standard.
Under this approach, the cumulative effect of initial application
of the standard is recognised at the date of adoption, ie 1 April
2019. The Group is in the process of finalising the impact the new
standard will have on the financial statements but currently do not
believe a material adjustment will be required in respect of leases
in place at 31 March 2019 given the current value of operating
leases payable. Under the standard, the Group will recognise
right-of-use assets and lease liabilities for all operating and
finance leases unless the lease term is 12 months or less or the
underlying asset has a low value.
The largest impact of the new standard is expected to be on the
accounting treatment of property rentals payable, once the lease is
completed. This will create a right-of-use asset and a lease
liability. Rental charges will be reclassified as finance charges
and depreciation. Key accounting judgements will be an appropriate
discount rate and the level of certainty of exercising lease
options.
(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 2018,
except for those policies described below. The annual report and
accounts for the year ended 31 March 2018 can be found on our
website at www.parkgroup.co.uk.
Revenue recognition
With effect from 1 April 2018 the group adopted IFRS 15 Revenue
from Contracts with Customers. The group applied the full
retrospective approach when transitioning to the new standard and
as a consequence the date of transition to IFRS15 was 1 April 2017.
The group prepared its opening statement of financial position as
at that date.
The group recognises revenue from contracts with customers when
control over the goods and services is transferred to the customer.
Revenue is recognised at an amount that reflects the consideration
to which the group expects to be entitled in exchange for those
goods and services, net of VAT, rebates and discounts.
The group is a principal if it controls the promised good or
service before transferring it to the customer. The group is an
agent if its role is to arrange for another entity to provide the
good or service. The group acts as an agent in the sale of
multi-retailer redemption products and travel agency services and
therefore fees that are retained for its agency service are
recorded in revenue on a net basis. For all other products and
services, the group acts as a principal and revenues are recorded
on a gross basis.
As described below, the majority of revenues are recognised at a
point in time. For multi-retailer redemption products revenue is
recognised when the products are redeemed; for single retailer
redemption products and other goods revenue is recognised when the
goods are received by the customer. Revenue for other services is
recognised over time or at a point in time depending on the nature
of the revenue stream, as described further in (ii) below.
The group's multi-retailer redemption products may be partially
or fully redeemed, and the unused amount (ie the non-refundable
unredeemed or unspent funds on a voucher, card or e-code at expiry)
is referred to as breakage. Where the end user has no right of
redemption (corporate gifted cards), the group may expect to earn a
breakage amount and this is recognised as revenue in proportion to
the actual timing of redemptions. Where the customer has the right
of redemption, breakage is recognised as revenue when the card has
expired and the right of redemption has lapsed.
Significant accounting judgements and estimates relating to
revenue are described on pages 27 and 28.
Impact of the adoption of IFRS15
The adoption of IFRS15 does not impact billings to external
customers or clients or cash flow, nor does it change the overall
profitability of the business model. However, it has led to the
group recognising significantly lower revenues, an immaterial
movement in operating profit and a reduced net asset position in
retained earnings for all restated periods.
The effects of adopting IFRS15 on the Consolidated Statement of
Financial Position at 1 April 2017 are detailed below:
Consolidated Statement
of Financial Position
IFRS15
01.04.2017 Revenue IFRS15
As Classification Revenue
Previously & Presentation Timing 01.04.2017
Reported Adjustments Adjustments Restated
GBP'000 GBP'000 GBP'000 GBP'000
Key impacts (i) & (iii) (ii)
Assets
Non-current assets
Deferred tax (194) - 848 654
Current assets
Trade and other receivables 9,096 - 140 9,236
Liabilities
Current liabilities
Trade and other payables (82,602) - (4,599) (87,201)
Equity attributable to
equity holders of the
parent
Retained earnings 2,912 - (3,611) (699)
The effects of adopting IFRS15 on the financial year ended 31
March 2018 are detailed below:
Consolidated Statement
of Profit or Loss
IFRS15
2018 Revenue IFRS15
As Classification Revenue
Previously & Presentation Timing 2018
Reported Adjustments Adjustments Restated
GBP'000 GBP'000 GBP'000 GBP'000
Key impacts (i) & (iii) (ii)
Revenue
Goods - Single retailer
redemption products 60,621 - - 60,621
Other goods 8,497 - - 8,497
Services - Multi-retailer
redemption products 221,136 (184,797) (252) 36,087
Other services 5,862 - (85) 5,777
Other 72 - - 72
------------- -----------
296,188 111,054
Cost of sales (264,490) 184,797 65 (79,628)
Gross profit 31,698 - (272) 31,426
Operating profit 11,589 - (272) 11,317
Profit before taxation 12,859 - (272) 12,587
Taxation (2,450) - 51 (2,399)
Profit for the year attributable
to equity holders of the
parent 10,409 - (221) 10,188
Earnings per share
- basic (p) 5.62 - (0.12) 5.50
- diluted (p) 5.60 - (0.12) 5.48
Consolidated Statement
of Financial Position
IFRS15
2018 Revenue IFRS15
As Classification Revenue
Previously & Presentation Timing 2018
Reported Adjustments Adjustments Restated
GBP'000 GBP'000 GBP'000 GBP'000
Key impacts (i) & (iii) (ii)
Assets
Non-current assets
Deferred tax (662) - 899 237
Current assets
Trade and other receivables 10,872 - 45 10,917
Liabilities
Current liabilities
Trade and other payables (89,816) - (4,776) (94,592)
Equity attributable to
equity holders of the
parent
Retained earnings 8,320 - (3,832) 4,488
Key impacts of IFRS15
Having applied the principles of IFRS15, the directors have
concluded that the key impacts for the group are:
(i) Principal and Agent classification (affecting 'gross' and 'net' revenue recognition).
(ii) Timing of revenue recognition.
(iii) Presentation and disclosure.
The primary driver of the reduction in revenue and cost of sales
is the presentation of Love2Shop vouchers, where the group is now
deemed to act as the agent and revenue is based on service fees
received, rather than the face value of the vouchers sold. This has
no impact on profit. Further details are provided in (i) below.
The IFRS15 profit impacts, marked as (ii) above, relate
principally to the deferral of service fee for vouchers and
breakage for vouchers, cards and e-codes which are now recognised
in proportion to actual redemption timing, rather than on despatch
or load. Further details are provided in (ii) below.
The adjustment to retained earnings at 01.04.17 and at 31.03.18
represents the cumulative effect of the revenue, and profit, timing
adjustments (ii) for all restated periods.
Adjustments in respect of other revenue streams are
immaterial.
The impact of the IFRS15 adjustments on the tax expense and
deferred tax is also reflected above.
The adoption of IFRS15 does not impact Other Comprehensive
Income or the Statement of Cash Flows.
The group's primary revenue streams are as follows:
1. Services - multi-retailer redemption products
a) Love2shop vouchers
b) flexecash(R) cards and e-codes
c) Mastercards
2. Goods - single retailer redemption products
a) third party vouchers, cards and e-codes
3. Other goods
a) hampers and gifts
4. Other services
a) brand engagement
b) packing
c) collection and delivery
d) travel agency
e) other services
Customers are offered standard business credit terms or pay in
advance for their products and services.
The adoption of IFRS15 has significantly impacted the reporting
of revenue in respect of the group's multi-retailer redemption
products. The revenue associated with these products is as
described below.
For multi-retailer redemption products, the group now recognises
revenue for service fees, cardholder fees and breakage.
The group has contractual relationships with each of the
redeemers. The group earns a service fee from the redeemer when a
consumer redeems their voucher, card or e-code with that
redeemer.
Cardholder fees are earned for services provided to cardholders
such as issue, dealing with lost/stolen/damaged cards and
maintenance.
The multi-retailer redemption products may be partially or fully
redeemed, and the unused amount (ie the non-refundable unredeemed
or unspent funds on a voucher, card or e-code at expiry) is
referred to as breakage. Where the end user has no right of
redemption (corporate gifted cards), the group may expect to earn a
breakage amount. However, where the customer has the right of
redemption, no breakage is recognised until the card has expired
and the right of redemption has lapsed.
IFRS15 also impacts the following costs:
-- discounts provided to corporate clients; and
-- commission rewards paid to Park Christmas Savings agents for their orders.
These are described further within (ii) and (iii) below.
(i) Principal and Agent
Under IFRS15, the group is a principal (and records revenue on a
gross basis) if it controls the promised good or service before
transferring it to the customer.
The group 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 directors have concluded that the group acts as an agent
when it supplies multi-retailer redemption products in exchange for
a service fee from the redeemer. This results in the restatement of
revenues from the sale of Love2shop vouchers.
Revenue stream Principal / Agent Gross / Net revenue Revenue based on Previous basis
1a) Love2shop vouchers Agent Net Service fees received Gross face value of
from redeemers the vouchers
---------------------- ------------------ -------------------- ---------------------- ----------------------
1b) flexecash(R) cards Agent Net Service fees received No change
and e-codes from redeemers
---------------------- ------------------ -------------------- ---------------------- ----------------------
1c) Mastercards Agent Net Service fees received No change
from redeemers
---------------------- ------------------ -------------------- ---------------------- ----------------------
2a) Third party vouchers, Principal Gross Values invoiced to No change
cards and e-codes external customers
for goods
---------------------- ------------------ -------------------- ---------------------- ----------------------
3a) Hampers and gifts Principal Gross Values invoiced to No change
external customers
for goods
---------------------- ------------------ -------------------- ---------------------- ----------------------
4a) Brand engagement Principal Gross Values invoiced to No change
external customers
for services
---------------------- ------------------ -------------------- ---------------------- ----------------------
4b) Packing Principal Gross Values invoiced to No change
external customers
for services
---------------------- ------------------ -------------------- ---------------------- ----------------------
4c) Collection and Principal Gross Values invoiced to No change
delivery external customers
for services
---------------------- ------------------ -------------------- ---------------------- ----------------------
4d) Travel agency Agent Net Agent's commission No change
received
---------------------- ------------------ -------------------- ---------------------- ----------------------
4e) Other services Principal Gross Values invoiced to No change
external customers
for services
---------------------- ------------------ -------------------- ---------------------- ----------------------
For multi-retailer redemption products, in addition to the
service fees noted above, the group also earns cardholder fees and
breakage as follows:
Revenue stream Principal Gross / Revenue based Previous
/ Agent Net revenue on basis
1. Cardholder fees Principal Gross Charges levied No change
---------------- ---------- ------------- ------------------ -----------
1. Breakage Principal Gross Non-refundable No change*
unredeemed funds
---------------- ---------- ------------- ------------------ -----------
* See (iii) below for presentational change.
For all revenue streams, intra-group sales are eliminated and
revenue is recorded net of VAT, rebates and discounts.
(ii) Timing of revenue recognition
Under IFRS15, revenue is recognised when (or as) an entity
satisfies an identified performance obligation by transferring a
promised good or service to a customer. A good or service is
considered to be transferred when the customer obtains control.
As summarised below, the adoption of IFRS15 has resulted in the
deferral of service fees relating to Love2shop vouchers and
breakage relating to multi-retailer redemption products, until the
point at which the products have been redeemed. Previously they
were recognised on despatch.
Revenue stream Revenue recognised Previously recognised
1a) Love2shop vouchers Service fees - when product is On despatch of product.
redeemed.
-------------------------------------- -------------------------------------- --------------------------------
Breakage - in proportion to actual On despatch of product.
redemption timing.
-------------------------------------- -------------------------------------- --------------------------------
1b) flexecash(R) cards and e-codes Service fees - when product is No change
redeemed.
-------------------------------------- -------------------------------------- --------------------------------
Cardholder fees - when fees are No change
levied.
-------------------------------------- -------------------------------------- --------------------------------
Breakage (where end user has no right On despatch or load of product.
of redemption) - in proportion to
actual redemption
timing.
-------------------------------------- -------------------------------------- --------------------------------
Breakage (where end user has the No change
right of redemption) - when product
has expired and the right
of redemption has lapsed.
-------------------------------------- -------------------------------------- --------------------------------
1c) Mastercards Service fees - when product is No change
redeemed.
-------------------------------------- -------------------------------------- --------------------------------
Cardholder fees - when fees are No change
levied.
-------------------------------------- -------------------------------------- --------------------------------
Breakage (where end user has no right On despatch or load of product.
of redemption) - in proportion to
actual redemption
timing.
-------------------------------------- -------------------------------------- --------------------------------
Breakage (where end user has the No change
right of redemption) - when product
has expired and the right
of redemption has lapsed.
-------------------------------------- -------------------------------------- --------------------------------
2a) Third party vouchers, cards and When the customer obtains control of No change
e-codes the goods - usually the date on which
they are received
by the customer.
-------------------------------------- -------------------------------------- --------------------------------
3a) Hampers and gifts When the customer obtains control of No change
the goods - usually the date on which
they are received
by the customer.
-------------------------------------- -------------------------------------- --------------------------------
4a) Brand engagement Over time. As the services provided No change
are unique to each client, the
group's performance creates
an asset with no alternative use to
the group. Additionally, the group
has an enforceable
right to payment for work performed.
Revenue continues to be recognised
using input methods,
as this is the measure of progress
which most faithfully depicts the
group's performance towards
complete satisfaction of the
performance obligation. The majority
of projects are less than
12 months in duration.
-------------------------------------- -------------------------------------- --------------------------------
4b) Packing When the customer obtains control of No change
the service - usually the date on
which they are received
by the customer.
-------------------------------------- -------------------------------------- --------------------------------
4c) Collection and delivery When the customer obtains control of No change
the service - usually the date on
which they are received
by the customer.
-------------------------------------- -------------------------------------- --------------------------------
4d) Travel agency When the commission is paid by the At the point of travel booking.
third party agent.
-------------------------------------- -------------------------------------- --------------------------------
4e) Other services When the customer obtains control of No change
the service - usually the date on
which they are received
by the customer.
-------------------------------------- -------------------------------------- --------------------------------
Travel commission represents variable consideration contingent
on future events (as travel plans can be changed or cancelled after
the original booking date). Accordingly, the group does not
recognise revenue until it is highly probable that a significant
reversal in the amount of cumulative revenue will not occur.
The timing of the following costs is also impacted by
IFRS15.
Cost Timing of recognition Previously recognised
Discounts for multi-retailer In proportion to actual Voucher discounts
redemption products redemption timing. were recognised on
provided to corporate despatch. No change
clients for cards and e-codes.
------------------------ ------------------------
Commission rewards In proportion to actual Expensed as incurred.
for multi-retailer redemption timing.
redemption products
------------------------ ------------------------
(iii) Presentation and disclosure
The group's implementation of IFRS15 has introduced some
presentational changes as follows:
Presentation Previous presentation
Breakage on multi-retailer Presented as revenue Voucher breakage was
redemption products in the Statement of presented in cost
Profit or Loss. of sales.
No change for cards
and e-codes.
---------------------------- ------------------------
Deferred revenue for Presented as deferred Presented as deferred
multi-retailer redemption income in the Statement income for cards and
products - service of Financial Position e-codes only.
fees for vouchers, cards
and e-codes.
---------------------------- ------------------------
Deferred revenue for Presented as deferred Not deferred.
multi-retailer redemption income in the Statement
products - breakage of Financial Position
for vouchers, cards
and e-codes.
---------------------------- ------------------------
Discounts Discounts form part No change.
of the transaction
price and are therefore
presented as deductions
from revenue in the
Statement of Profit
or Loss.
---------------------------- ------------------------
Deferred discounts Netted against deferred Netted against deferred
for multi-retailer income in the Statement income for cards and
redemption products of Financial Position e-codes only.
for vouchers, cards
and e-codes.
---------------------------- ------------------------
Agents' commission Incremental cost of No change.
obtaining customer
contracts, presented
in cost of sales in
the Statement of Profit
or Loss.
---------------------------- ------------------------
Deferred agents' commission Commission costs for Not deferred.
for multi-retailer multi-retailer redemption
redemption products products are included
in prepayments in
the Statement of Financial
Position
---------------------------- ------------------------
Prepaid costs and deferred income are not discounted to take
into account the expected timing of redemption as the impact is not
considered to be material. This is due to the fact that over 90 per
cent of multi-retailer redemption products are redeemed within 12
months of issue.
Contract balances
Trade Receivables
A receivable represents the group's right to an amount of
consideration that is unconditional (ie only the passage of time is
required before payment of that consideration is due).
Contract Liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the group has received
consideration (or an amount of consideration is due) from the
customer. Contract liabilities are presented as deferred income
within trade and other payables.
Billings
Billings represents the value of goods and services shipped and
invoiced to customers during the year and is recorded net of VAT,
rebates and discounts. Billings is an alternative performance
measure, which the directors believe provides a more meaningful
measure of the level of activity of the group than revenue. This is
due to revenue from multi-retailer redemption products being
reported on a 'net' basis, whilst revenue from single retailer
redemption products and other goods are reported on a 'gross'
basis.
The reconciliation between billings and revenue is as
follows:
2019 2018
GBP'000 GBP'000
-------------------------------------------- ---------- ----------
Billings 426,901 412,786
Multi-retailer redemption products - gross
to net revenue recognition (315,305) (301,271)
Timing of revenue recognition (1,202) (461)
-------------------------------------------- ---------- ----------
Revenue 110,394 111,054
-------------------------------------------- ---------- ----------
Financial instruments (selected policies where changed)
Financial assets and liabilities are recognised in the group's
statement of financial position when the group becomes party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the group's business model for managing
them.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
(SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
The group only holds financial assets that are classified as
loans and receivables and are measured at amortised cost. The group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows, and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the group's statement of financial
position) when:
-- The rights to receive cash flows from the asset have expired;
or
-- The group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either:
(a) the group has transferred substantially all the risks and
rewards of the asset, or
(b) the group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
When it has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred control of
the asset, the group continues to recognise the transferred asset
to the extent of its continuing involvement.
Trade and other receivables
For trade and other receivables the group applies the simplified
approach permitted by IFRS9, with lifetime expected credit losses
(ECLs) recognised from initial recognition of the receivable. These
assets are assessed based on the group's historical credit loss
experience adjusted for forward looking information. The group uses
historical trends to then apply this to an assessment of the likely
credit losses in the future. The group's experience has shown that
aging of receivable balances is primarily due to normal collection
process issues rather than increased likelihood of
non-recoverability, and therefore IFRS9 has had an immaterial
impact on the group's financial performance or position. At each
reporting date, management reviews the carrying amount of its
receivables to determine whether there is any indication that those
assets had suffered an impairment loss.
In respect of receivables from subsidiaries, management's
assessment of the impact of IFRS9 has focused on the change in
IFRS9 around ECLs on intercompany balances. The loans to the
subsidiary companies are classified as repayable on demand.
Management have considered the probability of default, the loss
given default, when the borrower is not capable of repaying on
demand, and the discount rate when calculating ECLs. As the
intercompany loans have no terms and the company expects a full
recovery of the loan, there is no credit loss per time value lost.
Therefore no ECLs have been recognised on intercompany
balances.
Provisions
Unredeemed vouchers and cards
Unredeemed vouchers and unspent balances on flexecash(R) cards
and e-codes where the cardholder does not have the right of
redemption (corporate gifted cards), are included at their present
value at the date of recognition. This comprises the anticipated
amounts payable to retailers on redemption, after applying an
appropriate discount rate to take into account the expected timing
of payments. Anticipated payments to retailers are assessed by
reference to historical data as to voucher and card redemption
rates and timings. The key estimates used in deriving the provision
include the future service fees paid by retailers, interest rates
used for discounting and the timing and amount of the future
redemption of vouchers and cards. The future cash payments are
discounted as required under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, as the amounts are considered to
be material. The service fee and breakage revenue associated with
multi-retailer redemption products is deferred as described in the
revenue recognition accounting policy.
(5) Key judgements and estimates
The preparation of financial statements in conformity with IFRS
requires the use of estimates and judgements that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
New judgements and estimates for the year to 31 March 2019 are
shown below.
Judgements
In applying the accounting policies, management has made the
following judgements:
Revenue
In applying the principles of IFRS15, management have considered
whether the group is a principal or agent when it supplies
multi-retailer redemption products. Having assessed the nature of
the group's contractual relationships with retailers, the directors
have concluded that the group acts as an agent in exchange for a
service fee as it does not control the transfer of goods or
services by the retailer to the product holder upon redemption.
This results in 'net' revenue recognition as described in the
revenue recognition accounting policy.
For cardholder fees and breakage associated with multi-retailer
redemption products, the group acts as a principal in its
contractual relationship with the product holders. This results in
'gross' revenue recognition as described in the revenue recognition
accounting policy.
Under IFRS15, entities are required to disclose disaggregated
revenue information to illustrate how the nature, amount, timing
and uncertainty about revenue and cash flows are affected by
economic factors. Management have considered this requirement and
have disclosed information with regard to type of good or service,
market or type of customer, timing of transfer of goods or services
and geographical region. Management believe that this level of
disaggregation is sufficient to satisfy the disclosure requirements
of the standard.
Unredeemed cards
The directors have assessed the features of the group's
multi-retailer redemption products and concluded that unredeemed
balances on corporate gifted cards do not meet the definition of a
financial liability within the scope of IFRS9. This is because the
cards have expiry dates after which the card cannot be redeemed.
The cards can also be redeemed with the group for certain goods or
services and cannot be redeemed in cash. As a result, the
liabilities relating to these products are not within the scope of
IFRS9 and are instead measured in accordance with IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
Land and buildings
Subsequent to an assessment of the value of the Valley Road
property conducted in early 2019 an assessment was made whether the
property asset was an asset held for sale at 31 March 2019. As the
sale of the property is not considered to be highly probable within
12 months, the property will continue to be classified as property,
plant and equipment within non-current assets and impaired to the
level of the current valuation indication.
Estimates
The key assumptions and other sources of estimation uncertainty
at the reporting date are described below:
Breakage
For multi-retailer redemption products where the end user has no
right of redemption (corporate gifted cards), the group may expect
to earn a breakage amount. In order to calculate the expected
breakage amount, the group estimates how many products will be
fully redeemed and how many will be partially redeemed. For those
which are partially redeemed, the group estimates projected
balances remaining on the products at expiry. Historical data and
current trends regarding patterns of redemption and expiry are used
to prepare the estimates. As redemption behaviour may differ by
market, historical data and current trends are reviewed at this
level. If the expected level of breakage were to change by 0.1 per
cent, the impact on revenue for the reporting period would be
GBP0.2m. Management have considered the sensitivity of this
estimate and do not foresee that any likely change to the estimate
will have a material impact on either the level of deferred income
held in the statement of financial position or the amount of
revenue for the reporting period.
Deferred income - Love2shop voucher redemption timing
Revenue for multi-retailer redemption products is recognised in
proportion to actual redemption timing, generating deferred income
balances until the point of redemption. For Love2shop vouchers,
there is a time delay between the point of redemption and when they
are physically returned to the group for validation and accounting
purposes. To negate the effects of this delay, an adjustment is
made at the end of the reporting period, which estimates the value
of vouchers already redeemed but not yet returned to the group and
records the associated revenue. Historical data over a number of
years and current trends are used to prepare the estimate.
Management have considered the sensitivity of this estimate and do
not foresee that any likely change to the estimate will have a
material impact on either the level of deferred income held in the
statement of financial position or the amount of revenue for the
reporting period.
Property, plant and equipment - Value of Valley Road site
In December 2018 Park Group plc announced their intention to
relocate the majority of their operations from the current site in
Valley Road, Birkenhead to a modern city centre location in
Liverpool. Subsequent to this, Glenbrook Property made an
assessment of the value of the site. This took into account an
assessment of the worth at sale, as well as the likely rental for
spaces retained by Park and an assessment of the vacant space. This
assessment has now been completed and the value of the site has
been impaired to GBP5.0m, which is management's best estimate of
market value. Any differences to this estimate may necessitate a
material adjustment to the value of the property, plant and
equipment held in the statement of financial position.
(6) Segmental analysis
The Group's operations are divided into two principal operating
segments:
-- Consumer - which represents sales to consumers, utilising the
Group's Christmas savings offering and our website,
highstreetvouchers.com; and
-- Corporate - comprising sales to businesses, offering
primarily sales of the Love2shop voucher, flexecash(R) cards,
Mastercards and e-codes in addition to other retailer vouchers.
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 products 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.
Finance income, finance costs and taxation are not allocated to
individual segments as they are managed on a group basis.
All other All other
segments/ 2019 segments/ Restated*2018
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 232,096 194,805 - 426,901 232,635 180,151 - 412,786
Inter-segment
billings - 134,714 (134,714) - - 140,751 (140,751) -
--------- ---------- ------------- -------- --------- ---------- ------------- --------------
Total billings 232,096 329,519 (134,714) 426,901 232,635 320,902 (140,751) 412,786
--------- ---------- ------------- -------- --------- ---------- ------------- --------------
Revenue
External
revenue 58,886 51,508 - 110,394 61,250 49,804 - 111,054
Inter-segment
revenue - 38,204 (38,204) - - 39,462 (39,462) -
--------- ---------- ------------- -------- --------- ---------- ------------- --------------
Total revenue 58,886 89,712 (38,204) 110,394 61,250 89,266 (39,462) 111,054
--------- ---------- ------------- -------- --------- ---------- ------------- --------------
Inter-segment sales are entered into under normal arm's length commercial
terms and conditions.
Result
Segment
operating
profit/(loss) 6,809 7,789 (4,866) 9,732 7,246 6,700 (2,629) 11,317
--------- ---------- ------------- -------- --------- ---------- ------------- --------------
Finance income 1,572 1,274
Finance costs - (4)
-------- --------
Profit before
taxation 11,304 12,587
Taxation (2,422) (2,399)
-------- --------
Profit 8,882 10,188
-------- --------
* Revenue, operating profit, profit before taxation and profit
have been restated for implementation of IFRS15, see revenue
recognition accounting policy. As well as restating the prior year
results for the effects of IFRS15, there has also been a movement
from the corporate segment to the consumer segment in respect of
the consumer element of our website highstreetvouchers.com. This
movement amounted to GBP8,093,000 of billings, GBP2,649,000 of
revenue and GBP68,000 of operating profit.
(7) Taxation Restated*
2019 2018
GBP'000 GBP'000
Charge for the year - current
and deferred 2,422 2,399
---------- ----------
Comments on the effective tax rate can be found in the Financial
Review.
* Restated for implementation of IFRS15, see revenue recognition
accounting policy
(8) Earnings per share
The calculation of basic and diluted EPS is based on the profit
on ordinary activities after taxation of GBP8,882,000 (2018 -
GBP10,188,000) and on the weighted average number of shares,
calculated as follows:
2019 2018
Basic EPS - weighted average number
of shares 185,964,433 185,268,587
Diluting effect of employee share
options 112,540 601,293
------------ ------------
Diluted EPS - weighted average number
of shares 186,076,973 185,869,880
------------ ------------
(9) Impairment of property, plant and equipment
In December 2018 Park Group plc announced their intention to
relocate the majority of their operations from the current site in
Valley Road, Birkenhead to a modern city centre location in
Liverpool. Subsequent to this, Glenbrook Property made an
assessment of the value of the site. This took into account an
assessment of the worth at sale, as well as the likely rental for
spaces retained by Park and an assessment of the vacant space. This
assessment has now been completed and the value of the site has
been impaired by GBP1.2m to GBP5.0m, which is management's best
estimate of market value.
(10) Reconciliation of profit for the year to net cash inflow from operating activities
Restated*
2019 2018
GBP'000 GBP'000
Profit for the year 8,882 10,188
Adjustments for:
Tax 2,422 2,399
Interest income (1,572) (1,274)
Interest expense - 4
Research and development tax credit (54) (121)
Depreciation and amortisation 1,394 1,428
Impairment of property, plant and
equipment 1,210 -
--------- ----------
Impairment of goodwill 17 17
--------- ----------
Profit on sale of other intangibles
and property, plant and equipment - (1)
Increase in inventories (766) (1,176)
Increase in trade and other receivables (1,589) (1,678)
(Decrease)/increase in trade and
other payables (877) 4,197
Increase in provisions 10,274 1,848
Increase in monies held in trust (12,259) (3,974)
Decrease in retirement benefit
obligation (215) (676)
Translation adjustment (3) (20)
Taxes paid on share-based payments (116) (851)
Share-based payments 126 230
--------- ----------
Net cash inflow from operating
activities 6,874 10,540
--------- ----------
* Restated for implementation of IFRS15, see revenue recognition
accounting policy
(11) 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.
(12) The financial information set out above does not constitute
the Group's statutory accounts for the years ended 31 March 2019 or
2018 but is derived from those accounts.
Statutory accounts for 2018 have been delivered to the registrar
of companies. The auditor, Ernst & Young LLP, has reported on
the 2018 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 2019 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 1
August 2019 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 ZMGMVZMKGLZZ
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