Park Group plc, the UK’s leading multi-retailer redemption product provider to corporate and consumer markets, announces an update on trading for its financial year ended 31 March 2019 and its Notice of Results.
Year End Update
Trading & Financial Update
Group trading for the year was ahead of our expectations, despite the impact of an additional £0.5m of costs relating to investment in the new strategic business plan that we outlined at the time of our half year results. This was driven by a strong performance from our Corporate business and a broadly stable performance from our Consumer business, reflecting the evolving Christmas Savings market.
However, the particularly strong growth in our more profitable card business means that the financial impact of the new accounting standard IFRS15 is now expected to be approximately £0.5m higher than previously anticipated, as a greater proportion of profit will be deferred until the current year.
Accordingly, despite the strong underlying trading performance, reported PBT (before exceptional items) is expected to be marginally below market expectations*.
Having taken the decision to move to new offices, we anticipate incurring an exceptional impairment charge of approximately £1.25m on the carrying value of our existing site.
*current Company compiled analyst consensus forecasts: £12.9m PBT on revenue of £112m (post IFRS15).
The Board anticipates the trends experienced in the year just ended will continue, with good growth in Corporate business partially offset against a slower Consumer Christmas savings market. Additional costs (net of initial expected cost savings) of £2.0m associated with implementing the strategic business plan have been identified, which will be incurred during the current financial year, reflecting the initiatives described below.
These costs (which reflects both one off and ongoing costs) will relate to running two sites as we transition to the new offices, as well as additional technology and marketing investment.
The benefits of the changes are expected to accrue in subsequent financial years both in terms of directly enhancing profitability and in terms of positioning Park to continue developing and growing in its fast-moving sectors. Overall, the Board therefore anticipates profitability will be lower in the current year before growth resumes thereafter.
We have made good progress through the initial steps of our strategic business plan (as set out in December 2018) to enhance how we work with consumers, businesses and retailers. In relation to the four pillars of the strategy, specific actions include:
- Clarity: we have separated the hampers business, under a new discrete management team. We have invested in our people having appointed a Chief Transformation Officer, to help execute the changes we are making, a new Human Resources Director, and a new Interim Head of Marketing.
- Experience: we continue to drive product and customer innovation, becoming an organisation anchored on digital. We have selected a new Enterprise Resource Planning (ERP) system, Microsoft Dynamics, which provides scalability, resilience and efficiency.
- Productivity: we have signed a lease for our new offices in Liverpool city centre, which we believe will ensure an integrated working culture as well as retain and attract talented staff. We expect to move in during late summer 2019.
- Appeal: we continue our work in relation to the launch of a new product, targeting currently untapped demand from a broader audience.
We will provide an update on the four pillars of the strategic business plan with the results in June.
Ian O’Doherty, Chief Executive of Park, said:
“Park delivered another good performance last year and, importantly, we put in place our new strategic business plan. We are beginning to make tangible progress delivering the initial steps of the plan, in terms of premises, people and digital investment. This investment is expected to result in enhanced growth prospects and a more robust business model, putting us in a much stronger position for the future.”
Reappointment of Laura Carstensen as Chairman
The Group is also pleased to announce that Laura Carstensen has agreed to continue as non-executive Chairman for another three years from 3 June 2019.
Ian O’Doherty, Chief Executive Officer of Park, said:
“This is excellent news for Park. Laura has a thorough understanding of our business and has been instrumental in guiding us through a period of change.”
Laura Carstensen added:
“I am delighted to continue as Chairman of Park. Having announced a review of our business strategy last year we are now working hard to both grow the business we have and develop our business for the future in line with our refreshed strategic thinking. I am pleased to continue my involvement in this exciting process and I look forward to working with Ian, Tim and their strong executive team as we strive to deliver it. Our relocation later this year to new offices in Liverpool exemplifies our commitment to moving our business forward and our commitment to our fantastic Park people.”
Notice of Results
The Group will announce its final results for the financial year end 31 March 2019 on Wednesday, 12 June 2019.