PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Parkwood Holdings plc, the public sector support services specialist, announces
its preliminary results for the year ended 31 December 2006. These results have
been prepared under International Financial Reporting Standards ("IFRS").
Financial and Business Highlights:
* Group turnover increased by 16% to �92.7 million (2005: �79.8 million)
* Operating profits increased by 14% to �2.25 million (2005: �1.97 million)
* Profits before tax increased by 23% to �2.53 million (2005: �2.06 million)
* Earnings per share increased by 28% to 8.8 pence (2005: 6.9 pence)
* Proposed final dividend up 27% to 1.9 pence per share (2005: 1.5 pence).
Total amount paid and charged in the year 2.6 pence (2005: 2.3 pence)
* Group order book increased by 44% to �412 million as at 31 December 2006
(2005: �285 million (revised))
* Acquisition of tree moving business by Glendale, the "green" services
division, to diversify service offering
* Financial close on a leisure PFI with Solihull Council in March 2006
Tony Hewitt, Executive Chairman, commented:
" This is another strong set of Parkwood results. The Group's improved
turnover, profitability and cashflow make Parkwood better placed to consider
sensible acquisitions and implement other strategic initiatives that will
supplement continuing organic growth."
For further information, please contact:
Parkwood Holdings plc
Tony Hewitt, Executive Chairman 01772 627111
Terry Bowman, Interim Finance Director 01772 627111
Neil Baldwin, Brewin Dolphin Securities Limited 0113 241 0126
Neil Boom, Gresham PR 0207 404 9000
Notes for Editors:
Parkwood Holdings plc specialises in providing outsourced and support services,
predominantly to the public sector across England and Wales under long term
contracts. Its four main areas of operation are as follows:
Glendale. Provides amenity horticulture, grass cutting, arboriculture and care
of sports pitches, parks and open spaces. The division also includes golf
course management, green waste recycling, environmental consultancy and
horticulture.
Parkwood Leisure. Manages a diverse range of leisure facilities, including
swimming pools, sports halls, gyms, health suites and catering operations.
Parkwood Projects. Undertakes PFI, PPP and similar bids on behalf of joint
ventures and the Group. Parkwood PFI is also responsible for project management
of contracts and the management of other funds such as the lifecycle funds
associated with the project agreement.
Healthcare. A nursing agency and an ambulance and patient transport business,
Parkwood Healthcare deals both with the NHS and the private sector.
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
CHAIRMAN'S STATEMENT
With profits before tax of �2.53 million, Parkwood has exceeded its performance
target for 2006. Both the Leisure division and Glendale, the `green services'
division, performed well despite the impact of higher energy costs. Parkwood's
Healthcare division continued to under-perform and the directors are reviewing
its future.
Results
Group turnover, excluding joint ventures, increased by 16% to �92.7 million
(2005: �79.8 million) and profits before tax rose 23% to �2.53 million from �
2.06 million in 2005. Operating profits from trading increased to �2.6 million
(2005: �2.2 million) but, after taking into account the anticipated effect of
front-loaded interest charges in the PFI/PPP businesses, amounted to �2.25
million (2005: �1.97 million). Earnings per share increased by 28% to 8.8p
(2005: 6.9p).
The Group's Leisure division again performed well with operating profits of �
2.1 million. Glendale also performed strongly, achieving operating profits
before interest of �1.8 million, an 83% increase on the previous year.
Unfortunately Healthcare continued to experience difficult trading conditions
with operating losses of �0.46 million. Parkwood Projects achieved a profit of
�0.35 million including net income from investments.
The Group invested �1.15 million in 2006 in subordinated debt in special
purpose PFI companies. As a result net investment income is increasing and,
with the investments planned for 2007, this income is scheduled to exceed �0.5
million in 2007. A total of �58 million of capital financed through senior debt
in project management companies has now been raised and committed to the
construction of new PFI/PPP facilities. Excluding non-recourse debt, gearing at
the year-end was 82% (2005: 52%). Cash balances at the year-end were �3.6
million (2005: �1.4 million).
Dividends
The increased profits earned in 2006 allow the Board to increase the proposed
dividend payable on 18 May 2007 to 1.9p, a 27% increase over last year. Payment
will be made to all shareholders on the register on 20 April 2007. Total
dividends paid and charged in 2006 were 2.6p (2005: 2.3p).
Strategy and Order Book
A new strategic business plan for the years 2007 - 2009 was agreed by the Board
at the year-end. Parkwood will focus on doubling the size of its leisure
business, which has been bolstered by recent successful contract wins.
Moreover, the performance of Parkwood Project Management, which was chosen as
the preferred bidder on a DBOM (design, build, operate and maintain) contract
after the year end also supports the directors' view that the strategy can be
achieved within the timeframe set.
A new order book target of �1.0 billion was set in 2006 and stands at �412
million at the year end a 44% increase over 2005. This figure is calculated on
the basis of forecast income rising in connection with existing contracts to a
ten year horizon. Recent awards of preferred bidder status suggest an
additional �85 million may be added by the summer of 2007, mostly in the
leisure sector. This will also assist Parkwood in continuing to raise net
profit margins.
Management and Board
I will continue to serve as both Executive Chairman and Chief Executive for the
foreseeable future. Charles Bithell who had been Group Finance Director since
2003 left Parkwood at the year end. Charles is continuing his career in the
private equity market and the Board wishes him every success. His replacement
is currently being sought and, in the interim, a former Group Finance Director,
Mr Terry Bowman, is acting in a consulting capacity. Andrew Holt continues as
an executive director of the Group.
During the year Sarah Kling became the senior independent non executive
director and Chair of the Audit Committee and Richard Tolkien joined the board
as a non executive director in May. Chris Marsh resigned as a non executive
director on 4 May 2006. I would like to express my thanks for his advice and
support during his time on the Board.
Staff
Parkwood now employs over 4,000 people including agency, seasonal, part-time
and casual staff. The Group's Human Resources department, which was reorganised
and strengthened during the year, remains as busy as ever, ensuring that the
Group complies with all the legislation affecting the employment of staff. The
most significant new legislation affecting Parkwood in 2006 has been the Age
Discrimination Act, and for 2007, the impact of the smoking ban in public
places.
Parkwood is a community based service business and our employees deal with day
to day issues that concern everyone: running health and fitness clubs and
cr�ches, teaching people to swim, maintaining parks and gardens, taking people
to hospital and providing care services. We once again congratulate staff for
the part they play in providing these important services to the communities in
which they live and work.
Outlook
This is another strong set of Parkwood results. The Group's improved turnover,
profitability and cash flow make Parkwood better placed to consider sensible
acquisitions and implement other strategic initiatives that will supplement
continuing organic growth.
In addition, our project management company is seeking new projects in the
leisure and cultural markets. Parkwood Leisure has already made progress on
organic growth with recent contract awards and Glendale's diversified
activities in Golf Management and Recycling will continue to expand, as will
the Group's core Grounds Management operations. The developing PFI market in
Germany is also being explored.
Group trading has started 2007 in line with budget and prospects for the future
are good.
A W Hewitt
Executive Chairman
12 March 2007
Funding, gearing and interest cover
To illustrate the impact of PFI/PPP ventures on the Group's balance sheet, the
following table analyses the Group's assets and liabilities and between trading
activities and non-recourse PFI/PPP ventures.
Summary Group Group Group PFI/PPP PFI/PPP Total Total
Balance Sheet Recourse Recourse
(non-recourse) (non-recourse)
At 31 December 2006 2005 2006 2005 2006 2005
�000 �000 �000 �000 �000 �000
Non-current assets 12,385 10,929 15,184 2,035 27,569 12,964
Investments in joint
ventures
Subordinated debt 1,177 1,177 - - 1,177 1,177
held in Joint
Ventures
Share of net - - (1,119) (763) (1,119) (763)
liabilities of Joint
Ventures
1,177 1,177 (1,119) (763) 58 414
Investment in - - 248 221 248 221
associate
Total non-current 13,562 12,106 14,313 1,493 27,875 13,599
assets
Current assets
Inventories and 14,021 11,688 656 404 14,677 12,092
debtors
Cash at bank and in 994 1,343 2,632 13 3,626 1,356
hand
Total current assets 15,015 13,031 3,288 417 18,303 13,448
Current liabilities (17,267) (15,552) (3,620) (73) (20,887) (15,625)
Net current (2,252) (2,521) (332) 344 (2,584) (2,177)
(liabilities)/assets
Non-current
liabilities
Bank loans (1,103) (202) (15,014) (2,403) (16,117) (2,605)
Other long term (4,366) (6,460) - - (4,366) (6,460)
liabilities
Net assets 5,841 2,923 (1,033) (566) 4,808 2,357
Net debt 4,778 1,527 12,387 2,390 17,165 3,917
Gearing 82% 52% 357% 166%
The gearing of the Group at 31 December based on its total net debt was 357%
(2005: 166%). The Group's net debt includes �15.0 million of non-recourse debt
(2005: �2.4 million). The underlying gearing of the Group based on net recourse
debt (compared to recourse net assets) was 82% (2005: 52%).
The Group had net interest income of �97,000 (2005: charge �5,000). Interest
cover (based on the gross interest cost compared to profit before finance costs
and tax) was 12.0 times (2005: 11.2 times.
CONSOLIDATED INCOME STATEMENT
Year Ended 31 December 2006
2006 2005
Total
�000 Total
�000
Continuing operations
Revenue 94,968 81,437
Less: share of joint ventures' revenue (2,223) (1,654)
Group revenue - continuing operations 92,745 79,783
Cost of sales (65,927) (59,794)
Gross profit 26,818 19,989
Administrative expenses (24,243) (17,825)
2,575 2,164
Share of results of associate 27 51
Share of results of joint ventures (356) (245)
Operating profit 2,246 1,970
Investment income 515 197
Other gains and losses - 93
Finance costs (231) (202)
Profit before tax 2,530 2,058
Tax (865) (752)
Profit for the year from continuing operations 1,665 1,306
Attributable to:
Equity holders of the parent 1,665 1,306
Earnings per share from continuing operations
Basic earnings per share 8.8p 6.9p
Diluted earnings per share 8.7p 6.8p
CONSOLIDATED BALANCE SHEET
As at 31 December 2006
2006 2005
�000
�000
Non-current assets
Goodwill 708 1,039
Intangible asset 58 -
Property, plant and equipment 26,412 9,571
Interests in joint ventures 58 414
Interest in associate 248 221
Derivative financial instrument 187 -
Deferred tax asset 204 2,354
27,875 13,599
Current assets
Inventories 2,698 2,332
Trade and other receivables 11,979 9,760
Cash and cash equivalents 3,626 1,356
18,303 13,448
Total assets 46,178 27,047
Current liabilities
Trade and other payables 18,071 13,721
Current tax liabilities 75 945
Obligations under finance leases 1,250 860
Bank loans 1,491 99
20,887 15,625
Net current liabilities (2,584) (2,177)
Non-current liabilities
Bank loans 16,117 2,605
Retirement benefit obligations 1,435 3,307
Long-term provisions 998 1,444
Obligations under finance leases 1,933 1,709
Total non-current liabilities 20,483 9,065
Net assets 4,808 2,357
Equity
Share capital 196 196
Share premium account 2,227 2,227
Investment in own shares (339) (154)
Capital redemption reserve 401 401
Retained earnings/(deficit) 2,321 (313)
Total shareholders' equity 4,806 2,357
Minority interest in equity 2 -
Total equity 4,808 2,357
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2006
�000 2006 �000 2005
�000 �000
Net cash from operating activities 6,882 4,559
Cashflows from investing activities
Interest received 328 197
Dividends received from associate - 73
Proceeds on disposal of property, 38 141
plant and equipment
Purchases of property, plant and (17,499) (4,744)
equipment
Subordinated debt invested in joint - (784)
ventures
Equity investments in joint ventures - (113)
Subordinated debt invested in other - (95)
investments
Sales of own shares by employee 15 10
benefit trust
Acquisition of shares by employee (94) -
benefit trust
Acquisition of treasury shares (103) -
Acquisition of subsidiary (net of cash (89) (1,787)
acquired)
Cash acquired with minority interest 2 -
Disposal of investment to joint - 95
venture
Disposal of subsidiary to joint - (643)
venture (net of cash disposed)
Net cash used in investing activities (17,402) (7,650)
Cashflows from financing activities
Interest paid (231) (202)
Dividends paid (494) (427)
Repayments of obligations under (1,397) (1,014)
finance leases
New recourse bank loans raised 2,386 301
New non-recourse bank loans raised 12,616 3,679
Repayments of recourse bank loans (90) -
Net cash from financing activities 12,790 2,337
Net increase/(decrease) in cash and 2,270 (754)
cash equivalents
Cash and cash equivalents at beginning 1,356 2,110
of the year
Cash and cash equivalents at end of 3,626 1,356
the year --> [Author:a]
Comprising: --> [Author:a]
Cash --> [Author:a] 3,626 1,356
RECONCILIATION OF NET CASHFLOW MOVEMENT TO NET DEBT
Year ended 31 December 2006
2006 2005
�000 �000
Increase/(decrease) in cash in the year 2,270 (754)
Cash outflow from reduction in debt and lease financing 1,397 1,014
Movement on bank loans (14,904) 2,055
Finance leases acquired with subsidiary (13) (343)
Change in net debt resulting from cashflows (11,250) 1,972
New finance leases (1,998) (1,160)
(Increase)/ decrease in net debt (13,248) 812
Net debt at 1 January (3,917) (4,729)
Net debt at 31 December (17,165) (3,917)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Year ended 31 December 2006
2006 2005
�000 �000
Actuarial gains/(losses) on defined benefit pension 2,081 (1,088)
schemes
Deferred tax relating to actuarial gains and losses on (624) 326
defined benefit pension schemes
Net gain/(loss) recognised directly in equity 1,457 (762)
Profit for the year 1,665 1,306
Total recognised income and expense for the year 3,122 544
Notes
1. RESULTS AND ACCOUNTING POLICIES
While the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
("IFRS"), this announcement does not itself contain sufficient information to
comply with IFRS. The Group expects to publish full financial statements which
comply with IFRS on or before 4 April 2007. The accounting policies used in
preparation of this preliminary announcement are consistent with those in the
full financial statements which have yet to be published. The preliminary
results for the year ended 31 December 2006 were approved by the board of
directors on 12 March 2007.
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 December 2006 or 2005 as detailed in
section 240 of the Companies Act 1985, but is derived from those accounts.
Statutory accounts for 2005 under IFRS have been delivered to the Registrar of
Companies and those for the year ended 31 December 2006, under IFRS, will be
delivered to the Registrar of Companies following the Company's annual general
meeting. The auditors have reported on these accounts; their report was
unqualified and did not contain a statement under s237(2) or (3) of the
Companies Act 1985.
2. BUSINESS SEGMENTS
Revenue, profit before tax and net assets all arose in the United Kingdom.
An analysis of the Group's revenue is as follows:
2006 2005
Continuing operations �000 �000
Provision of services to local authorities - Grounds 38,526 36,231
management and parks
Horticultural sales 3,552 1,113
Tree moving and sales 693 -
Golf course management, including retail sales 4,523 4,063
Provisions of services to local authorities - Leisure 37,589 30,911
facility management
Provision of patient transport services 4,329 4,520
Nursing agency sales 1,432 1,861
Project and bid management fees 1,702 1,032
Service charges made by PFI companies 1,250 568
Inter segment revenue (851) (516)
Total revenue 92,745 79,783
2. BUSINESS SEGMENTS (continued)
An analysis of results by division for 2006 and 2005 is as follows:
Year ended Glendale Leisure Healthcare Project Other Consolidated
Management
31 December 2006 �000 �000 �000 �000 �000 �000
External revenue 47,294 37,463 5,760 978 1,250 92,745
Inter-segment - 126 1 724 (851) -
revenue
Revenue 47,294 37,589 5,761 1,702 399 92,745
Operating Profit 1,842 2,068 (457) 175 (1,053) 2,575
Share of results of - - - - 27 27
associate
Share of results of - - - - (356) (356)
joint ventures
Total operating 1,842 2,068 (457) 175 (1,382) 2,246
profit / (loss)
Net finance costs (295) 143 (120) 173 383 284
and other income
Profit / (loss) 1,547 2,211 (577) 348 (999) 2,530
before tax
Total assets 18,605 14,048 1,496 3,074 8,955 46,178
Total liabilities (14,906) (11,491) (4,338) (2,801) (7,834) (41,370)
Net assets/ 3,699 2,557 (2,842) 273 1,121 4,808
(liabilities)
2. BUSINESS SEGMENTS (continued)
Year ended Glendale Leisure Healthcare Project Other Consolidated
31 December 2005 �000 �000 �000 Management �000 �000
�000
External revenue 41,407 30,911 6,381 516 568 79,783
Inter-segment - - - 516 (516) -
revenue
Revenue 41,407 30,911 6,381 1,032 52 79,783
Results
Profit before 1,056 2,018 (151) 2 (714) 2,211
reorganisation
costs
Reorganisation (47) - - - - (47)
costs
1,009 2,018 (151) 2 (714) 2,164
Share of results of - - - - 51 51
associate
Share of results of - - - - (245) (245)
joint ventures
Total operating 1,009 2,018 (151) 2 (908) 1,970
profit / (loss)
Net finance costs (253) 122 (91) - 310 88
and other income
Profit / (loss) 756 2,140 (242) 2 (598) 2,058
before tax
Total assets 16,620 15,747 1,169 1,987 (8,476) 27,047
Total liabilities (14,613) (13,480) (3,455) (2,402) 9,260 (24,690)
Net assets/ 2,007 2,267 (2,286) (415) 784 2,357
(liabilities)
3. TAXATION
The effective tax rate for the year was reduced to 34.2% (2005: 36.5%). The
current year charge was higher than the basic UK rate due to the impact of
goodwill impairment and intangible asset amortisation and due to expenses not
allowable for taxation.
4. STATEMENT OF CHANGES IN EQUITY
Share Share Investment Capital Retained Total
capital premium in own redemption earnings
shares reserve
�000 �000 �000 �000 �000 �000
Group
Balance at 1 January 196 2,227 (164) 401 (430) 2,230
2005
Actuarial losses on - - - - (762) (762)
defined benefit pension
schemes (net of tax)
Profit for the year - - - - 1,306 1,306
Total recognised income - - - - 544 544
for the year
Share based payments - - 10 - - 10
Dividends - - - - (427) (427)
Balance at 31 December 196 2,227 (154) 401 (313) 2,357
2005
Balance at 1 January 196 2,227 (154) 401 (313) 2,357
2006
Actuarial gains on - - - - 1,457 1,457
defined benefit pension
schemes (net of tax)
Profit for the year - - - - 1,665 1,665
Total recognised income - - - - 3,122 3,122
for the year
Purchase of treasury - - (103) - - (103)
shares
Purchase of employee - - (94) - - (94)
benefit trust shares
Share based payments - - 12 - 6 18
Dividends - - - - (494) (494)
Balance at 31 December 196 2,227 (339) 401 2,321 4,806
2006
5. The final dividend is payable on 18 May 2007 to shareholders on the register
as at 20 April 2007.
6. Earnings per share for the year to 31 December 2006 have been calculated on
the profit attributable to ordinary shareholders of �1,665,000 (2005: �
1,306,000) using the weighted average number of shares in issue during the
period.
7. The Annual Report will be posted to shareholders on or around 4 April 2007.
Copies will also be available from the company's website (
www.parkwood-holdings.co.uk) and from:
The Company Secretary, Parkwood Holdings plc, Parkwood House, Cuerden Park,
Berkeley Drive, Bamber Bridge, Preston PR5 6BY
The results will not be advertised in any newspaper
ENDS
FOR RELEASE 12 MARCH 2007
PARKWOOD HOLDINGS PLC
END
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