RNS Number:4257B
Parkwood Holdings PLC
2 April 2001
Parkwood Holdings plc
PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2000
Parkwood Holdings plc, the grounds management, leisure and healthcare support
services group announces its preliminary results for the year ended 31
December 2000.
Financial Highlights
* Turnover on continuing businesses increased by 20% to #37.2m
* Operating profit on continuing operations of #0.96m, although losses of
#1.19m were incurred on discontinued activities
* Profit in second half of the year 2000 of #0.45m indicates that the
Group has recovered from first half losses
* 32% reduction in Net Debt to #1.93m at the year end
* Dividend for year maintained at 1.5p per share - final dividend for the
year 0.8p
Key Events
* Group signs first 25 year PFI contract with the MoD in August 2000 to
operate the Defence Animal Centre in Melton Mowbray
* Decision taken in June 2000 to exit the loss making landscapes
construction business
* Senior management succession planning reflected in announcement that
Andrew Holt is to take over as Chief Executive from 1 May 2001, with Tony
Hewitt remaining as Executive Chairman
* Disposal of Group's Head Office in sale and leaseback transaction,
realising an exceptional gain of #0.46m.
Tony Hewitt, Chairman and Chief Executive, commented:
"The year 2001 requires the Parkwood Group to prove that it can lay the
foundations for a brighter future."
Enquires:
Parkwood Holdings plc
Tony Hewitt, Chairman and Chief Executive 01772 627 111
Doug Eadie, Finance Director
Parkwood Holdings plc
Preliminary Results for the Year Ended 31 December 2000
Chairman's Statement
I am not pleased to have to report to shareholders a poor year that produced
only very small profits. Performance in the second half has been more
encouraging, with a profit before tax of #453k, which is a significant
improvement on the first half of the year.
Results
The Parkwood Group results show a profit before tax of #19k (1999: restated
#770k) after an exceptional gain resulting from the sale and lease back of the
company's Head Office, Parkwood House. Before this exceptional gain the Group
produced the first loss in its history of #445k. However, operating profits on
continuing activities were #959k, with the core grounds management and leisure
businesses being profitable. Turnover totalled #37.8 million (1999: restated #
34.5 million) an increase of 10%.
The results for 1999 have been restated. A prior year adjustment of #168k to
shareholders funds has been made to take into account a new, more prudent,
accounting policy for income recognition in the leisure business. This has
also affected results in the year 2000 by reducing profits by approximately #
68k (1999: reduction in restated reported profits of #63k).
Operating profit margins on continuing businesses were 2.6% (1999: restated
5.3%). Losses on discontinued activities totalled #1.19 million. These losses
arose in the landscape construction business which ceased taking on new
contracts in August 2000 and the buildings maintenance business which closed
in December 1999.
On a more positive note the Group witnessed a reduction in net debt of #915k,
the first such reduction in several years. The cash position is expected to
continue to improve in the current year. Cashflows have benefited from the
termination of several loss making activities, which had absorbed significant
working capital.
Dividend
With the security of our order book and the improving cash position, I am
pleased to be able to report that the final dividend per share will be
maintained at 0.8p payable on 11 May 2001 to shareholders on the register on
17 April 2001. The full year dividend for 2000 will therefore be 1.5p per
share as was the case in the year ended 31 December 1999.
Markets and Order Book
Markets have changed as the Compulsory Competitive Tendering (CCT) regime
finally came to an end on 2 January 2000. The year 2000 did not offer many
tendering opportunities in the local authority market place, as most
authorities continued to conduct their Best Value reviews. The Parkwood Group
has moved resources to the Private Finance Initiative (PFI)/Public Private
Partnership (PPP) market place buoyed up by the success of signing in August
2000 our long heralded first PFI with the Ministry of Defence for the Defence
Animal Centre. The PFI team shortly thereafter secured preferred bidder status
on the first ever Leisure PFI for Sefton Metropolitan Borough Council
involving the building and management of a new leisure centre at Crosby. This
stimulated great interest amongst potential customers and further leisure
projects are being worked on with a variety of consortium partners. The future
for Parkwood's PFI/PPP looks increasingly assured.
The Group's forward order book has reduced slightly to #146 million, but is
targeted to grow to #250 million by 2004/5.
Management and Board
I announced in July last year that I would be relinquishing the role of Chief
Executive and continuing in the capacity of Executive Chairman. I am pleased
that Andrew Holt, who has been with the Group since 1995 and was appointed an
Executive Director of the Group in 1998, will be taking on the Chief Executive
role. The composition of the Board remains exactly the same as in 2000 and a
very gradual approach is being adopted to the change-over. The roles of the
Chairman and the Chief Executive will, as a result, once again be split, in
line with best practice.
Elsewhere, we were pleased to announce in October 2000 the promotion of Paul
Cluett to the position of Managing Director of Glendale Leisure and to welcome
in December 2000 James Money-Kyrle as Managing Director of Glendale
Countryside.
Staff
We also welcomed 350 new staff to Parkwood early in the year 2000 and both the
new employees and existing staff have worked hard throughout the year. I would
like to thank everyone in the Group for their efforts during the year and have
been pleased to issue one thousand free shares from the Employee Benefit Trust
activated in December 2000 to each of 80 members of staff, with over five
years service, as a reward for their continuing loyalty.
Outlook
The year 2001 requires the Parkwood Group to prove that it can build on the
profitability of the second half of 2000 and thereby lay the foundation for a
brighter future. It is my belief that the Group's core businesses are stable
and that the Group should be more successful in the year ahead.
A W Hewitt
Chairman and Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year Ended 31 December
Note Continuing 2000 Total 1999
Operations Discontinued Restated
#000 Operations #000 #000
#000
Turnover 2 37,202 628 37,830 34,474
Cost of sales (28,051) (868)(28,919) (27,038)
Gross profit/(loss) 9,151 (240) 8,911 7,436
Administrative expenses (8,192) (953) (9,145) (6,423)
Exceptional operating costs 3 - - - (39)
Total administrative (8,192) (953) (9,145) (6,462)
expenses
Operating profit/(loss) 2 959 (1,193) (234) 974
Profit on sale of property 3 464 -
Interest payable 2 (211) (204)
Profit on ordinary 2 19 770
activities before taxation
Tax on profit on ordinary 4 (14) (317)
activities
Profit on ordinary 5 453
activities after taxation
Dividends 7 (307) (320)
Retained (loss)/profit for (302) 133
the year
Earnings per share 6 0.0p 2.1p
Earnings per share before 6 0.5p 2.6p
goodwill
Earnings per share before 6 (1.7p) 2.8p
goodwill and exceptional
items
Statement of Total Recognised Gains and Losses
2000 1999
#000 #000
Total recognised gains and losses relating to the year 5 453
Prior year adjustment (see note 2) (168) -
Total gains and losses recognised since last annual report (163) 453
CONSOLIDATED BALANCE SHEET
At 31 December
Note 2000 1999
Restated
#000 #000
Fixed assets
Intangible assets 661 765
Tangible assets 3,158 3,366
Investments 144 -
3,963 4,131
Current assets
Stocks 446 404
Debtors due within one year 5,841 6,869
Debtors due after more than one year 445 587
Cash at bank and in hand - -
6,732 7,860
Creditors: amounts falling due within one year (6,142) (7,335)
Net current assets 590 525
Total assets less current liabilities 4,553 4,656
Creditors: amounts falling due after more than (784) (596)
one year
2 3,769 4,060
Capital and reserves
Called up share capital 214 213
Capital redemption reserve 383 383
Share premium account 2,227 2,217
Profit and loss account 945 1,247
Equity shareholders' funds 3,769 4,060
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December
Notes 2000 1999
#000 #000 #000 #000
Cash inflow from operating activities 8 2,349 1,414
Returns on investments and servicing
of finance
Interest paid (94) (74)
Interest element of finance lease (117) (130)
contracts
Net cash outflow for returns on (211) (204)
investments and servicing of finance
Taxation (158) (300)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (704) (666)
Proceeds from sale of tangible fixed 894 255
assets
Net cash inflow/(outflow) for capital 190 (411)
expenditure and financial investment
Acquisitions and disposals
Purchase of subsidiary undertaking - (115)
Purchase of own shares (144) -
Net cash outflow for acquisitions and (144) (115)
disposals
Equity dividends paid (321) (277)
Cash inflow before use of liquid 1,705 107
resources and financing
Financing
Capital element of finance lease rental (884) (1,042)
payments
Director's loan received 143 -
Net cash outflow for financing (741) (1,042)
Increase/(decrease) in cash in the year 9 964 (935)
Notes
1. The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. Financial statements have not
yet been delivered to the Registrar, nor have the auditors yet reported on
them. The comparative financial information has been extracted from the
statutory accounts for the financial year ended 31 December 1999. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
The preliminary announcement has been prepared in accordance with applicable
accounting standards under the historical cost convention. The principal
accounting policies of the Group have remained unchanged from those set out in
the Group's 1999 annual report and financial statements, other than as set out
in note 2 below.
2. Turnover and profit/(loss) on ordinary activities before taxation all of
which originated in the United Kingdom are attributable to the following
classes of business:
Turnover Operating Net Profit/(loss) Net assets/
#000 Profit/(Loss) Interest before tax (liabilities)
2000 #000 #000 #000 #000
Managed Services Division
- Continuing 34,777 1,173
- Discontinued 628 (1,193)
Total 35,405 (20) (255) 189 1,561
Healthcare 2,425 (171) (40) (211) (270)
Division
Other - (43) 84 41 2,478
37,830 (234) (211) 19 3,769
1999 Turnover Operating Net Profit/(loss) Net assets/
Restated Profit/(Loss) Interest before tax (liabilities)
#000 Restated #000 Restated Restated
#000 #000 #000
Managed Services Division
- Continuing 28,593 1,914
- Discontinued 3,582 (660)
Total 32,175 1,254 (238) 1,016 2,006
Healthcare 2,299 (63) (26) (89) (125)
Division
Other - (217) 60 (157) 2,179
34,474 974 (204) 770 4,060
Discontinued activities consist of the landscape construction business which
was closed in August 2000 and the buildings maintenance business which closed
in December 1999.
Prior year adjustment
Prior year results have been restated following a change to the Group's
accounting policy in respect of income recognition in the Leisure business.
Historically, income was recognised on an invoiced basis. The Directors
believe that as the Leisure business is a growing part of the Group's
business, that matching the income with the period over which the services are
provided ensures a more prudent view is given by the accounts. The effect of
the change is as follows:
1999
Consolidated Profit and Loss #000
Profit after taxation as previously reported 516
Less: reduction in turnover (63)
Restated profit after taxation 453
In the year to 31 December 2000 the effect has been to decrease profit after
tax by #68,000.
Consolidated Balance Sheet Accruals and Deferred Income Shareholders' Funds
1999 as previously reported 397 4,228
Movement in year 168 (168)
1999 as restated 565 4,060
Half Yearly Performance Analysis
In order to comply with best practice, given below are the results in each
half of the year. These results are as follows:
2000 1999
Half 1 Half 2 Total Half 1 Half 2 Total
#000 #000 #000 #000 #000 #000
Turnover 18,594 19,236 37,830 17,436 17,038 34,474
Operating (loss)/profit (766) 532 (234) 465 509 974
Profit on sale of property 463 1 464 - - -
(Loss)/profit on ordinary (303) 533 230 465 509 974
activities before interest
Interest payable (131) (80) (211) (122) (82) (204)
(Loss)/profit on ordinary (434) 453 19 343 427 770
activities before taxation
The profit/(loss) on ordinary activities is stated after: 2000 1999
#000 #000
Depreciation of tangible fixed assets 1,309 1,181
Profit on sale of fixed assets (501) (31)
Amortisation of goodwill 103 100
Hire of other assets 946 815
Auditors' remuneration - audit services 23 24
- other services 14 26
3. Exceptional Items
2000 1999
#000 #000
Exceptional Operating Costs
Continuing activities
Costs relating to aborted acquisition - 39
Exceptional Non Operating Profit
Disposal of fixed assets 464 -
On 31 March 2000, the Group entered into a sale and leaseback of Parkwood
House, the Group's Head Office.
4. Taxation
The charge for taxation in 2000 of #14k relates entirely to prior year
adjustments, as no tax has been charged in the year due to the operating
losses incurred.
5. Post Balance Sheet Events
(a) At the Extraordinary General Meeting on 29 January 2001, the
Company obtained approval to purchase up to 15% of its own shares. On
the same date, the company purchased and cancelled 1.8 million shares,
representing 8.4% of the Company's issued share capital at a price of
20 pence per share. As a result, the issued share capital reduced to
19,600,420 ordinary 1 pence shares. This transaction was financed by a
twelve month loan facility of #360,000 from National Westminster Bank
Plc.
(b) On 1 March 2001 the Group completed the acquisition of the
business of the National Ambulance Service, for a total consideration
of #300k, of which #40k was payable in cash on completion, with the
balance of #260k settled by loan notes.
6. Earnings per share (EPS) have been calculated on the weighted average
number of Ordinary shares in issue throughout the year ended 31 December 2000
of 21,279,241 shares (1999: 21,346,200 shares). Earnings, which are based on
profits on all activities after tax, amounted to #5,000 (1999: #453,000).
Earnings before goodwill amortisation were #108,000 in 2000 (1999: #553,000).
Losses before goodwill amortisation and exceptional items were #356,000 in
2000 (1999: profit #592,000). The EPS before goodwill amortisation and
exceptional items are shown separately in order to illustrate the impact of
Group goodwill accounting policies and exceptional items on reported EPS. It
is considered that there are minimal potentially dilutive ordinary share
options in existence at the year end, therefore diluted EPS is identical to
the basic EPS.
Earnings before goodwill and exceptional items are calculated as follows:
2000 1999
Earnings Weighted Per Earnings Weighted Per share
#000 average share #000 average amount
number of amount number of (pence)
shares (pence) shares
Restated Restated
Basic earnings per 5 21,279,241 0.0 453 21,346,200 2.1
share
Goodwill 103 - 0.5 100 - 0.5
amortisation
Earnings per share 108 21,279,241 0.5 553 21,346,200 2.6
before goodwill
Exceptional items (464) - (2.2) 39 - 0.2
Earnings per share
before goodwill
and exceptional (356) 21,279,241 (1.7) 592 21,346,200 2.8
items
7. Dividends
2000 1999
#000 #000
Equity dividends
Final proposed dividend of 0.8p (1999: 0.8p) per Ordinary 157 171
share
Interim dividend of 0.7p (1999: 0.7p) per Ordinary share 150 149
307 320
8. Reconciliation of Operating (loss)/profit to Operating Cashflows
2000 1999
#000 Restated
#000
Operating (loss)/profit (234) 974
Depreciation 1,309 1,181
Profit on sale of fixed assets (37) (31)
Amortisation of intangible assets 103 100
Increase in stocks (42) (79)
Decrease/(increase) in debtors 1,170 (1,387)
Increase in creditors 80 656
Net cash inflow from operating activities 2,349 1,414
9. Reconciliation of Net Cashflow Movement to Net Debt
2000 1999
#000 #000
Increase/(decrease) in cash in the year 964 (935)
Cash outflow from reduction in debt and lease financing 884 1,042
New director's loan (143) -
New finance leases (790) (750)
Decrease/(increase) in net debt 915 (643)
Net debt at 1 January (2,847) (2,204)
Net debt at 31 December (1,932) (2,847)
The Annual Report will be posted to shareholders on or about 6 April 2001 and
copies will be available from the Company Secretary, Parkwood House, Cuerden
Park, Berkeley Drive, Bamber Bridge, Preston PR5 6BY.
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