PARKWOOD HOLDINGS PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Parkwood Holdings plc, the support services group, announces interim results
for the 6 months ended 30 June 2003.
Highlights
* Group signs largest PFI contract to date, managing leisure centres in the
London Borough of Bexley under a 33 year contract, with an expected annual
turnover in excess of �4 million.
* Order book increased by 33% since 31 December 2002 to �220 million.
* Turnover increased by 11% to �24.2 million (2002: �21.7 million).
* Operating profit on continuing operations reduced by 3% to �0.56 million
(2002: �0.58 million).
* Profit before tax reduced by 39% to �0.31 million (2002: �0.51 million) due
to continuing losses in Parkwood Healthcare and investment in new business
in Glendale.
* Interim dividend per share of 0.9p (2002: 0.9p).
* Earnings per share (before goodwill) reduced by 32% to 1.43p (2002: 2.11p).
Tony Hewitt, Executive Chairman, commented:
"Results for the second half of 2003 are expected to show a significant
improvement due to the benefit of signing the Bexley contract and the forecast
reduction in losses in Parkwood Healthcare."
Enquiries:
Parkwood Holdings plc
Tony Hewitt, Executive Chairman 01772 627111
Notes for Editors:
Parkwood Holdings plc specialises in providing outsourced services to the
public sector across England and Wales under long term contracts. Its three
main areas of operation are as follows:
* Glendale - The management of parks and open spaces for a predominately
local authority client base. This operation is currently being expanded
into related "green" businesses under the "Think Green - Think Glendale"
logo.
* Parkwood Leisure - The management of a diverse range of leisure facilities,
again predominately for local authority clients. This Division is also the
beneficiary of most of the Group's contracts won under the PFI procurement
process.
* Parkwood Healthcare - The provision of non emergency patient transport to
NHS Trusts under the "National Ambulance Service" banner, together with the
provision of nurses on an agency basis to a similar client base
CHAIRMAN'S STATEMENT
The half year ended 30 June 2003 has been dominated by the signing of the
Group's largest PFI contract to date and the continuing losses in the Group's
Healthcare business. Overall, results are disappointing in that profits for the
period are considerably less than in the first half of 2002. The second half of
the year will benefit from the signing of the Bexley contract and from reduced
losses in Parkwood Healthcare. The Group is currently working on bringing a
further three PFI projects to financial close, with these deals likely to
provide a significant benefit to 2004 and future years.
Group Results
Group turnover continues to increase, up by 11% in the period to �24.2 million
(2002: �21.7 million). Operating profit before goodwill, and the joint venture
and associate company profits associated with the PFI special purpose companies
was �0.41 million (2002: �0.65 million), whilst profits before tax fell to �
0.31 million (2002: �0.51 million). Significantly, the Group's forward order
book, taken to a ten year horizon has increased by 50% to �220 million since 30
June 2002.
The Board is pleased to declare an interim dividend of 0.9p (2002: 0.9p)
payable on 17 October 2003 to all shareholders registered on 26 September 2003.
Board and Management
In March I announced that consideration was being given to the future size and
composition of the board, and in May, Sarah Kling a recently retired partner in
KPMG (London office) joined the Board as a Non-Executive Director replacing
Edwin Lee who had served as a non-executive director since the formation of
Parkwood Holdings plc. It has been decided that the Group Board will be
expanded to seven by mid 2004, consisting of three independent non-executives
(currently two) and four executive directors (currently three).
As previously announced, Doug Eadie the Group Finance Director leaves Parkwood
Holdings plc on 15 September 2003 and the Board wishes him well for the future.
A new Group Finance Director has been selected and it is expected that he will
commence employment with the Group in December. Further details will be
released shortly.
As a result of the substantial growth that Parkwood Leisure will achieve over
the next three years from the Group's success in the PFI/PPP market, Andrew
Holt has decided to concentrate on managing Parkwood Leisure and to stand down
from his role as Group Chief Executive with effect from 1 August 2003, although
he remains on the Group Board. I assumed the responsibilities of Chief
Executive from the same date.
Glendale
Glendale, the "green" services division of Parkwood Holdings achieved sales of
�13.61 million (2002: �12.94 million), although profits fell to �0.28 million
(2002: �0.45 million). Our efforts to diversify and expand the business since
mid 2002 have led to costs being incurred to date of �173,000, of which �98,000
relates to this period. Success has already been achieved with the creation of
Glendale Golf which now has two golf courses under management and Glendale
Environmental where consultancy work has been undertaken for the Department of
the Environment. Two other initiatives, Glendale Horticulture and Glendale
Green Waste Recycling made no contribution in the period, whilst interest in
Parkplan, the Group's funding partnership for investment in parks and open
spaces has been slow.
The regional organisational structure planned for Glendale is now in place and
the business has already fulfilled one of its strategic aims by operating
nationally in England, Wales and Scotland. Both the North of England and the
Midlands have exceeded expectations in the first half, while new contracts in
London and the South East with Eastbourne, Surrey County Council and the London
Borough of Camden have commenced.
Parkwood Leisure and Leisure PFIs
Parkwood Leisure is poised for an exciting expansion of its business. At the
end of the period it signed its largest contract to date, to provide leisure
management services to the London Borough of Bexley as a sub-contractor to
Boxwood Leisure Limited a company in which the Group's PFI unit has a 50%
equity stake via Leisureplan Limited, its specialist joint venture company.
Operationally, the contract commenced on 1 September 2003 when over 450 full
time, part time and casual staff transferred to the employment of Parkwood
Leisure in five leisure centres in the Borough. Parkwood Leisure's turnover
will increase by �4 million in the first full year of operations, rising to �5
million per annum in 2� years time when �32 million of capital has been
expended to build new and refurbish existing facilities.
Leisureplan Limited via its specially created subsidiaries has also achieved
commercial close or preferred bidder status on three other Leisure PFIs. These
are at Penzance with Penwith District Council, where it will build and operate
a new �6 million leisure centre; at Thetford and Dereham in Norfolk for
Breckland District Council where it will refurbish the centre in Thetford and
build a new centre at Dereham, with a total capital commitment of �14 million
and for the London Borough of Croydon involving four leisure centres at South
Norwood, Purley, New Addington and Thornton Heath, with capital expenditure
totalling �11 million. In all cases, Parkwood Leisure will become the operator.
When financial close has been achieved on all these projects the turnover of
Parkwood Leisure will then grow to be in excess of �20 million in the first
full year of operations.
Parkwood Leisure's results for the period produced a profit before tax of �0.54
million (2002: �0.46 million) on turnover of �6.7 million (2002: �6.26
million). The leisure business is also the major generator of cash in the Group
with a positive cashflow of �506,000 in the period.
Parkwood Healthcare
Losses of �0.33 million in the period compare with a loss of �74,000 in the
same period last year and bring the total losses in the business to �0.75
million over the last two years. Sales in the period amount to �3.51 million
(2002: �2.4 million). Our new management team comprising of Liz Semain as
Managing Director and Raj Kandeth as Finance Director has already made good
progress. Gradually the patient transport and ambulance business that had been
responsible for the losses is being rationalised with contracts renegotiated or
terminated. Losses will continue into the second half but at a lower level than
previously.
Parkwood PFI Projects
The Group's PFI unit is pleased to announce that Sarah Hughes-Clarke rejoined
the Group as Head of PFI on 1 September 2003 after an absence of five years
during which time she has been responsible for business development with a
public sector agency. It is expected that Sarah will be able to build on the
substantial contribution made by her predecessor, Mark Davies.
The PFI unit is operating as a profit unit for the first time in 2003 and has
contributed �138,000 to the Group's profits in the period. A new strategy
whereby the unit becomes a fully fledged project management business providing
bid management, project management and life cycle fund management is being
developed. This will ensure the long term success and profitability of the
unit.
Funding and Cashflow
Net borrowings of �5.29 million at 30 June 2003 have increased significantly
from the borrowings of �2.12 million at 31st December 2002 and �2.86 million at
30 June 2002. The increase since December 2002 partially reflects the seasonal
nature of the Group's working capital requirements, but was also adversely
affected by the delay to the signing of the Bexley contract. Since the half
year, the Group's bank overdraft has already reduced substantially, having more
than halved by the beginning of September as a result of seasonal cash inflows,
together with cost recoveries on the Bexley contract. There should be a net
cash inflow in the second half of the year which is expected to lead to a
significant reduction of gearing by the year end.
Outlook
As indicated above, results for the second half of 2003 are expected to show a
significant improvement, due to the benefits of signing the Bexley contract and
the forecast reduction in losses in Parkwood Healthcare. The first half of 2003
included substantial costs in relation to new ventures being pursued in
Glendale as well as in relation to PFI bidding. The board will now seek to
develop the strategy to maximise the benefits arising from these significant
investments.
A W HEWITT
Executive Chairman
15th September 2003
Financial Highlights
Interim Interim %
2003 2002 Change
Turnover (excluding joint ventures and associates) �24.2m �21.7m +11%
Operating Profit (before goodwill, joint venture and �0.41m �0.65m - 37%
associate profits)
Profit before Tax �0.31m �0.51m - 39%
Earnings per share (EPS) 1.04p 1.81p - 43%
EPS (before goodwill) 1.43p 2.11p - 32%
Dividends per share 0.9p 0.9p 0%
Order Book �220m �147m +50%
Gearing (1) 123.7% 71.8%
(1) Calculated by expressing net debt (as note 9) as a percentage of net
assets.
Financial Calendar
Interim Dividend Paid October 2003
Full Year Results Announced March 2004
Annual General Meeting May 2004
This statement is being sent to all shareholders and copies are available from
the Company's
registered office:
Parkwood House, Cuerden Park, Berkeley Drive, Bamber Bridge, Preston PR5 6BY
Summary Group Profit and Loss Account
Notes 6 Months Ended Year Ended
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Gross turnover 24,340 21,736 45,030
Less Group's share of (178) - -
joint ventures
Group Turnover - 2 24,162 21,736 45,030
continuing operations
Net operating profit - 3 337 596 1,421
continuing operations
Share of operating 114 (13) (59)
profit / (loss) in joint
ventures
Share of operating 110 - 189
profits in associates
Total operating profit - 561 583 1,551
continuing operations
Interest payable and
similar charges
- Group (82) (69) (139)
- Joint ventures (105) - -
- Associates (66) - (118)
(253) (69) (257)
Profit on ordinary 2 308 514 1,294
activities before
taxation
Tax on profit on 4 (114) (175) (446)
ordinary activities
Profit on ordinary 194 339 848
activities after
taxation
Dividends 6 (170) (158) (401)
Retained profit 24 181 447
Earnings per share - 5 1.04p 1.81p 4.5p
basic
Earnings per share 5 1.43p 2.11p 5.2p
(before goodwill) -
basic
Earnings per share - 5 1.04p 1.78p 4.5p
diluted
Dividends per share 6 0.9p 0.9p 2.2p
Summary Group Balance Sheet
Notes At 30 June At 30 June At 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Fixed assets
Intangible assets 576 564 639
Tangible assets 4,707 4,184 4,029
Investments 7 559 426 568
5,842 5,174 5,236
Investments in joint
ventures
Share of gross assets 4,430 1,962 3,568
Share of gross (4,026) (1,958) (3,584)
liabilities
404 4 (16)
Current assets
Stocks 620 479 475
Debtors 9,776 8,242 7,196
Cash at bank and in - - -
hand
10,396 8,721 7,671
Creditors: amounts (10,781) (8,627) (7,427)
falling due within one
year
Net current (385) 94 244
(liabilities) / assets
Total assets less 5,861 5,272 5,464
current liabilities
Creditors: amounts (1,354) (1,182) (918)
falling due after more
than one year
Provisions for (232) (105) (295)
liabilities and
charges
4,275 3,985 4,251
Capital and reserves
Called up share 10 196 196 196
capital
Capital redemption 10 401 401 401
reserve
Share premium account 10 2,227 2,227 2,227
Profit and loss 10 1,451 1,161 1,427
account
Equity Shareholders' 4,275 3,985 4,251
funds
Summary Group Cash Flow
Notes 6 Months Ended Year Ended
30 June 2003 30 June 31 December
2002 2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Net cash (outflow) / 8 (878) 70 2,399
inflow from operating
activities
Returns on investments
and
servicing of finance
Interest paid (24) (25) (40)
Interest element of (58) (44) (99)
finance lease payments
(82) (69) (139)
Taxation
UK corporation tax (119) - (697)
paid
Capital expenditure
and
financial investment
Purchase of fixed (382) (503) (960)
assets
Purchase of fixed - - -
asset investment
Proceeds from sale of 16 22 101
tangible fixed assets
Sale / (Purchase) of 39 (110) (105)
own shares by Employee
Benefit Trust
(327) (591) (964)
Acquisitions and
disposals
Purchase of business - - (123)
Purchase of shares in (11) - (25)
joint venture /
associate undertakings
(11) - (148)
Equity dividends paid (243) (225) (393)
Net cash (outflow) / (1,660) (815) 58
inflow before
use of liquid
resources and
financing
Financing
Capital element of (446) (321) (719)
finance lease rental
payments
Debt due within one
year:
Bank loan repaid - (180) (180)
Subordinated debt in (415) - -
joint venture /
associates
(861) (501) (899)
Decrease in cash in (2,521) (1,316) (841)
the period
Notes to the Interim Accounts
1. Accounting Policies
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year
ended 31 December 2002.
The interim financial statements have been approved by the Board and have
neither been reviewed nor audited.
The figures for the year to 31 December 2002 have been extracted, from the
statutory accounts for the year. These accounts received an unqualified audit
report and have been filed with the Registrar of Companies.
2. Turnover and profit on ordinary activities before taxation
6 Months Ended Year Ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited)
(audited)
�000 �000
�000
Turnover
Glendale (1) 13,609 12,943 27,234
Parkwood 6,702 6,260 12,470
Leisure (2)
Healthcare 3,509 2,400 4,960
Holding Company 342 133 366
24,162 21,736 45,030
(1) Glendale was prior to 1 January 2003 referred to as the Grounds Management
business of the Managed Services Division.
(2) Parkwood Leisure was prior to 1 January 2003 referred to as the Leisure
business of the Managed Services Division.
All Group turnover originated in the United Kingdom. Figures for June 2002, and
December 2002 have been restated to reflect the separation of the Parkwood
Leisure business effective from 1 January 2003.
6 Months Year Ended
Ended
30 June 2003 30 June 31 December
2002 2002
(unaudited)
(unaudited) (audited)
�000
�000 �000
Profit Before Tax
Glendale 276 449 1,471
Parkwood Leisure 542 463 919
Healthcare (332) (74) (462)
Central Costs (157) (255) (522)
Share of Joint Venture 9 (13) (58)
Profit / (Losses)
Share of associate 43 - 72
profits
Profit before goodwill 381 570 1,420
Goodwill (73) (56) (126)
308 514 1,294
3. Analysis of Operating Profit
30 June 30 June Year Ended
2003 2002
(unaudited) (unaudited) 31 December
2002
�000 �000 �000
Operating profit 410 652 1,547
before
goodwill
Goodwill (73) (56) (126)
amortisation
Net operating 337 596 1,421
profit
4. Taxation
Corporation Tax for the current year is charged at 30% of profits before
goodwill, which is the current expected rate for the year ending 31 December
2003.
5. Earnings Per Share
Earnings per share have been calculated on earnings for the period divided by
the weighted average number of ordinary shares in issue of 18,594,974 (2002:
18,727,039).
6. Dividends
The Board has declared an interim dividend of 0.9p per ordinary share (2002:
0.9p). The dividend will be paid on 17 October 2003 to all shareholders
registered on 26 September 2003. The final dividend for 2002 was paid in May
2003.
7. Investments
Investments in own shares at 30 June 2003 of �192,000 comprise the holding of
761,625 shares in Parkwood Holdings Plc by Parkwood Group Trustees Ltd, the
corporate trustee of the Parkwood Group Employee Benefit Trust. At 30 June
2003, the market value of these shares was 45.5p per share, or �347,000.
The other investment of �367,000 relates to the goodwill in respect of the
Group's 22.2% stake in Realm Services (DAC) Limited. This company is treated as
an associate in the accounts
8. Reconciliation of operating profit to net cash (outflow) / inflow from
operating activities
6 Months Ended Year Ended
30 June 2003 30 June 31 December 2002
2002
(unaudited) (unaudited) (audited)
�000 �000 �000
Net operating profit 337 596 1,421
Depreciation of tangible 795 751 1,460
fixed assets
Profit on sale of tangible (14) (9) (54)
fixed assets
Amortisation of intangible 73 56 126
assets
Increase in stocks (145) (60) (56)
Increase in debtors (2,578) (2,168) (1,122)
Increase in creditors 632 904 624
Increase in provisions for 22 - -
liabilities and charges
Net cash (outflow) / inflow (878) 70 2,399
from
operating activities
9. Analysis of net debt
At 1 January Cashflow Other non-cash At 30 June
2003 changes 2003
�000 �000 �000 �000
Bank overdraft/ (455) (2,521) - (2,976)
cash at bank
Finance leases (1,669) 446 (1,091) (2,314)
(2,124) (2,075) (1,091) (5,290)
10. Share Capital and Reserves
Share Capital Share Premium Profit & Loss
Capital Redemption Account Account
Reserve
�000 �000 �000 �000
As at 1 196 401 2,227 1,427
January 2003
Retained - - - 24
profit
At 30 June 196 401 2,227 1,451
2003
11. Reconciliation of movement in consolidated shareholders' funds
6 Months Ended Year Ended
30 June 30 June 31 December 2002
2003 2002
�000 �000 �000
Profit for the financial 194 339 848
period
Dividends (170) (158) (401)
Net increase in shareholders' 24 181 447
funds
Opening shareholders' funds 4,251 3,804 3,804
Closing shareholders' funds 4,275 3,985 4,251
END