PARKWOOD HOLDINGS PLC
PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2002
Parkwood Holdings plc, the public sector outsourcing specialist, announces its
preliminary results for the year ended 31 December 2002.
Financial Highlights
* Turnover increased by 10% to �45.0 million
* Strong operational performance by Parkwood Leisure and Glendale offset by
poor results in Parkwood Healthcare.
* Profit before goodwill and tax of �1.42 million in line with market
expectations.
* Profit before taxation of �1.29 million (2001: �1.34 million).
* Earnings per share before goodwill of 5.2p.
* Dividend for the year increased by 10% to 2.2p per share (final dividend
for the year 1.3p)
* Group order book increased to a record �166 million.
Key Events
* The Group signed its third PFI contact in June 2002, with the first two
contracts now fully operational.
* Joint venture signed in July 2002 ("Leisureplan") with the Barclays
European Infrastructure Fund, which will play a key part in funding the
Group's future local authority leisure PFI deals.
* The Group's consortia are currently at preferred bidder stage on four
Leisure PFI/PPP deals, at London Borough of Bexley, Breckland (Norfolk),
London Borough of Croydon and Penwith (Cornwall).
Tony Hewitt, Executive Chairman, commented;
"Parkwood is well placed to increase turnover to �50 million or thereabouts in
2003, on which there should be a resumption of profit growth".
For further information, please contact:
Parkwood Holdings plc
Tony Hewitt, Executive Chairman 01772 627111
Doug Eadie, Finance Director 07710 652572
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 predominantly
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 predominantly 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.
Parkwood Holdings plc
PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2002
CHAIRMAN'S STATEMENT
Fortunes were mixed in 2002, and although profits before tax of �1.29 million
were broadly in line with expectations, this figure would have been higher had
it not been for a disappointing performance in the Group's Healthcare division.
Results
Group turnover increased to �45.0 million from �40.9 million in the previous
year and profit before tax and goodwill amounted to �1.42 million. Operating
profit margins (including goodwill charge) on continuing activities fell to
3.2% against 3.7% in 2001 largely as a result of the impact of losses of �0.46
million in the Group's Healthcare business.
Operating cashflows of �2.4 million remained strong. However, the net cash
outflow for the year of �0.8 million reflected increased corporation tax
payments, investments in PFI projects and expenditure on the purchase of
additional shares for the Employee Benefit Trust. Gearing at the year end rose
slightly to 50%.(1) The Group's return on capital employed remained
satisfactory at 27%. (2)
Dividends
Overall trading performance for the year was similar to 2001, but the greater
certainty of future revenues and profits particularly in the Leisure Division
enables a progressive view to be taken of the dividends available for
distribution to shareholders. I am pleased to announce that the Board considers
it appropriate to increase the final dividend to 1.3p (2001: 1.2p) payable on 9
May to all shareholders on the register on 11 April 2003. The full year
dividend of 2.2p per share represents a 10% increase over the previous year
(2.0p).
Markets and Order Book
The Group's forward order book has increased to �166 million and should rise
substantially when the current PFI/PPP leisure projects on which preferred
bidder status has been achieved are all signed. During the last 12 months, the
Group has successfully signed its third PFI deal, while the Group is now
preferred bidder on four separate PFI / PPP projects in the local authority
leisure sector. This includes the previously announced projects at Bexley,
where financial close is expected shortly, Croydon and Breckland in Norfolk, as
well as the recent award of preferred bidder status at Penwith in Cornwall.
At the same time, the original "green" sector business of Glendale is being
diversified and a strategy has been set in place to grow this business to
become one of the largest specialist providers of horticultural services in the
UK under the "Think Green - Think Glendale" strapline.
The future of the Group's problematic Healthcare division remains under review
and the Board will endeavour to return this Division to profitability as soon
as possible.
The Group's embryonic Defence Division created last year and named Realm
Defence Services has submitted expressions of interest in three defence PFI
projects and has been "long listed" for two of these. Patience and continued
investment in the defence sector will be required to achieve success in the
long term.
Management and Board
Edwin Lee who has been a Non-Executive Director since the formation of Parkwood
Holdings plc in 1992 will retire at the Annual General Meeting in May this
year. Edwin has given both myself and the Board all the support that could be
wished for from a non-executive director and we extend our sincere thanks to
him. A replacement non-executive director is currently being sought.
Otherwise the composition of the Board remains the same, although consideration
is currently being given to its future size and composition.
The new Managing Director of Parkwood Healthcare appointed in the Spring of
2002 left the company in December 2002 and elsewhere there have been changes
resulting in a net loss of some Senior Managers and Directors.
Staff
Staff numbers have increased again and all new and existing employees deserve
thanks for their efforts. For the third year running shares have been awarded
from the Employee Benefit Trust to employees with more than five years service.
Outlook
Parkwood is well placed to increase turnover to �50 million or thereabouts in
2003, on which there should be a resumption of profit growth.
A W Hewitt
Executive Chairman
17 March 2003
(1) Calculated by expressing net debt of �2.124 million as a percentage of net
assets of �4.251 million.
(2) Calculated by expressing operating profit of �1.421 million as a percentage
of average capital employed.
Capital employed is calculated by adding net debt to shareholders' funds.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year Ended 31 December 2002
Note 2002 2001
�000 �000
Turnover - continuing 2 45,030 40,872
operations
Cost of sales (33,716) (30,407)
Gross profit 11,314 10,465
Administrative expenses 3 (9,893) (8,943)
Operating profit 2 1,421 1,522
Share of operating profit /
(loss) in
- Joint ventures (59) (9)
- Associates 189 -
130 (9)
Total operating profit - 1,551 1,513
continuing operations
Interest payable and similar
charges
- Group (139) (172)
- Associates (118) -
2 (257) (172)
Profit on ordinary activities 2 1,294 1,341
before taxation
Tax on profit on ordinary 5 (446) (464)
activities
Profit on ordinary activities 848 877
after taxation
Dividends 7 (401) (377)
Retained profit for the year 447 500
Earnings per share - basic 6 4.5p 4.7p
Earnings per share before 6 5.2p 5.3p
goodwill - basic
Earnings per share - diluted 6 4.5p 4.6p
Statement of Total Recognised Gains & Losses
2002 2001
�000 �000
Total recognised gains and losses 848 877
relating to the year
Prior year adjustment - deferred (105)
taxation
Total gains and losses recognised 743
since last annual report
CONSOLIDATED BALANCE SHEET
31 December 2002
Group
2002 2001
�000 Restated
�000
Fixed assets
Intangible assets 639 620
Tangible assets 4,029 3,760
Investments 568 316
5,236 4,696
Investments in joint ventures
Share of gross assets 3,568 939
Share of gross liabilities (3,584) (923)
(16) 16
Current assets
Stocks 475 419
Debtors due within one year 6,423 5,584
Debtors due after more than one year 773 490
Cash at bank and in hand - 386
7,671 6,879
Creditors: amounts falling due (7,427) (6,669)
within one year
Net current assets 244 210
Total assets less current 5,464 4,922
liabilities
Creditors: amounts falling due after (918) (1,013)
more than
one year
Provisions for liabilities and (295) (105)
charges
4,251 3,804
Capital and reserves
Called up share capital 196 196
Capital redemption reserve 401 401
Share premium account 2,227 2,227
Profit and loss account 1,427 980
Equity shareholders' funds 4,251 3,804
CONSOLIDATED CASHFLOW STATEMENT
Year Ended 31 December 2002
Notes �000 2002 �000 2001
�000 �000
Net cash inflow from operating 2,399 3,693
activities 8
Returns on investments and servicing
of finance
Interest paid (40) (62)
Interest element of finance lease (99) (110)
contracts
Net cash outflow for returns on (139) (172)
investments and servicing of finance
Taxation
UK corporation tax (paid) / received (697) 7
Capital expenditure and financial
investment
Purchase of tangible fixed assets (960) (1,037)
Purchase of fixed asset investment - (170)
Proceeds from sale of tangible fixed 101 192
assets
(Purchase) / sale of own shares by (105) 18
Employee Benefit Trust
Net cash outflow for capital (964) (997)
expenditure
and financial investment
Acquisitions and disposals
Purchase of business (123) (294)
Cash acquired with business - 70
Purchase of shares in joint venture (25) (25)
undertaking
Net cash outflow for acquisitions and (148) (249)
disposals
Equity dividends paid (393) (299)
Cash inflow before use of liquid 58 1,983
resources and financing
Financing
Capital element of finance lease (719) (717)
rental payments
Bank loan (180) 180
Purchase of own shares - (360)
Loan from director repaid - (143)
Net cash outflow for financing (899) (1,040)
(Decrease) / increase in cash in the (841) 943
year 9
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Year Ended 31 December 2002
Group Company
2002 *Restated 2002 2001
�000 2001 �000 �000
�000
Profit for the financial year 848 877 543 347
Dividends (401) (377) (419) (391)
Redemption of shares - (360) - (360)
Net increase / (reduction) in 447 140 124 (404)
shareholders' funds
Shareholders' funds at 1 January 3,804 3,664 2,969 3,373
(restated)
Shareholders' funds at 31 December 4,251 3,804 3,093 2,969
* The opening shareholders' funds at 1 January 2002 amounted to �3,909,000
before the prior year adjustment
of �105,000 in respect of the adoption of FRS 19 "Deferred Taxation".
Notes
1. Accounting Policies
The above financial information does not comprise statutory accounts as
detailed in Section 240 of the Companies Act 1985. The comparative financial
information has been extracted from the statutory accounts for the year ended
31 December 2001. These accounts have been delivered to the Registrar of
Companies. The auditors have reported on these accounts; their report was
unqualified and did not contain a statement under s237(2) or (3) Companies Act
1985.
The statutory accounts for the year ended 31 December 2002 will be finalised on
the basis of the financial information presented by the directors in their
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
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 2001 annual report and financial statements, with the exception of
FRS19. FRS19 "Deferred Taxation" has become effective in the period and has led
to a reduction of profit of �97,000 in the year (2001: Nil)
The Group continues to account for pension costs under SSAP24 "Accounting for
Pension Costs". However, in accordance with FRS17 "Retirement Benefits" the
Group will provide the necessary transitional disclosures in the full financial
statements.
2. Analysis of Turnover, Operating Profit, Net Interest, Profit on Ordinary
Activities Before Taxation and Net Assets.
Turnover, operating profit, net interest, profit on ordinary activities before
taxation and net assets all of which originated and arose in the United Kingdom
are attributable to the following classes of business:
2002 Turnover Operating Net Profit/ Net assets/
(loss)
�000 Profit / Interest (liabilities)
(loss) before tax
�000 �000
�000 �000
Managed Services 39,703 2,474 (84) 2,390 4,556
Division
Healthcare Division 4,960 (460) (2) (462) 293
Other 367 (593) (171) (634) -
45,030 1,421 (257) 1,294 4,849
Bank loan and (969)
overdrafts
Fixed asset 122
investments
Other debtors 249
4,251
2001 (Restated) Turnover Operating Net Profit/ Net assets/
(loss)
�000 Profit / Interest (liabilities)
(loss) before tax
�000 �000
�000 �000
Managed Services 37,168 2,076 (93) 1,983 4,183
Division
Healthcare Division 3,704 43 (42) 1 358
Other - (597) (37) (643) -
40,872 1,522 (172) 1,341 4,541
Bank loan and (935)
overdrafts
Fixed asset 335
investments
Other creditors (137)
3,804
Profit on ordinary activities before taxation is stated after charging /
(crediting):
2002 2001
�000 �000
Depreciation and amounts written off tangible
fixed assets:
- owned 943 951
- held under finance leases and hire purchase 517 462
contracts
Amortisation of goodwill 126 110
Profit on sale of fixed asssets (54) (74)
Operating lease rentals
- other 1,004 1,104
Auditors remuneration
- audit services 31 31
- other services 17 23
3. Administrative Expenses
2002 2001
�000 �000
Administrative expenses - other 9,767 8,833
Goodwill amortisation 126 110
9,893 8,943
4. 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:
2002 2001
Half 1 Half 2 Total Half 1 Half 2 Total
�000 �000 �000 �000 �000 �000
Turnover 21,736 23,294 45,030 20,467 20,405 40,872
Operating profit / (loss) 650 771 1,421 551 971 1,522
Share of operating loss in (13) (46) (59) - (9) (9)
joint ventures
Share of operating profit - 189 189 - - -
in associates
Profit on ordinary 637 914 1,551 551 962 1,513
activities before interest
Interest payable - group (69) (70) (139) (113) (59) (172)
Interest payable - - (118) (118) - - -
associates
Profit on ordinary 568 726 1,294 438 903 1,341
activities before taxation
5. Tax on Profit on Ordinary Activities
The tax charge is based on the profit for the year and comprises:
2002 2001
�000 �000
UK corporation tax at 30% (2001: 30%) 372 468
Adjustment in respect of prior years:
UK corporation tax (23) (4)
Deferred taxation charge for the year - 97 -
origination and reversal
of timing differences
446 464
The standard rate of current tax for the year, based on the UK standard rate of
corporation tax is 30% (2001; 30%). The current tax charge for the year is
below 30% for the reasons set out in the following reconciliation:
2002 2001
�000 �000
Profit on ordinary activities before tax 1,294 1,341
Tax on profit on ordinary activities at 388 402
standard rate
Expenses not deductible for tax purposes 34 60
including
goodwill amortisation
Capital allowances in excess of depreciation 20 24
Movement in short term timing differences (32) (18)
Capitalised interest (38) -
Adjustment in respect of prior period (23) (4)
corporation tax
349 464
Adoption of FRS 19 "Deferred Taxation" has required a change in the method of
accounting for deferred tax. The tax on profit on ordinary activities for 2001
has not been impacted by this change. The impact of adopting FRS19 on the 2002
results in an increase to the tax charge of �97,000
6. Earnings Per Ordinary Share
Earnings per share (EPS) have been calculated on the weighted average number of
Ordinary shares in issue throughout the year ended 31 December 2002 of
18,700,485 shares (2001: 18,827,497 shares). Earnings, which are based on
profits on all activities after tax, amounted to �848,000 (2001: �877,000).
Earnings before goodwill amortisation were �974,000 in 2002 (2001: �987,000).
The EPS before goodwill amortisation is shown separately in order to illustrate
the impact of Group goodwill accounting policies and exceptional operating
items on reported EPS.
Earnings before goodwill and exceptional items are calculated as follows:
2002 2001
Earnings Weighted Per Earnings Weighted Per
average share average share
�000 number of amount �000 number of amount
shares shares
(pence) (pence)
Basic earnings per share 848 18,700,485 4.5 877 18,827,497 4.7
Goodwill amortisation 126 - 0.7 110 - 0.6
Earnings per share before 974 18,700,485 5.2 987 18,827,497 5.3
goodwill
Weighted average shares 507,400 571,553
held by Group's employee
share options scheme
Basic weighted average 18,700,485 18,827,497
number of shares
Dilutive effect of share 227,457 218,292
options
Diluted weighted average 18,927,942 19,045,789
number of shares
Diluted earnings per 848 18,927,942 4.5 877 19,045,789 4.6
share
Goodwill amortisation 126 - 0.7 110 - 0.6
Diluted earnings per 974 18,927,942 5.2 987 19,045,789 5.2
share before goodwill
7. Dividends
2002 2001
�000 �000
Equity dividends
Final proposed dividend of 1.3p (2001: 1.2p) per 243 235
Ordinary share
Interim dividend of 0.9p (2001: 0.8p) per 158 142
Ordinary share
401 377
8. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
2002 2001
�000 �000
Operating profit 1,421 1,522
Depreciation 1,460 1,413
Profit on sale of fixed assets (54) (74)
Amortisation of intangible assets 126 110
(Increase) / decrease in stocks (56) 27
(Increase) / decrease in debtors (1,122) 401
Increase in creditors 624 294
Net cash inflow from operating 2,399 3,693
activities
9. Reconciliation of Net Cashflow to Movement in Net Debt
2002 2001
�000 �000
(Decrease) / increase in cash in the year (841) 943
Cash outflow from reduction in debt and lease 719 537
financing
Movement on bank loan 180 -
Movement on director's loan - 143
Change in net debt resulting from cashflows 58 1,623
Finance leases acquired with business - (7)
New finance leases (820) (1,046)
(Increase) / decrease in net debt (762) 570
Net debt at 1 January (1,362) (1,932)
Net debt at 31 December (2,124) (1,362)
The Annual Report will be posted to shareholders on or around 31 March 2003 and
copies will be available from the Company Secretary, Parkwood House, Cuerden
Park, Berkeley Drive, Bamber Bridge, Preston, PR5 6BY
12
END