Financial Performance
CHAIRMAN’S STATEMENT
It gives me great pleasure to present an excellent set of results after a challenging year, which reflect the strong growth within our Christmas savings and high street voucher business.
Group revenue from continuing operations has increased by 33% to £310.7m whilst profit before tax from continuing operations has increased to £5.4m. As a result earnings per share rose to 2.58p (2006 - loss of 10.64p). The directors are pleased to recommend a final dividend of 0.8p per share payable on 1 October 2007 to shareholders on the register at close of business on 31 August 2007, making a total distribution of 1.2p for the year.
Christmas 2006 was the most successful in Park's history. The Park, Country and Family brands delivered Christmas for our agents and customers in record volumes. This division achieved considerable growth. Revenue increased by 32.6% to £305.2m and profit before tax increased by 88% to £10.2m.
The internet is now playing an ever increasingly important role in the group's activities. In the Christmas savings business, on-line orders amount to 21% of all orders for Christmas 2007. On the corporate side, the majority of new business contacts are being generated by internet marketing and our fledgling online voucher retail business, www.highstreetvouchers.com is showing impressive growth. Park Group is now an established multi channel organisation.
The Office of Fair Trading announced in April 2007 that it was enquiring into the acquisition by Park of the Home Farm business on 7 March 2007. We are fully responding to this enquiry, but believe that the Christmas savings business forms part of a demonstrably wider market where Park has only a small market share. The results of this enquiry are expected in August 2007.
The decision last year to withdraw from the home collected credit industry was followed in March this year by the announcement that we were closing the bulk of our loan broking business Imagine Finance. This restructuring returns the group primarily to its core business of Christmas savings and high street vouchers.
Following consultation with the Government on the implications of the collapse of Farepak, we have agreed to introduce additional protection in the form of trust accounts to hold cash savings on behalf of our agents and customers. These trust accounts will be subject to independent oversight in the form of independent trustees and the formation of a new trade association - The Christmas Prepayment Association Limited (CPA). We believe that these measures, when finalised, will be a substantial benefit in restoring customers' faith in the Christmas savings model.
Our Christmas 2007 recruitment campaign was conducted against a background of the massive publicity surrounding the collapse of our competitor Farepak Food & Gifts Ltd. In spite of this, we generated record levels of enquiries, 262,000 and recruited 39,000 new agents with 72,000 new customers. Unsurprisingly, total orders for Christmas 2007 have been impacted by a loss of confidence in the market and are 30.6% below last year. While this will affect our results for the current year, we believe that Park stands to benefit in subsequent years as our customers' confidence is restored with the provision of the cash safeguards I have mentioned above and Park's continuing commitment to the highest levels of customer service. The corporate voucher product continues to make progress and the sales to date are most encouraging.
As announced previously, we intend to move the Company's stock exchange listing from the London Stock Exchange Main Market to the Alternative Investment Market (AIM). A resolution to approve this change, and associated changes to the Articles of Association, will be proposed at an EGM to be convened for the same day as the AGM in September 2007.
Finally, the skills and commitment of our employees have come to the fore in what has been a very challenging but very successful year and I want to thank them all for their efforts. Most of all I would like to thank our customers who continue to enjoy the benefits of the unique services that Park Group offers.
Peter Johnson
Chairman
27 June 2007
Preliminary Unaudited Results for the Year Ended 31 March 2007
