Parkwood Holdings plc
28 August 2008
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Parkwood Holdings plc, the support services group, is pleased to announce its
interim results for the 6 months ended 30 June 2008.
Financial highlights:
* Revenues rose by 20.1% to �61.5m (2007: �51.2m)
* Operating profit increased by 70.1% to �2.33m (2007: �1.37m)
* Profits before tax rose by 15.2% to �1.21m (2007: �1.05m)
* Earnings per share increased to 4.7p, up 30.6% from last year (2007: 3.6p)
* Proposed dividend of 1.5p (2007: 1.3p) payable to shareholders on 3 October
2008
* Group order book increased by 24% to �531m (2007: �429m)
Operating highlights:
* New Leisure management contracts at Portsmouth and Cherwell under DBOM
arrangements
* Preferred bidder status on Bristol City Council Leisure PFI Project
* LINk Contract awards for Parkwood Healthcare in Lewisham and Harrow
Tony Hewitt, Executive Chairman of Parkwood Holdings, commented:
"Our blue-chip order book and index-linked contracts, which account for in
excess of 85% of revenue, provide a degree of certainty for the future
performance of the Group".
For further information, please contact:
Tony Hewitt Executive Chairman 01772 627111
Terry Bowman Group Finance Director 07825 607358
Neil Baldwin Brewin Dolphin Securities Limited 0113 241 0126
Information on Parkwood Holdings plc can be accessed via the company's website
at
www.parkwood-holdings.co.uk
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. Operates a nursing agency and an ambulance and patient transport
business. Parkwood Healthcare has recently been successful in winning NHS LINk
contracts in London.
Parkwood Holdings Plc
Interim Report 2008
Chairman's Statement
The six-month period to 30 June 2008 has seen continued growth in Parkwood's
revenues and profits, particularly in its Leisure Division, where significant
new contracts under design, build, operate and manage (DBOM) arrangements
commenced in Portsmouth in January and with Cherwell District Council in North
Oxfordshire in April. Glendale experienced difficult trading conditions
especially in its golf management and horticultural businesses, whilst
increases in fuel prices also impacted adversely on the costs of running the
division's fleet of more than 500 vehicles. Significantly, Parkwood
Healthcare's new medical service division was awarded their first new contracts
with two London Boroughs for the provision of LINk hosting consultancy
services. In July, Bristol City Council announced that Parkwood had gained
preferred bidder status on a �24 million PFI project to design, finance, build
and operate a new leisure centre in the south of the city, reaffirming the
Group's leadership in this sector of the PFI market place.
Group Results
Revenues increased by 20.1% to �61.5 million (2007: �51.2 million) whilst
profit before tax rose to �1.21 million (2007: �1.05 million), an increase of
15%. Operating profit rose significantly to �2.33 million from �1.37 million in
the previous year as a result of increased profits in Parkwood Leisure and
Parkwood Project Management, reduced losses in Parkwood Healthcare, as a result
of the release of part of the onerous contract provision, and the benefit of
the acquisition of the parent company of Realm Services (DAC) in May 2007 and
increased revenue in the SPC Group as a result of the completion of the
construction of the Solihull and Sidcup leisure centres.
The Group's forward order book at the period end was �531 million (2007: �429
million), an increase of 24%.
The Board is pleased to announce an increase in the dividend for the period to
1.5p per share (2007: 1.3p per share) payable on 3 October 2008 to all
shareholders on the register on 12 September 2008.
Board and Management
Nick Temple-Heald, who has been the managing director of Glendale, the Group's
green services division, for the last three years, was appointed to the Board
as an executive director on 1 May 2008. Nick has been instrumental in
diversifying the activities of Glendale and doubling the size of the business
since he joined the Group in September 2004. The Board now consists of four
executive and two independent non-executive directors.
Leisure
Parkwood Leisure had a successful first half with revenue increasing by 28% to
�26.1 million (2007: �20.4 million) and profit before tax by 24% to �1.25
million (2007: �1.1 million).
The beginning of the year saw the start of the Portsmouth (DBOM) contract where
the division took over nine leisure centres and other sites with operating
revenues of �3.6 million per annum. Portsmouth City Council also invited
Parkwood Leisure to run the Pyramids Centre, a seafront venue which had been
scheduled to close. The new Tudor Grange leisure centre and pool in Solihull,
built by Leadbitter Construction Ltd under a PFI contract managed by Parkwood
Project Management (PPM), was handed over to Parkwood Leisure to operate on 28
January 2008 and proved popular immediately. Similarly, in March, a new leisure
centre in Sidcup built by Gleeson Construction, again under the management of
PPM, was handed over to Parkwood Leisure as operator. Then, in April, yet
another DBOM contract commenced operations in North Oxfordshire involving three
leisure centres in Banbury, Bicester and Kidlington. In total, at the end of
the period, the Leisure divison operated 73 leisure centres.
New centres, as well as many of the older leisure centres, have health and
fitness clubs within them which, along with the division's three private clubs,
operate under the Expressions brand. Expressions' memberships at the period end
totalled 41,600 providing �1.15 million of direct debt income per month with an
average membership fee of �33.
Glendale
Glendale revenues in the period grew to �30.6 million (2007: �26.8 million), an
increase of 14%, but trading conditions have been difficult, with golf income
below expectation and the Euro affecting the cost of imported plants in
horticulture. Poor weather in the spring impacted on operations, whilst fuel
price increases cost the division in excess of �0.25 million in the period.
Profits before tax consequently fell to �0.17 million (2007: �0.65 million).
Nevertheless the core businesses of Glendale Grounds Management and Glendale
Countryside both performed well. Notably, Glendale further strengthened its
position in the South West with the award of a five year contract for grounds
management by North Devon District Council, worth in excess of �1 million per
annum. Glendale also sponsored and co-hosted the national Green Flag Awards
ceremony on 31 July, where Glendale was responsible for 55 of the parks and
open spaces that won awards this year.
The division has outgrown its current structure and from 1 September 2008,
Glendale will become a holding company allowing its subsidiaries, Glendale
Grounds Management, Glendale Countryside, Glendale Golf, Glendale Horticulture
and Glendale Recycling to trade with greater autonomy. Nick Temple-Heald
becomes the new Divisional Chief Executive Officer and new boards of directors
comprising both executive and non-executive directors are being established.
Mark Hawkesworth, who was the Chairman of Parkwood Holdings plc from 1992 to
1997, becomes Glendale's new divisional Chairman and Professor John Moverley,
previously CEO of the Royal Agricultural Society of England and Myerscough
College, also joins the Glendale holding company board.
Parkwood Project Management
Parkwood Project Management increased revenue to �1.4 million (2007: �1.1
million) in the period, and profits increased to �0.33 million (2007: �0.18
million). The year started well with the commencement of construction work at
the Mountbatton Leisure Centre for Portsmouth City Council and the completion
of Tudor Grange leisure centre and pool for the Metropolitan Borough of
Solihull. In March construction work was also completed on a new leisure centre
in Sidcup. April saw the signing of a DBOM contract with Cherwell District
Council allowing construction to commence on a new leisure centre in Banbury
along with refurbishment programmes on two other centres. A final bid submitted
in June to Bristol City Council resulted in preferred bidder status being
awarded to the Parkwood consortium to build a new leisure centre in the south
of the city. On 31 July negotiations were completed with the Metropolitan
Borough of Rotherham on behalf of Dignity, a bereavement services company, to
refurbish a crematorium and manage cemeteries throughout the Borough. This
contract also gives rise to a 25 year grounds management contract for Glendale.
PPM expanded on 1 July 2008 when the business of Glendale Environmental was
incorporated into the practice; bringing with it landscape architect, ecology,
environmental sustainability and arboricultural competencies. As a result the
business has rebranded and now trades as `Parkwood Consultancy Services'.
Parkwood Healthcare
With the planned reduction in its patient transport business, Parkwood
Healthcare's revenue fell to �2.3 million (2007: �3.1 million). Losses
continue, and were reduced to �0.23 million (2007: �0.45 million).
Significant business development activity has taken place during the period to
establish a new medical services business, with tenders being submitted for
mental health programmes, clinical services, LINk hosting services and the
Equitable Access Programme which will provide new GP-led health centres, known
in the media as `polyclinics'. Two LINk contracts have been won, the London
Borough of Lewisham which commenced in April and the London Borough of Harrow
in July. The purpose of the LINk programme is to give a voice to local people
to enable them to comment and make representations on the way health and social
care services are commissioned and delivered in their community. The company
has been invited to tender for three GP-led health centres to date and awaits
the results of several more applications. These new health centres will open 12
hours per day, 7 days per week and are to be in existence by the spring of 2009
in all of the 152 primary care trust areas in England. Parkwood Healthcare
hopes to be a successful participant in the provision of community based
healthcare services for the future.
Funding and Cash Flow
The completion of the construction phases of the Tudor Grange and Sidcup
leisure centres in the period has seen a significant reduction in capital
expenditure compared to previous years. The new DBOM contracts at Portsmouth
and Cherwell do not require capital funding by the Group.
Whilst total and recourse gearing have increased since December, in line with
the Group's cashflow profile, they have both fallen when compared to the
position at June 2007. Cashflow generated from operations before working
capital movements increased by 65%, whilst the outflow of cash from working
capital resulted from the timing of payments in respect of the PFI construction
projects when compared to 2007.
The Group also exercised the powers granted by the 2007 and 2008 Annual General
Meetings to purchase its own shares where the directors considered it was in
the interest of shareholders. In total 500,000 ordinary shares were acquired at
a total cost of �589,000 in the half year.
Outlook
Parkwood is currently reviewing its strategy for the three-year period 2009-11,
which will focus on consolidating its position in the markets it occupies and
releasing value to shareholders. The Group's blue chip order book and
index-linked contracts account for in excess of 85% of revenue and provide a
degree of certainty for the future in deteriorating economic conditions. The
Group also holds investments in PFI/PPP related special purpose companies
(SPC's), the value of which are not fully recognised in the balance sheet. The
Board is reviewing options for realising this value for shareholders.
Despite the difficult trading conditions faced by some Glendale activities, the
directors remain of the opinion that the Group's results for the full year will
be in line with market expectations.
A W Hewitt
Executive Chairman
28 August 2008
Parkwood Holdings Plc
Interim Report 2008
Financial Review
In the first half of 2008 the Group has seen profit before tax increase by 15%
on Revenue growth of 20%. Adjusted operating profit increased by almost 70%,
whilst finance costs rose to �1.21 million (2007: �0.41 million) as a result of
a full six month charge for the cost of the purchase of the majority
shareholding in the parent company of Realm Services (DAC), which was acquired
in May 2007, and initial expensing of the debt funding of the Rivendell
(Solihull) and Boxwood (Sidcup) PFI building contracts which had previously
been capitalised until completion of construction.
In addition the charge for impairment and goodwill amortisation increased to �
0.224 million (2007: �0.107 million) as a result of the Realm Services (DAC)
transaction.
The Group's total interest charges were covered 1.9 times (2007: 3.3 times).
Recourse interest charges were covered 13 times (2007: 6 times) as interest
costs declined to �0.118 million (2007: �0.223 million).
Trading Performance
The following table continues the practice, commenced with the 2007 Report and
Accounts, of separating the performance of the Trading Group from the
non-recourse SPC Group.
Year ended 31
6 months to June 6 months to June December 2007
2008 2007
Revenue Adjusted Revenue Adjusted Revenue Adjusted
operating operating operating
profit profit profit
�000 �000 �000 �000 �000 �000
Trading group
Glendale 30,637 518 26,755 854 54,274 1,931
Leisure 26,117 1,311 20,368 1,071 42,549 2,423
Healthcare 2,287 (198) 3,085 (306) 6,002 (600)
PPM 1,365 309 1,104 181 2,281 311
Central costs - (435) - (360) - (524)
Inter-segment elimination (2,983) - (1,700) - (4,141) -
Total trading group 57,423 1,505 49,612 1,440 100,965 3,541
SPC group
Subsidiaries 4,067 1,070 1,594 114 4,843 885
Joint ventures and 1,184 (23) 1,137 (73) 2,288 (202)
Associate
Total SPC group 5,251 1,047 2,731 41 7,131 683
Total Group 62,674 2,552 52,343 1,481 108,096 4,224
Note - Adjusted operating profit is profit before interest, tax, amortisation
and goodwill impairment.
Whilst the revenue of the Trading Group increased by 15.7%, the adjusted
operating profit increased by only 4.5% as a result of the underperformance of
Glendale, which is referred to in the Chairman's statement. Other members of
the Trading Group increased their adjusted operating profit by over �0.43
million.
The SPC Group benefited from Realm Service (DAC) becoming a wholly owned
subsidiary in May of 2007 (it was previously accounted for as an Associate).
This increased revenue and adjusted operating profit by �1.29 million and �0.45
million respectively in comparison to 2007. In addition the completion of the
Solihull and Sidcup leisure centres resulted in increased revenue and adjusted
operating profit totalling �0.24 million and �0.39 million respectively.
Summary Group Balance Sheet
The following table shows a summary of the Group's balance sheet at 30 June
2008, analysed between the main trading assets and recourse liabilities and
those of the consolidated SPC's, which hold the PFI/PPP investments. The assets
and liabilities, including long-term debt, within the SPC's are non-recourse to
the Group.
Recourse Non-recourse Total Total
30 Jun 31 Dec 30 Jun 31 Dec 30 Jun 31 Dec
08 07 08 07 08 07
�000 �000 �000 �000 �000 �000
Non-current assets 26,309 22,135 25,723 29,842 52,032 51,977
Investments in Joint 1,031 826 (3,170) (3,147) (2,139) (2,321)
Ventures
Total non-current assets 27,340 22,961 22,553 26,695 49,893 49,656
Current assets
Inventories and debtors 22,410 17,880 1,216 2,219 23,626 20,099
Cash at bank and in hand 635 1,239 1,988 3,861 2,623 5,100
23,045 19,119 3,204 6,080 26,249 25,199
Current liabilities (28,806) (24,122) (431) (3,881) (29,237) (28,003)
Net current (liabilities)/ (5,761) (5,003) 2,773 2,199 (2,988) (2,804)
assets
Non current liabilities
Bank loans (4,436) (4,459) (28,490) (28,947) (32,926) (33,406)
Other long term (5,077) (5,550) (1,710) (1,186) (6,787) (6,736)
liabilities
Net assets 12,066 7,949 (4,874) (1,239) 7,192 6,710
Net debt 12,201 7,632 27,342 27,086 39,543 34,718
Gearing 101% 96% 553% 517%
Continued investment in PFI/PPP projects and deferred consideration payments
for the acquisition of DPL Holdings in November 2007 have seen total gearing
increase to 553% from 517% at December 2007. However, repayment of non-recourse
borrowings totalling �1.57 million in this half year, when added to repayments
of �0.36 million in the second half of 2007, has resulted in a reduction in
gearing from 656% at June 2007. Recourse gearing was 101% at the end of June.
This is a reduction from 147% a year earlier and up on the December 2007 figure
of 96%.
Summary Cash Flow Statement
6 months to 6 months to Year ended
June 2008 June 2007 December 2007
�000 �000 �000
Operating cash inflow before movement
in working capital 4,968 3,016 7,852
Movement in working capital (5,645) (3,534) (2,050)
Income tax as refunded/(paid) 293 (2) -
Cash used in investing activities (1,657) (7,543) (9,258)
Cash flow from financing activities (4,416) 4,249 4,930
(Decrease)/Increase in cash and cash (6,457) (3,814) (1,474)
equivalents
Overall the Group experienced an outflow of funds in the period of �6.1 million
in respect of investing and financing activities. This was �2.6 million greater
than in the same period of 2007 despite an increase of �1.9 million in cash
generated from operating activities before movements in working capital.
Working capital outflow increased by �2.0 million principally as a result of a
decrease in the level of accounts payable of �1.5 million compared to a
marginal increase in 2007. The reduction reflects timing of payments relating
to PFI projects between the two half years.
The completion of all current PFI building projects saw a fall in property,
plant and equipment expenditure in the period to �1.1 million from �6.3 million
in the same period of 2007. This change was reflected in the absence of new
recourse and non-recourse loans in the half year compared to a total of �5.9
million of new borrowings in 2007. Cash outflow in respect of acquisitions fell
to �0.5 million in the half year (2007: �1.7 million). The 2007 figure included
the purchase of the majority shareholder in Realm Services (DAC), whilst this
half year saw additional deferred consideration payments relating to the DPL
Holdings acquisition, which completed in November 2007. Scheduled repayment of
non-recourse loans amounted to �1.6 million (2007: �0.2 million). The Group's
purchases of its own ordinary shares resulted in an outflow of �589,000 (2007:
�nil) in the first six months as 500,000 shares were acquired. A total of
375,000 shares were cancelled and 75,000 transferred to the Employee Benefit
Trust at cost. The balance of 50,000 ordinary shares are held in Treasury.
Interest payments increased to �0.8 million (2007: �0.26 million) as a result
of the expensing of interest on previously capitalised non-recourse loans
following completion of the construction phase of these PFI contracts.
Principal Risks and Uncertainties
The Group's report and accounts for the year ended 31 December 2007 set out the
principal risks and uncertainties affecting the Group and its separate
businesses. The Directors consider that these risks and uncertainties remained
valid throughout the six months to 30 June 2008 and will remain valid for the
second half of the year.
T P Bowman
Group Finance Director
28 August 2008
Parkwood Holdings Plc
Unaudited Consolidated Income Statement
Six months ended 30 June 2008
Year ended
Six months ended 30 31 December
June (audited)
2007
Note (unaudited) (unaudited) �000
2008 2007
�000 �000
Continuing operations
Revenue 62,674 52,343 108,096
Less: share of joint ventures' (1,184) (1,137) (2,288)
revenue
Group revenue - continuing 3 61,490 51,206 105,808
operations
Cost of sales (44,072) (37,266) (75,715)
Gross profit 17,418 13,940 30,093
Administrative expenses (15,067) (12,493) (26,565)
2,351 1,447 3,528
Share of results after tax of - (16) (16)
associate
Share of results after tax of joint (23) (57) 116
ventures
Operating profit 2,328 1,374 3,628
EBITDA 5,078 3,203 8,277
Depreciation (2,526) (1,722) (4,053)
Amortisation (224) (43) (174)
Exceptional item - - (358)
Impairment of goodwill - (64) (64)
Operating profit 2,328 1,374 3,628
Investment income 94 93 341
Finance costs 4 (1,211) (414) (1,470)
Profit before income tax 1,211 1,053 2,499
Income tax expense 5 (346) (372) (822)
Profit for the period attributable 865 681 1,677
to equity shareholders
Earnings per share Pence per Pence per Pence per
share share share
Basic 7 4.7p 3.6p 8.9p
Diluted 7 4.7p 3.6p 8.8p
There were no discontinued operations in the period.
Parkwood Holdings Plc
Consolidated balance sheet as at 30 June 2008
30 June 30 June 31
December
Note 2008 2007 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Non-current assets
Goodwill 2,681 651 2,521
Intangible Assets 4,716 2,795 4,941
Property, plant and equipment 8 43,471 40,729 43,750
Investments in joint ventures 5 - 12
Derivative financial instrument 844 1,032 303
Trade and other receivables - - 142
Deferred tax asset 320 305 320
52,037 45,512 51,989
Current assets
Inventories 3,537 2,945 3,624
Trade and other receivables 20,089 17,119 16,475
Cash 2,623 1,260 5,100
26,249 21,324 25,199
Total assets 78,286 66,836 77,188
Current liabilities
Trade and other payables 21,996 19,967 23,270
Tax liabilities 500 453 371
Obligations under finance leases 1,601 1,482 1,982
Bank overdrafts 3,980 1,448 -
Bank loans 1,160 598 2,380
29,237 23,948 28,003
Non-current liabilities
Bank loans 32,926 31,943 33,406
Retirement benefit obligations 788 1,435 788
Long-term provisions and deferred 780 1,012 1,105
income
Obligations under finance leases 2,501 2,641 2,050
Derivative financial instrument - - 230
Interests in joint ventures 2,144 - 2,333
Deferred tax liability 2,718 236 2,563
Total non-current liabilities 41,857 37,267 42,475
Net assets 7,192 5,621 6,710
Equity
Share capital 189 196 193
Share premium account 2,227 2,227 2,227
Retained Earnings 4,366 2,795 3,884
Capital redemption reserve 408 401 404
Equity attributable to equity holders of 7,190 5,619 6,708
the parent
Minority interest in equity 2 2 2
Total equity 7,192 5,621 6,710
Parkwood Holdings Plc
Consolidated statement of recognised income and expense
For the six months ended 30 June 2008
6 months ended Year
ended
30 June 30 June 31
2008 2007 December
2007
�000 �000 �000
Profit for the period 865 681 1,677
Net actuarial gains on defined benefit pension - - 326
schemes
Cash flow hedges (net of tax) 555 608 (82)
Total recognised income for the period 1,420 1,289 1,921
All recognised income and expense is attributable to the equity holders of the
parent.
Parkwood Holdings Plc
Interim Report 2008
Group cash flow statement
For the six months end 30 June 2008
Six months ended 30 Year ended
June 31
December
Note 2008 2007 2007
(unaudited) (unaudited) (audited)
�000 �000 �000
Net cash (used in)/ generated from 9 (384) (520) 5,802
operating activities
Investing activities
Interest received 130 277 522
Dividends received from associate - 111 482
Proceeds on disposal of property, plant 7 70 60
and equipment
Purchases of property, plant and (1,119) (6,299) (10,375)
equipment
Subordinated debt (invested in)/repaid (204) 2 351
by joint ventures
Subordinated debt invested in - - (661)
subsidiary on acquisition
Proceeds from refinancing - - 1,773
Sales of own shares by employee benefit 4 12 90
trust
Acquisition of subsidiaries (net of (475) (1,716) (1,500)
cash acquired)
Net cash used in investing activities (1,657) (7,543) (9,258)
Cash flows from financing activities
Interest paid (831) (258) (1,409)
Acquisition of treasury shares (589) - (326)
Acquisition of shares by employee - (127) (128)
benefit trust
Dividends paid (408) (358) (605)
Repayments of obligations under finance (971) (691) (1,718)
leases
New recourse bank loans raised - 2,550 2,400
New non-recourse bank loans raised - 3,342 7,362
Repayment of recourse bank loans (45) (45) (287)
Repayment of non-recourse bank loans (1,572) (164) (359)
Net cash (used in)/generated from (4,416) 4,249 4,930
financing activities
Net (decrease)/increase in cash and (6,457) (3,814) 1,474
cash equivalents
Cash and cash equivalents at beginning 5,100 3,626 3,626
of period
Cash and cash equivalents at end of (1,357) (188) 5,100
period
Comprising:
Cash 2,623 1,260 5,100
Bank overdraft and loans (3,980) (1,448) -
(1,357) (188) 5,100
Parkwood Holdings Plc
Notes to the interim financial report
Six months ended 30 June 2008
General information
The financial information for the six months ended 30 June 2008 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985 and has not been audited. No statutory accounts for the period have been
delivered to the Registrar of Companies.
The financial information in respect of the year ended 31 December 2007 has
been produced using extracts from the statutory accounts prepared under IFRS
for this period. The statutory accounts for this period have been filed with
the Registrar of Companies. The auditors' report on these accounts was
unqualified and did not contain a statement under Sections 237 (2) or (3) of
the Companies Act 1985 which deal respectively with the maintaining of proper
accounting books and records and the availability of information to the
auditors.
The financial information presented on pages 6 to 17 has been prepared in
accordance the Listing Rules of the Financial Services Authority and with the
principles of IFRS, including International Accounting Standards (IAS) and
interpretations issued by the International Accounting Standards Board (IASB)
and its committees.
Accounting policies and basis of preparation
The interim financial statements have been approved by the Board and have not
been audited by the auditors.
This condensed consolidated interim financial information for the six months
ended 30 June 2008 has been prepared in accordance with IAS 34, `Interim
financial reporting'. The condensed consolidated interim financial information
should be read in conjunction with the annual financial statements for the year
ended 31 December 2007, which have been prepared in accordance with IFRSs.
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 31 December 2007,
as described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The following new standards, amendments to standards or interpretations are
mandatory for the first time for the financial year beginning 1 January 2008:
* IFRIC 11, `IFRS 2 - Group and treasury share transactions'; the effects of
this IFRIC are not material to the Group.
* IFRIC 12, `Service concession arrangements'; the IFRIC is not yet endorsed
by the EU and management continue to assess the impacts on the Group.
* IFRIC 14, `IAS 19 - the limit on a defined benefit asset, minimum funding
requirements and their interaction'; this IFRIC is not currently relevant
to the Group.
The following new standards, amendments to standards and interpretations have
been issued but are not effective for the financial year beginning 1 January
2008 and have not been early adopted:
* IFRS 8, `Operating segments', effective for annual periods beginning on or
after 1 January 2009. IFRS 8 replaces IAS 14, `Segment reporting', and
requires a `management approach' under which segment information is
presented on the same basis as that used for internal reporting purposes.
The Group's presentation in Note 3 accords with the requirements of IFRS8.
* IAS 23 (revised), `Borrowing costs', effective for annual periods beginning
on or after 1 January 2009. This amendment will have no impact on the
Group, as the Group currently applies a policy of capitalising borrowing
costs.
* IFRS 2 (amendment) `Share-based payment', effective for annual periods
beginning on or after 1 January 2009. Management is assessing the impact of
changes to vesting conditions and cancellations on the Group's option
schemes.
Parkwood Holdings Plc
Notes to the interim financial report
Six months ended 30 June 2008
* IFRS 3 (revised), `Business combinations' and consequential amendments to
IAS 27, `Consolidated and separate financial statements', IAS 28,
`Investments in associates' and IAS 31, `Interests in joint ventures',
effective prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period
beginning on or after 1 July 2009. Management is assessing the impact of
the new requirements regarding acquisition accounting, consolidation and
joint ventures on the group.
* IAS 1 (revised), `Presentation of financial statements', effective for
annual periods beginning on or after 1 January 2009. Management is in the
process of developing proforma accounts under the revised disclosure
requirements of this standard.
* IAS 32 (revised), `Financial instruments: presentation', and consequential
amendments to IAS 1, `Presentation of financial statements', effective for
annual periods beginning on or after 1 January 2009. This is not currently
relevant to the Group as the Group, does not have any puttable instruments.
* IFRIC 13, `Customer loyalty programmes', effective for annual periods
beginning on or after 1 July 2008. The IFRIC is not expected to have a
material impact on the Group Financial Statements.
* IFRIC 15, `Agreements for the construction of real estate', effective for
annual periods beginning on or after 1 January 2009. The IFRIC is not
expected to have a material impact on the Group Financial Statements.
* IFRIC 16, `Hedges of a net investment in a foreign operation', effective
for annual periods beginning on or after 1 October 2008. This is not
currently relevant to the Group as the Group, does not hedge any foreign
currency risk.
3. Business segments
For management purposes, the Group is organised into four Trading divisions -
Glendale, Parkwood Leisure, Parkwood Healthcare and Project Management (the
Trading Group) incorporating a group of non-recourse SPCs (the SPC Group).
These form the basis on which the Group reports its primary segment information
for statutory and management purposes:
The principal activities, which the directors consider to be the segments of
the business for the purpose of analysis 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, waste recycling, environmental consultancy, tree moving and
horticulture.
Parkwood Leisure Manages a diverse range of public and private leisure
facilities, including swimming pools, sports halls, gyms, health suites and
catering operations.
Project Management Undertakes PFI, PPP and similar bids on behalf of joint
ventures and the Group. Parkwood Project Management is also responsible for
project management of contracts and the management of other funds such as the
lifecycle funds associated with the project agreements.
Healthcare A nursing agency, and an ambulance and patient transport business,
and a medical services business dealing both with the NHS and the private
sector.
Parkwood Holdings Plc
Notes to the interim financial report
Six months ended 30 June 2008
3. Business Segments (Continued)
An analysis of the Group's revenue is as follows:
6 months ended Year ended
Continuing operations 2008 2007 2007
�000 �000 �000
Provision of services to Local Authorities 19,754 19,313 40,643
Provision of services to the private sector 6,516 3,069 5,185
Horticultural revenue 2,113 2,190 3,740
Golf Course management, including retail 2,254 2,183 4,706
sales
Total Glendale 30,637 26,755 54,274
Provision of leisure management services to 25,008 19,573 40,834
Local Authorities
Provision of private leisure facilities 1,109 795 1,714
Total Leisure 26,117 20,368 42,548
Provision of patient transport services 1,331 2,377 4,393
Nursing agency sales 912 708 1,609
Medical Services revenue 44 - -
Total Healthcare 2,287 3,085 6,002
Bid and project management fees ("Project 1,365 1,104 2,282
Management")
Service charges made by PFI companies 4,067 1,594 4,843
Other (Including inter-segment revenue (2,983) (1,700) (4,141)
elimination)
Total revenue 61,490 51,206 105,808
A geographical segmental analysis of the results is not presented as the Group
operates only in the UK. Inter-segment sales are charged a prevailing market
prices.
Parkwood Holdings Plc
Notes to the interim financial report (continued)
Six months ended 30 June 2008
3. Business Segments (continued)
Six months Glendale Leisure Healthcare PPM Non-recourse Consolidated
ended 2008 2008 2008 2008 Other 2008 2008
�000 �000 �000 �000 2008 �000 �000
30 June 2008 �000
External 29,410 25,347 2,287 379 - 4,067 61,490
revenue
Inter-segment 1,227 770 - 986 (2,983) - -
revenue
Revenue 30,637 26,117 2,287 1,365 (2,983) 4,067 61,490
Segment 518 1,311 (198) 309 (435) 1,070 2,575
result
Share of - - - - - (23) (23)
results of
joint
ventures
Operating 518 1,311 (198) 309 (435) 1,047 2,552
profit/(loss)
before
amortisation
and goodwill
impairment
Amortisation (18) - - - - (206) (224)
and goodwill
impairment
Operating 500 1,311 (198) 309 (435) 841 2,328
profit/(loss)
Investment - 32 - 282 (59) (161) 94
income
Interest (335) (92) (34) (262) 605 (1,093) (1,211)
expense
Profit/(loss) 165 1,251 (232) 329 (111) (413) 1,211
before tax
Glendale Leisure Healthcare PPM Non-recourse Consolidated
Six months 2007 2007 2007 2007 Other 2007 2007
ended �000 �000 �000 �000 2007 �000 �000
30 June 2007 �000
External 26,449 19,410 3,085 668 - 1,594 51,206
revenue
Inter-segment 306 958 - 436 (1,700) - -
revenue
Revenue 26,755 20,368 3,085 1,104 (1,700) 1,594 51,206
Segment 854 1,071 (306) 181 (360) 114 1,554
result
Share of - - - - - (16) (16)
results of
associate
Share of - - - - - (57) (57)
results of
joint
ventures
Operating 854 1,071 (306) 181 (360) 41 1,481
profit/(loss)
before
amortisation
and goodwill
impairment
Amortisation (18) - (64) - - (25) (107)
and goodwill
impairment
Operating 836 1,071 (370) 181 (360) 16 1,374
profit/(loss)
Investment - - - 86 - 7 93
income
Interest (187) (65) (83) (91) 203 (191) (414)
expense
Profit/(loss) 649 1,006 (453) 176 (157) (168) 1,053
before tax
Parkwood Holdings Plc
Notes to the interim financial report (continued)
Six months ended 30 June 2008
4. Finance costs
Six Six Year
months months ended 31
ended 30 ended 30 December
June June
2008 2007 2007
�000 �000 �000
Recourse loan interest 179 88 309
Non-recourse loan interest 880 191 795
Finance and HP lease interest 141 97 211
Other finance costs 11 38 155
1,211 414 1,470
5. Tax
Corporation tax for the interim period to 30 June 2008 is charged at 33% (2007:
33%) of profit excluding joint ventures and associates representing the best
estimate of the effective rate of annual corporation tax expected for the full
financial year.
6. Dividends
Six Six Year
months months ended 31
ended 30 ended 30 December
June June
2008 2007 2007
�000 �000 �000
Final 2007 paid May 2008 2.2p per share 424 - -
Final 2006 paid May 2007 1.9p per share - 359 359
Interim 2007 paid October 2007 1.3p per share - - 246
424 359 605
Following the balance sheet date, the Board of Directors has approved a
dividend of 1.5p per share (2007: 1.3p) payable on 3 October 2008 to all
shareholders on the register on 12 September 2008.
7. Earnings per share
Earnings per share relate to continuing operations and have been calculated on
earnings for the period divided by the weighted average number of ordinary
shares in issue of 18.54 million (December 2007: 18.86 million; June 2007:
18.84 million).
Parkwood Holdings Plc
Notes to the interim financial report (continued)
Six months ended 30 June 2008
8. Property, plant and equipment
Six months ended 30 Land and Assets under Plant and Fixtures
June 2007 buildings construction Vehicles equipment and Total
�000 �000 �000 �000 fittings �000
�000
Opening net book
amount at 1 January 3,910 15,136 603 4,646 2,117 26,412
2007
Additions 502 4,522 77 2,349 395 7,845
Acquired with 7,715 - 57 66 405 8,243
subsidiaries
Transfers 12,182 (13,074) - 20 873 -
Disposals - - (5) (17) (27) (49)
Depreciation (180) (17) (107) (1,030) (388) (1,722)
Closing net book
amount at 30 June 23,129 6,567 625 6,034 3,374 40,729
2007
Six months ended 30
June 2008
Opening net book 24,160 9,629 848 5,806 3,307 43,750
amount at 1 January
2008
Additions 98 1,116 7 775 256 2,253
Transfers 8,503 (9,501) - - 998 -
Disposals - - - - (5) (5)
Depreciation (619) (24) (162) (1,206) (515) (2,526)
Closing net book
amount at 30 June 32,142 1,220 693 5,375 4,038 43,471
2008
Parkwood Holdings Plc
Notes to the interim financial report (continued)
Six months ended 30 June 2008
9. Net cash from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2008 2007 2007
�000 �000 �000
Operating profit 2,328 1,374 3,628
Cost charged in respect of share 15 - 7
remuneration
Share of results of joint ventures after 23 57 (116)
taxation
Share of results of associate after - 16 16
taxation
Depreciation of property, plant and 2,526 1,722 4,053
equipment
(Gain)/loss on disposal of property, plant - (22) 75
and equipment
Net impairment of goodwill - 64 64
Amortisation of intangible assets 224 43 174
Decrease in provisions (148) (238) (49)
Operating cash flows before movements in 4,968 3,016 7,852
working capital
Increase in inventories (recourse) (204) (155) (749)
Decrease/(increase) in receivables (3,968) (3,842) (2,318)
(recourse)
(Decrease)/increase in payables (recourse) (381) 2,366 2,856
Decrease/(increase) in receivables 79 434 (175)
(non-recourse)
Decrease in payables (non-recourse) (1,171) (2,337) (1,664)
Cash (used in)/generated by operations (677) (518) 5,802
Income taxes refunded/(paid) 293 (2) -
Net cash (used in)/generated from operating (384) (520) 5,802
activities
Parkwood Holdings Plc
Notes to the interim financial report (continued)
Six months ended 30 June 2008
10. Acquisition of subsidiary
DPL Holdings Limited
On 2 November 2007, the Group completed the acquisition of the entire issued
share capital of DPL Holdings Limited ("DPL") and its subsidiaries, Silvanus
Services Limited ("Silvanus") and Landscapes Southwest Limited ("LSW"), which
are companies involved in term grounds maintenance contracts, arboriculture,
woodland and landscaping services
The acquisition has been accounted for by the purchase method of accounting.
During the hindsight period management have reviewed and amended the fair value
of assets acquired. This review is still on-going and will be complete by 1
November 2008. The following table sets out a summary of assets and liabilities
acquired and the fair value adjustments required to reflect their provisional
fair value to the Group.
Group Book Value Fair value Provisional
adjustments fair
value to the
Group
�000 �000 �000
Property, plant and equipment 688 (107) 581
Inventories 176 - 176
Trade and other receivables 1,153 (19) 1,134
Cash and cash equivalents 50 - 50
Trade and other payables (1,462) - (1,462)
Obligations under finance leases (582) - (582)
Current tax liability (59) - (59)
Long term provisions (79) - (79)
Borrowings (138) - (138)
Deferred tax (58) - (58)
Net liabilities acquired (311) (126) (437)
Provisional goodwill arising on the 1,640
acquisition
Total cost of investment 1,203
Satisfied by:
Cash consideration on acquisition 400
Deferred consideration 740
Costs of acquisition 63
1,203
The goodwill arising on the acquisition of DPL Holdings Limited is attributable
to synergies expected to arise after the acquisition when the operations of the
company are integrated into the Glendale division.
Notes to the interim financial report (continued)
Six months ended 30 June 2008
Landscape Construction (Scotland) Limited
On 29 June 2007, the Group completed the acquisition of the entire issued share
capital of Landscape Construction (Scotland) Limited, which is a company
involved in soft landscaping for construction industry customers.
The acquisition has been accounted for by the purchase method of accounting.
The following table sets out a summary of assets and liabilities acquired and
the fair value adjustments required to reflect their provisional fair value to
the Group.
During the hindsight period management have reviewed and amended the fair value
of assets acquired.
Book Fair value Provisional
Value adjustments fair
value to the
Group
�000 �000 �000
Property, plant and equipment 125 (35) 90
Inventories 1 - 1
Trade and other receivables 176 - 176
Cash and cash equivalents (116) - (116)
Obligations under finance leases (47) - (47)
Trade and other payables (77) - (77)
Deferred tax (6) (8) (14)
Net assets acquired 56 (43) 13
Provisional goodwill arising on the 50
acquisition
Total cost of investment 63
Satisfied by:
Cash consideration on acquisition 40
Deferred consideration paid on 31 8
July 2007
Costs of acquisition 15
63
Net cash outflow arising on acquisition
Cash consideration 63
Cash and cash equivalents acquired 116
Net cash outflow arising on acquisition 179
During the hindsight period management have reviewed and amended the fair value
of assets acquired.
12. Related Parties
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
There has been no change to the nature of related party transactions in the
first six months of the financial year that has materially affected the
financial position or performance of the Group.
Cautionary Statement
This interim management report has been prepared solely to provide additional
information to shareholders to assess the Group's strategies and the potential
for those strategies to succeed. The interim management report should not be
relied on by any other party or for any other purpose.
Responsibility Statement
We confirm that to the best of our knowledge:
* The condensed set of financial statements has been prepared in accordance
with IAS 34 `Interim Financial Reporting';
* The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the
remaining six months of the year); and
* The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
By the order of the Board
T P Bowman
ENDS
END
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