TIDMPKW
RNS Number : 8402C
Parkwood Holdings PLC
14 March 2011
Preliminary Results for the year ended 31 December 2010
Parkwood Holdings Plc ("Parkwood" or "the Group"), the public
sector support services specialist, announces its preliminary
results for the year ended 31 December 2010.
Highlights:
-- Profit before tax from continuing operations of GBP2.4
million (2009 restated: GBP0.1 million)
-- Revenues in Parkwood Leisure grew by 5% to GBP64.4 million
(2009 restated: GBP61.4 million)
-- Parkwood Leisure's adjusted operating profit increased by 9%
to GBP4.6 million (2009 restated: GBP4.2 million)
-- Glendale reduced its adjusted operating loss to GBP0.3
million (2009: GBP0.7 million)
-- Basic earnings per share from continuing operations of 10.6p
(2009 restated: 0.8p loss)
-- The Group had no net debt as at 31 December 2010 (2009:
GBP2.7 million)
-- Net assets as at 31 December 2010 of GBP6.8 million (2009
restated: GBP5.6 million)
-- Ten year forward order book increased by 14% to GBP535
million (2009: GBP471 million)
For further information please contact:
Tony Hewitt Executive Chairman 01772 627111
Mike Quayle Group Finance Director 01772 627111
Neil Baldwin Brewin Dolphin 0113 241 0126
Chairman's statement
The year ended 31 December 2010 was challenging for Parkwood and
produced mixed results. Profit before taxation from continuing
operations increased to GBP2.4 million on revenues which fell
slightly to GBP113.8 million. Parkwood Leisure, the Group's largest
business, continued to grow and increased its profitability. A
major leisure PFI was signed in the spring with Bristol City
Council and is currently being built. Glendale, the Group's green
services division, suffered a 9% decline in revenues although its
operating loss was reduced to GBP0.3 million. Glendale Recycling,
the green waste composting business, was put up for sale at the end
of the year and has been reclassified as a discontinued operation.
The year brought to an end the Group's involvement in the provision
of ambulance services for the NHS, which had incurred significant
losses in previous years. Retained profits reduced to GBP0.8
million although the prior year included a profit from the sale of
the Group's investment in special purpose companies.
Results
Revenues from continuing operations were GBP113.8 million
against a restated figure of GBP115.1 million in the prior year.
Adjusted operating profits, before allowing for losses from
discontinued operations, impairments and similar charges, amounted
to GBP3.6 million (2009 restated: GBP0.8 million). However,
retained profits were reduced to GBP0.8 million after allowing for
discontinued operations, impairments and a tax charge of GBP0.5
million (2009 restated: GBP0.3 million). Earnings per share were
4.2 pence (2009 restated: 11.2 pence).
Parkwood Leisure's revenue rose to GBP64.4 million (2009:
GBP61.4 million), and Glendale's revenue fell to GBP46.0 million
(2009 restated: GBP50.3 million). Parkwood Leisure achieved an
adjusted operating profit of GBP4.6 million (2009 restated: GBP4.2
million) whilst Glendale's adjusted operating loss amounted to
GBP0.3 million (2009 restated: GBP0.7 million loss). Financial
close of the leisure PFI at Bristol and the sale of the associated
equity and debt enabled Parkwood Consultancy Services to produce a
profit of GBP1.1 million for the year. Parkwood Healthcare's
revenues were impacted by a decline in the demand for nursing staff
and sales declined to GBP2.3 million (2009: GBP3.8 million), but
the business almost broke-even compared to a prior year loss of
GBP0.3 million.
Parkwood's cash position was much improved throughout the year
enabling bank loans of GBP3.3 million to be repaid in the first
half. The Group ended the year with a cash balance of GBP1.9
million.
Dividends
The Board is able to recommend the payment of a dividend of 1.5
pence per ordinary share payable on 6 May 2011. Total dividends
paid and charged in 2010 were 2.7 pence (2009: nil).
Strategy and order Book
Having lived through a difficult time between 2008 and 2010
Parkwood looks forward to the future with confidence. The Group's
order book with the public sector has grown to GBP535 million from
GBP471 million. The Government's comprehensive spending review
combined with the localism bill currently before parliament
suggests a greater role for the private sector in the provision of
public services. The outsourcing market is valued at GBP80 billion
per annum and represents 15% of all public sector expenditure; it
is expected to grow by 5% per annum or more over the next few
years.
The pressure that local government is under to protect front
line services while cutting budgets will inevitability lead many to
turn to the private sector for support. Parkwood expects to gain
from the new ways of working that the public sector will need to
adopt. Some trends are already beginning to emerge. In particular,
longer term contracts are being suggested in return for increased
investment by the private sector. The affordability of some
projects looks doubtful and Parkwood's resources are limited so
careful selection and investment appraisal is required. Also there
is a tendency to 'bundle' services together, which can lead to the
misalignment of services and contracts which are out of character
for Parkwood. In some cases strategic alliances with others
companies may be required. In the short term the Group is being
asked to help clients come up with 'savings' and the certainty of
some revenue streams remains unclear.
Nevertheless there is much that is positive and after three
years when revenues have been static Parkwood is likely to start to
grow again, particularly in the leisure management sector.
Management and board
I have served as Executive Chairman and Chief Executive for the
past eight years. It is now time for me to split the role and I
intend to become part time Executive Chairman of Parkwood from 1
January 2012. Andrew Holt, the Managing Director of Parkwood
Leisure, will take over the role of Chief Executive. Andrew, aged
53, joined Parkwood in 1996 and has worked closely with me for many
years during which time he has built Parkwood Leisure to be the
most profitable leisure management business in its field. Mike
Quayle continues as the Group Finance Director, and Heather Rosling
serves as Company Secretary while Carolyn Stockdale is on maternity
leave.
There are currently four non-executive directors with Richard
Tolkien acting as the Senior Independent Non-Executive Director.
Richard Allen and Edward Lord are newly appointed, and Sarah Kling
will retire at the end of April 2011 having served as a
non-executive for eight years. Sarah will be greatly missed and on
behalf of the Company I thank her most warmly for her contribution
to the success of Parkwood.
Staff
Staff numbers continue to increase and total 5,889 or 3,156 full
time equivalents, with a gender ratio of 52% female and 48% male.
There has been a high turnover of staff over the last year largely
as a result of contracts being won and lost.
New managing directors are being sought for both Glendale and
Parkwood Leisure but otherwise senior management teams remain
settled. I would like to congratulate everyone in Parkwood for the
enthusiasm and dedication they have shown over the last year. The
work that they undertake on behalf of the communities we all live
and work in is essential and valued. The ethos of public service,
albeit by a private sector organisation, is one that we can be
justly proud of.
Outlook
Parkwood Holdings is a business that survives whilst others come
and go. The outlook for the immediate future is uncertain and
neither I, nor others, can safely predict the effect that high
inflation coupled with cuts to public service budgets will have on
Parkwood. However, in the medium term prospects seem good and
opportunities many. The challenge will be in choosing wisely where
to concentrate the Group's attention; leisure management looks to
be the safest bet.
Tony Hewitt
Executive Chairman
14 March 2011
Financial Review
The Group's profit before tax from continuing operations was
GBP2.4 million. This is a substantial improvement on the prior year
restated profit before tax of GBP0.1 million. Revenue from
continuing operations of GBP113.8 million was slightly below the
prior year (2009 restated: GBP115.1 million) and reflects a
refocussing of the Group's activities towards its more profitable
operations. Operating profit before amortisation, impairments and
similar charges rose to GBP3.6 million (2009 restated: GBP0.8
million). Impairments and similar charges totalled GBP0.9 million
(2009 restated: GBP0.3 million). Profit after tax from continuing
operations was GBP1.9 million (2009 restated loss: GBP0.1
million).
The loss making Recycling business is currently the subject of a
disposal process and has therefore been classified as a
discontinued activity. The loss from discontinued operations of
GBP1.1 million includes one-off items and a goodwill impairment
charge. After the loss from discontinued operations, the Group
recorded a retained profit for the year of GBP0.8 million (2009
restated: GBP2.0 million).
Trading performance
The following summary has been prepared from information
contained within the financial statements.
2010 2009 (restated)
Adjusted Adjusted
operating operating
Revenue profit Revenue profit
GBP000 GBP000 GBP000 GBP000
Leisure 64,422 4,588 61,425 4,225
Glendale 46,373 (259) 50,287 (707)
Healthcare 2,279 (11) 3,792 (337)
PCS 1,860 1,033 1,317 (286)
Other 1,453 (1,707) 1,760 (2,115)
Inter-segmental
elimination (2,573) - (3,431) -
-------------------- ---------- ------------- -------- -----------
113,814 3,644 115,150 780
-------------------- ---------- ------------- -------- -----------
Adjusted operating profit is operating profit from continuing
operations before amortisation, impairment and similar charges.
Parkwood Leisure continued its strong growth record with a 5%
increase in revenue and a 9% increase in adjusted operating profit.
Growth was driven both by new contracts and improved performance on
existing contracts.
Glendale's revenue fell by 8% to GBP46 million but the adjusted
operating loss of GBP0.3 million is an improvement on the prior
year loss of GBP0.7 million. Glendale's adjusted operating loss
results from the underperforming Golf and Horticulture businesses
with combined losses of GBP1.6 million. The Horticulture loss
includes approximately GBP0.5 million in respect of overvalued
inventory. The profitability of Glendale's core Grounds and
Countryside business improved by GBP0.4 million.
Healthcare's revenues reduced by GBP1.5 million following the
end of the onerous patient transport contract in July 2009. More
significantly, the adjusted operating loss has reduced from GBP0.3m
in 2009 to an almost breakeven position in 2010.
Parkwood Consultancy Services recorded an adjusted operating
profit of GBP1.0 million compared to the prior year loss of GBP0.3
million. The growth in profit is mainly attributable to the closure
of the Bristol PFI contract in April 2010. Parkwood Consultancy
Services does not currently have any other such projects in the
pipeline.
Within the "Other" row in the above table, revenue relates to
the Design, Build, Operate and Maintain (DBOM) contracts and the
costs of GBP1.7 million relate to central group costs, which have
been reduced by GBP0.3 million compared to 2009.
Impairments and similar charges
The Group incurred a GBP0.5 million impairment charge (2009
restated: GBP0.3 million), of which GBP0.4 million relates to a
charge taken against the carrying value of fixed assets within the
Golf business. In addition, following the impairment of certain
Golf assets, a provision of GBP0.4 million has been established.
The total charge to the consolidated income statement was therefore
GBP0.9 million (2009 restated: GBP0.3 million).
Finance costs
Net finance costs have reduced to GBP0.2 million (2009 restated:
GBP0.4 million). The Group received finance income totalling
GBP0.1million on its remaining SPC investment and positive cash
balances. Finance costs relate to interest on hire purchase
contracts of GBP0.2 million (2009 restated: GBP0.3 million) and
interest paid on bank loans up to the date of repayment of GBP0.1
million (2009 restated: GBP0.2 million).
Taxation
The Group's tax charge on continuing operations was GBP0.5
million (2009 restated: GBP0.3 million). This is lower than the
expected charge based on the profit from continuing operations due
to non-taxable gains and adjustments to prior year computations.
The taxation credit relating to discontinued operations is
disclosed within those activities.
Discontinued operations
The board expects to complete the sale of Recycling in the first
half of 2011. The loss for the year of GBP1.1 million includes an
impairment charge against goodwill of GBP0.3 million and also
includes a provision for exit liabilities. No significant profit or
loss on disposal is anticipated.
The restated 2009 results include a GBP2.1 million profit from
discontinued operations which reflects the profit on sale of SPC
investments offset by the Realm impairment. The loss of the
Recycling business for 2009 is now included within discontinued
operations.
Prior year adjustments
The 2009 results have been restated to exclude the results of
the Recycling business from the Income Statement from continuing
operations. In addition, adjustments have been made to
deconsolidate Glendale Liverpool Limited as explained in note 1 and
also to implement IFRIC 12, 'Service Concession Arrangements'.
IFRIC 12 became effective during the period and requires that
assets funded by local authorities should not be capitalised by the
private sector concessionaire. IFRIC 12 also requires that the
contractual obligation of replacing such assets should be accrued
for. The requirements of IFRIC 12 affect certain contracts operated
by the Leisure division.
The Group balance sheet as at 31 December 2009 has been restated
to remove the affected assets with a net book value of GBP2.2
million. A GBP0.7 million creditor in respect of unamortised
funding received has also been derecognised. A net financial asset
of GBP1.1m has been recognised which represents a timing difference
for expenditure incurred in excess of the charge to the income
statement. After tax, the net impact is a GBP0.3 million reduction
to net assets as at 31 December 2009.
Cash flow
The net cash inflow generated from operating activities was
GBP3.5 million (2009 restated: GBP8.7 million) and includes a
GBP0.3 million outflow from discontinued activities (2009 restated:
GBP3.3 million inflow). The total cash outflow from discontinued
activities, including financing and investing activities, was
GBP0.7 million (2009: GBP0.4 million outflow).
The net cash flow from investing activities was GBP0.5 million
and includes capital expenditure funded by the Group of GBP1.0
million, offset by proceeds from disposals of surplus fixed assets
totalling GBP0.4 million. Following the implementation of IFRIC 12,
the Group's expenditure on replacing council owned assets is
included within operating activities. Such expenditure totalled
GBP0.6 million (2009: GBP0.4 million).
Total capital expenditure was GBP1.0 million (2009 restated:
GBP0.7 million), of which GBP0.4 million was funded through hire
purchase agreements. Capital expenditure was significantly lower
than the depreciation charge from continuing activities of GBP2.4
million.
Before financing cash flows, the Group generated a net cash
inflow of GBP3.0 million (2009 restated: GBP8.5 million).
The cash outflow from financing activities was GBP5.9 million
(2009 restated: GBP6.0 million) and includes the early repayment of
all the Group's bank loans totalling GBP3.3 million. In addition,
GBP1.3 million of HP obligations were repaid during the year. After
financing, there was a net cash outflow of GBP3.0 million for the
year. The opening cash balance of GBP4.9 million therefore reduced
to GBP1.9 million as at 31 December 2010.
Share purchases for cancellation
During the year 175,000 of the Company's own shares were
repurchased at a cost of GBP0.1 million.
Pensions
The Group provides a limited number of employees with defined
benefit pensions through a multi-employer arrangement with the
Citrus defined benefit pension scheme ("the Scheme").
The IAS 19 accounting valuation at 31 December 2010 indicated a
deficit of GBP0.8 million (2009: GBP2.4 million). Of the GBP1.6
million reduction in the IAS 19 deficit, GBP1.3 million related to
changes in actuarial assumptions and has been credited directly to
equity in accordance with IAS 19. The pension charge for the year
in respect of the Scheme amounted to GBP0.5 million (2009: GBP0.5
million) and total contributions amounted to GBP0.7 million (2009:
GBP0.8 million).
The March 2009 valuation for funding purposes indicated a
deficit of GBP4.4 million. A ten year deficit recovery plan was
agreed with the trustees in June 2010.
During 2010 the Government announced a change to the inflation
measure for defined benefit pension schemes from RPI to CPI. The
trustees have confirmed that in accordance with the existing Scheme
rules, the CPI inflation measure will be used to calculate pension
increases for the majority of the Scheme's members. This is
expected to reduce the funding deficit by around GBP1 million and
has already been taken into account in the IAS 19 valuation as at
31 December 2010.
A further funding valuation will be undertaken as at 31 March
2011 and is expected to show a material improvement in the funding
position due to the change in the inflation measure to CPI and the
general recovery in equity values partly offset by an increase in
gilt yields.
Balance sheet
The Group's balance sheet continues to strengthen with net
assets as at 31 December 2010 totalling GBP6.8 million (2009
restated: GBP5.6 million). The Group's balance sheet does not
include any value for the intangible asset associated with the
Group's ten year order book of GBP535 million.
Following the repayment of the Group's bank loans, the Group's
only debt as at 31 December 2010 related to HP contracts with an
outstanding balance of GBP1.9 million, excluding GBP1.2 million
relating to Recycling which is classified within liabilities held
for resale.
The Group held positive cash balances of GBP1.9 million as at 31
December 2010. The average daily cash balance during the year was
GBP2.8 million. The Group utilised its GBP2.5 million overdraft
facility for a total of 22 days with the maximum utilisation being
GBP1.2 million.
Going concern
The directors acknowledge the guidance on going concern and
financial reporting published by the Financial Reporting Council in
October 2009. Given the broad base of the Group's contract
portfolio with the public sector and high earnings visibility, the
Group is well placed to manage its business risks and has adequate
resources to continue in operational existence for the foreseeable
future.
In December 2010 the Group renewed its overdraft facility at
GBP2.5 million until June 2011. The Group is currently undertaking
an exercise to review its existing banking relationships and
expects to consolidate its relationships in order to improve
efficiency and reduce costs. Once an appropriate banking partner
has been selected, the Group will enter into a new overdraft
facility for a period of at least 12 months. Based on ongoing
discussions with potential banking partners, the directors are
confident that sufficient facilities will be available.The
directors have reviewed the Group's forecasts and budgets for the
next 12 months which indicate that there will be minimal
utilisation of the overdraft facility given the cash balance
available to the Group.
Based on the information set out above, the directors believe
that it is appropriate to prepare the financial statements on a
going concern basis.
Mike Quayle
Group Finance Director
14 March 2011
Consolidated Income Statement
For the year ended 31 December 2010
Restated
2010 2009
Note GBP000 GBP000
Revenue 113,814 115,150
Cost of sales (75,852) (78,312)
Gross profit 37,962 36,838
Administrative expenses (35,323) (36,426)
Operating profit 2,639 412
EBITDA 6,094 4,076
Depreciation (2,450) (3,296)
------------------------------------------------- ----- --------- ---------
Operating profit before amortisation,
impairments and similar charges 3,644 780
Amortisation (62) (62)
Impairments and similar charges (943) (306)
------------------------------------------------- ----- --------- ---------
Operating profit 2,639 412
Finance income 77 193
Finance costs (274) (471)
Profit before taxation from continuing
operations 2,442 134
Income tax expense 6 (541) (270)
Profit/(loss) for the year from continuing
operations 1,901 (136)
Discontinued operations
Gain on disposal of SPCs - 5,620
Loss on impairment of Realm - (2,700)
Loss for the year from other discontinued
operations 4 (1,149) (757)
Total (loss)/profit from discontinued operations (1,149) 2,163
Profit for the year attributable to equity
shareholders 752 2,027
------------------------------------------------- ----- --------- ---------
Basic and diluted earnings/(loss) per share
From continuing operations 10.6 (0.8)
From discontinued operations (6.4) 12.0
Total 7 4.2 11.2
------------------------------------------------- ----- --------- ---------
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2010
Restated
2010 2009
GBP000 GBP000
Profit for the year attributable to equity
shareholders 752 2,027
Other comprehensive income/(losses)
Continuing operations
Actuarial gain/(loss) on defined benefit
pension scheme 1,357 (1,933)
Change in derivative valuations - cash flow
hedges - 62
Disposal of cashflow hedge 47 -
Income tax relating to components of other
comprehensive income (379) 524
Discontinued operations
Actuarial loss on defined benefit pension
scheme - (200)
Change in derivative valuations - cash flow
hedges - 441
Income tax relating to components of other
comprehensive income - (67)
Reclassification adjustment - disposal of
cash flow hedges - 3,442
Other comprehensive income for the year,
net of tax 1,025 2,269
Total comprehensive income for the year 1,777 4,296
--------------------------------------------- ------- ---------
Consolidated Statement of Financial Position
As at 31 December 2010
Restated Restated
2010 2009 2008
GBP000 GBP000 GBP000
Non-current assets
Goodwill 1,443 1,868 2,364
Intangible assets 123 185 4,752
Property, plant and equipment 7,981 11,891 19,683
Investments 435 447 54
Trade and other receivables 1,162 1,244 1,410
Deferred tax asset 1,040 1,375 -
------------------------------------ ------- --------- ---------
12,184 17,010 28,263
------------------------------------ ------- --------- ---------
Current assets
Inventories 1,945 2,878 3,750
Trade and other receivables 10,479 11,794 17,645
Cash and cash equivalents 1,945 4,904 1,089
14,369 19,576 22,484
Assets classified as held-for-sale 2,406 - 25,068
------------------------------------ ------- --------- ---------
Total current assets 16,775 19,576 47,552
------------------------------------ ------- --------- ---------
Total assets 28,959 36,586 75,815
------------------------------------ ------- --------- ---------
Current liabilities
Trade and other payables 16,667 20,517 25,283
Income tax payable 441 33 2,656
Obligations under finance
leases 1,050 1,503 1,540
Borrowings - 2,639 1,313
------------------------------------ ------- --------- ---------
18,158 24,692 30,792
Liabilities classified
as held-for-sale 1,761 - 27,725
------------------------------------ ------- --------- ---------
Total current liabilities 19,919 24,692 58,517
------------------------------------ ------- --------- ---------
Non-current liabilities
Borrowings - 705 11,302
Retirement benefit obligations 831 2,440 621
Long-term provisions 229 293 171
Obligations under finance
leases 859 2,771 1,800
Derivative financial instruments - 48 1,419
Deferred tax liability 286 26 650
------------------------------------ ------- --------- ---------
2,205 6,283 15,963
------------------------------------ ------- --------- ---------
Total liabilities 22,124 30,975 74,480
------------------------------------ ------- --------- ---------
Net assets 6,835 5,611 1,335
------------------------------------ ------- --------- ---------
Restated Restated
2010 2009 2008
GBP000 GBP000 GBP000
Equity
Share capital 185 187 189
Share premium account 2,227 2,227 2,227
Investment in own shares (415) (417) (729)
Capital redemption reserve 412 410 408
Hedging reserve - (34) (1,022)
Revaluation reserve - - 819
Retained earnings 4,426 3,238 2,260
6,835 5,611 4,152
Amounts recognised directly
in equity relating to
assets classified as held
for sale - hedging reserve - - (2,817)
Equity attributable to equity
holders of the parent 6,835 5,611 1,335
------------------------------- ------- --------- ---------
Consolidated Statement of Cash Flows
For the year ended 31 December 2010
Restated
2010 2009
GBP000 GBP000
Net cash flow from operating
activities 3,461 8,687
Cash flow from investing activities
Interest received 77 195
Proceeds on disposal of property,
plant and equipment 367 102
Purchase of property, plant and
equipment (983) (734)
Subordinated debt repaid 12 9
Net proceeds from sale of SPCs - 4,154
Cash disposed on sale of SPCs - (2,230)
Cash eliminated on Realm deconsolidation - (818)
Acquisition of subsidiary (net
of cash acquired) - (150)
Purchase of investment - (393)
Cash flows used in investing
activities (discontinued) (5) (289)
Net cash generated used in investing
activities (532) (154)
------------------------------------------ -------- ---------
Cash flow from financing activities
Interest paid (274) (542)
Dividends paid (486) -
Acquisition of own shares for
cancellation (84) -
Repayment of obligations under
finance leases (1,310) (1,642)
Repayment of bank loans (3,344) (1,115)
Cash flows from financing activities
(discontinued) (390) (2,678)
Net cash used in financing activities (5,888) (5,977)
------------------------------------------ -------- ---------
Net (decrease)/increase in cash
and cash equivalents (2,959) 2,556
Cash and cash equivalents at
beginning of the year 4,904 2,348
Cash and cash equivalents at
end of the year 1,945 4,904
------------------------------------------ -------- ---------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2010
Share Investment Capital
Share premium in own redemption Hedging Revaluation Retained
capital account shares reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2009
as originally
reported 189 2,227 (729) 408 443 819 2,688 6,045
Prior period
adjustments
(note 1) - - - - (4,282) - (428) (4,710)
---------------- -------- -------- ----------- ----------- -------- ------------ --------- --------
Balance at 1
January 2009
as restated 189 2,227 (729) 408 (3,839) 819 2,260 1,335
Profit for the
year - - - - - - 2,027 2,027
Other
comprehensive
income
Actuarial loss
on defined
benefit
pension
scheme - - - - - - (1,933) (1,933)
Actuarial loss
on defined
benefit
pension scheme
(discontinued) (200) (200)
Change in
derivative
valuations -
cash flow
hedges - - - - 62 - - 62
Change in
derivative
valuations -
cash flow
hedges
held-for-sale - - - - 441 - - 441
Disposal of
cash flow
hedges - - - - 3,442 - - 3,442
Income tax
relating to
components of
other
comprehensive
income - - - - (17) - 541 524
Income tax
relating to
other
comprehensive
income
(discontinued) - - - - (123) - 56 (67)
---------------- -------- -------- ----------- ----------- -------- ------------ --------- --------
Total
comprehensive
income for the
year - - - - 3,805 - 491 4,296
Transactions
with owners
Cancellation of
treasury
shares (2) - 312 2 - - (312) -
Share based
payments - - - - - - (8) (8)
Tax related to
share based
payments - - - - - - (12) (12)
Transfer to
retained
earnings - - - - - (819) 819 -
---------------- -------- -------- ----------- ----------- -------- ------------ --------- --------
Balance at 31
December 2009 187 2,227 (417) 410 (34) - 3,238 5,611
Profit for the
year - - - - - - 752 752
Other
comprehensive
income
Actuarial gain
on defined
benefit
pension
scheme - - - - - - 1,357 1,357
Disposal of
cash flow
hedge - - - - 47 - - 47
Income tax
relating to
other
comprehensive
income - - - - (13) - (366) (379)
---------------- -------- -------- ----------- ----------- -------- ------------ --------- --------
Total
comprehensive
income for the
year - - - - 34 - 1,743 1,777
Transactions
with owners
Cancellation of
treasury
shares (2) - - 2 - - (84) (84)
Share based
payments - - 2 - - - 15 17
Dividends - - - - - - (486) (486)
Balance at 31
December 2010 185 2,227 (415) 412 - - 4,426 6,835
---------------- -------- -------- ----------- ----------- -------- ------------ --------- --------
Reconciliation of Net Cash Flow Movement to Net Debt
For the year ended 31 December 2010
Restated
2010 2009
GBP000 GBP000
(Decrease)/increase in cash in
the year including discontinued (2,959) 2,536
Cash eliminated on Realm deconsolidation - 818
Cash outflow in the year from SPC disposal
group - 1,260
---------------------------------------------- -------- ---------
(2,959) 4,614
Cash outflow from reduction in
debt and lease financing 1,310 1,753
Repayment of bank
loans 3,344 1,320
Reclassification to disposal group
held for sale 1,502 -
Net debt eliminated on Realm deconsolidation - 7,133
Finance leases acquired with Verdia - (1,408)
---------------------------------------------- -------- ---------
Change in net debt resulting from
cash flows 3,197 13,412
New finance leases (447) (1,279)
---------------------------------------------- -------- ---------
Decrease in net debt 2,750 12,133
Net debt at 1 January (2,714) (14,847)
Net cash/(debt) at 31 December 36 (2,714)
---------------------------------------------- -------- ---------
Notes
For the year ended 31 December 2010
1. Results and accounting policies
While the financial information included in this preliminary
announcement has been computed in accordance with International
Financial Reporting Standards ("IFRS"), this announcement does not
itself contain sufficient information to comply with IFRS. The
Group expects to publish full financial statements, which comply
with IFRS on or before 24 March 2011. In accordance with IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations' and
the Group's decision to classify certain trade and assets as
discontinued, the Group has restated its comparatives and
associated notes within its consolidated income statement,
consolidated statement of comprehensive income, consolidated
statement of financial position and statement of changes in equity
as required. The accounting policies used in preparation of this
preliminary announcement have remained unchanged from those set out
in the Group's 2009 annual report, apart from those policy changes
noted above and the adoption of IFRIC 12 'Service Concession
Arrangements'. They are also consistent with those in the full
financial statements which have yet to be published. The
preliminary results for the year ended 31 December 2010 were
approved by the board of directors on 14 March 2011.
Prior period adjustments
IFRIC 12
IFRIC 12 'Service Concession Arrangements', requires that assets
purchased by an operator of a service concession arrangement for
use by the public in return for a fee from a public body, or for
the right to charge the public to use the assets, are not
recognised as tangible fixed assets if the public body controls or
regulates what services the operator must provide with those assets
and controls any significant residual interest in the asset at the
end of the arrangement.
The contractual obligation at the date of the Statement of
Financial Position of purchasing assets during the contract is now
accrued for evenly over the life of the contract in accordance with
IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'.
Due to up front expenditure on refurbishment of leisure centres the
net spend on assets is higher than the cumulative provision and
therefore a net receivable is held on the balance sheet.
Assets with a net book value of GBP2.2 million have been
derecognised from the Group's balance sheet, a creditor
representing lifecycle income received to date of GBP0.7 million
has been derecognised and a receivable of GBP1.1 million has been
recognised as at 31 December 2009. Under the Group's previous
revenue recognition policy, monies received for lifecycle spend on
assets were not recognised as revenue. Under the new policy and in
accordance with IFRIC 12, such monies are now recognised as revenue
and a corresponding amount is recognised as an expense, resulting
in a nil impact on gross profit. As a result of the adoption of the
new policy, revenue for the year ended 31 December 2009 increased
by GBP0.4 million, profit before tax declined by GBP0.07 million
and taxation reduced by GBP0.02 million. The net impact was a
GBP0.05 million reduction in profit after tax.
Net assets as at 31 December 2008 have been reduced by GBP0.2
million as a result of the adoption of the new policy. In the
current period a depreciation charge of GBP0.8 million would have
been recognised in the income statement relating to assets which
have been derecognised. Additional revenue of GBP0.6 million has
been recognised in the current period under the new accounting
policy, representing income received for spend on lifecycle, a
corresponding expense has been recognised in cost of sales of
GBP0.6 million. A charge of GBP0.6 million has been recognised in
relation to the Group's contractual obligations. The net effect on
income in the current period is an increase in profit before tax
for continuing operations of GBP0.2 million.
Glendale Liverpool
Glendale Liverpool Limited is company set up to operate a
grounds management contract in Liverpool. After review, it has been
concluded that the Group does not have control as defined by IAS 27
'Consolidated and separate financial statements' and accordingly
Glendale Liverpool Limited should not be consolidated in the Group
financial statements. The impact of deconsolidating Glendale
Liverpool Limited is to reduce revenue in the year ended 31
December 2009 by GBP2.4 million. There is no impact on profit and
no material impact on the statement of financial position as a
result of this restatement.
2. Going concern
The Group meets its day-to-day working capital requirements
through an overdraft facility, which is due for renewal in June
2011. The Group's forecasts and projections, which have been
prepared for the period to 31 March 2012 and taking into account
reasonably possible changes in performance, show that the Group
should be able to operate within the level of its current facility.
The Group has begun discussions with its bankers about its future
borrowing needs and has reason to believe that the appropriate
facilities will be available when required.
After making reasonable enquiries, the directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly they continue to adopt the going concern basis
in preparing the annual report and accounts.
3. Critical accounting estimates
Impairment of goodwill, intangible assets, property, plant and
equipment
Determining whether goodwill, intangible assets, property, plant
or equipment are impaired requires an estimation of the value in
use of the cash generating units. The value in use calculation
involves an estimation of the future cash flows of cash generating
units and also the selection of appropriate discount rates to
calculate present values. In support of the assumptions, management
uses experience of historic performance and expected contractual
cash flows to arrive at future cash flows.
In assessing the quantum of the future cash flows generated from
property, plant and equipment, management have made judgements over
future cash flows arising from operational improvements and the
level of forecast additional income to be generated from
development projects that are not yet completed.
Onerous contract provisions
Management have made judgments over the future cash flows and
discount rates used in the estimation of onerous contract
provisions. In assessing the quantum of certain future cash flows
management have made judgements over future cash flows arising from
operational improvements and the level of forecast additional
income to be generated from development projects that are not yet
completed. The carrying value of the onerous contract provisions as
at 31 December 2010 amounts to GBP0.7 million (2009: GBP0.4
million).
Estimate of contractual obligations on council owned assets
The contractual obligation on replacement of council owned
assets within leisure centres operated by the Group is based on
management's best estimate after taking into account past
experience of the estimated useful economic life of assets and the
present operational state of assets within the centres. The
estimate is based on expected future prices of assets at the
expected replacement dates.
Defined benefit liability
Management have made judgements over certain assumptions in
relation to the Group's IAS 19 pension liabilities.
4. Assets of the disposal group classified as held-for-sale
The Recycling business which comprises of Ecological Sciences
Limited and Verdia Horticulture Limited has been treated as
discontinued operations as the business was put up for sale in
November 2010. Consequently, the comparatives have been restated.
In the prior year the results of Realm Services (DAC) Limited and
Glendale Facilities Management Limited together with the leisure
related SPCs were treated as discontinued operations. The combined
results of these operations are summarised below:
2010 2009
Loss for the year from discontinued operations GBP000 GBP000
Revenue 549 9,836
Less: share of joint ventures
revenue - (2,409)
------------------------------------------------ -------- --------
549 7,427
Expenses (including goodwill
impairment) (1,898) (6,478)
Finance income - (82)
Finance costs (103) (1,842)
Share of results of joint ventures - (26)
------------------------------------------------ -------- --------
Profit before tax (1,452) (1,001)
Tax 303 244
Loss for the year from discontinued
operations (1,149) (757)
------------------------------------------------ -------- --------
5. Business segments
Operating segments have been determined based on the reports
regularly reviewed by the Board of Directors that are used to make
strategic and operational decisions. The Group Board of Directors
is considered to be the Chief Operating Decision Maker (CODM). The
Board of Directors review the business based on the nature of the
services provided. Parkwood is organised into four operating
divisions: Leisure, Glendale, Healthcare and Parkwood Consultancy
Services (PCS). Glendale's performance is further analysed by
service being: Glendale Core, Golf, and Horticulture.
The Board assess performance of the operating segments primarily
based on a measure of adjusted operating profit being operating
profit before amortisation, impairments and similar charges. The
reportable segments derive their revenues as follows:
Leisure provision of leisure facility management services to
local authorities and provision of private health and fitness
clubs
Glendale core grounds management, arboriculture, countryside
services and landscaping
Golf golf course management including retail sales
Horticulture plant production and sales
Healthcare nursing agency, LINk and patient transport
services
PCS operational project, lifecycle and bid management fees
Glendale Grounds Management and Glendale Countryside have been
reported together as Glendale Core given the similar economic
characteristics which exist in the markets in which the two
operating segments trade.
Although PCS and Healthcare do not meet the quantitative
thresholds required by IFRS 8, they are reported separately since
their performance is monitored and reported to the Board of
Directors and they have different economic characteristics to other
segments.
The Group does not have any major customers which represent more
than 10% of the Group's revenue. The measurement policies used for
segment reporting reflect those used for internal reporting and for
the Group's financial statements. Inter-segment sales are charged
at arms length prices. Segment assets comprise all assets allocated
to the segment excluding costs of investments and intercompany
loans.
Adjusted
Total operating Gross
revenue Depreciation profit assets Net assets
Year ended 31
December 2010 GBP000 GBP000 GBP000 GBP000 GBP000
Leisure 64,422 393 4,588 11,514 5,751
Glendale core 40,328 1,625 1,379 10,742 3,653
Golf 3,573 203 (580) 1,501 (1,913)
Horticulture 2,472 114 (1,058) 1,249 (2,583)
Healthcare 2,279 17 (11) (611) (793)
PCS 1,860 18 1,033 1,106 676
All other
segments 1,453 80 (1,707) 1,052 1,399
---------------- --------- ------------- ----------- -------- -----------
Total Group
(continuing) 116,387 2,450 3,644 26,553 6,190
Discontinued
operations 651 268 (965) 2,406 645
---------------- --------- ------------- ----------- -------- -----------
Total Group 117,038 2,718 2,679 28,959 6,835
---------------- --------- ------------- ----------- -------- -----------
Year ended 31
December 2009
(restated)
Leisure 61,425 426 4,225 13,997 5,931
Glendale core 43,024 2,120 938 13,337 644
Golf 4,259 352 (381) 2,780 (562)
Horticulture 3,004 140 (1,264) 2,021 (1,091)
Healthcare 3,792 108 (337) (1,185) (964)
PCS 1,317 23 (286) 1,506 380
All other
segments 1,760 127 (2,115) 2,799 858
---------------- --------- ------------- ----------- -------- -----------
Total Group
(continuing) 118,581 3,296 780 35,255 5,196
---------------- --------- ------------- ----------- -------- -----------
Discontinued
operations 7,447 563 2,282 2,773 415
---------------- --------- ------------- ----------- -------- -----------
Total Group 126,028 3,859 3,062 38,028 5,611
---------------- --------- ------------- ----------- -------- -----------
All other segments includes the revenues generated by the
Broadwater and Cherwell DBOM (design, build, operate and maintain)
contracts and expenses of the Group's head office function. They
are not included within the reportable operating segments as they
are not reported to the Board and are below the IFRS 8 quantitative
disclosure thresholds. The Group's head office function is not an
operating segment as defined by IFRS 8. Funding for the DBOM
companies is provided by the local authority so there is no impact
on the Group's debt and the underlying assets and related funding
do not appear on the Group's balance sheet as the local authority
retains ownership.
All revenues and non current assets arise within the United
Kingdom. The revenue from external customers reported to the Board
is measured in a manner consistent with that in the income
statement. The totals presented for the Group's operating segments
reconcile to Group revenues as follows:
Intercompany
revenue External revenue
Restated Restated
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
Leisure 1,175 2,038 63,248 59,387
Glendale core 256 189 40,072 42,835
Golf 9 - 3,564 4,259
Horticulture 374 326 2,098 2,678
Healthcare - - 2,279 3,792
PCS 459 766 1,401 551
All other segments 300 112 1,152 1,648
Group revenues 2,573 3,431 113,814 115,150
-------------------- ------- --------- -------- ---------
During the year the Group entered into finance lease
arrangements. The capital value at the inception of the leases was
GBP76,000 (2009: GBPnil) in the Leisure business, GBP371,000 (2009:
GBP910,000) in the Glendale core business, GBPnil (2009:
GBP111,000) in Horticulture, GBPnil (2009: GBP251,000) in Golf and
GBPnil (2009: GBP7,000) in all other segments.
The adjusted operating profit (operating profit before
amortisation, impairments and similar charges) reported to the
Board is measured in a manner consistent with that in the income
statement.
6. Taxation
The effective tax rate for the year was 22%. The current year
charge was lower than the basic UK rate mainly due to adjustments
in respect of prior period taxation.
7. Earnings per Ordinary share
Earnings per share (EPS) has been calculated on the weighted
average number of ordinary shares in issue throughout the year of
17,963,080 shares (2009: 18,034,443 shares). The diluted earnings
include the effects of all potentially dilutive ordinary shares,
which increases the average number of shares to 17,982,241 (2009:
18,041,443). Earnings, which are based on profits on all activities
after tax from continuing operations, amounted to a profit of
GBP1,901,000 (2009 restated: GBP135,000 loss). The weighted average
number of ordinary shares used to calculate diluted EPS has been
adjusted for the conversion of share options. Share options which
are anti-dilutive for this period but could potentially dilute
earnings per share at a later date are considered immaterial.
2010 2010 2009 2009
Restated Restated
Earnings Earnings Earnings
post per share Earnings per share
tax (pence) post tax (pence)
GBP000 GBP000 GBP000 GBP000
Basic earnings/(loss) from
continuing operations 1,901 10.6 (136) (0.8)
Amortisation of intangible
assets 62 0.4 62 0.4
Impairments and
similar charges 943 5.2 306 1.7
Adjusted basic and diluted
earnings from continuing
operations 2,906 16.2 232 1.3
----------------------------- --------- ----------- ---------- -----------
Basic earnings/(loss) from
continuing operations 1,901 10.6 (136) (0.8)
Basic earnings from
discontinued operations (1,149) (6.4) 2,163 12.0
----------------------------- --------- ----------- ---------- -----------
Total basic earnings 752 4.2 2,027 11.2
Diluted earnings/(loss) from
discontinued operations (1,149) (6.4) 2,163 12.0
----------------------------- --------- ----------- ---------- -----------
8. Annual report
The Annual Report will be posted to shareholders on or around 24
March 2011. Copies will also be available from the company's
website (www.parkwood-holdings.co.uk) and from:
The Company Secretary, Parkwood Holdings Plc, Parkwood House,
Cuerden Park, Berkeley Drive, Bamber Bridge, Preston, PR5 6BY.
The results will not be advertised in any newspaper
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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