Digital investment has become increasingly important in driving profit growth at Park Group (PKG). Pre-paid cards, namely Mastercard and its Flexecash card, continued to rise in popularity among customers. Revenue earned from the sale of these cards increased by almost a fifth last year, helped by the launch of digital e-codes for Flexecash. However, because pre-paid sales are accounted for on a net basis, as opposed to a gross basis for paper vouchers, group revenue dipped slightly on the prior year.
Customer billings rose 2 per cent to £413m, boosting year-end cash balances to £40m, from £34m in March 2017. However, corporate billings were only marginally higher, held back by a contract delay. Management says this has now been implemented, with the revenue expected from the second half of this year. Still, that meant billings from corporate incentives were slightly behind expectations.
Fulfilling a higher level of customer prepayment orders for Christmas 2017 helped drive a 4 per cent rise in consumer billings. Almost three-quarters of new consumer accounts placed orders online, up from 65 per cent in the prior year, bringing down customer acquisition costs, while increasing the adjusted operating cash profit margin by 10 basis points to 3.1 per cent.
Analysts at house broker Arden Partners expect adjusted pre-tax profits of £13.6m for the year ending March 2019, giving EPS of 5.9p (from £12.9m and 5.6p in FY2018).
| PARK GROUP (PKG) | ||||
| ORD PRICE: | 80.75p | MARKET VALUE: | £150m | |
| TOUCH: | 80-81.5p | 12-MONTH HIGH: | 90p | LOW: 74p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 10p* | NET CASH: | £34m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 270 | 9.4 | 4.2 | 2.3 |
| 2015 | 293 | 10.9 | 4.7 | 2.4 |
| 2016 | 303 | 11.9 | 5.3 | 2.75 |
| 2017 | 311 | 12.4 | 5.4 | 2.9 |
| 2018 | 296 | 12.9 | 5.6 | 3.05 |
| % change | -5 | +4 | +4 | +5 |
| Ex-div: | 23 Aug | |||
| Payment: | 1 Oct | |||
| *includes intangible assets of £4.5m, or 2p a share | ||||
