Park Report and Accounts Mar 12

Delivering Growth
Park Group plc Annual report and accounts 2012
Delivering Growth
through... Partnerships Innovation Delivery Strength
Contents
Company Overview 2012 Financial highlights At a glance How we operate Our strategy Business Review Chairmans statement Chief Executives review Financial review Risk factors Directors Corporate Governance Directors Report Corporate Governance Remuneration Report Independent Auditors Report 1 2 4 6 7 8 12 14 16 18 19 23 26
Financial Statements Consolidated Income Statement 27 Consolidated Statement of Comprehensive Income 27 Statements of Financial Position 28 Consolidated Statement of Changes in Equity 29 Company Statement of Changes in Equity 30 Statements of Cash Flows 31 Accounting Policies 32 Notes to the Accounts 37 Notice of Meeting 62 Directors and Advisers 63
2012 Financial highlights
Profit before tax and other operatin g income rose
329.0m (2011 297.6m) 1.7m (2011 1.4m)

Dividend for year lifted
Billings increased 11 per cent to
Finance income of
Company Overview
(2011 7.0m)
23% to 8.6m
(2011 1.70p)
18% to 2.00p
279.0m (2011 279.9m) 152m (2011 140m)

Online orders over
Revenues declined 0.3 per cent to
Total cash balances peaked at
Business Review
100m
Corporate Governance
Group billings (m)
Prot before taxation and other operating income (m)

329.0 297.6
Financial Statements
329.0m (2011 297.6m)

250.5 263.2
8.6m (2011 7.0m)

7.0 6.2 5.3 4.3
8.6
225.8
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Dividends per share (p)
Total adjusted basic earnings per share (p)
2.00p (2011 1.70p)

2.00 1.70 1.32 1.32
3.91p (2011 3.17p)

3.91 3.17 2.80 2.44 2.14
1.20
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Park at a glance
Park is a UK based financial services business offering corporate and private customers a range of incentive and savings products, backed by the highest levels of service.
Corporate
Park sells its own brand vouchers and prepaid cards as well as individual store vouchers to corporate customers, who use them for incentive schemes and sale to end users.
corporate incentive prov ide 2011/2012 billings 142m r
UKs No 1
Corporate and consumer brands
online gift voucher retailer 2011/2012 billings 11m
UKs No 1
multi-redemption gift voucher/card 2011/2012 billings 295m recently launched regulated E money prepaid card 2012 value loaded 56m
UKs No 1
Consumer
Customers purchase vouchers, prepaid cards, hampers or other gift products on a 45 week prepaid instalment plan from Park. Products are delivered in time for Christmas.
Prepaid card
UKs No 1
Christmas savings club 2012 orders 173m
Company Overview
>> Billings increase 14.6 per cent to 141.8m >> Operating profit increases to 4.9m (2011 3.9m) >> Incentive and reward billings up 10.8 per cent to 80.3m >> Customer numbers rise over 8 per cent to a record 6,100 >> Customer retention steady at around 80 per cent >> Major new clients include Daily Mail, Rexel UK, Sky, HomeServe, Philip Morris, Micheldever >> Leading UK brands Love2reward, Love2shop, Love2choose, Love2play, Love2travel, retailers vouchers
Billings by market (m)

Christmas savings hsv.com Other consumer Incentive Credit Other corporate 173.1 10.7 3.4 80.3 47.4 14.1
Business Review
>> Billings increase 7.6 per cent to 187.2m >> Operating profit reduced to 4.1m (2011 4.5m) >> Average customer order increases to 416 (2011 401) >> 116,000 agents (2011 110,000) UK and Ireland >> 424,000 customers (2011 410,000) UK and Ireland >> Euro voucher established >> flexecash prepaid card now 10 per cent of total sales >> Christmas 2012 well ahead of same time last year, orders up by 6 per cent >> Targeted advertising campaign to reach selected social and geographical groupings
Billings by product (m)

Consumer voucher Corporate voucher Consumer card Corporate card Third party voucher Hampers, gifts and other products
Total Total 329m 329m
Growth
Corporate Governance Financial Statements 142.4 98.9 14.7 39.0 18.0 16.0 Park Group plc Annual report and accounts 2012
Total Total 329m 329m
How we operate
Serving our customers
While Park has undergone significant change over recent years, our strategy, core skills and management focus remain unchanged. We concentrate on broadening our product range, providing more options to existing customers while also seeking to attract new customers by expanding into new areas through innovation and technology. The success we enjoy is against a backdrop of high levels of customer service, tight financial control and imaginative sales and marketing efforts, all supported by measured investment in technology.
Retailer partners
85+
High street retailers
20,000
Retail outlets
Corporate
>> UK voucher and gift market estimated at 4bn >> Strong, loyal and growing customer base >> Low growth economy encourages customers to seek incentive and reward opportunities >> Innovative schemes tailor made to suit individual customer needs >> Over 600 businesses have purchased flexecash since launch in June 2010 >> Launch of flexecodes in 2012 will further broaden prepaid offering
Consumer
>> Currently supplying over 425,000 customers market 16m >> Targeted TV and web advertising; increasing use of social networking >> Online sales now over 50 per cent from 2 per cent in 2007 and still growing >> Internet use has raised customer service levels and lowered costs >> flexecash prepaid card delivering incremental sales >> Full year contribution from Irish business
Products and services

Vouchers and cards 313m Other products 16m
Channels
Consumer B2C Online retail Corporate B2B
Customers
Over 1 million customers
Partnerships
Company Overview Business Review
Internet
The importance of IT systems to Park is immense and it is at the heart of our operations. We invest around 1m annually in capital equipment, hardware and software to ensure we remain abreast of the latest developments in order to capitalise on the opportunities they offer. Park has a team of highly skilled IT staff with specialist expertise in technology and web based areas, including digital marketing, to support our web business and traditional markets. An increasing proportion of our business is conducted via the web, giving customers the information they require in real time, day or night, throughout the year.
Prepaid cards
Parks innovative flexecash prepaid card was launched in June 2010 following three years of product development and authorisation by the Financial Services Authority (FSA). The prepaid card spans all Parks business channels and is driving growth across the group. We started with just two types of card, which we have expanded rapidly to a suite comprising 17, as new customer applications and opportunities are identified and serviced. There are now: >> More than 600 corporate users of the flexecash card >> Over 77m of value loaded >> Approximately 1.4m individual cards issued
Innovation
Corporate Governance Financial Statements
Our strategy
Our strategy is focused on generating growth from our principal corporate and consumer markets through innovation and by harnessing the power of the internet to deliver new products to our customers backed by outstanding service.
Key performance indicators

Number of customers corporate 6,100 (2011 5,600)
5,337 4,354 3,550 5,600 6,100
Number of customers consumer (000s) 425,000 (2011 410,000)

398 432 400 410 425 21.4
15.2
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2011
2012
Billings growth corporate (m) 141.8m (2011 123.7m)

141.8 123.7 107.2 81.6 85.0
Average order value consumer () 416 (2011 401)

355 374 375 401 416
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Internet derived revenue corporate (m) 21.4m (2011 15.2m)

21.4
Christmas order book consumer (m) 172.6m (2011 164.5m)

162.1 141.3 164.5 150.5 172.6
15.2
8.7 2.3 2008 6.0 2009 2010 2011 2012 2008 2009 2010 2011 2012
Chairmans statement
Park has delivered another excellent set of results. The quality and strength of our operations is reflected in these results and that performance has extended into the current year, which has started well. The transformation of Park has continued with the rapid growth in our prepaid card offering and the introduction of a series of exciting new products.
Peter Johnson Chairman
Company Overview
It is pleasing to report that Park has delivered another excellent set of results. Park has achieved a significant advance in profit backed by strong cash generation and for shareholders, another increase in the proposed dividend for the full year. This time last year, I referred to the steady transformation of Park as it harnesses the power of the internet and social media tools to drive growth in its existing markets, while introducing innovative new products which give access to exciting new markets. The success of the strategy and managements ability to deliver strong growth, is clearly demonstrated in these results and Parks success enables us to look forward with optimism. Group profit before taxation and other operating income for the year to 31 March 2012 was ahead by 22.6 per cent at 8.6m (2011 7.0m). Operating profit before other operating income increased 22.1 per cent to 6.9m (2011 5.6m). Finance income was 1.7m (2011 1.4m) reflecting the ongoing low interest rate environment, with the uplift in income resulting from higher cash balances, which continue to be managed very conservatively to minimise risk. Park is cash generative and has no bank debt on its balance sheet. Revenue for the year reduced by 0.3 per cent to 279.0m (2011 279.9m). Customer billings increased 10.5 per cent to 329.0m (2011 297.6m). It is important to note that customer billings differ from revenue reflecting the effect of the flexecash prepaid card accounting policy announced in our results statement of June 2011. Revenue from prepaid cards is recorded differently to revenue from paper vouchers and is the margin earned based on customer billings, recognised when the value loaded on the card has been redeemed. This policy has no effect on the level of margin contribution or profit, but delays recognition. The very significant and growing numerical difference between revenue and billings vividly demonstrates the positive impact of our prepaid card and highlights its success since launch two years ago.
The board proposes raising the final dividend by 22.9 per cent to 1.475p per share (2011 1.20p) making a total dividend for the year of 2.0p per share (2011 1.70p). This increase reflects continued confidence in the business and the anticipated further contribution from the profitability of its innovative product ranges. Shareholder approval will be sought at the annual general meeting to be held on 27 September 2012 to pay the final dividend on 1 October 2012 to shareholders on the register on 31 August 2012. Park is an ambitious business that believes in continually supporting innovation to meet the current and future needs of its customers in both the corporate and consumer marketplaces. The face of Park may be traditional, but its businesses over recent years have become leading edge. This progress is one of the reasons why we have updated our corporate identity at the group level. Building on many years of growth and evolution, the identity is a symbol of the companys ongoing commitment to the future, through innovation and the delivery of stakeholder value. A further change is more personal. I am proud of my executive involvement in Park since founding the company in 1967, when it was known as the Park Hamper Company Limited. As with all business decisions timing is crucial and some months ago, after 45 years at the helm, I advised the board that the time was right for me to take a step back. I reached that decision confident in the knowledge that Park has a first class, highly experienced management team, which would continue the impressive development of the business. I was delighted to accept the boards invitation to retain my close relationship with Park as non-executive chairman. Subsequent to my role becoming non-executive, the board appointed Chris Houghton as chief executive officer. Chris joined Park in 1986 becoming group managing director in 2004; he has played a leading role in the development of Park and I am confident that he will continue to drive the organisation forward with distinction.
Parks strategy over the years has been consistent and transparent. We are a UK based financial services business focused on harnessing the power of technology, principally the internet, social media and our own innovation, to offer corporate and private customers a range of incentive and savings products, backed by the highest levels of service and security. We achieve our goals through the range of products and services we offer. In addition, we also continue to develop innovative new products and services for existing customers, while working to reach new customers and new markets. Park has two core channels business to business and business to consumer. Park is a market leader in the UK and last year entered the Irish market. People Parks continuing success is a reflection of the quality, dedication and application of its people at all levels. Their enthusiasm and energy are our most vital assets and on behalf of all shareholders, I thank them for their support. Outlook The quality and strength of our operations is reflected in these results and that performance has extended into the current year, which has started well. The transformation of Parks business has continued with the rapid growth in our prepaid card offering and the introduction of a series of exciting new products. Orders for Christmas 2012 are up approximately 6 per cent compared with the prior year at this time, corporate and online billings are also ahead of last year at this early stage of the current financial year. Park is well placed for another year of progress, as its experienced management team builds on market leading positions, backed by strong customer relations and a strong cash position.
Business Review Corporate Governance Financial Statements
Peter Johnson Non-executive Chairman 12 June 2012
Chief Executives review
Chris Houghton Chief Executive Office r
Key strengths
>> Market leading brands in each area in which we operate >> Profitable, highly cash generative, no bank debt >> Over 90 per cent of annual revenues from vouchers and cards >> Increasing focus on use of internet and e-solutions >> Transformational impact of flexecash prepaid card
This has been another year of significant achievement across our business divisions as we capitalise on sales opportunities in our key growth markets. We have introduced exciting and innovative new products, achieving accelerating sales growth from the flexecash prepaid card. Since this impressive product was launched in June 2010, there are now in excess of 600 corporate users of the flexecash card, with 77m of value loaded across approximately 1.7m individual cards. We started with just two types of card, which we have expanded rapidly to a suite comprising 17 products, as new customer applications and opportunities are identified and serviced. A year ago, in our statement accompanying the full year results for 2011, we commented on the effect accounting policies were having on the reporting of revenues within the prepaid card business. The accounting policy in respect of revenue recognition masks the expansion of the prepaid card range and the gap between billings and revenue will widen as card sales grow. The total value of customer billings in the year to 31 March 2012 rose significantly to 329.0m, up from 297.6m in 2011, while reported revenue was 279.0m compared with 279.9m in 2011. Reported revenue from prepaid cards is accounted differently from vouchers as only the margin earned is recognised as revenue, not the actual amount billed to customers, with some margin being deferred to future periods. While Park has undergone significant change over recent years, our strategy, core skills and management focus remain unchanged. We are resolute in continuing to concentrate on broadening our product range, providing more options to existing customers while also seeking to attract new customers by expanding into new areas through innovation and technology. The success we enjoy is against a backdrop of high levels of customer service, tight financial control and imaginative sales and marketing efforts, all supported by measured investment in technology.
There is no doubt that Park has been transformed by flexecash and we continue to control its development in a careful and disciplined manner. We continue to ensure that the correct infrastructure is in place, with systems tested rigorously to handle the increasing volumes from our growing customer base. This infrastructure also allows us to capitalise on new sales opportunities and launch new product applications. Post year end, we built on the flexecash platform, by launching flexecodes, an innovative multi-retailer e-code solution. flexecodes is a virtual card application, which gives users a unique code allowing them to shop online at the sites of participating retailers up to the value attached to each flexecode. Our growing number of participating retailers currently includes Amazon.co.uk, HMV, iTunes, Marks & Spencer and many more. The prepaid card spans all Parks business channels and is driving growth across the business. One of the most important developments for flexecash is being Euro () enabled, which could clearly offer significant opportunity for geographic expansion. We continue to expand further our use of the internet as a means of enhancing product development, which in turn improves our customer service levels and increases business efficiency. Our corporate business now conducts over 80 per cent of its marketing online, whilst our consumer division currently handles around 130,000 customers via the internet. The success of Parks prepaid card range is the result of many years of product research and development coupled with investment in the latest internet technology and support from highly trained and experienced staff with sophisticated application skills. Annual capital investment in IT is now running at over 1m with about half spent on upgrading and replacing servers, peripherals and general infrastructure. We now employ some 50 specialists in IT, including web services, desktop and telephone support. This has doubled from five years ago.
Strength
Since the flexecash prepaid card was launched in June 2010, there are now in excess of 600 corporate users, with 77m of value loaded across approximately 1.7m individual cards. We started with just two types of card, which we have expanded rapidly to a suite comprising 17 products, as new customer applications and opportunities are identified and serviced.
Company Overview
Park is in the final stages of achieving ISO 27001 accreditation. This internationally recognised standard on information security is the best practice specification and identifies businesses and organisations throughout the world that have developed best-in-class information security management systems. Managing risk is a vital component of our sales offering and is particularly important to our 424,000 consumer customers, who want to be confident that their funds are secure. Treasury management is at the core of our operations and we follow very conservative strategies to ensure that customer savings are protected. The majority of these funds are held in the independent Park Prepayments Trustee Company Limited, which segregates prepayments away from Parks funds, to provide extra security and give customers reassurance and confidence. Corporate The business delivered yet another year of growth. Billings rose 14.6 per cent to 141.8m compared with 123.7m in the previous year while revenue was lower at 104.7m against 111.5m a year earlier. This widening gap between billings and revenue reflects the positive impact of the prepaid card and the manner in which it is recognised in the accounts. Operating profit increased 23.7 per cent to 4.9m from 3.9m in the previous 12 months. This excellent performance was driven by the strong growth of flexecash but also the launch of other new products, many tailored to meet specific customer needs. Among significant developments, Argos agreed to accept all Park vouchers and cards in the incentive and reward sector, which is another very positive development. This follows the welcome news during the period of Marks & Spencers decision to accept flexecash cards. The UK voucher and gift market is estimated to be now worth around 4bn. Parks Love2shop is the UKs leading multi-redemption gift voucher, available in paper or electronic form, accepted by over 85 major retailers covering more than 20,000 high street outlets.
Customer numbers grew to a record 6,100, some 400 above the level of last year, with retentions steady at around 80 per cent. Over 600 businesses have now purchased flexecash since launch in June 2010. New redeemers include DW Sports, Greenwoods, Homebase, House of Fraser, JJB Sports, Poundstretcher, Shoe Zone and Stead & Simpson. Marks & Spencer will be accepting flexecash in its stores for Christmas 2012. The launch of flexecodes, after the year end, is a further step forward in Parks prepaid offering. Customers can shop online with selected retailers including Amazon, iTunes, CD Wow, Hamleys, HMV, LOVEFiLM, Marks & Spencer and The Hut. With no postage or fulfilment costs, flexecodes are delivered to recipients via email, offering businesses a quick, trouble-free and cost effective way to reward and incentivise their customers with sales promotions, on-pack promotions, online surveys and gaming incentives. flexecodes is also an ideal instant reward mechanism for staff.
Digital marketing and mobile developments >> Conducted over 400 digital marketing campaigns in the last 12 months >> Using mobile SMS to market and inform customers about deliveries >> Using social media to interact with customers >> New mobile applications launched in November. Available on iPhone, android phones plus mobile enabled site >> Over 15,000 apps downloaded >> Mobile transactional sites under construction
Business Review Corporate Governance
mobile website
Financial Statements Park Group plc Annual report and accounts 2012
10
Chief Executives review continued

The corporate sector is characterised by many companies using Parks products as employee or sales incentives. Our sales teams work alongside customers to develop tailored schemes to meet the individual requirements of end users. This personalised service reflects the knowledge and experience of the sales team, drawing on years of know-how to ensure that each customer is offered the application that best matches its needs. Schemes developed during the year include a very successful incentive promotion to readers of the weekend editions of the Daily Mail offering Love2shop cards in return for redeeming codes from the newspaper. Over 650,000 flexecash cards were issued and the promotion was repeated in the early months of 2012. Also, a leading consumer market research business now offers flexecash cards as a reward to participants. These businesses and others like them often find it difficult to attract interviewees so cards are being offered to incentivise respondents. This reward scheme has resulted in over 100,000 cards being distributed during the year under review. Among other new product initiatives, Park has launched flexebens as an employee benefit scheme. The employee benefits market is increasingly important, as businesses seek innovative ways to retain and reward their people, against a general backdrop of increased focus on costs. The scheme is simple to operate. Participating staff members are given a flexebens gift card and value is added to the card as an after tax salary deduction, with staff receiving a discount on the amount loaded. The card can then be used in thousands of retail outlets including branches of Argos, Boots, Comet, Debenhams, The Early Learning Centre, Halfords, Mothercare and Superdrug. Park Travel made good progress with revenues rising 31 per cent above the level of the previous year. This full-service travel agency offers customers a wide choice of highly competitive deals from over 200 of the worlds leading holiday and travel companies. Many customers take rewards via the Love2travel card, which can be redeemed at Park Travel. The Irish customer list, purchased in September 2010, is steadily building sales of the Euro Love2shop voucher, which is now accepted by close to 30 retailers in the Republic of Ireland. The next step in the development of this operation will be the launch of flexecash into the country. Consumer Consumer revenue increased by 3.5 per cent to 174.3m with billings increasing by 7.6 per cent to 187.2m. A reduction in the level of contract packing and storage activity and a
movement in product mix towards vouchers and cards impacted on margin and resulted in a 7.4 per cent reduction in operating profit for the year to 4.1m. Parks savings schemes allow customers to manage their finances in a controlled and careful manner, ensuring that they enjoy the festive season free from financial worries. Customers purchase vouchers, hampers or other gift products through a 45 week instalment plan, with everything delivered in time for Christmas. Park has been helping families prepare and budget for Christmas for over 45 years. The discipline of making regular contributions to a savings plan is particularly valuable to those families who want to look forward to the festive season free of last minute financial concerns, especially in times of economic uncertainty. The business is operated through agents, who are usually recruited between October and February. The agents sign up customers, often family members, who wish to purchase the various products in Parks catalogues or on the internet, including shopping, travel and leisure vouchers as well as hampers. Although hampers were the original Park product, they now comprise less than 5 per cent of total revenues. Agents are paid a commission based on sales and they may also receive gifts and other benefits for achieving targets throughout the year. The stability of the Christmas savings business reflects not only the popularity, quality and reliability of the product but also the traditional habits of its customers. The internet has transformed the way many customers interact with the company, it has radically altered the way Park operates, but our commitment to customer loyalty remains unchanged. In 2007 only 2 per cent of orders were placed online, in the current year over half will be received via the web. flexecash now accounts for approximately 10 per cent of the Christmas savings business with sales of paper vouchers at a similar level to last year, demonstrating the incremental contribution from our E money offering. Christmas MoneyBox, launched in 2011, is a new brand using our web-based flexesaver Christmas savings solution. It operates in a similar way to our other savings products but can be delivered in white label form to offer corporate customers employee benefit opportunities. Park makes great efforts to stay close to its customers through feedback surveys to ensure satisfaction with products and service. Over 90 per cent of our customers said service was excellent or very good. Recent results indicate that among the Christmas savings customer
base over 90 per cent have a mobile phone, 70 per cent have internet access, while fewer than 50 per cent have a credit card. Television advertising remains the most effective method of reaching new and existing customers. Advertisements are carefully targeted at selected social groupings in specific areas of the UK and Ireland. The campaign peaks in January and February and its effectiveness is monitored on a daily basis so that it can be fine tuned to accommodate any unexpected trends. The Christmas 2012 television campaign was very successful with the volume of new business secured rising above that of the previous year for the same advertising spend. While television remains the key driver of Christmas volume there is also a major advance in online referrals through word of mouth or recommending a friend. Social media is a fast growing marketing tool and Parks Facebook site has over 12,000 members; many go to great lengths to discuss their interest in the business and its products. Another development is the popularity and effectiveness of Ask Wanda, the customer service device on Parks websites that answers users questions. Last year over 200,000 questions were answered and the knowledge base of FAQs is growing steadily. This helps improve customer service, whilst driving costs down. In 2012 highstreetvouchers.com, the fast growing, direct-to-consumer online offering, achieved record revenue of 10.4m, a 25 per cent uplift over last years figure of 8.3m. This internet-only brand has in excess of 90,000 customers, 20,000 more than in the previous year, and gives users the ultimate in choice and flexibility to order when and how they wish. Parks analysis shows that 18 per cent of online visitors access the site from a mobile device, but the conversion level is low. Park is addressing this by creating a mobile version of the site to improve functionality, making it more mobile friendly to generate additional sales. Park is a changing business, adopting new and innovative technology to drive growth. I am very pleased with the progress we are making across all areas and look forward to the next financial year with confidence.
Chris Houghton Chief Executive Officer 12 June 2012
11
Park is a changing business, adopting new and innovative technology to drive growth. I am very pleased with the progress we are making across all areas and look forward to the next financial year with confidence.
Company Overview
Brands and retail partners

Park has in its portfolio a number of the UKs leading brands in the market places in which it operates.
Leading brand position in key markets
>> UKs No 1 multi-redemptiongift voucher/card Billings 295m (2011 265m)
>> UKs No 1 Christmas savings business Billings 173m (2011 162m)
>> UKs No 1 corporate incentive provider Billings 142m (2011 124m)
>> UKs No 1 online gift voucher retailer Billings 11m (2011 8m)
>> Regulated E money prepaid card launched in June 2010 Value loaded since launch circa 77m, 2012 56m (2011 18m)
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Financial review
Martin Stewart Group Finance Direc tor
Profit from continuing operations The groups continuing operations are divided into two operating segments: >> corporate, comprising the groups sales to businesses, offering primarily sales of the Love2shop voucher, flexecash cards and other retailer vouchers to businesses for use as staff rewards/ incentives, marketing aids and prizes; and >> consumer, which represents the groups sales to consumers, utilising its Christmas savings offering and consumer sales via the internet. All other segments comprise central costs and property costs. Revenue and margin from sales of flexecash cards is included in both operating segments. Operating profit is detailed below:
2012 000 2011 000 Change 000
Corporate Consumer Other segments Operating profit before other operating income Other operating income Operating profit
4,865 4,138 (2,144) 6,859 6,859
3,934 4,470 (2,785) 5,619 5,506 11,125
931 (332) 641 1,240 (5,506) (4,266)
Operating profit before other operating income for the year ended 31 March 2012 has increased by 1.2m to 6.9m. In the corporate business customer billings have increased by 14.6 per cent in the year to 141.8m with operating profit increasing by 0.9m. With card revenue generally recognised as the margin earned on the value of cards spent rather than customer billings, this has resulted in revenue decreasing by 6.1 per cent to 104.7m. Overall margins when expressed as a percentage of customer billings have improved to 3.4 per cent from 3.2 per cent. This reflects the increased volume of business and improved margin in certain markets, offset by increased costs associated with the operation of flexecash.
Daily cash graph

160,000 150,000 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 May Apr
2011 2012 Actual 2010 2011 Actual Aug Jun Sep Nov Jul Oct Feb Jan Mar
13
The board has recommended an increase in the final dividend of 23 per cent to 1.475p per share.
Company Overview
In the consumer business operating profit declined by 0.3m to 4.1m arising from an adverse mix movement on sales to customers who participate in Christmas savings plans which reduced profits by 0.1m. Reductions in income from cold storage and repackaging activities have reduced profit from 2011 by 0.5m offset by improved income from online sales to consumers which increased by 0.4m over 2011. The improvement in profit for other segments of 0.6m reflects primarily the reduction in the cost of management incentive payments/ awards of 0.5m and reduced property rental payments of 0.2m, following the purchase of the groups head office near the end of last year. Other operating income in 2011 includes 4.4m of profit arising from the VAT Fleming claim and a 1.1m profit arising on the sale of unutilised surplus land in Birkenhead. Taxation The effective tax rate for the year was 24.1 per cent (2011 23.9 per cent) of profit before tax. The low effective tax rate this year is mainly due to adjustments to current tax in respect of prior years computations. Last year we made the decision to provide in full for tax on the receipt of 1.9m of VAT received in 2010 in respect of the over declaration of output tax for prior periods (Fleming claim). Whilst it is still our contention that this amount should not be treated as taxable income, it is clear from correspondence we have had with HM Revenue and Customs (HMRC) that it believes this amount to be taxable. Earnings per share Basic earnings per share decreased to 3.91p from 5.76p. Excluding the prior year other operating income, the basic adjusted earnings per share has increased to 3.91p from 3.17p. Dividends The board has recommended an increase in the final dividend of 23 per cent to 1.475p per share. An interim dividend of 0.525p per share
was paid on 6 April 2012. Subject to approval of the final dividend at the annual general meeting (AGM), the total dividend for 2012 will be 2.00p per share. Cash flows At the end of March 2012 9.2m (2011 6.8m) of cash and cash equivalents was held by the group with a further 42.0m (2011 38.2m) being held by the Park Prepayments Trustee Company Limited. The trust holds payments received from agents in respect of orders for delivery the following Christmas. The conditions for the release of this money to the group are detailed in the trust deed, which is available at www.getpark.co.uk. In addition at 31 March 2012 the group holds 4.9m (2011 1.4m) of cash in the Park Card Services Limited E money Trust (PCSET) to support the E money float in accordance with regulatory requirements. The total amount of cash held by the group combined with the monies held in trust has increased in the year to 56.1m from 46.4m as at 31 March 2011. These total balances peaked at almost 152m in the year representing an increase of 12m over last year. The group had no bank borrowings in the period. During the year, the group invested a further 0.7m in improving its customer facing systems and telephony, and a further 0.7m in associated computer hardware. Provisions At the year end provisions had reduced to 33.0m from 34.1m. This was due to a reduction in the value of unspent vouchers. These unspent vouchers arise primarily from sales in the corporate business. Accounting policies Following the launch of the flexecash card last year, our accounting policy in respect of revenue recognition has this year been updated for new terms and regulations associated with flexecash cards. Revenue from cards is recorded differently to revenue from paper vouchers and is the margin earned based on customer billings, recognised when
the value loaded on the card has been redeemed. Where cards are sold to businesses for onward gifting to consumers with no right of redemption, revenue includes an estimate of projected balances remaining on the card at expiry. The amount included in this years income statement as revenue from flexecash cards is 3.3m (2011 1.2m). Pensions The group continues to operate defined benefit pension schemes, where pensions at retirement are based on service and final salary. These schemes are now closed to future accrual of benefit arising from service with the group. The pension deficit based on the valuation performed at 31 March 2012 has reduced to 1.9m (2011 2.1m). The current and prior year deficits reflect a prior year adjustment shown in the statement of comprehensive income (SOCI) of 1.7m. This is due to a change in actuarial assumptions to use consumer price index (CPI) rather than retail price index (RPI). Under IAS 19 Employee Benefits the group has recognised a cost of 123,000 (2011 255,000) in its income statement. It has also recognised an actuarial loss in the SOCI of 0.2m (2011 gain of 1.1m) net of tax. In the year ended 31 March 2012 contributions by the company to the schemes totalled 0.7m, in response to the actuarial valuations performed, the latest of which was as at 31 March 2010. This indicated a technical provisions deficit of 3.3m and expected future company contributions of 0.7m per annum.
Martin Stewart Group Finance Director 12 June 2012
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Risk factors
Financial risks
Risk area
Group funding
Potential impact
The group, like many other companies, depends on its ability to continue to service its debts as they fall due and to have access to finance where this is necessary.
Mitigation
The group manages its capital to safeguard its ability to operate as a going concern. Whilst the group currently operates without bank borrowings, the funding requirements of the business are continually reforecast to ensure that sufficient liquidity exists to support its operations and future plans. The group treasury policy ensures that funds are only placed with and spread between high quality counterparties and where appropriate any exchange rate exposure is managed to minimise any potential impact. The group seeks wherever possible to offer the widest possible range of payment options to customers to reduce the potential impact of failure of a single payment route. The groups pension schemes are closed to future benefit accrual related to service. Funding rates are in accordance with the actuaries recommendations. The group has a regulatory team that monitors and enforces compliance with existing regulations and keeps the group up to date with impending regulation. The group shares the objectives of Government in treating customers fairly and in the protection of customer prepayments. The group operates a number of trusts to safeguard funds held on behalf of customers. Customers are given an appropriate level of credit based on their trading history and financial status, a prudent approach is adopted towards credit control. Credit insurance is used in the majority of cases where customers do not pay in advance.
Treasury risks
The group has significant funds on deposit and as such is exposed to interest rate risk, counterparty risk and exchange rate movements following the commencement of operations in Ireland. Disruption to the banking system would adversely impact on the groups ability to collect payments from customers and could adversely affect the groups cash position. The group may be required to increase its contributions to cover any funding shortfalls. The business model may be compromised by changes in existing regulation or by the introduction of new regulation.
Banking system
Pension funding
Financial services and other market regulation
Credit risks
Failure of one or more customers and the risk of default by credit customers due to reduced economic activity.
15
Company Overview
Operational risks
Risk area
Business continuity and IT systems
Potential impact
Failure to provide adequate service levels to customers, retail partners or other suppliers, resulting in a failure to maintain services that generate revenue.
Mitigation
The group plans and tests its business continuity procedures in preparation for catastrophic events and for the existence of counterfeit vouchers or cards. Our focus is on the elimination of any single point of failure in our IT systems. The group maintains three separate data centres in relation to its core infrastructure to ensure that service is maintained in the event of a disaster at its primary data centre. Developed software is extensively tested prior to implementation.
Business Review
Loss of key management
The group depends on its directors and key personnel. The loss of the services of any directors or other key employees could damage the groups business, financial condition and results. The group is dependent upon the success of its Love2shop voucher and flexecash card. These products only operate provided the participating retailers continue to accept them as payment for goods or services provided.
Existing key appointments are rewarded with competitive remuneration packages including long term incentives linked to the groups performance and shareholder return. The group has a dedicated team of managers who work closely with all retailers to promote their businesses to Parks customers who utilise Parks vouchers and cards and drive forward incremental sales to their retail outlets. Contracts which provide minimum notice periods for withdrawal are in place with all retailers and are designed to mitigate any potential impact on Parks business. Wherever possible the group seeks to utilise a wide range of geographically spread carriers to mitigate the failure of a single operator. Ongoing investment in television advertising. Operation of a process of continual review of all marketing material and websites to promote transparency to customers. Extensive testing and vigorous internal controls exist for all group systems to maintain continuity of online customer service. Detailed management processes that are designed to optimise the cost of recruiting are in place. The effectiveness of each individual television advert is assessed separately and future plans amended where appropriate. The group has a broad base of customers and no single customer represents more than 11 per cent of total customer billings. Significant resources are dedicated to developing and maintaining strong relationships with customers and to developing new and innovative products which meet their precise needs.
Relationships with high street and online retailers
Failure of the distribution network
The failure of the distribution network during the Christmas period, for example a Post Office strike, road network disruption or fuel shortages could adversely impact the results and reputation of Parks brands. Adverse market perception in relation to the groups products or services, for example, following the collapse of a competitor. This could result in a downturn in demand for its products and services. The success of the groups annual promotional campaign is essential to ensure the continued recruitment of customers. Failure to recruit would result in loss of revenue to the group. Promotional activity must also be cost effective. Loss of margins or market share arising from increased activity from competitors.
Brand perception and reputation
Promotional activity
Competition
16
Directors
01
02
03
04
05
06
07
17
Company Overview
01 Peter Johnson (72) is the companys founder and majority shareholder and has the role of non-executive chairman. He has a service agreement with the company entered into on 6 April 2012 which requires six months notice of termination by either party. 02 Chris Houghton (53) was appointed to the board on 11 October 2000 and became chief executive officer on 11 April 2012. He is a Fellow of the Chartered Institute of Management Accountants and joined the group as group accountant in 1986. He became group finance director on 29 March 2001 and up to his appointment as chief executive officer was previously group managing director. He has a service agreement with the company entered into on 29 June 2001 which requires 12 months notice of termination by either party. 03 Martin Stewart (51) was appointed to the board on 1 November 2004 and is the group finance director. He is a Fellow of the Institute of Chartered Accountants in England and Wales and joined the group from Eddie Stobart Group PLC, where he was group finance director. Prior to this he was with UK Waste Management Limited from 1992 to 2000, from 1997 as finance director, and earlier in his career held financial positions with The Littlewoods Organisation, ICI PLC and Price Waterhouse. He has a service agreement with the company entered into on 1 November 2004 which requires 12 months notice of termination by either party. 04 Gary Woods (55) was appointed to the board on 29 March 2001. He joined the group with the acquisition of Chrisco Hampers in 1980 and has gained wide experience in divisional roles. He is managing director of Park Retail Limited. He has a service agreement with the company entered into on 29 June 2001 which requires 12 months notice of termination by either party. Mr Woods, in accordance with the articles of association of the company, retires by rotation and, being eligible, offers himself for re-election.
05 Christopher Baker MBE (60) was appointed to the board as a non-executive director on 29 March 2001. He has a service agreement with the company entered into on 23 March 2006 which requires six months notice of termination by either party. He has formerly held senior management positions with Littlewoods plc and Hill Samuel Bank Limited, and is currently chairman of Aintree University Hospitals NHS Foundation Trust and chair of GSTS Pathology LLP and holds a number of other non-executive appointments on public and private sector boards. He is chairman of the groups audit committee, a member of the remuneration and nomination committees, and the groups senior independent non-executive director. 06 George Marcall (62) was appointed to the board as a non-executive director on 29 March 2001. He has a service agreement with the company entered into on 23 March 2006 which requires six months notice of termination by either party. He has formerly held directorships with Airtours plc and Yates Group plc and is a non-executive director of Aintree University Hospitals NHS Foundation Trust and of the National Union of Students Services Limited. Mr Marcall is chairman of the groups remuneration committee and a member of the audit and nomination committees. Mr Marcall, in accordance with the articles of association of the company, retires by rotation and, being eligible, offers himself for re-election.
07 John Dembitz (62) was appointed to the board as a non-executive director on 8 May 2008. He has a service agreement with the company entered into on 8 May 2008 which requires six months notice of termination by either party. He was formerly chairman of a number of companies including Tack International Limited, Coffee Point plc and CVO Group BV, and held senior executive positions with McKinsey & Co, Consolidated Gold Fields Plc, Charterhouse Japhet and Valin Pollen Limited. He is currently chairman of Allanfield Group Plc and EAC Management Limited and a non-executive director of Avidity-IP Group and Lee Baron. Mr Dembitz is chairman of the nomination committee and a member of the audit and remuneration committees.
18
Directors Report
The directors submit their report for the year ended 31 March 2012 for Park Group plc, registration number 1711939. Profit and dividend The group profit for the financial year, after taxation, was 6.516m (2011 9.514m). The directors have declared a dividend as follows:
m
Employee involvement Employees are kept informed of the performance and objectives of the group through personal briefings, regular meetings and e-mail. Market value of land and buildings As at 31 March 2012, in the opinion of the directors, the market value and book value of the land and buildings of the group are not significantly different. Political and charitable contributions During the year ended 31 March 2012 the group contributed to charity 10,895 (2011 8,937). There were no political contributions. Creditor payment policy For all trade creditors, it is the groups policy to: >> agree the terms of payment at the start of business with that supplier; >> ensure that suppliers are aware of the terms of payment; and >> pay in accordance with its contractual and other legal obligations. As at 31 March 2012 the number of days of parent company purchases outstanding was 14 days. Disclosure of information to auditors The directors who held office at the date of approval of this directors report confirm that, so far as they are aware, there is no relevant audit information of which the companys auditors are unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the companys auditors are aware of that information. Reappointment of auditors In accordance with section 489 of the Companies Act 2006, a resolution for the reappointment of KPMG Audit Plc as auditors of the group is to be proposed at the forthcoming AGM. By order of the board
Approved interim dividend of 0.525p per share (2011 0.50p) 0.882 Proposed final dividend of 1.475p per share (2011 1.20p) 2.478 Total ordinary dividend of 2.00p per share (2011 1.70p) 3.360
The directors have recommended that the final ordinary dividend be paid on 1 October 2012 to those shareholders on the register on 31 August 2012. Principal activities A statement describing the business activities of the company and its subsidiary undertakings is set out on pages 8 to 11 with comments on current developments in the chairmans statement on page 7. The principal subsidiary undertakings and their activities are set out in note 9 to the accounts. Business review A review of the groups activities over the financial year is contained in the chairmans statement on page 7 and in the chief executives review on pages 8 to 11. Share capital Grant of long term incentive plan (LTIP) awards On 14 June 2011, 1,394,910 provisional shares were awarded under the terms of the groups 2011 LTIP scheme. Share distributions may be made at the end of the plan cycle, which cannot be less than three consecutive years, and are subject to certain performance criteria. Major shareholders At the date of this report the following had notified interests in the share capital of the company of 3 per cent or more:
No of shares %
Mr P R Johnson Jupiter Nominees Limited Schroder Investment Management Limited
94,649,325 16,235,386 16,000,000
56.33 9.66 9.52
M R Stewart Company Secretary Birkenhead 12 June 2012
Mr P R Johnson has: >> a beneficial interest in 94,648,325 shares held in the 1989 Peter Johnson Settlement Trust in which Allied Irish Banks plc, Capita Trustee Services Limited and AIB Bank (CI) Limited have notified their interest; >> a beneficial interest in 16,235,386 shares in which Jupiter Nominees Limited has an interest; and >> a non-beneficial interest, as a member and council member, in The Johnson Foundation, a registered charity with number 518660. The Johnson Foundation hold 4,665,454 shares in the company. Directors and their interests The directors who were in office during the year ended 31 March 2012 or have been subsequently appointed are shown on pages 16 and 17. Details of directors and connected persons share interests in the company are shown in the remuneration report on page 24.
19
Corporate Governance The board has given consideration to the Combined Code of Corporate Governance (the Code) issued by the Financial Reporting Council (FRC) in June 2010 and applicable for listed companies for financial periods beginning after 29 June 2010. Although companies traded on the Alternative Investment Market (AIM) are not required to provide corporate governance disclosures, or follow guidelines in its Code, the directors have chosen to provide certain information on how the company has adopted various principles of the Code. The board The group is controlled through its board of directors. The boards main roles are: >> to provide entrepreneurial leadership of the group; >> to set the groups strategic objectives and to ensure that the necessary financial and human resources are in place to enable them to meet those objectives; >> to review management performance; >> to set the companys standards and values; and >> to ensure that the companys obligations to its shareholders and others are understood and met. The board, which meets at least six times a year, has a schedule of matters reserved for its approval. It meets on other occasions as necessary. The specific responsibilities reserved to the board include: >> setting group strategy and approving an annual budget and medium-term projections; >> implementing the strategies and policies of the group; >> reviewing operational and financial performance; >> approving major acquisitions, divestments and capital expenditure; >> reviewing the groups systems of financial control and risk management; >> ensuring that appropriate management development and succession plans are in place; >> developing and implementing risk management systems; >> reviewing the environmental, health and safety performance of the group; >> approving appointments to the board and the company secretary; >> approving policies relating to directors remuneration and the severance of directors contracts; and >> ensuring that a satisfactory dialogue takes place with shareholders. Compliance with the Code Throughout the year to 31 March 2012, the company complied with the provisions of the Code except for the fact that the non-executive directors and board committees are not subject to evaluation. The board considers its arrangements for appraisal are adequate for the size of the company and its board. Committees of the board Nomination committee During the year the nomination committee comprised John Dembitz (chairman), Peter Johnson, Christopher Baker and George Marcall. No meetings were held during the year. The nomination committees terms of reference are available from the company secretary and are displayed on the groups website. The nomination committee will meet if a future vacancy arises or need is identified to alter the mix of skills and experience on the board. Remuneration committee During the year the remuneration committee comprised George Marcall (chairman), Christopher Baker and John Dembitz, who are independent non-executive directors. Peter Johnson attended meetings by invitation. The remuneration committee met three times during the year. The remuneration committees principal responsibilities are: >> setting, reviewing and approving individual remuneration packages for executive directors and the chairman including terms and conditions of employment and any changes to the packages; >> approving the rules, and launch, of any group share, share option or cash based incentive scheme; and >> the grant, award, allocation or issue of shares, share options or payments under such scheme. In addition the remuneration committee periodically reviews the groups remuneration policy in relation to: >> its competitors and industry norms; >> compensation commitment; and >> contract periods. The remuneration for the non-executive directors is determined by the chairman and executive directors. The remuneration committees terms of reference are available from the company secretary and are displayed on the groups website. The directors remuneration report is set out on pages 23 to 25 of the annual report. Audit committee During the year the audit committee comprised Christopher Baker (chairman), George Marcall and John Dembitz, who are independent non-executive directors. Peter Johnson, Chris Houghton and Martin Stewart and the groups external auditors attend meetings of the audit committee by invitation. Christopher Baker has the necessary recent and relevant experience set out in the biographical details on page 17. The audit committee met three times during the year. The audit committee usually reviews its terms of reference annually and recommends to the board any changes required as a result of the review. No changes were made in the year. The audit committees terms of reference are available from the company secretary and are displayed on the groups website. In the financial year to 31 March 2012 the audit committee discharged its responsibilities by: >> reviewing the groups draft financial statements and interim results statement prior to board approval and reviewing the external auditors detailed reports thereon; >> reviewing the appropriateness of the groups accounting policies; >> reviewing regularly the potential impact in the groups financial statements of certain matters; >> reviewing and approving the audit fee and reviewing non-audit fees payable to the groups external auditors; >> reviewing the external auditors plan for the audit of the groups accounts, which included key areas of audit focus, key risks on the accounts, confirmations of auditor independence and the proposed audit fee and approving the terms of engagement for the audit; >> reviewing post-acquisition reports on integration and performance of significant recent acquisitions; and >> reviewing the risks associated with major business programmes.
Company Overview Business Review Corporate Governance Financial Statements
20
Corporate Governance continued

The audit committee, at least annually, meets the external auditors, without management, to discuss matters relating to its remit and any issues arising from the audit. Under its terms of reference, the audit committee monitors the integrity of the groups financial statements. The audit committee is responsible for monitoring the effectiveness of the external audit process and making recommendations to the board in relation to the appointment, reappointment and remuneration of the external auditor. It is responsible for ensuring that an appropriate relationship between the group and the external auditors is maintained, including reviewing non-audit services and fees. The audit committee monitors regularly the non-audit services being provided to the group by its external auditors in line with its policy on non-audit work performed by the auditors. The policy prohibits the external auditors from undertaking certain work and provides that other categories of non-audit work must be submitted to the audit committee for approval prior to engagement. The audit committee keeps under informal review the need for the group to have an internal audit function. Due to the size and scope of the business the audit committee has recommended to the board that it does not currently consider it appropriate for the group to have an internal audit function. Risk management committee During the year the risk management committee comprised Chris Houghton (chairman), Gary Woods, Martin Stewart and Steve Lock (head of IT). The risk management committee met four times during the year. The risk management committees terms of reference include: >> identification of business risk throughout the groups operations; >> determination of the controls necessary to manage identified risk; >> evaluation of the effectiveness of those controls; and >> continuous assessment and reporting to the board. The audit committee considers any matters in relation to the principal risks, as determined by the risk management committee. The following table sets out the number of scheduled meetings of the board and its committees during the year and individual attendance by board members at these meetings. Attendance at the meetings by non-member directors is not shown:
Group board Audit committee Remuneration committee Nomination committee
Executive directors Peter Johnson (chairman) Chris Houghton Martin Stewart Gary Woods Non-executive directors Christopher Baker George Marcall John Dembitz Scheduled meetings
6 6 6 6 5 6 6 6 3 3 3 3 3 3 3 3
0 0 0 0
Senior independent director The board has appointed Christopher Baker as senior independent director. He is always available to meet shareholders on request and to ensure that the board is aware of any shareholder concerns not resolved through the existing mechanisms for investor communication. Directors and directors independence The board currently comprises the non-executive chairman, three independent non-executive directors and three executive directors. The names of the directors together with their biographical details are set out on pages 16 and 17. All the directors served throughout the period under review. The board includes independent non-executive directors who constructively challenge and help develop proposals on strategy and bring independent judgement, knowledge and experience to the boards deliberations. The independent directors are of sufficient calibre and number that their views carry significant weight in the boards decision making. The board considers its non-executive directors to be independent in character and judgement.
21
The non-executive directors have confirmed that, except for as noted below, none of them: >> has been an employee of the group within the last five years; >> has, or has had within the last three years, a material business relationship with the group; >> receives remuneration other than a directors fee; >> has close family ties with any of the groups advisers, directors or senior employees; >> holds cross-directorships or has significant links with other directors through involvement in other companies or bodies, other than those disclosed in the directors biographical details on pages 16 and 17; >> represents a significant shareholder; or >> has served on the board for more than nine years. Our non-executive chairman Mr Peter Johnson has a significant shareholding in the company and was an employee of the group as chief executive officer for the year ended 31 March 2012. He also performs a number of pro-bono roles but the board is satisfied that these are not such as to interfere with the discharge of his duties.
Company Overview
Two of the non-executive directors, Mr Christopher Baker and Mr George Marcall, have served on the board for more than nine years. The board considers that these arrangements are appropriate and have no impact on effective governance. The directors are given access to independent professional advice at the groups expense, when the directors deem it is necessary in order for them to carry out their responsibilities. Professional development On appointment, directors take part in an induction programme when they receive information about the structure and practices of the group together with the groups latest financial information. This is supplemented by meetings with key senior executives. Throughout their period in office the directors are continually updated on the groups business, the competitive and regulatory environments in which it operates and other changes affecting the group and the industry it operates in as a whole, by written briefings, meetings with senior executives and attendance at external courses. Performance evaluation There is a formal process for the annual evaluation of the executive directors. In addition the remuneration committee considers individual directors performance when it determines their forthcoming annual remuneration. Directors performance is under continual review and is measured against targets. The non-executive directors are not subject to evaluation. The board considers its arrangements for appraisal are adequate to ensure effective governance given the size of the company and its board. Re-election Subject to the companys articles of association, the Companies Acts and satisfactory performance, non-executive directors are appointed for an initial period of three years. Before the third and sixth anniversary of the non-executive directors first appointment, the director discusses with the board whether it is appropriate for a further three year term to be served. The companys articles of association require that one third of the members of the board or, if their number is not three or a multiple of three, the number nearest to but not exceeding one third, shall retire by rotation and seek re-election each year. Notwithstanding this, the board is observing the terms of the Code in that each director will seek re-election at regular intervals consisting of no more than three years. Company secretary The company secretary is responsible for advising the board through the chairman on all governance matters. The directors have access to the advice and services of the company secretary who is responsible to the board for ensuring board procedures are complied with. The companys articles of association provide that the appointment and removal of the company secretary is a matter for the full board. Information Regular reports and papers are circulated to the directors in a timely manner in preparation for board and committee meetings. These papers are supplemented by information specifically requested by the directors from time to time. All executive directors receive monthly management accounts and regular management reports and information which enable them to scrutinise the groups and managements performance against agreed objectives.
22
Corporate Governance continued

Relations with shareholders The chairman gives feedback to the board on issues raised with him by major shareholders. The AGM is normally attended by all directors, and shareholders are invited to ask questions during the meeting and to meet with directors after the formal proceedings have ended. The group maintains a corporate website containing a wide range of information of interest to investors. Presentations are made to analysts and institutional investors following announcements to the stock exchange of the half-year and full-year results. Other ad hoc meetings are held with interested parties on request. The senior independent director is available to shareholders if they have concerns which contact through the normal channels of non-executive chairman and chief executive officer has failed to resolve or for which such contact is inappropriate. Risk and internal control The board is responsible for the groups system of internal control and for reviewing its effectiveness. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the group. These may be strategic, operational, reputational, financial or environmental. It is reviewed regularly by the board and accords with the Code. The directors have continued to review the effectiveness of the groups system of financial, operational and compliance controls against significant risk. The principal elements of the groups established control systems include: >> a clearly defined organisational structure under which individual responsibilities are monitored by members of the board; >> budgets covering key financial aspects of group activities which are approved by the board; >> monthly comparisons of results against budget and prior year which are considered by the board; >> clearly defined procedures for treasury management and the authorisation of capital expenditure; and >> the appointment of a risk management sub-committee. The risk management sub-committees terms of reference are shown on page 20. As pointed out in the Code, any such system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. This process has been in place for the year under review and up to the date of approval of the annual report and accounts. Statement of directors responsibilities in respect of the annual report and the financial statements The directors are responsible for preparing the annual report and the group and parent company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to: >> select suitable accounting policies and then apply them consistently; >> make judgements and estimates that are reasonable and prudent; >> state whether they have been prepared in accordance with IFRSs as adopted by the EU; and >> prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent companys transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. The directors have decided to prepare voluntarily a directors remuneration report in accordance with Schedule 8 to The Large and Mediumsized Companies and Groups (Accounts and Reports) Regulations 2008 made under the Companies Act 2006, as if those requirements were to apply to the company. The directors have also decided to prepare voluntarily a corporate governance statement as if the company were required to comply with the Listing Rules and the Disclosure Rules and Transparency Rules of the Financial Services Authority in relation to those matters. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the companys website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
23
Remuneration Report
Park Group plc uses, as a guideline for its disclosure in relation to remuneration, the requirements applicable to listed companies, as set out in the Directors Remuneration Report Regulations 2002 (incorporated into the Companies Act 2006). Unaudited information Remuneration committee Details of the remuneration committee are given on page 19. The committee has access to external advisers if it so wishes. It has not been materially assisted during the year. Executive remuneration policy The aim of the groups remuneration policy is to adopt levels of remuneration which should be sufficient to attract, motivate and retain high calibre executives. The policy is to reward directors with competitive salaries and benefit packages which are linked to both individual and business performance. These packages are reviewed each year to ensure that they are supportive of the groups business objectives and the creation of shareholder value. Details of remuneration Executive directors are remunerated through the provision of a basic salary, annual bonus (linked to performance), long term incentives (share options linked to performance), car allowance, medical and permanent health insurance cover. Certain executive directors enjoy benefits in kind such as contributions to pension arrangements and the payment of certain telephone accounts and professional subscriptions. Basic salaries Basic salaries for executive directors are reviewed each year. Performance related payments Executive directors can earn performance related bonus payments, subject to the achievement of predetermined business unit and group profit targets. Bonuses do not form part of pensionable earnings. Share options and LTIP The directors participation in the groups approved executive share option scheme (AESOS) and LTIP is shown below. Exercise of the options for all directors is subject to the following criteria: The 2009 LTIP and 2010 LTIP were adopted by the remuneration committee on 25 June 2010. The 2011 LTIP was adopted by the remuneration committee on 21 July 2011. The vesting of awards and the distribution of shares resulting therefrom to participants is subject to the achievement of certain performance targets related to total shareholder return over each plan cycle. Contracts Details of executive directors service contracts are given on page 17. At the date of this report all contracts had an unexpired term of 12 months. No contract provides for compensation payments on loss of office. Non-executive directors The independent non-executive directors receive fees as directors which are determined by the whole board, each director abstaining from decisions affecting his own remuneration. Total shareholder return (TSR) The following graph charts the total cumulative shareholder return of the company since 1 April 2007, compared with the AIM all share index and the speciality and other financial share index. The company feels that these are the most appropriate indices to use as the first shows a broad average equity share performance and the second shows the share performance for the industry sector in which the company operates. 200 150 100 50 0 -50 -100 2007
Source: Hemscott
Park Group plc Financial services AIM all share
TSR (%) rebased to April 2007
2008
2009
2010
2011
2012
24
Remuneration Report continued

Audited information Directors emoluments The emoluments of directors for the year ended 31 March 2012 were:
Salary or fees 000 Performance related payments 000 Total Benefits 000 2012 000 2011 000 Pension costs 2012 000 2011 000
Executive P R Johnson C Houghton M R Stewart G A Woods Non-executive C J Baker R G Marcall J Dembitz
292 205 169 169 835 45 45 45 135 970
106 106 83 83 378 378
41 17 17 17 92 92
439 328 269 269 1,305 45 45 45 135 1,440
512 405 331 331 1,579 40 40 40 120 1,699
50 47 49 146 146
46 37 38 121 121
Directors share interests The beneficial interests in the share capital of the company of the directors in office at 31 March 2012 and connected persons were as follows:
Beneficial shareholding 31 March 2012 31 March 2011
P R Johnson C Houghton M R Stewart G A Woods C J Baker R G Marcall J Dembitz
110,884,711 322,797 206,851 174,696 10,000 10,000 100,000

AESOS options over ordinary shares 31 March 2012 31 March 2011 Exercise price Date exercisable
110,884,711 322,797 206,851 174,696 10,000 10,000 100,000
Expiry date
C Houghton G A Woods M R Stewart
148,148 148,148 148,148
148,148 148,148 148,148
20.25p 16.06.13 20.25p 16.06.13 20.25p 16.06.13
15.06.20 15.06.20 15.06.20
LTIP provisional share awards 31 March 2012 31 March 2011 Year*** exercisable
C Houghton
666,338 671,386 298,570 548,952 553,111 245,973 548,952 553,111 245,973
666,338 671,386 548,952 553,111 548,952 553,111
2012* 2013* 2014** 2012* 2013* 2014** 2012* 2013* 2014**
G A Woods
M R Stewart
* subject to performance criteria as set out in LTIP plan dated 25 June 2010. ** subject to performance criteria as set out in LTIP plan dated 21 July 2011. *** options are exercisable after 10 consecutive dealing days commencing on the date of the announcement by the group of its results in each year.
25
Share price information is given in note 21a to the accounts. There were no changes to directors interests in shares between 31 March 2012 and the date of this report. Directors pension entitlements In November 2010, the executive directors ceased to be members of the Park Group pension scheme following their acceptance of a transfer value offer made by the scheme. On behalf of the board
R G Marcall Chairman of the Remuneration Committee Birkenhead 12 June 2012
Company Overview Business Review Corporate Governance Financial Statements Park Group plc Annual report and accounts 2012
26
Independent Auditors Report

to the Members of Park Group plc
We have audited the financial statements of Park Group plc for the year ended 31 March 2012 set out on pages 27 to 61. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In addition to our audit of the financial statements, the directors have engaged us to audit the information in the Directors Remuneration Report that is described as having been audited, which the directors have decided to prepare (in addition to that required to be prepared) as if the company were required to comply with the requirements of Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No 410) made under the Companies Act 2006. This report is made solely to the companys members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and, in respect of the separate opinion in relation to the Directors Remuneration Report and reporting on corporate governance, on terms that have been agreed. Our audit work has been undertaken so that we might state to the companys members those matters we are required to state to them in an auditors report and, in respect of the separate opinion in relation to the Directors Remuneration Report and reporting on corporate governance, those matters that we have agreed to state to them in our report, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the companys members, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors Responsibilities Statement set out on page 22, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Boards (APBs) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APBs website at www.frc.org.uk/apb/scope/private.cfm. Opinion on financial statements In our opinion: >> the financial statements give a true and fair view of the state of the groups and of the parent companys affairs as at 31 March 2012 and of the groups profit for the year then ended; >> the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU; >> the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; >> the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006 and under the terms of our engagement In our opinion: >> the part of the Directors Remuneration Report which we were engaged to audit has been properly prepared in accordance with Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the Companies Act 2006, as if those requirements were to apply to the company; and >> the information given in the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies Act 2006 and under the terms of our engagement we are required to report to you if, in our opinion: >> adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or >> the parent company financial statements and the part of the Directors Remuneration Report which we were engaged to audit are not in agreement with the accounting records and returns; or >> certain disclosures of directors remuneration specified by law are not made; or >> we have not received all the information and explanations we require for our audit. In addition to our audit of the financial statements, the directors have engaged us to review their Corporate Governance Statement as if the company were required to comply with the Listing Rules and the Disclosure Rules and Transparency Rules of the Financial Services Authority in relation to those matters. Under the terms of our engagement we are required to review: >> the directors statement, set out on page 32, in relation to going concern; and >> the part of the Corporate Governance Statement on pages 19 to 22 relating to the companys compliance with the nine provisions of the UK Corporate Governance Code specified for our review.
Nicola Quayle (Senior Statutory Auditor) for and on behalf of KPMG Audit Plc, Statutory Auditor Chartered Accountants 8 Princes Parade Liverpool L3 1QH United Kingdom 12 June 2012
27
Consolidated Income Statement

For the year to 31 March 2012
Notes 2012 000 2011 000
Billings Revenue Cost of sales Gross profit Other operating income Distribution costs Administrative expenses Operating profit Finance income Finance costs Profit before taxation Taxation Profit for the year Attributable to: Equity holders of the parent Minority interest Earnings per share basic basic adjusted diluted diluted adjusted All activities derive from continuing operations.
1 1
328,965 279,025 (257,283) 21,742
297,612 279,938 (259,819) 20,119 5,506 (2,548) (11,952) 11,125 1,384 (2) 12,507 (2,993) 9,514 9,514 9,514 5.76p 3.17p 5.53p 3.05p
Company Overview
(2,638) (12,245) 6,859
4 4 1, 2 5
1,725 (2) 8,582 (2,066) 6,516 6,565 (49) 6,516
Business Review
6 3.91p 3.91p 3.76p 3.76p
Consolidated Statement of Comprehensive Income

2012 000 Restated 2011 000
Profit for the year Other comprehensive income: Actuarial (losses)/gains on defined benefit pension plans Deferred tax on actuarial losses/(gains) on defined benefit pension plans Foreign exchange translation differences Other comprehensive income for the year net of tax Total comprehensive income for the year Attributable to: Equity holders of the parent Minority interest
6,516 (310) 108 52 (150) 6,366 6,415 (49) 6,366
9,514 1,465 (381) 1,084 10,598 10,598 10,598
28
Statements of Financial Position

As at 31 March 2012
Group 2012 000 Restated 2011 000 Company 2012 000 Restated 2011 000 Notes
Assets Non-current assets Goodwill Other intangible assets Investments Investment property Property, plant and equipment Trade and other receivables Deferred tax assets Current assets Inventories Trade and other receivables Tax receivable Monies held in trust Cash and cash equivalents Total assets Liabilities Current liabilities Trade and other payables Tax payable Provisions Non-current liabilities Deferred tax liability Retirement benefit obligation Total liabilities Net (liabilities)/assets Equity attributable to equity holders of the parent Share capital Share premium Retained earnings Minority interests Total equity Approved by the board of directors and signed on its behalf on 12 June 2012.
7 8 9 10 11 14 12
1,369 4,291 8 257 9,020 628 15,573
1,407 4,519 2 262 8,873 1,543 16,606 1,325 6,587 39,607 6,808 54,327 70,933
214 7,972 887 728 9,801 6,867 303 8,616 15,786 25,587
110 7,966 523 823 9,422 3,189 4,421 7,610 17,032
13 14 15 16
1,941 7,256 46,882 9,211 65,290 80,863
17 18
(59,385) (2,248) (33,025) (94,658)
(52,123) (2,066) (34,063) (88,252) (20) (2,121) (2,141) (90,393) (19,460)
(9,269) (9,269) (1,884) (1,884) (11,153) 14,434
(3,678) (13) (3,691) (2,121) (2,121) (5,812) 11,220
12 19
(21) (1,884) (1,905) (96,563) (15,700)
21a
3,361 1,638 (20,650) (49) (15,700)
3,361 1,638 (24,459) (19,460)
3,361 1,638 9,435 14,434
3,361 1,638 6,221 11,220
P R Johnson Chairman
29
Consolidated Statement of Changes in Equity

Share capital 000 Share premium 000 Retained earnings 000 Total parent equity 000 Minority interest 000 Total equity 000
Restated balance at 1 April 2011 Total comprehensive income for the year Profit Other comprehensive income Actuarial losses on defined benefit pension plans Tax on other comprehensive income Foreign exchange translation adjustments Total other comprehensive income Total comprehensive income for the year Transactions with owners, recorded directly in equity Equity settled share-based payment transactions Dividends Total contributions by and distribution to owners Balance at 31 March 2012 Balance at 1 April 2010 Total comprehensive income for the year Profit Other comprehensive income Restated actuarial gains on defined benefit pension plans Restated tax on other comprehensive income Total other comprehensive income Total comprehensive income for the year Transactions with owners, recorded directly in equity Equity settled share-based payment transactions Share options exercised Dividends Total contributions by and distribution to owners Restated balance at 31 March 2011
3,361
1,638
(24,459) 6,565 (310) 108 52 (150) 6,415
(19,460) 6,565 (310) 108 52 (150) 6,415
(49) (49)
(19,460) 6,516 (310) 108 52 (150)

Company Overview
6,366
3,361 3,301
1,638 1,070
250 (2,856) (2,606) (20,650) (33,769) 9,514 1,465 (381) 1,084 10,598
250 (2,856) (2,606) (15,651) (29,398) 9,514 1,465 (381) 1,084 10,598
(49)
250 (2,856) (2,606) (15,700) (29,398) 9,514 1,465 (381) 1,084 10,598
60 60 3,361
568 568 1,638
165 (1,453) (1,288) (24,459)
165 628 (1,453) (660) (19,460)
165 628 (1,453) (660) (19,460)
30
Company Statement of Changes in Equity

Share capital 000 Share premium 000 Retained earnings 000 Total parent equity 000
Restated balance at 1 April 2011 Total comprehensive income for the year Profit Other comprehensive income Actuarial losses on defined benefit pension plans Tax on other comprehensive income Total other comprehensive income Total comprehensive income for the year Transactions with owners, recorded directly in equity Equity settled share-based payment transactions Dividends Total contributions by and distribution to owners Balance at 31 March 2012
3,361
1,638
6,221 6,022 (310) 108 (202) 5,820
11,220 6,022 (310) 108 (202) 5,820
3,361
1,638
250 (2,856) (2,606) 9,435
250 (2,856) (2,606) 14,434
Balance at 1 April 2010 Total comprehensive income for the year Loss Other comprehensive income Restated actuarial gains on defined benefit pension plans Restated tax on other comprehensive income Total other comprehensive income Total comprehensive income for the year Transactions with owners, recorded directly in equity Equity settled share-based payment transactions Share options exercised Dividends Total contributions by and distribution to owners Restated balance at 31 March 2011
3,301
1,070
10,258 (3,833) 1,465 (381) 1,084 (2,749)
14,629 (3,833) 1,465 (381) 1,084 (2,749)
60 60 3,361
568 568 1,638
165 (1,453) (1,288) 6,221
165 628 (1,453) (660) 11,220
31
Statements of Cash Flows

Group Notes 2012 000 2011 000 Company 2012 000 2011 000
Cash flows from operating activities Cash generated from/(used in) operations Interest received Interest paid Tax paid Net cash generated from/(used in) operating activities
23
6,180 1,695 (2) (1,774) 6,099
(485) 970 (2) (1,347) (864)
1,437 130 (2) (1,774) (209)
(7,722) 223 (1) (1,347) (8,847)
Cash flows from investing activities Proceeds from sale of assets held for sale Proceeds from sale of investments Dividends received from group companies Purchase of other intangible assets Purchase of property, plant and equipment Purchase of investments Net cash (used in)/generated from investing activities
602 17 (710) (741) (8) (840)
10 (1,518) (5,474) (6,982)
17 8,000 (154) (595) (8) 7,260
(47) (331) (378)
Company Overview
Cash flows from financing activities Net proceeds from issue of ordinary share capital Dividends paid to shareholders Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Cash and cash equivalents comprise: Cash 16
Business Review
(2,856) (2,856) 2,403 6,808 9,211 9,211
628 (1,453) (825) (8,671) 15,479 6,808 6,808
(2,856) (2,856) 4,195 4,421 8,616 8,616
628 (1,453) (825) (10,050) 14,471 4,421 4,421
32
Accounting Policies
1 Basis of preparation The group and company financial statements have been prepared and approved by the directors in accordance with the IFRSs as adopted by the EU (adopted IFRS). In December 2010 the Government announced a change in the statutory indexation measure in respect of index-linked retirement benefits to CPI rather than RPI. In response, UITF Abstract 48 Accounting implications of the replacement of the retail prices index with the consumer prices index for retirement benefits was issued. This UITF required actuarial movements arising from this change to be recognised in the SOCI. In the prior year the group continued to adopt RPI as the indexation measure. During the current year the group sought legal advice indicating that the future pension liability should be assessed using CPI rather than RPI. A prior period adjustment has been recognised in the financial statements to reflect this change in assumption. This has resulted in a restatement of the prior year SOCI. Ordinarily a prior period adjustment would require the presentation of a third balance sheet; however, this restatement does not affect the balance sheet for the year ended 31 March 2010 and consequently this has not been presented. The groups business activities, together with factors likely to affect its future development, performance and position are set out on pages 8 to 11 of the business review. The financial position of the group, its cash flows, liquidity position and financial risks are described on pages 12 to 15 of the business review. In addition notes 28, 15 and 16 of the consolidated financial statements include the groups objectives, policies and processes for financial risk management, details of monies held in trust and cash and cash equivalents. The groups forecasts and projections, taking into account reasonably possible changes in trading performance and customer behaviour, show that the group has sufficient financial resources (without requiring bank borrowings) to fund the business for the foreseeable future despite the groups net liabilities. The group continues to trade profitably and has no bank borrowings. Accordingly the directors continue to adopt the going concern basis in preparing the consolidated financial statements. The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value where required by IAS 39 Financial Instruments: Recognition and Measurement. The accounting policies have, unless otherwise stated, been applied consistently to all periods and by all group entities. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on managements best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. 2 Changes to International Financial Reporting Standards The following standards have been adopted by the EU but are not yet effective for the year ended 31 March 2012 and have not been applied in preparing the financial statements. Their adoption is not expected to have a material impact on the financial statements. >> IAS 12 Amendment to Income taxes on deferred tax, effective for accounting periods starting on or after 1 January 2012. >> IAS 1 Amendment to Financial statement presentation, effective for accounting periods starting on or after 1 July 2012. >> IAS 19 Amendment to Employee benefits, effective for accounting periods starting on or after 1 January 2013. >> IFRS 10 Consolidated financial statements, effective for accounting periods starting on or after 1 January 2013. >> IAS 27 Separate financial statements (revised), effective for accounting periods starting on or after 1 January 2013. >> IAS 28 Associates and joint ventures (revised), effective for accounting periods starting on or after 1 January 2013. >> IFRS 9 Financial Instruments, effective for accounting periods starting on or after 1 January 2015. 3 Accounting policies Basis of consolidation The group accounts consolidate the accounts of the company and its subsidiary undertakings up to the relevant period end. Subsidiaries are all entities over which the group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The results of a subsidiary undertaking are included in the consolidated financial statements from the date that control commences until the date that control ceases. All subsidiaries share the same reporting date, 31 March, as Park Group plc. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. Inter-group income, expenses, balances and unrealised gains or losses on transactions between group companies are eliminated on consolidation. As permitted by section 408 of the Companies Act 2006, the income statement of the parent company has not been separately presented. The profit of the parent company is shown in its statement of changes in equity. Business combinations A business combination is recognised where separate entities or businesses have been acquired by the group. The purchase method of accounting is used to account for the business combinations made by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.
33
Identifiable assets, liabilities and contingent liabilities acquired in the business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the groups share of the identifiable net assets acquired is recorded as goodwill. Segmental reporting An operating segment is a distinguishable component of an entity about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Provided certain quantitative and qualitative criteria are fulfilled, IFRS 8 Operating Segments permits the aggregation of those components into reportable segments for the purposes of disclosure in the groups financial statements. In assessing the groups reportable segments, the directors have had regard to the nature of the products offered and the client bases amongst other factors. The group operates in one geographical segment being the UK. The group operations in Ireland are immaterial to the results and assets of the group in the year ended 31 March 2012.
Company Overview
Income recognition Vouchers and other goods revenue is based on values invoiced to external customers for goods and services and is recorded net of VAT, rebates and discounts after eliminating intra-group sales. Revenue is recognised when the significant risk and rewards have passed to the customer. This is usually the date on which items are received by customers. This is normally shortly after despatch. At the point of revenue recognition, a provision is made for the redemption liability arising. flexecash cards revenue is the fees charged to cardholders and service fees receivable from retailers/redemption partners. Where the cardholder has the right of redemption, this is recognised when amounts are deducted from values held on cards, ie when cards are redeemed at retailers/redemption partners or when charges are levied. Where there is no right of redemption, revenue also includes an estimate of projected balances remaining on the card at expiry. Revenue is recorded net of VAT, rebates and discounts. Billings Billings represents the value of vouchers, flexecash cards and other goods and services shipped and invoiced to customers during the year and are recorded net of VAT, rebates and discounts. Finance income and costs Finance income comprises the returns generated on cash and cash equivalents and monies held in trust and is recognised as it accrues. Finance costs comprise the interest on external borrowings and are recognised as they accrue. Goodwill Goodwill arising on acquisition represents the difference between the consideration and the fair value of net assets acquired. Goodwill is not amortised, but is reviewed annually for impairment and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be receivable. Goodwill is carried in the statement of financial position as deemed cost at 1 April 2004, the date of transition to IFRS for the group, less accumulated impairment losses. Impairment of property, plant and equipment and intangibles An impairment loss is recognised to the extent that the carrying amount of the property, plant and equipment exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and its value in use. Value in use is calculated using cash flows derived from budgets and projections approved by the board which are discounted at the groups risk adjusted weighted cost of capital calculated from equity market data and borrowing rates. For the purpose of impairment testing, goodwill and intangible assets ie customer lists are allocated to cash generating units (CGUs) based on past acquisitions of Christmas savings club brands and customer lists. Whilst these are not reportable segments, as management do not manage and review the business at this level, information is available to enable goodwill to be tested for impairment at this level. Any impairment is recognised immediately through the income statement and impairments in respect of goodwill are not subsequently reversed. Other intangible assets Computer software Acquired software licences are capitalised at cost and are amortised on a straight-line basis over their anticipated useful life which is generally five years. Costs that are directly associated with the creation of identifiable software, which meet the development asset recognition criteria as laid out in IAS 38 Intangible Assets, are recognised as intangible assets. Direct costs include the employment costs of staff directly involved in specific software development projects and external consultancy fees. All other software development and maintenance costs are recognised as an expense as incurred. Computer software development costs recognised as assets are amortised over their anticipated useful lives on a systematic straight-line basis.
34
Accounting Policies continued

Other intangible assets continued Customer lists Customer lists acquired are included at cost less accumulated amortisation and impairment. They are amortised over their useful life of up to 10 years based on the pattern of forecast cash flows to be generated. On an annual basis, management review the expected cash flows to be generated and make appropriate provision for impairment. Investments Investments are stated at cost less any provision for impairment in their value. Impairment is calculated based on lower of cost or recoverable amount, determined with reference to market value wherever possible or discounted cash flows. Investment property Properties are classified as investment properties where they are held by the group to earn rentals or for capital appreciation. Investment properties are carried at cost and are depreciated through the income statement over 50 years on a straight-line basis so as to spread the difference between the cost and residual value over the anticipated useful life of properties. The properties residual values are reviewed, and adjusted if appropriate, at each year end. A propertys carrying amount is written down immediately to its recoverable amount if its carrying value is greater than its recoverable amount. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost represents expenditure that is directly attributable to the purchase of the asset. At the date of transition to IFRS on 1 April 2004, land and buildings previously held at cost under UK GAAP less accumulated depreciation were revalued and the fair values derived have been taken as their deemed cost as at that date in accordance with the exemption available under IFRS 1 First time Adoption of International Financial Reporting Standards. The parent companys date of transition to IFRS was 1 April 2006, however it did not revalue its land and buildings at that date. Depreciation is charged on a straight-line basis spreading the difference between cost and residual value over the anticipated useful life of assets as follows: Freehold land Freehold buildings Short leasehold Fixtures and equipment Motor vehicles Nil 22.5 per cent over unexpired term of lease 1020 per cent 25 per cent
The assets residual values and economic lives are reviewed, and adjusted if appropriate, at each year end date. An assets carrying value is written down immediately to its recoverable amount if its carrying value is greater than its recoverable amount. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined by the first in first out method and is based on purchase price. Finished goods stock and work in progress includes attributable production overheads. Net realisable value is based on estimated selling price in the ordinary course of the business less cost of disposal having regard to the age, saleability and condition of the inventory. Trade and other receivables Trade receivables Trade receivables are recognised initially at the fair value of the amount receivable and subsequently reduced by any provision for impairment. A provision for impairment is established when there is objective evidence that there is a difference between the carrying value and the recoverable amount. Monies held in trust On 13 August 2007 a declaration of trust constituted the Park Prepayments Protection Trust (PPPT) to hold agents prepayments. Park Prepayments Trustee Company Limited, as trustee of the trust, holds this money on behalf of agents. The conditions of the release of this money to the group are detailed in the trust deed, which is available at www.getpark.co.uk. On 16 February 2010 a declaration of trust constituted the PCSET to hold the E money float in accordance with regulatory requirements. The E money float represents the value of the obligations of the company to card holders and redeemers. The liability in respect of deposits received on flexecash cards is held within trade creditors. Monies held under the declaration of trust with the PPPT and the PCSET on behalf of customers, card holders and redeemers is recognised on the statement of financial position as the group has access to the interest on these monies and can, having met certain conditions, withdraw the funds. However, given the restrictions over these monies, the amounts held in trust are not included in cash and cash equivalents for the purposes of the statement of cash flows.
35
Cash and cash equivalents Cash and cash equivalents includes cash in hand and deposits held with banks with original maturities of eight months or less, however, the deposits can be accessed immediately if required. It is therefore considered appropriate that these deposits be classed as cash and cash equivalents. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. Cash balances and overdrafts are offset where the group has the ability and intention to settle these balances on a net basis. For cash flow purposes, bank overdrafts are shown within cash and cash equivalents. Provisions Unredeemed vouchers Unredeemed vouchers are included at their fair value at the date of initial recognition. This comprises the anticipated amounts payable to retailers on redemption, after applying an appropriate discount rate to take into account the expected timing of payments. Anticipated payments to retailers are assessed by reference to historical data as to voucher redemption rates and timings. The key estimates used in deriving the provision includes discounts provided by retailers, interest rates used for discounting and the timing and amount of the future redemption of vouchers. Employee benefits Retirement benefit obligation The group has both defined benefit and defined contribution pension plans. The assets of the defined benefit pension plans are held in separate trustee administered funds. The present value of the defined benefit obligation less the fair value of the plan assets is recognised in the statement of financial position as the retirement benefit obligation. Regular valuations are prepared by independent professionally qualified actuaries on the projected unit credit method. The valuations are carried out every three years and updated on a half yearly basis for accounting purposes. These determine the level of contribution required to fund the benefits set out in the rules of the plans and allow for the periodic increase of pensions in payment. The regular service cost of providing retirement benefits to employees during the year is charged to operating profit in the year. The schemes are closed to future accrual for years service but pensions are still dependent on actual final salaries. Consequently the group may have a current service cost in future where salary rises differ from those projected. Past service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period, in which case the past service costs are spread over that period. A credit representing the expected return on the assets of the retirement benefit schemes during the year is included within administrative expenses. This is based on the market value of the assets of the schemes at the start of the financial year. A charge is also made within administrative expenses representing the expected increase in the liabilities of the retirement benefit schemes during the year. This arises from the liabilities of the schemes being one year closer to payment. The difference between the market value of the assets and the present value of accrued pension liabilities is shown as an asset or liability in the statement of financial position.
Financial Statements Business Review Corporate Governance
Company Overview
Differences between actual and expected returns on assets during the year are recognised in the SOCI, together with differences arising from changes in actuarial assumptions. For defined contribution plans, the group pays contributions to privately administered pension plans on a contractual basis. The contributions are recognised as an employee benefit expense as they fall due. Holiday pay Provision is made for any holiday pay accrued by employees to the extent that the holiday entitlements accrued have not been taken at the period end. Share-based payments The group operates a number of equity settled share-based payment plans. An expense is recognised in respect of the fair value of the share options at the date of grant. This is calculated using the binomial method. A corresponding amount is recorded as an increase in equity. This expense is spread on a straight-line basis over any relevant vesting period and is adjusted on a prospective basis at each period end for any changes in assumptions or estimates that relate to non-market conditions, taking into account the conditions existing at each year end. Leases Operating lease rentals are charged to the income statement on a straight-line basis over the period of the lease. Foreign currency Transactions in foreign currencies are recorded at the rates of exchange at the date the transactions occur. Monetary assets and liabilities are restated at the prevailing exchange rate at each year end. Differences arising on restatement are included in the income statement for the year.
36
Accounting Policies continued

Taxation The charge for taxation is based on the result for the year and takes into account taxation deferred because of temporary differences between the treatment of certain items for taxation and accounting purposes. Current tax is the expected tax payable on the taxable result for the year using tax rules enacted or substantively enacted at the year end, and any adjustment to tax payable in respect of previous years. Deferred tax is provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the year end and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Taxation is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Dividends In accordance with IAS 10 Events After the Balance Sheet Date dividends are recognised in the financial statements in the period in which they are approved or paid, whichever is earlier. Key assumptions and estimates The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on managements best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. In applying the accounting policies set out above, the group make significant estimates and assumptions that affect the reported amounts of assets and liabilities as follows: Income taxes (0.02m deferred tax liability, current tax liability 2.25m) The tax treatment of certain items cannot be determined precisely until tax audits or enquiries have been completed by the tax authorities, which in some instances can be some years after the item has been first reflected in the financial statements. The group recognises assets/liabilities for anticipated tax audits and enquiry issues based on an assessment of whether such assets/liabilities are likely to arise. If the outcome of such audits is that a final asset/liability is different to the amount originally estimated, such differences will be recognised in the period in which the audit or enquiry is determined. Any differences may necessitate a material adjustment to the level of tax assets held in the statement of financial position. Provisions (33.03m) A provision is made in respect of unredeemed vouchers. The provision is calculated by estimating anticipated amounts payable to retailers on redemption and the expected timing of payments. Historical data over a number of years and current trends are regularly reviewed and are used to prepare the estimates detailed above. Any differences to the above estimates may necessitate a material adjustment to the level of the provision held in the statement of financial position. Management have considered the sensitivities of the key estimates and do not foresee that any likely change in these estimates will have a material impact on the size of the provision. Short term variations in the redemption profile would not be reflected in the provision until further evidence was obtained that the changes in consumer behaviour were sustained in the long term. Consequently the provision for non redemption is not sensitive to such variations. Monies held in trust (46.88m) and trade and other payables (59.39m) The group includes within monies held in trust and trade and other payables, amounts received from customers in respect of savings for Christmas 2012 and value held on E money cards. The group is entitled to receive amounts from the trusts provided the group meets the conditions specified in each trust deed. Goodwill (1.37m) and other intangible assets (4.29m) Goodwill arising on acquisition represents the difference between the consideration and the fair value of net assets acquired. Goodwill is not amortised, but is reviewed annually for impairment and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be receivable. The impairment review relies on a number of assumptions (see note 7 for details). Any differences to the assumptions made may necessitate a material adjustment to the level of goodwill held in the statement of financial position. Within other intangible assets are agency customer lists of 0.71m. These customer lists are amortised over their useful life of up to 10 years based on the pattern of forecast cash flows expected to be generated. These cash flows are reviewed on an annual basis and where necessary an appropriate provision for impairment is made. Pensions (1.88m) The valuation of the pension deficit uses actuarial valuations and assumptions regarding discount rate, future salary increases, future pension increases and mortality rates. Any differences to the assumptions made may necessitate a material adjustment to the pension deficit in the statement of financial position.
37
Notes to the Accounts

1 Segmental reporting The amount included within the elimination column reflects vouchers sold by the corporate vouchers segment to the consumer segment. They have been included in elimination so as to show the total revenue for both segments. Details of operating segments can be found on page 12 of the financial review. All other segments are those items relating to the corporate activities of the group which it is felt cannot be reasonably allocated to either business segment.
Consumer 000 Corporate 000 All other segments 000 Elimination 000 Group 000
2012
Billings External billings Inter-segment billings Total billings Revenue External revenue Inter-segment revenue Total revenue Results Segment operating profit/(loss) Finance income Finance costs Profit before taxation Taxation Profit
187,193 187,193
141,772 141,050 282,822
328,965 (141,050) (141,050) 328,965
Company Overview
174,286 174,286
104,739 141,050 245,789
279,025 (141,050) (141,050) 279,025
Business Review
4,138
4,865
(2,144)
6,859 1,725 (2) 8,582 (2,066)
All other segments 000
6,516
Consumer 000
Corporate 000
Group 000
Segment assets Segment liabilities Other segment items Capital expenditure Depreciation Impairment of goodwill Other intangible asset additions Amortisation of other intangible assets
49,305 46,587
5,863 41,971
25,695 8,005
80,863 96,563
470 417 38 333 675
271 182 377 263
741 599 38 710 938
38
Notes to the Accounts continued

1 Segmental reporting continued
2011 Consumer 000 Corporate 000 All other segments 000 Elimination 000 Group 000
Billings External billings Inter-segment billings Total billings Revenue External revenue Inter-segment revenue Total revenue Results Segment operating profit/(loss) before other operating income Other operating income Segment operating profit/(loss) Finance income Finance costs Profit before taxation Taxation Profit
173,892 173,892
123,720 136,300 260,020
(136,300) (136,300)
297,612 297,612
168,416 168,416
111,522 136,300 247,822
(136,300) (136,300)
279,938 279,938
4,470 4,416 8,886
3,934 3,934
(2,785) 1,090 (1,695)
5,619 5,506 11,125 1,384 (2) 12,507 (2,993)
All other segments 000
9,514
Consumer 000
Corporate 000
Group 000
Segment assets Segment liabilities Other segment items Capital expenditure Depreciation Impairment of goodwill Other intangible asset additions Amortisation of other intangible assets
45,619 44,385
4,955 42,091
20,359 3,917
70,933 90,393
3,248 325 45 1,358 272
2,226 141 160 194
5,474 466 45 1,518 466
The group operates in only one geographical segment, being the UK. The groups operations in Ireland were immaterial to the results and assets of the group for the year ended 31 March 2012.
39
2 Profit before taxation The following items, relating to continuing operations only, have been included in arriving at profit before taxation:
2012 000 2011 000
Staff costs Cost of inventories recognised as an expense (included in cost of sales) Depreciation of property, plant and equipment and investment property Amortisation of other intangibles (included in cost of sales) Impairment loss on goodwill (Profit)/loss on sale of property, plant and equipment Other operating leases payable: plant and machinery property Repairs and maintenance on property, plant and equipment Services provided by the groups auditors During the year the group obtained the following services from the groups auditor at costs as detailed below:
10,630 25,134 599 938 38 77 8 422
10,388 23,964 466 466 45 (1,090) 83 185 334
Company Overview
2012 000
2011 000
Fees payable to the companys auditor for the audit of the companys annual accounts Fees payable to the companys auditor and its associates for other services: audit of subsidiaries and associates pursuant to legislation other services pursuant to legislation
38 69 10 117
38 61 99
Business Review
Fees paid for non-audit services to the company itself are not disclosed in the individual accounts of Park Group plc because the companys consolidated accounts are required to disclose such fees on a consolidated basis. 3 Other operating income
2012 000 2011 000
Fleming claim Profit on sale of Dock Road property
4,416 1,090 5,506
As announced in August 2010, Park Group plc received an amount of 1,891,000 from HMRC in settlement of a Fleming claim in respect of an over declaration of output tax arising from the VAT treatment of commissions paid to agents. The claim covered the period 1978 to 1996. Park also received a further net amount of 345,000 in respect of a VAT refund in respect of the years post 1996, net of clawed back input VAT previously repaid to us in connection with flotation costs. Statutory interest of 2,547,000 was received in respect of both of these claims and professional fees of 367,000 were incurred. On 30 September 2010, we announced the sale of our Dock Road North site to a major housebuilder for a deferred cash consideration of 1,815,000. The site was held in the books previously, in Assets held for sale, at a value of 725,000, giving rise to a profit on sale of 1,090,000. 4 Finance income and costs
2012 000 2011 000
Finance income Bank interest receivable Other interest receivable Finance costs Bank interest payable Other interest payable
1,587 138 1,725 2 2
1,336 48 1,384 2 2
40

5Taxation
2012 000 000 000 2011 000
Analysis of charge in period Current tax Adjustments to current tax in respect of prior periods Deferred tax Adjustments to deferred tax in respect of prior periods Taxation Tax on items charged to equity Deferred tax on actuarial (losses)/gains on defined benefit pension plans 2,204 (247) 49 60 1,957 109 2,066 87 35 122 2,993
Restated
3,209 (338) 2,871
(108)
381
The tax for the period is lower (2011 lower) than the standard rate of corporation tax in the UK of 26 per cent (2011 28 per cent). The differences are explained below:
2012 000 2011 000
Profit on ordinary activities before tax Expected tax charge at 26 per cent (2011 28 per cent) Effects of: Adjustments to tax in respect of prior periods Capital gain covered by capital losses Expenses not deductible for tax purposes Effect of rate change on current year deferred tax Total taxation
8,582 2,231 (187) 26 (4)
12,507 3,502 (303) (305) 106 (7) 2,993
2,066
41
6 Earnings per share Basic earnings per share (eps) is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. For diluted eps, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Adjusted eps is calculated by dividing the earnings attributable to ordinary shareholders, before taking into account other operating income, by the appropriate number of shares as detailed above for both basic and diluted calculations. The calculation of basic and diluted eps is based on the following figures:
2012 000 2011 000
Earnings Earnings before other operating income Other operating income Total earnings for year
Company Overview
6,565 6,565
2012
5,244 4,270 9,514

2011
Weighted average number of shares Basic eps - weighted average number of shares Diluting effect of employee share options Diluted eps weighted average number of shares
168,030,990 6,802,106 174,833,096

2012
165,251,345 6,889,894
Business Review
172,141,239
2011
Basic eps Weighted average number of ordinary shares in issue Eps (pence)
168,030,990 3.91
2012
165,251,345 5.76
2011
Diluted eps Weighted average number of ordinary shares Eps (pence) Adjusted eps
174,833,096 3.76
172,141,239 5.53
2012
2011
Basic eps Weighted average number of ordinary shares in issue Eps (pence)
168,030,990 3.91
2012
165,251,345 3.17
2011
Diluted eps Weighted average number of ordinary shares Eps (pence)
174,833,096 3.76
172,141,239 3.05
42

7Goodwill Group
000
Deemed cost At 31 March 2011 and 2012 Impairment At 1 April 2011 Impairment in year At 31 March 2012 Net book amount At 31 March 2012 At 31 March 2011
4,166
2,759 38 2,797
1,369 1,407
000
Deemed cost At 31 March 2010 and 2011 Impairment At 1 April 2010 Impairment in year At 31 March 2011 Net book amount At 31 March 2011 At 31 March 2010 Goodwill allocation to CGUs The allocation of goodwill to CGUs is shown below:
4,166
2,714 45 2,759
1,407 1,452
CGUs
Goodwill at 1 April 2011 000
Impairment 000
Goodwill at 31 March 2012 000
Consumer Corporate Net book amount
1,407 1,407
(38) (38)
1,369 1,369
All goodwill acquired prior to the current financial year was tested for impairment during the year in accordance with IAS 36 Impairment of Assets. In performing the impairment tests all recoverable amounts were measured on their value in use. Consumer - Family (1,173,000) and Country Hampers franchisee (196,000) The key assumptions in the value in use calculations were as follows: >> The order position for the forthcoming Christmas. >> The budgeted gross margins. These are based on the average achieved in the last 12 month period. These margins are forecast to be maintained going forward. >> Average agent retentions forecast. These are based on historical performance of agent retention achieved. Historically, such forecasts have been materially correct. >> Budgeted revenue. This is based on average historical order value and average agent retention rates which have been extrapolated forward 10 years post acquisition. The generally high retention values for customers supports the adoption of a 10 year customer life cycle value as being appropriate for the business. No revenue growth has been factored into the data used in the calculation (2011 nil).
43
7Goodwill continued The resulting cash flows were discounted using a pre-tax discount rate of 7 per cent (2011 7 per cent). The above assumptions have been used as the businesses are profitable and stable. It is therefore appropriate to use historical data. Following the tests, an impairment of 38,000 was identified (2011 45,000) in respect of the Country Hampers franchisee, which reduced the goodwill value from 234,000 to 196,000. This reduction was based on estimated value in use, calculated as outlined above, being less than previously calculated due to a decline in revenue marginally greater than previously anticipated. 8 Other intangible assets Group
Computer software 000 Agency customer lists 000 Total 000
Company Overview
Cost At 1 April 2011 Additions internally developed assets Additions externally purchased assets Disposals At 31 March 2012 Amortisation and impairment At 1 April 2011 Amortisation charge for the year Disposals At 31 March 2012 Net book amount At 31 March 2012 At 31 March 2011 Cost At 1 April 2010 Additions internally developed assets Additions externally purchased assets At 31 March 2011 Amortisation and impairment At 1 April 2010 Amortisation charge for the year At 31 March 2011 Net book amount At 31 March 2011 At 31 March 2010
6,314 429 281 (362) 6,662
2,130 2,130
8,444 429 281 (362) 8,792
Business Review
2,954 492 (362) 3,084
971 446 1,417
3,925 938 (362) 4,501
3,578 3,360
713 1,159
4,291
4,519
5,668 402 244 6,314
1,258 872 2,130
6,926 402 1,116 8,444
2,605 349 2,954
854 117 971
3,459 466 3,925
3,360 3,063
1,159 404
4,519 3,467
44

8 Other intangible assets continued The agency customer lists relate to a list of 30,000 agents nationwide acquired from FHSC Limited on 15 February 2006, 7,500 agents nationwide acquired from Findel PLC on 7 March 2007 and 4,000 agents in the Republic of Ireland acquired from Dublin based Celtic Hampers and Family Hampers on 25 October 2010. Customer lists are amortised over their useful life of up to 10 years based on the pattern of forecast cash flows expected to be generated. On an annual basis, management review the expected cash flows to be generated and make appropriate provision for impairment. Company
Computer software 000
Cost At 1 April 2011 Additions At 31 March 2012 Amortisation and impairment At 1 April 2011 Amortisation charge for the year At 31 March 2012 Net book amount At 31 March 2012 At 31 March 2011 Cost At 1 April 2010 Additions At 31 March 2011 Amortisation and impairment At 1 April 2010 Amortisation charge for the year At 31 March 2011 Net book amount At 31 March 2011 At 31 March 2010 9Investments Group

2,017 154 2,171
1,907 50 1,957
214 110
1,970 47 2,017
1,871 36 1,907
110 99
Other investments 000
Cost At 1 April 2011 Additions Disposals At 31 March 2012 Provisions At 31 March 2011 and 2012 Net book amount At 31 March 2012 At 31 March 2011
2 8 (2) 8
8 2
45
9Investments continued Company

Shares in subsidiary undertakings 000 Other investments 000 Total 000
Cost At 1 April 2011 Additions Disposals At 31 March 2012 Provisions At 31 March 2011 and 2012 Net book amount At 31 March 2012 At 31 March 2011 The other investment relates to a minority investment in ordinary share capital of a single third party. At 31 March 2012 the parent companys principal subsidiary undertakings included in the consolidation were:
Name of company
8,525 8,525
2 8 (2) 8
8,527 8 (2) 8,533
561
561
Company Overview
7,964 7,964
8 2
7,972 7,966
Business Review
Nature of business
Park Group UK Limited Park Retail Limited Park Christmas Savings Club Limited Country Christmas Savings Club Limited Family Christmas Savings Club Limited Handling Solutions Limited High Street Vouchers Limited Budworth Properties Limited Park Direct Credit Limited Park Travel Service Limited Park Financial Services Limited Park Card Services Limited Park Card Marketing Services Limited MaximB2B Limited
Holding company Mail order and cash savings operations Mail order agency cash savings Mail order agency cash savings Mail order agency cash savings Contract packing Voucher sales Property management Cash lending and debt collection services Travel agency Insurance broking services Electronic money issuer Card administration support services Sales and marketing
Park Group UK Limited, Park Card Services Limited and Park Card Marketing Services Limited are wholly owned subsidiary undertakings of Park Group plc. All of the other companies above were directly held, wholly owned, subsidiary undertakings of Park Group UK Limited, except for MaximB2B Limited. Park Retail Limited owns 50.01 per cent of the share capital of MaximB2B. All of the above companies are registered in England.
46

10 Investment property Group
2012 000 2011 000
Cost At 1 April and 31 March Accumulated depreciation At 1 April Charge in year At 31 March Net book amount at 31 March Two properties, one in Walton and one in Bishop Auckland, are rented out to a third party. Included in revenue is 24,000 (2011 24,000) of rental income generated from investment properties. Direct operating expenses arising on the investment property in the period amounted to nil (2011 nil). The directors are of the opinion that the fair value and book value of investment properties are not significantly different. 11 Property, plant and equipment Group
Land and buildings 000 Plant and equipment 000
296
296
34 5 39 257
28 6 34 262
Vehicles 000
Total 000
Cost or valuation At 1 April 2011 Additions at cost Disposals At 31 March 2012 Accumulated depreciation At 1 April 2011 Charge in year Disposals At 31 March 2012 Net book amount At 31 March 2012 At 31 March 2011 Cost or valuation At 1 April 2010 Additions at cost At 31 March 2011 Accumulated depreciation At 1 April 2010 Charge in year At 31 March 2011 Net book amount At 31 March 2011 At 31 March 2010
15,700 6 15,706
5,678 735 (437) 5,976
22 22
21,400 741 (437) 21,704
7,729 225 7,954
4,776 369 (437) 4,708
22 22
12,527 594 (437) 12,684
7,752 7,971
1,268 902
9,020 8,873
10,668 5,032 15,700
5,236 442 5,678
22 22
15,926 5,474 21,400
7,583 146 7,729
4,462 314 4,776
22 22
12,067 460 12,527
7,971 3,085
902 774
8,873 3,859
47
11 Property, plant and equipment continued Company

Land and buildings 000 Plant and equipment 000 Total 000
Cost or valuation At 1 April 2011 Additions at cost Group transfer At 31 March 2012 Accumulated depreciation At 1 April 2011 Charge in year Group transfer At 31 March 2012 Net book amount At 31 March 2012 At 31 March 2011 Cost or valuation At 1 April 2010 Additions at cost At 31 March 2011 Accumulated depreciation At 1 April 2010 Charge in year At 31 March 2011 Net book amount At 31 March 2011 At 31 March 2010 12 Deferred tax Group
35 (4) 31
3,565 595 4,160
3,600 595 (4) 4,191
32 (1) 31
3,045 228 3,273
3,077 228 (1) 3,304
Company Overview
887 520
887 523
Business Review
35 35
3,234 331 3,565
3,269 331 3,600
32 32
2,882 163 3,045
2,914 163 3,077
3 3
520 352
523 355
2012 000
Restated 2011 000
Deferred tax asset Deferred tax liability Net deferred tax liability
626 (647) (21)
676 (696) (20)
IAS 12 Income Taxes permits deferred tax balances within the same tax jurisdiction to be offset. All deferred tax liabilities were available for offset against deferred tax assets. Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 24 per cent (2011 26 per cent). The rate of corporation tax was reduced to 24 per cent for the year to 31 March 2013 in the budget of March 2012 and the rate change was substantively enacted on 26 March 2012. The announced further reduction in the rate to 22 per cent is not expected to have a material impact on the deferred tax position. The movement on the deferred tax account is shown below:
2012 000 Restated 2011 000
At 1 April Income statement charge Amounts credited/(charged) to equity At 31 March
(20) (109) 108 (21)
483 (122) (381) (20)
48

12 Deferred tax continued Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets where it is probable that these assets will be recovered. Deferred tax assets have not been provided on trading losses of 20,406,000 and on capital losses of 2,660,000. There are no deferred tax liabilities arising on temporary differences associated with subsidiaries. The movements in deferred tax assets and liabilities are shown below:
Property, plant and equipment 000
Total 000
Deferred tax liabilities At 1 April 2011 Credited to income statement At 31 March 2012 At 1 April 2010 Charged to income statement At 31 March 2011
Retirement benefit obligation 000
(696) 49 (647) (683) (13) (696)
(696) 49 (647) (683) (13) (696)
Share options 000
Total 000
Deferred tax assets At 1 April 2011 (Charged)/credited to income statement Credited to equity At 31 March 2012
551 (207) 108 452
125 49 174
676 (158) 108 626

Restated
At 1 April 2010 (Charged)/credited to income statement Charged to equity At 31 March 2011 The deferred income tax credited/(charged) to equity during the year is as follows:
1,078 (146) (381) 551
88 37 125
1,166 (109) (381) 676
2012 000
Restated 2011 000
Deferred tax on actuarial losses/(gains) Company
108
(381)
2012 000
Restated 2011 000
Deferred tax asset Deferred tax liability Net deferred tax asset
728 728
823 823
IAS 12 permits deferred tax balances within the same tax jurisdiction to be offset. All deferred tax liabilities were available for offset against deferred tax assets. Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 24 per cent (2011 26 per cent). The rate of corporation tax was reduced to 24 per cent for the year to 31 March 2013 in the budget of March 2012 and the rate change was substantively enacted on 26 March 2012. The announced further reduction in the rate to 22 per cent is not expected to have a material impact on the deferred tax position.
49
12 Deferred tax continued The movement on the deferred tax account is shown below:
2012 000 Restated 2011 000
At 1 April Income statement (charge)/credit Amounts credited/(charged) to equity At 31 March
823 (203) 108 728
1,125 79 (381) 823
Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets where it is probable that these assets will be recovered. Deferred tax assets have not been provided on capital losses of 440,000.
Company Overview
The movements in deferred tax assets and liabilities are shown below:
Property, plant and equipment 000 Total 000
Deferred tax liabilities At 1 April 2010 Credited to income statement Transferred to assets At 31 March 2011
Retirement benefit obligation 000 Property, plant and equipment 000
(41) 188 (147)
(41) 188 (147)

Business Review
Share options 000
Total 000
Deferred tax assets At 1 April 2011 (Charged)/credited to income statement Credited to equity At 31 March 2012
551 (207) 108 452
147 (45) 102
125 49 174
823 (203) 108 728

Restated
At 1 April 2010 (Charged)/credited to income statement Charged to equity Transferred from liabilities At 31 March 2011 The deferred income tax credited/(charged) to equity during the year is as follows:
1,078 (146) (381) 551
147 147
88 37 125
1,166 (109) (381) 147 823
2012 000
Restated 2011 000
Deferred tax on actuarial losses/(gains) 13Inventories Group

108
(381)
2012 000
2011 000
Raw materials Finished goods The cost of inventories recognised as an expense in the year is 25,134,000 (2011 23,964,000).
90 1,851 1,941
163 1,162 1,325
The write down of inventories recognised as an expense in the period is nil (2011 reduction of write down of inventories credited to the income statement in the period 8,000).
50

14 Trade and other receivables Group
2012 000 2011 000
Non-current assets Other receivables
628
2012 000
1,543
2011 000
Current assets Trade receivables Less: Provision for impairment of receivables Trade receivables net Other receivables Prepayments
3,602 (20) 3,582 2,781 893 3,619 (22) 3,597 2,136 854 6,587
7,256
Of the trade receivables net balance above, 3,390,000 is due within one month, with the remaining 192,000 falling due in more than one but less than three months. The other receivables balance within non-current assets is due in more than one but less than three years. Of the other receivables balance within current assets, 2,179,000 is due within one month, with the remaining 602,000 due in more than one month but less than 12 months. Credit quality of trade receivables Neither past due nor impaired Past due but not impaired Past due and impaired Total
2012 000 2011 000
3,408 180 14 3,602
3,410 194 15 3,619
The group has charged 2,000 in respect of the provision for impairment of receivables during the year (2011 15,000). The movement in the provision for impairment of trade receivables is as follows:
2012 000 2011 000
At 1 April Additional provisions Amounts used Amounts reversed At 31 March Company

(22) (2) 4 (20)
(9) (18) 2 3 (22)
2012 000
2011 000
Receivables from subsidiaries Other receivables Prepayments
6,116 334 417 6,867
2,580 293 316 3,189
Other receivables includes 8,000 bank interest receivable, falling due in over three months, if the relating deposit is taken to maturity (2011 nil). The rest is due within one month.
51
15 Monies held in trust Group

2012 000 2011 000
Park Prepayments Protection Trust E money Trust Monies held in trust
42,049 4,833 46,882
38,231 1,376 39,607
On 13 August 2007 a declaration of trust constituted PPPT to hold agents prepayments. Park Prepayments Trustee Company Limited, as trustee of the trust, holds this money on behalf of the agents. The conditions of the release of this money to the group are detailed in the trust deed, which is available at www.getpark.co.uk. On 16 February 2010 a declaration of trust constituted the PCSET to hold the E money float in accordance with regulatory requirements. The E money float represents the value of the obligations of the company to card holders and redeemers. All monies held in trust have a maturity date of less than four years. The timing of the release of the monies to the group from PPPT is as detailed above. The release of monies from the PCSET occurs as the obligations fall due. 16 Cash and cash equivalents Group
2012 000 2011 000
Company Overview
Cash at bank and in hand
9,211
6,808
Business Review
All cash held at bank at 31 March 2012 had a maturity date of less than eight months however the deposits can be accessed immediately if required. It is therefore considered appropriate that these deposits be classed as cash and cash equivalents. Company
2012 000 2011 000
Cash at bank and in hand
8,616
4,421
All cash held at bank at 31 March 2012 had a maturity date of less than eight months however the deposits can be accessed immediately if required. It is therefore considered appropriate that these deposits be classed as cash and cash equivalents. 17 Trade and other payables Group
2012 000 2011 000
Trade payables Other taxes and social security payable Other payables Accruals and deferred income Trade payables fall due as follows:
55,804 1,167 461 1,953 59,385
47,701 1,148 375 2,899 52,123
2012 000
2011 000
Not later than one month Later than one month and not later than three months
54,781 1,023 55,804
46,872 829 47,701
Trade payables include agents prepayments for products that will be supplied prior to Christmas 2012. It also includes balances due to both customers and retailers in respect of flexecash cards. Other payables are due within one month.
52

17 Trade and other payables continued Company
2012 000 2011 000
Trade payables Other taxes and social security payable Payables to subsidiaries Other payables Accruals and deferred income Trade payables and other payables are due within one month. 18Provisions Group
133 76 8,113 333 614 9,269
52 507 2,451 296 372 3,678
000
At 1 April 2011 Utilised in the period Increase in the period At 31 March 2012
34,063 (31,045) 3,018 30,007 33,025
The provision is made in respect of unredeemed vouchers which are included at the present value of expected redemption amounts. This comprises the anticipated amounts payable to retailers on redemption after applying an appropriate discount rate to take into account the expected timing of payments. The anticipated amounts payable to retailers are arrived at by reference to historical data as to voucher redemption patterns. Whilst the voucher redemption provision covers a number of years of expected redemptions, typically the great majority of vouchers issued are redeemed within 12 months of issue. 19 Retirement benefit obligation Group and company The group operates two defined benefit pension schemes, Park Food Group plc Pension Scheme (PF) and Park Group Pension Scheme (PG), providing benefits based on final pensionable pay. Both schemes are closed to future accrual of benefit based on service. The assets of the schemes are held separately from those of the company in trustee administered funds. Contributions to the schemes are determined by a qualified actuary on the basis of triennial valuations. The group makes contributions to a defined contribution pension scheme which is insured with Aegon. It also makes contributions to a defined contribution stakeholder pension plan, insured with Clerical Medical, for employees who are not eligible to join the Aegon defined contribution scheme, as well as to individual personal pension plans for certain employees. The total pension charge for the year to 31 March 2012 was 661,000 (2011 656,000) of which 538,000 (2011 401,000) related to defined contribution pension schemes. At 31 March 2012, contributions of 75,000 (2011 59,000) were outstanding, which represented the contributions for the month of March. The group has applied IAS 19 (Revised 2004) to both schemes and the following disclosures relate to this standard. The group recognises any differences between the actual and expected return on assets and differences arising from the changes in actuarial assumptions in each period in the SOCI. Full actuarial valuations were carried out at 31 March 2008 (of the PF scheme) and as at 31 March 2010 (of the PG scheme). Both valuations have been updated to 31 March 2012 by a qualified independent actuary.
53
19 Retirement benefit obligation continued Principal actuarial assumptions at the date of the statement of financial position (expressed as weighted averages):
2012 % 2011 %
Discount rate Future salary increases Future pension increases: PF scheme PG scheme Life expectancy at age 65 for: Males (PG and PF) Females (PG and PF)
4.9 2.4 3.4 2.4 85.6 88.5
5.5 3.5 3.5 3.5 85.6 88.5

Company Overview
The post-retirement mortality assumptions used are based on PCXA 00 standard tables with some allowance for future mortality improvements. The expected rates of return for each asset class, gross of scheme expenses, were:
2012 % 2011 %
Equities Bonds Diversified Growth Fund Property Cash Gilts The major categories of scheme assets as a percentage of total scheme assets are as follows:
6.2 4.9 5.7 5.7 0.5 2.7
7.2 5.5 6.2 6.2 0.5 4.2
Business Review
2012 %
2011 %
Equities Bonds Diversified Growth Fund Property Cash Gilts
55.2 9.1 4.5 4.8 4.2 22.2
58.2 5.8 4.7 5.7 4.2 21.4
Where investments are held in bonds and cash, the expected long term rate of return is taken to be the yields generally prevailing on such assets at the date of the statement of financial position. A higher rate of return is expected on equity investments, which is based more on realistic future expectations than on returns that have been available historically. Diversified Growth Funds aim to deliver equity-like returns. The overall expected long term rate of return on assets is then the average of these rates taking into account the underlying asset portfolio of the pension plan. The amounts recognised in the statement of financial position are as follows:
2012 000 Restated 2011 000 2010 000 2009 000 2008 000
Present value of pension obligation Fair value of scheme assets Net liability
14,303 (12,419) 1,884
13,913 (11,792) 2,121
17,759 (13,910) 3,849
11,722 (10,655) 1,067
14,631 (12,008) 2,623
54

19 Retirement benefit obligation continued The amounts recognised in the income statement are as follows:
2012 000 2011 000
Current service cost Interest on obligation Expected return on scheme assets Settlement losses Total included in administrative expenses Actual return on scheme assets for the year to 31 March 2012 was 0.425m (2011 0.708m). Changes in present value of the defined benefit obligation are as follows:
848 (725) 123
886 (674) 43 255
2012 000
Restated 2011 000
Opening defined benefit obligation Service cost Employee contributions Interest cost Settlement losses Actuarial losses/(gains) Benefits paid Changes in assumptions Closing defined benefit obligation Change in the fair value of scheme assets:
13,913 848 198 (468) (188) 14,303
17,759 886 43 (5) (3,344) (1,426) 13,913
2012 000
2011 000
Opening fair value of scheme assets Expected return Actuarial (losses)/gains Contributions by employer Contributions by employees Benefits paid Closing assets at fair value None of the schemes assets were invested in Park Group plc or property occupied by Park Group plc.
11,792 725 (300) 670 (468) 12,419
13,910 674 34 518 (3,344) 11,792
The group expects to contribute in the year to 31 March 2013 to the PG scheme a fixed amount of 643,000 per annum, payable monthly, based on the current schedule of contributions following the actuarial valuation carried out as at 31 March 2010. In addition to this Park has committed to pay life assurance premiums of 9,000 in the year. Contributions to the PF scheme are to be paid at a rate of 2,000 per calendar month following completion of the actuarial valuation as at 31 March 2008. Analysis of amount to be recognised in the SOCI:
2012 000 Restated 2011 000
Actual return less expected return on pension scheme assets Actuarial (losses)/gains arising on pension scheme liabilities Changes in assumptions underlying the present value of the scheme liabilities Total amount of actuarial (losses)/gains recognised in the SOCI in the year: Cumulative amount of actuarial losses recognised in the SOCI at year end:
(300) (198) 188 (310) (677)
34 5 1,426 1,465 (367)
55
19 Retirement benefit obligation continued History of experience gains and losses over the years:
2012 000 Restated 2011 000 2010 000 2009 000 2008 000
Difference between the expected and actual return on scheme assets: Amount Value of assets Percentage of scheme assets Experience gains and losses on scheme liabilities: Amount Present value of liabilities Percentage of present value of scheme liabilities Total amount recognised in SOCI: Amount Present value of liabilities Percentage of present value of scheme liabilities 20 Employees and directors Group Employee benefit expense for the group during the year
(300) 12,419 (2%)
34 11,792 0%
2,399 13,910 17%
(2,310) 10,655 (22%)
(986) 12,008 (8%)
(198) 14,303 (1%)
5 13,913 0%
(108) 17,759 (1%)
120 11,722 1%
(190) 14,631 (1%)
Company Overview
(310) 14,303 (2%)
1,465 13,913 11%
(3,038) 17,759 (17%)
1,506 11,722 13%
(306) 14,631 (2%)
Business Review
2012 000
2011 000
Wages and salaries Social security costs Other pension costs Share-based payments Other benefits Average monthly number of people (including executive directors) employed
8,825 824 677 250 54 10,630
8,614 903 656 165 50 10,388
2012 Number
2011 Number
Consumer Corporate All other segments Average number employed Key management compensation
184 94 8 286
187 88 8 283
2012 000
2011 000
Salaries and short term employee benefits Post-employment benefits Share-based payments Key management are deemed to be the groups executive and non-executive directors. Details of directors emoluments, including those of the highest paid, can be found in the remuneration report.
1,440 146 134 1,720
1,699 121 80 1,900
56

21a Share capital Group and company
No of shares 000
Authorised: Ordinary shares of 2p each At 31 March 2011 and 2012 Allotted, called up and fully paid At 31 March 2011 and 2012 Options over ordinary shares in the company have been granted and dealt with as follows as at 31 March 2012:
Options over ordinary shares Lapsed/ surrendered Exercised Prior years This year
195,000,000
3,900
168,030,990
3,361
Date of grant
Granted
Outstanding
Exercise price
Latest exercise date
03.09.01 17.01.03 15.07.04 16.06.10
4,150,000 (4,150,000) 2,650,000 (1,800,000) 1,800,000 (1,350,000) 888,888
850,000 450,000 888,888
11.00p 21.83p 29.00p 20.25p
02.09.11 16.01.13 14.07.14 15.06.20
The market price of the shares at 31 March 2012 was 48.50p with a range in the year of 36.00p to 57.70p. 21b Share-based payments The group operates three share schemes: unapproved executive share option scheme (UESOS), AESOS and LTIP. For the purposes of assessing the income statement charge under IFRS 2 Share-based Payments the options under the scheme were valued using the binomial option pricing model. The group recognised a total charge of 250,000 (2011 165,000) related to equity settled share-based transactions during the year ended 31 March 2012. This charge was split across the schemes as follows:
2012 000 2011 000
UESOS AESOS LTIP The fair value per option granted and the assumptions used in the calculation are as follows:
UESOS AESOS UESOS AESOS LTIP 200912
28 14 208 250
30 17 118 165
LTIP 201013
LTIP 201114
Grant date Share price at grant date Exercise price Number of shares under option Option life (years) Expected volatility Risk free rate Expected dividend yield Forfeiture rate Fair value per option
17.01.03 17.01.03 15.07.04 21.83p 21.83p 29.00p 21.83p 21.83p 29.00p 463,475 2,186,525 1,800,000 10 10 10 45% 45% 45% 4.50% 4.50% 4.50% 3.75% 3.75% 3.75% 25% 30% 25% 4.32p 4.03p 6.10p
16.06.10 25.06.10 25.06.10 14.06.11 20.50p 21.75p 21.75p 48.00p 20.25p Nil Nil Nil 888,888 2,753,102 2,851,908 1,394,910 10 10 10 10 35% 35% 35% 35% 3.76% 3.61% 3.61% 3.57% 6.00% 6.00% 6.00% 5.00% 0% 0% 0% 0% 5.38p 7.32p 5.95p 13.51p
The table above excludes all options issued prior to 1 November 2002.
57
21b Share-based payments continued For share options issued prior to June 2010, the expected volatility of share price has been estimated using the logarithmic share price returns approach, based on share price performance over recent years. For awards issued from June 2010, the expected volatility of share price was based on historical movements in the share price, calculated as the standard deviation of percentage returns on the shares in the period since 2006. The risk free interest rate is based on the yield available on zero coupon UK Government bonds of a term consistent with the assumed option life. For share options issued prior to June 2010, projected dividend yield is based on dividend yield over the last 10 years. For awards issued from June 2010, projected dividend yield was based on historical dividend payments in the three years prior to the dates of the awards, relative to the average annual share prices in that period. For share options issued prior to June 2010, forfeiture rates are based on historical leaver information and depend on length of vesting period and category of employee. For awards issued from June 2010, on the basis that these awards were granted to senior management, a forfeiture rate of nil was assumed. UESOS and AESOS Options are granted at the discretion of directors. Options can only be exercised during the option exercise period, being the period commencing on the third anniversary of the date of the grant of the option and ending on the day before the tenth such anniversary. Schemes with a grant date prior to 2007 No option can be exercised unless the market value of a share is at least 50p. No option can be exercised unless the eps of the company is at least 4.3p per share.
Business Review
Company Overview
Scheme granted 29.01.07 No option can be exercised unless the middle market value of a share is more than 30p for 20 trading days before exercise. Scheme granted on or after 16.06.10 No performance criteria attach to these options. The requirement for the market value of a share to be a certain price is a market condition and has thus been reflected in the fair value of the options at the date of grant. The requirement for eps to be at least 4.3p per share is a non-market condition. The fair value calculations do not incorporate the effects of non-market conditions. Options lapse if an individual leaves the company by resigning. A reconciliation of option movements during the year is shown below:
2012 Weighted average exercise price (p) 2011 Weighted average exercise price (p)
Number
Number
Outstanding at 1 April Granted Expired Surrendered Exercised Outstanding at 31 March
2,388,888 (200,000) 2,188,888

2012 Weighted average share price at date of exercise (p)
21.69 7,175,000 888,888 11.00 (2,708,420) (2,966,580) 22.66 2,388,888

2011 Weighted average share price at date of exercise (p)
20.44 20.25 18.48 21.17 21.69
Number of shares
Number of shares
Share options exercised in the financial period
35.80 2,966,580
2012 2011
Share options outstanding at end of period Weighted average remaining contractual life
4.1 years
4.7 years
58

21b Share-based payments continued LTIP In June 2010, an LTIP was adopted by the remuneration committee. This plan was for the benefit of certain employees selected at the discretion of the committee. The awards consist of allocations of shares, the final distribution of which is dependent on non-market performance targets. Each participating employee can be awarded shares up to a maximum value of 100 per cent of salary. A reconciliation of LTIP award movements during the year is shown below:
2012 Weighted average exercise price (p) 2011 Weighted average exercise price (p)
Number
Number
Outstanding at 1 April Granted Outstanding at 31 March
5,605,010 1,394,910 6,999,920
5,605,010 5,605,010
2012

2011
LTIP awards outstanding at end of period Weighted average remaining contractual life 22Dividends Amounts recognised as distributed to equity holders in the year:
1.0 years
1.7 years
2012 000
2011 000
Interim dividend for the year ended 31 March 2011 of 0.50p (2010 0.44p) Final dividend for the year ended 31 March 2011 of 1.20p (2010 0.88p)
840 2,016
1,453
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 March 2012 of 1.475p per share which will absorb an estimated 2,478,000 of shareholders funds. The final dividend will be paid on 1 October 2012 to shareholders who are on the register of members at the close of business on 31 August 2012. Last year, the interim dividend was paid on 6 April 2011 and so was not provided for at the year end. 23 Reconciliation of net profit/(loss) to net cash inflow/(outflow) from operating activities
Group 2012 000 2011 000 Company 2012 000 2011 000
Net profit/(loss) Adjustments for: Tax Interest income Interest expense Dividend from related party Depreciation and amortisation Impairment of goodwill Profit on sale of other assets held for sale Increase in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Movement in balances with related parties (Decrease)/increase in provisions Increase in monies held in trust Decrease in retirement benefit obligation Translation adjustment Share-based payments Net cash inflow/(outflow) from operating activities
6,516 2,066 (1,725) 2 1,537 38 (616) (342) 7,262 (1,038) (7,275) (547) 52 250 6,180
9,514 2,993 (1,384) 2 932 45 (1,090) (447) (1,011) 4,339 3,870 (18,150) (263) 165 (485)
6,022 (1,170) (308) 2 (8,000) 278 (127) (72) 5,109 (547) 250 1,437
(3,833) (1,670) (209) 1 199 900 453 (3,465) (263) 165 (7,722)
59
24 Contingent liabilities The group has an obligation under a contract with a Country Christmas Savings Club franchisee to buy back the franchise once notice has been given of a desire to surrender by the franchisee. The cost to the group if notice were to be given is presently estimated to be 197,000 (2011 204,000). 25 Operating lease commitments - minimum lease payments Group
2012 Vehicles, plant and equipment 000 2011 Vehicles, plant and equipment 000
Property 000
Property 000
Non-cancellable operating lease rentals are payable as follows: Within one year Later than one year and less than five years After five years
17 18 35
22 86 80 188
25 2 27
Company Overview
The group leases plant and machinery under non-cancellable operating lease agreements. These have been renewed in April 2012. 26 Capital and other financial commitments Group
2012 000 2011 000
Business Review
Contracts placed for future capital expenditure not provided in the financial statements
48
174
27 Related party transactions Group Transactions between the groups wholly owned subsidiaries, which are related party transactions, have been eliminated on consolidation and are therefore not disclosed in this note. During the year the group provided working capital funding to MaximB2B Limited. At the year end the balance owed to the group by MaximB2B was 234,000. There are no transactions with key management personnel other than those disclosed in the directors remuneration report. The ultimate controlling party of the group is Mr P R Johnson. He directly holds 56.33 per cent of the share capital of Park Group plc and has a beneficial interest in 9.66 per cent of shares held by Jupiter Nominees Limited. Park Group plc have entered into a sponsorship agreement with Tranmere Rovers Football Club at a cost of 10,000. Mr P R Johnson has a controlling interest in the club. Company The following transactions with subsidiaries occurred in the year:
2012 000 2011 000
Dividends received
8,000
No purchases or sales transactions were entered into between the company and subsidiary companies. The provision in the company books in respect of payment protection insurance claims currently stands at 192,000 (2011 200,000). 58,000 of the prior year balance has been utilised in the year and an additional amount of 50,000 has been provided. Year end balances arising from transactions with subsidiaries
2012 000 2011 000
Receivables from subsidiaries (note 14) Payables to subsidiaries (note 17) The payables to subsidiaries arise mainly due to cash collected on behalf of other subsidiaries.
6,116 8,113
2,580 2,451
60

27 Related party transactions continued Provisions against inter company loans The balances stated above are shown net of the following provisions:
2012 000 2011 000
Subsidiaries
10,568
11,506
28 Financial instruments Credit risk Management has a policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for all customers. The majority of trade receivables are subject to credit insurance, which further reduces credit risk. At the year end there were no significant concentrations of risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The financial assets and financial liabilities of the group are detailed below:
Carrying amount and fair value 2012 000 Carrying amount and fair value 2011 000
Notes
Financial assets Monies held in trust Cash and cash equivalents Trade receivables Other receivables (due within one year and over one year) Financial liabilities Trade payables Other payables Cash balances are held on deposit with major UK banks to minimise credit risk on cash deposits. For further details of each of the financial assets and financial liabilities, see note numbers as detailed above.
15 16 14 14 17 17
46,882 9,211 3,582 3,409 63,084 55,804 461 56,265
39,607 6,808 3,597 3,679 53,691 47,701 375 48,076
Due to their relatively short maturity, the carrying amounts of all financial assets and financial liabilities approximate to their fair values. Other receivables due in more than one year relate to the deferred consideration for the sale of the Dock Road site on which interest is charged at market rates. The provision for unredeemed vouchers is not a financial liability and is therefore excluded from the table above. Interest rate risk Due to the significant levels of cash and cash equivalents held by the group and in trust, the group has an exposure to interest rates. In respect of all other financial assets and liabilities, the group does not have any interest rate exposure. A 0.5 per cent movement in the interest rate applied to cash and cash equivalents and monies held in trust would not have a material impact on the groups profit before taxation, however a 1 per cent movement in interest rates would change profit before taxation by approximately 800,000. Liquidity risk The group manages liquidity risk by continuously monitoring actual and forecast cash flows and by matching the maturity profiles of financial assets and liabilities. Whilst the group has net liabilities, it generates operational cash flows which enable it to meet its liabilities as they fall due. The group maintains an E money float, regulated by the FSA, to hold E monies totally separately from group funds. The group is entitled to make limited draw downs from the PPPT subject to specific conditions being met as set out in the trust deed, available from www.getpark.co.uk. The groups positive cash position enables it to operate without reliance on any external funding. Details of the maturity of financial liabilities can be found in note 17. Comments on the groups liquidity position and financial risk are set out on page 13 of the financial review and pages 14 and 15, the groups risk factors. Comments on provisions, an area of concentration of risk, can be found in note 18.
61
28 Financial instruments continued Capital risk The groups objectives in managing capital are to safeguard the groups ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The group is not subject to any external capital requirements (regulatory or funding). Park Financial Services Limited, a group subsidiary offering insurance broking services, and Park Card Services Limited, a group subsidiary operating as an electronic money issuer, are subject to FSA capital requirements. Both companies report twice annually to the FSA on the level of regulatory capital each company holds. The capital requirements were adhered to in the period. The groups capital base includes share capital, share premium account and retained earnings. Capital is reported monthly as part of the internal management accounts and is also included in budgeting and forecasting exercises. It is managements intention to manage the groups capital to maintain its ability to pay dividends.
62
Notice of Meeting
Notice is hereby given that the twenty ninth annual general meeting of Park Group plc will be held in The Vice Presidents Room, Tranmere Rovers Football Club Limited, Prenton Park, Prenton Road West, Birkenhead CH429PN on Thursday 27 September 2012, at 12 noon for the following purposes: To consider and, if thought fit, to pass the following resolutions as ordinary resolutions: 1. To receive and adopt the companys annual accounts for the financial year ended 31 March 2012, together with the last directors report and the auditors report on those accounts. 2. To declare a final dividend for the financial year ended 31 March 2012. 3. To approve the remuneration report of the directors for the financial year ended 31 March 2012. 4. To re-elect Gary Woods who retires by rotation and offers himself for re-election. 5. To re-elect George Marcall who retires by rotation and offers himself for re-election. 6. To reappoint KPMG Audit Plc as auditors of the company. 7. To authorise the directors to determine the remuneration of the auditors. 8. That, pursuant to section551 of the Companies Act 2006 (Act), the directors be and are generally and unconditionally authorised to exercise all powers of the company to allot shares in the company or to grant rights to subscribe for or to convert any security into shares in the company up to an aggregate nominal amount of 1,120,206.60, provided that (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next annual general meeting of the company after the passing of this resolution or on 27 December 2013 (whichever is the earlier), save that the company may make an offer or agreement before this authority expires which would or might require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after this authority expires and the directors may allot shares or grant such rights pursuant to any such offer or agreement as if this authority had not expired. To consider and, if thought fit, to pass the following resolution as a special resolution: 9. That, subject to the passing of resolution8 and pursuant to section570 of the Act, the directors be and are generally empowered to allot equity securities (within the meaning of section560 of the Act) for cash pursuant to the authority granted by resolution8 as if section561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities: 9.1 in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise): 9.1.1 to holders of ordinary shares in the capital of the company in proportion (as nearly as practicable) to the respective numbers of ordinary shares held by them; and 9.1.2 to holders of other equity securities in the capital of the company, as required by the rights of those securities or, subject to such rights, as the directors otherwise consider necessary, but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under the laws of any territory or the requirements of any regulatory body or stock exchange; and 9.2 otherwise than pursuant to paragraph9.1 of this resolution, up to an aggregate nominal amount of 168,030.99, and (unless previously revoked, varied or renewed) this power shall expire at the conclusion of the next annual general meeting of the company after the passing of this resolution or on 27 December 2013 (whichever is the earlier), save that the company may make an offer or agreement before this power expires which would or might require equity securities to be allotted for cash after this power expires and the directors may allot equity securities for cash pursuant to any such offer or agreement as if this power had not expired. By order of the board
M R Stewart Company Secretary Valley Road Birkenhead CH41 7ED 30 July 2012
Notes: A member entitled to attend and vote at the meeting may appoint a proxy to attend and vote, on a poll, instead of him or her. A proxy need not be a member of the company. A form of proxy is enclosed for use by shareholders.
63
Directors and Advisers

Directors: P R Johnson (Non-executive Chairman) C Houghton M R Stewart G A Woods C J Baker (Non-executive) * R G Marcall (Non-executive) * J Dembitz (Non-executive) * Secretary: M R Stewart Registered office: Valley Road Birkenhead CH41 7ED Registered in England No 1711939 Nominated adviser: Arden Partners plc 125 Old Broad Street London EC2N 1AR Merchant bankers: N M Rothschild & Sons Limited 82 King Street Manchester M2 4WQ Auditors: KPMG Audit Plc 8 Princes Parade Liverpool L3 1QH Stockbrokers: Arden Partners plc 125 Old Broad Street London EC2N 1AR Bankers: Barclays Bank PLC 1 Marsden Street Manchester M2 1HW Registrars: Computershare Investor Services PLC PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH
* Member of the audit committee Member of the remuneration committee Member of the nomination committee
Company Overview Business Review Corporate Governance Financial Statements Park Group plc Annual report and accounts 2012
64
Notes
www.parkgroup.co.uk www.getpark.co.uk www.highstreetvouchers.com www.love2reward.co.uk www.flexecash.com www.getcountry.co.uk www.familyhampers.co.uk www.love2choose.co.uk
Park Group plc Valley Road, Birkenhead Merseyside CH41 7ED info@parkgroup.co.uk

Park Report and Accounts Mar 12

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Delivering Growth

Park Group plc Annual report and accounts 2012

2012 Financial highlights

Profit before tax and other operatin g income rose

329.0m (2011 297.6m) 1.7m (2011 1.4m)

Billings increased 11 per cent to

279.0m (2011 279.9m) 152m (2011 140m)

Revenues declined 0.3 per cent to

Total cash balances peaked at

Group billings (m)

Prot before taxation and other operating income (m)

329.0m (2011 297.6m)

8.6m (2011 7.0m)

Dividends per share (p)

Total adjusted basic earnings per share (p)

2.00p (2011 1.70p)

3.91p (2011 3.17p)

Park Group plc Annual report and accounts 2012

Corporate and consumer brands

online gift voucher retailer 2011/2012 billings 11m

Christmas savings club 2012 orders 173m

Park Group plc Annual report and accounts 2012

Billings by market (m)

Billings by product (m)

Total Total 329m 329m

Total Total 329m 329m

High street retailers

Park Group plc Annual report and accounts 2012

Products and services

Over 1 million customers

Company Overview Business Review

Park Group plc Annual report and accounts 2012

Corporate Governance Financial Statements

Key performance indicators

Number of customers consumer (000s) 425,000 (2011 410,000)

Billings growth corporate (m) 141.8m (2011 123.7m)

Average order value consumer () 416 (2011 401)

Internet derived revenue corporate (m) 21.4m (2011 15.2m)

Christmas order book consumer (m) 172.6m (2011 164.5m)

Park Group plc Annual report and accounts 2012

Peter Johnson Chairman

Business Review Corporate Governance Financial Statements

Peter Johnson Non-executive Chairman 12 June 2012

Park Group plc Annual report and accounts 2012

Chief Executives review

Chris Houghton Chief Executive Office r

Business Review Corporate Governance

Chief Executives review continued

Chris Houghton Chief Executive Officer 12 June 2012

Brands and retail partners

Leading brand position in key markets

>> UKs No 1 multi-redemptiongift voucher/card Billings 295m (2011 265m)

Business Review Corporate Governance

>> UKs No 1 Christmas savings business Billings 173m (2011 162m)

>> UKs No 1 corporate incentive provider Billings 142m (2011 124m)

Park Group plc Annual report and accounts 2012

Martin Stewart Group Finance Direc tor

4,865 4,138 (2,144) 6,859 6,859

3,934 4,470 (2,785) 5,619 5,506 11,125

931 (332) 641 1,240 (5,506) (4,266)

Daily cash graph

Park Group plc Annual report and accounts 2012

Business Review Corporate Governance Financial Statements