Park Group: Continued Growth In Earnings And Cash
Edison | Jun 27, 2018 06:36AM ET
Park Group (LON:PRKG) continued to grow billings, profits, cash and the well-covered dividend in FY18. Billings growth was modest, with the previously flagged delayed start to a significant contract within the corporate business, but profit growth was supported by higher margins, primarily reflecting business mix changes. The management transition is complete with both a new CEO and CFO in place and we expect to hear more about the strategic objectives over the next few months.
Small forecast increase, awaiting IFRS 15
FY18 billings grew by 2% but with a greater share of pre-paid cards and fewer third-party vouchers, gross profit increased by 5% and operating profit by 7%. At the seasonal peak in November, cash balances were 6% higher and shareholder cash closed the year at £34.2m (+9%). Finance income was nevertheless lower as bank deposit rates remain at subdued levels, trimming PBT growth to 4%. Our FY19 forecast changes are modest (EPS +2%) and are yet to reflect the shift to IFRS 15 that will take effect this year. We expect management to provide guidance in the coming months, but as the accounting treatment of cards and vouchers converges there will be a noticeable impact on reported revenues, a relatively small impact on reported profit, but no impact on cash flow.
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