15th Aug 2007 07:00
Stagecoach Theatre Arts PLC 15 August 2007 15 August 2007 Stagecoach Theatre Arts plc (STA.L) ("Stagecoach" or "the Group") Final Results 2007 Preliminary Announcement of Final Results for the year ended 31 May 2007 Stagecoach Theatre Arts plc operates the UK's largest franchise network ofpart-time performing arts schools for children aged between 4 and 16. Highlights: • Profit before tax of £310,000 (2006: loss of £213,000) • Franchise network fees up 10% to £26.5m • The core Stagecoach UK business, which accounts for 91% of network fees, continues to grow strongly, with net profit up 120% to £1.1m (2006: £0.5m) • Vigorous cost cutting exercise undertaken, with further benefits to be realised next year • 318 franchisees at year-end (2006: 288) • Total students worldwide up 7% to 39,200 (2006: 36,700) • Net cash inflow from operating activities of £473,000 (2006: outflow £14,000) • Group net cash balance of £1.3 million as at 30 June 2007 David Sprigg and Stephanie Manuel, Joint Managing Directors, commented: "With over 2,000 more students enrolling in our Stagecoach Theatre Arts schoolsin the UK this year, we see that the demand for performing arts tuitioncontinues to grow strongly. We implemented a programme of cost cutting, and thefinancial benefits have started to take effect. The prospects for thefuture look encouraging." Enquiries: Stagecoach Theatre Arts: Tel: 01932 254 333Richard Dawson, Finance Director 0777 564 3939and Investor Relations Smith & Williamson Corporate Finance Limited: Tel: 020 7131 4000Robert KidsonSiobhan Sergeant Public Relations, Adventis Financial PR Tel: 020 7034 4758Tarquin Edwards 07789 458364 Stagecoach Theatre Arts plcYear ended 31 May 2007 Chairman's Statement Overview This year has been one of continuing growth in our core Stagecoach Theatre Artsbusiness together with a substantial reduction in our overheads. I am delightedto report a return to profitability for the Group. The increase in number of schools and students was reflected in a ten per centincrease in network fees to £26.5 million (2006: £24.1 million). Network feesreflect total school fees earned over the year by our franchisees from the39,200 students that now attend Stagecoach, SportsCoach and Mini Stages schoolsworldwide. Group turnover increased to £6.3 million (2006: £5.7 million). The growth in the UK Stagecoach network and the cost savings achieved during theyear have returned the Group to profitability, reporting profit before tax of£310,000 compared to a prior year loss of £213,000. Since the year 2000, the Group has expanded considerably, increasing its annualnetwork fees by over 250 per cent from £7.5 million to £26.5 million in 2007.The demand for private performing arts tuition continues to grow each year. I reported in last year's statement that we required each part of our businessto either contribute a profit or to be restructured. We have continued with theimplementation of this key strategy. The benefits of the Stagecoach USArestructuring and cost cutting in the prior year were realised in this financialyear, with the US subsidiary breaking-even in cash flow terms. Your Board has restructured SportsCoach and Mini Stages in the final quarter,enabling further cost savings. The existing SportsCoach and Mini Stagesfranchisees are now being supported by the established Stagecoach UK franchisedepartment, thus reducing the overheads incurred in running them as separatebusiness units. In addition to the restructuring your Board has undertaken a cost cuttingexercise over the year, reducing overheads where possible, including a reductionin premises and renegotiation of office equipment hire. Over the year, fivesenior manager positions that have been vacated have not been replaced. Thefinancial benefits of the restructuring and cost cutting will be furtherrealised in the year ahead. Earnings per share was 1.1 pence (2006: loss 2.4 pence). Your Board does notpropose the payment of a final dividend (2006: nil). The Group continues to support the Stagecoach Charitable Trust, which runsInterAct Theatre Workshops, providing inclusive performing arts tuition tochildren of all abilities and needs. Employees On behalf of the Directors, I would like to take this opportunity to thank allthe staff for their continued hard work throughout the year. Prospects Your Board anticipates further growth in the Stagecoach Theatre Arts UK network,with several new Stagecoach schools and Early Stages classes already contractedto open in September 2007. The extensive programme of cost cutting continuesthroughout the Group, and the benefits of this will be further realised in theyear ahead. Graham ColeChairman 15 August 2007 Joint Managing Directors' Operating Review We report on the operations and results of the Group for the year ended 31 May2007. Operations Group Overview The Group reports a return to profitability, with profit before tax of £310,000(2006: loss of £213,000). The Group comprises the core Stagecoach Theatre Arts franchise business in theUK, which represents over 90 per cent of the business in terms of student numbers and fees and is the clear market-leader for providing performingarts tuition to children in the UK. The other franchises within the Group are based upon the same business model as Stagecoach UK. The Group also runs a Montessori school at its Head Office in Walton-on-Thames. The principal indicator of the Group's growth is the number of schools openedduring the year and the number of students attending those schools. In September2006, at the start of this new academic year, we opened 30 new Stagecoachschools, the largest number of new openings in a term for nearly three years. Stagecoach Theatre Arts UK The core Stagecoach UK business continues to expand, with 34 new school openingsand 59 new Early Stages classes, together with an increase in average studentnumbers from last year. The number of UK Stagecoach Theatre Arts main schools (for 6 to 16 year olds)and of students attending them has increased over the year to 607 schools with26,032 students (2006: 573 schools and 24,471 students). Most franchisees run at least one Early Stages class, providing performing artstuition to younger students aged 4 to 6 years, alongside the main school. EarlyStages classes are an important feeder to the main schools. The number of EarlyStages classes increased this year to 670 with 8,713 students attending (2006:611 Early Stages classes and 8,000 students). We have seen enormous growth inthis market over the past three years. The total number of students attending Stagecoach schools, including EarlyStages classes, increased from 32,650 to 34,745 students. The average occupancy rate at the main Stagecoach schools has increased to 42.9students per school, or 95.3 per cent (2006: 94.9 per cent) based on an optimumnumber of students per class of 45. The percentage occupancy rate throughout thecore Stagecoach UK network remains strong. The number of franchisees increased over the period under review from 241 to261, demonstrating that the growth in schools has come from both new franchiseesjoining the network and existing franchisees expanding their individualbusinesses. The number of Stagecoach schools per franchisee remains level at 2.3 schools.With several franchisees running five or six schools, this shows there isconsiderable scope for further growth from the existing network. Whilst continuing to grow the network, we are committed to maintaining thehighest standards of education throughout the network, including regularunannounced school inspections, regional meetings and franchisee and teachertraining. Parents receive progress reports twice a year and students receivemedals for longevity and participation. The skills students learn at Stagecoachhelp them perform better in life. Stagecoach are pleased to have expanded its partnership operations with FirstChoice, one of the UK's leading tour operators, to offer Stagecoach classes atsix First Choice overseas holiday locations. The core Stagecoach UK business showed strong growth in all areas and reportedan increase in network fees of 10 per cent to £24.2 million (2006: £22.1million), and a 26 per cent increase in operating profit before overheads to£2.9 million (2006: £2.3 million). After attributing all the Group overheads, the net profit before tax of the coreStagecoach UK business was £1.1 million (2006: £0.5 million). Stagecoach Agency The Stagecoach Agency forms an integral part of the Stagecoach Theatre Artsoffering to students. As the biggest children's agency in the UK the StagecoachAgency has continued to expand its influence within the entertainment industry.In its second year the Agency secured over 3,000 professional auditions or workplacements for Stagecoach school students. The Agency provides a comprehensive range of services to Casting Directors andProduction Companies who in turn offer Stagecoach school students workopportunities within a wide range of entertainment platforms. These include TVand Film, Commercials and Corporate Videos, Theatre, Radio Dramas, Photo Shootsand Promotions, Musicals and Voice-Overs. Assignments won this year by the Agency include parts for students in most majortelevision series and many other high-profile productions, both domestic andinternational. Such credits include TV roles in Eastenders, Dr Who, Torchwood,Grange Hill, The Bill, Casualty and Hollyoaks; film credits include Harry Potterand Hot Fuzz; and in theatre Billy Elliot, Annie, Chitty Chitty Bang Bang, Soundof Music and Mary Poppins. The Agency's growing success offers excellent publicity opportunities forindividual Stagecoach schools throughout the UK. On 1 June 2007, the outstanding 25 per cent. share capital of the StagecoachAgency was purchased by the company, taking full control and ownership of theAgency business. Creative and Educational Department Your Board is dedicated to continuing to provide the highest standards ofstudent education and opportunity throughout the Stagecoach network. TheCreative and Educational Department is committed to being at the forefront ofstandards of education in the performing arts. One of the unique features of Stagecoach is that it provides its students withopportunities to participate in special performances and events including: • In June 2006, 400 students from all the UK regional choirs and Germany took part in the first Stagecoach choir festival at Symphony Hall, Birmingham. • Also in June, 550 students from Oxfordshire and Buckinghamshire performed at the New Theatre, Oxford in a production of dance, drama and singing raising over £20,000 for charity. • The annual 'Easy Stages' show-case production of Annie in August 2006 featured 70 Stagecoach students from schools across the UK and overseas. • In September more than 100 students from the South East performed at The Children's Society 125th Anniversary at Southwark Cathedral. • In December 2006, 300 Stagecoach students from all over the UK performed a selection of dance, drama and singing routines at Her Majesty's Theatre in London's West End. • Also in December students filled the house at the Apollo Victoria Theatre, London for a performance of "Wicked" especially staged for Stagecoach. The students also had the opportunity to meet several members of the cast after the performance. • In March 2007, 100 students of the Stagecoach Midlands Choir were invited to perform at Crufts at Birmingham's NEC, as part of the BBC televised "Friends for Life". • In April and May 2007, Stagecoach students attended a pre production workshop at The Blue Man Group where they met cast, crew and members of the creative team before watching an evening performance. • In May 2007, one of our regional Stagecoach choirs was invited to perform at Disneyland Paris as part of its fifteen year anniversary. The Stagecoach Foundation Course continues to be run twice yearly, withsignificant workshop input from The Royal Academy of Dramatic Art ('R.A.D.A').The course, designed with the particular needs of Stagecoach and part-timetheatre arts schools in mind, is becoming recognized nationally. It hasaccreditation from Trinity/Guildhall as part of their A.T.C.L in Musical Theatre(Associate of Trinity College London). Regional teacher training workshops offer Stagecoach teachers and franchiseesin-service development by top leaders in performing arts. Stagecoach's training,together with these extra-curricular performing opportunities, offers immensebenefits to students in the growth of confidence and self-esteem as well asfostering enjoyment and well being. SportsCoach and Mini Stages franchises In the latter part of the year, your Board restructured the SportsCoach and MiniStages activities. The purpose of these changes was to reduce the overheads andother operating costs of running these networks, whilst still providing fullsupport to their franchisees. Network fees of SportsCoach, representing the total student fees, increasedmarginally to £997,000 (2006: £977,000). SportsCoach reported an operating loss,after provisions, for the year of £190,000 (2006: loss of £52,000). At year-endthere were 29 schools, 8 Early Sporties and 1,191 students (2006: 34 schools, 8Early Sporties and 1,360 students). Network fees of Mini Stages increased to £141,000 (2006: £123,000). Mini Stagesreported an operating loss, after provisions, for the year of £210,000 (2006:loss of £125,000). At year-end there were 19 Mini Stages schools, from which 73teaching sessions were held, and a total of 723 students attending (2006: 19venues, 45 sessions and 442 students). Post year-end, the existing SportsCoach and Mini Stages franchisees are nowbeing supported by the experienced UK Stagecoach franchise department. Twosenior managers within these former divisions took voluntary redundancy atyear-end, and together with the other cost savings in overheads, we expect thefinancial benefit of this restructuring to flow through next year. Overseas operations The Group's overseas operations include US and German subsidiary companies, eachrunning Stagecoach Theatre Arts franchise networks, and Stagecoach schoolsoperated under licence or direct franchise agreement in Australia, Canada,Gibraltar, Republic of Ireland, Malta and Spain. Significant restructuring of the overseas operations has been undertaken suchthat the Group no longer runs any managed schools overseas. All overseas schoolsare now operated under either a franchise or licence agreement. This allows theGroup to significantly reduce its overheads overseas, and move towards making aprofit from the overseas operations in the short term, whilst maintaining thepotential upside for expansion in these markets for the medium to long term. The successful start of this strategy was evidenced this year following therestructuring of the US subsidiary operations in the prior year. The remainingthree US managed schools were sold as franchises, and head office staff numbersand other overheads were significantly reduced. Stagecoach Germany expanded its network with three new school openings and twonew Early Stages. During the year, the Group acquired the outstanding 10% ofStagecoach Germany share capital that it did not own. Taking full control of thebusiness allowed the Group to undertake a restructuring of the German operationsat the end of this year similar to that implemented in the USA. The Germanmanaged schools were all either sold as franchises or closed in April 2007,allowing a reduction in head office staff costs and other overheads. Stagecoach USA and Stagecoach Germany reported operating losses, after year-endprovisions, of £75,000 and £153,000 respectively. Between these two overseasmarkets, at year end there were 18 franchisees, 29 Stagecoach schools, 28 EarlyStages classes, 2 Further Stages classes and a total of 1,267 students (2006:1,149 students). Financial Review Profitability Network fees increased 10 per cent to £26.5 million (2006: £24.1 million). Groupturnover for the year increased to £6.3 million (2006: £5.7 million). The core Stagecoach UK business continues to support the other activities.However as the financial benefits of the restructuring takes effect the non-coreactivities should move towards operational profitability. Your Board's primaryobjective continues to be to bring each of these ancillary activities toprofitability as soon as possible. Furthermore, your Board has taken steps to reduce Head Office overheads wherepossible, with cost savings in salaries, premises and equipment costs beingachieved during the year. Consequently, the Group moved back into profitability this year, reportingprofit before tax of £310,000 (2006: loss £213,000). The Group is prepared for the transition to report under IFRS next year. TheDirectors estimate that the profitability for this year under review would notbe materially different if reported under IFRS. Cash balances The Group receives the majority of its cash in-flow three times a year, sixweeks into each academic term, from franchise fees for that term. The Group'scash position significantly improved over the year, reporting year-end net cashinflow from operating activities of £473,000. The positive net cash balance for the Group at 30 June 2007 was £1.3 million. The restructuring of the USA subsidiary at the end of the prior year had asignificant positive impact on reducing the cash outflow of the non-coreactivities. The US subsidiary reported break-even cash flow for the year.However, as the restructuring of the other non-core activities was notimplemented until the end of this year, the full financial benefits will notstart to flow through until next year. Employees The number of employees (full time equivalents) employed by the Group is 59 asat 31 May 2007 (2006: 65 full time equivalent employees). Stagecoach Charitable Trust The Group continues to support and provide management time to the StagecoachCharitable Trust, which amongst other activities runs InterAct TheatreWorkshops, providing inclusive performing arts tuition to children of allabilities and needs. The feedback from the children attending InterAct and theirparents has been overwhelmingly positive. Current Trading and Prospects Post year-end we have continued with the cost cutting programme across all areasof the Group, and have seen further growth in the core UK Stagecoach franchisenetwork. The prospects for the year ahead look encouraging. Stephanie Manuel David SpriggJoint Managing Director Joint Managing Director 15 August 2007 Stagecoach Theatre Arts plcConsolidated Profit and Loss AccountYear ended 31 May 2007 Notes 2007 2006 £'000 £'000 Restated Network fees (see note) 26,544 24,125 ======= ======= Turnover 2 6,324 5,673 Cost of sales (3,654) (3,330) ------- ------- Gross profit 2,670 2,343 Administrative expenses (2,364) (2,560) Other operating income 22 17 ------- ------- Operating profit/(loss) 328 (200) Interest receivable 10 11 Interest payable and similar charges (28) (24) ------- ------- Profit/(loss) on ordinary activities before taxation 310 (213) Taxation 3 (205) (22) ------- ------- Profit/(loss) on ordinary activities after taxation 105 (235) Minority interest 10 3 ------- -------Profit/(loss) for the year 115 (232) ======= ======= Earnings /(loss) per share, pence - Basic 5 1.1 (2.4) - Diluted 5 1.1 (2.4) All amounts relate to continuing operations. Note: Network fees reflect total school fees earned over the year by ourfranchisees from the 39,200 students that attended Stagecoach, SportsCoach andMini Stages worldwide. Stagecoach Theatre Arts plcConsolidated Statement of Total Recognised Gains and LossesAs at 31 May 2007 2007 2006 £'000 £'000 Restated Profit/(loss) for the year 115 (232)Exchange differences on translation of foreign operations (1) (1) ------- ------- Total recognised gains and losses relating to the year 114 (233) ======= ======= Total gains and losses recognised in the year is attributableto:Equity holders of the parent 124 (230)Minority interest (10) (3) ------- ------- 114 (233) ======= ======= Stagecoach Theatre Arts plcConsolidated Balance SheetAs at 31 May 2007 Notes 2007 2006 £'000 £'000 £'000 £'000 Fixed assetsIntangible fixed assets 775 735Tangible fixed assets 614 673 ------- ------- 1,389 1,408 Current assets Stocks 298 279Debtors 1,932 2,128Cash at bank and in hand 341 304 ------- ------- 2,571 2,711 Creditors Amounts falling due within one year (1,380) (1,762) ------- ------- Net current assets 1,191 949 ------- ------- Total assets less current liabilities 2,580 2,357 Creditors Amounts falling due after one year (131) (57) ------- ------- Net assets 2,449 2,300 ======= ======= Capital and reserves Share capital 494 494Share premium 1,601 1,601Profit and loss account 354 220 ------- ------- 2,449 2,315 Minority interests - (15) ------- ------- Equity shareholders' funds 2,449 2,300 ======= ======= The financial statements were approved and authorised for issue by the board andwere signed on its behalf on 15 August 2007. Stephanie Manuel David SpriggDirector Director Stagecoach Theatre Arts plcConsolidated Cash Flow StatementYear ended 31 May 2006 Notes 2007 2006 £'000 £'000 £'000 £'000 Net cash inflow/(outflow) fromoperating 6 473 (14)activities Returns on investments and servicingof financeInterest received 10 11Interest paid (28) (24) ------- ------- (18) (13)TaxationCorporation tax paid - (59) Capital expenditureProceeds on disposal of fixed assets 1 -Payments to acquire tangible fixed (205) (454)assets ------- ------- (204) (454)Acquisitions and disposalsPurchase of additional shares in (51) -subsidiary ------- ------- Net cash inflow/(outflow) before 200 (540)financing FinancingProceeds from bank loan 150 100Repayment of bank loans (54) (19) ------- ------- 96 81 ------- ------- Increase/(decrease) in cash 296 (459) ======= ======= Stagecoach Theatre Arts plcYear ended 31st May 2007 Notes to the Preliminary Results 1. Basis of preparation The preliminary results have been based on accounting policies which aredisclosed in the Annual Report and Accounts 2007. The financial statements have been prepared in accordance with applicableAccounting Standards and under the historical cost convention. FRS20 "sharebased payments" has also been adopted for the first time. The adoption of thisstandard represenrs a change in accounting policy and the comparative figureshave been restated accordingly. The consolidated financial statements include the audited financial statements of the Company and its subsidiary undertakings. Subsidiary undertakings acquired are consolidated using the acquisition method of accounting from the effective date of acquisition. 2. Turnover by geographical location 2007 2006 £'000 £'000 UK 5,996 5,153Europe 271 335Rest of the world 57 185 ------- ------- Total turnover 6,324 5,673 ======= ======= Turnover is analysed on an origination basis and is all derived from externalcustomers. 3. Taxation a) Analysis of the tax charge 2007 2006 £'000 £'000UK corporation taxCurrent tax on income for the period 167 35Adjustments in respect of prior periods (37) (14) ------- ------- Total current tax 130 21 Deferred taxOrigination of timing differences 19 1Adjustment in respect of previous years 56 - ------- ------- 75 1 ------- ------- Tax on profit on ordinary activities 205 22 ======= ======= Deferred tax arose principally due to timing differences between capitalallowances and depreciation. b) Factors affecting the tax charge for the current period The current charge for the period is higher than the standard rate ofcorporation tax in the UK 30% (2006: 30%). The differences are explained below: 2007 2006 £'000 £'000Current tax reconciliationProfit/(loss) on ordinary activities before tax 310 (213) ------- ------- Current tax at 30% (2006: 30%) 93 (64)Effects of:Unrelieved losses of overseas subsidiaries 53 74Expenses not deductible for tax purposes 7 27Depreciation in excess of capital allowances 8 -Share Options 6 5Adjustment to tax charge in previous periods (37) (14)Marginal relief - (7) ------- ------- Total current tax charge for year 130 21 ======= ======= 4. Dividends Your Board does not propose the payment of a final dividend (2006: nil). 5. Earnings/(loss) per share Basic earnings per share, calculated in accordance with FRS 22 (Earnings pershare) is 1.1 pence (2006: loss per share 2.4 pence). This is based on theprofit on ordinary activities after tax of £105,313 (2006: loss after tax of£234,890) apportioned over the weighted average number of ordinary shares thatwere in issue for the period of 9,879,317 (2006: 9,879,317). Fully dilutedprofit per share is calculated at 1.1 pence (2006: loss per share 2.4 pence),based upon weighted average number of ordinary shares, including options grantedto employees, of 9,931,213 (2006: 9,887,327). 6. Reconciliation of operating profit/(loss) to operating cashflows 2007 2006 £'000 £'000 Operating profit/(loss) 328 (200)Depreciation and amortisation of goodwill 198 102Employee share option scheme 20 18Loss on disposal of fixed assets 15 -Increase in stocks (19) (16)Decrease in debtors 281 65(Decrease)/increase in creditors (354) 13Foreign exchange differences 4 4 ------- ------- Net cash inflow/(outflow) from operating activities 473 (14) ======= ======= 7. Analysis of changes in net funds At Cashflow At 1 June 2006 31 May 2007 £'000 £'000 £'000 Cash at bank and in hand 304 37 341Bank overdraft (259) 259 - ---------- ------- ---------- 45 296 341 Bank loans due within one year (24) (37) (61)Bank loans due after one year (57) (59) (116) ---------- ------- ---------- (36) 200 164 ========== ======= ========== 8. Extract from the Group's statutory accounts The financial information presented in this preliminary announcement does notconstitute statutory accounts within the meaning of the Companies Act 1985. Theinformation has however been extracted from the Group's statutory accounts forthe year ended 31 May 2007 which were approved by the Board on 15 August 2007and on which the Group's auditors have given an unqualified opinion. 9. Annual Report & Accounts available on the website The Annual Report and Accounts, which will be posted to shareholders as soon aspracticably possible, are available to download via the website,www.stagecoach.co.uk. A copy of the Annual Report and Accounts may be obtainedupon application to the Company Secretary, subject to availability, at theCompany's Registered Office, The Courthouse, Elm Grove, Walton-on-Thames,Surrey, KT12 1LZ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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