Final Results

ARENA LEISURE PLC

Final results for the year ended 31 December 2011

Arena Leisure Plc ('Arena' or 'the Group' or 'the Company'), the UK's leading operator of horseracing fixtures which owns and operates seven racecourses in the UK comprising Doncaster, Royal Windsor, Lingfield Park, Southwell, Wolverhampton, Folkestone and Worcester, today announces audited final results for the year ended 31 December 2011.

Highlights

Recommended cash offer:

·; Following a strategic review by the Board, a recommended cash offer ('the Offer') was announced by Aldersgate Investments Limited to acquire the Company for 44.25 pence per share on 13 January 2012.

·; Subject to OFT and Court approval, the Board expects completion on 30 March 2012.

Financial performance:

·; Profit before tax increased by 14.6% to £4.2m (2010: £3.6m)

·; Profit before interest and tax increased by 7.1% to £5.8m (2010: £5.4m)

·; Revenue was down £2.5m to £61.5m (2010: £64.0m) after a £7.3m reduction in centrally collected and allocated funding from the Levy

·; Earnings per share increased by 12.7% to 1.15p (2010: 1.02p)

·; In accordance with the terms of the Offer, no final dividend is proposed (2010: 0.38p per share)

·; Net borrowings reduced by £9.3m to £30.5m at 31 December 2011 (31 December 2010: £39.8m)

Operational:

·; Record total attendances at the Group's racecourses of 683,000, representing a 7.8% increase (2010: 634,000)

·; Average attendance per fixture also increased by 7.8% to a record 1,941 (2010: 1,800) ahead of the market average growth of 1.0%

·; Hospitality attendance increased by 14% to 51,500 (2010: 45,200)

·; 352 fixtures were staged in the year representing 24% of UK racing fixtures (2010: 352 fixtures, 25%)

·; Combined admission and catering incomes increased by 14% to £23.4m (2010: £20.5m)

·; Arena's share of post tax profits of At The Races increased by £1.5m to £2.9m (2010: £1.4m) of which £0.8m relates to the prior years' entitlement to preference distributions

Recent developments and future growth:

·; 345 fixtures secured for 2012 (2011: 352 staged, 353 scheduled)

·; The estimated yield for the Levy in 2012/13 is £72.4m (2011/12: £71.4m) providing a stable funding level for 2012

·; On 1 January 2012, the five-year media rights agreement with SIS commenced, which will provide an estimated annual uplift in income of £10m

·; Arena is contracted to provide catering services to two Olympic and Paralympic venues in 2012, with an estimated net profit contribution of £0.5m to £1.0m

·; Folkestone Racecourse has been identified as the strategic site for a mixed-use development of up to 820 residential units by the local authority in its Local Development Framework core strategy that was submitted to the Planning Inspectorate in January 2012

Mark Elliott, Chief Executive of Arena Leisure Plc, commented:

"This has been another year of progress in which the Group has continued its track record of operational outperformance in spite of the difficult trading environment and ongoing Levy challenges. Arena continues to demonstrate industry-leading growth with record attendances at its racecourses and growth in both hospitality and catering revenue.

"Looking ahead, 2012 sees the commencement of our five year media rights agreement with SIS which significantly enhances the Group's income. We intend to maximise the opportunity provided by our catering service contract at the Olympic and Paralympic Games and to extend our in-house catering services to other third party venues and events.

"The Offer from Aldersgate Investments represents a fair and reasonable opportunity for shareholders to realise value that would not otherwise be available in the current market."

12 March 2012

Enquiries:

Forward-looking statements

This report may contain certain statements about the future outlook for Arena. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

The preliminary results presentation will be available on Arena's website at:

www.arenaleisureplc.com

In June 2011 the Board commenced a strategic review of possible options to realise value for shareholders, including a possible offer for the Company. This review resulted in the announcement of a recommended cash offer ('the Offer') from Aldersgate Investments Limited to acquire the Company for 44.25 pence per share on 13 January 2012. The Offer was approved by shareholders on 7 March 2012 and now awaits clearance from the Office of Fair Trading and approval of the Court before it becomes effective. The Board anticipates completion on 30 March 2012.

In 2011, Arena delivered another year of underlying growth in its racecourse operations and continued to outperform the UK racecourse market. Record numbers of people attended Arena's racecourses and hospitality guest numbers again achieved double-digit percentage growth. Horseracing remains at the heart of the business and good progress has also been made in complementary activities, including further headway on real estate developments. Funding from the statutory Levy on bookmakers reached a low point but there is some encouragement for the future with more stability for 2012. The prospects for Arena are enhanced by the commencement of the media rights contract with SIS for the provision of live racing into betting shops and delivery of the major contract for catering services at two Olympic and Paralympic venues in the coming year.

352 fixtures were staged at Arena's seven racecourses in 2011 (2010: 352), with average attendance per fixture increasing by 7.8% to a record of 1,941 (2010: 1,800). Total attendance also increased by 7.8% to a record of 683,000 (2010: 634,000) and hospitality attendances of 51,500 were 14% above 2010 (45,200) which in turn were 17% above 2009 (38,600). These increases have been driven by quality of product, service and customer experience together with improvements in sales and marketing. Compared to the UK racing industry as a whole, Arena has outperformed both the average attendance increase of 1.0% and the total attendance increase of 6.6% (2011: 6.2million, 2010: 5.8million).

Racing generally has made progress in broadening its appeal and attracting new customers to racecourses. However, the financial side of the industry remains constrained and this has significantly impacted Arena's 2011 performance. Amounts received by the racing industry from the statutory Levy on bookmakers suffered a further reduction with the total amount distributed in 2011 reducing by 36% to £60.1m (2010: £94.5m). The Government determination of the 2011/12 Levy Scheme in February 2011 set a benchmark yield target of £73m-£81m against the current estimated yield of £71.4m. In October 2011, the 2012/13 Scheme was agreed without recourse to Government at an estimated level of £72.4m with a significant element guaranteed by the major bookmakers. Whilst the quantum falls short of the amount that racing might reasonably expect, the certainty of underwriting provides some comfort for 2012. The expected Levy distribution of £65.0m for 2012 represents a slight improvement on 2011 (£60.1m).

Arena's total revenue for 2011 was £61.5m, down £2.5m (2010: £64.0m) following a £7.3m reduction in funding from the Levy, a large proportion of which impacted prize money payments in the year. Growth in admission and catering incomes accounted for a £2.9m increase, and the first full year of operation of the Lingfield Marriott Hotel and Country Club added £1.8m. Further growth was achieved from media rights, sponsorship and non-racing activities. This good operating performance generated in total an additional £2.2m profit, which is a creditable result in difficult economic conditions, although unfortunately overshadowed by the £2.8m negative profit impact caused by reduced Levy income.

Attheraces Holdings Limited ('ATR'), Arena's affiliate company, increased its revenues by 5.7% to £20.3m (2010: £19.2m) largely as a result of growth in international media distribution through GBI Racing. Following a financial restructuring of the ATR group in late 2011, the creation of distributable reserves has allowed Arena to recognise its entitlement to preferential distributions under a preference share structure. ATR's contribution to Arena in the year including this amount was £2.9m (2010: £1.4m), an increase of £1.5m, of which £0.8m relates to prior years' entitlement to preference distributions.

Arena's profit before interest and tax increased by 7.1% to £5.8m (2010: £5.4m), after incurring fees associated with the Offer of £0.2m (2010: £nil). Profit before tax was 14.6% higher at £4.2m (2010: £3.6m) after net finance expenses of £1.6m (2010: £1.8m). Basic earnings per share were 1.15p (2010: 1.02p), an increase of 12.7%.

The Lingfield Park Marriott Hotel and Country Club completed its first full year of operation having opened in May 2010. Whilst trading conditions remain difficult, the hotel is building a solid base of business and a good reputation for product and service which is allowing it to command a healthy rate premium. Other major development projects, for which planning permission has previously been obtained, include the hotel and casino scheme at Wolverhampton Racecourse for which the casino licence tender process is finally expected to commence in 2012. Folkestone Racecourse is on track with its plans to achieve consent for a mixed use development incorporating both residential and racecourse facilities. In July 2011, Shepway District Council published its Local Development Framework core strategy for consultation identifying Folkestone Racecourse as mixed-use development incorporating up to 820 residential units and this core strategy was subsequently submitted to the Planning Inspectorate on 31 January 2012.

In accordance with the terms of the Offer from Aldersgate Investments, the Board is not proposing a final dividend for 2011 (2010: 0.38p per share). No interim dividend was paid during the year (2010: none).

On behalf of the Board I would like to thank all of the employees of Arena for their hard work and commitment to our business particularly during the uncertainty arising from the strategic review. They can be justly proud of the service that is consistently delivered every day of the year. There have been no changes to the composition of the Board during 2011.

In 2012, the media rights agreement with SIS will make a substantial difference to the Group's income and progress is expected on finding a long term solution for the ongoing issues surrounding the Levy. The current Levy arrangement provides for some certainty in the coming year, albeit at a level that is only slightly above that for 2011. The development of Arena's catering operation will continue with the contract for the provision of catering services at the Olympic and Paralympic Games.

David Thorpe

Chairman

9 March 2012

Arena has produced results that reflect growing customer revenues and profit conversion, achieved against difficult economic conditions and mitigating the substantial fall in Levy contributions.

Overview

Arena has had a record year in terms of attendances at our seven racecourses. The total attendance in 2011 was 683,000, a 7.8% increase (2010: 634,000) and 6.9% above the 639,000 achieved in the next best year of 2009. Hospitality attendance is not yet back to the 2007 peak of 62,700, but at 51,500 it is 14% ahead of 2010 and 33% ahead of 2009 (2010: 45,200; 2009: 38,600). We believe that this growth, in difficult economic conditions, is a result of a combination of factors: the investment in our racecourse estate over recent years which has provided facilities that meet the needs of racegoers and the racing industry; improvement in the effectiveness of promotion and selling through existing and new channels; and, importantly, the high levels of customer service and overall experience that we deliver on a day-to-day basis at each racecourse for racing and non-racing events.

Arena's in-house catering operations have consistently delivered a high quality offering that regularly exceeds the expectations of racegoers in retail, restaurant and hospitality. Our focus on product and service has increased the attractiveness of individual racedays and of the racing experience as a whole. Innovation increases the appeal of racing, for example through themed events and music concerts, and the dedication of our team members ensures the best possible customer experience.

The catering operation - launched in April 2007 - has developed well, allowing us to pursue opportunities for providing catering services to third parties. In February 2011, we announced a first major contract following the successful tender to LOCOG to provide catering services at both the Eton Dorney and Greenwich Park venues as part of the Olympic and Paralympic Games in 2012. The contract contains elements of both fixed and variable income, the latter being dependent upon the number of attendees and spend per head. The Board estimates that the net profit contribution from the contract will be in the range of £0.5m to £1.0m. It is our intention to build on this with further third party contracts at external venues and events.

As expected, 2011 was heavily impacted by a shortfall in contributions from the Levy. The yield from the Levy on bookmakers fell from £75.4m in 2009/10 to £59.5m in 2010/11. The resulting contributions to racing fell by 36% from £94.5m in 2010 to an estimated £60.1m in 2011 with Arena's share falling by £7.3m from £17.7m to £10.4m. The negative impact on profit of this reduction was £2.8m. In the latter part of 2012, Arena injected a further £0.5m of prize money funding in order to help support the racing programme.

Operations

During 2011 Arena's operating business continued to demonstrate strong progress, notwithstanding the substantial negative impact of funding cuts from the reduced Levy yield. 352 fixtures were staged in the year, the same as in 2010 and one less than the scheduled number after two abandonments and one additional fixture that was staged at short notice in January 2011.

Total revenue in the year was £61.5m which is £2.5m down on the prior year (2010: £64.0m). The significant reduction in Levy-sourced incomes accounted for a revenue shortfall of £7.3m, and net of this, therefore, the underlying operating revenues grew by £4.8m, a growth of 10.4%. Within this, growth in attendance added £1.0m and associated catering incomes increased by £1.9m.

Income from the rights to content that can be used in UK and Irish licensed betting offices ('LBOs') increased by £0.2m to £11.8m (2010: £11.6m). A total of 2,470 races were staged (2010: 2,471) and, as a result, additional income of £0.5m was generated solely from an inflationary increase in the contract. The early part of the year saw significantly reduced field sizes in many races which had a negative impact of £0.3m on receipts due to the contract with BAGS, which expired on 31 December 2011, providing for a reduction in payments when field sizes fell below eight runners, giving a net increase of £0.2m. In order to protect field sizes in the later part of the year, and into the all-weather season, Arena injected a further £0.5m into supporting prize money levels above that already committed in the published race programme. Royalties for the media rights received through ATR increased by 10% to £2.2m (2010: £2.0m).

A new five-year contract with Satellite Information Services Ltd ('SIS') commenced on 1 January 2012 replacing the existing BAGS contract. This contract was signed in July 2009 and the Board has estimated that it will have a total value of £106.0m over its term. This compares to the previous contract that delivered £55.5m between 2007 and 2011. Under the terms of the SIS contract, £32.0m of advanced payments have been received by Arena and the balance of the estimated revenue is due over the 5-year term linked to the number of races at Arena's racecourses.

Revenues from the Lingfield Park Marriott Hotel and Country Club increased by £1.8m, of which £1.0m was in the non-comparable period of January to mid-May (the hotel opened on 10 May 2010). On a like-for-like basis, comparing the period post opening in 2010, revenue has grown by over 30% in the year with an achieved average nightly rate of £71 and occupancy of 50%. For the first full year of operation, in what remains a difficult trading market, this is a satisfactory performance and the property is achieving a good rate premium compared to its direct competitors. Occupancy performance is dependent on the mix of business and, so far, the demand for residential conference and meetings remains depressed and affected by market conditions. Operating margins are in line with expectations despite the high fixed costs that the business is exposed to, notably in rates and utilities.

Industry funding from the Levy reduced by £7.3m to £10.4m (2010: £17.7m). Of the amount received, £5.5m was paid out as a contribution to prize money, a reduction of £4.9m compared to 2010. After additional contributions from Arena, and net of reduced owner entry fees of £0.3m, total prize money was £3.0m lower than in 2010. The total incremental negative profit impact on Arena of industry funding reductions in 2011 was £2.8m. This includes additional Arena contributions to prize money, reductions in fixture incentive fees paid to less customer-friendly fixtures, and other reduced fixture contributions that were previously received to fund racing operations.

Arena's racecourse operation delivered an operating profit of £6.2m in the year (2010: £6.8m) which is stated after the £2.8m negative impact of the Levy reduction. Excluding this impact, the operating contribution would have increased by £2.2m, a growth of 32.4%, of which £0.4m relates to the Lingfield Park hotel, £0.4m to media rights (both LBO and ATR) and £1.4m from general trading across both hospitality and public sales.

Real estate

Over the past five years, Arena has successfully pursued strategies for developing its estate and creating value from surplus land. In 2007, Doncaster Racecourse reopened after a complete redevelopment, including the construction of a new grandstand that includes substantial conference and event capacity. The Racecourse is now establishing itself as a major venue for trade shows and exhibitions and in 2011 it hosted the hugely successful White Rose Awards black-tie dinner for 995 people. Planning consent and option rights over land for a 120-bedroom hotel adjacent to the Racecourse has been extended to mid-2013 and will provide a complementary development.

During 2011 some smaller projects including the refurbishment of hospitality facilities at Wolverhampton Racecourse and the construction of a new entrance building and associated facilities at Royal Windsor Racecourse were completed.

Looking forward, in addition to the hotel planning consent at Doncaster, Wolverhampton Racecourse has planning consent for a combined hotel and casino development that would extend the existing hotel from 54 to 170 bedrooms. This scheme has been delayed pending the grant of a small casino licence from Wolverhampton City Council. The tender application document has been issued for consultation until April 2012 after which the tender process is expected to commence.

In October 2010, Arena submitted its plan for the redevelopment of Folkestone Racecourse to Shepway District Council ('SDC'). The proposal will help safeguard the future of the Racecourse via a complete re-alignment and rebuild, funded by the introduction of residential units to create a major leisure and business facility and tourist attraction. In July 2011, SDC published its Local Development Framework Core Strategy (Proposed Submission Document) for public consultation and identified Folkestone Racecourse as a strategic site for a mixed-use development incorporating up to 820 residential units. Following completion of the process of public consultation, SDC has submitted its core strategy to the Planning Inspectorate with an examination-in-public of its proposals expected to conclude in mid-2012.

At The Races

ATR is the UK and Ireland's most watched, dedicated horseracing channel and is available in 14 million homes. The channel reaches up to 2.0 million individuals each month and has a demographic profile of audience that is attractive to both advertisers and sponsors.

The website 'attheraces.com' is the premier racing and betting website in the UK and Ireland. For the first time during 2011 it has achieved monthly usage in excess of an average of 1.0 million per month. Users are attracted to the wealth of information on the site including racecards, tipping and video content. ATR has continued to develop 'Bet & Watch' technology that allows race streams to be viewed live on bookmaker websites as well as a live channel available via annual subscription. This functionality is available through broadband and on mobile phone platforms through 3G technology.

ATR's joint venture with Racecourse Media Group for the international distribution of all UK and Irish racing has established itself in 2010 and 2011. It pools the respective rights of the two entities and provides a unified broadcast service for British and Irish racing in important pari-mutuel markets such as Italy, France, South Africa, Turkey and Australia, as well as further developing opportunities in newer markets such as Singapore, Malaysia and Hong Kong. In the year to 31 December 2011, ATR generated an operating profit of £3.3m (2010: £2.5m) from revenue of £20.3m (2010: £19.2m) and a gross profit of £13.1m (2010: £11.8m). Arena's share of post-tax profit was £2.9m (2010: £1.4m), of which £0.8m relates to prior years' entitlement to preference distributions.

Capital expenditure

During the year, £3.1m was invested in capital assets (2010: £9.1m) a significant reduction on 2010 when £7.6m was incurred on the completion of the Lingfield Park Marriott Hotel scheme. Investment in 2011 included £0.6m (2010: £0.4m) in completing a £1.0m project at Royal Windsor Racecourse that provides improved racecourse facilities and a new entrance building with office and retail space. Capital additions also include £0.3m (2010: £0.8m) of interest costs related to development projects during the planning and construction phases.

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2011

Consolidated Statement of Changes in Shareholders' Equity

for the year ended 31 December 2011

Consolidated Balance Sheet

at 31 December 2011

Consolidated Cash Flow Statement

for the year ended 31 December 2011

Notes forming part of the financial statements

1. Reporting entity

Arena Leisure Plc ('the Company') is a company domiciled in the UK. The address of the Company's registered office is 408 Strand, London WC2R 0NE. The consolidated financial statements of the Company as at and for the year ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as 'the Group') and the Group's interest in jointly controlled entities. The Group is primarily involved in the ownership and operation of racecourses, and the worldwide broadcast and exploitation of racecourse media rights via the Group's shareholding in its At The Races joint venture.

2. Basis of preparation

Statement of compliance

The Group financial statements ('financial statements') have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRS').

The financial information in this preliminary announcement represents non-statutory accounts within the meaning of Section 435 of the Companies Act 2006.

The auditors' report on the statutory accounts for the year ended 31 December 2011 was: (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2010 have been delivered to the Registrar of Companies. The auditors' report on the statutory accounts for the year ended 31 December 2010 was: (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 

The financial statements were approved by the Board of Directors on 9 March 2012.

Going concern

The Group continues to be a cash-generative operational business with good quality assets. Revenues are generated from a variety of sources including industry funding through the Horserace Betting Levy Board ('HBLB') and income from the Group's new five-year agreement with Satellite Information Services Ltd ('SIS') for the provision of media rights to provide live racing pictures to UK licensed betting offices. £32,000,000 advance payments have been received under this agreement.

The Group has banking facilities from Lloyds Banking Group which are committed until, and amortise to maturity on, 31 December 2013.

As more fully explained in note 12, the Company has received an offer for its entire issued and to be issued share capital from Aldersgate Investments Limited. While the completion of the sale of the Company is dependent on regulatory approval and other matters, it is expected to complete in the foreseeable future. The Group's existing bank facilities are subject to a change of control clause that would result in those facilities becoming repayable on demand. Included within the offer documentation sent to shareholders is information on the financial substance of Aldersgate Investments Limited and on their strategic plans for Arena which are to continue with the existing Arena management's strategy for the use of the racecourses. Therefore, should the sale proceed as planned, the Directors are not aware of any reason why sufficient facilities or other funding would not be available to enable the Group to continue to meet its liabilities as they fall due for the foreseeable future, and at least 12 months from the date of signing the financial statements.

Although the current economic conditions create uncertainty, particularly over funding levels for racecourse fixtures that are received from the Levy on bookmakers, on the basis of the Group's forecasts and projections, taking account of reasonably possible changes in trading performance, together with mitigating actions that are within management's control, the Group is expected to be able to operate within the level and covenant conditions of its debt facilities.

The Directors believe that the Group is well placed to manage its business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, and at least 12 months from the date of signing the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

3. Estimates

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

4. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors of Arena Leisure Plc. The segment information set out below is consistent with the information presented to the Board for the purposes of evaluating performance and deciding upon resource allocation.

The Group has one reportable operating segment: racecourse operations. This business segment arises in the UK.

Additional information on this segment is as follows:

The Group derived a significant proportion of its annual revenue from the Horserace Betting Levy Board ('HBLB') and from its media rights agreement with BAGS, as disclosed below:

5. Finance income and expense

The valuation of the Group's interest rate derivative contracts at 31 December 2011 has resulted in a liability of £1,026,000 (2010: £1,328,000) being recorded on the balance sheet and a credit of £302,000 (2010: £126,000) to the statement of comprehensive income.

A further £270,000 (2010: £844,000) of interest costs relating to development projects in progress have been capitalised in the year.

6. Taxation

There is no current year tax charge (2010: no tax charge) mainly due to the utilisation of HBLB capital credits which are not assessable to tax. At 31 December 2011, corporation tax losses representing trading and non-trading losses of £67,640,000 (2010: £64,363,000) were available for utilisation in future years, subject to agreement with HM Revenue & Customs.

The Directors have recognised a deferred tax liability on temporary differences of £10,483,000 (2010: £13,308,000). In addition, the Directors have also recognised a deferred tax asset for losses of £10,483,000 (2010: £13,308,000).

7. Earnings per share

Certain employee options have not been included in the calculation of diluted EPS because their exercise is contingent on the satisfaction of specific criteria that had not been met at the end of the year. In addition, certain employee options have also been excluded from the calculation of diluted EPS as their exercise price is greater than the weighted average share price during the year (i.e. they are out-of-the-money) and therefore would not be dilutive. The total number of share options excluded in 2011 was 3.59 million (2010: 4.30 million).

The average market value of the Company's shares for the purposes of calculating the dilutive effect of share options was based on quoted market prices for the period that the options were outstanding.

8. Dividends

In accordance with the terms of the Offer to acquire Arena announced on 13 January 2012, the Board is not proposing a final dividend for 2011 (2010: 0.38p per ordinary share).

9. Property, plant and equipment

During the year ended 31 December 2011 the Group acquired assets with a cost of £3,093,000 (2010: £9,089,000).

The Group has capitalised costs in relation to continuing development projects at Doncaster, Lingfield Park, Royal Windsor, Folkestone and Wolverhampton Racecourses. The Board considered the carrying value of assets under construction at 31 December 2011 and 31 December 2010 and concluded that no impairment provisions are required.

At 31 December 2011, the Group's commitments to purchase property, plant and equipment totalled £nil (2010: £282,000).

10. Accruals and deferred income

In July 2009, the Group signed a new agreement with SIS for the provision of horseracing content from Arena's racecourses into licensed betting offices in the United Kingdom and Ireland. At 31 December 2011, £25,600,000 is included within non-current deferred income in respect of advanced payments received from SIS under the agreement (2010: £32,000,000) and £6,400,000 is included within current deferred income (2010: £nil). The income deferred will be recognised in the profit or loss account on a straight-line basis over the five-year term of the agreement, which commenced on 1 January 2012.

11. Statement of net debt

12. Events after the reporting date

On 13 January 2012, Aldersgate Investments Limited announced a cash offer for the entire issued and to be issued share capital of Arena Leisure Plc of 44.25 pence per share. The Offer has been recommended by the Directors and was approved on 7 March 2012. The Offer now awaits clearance from the Office of Fair Trading and approval of the Court before it becomes effective.

Responsibility statement of the Directors in respect of the annual financial report

The Directors confirm to the best of their knowledge:

·; The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and

·; The Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risk and uncertainties that they face.

By order of the Board

Robert Mercer FCMA

Company Secretary

9 March 2012