Final Results

2nd Oct 2008 07:00



2 October 2008

Powerleague Group Plc

Preliminary Results for the year ended 28 June 2008

Introduction

Powerleague Group plc is the market-leading operator of premium quality, purpose-built 5-a-side football centres in the United Kingdom. We offer our customers the option of competitive league matches, corporate tournaments or social play within an environment of excellent service and first-class facilities. We continue to focus on increasing our national brand presence to meet local and regional demand for small-sided football. In addition we are extending our relationships with a growing number of high profile sponsors, blue-chip companies and major brands wishing to align themselves with grass-roots football and our customer base.

Highlights 2008

Claude Littner, Executive Chairman commented: "This has been another year of significant growth for the Group during which we have opened and acquired nine centres. I am pleased to report that trading for the first three months of the year is in line with our expectations with pitch revenues, our key income driver, continuing to be strong. This, together with our increasing pipeline of potential new sites, means that we are well positioned to weather the current difficult economic environment."

Results for the periods to 28 June 2008 and 30 June 2007 represent 52 weeks' trading and references to "year" throughout these accounts refer to these periods as defined.

Enquiries:
Powerleague Group plc	Tavistock Communications
Claude Littner, Executive Chairman	Lulu Bridges
Sean Tracey, Chief Executive	John West
Tel: 020 7920 3150 (2 October 2008 only)	Tel: 020 7920 3150
Tel: 0141 887 7758 (thereafter)

Powerleague Group plc

Year ended 28 June 2008

Chairman's Statement

Introduction

I am once again delighted to be able to report another year of significant revenue and EBITDA growth for Powerleague.

Strengthening our Leading Position

The year under review has seen a step change in the progress and development of our Group. This has been a year of significant investment, with £24.4 million spent on building and acquiring nine new centres and maintaining the premium facilities in our existing estate. This investment consolidates our leading position in this sector and provides the basis for growth in the new financial year and beyond.

Acquisition of Soccer Domes

On 26 February 2008, we completed the acquisition of JJB Soccer Domes from JJB Sports plc. JJB Soccer Domes was the third largest 5-a-side football operator in the United Kingdom. We paid £17.4m in cash, derived from existing resources and increased banking facilities.

The acquisition comprised five purpose-built indoor soccer centres with a total of 70 pitches. The centres are located in Manchester, Wigan, Derby, Blackburn and North Shields and are highly complementary to Powerleague's existing portfolio and pipeline of sites. The Manchester centre is the largest 5-a-side football centre in the world with 19 indoor and 4 outdoor pitches.

We are very satisfied with the progress we have made to date. Powerleague's management techniques and bespoke booking systems have been successfully implemented and we are beginning to see efficiency and synergistic benefits flowing through. These new centres not only extend our reach, but now make us unique in providing both outdoor and indoor purpose built 5-a-side facilities to our customers.

£23.1 million investment by Patron Capital Partners ("Patron")

In March 2008, we announced that Patron Capital, a leading private equity and property investment fund, had acquired a 29% stake in Powerleague.

I believe that our strategic alliance with Patron will bring significant benefits, given their wealth of experience in the property sector, coupled with their wide network of global relationships which will help us unlock further growth opportunities for our business in the UK and our potential expansion of 5-a-side into Europe.

Dividends 

The Board recommends a final dividend of 1.1p per share, which is in line with that paid in 2007. We believe that this strikes the right balance between dividends and retaining cash in the business until there is greater clarity on the direction of the UK economy.

Development Programme

In addition to the acquisition of the Soccer Domes, we have opened four new centres, thereby adding a further thirty 5-a-side pitches and three 7-a-side pitches to our portfolio, all with 'next generation' playing surfaces.

Powerleague Cardiff opened in August 2007 with ten 5-a-side pitches.

Powerleague Old Street opened in September 2007 and is an innovative indoor centre with four pitches in the heart of the City of London.

Powerleague Milton Keynes opened in October 2007 adding ten 5-a-side pitches and two 7-a-side pitches.

Powerleague Shrewsbury opened in January 2008 and added six 5-a-side pitches and one 7-a-side pitch.

Board Changes

As a result of the Patron Investment, we have strengthened our Board with the appointment of two non-executive directors with effect from 14 March 2008.

Paul Orchard-Lisle - Paul has a wealth of experience in the property sector, having previously been Senior Partner of Healey & Baker, President of the Royal Institution of Chartered Surveyors and Chairman of Slough Estates plc. He is currently Chairman of Falcon Property Trust, a director of Standard Life Property Income Trust, Director of Trinity Capital PLC and Chairman of Crown Golf UK, the largest operator of golf clubs in Europe.

Keith M Breslauer - Keith is the founder and Managing Director of Patron Capital Limited and related Patron entities. He has over 20 years experience in Corporate and Property Investment and has held senior investment banking positions in New York and London.

At the end of June 2008, Jeremy Hall, our Development Director, resigned as a Director of the Company. We would like to thank Jeremy for his contribution to the development of Powerleague over the years.

Post Balance Sheet Event

In August 2008, we announced that we had acquired Soccer Sensations Limited, an established 5-a-side football centre located in Stockton-on-Tees. This centre has excellent facilities with ten 'next generation' 5-a-side pitches and its geographic location complements Powerleague's portfolio of 43 centres around the UK.

Prospects and Outlook 

Whilst the economic outlook in the UK is uncertain, we believe that the Group has developed a resilient market and financial position. Trading during the first three months of the new financial year has continued to be in line with our expectations. Pitch revenues, our core business and key income driver, remain strong while the sector-wide reduction in bar revenues continues to impact the Group. 

We have enjoyed a healthy growth in Sponsorship and Events over the past few years and I anticipate that the Group will deliver further progress in this area in the new financial year.

For the current financial year, our focus is to grow revenue in the four centres we opened in the financial year and complete the integration and maximise the potential of the Soccer Domes and Soccer Sensations acquisitions, whilst ensuring that our established centres continue to prosper. I am confident we have the management team and wherewithal to achieve these objectives.

In addition, we continue to increase our pipeline of potential new sites and move them along the development process. These initiatives will enable us to maintain or accelerate our roll out programme. We have a number of strategically located high quality sites with no commercial competition under agreement to lease. In time these will come to fruition and add significant value to the Group.

I would like to take the opportunity to thank our staff for their hard work, dedication and loyalty, and finally I want to thank our bankers, HBOS who have been so supportive of our growth strategy over many years and with whom we have developed an excellent working relationship.

Claude Littner

Chairman

Powerleague Group plc

Year ended 28 June 2008

Chief Executive's Report

As outlined in the Chairman's statement, this year has been one of significant development for the Group and I am pleased that we have continued to show strong growth over the year with increases in revenue and EBITDA.

New openings

During the year under review, we opened four new centres across the UK.

The new Powerleague centre at Cardiff opened in August 2007 and is located at Whitchurch High School, the largest comprehensive school in the country, just off a main arterial road into the city. It is a state-of-the art 5-a-side football venue with 10 rubber crumb pitches, a sports bar and modern changing facilities. Powerleague invested £1.6 million in the construction of the centre.

The new Milton Keynes centre, which opened in October 2007, is also located at a school and was successfully won via a tender process. Powerleague has invested in excess of £2 million in the centre at Milton Keynes which comprises ten 5-a-side and two 7-a-side pitches.

The centre at Old Street opened in September 2007. It is an innovative indoor centre with four pitches in the heart of the City of London, not far from our existing centre in Worship Street and has extremely high utilisation rates.

The newest centre which opened in January 2008 is located in Shrewsbury, alongside the grounds of the football club's new stadium. The centre has six 5-a-side pitches and one 7-a-side pitch and will benefit from clubhouse revenues when the Club hosts home games as the football season gets underway.

We are very pleased with the performance of these centres which will all make a positive contribution in the current financial year.

In August 2008, we announced that we had acquired Soccer Sensations; the premier 5-a-side football centre in Teesside, located at Stockton-on-Tees. This is a centre with excellent facilities that boasts ten "next generation" 5-a-side pitches and its geographic location complements Powerleague's portfolio of 43 centres around the UK. We are confident that with our know-how, we can grow revenue and profit.

Soccer Domes

Our recent acquisition of the JJB Soccer Domes combined the third largest 5-a-side operator in the UK with Powerleague, already the largest player in the market. This acquisition of outdoor and indoor centres has created a number of exciting growth opportunities for the Group to exploit and has been welcomed by customers, colleagues and sponsors. The Soccer Domes offer excellent security of tenure with an average lease period of 20 years with an option to renew. 

All five of the Soccer Domes are making a positive contribution to profits, present excellent growth opportunities and fit extremely well into our core estate. In Greater Manchester, Powerleague now has four locations with 67 pitches in total covering different parts of the city and beyond. The Soccer Domes also retain a number of high profile corporate clients and events and our unrivalled track record in monetising Sponsorship and Events means we are well placed to grow this revenue stream as the year progresses.

Over the last six months we have successfully integrated Powerleague's proprietary management and booking systems into the Soccer Domes. This, together with a focused, proactive sales approach has given us far greater revenue visibility and allowed us to fully utilise our pitch bookings, creating the platform, infrastructure and branch management expertise to generate further revenue growth. A full review of staffing levels has been carried out and cost savings have been made in a number of non key areas. 

A major re-marketing campaign is underway at the Powerleague Soccer Domes, with the rebranding of the centres already complete and new marketing literature created. This is timed for the key Autumn recruitment period as we come out of the summer months, the darker nights kick in and the football season gets into full swing.

We have also gained entertainment licenses at all five of the Soccer Domes opening up a whole new income stream to the Group. Weekend functions are highly popular with the local communities in which our centres serve and we have been successfully marketing our bars for private weekend function trade for a number of years. With all of the Soccer Domes in prominent locations we have already started to see function bookings being made particularly since we refurbished the Soccer Dome bars, and adapted them for weekend function trade.

Capital Investment

In the last financial year,we have continued to invest in our core estate. We spent £1.4 million on eighty pitches at nine centres, introducing the latest 5th generation playing surfaces and thus enhancing our customers playing experience. Over 80% of our pitches now have the latest playing surfaces up from less than 50% three years ago. As discussed earlier, we have also invested in improving the look and feel of the Soccer Dome bars for existing customers and to make them suitable for private functions.

In addition, we have just opened two new 5-a-side pitches at our Mill Hill centre which was running at capacity and has scope for further growth and have extended the car park and improved the lighting as part of our commitment to improve our customer experience.

Pipeline Sites

Our pipeline of potential sites continues to strengthen and there are many areas where the demand for commercial 5-a-side remains untapped. We remain focused on developing new sites in the United Kingdom, which are not only in strong locations but with a prudent rent and lease agreement in place. We will continue to develop the business in an entrepreneurial and prudent fashion and remain alive to all future opportunities for growth, helping to build our business for the long term.

Sponsorship and Corporate events

With an unrivalled client list of Blue Chip Sponsors and Corporate Events in place and built up over recent years, improving on last year's strong growth was a significant challenge. We are delighted to have once again increased our Sponsorship and Event income with 9% growth. We have added Nivea for Men as our official grooming partner and entered into a 3-year agreement with Carling. We have also signed up JJB as our official sports retailer, thereby giving us access to 360 sports stores and the opportunity of communicating with a huge segment of our target market around the country on a regular basis. Finally we are pleased to confirm that we have renewed our Sponsorship agreement with Lucozade, our official sports drink, for a further four years on enhanced terms. 

In the last twelve months we have also hosted and managed new National Events for major clients including Asda, Grant Thornton, Alliance and Leicester and Ernst & Young. Our well established track record of sourcing and securing new clients means we remain uniquely well placed to take advantage of the increasing popularity of 5-a-side football, particularly as the country turns its attention to the 2010 World Cup. 

Principal Risks and Uncertainties

The pipeline of sites is an important factor as it impacts our roll-out programme. Key to this is market intelligence in finding suitable potential sites and then managing them through the planning process. We are confident that we have the expertise to develop and bring new sites to fruition. Competitor activity may have an adverse impact if a 5-a-side centre is established within close proximity and encroaches on our existing catchment area. However, with so many geographic areas not yet well served by purpose built 5-a-side facilities, we view this as a factor which any commercial operator should take into account when considering new site development.

As with any business, there is always a dependence on a number of employees who hold key positions and are tasked to implement the Group's objectives. We provide an attractive salary and incentive package designed to retain and motivate all employees and these people in particular. We embrace a culture where initiative, teamwork and results are recognised and rewarded.

Health and Safety is a priority and is discussed at both branch and Board level, with audits undertaken by qualified managers.

Corporate and Social Responsibility

Powerleague continues to work with a number of charities on a local and national basis. In the year under review, we have hosted and managed a national event for Childline and supported the Meningitis Trust. We have strengthened our links with Clic Sargent, a children's cancer charity, with a national fundraising event. We hosted Clubs for Young People and had 800 children entertained at our Manchester Trafford Soccer Dome. We supported the Motor and Allied Trade Benevolent fund with a fundraising National Event and also Myeloma UK. We are currently working with the Homeless World Cup, a major international charity which runs small-sided football around the world, offering our expertise to assist with the World cup finals in Milan this year and supporting the Scottish and English team entrants with free training facilities. 

The Group also continues to offer free play in all centres for local schools and community groups. This helps in tackling issues such as obesity by providing quality, purpose-built sports facilities where currently there are none. In addition, the thirteen education sector institutions where we have centres derive an additional income stream from our rental payments.

Staff

I would once again like to thank our staff for their hard work, loyalty and commitment to the Group over the past year. Our new colleagues who have joined us from JJB have shown genuine commitment, energy and patience as we have set about introducing our processes and controls on the Soccer Dome centres. Our network of staff at branch and head office continues to perform to the highest standards and their unrivalled experience in the industry provides the essential building blocks to manage our existing business and to continue growing.

Outlook

Over the past twelve months we have strengthened our dominant position as the market leader in purpose built 5-a-side football with our acquisition of the JJB Soccer Domes. We are well placed to continue to develop the business and our focus over the next period is primarily to maximise revenue and profit within our recently expanded estate, continue to grow Sponsorship and Events and extend our pipeline of potential new sites. 

I am confident the investment we have made in new and existing centres will provide further growth in the new financial year.

Sean Tracey

Chief Executive

Powerleague Group plc

Year ended 28 June 2008

Financial Review

Revenue and Profit

At £26.3 million, revenue in the year to 28 June 2008 increased by 14% over the prior year, with performance boosted by the addition of the four new-build centres throughout the year and the five Soccer Domes in February 2008.

EBITDA before exceptional items increased by 9% as detailed below:

			52 weeks ended  28 June 2008		52 weeks ended  30 June 2007
			£'000		£'000
Profit for the year			3,331		3,659
Taxation expense			1,632		1,299
Net interest expense			1,683		1,104
Exceptional items			74		28
Depreciation of tangible fixed assets			2,302		2,279
Amortisation of intangible fixed assets			125		-
EBITDA before exceptional items			9,147		8,369
EBITDA margin before exceptional items			34.7%		36.3%

Whilst our underlying EBITDA margin remains strong, it has been impacted by pre-opening costs of the four new centres built during the year, in comparison with no such costs in the prior year. In addition, the Group bore the higher costs of operation of the Soccer Domes, including an element of restructuring costs and greater management resource, whilst they were being integrated into the Powerleague operation. This restructuring is now complete.

Amortisation

Arising from the acquisition of the Soccer Dome business on 26 February 2008, intangible assets of £1,229,000 have been separately identified and valued on a fair value basis. In accordance with IFRS 3, these intangible assets will be amortised over a five year period. The charge for the period from acquisition to 28 June 2008 was £125,000. Profit before taxation has therefore been reduced by this amount, which was not charged in the comparative period.

EBITA before exceptional items, being EBITDA as detailed above, less depreciation, improved by 11% to £6.8 million from £6.1million.

Interest

The interest rate cost to the Group has increased over the prior year by £579,000. Over the course of the financial year the base rate reduced from 5.75% to 5% which resulted in savings in interest on the portion of the Group's borrowing which is linked to base rate. At the same time, the Group's overall net debt increased from £18.5 million to £38.4 million, as a result of both the level of capital expenditure on construction of new centres and the acquisition of the Soccer Domes. Much of this new borrowing is linked to LIBOR and the Group has been impacted by the marked dislocation between base rate and LIBOR as the LIBOR rate has ranged between 6.65% and 5.95% in the period. After the year-end, on 30 July 2008, a £17.0m 2-year cap/collar hedging arrangement was established, with a cap rate of 6.00% and collar rate of 5.36%. There was no cost incurred to establish this facility.

Taxation

A detailed analysis of taxation is set out at note 3.

The effective rate of taxation is 33%, which is higher than the composite standard rate of 29.5%, principally as a result of adding back non-qualifying depreciation to arrive at profit chargeable to taxation. The effective rate this year represents an increase over the effective rate of 26% applicable in the year to 30 June 2007 as that period benefited from a one-off restatement in the carrying value of deferred taxation balances from 30% to 28%, an impact of £279,000, together a £57,000 benefit from losses brought forward from earlier periods. Had these not taken place, the effective rate would have been 33%. 

Earning per Share

Earnings per share for the year was 4.07 pence compared with 4.47 pence in the previous year. As detailed above, whilst EBITDA increased during the year, amortisation was charged for the first time. In addition, interest increased following a year of significant investment, however the business did not benefit fully from the increased trading which will ultimately arise from that expenditure as the new centres mature and the acquired centres benefit from our expertise. Also, the effective tax rate increased from an unusually low rate in the prior year. An adjusted earnings per share calculation is provided below, illustrating the impact of exceptional items, amortisation and the effective tax rate change:

		52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
		£'000		£'000
Profit for basic and diluted earnings per share		3,331		3,659
Exceptional operating items		74		28
Taxation effect of exceptional items		24		7
Amortisation		-		(125)
Change in effective rate of taxation to current year rate		-		(336)
Profit for adjusted earnings per share		3,429		3,233
Adjusted earnings per share (increased by 6%)		4.19		3.95

Cash Flow

Cash flow from operating activities increased by 7% to £6,896,000 from £6,421,000 a direct result of the improvement in operating profit. The high level of capital expenditure and acquisition during the year was largely funded by new debt, whilst £3,852,000 of existing debt was repaid. Despite the increase in interest costs and an increase in the dividend paid to shareholders, the Group generated £615,000 in cash.

Sheena Beckwith

Finance Director

Powerleague Group plc

Group income statement

for the year ended 28 June 2008

					52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
			Notes		£'000		£'000
Revenue					26,338		23,030
Cost of sales					(4,224)		(3,946)
Gross profit					22,114		19,084
Administrative expenses					(15,394)		(12,994)
Exceptional items			2		(74)		(28)
Total administration expenses					(15,468)		(13,022)
Operating profit					6,646		6,062
Analysed as:
Operating profit excluding exceptional items					6,720		6,090
Exceptional items			2		(74)		(28)
Finance revenue - bank interest					2		6
Finance costs					(1,685)		(1,110)
Profit for the year before tax					4,963		4,958
Tax expense			3		(1,632)		(1,299)
Profit for the year					3,331		3,659
Earnings per ordinary share
- basic and diluted			4		4.07		4.47

Group statement of recognised income and expense

for the year ended 28 June 2008

					52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
					£'000		£'000
Profit for the year					3,331		3,659
Total recognised income and expense for the year attributable to equity holders of the parent					3,331		3,659

Powerleague Group plc

Group balance sheet

as at 28 June 2008

					As at  28 June  2008		As at  30 June  2007
			Notes		£'000		£'000
Non-current assets
Property, plant and equipment			5		48,817		43,940
Intangible assets			6		17,386		258
Other receivables					152		302
					66,355		44,500
Current assets
Inventories					194		158
Trade and other receivables					2,233		1,516
Cash and cash equivalents					570		549
					2,997		2,223
Total assets					69,352		46,723
Current liabilities
Trade and other payables					3,255		3,310
Taxation payable					272		571
Financial liabilities					6,722		4,991
					10,249		8,872
Non-current liabilities
Other payables					252		329
Financial liabilities					32,280		14,060
Deferred tax liabilities					4,855		4,164
					37,387		18,553
Total liabilities					47,636		27,425
Net assets					21,716		19,298
Equity
Called up share capital					8,182		8,182
Share premium account					7,287		7,287
Merger reserve					(4,999)		(4,999)
Retained earnings					11,246		8,828
Total equity					21,716		19,298

These financial statements were approved by the Board of Directors on 1 October 2008

Sheena Beckwith

Director

Powerleague Group plc

Group cash flow statement

For the year ended 28 June 2008

					52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
			Notes		£'000		£'000
Net cash flow from operating activities			7		6,896		6,421
Cash flows from investing activities
Purchase of property, plant and equipment					(6,355)		(4,790)
Sale of property, plant and equipment					-		45
Acquisition of subsidiary undertakings			6		(18,077)		-
Interest received					2		6
Net cash flow from investing activities					(24,430)		(4,739)
Cash flows from financing activities
Interest paid					(1,484)		(1,170)
Dividends paid to shareholders					(900)		(614)
New borrowings					24,385		17,633
Repayment of borrowings					(3,852)		(17,860)
Net cash flow from financing activities					18,149		(2,011)
Net increase/(decrease) in cash and cash equivalents					615		(329)
Cash and cash equivalents at beginning of year					(927)		(598)
Cash and cash equivalents at end of year					(312)		(927)

Powerleague Group plc

Notes to the financial information 

1 Accounting policies

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union as they apply to the financial statements of the Group for the year ended 28 June 2008 and applied in accordance with the Companies Act 1985. The consolidated financial information has been prepared on a going concern basis under the historical cost convention. The Group financial information is presented in pounds sterling and all values are rounded to the nearest thousand (£'000) unless otherwise indicated.

Changes in accounting policy

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial performance or position of the Group in the current or prior periods, although in certain cases, they did give rise to additional disclosures.

IFRS 7 Financial Instruments: Disclosures

IAS 1 Amendment - Presentation of Financial Statements: Capital Disclosures

IFRIC 8 Scope of IFRS 2

IFRIC 9 Reassessment of Embedded Derivatives

IFRIC 10 Interim Financial Reporting and Impairment

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions 

IFRS 7 Financial Instruments: Disclosures

This standard requires disclosures that enable users of the financial statements to evaluate the significance of the Group's financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are included throughout the financial statements. While there has been no effect on the financial position or results, comparative information has been revised where necessary.

IAS 1 Presentation of Financial Statements

This amendment requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group's objectives, policies and processes for managing capital. These new disclosures are shown in the capital management section of the Financial Review.

IFRIC 8 Scope of IFRS 2

This interpretation requires IFRS 2 to be applied to any arrangements in which the entity cannot identify specifically some or all of the goods received, in particular where equity instruments are issued for consideration which appears to be less than fair value. As equity instruments are only issued to employees in accordance with the employee share scheme, the interpretation has no impact on the financial position or performance of the Group.

IFRIC 9 Reassessment of Embedded Derivatives

IFRIC 9 states that the date to assess the existence of an embedded derivative is the date that an entity first becomes a party to the contract, with reassessment only if there is a change to the contract that significantly modifies the cash flows. As the Group has no embedded derivative requiring separation from the host contract, the interpretation has no impact on the financial position or performance of the Group.

IFRIC 10 Interim Financial Reporting and Impairment

IFRIC 10 requires that an entity must not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instruments or a financial asset carried at cost. As the Group had no impairment losses previously reversed, the interpretation had no impact on the financial position or performance of the Group.

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions

IFRIC 11 requires arrangements whereby an employee is granted rights to an entity's instruments to be accounted for as an equity-settled scheme, even in if the entity buys the instruments from another party, or the shareholders provide the equity instruments needed. As the Group had no such arrangement, the interpretation has no impact on the financial position or performance of the Group.

2 Exceptional items

			52 weeks  ended 28 June 2008	52 weeks  ended 30 June 2007
			£'000	£'000
Costs incurred in conversion to IFRS accounting			74	-
Loss on sale of assets			-	28
			74	28

3 Taxation

 

Tax on profit on ordinary activities

The charge for taxation on profit for the year comprises:

			52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
			£'000		£'000
Current tax:
UK corporation tax			1,011		1,329
Adjustment in respect of prior years			(70)		(57)
			941		1,272
Deferred tax:
Origination and reversal of temporary differences			639		306
Adjustment in respect of prior years			52		-
Effect of reduction in tax rate from 30% to 28%			-		(279)
			691		27
			1,632		1,299

UK corporation tax is calculated at 29.5% (2007: 30%) of the estimated assessable profit for the year. 

Reconciliation of the total tax charge

The charge for the year can be reconciled to the profit for the year before taxation per the consolidated income

statement as follows:

			52 weeks  ended 28 June 2008		52 weeks  ended 30 June 2007
			£'000		£'000
Profit for the year before taxation			4,962		4,958
Profit for the year before taxation multiplied by the effective rate of corporation tax in the UK of 29.5% (2007: 30%)			1,464		1,487
Effects of:
Expenses not deductible for tax purposes			220		136
Adjustment in respect of rate changes			(34)		(279)
Adjustment in respect of prior years			(18)		(57)
Other			-		12
Charge for taxation on profit for the year			1,632		1,299

4 Earnings per share

Basic earnings per ordinary 10p share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, which was 81,820,000 (2007: 81,820,000).

Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. For the year ended 28 June 2008, this was 81,820,000 (2007: 81,954,000).

	2008			2007
	Profit for the year	Earnings per share		Profit for the year	Earnings per share
	£000	p		£000	P
Basic earnings per share	3,331	4.07		3,659	4.47
Diluted earnings per share	3,331	4.07		3,659	4.47

		2008		2007
		No. ('000)		No. ('000)
Basic weighted average number of shares		81,820		81,820
Dilutive potential ordinary shares:
Employee share options		-		134
Diluted weighted average number of shares		81,820		81,954

5 Property, plant and equipment 

Group

	Long leasehold and
	Freehold property
	Head office property	Operating  facilities	Equipment,  fixtures & fittings	Computer  equipment	Assets under construction £'000	Total
	£'000	£'000	£'000	£'000		£'000
Cost
At 1 July 2007	501	52,960	3,467	1,552	2,602	61,082
Additions	218	5,119	723	295	-	6,355
Acquisition of subsidiary	-	-	824	-	-	824
Transfers	-	2,602	-	-	(2,602)	-
At 28 June 2008	719	60,681	5,014	1,847	-	68,261
Accumulated depreciation
At 1 July 2007	69	13,573	2,321	1,179	-	17,142
Charge for the year	10	1,751	297	244	-	2,302
At 28 June 2008	79	15,324	2,618	1,423	-	19,444
Net book value
At 28 June 2008	640	45,357	2,396	424	-	48,817
At 30 June 2007	432	39,387	1,146	373	2,602	43,940

6 Intangible assets

Group

			Goodwill	Order backlog	Customer relationships	Total
			£'000	£'000	£'000	£'000
Cost:
At 1 July 2007			258	-	-	258
Acquisition of subsidiary undertaking			16,024	161	1,068	17,253
At 28 June 2008			16,282	161	1,068	17,511
Amortisation:
At 1 July 2007			-	-	-	-
Charge for the year			-	54	71	125
At 28 June 2008			-	54	71	125
Net book value at 28 June 2008			16,282	107	997	17,386
Net book value at 30 June 2007			258	-	-	258

On 26 February 2008 the Group acquired five indoor centres from JJB Sports plc. 

Fair value table

	Book value		Fair value on acquisition
	£'000		£'000
Tangible Fixed assets	824		824
Intangible assets (see note (a) below)	-		1,229
Net assets	824		2,053
Goodwill arising			16,024
			18,077
Discharged by:
Purchase price			17,426
Costs associated with the acquisition			651
			18,077

Note (a) - the intangible assets represent the fair value of customer relationships and backlog orders which were in place at the date of acquisition. Their fair value has been calculated in accordance with IFRS 3 by Grant Thornton, LLP, Chartered Accountants on a discounted cash flow basis, based on estimates supplied by management. Included in the £16,024,000 of goodwill recognised above are certain intangible assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies and an assembled workforce.

7 Reconciliation of cash flow from operating activities

Group

	52 weeks  ended  28 June 2008		52 weeks  ended  30 June 2007
	£'000		(restated)* £'000
Profit for the year	3,331		3,659
Taxation expense	1,632		1,299
Net interest expense	1,683		1,104
Operating profit	6,646		6,062
Adjustments for:
Depreciation of property, plant and equipment	2,302		2,279
Amortisation of intangible assets	125		-
Release of deferred grant	(1)		(1)
(Increase)/decrease in inventories	(36)		16
Increase in receivables	(567)		(288)
Decrease in payables	(333)		(231)
Cash flow generated from operating activities	8,136		7,837
Income taxes (paid)/refunded	(1,240)		(1,416)
Net cash flow from operating activities	6,896		6,421

 

* Net cash flow from operating activities for the period ended 30 June 2007, which was previously reported as £6,183,000, has been restated to reflect a change in the increase in receivables by £238,000. The amount reported in the cash flow statement as received from the sale of assets held for sale was reduced by £238,000 as this sum is receivable over a period of 9 years.

Company

	52 weeks  ended  28 June 2008		52 weeks ended  30 June 2007
	£'000		£'000
Profit for the year	2,200		953
Taxation expense	124		142
Interest received	(602)		(618)
Dividend received	(1,881)		(614)
Operating loss	(159)		(137)
Cash flow from operating activities	(159)		(137)
Income taxes paid	(151)		(157)
Net cash flow from operating activities	(310)		(294)

 

8 Reconciliation of net cash flow to movement in net debt

	52 weeks  ended  28 June 2008		52 weeks ended  30 June 2007
	£'000		£'000
Increase/(decrease) in cash in the year	615		(329)
Net cash (inflow)/outflow from (increase)/decrease in debt	(20,533)		227
Movement in net debt arising from cash flows	(19,918)		(102)
Amortisation of issue costs	(12)		(9)
Opening net debt	(18,502)		(18,391)
Closing net debt	(38,432)		(18,502)

9 Analysis of changes in net debt

		At 1 July 2007	Cash flows	Non-cash transactions	At 28 June 2008
		£'000	£'000	£'000	£'000
Cash in hand and at bank		549	21	-	570
Bank overdraft		(1,476)	594	-	(882)
		(927)	615	-	(312)
Debt due within one year		(3,515)	(2,325)	-	(5,840)
Debt due after one year		(14,060)	(18,208)	(12)	(32,280)
Closing net debt		(18,502)	(19,918)	(12)	(38,432)

10 Post Balance Sheet Events

On 28 July 2008, the Group acquired the entire share capital of Soccer Sensations Ltd for a consideration of £1,825,000, payable in cash. Soccer Sensations Ltd operates a 5-a-side centre in Stockton on Tees. At the same time, a new term loan facility was drawn, which is repayable over 6 years commencing in October 2009 and bearing interest at 2% over LIBOR. With effect from August 2008, the margin on the Group's base-rate linked borrowing increased from 1% to 1.25%.

With effect from September 2008, the terms of repayment on the Group's term loan of £14,107,000 were varied to extend repayment from 4 years to 6 years, with a variation in the margin on this loan from 1.25% to 1.5%. At the same time, the interest cover covenant for the Group's borrowing was reduced from 3:1 to 2.75:1.

11 Annual report and accounts

The annual report and accounts for the year ended 28 June 2008 will be posted to Shareholders in October 2008. Additional copies will be available via the Company's website, www.powerleagueplc.com, or from the Company Secretary at the Company's Head Office at Anchor Grounds, Blackhall St, Paisley, PA1 1TD.

 

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Related Shares:

Power Probe