Final Results

2nd Oct 2009 07:00



Powerleague Group plc 

Preliminary Results for the year ended 4 July 2009

2 October 2009

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 2009

*	Revenue increased by 17% to £30.9 million (2008: £26.3 million)
*	Net cash flow from operating activities increased by 23% to £8.5 million (2008: £6.9 million)
*	Net debt reduced by £2.0 million to £36.4 million (2008: £38.4 million)
*	EBITDA before exceptional items increased by 12% to £10.2 million (2008: £9.1 million)
*	Adjusted operating profit (note 1) before exceptional items up 10% to £7.5 million (2008: £6.8 million)
*	Adjusted profit before taxation (notes 1,2) and exceptional items increased by 4% to £5.4 million (2008: £5.2 million)
*	Adjusted earnings per share before IAS 39 adjustment increased by 6% to 4.55p (2008: 4.29p)
*	Sponsorship and events revenue increased by 3% (2008: 9%)
*	Proposed recommended acquisition of the entire issued share capital of Powerleague Group Plc by Patron Sports Leisure S.a.r.l by means of a Scheme of Arrangement that values Powerleague at approximately £42.5m. See separate announcement for full details.

Claude Littner, Executive Chairman commented: "I am delighted to report yet another set of strong results with further growth in revenue and adjusted operating profit before exceptional items. We have steadfastly and consistently maintained that our business is highly resilient to economic downturns and this has proven to be the case."

* Note: In order to provide a better indication of underlying business performance, reported earnings have been adjusted for note 1) amortisation of intangible assets and note 2) the impact of IAS 39 re-measurement of derivative financial instruments (further details are given in note 4).

Results for the period to 4 July 2009 represents 53 weeks' trading and the period to 28 June 2008 represent 52 weeks' trading and references to "year" throughout these accounts refer to these periods as defined.

Enquiries:
Tavistock Communications	Powerleague Group plc
Lulu Bridges	Claude Littner, Executive Chairman
Paul Young	Sean Tracey, Chief Executive
Tel: 020 7920 3150	Tel: 0141 887 7758

Powerleague Group plc

Year ended 4 July 2009

Chairman's Statement

Introduction

I am delighted to report yet another set of strong results with further growth in revenue and adjusted operating profit before exceptional items.

This has been a challenging year and the leisure industry has been impacted as consumer spending has weakened. We have worked very hard to grow our core business and retain our corporate customers and blue chip sponsors. There have been cut-backs in corporate budgets in response to the severe economic and financial downturn but we have found innovative ways of keeping our sponsors involved. In spite of the difficult environment, we have successfully grown our sponsorship and events income. 

The significant investment made in acquiring the Soccer Domes from JJB Sports plc in February 2008 has yielded excellent results. Our estate continues to demonstrate its strongly cash generative nature with net cash flow from operating activities up by 23% to £8.5 million (2008: £6.9 million), and this in spite of limiting our price increases to just a handful of centres during the financial year.

We have steadfastly and consistently maintained that our business is highly resilient, but not immune, to economic downturns and this has proven to be the case. The Board decision taken, in July 2008, to make 2009 a year in which we consolidated and paused for breath after our accelerated capital investment in 2008 has proved to be more than justified, and we have used our time wisely with the integration of the acquired businesses and new openings.

I indicated in my interim statement that we would pay down a proportion of our debt and concentrate resources into building and improving our portfolio of pipeline sites. I can now confirm that we have achieved these objectives, having reduced our net indebtedness by £2 million to £36.4 million and we have in place an excellent, high quality pipeline of future sites.

Dividends 

Given that the recession appears to be very deep and far-reaching, we have decided not to recommend a dividend and instead to retain the funds for use in partly funding the next two new centres this year with a view to revisiting the dividend position once more stability returns to the economy.

Outlook

We are well placed to continue to successfully develop the business. Our focus over the next period is to maximise revenue and profit within our core estate, open two new centres in the first half of the financial year, in Central London, near Regents Park and Yardley in the Midlands, continue to grow sponsorship and events, extend our pipeline of potential new sites and reduce our level of indebtedness.

Finally, I take this opportunity to thank our loyal staff for a year during which they exhibited outstanding effort and achievement. 

 

Claude Littner

Chairman

Powerleague Group plc

Year ended 4 July 2009

Chief Executive's Report

As outlined in the Chairman's statement, this year has been one of strong financial resilience and progress within the business, despite the difficult prevailing economic climate. 

Overview

During the year under review we have worked extremely hard to ensure our customers have the best possible experience at our network of national 5-a-side centres. Our first-class customer service and experienced staff, along with unique and exclusive sponsors' events kept our customers playing on a regular weekly basis throughout the year. The resilience of our core offering was reflected in the stable pitch revenue we achieved for the year, with only a 1% decline, despite the impact of the unprecedented snowfall in February, which affected revenue and profits by £200,000. Given that the vast majority of centres' prices were held at 2008 levels, this evidences that underlying customer retention remains strong. Encouragingly we have also seen a halt in the decline in bar revenues and for the fifth consecutive year, we have continued to improve our sponsorship and events income with a 3% increase over the prior year. 

Acquisition

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 centres throughout the UK. We are encouraged that this centre has made a positive contribution to revenue and profit growth in this financial year and expect further improvement as we bring our expertise to bear.

Soccer Domes

Our success in acquiring the JJB Soccer Domes in the second half of the last financial year combined the third largest 5-a-side operator in the UK with Powerleague, already the largest player in the market. This acquisition of premium quality indoor centres created a number of exciting growth opportunities for the Group to exploit and has been welcomed by customers and sponsors. All five of the Soccer Domes have been successfully integrated into our core estate and developed well as the year progressed.

Capital Investment

In the last financial year, we have continued to invest in our core estate. 85% of our pitches now have the latest playing surfaces, up from less than 50% four years ago.

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

The refurbishment of six bars within the core estate together with the introduction of a new pricing strategy for weekend functions helped to reverse the previous year's bar decline of 10% to flat against prior year. We regard this as a positive sign, as the impact of the smoking ban has also worked through the system.

Pipeline Sites

In a reversal of the general trend, the last twelve months' unique market conditions have widened the scope of sites available for development and have thus provided us with the opportunity to strengthen our already exciting pipeline. We have been well placed to take advantage of this as our future sites are not only in strong locations but have sustainable rents and lease agreements 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 portfolio of blue-chip sponsors and corporate events established 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 for the fifth consecutive year with 3% growth. 

Despite substantial reductions in marketing spend from major brands and companies in the last twelve 12 months and a reduction in summer corporate tournaments, we have still delivered improvement as the retention of the majority of our long term sponsors helped underpin our performance.  

After a highly successful, six year association, Xbox have taken a strategic change of direction and will not be renewing their headline sponsorship in the new financial year. We have greatly enjoyed our close association with Xbox and they have expressed their appreciation for the exposure we were able to offer and the professional way in which we worked. We are in discussions with a number of potential sponsors and are cautiously optimistic of securing a new headline sponsor during this year. 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. 

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. We have strengthened our links with Clic Sargent and assisted in fundraising for the Meningitis trust; we also 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, thirteen education sector institutions, where we have a centre, derive an additional income stream from our rental payments. Over 20,000 children aged between six and sixteen have free-play access to our centres on a weekly basis.

Disposals

As the Group has sought to increase the quality of the estate, as evidenced by the JJB Soccer Dome acquisition, the opportunity to dispose of two of the "tail" centres in the last 12 months has resulted in the conclusion of the sale of Warrington in January 2009 and Norwich post year end in July 2009. Further details are provided in note 9.

New Centres

We currently have 2 centres under construction which will open in the first half of the new financial year. Yardley, in the West Midlands will have six 5-a-side pitches and one 7-a-side pitch and is scheduled to open in the autumn. The centre will not have a bar and will focus on driving pitch revenue, our key income stream and profit generator.

The second centre scheduled to open this year will be a temporary one in the heart of London, by Regents Park, and will have six 5-a-side pitches and one 7-a-side pitch. There will be no bar and focus will be on driving pitch revenue. We hope to replicate the success of our London City centre in this outstanding West End location. 

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 team has shown genuine commitment, energy and expertise as we have traded the business through the difficult economic climate. 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 demonstrated the resilience of our business and its cash-generative nature, growing sales and operating profit before exceptional items while successfully reducing our level of indebtedness. 

We are all excited about the future prospects for the Group as a whole and look forward to further growth as we develop our pipeline of new sites and attract even greater numbers to Powerleague's unique brand of 5-a-side football.

Sean Tracey

Chief Executive

Powerleague Group plc

Year ended 4 July 2009

Financial Review 

Revenue and Profit

At £30.9 million, revenue in the year to 4 July 2009 increased by 17% over the prior year, which is an encouraging result, given the economic environment in which we have been operating.

EBITDA before exceptional items increased by 12% as detailed below:

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Profit for the year	2,296	3,331
Taxation expense	1,439	1,632
Net interest expense	2,898	1,683
Exceptional operating items	521	74
Depreciation of tangible fixed assets	2,697	2,302
Amortisation of intangible fixed assets	349	125
EBITDA before exceptional items	10,200	9,147
EBITDA margin before exceptional items	33.0%	34.7%

EBITDA margin was impacted by two main factors in the year:-

- while the Soccer Domes delivered the EBITDA forecast at the time of acquisition, a remarkable result given the downturn experienced and serving to emphasise the overall resilience of the 5-a-side football business, there is a short-term dilutive impact from the relatively higher property costs at these centres. This dilutive impact will lessen as we continue to drive sales and operational efficiency in these impressive facilities.

- despite fixing prices in advance, utilities costs represented a higher proportion of total costs than in prior year. This impact has lessened in the current year, as prices have fallen markedly.

Meanwhile, our staff costs ratio improved from 22% to 21% as we sought to maximise efficient staffing structures throughout our centres.

Interest

Finance costs have increased by £1.2 million to £2.9 million. Following from the significant capital expenditure in 2008 and early 2009, during the current year net debt rose to a high of £39.9 million, although this reduced to £36.4 million by year-end (2008: £38.4 million). £0.9 million of the increase is due to these higher borrowings, despite the reductions in base rate and LIBOR during the year. In addition, a cap and collar arrangement was implemented in July 2008 and, as required under IAS 39, a loss of £0.8 million has been recognised on the fair value of this financial derivative. Full details are given in note 4.

Taxation

A detailed analysis of taxation is set out at note 5.

The effective rate of taxation is 39%, which is higher than the standard rate of 28%, as a result of adding back non-qualifying depreciation and impairment to arrive at profit chargeable to taxation.

Earnings per Share

Unadjusted earnings per share for the year was 2.81 pence compared with 4.07 pence in the previous year. As detailed above, whilst EBITDA increased during the year, impairment costs, higher depreciation and finance costs have impacted on the year's results. An adjusted earnings per share calculation is provided below, illustrating the impact of exceptional items, amortisation and the impact of IAS 39 and demonstrating that the underlying business continues to deliver improved results:

	53 weeks ended 4 July 2009	52 weeks ended 30 June 2008
	£'000	£'000
Profit for basic and diluted earnings per share	2,296	3,331
Exceptional operating items	521	74
Amortisation of intangible fixed assets	349	125
Taxation effect of exceptional items	-	(22)
Profit for basic and diluted, adjusted earnings per share	3,166	3,508
Impact of IAS 39	770	-
Taxation effect of IAS 39	(216)	-
Profit for basic and diluted, adjusted earnings per share before IAS 39 adjustment	3,720	3,508
Adjusted earnings per share before IAS 39 adjustment (increased by 6%)	4.55	4.29

Cash Flow

Cash flow from operating activities increased by 23% to £8,496,000 from £6,896,000. Capital expenditure was lower in 2009 than in 2008, facilitating a reduction in net debt of £2,061,000, whilst an additional £711,000 of interest costs was paid out. Despite the increase in interest costs, net cash decreased by only £32,000.

Capital Management

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year end 4 July 2009 or 28 June 2008. 

The Group monitors capital using a gearing ratio of net debt divided by capital plus net debt. Net debt comprises total bank loans less cash and cash equivalents and capital comprises equity attributable to the equity holders of the parent. The Group's policy is to maintain the gearing ratio below 75%. 

Calculation of gearing ratio

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Cash and cash equivalents	(39)	(570)
Short-term borrowings	5,668	6,722
Non-current instalments due on bank loans	30,766	32,280
Net debt	36,395	38,432
Capital	23,112	21,716
Net debt	36,395	38,432
	59,507	60,148
Gearing ratio	61%	64%

Changes in the Group's business environment and response to those changes are discussed in the Chairman's and Chief Executive's reports on pages 3 to 5.

Sheena Beckwith

Finance Director

Powerleague Group plc

Group income statement

for the year ended 4 July 2009

		53 weeks ended 4 July 2009 (before IAS 39 adjustment)	IAS 39 adjustment	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	Notes	£'000	£'000	£'000	£'000
Revenue		30,870		30,870	26,338
Cost of sales		(4,761)		(4,761)	(4,224)
Gross profit		26,109		26,109	22,114
Administrative expenses		(18,955)		(18,955)	(15,394)
Exceptional items	3	(521)		(521)	(74)
Total administration expenses		(19,476)		(19,476)	(15,468)
Operating profit		6,633		6,633	6,646
Analysed as:
Operating profit excluding exceptional items		7,154		7,154	6,720
Exceptional items	3	(521)		(521)	(74)
Finance revenue		26		26	2
Finance costs	4	(2,154)	(770)	(2,924)	(1,685)
Profit for the year before tax		4,505	(770)	3,735	4,963
Tax expense	5	(1,655)	216	(1,439)	(1,632)
Profit for the year		2,850	(554)	2,296	3,331
Earnings per ordinary share
- basic and diluted	6			2.81	4.07
- basic and diluted, adjusted	6	4.55		3.87	4.29

Group statement of recognised income and expense

for the year ended 4 July 2009

	53 weeks ended 4 July 2009 (before IAS 39 adjustment)	IAS 39 adjustment	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000	£'000	£'000
Profit for the year	2,850	(554)	2,296	3,331
Total recognised income and expense for the year attributable to equity holders of the parent	2,850	(554)	2,296	3,331

Powerleague Group plc

Group balance sheet

as at 4 July 2009

		As at 4 July 2009	As at  28 June  2008
	Notes	£'000	£'000
Non-current assets
Property, plant and equipment	7	46,946	48,817
Intangible assets	8	19,005	17,386
Other receivables		133	152
		66,084	66,355
Current assets
Inventories		203	194
Trade and other receivables		1,739	2,233
Cash and cash equivalents		39	570
		1,981	2,997
Assets in disposal group held for sale	9	164	-
Total assets		68,229	69,352
Current liabilities
Trade and other payables		2,088	3,255
Taxation payable		713	272
Interest bearing loans and borrowings		5,668	6,722
Derivative instrument		711	-
		9,180	10,249
Non-current liabilities
Other payables		151	252
Interest bearing loans and borrowings		30,766	32,280
Derivative instrument		59	-
Deferred tax liabilities		4,951	4,855
		35,927	37,387
Liabilities in disposal group held for sale	9	10	-
Total liabilities		45,117	47,636
Net assets		23,112	21,716
Equity
Called up share capital		8,182	8,182
Share premium account		7,287	7,287
Merger reserve		(4,999)	(4,999)
Retained earnings		12,642	11,246
Total equity		23,112	21,716

These financial statements were approved by the Board of Directors on 2 October 2009. 

Sheena Beckwith

Director

Powerleague Group plc

Group cash flow statement

For the year ended 4 July 2009

		53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	Notes	£'000	£'000
Net cash flow from operating activities	10	8,496	6,896
Cash flows from investing activities
Purchase of property, plant and equipment		(1,767)	(6,355)
Sale of property, plant and equipment		255	-
Acquisition of subsidiary undertakings	8	(2,004)	(18,077)
Costs of acquisition		(77)	-
Cash acquired with subsidiary undertaking		235	-
Subsidiary undertaking loan repaid on acquisition		(40)	-
Interest received		26	2
Net cash flow from investing activities		(3,372)	(24,430)
Cash flows from financing activities
Interest paid		(2,195)	(1,484)
Dividends paid to shareholders		(900)	(900)
New borrowings		2,615	24,385
Repayment of borrowings		(4,676)	(3,852)
Net cash flow from financing activities		(5,156)	18,149
Net (decrease)/increase in cash and cash equivalents		(32)	615
Cash and cash equivalents at beginning of year		(312)	(927)
Cash and cash equivalents at end of year		(344)	(312)

Powerleague Group plc

Year ended 4 July 2009

Notes to the financial statements

1. General information

The financial statements comprise the financial statements of Powerleague Group plc and its wholly owned subsidiaries (the "Group") for a period of fifty-three weeks to 4 July 2009 ("2009"). The previous period was fifty-two weeks to 28 June 2008 ("2008"). Powerleague Group plc is an AIM listed company incorporated in the United Kingdom under the Companies Act 2006. 

The principal activity of the Group is to develop and manage 5-a-side football centres. At the year end, the Group operated from 43 centres throughout the UK, all but two of which are freehold or long leasehold.

The consolidated financial statements of the Group for the year ended 4 July 2009 were authorised for issue in accordance with a resolution of the Directors on 1 October 2009.

2. 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 4 July 2009 and applied in accordance with the Companies Act 2006. The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 4 July 2009. 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.

The format of the consolidated income statement presented in these financial statements differs from that used in the Group's consolidated financial statements for the 52 weeks ended 28 June 2008. The format of the consolidated income statement included within these financial statements, which now presents IAS 39 fair value adjustment in a separate column, has been adopted as it presents information in a format that is more relevant to users.

The financial information set out above does not constitute the company's statutory accounts for the years ended 4 July 2009 or 28 June 2008. Statutory accounts for the year ended 28 June 2008 have been delivered to the Registrar of Companies, and those for the year ended 4 July 2009 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not a contain statement under section 498(2) or (3) of the Companies Act 2006.

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.

New interpretations

IFRIC 13 "Customer Loyalty Programmes"

Amendments to standards

IAS 39 & IFRS 7 "Amendments to IAS 39/ IFRS 7 - Reclassification of Financial Instruments"

IFRIC 13 addresses how companies which grant their customers loyalty award credits (often called 'points') when buying goods or services should account for their obligation to provide free or discounted goods or services if and when the customers redeem the points. As the Group has no such programmes, the interpretation has no impact. The amendments to IAS 39/IFRS 7 relate to reclassification of financial assets and permit an entity to reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the 'fair value through profit or loss' category in particular circumstances. As the Group has no such financial assets, there is no impact on Group disclosure.

3. Exceptional items

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Gain on sale of tangible fixed assets	(149)	-
Impairment of assets held for sale	678	-
Impairment of property, plant and equipment	1,359	-
Reversal of former impairment	(1,367)	-
Costs incurred in conversion to IFRS accounting	-	74
	521	74

On 30 January 2009, the Group disposed of its site at Warrington to Warrington Borough Council for £255,000, recording a gain on sale of £149,000. The impairment of assets held for sale relates to the centre at Norwich, which has arisen following a change in local market conditions during the current year. At 4 July 2009, the centre was the subject of a provisional sale agreement.  

The impairment reflects the difference between the carrying value of the asset and the anticipated net proceeds from the sale. The disposal of this centre was completed on 22 July 2009. 

The impairment of property, plant and equipment of £1,359,000 arose where a review of the carrying amount of five centres indicated that, following a decline in trading, the discounted cash flows generated by those centres did not support their carrying amount. 

The reversal of previous impairment relates to the partial reversal of impairment of four centres that was recognised in the profit and loss account during 2001 - 2006 and has arisen as a result of an improvement in trading performance and in the expected cash flows arising from the operation of these facilities.

4. Finance costs

Finance costs

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Interest on bank loans and overdrafts	2,142	1,673
Amortisation of loan issue costs	12	12
Finance costs before the impact of IAS 39	2,154	1,685
Loss on valuation of derivative instrument	770	-
Total finance costs	2,924	1,685

On 30 July 2008, the Group entered into a two-year interest rate cap and collar arrangement over £17 million of LIBOR-related debt, with a cap of 6% and a floor of 5.36%. Under IAS 39, this arrangement requires to be incorporated at its fair value, resulting in a loss recognised in the income statement of £0.8 million (2007: nil). This loss has arisen due to the reductions in interest rates in recent months which have brought the floating rate of LIBOR below the floor of 5.36%. The loss will be extinguished over the remaining term of the cap and collar arrangement as the related liability is reduced by interest payments.

5. Taxation

Tax on profit on ordinary activities

The charge for taxation on profit for the year comprises:

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Current tax:
UK corporation tax	1,367	1,011
Adjustment in respect of prior years	2	(70)
	1,369	941
Deferred tax:
Origination and reversal of temporary differences	70	639
Adjustment in respect of prior years	-	52
	70	691
	1,439	1,632

UK corporation tax is calculated at 28% (2008: 29.5%) 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:

	53 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Profit for the year before taxation	3,735	4,963
Profit for the year before taxation multiplied by the effective rate of corporation tax in the UK of 28% (2008: 29.5%)	1,046	1,464
Effects of:
Expenses not deductible for tax purposes	391	220
Adjustment in respect of rate changes	-	(34)
Adjustment in respect of prior years	2	(18)
Charge for taxation on profit for the year	1,439	1,632

Factors that may affect future tax charges

A deferred tax asset has not been recognised in respect of timing differences relating to non-trading deficits and capital losses as there is insufficient evidence that the assets will be recovered. The amount of the asset not recognised is £666,000 (2008: £606,000). The asset would be recovered if appropriate future taxable profits are made.

6. Earnings per share

	2009		2008
	Profit for the year	Earnings per share	Profit for the year	Earnings per share
	£000	p	£000	p
Basic and diluted earnings per share	2,296	2.81	3,331	4.07
Basic and diluted, adjusted earnings per share	3,166	3.87	3,508	4.29
Basic and diluted, adjusted earnings per share before IAS 39 adjustment	3,720	4.55	3,508	4.29

 

Basic and diluted 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 (2008: 81,820,000).

Basic and diluted, adjusted earnings per ordinary 10p share is calculated using profit adjusted for exceptional items, amortisation of intangible fixed asset, the impact if IAS 39 and the taxation effect of those items. This measure has been utilised to exclude one-off exceptional items and thus enable future adjusted earnings per share calculations, which are not affected by the above items, to be meaningfully compared with the past.

Reconciliation of profit for the year:

	53 weeks ended 4 July 2008	52 weeks ended 30 June 2008
	£'000	£'000
Profit for basic and diluted earnings per share	2,296	3,331
Exceptional operating items	521	74
Amortisation of intangible fixed assets	349	125
Taxation effect of exceptional items	-	(22)
Profit for basic and diluted, adjusted earnings per share	3,166	3,508
Impact of IAS 39	770	-
Taxation effect of IAS 39	(216)	-
Profit for basic and diluted, adjusted earnings per share before IAS 39 adjustment	3,720	3,508

7. Property, plant and equipment 

Group

	Long leasehold and Freehold property
	Head office property	Operating facilities	Equipment, fixtures & fittings	Computer equipment	Assets under construction	Total
	£'000	£'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 and 29 June 2008	719	60,681	5,014	1,847	-	68,261
Additions	324	921	362	160	-	1,767
Acquisition of subsidiary undertaking	-	-	13	-	-	13
Disposals	-	(1,234)	(18)	(18)	-	(1,270)
Transfer of assets held for disposal	-	(1,050)	(30)	(14)	-	(1,094)
At 4 July 2009	1,043	59,318	5,341	1,975	-	67,677
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 and 29 June 2008	79	15,324	2,618	1,423	-	19,444
Charge for the year	9	1,855	562	271	-	2,697
Disposals	-	(1,127)	(5)	(18)	-	(1,150)
Impairment of assets held for sale *	-	678	-	-	-	678
Impairment of property, plant and equipment *	-	1,359	-	-	-	1,359
Reversal of former impairment *	-	(1,367)	-	-	-	(1,367)
Transfer of assets held for disposal	-	(891)	(25)	(14)	-	(930)
At 4 July 2009	88	15,831	3,150	1,662	-	20,731
Net book value at 4 July 2009	955	43,487	2,191	313	-	46,946
Net book value at 28 June 2008	640	45,357	2,396	424	-	48,817
Net book value at 30 June 2007	432	39,387	1,146	373	2,602	43,940

* Reported in exceptional items in the income statement. 

At 4 July 2009, the Group had entered into contractual commitments for expenditure on property, plant and equipment amounting to £759,000 (2008: £400,000)

8. 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 and 29 June 2008	16,282	161	1,068	17,511
Adjustment of goodwill on former acquisitions	12	-	-	12
Acquisition of subsidiary undertaking	1,859	11	94	1,964
Deferred taxation released	(8)	-	-	(8)
At 4 July 2009	18,145	172	1,162	19,479
Amortisation
At 1 July 2007	-	-	-	-
Charge for the year	-	54	71	125
At 28 June 2008 and 29 June 2008	-	54	71	125
Charge for the year	-	118	231	349
At 4 July 2009	-	172	302	474
Net book value at 4 July 2009	18,145	-	860	19,005
Net book value at 28 June 2008	16,282	107	997	17,386
Net book value at 30 June 2007	258	-	-	258

On 29 July 2008 the Group acquired 100% of Soccer Sensations Limited, which operates a centre at Stockton-on-Tees. 

Fair value table

	Book  value	Fair value  on acquisition
	£'000	£'000
Tangible Fixed assets	-	13
Intangible assets (see note (a) below)	-	105
Stock	4	4
Debtors	1	1
Cash and cash equivalents	235	235
Creditors	(27)	(27)
Other taxes and social security costs	(11)	(11)
Accruals	(20)	(20)
Loan	(40)	(40)
Corporation tax	(5)	(5)
Deferred taxation	-	(33)
Net assets	137	222
Goodwill arising		1,859
		2,081
Discharged by:
Purchase price		2,004
Costs associated with the acquisition		77
		2,081

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 £1,859,000 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.

The amount of net profit before taxation generated by this centre since the acquisition date was £252,000. If the combination had taken place at the beginning of the financial year, the profit for taxation for the Group would have been £3,750,000 and revenue from continuing operations would have been £30,908,000. Cash generated by these centres cannot readily be disclosed as cash, debtors and creditors are accounted for across the whole business and are not separable.

During the year ended 28 June 2008, the Group acquired five indoor centres from JJB Sports plc.

9. Assets and liabilities in disposal group held for sale

In March 2009, the Group reached agreement to sell its Norwich, as the location of the centre limited the ability to satisfactorily develop the business. At 4 July 2009, the assets of the centre were written down to fair value less costs to sell of £164,000 resulting in an impairment recognised within exceptional items (note 3) of £678,000. The sale was completed in July 2009. Liabilities of £10,000 held for sale at 4 July 2009 related to the Capital Goods Scheme liability for the Norwich centre which ceased to be a liability of the Group at the date of the disposal.

10. Reconciliation of cash flow from operating activities

  Group

	52 weeks ended 4 July 2009	52 weeks ended 28 June 2008
	£'000	£'000
Profit for the year	2,296	3,331
Taxation expense	1,439	1,632
Net interest expense	2,898	1,683
Operating profit	6,633	6,646
Adjustments for:
Depreciation of property, plant and equipment	2,697	2,302
Amortisation of intangible assets	349	125
Impairment of tangible fixed assets	670
Gain on disposal of tangible fixed assets	(149)
Release of deferred grant	(1)	(1)
Increase in inventories	(9)	(36)
Decrease/(increase) in receivables	513	(567)
Decrease in payables	(1,293)	(333)
Cash flow generated from operating activities	9,410	8,136
Income taxes paid	(914)	(1,240)
Net cash flow from operating activities	8,496	6,896

11. Reconciliation of net cash flow to movement in net debt

	52 weeks  ended  4 July 2009	52 weeks  ended  28 June 2008
	£'000	£'000
(Decrease)/increase in cash in the year	(32)	615
Net cash outflow/(inflow) from decrease/(increase)/ in debt	2,081	(20,533)
Movement in net debt arising from cash flows	2,049	(19,918)
Amortisation of issue costs	(12)	(12)
Opening net debt	(38,432)	(18,502)
Closing net debt	(36,395)	(38,432)

12. Analysis of changes in net debt

	At 1 July 2008	Cash flows	Non-cash transactions	At 4 July 2009
	£'000	£'000	£'000	£'000
Cash in hand and at bank	570	(531)	-	39
Bank overdraft	(882)	499	-	(383)
	(312)	(32)	-	(344)
Debt due within one year	(5,840)	555	-	(5,285)
Debt due after one year	(32,280)	1,526	(12)	(30,766)
Closing net debt	(38,432)	2,049	(12)	(36,395)

13. Post Balance Sheet Event

On 22 July 2009, the Group disposed of a centre in Norwich. Further details are provided in note 9.

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ENDFR CKBKQPBDKQKK

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