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Half Yearly Report

3rd Mar 2009 07:00

RNS Number : 1803O
Powerleague Group plc
03 March 2009
 



3 March 2009

The Champions of 5-a-side Powerleague Group plc

Half Yearly Financial Report for the 6 months ended 27 December 2008

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. 

Powerleague scores with strong sales and operating profit growth

*

Revenue increased by 29% to £14.6 million (2007: £11.3 million) 

*

Net cash flow from operating activities increased by 86% to £4.1 million (2007: £2.2 million) 

*

EBITDA increased by 19% to £4.3 million (2007: £3.6 million)

*

Adjusted operating profit (note 1) increased by 16% to £2.9 million (2007: £2.5 million)

*

Adjusted profit before taxation (note 1, 2) decreased to £1.7 million (2007: £1.9 million), reflecting the increased adjusted finance cost (note 2) of £1.3 million (2007: £0.6 million) which has arisen following the expansion in our estate by ten centres during 2007 and 2008

*

Adjusted earnings per share (note 2) excluding amortisation increased by 1% from 1.47p to 1.49p (2007: decreased by 3%)

*

Sponsorship and events revenue increased by 13% (2007: 12%)

*

Successful integration of the acquired JJB Soccer Domes

*

Acquisition of Stockton-on-Tees centre

Claude Littner Chairman commented: "The first half of the year has been one of robust sales and operating profit growth for the Group. Our centres have continued to perform strongly despite more challenging conditions in the leisure sector and wider economy. In the second half of the year, we will continue to focus on growing revenue and profits from our estate, use our strong cash generation to further reduce our debt, and progress and build up our pipeline of stellar future sites.

Whilst not immune from the current economic turmoil, I remain confident that Powerleague's performance will generate further profit growth in the second half of the year. We operate well within our bank facilities and have significant headroom in terms of our covenants"

Enquiries:

Powerleague Group plc

Cenkos Securities plc

Tavistock Communications

Claude Littner, Executive Chairman

Stephen Keys

Lulu Bridges

Sean Tracey, Chief Executive 

Paul Young

Tel: 020 7920 3150 (3 March only)

Tel: 020 7397 8926

Tel: 020 7920 3150

Tel: 0141 887 7758 (thereafter)

* 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 3).

Powerleague Group plc

Six months ended 27 December 2008

Chairman's Statement

Results

At this interim stage, I am pleased to report robust sales and operating profit growth for the Group which is in line with management expectations. Our centres continue to perform strongly despite more challenging conditions in the wider economy.

We are now reaping some of the benefits of the investments made to strengthen our portfolio. The JJB Soccer Domes, acquired in February 2008, are fully integrated and our core business is proving resilient although not immune from the economic malaise. 

Financial Review

Revenue for the six months ended 27 December 2008 was £14.6 million, an increase of 29% on the comparable period in 2007. On a like for like basis, branch sales decreased by 2% (2007: increased by 2%); like for like pitch income decreased by 1% (2007: increased by 5%) while like for like bar and other clubhouse revenues were down by 5% (2007: down by 8%). Central income from sponsorship and events was up by 13% (2007: 12%) as we continue to benefit from our long-term sponsorship agreements.

EBITDA increased by 19% to £4.3 million (2007: £3.6 million), with like-for-like EBITDA down by 3% (2007: up by 4%).

Finance costs have increased by £1.5 million to £2.1 million. Net debt rose to £39.9 million (2007: £22.8 million) due to the Soccer Domes acquisition and construction of four new centres in the prior year, coupled with the Soccer Sensations acquisition and building of additional pitches at our Mill Hill centre in the current year. £0.7 million of the increase is due to these higher borrowings. In addition, during the period, a cap and collar arrangement was implemented 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 3.

Taxation is provided for in this interim statement at the effective rate which is expected to apply for the full year to 3 July 2009.

Dividends 

In December 2008, the Company paid a final dividend of 1.1 pence per ordinary share in respect of the year ended 28 June 2008. Historically we have not paid dividends at the interim stage and once again, we do not propose an interim dividend.

Operational Review

The five Soccer Dome centres acquired from JJB have been successfully integrated and each is making a positive contribution to profits. The centres have benefited from the introduction of our proprietary systems and a more structured and pro-active sales and marketing approach. The acquisition of these spectacular indoor facilities has added extra quality and depth to the Powerleague brand and offering.

In August 2008, we announced that we had acquired Soccer Sensations Limited, an established 5-a-side football business located in Stockton-on-Tees. The centre is performing in line with expectations and has ten 'next generation' 5-a-side pitches and a geographic location that complements Powerleague's portfolio.

We continue to invest in our core estate; two pitches and additional car parking were added at Mill Hill in North London, one of the Group's busiest centres; five bars and function rooms were refurbished during summer 2008.

In January 2009, we disposed our Warrington centre, one of our weakest, 'first generation' sites, to the local council. This transaction will produce a small gain which will be reported in the second half of the year.

The income derived from sponsorship and events continued to grow in the first half of the year. We renewed our sponsorship agreement with Lucozade, our official sports drink, for a further four years on enhanced terms and I am pleased to report that we have also secured a two-year extension of our sponsorship agreement with Nike, the world's leading sports brand. However, we do believe we are unlikely to maintain this rate of growth in the second half-year as we anticipate that 'one-off' corporate clients may trim back their events and hospitality spend in the face of the worsening financial environment.

Outlook

As outlined in our last report, in the second half of this financial year we will continue to progress the three main elements of our strategy for this financial year. First, we will continue to focus on growing revenue and profits from our estate. Second, we intend to pay down debt and third, we will progress and build up our pipeline of sites.

Whilst few businesses are entirely immune from the current economic turmoil, I remain confident that Powerleague will prove resilient and will continue to prosper. Our business model is sound, the management team has the ability and determination to grow the business and continue to generate profits and we operate well within our bank facilities.

Claude Littner

Chairman

Powerleague Group plc

INDEPENDENT REVIEW REPORT 

For the six months ended 27 December 2008

Introduction 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 27 December 2008 which comprises the Group income statement, the Group statement of recognised income and expenses, the Group balance sheet, the Group cash flow statement and the related notes 1 to 7. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange. 

Our Responsibility 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 27 December 2008 is not prepared, in all material respects, in accordance with the accounting policies outlined in Note 1, which comply with IFRS's as adopted by the European Union and in accordance with the AIM Rules issued by the London Stock Exchange. 

Ernst & Young LLP

Glasgow

Powerleague Group plc

Group income statement

for the six months ended 27 December 2008

 

Notes

6 months 

ended 

27 December 

2008 

before IAS 39 

adjustment 

(unaudited)

 

 

IAS 39 

fair value 

adjustment 

(unaudited)

6 months 

ended 

27 December 

2008 

(unaudited)

6 months 

ended 

29 December 

2007 

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

 

£'000 

£'000 

£'000 

£'000 

£'000 

 

 

 

 

 

 

 

Revenue

 

14,555 

 

14,555 

11,261 

26,338 

 

 

 

 

 

 

 

Cost of sales

 

(2,361)

 

(2,361)

(1,893)

(4,224)

 

 

 

 

 

 

 

Gross profit

 

12,194 

 

12,194 

9,368

22,114 

 

 

 

 

 

 

 

Administrative expenses

 

(9,432)

 

(9,432)

(6,893)

(15,394)

Exceptional items

2

 

(74)

Total administration expenses

 

(9,432)

 

(9,432)

(6,893)

(15,468)

 

 

 

 

 

 

 

Operating profit 

 

2,762 

 

2,762 

2,475 

6,646 

 

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

 

Operating profit excluding exceptional items

 

2,762 

 

2,762 

2,475 

6,720 

Exceptional items

2

 

 

 

(74)

 

 

 

 

 

 

 

Finance revenue - bank interest

 

 

2 

2 

Finance costs

3

(1,266)

(813)

(2,079)

(612)

(1,685)

 

 

 

 

 

 

 

Profit for the period before tax

 

1,498 

(813)

685

1,865 

4,963 

 

 

 

 

 

 

 

Tax expense

4

(454)

228 

(226)

(659)

(1,632)

 

 

 

 

 

 

 

Profit for the period

 

1,044 

(585)

459 

1,206 

3,331 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per ordinary share

- basic and diluted

5

 

 

0.56 

1.47 

 

4.07 

Adjusted earnings per ordinary share

- basic and diluted

5

1.28 

 

1.47

4.07 

Powerleague Group plc

Group statement of recognised income and expense

for the six months ended 27 December 2008

 

6 months 

ended 

27 December 

2008 

before IAS 39 

adjustment 

(unaudited)

IAS 39 

fair value 

adjustment 

(unaudited)

6 months 

ended 

27 December 

2008 

(unaudited)

6 months 

ended 

29 December 

2007 

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

£'000 

£'000 

£'000 

£'000 

£'000

Profit for the period

1,044 

(585)

459 

1,206 

3,331 

Total recognised income and expense for the period attributable to equity holders of the parent

1,044 

(585)

459 

1,206 

3,331 

Powerleague Group plc

Group balance sheet

as at 27 December 2008

 

 

As at 

27 December 

2008 

(unaudited)

As at 

29 December 

2007 

(unaudited)

As at 

28 June

2008 

(audited)

 

Notes

£'000 

£'000 

£'000 

Non-current assets

 

 

 

 

Property, plant and equipment

 

48,754 

47,879 

48,817 

Intangible assets

 

19,185 

258 

17,386 

Other receivables

 

133 

289 

152 

 

 

68,072 

48,426 

66,355 

Current assets

 

 

 

 

Inventories

 

226 

171 

194 

Trade and other receivables

 

1,649 

1,322 

2,233 

Cash and cash equivalents

 

321 

321 

570 

 

 

2,196 

1,814 

2,997 

 

 

 

 

 

Assets in disposal group held for sale

 

124 

 

 

 

 

 

Total assets 

 

70,392 

50,240 

69,352 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

2,676 

2,203 

3,255 

Taxation payable

 

462 

613 

272 

Interest bearing loans and borrowings

 

6,926 

6,320 

6,722 

Derivative instrument

 

271 

 

 

10,335 

9,136 

10,249 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Other payables

 

144 

249 

252 

Interest bearing loans and borrowings

 

33,310 

16,802 

32,280 

Derivative instrument

 

542 

Deferred tax liabilities

 

4,758 

4,431 

4,855 

 

 

38,754 

21,482 

37,387 

 

 

 

 

 

Liabilities in disposal group held for sale

 

28 

 

 

 

 

 

Total liabilities 

 

49,117 

30,618 

47,636 

 

 

 

 

 

Net assets 

 

21,275 

19,622 

21,716 

 

 

 

 

 

Equity

 

 

 

 

Called up share capital

6

8,182 

8,182 

8,182 

Share premium account

6

7,287 

7,287 

7,287 

Merger reserve

6

(4,999)

(4,999)

(4,999)

Retained earnings

6

10,805 

9,152 

11,246 

Total equity

 

21,275 

19,622 

21,716 

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

Sheena Beckwith

Director

Powerleague Group plc

Group cash flow statement

For the six months ended 27 December 2008

 

6 months 

ended 

27 December 

2008 

(unaudited)

6 months 

ended 

29 December 

2007 

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

Notes

£'000

£'000 

£'000

 

 

 

 

Net cash flow from operating activities

7

4,077 

2,160 

6,896 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

(1,390)

(5,063)

(6,355)

Acquisition of subsidiary undertakings

(1,985)

(18,077)

Interest received

Net cash flow from investing activities

(3,373)

(5,061)

(24,430)

 

 

 

 

Cash flows from financing activities

 

 

 

Interest paid

(1,281)

(492)

(1,484)

Dividends paid to shareholders

(900)

(900)

(900)

New borrowings

2,456 

4,499 

24,385 

Repayment of borrowings

(2,275)

(1,763)

(3,852)

Net cash flow from financing activities

(2,000)

1,344 

18,149

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(1,296)

(1,557)

615 

Cash and cash equivalents at beginning of period

(312)

(927)

(927)

Cash and cash equivalents at end of period

(1,608)

(2,484)

(312)

Powerleague Group plc

Notes to the financial information

1. Accounting policies

Basis of preparation

This interim report was approved by the Board on 2 March 2009. The condensed set of financial statements in this interim report has been prepared in accordance with accounting policies which will be adopted in presenting the full year annual report and accounts for the year ending 3 July 2009. The full year annual report and accounts will be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European UnionThe Group has not applied IAS 34 Interim Financial Reporting in the preparation of these condensed interim financial statements, as it is not mandatory for AIM listed Companies.

The format of the consolidated income statement presented in these interim condensed set of 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 interim condensed 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 of the interim report.

The financial information for the full preceding year does not constitute statutory accounts as defined in Section 435 Companies Act 2006 and has been extracted from the statutory accounts for the financial year ended 28 June 2008. Those accounts, upon which the auditors issued an unqualified audit report and which did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985, have been delivered to the Registrar of Companies.

The interim report consolidates the financial information of Powerleague Group plc and its subsidiaries drawn up to 27 December 2008.

2. Exceptional items

6 months

ended

27 December

2008

(unaudited)

6 months

ended

29 December

2007

(unaudited)

Year

ended

28 June

2008

(audited)

£'000 

£'000

£'000 

Costs incurred in conversion to IFRS accounting

-

-

74

-

-

74

3. Finance costs

6 months

ended

27 December

2008

(unaudited)

6 months

ended

29 December

2007

(unaudited)

Year

ended

28 June

2008

(audited)

£'000 

£'000

£'000 

Interest on bank loans and overdrafts

1,260

606

1,673

Amortisation of loan issue costs

6

6

12

Finance costs before the impact of IAS 39

1,266

612

1,685

Loss on valuation of derivative instrument *

813

-

-

Total finance costs

2,079

612

1,685

On 30 July 2008, the Group entered into a 2-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 rate 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. 

4. Taxation

Tax on profit on ordinary activities

The charge for taxation on profit for the period comprises:

 

6 months 

ended 

27 December 

2008 

(unaudited)

6 months 

ended 

29 December 

2007 

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

£'000 

£'000 

£'000 

Current tax:

 

UK corporation tax

323 

455 

1,011 

Adjustment in respect of prior periods

(63)

(70)

 

323 

392 

941 

 

 

 

 

Deferred tax:

 

 

 

Origination and reversal of temporary differences

(97)

200 

639 

Adjustment in respect of prior periods

67 

52 

 

(97)

267 

691 

 

 

 

 

 

226 

659 

1,632 

UK corporation tax is calculated at 28% (December 2007: 30%; June 2008: 29.5%) of the estimated assessable profit for the period. 

Reconciliation of the total tax charge

The charge for the period can be reconciled to the profit for the period before taxation per the consolidated income statement as follows:

 

6 months

ended

27 December

2008

(unaudited)

6 months

ended

29 December

2007

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

£'000 

£'000

£'000 

Profit for the period before taxation

685

1,865

4,962 

Profit for the period before taxation multiplied by the standard rate of corporation tax in the UK of 28% 

(December 2007: 30%; June 2008: 29.5%)

192

560

1,464 

Effects of:

 

 

 

Expenses not deductible for tax purposes

34

95

220 

Adjustment in respect of rate changes

-

-

(34)

Adjustment in respect of prior periods

-

4

(18)

Charge for taxation on profit for the period 

226

659

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 £606,000 (December 2007 £607,000, June 2008: £606,000). The asset would be recovered if appropriate future taxable profits are made.

5. 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 period, which at 27 December 2008 was 81,820,000 (June 08: 81,820,000, December 2007: 81,820,000).

 

6 months ended 

27 December 2008

6 months ended 

29 December 2007

Year ended 

30 June 2008

 

Profit for

the period

Earnings

per share

Profit for

the period

Earnings

per share

Profit for

the period

Earnings

per share

 

£000

p

£000

p

£000

p

Basic and diluted earnings per share

459

0.56

1,206

1.47

3,331

4.07

Basic and diluted earnings per share adjusted for the impact of IAS 39

1,044

1.28

1,206

1.47

3,331

4.07

 

 

6 months ended

27 December 2008

6 months ended

29 December 2007

Year ended

30 June 2008

No. ('000)

No. ('000)

No. ('000)

Basic weighted average number of shares

81,820

81,820

81,820

Dilutive potential ordinary shares:

 

 

 

Employee share options

-

190

-

Diluted weighted average number of shares

81,820

82,010

81,820

6. Reconciliation of movements in equity

 

Share

Share

Group 

Retained 

 

capital

premium

merger 

earnings 

Total 

 

£'000

£'000

£'000 

£'000 

£'000 

At 30 June 2007 (audited)

8,182

7,287

(4,999)

8,828 

19,298 

Share based payment

-

-

18 

18 

Dividend paid

-

-

(900)

(900)

Profit for the period

-

-

1,206 

1,206 

At 29 December 2007

8,182

7,287

(4,999)

9,152 

19,622 

Share based payment credit

-

-

(31)

(31)

Profit for the period

-

-

2,125 

2,125 

At 30 June 2008 (audited)

8,182

7,287

(4,999)

11,246 

21,716 

Dividend paid

-

-

(900)

(900)

Profit for the period

-

-

459 

459 

At 27 December 2008

8,182

7,287

(4,999)

10,805 

21,275 

7. Reconciliation of cash flow from operating activities

 

6 months 

ended 

27 December 

2008 

(unaudited)

6 months 

ended 

29 December 

2007 

(unaudited)

Year 

ended 

28 June 

2008 

(audited)

 

£'000 

£'000 

£'000 

 

 

 

 

Profit for the period

459 

1,206 

3,331 

Taxation expense

226 

659 

1,632 

Net interest expense

2,077 

610 

1,683 

Operating profit

2,762 

2,475 

6,646 

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

1,342 

1,124 

2,302 

Amortisation of intangible assets

173 

125 

Net loss on fair value of financial derivative

813 

Release of deferred grant

(1)

Increase in inventories

(32)

(13)

(36)

Decrease/(increase) in receivables

603 

207 

(567)

Decrease in payables

(1,451)

(1,283)

(333)

Cash flow generated from operating activities

4,210 

2,510 

8,136 

Income taxes paid

(133)

(350)

(1,240)

Net cash flow from operating activities 

4,077 

2,160 

6,896 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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