28th Feb 2006 07:03
Powerleague Group plc28 February 2006 Powerleague Group plc Interim Results for the six months ended 31 December 2005 Powerleague scores with 107% increase in profit POWERLEAGUE - The Champions of 5 a-side Powerleague is the leading commercial operator of 5 a-side football centres. TheGroup currently has 32 centres encompassing 339 floodlit, all-weather outdoorpitches, representing an increase of 24% on the previous year. We are geographically spread throughout the UK and attract around 85,000 players to our venues each week, representing an increase of 13% on the previous year. * Sales up 21% to £9.5 million * EBITDA up 19% to £2.9 million * Pre-tax profit increased 107% to £1.4 million * Earnings per share increased by 148% to 1.19p (2004: 0.48p) * Cash generated from operating activities of £2.6 million, up from £1.5 million * Two new centres opened in the period * New sponsorship agreements with * Xbox - headline sponsorship extended to 2008 * Nike - one year event and football sponsorship agreement * Lucozade - new three year sponsorship agreement Since 31 December 2005 * Budweiser - new two year sponsorship agreement * Braun - major World Cup event Claude Littner, Executive Chairman of Powerleague, commented: "5 a-side footballcontinues to grow in popularity. The World Cup, which kicks off in June, willitensify interest in football during the year and we are well positioned to takeadvantage of the knock on effects. "I am delighted to announce today that Powerleague has concluded an agreementwith Braun, a major 2006 World Cup sponsor. In addition, we have secured a2-year sponsorship agreement with Budweiser, the premium beer brand and officialBeer of the Barclays Premiership and the World Cup. "I remain confident that we will acheive our plan for the full year.Furthermore, we have a strong pipeline of new sites at various stages in thedevelopment process, which will enable us to maintain our roll-out programme." For further information Claude Littner, Executive Chairman Lulu BridgesSean Tracey, Chief Executive John WestSheena Beckwith, Finance Director Tavistock CommunicationsTel: 020 7920 3150 (28 February, 1,2 & 3 March) Tel: 020 7920 3150 Chairman's reportSix months to 31 December 2005 I am very pleased to report that the first half of this financial year hasstarted well, with strong growth in both revenues and profits. Results Sales for the six months ended 31 December 2005 were £9.5m (2004: £7.9m), anincrease of 21%. Revenue visibility remains strong with 64% of sales generatedby league and block bookings and only 5% generated by casual "one-off" bookings. EBITDA increased by 19% to £2.9m (2004: £2.4m), with like for like EBITDA up11%. Operating profit increased by 19% to £1.9m (2004: £1.6m). This improvementincludes £100,000 increase in the depreciation charge resulting from the changein the depreciation policy on pitch surfaces which was outlined in the lastannual report and accounts. The increase in profitability has been achieved through effective marketingwhich has driven sales growth and improved pitch utilisation. We have continuedto benefit from our strong focus on cost management and the improved operationalgearing resulting from increasing the number of centres we operate. Furthergrowth in Sponsorship and Events has also contributed to improve sales andprofit margins. The interest charge for the period fell to £492,000 (2004: £793,000) reflectingthe significant reduction in our debt position resulting from the fund raisingat the time of the listing on AIM in May 2005, and the increased cash generatedfrom operating activities during the period of £2.6m, up from £1.5m in thecomparative period. As a result, profit before tax increased by 107% to £1.4m(2004: £0.7m). Earnings per share increased by 148% to 1.19p (2004: 0.48p). Dividends As outlined in our AIM admission document, it remains the intention of the Boardto pay dividends in the future. The Board has not declared an interim dividendfor the six months ended 31 December 2005 and will continue to use the cashgenerated to grow the business and further reduce debt. Operational Review During the year we have continued to exploit the increasing popularity of 5a-side football, capitalising on the strength of our management team, ourproprietary software and leading position within the market. During the first half of the year, a further two centres opened, taking thetotal to 32 centres across the UK. Our new centres are located in Basingstokeand Kilmarnock following capital expenditure of £1.3m and £1.0m respectively, and both opened in September 2005, on budget and slightly aheadof schedule. Both centres achieved significant bookings prior to opening with 160 teams registering at the Basingstoke centre and 120 teams registering with the Kilmarnock centre. We are very encouraged by the performance of these centres, whichreached an EBITDA positive position within the first full month of trading, generating average income per pitch of approximately £800 and £1,000 per week respectively and continue to show upward momentum. We have continued to invest in our estate, by upgrading existing pitches andextending facilities. Since July 2005, we have refurbished a further 28 pitchesin next generation rubber crumb, and added a 7 a-side pitch at both Watford andBarnet and two 7 a-side pitches at Fairlop and will continue to invest inrefurbishing pitches where it is commercially justifiable. Towards the end of the last financial year, we acquired four 5 a-side footballcentres from VIDA, which are located in South Manchester, Warrington, Barnsleyand Dunfermline. All have now been fully integrated into the Group, with thesuccessful implementation of our management and operational systems. We haveseen increases in sales at these centres since the acquisition and they continueto perform to our expectations. The centre acquired in South Manchester included a gym at the 'affordable' endof the market, and this has been refurbished and extended. Membership levelshave increased, giving us good incremental sales revenue and highly satisfactoryreturns on our investment. Despite costs incurred in establishing our new centres, both bar margins andstaff cost ratios have remained constant at 68% and 22% respectively with othercost ratios improving slightly to 29% from 30%. Pitch income has increased by5.7% with pitch utilisation rates of 75% providing scope for further incomegrowth. We are on target to achieve our objective of opening three centres during thisfinancial year. Our new Coventry centre is on schedule to open ahead of theWorld Cup in June 2006. Located on a school site, it will be the cornerstone ofa major Council funded leisure centre project. The Powerleague element willcomprise 10 pitches, a licensed bar and an "affordable" gym facility. Sponsorship and Events We continue to explore new opportunities to develop our sponsorship revenues andlong term relationships with blue-chip companies. Our contract with Nike, which was entered into in November 2005, is supplementedthis financial period by a new three-year sponsorship and supply agreement withLucozade and complements our existing Headline Sponsorship agreement with Xboxwhich was extended to 2008. I am delighted to announce today that Powerleague has concluded an agreementwith Braun, a major 2006 World Cup sponsor. In addition, we have secured atwo-year sponsorship agreement with Budweiser, the premium beer brand and official Beer of the Barclays Premiership and the World Cup. These alliances reflect our ability to implement strategies with major blue chip companies who wish to further develop their links with grass root football and are attracted by our professionalism, network of centres and customer base. Sponsorship and Events now contribute 5% of gross profit and, with the newagreements announced today, I am confident that this will provide furtherimpetus to the second half of the financial year. Outlook 5 a-side football continues to grow in popularity. The World Cup, which kicksoff in June, will intensify interest in football during the year and we arewell positioned to take advantage of the knock on effects. Female participationtoo is on the increase, with ladies leagues and coaching being established in anumber of centres. Trading during the first eight weeks of the second half of the year is in line with expectations. The financial period from January to the end of June istraditionally stronger than the first half, as we do not have the seasonaldownturn of activity of the July/August holiday periods and Christmas/ New Year. I remain confident that we will achieve our plan for the full year. Furthermore,we have a strong pipeline of new sites at various stages in the development process, which will enable us to maintain our roll-out programme. Claude LittnerChairman Consolidated profit and loss accountfor the six months ended 31 December 2005 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 Notes £000 £000 £000 (unaudited) (unaudited) (audited) Turnover 9,516 7,882 17,477Cost of sales (1,731) (1,466) (3,212) ---------- ---------- ----------Gross profit 7,785 6,416 14,265 ---------- ---------- ---------- Administration expenses excluding exceptional items (5,933) (4,866) (10,052)Exceptional items 2 - - 928 ---------- ---------- ----------Total administration expenses (5,933) (4,866) (9,124) ---------- ---------- ---------- Operating profit 1,852 1,550 5,141 ---------------------------------------------------------------------------------------------------------Analysed as: Operating profit excluding exceptional items 1,852 1,550 4,213Exceptional items - - 928--------------------------------------------------------------------------------------------------------- Cost of group reconstruction 2 - - (189) Loss on disposal of fixed assets - (100) (285) Net interest payable and similar charges (492) (793) (1,575) ---------- ---------- ----------Profit on ordinary activities before taxation 1,360 657 3,092Tax on profit on ordinary activities 3 (384) (185) (660) ---------- ---------- ----------Profit on ordinary activities after taxation 976 472 2,432 Dividends Preference dividend on non-equity shares - (80) (145) ---------- ---------- ----------Retained profit for the period 5 976 392 2,287 ========== ========== ========== ---------------------------------------------------------------------------------------------------------Earnings per ordinary share 4 - basic and diluted for profit for the period, attributable to ordinary equity holders of the company 1.19p 0.48p 2.80p - basic and diluted for profit from continuing operations for the period, attributable to ordinary equity holders of the company 1.19p 0.48p 2.80p Adjusted Earnings per ordinary share 4 1.66p 0.83p 3.05p--------------------------------------------------------------------------------------------------------- Note of historical costs profits and lossesfor the six months ended 31 December 2005 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 (unaudited) (unaudited) (audited) Reported profit on ordinary activities before taxation 1,360 657 3,092 Difference between historical cost depreciation charge and the actual depreciation charge calculated on the revalued amount 312 332 664 ---------- ---------- ----------Historical cost profit on ordinary activities before taxation 1,672 989 3,756 ========== ========== ==========Historical cost profit on ordinary activities after taxation and dividends 1,288 724 2,951 ========== ========== ========== Group statement of total recognised gains and lossesfor the six months ended 31 December 2005 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 (unaudited) (unaudited) (audited) Profit on ordinary activities after taxation 976 472 2,432Gain on revaluation of fixed assets - - 10,456 ---------- ---------- ----------Total recognised gains and losses relating to the period 976 472 12,888 ========== ========== ========== Consolidated balance sheetAt 31 December 2005 As at 31 As at 26 As at December December 2 July 2005 2004 2005 Notes £000 £000 £000 (unaudited) (unaudited) (audited) Fixed assets Tangible assets 63,299 42,708 61,500Negative goodwill (1,980) - (2,110) ---------- ---------- ---------- 61,319 42,708 59,390Current assets Stocks 148 95 115Debtors 749 457 944Cash at bank and in hand 591 239 755 ---------- ---------- ---------- 1,488 791 1,814 Creditors: amounts falling due within one year (7,218) (6,571) (7,021) ---------- ---------- ----------Net current liabilities (5,730) (5,780) (5,207) ---------- ---------- ----------Total assets less current liabilities 55,589 36,928 54,183 Creditors: amounts falling due after more than one year (14,000) (20,425) (13,774) Provisions for liabilities and charges (2,020) (1,056) (1,816) ---------- ---------- ----------Net assets 39,569 15,447 38,593 ========== ========== ========== Capital and reserves Called up share capital 8,182 5,026 8,182Share premium account 5 7,287 - 7,287Group Merger Reserve 5 - 23,396 -Revaluation reserve 5 19,146 14,767 19,458Profit and loss account 5 4,954 (27,742) 3,666 ---------- ---------- ----------Shareholders' funds 39,569 15,447 38,593 ========== ========== ==========Equity 39,569 15,421 38,593Non-equity - 26 - ---------- ---------- ---------- 39,569 15,447 38,593 ========== ========== ========== Consolidated statement of cash flowsfor the six months ended 31 December 2005 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 Notes £000 £000 £000 (unaudited) (unaudited) (audited) Net cash inflow from operating activities 6 2,619 1,533 5,252 Return on investments and servicing of finance Interest paid (491) (889) (1,591)Issue costs of borrowings - - (69)Non-equity dividends paid by subsidiary - - (273) ---------- ---------- ---------- (491) (889) (1,933) ---------- ---------- ----------Capital expenditure Payments to acquire tangible fixed assets (2,977) (740) (2,727)Proceeds from the disposal of tangible fixed assets - 7 12 ---------- ---------- ---------- (2,977) (733) (2,715) ---------- ---------- ---------- Acquisitions and disposals Acquisition of trading business - - (4,047)Cash acquired with trading business - - 2 ---------- ---------- ---------- - - (4,045) ---------- ---------- ---------- Cash outflow before management of liquid resources and financing (849) (89) (3,441) Management of liquid resources Increase in short term deposits held - - (300) Financing New shares issued - - 14,001Shares redeemed - - (2,600)Cost of equity share issue - - (958)Proceeds of Employee Benefit Trust Shares Sale - - 352New borrowings 1,665 546 17,344Repayment of borrowings (1,333) (1,725) (26,115) ---------- ---------- ---------- 332 (1,179) 2,024 ---------- ---------- ----------Decrease in cash 7 (517) (1,268) (1,717) ========== ========== ========== Notes to the financial statementsfor the six months ended 31 December 2005 1. Basis of preparation This interim report, which has not been audited and does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985,was approved by the Board on 27 February 2006. It has been prepared under thehistorical cost convention as modified for the revaluation of certain fixedassets. The report is consistent with the accounting policies set out in theaudited Report and Accounts of the group for the year ended 2 July 2005, subjectto the adoption by the company of Financial Reporting Standards 21, (Eventsafter the Balance Sheet date) and 22 (Earnings per Share) and the presentationrequirements of Financial Reporting Standard 25 (Financial Instruments:Disclosure and Presentation). In applying the presentation requirements ofFinancial Reporting Standard 25, the company has taken advantage of theexemption allowed in the Standard not to restate comparative information. The financial information for the full preceding year is based on the statutoryaccounts for the financial year ended 2 July 2005. Those accounts, upon whichthe auditors issued an unqualified audit report, have been delivered to theRegistrar of Companies. The interim report consolidates the financial statements of Powerleague Groupplc and its subsidiaries, which have been made up to 31 December 2005. 2. Exceptional items 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 Reversal of previous impairment of tangible fixed assets - - (1,280)Bonus payable to Employee Benefit Trust scheme participants - - 352 ---------- ---------- ---------- - - (928) ========== ========== ========== The reversal of previous impairment of fixed assets for the year to 2 July 2005of £1,280,000 relates to an original impairment that was recognised in theprofit and loss account in the year ended 30 June 2001 and has arisen as aresult of an improvement in trading performance and in the expected cash flowsarising from the operation of these facilities. Non operating exceptional costs for the year to 2 July 2005 of £189,000represent costs associated with group reconstruction, including legal, tax andaccounting services and costs of related court proceedings. 3. Taxation on profit on ordinary activities 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 Current taxation: UK Corporation tax 204 - -Adjustment in respect of prior years - - (285) ---------- ---------- ----------Total current tax 204 - (285) Deferred taxation: Charge/ (Credit) for the current year 180 185 945 ---------- ---------- ----------Taxation on profit on ordinary activities 384 185 660 ========== ========== ========== The taxation charge for the current period has been calculated using the ratelikely to apply for the whole year. 4. Earnings per share Basic and diluted earnings per ordinary 10p share is calculated by dividing theearnings attributable to ordinary shareholders by the weighted average number ofordinary shares in issue during the period. All profits arose from continuingoperations. For the first reporting period to 2 July 2005, the shares on issue at flotationwere treated as if they had been in issue for the whole of that financial year.As there have been no further changes in the issued share capital, in eachperiod the weighted average number of shares is 81,820,000. Six months Six months Year ended ended ended 31 December 2005 26 December 2004 2 July 2005 ----------------------- ----------------------- ----------------------- Profit for Earnings Profit for Earnings Profit for Earnings the period per share the period per share the year per share £000 p £000 p £000 p Basic and diluted earnings per share 976 1.19 392 0.48 2,287 2.80 Adjusted earnings per ordinary 10p share is calculated using operating profitbefore exceptional items, but after deducting dividends payable on preferenceshares. This measure has been selected to exclude one-off exceptional items andthe impact of tax losses brought forward, which have reduced the effective rateof tax on the business in previous years. Thus, future adjusted earnings pershare calculations, which are not affected by the above items, can bemeaningfully compared with the past. Six months Six months Year ended ended ended 31 December 2005 26 December 2004 2 July 2005 ----------------------- ----------------------- ----------------------- Profit for Earnings Profit for Earnings Profit for Earnings the period per share the period per share the year per share £000 p £000 p £000 p Adjusted earnings per share 1,360 1.66 677 0.83 2,493 3.05 Reconciliation of profit for the year: 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 Profit for basic and diluted earnings per share 976 392 2,287Exceptional operating items - - (928)Costs of group reconstruction - - 189Loss on disposal of tangible fixed assets - 100 285Taxation 384 185 660 ---------- ---------- ----------Profit for adjusted earnings per share 1,360 677 2,493 ========== ========== ========== 5. Reconciliation of Shareholders' funds and movement on reserves Share Group Profit & Total Share Premium Merger Revaluation Loss Shareholders Capital account reserve reserves account funds £000 £000 £000 £000 £000 £000 As at 26 June 2004 5,026 - 23,396 15,099 (28,466) 15,055 Retained profit for the period - - - - 392 392Transfer to profit and loss account - - - (332) 332 - ---------- ---------- ---------- ---------- ---------- ----------As at 26 December 2004 5,026 - 23,396 14,767 (27,742) 15,447 Reduction in share premium account of subsidiary prior to merger - - (28,395) - 28,395 -Shares issued 3,182 10,819 - - - 14,001Shares redeemed (26) (2,574) - - - (2,600)Costs incurred in issue of shares - (958) - - - (958)Arising from revaluation of operating assets - - - 10,456 - 10,456Retained profit for the year - - - - 1,895 1,895Transfer to profit and loss account - - - (766) 766 -Proceeds on sale of Employee Benefit Trust Shares - - - - 352 352Merger adjustment - - 4,999 (4,999) - - ---------- ---------- ---------- ---------- ---------- ----------At 2 July 2005 8,182 7,287 - 19,458 3,666 38,593 Retained profit for the period - - - - 976 976Transfer to profit and loss account - - - (312) 312 - ---------- ---------- ---------- ---------- ---------- ----------At 31 December 2005 8,182 7,287 - 19,146 4,954 39,569 ========== ========== ========== ========== ========== ========== The capital and reserves of Powerleague Group plc were restated on the basis ofmerger accounting for the year ended 2 July 2005. 6. Reconciliation of operating profit to net cash flow from operating activities 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 Operating profit 1,852 1,549 4,952Depreciation and impairment 1,178 891 1,806Release of negative goodwill (131) - (49)Release of deferred grant - - (1)Amortisation of deferred finance costs 6 - -Reversal of impairment of fixed assets - - (1,280)(Increase)/decrease in stock (30) 8 6Decrease/(increase) in debtors 195 162 (323)(Decrease)/increase in creditors (451) (1,077) 141 ---------- ---------- ----------Net cash inflow from operating activities 2,619 1,533 5,252 ========== ========== ========== 7. Reconciliation of net cash flow to movement in net debt 6 months 6 months Year ended 31 ended 26 ended December December 2 July 2005 2004 2005 £000 £000 £000 Decrease in cash in the period (517) (1,268) (1,717)Net cash outflow from (increase)/ decrease in debt (332) 1,179 8,840Movement in liquid resources - - 300 ---------- ---------- ----------Movement in net debt arising from cash flows (849) (89) 7,423Amortisation of deferred debt costs (6) - -Opening net debt (16,685) (24,108) (24,108) ---------- ---------- ----------Closing net debt (17,540) (24,196) (16,685) ========== ========== ========== 8. Analysis of changes in net debt At At 31 2 July Non cash December 2005 Cash flows Transactions 2005 £000 £000 £000 £000 Cash in hand and at bank 455 (164) - 291Bank overdraft (1,509) (353) - (1,862) ---------- ---------- ---------- ---------- (1,054) (517) - (1,571)Liquid resources 300 - - 300Debt due within one year (2,655) - - (2,655)Debt due after one year (13,276) (332) (6) (13,614) ---------- ---------- ---------- ----------Closing net debt (16,685) (849) (6) (17,540) ========== ========== ========== ========== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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