28th Sep 2005 07:01
Crown Sports PLC28 September 2005 For Immediate Release 28 September 2005 Crown Sports PLC Interim Results for the Six Months Ended 30 June 2005 Crown Sports plc, the only listed operator of health and fitness clubs in theUK, today announces its interim results for the six months ended 30 June 2005. Results •Group Turnover £10.8m (2004: £12.0m). •Group Operating Profit £1.8m (2004: £2.0m). •Pre Tax Profits £1.4m. (2004: £2.0m). •Earnings Per Share 0.3p (2004:0.5p). Highlights €1% improvement in like-for-like continuing operations operating profit before exceptional administration expenses to £1.98m (2004: £1.97m). €7% decline in continuing operations operating profit to £1.83m. (2004: £1.97m) as a result of restructuring costs. •Net borrowing reduced by 3% to £12.4m (Dec 2004: £12.7m). •Gearing reduced to 24% at period end (Dec 2004: 25%). •Dragons membership up 2% to 52,186 (Dec 2004: 51,237). •Net Assets per share 17.6p (Dec 2004: 17.6p) Ray Pierce, Chairman, commented: "The results for Crown Sports plc for the first six months of 2005 reflect asolid performance in the light of the strong competition, weak consumerenvironments and rising property and utility costs. Although the business has seen a decline in turnover in the first half of theyear, through the application of good business controls it has deliveredmarginal growth in profitability before restructuring costs. Our focus remains on developing the Dragons brand which we believe provides anexcellent platform for future growth. Dragons is well placed to exploit itsposition in the current climate of sector consolidation with its differentiatedmembership base, robust cash flows and a strong freehold and long leaseholdproperty portfolio." For further information please contact:Crown Sports plc Tel: +44 (0)1332 525 831Martyn Grealey - ChiefExecutiveChris Storr - Finance Director Buchanan Communications Tel: +44 (0)20 7466 5000Mark EdwardsJames Strong Chairman's Statement The results for Crown Sports plc for the first six months of 2005 reflect asolid performance in the light of the tough competitive and weak consumerenvironments, both of which have impacted on the 21 club Dragons brand. In addition, we have experienced one off restructuring costs as a result of therelocation of our finance function from Purley to Derby and some disruption as aresult of the roll out of a new membership system to replace the multitude ofageing systems previously operated. Both changes are expected to make acontribution towards reducing overhead costs going forward. Results The turnover for the Group was £10.8m, Group operating profit was £1.8m andGroup profit before tax was £1.4m. Despite membership levels being 2% higher than at December 2004, pressures onpricing in a highly competitive environment resulted in a 3% decline in turnoverfor continuing operations. Operating profits in the continuing business, on a true like-for-like basis andbefore exceptional administration costs, grew by 1% to £1.98m. This was theresult of continued improvements in operational efficiency that resulted in theoverheads of the business reducing by 4%. Despite a significant increase in capital expenditure over the first half year,the group continues to reduce its net borrowings; at the end of June 2005 netborrowings stood at £12.4m, (£12.7m at December 2004 and £14.1m at June 2004)representing a gearing ratio of 24% (25% at the end of December 2004 and 28% atJune 2004). Basic and diluted earnings per share are 0.28p (2004 0.47p). The Directors havenot recommended the payment of an interim dividend. Review of operations Relative to 2004, the business has seen a decline in turnover in the first halfof the year. However, through the application of good business controls it hasdelivered marginal growth in profitability before restructuring costs, despite asignificant increase in property and utility costs. The competitive trading environment has been characterised by the high level ofdiscounting, particularly in areas where new club openings have taken place. As a result, a small number of clubs have incurred a disproportionately highshortfall in membership levels and turnover. In recent months performance formany of these clubs has stabilised, however, the impact in terms of reducedsubscriptions will continue to the end of this year. Importantly, we have maintained a robust capital investment programme, improvingthe overall quality of the estate whilst adding new and improved facilities thatcomplement our distinctive membership profile. Furthermore, in the first half of the year we have undertaken two majorstrategic projects that will benefit the business moving forward:- - The implementation of a new membership system that replaces themultitude of independent legacy systems. This move will allow for more effectivemanagement and utilisation of our valuable membership database as well asadditional controls over subscription income;- The successful relocation of the finance function from Purley toDerby which will result in ongoing cost savings and efficiency improvements. Prospects for the Future The current trading environment combined with rises in property and energy costsindicate that the second half of 2005 will be below our original expectations.However, we have reacted promptly with an up weighted marketing plan that isalready showing an improving sales trend. Our focus remains on developing the Dragons brand which we believe provides anexcellent platform for future growth. Dragons is well placed to exploit itsposition in the current climate of sector consolidation with its differentiatedmembership base, robust cash flows and a strong freehold and long leaseholdproperty portfolio. Ray PierceChairman CROWN SPORTS PLCConsolidated Profit and Loss Account (Unaudited)Six months ended 30 June 2005 Total (all Continuing Discontinued Total Restated Restated Restated continuing) Continuing Discontinued Total Six Six months Six months Six months Year Year Year months Note ended ended ended ended ended ended ended 30 June 30 June 30 June 30 June 31 December 31 December 31 2005 2004 2004 2004 2004 2004 December 2004 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 Turnover 10,815 11,144 902 12,046 21,957 902 22,859 Cost of (203) (222) - (222) (427) - (427)sales Gross profit 10,612 10,922 902 11,824 21,530 902 22,432 Administrationexpenses (8,633) (8,955) (872) (9,827) (17,344) (872) (18,216) Exceptionaladministration 5 (148) - - - (468) - (468)expenses Totaladministrationexpenses (8,781) (8,955) (872) (9,827) (17,812) (872) (18,864) Groupoperatingprofit beforeexceptionalitems 1,979 1,967 30 1,997 4,186 30 4,216 Exceptionaladministrationexpenses 5 (148) - - - (468) - (468) GroupOperatingProfit afterexceptionalitems 1,831 1,967 30 1,997 3,718 30 3,748 Net interestpayable andsimilarcharges (480) (505) - (505) (992) - (992) Profit ondisposal fixedassets 5 - 479 - 479 488 - 488 Profit ondisposal ofdiscontinued 5 - - 57 57 - 47 47operations Profit onordinaryactivitiesbef 1,351 1,941 87 2,028 3,214 77 3,291ore taxation Tax on profiton ordinaryactivities (531) (644) (29) (673) (899) (22) (921) Profit aftertax 820 1,297 58 1,355 2,315 55 2,370 Dividends paid (785) - - - - - - Retainedprofit for thefinancialperiod 35 1,297 58 1,355 2,315 55 2,370Basic anddilutedearnings pershare - pence 0.28 0.45 0.02 0.47 0.80 0.02 0.82 There are no gains or losses other than those reflected in the profitand loss account for the period.There are no discontinued operations in the six months ended June2005 CROWN SPORTS PLCConsolidated Balance Sheet (Unaudited)As at 30 June 2005 Note 30 June 30 June Restated 2005 2004 31 December 2004 £ 000 £ 000 £ 000Fixed Assets Intangibleassets 1,661 1,846 1,753Tangibleassets 68,168 68,262 67,845 Total fixedassets 69,829 70,108 69,598 Current AssetsStocks 80 175 203Debtors 1,852 1,619 1,241Cash at bankand in hand 883 563 1,214 Total CurrentAssets 2,815 2,357 2,658 Creditors:Amountsfalling duewithin oneyear (8,190) (7,330) (5,865) Net Current(Liabilities) (5,375) (4,973) (3,207) Total AssetsLess CurrentLiabilities 64,454 65,135 66,391Creditors:Amountsfalling dueafter morethan one year (10,362) (11,955) (12,354)Provisions forliabilitiesand charges (2,928) (3,066) (2,908) Net Assets 51,164 50,114 51,129 Capital and ReservesCalled-upshare capital 14,538 14,538 14,538 Share premiumaccount 6 27,010 27,010 27,010Capitalredemptionreserve 6 1,250 1,250 1,250Specialnon-distributable reserve 6 7,395 7,316 7,395Profit andloss account 6 971 - 936 Total Capitalemployed 51,164 50,114 51,129 These interim results were approved by the Board on 27 September 2005. CROWN SPORTS PLCCash Flow Statement (Unaudited)Six months ended 30 June 2005 Six months Six months Year ended ended ended 31 December 30 June 30 June 2004 2005 2004 £ 000 £ 000 £ 000 Net cash flowfrom operatingactivities 3,138 2,631 5,162 Returns on investments and servicing offinanceNet interest paid (674) (443) (1,104) Net cashoutflow fromreturns oninvestmentsand servicingof finance (674) (443) (1,104) Taxation - - - Capital expenditure and financialinvestment Receipts fromsales of fixedassetinvestments - - 7Payments toacquiretangible fixedassets (1,217) (514) (942)Receipts fromsales oftangible fixedassets - 1,371 1,408 Net cash(outflow) /inflow forcapitalexpenditureand financialinvestment (1,217) 857 473 Acquisitions and disposals Costs of acquiring subsidiary - - -undertakingsProceeds fromdisposal ofdiscontinuedoperations - 1,078 1,075Net cashbalancesleaving thegroup withdisposal ofdiscontinuedoperations - (117) (117) Net cashinflow fromacquisitionsand disposals - 961 958 Equitydividends paid (785) - - Cash inflowbeforefinancing 462 4,006 5,489 FinancingNet cashoutflow fromrepayment ofbank loans (729) (3,097) (3,804)Net cashoutflow fromreduction infinance leases (64) (140) (265) Net cashoutflow fromfinancing (794) (3,237) (4,069) (Decrease) /increase incash (331) 769 1,420 CROWN SPORTS PLCCash Flow Statement (Unaudited)Six months ended 30 June 2005 Reconciliation of operating profit tonet cash inflow from operating activities Six months Six months Year ended ended 30 ended 30 31 December June June 2004 2004 2005 £ 000 £ 000 £ 000Operatingprofit 1,979 1,997 3,748Goodwillamortisation 92 92 185Depreciation 992 1,001 1,992Loss /(profit)ondisposal offixed assets 1 (2) (1)Decrease /(increase) instocks 122 (57) (87)(Increase)/decrease indebtors (611) (332) 20Increase /(decrease) increditors 711 (68) (695)Exceptionalitems (148) - - Net cashinflow fromoperatingactivities 3,138 2,631 5,162 Reconciliation of net cash flow to movement in net debt Six months Six Year ended 30 months ended 31 June ended 30 December 2005 June 2004 2004 £ 000 £ 000 £ 000 DeIncrease / (Decrease) in cash (331) 769 1,420 Net cash outflow from repayment of bank 729 3,097 3,804loansNet cash outflow from reduction in financeleases 64 140 265Change in net debt resulting from cash flows 462 4,006 5,489 Finance leases undertaken during the period/ year (100) (178) (311) Finance leases that have left the group ondisposal of subsidiary undertakings - 65 65 Movement in net debt for the period / year 362 3,893 5,243 Net debt at start of period / year (12,726) (17,970) (17,970)Net debt at end of period / year (12,364) (14,077) (12,727) CROWN SPORTS PLCNotes to the Interim Report (Unaudited)Six months ended 30 June 2005 1. Basis of Preparation The accounting policies adopted by Crown Sports plc are consistent with thosedisclosed in the Report and Accounts for the year ended 31 December 2004 exceptfor the adoption and impact of FRS 21 and FRS 22. FRS 21: Post Balance Sheet Events prohibits dividends declared after the periodend from being recognised as a liability at the balance sheet date. This changein accounting policy has resulted in the 2004 year end proposed dividend beingrecorded in the profit and loss account for the period ended June 2005. Netassets at 31 December 2004 as previously reported have therefore increased by£785,000 as a result of this change. FRS 22: Earnings per Share has had no impact on the calculation of earnings pershare. However, the Group is now required to present earnings per share fromcontinuing operations on the face of the profit and loss account and to discloseearnings per share for discontinued operations. Accordingly, earnings per sharehave been calculated on the net basis for total, continued and discontinuedoperations using the weighted average number of ordinary shares in issue of290,768,005 (30 June 2004: 290,768,005; 31 December 2004: 290,768,005). 2. Taxation Taxation has been provided on the basis of estimated rates for the financialyear as a whole and after taking account of tax losses available from theprevious year and a provision for deferred taxation as required by FinancialReporting Standard 19 'Deferred Taxation'. As required by Financial ReportingStandard 19 'Deferred Taxation' the Profit and Loss Account includes a provisionfor deferred taxation that may become payable at some future date. The effectivetax rate of Corporation Tax and Deferred Tax combined is 35 per cent of the'Profit before Tax' as stated in the Profit and Loss Account, due to tradingexpenses that are not deductible for Corporation Tax purposes and depreciationcharges being higher than capital allowances. 3. Other Information The interim results do not constitute full results within the meaning of Section40 of the Companies Act 1985. The comparative figures for the financial yearended 31 December 2004 are not the statutory accounts of Crown Sports plc forthat financial year but are abridged from them. Those accounts have beenreported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors KPMG Audit plc was unqualified and did notcontain a statement under Section 237 (2) or (3) of the Companies Act 1985. 4. Approval The interim financial statements were approved by the Board on 27 September2005. CROWN SPORTS PLCNotes to the Interim Report (Unaudited)Six months ended 30 June 2005 5. Exceptional items The results include the following exceptional items: Six months Six months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 £ 000 £ 000 £ 000Costs ofrestructuringcontinuingoperations (148) - -Strategicreview - - (468)Exceptionaloperatingcosts (148) - (468) Profit ondisposal ofLeamington Spa - 409 409Profit ondisposal ofpart offreeholdproperty - 70 70Profit ondisposal ofshares - - 7Profit ondisposal ofCrown Content - 2 2Profit ondisposal ofFitnessExpress - 55 47Exceptionalnon operatingitems - 536 535 Totalexceptionalitems (148) 536 67 6. Reserves The results include the following movement on reserves: Share premium Capital Special non- Profit and account redemption distributable loss reserve reserve account £ 000 £ 000 £ 000 £ 000 At start ofperiod (aspreviouslystated) 27,010 1,250 7,395 151Prior yearadjustment - - - 785At start ofperiod(restated) 27,010 1,250 7,395 936Profit forperiod - - - 820Dividends paid - - - (785) At end ofperiod 27,010 1,250 7,395 971 INDEPENDENT REVIEW REPORTTO CROWN SPORTS PLC Six months ended 30th June 2005 Introduction We have been engaged by the company to review the financial information set outon pages 4 to 9 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. The report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The Directors are responsible for preparing the interim report in accordancewith the AIM rules which require that the interim report must be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information, issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether accounting policies and presentation have been consistentlyapplied unless otherwise disclosed. A review is substantially less in scope thanan audit performed in accordance with Auditing Standards and therefore providesa lower level of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. KPMG Audit PlcLondonChartered Accountants 27 September 2005 CROWN SPORTS PLC Locations Dragons Health Clubs Bedford Club Lincoln ClubKimbolton Road, Witham Park House Witham ParkBedford Waterside SouthBedfordshire MK41 9DL Lincoln LN5 7JP01234 354 363 01522 568 755Brentwood Club Maidstone ClubChindits Lane Warley Mill MeadowBrentwood St. Peter's Street MaidstoneEssex CM14 5LF Kent ME16 0SX01277 202 088 01622 681 987Brooklands Club Milton Keynes ClubWhitehall Road Brickhill Street Willen LakeBrooklands Sale Milton KeynesCheshire M33 3NL MK15 0DS0161 972 8999 01908 295 699Burnham Club Muswell Hill ClubBuckingham Avenue Hillfield Park Muswell HillTrading Estate Slough London N10 3PJBerkshire SL1 4JB 0208 444 821201753 553 888Chester Club Northwood ClubWrexham Road Chestnut AvenueChester NorthwoodCheshire CH4 7QP Middlesex HA6 1HR01244 683 999 01923 840 214Derby Club Orpington ClubCarrington Street Castle Ward Sandy Lane St Pauls CrayDerby DE1 2ND Orpington Kent BR5 3HY01332 381 451 01689 874 884Epsom Club Purley Club27 Ruxley Lane Ewell 33 Imperial WaySurrey KT19 0JB Purley Way0208 393 6011 Croydon CR0 4RR 0208 686 8811Gatwick Club Rugby ClubCopthorne Road Copthorne Webb Ellis RoadCrawley West Sussex RugbyRH10 3PG Warwickshire CV22 7AU01342 715 022 01788 540 523Guildford Club Southport ClubEpsom Road Merrow Fairways North PromenadeGuildford GU4 7AA Southport01483 458 811 Merseyside PR8 1RY 01704 532 999Hove Club Western Avenue ClubSt. Heliers Avenue Hove Rowdell Road NortholtEast Sussex BN3 5RE Middlesex UB5 6AG01273 724 211 0208 841 5611Leeds ClubHaworth Lane YeadonLeeds LS19 7EN0113 239 1155 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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