6th Mar 2007 07:03
Powerleague Group plc06 March 2007 POWERLEAGUE GROUP PLC Interim Results for the Six Months Ended 30 December 2006 Strong increase in revenues and profits POWERLEAGUE - The Champions of 5 a-side 6 March 2007 Powerleague is the leading commercial operator of 5-a-side football centres inthe UK. The Group currently has 34 centres encompassing 356 floodlit,all-weather outdoor pitches, spread throughout the UK and attracting around90,000 players to our venues each week. * Sales up 15% to £10.9 million (2005: £9.5 million) * EBITDA up 21% to £3.5 million (2005: £2.9 million) * Pre-tax profit increased 21% to £1.7 million (2005: £1.4 million) * Earnings per share increased by 25% to 1.19p (2005: 0.95p) * Centres' like for like sales up 5% (excluding sponsorship and events) * Like for like sponsorship and events revenue up 62% * Further investment of £1.4 million to be made during summer 2007 to upgrade eight centres Claude Littner, Chairman of Powerleague, commented: "The increase inprofitability has been achieved through the combination of new centres andeffective marketing which has driven sales growth and improved pitch utilisationrates, in particular at centres where pitches were upgraded over the summermonths. Sponsorship and events income has shown further growth and hascontributed to the improvement in sales and profit margins. "Trading during the first nine weeks of the second half of the year remainsstrong and is in line with expectations and we are on target to achieve our planfor the full year. We have a strong pipeline of new sites at various stages inthe development process, which will enable us to maintain our rollout programme.The significant investment planned for the summer will further enhance theperformance of our core estate. Last, but by no means least, we have anexperienced management team with focused and motivated staff. All this augurswell for the future. " For further information: Claude Littner, Executive Chairman Lulu BridgesSean Tracey, Chief Executive John WestSheena Beckwith, Finance Director Tavistock CommunicationsTel: 020 7920 3150 (6, 7, 8, 9 March only) Tel: 020 7920 3150 Chairman's reportSix months to 30 December 2006 I am delighted to report that the first half of this financial year has showncontinued strong growth in both revenues and profits. Results Sales for the six months ended 30 December 2006 were £10.9m (2005: £9.5m), anincrease of 15%. Like for like sales encouragingly have grown by 5% (2005:3.5%). EBITDA increased by 21% to £3.5m (2005: £2.9m), with like for like EBITDA up by6%. Operating profit increased by 21% to £2.3m (2005: £1.9m). The increase in profitability has been achieved through the combination of newcentres and effective marketing which has driven sales growth and improved pitchutilisation rates, in particular at centres where pitches were upgraded over thesummer months. Sponsorship and events income has shown further growth and hascontributed to the improvement in sales and profit margins. Earnings per share increased by 25% to 1.19p (2005: 0.95p). Dividends In December 2006, the company paid a final dividend of 0.75 pence per ordinary10p share in respect of the year ended 1 July 2006. We do not propose aninterim dividend for the current year but intend to recommend a final dividend. Operational Review During the year we have continued to benefit from the increasing popularity of5-a-side football, capitalising on the strength of our leading position withinthe market to increase our pipeline of sites and further successfully monetisesponsorship and brand partnerships. During the first half of the year, we have continued with our commitment toinvest in our estate by upgrading existing pitches and extending facilities. Weremain committed to investing in the estate where it is commerciallyjustifiable. Five centres benefited from the installation of the latest 5th generationsurfaces. As a result of this investment and subsequent re-marketing, ourcentres at Barnet, Mill Hill, Birmingham, Paisley and Hamilton have helped boostour like for like sales through a combination of increased occupancy rates,player participation numbers and price. In October 2006, we also added a7-a-side pitch at Kilmarnock to meet demand and opened a "Power for Life"affordable gym at Norbury. The two new centres opened just prior to the start of the new financial year atLondon City and Bolton are both making positive contributions in this financialyear and exceeding expectations. Building for Growth In the next 12 months the company plans to accelerate its roll out and open afurther five new centres. I am delighted to announce that a new site is under construction at an excellentschool site in Milton Keynes, in a strong catchment area with no commercialcompetition. The centre will have ten 5-a-side pitches and two 7-a-side pitchesas well as full clubhouse facilities and bar, and is scheduled to open thissummer. In addition, I am pleased to confirm that Powerleague Cardiff is scheduled forcompletion in the first half of the next financial year. Built on the largestcomprehensive school in the UK, this high profile site with ten 5-a-sidepitches, full clubhouse and bar and situated prominently on a main arterialroute into Cardiff, will be a valuable addition to the Powerleague portfolio. These sites, combined with our current ten school and university centres andcoupled with our pipeline of future opportunities, confirm Powerleague'spre-eminent position within the education sector. Furthermore, we continue towork on a number of initiatives in conjunction with local authorities, privatelandlords and other leisure operators. This gives further impetus to our rollout plans. Investing for Growth We have been encouraged by the strong performances at the centres that we haveupgraded and we intend to take the opportunity to accelerate our refurbishmentprogramme with a further tranche of centres. Eight centres, comprising 78pitches will be fully upgraded with 5th generation playing surfaces. To minimisedisruption, the work will be carried out over the summer months. This will takethe percentage of 3rd and 5th generation surfaces from 50% to 80%. In addition,a further eight bar areas will be refurbished, to help drive wet sale revenue.We intend to invest £1.4 million to complete this programme and are confidentthat this investment will help boost performance by providing an enhancedplaying experience for existing customers and attracting new players. In our Annual Report, we stated that the Powerleague Group plc 2006 Share OptionScheme had been established and approved on 29th September. Options over a totalof 190,000 shares have now been granted to a number of long-serving employees. Sponsorship and Events In the last financial year, we signed new and improved long-term agreementswith, amongst others, Xbox, Nike, Budweiser and Lucozade. In addition, we havesecured a new national event for Securicor and rebooked the Barclays National5-a-side tournament. We continue to reap the financial benefits of theseassociations, with a 62% increase in sponsorship revenues. This growth, coupledwith further new local and national 5-a-side events and tournaments for a widerange of companies, has been highly encouraging. Our success at monetisingsponsorship from grass roots football has been driven by a dedicated sales teamwho are well versed in designing campaigns for major brands to fit theirstrategic goals. I am optimistic about the potential for further growth in this area of activity,both in the short and longer term. Outlook Trading during the first nine weeks of the second half of the year remainsstrong and is in line with expectations and we are on target to achieve our planfor the full year. The financial period from January to the end of June istraditionally stronger than the first half, as we do not have the seasonaldownturn in activity of the July/August and Christmas/ New Year holiday periods. The popularity of 5-a-side football continues unabated and participation numberscontinue to increase. Powerleague attracts a wide age range of customers on aregular basis who enjoy our superior offering and excellent facilities. We havea strong pipeline of new sites at various stages in the development process,which will enable us to maintain our rollout programme. The significantinvestment planned for the summer will further enhance the performance of ourcore estate. Last, but by no means least, we have an experienced management teamwith focused and motivated staff. All this augurs well for the future. Claude LittnerChairman Powerleague Group plc INDEPENDENT REVIEW REPORTTO POWERLEAGUE GROUP PLCSix months to 30 December 2006 Introduction We have been instructed by the company to review the financial information forthe six months ended 30 December 2006 which comprises the Consolidated Profitand Loss Account, Note of Historical Cost Profits and Losses, ConsolidatedStatement of Total Recognised Gains and Losses, Consolidated Balance Sheet,Consolidated Cash Flow Statement, and the related notes 1 to 9. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept 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 interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion 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 December 2006. As noted in the interim report, the comparative amounts have not been reviewed.Our report is not qualified in this respect. Ernst & Young LLPGlasgowMarch 2006 Powerleague Group plc Consolidated profit and loss accountfor the six months ended 30 December 2006 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) Notes £000 £000 £000 Turnover 10,855 9,516 20,488Cost of sales (1,904) (1,731) (3,640) ----------- ----------- -----------Gross profit 8,951 7,785 16,848 ----------- ----------- -----------Administration expenses excluding exceptional items (6,669) (5,933) (12,018)Exceptional items 2 - - (96) ----------- ----------- -----------Total administration expenses (6,669) (5,933) (12,114) ----------- ----------- -----------Operating profit 2,282 1,852 4,734Analysed as: Operating profit excluding exceptional items 2,282 1,852 4,830Exceptional items - - (96) Loss on disposal of fixed assets - - (319) Net interest payable and similar charges (554) (492) (995) ----------- ----------- -----------Profit on ordinary activities before taxation 1,728 1,360 3,420 Tax on profit on ordinary activities 3 (752) (585) (1,472) ----------- ----------- -----------Profit on ordinary activities after taxation 976 775 1,948 =========== =========== =========== Earnings per ordinary share- basic and diluted 4 1.19p 0.95p 2.38p Adjusted Earnings per ordinary share - basic and diluted - as revised 4 1.19p 0.95p 3.11p - on the basis previously used 4 2.11p 1.66p 4.69p Note of historical cost profits and lossesfor the six months ended 30 December 2006 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000 Reported profit on ordinary activities before taxation 1,728 1,360 3,420 Difference between historical cost depreciation charge and the actual depreciation charge calculated on the revalued amount 337 312 673 ---------- ---------- ----------Historical cost profit on ordinary activities before taxation 2,065 1,672 4,093 ========== ========== ========== Historical cost profit on ordinary activities after taxation and dividends 1,313 1,087 2,621 ========== ========== ========== Group statement of total recognised gains and lossesfor the six months ended 30 December 2006 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000 Profit on ordinary activities after taxation 976 775 1,948Gain on revaluation of fixed assets - - 2,383 ---------- ---------- ----------Total recognised gains and losses relating to the period 976 775 4,331 ========== ========== ========== Consolidated balance sheetAt 30 December 2006 As at As at As at 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) Notes £000 £000 £000Fixed assets Tangible assets 69,329 63,299 68,984Negative goodwill (1,761) (1,980) (1,915) ------------ ------------ ------------ 67,568 61,319 67,069Current assets Stocks 181 148 174Debtors: amounts falling due after one year 152 - - amounts falling due within one year 725 749 1,042 ------------ ------------ ------------ 877 749 1,042Cash at bank and in hand 597 591 766 ------------ ------------ ------------ 1,655 1,488 1,982 Creditors: amounts falling due within one year 5 (8,616) (7,310) (7,892) ------------ ------------ ------------Net current liabilities (6,961) (5,822) (5,910) ------------ ------------ ------------Total assets less current liabilities 60,607 55,497 61,159 Creditors: amounts falling due after more than one year (14,454) (14,000) (15,595) Provisions for liabilities and charges (2,863) (2,129) (2,640) ------------ ------------ ------------Net assets 43,290 39,368 42,924 ============ ============ ============ Capital and reserves Called up share capital 8,182 8,182 8,182Share premium account 6 7,287 7,287 7,287Revaluation reserve 6 20,831 19,146 21,168Profit and loss account 6 6,990 4,753 6,287 ------------ ------------ ------------Shareholders' funds 43,290 39,368 42,924 ============ ============ ============ Consolidated statement of cash flowsfor the six months ended 30 December 2006 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) Notes £000 £000 £000 Net cash inflow from operating activities 7 2,579 2,619 7,468 Return on investments and servicing of finance Interest paid (534) (491) (916) Taxation Taxation refund in respect of prior years - - 65 Capital expenditure Payments to acquire tangible fixed assets (1,887) (2,977) (6,665) Acquisitions and disposals Acquisition of subsidiary undertaking - - (982)Cash acquired with subsidiary undertaking - - 8Subsidiary undertaking loan repaid on acquisition - - (328)Proceeds from disposal of trading business 45 - - ---------- ---------- ---------- 45 - (1,302) ---------- ---------- ---------- Equity dividends paid (614) - - Cash outflow before management of liquid resources and financing (411) (849) (1,350) Management of liquid resources Increase in short term deposits held - - 50 Financing New borrowings 321 1,665 4,423Repayment of borrowings (1,334) (1,333) (2,667) ---------- ---------- ---------- (1,013) 332 1,756 ---------- ---------- ----------(Decrease)/increase in cash 8 (1,424) (517) 456 ========== ========== ========== Notes to the financial statementsfor the six months ended 30 December 2006 1. Basis of preparation This interim report does not constitute statutory accounts within the meaning ofsection 240 of the Companies Act 1985, was approved by the Board on 5 March2007. It has been prepared under the historical cost convention as modified forthe revaluation of certain fixed assets. The interim financial statements are unaudited, however for the first time wehave requested our auditors to perform a formal review and their report to thecompany is set out on page 6. The comparative figures have therefore not beenreviewed. The interim report consolidates the financial statements of Powerleague Groupplc and its subsidiaries, which have been made up to 30 December 2006. The report is consistent with the accounting policies set out in the auditedReport and Accounts of the group for the year ended 1 July 2006 with theexception of the adoption by the Group of FRS20 - "Share Based Payments". FRS 20requires the fair value of options and share awards which ultimately vest to becharged to the profit and loss account over the vesting period. Forequity-settled transactions the fair value is determined at the date of grantusing an appropriate pricing model. If an award fails to vest, the charge to theprofit and loss will be adjusted to reflect this. This is the first period inwhich options have been granted and the charge to profit in the period was£3,790. The financial information for the full preceding year does not constitutestatutory accounts as defined in Section 240 Companies Act 1985 and has beenextracted from the statutory accounts for the financial year ended 1 July 2006.Those accounts, upon which the auditors issued an unqualified audit report, havebeen delivered to the Registrar of Companies. The financial information for the comparative interim period to 31 December 2005has been restated to reflect the effective rate of taxation which applied forthe full year to 1 July 2006. Previously the company applied a compositeeffective tax rate, based on an assumed mix of income and capital gains tax. Theimpact of this restatement was an increase in the taxation charge to the profitand loss account of £201,000, an increase in the corporation tax creditor of£91,000 and an increase in the deferred taxation provision of £110,000. The calculation of adjusted earnings per share has been changed. In previousperiods, the taxation charge was eliminated in full, in order to facilitatecomparison to earlier periods in which tax losses were utilised. Sincemanagement now regard the tax charge to be more relevant to current periodperformance, the adjusted, earnings per share calculation now eliminates onlyexceptional items and their taxation effect. The impact of the change is shownin note 4. 2. Exceptional items 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000 Impairment of tangible fixed assets - - (96) ====== ====== ====== The impairment of tangible fixed assets relates to the centre at Dunfermline,which, at 1 July 2006, was the subject of a provisional sale agreement. Theimpairment at that date reflects the difference between the carrying value ofthe assets and the anticipated net proceeds from the sale. 3. Taxation on profit on ordinary activities 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000Current taxation: UK Corporation tax 529 272 696Adjustment in respect of prior years - - (55) ---------- ---------- ----------Total current tax 529 272 641 Deferred taxation: Origination and reversal of timing differences 223 313 463Brought forward losses utilised - - 386Adjustment in respect of prior years - - (18) ---------- ---------- ----------Deferred tax charge for the current period 223 313 831 ---------- ---------- ----------Taxation on profit on ordinary activities 752 585 1,472 ========== ========== ========== The taxation charge for the current period has been calculated using the ratelikely to apply for the whole year. The taxation charge for the 6 months ended 31 December 2005 has been adjustedfrom the rate thought likely to apply at that time, to the actual rateapplicable for that period. The adjustment amounted to an increase in the chargeof £201,000. 4. Earnings per share Basic earnings per ordinary 10p share is calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of ordinaryshares in issue during the period, which was 81,820,000 for each period underconsideration. Diluted earnings per share is calculated by dividing the earnings attributableto ordinary shareholders by the weighted average number of ordinary shares inissue and share options granted during the period. For the period ended 30December 2006, this was 81,915,000 and for the two comparative periods this was81,820,000. Six months Six months Year ended ended ended 30 December 2006 31 December 2005 1 July 2006 (unaudited) (not reviewed- (audited) restated) ------------------------- -------------------------- ------------------------- 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 earnings per share 976 1.19 775 0.95 1,948 2.38 Diluted earnings per share 976 1.19 775 0.95 1,948 2.38 Adjusted earnings per ordinary 10p share is calculated using profit adjusted forexceptional items and the taxation effect of those exceptional items. Thismeasure has been selected to exclude one-off exceptional items and thus enablefuture adjusted earnings per share calculations, which are not affected by theabove items, to be meaningfully compared with the past. Six months Six months Year ended ended ended 30 December 2006 31 December 2005 1 July 2006 (unaudited) (not reviewed- (audited) restated) ------------------------- -------------------------- ------------------------ 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 pBasic adjusted earnings per share 976 1.19 775 0.95 2,541 3.11 Diluted adjusted earnings per share 976 1.19 775 0.95 2,541 3.11 On the basis previously used: Basic and diluted adjusted earnings per share 1,728 2.11 1,360 1.66 3,835 4.69 Reconciliation of profit for the year: 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000 Profit for basic and diluted earnings per share 976 775 1,948Exceptional operating items - - 96(Gain)/loss on disposal of tangible fixed assets - - 319Taxation effect of exceptional items - - 178 ---------- ---------- ----------Profit for adjusted earnings per share 976 775 2,541 Taxation added back 752 585 1,294 ---------- ---------- ----------Profit for adjusted earnings per share on the basis previously used 1,728 1,360 3,835 ========== ========== ========== 5. Creditors: amounts falling due within one year 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not reviewed- (audited) restated) £000 £000 £000 Bank overdrafts 2,369 1,862 1,114Bank term loans 2,655 2,655 2,655Trade creditors 867 655 1,925Other taxation and social security 379 282 370Deferred grant 1 1 1Corporation tax 1,233 272 715Accruals and deferred income 1,112 1,583 1,112 ---------- ---------- ---------- 8,616 7,310 7,982 ========== ========== ========== 6. Reconciliation of Shareholders' funds and movement on reserves Share Profit & Total Share Premium Revaluation Loss Shareholders Capital account reserves account funds £000 £000 £000 £000 £000 At 3 July 2005 (audited) 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 as previously reported (not reviewed) 8,182 7,287 19,146 4,954 39,569 Taxation charge restated (see note 3) - - - (201) (201) ---------- ---------- ---------- ---------- ----------At 31 December 2005 (not reviewed - restated) 8,182 7,287 19,146 4,753 39,368 Arising from revaluation of operating assets - - 2,383 - 2,383Retained profit for the period - - - 1,173 1,173Transfer to profit and loss account - - (361) 361 - ---------- ---------- ---------- ---------- ----------At 1 July 2006 (audited) 8,182 7,287 21,168 6,287 42,924 Retained profit for the period - - - 976 976Ordinary dividend - - - (614) (614)Share based payment - - - 4 4Transfer to profit and loss account - - (337) 337 - ---------- ---------- ---------- ---------- ----------At 30 December 2006 (unaudited) 8,182 7,287 20,831 6,990 43,290 ========== ========== ========== ========== ========== 7. Reconciliation of operating profit to net cash flow from operating activities 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not (audited) reviewed- restated) £000 £000 £000 Operating profit 2,282 1,852 4,734Depreciation and impairment 1,321 1,178 2,610Release of negative goodwill (154) (131) (241)Release of deferred grant - - (1)Amortisation of deferred finance costs 6 6 12Increase in stock (7) (30) (59)Decrease/(increase) in debtors 341 195 (98)(Decrease)/increase in creditors (1,210) (451) 511 ---------- ---------- ----------Net cash inflow from operating activities 2,579 2,619 7,468 ========== ========== ========== 8. Reconciliation of net cash flow to movement in net debt 6 months 6 months Year ended ended ended 30 December 31 December 1 July 2006 2005 2006 (unaudited) (not (audited) reviewed- restated) £000 £000 £000 (Decrease)/increase in cash in the period (1,424) (517) 456Net cash inflow/(outflow) from decrease/(increase) in debt 1,013 (332) (1,756)Movement in liquid resources - - (50) ---------- ---------- ----------Movement in net debt arising from cash flows (411) (849) (1,350)Amortisation of deferred debt costs (6) (6) (12)Accrued interest costs - - (94)Opening net debt (18,141) (16,685) (16,685) ---------- ---------- ----------Closing net debt (18,558) (17,540) (18,141) ========== ========== ========== 9. Analysis of changes in net debt At At 1 July Non cash 30 December 2006 Cash flows transactions 2006 (audited) (unaudited) £000 £000 £000 £000Cash in hand and at bank 516 (169) - 347Bank overdraft (1,114) (1,255) - (2,369) ---------- ---------- ---------- ---------- (598) (1,424) - (2,022)Liquid resources 250 - - 250Debt due within one year (2,655) - - (2,655)Debt due after one year (15,138) 1,013 (6) (14,131) ---------- ---------- ---------- ----------Closing net debt (18,141) (411) (6) (18,558) ========== ========== ========== ========== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Power Probe