17th Aug 2006 07:15
Stagecoach Theatre Arts PLC 17 August 2006 Stagecoach Theatre Arts plc - Final Results 17th August 2006 Stagecoach Theatre Arts plc ("Stagecoach Theatre Arts", "Stagecoach" or the"Group") Preliminary Announcement of Final Results for the year ended 31st May 2006 Stagecoach Theatre Arts reports on the continuing growth in the number ofschools and students, whilst developing further its new business opportunities. Stagecoach Theatre Arts was founded in 1988 and operates the UK's largestfranchise network of part-time performing arts schools for young people agedbetween 4 and 16. A summary of the Group's results and achievements during the year is as follows: Franchise network turnover up 10% to £24.1m Group turnover £5.7m (2005: £5.7m) Operating profit of £2,000 (2005: £58,000) Loss before tax of £195,000 due to Exceptional costs of £184,000 (2005: profit£60,000) Total students up 7% to 35,709 (2005: 33,432) 633 Stagecoach and SportsCoach schools and 689 junior classes (2005: 586 and628) Launch of the first Early Sporties class in April 2005 Stagecoach Agency secures over 2,700 work placements or auditions for the year Stagecoach holds its inaugural "Foundation Course for Teachers of PerformingArts" in collaboration with RADA and Trinity/Guildhall Stagecoach students performed at The Drury Lane Theatre in London David Sprigg, Joint Managing Director, commented: "We have achieved another year of growth in the number of schools and studentswithin the core UK business, resulting in a 10% increase in Group networkturnover to £24.1m. We further developed our emerging divisions of SportsCoach,Mini Stages and Germany, whilst undertaking a fundamental restructuring of ourUS operations. In the year ahead we expect to see more growth in the core UKbusiness, whilst focussing on bringing the emerging divisions towardsprofitability." Enquiries: Stagecoach Theatre Arts: Tel: 01932 254 333David Sprigg, Joint Managing DirectorRichard Dawson, Finance Director Evolution Securities: Tel: 020 7071 4300Tom Price JB Public Relations: Tel: 01629 825 777John Burley Chairman's Statement I am pleased to report on the Group's results for the year ended 31 May 2006.Stagecoach Theatre Arts was founded in 1988 and operates the UK's largestnetwork of part-time performing arts schools for young people aged between 4 and16. Overview The continuing growth in the number of schools and students was reflected in a10 per cent increase in network turnover to £24.1 million (2005: £21.9 million).Network turnover reflects total school fees earned over the year by ourfranchisees, from the 35,709 students that now attend Stagecoach, SportsCoachand Mini Stages schools. Group turnover £5.7 million (2005: £5.7 million). Over the past five years the size of the Group has expanded considerably,reporting an increase of annual network turnover by 136 per cent from £10.3million in 2001 to £24.1 million in 2006. Due to the further investment in and development of the emerging divisions, andrestructuring costs of Stagecoach USA and SportsCoach, the Group reports a lossfor the year of £195,000 (2005: £60,000 profit). The restructuring costs, whichincluded transferring managed schools to franchises and a reduction in staffnumbers and head office operations, were £184,000. Operating profit was £2,000(2005: £58,000). Your Board acknowledges that it has taken longer than expected for the divisionsto be self-sustaining, and we plan for each division to either contribute aprofit to the Group or to be restructured. This approach was evidenced in therestructuring of the USA and SportsCoach divisions. Although this resulted inone-off increased costs, SportsCoach is expected to move into operating profitin the current year and the USA to significantly reduce its losses. The business model of each division is the same as the core Stagecoach business,based on economies of scale, requiring a certain number of franchised schools togenerate sufficient income to cover a predominantly fixed administrative costbase. Your Board's primary objective continues to be to bring each division intoprofitability as soon as possible. Furthermore, your Board is taking steps to reduce Head Office overheads wherepossible. A number of potential cost savings in salaries, premises and equipmentoverheads have been identified, and plans are in place to reduce these costs.Further details of the operations of the business are set out in the JointManaging Directors' Operating Review. Loss per share was 2.2 pence (2005: loss 0.2 pence). Your Board does not proposethe payment of a final dividend (2005: nil). The Group continues to support the Stagecoach Charitable Trust, which runsInterAct Theatre Workshops, providing inclusive performing arts tuition tochildren of all abilities and needs. Employees On behalf of the Directors, I would like to take this opportunity to thank allthe staff for their continued hard work throughout the year. Prospects During the year 47 new Stagecoach or SportsCoach schools, 51 Early Stages/Sporties and 10 Mini Stages sessions were opened. There has been another 7 percent increase in students attending Stagecoach, SportsCoach and Mini Stagesschools, from 33,432 to 35,709 students, and a 10 per cent increase in networkturnover to £24.1 million. Your Board anticipates further growth in the network in the year ahead, with 32new Stagecoach and SportsCoach main schools, 6 Early Stages/Sporties, and 12Mini Stages schools already contracted to open in September 2006. The emerging divisions of SportsCoach, Mini Stages, USA and Germany remaindemanding on cash resources in the short term, although the medium to long termearnings potential of the Group is being enhanced through the development andexpansion of these divisions. A continuing increase in new franchises, schools and students, and hence a moveinto profitability, from any one of these emerging divisions will have asignificant impact on the future earnings of the Group. Your Board expectsSportsCoach to be the first of these divisions to move into operationalprofitability. Graham ColeChairman 15 August 2006 Joint Managing Directors' Operating Review We report on the principal operations and results of the Group for the yearended 31 May 2006. Operations Group Overview The group has reported an operating profit of £2,000 (2005: £58,000) which isafter meeting the cost of continued investment in the Franchisee network, whichduring the year amounted to £175,000 as explained in the Financial Review below. The Group comprises the core Stagecoach Theatre Arts business in the UK and fouremerging divisions in other disciplines or countries. Stagecoach, whichrepresents over 90 per cent of the business in terms of student numbers andturnover, is the clear market-leader for providing performing arts tuition tochildren in the UK. The emerging divisions are based upon the same franchisebusiness model as Stagecoach UK. The Group also runs a Montessori school at itsHead Office in Walton-on-Thames. The core Stagecoach UK business still accounts for 91 per cent of the network'sstudents and turnover (2005: 94 per cent). SportsCoach has increased itsrelative share of the Group total number of students from 3 per cent last yearto 4 per cent, and both USA and Germany have increased from 1 per cent to 2 percent of the total students. The principle indicator of the Group's growth is the number of schools openedduring the year and the number of students attending those schools. During theyear a total of 29 new franchisees joined the network of schools, 47 newStagecoach or SportsCoach Schools opened, 51 new Early Stages or Early Sportiesand 10 new Mini Stages Sessions. The core Stagecoach UK business still accountsfor the majority of new school openings, as shown in the graph overleaf, howeverwe expect this trend to reverse over time as the emerging divisions expand. During the year 39 Stagecoach UK main schools were opened. SportsCoach openedthree schools, Mini Stages expanded by 10 sessions, USA one school and Germanysix schools. In addition to the above, 37, 4 and 3 new Early Stages classes opened during theyear in the UK, USA and Germany respectively, and 7 Early Sporties classes alsoopened. These junior classes recruit students at a younger age, and are animportant feeder to the main schools. Stagecoach Theatre Arts UK The core Stagecoach UK business continues to perform strongly and has funded theoperational losses of the emerging divisions. Your Board requires each divisionto move into profitability as soon as possible. The number of UK Stagecoach Theatre Arts main schools (for 6 to 16 year olds)and of students attending them has increased over the year to 573 schools at theyear end with 24,471 students (2005: 534 schools and 23,188 students). The number of franchisees increased over the period under review from 220 to241, demonstrating that the growth in schools has come from both new franchiseesjoining the network and existing franchisees expanding their individualbusinesses. The number of Stagecoach schools per franchisee remains level at 2.3 schools.Including the 21 new franchisees that joined the network during the year thereare 48 franchisees operating only one school, highlighting the potential forfurther growth within the existing UK network. There are several franchiseesthat run five or six schools. The average occupancy rate as at the year-end date is 42.7 students per school,or 94.9 per cent (2005: 96.4 per cent). Although a small decrease from lastyear, the percentage occupancy rate throughout the core Stagecoach UK networkremains strong. We are committed to ensuring the highest standards of education throughout thenetwork, having provided Training Workshops for franchisees and teachers duringthe year. In April, we held the inaugural "Foundation Course for Teachers ofPerforming Arts" in collaboration with RADA and Trinity/Guildhall. During theyear we also provided tailored marketing workshops for franchisees requiringadditional assistance with student recruitment. Such measures should have apositive impact on the average occupancy rate across the network going forward. Stagecoach enters its third year of partnership with First Choice, one of theUK's leading tour operators, to offer Stagecoach classes within First Choiceholiday resorts. In Summer 2005 over 1,000 students attended the performing artsworkshops at First Choice resorts in Spain, Mallorca, Lanzarote and Turkey. The number of Early Stages classes increased over the year by 37 classes to 611at the year-end with 8,000 students attending (2005: 574 Early Stages classesand 7,544 students). Early Stages classes provide performing arts tuition toyounger students aged 4 to 6 years and are an important feeder to the mainschools. During the year we formalised independent inspections for the Early Stagesclasses, as we undertake for our main schools network, thus further ensuringquality control of the performing arts tuition provided. The core Stagecoach UK business showed strong growth in all areas and reportedan increase in network turnover of 9 per cent to £22.1 million (2005: £20.3million). The number of students attending Stagecoach schools in the UK,including Early Stages classes, increased from 30,843 to 32,650 students. After attributing a proportion of the Head Office overheads, the divisionalprofit before tax of the core Stagecoach UK business was £922,000 (2005:£918,000). Mini Stages Mini Stages, musical fun for six months to four-year-olds accompanied by aparent, is the newest franchise offering by the Group. Your Board expects that once the Mini Stages network is fully established acrossthe UK, not only will it provide new revenue streams as a stand-alone networkbut also bring further awareness of Stagecoach Theatre Arts training to parentsof children at a younger age. The symbiotic relationship between Mini Stages andStagecoach schools should provide a competitive edge for the Stagecoach Group. During the year significant changes to the franchise offering were made. Theyincluded promoting weekday Mini Stages rather than weekends, and seekingfranchisees to teach the sessions as opposed to manage the operations. The MiniStages business model is such that new schools can open throughout the academicyear. At year-end there were 19 Mini Stages schools (or venues), from which 45teaching sessions were held, and a total of 442 students attending (2005: 13venues, 35 sessions and 370 students). In addition the licensee in Malta, whoruns 11 Stagecoach schools, opened its first Mini Stages classes in January2006, with already 98 Mini Stages students attending. Each Mini Stages class (or session) comprises up to 15 students. The averageoccupancy rate for the Mini Stages network as at the year-end date was 9.8students per class, or 65 per cent capacity. The focus for the year ahead is toassist franchisees with increasing student numbers across the network. The network turnover of Mini Stages, representing the total student fees chargedacross the network for the year increased by 68 per cent to £123,000 (2005:£73,000). This year represented one of investment of time and resources in restructuringthe Mini Stages concept and sale of the franchises. The business model of MiniStages is such that it requires a certain critical mass of schools opened tomeet its predominantly fixed cost base. Your Board aims to achieve a divisionaloperating profit as soon as possible. As a result of the changes in the franchise offering, the pipe line for new MiniStages franchises is encouraging with 12 new Mini Stages franchisees alreadycontracted to open their schools in September 2006. The Mini Stages division reported a loss after the allocation of overheads of£272,000 for the year (2005: loss of £267,000). SportsCoach schools This year represented one of consolidation and restructuring within theSportsCoach franchise network, refining the franchise offering and developingnew marketing strategies for student recruitment. At year-end there were 34schools, 8 Early Sporties and 1,360 students (2005: 33 schools, 1 Early Sportyand 1,134 students). During the year we reviewed the advertising and marketing material ofSportsCoach, so as to inform parents that SportsCoach is for children of allabilities and those who wish to have fun in sports, not just children withsporting ability. We also provided additional student recruitment training forfranchisees. As expected this has had a positive impact on occupancy levels,increasing to 76.7 per cent compared to 71.7 per cent at year-end 2005. Therevised marketing strategy is now part of the standard franchise offering fornew SportsCoach franchisees. Early Sporties, a fun introduction to sports for 4 to 6 year olds, was offeredto the franchise network after having been successfully piloted in April 2005.This is equivalent to the hugely successful Early Stages classes for the mainStagecoach Theatre Arts business, acting as an introduction to SportsCoach foryounger children. At year-end there were 8 Early Sporties classes with 109students (85.2 per cent occupancy). SportsCoach has teamed up with First Choice, one of the UK's leading touroperators, to provide sporting activities for children aged 6-16 years at one oftheir flagship European resorts for Summer 2006. The intention is to roll outthe programme to a further six resorts giving SportsCoach increased profile toits target audience and getting youngsters inspired to join their local schoolwhen returning to the UK. Having successfully piloted the nationally recognised 'Junior Sports LeadersAward', SportsCoach will be introducing this highly valued programme to thenetwork. The course takes students a year to complete and is fully approved bythe Qualification and Curriculum Authority. Our first successful candidates werepresented with their awards at SportsCoach Cheam in June. The network turnover of SportsCoach, representing the total student fees chargedacross the network for the year, increased by 21 per cent to £977,000 (2005:£806,000). SportsCoach division reported a loss for the year, after the allocation ofoverheads, of £250,000 (2005: loss of £233,000). These losses includedre-organisational costs for SportsCoach, transferring managed schools tofranchises and a reduction in head office staffing, resulting in an estimatedone-off cost to the Group of £39,000. We expect the SportsCoach division to be the first new division to contribute aprofit to the Group. There are 5 new SportsCoach franchise schools alreadycontracted to open in September 2006. Stagecoach Theatre Arts USA This year represented a period of major restructuring of the business operationsof the Stagecoach USA subsidiary, significantly reducing the US head officeoperations. As part of this process we transferred the three managed schools to franchiseschools, thus from the Summer Term 2006 onwards there are no managed schooloperations in the USA. This has allowed us to significantly reduce the US headoffice costs. We reduced the number of employees from three full-time to onepart-time Operations Officer, and subsequently reduced our head office overheadsand other direct costs associated with running managed schools. Such action,together with a policy of writing off the stock value of the managed schoolstransferred to franchisees, has significantly increased the accounting losses inthe year under review. The cost reduction benefits of this restructuring will beevident in the year ahead. As at the year-end there were 558 students attending Stagecoach USA's 13 schoolsand 13 Early Stages classes (2005: 479 students attending 12 schools and 9 EarlyStages classes). The Stagecoach USA network also runs a successful SummerWorkshop programme, with nine weeks of workshops scheduled over the Summer 2006. The average student numbers per school across the US network increased slightlyfrom 32.4 students to 32.5 students (or 72 per cent occupancy). The main focus for the year ahead continues to be to increase the averagestudent numbers across the US network, so as to ensure maximum profitability forexisting franchisees, enabling them to open subsequent schools, and attract newfranchisees to the network. The network turnover of Stagecoach USA, representing the total student feescharged across the network for the year, increased by 59% to £382,000 (2005:£241,000). After accounting for the restructuring costs of £145,000, the wholly-ownedStagecoach USA subsidiary reported an operational loss for the year of £304,000.Adding back these exceptional items, the adjusted unaudited loss is estimated at£159,000 (2005: loss of £154,000). We expect the losses to be significantlyreduced in the year ahead following the restructuring. Stagecoach Theatre Arts Germany This year represented the first full year of franchising in Germany for theStagecoach Group. During the year a further six main schools and three EarlyStages classes opened in Germany. Stagecoach franchise schools are now operating across Germany, in Berlin,Frankfurt, Hanover, Stuttgart and Erlangen, and managed schools in and aroundNuremburg. In preparation for the expansion of the German Stagecoach network we haveincreased our marketing activity for new franchisees. The network is expected togrow further over the next year. As at the year-end there were 591 students attending Stagecoach Germany's 13schools and 12 Early Stages classes (2005: 334 students attending 7 schools and9 Early Stages classes). The average student numbers per school across theGerman network increased to 36.7 at the year-end (2005: 34.7 students). The main focus for the year ahead will be to further expand the Stagecoachnetwork throughout Germany. Three new franchise schools are already contractedto open in September 2006. The network turnover of Stagecoach Germany, representing the total student feescharged across the network for the year, increased by 70 per cent to £335,000(2005: £197,000). The 90 per cent owned Stagecoach Germany subsidiary reported aloss of £95,000 for the year (2005: loss of £112,000). Other overseas operations The Group continues to provide support for its other overseas operations andinterests in Stagecoach Theatre Arts schools in Australia, Gibraltar, Malta, theRepublic of Ireland and Spain. Collectively, these operations provide a smallprofit to the Group. Your Board has identified overseas licensing of the Stagecoach Theatre Artsbrand and use of our established systems as a possible future profit-centre forthe Group. As such we are looking for overseas people or organisations with abackground in the performing arts and some business experience who have a desireto operate Stagecoach schools in their country. Stagecoach Agency As the biggest children's performing arts agency in the UK the Stagecoach Agencyhas continued to expand its influence within the entertainment industry. In itsfirst full year of operation the Agency has secured over 2,700 professionalauditions or actual work placements for Stagecoach students. By providing a comprehensive range of services to Casting Directors andProduction Companies the Stagecoach Agency is obtaining increasingly moreopportunities for Stagecoach school students to take part in a wide range ofentertainment platforms including; TV and Film, Commercials and CorporateVideos, Theatre, Radio Dramas, Photo Shoots and Promotions, Musicals andVoice-Overs. Assignments won by the Agency within the year include parts for students in mostmajor television series and many other high profile productions, both domesticand international. The Agency's success offers excellent publicity opportunitiesfor individual Stagecoach schools throughout the UK. Financial Review There was an increase in the number of schools and students across the Group anda 10 per cent increase in network turnover to £24.1 million. Group turnover forthe year was £5.7 million (2005: £5.7 million). The core Stagecoach UK business continues to fund the growth of the emergingdivisions. Your Board's primary objective is to bring each division intoprofitability as soon as possible. Furthermore, your Board has taken steps to reduce Head Office overheads wherepossible. Further cost savings in salaries, premises and equipment costs areexpected in the year ahead. The Group invested in and developed an online data management system for use bythe franchise network to manage their school records. This Internet systemallows franchisees to maintain their registers, monitor fees payable, managetheir school administration and correspond effectively with parents. The systemalso provides important real-time management information for the Group. TheGroup has also developed a new website for franchisees to attract and registernew students. The development costs of these systems are shown in the balancesheet as fixed assets. The emerging divisions were a draw on the Group's cash resources during theyear. As at 31 May 2006, the net cash balances of the Group were £45,000 (2005:£504,000). With the exception of the new data management system, which waspartially funded by a bank loan, the Group had little capital expenditure duringthe year. The Company continues to operate an overdraft facility of £800,000,with increases of up to £1 million at peak requirements, to manage its workingcapital. The Group receives the majority of its cash in-flow three times a year, sixweeks into each academic term from franchise fees for that term. The positivecash balance for the Group at 30 June 2006 was £1.1 million. Operating profit for the year was £2,000 (2005: £58,000). After exceptionalcosts and interest payments, loss before tax was £195,000 (2005: profit of£60,000). This loss is attributed to the further investment in and developmentof the emerging divisions, and in particular the exceptional fundamentalrestructuring costs, primarily of Stagecoach USA, of £184,000. Theserestructuring costs included transferring managed schools to franchises and areduction in staff numbers and head office operations going forward. The Board has continued to invest in the infrastructure and resources for thebenefit of the Franchisee network and promote the continued growth in studentnumbers, schools and territories. Although the AMP expenditure incurred in thecurrent year will be for the long-term benefit of the Franchisees andStagecoach, and will ultimately be funded through the annual AMP contributions,accounting standards do not always allow for the deferral of such expenditure.Consequently, the current year group profit and loss includes a charge of£175,000 for AMP expenditure which although for the long-term benefit of theFranchisees and the Group, cannot be deferred or capitalised. The number of employees (full time equivalents) employed by the Group is 65 asat 31 May 2006 (2005: 67 full time equivalent employees). Creative and Educational Department Your Board is dedicated to continuing to provide the highest standards ofstudent education and opportunity throughout the Stagecoach network. TheCreative and Educational Department is committed to being at the forefront ofstandards of education in the performing arts. One of the unique features of Stagecoach is that it provides students withopportunities to participate in special performances and events each year. Overthe last year these included: In June 2005, 500 students from 10 Stagecoach schools performed at Nottingham'sRoyal Concert Hall in aid of charity. The annual 'Easy Stages' show-case production in August 2005, being "GypsyBlood", written and directed by Stagecoach's own Director of Education VeronicaBennetts, featured 70 Stagecoach students from schools across the country andoverseas. In August, 380 students from 12 Stagecoach schools performed at the Dance, Dramaand Music Extravaganza at Birmingham's NEC over the two day exhibition. In November, 400 Stagecoach students performed a selection of dance and singingroutines at The Theatre Royal, Drury Lane, London, celebrating eighteen years ofStagecoach Theatre Arts success. In April and May 2006, Stagecoach students attended a post production workshopat Les Miserables, where they met cast, crew and members of the creative teamafter watching a matinee performance. In May 2006, 130 students from several Stagecoach schools performed at TheNottingham Playhouse in a charity concert in aid of Childline. Stagecoach's training, together with these extra-curricular performingopportunities, offers immense benefits to students in the growth of confidenceand self-esteem as well as fostering enjoyment and well being. Stagecoach Charitable Trust The Group continues to support and provide management time to the StagecoachCharitable Trust, which amongst other activities runs InterAct TheatreWorkshops, providing inclusive performing arts tuition to children of allabilities and needs. The feedback from the children attending InterAct and theirparents has been overwhelmingly positive. Stephanie Manuel David SpriggJoint Managing Director Joint Managing Director 15 August 2006 Stagecoach Theatre Arts plcConsolidated Profit and Loss AccountYear ended 31 May 2006 Notes 2006 2005 £'000 £'000 Turnover 2 5,673 5,746 Cost of sales (3,330) (3,480) Gross profit 2,343 2,266 Administrative expenses (2,358) (2,246)Other operating income 17 38 Operating profit 2 58 Exceptional costs (184) - (182) 58 Interest receivable 11 14Interest payable and similar charges (24) (12) (Loss)/profit on ordinary activities before taxation (195) 60 Taxation 3 (22) (79) Loss on ordinary activities after taxation (217) (19) Minority interest 3 7 Loss for the year transferred to reserves (214) (12) Loss per share, pence - Basic 5 (2.2) (0.2) - Diluted 5 (2.2) (0.2) A Statement of Recognised Gains and Losses is not presented as all recognisedgains and losses are included in the profit and loss account. All amounts relate to continuing operations. Stagecoach Theatre Arts plcConsolidated Balance SheetAs at 31 May 2006 Notes 2006 2005 £'000 £'000 £'000 £'000 Fixed assetsIntangible fixed assets 735 794Tangible fixed assets 673 112 1,408 906 Current assetsStocks 279 262Debtors 2,128 2,208Cash at bank and in hand 304 504 2,711 2,974 CreditorsAmounts falling due within one year (1,762) (1,362) Net current assets 949 1,612 Total assets less current liabilities 2,357 2,518 CreditorsAmounts falling due after one year (57) - Net assets 2,300 2,518 Capital and reservesShare capital 494 494Share premium 1,601 1,601Profit and loss account 220 435 2,315 2,530 Minority interests (15) (12) Equity shareholders' funds 2,300 2,518 The financial statements were approved and authorised for issue by the board andwere signed on its behalf on 15 August 2006. Stagecoach Theatre Arts plcConsolidated Cash Flow StatementYear ended 31 May 2006 Notes 2006 2005 £'000 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 6 (14) 417 Returns on investments and servicing of financeInterest received 11 14Interest paid and interest element of finance lease (24) (12)rental repayments (13) 2TaxationCorporation tax paid (59) (148) Capital expenditureProceeds on disposal of fixed assets - 25Payments to acquire tangible fixed assets (454) (35) (454) (10)Acquisitions and disposalsPurchase of subsidiary - (16) Equity dividends paid - (195) Net cash (outflow)/inflow before financing (540) 50 FinancingGross proceeds from the issue of shares - 64Capital element of hire purchase payments - (26)Proceeds from bank loan 100 -Repayment of bank loan (19) - 81 38(Decrease)/increase in cash at bank and in hand (459) 88 Stagecoach Theatre Arts plc Year ended 31st May 2006 Notes to the Financial Statements Accounting Policies Basis of preparation The financial statements have been prepared in accordance with applicableAccounting Standards and under the historical cost convention. The consolidatedfinancial statements include the audited financial statements of the company andits subsidiary undertakings. Subsidiary undertakings acquired are consolidatedusing the acquisition method of accounting from the effective date ofacquisition. The financial information presented in this preliminary announcement does notconstitute statutory accounts within the meaning of the Companies Act 1985. Theinformation has however been extracted from the Group's statutory accounts forthe year ended 31st May 2006 which were approved by the Board on 15th August2006 and on which the Group's auditors have given an unqualified opinion. Turnover by geographical location 2006 2005 £'000 £'000 UK 5,153 5,340Europe 335 238Rest of the world 185 168 Total turnover 5,673 5,746 Turnover is analysed on an origination basis and is all derived from externalcustomers. Taxation a) Analysis of the tax charge The tax charge on the profit on ordinary activities for the year was as follows: 2006 2005 £'000 £'000 UK corporation tax - current year tax 35 76 - prior year tax (14) (2) - deferred tax 1 8Germany corporation tax - prior year tax - (3) 22 79 UK corporation tax has been charged at 30% (2005: 30%). b) Reconciliation of the tax charge 2006 2005 £'000 £'000 (Loss)/profit on ordinary activities before tax (195) 60 (Loss)/profit on ordinary activities at standard rate (59) 18 of UK corporation tax of 30%Effects of:Unrelieved losses of overseas subsidiaries 74 43Expenses not deductible for tax purposes 27 18Adjustment to tax charge in previous periods (14) 3Marginal relief (6) (3)Current tax charge for year 22 79 Dividends Your Board does not propose the payment of a final dividend (2005: nil). Loss per share Basic loss per share, calculated in accordance with FRS22 (Earnings per share)is 2.2 pence (2005: 0.2 pence). This is based on the loss on ordinary activitiesafter tax of £216,764 (2005: £19,273) apportioned over the weighted averagenumber of ordinary shares that were in issue for the period of 9,879,317 (2005:9,773,723). Fully diluted loss per share is calculated at 2.2 pence (2005: 0.2pence), based upon weighted average number of ordinary shares, including optionsgranted to employees, of 9,887,327 (2005: 9,842,631). Reconciliation of operating profit to operating cash flows 2006 2005 £'000 £'000 Operating profit 2 58Exceptional costs (184) -Depreciation and amortisation of goodwill 102 103Profit on disposal of fixed assets - (6)(Increase)/decrease in stocks (16) 15Decrease/(increase) in debtors 65 (198)Increase in creditors 13 443Foreign exchange differences 4 2 Net cash (outflow)/inflow from operating activities (14) 417 Analysis of changes in net funds At Cashflow At 1 June 2005 31 May 2006 £'000 £'000 £'000 Cash at bank and in hand 504 (200) 304Bank overdraft - (259) (259) 504 (459) 45 Bank loan due within one year - (24) (24)Bank loan due after one year - (57) (57) 504 (540) (36) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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