3rd Oct 2006 07:01
Powerleague Group plc03 October 2006 3 October 2006 Powerleague Group plc Announcement of Preliminary Results For the Twelve Months Ended 1 July 2006 Powerleague Group plc is the market-leading operator of 5-a-side footballcentres in the United Kingdom. We are focused on increasing our national brandpresence to meet local and regional demand for grass roots football. In additionwe are proactively working with an increasing number of sponsors, blue-chipcompanies and major brands wishing to tap into the lucrative 5-a-side market. Highlights 2006 * Turnover up 17% to £20.5 million * Like for like sales up 3% * EBITDA before exceptional items up 19% to £7.1 million * Operating profit before exceptional items up 15% to £4.8 million * Depreciation for the year increased to £2.5 million (2005: £1.8 million) reflecting the revaluation of properties in the balance sheet * Pre-tax profit, excluding the depreciation associated with the revaluation of the properties, was £4.1 million * Cash generated from operating activities of £7.5 million, up 39% from £5.4 million * Proposed maiden dividend of 0.75p per ordinary share * Sponsorship and events revenues up by 7% * 3 new centres opened during the year, as forecast. A further two centres added at the end of the year, ahead of schedule for 2006/7 Results for the year to 1 July 2006 represent 52 weeks' trading compared with 53weeks for the period to 2 July 2005 and references to "year" throughout thisstatement refer to these periods as defined. Commenting on the results, Claude Littner, Chairman of Powerleague, said: "I amdelighted to announce another record set of results which are ahead of marketexpectations. "The popularity of 5-a-side football continues unabated as more people becomeinvolved and enjoy the game. Powerleague will drive the business forward andseek innovative and lucrative revenue streams, whilst maintaining the focus onpitch income and providing our customers with an exciting 5-a-side footballexperience time and time again. "We have a strong pipeline of future sites to develop and are well placed toincrease the estate by four new centres during the current year, two of whichhave already opened." Enquiries: Powerleague Group plc Claude Littner, Executive Chairman Sean Tracey, Chief ExecutiveTel: 020 7920 3150 (3 October 2006)Tel: 0141 887 7758 (thereafter) Tavistock Communications Lulu Bridges / John West / Matt RidsdaleTel: 020 7920 3150 Chairman's StatementIntroduction This has been another good year for the Group. I am very satisfied with theperformance for the year to 1 July 2006 and delighted to announce another recordset of results which are ahead of market expectations. Results Group turnover increased by 17% to £20.5 million. EBITDA before exceptionalitems increased by 19% to £7.1 million. Operating profit before exceptionalitems was up by 15% at £4.8 million. Cash generated from operating activitiesincreased from £5.4 million to £7.5 million. It is worth noting that 2005 was a53 week year and comparatives for 2006 represent 52 weeks' trading. Dividends Last year I stated that it was the Board's intention to pay dividends in thefuture. In light of these results, coupled with the cash generative nature ofthe business, we feel that it is appropriate to recommend a dividend at thistime of 0.75p per ordinary share, at a cost of £613,650. This strikes a prudentbalance between the Group's excellent cash generation on the one hand and ourgrowth plans and servicing our bank debt on the other. The dividend, if approved, will be paid on 4 December 2006 to shareholders onthe register at the close of business on 10 November 2006. Leading Position We continue to dominate the 5-a-side market, and currently operate 34 centresacross the UK. Our policy is to establish Powerleague centres in locations thatextend our national coverage, and these may be large conurbations as well asother towns where we believe there is a strong potential demand for 5-a-sidefootball at purpose built centres. During the year, we have added three new centres, as forecast, and these centresare all performing well. A further two centres were added at the end of theyear, ahead of schedule for 2006/7. Our highly successful partnership with Microsoft's Xbox, our headline sponsor,has a further 2 years to run and we have new sponsorship agreements withBudweiser, Lucozade and Nike. A new event has been secured with Braun and, inaddition, we continue to manage national corporate 5-a-side events with leadingcompanies such as Barclays, Sainsburys, JD Wetherspoon and John Lewis. It ispleasing that we have been able to attract and retain such a plethora of bluechip sponsors and remain optimistic that we are well placed to grow thisfurther. Flexible Approach We initiated and lead the way in 5-a-side centres within 'school sites' where wehave fostered excellent relationships with schools and local councils. Theprinciple is that we work closely with all parties to develop a 5-a-sidefacility within the grounds of the school which enhances the community leisureoffering and provides the school with a purpose built football facility fortheir free use during the day. Two of our new centres this year, at Basingstokeand Coventry, are school sites, bringing our total school sites to ten. Our 'affordable' gym offering, under the branding "Power for Life" has also beendeveloped. In addition to those at Manchester South and Catford, we have nowopened another within our new centre in Coventry and construction is under wayat Norbury. As our estate matures, we have sought to invest heavily in a programme ofrefurbishment by upgrading existing pitch surfaces to the latest generationwhere required, adding new pitches to existing centres and renewing bar areas.These investments have been undertaken with minimum disruption to the business,and in all cases have proved accretive. Outlook Looking ahead, we have a strong pipeline of potential future sites to develop,and are well placed to increase the estate by four new centres during the year,two of which have already opened. We continue to be alive to new and lucrativerevenue streams whilst maintaining the focus on pitch income which remains theprime driver of this business. The 5-a-side market continues to grow as morepeople, both male and female, become involved and enjoy the activity. One of the keys to our success is undoubtedly the quality of our managers andstaff. We all have a clear sense of purpose and direction. Our customer focus,attention to detail, short lines of communication and management informationsystems all contribute to our ability to respond quickly and provide ourcustomers with an exciting 5-a-side football experience time and time again. Claude LittnerExecutive Chairman Operating and Financial Review Operating review I am pleased to report that trading in the year to 1 July 2006 has continued tobe strong and we have reported further growth in sales and profitability. Sales increased by 17% for the year from £17.5 million to £20.5 million. Overalllike for like sales were up by 3%, demonstrating our ability to further boostrevenues from our existing portfolio of centres. This increase has beengenerated primarily from the Group's core activity of pitch income which yieldeda 6% like for like increase and which is the most profitable part of thebusiness. Sponsorship and events turnover increased by 7% and further growth is forecastthis year, with the securing of a number of long term blue chip sponsors. Disappointingly, bar sales declined during the year by 4% on a like for likebasis. A number of factors contributed to this: the smoking ban in Scotland, theintroduction of a non-smoking policy in all centres opened in the last twelvemonths and, most significantly, a change in drinking culture away from midweekalcoholic drinking in the bar after a game, to energy type drinks. This culture change has been reflected in the increase in vending sales andother income (8% on a like for like basis) with a non-carbonated bottle ofLucozade or soft drink purchased and drunk straight after a game or taken offsite increasing in popularity. This growth has helped offset in some part thedecline in bar revenues as customers' tastes and habits change. It isencouraging to see growth in this area as it demonstrates revenues are stillbeing retained and customers are still spending on site, albeit on a differentproduct with a slightly lower margin. While the bar is not the main revenue driver of the business and margins aresignificantly less than the core football activity, over recent months Hamilton,Stockport, Birmingham, Mill Hill, and Slough have all had bar refurbishments, toencourage further weekend function trade and midweek bar retention. The latestplasma screens have also been installed to improve live viewing of football andother sporting events. New openings During the year under review, we opened and acquired a total of 5 new centres. In September 2005, we opened two new centres, one in Scotland and one in theSouth of England. The centre in Kilmarnock was opened for business on 16September 2005, with six 5-a-side pitches and one 7-a-side. The centre haspotential for further expansion and since the year-end we have begunconstruction of an additional 7-a-side pitch. At the same time we opened a newcentre at Basingstoke comprising eight 5-a-side pitches and one 7-a-side pitch.Both centres were opened ahead of schedule and on budget and I am pleased toreport that they made a positive EBITDA contribution in the first full month oftrading. During June, just prior to the start of the World Cup and ahead of schedule, weopened a unique and highly successful centre in the City of London. Located on adevelopment site close to Liverpool Street Station and just off Bishopsgate, wehave established five 5th generation 5-a-side football pitches, three of whichare covered under a marquee. The centre incorporates well-appointed changingfacilities and a licensed bar. The centre has proven to be a real hit with theCity community with lunchtime and after-work slots nearing capacity. Although wehave secured this site on a short lease, we are led to believe that Powerleaguewill continue to operate beyond this period. A great proportion of the capitalinvestment made in this site is demountable and can be relocated if required.Due to the success of this centre, we are looking for other entrepreneurial andground breaking opportunities of a similar nature. At the very end of the year, we opened a further centre in Coventry. This is astate of the art 5-a-side football venue with ten rubber crumb pitches, anaffordable gym, sports bar and modern changing facilities. The centre, which islocated at Woodlands School and Sports College, was developed in conjunctionwith the School and Coventry City Council and forms part of a major leisurefacility, which includes a regional gymnastics centre run by the school.Powerleague controls all of the dry and wet sales within the complex. Opened on30 May 2006, Powerleague Coventry made a small contribution to the results underreview; however, we are very satisfied with its performance to date with highlevels of bookings anticipated as the centre ramps up. Acquisition On 24 May 2006, we acquired JJ Boyle (Leisure) Limited, an independent privateoperator with a centre in Bolton. Since acquisition, the ten 5-a-side pitcheshave been refurbished in the latest pitch surfaces and the facilities have beenextensively upgraded. The changing rooms have been revamped, the hospitality andreception areas have been refitted and we have added a new sports bar. Thecentre started trading under the Powerleague brand in July 2006 and we are verypleased with the increase in pitch utilisation since re-opening. 'Power for Life' Affordable Gym Last year, I reported that we were extending the Gym facilities at the SouthManchester centre. This extension was completed during the year and resulted ina marked increase in annual subscriptions. This prompted us to review ourexisting portfolio of centres to see if there were suitable opportunities tointroduce this affordable gym concept, based on both demographics and space. Asa result, in January, we opened an affordable gym at our Catford centre,utilising dead space that was formerly squash courts. Both gyms are providing agood return on the initial investment and we have included an affordable gymwithin our newly opened Coventry centre, which has also started to produce agood return. The Group's primary focus remains the successful roll out of5-a-side football centres but where additional revenue streams can be generatedand strong returns on capital employed achieved, Powerleague will continue totake advantage of these opportunities. Centre Upgrades In addition to our investment in new centres, we continue to invest in ourexisting estate. We have invested £848,000 during the year in upgrading existingpitches and extending our existing facilities. During the year we upgraded afurther 29 pitches to next generation rubber crumb, and since the year-end afurther 52 pitches and 5 centres have had all of their pitches refurbished inthe latest 5th generation surfaces. The Group now has over 50% of its pitchesusing the 3rd and 5th generation surfaces. In the last 12 months, we have added an additional 7-a-side pitch on our centresin Watford and Barnet and a further two 7-a-side pitches at Fairlop. Theseadditions have provided a high level of return on investment, with no extramanagement or running costs required and high utilisation rates achieved almostimmediately. We also refurbished the bars in Croydon, Sheffield, and Catford andwe will continue to invest in the estate to maintain our high standards, enhanceour customers' experience, and where appropriate returns can be achieved. Corporate Events and Sponsorship Although the World Cup straddled our financial year-end, there is no doubt thatit significantly heightened interest in all aspects of the football game. Asalready stated, revenue from corporate events and sponsorship increased by 7%during the year. This was achieved by a combination of the "World Cup" factor,which precipitated an increase in corporate events, and new sponsorshipagreements that have been secured during the year. In particular, I would like to highlight the following agreements which, whenadded to our existing sponsorship relationships, provide excellent revenuevisibility and helps to underwrite a significant part of forecast futureearnings in this important strategic area: * Two-year sponsorship with Budweiser, the official beer of the Barclays Premiership and the World Cup * A new agreement reached with Nike in November 2005, which includes the title of Official Ball Sponsor of Powerleague * Unique World Cup event, Joga Bonita, created spin-off leagues in 12 Powerleague centres * A new three-year sponsorship agreement with Lucozade, official Sponsors of the Premiership * A new London event with Braun, a major World Cup sponsor * Repeat bookings for national corporate events e.g. Barclays, Sainsbury, JD Wetherspoon and John Lewis. Towards the end of 2006, we will be hosting a very significant nationwide eventwith Nike as they launch their new range of apparel specifically designed forthe 5-a-side game. The launch will be headlined by Wayne Rooney, Rio Ferdinandand Joe Cole, and will feature Powerleague centres in the marketing campaignalong with a National Event open to every amateur player in the UK. Powerleaguewill host and manage the whole event on behalf of Nike. We are currently in discussions with other potential sponsors who recognise thestrength of the Powerleague brand and the unique national coverage of ourcentres which provides a platform for interacting with the 90,000 or so grassroots players that visit our centres each week. Recent recognition from the English Football Association was received with theaccolade of "Advanced Small Sided Football Centre", the highest award available,and granted to all of Powerleague's centres based in England. The Group not onlyhas full affiliation but plays a prominent role on the FA's small sided footballCommittee which helps shape future initiatives and developments within the game. Corporate and Social Responsibility Powerleague has continued its active involvement with a number of charities on alocal, regional and national basis. In the last 12 months we have hosted andmanaged National events for Childline, Clic Sergeant and the Motor and AlliedBenevolent Fund. The Group continues to offer free play in all centres for localschools and community groups, helping to tackle issues such as obesity, lack ofquality, purpose-built sports facilities, and providing the ten schools where wehave centres with an additional income stream, by way of rental. Staff Our strong performance during the year could not have been achieved without thededication and hard work of our staff, who relate on a daily basis with ourcustomers and are committed to excellence. As an operational team, they ensurethat every aspect of the centres provide a safe environment and a greatexperience for our customers. I would like to thank them for their loyalty andeffort during the year. Outlook We have an excellent pipeline of future sites at varying stages of the processand have already opened both Bolton and London City slightly ahead of schedule.We are now reaping the benefits of the heightened interest in football broughtabout by the World Cup and the new football season. With the strong visibilityof revenue generation from our core business and further growth opportunitieswithin the corporate events and sponsorship area, we are confident that thecoming year will be another one of strong growth. Sean Tracey, Chief Executive Financial Review Turnover and Profit At £20.5 million, turnover in the 52 week period to 1 July 2006 increased by 17%over the 53 week period to 2 July 2005. EBITDA before exceptional itemsincreased by 19% to £7.1 million as detailed below: 52 weeks 53 weeks ended ended 1 July 2006 2 July 2005 £000 £000 Operating profit 4,734 5,141Exceptional items 96 (928) Depreciation of tangible fixed assets 2,514 1,806 Negative goodwill released (241) (49) ----------- ----------EBITDA before exceptional items 7,103 5,970 ----------- ---------- EBITDA margin before exceptional items 34.7% 34.2% The significant factors generating the improvement in EBITDA before exceptionalitems were: * the addition of 2 centres in September 2005 * a 6% like for like increase in high-margin pitch income * a 7% increase in income from sponsorship and corporate events, which is also high margin * consistency of centre staff costs ratio at 21%, despite new centre start-up costs However, this overall improvement has been slightly reduced by: * start-up costs for the three centres opened towards the end of the financial year * continued investment in our pipe-line of future sites * upwards pressure on utility and property rates costs * the costs associated with our first full year as an AIM-listed public company Revaluation and Depreciation Our centres are carried on the balance sheet at their valuation on an existinguse basis. With the exception of London City, which is on a short-term lease,the centres opened and acquired during the year were revalued at £8.4 million at30 June 2006. This basis of accounting gives rise to a high depreciation charge,of which £673,000 (2005 - £664,000) arose from the revaluation of properties. On a historical cost basis, our profit before tax and exceptional items was £4.2million (2005 - £2.8 million) an increase of 48%. Interest During the year, repayments of £2.7 million on our term loan have been made,whilst development funds of £4.4 million have been drawn down. We commenced theyear with interest rates applying at 1.25% over base rate, but secured areduction during the year to 1.15% over base rate. The average rate payableduring the year was 5.70%. Earnings per Share Basic and diluted earnings per share for the year was 2.38p compared with 2.80pfor the prior period. The principal factors affecting this reduction areincreases in: * exceptional items of £96,000 (charge) compared with £928,000 (credit) (see note 2) * taxation arising principally from an increase in non-qualifying deprecation (see note 3) * depreciation, with new centres added * staff costs, with new centres opening but not yet generating the same proportion of income as established centres, a trend which will improve as centres mature The adjusted measure for earnings per share derives earnings per share of 4.69pcompared with 3.05p. This measure eliminates the impact of the exceptional itemsand taxation, and demonstrates strong continued improvement in the business. Taxation A detailed analysis of taxation is set out at note 3. The effective rate of taxation has risen from 21.3% in 2005 to 43.0%. Theprimary reason for this is the impact of revalued depreciation, which reducesthe profit before taxation, whilst increasing the taxation charge. Had therevaluation of the centres not been recognised in the balance sheet, the actualtaxation charge would be unchanged, but the effective rate would have been 36%. It should be noted that in 2006, £1.3 million in losses brought forward wereutilised against the profits for the year in calculating the taxation payable. Share Option Scheme At a meeting of the Board of Directors on 4th September 2006, it was resolvedthat the Company adopt a share option scheme, to be known as the PowerleagueGroup plc Employee Share Option Scheme (the "Option Scheme"). The Option Schemeprovides for the grant of HM Revenue & Customs ("HMRC") approved share optionsunder Part I of the Option Scheme and unapproved options, on substantially thesame terms as approved options, under Part 2 of the Option Scheme. The OptionScheme is on broadly the same terms as was described in the admission documentat the time of the Company's flotation on AIM. HMRC has confirmed the rules ofthe Option Scheme are capable of formal approval, which approval was granted on29 September 2006. Funds from operating activities and other sources The statement of cash flows shows an increase in cash of £456,000 (2005:decrease of £1,717,000). Cash generated from operating activities increased by39% from £5.4 million to £7.5 million. This increase in cash generated wasdriven by an increase of six in the average number of centres operating. A totalof £8 million (2005 - £6.8 million) was spent on building or acquiring centres,funded in part by drawdown under our development facility of £4.4 million. Goodwill Negative goodwill arose in the year following the acquisition and Fair Valuereview of JJ Boyle (Leisure) Ltd. The centre in Bolton operated by the companywas valued on an existing use basis, as mentioned above, and negative goodwillof £163,000 was brought onto the balance sheet. This adds to the negativegoodwill brought on with the acquisition in 2005 of 4 centres from VIDA.Goodwill is being recognised in the profit and loss account in line with thedepreciation of the underlying assets and £241,000 was released in the year,relating entirely to the 2005 negative goodwill balance. Sheena Beckwith, Finance Director Group Profit and Loss Account For the year ended 1 July 2006 52 weeks 53 weeks ended ended 1 July 2 July 2006 2005 Notes £000 £000Turnover----------------------------------------------------------------------------Continuing operations:Ongoing 20,449 17,477Acquisitions - JJ Boyle (Leisure) Ltd 39 -----------------------------------------------------------------------------Group Turnover 20,488 17,477 Cost of sales (3,640) (3,212) ----------- -----------Gross profit 16,848 14,265 ----------- ----------- Administration expenses (12,018) (10,052)Exceptional items 2 (96) 928 ----------- -----------Total administration expenses (12,114) (9,124) ----------- ---------------------------------------------------------------------------------------Continuing operations:Ongoing 4,717 5,141Acquisitions - JJ Boyle (Leisure) Ltd 17 -----------------------------------------------------------------------------Operating profit 4,734 5,141 ----------------------------------------------------------------------------Analysed as:Operating profit excluding exceptional items 4,830 4,213Exceptional items (96) 928---------------------------------------------------------------------------- Cost of group reconstruction - (189) Loss on disposal of fixed assets (319) (285) Net interest payable and similar charges (995) (1,575) ----------- ----------- Profit on ordinary activities before taxation 3,420 3,092 Tax on profit on ordinary activities 3 (1,472) (660) ----------- -----------Profit on ordinary activities after taxation 1,948 2,432 =========== ===========----------------------------------------------------------------------------Earnings per ordinary share- basic and diluted 4 2.38p 2.80pAdjusted Earnings per ordinary share 4 4.69p 3.05p---------------------------------------------------------------------------- Group Balance SheetAt 1 July 2006 As at As at 1 July 2 July 2006 2005 Notes £000 £000Fixed assetsTangible assets 68,984 61,500Negative goodwill 5 (1,915) (2,110) ----------- ----------- 67,069 59,390Current assetsStocks 174 115Debtors 1,042 944Cash at bank and in hand 766 755 ----------- ----------- 1,982 1,814 Creditors: amounts falling due within (7,892) (7,021)one year ----------- -----------Net current liabilities (5,910) (5,207) ----------- -----------Total assets less current liabilities 61,159 54,183 Creditors: amounts falling due after (15,595) (13,774)more than one year Provisions for liabilities and charges (2,640) (1,816) ----------- -----------Net assets 42,924 38,593 =========== =========== Capital and reservesCalled up share capital 8,182 8,182Share premium account 7,287 7,287Revaluation reserve 21,168 19,458Profit and loss account 6,287 3,666 ----------- -----------Shareholders' funds 42,924 38,593 =========== =========== Group Statement of Cash FlowsFor the year ended 1 July 2006 52 weeks 53 weeks ended ended 1 July 2 July 2006 2005 Notes £000 £000 Net cash inflow from operating activities 6 7,468 5,441 Return on investments and servicing of financeInterest paid (916) (1,591)Issue costs of borrowings - (69)Non equity dividends paid by subsidiary - (273) ----------- ----------- (916) (1,933)TaxationTaxation refund in respect of prior years 65 - Capital expenditurePayments to acquire tangible fixed assets (6,665) (2,727)Proceeds from the disposal of tangible fixed assets - 12 ----------- ----------- (6,665) (2,715) ----------- -----------Acquisitions and disposalsAcquisition of subsidiary undertaking (982) -Cash acquired with subsidiary undertaking 8 -Subsidiary undertaking loan repaid on acquisition (328) -Acquisition of trading business - (4,047)Cash acquired with trading business - 2 ----------- ----------- (1,302) (4,045) ----------- ----------- Cash outflow before management of liquid resources and financing (1,350) (3,252) Management of liquid resourcesDecrease/(increase) in short term deposits held by third parties 50 (300) FinancingNew shares issued - 14,001Shares redeemed/repurchased - (2,600)Cost of equity share issue - (958)Cost of group reconstruction - (189)Proceeds of Employee Benefit Trust Shares Sale - 352New borrowings 4,423 17,344Repayment of borrowings (2,667) (26,115) ----------- ----------- 1,756 1,835 ----------- -----------Increase/(decrease) in cash 7 456 (1,717) =========== =========== Notes to the preliminary results for the year ended 1 July 2006 1. Basis of preparation The financial statements are prepared in accordance with applicable accountingstandards. Since 3 July 2005 the following Financial Reporting Standards ("FRS")have been adopted: FRS 21, (Events after the Balance Sheet date), FRS 22(Earnings per Share) and the presentation requirements of FRS 25 (FinancialInstruments: Disclosure and Presentation). In applying the presentationrequirements of FRS 25, the company has taken advantage of the exemption allowedin the Standard not to restate comparative information. The principal accounting policies, which have been consistently applied, aredescribed below. The financial statements have been prepared under thehistorical cost convention as modified for the revaluation of certain fixedassets. 2. Exceptional items Operating exceptional items 52 weeks 53 weeks ended ended 1 July 2 July 2006 2005 £000 £000 Impairment of tangible fixed assets (96) - Reversal of previous impairment of tangible fixed assets - 1,280Bonus payable to Employee Benefit Trust scheme participants - (352) ----------- ----------- (96) 928 =========== =========== 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 reflects the difference between the carrying value of the asset andthe anticipated net proceeds from the sale. The disposal of this centre wascompleted on 25 September 2006. The reversal of previous impairment of tangible fixed assets of £1,280,000 inthe year ended 2 July 2005 relates to an original impairment that was recognisedin the profit and loss account in the year ended 30 June 2001 and has arisen asa result of an improvement in trading performance and in the expected cash flowsarising from the operation of these facilities. 3. Taxation on profit on ordinary activities 52 weeks 53 weeks ended ended 1 July 2 July 2006 2005 £000 £000Current taxation:UK Corporation tax 696 -Adjustment in respect of prior years (55) (285) ----------- -----------Total current tax 641 (285) ----------- -----------Deferred taxation:Origination and reversal of timing differences 463 945Brought forward tax losses utilised 386 -Adjustment in respect of prior years (18) - ----------- -----------Group deferred tax charge for the current period 831 945 ----------- -----------Taxation on profit on ordinary activities 1,472 660 =========== =========== Factors affecting the current tax charge: The tax assessed for the periods differs from the standard rate of corporationtax in the UK. The differences are explained below: 52 weeks 53 weeks ended ended 1 July 2 July 2006 2005 £000 £000 Profit on ordinary activities before tax 3,420 3,092 ----------- ----------- Tax on profit on ordinary activities before tax at 30% 1,026 927Expenses not deductible for tax purposes 519 541Non-taxable reversal of impairment - (384)Other non-taxable credits - (36)Capital allowances in excess of depreciation (451) (448)Brought forward tax losses utilised (386) (601)Adjustments to tax charge in respect of prior (55) (285)yearOther timing differences (12) 1 ----------- -----------Total current tax 641 (285) =========== =========== Factors that may affect future tax charges A deferred tax asset has not been recognised in respect of timing differencesrelating to non trading deficits as there is insufficient evidence that theasset will be recovered. The amount of the asset not recognised is £653,000(2005 - £651,000). The asset would be recovered if appropriate future taxableprofits are made. No provision has been made for deferred tax on gains recognised on revaluingproperty to its market value. Such tax would become payable only if the propertywere sold without it being possible to claim rollover relief. The total amountunprovided is £4,100,000 (2005 - £4,400,000). At the balance sheet date thereare no contracts of sale and it is not envisaged that any tax will becomepayable in the foreseeable future. As the independent valuation of the properties exceeded their tax written downvalues, capital allowances in respect of these assets will be lower than therelated depreciation until the properties are fully depreciated. 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. Weighted Weighted Average average number of 2006 number of 2005 Profit for shares earnings Profit for shares earnings the year number per share the year number per share £000 (000) p £000 (000) p Basic anddilutedearningspershare 1,948 81,820 2.38 2,287 81,820 2.80 Profit in the comparative period is stated after deduction of the preferencedividend on non-equity shares. 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. Weighted Weighted Average average number of 2006 number of 2005 Profit for shares earnings Profit for shares earnings the year number per share the year number per share £000 (000) p £000 (000) p Adjustedearningspershare 3,835 81,820 4.69 2,493 81,820 3.05 Reconciliation of profit for the year: 52 weeks 53 weeks ended ended 1 July 2006 2 July 2005 £000 £000 Profit for basic and diluted earnings per share 1,948 2,287Exceptional items 96 (928)Cost of group reconstruction - 189Loss on disposal of tangible fixed assets 319 285Taxation 1,472 660 ----------- -----------Profit for adjusted earnings per share 3,835 2,493 ----------- ----------- In the prior year, the shares in issue at flotation were treated as if they hadbeen in issue for the whole of the period. 5. Goodwill Negative goodwill £000Cost:At 3 July 2005 2,159Arising on acquisition of subsidiary undertaking 163 -----------At 1 July 2006 2,322 -----------Amortisation:At 3 July 2005 49Released to the profit and loss account in the year 241Released on impairment of tangible fixed assets 117 -----------At 1 July 2006 407 -----------Net book value:At 1 July 2006 1,915 =========== At 2 July 2005 2,110 =========== Negative goodwill arose in the year following the acquisition of JJ Boyle(Leisure) Limited and after the application of fair values to the assets andliabilities acquired. Fair value table Adjustments Book value Revaluation Total £000 £000 £000 Fixed assets 624 854* 1,478Stock 4 - 4Cash 8 - 8Prepayments 1 - 1Creditors due within less than one year (25) - (25)Creditors due after more than one year (328) - (328)Deferred tax 7 - 7 ----------- ----------- -----------Net assets 291 854 1,145 ----------- ----------- ----------- Negative goodwill arising (163) ----------- 982 ===========Discharged by:Purchase price 947Costs associated with the acquisition 35 ----------- 982 =========== * increase in value of long leasehold properties to reflect third party valuation Negative goodwill has been released to the profit and loss account pound forpound with the depreciation charge for the properties which gave rise to thenegative goodwill. JJ Boyle (Leisure) Ltd consumed £21,000 of the Group's net operating cash flowsand generated profit of £17,000 from the period from 24 May 2006 to 1 July 2006.The company recognised gains on revaluation of £854,000 in this period,following third party revaluation. 6. Reconciliation of operating profit to net cash flow from operating activities 52 weeks 53 weeks ended ended 1 July 2006 2 July 2005 £000 £000 Operating profit 4,734 5,141Depreciation and impairment 2,610 1,806Release of negative goodwill (241) (49)Amortisation of finance costs 12 -Release of deferred grant (1) (1)Reversal of impairment of fixed assets - (1,280)(Increase)/decrease in stock (59) 6Increase in debtors (98) (323)Increase in creditors 511 141 ----------- -----------Net cash inflow from operating activities 7,468 5,441 =========== =========== 7. Reconciliation of net cash flow to movement in net debt 52 weeks 53 weeks ended ended 1 July 2006 2 July 2005 £000 £000 Increase/(decrease) in cash in the period 456 (1,717)Net cash (inflow)/outflow from (increase)/ decrease in debt (1,756) 8,840Movement in liquid resources (50) 300 ----------- -----------Movement in net debt arising from cash flows (1,350) 7,423Amortisation of issue costs (12) -Accrued interest costs (94) -Opening net debt (16,685) (24,108) ----------- -----------Closing net debt (18,141) (16,685) =========== =========== 8. Analysis of changes in net debt At At 3 July Non cash 1 July 2005 Cash flows transactions 2006 £000 £000 £000 £000 Cash in hand and at bank 455 61 - 516Bank overdraft (1,509) 395 - (1,114) ----------- ----------- ----------- ----------- (1,054) 456 - (598)Liquid resources 300 (50) - 250Debt due within one year (2,655) 2,667 (2,667) (2,655)Debt due after one year (13,276) (4,423) 2,561 (15,138) ----------- ----------- ----------- -----------Closing net debt (16,685) (1,350) (106) (18,141) =========== =========== =========== =========== 9. Annual report and accounts The annual report and accounts for the year ended 1 July 2006 will be posted toShareholders in October 2006. Additional copies will be available via theCompany's website, www.powerleagueplc.com, or from the Company Secretary at thecompany's Head Office at Anchor Grounds, Blackhall St, Paisley, PA1 1TD. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Power Probe