RNS Number:7267O
Arena Leisure PLC
31 July 2000
ARENA LEISURE PLC ("Arena Leisure")
Preliminary Results to 31 March 2000
HIGHLIGHTS
- Turnover up by 62% to #14.4 million.
- Increase in profit from racecourse activities (excluding non
recurring items of #298,000 in 1999) by #400,000 to
#1,642,000.
- 4 racecourses acquired at Royal Windsor, Worcester,
Wolverhampton and Southwell.
- Operate 20% of all horseracing fixtures in the UK, over 1,500
individual races.
- Joint Venture to create Trackplay, a global pari-mutuel
gaming hub established with Autotote Corporation of USA (NYSE
listed) to facilitate reciprocal arrangements whereby
individuals from around the world may bet on their own and
other countries horseracing.
- Agreement signed with Fair Grounds racecourse, New Orleans on
Trackplay technology.
- Negotiations underway with other overseas racing
organisations and racecourse groups.
- Heads of Agreement signed with Northern Racing, for
collaboration on new opportunities in racing.
- New offer made today to all UK racecourses for non
terrestrial media rights (see separate announcement).
Commenting on the above, Martin Pope, Chairman of Arena Leisure
said:
"The year ended 31 March 2000 saw significant progress in
positioning your company to become a leading player in the
ownership of racecourses, and the global management of racecourses
associated intellectual property rights, to deliver significant
shareholder returns over the medium term. We have achieved this by
securing additional content through continued acquisition of UK
racecourses, and developing our relationship with Autotote
Corporation of USA to create "Trackplay". The ambitious target of
this relationship is to create the world's premier pari mutuel new
media gaming platform".
Enquiries:
Graham Parr
Ian Penrose
Arena Leisure
020 7495 2277
David Bick
Holborn PR
020 7929 5599
Joint statement by the Chairman and the Chief Executive
Introduction
Your board believes that new media, such as internet, interactive
digital television and WAP technology provide a major opportunity
for UK horseracing to exploit fully the commercial potential of its
media rights. We believe that the major areas of opportunity are
in respect of global broadcasting revenues and more significantly
revenues from worldwide interactive gaming on live pictures of UK
horseracing.
Your board is focused on positioning Arena Leisure as a leader in
the future development of UK horseracing and to maximise the
revenues from Arena's media rights. The year ended 31 March 2000
saw significant progress in achievement of this objective. We have
secured additional content through continued acquisition of UK
racecourses.
During the year we acquired four racecourses, at Wolverhampton,
Southwell, Royal Windsor and Worcester, thus taking our portfolio
to a total of six racecourses and we now stage 20% of all UK
horseracing fixtures.
Your Board remains focused on a strategy of owning and acquiring a
strong and balanced portfolio of racecourses, which will best
enable Arena to capitalise on the valuable television, interactive
and other media rights associated with UK horseracing.
In furtherance of our aims in relation to online gaming, we
announced in February 2000 a development agreement with Autotote
Corporation, listed on the New York Stock Exchange, to create the
world's premier internet, mobile telephone and interactive TV based
pari-mutuel gaming hub for domestic and international horse racing.
Autotote Corporation is the world's largest provider of pari mutuel
gaming technology to racecourses and national tote operators.
This relationship is developing rapidly and, under the name of
'Trackplay', has signed letters of intent with Fair Grounds
Racecourse, one of the largest operators of thoroughbred racing in
the USA, based in New Orleans, Louisiana. These negotiations were
conducted in competition with several American technology groups
looking to establish a foothold in this market, and this contract
represents a considerable endorsement of Trackplay's technological
infrastructure.
Negotiations with a number of other significant racing nations and
international racing organisations are ongoing. We expect to be
able to announce several high profile customers for the technology
provided by Trackplay in due course.
In addition, the Arena Online team has continued the development of
our internet site which will ultimately provide visitors with a
'virtual' day at the races including live pictures, a wealth of
racing information and statistics and the ability to bet online.
We believe that this site will set a new standard for online gaming
and entertainment. We expect the site to be operational by the end
of this calendar year.
Financial
The audited results for the year ended 31 March 2000 show a 62 %
increase in turnover to #14,423,000 (1999 #8,907,000).
During the year, we moved a number of racing fixtures from our
existing operations to the new racecourses acquired, with a
correspondent movement in contribution between racecourses. Our
racecourse division benefited last year from two items of a non-
recurring nature totalling #298,000; a fixture transfer and a
dividend from SIS no longer receivable as we near the end of this
contract to take pictures to the betting shops. Excluding these
items, net profit from our racecourse activities has increased from
#1,242,000 to #1,642,000.
We have incurred considerably increased costs during the year in
pursuit of our strategic ambitions of racecourse acquisition
combined with internet and new media development. We have adopted
the prudent accounting policy of writing off all monies
(#2,687,000) invested in new technology and other business
development activities, which are the central focus in delivering
shareholder value. This in no way diminishes your board's belief
in the potential of our new media projects.
In addition, the board has adopted a recent accounting standard by
providing for employers' national insurance on share options
granted after 5 April 1999. A provision of #675,000 has been made
based on the difference between the market price of shares at 31
March 2000 and the price at which options were granted, this
incorporates the pool of 3 million share options approved by
shareholders at the Extraordinary General Meeting on 25 January
2000 which have not yet been allocated.
With net interest payable increasing to #671,000 (1999 #328,000)
the loss on ordinary activities before and after taxation is
#2,964,000 (1999 profit #203,000). The basic loss per share on the
increased average number of shares in issue was 1.21 pence (1999
profit 0.1 pence).
Net bank borrowings at the year end totalled #19,110,000 which
together with loans from the Horserace Betting Levy Board of
#1,918,000, represented gearing of 65% on net assets of #32,352,000
(1999 gearing of 37% on net assets of #14,587,000).
In July 1999 we acquired RAM Racing Leisure Limited the owner of
Wolverhampton and Southwell racecourses for #16 million.
Consideration payable was #13 million in cash and #3 million in
ordinary shares in Arena Leisure Plc. The cash element was funded
by way of a 1 for 4 rights issue at 15 pence and from new bank
facilities.
In January 2000 we successfully acquired Royal Windsor Racecourse
situated on 167 acres of freehold land on the banks of the River
Thames. Consideration was #13.5 million satisfied by #10 million
in cash and #3.5 million in ordinary shares in Arena Leisure Plc.
To assist in the funding for this transaction we successfully
raised #7.9 million by way of a placing of ordinary shares at a
placing price of 62 pence.
On 31 March 2000 we completed the acquisition of an 81% share
holding in Worcester Racecourse for #1 million (the balance being
held by Worcester City Council), together with a 99 year lease on
the site.
In November 1999 we completed the sale of the business and assets
of The Farringford Hotel, on the Isle of Wight, for #950,000
realising a profit of #80,000.
Dividend
As indicated in previous Annual Reports and shareholder
correspondence it is not the Board's intention to pay a dividend
for the year ended 31 March 2000, nor for the current year ending
31 March 2001 as the company's priority is to invest in the long
term growth of its businesses.
Racecourse Operational Review
The year ended 31 March 2000 has been a very significant period in
the development of your company and the rapid expansion of our
racecourse activities ran parallel to the development of an
integrated strategy for generating revenues using new media
distribution channels. The next phase of this strategy will
culminate in the launch of an internet horseracing entertainment
and betting site at the end of this calendar year.
During the year Arena has continued to invest in new projects
across its racecourses and has also acquired the Lingfield Health
and Squash Club for #375,000. This acquisition unifies the
Lingfield estate and offers a number of alternative possibilities
as we look to improve the facilities and benefit from the
development of property surplus to the core racing activities.
Your board recognised the need to strengthen the management team
within our racing activities and also to ensure the acquisitions of
Wolverhampton, Southwell, Royal Windsor and Worcester racecourses
are being successfully integrated into our Racecourse Division.
Accordingly, we have invested in recent months to enhance the
operational efficiency of your company.
As previously reported we have continued to work closely with the
local planning authorities at Folkestone, Lingfield and more
recently at Royal Windsor and Worcester, to derive value from
surplus land from an operational or development perspective.
Whilst planning remains a delicate and lengthy process, due to the
greenbelt location of these two courses, we are pleased with the
progress made to date and will make further announcements as
appropriate.
Internet and New Media Activities
The board achieved significant progress in implementing its new
media strategy by developing its relationship with Autotote
Corporation to create 'Trackplay', which will be the world's
premier pari mutuel new media gaming platform.
The software, which is in its final testing phase, will facilitate
reciprocal arrangements whereby individuals from around the world
may bet on, and watch, their own and other countries horseracing.
Additionally, the proprietary software will be sold on license to
international racing authorities and racecourse groups.
The Trackplay system is expected to become a worldwide network for
the racing industry, creating 24-hour access to racing information,
live racing pictures and most importantly, real time pari mutuel
bets. Trackplay aims to facilitate a significant increase in the
#75 billion per year estimated to be wagered on horseracing
worldwide.
Developments in the UK horseracing industry have been moving apace,
and we are continuing to negotiate with the UK Racing authorities
and leading racecourse groups to unite British Racing and play a
key role in the development of internet and interactive gaming on
horseracing worldwide.
Organisation and People
In July 1999 we strengthened the board with the appointment of
Richard Muddle as Director of Racing and in September 1999, of
Andrew Parker-Bowles who joined as a Non Executive Director.
Your company has undergone a period of rapid growth and substantial
organisational change. The successful implementation and execution
of the board's strategy could not have been achieved without the
enormous efforts and loyalty of our employees to whom we would like
to record our sincere appreciation.
Current Trading and Prospects
Trading in the first three months of the current financial year
remains in line with expectations. The more recent acquisitions of
Royal Windsor and Worcester racecourses continue to be integrated
into the group and their prospects are viewed optimistically.
Your board continues its focus on developing a leading role in the
rationalisation of the UK horseracing industry and in maximising
the value of its media rights. We remain in detailed negotiation
with the leading UK horse racing authorities and the leading
racecourse groups to extend our strategy to the combined UK racing
industry. Moreover, your board continues to evaluate a number of
opportunities relating to the horseracing industry in both the UK
and overseas, to further build on the firm foundations laid to
date.
We are pleased with the progress that your company has made over
the last year, the full benefits of which will be realised
progressively over the forthcoming years.
Arena Leisure Plc
Consolidated Profit & Loss Account for the year ended 31 March 2000
Year ended 31 March 2000
Year ended
Discontinued Continuing Total 31 March
Operations Operations 1999
Acquisitions as
restated
#000 #000 #000 #000 #000
Turnover 652 7,985 5,786 14,423 8,907
Cost of Sales (363) (5,858) (3,414) (9,635) (6,240)
------- ------- ------- ------- --------
Gross Profit 289 2,127 2,372 4,788 2,667
Administrative
expenses
Exceptional
share option - (675) - (675) -
costs
Other (138) (4,599) (1,894) (6,631) (2,498)
------- ------- ------- ------- --------
(138) (5,274) (1,894) (7,306) (2,498)
Other
operating 80 145 - 225 458
income
------- ------- ------- ------- --------
Operating 231 (3,002) 478 (2,293) 627
(Loss)/profit
------- ------- ------- --------
Exceptional - (96)
items
Net interest
payable (671) (328)
and similar
charges
-------- --------
(Loss)/profit
on ordinary
activities (2,964) 203
before and
after taxation
and retained
-------- --------
Pence Pence
Basic (loss)/
earnings per (1.21) 0.10
share
Diluted
earnings per - 0.10
share
------- --------
Statement of total recognised gains and losses Year Year
for the year ended 31 March 2000 ended ended
31 March 31 March
2000 1999
as
restated
#000 #000
(Loss)/profit for
the financial (2,964) 203
year
Prior year adjustment (650) -
-------- --------
Total recognised
losses since (3,614) 203
the last annual
report
-------- --------
Arena Leisure Plc
Consolidated Balance Sheet at 31 March
2000
31 March 2000 31 March 1999
as restated
#000 #000
Fixed assets
Tangible Assets 51,512 20,157
Investments 345 150
Intangible Assets - Goodwill 6,032 -
------- -------
57,889 20,307
Current assets
Stock 163 85
Debtors - due within one year 2,672 1,321
Cash at bank and in hand 1,160 779
------- -------
3,995 2,185
Creditors : amounts falling due
within one year (7,618) (4,740)
------- -------
Net current (liabilities)/assets (3,623) (2,555)
------- -------
Total assets less current
liabilities 54,266 17,752
Creditors : amounts falling due
after one year (21,239) (3,165)
Provisions for liabilities and
charges (675) -
------- -------
Net assets 32,352 14,587
======= =======
Capital & reserves
Called up share capital 13,527 9,401
Share premium account 11,186 -
Merger Reserve 5,417 -
Revaluation reserve 15 15
Special reserve 4,564 4,564
Capital reserve - 16
Profit & loss account (2,357) 591
------- -------
32,352 14,587
======= =======
Arena Leisure Plc
Group cash flow statement for the 31 March 31 March
year ended 31 March 2000 2000 1999
as restated
#000 #000
Net cash (Outflow)/inflow from (730) 944
operating activities
Returns on investments and servicing
of finance
Dividends received - 118
Interest received 4 38
Interest paid (675) (366)
------- -------
(671) (210)
Capital expenditure
Purchase of tangible fixed assets (3,007) (557)
Sale of tangible fixed assets 935 -
------- -------
(2,072) (557)
Acquisitions and disposals
Acquisition of subsidiaries (24,181) (3,220)
Net overdraft acquired with
subsidiaries (125) -
-------- --------
Net cash outflow before financing (27,779) (3,043)
Financing
Inception of Loans 18,125 1,200
Issue of ordinary shares 14,955 -
Expenses paid on issue of shares (782) -
Repayment of loans (4,135) (142)
-------- --------
28,163 1,058
-------- --------
Increase/(decrease) in cash 384 (1,985)
======== =======
Notes
1. Turnover and result before taxation
The group's turnover and result before taxation relate mainly
to its principal activity of operating racecourses. The group
is also continuing to develop internet activities in relation
to horseracing and other media.
2. Administrative Expenses
2000 1999
#000 #000
Administrative expenses include the
following :
Exceptional share option costs 675 -
representing a provision for national
insurance contributions on share option
costs issued post 5 April 1999.
Expenditure incurred in relation to 2,687 650
internet and other media development
activities and other group reorganisation
costs
Amortisation of goodwill arising on 119 -
consolidation
3 Corporation tax
No tax is payable due to the availability
of group losses.
4 Earnings per share
Earnings per ordinary share have been
calculated using the weighted average
number of shares in issue during the
relevant financial periods. The weighted
average number of equity shares in issue
is 244,290,884 (1999: 205,141,268 as
restated as a result of the rights issue).
5 Change in accounting policy and prior year
adjustment
Expenditure incurred in relation to the
development of internet and other media
activities was previously deferred and
carried forward within prepayments and
deferred income. The directors feel it
would be more appropriate to write these
costs off as they occur. The impact on the
profit for the year in 2000 is #1,893,000
(1999: #650,000).
6 Financial information
The financial information set out above
does not constitute the company's
statutory accounts. Statutory accounts for
1999 have been delivered to the Registrar
of Companies and those for 2000 will be
delivered following the company's Annual
General Meeting.
7 Report and accounts
The report and accounts for 2000, which
will include the Notice of the Annual
General Meeting, will be posted to
shareholders shortly. Copies of the Report
and Accounts will be available from the
company's head office, 1 Hay Hill,
Berkeley Square, London, W1X 7LF.
Enquiries:
Graham Parr
Ian Penrose
Arena Leisure
020 7495 2277
David Bick
Holborn PR
020 7929 5599
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