RNS Number:9340Q
Arena Leisure PLC
07 September 2005
Arena Leisure Plc ("Arena" or the "Group")
Interim results for the six months ended 30 June 2005
Highlights
- Pre and post tax profit #2m (2004: #0.5m loss)
- Turnover increased by 12% to #20.2m (2004: #18.0m)
- Racecourse operating profit up 13% to #4.2m (2004: #3.7m)
- Average paying attendances increased by 10% and prize money upped by
14% to #6.8m
- Central costs reduced by 11% to #1m (2004: #1.1m)
- Planning application submitted to regenerate Doncaster racecourse
- At The Races ahead of target and on track to deliver profits in 2006
- Interim dividend 0.25 pence per share
- EPS of 0.6 pence per share (2004: loss of 0.1 pence per share)
Commenting on the interim results, Ian Penrose, Arena's Chief Executive said:
"I am delighted to report the excellent progress that the Group has made in the
first six months of the financial year. Our programme of investment into our
racecourses is now delivering - with the racecourse division reporting strong
results, record crowds and higher prize money.
"We are pleased that At The Races has made considerable progress both
domestically and internationally and is on track to be profitable in 2006.
"With trading ahead of the recently raised expectations and materially ahead of
last year we view the future with confidence."
For further information please contact:
Ian Penrose, Chief Executive
Arena Leisure Plc Tel: 020 7495 2277
Bob Mercer, Chief Financial Officer
Arena Leisure Plc Tel: 020 7495 2277
David Rydell/Zoe Sanders
Bell Pottinger Corporate & Financial Tel: 020 7861 3232
Interim Report 2005
Chairman's Statement
Introduction
I am delighted to report that Arena Leisure Plc ('Arena') has once again
produced excellent trading results. A clear focus on the strategic and
operational goals has again enabled us to deliver record profits in our racing
business.
Financial Review
The unaudited interim results for the six months ended 30 June 2005 show profits
after tax of #2 million, representing a fundamental #2.5 million improvement on
the same position last year (30 June 2004: #0.5 million loss). Turnover has
increased by 12% to #20.2 million and operating profits from our racecourse
operations have increased by 13% to #4.2 million. Central costs have been
reduced by 11% to #1 million. Arena's share of the operating losses of At The
Races have been reduced to #0.7 million from a #3 million loss in the same
period last year. This together with a further #0.2 million share of legal costs
incurred in pursuing the rebate claim results in a post tax share of At The
Races losses of #0.9m. After finance costs of #0.2 million (30 June 2004:
#0.05m) the profit for the period attributable to equity shareholders is #2
million, #2.1 million better than last year (30 June 2004: #0.1 million loss).
Racecourse Division
The racecourse division has once again delivered strong results with operating
profits for the first half of the year of #4.2 million, 13% ahead of last year.
Total prize money for the period was #6.8million, a 14% increase. Attendances
have also increased in the period with average paying attendance up 10% on last
year. These trends have continued since the half year and we have witnessed
record crowds at Worcester and on three separate occasions at Royal Windsor.
As the UK's number one operator of racing fixtures, hosting approximately 27% of
all racing in the UK, Arena is committed to investing in its racecourses. We
seek to improve the quality of service and the experience that we deliver to
racegoers and industry professionals alike.
Accordingly, we have continued to build on the investment programme that we have
been implementing across our racecourses. By investing in our own starting
stalls, stalls handling equipment and photofinish equipment, together with the
recruitment of specialised and trained personnel will enable us to provide a
dedicated, efficient and specialised racing service.
We recognise the importance of people to our business and have continued to
invest in our staff, facilities and systems to ensure that the growth we have
delivered continues. We have looked to strengthen and train our operational
teams further and in order to improve the quality of our sales initiatives we
are currently installing a new hospitality management system across all of our
racecourses.
The Group continues to focus on driving efficiencies. Back in July we announced
the rationalisation of contracts associated with the broadcast and onward
transmission of the pictures of live racing from Arena's racecourses. This will
deliver annualised cost savings of #0.5 million. In the coming weeks we expect
to announce the successful outcome of another initiative to deliver operational
efficiencies and material cost savings going forward.
Reflecting our commitment to improving our racecourse venues for our customers
we were delighted when our hotel on the racecourse at Wolverhampton achieved the
best overall score for 'Guest Satisfaction' in the second quarter of the year
for the Holiday Inn Hotels & Resorts in the Europe, Middle East and Africa
category.
The sport of horseracing continues to modernise and as part of that process, in
June, we participated successfully in the auction of fixtures conducted by the
British Horseracing Board (BHB). We acquired 66 new fixtures at an average cost
of #6,300, having returned 73 predominately lower quality fixtures. This
improvement in the mix of fixtures will enhance the quality of the fixture list
for 2006, providing an added draw to our venues which will translate into
additional profits next year.
The investment into our core racing product over the last four years has also
delivered the expected growth in betting turnover and betting margins, and the
corresponding growth in the Levy. Having invested in over #20m into providing
the world's leading racing surfaces, re-building many of our facilities and
repositioning All Weather racing in this country has led to Arena's share of the
#100 million annual Levy generation rising to nearly 25%, from some 16% four
years ago. With Arena receiving some 17% of the Levy for reinvesting in our
business and prize money, it is clear that hypothecation of income, representing
a more equitable way of distributing money from the Levy, needs to be introduced
at the earliest opportunity. We welcome the support from, amongst others, Greg
Nichols, Chief Executive of the BHB, in moving towards this broad principle.
Following the ruling from the European Court of Justice on data, the decision of
the Court of Appeal in July 2005 has led the racing industry to work together
with the Funding Review Group, under the Chairmanship of Lord Donoughue, to find
an enforceable funding mechanism to replace the Statutory Levy in 2009. Arena
looks forward to racing being under the umbrella of a reformed British
Horseracing Board, having split the functions of governance and integrity from
those of commercial and finance.
Racecourse Developments
We continue to make significant progress in relation to lodging our planning
applications to improve the racing and leisure facilities at both Lingfield Park
and Royal Windsor. We expect both of these to be lodged over the next few weeks.
It was with significant disappointment that we received the news from the Office
of the Deputy Prime Minister that we were unsuccessful with our planning
application to regenerate the racecourse, hotel and additional leisure
facilities at Dunstall Park, Wolverhampton, despite having received full support
from Wolverhampton City Council in January 2004. We are waiting to hear whether
the Unitary Development Plan ('UDP') removes the racecourse from Green Belt, or
whether a re-design of our proposals will be required to reduce the impact of
the scheme on the openness of the Green Belt area.
Last week we were pleased to be able to submit a detailed planning application
in conjunction with Doncaster Metropolitan Borough Council ('DMBC') for the
redevelopment of Doncaster racecourse, home of the world's oldest classic
horserace, the St Leger. The proposals include the development of a brand new
state-of-the-art grandstand, conference and exhibition centre, along with new
stables and an accommodation block on the site, to transform it into a leading
racecourse and leisure venue. This was an important landmark in the process to
concluding our joint venture partnership with DMBC which we expect to announce
shortly. In the meantime we have delivered a 27% increase in total corporate
attendance and 12% increase in other paying guests since we took over management
in September 2004. We look forward to building on this positive start when the
new facilities open in 2007.
At The Races Review
At The Races ('ATR') continues to make strong progress. It is ahead of target
and is on track to deliver profits in 2006.
ATR has maintained its domestic distribution base of 10 million households by
successfully renewing its agreements with cable operators NTL and Telewest.
Importantly, ATR has also added red button functionality behind its interactive
betting application on NTL. ATR has successfully launched its online 'Bet and
Watch' product, thereby enabling a bookmaker's online punters to watch a race
live having placed a bet. The service is already live with Ladbrokes, bet365,
Paddy Power and Boylesports, with others rolling out imminently.
In June, ATR became the world's first sports channel to introduce a live, daily
interactive 3G service, which is available in the UK to all customers to 3 and
Vodafone simply by dialling 83415 on their video call function. The channel is
then streamed live to the 3G handset and users can also place a bet with William
Hill.
A number of contracts have been re-negotiated which will deliver significant
benefits in 2006. In particular the strength of the audience numbers, which
peaked in the period at 1.1 million viewers in June 2005 compared to 0.9 million
viewers in June 2004, has enabled all advertising sales for the domestic channel
to be contracted by Sky Media and all sponsorship to be overseen by At The Races
itself.
ATR has also expanded its international reach. By the end of September, it will
be available in over 30 countries and to facilitate this growing market,
valuable capacity on the PAS10 satellite has been secured enabling ATR's
distribution footprint to extend to South East Asia, Australasia and the Far
East. In conjunction with this international strategy ATR has concluded an
important agreement with the UK Tote to enable the commingling of bets placed by
international customers on races shown on At The Races international back into
the UK Tote, thereby swelling domestic pool sizes.
ATR continues to pursue its legal right to receive rebates from those
racecourses that were party to the attheraces media rights agreement, which is
scheduled to be heard in the High Court in November 2005. This case follows the
successful injunction application against the British Horseracing Board which
was attempting to withhold a supply of data to ATR's various domestic and
international customers.
Dividend
I am pleased to announce that following our maiden dividend paid in June 2005,
our continued strong performance will enable your board to pay an interim
dividend for the first time. The dividend of 0.25 pence per share (30 June 2004:
nil pence) will cost #0.9 million and is proposed to be paid on 11 October to
all share holders on the register at the close of business on 16 September 2005.
Outlook
Since 30 June 2005 the Group has continued to make significant progress with
record attendances, strong operational efficiencies and continued progress at At
The Races. We continue to look for acquisitions where we can add shareholder
value. With trading ahead of the recently raised expectations and materially
ahead of last year the board views the future with confidence.
Roger D Withers
Chairman
7 September 2005
Consolidated Income Statement
Six months Six months Year
ended ended ended
31
December
30 June 2005 30 June 2004 2004
Restated Restated
#'000 #'000 #'000
Group turnover 20,199 17,995 36,019
Operating costs (13,317) (12,066) (23,688)
--------- --------- ---------
Gross profit 6,882 5,929 12,331
Administrative costs (3,731) (3,382) (7,157)
Share of post tax results of joint
ventures and associates (928) (3,022) 577
--------- --------- ---------
Profit/(loss) before interest and taxation 2,223 (475) 5,751
Net finance costs (216) (49) (843)
--------- --------- ---------
Profit/(loss) before taxation 2,007 (524) 4,908
Taxation - - 195
--------- --------- ---------
Profit/(loss) on ordinary activities
after taxation 2,007 (524) 5,103
Profit from discontinued operations - 430 482
Profit/(loss) for the period attributable
to equity shareholders 2,007 (94) 5,585
========= ========= =========
Earnings per share:
Continuing operations Pence Pence Pence
--------- --------- ---------
Basic earnings/(loss) per share 0.6 (0.1) 1.4
Diluted earnings/(loss) per share 0.6 (0.1) 1.4
Continuing & discontinued operations
Basic earnings/(loss) per share 0.6 - 1.5
Diluted earnings/(loss) per share 0.6 - 1.5
Dividend per ordinary share
Proposed for the period 0.25 - 0.30
Consolidated balance sheet
At At At
30 June 30 June 31 December
2005 2004 2004
Unaudited Unaudited Unaudited
Restated Restated
Assets #'000 #'000 #'000
Non - current assets
Property plant and equipment 69,302 61,958 68,867
Goodwill 4,878 4,878 4,878
Equity accounted investments (JV's and
Associates) (1,887) (5,688) (959)
Goodwill in respect of JV 1,580 2,539 1,374
Loans to JV 1,441 2,991
Other investments 345 345 345
--------- --------- ---------
75,659 64,032 77,496
--------- --------- ---------
Current assets
Inventories 30 50 30
Trade and other receivables 5,008 5,329 3,904
Cash and cash equivalents - - 27
--------- --------- ---------
5,038 5,379 3,961
--------- --------- ---------
Total assets 80,697 69,411 81,457
========= ========= =========
Liabilities
Current liabilities
Trade and other payables (9,876) (11,256) (9,454)
Short term borrowings (3,838) (1,979) (1,843)
Current tax payable (5)
--------- --------- ---------
(13,714) (13,235) (11,302)
--------- --------- ---------
Non current liabilities
Other payables (308) (1,357) (1,403)
Long term borrowings (5,644) (390) (8,644)
Accruals & deferred income (2,912) (2,912) (2,912)
--------- --------- ---------
(8,864) (4,659) (12,959)
--------- --------- ---------
Total liabilities (22,578) (17,894) (24,261)
========= ========= =========
Net Assets 58,119 51,517 57,196
========= ========= =========
Equity
Share Capital 18,075 18,075 18,075
Share premium account - 87,625 -
Other reserves 5,417 5,432 5,417
Retained earnings 34,627 (59,615) 33,704
--------- --------- ---------
Total equity 58,119 51,517 57,196
========= ========= =========
Consolidated Cash Flow
Six months Six months Year
ended ended ended
31
December
30 June 2005 30 June 2004 2004
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Cash flows from operating activities
Cash generated from operations 3,309 3,595 7,011
Interest paid (188) (49) (943)
Tax paid (5) - -
--------- --------- ---------
Net cash from operating activities 3,116 3,546 6,068
Cash flows from investing activities
Interest received - 46 106
Purchase of property, plant and equipment (2,442) (5,840) (13,537)
Proceeds on disposal of property, plant
and equipment 44 67 82
Repayment/(payment) of loans to joint
venture 1,550 - (2,991)
Investment in joint venture (206) (2,025) (2,025)
Decrease in restricted bank account - 1,365 1,365
--------- --------- ---------
Net cash from investing activities (1,054) (6,387) (17,000)
Cash flows from financing activities
Net proceeds from new loans - - 8,580
Repayment of borrowings (3,000) (2) (422)
Dividends paid (1,084)
--------- --------- ---------
Net cash from financing activities (4,084) (2) 8,158
--------- --------- ---------
Net decrease in cash and cash equivalents (2,022) (2,843) (2,774)
Cash and cash equivalents at 1 January (1,490) 1,284 1,284
--------- --------- ---------
Cash and cash equivalents at 31 December (3,512) (1,559) (1,490)
========= ========= =========
Cash and cash equivalents consist of:
Cash and cash equivalents - - 27
Overdrafts (3,512) (1,559) (1,517)
--------- --------- ---------
(3,512) (1,559) (1,490)
========= ========= =========
Notes to the Accounts
1 The interim financial statements have been prepared in accordance with the
accounting policies and presentation required by those International Financial
Accounting Standards, incorporating International Accounting Standards ((IAS's)
and interpretations (collectively IFRS), which are expected to be endorsed by
the EU and applicable for use in the company's annual financial statements for
the year ended 31 December 2005.Comparative information for the six months ended
30 June 2004 and for the year ended 31 December 2004 has been restated on an
IFRS basis. The endorsed IFRS that will be effective (or available for early
adoption) in the annual financial for the year ended 31 December 2005 are still
subject to change and to additional interpretations and therefore cannot be
determined with certainty. Accordingly, the accounting policies for the period
will only be determined finally when the annual consolidated financial
statements are prepared for the year ended 31 December 2005.
On 6 September 2005 Arena Leisure Plc published financial information in
accordance with IFRS on the London Stock Exchange. This document included
explanations of the impact of the transition from UK GAAP to IFRS on the
financial statements of Arena Leisure Plc and contained disclosure and
reconciliations in respect of the re-statement of 2004 accounts under IFRS. The
document is available on the company's website.
2 The tax charge for the period is nil due to the availability of tax losses.
3 Basic earnings per share have been calculated using the weighted average
number of shares in issue during the periods. The weighted average number of
share in issue for the six months to 30 June 2005 is 341,495,535 (six months to
30 June 2004 and year to 31 December 2004: 361,495,535). The calculation of
diluted earnings per share is calculated using the weighted average number of
shares in issue, adjusted for the number of outstanding share options capable of
being exercised.
4 Segmental information Six months Six months Year
ended ended ended
31
30 June 30 June December
2005 2004 2004
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Turnover (excluding discontinued
operations)
Racecourse operations 20,199 17,995 36,019
------- ------- -------
PBIT (excluding discontinued operations)
Racecourse operations 4,153 3,678 7,295
Central Costs (1,002) (1,131) (2,121)
Share of joint venture results after tax (937) (3,031) 617
Share of associate results after tax 9 9 (40)
------- ------- -------
2,223 (475) 5,751
------- ------- -------
5 Reconciliation of net profit to cash generated
from operations
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Net profit/(loss) 2,007 (94) 5,585
Share of post tax (profit)/
loss of joint ventures and
associates 928 3,022 (577)
Net interest payable/ (receivable) 216 49 843
Taxation - - (195)
Depreciation charges 843 644 1,424
(Profit)/loss on disposal of
fixed assets (3) 30 23
Goodwill released on
allocation of shares in At
The Races to Ascot racecourse - - 71
Profit on allocation of shares
in At The Races to Ascot racecourse - - (36)
Decrease/(increase) in inventories - 5 25
(Increase)/decrease in trade
and other receivables (1,121) (2,153) (642)
Increase/(decrease) in trade
and other payables 439 2,092 490
------- ------- --------
Cash generated from operations 3,309 3,595 7,011
------- ------- --------
6 Statement of changes in equity
Share Profit and
Share premium Other loss
Capital account reserves account
#'000 #'000 #'000 #'000
At 1 January 2004 18,075 87,625 5,432 (59,521)
Loss for six months to 30 June
2004 - - - (94)
------ ------- ------- --------
At 30 June 2004 18,075 87,625 5,432 (59,615)
Profit for six months to 31
December 2004 - - - 5,679
Capital Reorganisation - (87,625) (15) 87,640
------ ------- ------- --------
At 31 December 2004 18,075 - 5,417 33,704
Profit for six months to 30
June 2005 - - - 2,007
Dividend - - - (1,084)
------ ------- ------- --------
At 30 June 2005 18,075 - 5,417 34,627
------ ------- ------- --------
7 Statement of net debt
At At At
30 June 30 June 31 December
2005 2004 2004
Unaudited Unaudited Unaudited
#'000 #'000 #'000
Cash and cash equivalents - - 27
Bank Overdraft (3,512) (1,559) (1,517)
--------- --------- ---------
Net cash and cash equivalents at end of
period (3,512) (1,559) (1,490)
Bank Loan (5,000) - (8,000)
HBLB Loans (970) (810) (970)
--------- --------- ---------
Net debt at end of period (9,482) (2,369) (10,460)
--------- --------- ---------
8 The figures for the year ended 31 December 2004 are based on the accounts
which have been filed with the Registrar of Companies and have been re-stated to
take into account the changes required under IFRS. The auditors report on the
accounts prepared under UK GAAP and filed with the Registrar of Companies was
unqualified and did not contain a statement under Section 237 (2) - (3) of the
Companies Act 1985. These accounts do not comprise statutory accounts under the
meaning of Section 240.
9 Dividends
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
#'000 #'000 #'000
Final dividend for the year ended 31
December 2004 1,084 - -
-------- -------- ---------
The proposed interim dividend of 0.25 pence per ordinary share in respect of the
year ending 31 December 2005 was approved by the board on 6 September 2005 and
in accordance with IFRS has not been included as a liability at 30 June 2005.
This information is provided by RNS
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