RNS Number:4981W
Arena Leisure PLC
29 December 2000
Introduction
The six months ended 30 September 2000 have seen Arena Leisure make
considerable progress towards our long stated aim of becoming a leader in the
future development of UK horseracing and the maximisation of revenues from
Arena's media rights.
Your company has spent a significant part of this period focusing on a
strategy to maximise Arena's future revenues from staging approximately 20% of
all UK horseracing fixtures. One key component of this has been our offer to
acquire the television and media rights associated with UK horseracing from
all fifty nine racecourses (the "media rights"). After an extensive series of
negotiations with UK racing authorities, racecourse groups and their advisers,
Arena announced in October 2000 the formation of a joint venture with British
Sky Broadcasting (BSkyB) and Channel Four Television (Channel Four), named 'Go
Racing' to bid for the media rights.
The partners in Go Racing provide a unique and complimentary combination of
gaming technology, racing and award winning broadcasting expertise, together
with digital interactive technology and unrivalled global reach. We are
delighted that the joint venture has been selected to continue negotiations on
an exclusive basis to conclude suitable contractual arrangements by 17 January
2001.
Financial
The unaudited interim results for the six months ended 30 September 2000 show
a 97% increase in turnover to #10,080,000 (1999: #5,114,000). This reflects a
full period contribution from Wolverhampton, Southwell, Worcester and Royal
Windsor racecourses.
Operating profit from ongoing racecourse activities has increased by 118% to #
931,000 (1999: #426,000). A further #125,000 was also realised in the period
from a fixture swap, resulting in a total operating profit of #1,056,000 from
our racecourse division. In accordance with the prudent accounting policy
adopted for the preparation of the annual report at 31 March 2000, all monies
invested in new technology and other business development activities are
written off as incurred. This in no way diminishes your boards' belief in the
potential of these projects.
We have invested heavily in this period under review, with gaming technology
development, group centre costs and goodwill amortisation totaling #3,059,000,
resulting in a total operating loss of #2,003,000. Interest cost has risen to
#748,000 from #241,000 in 1999, reflecting the timing of the acquisition of
Wolverhampton, Southwell, Royal Windsor and Worcester in the last financial
year, together with the increased investment in our gaming technology
business. In summary, the retained loss after minority interest for the six
months ended 30 September 2000 is #2,735,000 (1999: #161,000 restated loss
following the change of accounting policy to write off new technology and
other business development costs).
Net debt at 30 September totaled #24,417,000, representing gearing of 83% on
net assets amounting to #29,601,000. The basic loss per ordinary share is
1.01p (1999: 0.08p as restated).
The company has changed its year-end to 31 December 2000 to coincide with the
racing calendar.
Dividend
The board will not be paying a dividend for the six months ended 30 September
2000. It is the company's priority to continue to invest in the growth of the
company's business.
Operations, organisation and people
In order to maximise the operational and managerial effectiveness of your
company following a period of significant acquisitions and corporate change,
your Board has resolved to separate the company's racecourse and technology
businesses into two separate divisions. Each division will have its own
management and profitability structures and will report directly to the main
board.
In this regard, we were pleased to announce recently the appointment of Ian
Renton from Racecourse Holdings Trust. Ian, who is currently Clerk of the
Course and General Manager at Wincanton and Salisbury racecourse and Clerk of
the Course at Aintree, will join Arena's racing division as Director of Racing
in April 2001, after officiating at the Grand National.
We have continued to invest in a number of improvements in infrastructure at
our racecourses, including a permanent marquee at Windsor, improvement to the
racing surface at Worcester, and a major reworking of the all-weather surface
at Southwell. As a result, we attracted one of this year's outstanding horses,
Giants Causeway, to train at Southwell prior to its magnificent performance at
the Breeders Cup in Churchill Downs in November.
Developments
As part of our overall business review referred to above, we are developing
detailed plans for major improvements to our racecourse facilities. During the
next year we will announce a number of capital projects that your board
expects will enhance the operational performance and profitability of the
company's racecourses. These improvements will play a vital part in making our
racecourses more attractive destinations for racegoers, and increasing
revenues from the sale of corporate hospitality, conferences, exhibitions and
other non-racing opportunities.
We continue to work closely with the planning authorities at each of our
racecourses to derive value from surplus land at each location.
Internet & Interactive Gaming Technology
In order to be at the forefront of developments in the Industry and in
particular interactive gaming, the company has invested significant time and
resources into the development of our Internet and interactive gaming
technology. The majority of this investment has taken place through the
company's wholly owned subsidiary, Arena Online Services, which has been
developing a sophisticated and versatile, platform neutral gaming web site,
that amongst other things, allows individuals to view races, research
information on horses and jockeys and place bets on races.
It is expected that this technology will form the central gaming platform for
Go Racing, which will appear on all platforms (other than in the licensed
betting offices in the UK) associated with the pictures of UK horseracing to
be broadcast both nationally and internationally.
Current trading and prospects
Trading in the first nine weeks of the second half of the current year was in
line with your Board's expectations. The operational and management changes
underway will place your company in its strongest position since it was formed
as a racecourse business in 1997.
Go Racing remains in an exclusive negotiating position with the Racecourse
Association, and expects to announce a positive conclusion to these
negotiations by 17 January 2001. We will be sending out detailed information
on the proposed transaction to all shareholders, together with its impact on,
and opportunities for, Arena Leisure shortly thereafter.
In addition to our joint venture in Go Racing, your board is continuing to
look at other opportunities to further develop the Group and expects to make
further progress during the forthcoming year. We will of course, be reporting
to you on these matters as they proceed.
Your Board views the prospects of your company with optimism.
Martin E Pope
Chairman
29 December 2000
Consolidated profit and loss account
Six Six
months months
ended ended Year
ended
30 30 31March
September September
2000 1999 2000
as
restated
Note Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 10,080 5,114 14,423
Operating (loss)/profit (2,003) 80 (2,293)
Net interest payable (748) (241) (671)
Loss on ordinary activities before
and after taxation 1 (2,751) (161) (2,964)
Minority interest 16
----------- ---------- ---------
Retained loss (2,735) (161) (2,964)
====== ===== =====
Pence Pence Pence
Basic loss per share 2 (1.01) (0.08) (1.21)
Diluted loss per share 2 (1.01) (0.08) (1.21)
Statement of total recognised gains and losses
Six
months
ended
30
September
1999
as
restated
Unaudited
#'000
Profit for the financial period 36
Prior period adjustment 3 (197)
Total recognised losses since the last (161)
interim statement
=====
Consolidated balance sheet
At At At
30 30 31 March
September September
2000 1999 2000
as restated
Unaudited Unaudited Audited
#'000 #'000 #'000
Fixed Assets
Tangible assets 52,395 39,128 51,512
Investments 345 345 345
Intangible assets - goodwill 5,878 2,954 6,032
58,618 42,427 57,889
Current Assets
Stock 160 108 163
Debtors 2,668 2,031 2,672
Cash at bank and in hand 2,034 538 1,160
4,862 2,677 3,995
Creditors
Amounts falling due within one year (11,161) (4,590) (7,618)
Net current liabilities (6,299) (1,913) (3,623)
---------- ---------- ----------
Total assets less current liabilities 52,319 40,514 54,266
Creditors
Amounts falling due after more than one (22,043) (15,788) (21,239)
year
Provisions for liabilities and charges (675) - (675)
---------- ---------- ----------
Net Assets 29,601 24,726 32,352
Capital and reserves
Called up share capital 13,527 12,751 13,527
Share premium account 11,186 6,300 11,186
Merger reserve 5,417 - 5,417
Other reserves 4,579 4,595 4,579
Profit and loss account (5,092) 1,080 (2,357)
---------- ---------- ----------
Shareholders funds 29,617 24,726 32,352
Minority Interest (16) - -
29,601 24,726 32,352
Consolidated cash flow statement Six Months Six Months
ended ended Year
ended
30 30 31 March
September September
2000 1999 2000
as
restated
Note Unaudited Unaudited Audited
#'000 #'000 #'000
Net cash (outflow)/inflow from operating 4 (1,084) 419 (730)
activities
Returns on investment and servicing of
finance
Dividends received - - -
Interest paid (748) (241) (671)
Taxation
Corporation tax paid (20) - -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (1,609) (825) (3,007)
Sale of tangible fixed assets 72 29 935
Acquisitions and disposals
Acquisition of subsidiaries - (14,214) (24,181)
Net overdraft acquired with subsidiaries - - (125)
Net cash outflow before financing (3,389) (14,832) (27,779)
Financing
Issue of ordinary shares - 7,050 14,955
Expenses paid on issue of shares - (400) (782)
Inception of loans 1,020 9,300 18,125
Repayment of loans (316) - (4,135)
Inception of other loans - 39 -
704 15,989 28,163
---------- ----------
----------
(Decrease)/increase in cash 5 (2,685) 1,157 384
Notes to the accounts
1. The tax charge for the period is nil due to the availability of tax
losses.
2. Earnings per ordinary share have been calculated using the weighted
average number of shares in issue during the periods. The weighted
average number of shares in issue for the six months ended 30 September
2000 is 270,545,173 (six months ended 30 September 1999 : 210,347,698).
The weighted number of equity shares used for calculation of the diluted
earnings per share is 270,545,173 (1999: 211,826,129).
3. The prior period adjustment reflects the impact on the six months to 30
September 1999 of writing off development costs as incurred. This change
in accounting policy was adopted for the full year accounts to 31 March
2000.
4. Reconciliation of operating profit to net cash flow from operating
activities
Six Months Six Months
ended ended Year ended
30 September 30 September 31March
2000 1999 2000
as restated
Note Unaudited Unaudited Audited
#'000 #'000 #'000
Operating (loss)/profit (2,003) 80 (2,293)
Depreciation charges 649 292 808
Amortisation of goodwill 154 25 119
Loss/(profit) on disposal of 5 - (91)
tangible fixed assets
Dividends received - - -
Decrease/(increase) in stocks 3 5 (50)
Decrease/(increase) in debtors 4 724 (108)
Increase/(decrease) in creditors 104 (707) 210
Increase in provisions - - 675
Exceptional items - - -
---------- ---------- ----------
Net cash (outflow)/inflow from (1,084) 419 (730)
operating activities
5. Reconciliation of net cash flow movement to movement in net debt
Six Months Six Months
ended ended Year ended
30 September 30 September 31March
2000 1999 2000
as restated
Note Unaudited Unaudited Audited
#'000 #'000 #'000
(Decrease)/increase in cash in (2,685) 1,157 384
the period
Cash received from inception of (1,020) (9,339) (13,990)
loans
Cash used to pay loans 316 - -
---------- ---------- ----------
Change in net debt arising from (3,389) (8,182) (13,606)
cash flows
Loans acquired on acquisition - (1,414) (2,023)
---------- ---------- ----------
Change in net debt during period (3,389) (9,596) (15,629)
Opening net debt (21,028) (5,399) (5,399)
Closing net debt (24,417) (14,995) (21,028)
6. There have been no changes to the accounting policies of the group as set
out in the 2000 financial statements.
7. The figures for the year ended 31 March 2000 have been extracted from the
accounts which have been filed with the Registrar of Companies. The
auditors' report on those accounts was unqualified.
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