TIDMARE
RNS Number : 4362L
Arena Leisure PLC
01 August 2011
ARENA LEISURE PLC
Results for the six months ended 30 June 2011
Arena Leisure Plc ('Arena' or the 'Group'), the UK's leading
operator of horseracing fixtures which owns and operates seven
racecourses in the UK comprising Doncaster, Royal Windsor,
Lingfield Park, Wolverhampton, Southwell, Folkestone and Worcester,
today announces its results for the six month period from 1 January
2011 to 30 June 2011 (the 'period').
Financial:
-- Revenue (excluding Levy income) grew by GBP3.0m (15.3%) to
GBP22.5m (2010: GBP19.5m), reflecting the progress of the consumer
business and increasingly diversified revenue streams. Total
revenue decreased by GBP1.9m to GBP28.2m (2010: GBP30.1m) after the
impact of the previously announced reduction in Levy funding
received by the Group of GBP4.9m.
-- Profit before interest and tax decreased by GBP0.6m to
GBP1.4m (2010: GBP2.0m) primarily as a result of a GBP1.3m net
impact from the reduced Levy income. It also reflects a GBP0.6m
improvement in operating performance and a GBP0.1m increased
contribution from At The Races.
-- Profit before tax was GBP0.4m lower at GBP0.5m (2010:
GBP0.9m). Basic earnings per share were 0.16 pence (2010: 0.28
pence).
-- Net bank borrowings at 30 June 2011 had reduced to GBP34.8m.
These have since reduced further by the receipt in July 2011 of the
final advanced payment of GBP7.0m from SIS under the terms of the
new media rights agreement.
Operations:
-- The Group staged 189 fixtures in the period (2010: 188) and
is scheduled to stage 353 fixtures in the full year (2010:
352).
-- Arena continues its track record of significantly
outperforming the industry as a whole with attendances up 11.7% to
315,000 (2010: 282,000), average attendance up by 11.3% at 1,667
(2010: 1,498), and hospitality attendance increasing by 8.2% to
18,400 (2010: 17,000).
-- Revenue from catering increased by GBP0.8m (18.9%) to GBP4.9m
and from hotels by GBP1.1m (137%) to GBP1.9m including a full
period of the Lingfield Park Marriott Hotel and Country Club.
-- Contribution from At The Races continues to grow, both from
royalties received and equity share.
Recent developments and future growth:
-- The Government is currently consulting on the future options
for the Levy with regard to remedying the current structural
deficiencies. Arena has participated in this process and considers
the recent Government statements on licensing and taxation of
off-shore bookmaking as a positive step.
-- The new five-year SIS media rights agreement, with an
estimated total value of GBP106.0m and an uplift in annual value of
GBP10.0m, will commence on 1 January 2012.
-- In February 2011, Arena successfully tendered to The London
Organising Committee of The Olympic Games and Paralympic Games Ltd
to provide catering services at Eton Dorney and Greenwich Park
venues in 2012, with an estimated net profit contribution of
GBP0.5m to GBP1.0m.
-- In July 2011, Shepway District Council published the Local
Development Framework Core Strategy (Proposed Submission Document)
for public consultation that identifies Folkestone Racecourse as a
strategic site for a mixed-use development incorporating up to 820
residential units.
-- In June 2011, the Board announced a review of possible
options to increase value for its shareholders. This process is
ongoing.
-- Trading performance since 30 June 2011 is in line with the
Company's expectations.
David Thorpe, Chairman of Arena Leisure Plc, commented:
"Despite the challenging back drop of reduced industry funding
and the slow economic recovery, the consumer-driven operations of
Arena's business have performed exceptionally well; most notably,
posting attendance growth of over 11% in the period. Our trading
performance since 30 June 2011 is in line with the Company's
expectations. The media rights uplift from 2012 onwards is now on
the horizon.
"The Government is in consultation on a reform of the Levy
scheme and we are encouraged by its recent statements on licensing
and taxation of off-shore gaming. We believe that the nature of
Arena's racecourse estate, in particular the all-weather assets,
will be advantageous in the event of a Levy replacement that is
predicated on a commercial relationship with bookmakers."
1 August 2011
Enquiries:
Arena Leisure Plc Tel: 020 7632 2080
Mark Elliott, Chief Executive
Tony Harris, Finance Director
College Hill Tel: 020 7457 2020
Justine Warren
Matthew Smallwood
Forward-looking statements
This report may contain certain statements about the future
outlook for Arena. Although we believe our expectations are based
on reasonable assumptions, any statements about future outlook may
be influenced by factors that could cause actual outcomes and
results to be materially different.
www.arenaleisureplc.com
HALF YEAR REVIEW
Overview
Arena's consumer-related revenue streams grew strongly in the
period with average attendances at its racecourses up by 11.3%,
compared to the same period in 2010, and hospitality attendances up
by 8.2%. The contribution from At The Races ('ATR') continued to
grow, both through media rights royalties and from Arena's 45.85%
equity shareholding. The Lingfield Park Marriott Hotel and Country
Club celebrated its first anniversary in May 2011 with an increase
in revenues of GBP1.1 in the period. Catering income, which is
largely attendance driven, has grown by GBP0.8m (18.9%). In
aggregate, this good progress has resulted in a GBP3.0m increase in
non-Levy-related income, compared to the same period in 2010, and
an increased contribution to operating profit of GBP0.7m.
Income from the centrally collected and allocated Levy has
reduced significantly as has been widely reported. Arena's receipts
from the Levy reduced by GBP4.9m to GBP5.7m and resulted in a net
negative profit impact of GBP1.3m in the period. Profit before
interest and tax in the period was GBP0.6m lower than in 2010 at
GBP1.4m (2010: GBP2.0m).
In February 2011, Arena announced that it was successful in its
tender to The London Organising Committee of The Olympic Games and
Paralympic Games Ltd ('LOCOG') to provide catering services at the
Eton Dorney and Greenwich Park venues in 2012. As previously
highlighted, the estimated 2012 net profit contribution from these
two contracts is between GBP0.5m and GBP1.0m.
Folkestone Racecourse's proposal for mixed-use redevelopment
incorporating a new racecourse continued to progress during the
period. The local authority has now published its Local Development
Framework Core Strategy (Proposed Submission Document) for public
consultation in which Folkestone Racecourse is identified as a
strategic site for a mixed-use development incorporating up to 820
residential units.
On 22 July 2011, the third and final advanced payment of GBP7.0m
was received from Satellite Information Services ('SIS') relating
to the new media rights agreement that was signed on 22 July 2009.
This five-year contract for the provision of our racing into
licensed betting shops in the UK and Ireland will commence on 1
January 2012. This final payment brings the total advanced payments
received from SIS to GBP32.0m. Aggregate revenues, estimated at
GBP106.0m including these upfront payments, will be recognised over
the five-year period of the contract commencing in 2012.
A final dividend of 0.38p per share relating to the year ended
31 December 2010 was paid on 12 May 2011 totalling GBP1.4m (2010:
0.38p per share totalling GBP1.4m). As previously stated, the
Company currently pays dividends in one instalment and, therefore,
there will be no interim dividend paid in respect of the current
year.
Operational Review
During the period, Arena staged 189 fixtures across its seven
racecourses (2010: 188 fixtures). There was only one abandoned
fixture in early January and one additional fixture was staged in
the same month. This compares to 11 abandoned fixtures and eight
additional fixtures in early 2010, as a result of the heavy snow
and poor weather conditions. The Group is scheduled to stage a
total of 353 fixtures for the full year (2010: 352 fixtures).
Total attendance at Arena's racecourses over the period was up
by 11.7% to 315,000 (2010: 282,000) with the resulting admission
and catering income generating an additional GBP0.3m profit in the
period. The average attendance showed an increase of 11.3% to 1,667
(2010: 1,498), which is extremely encouraging and reflects the
growing appeal of the Arena product and our ability to attract new
and existing customers. Part of this growth has been driven by
themed racedays and we have also seen good, positive trends across
all types of race meeting. In particular, at Doncaster Racecourse
on the bank holiday of 29 April 2011, 20,000 people attended the
free admission "Royal Wedding Raceday", which was an increase of
10,500 on the equivalent meeting in 2010. On a like for like basis,
before the additional crowd at the Doncaster free raceday, Arena's
underlying average attendance grew by 7.7%. Preliminary statistics
from the Racecourse Association show an industry-wide growth in
average attendance of 0.8% in the period and Arena is therefore
continuing its track record of significantly outperforming the
industry norm.
Hospitality attendances increased by 8.2% in the period to
18,400 (2010: 17,000) and generated an additional GBP0.1m of profit
in the period. This improvement builds upon the recovery in 2010,
when the full year total of 45,200 was a 17.1% increase on 2009,
but is still some way off the hospitality attendance record of
21,500 achieved in the first six month period in 2007. The second
half of the year is more significant in terms of hospitality
volumes (2010: H1, 38%; H2, 62%). Current trends for the summer
months at both Lingfield Park and Royal Windsor Racecourses are
encouraging and forward bookings for the Ladbrokes St Leger
festival at Doncaster Racecourse in September are also ahead of
2010.
Improving the quality and profitability of hospitality was a key
rationale for Arena establishing its own in-house catering
operation in April 2007. This catering business continues to
progress well, driven by both increased attendance and improved
spend and margin. Revenues in the period were GBP0.8m (18.9%) ahead
of 2010 mainly as a result of the increased public and hospitality
attendances. As part of the evolution of this business, management
are evaluating possible opportunities for expansion into external
catering contracts. On 10 February 2011, we announced that Arena
had successfully tendered to LOCOG to provide catering services at
both the Eton Dorney and Greenwich Park venues as part of the
Olympic and Paralympic Games in 2012. Eton Dorney will be home to
the sprint canoeing and rowing events and Greenwich Park will be
home to the equestrian and modern pentathlon events. The contract
contains elements of both fixed income and variable income that is
dependent upon the numbers of attendees and spend per head. As
previously highlighted, the Board estimates that Arena's 2012 net
profit contribution from the contract will be in the range of
GBP0.5m to GBP1.0m.
The Lingfield Park Marriott Hotel and Country Club celebrated
its first anniversary in May 2011. The hotel is building reputation
and awareness and we believe is achieving good rate premiums
compared to its competitors. However, the challenge in this market
and with a new hotel is driving occupancy. In common with the
provincial hotel market as a whole, the level of residential
conference and meeting business is currently weak however we are
building this segment on a three-year maturity programme through to
2013. Leisure business generated by racing, golf and the hotel's
health spa is performing better. The integration of operations with
Lingfield Park Racecourse is producing multiple benefits,
particularly in the selling and delivery of conference and events
business. When compared to the same period in 2010, the hotel has
incurred additional fixed charges, principally depreciation and
rates, of GBP0.3m and an operating loss before these costs of
GBP0.1m (2010: GBP0.5m pre-opening loss).
As expected, Arena's income from the Levy in the period reduced
by GBP4.9m to GBP5.7m, with the main element of this shortfall
impacting prize money. The reductions in Levy funding to both
fixture operating costs and incentives to run at
customer-unfriendly times of day, together with additional
Arena-funded prize money, resulted in a net negative profit impact
of GBP1.3m in the period. The Government is currently consulting on
methods to improve or replace the current Levy funding mechanism.
Arena is fully participating in this consultation process and is
optimistic that a beneficial solution can be found that involves
either a restructured Levy mechanism or a long-term commercial
alternative. These would both need to address the flaws in the
current mechanism and, in this respect, the recent statements of
intent by the Government to introduce regulation and taxation to
off-shore bookmakers is a positive first step.
Income from the Group's current media rights contract for the
provision of our racing into licensed betting shops in the UK and
Ireland remained at the same level as in 2010. The contractual
increase in the standard per race fee, which is linked to
inflation, was GBP0.3m in the period with there being an equal and
opposite impact from a drop in income as a result of more races
with fewer than eight runners in the first quarter.
ATR grew its revenues in the period by 11.1% to GBP10.9m (2010:
GBP9.8m), largely through increased contributions from its
international distribution business. Arena benefits from these
increased revenues as both a supplier of content, with royalty
payments made directly to the racecourses, and as a 45.85%
shareholder in ATR. In the period, royalty payments increased by
GBP0.1m and Arena's share of ATR's operating profit for the period
was GBP0.7m (2010: GBP0.5m). The impact of the recognition of a
deferred tax asset in 2010 did not recur in 2011 (2010: GBP0.1m
credit). As a consequence, Arena's share of the post-tax profit of
ATR in the period was GBP0.7m (2010: GBP0.6m).
Finance Review
The net interest expense for the period decreased to GBP0.9m
(2010: GBP1.1m). Of this decrease, GBP0.5m arises from a non-cash
credit of GBP0.2m (2010: GBP0.3m charge) that has resulted from the
IFRS revaluation of the Group's interest rate hedging instruments.
The non-cash charge as a result of the IFRS treatment of
interest-free loans was GBP0.1m (2010: GBP0.1m). The net trading
interest expense, before these non-cash items, increased by GBP0.3m
to GBP1.0m (2010: GBP0.7m). This was principally as a result of
interest costs of GBP0.3m, relating to the debt funding for the
Lingfield Park Marriott Hotel and Country Club development, which
were capitalised during the project construction phase up to the
opening in May 2010.
At 30 June 2011, the Group had GBP45.0m of available bank
facilities of which GBP34.8m was drawn (net of cash balances).
Following the period end, on 22 July 2011, the third and last
advanced payment was received from SIS as part of the new media
rights contract, reducing net borrowings by GBP7.0m. A scheduled
loan repayment of GBP5.0m took place on 31 July 2011 and a further
repayment of GBP5.0m is due on 31 January 2012. Both reduce
available facilities accordingly.
Development Projects
In October 2010, Arena submitted its masterplan for the
redevelopment of Folkestone Racecourse as part of Shepway District
Council's ('SDC') process for drawing up its new LDF. The proposal
safeguards the future of the Racecourse via a complete re-alignment
and rebuild, funded by the introduction of residential units, and
creates a major leisure and business facility and tourist
attraction. In July, SDC published the Local Development Framework
Core Strategy (Proposed Submission Document) for public
consultation that identifies Folkestone Racecourse as a strategic
site for a mixed-use development incorporating up to 820
residential units. SDC has begun the process of public
consultation. It is anticipated that an examination-in-public of
the proposals will conclude in mid-2012.
At Royal Windsor Racecourse a new entrance building
incorporating offices and a retail outlet was completed and opened
in May 2011.
The status of the other real estate projects at Wolverhampton
Racecourse (casino and hotel with planning consent), Doncaster
Racecourse (hotel and residential with planning consent) and Royal
Windsor Racecourse (grandstand enhancement that has yet to be
presented for planning consent) is unchanged from previous
statements.
Employees
The continued growth of attendances, as well as the successful
diversification of the Group's revenues, is a testament to the
excellent work of Arena's employees. Our customers often highlight
the friendly welcome, professional approach and dedication of our
teams and the Board would like to thank all employees for their
continued efforts on behalf of the Company.
Strategic Review
In June 2011, the Board announced that it is reviewing possible
options to increase value for its shareholders. The review process
is continuing and the Board will provide updates on the outcome of
the review as and when appropriate.
Outlook and Current Trading
During the period Arena has performed well and in line with
expectations, particularly with regard to the continued development
of the elements of the business that rely directly on consumer
demand, the growth of ATR and the increased diversification of
income streams. These have all helped to mitigate the shortfalls in
funding from the Levy. Trading in July continued to reflect the
growth trends of the previous months, with good racing attendances
and further increases in hospitality. Booking patterns for
September's Ladbrokes St Leger Festival at Doncaster Racecourse are
ahead of the same period last year and in line with expectations.
Net debt is expected to reduce further in the second half of the
year and through 2012, with a consequent benefit on interest
costs.
From January 2012 the new media rights contract from SIS
commences with its estimated GBP10.0m per annum uplift. The Board
believes that the nature of the racecourse estate, in particular
the all-weather assets, will be advantageous to Arena in the event
of a Levy replacement that is predicated on a commercial
relationship with bookmakers. The recent pronouncements by the
Government on licensing and taxation of overseas bookmaking is seen
as extremely encouraging with regards to a precedent for a
potential solution to the Levy's structural deficiencies in regard
to overseas operations.
David Thorpe Mark Elliott
Chairman Chief Executive
1 August 2011
Condensed Consolidated Interim
Statement of Comprehensive
Income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ----------- ----------- ------------
Revenue 6 28,233 30,142 63,983
Cost of sales (20,969) (22,117) (46,897)
------------------------------- ----- ----------- ----------- ------------
Gross profit 7,264 8,025 17,086
Administrative expenses (6,586) (6,618) (13,024)
------------------------------- ----- ----------- ----------- ------------
Profit from operating
activities 678 1,407 4,062
------------------------------- ----- ----------- ----------- ------------
Share of joint venture's
profit from operations 669 548 1,126
Share of joint venture's
interest and tax 32 91 226
------------------------------- ----- ----------- ----------- ------------
Share of post-tax results of
joint venture 701 639 1,352
------------------------------- ----- ----------- ----------- ------------
Profit before interest and
taxation 1,379 2,046 5,414
-----
Finance expense 7 (1,092) (1,204) (2,058)
Finance income 7 215 94 267
Net finance expense 7 (877) (1,110) (1,791)
------------------------------- ----- ----------- ----------- ------------
Profit before taxation 502 936 3,623
Income tax expense 8 - - -
------------------------------- ----- ----------- ----------- ------------
Profit for the period and
total comprehensive income 502 936 3,623
------------------------------- ----- ----------- ----------- ------------
Profit and total
comprehensive income
attributable to:
Equity shareholders of the
parent company 588 1,021 3,731
Non-controlling interest (86) (85) (108)
------------------------------- ----- ----------- ----------- ------------
502 936 3,623
------------------------------- ----- ----------- ----------- ------------
Pence Pence Pence
------------------------------- ----- ----------- ----------- ------------
Earnings per share 9
Basic earnings per share 0.16 0.28 1.02
Diluted earnings per share 0.16 0.28 1.02
------------------------------- ----- ----------- ----------- ------------
Condensed Consolidated
Interim Statement of Cash
Flows
Six months Six months Year
ended ended ended
30 June 31 December
2011 30 June 2010 2010
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
----------------------------- ----- ----------- ------------- ------------
Cash flows from operating
activities
Profit for the period 502 936 3,623
Adjustment for:
Depreciation 1,973 1,787 3,786
Share-based payment
expense 14 289 149 320
Net finance expense 7 877 1,110 1,791
Share of profit of joint
venture (701) (639) (1,352)
(Profit)/loss on sale of
property, plant and
equipment (36) 7 (31)
Grant amortisation (36) (36) (72)
----------------------------- ----- ----------- ------------- ------------
Cash flows from operating
activities before changes
in working capital and
provisions 2,868 3,314 8,065
Increase in trade and
other receivables (1,785) (3,923) (8,390)
Increase in inventories (82) (95) (49)
Increase in trade and other
payables 3,910 2,057 18,857
----------------------------- ----- ----------- ------------- ------------
Net cash from operating
activities 4,911 1,353 18,483
----------------------------- ----- ----------- ------------- ------------
Cash flows from investing
activities
Purchases of property, plant
and equipment (1,922) (5,877) (8,554)
Proceeds from sale of
property, plant and
equipment 24 3 295
Additions to intangibles - - (37)
Repayment of loans to joint
venture 575 515 515
Interest received - 58 72
----------------------------- ----- ----------- ------------- ------------
Net cash used in investing
activities (1,323) (5,301) (7,709)
----------------------------- ----- ----------- ------------- ------------
Net cash used in financing
activities
Proceeds from bank and other
borrowings 5,213 51,000 38,987
Repayment of loans (5,000) (39,520) (41,120)
Repayment of finance lease
liabilities (60) (35) (119)
Interest paid (1,069) (1,243) (2,516)
Dividends paid 10 (1,384) (1,384) (1,384)
----------------------------- ----- ----------- ------------- ------------
Net cash from financing
activities (2,300) 8,818 (6,152)
----------------------------- ----- ----------- ------------- ------------
Increase in cash and cash
equivalents 1,288 4,870 4,622
Net cash and cash
equivalents at beginning
of the period 3,099 (1,523) (1,523)
----------------------------- ----- ----------- ------------- ------------
Net cash and cash
equivalents at end of the
period 4,387 3,347 3,099
----------------------------- ----- ----------- ------------- ------------
Condensed Consolidated Interim
Balance Sheet
At
At 30 June At
30 June 2010 31 December
2011 Restated* 2010
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
--------------------------------- ----- ---------- ---------- ------------
-
Non-current assets
Property, plant and equipment 11 140,276 140,308 140,685
Intangible assets 12 6,072 6,035 6,072
--------------------------------- ----- ---------- ---------- ------------
Investment in joint venture
- Share of gross assets 4,284 3,985 4,028
- Share of gross liabilities (5,090) (6,205) (5,535)
--------------------------------- ----- ---------- ---------- ------------
(806) (2,220) (1,507)
Goodwill in respect of joint
venture 1,580 1,580 1,580
Loans to joint venture 3,767 4,275 4,308
--------------------------------- ----- ---------- ---------- ------------
4,541 3,635 4,381
Trade and other receivables 465 - -
--------------------------------- ----- ---------- ---------- ------------
Total non-current assets 151,354 149,978 151,138
--------------------------------- ----- ---------- ---------- ------------
Current assets
Inventories 553 517 471
Trade and other receivables 15,192 8,772 13,238
Cash and cash equivalents 4,387 3,347 3,099
--------------------------------- ----- ---------- ---------- ------------
Total current assets 20,132 12,636 16,808
--------------------------------- ----- ---------- ---------- ------------
Total assets 171,486 162,614 167,946
--------------------------------- ----- ---------- ---------- ------------
Current liabilities
Trade and other payables (7,880) (7,419) (5,821)
Loans and borrowings 13 (11,508) (11,373) (11,242)
Accruals and deferred income (9,620) (6,653) (4,618)
--------------------------------- ----- ---------- ---------- ------------
Total current liabilities (29,008) (25,445) (21,681)
--------------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Loans and borrowings 13 (31,711) (45,018) (31,669)
Accruals and deferred income (32,072) (15,721) (35,308)
--------------------------------- ----- ---------- ---------- ------------
Total non-current liabilities (63,783) (60,739) (66,977)
--------------------------------- ----- ---------- ---------- ------------
Total liabilities (92,791) (86,184) (88,658)
--------------------------------- ----- ---------- ---------- ------------
Net assets 78,695 76,430 79,288
--------------------------------- ----- ---------- ---------- ------------
Equity
Share capital 18,210 18,210 18,210
Share premium 223 223 223
Merger reserve 5,417 5,417 5,417
Retained earnings 53,322 50,948 53,829
--------------------------------- ----- ---------- ---------- ------------
Equity attributable to
shareholders of the parent
company 77,172 74,798 77,679
Non-controlling interest 1,523 1,632 1,609
--------------------------------- ----- ---------- ---------- ------------
Total equity 78,695 76,430 79,288
--------------------------------- ----- ---------- ---------- ------------
* - Relates to a change in the accounting policy for leased
assets. See Note 3.
Condensed Consolidated
Interim Statement of
Changes in Equity
Attributable to the equity holders
of the parent company
------------------------------------------------------------------
Share Share Merger Retained Non-controlling Total
capital premium reserve earnings Total interest equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
At 1 January 2010
(As reported)* 18,210 223 5,417 51,170 75,020 1,717 76,737
Impact of change in
accounting
policy* - - - (8) (8) - (8)
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
At 1 January 2010
(Restated)* 18,210 223 5,417 51,162 75,012 1,717 76,729
Profit for the
period and total
comprehensive
income - - - 1,021 1,021 (85) 936
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
Transactions with
owners:
- Dividends paid - - - (1,384) (1,384) - (1,384)
- Share-based
payment - - - 149 149 - 149
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
Total transactions
with owners - - - (1,235) (1,235) - (1,235)
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
At 30 June 2010
(Restated)*
(Unaudited) 18,210 223 5,417 50,948 74,798 1,632 76,430
Profit for the
period and total
comprehensive
income - - - 2,710 2,710 (23) 2,687
Share-based payment
and total
transactions with
owners - - - 171 171 - 171
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
At 31 December
2010 (Audited) 18,210 223 5,417 53,829 77,679 1,609 79,288
Profit for the
period and total
comprehensive
income - - - 588 588 (86) 502
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
Transactions with
owners:
- Dividends paid 10 - - - (1,384) (1,384) - (1,384)
- Share-based
payment 14 - - - 289 289 - 289
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
Total transactions
with owners - - - (1,095) (1,095) - (1,095)
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
At 30 June 2011
(Unaudited) 18,210 223 5,417 53,322 77,172 1,523 78,695
---------------------- ----- ----------- ---------- ---------- ----------- ------------ -------------------- --------
* - Relates to a change in the accounting policy for leased
assets. See Note 3.
Notes to the Condensed Consolidated Interim Financial
Statements
1 Reporting entity
Arena Leisure Plc (the 'Company') is a company domiciled in the
United Kingdom. The condensed consolidated interim financial
statements of the Company as at and for the six months ended 30
June 2011 comprise the Company and its subsidiaries (together
referred to as the 'Group') and the Group's interests in associates
and jointly controlled entities.
The consolidated financial statements of the Group as at and for
the year ended 31 December 2010 are available on the Company's
website at: www.arenaleisureplc.com.
The condensed consolidated interim financial statements of the
Group as at and for the six months ended 30 June 2011 will also be
available on the Company's website.
2 Basis of preparation
Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the EU. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group as at and for the year ended 31 December
2010.
The comparative figures for the financial year ended 31 December
2010 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the Company's
auditors and delivered to the registrar of companies. The report of
the auditors was (i) unqualified, (ii) did not include a reference
to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act
2006.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 29 July 2011.
These condensed consolidated interim financial statements have
not been subject to an audit or review pursuant to Auditing
Practices Board guidance on Review of Interim Financial
Information.
Going concern
The Group has sufficient bank facilities to enable it to
complete its committed expenditure and to continue to meet
day-to-day working capital requirements. Although the current
economic conditions create uncertainty, particularly over funding
levels from the Levy on bookmakers, the Group's forecasts and
projections, taking account of reasonably possible changes in
trading performance, together with mitigating actions that are
within management's control, show that the Group is expected to be
able to operate within the level and covenant conditions of its
debt facilities. Further information on the Group's borrowings is
provided in Note 13.
The Directors have a reasonable expectation that the Company and
Group have adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis of accounting in preparing the annual financial
statements.
3 Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and key sources of
estimation and uncertainty were the same as those that applied to
the consolidated financial statements as at and for the year ended
31 December 2010.
4 Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the consolidated financial
statements as at and for the year ended 31 December 2010. During
the six months to 30 June 2011, there has been no material change
in the risks to which the Group is exposed.
5 Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements as at
and for the year ended 31 December 2010 other than the new
standards adopted in the period as set out below.
The retrospective change in accounting policy for leased assets
applied in the consolidated financial statements as at and for the
year ended 31 December 2010 has also been applied in these
condensed consolidated interim financial statements. In accordance
with IAS 8, the prior year balance sheet figures have been
restated, with the net effect recognised in equity. The net effect
is not material.
The following International Accounting Standards ('IAS' or
'IFRS'), issued by the International Accounting Standards Board,
and interpretations, issued by the International Financial
Reporting Interpretations Committee ('IFRIC'), are effective for
the first time in the current financial year and have been adopted
by the Group with no significant impact on its consolidated results
or financial position:
- Amendments to IAS 32 'Financial Instruments: Presentation'
- Revised IAS 24 'Related Party Disclosures'
- Improvements to IFRS (issued by IASB in May 2010)
- IFRIC 19 'Extinguishing Financial Liabilities with Equity
Instruments'
- Amendments to IFRIC 14 'The Limit on a Defined Benefit'
6 Segment information
The Group only has one operating segment: racecourse operations.
This business segment arises in the UK. Additional information on
this segment is as follows:
Racecourse operations
Six months
Six months ended Year
ended 30 June 2010 ended
31 December
30 June 2011 Restated* 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------- ------------- ------------- ------------
Total external revenue 28,233 30,142 63,983
---------------------------------- ------------- ------------- ------------
Segment profit from operations 1,975 2,748 6,763
---------------------------------- ------------- ------------- ------------
Central operations (1,008) (1,192) (2,381)
Share-based payment (289) (149) (320)
Share of joint venture result 701 639 1,352
Finance income 215 94 267
Finance expense (1,092) (1,204) (2,058)
---------------------------------- ------------- ------------- ------------
Profit for the year 502 936 3,623
---------------------------------- ------------- ------------- ------------
Other information
Additions to property, plant
and equipment 2,185 6,461 9,089
Segment assets 171,486 162,614 167,946
Segment liabilities (92,791) (86,184) (88,658)
Intangible assets 6,072 6,035 6,072
Investment in joint ventures 4,541 3,635 4,381
---------------------------------- ------------- ------------- ------------
* - Relates to a change in the accounting policy for leased
assets. See Note 3.
7 Finance income and expense
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ----------- ------------
Finance income
Bank interest receivable - 58 72
Other interest receivable 34 36 69
Derivative liability held for risk
management 181 - 126
215 94 267
-------------------------------------- ----------- ----------- ------------
Finance expense
Bank interest payable (939) (779) (1,672)
Finance lease interest (58) (33) (113)
Amortisation of previous gain on
present value
of interest-free loans (95) (137) (273)
Derivative liability held for risk
management - (255) -
-------------------------------------- ----------- ----------- ------------
(1,092) (1,204) (2,058)
-------------------------------------- ----------- ----------- ------------
Net finance expense (877) (1,110) (1,791)
-------------------------------------- ----------- ----------- ------------
8 Income tax expense
The tax charge for the period is GBPnil (six months to 30 June
2010: GBPnil and the year to 31 December 2010: GBPnil) due to the
utilisation of Horserace Betting Levy Board capital credits, which
are not assessable to tax, and the utilisation of tax losses
brought forward.
9 Earnings per share
Basic earnings per share ('EPS') 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 to 30
June 2011 is 364,202,007 (six months to 30 June 2010: 364,202,007
and the year to 31 December 2010: 364,202,007).
Diluted EPS has been calculated by also including the number of
potentially dilutive ordinary shares in the periods. At 30 June
2011 the total number of potentially dilutive ordinary shares
included in the calculation of diluted EPS was nil (at 30 June
2010: nil and at 31 December 2010: nil). Certain employee options
have not been included in the calculation of diluted EPS because
their exercise is contingent on the satisfaction of specific
criteria that had not been met at the end of the period. In
addition, certain employee options have also been excluded from the
calculation of diluted EPS as their exercise price is greater than
the weighted average share price during the period (i.e. they are
out-of-the-money) and therefore would not be dilutive.
10 Dividends
The following dividends were declared and paid by the Group:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ----------- ------------
Final dividend of 0.38p (2010:
0.38p) per ordinary share approved
by the shareholders and paid
during the period relating to the
previous year's results 1,384 1,384 1,384
Dividends paid during the period 1,384 1,384 1,384
-------------------------------------- ----------- ----------- ------------
In accordance with the Company's policy to pay dividends in one
annual instalment as final dividends, the Directors have not
approved an interim dividend in respect of the six months ending 30
June 2011 (2010: nil).
11 Property, plant and equipment
During the six months to 30 June 2011, the Group acquired assets
with a cost of GBP2,185,000 (six months to 30 June 2010:
GBP6,461,000 and the year to 31 December 2010: GBP9,089,000). This
figure includes capitalised borrowing costs of GBP130,000 (six
months to 30 June 2010: GBP465,000 and the year to 31 December
2010: GBP844,000).
The Board considered the carrying value of assets under
construction at 30 June 2011 and concluded that there were no
indications of impairment and subsequently no impairment loss has
been recognised (at 30 June 2010: no impairment loss and at 31
December 2010: no impairment loss).
At 30 June 2011, the Group remained committed to purchase
property, plant and equipment totalling GBP81,000 (at 30 June 2010:
GBP129,000 and at 31 December 2010: GBP282,000).
12 Goodwill
At 30 June 2011, the Board considered the carrying value of
goodwill and concluded that there were no indications of impairment
and subsequently no impairment loss has been recognised (at 30 June
2010: no impairment loss and at 31 December 2010: no impairment
loss).
13 Loans and borrowings
The Group had the following interest-bearing loans and other
borrowings at each balance sheet date:
Six months
Six months ended Year
ended 30 June ended
30 June 2010 31 December
2011 Restated* 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- ------------
Current liabilities
Bank loans 10,000 10,000 9,829
Finance lease liabilities 2 4 2
Other loans 1,506 1,369 1,411
11,508 11,373 11,242
----------------------------- ----------- ----------- ------------
Non-current liabilities
Bank loans 29,200 41,000 29,158
Finance lease liabilities 1,008 1,010 1,009
Other loans 1,503 3,008 1,502
----------------------------- ----------- ----------- ------------
31,711 45,018 31,669
----------------------------- ----------- ----------- ------------
* - Relates to a change in the accounting policy for leased
assets. See Note 3.
All loans and borrowings are in sterling.
The Group has committed banking facilities with Lloyds Banking
Group providing for GBP45.0m of facilities that amortise over the
period to maturity on 31 December 2013, of which GBP10.0m falls due
within one year (GBP5.0m due in July 2011 and GBP5.0m due in
January 2012). The margin on these facilities is variable between
2.00% and 3.25%, dependent on the Group's leverage ratio. The
effective margin is currently 2.50%. An arrangement fee of
GBP412,500 was payable on initial drawing of the facilities in
March 2010.
Other loans represent interest-free loans from the HBLB and, as
required under IAS 39, they are held at present value, with a net
finance cost of GBP95,000 included in the income statement in the
period (six months to 30 June 2010: GBP137,000 and year to 31
December 2010: GBP273,000).
14 Share-based payment
The Group operates two share option schemes for employees. Final
grants were made under these schemes in 2006. In the six months to
30 June 2011, 710,000 share options lapsed due to the vesting
conditions not having been met.
In 2007, the Group established a long-term incentive plan
('LTIP') that provides for annual conditional awards of shares to
be made, subject to performance criteria, to key management
personnel and senior employees. In April 2011, awards over
2,361,967 ordinary shares in the Company were granted to certain
employees based on a share price of 27.5p per share. Vesting of the
shares is expected to occur following the issue of the Group's
annual results for 2013, subject to the Company achieving adjusted
EPS growth for the year ending 31 December 2013 (compared to the
base year of 2010) of RPI+90%. The vesting percentage reduces to
50% if EPS growth is RPI+60% and 0% if EPS growth is less than
RPI+30%. Straight line vesting occurs between 0% and 50% and
between 50% and 100%.
The share-based remuneration expense recognised in the six
months to 30 June 2011 in respect of the LTIP awards is GBP289,000
(six months to 30 June 2010: GBP149,000 and year to 31 December
2010: GBP320,000).
Further details on the share option schemes and the LTIP are
disclosed in the consolidated financial statements as at and for
the year ended 31 December 2010.
15 Related parties
Directors and key management personnel receive remuneration in
the form of wages and salaries, contributions to defined
contribution pension plans and share-based payments (see Note 14).
Remuneration in respect of Directors and key management personnel
for the six months to 30 June 2011 totalled GBP1,037,000 (six
months to 30 June 2010, restated: GBP888,000 and the year to 31
December 2010: GBP2,002,000), including share-based payment expense
of GBP264,000 (six months to 30 June 2010: GBP126,000 and the year
to 31 December 2010: GBP288,000).
Transactions with the other related parties of the Group in
respect of the six months to 30 June 2011 (as disclosed in the
consolidated financial statements as at and for the year ended 31
December 2010) are as follows:
Transaction amount Balance outstanding
Six Six Six
Six months months Year months months Year
ended ended ended ended ended ended
30 30 31 30 30 31
June June December June June December
2011 2010 2010 2011 2010 2010
Unauditedd Unaudited Audited Unaudited Unaudited Audited
Related party
and type of
transaction GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ----------- ---------- --------- ---------- ---------- ---------
Racecourse
Association
Annual
membership
fee and
related
costs (97) (72) (153) (7) (4) (4)
Admissions,
sponsorship
and
conference
facilities 5 4 12 3 2 3
----------------- ----------- ---------- --------- ---------- ---------- ---------
British
Horseracing
Authority
Programme
announcements
and racing
calendar
adverts - (10) - - (2) -
Admissions,
sponsorship
and Ian
Renton
Directorship 3 3 29 2 1 4
----------------- ----------- ---------- --------- ---------- ---------- ---------
At The Races
Contribution
to picture
provision,
sponsorship 1,633 1,614 2,622 89 1,062 373
Interest
receivable on
loans 34 36 69 - - -
Loans (575) (515) (515) 3,767 4,275 4,308
----------------- ----------- ---------- --------- ---------- ---------- ---------
The term of Ian Renton's British Horseracing Authority
directorship expired in July 2010. The information for the period
to 30 June 2011 is shown for comparative purposes. There were no
significant changes in the related party transactions described in
the consolidated financial statements as at and for the year ended
31 December 2010.
16 Subsequent event
On 22 July 2011 the third advanced payment of GBP7.0m was
received from Satellite Information Services Limited ('SIS') in
respect of the agreement for the provision of coverage of horse
racing content from the Group's seven racecourses into Licensed
Betting Offices ('LBOs') in the United Kingdom and Ireland. The
agreement was signed on 22 July 2009. It will replace the Group's
current contract with BAGS at its expiry on 31 December 2011 and
has a term of five years to 31 December 2016. Total revenues
receivable under the contract over this period are estimated at
GBP106.0m which compares to revenues under the existing five-year
BAGS contract of an estimated GBP55.0m. The Company received an
initial advanced payment from SIS of GBP12.5m upon signing the
agreement and a second advanced payment of GBP12.5m on 22 July
2010. The balance of the estimated revenues will be received by the
Group throughout the five-year term on a per race basis.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting" as adopted
by the EU; and
-- The interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Mark Elliott Tony Harris
Chief Executive Finance Director
29 July 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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