RNS Number:0680E
Ultimate Leisure Group PLC
19 September 2007
Wednesday 19 September 2007
ULTIMATE LEISURE GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007
Ultimate Leisure Group plc ("Ultimate" or "the Group"), the bar, restaurant,
hotel and nightclub operator, today announces its financial results for the year
ended 30th June 2007.
Highlights:
*Results in line with expectations.
*Turnover up 11.8% to #36.3m (2006 #32.5m), Like for like sales up 1%.
*Profit before tax (pre exceptional items and FRS 20 charge) of #0.4m.
*EBITDA of #4.2m (2006 #4.7m).
*Unspent placing proceeds of #7m.
*Investment programme and repositioning of estate complete and benefits
starting to come through.
*Acquisition of 'The Living Room' and 'Bel and The Dragon' brands -
balancing wet-led income with increased exposure to food and the premium end
of the market.
*Well prepared for smoking ban with limited impact to date.
*Planned change of name to Premium Bars and Restaurants PLC to reflect new
focus.
*Positive start to current year. Food mix now over 20%, and total group
sales more than double last year.
Commenting on the results, Mark Jones, Chairman said:
"These results are in line with market expectations and the second half of the
year saw an improved performance in our core estate as the benefits of the
investments in our assets, marketing and training started to come through.
Whilst it is still early, we have had an encouraging start to the current year.
Total company sales for the first nine weeks to 2nd September are up 109%, food
sales are up more than thirteen times on last year over the same period and food
mix now accounts for over 20% of total sales. Our sales have been boosted by our
recent acquisitions. On a like for like basis we have maintained sales despite
the smoking ban and poor summer weather.
The investment in our core estate is now complete, and we believe that the Group
is in a better position than ever before. Including the acquisitions of The
Living Room and Bel and The Dragon brands we have a strong portfolio of premium
brands, providing the Group with an enhanced platform for growth in what remains
a competitive market. As a result, we continue to be confident about delivering
value to shareholders in the current year and beyond."
For further information please contact:
Ultimate Leisure
Mark Jones Chairman Today: 020 7831 3113
Craig Bell Finance Director Thereafter: 0191 261 8800
Financial Dynamics
Ben Foster/Charles Watenphul Tel: 020 7831 3113
KBC Peel Hunt (Nominated Adviser and Broker)
Capel Irwin/Matt Goode Tel: 020 7418 8900
ULTIMATE LEISURE GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007
CHAIRMAN'S STATEMENT
Chairman's Statement
The year ending 30th June 2007 has been a transformational year for the Group.
The investment programme that commenced at the end of 2005 is now complete. Site
refurbishments, combined with targeted investment in training and marketing,
have put our core estate of bars, clubs and hotels in strong competitive
positions within their local markets. The benefits of this capital expenditure
are already being enjoyed within the business and this will accelerate in the
current year.
At the same time, we have made a number of acquisitions both to expand our
geographic footprint outside our traditional North East heartland and also to
increase our exposure to food income. Notably we acquired both the 'Bel and The
Dragon' and 'The Living Room' businesses. These acquisitions and our investment
programme have cemented the Group's position at the premium end of the market.
To reflect the new focus of the Group we will be formally changing the name of
the company to 'Premium Bars and Restaurants plc'. A resolution to this effect
will be put before our AGM.
The Board believes that a name change reflects the positive strides the Group
has taken over the last two years and is more appropriate for the future
direction and strategy of the company.
Operational and Financial Review
Financial Results
Turnover for the year increased by 11.8% to #36.3m (2006: #32.5m). Pre tax
profit before exceptional items and FRS 20 charge was #0.4m (2006: #1.5m),
EBITDA was #4.2m (2006 #4.7m). Profit in the year was impacted by the short-term
closure of fifteen outlets for refurbishment and also the losses incurred by our
non-core sites.
As part of our continued efforts to improve the overall quality of the estate,
several non core sites have been identified for disposal. These disposals are at
an advanced stage and the carrying value of these assets has been impaired by
#2m at 30 June 2007 to reflect the expected loss on their disposal.
Due to the changes at senior management level and the organisational structure
put in place to reflect the new enlarged shape of the business, a one off
exceptional restructuring cost of #0.3m was also charged to the profit and loss
account during the year.
In March 2007 the Group successfully raised #25m by way of a share placing.
After the recent acquisitions we still have #7m of these funds available for
further acquisitions.
The Group's fundamental finances remain sound with a strong balance sheet, good
asset base, low gearing and strong cash generation.
Following the acquisitions of 'The Living Room' and 'Bel and The Dragon', the
Group negotiated new banking facilities which will fund the expansion of the two
brands and 'Prohibition'.
Dividends
The Board has previously stated its intention to reinvest in the core estate and
to seek further earnings enhancing and strategically complimentary acquisitions.
As a result, the Board has decided not to propose a final dividend for the year.
Business Review
The trading environment in the year continued to be challenging as the long term
impact of the new licensing laws continued to be felt across the business. The
investment programme continued at pace throughout the year as we refurbished our
estate thereby increasing the competitiveness of the Group. In total we carried
out major capital investments in fifteen bars and one hotel, spending a total of
#2.3m. In the current financial year, therefore, our capital spend on our core
estate will drop substantially.
Additionally, a substantial investment was made into marketing and training to
improve promotional activity and customer service. As previously disclosed, the
overall profitability of the Group was temporarily impacted by the closure of a
number of outlets for refurbishment during the year as well as the increased
investment in marketing initiatives.
Despite this we achieved like for like sales improvement of 1% in the year. This
investment has been vital to the long term growth prospects of the business.
I am pleased to report significant progress in our strategy to balance our
traditionally wet-led income streams with greater exposure to increasingly
profitable food sales. For the second year in a row, our food sales grew very
strongly with total sales up 129% and like for like sales up 47%, albeit from a
relatively small base. This greater exposure to food has been invaluable in our
successful preparations for the Northern Irish and English smoking bans.
Smoking Ban
A significant amount of management time and over #250,000 of capital investment
went into preparing for the smoking ban in Northern Ireland (30th April 2007)
and England (1st July 2007). We were fully prepared for the bans and
approximately two thirds of our estate has smoking solutions in place. Overall
the bans have had a very limited impact to date.
Acquisitions and Development
During the year we disposed of two non-core nightclub sites in Rotherham and
South Shields for book value. We currently have four more sites under offer that
we previously identified as being non-core.
We acquired four new premium bar sites; two leasehold bars in Belfast - The
Advocate and the Potthouse; and two freehold bars - The Attic in Newcastle and
The Cotton Factory in Huddersfield. These venues are positioned in the premium
bar market and enjoy significant food sales.
Our most significant investments, however, have followed the placing we
undertook in March 2007. The #25m raised gave us substantial scope to grow our
business through acquisition.
On 18 June 2007 we acquired the 'Bel and The Dragon' business for a cash
consideration of #8.75m. Of the four sites, three are freeholds. The Bel and The
Dragon business is a premium pub restaurant brand, and in its last financial
year to 25 June 2007 produced EBITDA of #1.05m.
On 25 June 2007 we acquired Living Ventures Ltd ('Living Ventures') for a total
cash consideration of #28m. Living Ventures owns the Living Room brand. The
business was formed in 1999, and the Living Room brand is a high quality
restaurant and bar business operating from 13 sites in England and Scotland.
In the financial year to 30 March 2007, the Living Room delivered sales of
#29.2m and site EBITDA of #6.050m. As part of the acquisition, we took on a
number of key executives from Living Ventures, representing an associated
central overhead of #0.85m. Danny Fox, who played a central part in building
'The Living Room' brand, joined us as Managing Director of The Living Room Group
Ltd, and brought with him his highly regarded Operations, Marketing and Training
team. He has also assumed responsibility for the 'Prohibition' brand.
The board expects both deals to be earnings enhancing in the first year of
ownership. The acquisitions are in line with the Group's stated strategy of
balancing wet-led income streams with an increased exposure to food income. They
provide the Group with established formats and brands at the premium end of the
market, and the Group should benefit from the greater economies of scale from
the operation of over fifty assets. The integration of both groups is proceeding
ahead of schedule.
There are exciting opportunities to grow the total number of sites for both
brands and at present we have identified three sites for 'The Living Room',
including one in Bristol which will open by Easter 2008. We believe that 'The
Living Room' brand has the capability to expand to thirty sites and we are
currently seeking opportunities in a number of target towns. Additionally we are
currently seeking more sites for 'Bel and The Dragon' and for 'Prohibition'. The
Group is well positioned to maximise the benefits for shareholders of the roll
out of these three exciting brands.
People
During the year we welcomed Stephane Nahum and Alka Bali to the board, both as
non-executive directors.
The board wish to thank all of their employees for the contribution that they
have made over the financial year.
International Financial Reporting Standards ('IFRS')
The Group is required to produce its 31 December 2007 interim report under IFRS
and is currently undertaking a project to assess the financial and
presentational impact of these changes from UK GAAP.
Current Trading and Outlook
Whilst it is still early we have had an encouraging start to the current year.
Total group sales for the first nine weeks to 2 September year are up 109%
compared to last year and food sales are more than 13 times the level of last
year, both boosted by our recent acquisitions. Food now accounts for over 20% of
total sales. On a like for like basis we have maintained sales despite the
smoking bans and poor summer weather.
The investment in the core estate is now complete and we believe that the Group
is in a better position than ever before. With the acquisitions of 'The Living
Room' and 'Bel and The Dragon' we now have a strong portfolio of premium brands,
providing the Group with an enhanced platform for growth in what remains a
competitive market. With #7m of placing proceeds unspent we will also look for
opportunities to acquire more businesses that we believe will earnings enhancing
for our shareholders.
As a result we continue to be confident about delivering value to shareholders
into the current year and beyond.
Mark Jones
Chairman
Wednesday 19 September 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 June 2007
Notes 2007 2006
(as
restated)
#'000 #'000
Turnover 3 36,282 32,451
Cost of sales (18,248) (15,840)
Gross profit 18,034 16,611
------- -------
Administration expenses (20,036) (19,865)
Other operating income 464 487
------- -------
Operating loss (1,538) (2,767)
Analysed as:
Operating profit before exceptional items 1,488 2,364
Exceptional items 4 (3,026) (5,131)
--------- ---------
Operating loss after exceptional items (1,538) (2,767)
Interest receivable 5 383 18
Interest payable 6 (1,472) (880)
------- -------
Loss on ordinary activities before taxation (2,627) (3,629)
Tax on loss on ordinary activities 7 (76) (523)
------- -------
-------
Loss for the financial year (2,703) (4,152)
------- -------
Basic loss per share 8 (9.2p) (16.9p)
CONSOLIDATED BALANCE SHEET 2007 2006
As at 30 June 2007 #'000 #'000
Notes
-------
FIXED ASSETS
Intangible assets 10 19,811 1,258
Tangible assets 10 91,806 65,336
______ ______
111,617 66,594
______ ______
CURRENT ASSETS
Stocks 702 454
Debtors 11 4,633 2,337
Cash at bank and in hand 6,848 2,749
______ ______
12,183 5,540
CREDITORS - due within one year 12 (10,705) (8,056)
______ ______
Net current assets / (liabilities) 1,478 (2,516)
______ ______
TOTAL ASSETS LESS CURRENT LIABILITIES 113,095 64,078
CREDITORS - due after one year 12 (44,525) (18,266)
- Provisions for liabilities and charges 13 (3,136) (3,123)
______ ______
NET ASSETS 65,434 42,689
====== ======
CAPITAL AND RESERVES
Called-up share capital 3,982 2,503
Share premium 49,035 25,605
Other reserves 7,013 7,013
Profit and loss account 5,404 7,568
______ ______
EQUITY SHAREHOLDERS' FUNDS 65,434 42,689
====== ======
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2007
2007 2006
#'000 #'000
Notes
-------
Net cash inflow from operating activities A 1,979 4,032
------- -------
Return on investments and servicing of
finance
Interest received 383 18
Interest paid (1,425) (833)
------- -------
Net cash outflow from return on investments (1,042) (815)
and servicing of finance
------- -------
Taxation paid (664) (1,439)
------- -------
Capital expenditure
Purchase of tangible fixed assets (11,149) (4,360)
Acquisitions (37,100) (3,754)
Sale of tangible fixed assets and 2,200 1,250
investments
---------- ----------
Net cash outflow from capital expenditure (46,049) (6,864)
---------- ----------
Dividends paid - (1,390)
---------- ----------
Cash outflow before financing (45,776) (6,476)
Financing
Net proceeds from share issue 24,909 466
New Bank Loans 51,975 10,600
Repayment of Bank Loan (27,050) (2,222)
---------- ----------
49,834 8,844
---------- ----------
Net increase in cash in the year B 4,058 2,368
Opening cash and cash equivalents 2,749 431
Effect of foreign exchange movements 41 (50)
______ ______
Closing cash and cash equivalents 6,848 2,749
====== ======
NOTES TO CASH FLOW STATEMENT
A Reconciliation of Operating loss to Operating cash flow
2007 2006
#'000 #'000
Operating (loss) (1,538) (2,767)
Depreciation and Impairment charge 4,481 6,257
Amortisation of Intangible Fixed Assets 64 8
FRS 20 Charge 622 117
Loss on Disposal of Tangible Fixed Assets 5 142
Change in Stocks (22) 108
Change in Debtors (32) (447)
Change in Creditors (1,601) 614
------- -------
Cash Flow from operating activities 1,979 4,032
------- -------
B Movements in net debt
2007 2006
#'000 #'000
Increase in cash 4,058 2,368
Increase in loans (24,925) (8,378)
------- ---------
Change in net debt resulting from cash flows (20,867) (6,010)
Change in net debt resulting from non-cash flows 395 (47)
Exchange differences 90 (215)
------- -------
Movement in net debt in the year (20,382) (6,272)
Opening net debt (17,295) (11,023)
-------
Closing net debt (37,677) (17,295)
------- -------
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 June 2007
1. Basis of Preparation
The financial information contained in this document does not constitute the
company's statutory accounts for the years ended 30 June 2007 or 30 June 2006.
The financial information for 2006 is derived from the statutory accounts for
2006 which have been delivered to the Registrar of Companies. The auditors have
reported on the 2006 accounts; their report 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 232(2) or (3) of the Companies Act 1985, The statutory
accounts for 2007 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
2 Prior year adjustment (FRS 20 Share Based Payments)
The comparative figures for 2006 have been restated for the requirements of FRS
20 "Share based payments" which has been adopted for the first time in these
accounts. Under FRS 20, the fair value of options granted is recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees
become unconditionally entitled to the options. The fair value of the options
granted has been measured using an option pricing model taking into account the
terms and conditions upon which the options were granted. The amount recognised
as an expense is adjusted to reflect the actual number of share options that
vest, except where variations are due only to share prices not achieving the
threshold for vesting. This has resulted in prior year adjustments in 2006. The
charge in respect of the share based payments is matched by an equal and
opposite adjustment to profit and loss reserves, thereby having no net impact on
the Group's closing reserves. The effect on the period profit after interest and
tax for the periods is set out below:
30 June 2006
#000's
(Loss)/profit after interest and tax as originally reported (4,035)
Charge in respect of share based payments (117)
-------
(Loss)/profit after interest and taxation as restated (4,152)
-------
3. Segmental information
The results of the group arose from its principal activity and were derived from
the UK and Ireland.
4. Exceptional costs
2007 2006
(as
restated)
------- -----------
#'000 #'000
------- -------
Fixed asset impairments 2,044 3,917
Loss on disposal of fixed assets - 132
FRS20 charges 622 117
Restructuring charges 255 965
Acquisition related bonuses 105 -
------- -------
3,026 5,131
------- -------
5. Interest receivable
2007 2006
#'000 (as restated)
#'000
Bank interest 383 18
===== ====
6. Interest payable
2007 2006
#'000 (as restated)
#'000
On bank loans and overdrafts (1,472) (880)
========= =======
7. Taxation
Analysis of charge in year.
2007 2006
#'000 #'000
UK and Ireland corporation tax
Current tax on profit for the year 299 297
Adjustments in respect of prior periods (236) (67)
------- ------
Total current tax 63 230
Deferred tax (see note 13)
Origination of timing differences 225 239
Adjustment in respect of previous years (212) 54
------ ------
Tax on loss on ordinary activities 76 523
------ ------
Factors affecting the tax charge for the current year.
The current tax charge for the year is higher (2006: higher) than the standard
rate of corporation tax in the UK 30% (2006: 30%). The differences are explained
below:
2007 2006
#'000 #'000
Current tax reconciliation
Loss on ordinary activities before tax (2,627) (3,629)
Current tax at 30% (2006: 30%) (788) (1,088)
Effects of:
Expenses not deductible for tax purposes (primarily
impairment 1,399 1,624
of fixed assets)
Capital allowances for period in excess of depreciation (312) (239)
Adjustments to tax charge in respect of previous periods (236) (67)
------- -------
Total current tax charge (see above) 63 230
------- -------
8. Loss Per Share
The loss per share is calculated based on the loss for the financial year
divided by the weighted average number of shares in issue being 29,525,953
(2006: 24,581,477).
9. Acquisitions
During 2007 the Group made two acquisitions which complemented the exiting
operations. The Group acquired the Bel and The Dragon and Living Ventures
Limited on 18 June 2007 and 25 June 2007 respectively. Total cash consideration
of #8.875m was paid for the Bel and The Dragon creating goodwill of #1.4m. Total
cash consideration of #28.53m was paid for Living Ventures Limited creating
goodwill of #17.2m.
The directors consider that the goodwill in respect of both acquisitions to have
a useful economic life of 20 years.
10. Fixed Assets
2007 2006
#'000 #'000
Intangible Fixed Assets
Opening Net Book Value 1,258 127
Additions 18,617 1,139
Amortisation (64) (8)
------- -------
Closing Net Book Value 19,811 1,258
------- -------
2007 2006
#'000 #'000
Tangible Fixed Assets
Opening Net Book Value 65,336 65,823
Exchange Differences (164) 187
Additions 33,280 6,975
Disposals (2,165) (1,392)
Depreciation (2,437) (2,340)
Impairment of Assets (2,044) (3,917)
------- -------
Closing Net Book Value 91,806 65,336
------- -------
11. Debtors
2007 2006
#'000 #'000
Trade debtors 849 144
Other debtors 35 35
Prepayments 3,749 2,158
-------- ------
4,633 2,337
-------- ------
Other debtors include #35,000 (2006: #35,000) due after more than one year.
12. Creditors
2007 2006
#'000 #'000
Due within one year
Bank loans - 1,778
Trade creditors 5,143 3,139
Corporation tax 630 1,231
Other taxation and social security 2,122 796
Other creditors - -
Accruals and deferred income 2,810 1,112
------ ------
10,705 8,056
------ ------
Due after one year
Bank loans - due between one and two years - 1,778
- due between two and five years 1,775 16,488
- due after five years 42,750 -
------- -------
44,525 18,266
------- -------
13. Provisions for Liabilities and Charges
2007 2006
#'000 #'000
Deferred Taxation 3,136 3,123
======= =======
This information is provided by RNS
The company news service from the London Stock Exchange
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