Arena Leisure PLC - Interim Results
RNS Number:4732C
Arena Leisure PLC
01 September 2004
Arena Leisure Plc ('Arena' or the 'Group')
Interim results for the six months ended 30 June 2004
Highlights
*Pre-tax results excluding goodwill amortisation at breakeven (2003: £1.8m
loss)
*Pre-tax loss reduced by 88% to £0.2m (2003: £2.0m)
*Racecourse operating profit held at £3.7m, with underlying increase of
16% allowing for loss of old attheraces income and changes to industry
funding of £0.6m (2003: £3.8m)
*Commencement of new At The Races on 11 June 2004
*Arena's share of At The Races losses reduced to £3.0m including closure
of old attheraces (2003: £5.6m)
*Arena Online profits of £0.4m and closed in June 2004 (2003: £0.6m)
*Capital expenditure of £5.8m, including £4.6m on the ongoing
redevelopment of grandstand facilities at Lingfield Park
*Bank and other debt remains low at £2.4m (31 December 2003 £0.5m deposit)
Commenting on the interim results, Ian Penrose, Arena's Chief Executive said:
'These results reflect the changing emphasis of Arena's focus as we move
forward. Our racecourse business continues to make good positive progress. The
new At The Races has made a strong start and is pursuing its rebate claim
following the closure of old attheraces. With an ongoing investment program into
our spectator and racing facilities, we view the future with confidence.'
- ends -
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
Chairman's Statement
Introduction
I am pleased to announce our results for the six months to 30 June 2004, during
which period we have made significant progress. We continue to move our emphasis
onto our core operating assets and our racecourse division has once again
delivered strong results. We have withdrawn from our involvement in technology
and, together with BSkyB, have put At The Races on a sound business and
financial footing.
Financial Review
The unaudited interim results for the six months ended 30 June 2004 show a 1%
increase in turnover to £19.3m from £19.1m in the same period last year,
reflecting a 12% increase in racecourse turnover and a 57% reduction in turnover
from our now closed technology operations. Operating profit from our racecourse
operation was held at £3.7m, which, allowing for reductions in racecourse
receipts from attheraces and central industry funding of £0.6m, represented a
16% underlying increase on 2003. Operating profit from our now closed gaming
technology business reduced by 33% to £0.4m and central costs remain tightly
controlled at £1.1m. The Group share of the losses and closure costs of the old
attheraces business was £3m, reduced from £5.6m last year. Overall pre-tax
losses have been reduced by 88% to £0.2m.
Racing Review
Our racecourse division has produced very encouraging results in a period of
major change and uncertainty in the racing industry. We took early action to
address the inevitable reductions in income that was going to accrue to our
racecourses as a consequence of the termination of the attheraces media rights
contract, associated ongoing costs and the removal of industry funding for
starting stalls. The above items reduced our income for the half year by
£600,000 and we are pleased that our racecourses delivered operating profits of
£3.7m, compared to £3.8m last year; an effective underlying increase of 16%.
Prize money paid out at our courses during this period increased from £5.7m to
£5.9m.
We are delighted that our race meetings continue to prove increasingly popular
with owners, trainers and racegoers. Our third all-weather Championships,
sponsored again by Littlewoods Bet Direct, culminated in March with the richest
race day in the history of all weather racing when prize money in excess of
£250,000 was awarded.
Racecourse Developments
We have continued with our strategy of investing in our racecourses to improve
both the quality and experience for our wider customer base. Lingfield Park is
nearing the completion of a £6m investment in the grandstand, atrium, bars,
restaurants, parade ring and landscaping. The building works have caused a
significant degree of disruption to the business operations and we thank our
staff for their efforts and customers for their patience during this
construction phase.
We are at an advanced stage in the installation of a £3m world leading polytrack
racing surface at Wolverhampton. Shortly, work will commence at Southwell on
reconstructing the base of the fibresand racing surface, at a cost of £1.5m.
Together with further improvements in our spectator facilities, we will enter
2005 looking to build upon the quality of facilities in place across our
racecourses.
Following a lengthy and detailed planning application and consultation process,
Wolverhampton racecourse received planning approval from Wolverhampton City
Council in January 2004 for the development of an integrated sports, leisure and
gaming destination. The development which will include the building of a 40,000
sq ft casino, doubling the size of the existing hotel to 106 bedrooms, together
with the creation of dedicated trainers and owners facilities at the racecourse,
is planned to be the first integrated development of its type in the UK. The
planning approval was subsequently 'called in' for review by the Government
Office for the West Midlands and we have engaged all the appropriate
professionals to represent us at the Inquiry which is scheduled for the end of
November. We will update on progress as appropriate.
Further work on development opportunities around our racecourses continues.
The Office of Fair Trading ('OFT') and Arena
Following a process which has been ongoing for four years, we were pleased that
the Office of Fair Trading ('OFT) has reached a preliminary agreement with the
British Horseracing Board ('BHB') regarding future shape and regulation of
British horseracing. Many of these changes will take effect from 1 January 2006,
and Arena looks forward to developing the commercial opportunities that will
arise.
At The Races Review
The business formally known as attheraces terminated the Media Rights Agreement
with the Racecourse Association ('RCA') and the 49 racecourses on 29 March 2004
as a consequence of contractual clauses relating to the Tote's betting margin.
In addition, the OFT ruled that, by selling their rights on a collective basis,
the 49 UK racecourses restricted competition between them when supplying
attheraces and that, as a result, attheraces had to pay more for the rights than
would be the case if there was effective competition.
As a consequence of the above, in August 2004 At The Races commenced proceedings
to recover its rights to receive rebates exceeding £50m.
Strategically, we wish to ensure that live coverage of Arena's race meetings are
made available to the widest possible audience. This will attract new people
into the sport and onto our racecourses, enhance the value of sponsorship and
advertising packages to our customers, and provide betting opportunities for the
wider population away from the racecourses, revenues from which will be
distributed back to our racecourses under a fair and commercial mechanism in
future years. As a consequence, Arena and BSkyB came together to form At The
Races and has secured the media rights to Ascot, Northern Racing Plc, Newton
Abbot, the GG Media courses and the exclusive satellite and cable rights to
Irish racing. The UK's only dedicated television channel for racing is broadcast
on Sky channel 415, telewest 534 and ntl 908, available to over nine million
homes and a potential audience exceeding 20 million people. Racing is made
available to international territories through a partnership with SIS, the
company who broadcast racing's pictures to the bookmaker shops in the UK, whose
largest shareholders include Ladbrokes and William Hill.
With the first rights payments expected to flow to the At The Races associated
racecourses in October, strong partnerships domestically and globally, legal
proceedings commenced for recovery of rebates, and the At The Races business
being financially stable, we are pleased with the major progress that has been
made.
Technology Review
In line with Arena's strategic aims, Arena Online Services was closed in June
2004.
Acquisitions
Arena is delighted that following a lengthy and exceedingly competitive tender
process, we were nominated as the preferred bidder to enter into a joint venture
partnership with Doncaster Metropolitan Borough Council ('DMBC') to acquire and
develop Doncaster racecourse the home of the world's oldest classic horserace,
the St Leger. Due diligence is underway and we would anticipate a successful
completion later in the Autumn.
We continue to look at a number of other acquisition and development
opportunities to further develop the Group.
Dividend
On 11 August 2004, Arena was granted court approval to cancel its share premium
account and subject to meeting the court's provisions, it will be transferred to
profit and loss account reserves at 31 December 2004. The Board does not intend
to pay a dividend for the six months ended 30 June 2004 but anticipates that if
trading continues in the current manner, Arena will pay its maiden dividend for
the full year.
Looking Ahead
The Group has made considerable progress over recent months and we expect this
to continue in line with our stated strategy. The Board views the future with
confidence.
Roger D Withers
Chairman
1 September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Note Unaudited Unaudited Audited
£000 £000 £000
Turnover 4 19,288 19,105 34,302
---------- --------- ----------
EBITDA 3,621 4,143 (17,657)
Depreciation (645) (742) (1,616)
Amortisation (154) (154) (308)
---------- --------- ----------
Operating profit/(loss) 4 2,822 3,247 (19,581)
Share of operating loss in:
Joint venture (3,031) (5,573) (21,215)
Associate 9 (10) (22)
Goodwill amortisation in
respect
of joint venture (42) (113) (226)
Goodwill impairment in
respect of
joint venture - - (1,794)
---------- --------- ----------
Total operating loss:
Group and share of joint
ventures
and associates (242) (2,449) (42,838)
Income from other fixed asset
investments - 307
Net interest (payable)/
receivable (3) 432 554
---------- --------- ----------
Loss on ordinary activities
before taxation (245) (2,017) (41,977)
Taxation 2 - (443) (200)
---------- --------- ----------
Loss on ordinary activities
after
taxation (245) (2,460) (42,177)
---------- --------- ----------
Pence Pence Pence
Basic and diluted loss per
share 3 (0.07) (0.68) (11.7)
---------- --------- ----------
All amounts relate to continuing activities.
All recognised gains and losses are included within the profit and loss account
CONSOLIDATED BALANCE SHEET
At At At
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000 £000 £000
Fixed assets
Intangible assets - goodwill 4,724 5,032 4,878
Tangible assets 60,932 55,712 55,834
--------- -------- ----------
Investments - In associate 347 350 338
- other 345 345 345
--------- -------- ----------
692 695 683
--------- -------- ----------
66,348 61,439 61,395
Current assets
Stock 50 44 55
--------- -------- ----------
Debtors - due within one year 5,329 4,386 3,176
- due after more than one year - 57,235 -
--------- -------- ----------
5,329 61,621 3,176
--------- -------- ----------
Blocked bank deposit - 2,765 1,365
Cash at bank and in hand - 42 1,284
--------- -------- ----------
- 2,807 2,649
--------- -------- ----------
5,379 64,472 5,880
Creditors: amounts falling due within
one year (13,235) (10,902) (9,586)
--------- -------- ----------
Net current (liabilities)/assets (7,856) 53,570 (3,706)
Total assets less current liabilities 58,492 115,009 57,689
Creditors: amounts falling due after
one year
--------- -------- ----------
Share of gross assets in joint venture 3,414 24,942 5,006
Share of gross liabilities in joint
venture (9,449) (45,578) (41,464)
--------- -------- ----------
(6,035) (20,636) (36,458)
Arena Leisure Plc loans to joint
venture - - 33,968
Goodwill in respect of joint venture 2,497 1,906 -
--------- -------- ----------
(3,538) (18,730) (2,490)
Other (3,302) (4,665) (3,302)
--------- -------- ----------
(6,840) (23,395) (5,792)
--------- -------- ----------
Net assets 51,652 91,614 51,897
--------- -------- ----------
Capital and reserves
Called up share capital 18,075 18,075 18,075
Share premium account 87,625 87,625 87,625
Merger reserve 5,417 5,417 5,417
Other reserves 15 15 15
Profit and loss account (59,480) (19,518) (59,235)
--------- -------- ----------
Shareholders' funds 51,652 91,614 51,897
--------- -------- ----------
All shareholders' funds are equity.
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Note Unaudited Unaudited Audited
£000 £000 £000
Net cash inflow from
operating activities 5 3,595 4,765 7,783
Returns on investment and servicing
of finance
Interest received 46 546 990
Interest paid (49) (114) (257)
Dividends received - - 307
---------- ---------- ----------
(3) 432 1,040
Taxation
Taxation paid - - -
---------- ---------- ----------
Capital expenditure and financial
investment
Purchase of tangible
fixed assets (5,840) (1,658) (2,689)
Sale of tangible fixed
assets 67 37 130
Loans to joint venture - (7,735) (9,135)
---------- ---------- ----------
(5,773) (9,356) (11,694)
---------- ---------- ----------
Acquisition and disposals
Investment in joint
venture (2,025) - -
---------- ---------- ----------
Net cash outflow before
financing (4,206) (4,159) (2,871)
---------- ---------- ----------
Management of liquid resources
Withdrawals from short
term deposits 1,365 7,735 9,135
---------- ---------- ----------
Financing
Repayment of loans (2) (2,552) (3,476)
---------- ---------- ----------
(Decrease)/Increase in
cash (2,843) 1,024 2,788
---------- ---------- ----------
NOTES TO THE ACCOUNTS
1. There have been no changes to the accounting policies of the group as set out
in the financial statements for the period ended 31 December 2003.
2. The tax charge for the period is nil due to the availability of tax losses.
3. 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 June 2004 is 361,495,535 (six months
ended 30 June 2003: 361,495,535). There are no potentially dilutive shares in
issue.
4. Segmental Information
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
Turnover £000 £000 £000
Racecourse operations 17,995 16,126 29,094
Gaming technology 1,293 2,979 5,208
---------- ---------- ----------
19,288 19,105 34,302
---------- ---------- ----------
Operating Profit
Racecourse operations 3,677 3,767 7,021
Gaming technology 430 646 1,438
Central costs -
excluding (1,131) (1,012) (2,015)
exceptional items
Exceptional items - - (25,717)
Goodwill amortisation (154) (154) (308)
---------- ---------- ----------
2,822 3,247 (19,581)
---------- ---------- ----------
Operating profit is stated before group management charges and income within
each business segment.
5. Reconciliation of operating profit to net cash flow from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000 £000 £000
Operating profit/(loss) 2,822 3,247 (19,581)
Depreciation charges 645 742 1,616
Amortisation of goodwill 154 154 308
Loss/(Profit) on
disposal
of tangible fixed assets 30 (9) (67)
Decrease/(increase) in
stocks 5 (3) (14)
Increase in debtors (2,153) (895) 315
Increase in creditors 2,092 1,529 539
Provision against loans
to At The Races - - 24,667
---------- ---------- ----------
Net cash inflow from
operating activities 3,595 4,765 7,783
---------- ---------- ----------
6. Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
£000 £000 £000
(Decrease)/Increase in
cash in the period (2,843) 1,024 2,788
Cash outflow from
reduction in debt 2 2,552 3,476
---------- --------- ----------
Change in net debt
arising from cash flows (2,841) 3,576 6,264
Opening net funds/
(debt) 472 (5,792) (5,792)
---------- --------- ----------
Closing net (debt)/
funds (2,369) (2,216) 472
Blocked bank deposit - 2,765 1,365
---------- --------- ----------
Net (debt)/funds
(including blocked bank
deposit) (2,369) 549 1,837
---------- --------- ----------
7. The figures for the year ended 31 December 2003 have been extracted from the
accounts, which have been filed with the Registrar of Companies. The auditors'
report on these accounts was unqualified and did not contain a statement under
Section 237. These accounts do not comprise statutory accounts within the
meaning of Section 240.
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The company news service from the London Stock Exchange
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