RNS Number:4006A
Sports Cafe Holdings plc
27 March 2006
For Immediate Release 27 March 2006
Sports Cafe Holdings Plc ("Sports Cafe" or the "Group")
Preliminary Results for the year ended 31 December 2005
Sports Cafe (AIM: SCA), the owner and operator of the Sports Cafe chain of
leading licensed sports entertainment venues, announces preliminary results for
the year ended 31 December 2005.
Highlights
* Sales increased by 26% to #14.1m (2004: #11.2m)
* EBITDA of #980,000 (2004: #935,000)
* Operating loss of #692,000 (2004:#506,000)
* New sites opened in Liverpool and Newcastle
* Roll-out of new sites identified - sites already secured in:
- Bristol - March 29 2006
- Cardiff - anticipated opening 2007
* Launch of on-line Sports Cafe branded casino and poker sites
* Strategic partnership to create Sports Cafe Bet
- First site opened in Birmingham in February 2006
Commenting on Sports Cafe's results and prospects, Ian Lenagan, Chairman, said:
"The expansion of the restaurant and bar estate into the cities of Liverpool and
Newcastle brings the total estate to seven sites around the UK. The roll out of
additional sites and further expansion of our Betting Shops and related gaming
activities enables the Board to remain confident about the prospects of the
Group during 2006 and beyond."
For further information, please contact:
Sports Cafe Holdings Plc Tel: 020 7839 3377
Bill Balkou, Chief Executive
Paul Wright, Finance Director
Buchanan Communications Tel: 020 7466 5000
Charles Ryland
Rebecca Skye Dietrich
Chairman's Statement
Review of the Year
During a year of significant change within the high street leisure sector,
Sports Cafe continued its expansion programme, opening new sites in Liverpool
and Newcastle in line with the expectations that were set out in my statement in
2005. As a result of these two new openings I am pleased to report that turnover
increased by a healthy 26% to #14.1m and that the Group has now established the
foundations of a national estate serving customers and sports fans in major
cities throughout the UK.
The economic slow down during the second half of 2005 combined with licensing
changes and the summer impact of the London bombings created quieter trading
conditions than in previous years. As a result like-for-like sales were down by
5% compared with 2004 as previously announced, which had enjoyed the additional
benefit of Euro 2004. However, like-for-like sales were at 2003 levels,
demonstrating the impact of major international sporting events on our business.
As we move forward the prospect of the Football World Cup in 2006 and Rugby
World Cup in 2007, and Euro 2008 during the next three years creates an
extremely attractive sports calendar for the Sports Cafe concept and brand.
In addition to the opening of the two new sites in Liverpool and Newcastle, the
Group signed a lease on a property in Bristol during October 2005 and licensing
issues at the proposed Cardiff site were satisfactorily resolved. This will
ensure an estate covering eight cities in advance of the 2006 World Cup and the
roll out is expected to continue in preparation for the 2007 Rugby World Cup.
During 2005, Sports Cafe made its initial move to expand its sports brand and
deliver added value to its existing and potential customer base through the
creation of an online Casino and Poker site and, in a strategic partnership with
Betting Shop Services Ltd to create Sports Cafe Bet, whose first site in
Birmingham opened in February 2006. The creation of these two activities is in
response to our customer's sports profile and will, in the Board's opinion,
provide the opportunity for the Group to expand the Sports Cafe brand across a
wider segment of the leisure industry using sport as its primary driver.
The expansion of the Sports Cafe brand across a wider segment of the leisure
industry together with its attraction to corporate customers for major sporting
events has enabled the Group to increase its margins during 2005 and to resist
the heavy discounting reported by the media in many parts of the marketplace.
In addition to the openings during 2005, refurbishment work was undertaken in
Birmingham and Manchester to ensure the continuity and attraction of the Sports
Cafe brand and to continue to enhance the experience of our customers and sports
fans at all times.
Industry Overview
During 2005 the high street leisure sector experienced further consolidation in
a highly competitive marketplace. In addition to the increased competition posed
by high street supermarket chains, the sector experienced significant regulatory
change that culminated in the licensing reform that took effect in November
2005.
Whilst the operating environment during 2005 and particularly in the latter part
of the year, was difficult for high street operators the changes that took place
during the year are expected to lead to further rationalisation within the
sector, which will in turn create opportunities for us to extend the Sports Cafe
brand within the UK market.
Operational Review
The Sports Cafe brand remains strong within the UK market place and all our
sites benefit from their city centre locations. The expansion into Liverpool and
Newcastle during the year has extended the reach of the Sports Cafe brand into
two key sporting cities, and during the final quarter of 2005 enabled us to
generate weekly gross sales in excess of #400,000. This increased size and our
continuing strategy to avoid discounting where possible enabled us to increase
the gross margin to 73% (2004: 72%).
In addition to the two new sites, minor refurbishments were carried out at the
Birmingham and Manchester sites at a combined cost of approximately #150,000.
Following this work all Sports Cafe sites have now been opened or refurbished
within the last two years.
In spite of a strong start to 2005 and the positive effect of the Ashes series
during the late summer months, trading weakened from late September until the
Christmas period impacting on results. Since January 2006 trading has returned
to expected levels with like-for-like sales at a similar level to the strong
trading in the first quarter of 2005.
During 2005, the London Sports Cafe celebrated its tenth anniversary providing a
significant landmark for the Sports Cafe brand in the UK. The longevity and
continued success of the brand provides the opportunity to add related business
streams in the future and provide additional sports and leisure facilities to
our customers.
Financial Results
Sales for the year ended 31 December 2005 increased by 26% to #14.1m whilst
like-for-like sales fell by 5% compared with 2004. However, like for like sales
in 2004 had risen by 8% compared with 2003 principally as a result of Euro 2004
and in comparing the similar sporting years of 2005 and 2003 like-for-like sales
were marginally improved.
Profit before interest, tax, depreciation and amortisation (EBITDA) was #980,000
compared with #935,000 in the previous year. As anticipated in my previous
statements Head Office costs remained stable at #1.1m as the existing
infrastructure absorbed additional sites.
Operating Loss, after charging #1.7m depreciation and amortisation (2004: #1.4m)
was #0.7m (2004:#0.5m)
At 31 December 2005 the Group had net assets of #10.6m (2004: #12.0m). Capital
expenditure during the year in respect of the two new units and the
refurbishment of Manchester and Birmingham was #5.0m (2004: #4.4m). Much of this
expenditure was financed by long-term loans from Barclays Bank which increased
to #11.0m (2004: #6.9m) during the year. As a result of the increased long term
bank debt to finance our roll out programme, operational gearing defined as long
term debt excluding property mortgages divided by equity shareholders funds plus
long term debt excluding property mortgages, increased to 40% (2004: 21%) and
total gearing, as defined above but including property mortgages rose to 54%
(2004: 38%) at 31 December 2005.
During the year the Group renegotiated its bank facilities with Barclays to
increase its committed facilities to #14.6m (2004: #10.9m) in order to ensure
sufficient headroom for the continued roll out of Sports Cafe sites in the UK.
Dividend
As previously reported the strategy of the company in the short and medium term
is to continue with the roll out and expansion of the Sports Cafe Group. In
order to retain cash to finance this growth the directors do not recommend a
payment of a dividend for the period.
Employees
Following the opening of Sports Cafes in Liverpool and Newcastle the average
number of employees within the Group has increased to 354. The enthusiasm and
commitment of our staff to the Sports Cafe brand and its customers is
outstanding and on behalf of the Board I would like to thank all of our staff
for their contribution throughout 2005 and into 2006.
Current Trading Prospects
The expansion of the restaurant and bar estate together with the initial
expansion into related activities has created a strong base on which Sports Cafe
can develop its business and improve performance. During the first ten weeks of
the current financial year, trading has improved with like-for-like sales in
line with the corresponding period in 2005. The new site in Bristol opens on 29
March 2006 and is expected to contribute to trading and profitability during
2006.
The World Cup in Germany this summer is expected to have a positive impact on
the trade of Sports Cafe and a successful national team will promote long-term
interest in sporting events as demonstrated by the impact of England's rugby
success in 2003.
The controlled roll out of additional sites in major locations and further
expansion of Sports Cafe Betting Shops and related gaming activities enables the
Board to remain confident about the prospects of the Group during 2006 and
beyond.
Consolidated Profit and Loss Account
for the year ended 31 December 2005
Note 2005 2004
#000 #000
Group turnover 14,118 11,228
Cost of sales (3,853) (3,149)
Gross profit 10,265 8,079
Administrative expenses (10,957) (8,585)
Group operating loss (692) (506)
Interest Payable (710) (352)
Loss on ordinary activities before (1,402) (858)
taxation
Tax on loss on ordinary activities 50 151
Loss for the year (1,352) (707)
Loss per share-basic and diluted 2 (3.50p) (1.83p)
A statement of total recognised gains and losses has not been included as part
of these consolidated financial statements as the group made no gains or losses
in the period other than disclosed above in the profit and loss account.
A note on historical gains and losses has not been included as part of the
consolidated financial statements as the result as disclosed in the profit and
loss account are prepared on an unmodified historical cost basis
The results stated above are derived from continuing operations.
Reconciliations of Movements in Shareholders' Funds
for the year ended 31 December 2005
Group Group Company Company
2005 2004 2005 2004
#000 #000 #000 #000
Loss for the financial year (1,352) (707) (310) (233)
Net reduction in shareholders' (1,352) (707) (310) (233)
funds
Opening shareholders' funds 11,981 12,688 13,803 14,036
Closing shareholders' funds 10,629 11,981 13,493 13,803
Consolidated Balance Sheet
at 31 December 2005 2005 2004
#000 #000 #000 #000
Fixed assets
Intangible assets
Goodwill 7,625 8,101
Tangible assets 16,130 12,363
23,755 20,464
Current assets
Stocks 287 215
Debtors 1,263 1,163
Cash at bank and in
hand 950 599
2,500 1,977
Creditors: amounts
falling due within one year (5,012) (2,994)
Net current
liabilities
Due within one year (2,512) (1,109)
Debtors due after
more than one year - 92
(2,512) (1,017)
Total assets less
current liabilities 21,243 19,447
Creditors: amounts
falling due after
more than one year (10,614) (7,416)
Provisions for
liabilities and
charges - (50)
Net assets 10,629 11,981
Capital and reserves
Called up share capital 1,933 1,933
Share premium account 5,288 5,288
Merger reserve 7,200 7,200
Profit and loss account (3,792) (2,440)
Equity shareholders' funds 10,629 11,981
These financial statements were approved by the board of directors on 24 March 2006
and were
signed on its behalf by:
IF LENAGAN PK WRIGHT
Director Director
Company Balance Sheet
at 31 December 2005
2005 2004
#000 #000 #000 #000
Fixed assets
Investments 8,000 8,000
Current assets
Debtors 16,860 6,091
Creditors: amounts
falling
due within one year (1,062) (288)
Net current assets
Due within one year (1,053) (274)
Debtors due after more
than one year 16,851 6,077
15,798 5,803
Total assets less
current liabilities 23,798 13,803
Creditors: amounts
falling due
after more than one
year (10,305) -
Net assets 13,493 13,803
Capital and reserves
Called up share capital 1,933 1,933
Share premium 5,288 5,288
Merger reserve 7,200 7,200
Profit and loss account (928) (618)
Equity shareholders'
funds 13,493 13,803
These financial statements were approved by the board of directors on 24 March 2006
and were
signed on its behalf by:
IF LENAGAN PK WRIGHT
Director Director
Consolidated Cash Flow Statement
for the year ended 31 December 2005
Note 2005 2004
#000 #000
Cash flow statement
Cash flow from operating activities 3 1,079 1,685
Returns on investments and servicing of
finance (710) (352)
Capital expenditure (4,963) (4,423)
Cash outflow before management of liquid
resources and
financing (4,594) (3,090)
Management of liquid resources - -
Financing 4,042 3287
(Decrease) / Increase in cash in the period (552) 197
Reconciliation of new cash flow to movement
in net debt
Increase in cash in the period (552) 197
Cash flow from debt and lease financing (4,042) (3,287)
Cash flow in respect of liquid resources
Movement in net debt in the year (4,594) (3,090)
Net debt at the start of the year (6,966) (3,876)
Net debt at the end of the year 4 (11,560) (6,966)
Notes to the accounts
Note 1 - Publication of non-statutory accounts
The financial information set out in this preliminary announcement, which was
approved by the directors on 24 March 2005 has been prepared on the basis of
accounting policies set out in the accounts for the year ended 31 December 2005,
does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985.
The financial information for the year ended 31 December 2005 has been extracted
from the Group's financial statements to that date which have received an
unqualified auditors' report but have not yet been delivered to the Registrar of
Companies.
Note 2 - Loss per share
The calculation of basic loss per share is based on a loss of #1,352,000
(2004: #707,000). The weighted number of shares used in the calculation are,
basic and diluted 38,666,613 (2004: 38,666,613).
Note 3 - Reconciliation of Operating Loss to Operating Cash Flows
2005 2004
#000 #000
Operating loss (692) (506)
Depreciation and amortisation charges 1,672 1,441
(Increase) in stocks (72) (103)
(Increase) in debtors (100) (388)
Increase in creditors 271 1,241
Net cash outflow from operating activities 1,079 1,685
Note 4 - Analysis of Net Debt
At beginning At end
of
of year Cash flow year
#000 #000 #000
Cash in hand, and at bank 599 351 950
Overdrafts (492) (953) (1,445)
107 (602) (495)
Debt due after one year (7,023) (3,242) (10,265)
Debt due within one year (50) (750) (800)
Total (6,966) (4,594) (11,560)
Note 5 - Annual Report
A copy of the Annual Report and Accounts will be sent to all shareholders on 31
March 2006 and will be available from the Group's registered office at
80 Haymarket, London SW1Y 4TE.
This information is provided by RNS
The company news service from the London Stock Exchange
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