RNS Number:7270U
Sports Cafe Holdings plc
12 April 2007
For Immediate Release 12 April 2007
Sports Cafe Holdings PLC ("Sports Cafe" or the "Company")
Preliminary Results for the year ended 31 December 2006
Sports Cafe (AIM: SCA), the owner and operator of the Sports Cafe chain of
leading licensed sports entertainment venues, announces its preliminary results
for the year ended 31 December 2006.
Highlights
* Sales increased by 29% to #18.2m (2005: #14.1m);
* EBITDA from continuing operations increased to #1.3m (2005: #980,000);
* Operating loss from continuing operations reduced to #553,000 (2005:
#692,000);
* Gross margins increased to 74% (2005: 73%);
* Bristol Sports Cafe opened and trading well;
* On-line gaming activity closed due to changes in US regulation - no impact
on continuing core business; and
* Peter Marks appointed CEO.
Commenting on Sports Cafe's results and prospects, Ian Lenagan, Chairman, said:
"I am pleased to report increased revenue and cash generation for the Company,
and the opening of Bristol Sports Cafe, bringing our estate in the UK to eight
sites. In addition, I am delighted that Peter Marks joined the Board as CEO in
February 2007, bringing with him considerable experience of expanding and
exploiting brands similar to Sports Cafe in the UK Leisure Sector. Going forward
we anticipate expanding the business both organically and through acquisitive
options."
For further information, please contact:
Sports Cafe Holdings PLC Tel: 020 7839 3377
Peter Marks, Chief Executive
Paul Wright, Finance Director
Teather & Greenwood Limited Tel: 020 7246 9000
Mark Dickenson
Gareth Price
Buchanan Communications Tel: 020 7466 5000
Charles Ryland
Rebecca Skye Dietrich
Chairman's Statement
The Company's overriding objective is to achieve sustainable growth in
shareholder value through the expansion of the existing estate, driven by a
combination of organic growth and future acquisitions.
During the year under review the Company opened its eighth Sports Cafe in
Bristol and continues to hold a lease on a property in Cardiff for the
development of a further Sports Cafe in early 2008. However, it is recognised
that there is a limited number of cities able to sustain the Sports Cafe model
of 15,000 square foot sites and the Company's strategy of expansion has been
extended to encompass complementary brands and smaller sites in the future,
capable of roll out into a significantly larger number of geographical
locations. This expansion strategy will incorporate both acquisitive and
organic growth options.
The Licensed Entertainment sector is highly fragmented in the UK with a large
number of small operators, of less than 50 operating sites, plus a small number
of larger but by no means dominant organisations within the UK market. During
2006 the sector experienced significant change as it absorbed the implications
and impact of the new licensing laws introduced in November 2005, digested the
impact of the smoking ban in Scotland and prepared itself for the smoking ban in
England and Wales to be introduced in 2007.
Given the fragmented market it is unsurprising that there has been a great deal
of consolidation and corporate activity in this sector during the last five
years and this activity is expected to continue in the foreseeable future.
Review of Current Financial Position
Sales for the year ended 31 December 2006 increased by 29% to #18.2 million,
whilst like-for-like sales were at a similar level to that of 2005. Gross
margins increased to 74%, reflecting Sports Cafe's improved purchasing power and
more targeted promotional activity.
Profit before Interest, Tax, Depreciation and Amortisation (EBITDA) from
continuing businesses was #1,387,000, compared with #980,000 in the previous
year. During the year the Company incurred a Loss on Termination of operation
following the closure of its on-line gaming activity, totalling #303,000. The
closure of this business followed the enactment of new legislation in the US
concerning the legality of on-line gaming where it involved US residents and, in
the opinion of the Directors, the implications of this legislation made the
Company's on-line activities commercially unviable. The closure of the on-line
gaming operation has not impacted the Company's continuing core business.
The Operating Loss, after charging #1.94 million depreciation and amortisation
(2005: #1.7 million) was #553,000 from continuing businesses (2005: #692,000)
and #718,000 after absorbing the cost of the discontinued operation (2005:
#692,000).
Whilst the second half of 2006 restricted the short-term growth of the business
and prevented the Company from moving into profitability for the whole year,
operating activities generated #1.2 million of cash and the Company remained
within the terms of its banking covenants.
The Company has grown using its operational cash generation together with
long-term debt funding to create the existing eight site, #18 million turnover
business. As disclosed to the market in January 2007, the Directors carried out
a review of future strategy and financing options at the end of 2006, including
but not limited to the sale and leaseback of its Birmingham site at 240 Broad
Street. These options will allow the Company to restructure its Balance Sheet
and continue the expansion of the Company's estate in line with the strategy
outlined above.
Dividend
As previously reported, the strategy of the Company in the short to medium term
is to continue the expansion of the operating group. In order to retain cash to
finance this growth the Directors do not recommend payment of a dividend for the
period.
Employees
Following the opening of the Sports Cafe in Bristol and the Betting Shop in
Birmingham, the average number of employees within the consolidated Group
increased to 468 during 2006 (2005: 354). The commitment of our staff to the
Sports Cafe brand and its values remains outstanding and on behalf of the Board,
I would like to thank all of our staff for their contribution throughout the
year and into 2007.
Board Changes
In February 2007 I announced the appointment of Peter Marks as Chief Executive
of the Company was announced. It was also announced that Bill Balkou, who has
stepped down as Chief Executive, had agreed to remain on the Board in the newly
created role of Development Director.
I am delighted that Peter has joined the Board, bringing with him considerable
experience of expanding and exploiting brands similar to Sports Cafe in the UK
leisure sector. He has the required experience including senior positions with
Northern Leisure plc and Luminar plc and will lead the company in its important
next phase of development.
Bill Balkou has been the architect and driving force behind the development of
Sports Cafe into an internationally recognized brand and a premier sports venue
for fans and the media during his eleven years as Chief Executive. On behalf of
the Board I should like to thank Bill for his contribution to the Company during
this period.
The Board believes that Peter Marks will be a valuable addition to the Company
as we embark on a strategy to expand through organic and acquisitive growth,
including the potential integration of other operations. Peter has many years
of experience in consolidating groups within our sector and his experience in
this area will be valuable in executing the Board's strategy.
Current Trading Prospects
The expansion of the Sports Cafe estate during the last three years has created
a resilient, and cash generative operating base from which to expand the
business and generate earnings for shareholders. Following a quiet start to
2007, sales have improved in March to the strong levels achieved in March 2006.
As a result of the review of expenditure carried out at the end of 2006 both
gross and operating margins for the quarter have improved compared to the
corresponding period in 2006.
On 1 July 2007 the smoking ban will be implemented in England and the Company is
taking steps to minimise the possible impact of this event. It is anticipated
that the sector as a whole will suffer a short-term decrease in sales of
approximately 5% but that overall sales will return to previous levels within a
three to six month period.
The Company looks forward to a strong year of sport during 2007, in particular
the Rugby World Cup to be held in France during an 8-week period in the autumn,
which is expected to give a boost to the Company's second half trading.
The establishment of Sports Cafe's core eight site business generating positive
cash flow, together with the growth and acquisition strategy set out above
provides the company with good prospects for the current financial year and into
the future.
Ian Lenagan - Chairman
12 April 2007
Consolidated Profit and Loss Account
for the year ended 31 December 2006
2006 2005
Note Total Total
#000 #000
Group turnover 18,182 14,118
Cost of sales (4,781) (3,853)
Gross profit 13,401 10,265
Administrative expenses (13,954) (10,957)
Operating loss from continuing businesses (553) (692)
Operating loss from discontinued activities (165) -
Group operating loss (718) (692)
Loss on termination of operation (138) -
Loss on ordinary activities before interest and taxation (856) (692)
Interest payable (799) (710)
Loss on ordinary activities before taxation (1,655) (1,402)
Tax on loss on ordinary activities - 50
Loss for the year (1,655) (1,352)
Loss per share-basic and diluted 2 (4.3p) (3.5p)
Loss per share-basic and diluted -
continuing operations 2 (3.5p) (3.5p)
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 results as disclosed in the profit and loss account are prepared on an unmodified
historical cost basis.
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2006
Group Group Company Company
2006 2005 2006 2005
#000 #000 #000 #000
Loss for the financial year (1,655) (1,352) (441) (310)
Issue of ordinary shares for cash 13 - 13 -
Net reduction in shareholders' funds (1,642) (1,352) (428) (310)
Opening shareholders' funds 10,629 11,981 13,493 13,803
Closing shareholders' funds 8,987 10,629 13,065 13,493
Consolidated Balance Sheet
at 31 December 2006
2006 2005
#000 #000 #000 #000
Fixed assets
Intangible assets 7,149 7,625
Tangible assets 16,150 16,130
23,299 23,755
Current assets
Stocks 339 287
Debtors 1,176 1,263
Cash at bank and in hand 846 950
2,361 2,500
Creditors: amounts falling
due within one year (6,219) (5,012)
Net current liabilities (3,858) (2,512)
Total assets less current 19,441 21,243
liabilities
Creditors: amounts falling due
after more than one year (10,454) (10,614)
Net assets 8,987 10,629
Capital and reserves
Called up share capital 1,937 1,933
Share premium account 5,297 5,288
Merger reserve 7,200 7,200
Profit and loss account (5,447) (3,792)
Equity shareholders' funds 8,987 10,629
Consolidated Cash Flow Statement
for the year ended 31 December 2006
Note 2006 2005
#000 #000
Cash flow statement
Cash flow from operating activities 3 1,186 1,079
Returns on investments and servicing of finance (799) (710)
Capital expenditure (1,615) (4,963)
Cash outflow before management of liquid resources and (1,228) (4,594)
financing
Financing 315 4,042
Decrease in cash in the period (913) (552)
Reconciliation of net cash flow to movement in net debt 4
Decrease in cash in the period (913) (552)
Cash flow from debt and lease financing (302) (4,042)
Movement in net debt in the year (1,215) (4,594)
Net debt at the start of the year (11,560) (6,966)
Net debt at the end of the year (12,775) (11,560)
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 12 April 2006 has been prepared on the basis of
accounting policies set out in the accounts for the year ended 31 December 2006,
does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985.
The financial information for the year ended 31 December 2006 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 ordinary share is based on the group's loss of
#1,655,000 (2005: loss #1,352,000).
The weighted average number of shares used in the calculation are: basic and
diluted 38,697,863 (2005: basic and diluted 38,666,613).
Earnings per share for discontinued activities was a 0.8 pence loss per share on
both a basic and diluted basis (2005: nil) based on a loss of #303,000.
2,168,000 anti-dilutive share options were excluded from the calculation of EPS
(2005: 2,043,000).
Note 3 - Reconciliation of Operating Loss to Operating Cash Flows
2006 2005
#000 #000
Operating loss
(553) (692)
Loss on termination of operation (303) -
Depreciation and amortisation charges 1,940 1,672
Increase in stocks (52) (72)
Decrease/ (Increase) in debtors 87 (100)
Increase in creditors 67 271
Net cash outflow from operating activities 1,186 1,079
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 950 (104) 846
Overdrafts (1,445) (809) (2,254)
(495) (913) (1,408)
Debt due after one year (10,265) 40 (10,225)
Debt due within one year (800) (342) (1,142)
Total (11,560) (1,215) (12,775)
Note 5 - Annual Report
A copy of the Annual Report and Accounts will be sent to all shareholders on 16
April 2006 and will be available from the Company's registered office at 80
Haymarket, London.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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