RNS Number:6759E
Sports Cafe Holdings plc
28 September 2007
Immediate Release 28 September 2007
SPORTS CAFE HOLDINGS PLC
Interim Results for the six months ended 30 June 2007
Sports Cafe Holdings plc, the owner and operator of the Sports Cafe chain of
licensed sports entertainment venues, announces its unaudited interim results
for the six months ended 30 June 2007.
Highlights
* Turnover of #7.8m (2006: #9.3m)
* Loss of #289,000 against an adjusted operating profit calculated
under IFRS of #310,000 in 2006
* Gross margin increased to 75% (2006: 74%)
* Cost base reduced by #1 million per annum following cost cutting
exercise at end of 2006
* Sale and lease back of Birmingham site following the period end
generated gross proceeds of #4.4m and enabled debt repayment of #3.25m plus
increased working capital
* Following appointment of new CEO, Peter Marks, in February, full
strategic review undertaken establishing acquisition strategy as part of growth
Commenting on Sports Cafe's results and prospects, Ian Lenagan, Chairman, said:
"The first half of 2007 was a mixed trading period during which there were no
major international sporting events, and comparable 2006 sales were boosted by
the Football World Cup. However, the reduction in the Company's gross debt in
August 2007 together with the Rugby World Cup during the second half of the year
and the Football European Cup at the end of the first half of 2008, provide
improved prospects for the remainder of this year and into 2008. Furthermore,
the revised strategy to expand the Group through acquisition is expected to
provide the basis for growth in the future."
For further information, please contact:
Sports Cafe Holdings Plc Tel: 0207 839 3377
Peter Marks, Chief Executive
Paul Wright, Finance Director
Buchanan Communications Tel: 020 7466 5000
Charles Ryland / Rebecca Skye Dietrich
Landsbanki Securities (UK) Limited Tel 020 7426 9000
Mark Dickenson / Gareth Price
Chairman's Statement -
Review of the Period
The initial months of 2007 were a period of transition for the business. Peter
Marks was appointed as Chief Executive in February and undertook a full review
of the business and the strategic opportunities available to expand the Company
and to generate increased long-term value for shareholders. This review was
undertaken against the background of the cost cutting exercise that the Board
had put in place at the end of 2006 to remove #1 million per annum from the
Company's purchasing and trading cost base.
Following Peter's review and recommendations, the Board undertook to continue
the restructuring of the Company's Balance Sheet through the sale and lease-back
of 240 Broad Street, Birmingham and at the same time to investigate acquisition
opportunities in the leasehold club, bar and pub market within the UK high
street.
The sale and lease-back of the Birmingham property was completed following the
end of the review period generating #4.4 million gross at a yield of 6.25% and
enabling the Company to reduce its total debt by this figure to #9.0 million.
The sale and lease-back has generated a book profit of #2.0 million, after
transaction costs, that will be reflected in the figures for the second half of
the year.
In accordance with IFRS, the Company has restated its comparative results for
both the 6 months ended 30 June 2006 and the full year ended 31 December 2006.
As shown in the attached notes, adjustments have been made for the contrasting
accounting treatments of goodwill and property costs under IFRS compared with UK
GAAP.
Sales for the first quarter of the year were at a similar level to 2006.
However, as previously reported, trading in April was impacted by the
unseasonably warm weather and June competed against a prior year that included
the Football World Cup. As a result, revenue for the 6-month period was #1.5
million below the corresponding period of 2006 at #7.8 million.
The Company continued to improve its purchasing position and is able to report
increased gross margin of 75% for the first half compared with 74% during the
corresponding period of 2006.
As noted above, administrative expenses were reduced by almost #500,000 during
the period compared with the 6 months ended 30 June 2006. However, as a result
of the lower level of sales the company reports a loss from operations of
#289,000 compared to a restated profit for 2006 of #310,000.
Interest payments during the period increased to #478,000 (2006 #367,000)
reflecting the impact of the capital cost of the company's expansion during 2006
and the succession of interest rate increases during the period.
The sale and lease-back of the Birmingham site enabled the company to pay down
long-term debt of #3.25m and to increase working capital in August 2007.
Together with various financial instruments that are in place, this has ensured
the Company is protected against further interest rate rises on its remaining
debt.
As at 30 June 2007, the Company had net assets of #8.6 million (2006 #10.4
million). Gearing as at 30 June increased to 60% (2006 54%) as measured by net
debt to equity employed. This ratio will fall during the 2nd half as a result of
the reduction in long-term debt noted above.
The Sports Cafe brand is well known in each of its locations and continues to
benefit from the increasing televised sporting calendar. The Board is exploring
new ways to market the business using new CRM technology to promote its events
to a targeted audience. Since the end of the review period, further senior level
changes have been made to the Operations team to drive the marketing and
delivery of the core business.
Outlook
The reduction in the Company's gross debt in August 2007 together with the Rugby
World Cup during the second half of the year and the Football European Cup at
the end of the first half of 2008 provides the Company with improved prospects
for the remainder of the year and into 2008. Furthermore the revised strategy to
expand the Group through acquisition is expected to provide the basis for growth
in the future.
Unaudited Consolidated Income Statement For the six months ended 30 June 2007
6 Months 6 Months 12 Months
ended ended ended
30-Jun-07 30-Jun-06 31-Dec-06
#'000 #'000 #'000
(Unaudited) (Unaudited & (Restated)
restated)
Revenue 7,833 9,332 18,182
Cost of sales (1,960) (2,428) (4,781)
Gross profit 5,873 6,904 13,401
Administrative expenses 3 (6,162) (6,594) (13,407)
Profit from operations (289) 310 (6)
Finance expense (478) (367) (799)
Profit before tax (767) (57) (806)
Tax expense - - -
Post-tax loss on disposal of - - (303)
discontinued operation
Loss for the period (767) (57) (1,108)
Earnings per share - continuing 2
operations
- basic (pence) (2.0p) (0.1p) (2.9p)
- diluted (pence) (2.0p) (0.1p) (2.9p)
Unaudited Consolidated Balance Sheet at 30 June 2007
As at 30 As at 30 As at 31 Dec
June 2007 June 2006 2006
#'000 #'000 #'000
(Unaudited) (Unaudited (Restated)
& restated)
Assets
Non-current assets
Property, plant and equipment (PPE) 15,402 16,837 16,150
Intangible assets 7,625 7,625 7,625
Total non-current assets 23,027 24,462 23,775
Current assets
Inventories 225 310 339
Trade and other receivables 1,246 1,256 1,176
Cash and cash equivalents 642 1,241 846
Total current assets 2,113 2,807 2,361
Total assets 25,140 27,269 26,136
Liabilities
Current liabilities
Bank overdraft 2,611 2,225 2,270
Trade and other payables 2,301 2,712 2,894
Other financial liabilities 1,165 1,346 1,185
Total current liabilities 6,077 6,283 6,349
Non-current liabilities
Financial liabilities 10,478 10,616 10,455
Total liabilities 16,555 16,899 16,804
TOTAL NET ASSETS 8,565 10,370 9,332
Capital and reserves attributable to
equity holders of the company
Share capital 1,937 1,933 1,937
Share premium reserve 5,297 5,288 5,297
Merger reserve 7,200 7,200 7,200
Retained earnings (5,869) (4,051) (5,102)
TOTAL EQUITY 8,565 10,370 9,332
Unaudited Consolidated Cash Flow Statement for the Six Months ended 30 June 2007
Note 6 Months 6 Months 12 Months
ended ended ended
30-Jun-07 30-Jun-06 31-Dec-06
#'000 #'000 #'000
(Unaudited) (Unaudited (Restated)
& restated)
Operating activities before taxation
Net loss from ordinary activities before tax (767) (57) (1,108)
Adjustments for:
Depreciation 746 706 1,464
Interest expense 478 367 799
Operating loss before changes in working 457 1,016 1,155
capital & provisions
(Increase)/decrease in trade and other (70) 7 87
receivables
Decrease/(increase) in inventories 114 (23) (52)
(Decrease) in trade and other payables (568) (281) (4)
Cash generated from operations (67) 719 1,186
Income taxes paid - - -
Cash flows from operating activities (67) 719 1,186
Investing activities
Purchases of PPE - (1,414) (1,615)
Cash flows from investing activities - (1,414) (1,615)
Financing activities
Issue of ordinary shares - - 13
Proceeds from bank borrowings - 600 600
Repayment of bank borrowings - (29) (298)
Interest paid (478) (367) (799)
(Decrease) in cash and cash equivalents 4 (545) (491) (913)
Unaudited Consolidated Statement of Changes in Equity at 30 June 2007
Share Share Merger Retained Total
capital premium reserve earnings
account
#'000 #'000 #'000 #'000 #'000
Balance at 31 December 2005 1,933 5,288 7,200 (3,994) 10,427
Loss for the period - - - (57) (57)
Balance at 30 June 2006 1,933 5,288 7,200 (4,051) 10,370
Loss for the period - - - (1,051) (1,051)
Equity share options issued 4 9 - - 13
Balance at 31 December 2006 1,937 5,297 7,200 (5,102) 9,332
Loss for the period - - - (767) (767)
Balance at 30 June 2007 1,937 5,297 7,200 (5,869) 8,565
Notes to the Interim Results for the Six Months ended 30 June 2007
1 General Notes and Accounting Policies
The interim report is being dispatched to shareholders and will be available
from the company's registered office 80 Haymarket London SW1Y 4TE.
The results for the year ended 31 December 2006 have been extracted from the
audited financial statements for that year, which have been filed with the
Registrar of Companies.
The comparatives for the full year ended 31 December 2006 are not the company's
full statutory accounts for that year. A copy of the statutory accounts for that
year has been delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and did not contain a statement under section 237(2)-(3) of the Companies
Act 1985.
The next Annual Report of the group will be prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU. The
interim results have therefore been prepared using accounting policies
consistent with IFRS.
Previously, the group reported under UK GAAP. The Group's transition date to
IFRS is 1 January 2006. The following adjustments have arisen on conversion from
UK GAAP to EU adopted IFRS:
Under UK GAAP, goodwill is amortised over its estimated useful economic life.
Under IFRS, goodwill is not amortised and is instead subject to an annual
impairment test. This has resulted in the reversal of #476,000 of goodwill
amortisation at 31 December 2006 and #238,000 at 30 June 2006.
Under UK GAAP, rent free periods are recognised in the income statement over a
period of the shorter of either the length of the lease or the date from which
prevailing market rent becomes payable. Under IFRS, rent free period are
amortised over the length of the lease. This has resulted in a reduction in the
loss reported under IFRS of #71,000 at 31 December 2006 and #35,000 at 30 June
2006.
The cash flow statement has been reformatted to comply with IFRS 7 'Cash flow
statements'. Furthermore, the adjustments to goodwill and rent free period noted
above have also warranted amendments to the reconciliation of operating profit
before taxation to cash flows generated by operating activities.
The Company has taken advantage of the exemption not to restate business
combination that occurred prior to the transition date of 1 January 2006.
Furthermore, The Company has elected to recognise all property, plant and
equipment (PPE) at its historical UK GAAP carrying value and not to measure
items of PPE at fair value on transition to IFRS.
Comparative information can be reconciled as follows:
As at 30 June As at 31 Dec As at 1
January 2006
2006 2006
#'000 #'000 #'000
Equity reported under UK GAAP 10,299 8,987 10,629
Amortisation of goodwill 238 476 -
Effect of rent free period (167) (131) (202)
Equity reported under IFRS 10,370 9,332 10,427
Notes (continued)
Loss reported under UK GAAP (330) (1,655)
Amortisation of goodwill 238 476
Effect of rent free period 35 71
Loss reported under IFRS (57) (1,108)
2 Earnings per Share
Earnings per share have been calculated using the weighted average number of
shares in issue during the relevant financial periods. The weighted average
number of shares in issue is 38,697,863 (2006 - 38,741,613) and the earnings,
being a loss on ordinary activities after taxation, are #767,000 (2006:
#1,108,000).
3 Administrative Expenses
As at 30 June As at 30 June As at 31 Dec
2007 2006 2006
#'000 #'000 #'000
(Unaudited) (Unaudited & (Restated)
restated)
Operating expenses 5,414 5,923 12,014
Depreciation 748 706 1,464
6,162 6,629 13,478
4 Analysis of Cash and Cash equivalents
As at 30 June As at 30 June As at 31 Dec
2007 2006 2006
#'000 #'000 #'000
(Unaudited) (Unaudited & (Restated)
restated)
Cash available on demand 642 1,241 846
Overdrafts 2611 2,225 2,270
Net cash increase in cash and cash (545) (491) (929)
equivalents
Cash and cash equivalents at (1,424) (495) (495)
beginning of year
Cash and cash equivalents at end of (1,969) (986) (1,424)
year
This information is provided by RNS
The company news service from the London Stock Exchange
END
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