Final Results

Stagecoach Theatre Arts PLC 10 August 2004 Stagecoach Theatre Arts plc - Final Results 10th August 2004 Stagecoach Theatre Arts plc ('Stagecoach Theatre Arts', 'Stagecoach' or the 'Group') Preliminary Announcement of Final Results for the year ended 31st May 2004 Stagecoach Theatre Arts reports a year of continued expansion and top-level growth. The Group has maintained its high levels of educational quality, whilst developing new business opportunities. Stagecoach Theatre Arts was founded in 1988 and operates the UK's largest franchise network of part-time performing arts schools for young people aged between 4 and 16. A summary of the Group's results and achievements during the year is as follows: Franchise network turnover up 20% to £18.7m (unaudited) Profit before tax £0.3m (2003: £0.8m) Final dividend of 2 pence per share (2003: 2 pence) 491 Stagecoach schools and 493 Early Stages classes (2003: 456 schools and 429 Early Stages) 28,500 Stagecoach students across the UK (2003: 26,200 students) 23 SportsCoach schools and 842 students (2003: 10 schools and 326 students) Mini Stages pilot schools launched, 11 classes at year end A number of high profile successful events and productions Since the year-end, further developments have been achieved overseas, with the first three New York City franchisees and the first two German franchisees, in Frankfurt and Stuttgart, to open schools in September 2004. David Sprigg, Joint Managing Director, commented: 'This has been another very busy year for us, increasing the number of schools and students throughout the network, resulting in a 20% increase in network turnover to £18.7m. Further progress has been made with the growth of SportsCoach, development of Mini Stages, and expansion of our USA and German Stagecoach schools networks.' Enquiries: Stagecoach Theatre Arts: Tel: 01932 254 333 David Sprigg, Joint Managing Director Richard Dawson, Finance Director and Investor Relations Evolution Beeson Gregory: Tel: 020 7071 4300 Tom Price Henry Turcan JB Public Relations: Tel: 01629 825 777 John Burley Chairman's Statement I am pleased to report on the Group's full year results for the year ended 31st May 2004. Stagecoach Theatre Arts was founded in 1988 and operates the UK's largest network of part-time performing arts schools for young people aged between 4 and 16. Overview The growth in the core business over the year was reflected in a 20 per cent. increase in unaudited network turnover from £15.6 million to £18.7 million. The network turnover reflects total school fees earned over the year by our franchisees, from the nearly 30,000 students that now attend Stagecoach and SportsCoach schools. Since flotation, over the past three years, unaudited annual network turnover has increased by 82 per cent. from £10.3 million to £18.7 million. This year has seen further investment of time and resources in preparation for future growth in SportsCoach, Stagecoach USA, Stagecoach Germany and Mini Stages. However, despite the increase in network turnover, schools and student numbers, the investment for future growth and fewer school openings than expected has led to a fall in group profitability to £0.3 million (2003: £0.8 million). SportsCoach franchising continues to expand with 13 new schools opened throughout the year taking the total to 23 SportsCoach schools at year-end. Significantly, one of our franchisees has now opened three SportsCoach schools in their territory. We announced in May 2004, the sale of the first three franchises in New York City. These Stagecoach schools are to open in September 2004. During the year we completed negotiations to acquire and own 90 per cent. of Stagecoach Germany, and subsequently have sold franchises in Frankfurt and Stuttgart. These schools are to open in September 2004. Further details of the operations of the business are set out in the Joint Managing Directors' Operating Review. Earnings per share was 1.9 pence (2003: 5.5 pence). Your Board proposes the payment of a final dividend of 2 pence per share (2003: 2 pence). The Group continues to support Stagecoach Charitable Trust, which runs InterAct Theatre Workshops, providing inclusive performing arts tuition to children of all abilities and needs. Strategy for growth We have made good progress in fulfilling our plans for growth, which are: • to continue the expansion of Stagecoach in the UK; • to expand SportsCoach in the UK; • to develop and grow Stagecoach in USA and Germany; • to launch and develop Mini Stages in the UK. In the year ahead your Board is committed to providing more resources to enable growth within the UK Stagecoach franchise network. In particular, there will be a focus on increasing the number of schools per existing franchisee. In practice franchisees can run up to 6 schools each, compared to the current average across the network of 2.2 schools per franchisee (excluding Surrey Performing Arts). In addition, your Board will assist Surrey Performing Arts, which runs 38 Stagecoach schools, to increase its student numbers. As well as unallocated territory across the UK, the Group holds a stock of purchased territories that are available to new franchisees joining the network. On behalf of the Directors, I would like to take this opportunity to thank all the staff for their continued hard work throughout the year. Prospects The expansion of the core business is evidenced in the 20 per cent. increase in student fees this year to £18.7 million. The medium term to long term earnings potential of the Group is being enhanced through the current development and expansion plans. The future prospects of the Group remain encouraging. Graham Cole Chairman 10th August 2004. Joint Managing Directors' Operating Review We report on the principal operations and results for the year ended 31st May 2004. Operations The principal indicator of the Group's growth is the number of schools opened during the year and the number of students attending those schools. Our franchisees open new schools only at the beginning of the Summer Term in April and the Autumn Term in September. Stagecoach schools The numbers of Stagecoach Theatre Arts schools and of students attending them has increased over the year to 491 schools at the year end with over 21,600 students (2003: 456 schools and 20,400 students). We are pleased to report that the average occupancy rate across the network is maintained at approximately 98 per cent. capacity. The number of franchisees also increased over the period under review from 180 to 204, demonstrating that the growth in schools has come from both new franchisees joining the network and existing franchisees expanding their individual businesses. The number of Early Stages classes increased over the year to 493 at the year-end with 6,900 students (2003: 429 Early Stages classes and 5,800 students). In total, there has been an increase over the year of 9 per cent. in the number of students attending a Stagecoach Theatre Arts main school (for 6 to 16 year olds) or an Early Stages class (for 4 to 6 year olds) from approximately 26,200 to 28,500 students. Mini Stages Mini Stages, for six months to four-year-olds, was launched in the UK in September 2003 and complements the Group's existing core business of teaching the performing arts. The Mini Stages pilot was introduced at three venues in Walton-on-Thames, Epsom and Wimbledon, with two of these venues being fully enrolled from launch. This new educational concept allows the child (accompanied by parent or guardian) to listen, beat time, march to rhythms, sing songs, play with instruments and develop creativity, co-ordination and confidence. At year end there were five Mini Stages venues, from which 11 classes are held and a total of 156 students attending. The Group intends to offer Mini Stages franchises in the Autumn of 2004, starting with three pilot franchises in September. SportsCoach schools The SportsCoach franchise network continued to expand during the year, with the launch of thirteen more schools, taking the total to 23 schools. As with Stagecoach schools, the wide geographical spread around the country is encouraging. An important milestone for SportsCoach's development was achieved during the year when our franchisee operating in Amersham opened a third SportsCoach school. This demonstrates the viability of the business model for the franchisee and the popularity of the SportsCoach teaching concept in a particular area. As with Stagecoach, in practice franchisees can open up to six schools within their designated territory. The growth potential for the SportsCoach network across the UK, from both existing franchisees and new territories, remains very strong. As at the year end, there were 842 SportsCoach students attending the 23 SportsCoach schools across the UK (2003: 326 students and 10 schools). Average occupancy per SportsCoach school increased over the year from 68 per cent. to 76 per cent. Overseas schools USA The expansion of Stagecoach USA remains on track. In June 2003, the first Stagecoach franchise in the USA was sold, in Minneapolis, MN. A further franchise in Minnesota has also been sold during the year. Having completed the legal requirements to offer Stagecoach franchises in other US States and following an initial advertising and marketing campaign for franchisees, the wholly owned US subsidiary company sold its first three Stagecoach franchises in New York in April 2004. These schools are to be opened in September 2004, two in Manhattan and one in Brooklyn. These achievements during the year represent a major milestone in the expansion of the Stagecoach network in the USA, and give the Group the best opportunity to emulate the success of the UK franchise business model. As at the year end there were 330 students attending Stagecoach USA's six schools and Early Stages classes. Stagecoach USA also runs a successful Summer Workshop programme, with eleven weeks of workshops scheduled over the Summer 2004. Germany On 29th July 2003, we increased our equity stake in Stagecoach Germany to 90 per cent., employing our former joint venture partner as the Chief Operating Officer of the new German subsidiary company, Stagecoach Theatre Arts Schools GmbH. The subsequent development of and preparation for franchising in Germany resulted in the sale of the first two Stagecoach franchises, ahead of schedule, in Frankfurt and Stuttgart. These schools are to open in September 2004. Stagecoach Germany has five managed schools and Early Stages classes and a total of 250 students in the Nuremberg area. The USA and German markets present exciting opportunities for future growth. The Group continues to provide support for its other overseas operations and interests in Stagecoach Theatre Arts schools in Spain, Malta, Gibraltar, Australia and the Republic of Ireland. Financial Review Group turnover in the period increased to £5.3 million (2003: £5.0 million). Profit before tax for the year has decreased to £0.3 million (2003: £0.8 million). As previously reported, the Group's profitability is disproportionately impacted by the number of new franchises and schools which are opened. The number of new school openings in the Summer Term 2004 and contracts for September 2004 was lower than expected, which together with the increased development costs, a reduction in the administration fee earned from Surrey Performing Arts Ltd and a provision for exceptional professional fees, significantly reduced the profitability for this year. Notwithstanding this, there was an increase in the number of schools of 10 per cent. over the year and a 20 per cent. increase in network turnover. For the Autumn Term 2004 the Group expects to open a further 17 Stagecoach schools and nine SportsCoach schools in the UK, as well as three Stagecoach schools in the USA and two in Germany. As at 31st May 2004, the net cash balances of the Group stood at £0.4 million. These cash balances reflect the effects of the late Easter, resulting in our Summer Term 2004 school fees being collected after the year end. The net cash balances of the Group as at 30th June 2004 increased to £1.1 million. The Group has relatively little capital expenditure requirements. Despite a decrease in profits for this year, the fundamentals of the business remain strong and the expansion plans for future growth are progressing well. The Group has increased its number of employees (full time equivalents) to 58 as at 31st May 2004 from 50 as at 31st May 2003. Creative and Educational Department Your Board is dedicated to continuing to provide the highest standards of student education and opportunity throughout the Stagecoach network. The Creative and Education Department, headed by Stephanie Manuel, has six full time employees and is committed to being at the forefront of standards of education in the performing arts. Evidence of the continuing success of the Stagecoach programme is best illustrated by the achievements of its students who consistently gain places for further education at universities and accredited drama and dance colleges. In many cases qualified students return to take up teaching posts and even apply for franchises. One of the unique features of Stagecoach is that it provides students with opportunities to participate in special performances and events each year. Over the last year these included: On 6th July 2003, 1,500 Stagecoach students from across the UK performed in a charity concert, Sing-a-Single, at The Royal Albert Hall. The annual 'Easy Stages' show-case production at the Epsom Play House in August 2003, featured 70 Stagecoach students from throughout the UK and overseas in a performance of 'Seven Brides for Seven Brothers'. In November 2003, over 300 Stagecoach students performed at a charity event at Her Majesty's Theatre London where the first 14 Stagecoach Schools to open were invited to perform. Due to its success, this will now become an annual event. The Stagecoach Midlands Choir performed at BBC Radio Midlands Christmas carol concert at Birmingham's Symphony Hall. Three regional choirs have been opened and have held their first events. They are The South West, The North and the North West choirs. Throughout the year, students from all over the UK were auditioned and selected to perform at their local theatres in a professional show called 'Beyond Broadway'. Stagecoach's training, together with these extra-curricular performing opportunities, offers immense benefits to students in the growth of confidence, self-esteem as well as fostering enjoyment and well being. Stagecoach Charitable Trust The Group continues to support and provide management time to the Stagecoach Charitable Trust, which amongst other activities runs InterAct Theatre Workshops, providing inclusive performing arts tuition to children of all abilities and needs. The feedback from the children attending InterAct and their parents has been overwhelmingly positive. InterAct opened a further two schools during the year, taking the total to five schools in the UK. Stephanie Manuel David Sprigg Joint Managing Director Joint Managing Director 10th August 2004 Stagecoach Theatre Arts plc Year ended 31st May 2004 Consolidated Profit and Loss Account Note 2004 2003 £'000 £'000 £'000 £'000 Turnover 5,124 4,768 Continuing activities 157 193 Acquired activities 2 5,281 4,961 Cost of sales (3,370) (2,968) Gross profit 1,911 1,993 Administrative expenses (1,641) (1,417) Other operating income 46 194 Operating profit 384 Continuing activities (68) 824 Acquired activities (54) 316 770 Interest receivable 17 39 Interest payable and similar (4) (4) charges Profit on ordinary activities 329 805 before taxation Tax on profit on ordinary 3 (142) (277) activities Profit on ordinary activities 187 528 after taxation Minority Interest 6 - Dividends 4 (195) (194) Retained (loss) / profit for the (2) 334 year Earnings per share, pence - Basic 5 1.9 5.5 - Diluted 5 1.9 5.4 All recognised gains and losses are included in the profit and loss account. Stagecoach Theatre Arts plc Year ended 31st May 2004 Consolidated Balance Sheet 2004 2003 £'000 £'000 £'000 £'000 Fixed assets Intangible fixed assets 835 774 Tangible fixed assets 142 114 977 888 Current assets Stocks 278 206 Debtors 2,004 1,671 Cash at bank and in hand 416 1,029 2,698 2,906 Creditors Amounts falling due within one year (1,199) (1,273) Net current assets 1,499 1,633 Total assets less current liabilities 2,476 2,521 Creditors: Amount falling due after more than one - (44) year 2,476 2,477 Capital and reserves Share capital 486 485 Share premium 1,545 1,531 Profit and loss account 450 461 2,481 2,477 Minority interests (5) - Equity shareholders' funds 2,476 2,477 The financial statements were approved by the Board on 10thAugust 2004 Stephanie Manuel Director David Sprigg Director Stagecoach Theatre Arts plc Year ended 31st May 2004 Consolidated Cash Flow Statement Note 2004 2003 £'000 £'000 £'000 £'000 Net cash inflow / (outflow) from 6 5 (286) operating activities Returns on investments and servicing of finance Interest received 17 39 Interest element of finance lease rental (4) (4) repayments 13 35 Taxation Corporation tax paid (277) (218) Capital expenditure Payments to acquire tangible fixed (63) (30) assets Payments to acquire intangible fixed assets (35) (24) (98) (54) Acquisitions and disposals Purchase of subsidiary - (72) Purchase of trades (75) - Net cash acquired with subsidiary / 3 26 trades (72) (46) Equity dividends paid (194) - Net cash (outflow) before financing (623) (569) Financing Gross proceeds from the issue of shares 15 2 Flotation costs / costs of raising - (4) capital offset against share premium Capital element of finance lease (5) (8) payments Capital element of bank loan payments - (7) Cash inflow / (outflow) from financing 10 (17) (Decrease) in cash (613) (586) Reconciliation of net cash flow to movement in net funds (note 7) 2004 2003 £'000 £'000 £'000 £'000 (Decrease) in cash balances (613) (586) Capital element of finance lease payments 5 8 Capital element of bank loan payments - 7 (608) (571) Opening balances of net funds 998 1,569 Closing balances of net funds 390 998 Stagecoach Theatre Arts plc Year ended 31st May 2004 Notes to the Financial Statements Accounting Policies Basis of preparation The financial statements have been prepared in accordance with applicable Accounting Standards under the historical cost convention. The consolidated financial statements include the audited financial statements of the company and its subsidiary undertakings. Subsidiary undertakings acquired are consolidated using the acquisition method of accounting from the effective date of acquisition. The financial information presented in this preliminary announcement does not constitute statutory accounts within the meaning of the Companies Act 1985. The information has however been extracted from the Group's statutory accounts for the year ended 31st May 2004 which were approved by the Board on 10th August 2004 and on which the Group's auditors have given an unqualified opinion. Turnover by geographical location 2004 2003 £'000 £'000 UK 4,866 4,728 Europe 179 40 Rest of the world 236 193 Total turnover 5,281 4,961 Turnover is analysed on an origination basis and is all derived from external customers. It is not material or practical to provide a similar analysis of operating profit and net assets. 3. Taxation a) Analysis of the tax charge The tax charge on the profit on ordinary activities for the year was as follows: 2004 2003 Current tax: £'000 £'000 UK corporation tax 142 277 Tax on profit on ordinary activities 142 277 UK corporation tax has been charged at 30 % (2003: 30%). b) Reconciliation of the tax charge 2004 2003 £'000 £'000 Profit on ordinary activities before tax 329 805 Profit on ordinary activities at standard rate 99 242 of UK corporation tax of 30% Effects of: Unrelieved losses of overseas subsidiaries 25 17 Expenses not deductible for tax purposes 19 18 Capital allowances for period in excess of depreciation (1) - Current tax charge for year 142 277 Dividends 2004 2003 £'000 £'000 Equity shares: Proposed final dividend (2 pence per share) 195 194 5. Earnings per share Basic earnings per share, calculated in accordance with FRS14 (Earnings per share) of 1.9 pence (2003: 5.5 pence), is based upon the profit on ordinary activities after tax of £0.19 million (2003: profit £0.53 million) apportioned over the weighted average number of ordinary shares that were in issue for the period of 9,712,243 (2003: 9,688,780). Fully diluted earnings per share are calculated at 1.9 pence (2003: 5.4 pence), based upon weighted average number of ordinary shares, including options granted to employees, of 9,855,634 (2003: 9,825,682). 6. Reconciliation of operating profit to operating cash flows 2004 2003 £'000 £'000 Operating profit 316 770 Depreciation and amortisation of goodwill 92 71 (Increase) in stocks (72) (43) (Increase) in debtors (333) (748) Increase / (decrease) in creditors 11 (333) Foreign exchange differences (9) (3) Net cash inflow / (outflow) from operating activities 5 (286) 7. Analysis of changes in net funds Opening Cash Closing balance balance flow £'000 £'000 £'000 Cash at bank and in hand 1,029 (613) 416 Finance leases and loans (31) 5 (26) Total net funds 998 (608) 390 END This information is provided by RNS The company news service from the London Stock Exchange

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