Final Results

RNS Number : 8860W

Stagecoach Theatre Arts PLC

05 August 2009

 



5 August 2009

Stagecoach Theatre Arts plc (AIM: STA)

('Stagecoach' or 'the Group')

Preliminary Announcement of Results

for the year ended 31 May 2009

'Stagecoach Theatre Arts plc operates the UK's largest franchise network of part-time performing arts schools for children aged between 4 and 18'

'ANOTHER VERY GOOD YEAR FOR STAGECOACH THEATRE ARTS'

Highlights:

Financial

• Profit before tax up 3 per cent to £0.73m (2008: £0.71m).

• Franchise network fees up 3.2 per cent to £29.4m (2008: £28.5m) reflecting the continuing solid performance of franchisees worldwide.

• Healthy cash balance at year end increased slightly to £1.04m (2008: £1.03m).

• Earnings per share up by 4 per cent to 5.3 pence (2008: 5.1 pence).

• Total dividends for the year up 25 per cent to 2.5 pence per share following a proposed final dividend of 2.0 pence per share (2008: 2.0p).

• Current dividend yield of 4.8 per cent (based on a mid-market share price of 52.5 pence as at the close of business on 4 August 2009).

Operations

• Key objective over the past two years has been to bring each part of business to profitability:

  • Stagecoach USA pleasingly moved into profit this year.

  • Stagecoach UK continues to provide the majority of Group's profits, with SportsCoach, the Montessori nursery school and Other International all contributing a profit.

  • Stagecoach Germany's operating losses further reduced; with a move into operating profitability planned for year ending 31 May 2011 with new franchise sales and school openings. 

• International licence agreement format for expansion overseas showing positive signs of success in both Greece and Canada - the Board expects that future growth can be achieved through more international licence agreements:

  • In September 2008, the first Stagecoach school in Athens, Greece was launched with a second school opened in Athens in April. A third school is due to open in Piraeus this September.

  • Option agreement signed in May for Stagecoach schools in Hong Kong.

  • Stagecoach Canada performing well.

David Sprigg, Managing Director, commented:

'As for most companies, this has been a challenging year during this difficult economic climate. However, the effects of the recession have had a minimal impact on the sales and profitability of the business this year, demonstrating once again the popularity of our Stagecoach Theatre Arts schools training and education and the resilience of the business model.

The credit crunch has hampered both UK and overseas school openings, and this is likely to continue into next year. However, there remain significant medium-term growth prospects in the UK and considerable long-term growth potential for SportsCoach, Stagecoach Germany and USA, as well as other new overseas territories.'  

ENDS

Enquiries:

Stagecoach Theatre Arts Richard Dawson, Finance Director and Head of Investor Relations	Tel: [phone] [e-mail] www.stagecoach.co.uk
Smith & Williamson Corporate Finance Limited  Nominated Adviser & Joint Broker David Jones / Barrie Newton/ Charles Combe	Tel: [phone]
Daniel Stewart & Company plc Joint Broker Paul Shackleton	Tel: [phone]
Peckwater PR	Tel: [phone]
Tarquin Edwards	[e-mail]

Chairman's Statement

Overview

The Stagecoach Group reports a 3% increase in profit before tax to £726,000 for the year to 31 May 2009 (2008: £707,000), and a 4% increase in earnings per share at 5.3 pence (2008: 5.1 pence).

This has been another good year for Stagecoach Theatre Arts, particularly in light of the difficult economic climate throughout the year. Despite a small decline in worldwide student numbers due to the recession, network fees increased by 3% to £29.4 million (2008: £28.5 million). Network fees reflect total school fees earned over the year by our franchisees from the 38,900 students (2008: 40,600) that attend Stagecoach and SportsCoach worldwide.

We propose a final dividend of 2 pence per share, which together with the payment of the maiden interim dividend of 0.5 pence per share in February, represents an overall 25% increase on the dividend paid last year and endorses the strength and future prospects of the business.  

Strategy

The key objective over the past two years has been to bring each part of our business to profitability, and we are pleased that our Stagecoach USA subsidiary moved into profit this year. Stagecoach UK continues to provide the majority of profits, with SportsCoach, the Montessori nursery school and Other International Schools each contributing a profit. Stagecoach Germany's operating losses further reduced this year as it continues to expand its network.

This year also sees the full year benefits of the cost cutting exercise undertaken in recent years, where we have sought to reduce overheads where possible, including staff, premises and other costs. The reduction in administrative expenses has enabled us to report an increase in profitability.  

We continue to support the Stagecoach Charitable Trust, which runs InterAct Theatre Workshops, providing inclusive performing arts tuition to children of all abilities and needs.

Employees

I wish to express my thanks to all our employees for their commitment and contribution throughout the year, all of which has helped to deliver this pleasing performance. 

Prospects

We remain confident, based on our experience from the previous recession and this recession to date, that children's education tends to be one of the last items of expenditure cut from the family budget. However, large scale redundancies in particular areas in the UK have affected individual schools in those regions and the effect of this recession may be felt further during our next financial year. 

Once we come out of the recession, we are likely to see an increase in subsequent school openings and a boost in initial fees from school re-sales owing to pent up demand for transfers as some existing franchisees look towards retirement. We also remain optimistic of long-term growth in SportsCoach and our German and US-based operations, and we are in negotiation for licences in other countries. I am pleased with the way the Stagecoach Group has performed in these tough economic times and I congratulate the Group's executive team on their dedication and in delivering profitable growth.

Graham Cole

Chairman

5 August 2009

Operating Review

Group Overview

We are pleased with the overall performance of the Group this year, particularly during these difficult economic times. Our student numbers have proved to be comparatively resilient to the slowdown in consumer spending, and despite a 4% drop in student numbers the network is still averaging over 90% occupancy.  

The Directors believe that once we are past the current recession, Stagecoach's strong position and brand awareness in its markets, allied to its franchise model, offer significant growth potential for the business. 

Stagecoach Theatre Arts UK 

This is the first year since the business was founded 21 years ago that we have not seen an increase in Stagecoach UK school numbers and students. During the year 17 new Stagecoach schools opened; however 21 schools closed or merged with other schools, giving a net decrease of four schools. Encouragingly there was still growth in the Early Stages classes with net nine new classes opened during the year. These Early Stages classes provide an important stream of new students to the main schools for future years. 

The number of Stagecoach Theatre Arts main schools for 6 to 16 year olds in the UK is 617 schools with 25,574 students attending (2008: 621 schools and 26,554 students). Early Stages classes, providing performing arts tuition to younger students aged 4 to 6 years, increased to 707 classes in the UK with 9,254 students attending (2008: 698 Early Stages classes and 9,439 students). The total number of students attending Stagecoach schools in the UK, including Early Stages and Further Stages classes, decreased from 36,260 to 35,082 students.  

The average number of students per main Stagecoach school at year end was 41.4 (2008: 42.8), thus, despite a fall in student numbers, the occupancy rate throughout the network remains strong at 92% of all available places taken, based on an optimum number of students per school of 45.

The average number of Stagecoach schools per franchisee is 2.3 schools, demonstrating that there remains further significant growth potential in the existing network as many franchisees operate three, four or five schools, and still a number have yet to open a second school.

Our continuing success, particularly during these difficult times where we have seen numerous smaller competitors cease trading, comes from maintaining the highest standards of education, including regular unannounced school inspections, regional franchisee meetings and franchisee and teacher training. Parents receive progress reports twice a year and students receive medals for longevity and participation. The skills students learn at Stagecoach help them perform better in life. 

The network continues to promote the benefits of Stagecoach Theatre Arts training and education, and we have maintained our advertising budget across the network both at an individual local school level and through national advertising.  

We have ceased offering Mini Stages as a separate franchise; instead Mini Stages classes are now only operated by existing Stagecoach franchisees alongside an established Stagecoach school. Consequently, at year-end, there were 4 Mini Stages schools in the UK, from which 25 teaching sessions were held, and a total of 244 students attending (2008: 11 schools, 55 sessions and 589 students). Network fees for Mini Stages were £84,000 (2008: £142,000).  

The Montessori nursery increased fees by 25% to £325,000 (2008: £259,000) as a result of an increase in the average number of sessions attended by each student. At year end there were 116 students registered at our Montessori nursery (2008: 123 students). 

From October 2008, Stagecoach Parties was offered as an additional activity for our Stagecoach franchisees, to help with marketing, as well as to provide a supplemental income. By year end 36 of our 268 Stagecoach franchisees have paid us the initial set-up cost and annual licence fee for the rights to run Stagecoach Parties. Stagecoach Parties are fun, structured parties for children of all ages, predominantly run as children's birthday party activities, held either at their home or in a local hired venue.  

Stagecoach UK, including Mini Stages, the Montessori School and the Stagecoach Agency, reported operating profits before overheads of £2.6m (2008: £2.7m). After attributing all UK overheads Stagecoach UK profit before tax was £715,000 (2008: £819,000).

Stagecoach Agency 

The Stagecoach Agency maintains its status as the largest performing arts agency for children in the UK and continues to provide our students with varied work across all areas of the entertainment industry. Our 2009/10 intake has dropped this year to 1,510 students (2008/09: 2,043 students).  However, the total of individual submissions for jobs for the year increased to over 20,000, resulting in approximately 8,000 auditions and bookings.   

The jobs have become more varied and high profile; and this year saw a Stagecoach Agency first, in that every West End musical that has children in the cast has featured at least one Stagecoach student.  We are also raising our profile in the lucrative Voice Over market, in which we excel because of our unique nationwide pool of age related, regional and ethnic voices.

As the largest children's and young performers' agency in the UK, the Stagecoach Agency has continued to expand its influence throughout the entertainment industry.  The Agency provides a comprehensive range of services to Casting Directors and Production Companies who in turn offer Stagecoach students work opportunities within a wide range of entertainment platforms.  These include TV and Film, Commercials and Corporate Videos, Theatre, Radio Dramas, Photo Shoots and Promotions, Musicals and Voice-Overs.

Assignments won this year by the Agency include an 18 month national tour of Chitty Chitty Bang Bang across the U.K and Ireland in which 1,000 Stagecoach students have performed or will perform; Waterloo Road series 5 (our 5th consecutive booking, providing all the background artists); Survivors series 2; parts for students in most major television series and many other high-profile productions, both domestic and international.  Such credits include TV roles in Waterloo Road 4, Prince of Persia, New Heroics, Outnumbered, East-Enders, Dr Who, Lark Rise, Kevin Bishop Show, numerous Radio 4 dramas, BT, Morrisons, Sainsburys, Law & Order, Miss Marple, Game of Thrones; and in theatre Dolls House, National & European Tour of Thriller, Priscilla Queen of The Desert, Waiting For Godot, Billy Elliot, Chitty Chitty Bang Bang, The Sound of Music, Mary Poppins, Baby Girl, and Merry Wives of Windsor at The Globe.  Voiceover credits include Peppa Pig, Little Kingdom, Cbeebies, Radio, Tommy Zoom, and Disney - Tigger, Pooh and Friends.

The Agency's continued success offers excellent publicity opportunities for individual Stagecoach schools throughout the UK.

Creative and Educational Department

By working closely with our franchisees, the Group continues to provide the highest standards of performing arts education and opportunity throughout the Stagecoach network.  The Creative and Educational Department is committed to being at the forefront of standards of education in the performing arts.

Each year the Stagecoach network provides its students with opportunities to participate in special performances and events.  The events this year included:

- June 2008 and again in November 2008 - a total of 600 students from all over the UK performed a selection of dance, drama and singing routines at Her Majesty's Theatre in London's West End.

- June 2008 - a national choir festival at the Birmingham Symphony Hall featured over 400 Stagecoach students from around the UK.

- the annual 'Easy Stages' show-case production of the musical Children of Eden in August 2008 featured 70 Stagecoach students from the UK, Ireland, USA and Germany.

- December 2008 - 66 Stagecoach schools from the UK, Ireland and Germany and an estimated 5,000 Stagecoach students simultaneously performed a musical piece entitled 'Glad Rags', to set a new Guinness World Record beating our previous record set in 1999.

- March to May 2009 - fifteen Stagecoach schools performed with Andy Abraham in his UK tour. 

The Stagecoach Foundation Course continues to be run twice yearly, with significant workshop input from The Royal Academy of Dramatic Art ('R.A.D.A').  The course, designed with the particular needs of Stagecoach and part-time theatre arts schools in mind, has accreditation from Trinity/Guildhall as part of their A.T.C.L in Musical Theatre (Associate of Trinity College London).

Regional teacher training workshops offer Stagecoach teachers and franchisees in-service development by leaders in the performing arts.  Stagecoach's training, together with these extra-curricular performing opportunities, offers immense benefits to students in their growth of confidence and self-esteem as well as fostering enjoyment and well being.

SportsCoach 

Despite a small number of SportsCoach school closures this year we are now reaping the benefits of the restructuring from last year with an increase in profitability for the SportsCoach network. We are developing new marketing strategies to recruit students to SportsCoach, appealing to all children regardless of their sporting abilities. The majority of SportsCoach students are not sporty, but benefit through sport both mentally and physically. The results of these new marketing strategies tested on our local schools this Summer Term 2009 have shown early positive signs.  

The SportsCoach network has 20 SportsCoach schools, 8 Early Sporties classes and 876 students (2008: 26 schools, 10 Early Sporties and 1,156 students). Average student numbers per SportsCoach school for the Summer Term 2009 were 37.5 students (2008: 39.0 students).  

Network fees of SportsCoach were £727,000 (2008: £835,000) and profit before tax increased to £27,000 (2008: £11,000).

Overseas operations 

The Group's overseas operations include wholly owned US and German subsidiaries, each running Stagecoach Theatre Arts franchise networks, and Stagecoach schools operated under licence or direct franchise agreement in Australia, Canada, Gibraltar, Greece, Ireland, Malta and Spain.  

USA and Germany

The restructuring of the US operations was completed in May 2008, and this year represents the first full year since we closed our head office in Minnesota and no longer directly employ any head office staff in the US. We have been able to provide full support for our US franchisees from the UK whilst retaining a self-employed part-time administrator in the US.  

As a consequence, we are pleased to report a profit before tax for Stagecoach USA of £14,000 (2008: loss £78,000). 

One new US franchise school opened during the year in Portland, Oregon, in April 2009, and it was pleasing that the school opened with a full register of 45 students, which provides encouragement for more new school openings and expansion of Stagecoach USA.  

Stagecoach Germany continues to expand steadily and average student numbers per school increased significantly by 15% to 42.5 from 36.8 last year. The credit crunch over the past year has however hindered new sales and has slowed down the anticipated rate of expansion of the German network.  Stagecoach Germany reported losses of £100,000 (2008: losses of £105,000). As we move out of recession, and with franchisees trading at near full capacity we expect to see an increase in new franchise sales and school openings taking Stagecoach Germany to profitability within two years. 

Between these two overseas markets, USA and Germany, at year end there were 16 franchisees, 27 Stagecoach schools, 25 Early Stages classes, 1 Further Stages class and a total of 1,239 students (2008: 1,229 students).

Other overseas

In September 2008, the first Stagecoach school opened in Athens, Greece, under an international licence agreement. The school opened with a full register and a second school opened in Athens in April 2009. A third school is due to open in Piraeus in September 2009.  

The key to the success of the overseas operations has always been to identify and secure the right calibre of person in the local country. All overseas franchisees and licensees attend our one week's intensive training course at our Head Office in the UK and following site visits and assistance with launching new schools they are well positioned to make their Stagecoach businesses a success.

We had expected to secure an international licence agreement for at least one other country during this year, with discussions being held for Dubai, Sweden and Latvia, and in May we signed an option agreement with non-refundable deposit for Hong Kong. However, due to the credit crunch and global economic downturn none of these sales were finalised during this year. We continue to engage in discussions for these areas, and hope to finalise the agreement for Hong Kong, and continually receive interest from other countries. Now that the overseas licence format is showing positive signs of success in both Greece and Canada we are confident that we can achieve future growth through more international licence agreements.

With three new schools and two Early Stages classes opened in the other international areas, the sales and profitability of the overseas division increased. Once the economic climate shows signs of improvement, this is likely to be a significant growth area for the Group. 

At year end, in our other international locations, there were 6 franchisees, 23 Stagecoach schools, 25 Early Stages classes, a Further Stages class, 10 Mini Stages classes and a total of 1,370 students (2008: 1,281 students). The average student numbers were 39 per school (2008: 41.4 students). With network fees of £723,000 (2008: 537,000) these other overseas operations contributed £70,000 profit before tax to the Group (2008: £59,000), representing an increase of 19% over the prior period.

Employees

The number of employees (full time equivalents) employed by the Group as at 31 May 2009 is 50 (2008: 53).

Stagecoach Charitable Trust

The Group continues to support and provide management time to the Stagecoach Charitable Trust, a children's charity, 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.  

During the year InterAct has taken significant steps forward in expanding its reach and involving over 400 children and young people in seven additional locations with fourteen summer holiday workshops. InterAct has established a presence in Bristol, Colchester, Croydon, Edinburgh, Jarrow, Leeds and Nottingham in addition to its existing classes in Walton-on-Thames, Hampton, Hounslow and Bournemouth. InterAct students have also had the opportunity to perform with Stagecoach students at Her Majesty's Theatre, London, as well as performing locally for family and friends.

Current Trading and Prospects

As for most companies, this has been a challenging year during this difficult economic climate. However, the effects of the recession have had a minimal impact on the sales and profitability of the business this year, demonstrating once again the popularity of our Stagecoach Theatre Arts schools training and education and the resilience of the business model.

The credit crunch has hampered both UK and overseas school openings, and this is likely to continue into next year. However, there remain significant medium-term growth prospects in the UK and considerable long-term growth potential for SportsCoach, Stagecoach Germany and USA, as well as other new overseas territories. From this platform therefore, we look forward to the future with confidence.  

David Sprigg Joint Managing Director

Stephanie Manuel Artistic Director and Joint Managing Director

5 August 2009

Financial Review 

Network Fees and Group Turnover

Network fees, reflecting the total tuition fees earned by our network of franchisees running Stagecoach Theatre Arts schools worldwide and SportsCoach schools in the UK, increased 3.2% to £29.4m (2008: £28.5m). The higher network fees reflect an increase in tuition fees in September 2008, and compensated for the 4.2% fall in student numbers across the network. The UK Stagecoach Theatre Arts schools account for 91.7% of network fees (2008: 92.3%) following further growth in the number of international schools this year.  

Group turnover, made up of continuing franchise fees, initial fees, transfer fees and other ancillary income reduced marginally to £6.2m (2008: £6.3m). The main effect of the credit crunch during the year was to limit the availability of bank finance to prospective new franchisees wishing to purchase existing Stagecoach businesses. This reduction in school re-sale fees together with fewer subsequent school openings by existing franchisees resulted in a £0.3 million reduction in initial fee turnover for the year. This reduction was somewhat offset by an increase in continuing franchise fees from existing schools of £0.2 million, thus resulting in a £0.1 million decrease in turnover for the year.

Cost of Sales and Administrative Expenses

The Group costs of sales have remained level at £3.2m (2008: £3.2m).

We have reduced our administrative expenses over the year by 6.2% to £2.3m (2008: £2.5m). This cost saving has primarily been delivered through the restructuring of the Stagecoach USA operations. Other savings in overheads have been made across the Group.  

Profitability 

The small decrease in turnover has been more than matched by a reduction in costs, resulting in the Stagecoach Group reporting a modest 2.7% increase in profit before tax to £726,000 (2008: £707,000).

Taxation

The Group has benefited from a Research and Development tax relief and tax rebate claim for the work undertaken on our IT Global Reporting Management System, which was developed and paid for between 2004 and 2007. A tax benefit of £24,000 is included within these results for this Research and Development claim.

The Group's effective tax rate, including the benefit of the Research and Development claim and Stagecoach USA moving from loss making to profit this year, reduced to 27.5% (2008: 29.1%). 

Earnings per share and dividends

Earnings per share increased 3.9% to 5.3 pence (2008: 5.1 pence).

Your Board is pleased to propose the payment of a final dividend of 2 pence per share (2008: 2 pence). The proposed dividend, which amounts to £198,186 (2008: £197,586) will be paid on 25 November 2009 to those shareholders on the register as at 30 October 2009. This dividend has not been accounted for in this set of accounts, in line with accounting standards, as shareholders have not yet approved the payment.  

During the year an interim dividend of 0.5 pence per share was paid (2008: nil), taking the total dividends paid or proposed for the year to 2.5 pence per share, amounting to £247,583, being a 25% increase in the total dividends for the year. 

Share capital and share options 

During the year 30,000 shares under option were exercised, increasing the share capital to 9,909,317 ordinary shares in issue at 31 May 2009 (2008: 9,879,317). 

On 29 January 2009, the Company awarded 86,020 share options, and 1,000 options lapsed during the year on employees leaving the Group. There remain 1,060,355 options in issue, being 10.7% of shares in issue, with an exercise price between 32.5 pence and 112.5 pence.

Group Structure

The Stagecoach Group consists of the Stagecoach UK business including the UK Agency, the SportsCoach and Mini Stages franchise networks, and the wholly owned German and US subsidiaries. The other overseas operations run under licence or direct franchise.

Balance Sheet

The Stagecoach Group had total equity at 31 May 2009 of £3.2 million (2008: £3.0 million). The increase in total equity principally relates to the retained profit for the year after payment of dividends to its shareholders.  

Cash Flow

The Group increased its cash balances over the year by £5,000 to £1,037,000 at year end (2008: £1,032,000).  

This increase was after the payment of £350,000 of corporation tax during the year as the UK Company was re-classed as a large company for taxation reporting purposes by HMRC and was required to pay this year's corporation tax quarterly in advance, thus paying two years of taxation during this transition year.  

Other principal non-operating cash payments during the year have been:

£246,000 of dividends

£99,000 final payment for the acquisitions of the minority interest in Stagecoach Agency (£82,000) and Stagecoach Germany (£17,000)

£66,000 reduction in bank loan

£35,000 capital expenditure

The significant consequence of the positive cash flow over the past three years is that the Group has not required the use of its overdraft facility since October 2008, and now has sufficient cash resources to trade debt free for the foreseeable future. The Group receives the majority of its cash in-flow three times a year, six weeks into each academic term, from continuing franchise fees for that term.  

Following the collection of the Summer Term 2009 continuing franchise fees in June 2009, the peak cash balance post year-end was £2.2 million.  

Financial outlook

Trading post year-end has continued in line with expectations with £4.8 million of Stagecoach Group network fees earned in June and July 2009 and positive cash inflow for the Group.

Richard Dawson

Group Finance Director

5 August 2009

Consolidated Income Statement

For the year ended 31 May 2009

	Notes	2009	2008
		£'000	£'000
Network fees (see note)		29,435	28,466
Revenue		6,204	6,326
Cost of sales		(3,203)	(3,177)
Gross profit		3,001	3,149
Other operating income		23	30
Administrative expenses		(2,327)	(2,482)
Operating profit		697	697
Financial income		39	22
Financial expenses		(10)	(12)
Net financing income		29	10
Profit before income tax		726	707
Income tax expense	2	(200)	(206)
Profit for the year		526	501
Attributable to:
Equity holders of the parent		526	501
Earnings per share (pence)
Basic earnings per share	4	5.3	5.1
Diluted earnings per share	4	5.3	5.0

Note: Network fees represent total school fees earned over the year by our franchisees from over 38,900 students that attended Stagecoach, SportsCoach and Mini Stages worldwide.

Consolidated Statement of Recognised Income and Expenses

For the year ended 31 May 2009

	2009	2008
	£'000	£'000
Foreign currency translation differences for foreign operations	(44)	(22)
Expense recognised directly in equity	(44)	(22)
Profit for the year	526	501
Total recognised income and expense for the year	482	479
Attributable to:
Equity holders of the parent	482	479

Consolidated Balance Sheet

As at 31 May 2009

	2009	2008
	£'000	£'000
Non-current assets
Property, plant and equipment	92	100
Intangible assets	1,260	1,376
Investments in subsidiaries	-	-
Total non-current assets	1,352	1,476
Current assets
Inventories	245	303
Trade and other receivables	2,182	2,340
Cash and cash equivalents	1,037	1,032
Total current assets	3,464	3,675
Total assets	4,816	5,151
Equity
Share capital	495	494
Share premium	1,609	1,601
Translation reserve	(79)	(35)
Retained earnings	1,203	916
Total equity attributable to equity holders of the company	3,228	2,976
Non-current liabilities
Other interest-bearing loans and borrowings	-	50
Deferred tax liabilities	8	16
Total non-current liabilities	8	66
Current liabilities
Other interest-bearing loans and borrowings	50	66
Trade and other payables	1,530	2,043
Total current liabilities	1,580	2,109
Total liabilities	1,588	2,175
Total equity and liabilities	4,816	5,151

Consolidated Cash Flow Statement

For the year ended 31 May 2009

	2009	2008
	£'000	£'000
Cash flows from operating activities
Profit for the year	526	501
Adjustment for:
Depreciation and amortisation	156	159
Foreign exchange differences	(52)	(41)
Financial income	(39)	(22)
Financial expense	10	12
Loss on disposal of property, plant and equipment	3	8
Write-down of territories held for resale	45	13
Employee share option scheme	7	8
Income tax expense	200	206
Operating profit before changes in working capital and provisions	856	844
Decrease/(increase) in trade and other receivables	182	(393)
Decrease/(increase) in inventories	13	(18)
(Decrease)/increase in trade and other payables	(288)	623
Cash generated from the operations	763	1,056
Interest received	39	22
Interest paid	(10)	(12)
Income tax paid	(350)	(167)
Net cash from operating activities	442	899
Cash flows from investing activities
Acquisition of additional shares in subsidiaries	(99)	(99)
Acquisition of property, plant and equipment	(20)	(48)
Acquisition of intangible assets	(15)	-
Net cash used in investing activities	(134)	(147)
Cash flows from financing activities
Shares issued	9	-
Dividends paid	(246)	-
Repayment of borrowings	(66)	(61)
Net cash used in financing activities	(303)	(61)
Net increase/in cash and cash equivalents	5	691
Cash and cash equivalents at 1 June	1,032	341
Cash and cash equivalents at 31 May	1,037	1,032

Notes to the Preliminary Results 

1  Accounting Policies set out in the financial statements

General

Stagecoach Theatre Arts plc is a company incorporated in the UK.

The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group').

Statement of compliance

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').

Basis of preparation

The accounting policies set out in the financial statements have, unless otherwise stated, been consistently applied to all the periods presented in these consolidated financial statements.

The Group has considerable financial resources together with long-term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

2   Income tax expense

Recognised in the income statement

	2009	2008
	£'000	£'000
Current tax expense
Current year	232	253
Adjustments for prior years	(24)	-
Current tax expense	208	253
Deferred tax expense
Reversal and origination of temporary differences	(6)	(43)
Reduction in tax rate	-	(4)
Adjustment to tax charge in previous periods	(2)	-
Deferred tax (credit)/expense	(8)	(47)
Total tax expense in income statement	200	206

Deferred tax arose principally due to timing differences between capital allowances and depreciation.

Reconciliation of effective tax rate

The total charge for the period is lower than the standard rate of corporation tax in the UK of 28% (2008: 29.67%). The differences are explained below:

	2009	2008
	£'000	£'000
Profit for the year	526	501
Total tax expense	200	206
Profit excluding taxation	726	707
Tax using the UK corporation tax rate of 28% (2008: 29.67%)	203	210
Effects of:
Unrelieved losses of overseas subsidiaries	21	37
Permanent tax differences	2	(37)
Reduction in tax rate	-	(4)
Adjustment to tax charge in previous periods	(26)	-
Total tax expense	200	206

The £24,418 adjustment to the tax charge in previous periods mainly reflects a £20,906 cash payment received from HMRC relating to Research and Development tax credits for 2004-2007 which had not been previously recognised due to the uncertainty of recoverability of the amount. 

3   Dividends

	2009	2008
	£'000	£'000
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 May 2008 of 2p per ordinary share (2007: nil).	197	-
Interim dividend for the year ended 31 May 2009 of 0.5p per ordinary share (2008: nil).	49	-
	246	-
Amounts proposed as distributions to equity holders
Proposed final dividend for the year ended 31 May 2009 of 2p per ordinary share (2008: 2p).	198	197

The proposed final dividend had not been approved by shareholders at 31 May 2009 and therefore has not been included as a liability. The comparative final dividend at 31 May 2008 was also not recognised as a liability in the prior year. 

The proposed final dividend of 2p (2008: 2p) per ordinary share will be paid on 25 November 2009 to those shareholders on the register as at 30 October 2009, subject to approval of shareholders.

4   Earnings per share 

	2009	2008
Earnings
Profit for the year for basic and diluted earnings per share (£'000)	526	501
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	9,881	9,879
Dilutive effect of share options	83	106
Fully diluted weighted average number of shares used for diluted earnings per share ('000)	9,964	9,985
Basic earnings per share (pence)	5.3	5.1
Diluted earnings per share (pence)	5.3	5.0

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding by the number of shares deemed to be issued for no consideration (options granted to employees).

5   Extract from the Group's statutory accounts

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 31 May 2009 which were approved by the Board on 5 August 2009 and on which the Group's auditors have given an unqualified opinion.

6   Responsibility

The Directors of the company accept responsibility for the information contained in this document and to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

7   Annual Report and Accounts available on the website

The Annual Report and Accounts, which will be posted to shareholders as soon as practicably possible, will shortly be available to download via the website, www.stagecoach.co.uk. A copy of the Annual Report and Accounts may be obtained upon application to the Company Secretary, subject to availability, at the Company's Registered Office, The Courthouse, Elm Grove, Walton-on-Thames, Surrey, KT12 1LZ.  

 

END

 

 

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