Final Results

RNS Number : 0614M

Stagecoach Theatre Arts PLC

10 August 2011

 



Stagecoach Theatre Arts plc (AIM: STA)

("Stagecoach" or "the Group")

Preliminary Announcement of Final Results

for the year ended 31 May 2011

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

Highlights:

Financial

·    Network fees increased to £29.3m (2010: £29.2m) reflecting good growth internationally and a small increase in tuition fees in September.  Group revenue was £5.9 million (2010: £6.2 million).

·    Profit before tax reduced to £650,000 (2010: £727,000) due in part to planned increased investment in new marketing and advertising material across the Group. 

·    Healthy cash balance at year end up 15 per cent. to £1.3m (2010: £1.1m).  The Group has no debt nor has it needed to use its overdraft facility during the year.

·    Earnings per share of 4.8 pence (2010: 5.2 pence).

·    Final dividend proposed of 2p per share (2010: 2p), maintaining total annual dividend payments at 2.5p per share (2010: 2.5p).

Operational

·    The key objective to bring each part of our business to profitability has been achieved during this year with the German subsidiary moving into profitability and the North American subsidiary further increasing its profitability, as both overseas divisions further expand their school and student numbers.

·    Average student numbers attending each school in the UK decreased slightly by 2% over the year to 40.7 students per school, although the average occupancy still remains at over 90% of all places filled.

·    Year-end worldwide student numbers were lower at 38,075 (2010: 39,325).

David Sprigg, Managing Director, commented:

"Whilst the economic downturn has impeded growth and resulted in some consolidation in our core UK business, and this may continue in the financial year ahead, over 90 per cent. of all student places remain filled. We expect to see renewed growth in the UK business once economic conditions improve.  

The Stagecoach Theatre Arts networks in North America and Germany have continued to expand over the year.  Both regions are nearing a critical mass of schools and brand recognition which could trigger faster organic growth in these areas, as was achieved in the UK market ten years ago.  I am also pleased to report on the successful launch of Stagecoach in South Africa, establishing a presence in a new continent."

Enquiries:

Stagecoach Theatre Arts plc Richard Dawson, Finance Director and Head of Investor Relations	Tel: [phone] [e-mail] www.stagecoach.co.uk
Smith & Williamson Corporate Finance Limited Nominated Adviser & Broker David Jones / Siobhan Sergeant	Tel: [phone]
Peckwater PR	Tel: [phone]
Tarquin Edwards	[e-mail]

Chairman's Statement

Overview

I am pleased to report on a satisfactory year in this difficult economic climate, with our performance in some areas across the Group reflecting that tough environment, but in others showing encouraging resilience. 

As expected at the start of the year, profitability has reduced due in part to the planned investment in marketing and advertising, with profit before tax of £650,000 (2010: £727,000), and earnings per share of 4.8 pence (2010: 5.2 pence).

Our commitment to increase spend on marketing and advertising and its consequential effect on our profitability does reflect these tough times, however I believe that on a range of other measures, the Group and for that matter, the Stagecoach brand has performed with considerable credit and consistency.  A small increase in school fees last September saw Group network fees, being the total school fees for the year, increase slightly to £29.3m (2010: £29.2m).  Average student numbers attending each school in the UK decreased by 2% over the year to 40.7 students per school, although the average occupancy still remains at over 90% of all places filled.  Worldwide student numbers were lower at 38,075 (2010: 39,325).

The resilience in our underlying trading performance throughout the period has been encouraging.  In particular, I am pleased to report that our objective to bring all parts of our business to profitability has been achieved with excellent progress in our North American and German subsidiaries; we have successfully launched Stagecoach into South Africa, establishing a presence in a new continent; we have maintained the total annual dividend; we continue to be profitable and we continue to manage our capital resources successfully to increase our net cash at year end to £1.3m (2010: £1.1m).

Following the collection of the Summer Term 2011 continuing franchise fees in June 2011, the peak cash balance post year-end was £2.6m (2010: £2.4m).  The Group continues to manage its working capital well, with no debt throughout the year.  

We propose a final dividend of 2 pence per share (2010: 2 pence), which together with the interim dividend of 0.5 pence per share which was paid in February maintains the total annual dividend payment of 2.5 pence per share (2010: 2.5 pence). 

Strategy

The key objective to bring each part of our business to profitability has been achieved during this year.  Our Germany subsidiary moved into profitability this year (prior to the fair allocation of UK overheads) and the North American subsidiary further increased its profitability, as both these overseas divisions continue to expand their school and student numbers.

The Group maintains a tight control on costs, helping us to trade through this difficult economic period. 

However, we have significantly increased our investment in marketing and advertising to maintain Stagecoach Theatre Arts as the trusted brand leader in children's performing arts and to ensure that we see maximum benefit from the Internet and Internet-related marketing opportunities.  We funded a complete redesign and implementation of marketing and advertising material across our franchise network, including the creation of a new position for a Group marketing manager, and further investment in Stagecoach.tv.  This planned significant expenditure has of course contributed to the short term fall in profitability. 

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

Directors and Employees

It is with great sadness that I report that Julian Paul, our friend and fellow Non-Executive Director, passed away this year.  Julian joined Stagecoach at flotation of the company in 2001, and over the years provided insightful financial and commercial advice to Stagecoach and its Executive Directors.  

I wish to express my thanks to all our employees for their commitment and contribution throughout the year, all of which has helped to guide us through these difficult economic times.

Prospects

Whilst the economic downturn has impeded growth and resulted in some consolidation in our core UK business, and this may continue in the financial year ahead, over 90% of all student places remain filled. We expect to see renewed growth in the UK business once economic conditions improve.  

The Stagecoach Theatre Arts networks in North America and Germany have continued to expand over the year.  Both regions are nearing a critical mass of schools and brand recognition which could trigger faster organic growth in these areas, as was achieved in the UK market ten years ago.  I am also pleased to report on the successful launch of Stagecoach in South Africa, establishing a presence in a new continent.

I am pleased with the performance of Stagecoach Theatre Arts during a challenging year and, when the economic outlook improves, I am confident we will see a marked increase in schools and student numbers worldwide.

Graham Cole

Chairman

 

10 August 2011

Operating Review

Group Overview

We are pleased to report that Stagecoach has demonstrated resilience in its trading performance throughout this difficult economic climate.  We continue to be profitable and have managed our capital resources successfully, and propose maintaining the level of final dividend.  

Our Stagecoach Theatre Arts schools continue to lead the way in children's education through the performing arts. 

UK Operations

Stagecoach Theatre Arts UK

The number of Stagecoach Theatre Arts main schools for 6 to 18 year olds in the UK is 603 schools with 24,517 students attending (2010: 613 schools and 25,584 students).  There were several school closures or mergers during the year in areas particularly affected by the economic downturn.  The number of Early Stages classes, providing performing arts tuition to younger students aged 4 to 6 years is 724 classes in the UK with 9,070 students attending (2010: 716 Early Stages classes and 9,498 students).  The total number of students attending Stagecoach schools in the UK, including Early Stages, Further Stages and Mini Stages, decreased over the year from 35,394 to 33,994 students.  

The average number of students per main Stagecoach school at the year-end decreased to 40.7 (2010: 41.7), although the occupancy rate throughout the network remains strong at 90.4% 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 2.2 schools, demonstrating that there remains further significant growth potential in the existing network, once the economic climate improves, as many franchisees operate three, four or five schools, and a number have yet to open a second school.

Stagecoach maintains the highest standards of education throughout its network, 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 to develop confidence, improve communication skills and generally to perform better in life.

We have invested heavily during the period in advertising, marketing and promotions.  This includes a new senior marketing manager position, increased and targeted internet advertising, the development of Stagecoach.tv, and a significant re-design and implementation of all our marketing material. 

Stagecoach Parties continues to operate as a complementary activity for our Stagecoach franchisees, helping with marketing and providing a supplemental income for them. The Montessori nursery had 104 students registered at year-end (2010: 117 students).

Stagecoach Agency

The Stagecoach Agency maintains its reputation for providing talented young performers across the entertainment industry.  The Agency intake has declined this year due to the economic downturn, however castings are at an all time high with many high profile roles being won in film, television, radio and the corporate market. The total of individual submissions for jobs for the year increased by 10 percent, and bookings and auditions have also dramatically increased. The new management agency, S.T.Arts Management, representing young adults, is proving popular with casting directors and production companies with our clients working throughout Europe.

In providing casting directors and production companies with talented artistes offering a varied and comprehensive range of services, Stagecoach students are able to make use of their skills within a wide range of entertainment platforms. These include TV and film, commercials and corporate videos, theatre, radio dramas, role-playing, photo shoots and promotions, musicals and voice-overs.

Our credits this year include: a national tour of The Sound of Music, The Habit of Art, La Boheme, Peter Pan, White Christmas, The Damnation of Faust, Midsummer Night's Dream; and students appearing in the West End in Shrek, Thriller, Les Miserables, Oliver and The Wizard of Oz. Television appearances have been frequent with students winning roles in: Spooks, Casualty, Mister Maker, Law & Order, Downton Abbey, Seconds from Disaster, Jelly Fish, Waterloo Road series 7, Ra Ra, The Noisy Lion, Little Kingdom and Peppa Pig. Forthcoming film credits include Shaun, The Lost Christmas, Horrid Henry, Sherlock Holmes 2, Little Cowboys, Naked Apes, Outpost Black Sun, The Invention of Hugo Cabret, and Dr Who.  Television adverts include: BT, Morrisons, Sainsburys, Bing, Argos, Toast Me, Nintendo, Sky Plus, Visa and Nisa Supermarkets.

Creative and Educational

By working closely with our franchisees, the Group continues to provide the highest standards of performing arts education and opportunity throughout the Stagecoach network.  Our Creative and Educational team are 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:

·     In June 2010, November 2010 and March 2011 - a total of 900 Stagecoach 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.

·     We hosted the Stagecoach Choir Festival in July 2010 at the Birmingham Symphony Hall with over 400 students taking part.

·     The annual 'Easy Stages' show-case production of the classic musical "My Fair Lady" was performed in August 2010.  It featured 75 Stagecoach students from the UK, Ireland, Canada, USA, Germany, Spain and Malta.

·     In February 2011 we organised a special theatre trip to see Mamma Mia in London's West End, with over 300 students enjoying a Question and Answer session with members of the cast before watching the performance.

·     In March 2011 several Stagecoach schools took part at the Move it Exhibition in London's Olympia.

Stagecoach is delighted to report that the Foundation Course, created by the Stagecoach Education Department, has now become Unit One of a fully validated and internationally recognised teaching qualification, awarded by Performance Arts Awards.  Students are required to pass Units One and Two of a practical examination in order to receive the Associate Diploma in Performance Arts (ADPA) award.  The Teacher Training Stagecoach offers prepare candidates for both Units One and Units Two.

Teachers who are already experienced are eligible to by-pass Unit One and attend Stagecoach's 'Fast Track' course to prepare solely for the Unit Two of the ADPA examination.  Both these Teacher Training Courses are running very successfully and we anticipate the need for more courses in the future.

Stagecoach was a guiding force behind the creation by Performance Arts Awards of a brand new suite of musical theatre examinations for young people. Having had a significant input into both the content and criteria for these examinations, Stagecoach and Performance Arts Awards piloted these examinations with great success last year.

Regional workshops continue to take place around the country, offering relevant opportunities for in-service training for principals and teachers in Stagecoach.

SportsCoach

It is with great sadness that we report that our friend and managing director of SportsCoach, George Rettie, sadly passed away this year.  George was also the franchisee and principal of three SportsCoach schools, and we shall greatly miss the dedication and enthusiasm he gave to SportsCoach and all the students over the years.

The economic downturn has reduced student numbers; however, the SportsCoach network remains a profitable contributor to the Group with 17 SportsCoach schools, 10 Early Sporties classes and 673 students (2010: 20 schools, 10 Early Sporties and 850 students).  Average student numbers per SportsCoach school are 32.7 students (2010: 37.0 students). 

The UK Operations, comprising Stagecoach UK, SportsCoach, the Montessori School and the Stagecoach Agency, reported profit before income tax of £608,000 (2010: £732,000).

International Operations

The Group's international operations include wholly owned German and North American subsidiaries, each running Stagecoach Theatre Arts franchise networks, and Stagecoach schools operated under licence or direct franchise agreement in Australia, Greece, Ireland, Malta, Gibraltar, Spain and recently launched in South Africa. 

Germany

We are delighted with the continuing expansion of Stagecoach Germany, and the move into profitability (prior to the fair allocation of UK overheads) this year. There were three new school openings and three new Early Stages classes during the year, and the number of students across the country increased by 14%.  At year-end there are 11 franchisees, 25 Stagecoach schools, 18 Early Stages classes and a total of 1,232 students (2010: 1,083 students).

North America

We report on a successful year for Stagecoach North America, with a 37% increase in student numbers and increase in profitability. We continue to keep overheads as low as possible whilst maintaining the high levels of support to our franchisees and investing in marketing and advertising for students for future growth.  At year-end there were 8 franchisees, 13 Stagecoach schools, 16 Early Stages classes, a Further Stages class and a total of 671 students (2010: 489 students).

Other International

We were delighted to help our new franchisee open the first Stagecoach school in South Africa, a milestone event as this is a new continent for Stagecoach. At year-end, there were 8 franchisees or licensees, in Australia, Greece, Ireland, Malta, Gibraltar, Spain and South Africa, 26 Stagecoach schools, 27 Early Stages classes, a Further Stages class, 9 Mini Stages classes and a total of 1,401 students (2010: 1,392 students). 

The international operations, including Germany and North America, reported profit before income tax, after a fair allocation of UK overheads, of £42,000 (2010: £5,000 loss).

Corporate Social Responsibility

We are committed to behaving ethically, safeguarding the environment and using our skills to make a lasting contribution to communities in which our schools operate.

Stagecoach Charitable Trust

The Group continues to support and provide management time to The Stagecoach Charitable Trust ('SCT'), 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 SCT and their parents has been overwhelmingly positive.

During the year SCT has built on its workshop network by involving 430 children in our summer holiday programmes in Bristol, Croydon, Cardiff, Edinburgh, Feltham, Exeter, Glasgow, Jarrow, Leeds, Luton, Nottingham and Southampton. SCT has established an after school programme in Exeter in addition to its existing classes in Walton-on-Thames, Birmingham, Colchester, Hampton, Hounslow and Bournemouth. SCT 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.

Stagecoach Awards

On 9 November 2010, the Directors of Stagecoach Theatre Arts proudly presented The Stagecoach Theatre Arts Awards, Acknowledging and Rewarding Children's Achievements.  The launch reception took place at The House of Commons hosted by Lord Cope of Berkeley. Patrons of these awards are Viscountess Mackintosh of Halifax and Sir Bernard Ingham.  The Awards recognise young people from all walks of life who have faced adversity, demonstrated bravery, shown courage, cared for others or been good role models for young citizens. 

Environmental Issues

We manage our environmental impact responsibly, including a proactive recycling policy and reduction of consumption of paper and utilities.

Employees

The Group aims to be a good employer and select employees on the basis of qualifications and merit, without discrimination.

The number of employees (full time equivalents) employed by the Group as at 31 May 2011 was 55 (2010: 53).

Current Trading and Prospects

We continue to increase our investment in online marketing and other promotional activity to maintain our market presence and brand awareness.  Trading has declined a little in the UK, however we are particularly pleased with the growth in Germany and North America.

There remain significant medium-term growth prospects in the UK, Germany and North America, and long-term growth potential for other international territories and for SportsCoach.  Our thanks to all our employees for their commitment and contribution throughout the year and we look forward to our successful progress into the future.

David Sprigg	Stephanie Manuel
Joint Managing Director	Artistic Director and Joint Managing Director

10 August 2011

Financial Review

Network Fees and Group Turnover

Network fees, reflecting the total tuition fees earned by our network of franchisees operating Stagecoach Theatre Arts schools worldwide and SportsCoach schools in the UK, increased to £29.3m (2010: £29.2m).  This reflects the 1% increase in Stagecoach UK student tuition fees from September 2010, off-setting the effect of the decrease in worldwide student numbers.

UK schools account for 91.9% of network fees (2010: 93.2%) 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 to £6.0m (2010: £6.2m).  The difficult economic climate and the restriction of bank credit for new franchisees impacted new school openings and re-sale fees.  These fees were down for the year at £0.33m (2010: £0.48m). However, these non-recurring fees represent just 5.6% of Group turnover, which is a positive indicator of the stability of the core business, with the majority of revenues now earned from the contractual continuing franchise fees from the 308 franchisees worldwide.  Brochure income from the Stagecoach Agency reduced to £0.27m (2010: £0.33m) due to fewer students enrolling for the Agency. 

Cost of Sales and Administrative Expenses

The Group cost of sales remained level at £3.1m (2010: £3.1m) and Group administrative expenses decreased to £2.3m (2010: £2.4m).  There were some positive and negative movements within these expense categories.  In particular, the planned investment in marketing and advertising including the creation of a new position of a marketing manager and investment in Stagecoach.tv increased our spend in this area by £0.14m to £0.65m for the year.  There were significant cost savings in general overheads across each of the operating divisions including a reduction in indirect staff costs.  

Profitability

Operating profit decreased by 11% to £641,000 (2010: £720,000), and profit before income tax decreased similarly to £650,000 (2010: £727,000).

Taxation

The Group's effective tax rate is 25.8% (2010: 28.9%).  The reduction in this tax rate results from the overseas subsidiaries reporting profits whilst using their losses brought forward to minimise their actual tax charges for the year. 

Earnings per Share and Dividends

Earnings per share are 4.8 pence (2010: 5.2 pence).

Your Board is pleased to propose the payment of a final dividend of 2 pence per share (2010: 2 pence).  The proposed dividend, which amounts to £199,000 (2010: £199,000) will be paid, subject to shareholder approval, on 19 October 2011 to those shareholders on the register as at 23 September 2011.  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 (2010: 0.5 pence), taking the total dividends paid or proposed for the year to 2.5 pence per share (2010: 2.5 pence), amounting to £249,000 (2010: £249,000). 

Group Structure

The Stagecoach Group consists of the Stagecoach UK business, including the UK Agency and SportsCoach, and the wholly owned German and North American subsidiaries. The other international operations run under licence or direct franchise.

Capital Structure

The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.  In the current circumstances the Board of Directors considers the current structure to be at the optimal level.

The capital structure of the Group consists of cash and cash equivalents, equity attributable to equity holders of the company, comprising issued capital, reserves and retained earnings (see Statements of Changes in Equity).  At the reporting date there is no debt.

The Group reviews its capital structure on a regular basis and will balance its overall capital structure through payments of dividends, new share issues as well as the issue of new debt or the redemption of existing debt in line with the financial risk policies outlined in Note 22.

The Stagecoach Group had total equity at 31 May 2011 of £3.7m (2010: £3.5m).  The increase in total equity principally relates to the retained earnings for the year after payment of dividends to its shareholders. 

Share Capital and Share Options

There has been no movement of share capital during the year, and so there remain 9,944,317 ordinary shares in issue at 31 May 2011 (2010: 9,944,317).

During the year 7,000 share options lapsed on employees leaving the Group.  On 11 August 2011, the Company awarded 63,000 share options, thus there remain 802,189 (2010: 746,189) options in issue, being 8.1% of shares in issue.

Cash Flow

The Group increased its cash balances over the year by £169,000 to £1,288,000 at year-end (2010: £1,119,000). 

Principal non-operating cash payments during the year have been:

·     £249,000 of dividends

·     £199,000 of income tax

·     £38,000 of capital and IT development expenditure

The Stagecoach Group now has no loans and did not use its overdraft facility during the year.  The significant consequence of the positive cash flow over the past few years is that the Group 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 2011 continuing franchise fees in June 2011, the peak cash balance post year-end was £2.6m (2010: £2.4m). 

Financial Outlook

Trading post year-end has continued in line with expectations with £4.6m of Stagecoach Group network fees earned in June and July 2011 and positive cash inflow for the Group.

Once the worldwide economic climate improves, we would expect to see an increase in initial fees turnover from Stagecoach UK franchisees opening more schools, and new franchise sales in international territories, particularly in North America and Germany.

Richard Dawson

Group Finance Director

10 August 2011

Consolidated Statement of Comprehensive Income

For the year ended 31 May 2011	Notes	2011	2010
		£'000	£'000
Network fees (see note)		29,304	29,242
Revenue		5,987	6,219
Cost of sales		(3,092)	(3,065)
Gross profit		2,895	3,154
Other income		20	24
Administrative expenses		(2,274)	(2,458)
Results from operating activities		641	720
Finance income		9	11
Finance expenses		-	(4)
Net finance income		9	7
Profit before income tax		650	727
Income tax expense	2	(168)	(210)
Profit for the year attributable to equity holders of the parent		482	517
Other comprehensive income
Foreign currency translation differences for foreign operations		(14)	11
Total comprehensive income for the year attributable to equity holders of the parent		468	528
Earnings per share (pence)
-       Basic earnings per share	4	4.8	5.2
-       Diluted earnings per share	4	4.8	5.2

Statements of Changes in Equity

For the year ended 31 May 2011 Group	Notes	Share capital	Share premium	Trans-lation reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 1 June 2009		495	1,609	(79)	1,203	3,228
Total comprehensive income for the year
Profit for the year		-	-	-	517	517
Other comprehensive income
Foreign currency translation differences for foreign operations		-	-	11	-	11
Contributions by and distributions to owners
Dividends paid	3	-	-	-	(249)	(249)
Share based payments transactions		-	-	-	(11)	(11)
Shares issued		2	10	-	-	12
Balance at 31 May 2010 and 1 June 2010		497	1,619	(68)	1,460	3,508
Total comprehensive income for the year
Profit for the year		-	-	-	482	482
Other comprehensive income
Foreign currency translation differences for foreign operations		-	-	(14)	-	(14)
Contributions by and distributions to owners
Dividends paid	3	-	-	-	(249)	(249)
Share based payments transactions		-	-	-	18	18
Balance at 31 May 2011		497	1,619	(82)	1,711	3,745

Company	Notes	Share capital	Share premium	Retained earnings	Total equity
		£'000	£'000	£'000	£'000
Balance at 1 June 2009		495	1,609	1,294	3,398
Comprehensive income for the year
Profit for the year		-	-	488	488
Contributions by and distributions to owners
Dividends paid	3	-	-	(249)	(249)
Share based payments transactions		-	-	(11)	(11)
Shares issued		2	10	-	12
Balance at 31 May 2010 and 1 June 2010		497	1,619	1,522	3,638
Comprehensive income for the year
Profit for the year		-	-	438	438
Contributions by and distributions to owners
Dividends paid	3	-	-	(249)	(249)
Share based payments transactions		-	-	18	18
Balance at 31 May 2011		497	1,619	1,729	3,845

Statements of Financial Position

As at 31 May 2011	Notes	Group		Company
		2011	2010	2011	2010
		£'000	£'000	£'000	£'000
Assets
Property, plant and equipment		73	74	71	72
Intangible assets		1,048	1,177	809	938
Investments in subsidiaries		-	-	422	422
Deferred tax assets		32	9	32	9
Total non-current assets		1,153	1,260	1,334	1,441
Inventories		206	244	204	242
Trade and other receivables		2,276	2,402	2,196	2,318
Cash and cash equivalents		1,288	1,119	1,191	1,068
Total current assets		3,770	3,765	3,591	3,628
Total assets		4,923	5,025	4,925	5,069
Equity
Share capital		497	497	497	497
Share premium		1,619	1,619	1,619	1,619
Translation reserve		(82)	(68)	-	-
Retained earnings		1,711	1,460	1,729	1,522
Total equity attributable to equity holders of the company		3,745	3,508	3,845	3,638
Liabilities
Trade and other payables		1,178	1,517	1,080	1,431
Total current liabilities		1,178	1,517	1,080	1,431
Total equity and liabilities		4,923	5,025	4,925	5,069

Statements of Cash Flows

For the year ended 31 May 2011	Notes	Group		Company
		2011	2010	2011	2010
		£'000	£'000	£'000	£'000
Cash flows from operating activities
Profit for the year		482	517	438	488
Adjustments for:
Depreciation and amortisation		168	166	167	164
Foreign exchange differences		(4)	1	-	-
Finance income		(9)	(11)	(9)	(11)
Finance expenses		-	4	-	4
Loss on disposal of property, plant and equipment		-	5	-	5
Impairment of territories held for re-sale		26	23	26	23
Employee share option scheme		18	16	18	16
Income tax expense		168	210	168	210
Operating profit before changes in working capital and provisions		849	931	808	899
Decrease/(increase) in inventories		11	(21)	12	(21)
Decrease/(increase) in trade and other receivables		122	(215)	122	(179)
Decrease in trade and other payables		(334)	(8)	(343)	(3)
Cash generated from operations		648	687	599	696
Interest received		9	11	9	11
Interest paid		-	(4)	-	(4)
Income tax paid		(199)	(230)	(199)	(230)
Net cash from operating activities		458	464	409	473
Cash flows from investing activities
Acquisition of property, plant and equipment		(18)	(8)	(17)	(7)
Acquisition of intangible assets		(20)	(62)	(20)	(62)
Net cash used in investing activities		(38)	(70)	(37)	(69)
Cash flows from financing activities
Shares issued		-	12	-	12
Cancellation of share options		-	(27)	-	(27)
Dividends paid	3	(249)	(249)	(249)	(249)
Repayment of borrowings		-	(50)	-	(50)
Net cash used in financing activities		(249)	(314)	(249)	(314)
Net increase in cash and cash equivalents		171	80	123	90
Cash and cash equivalents at 1 June		1,119	1,037	1,068	978
Effect of exchange rate fluctuations on cash held		(2)	2	-	-
Cash and cash equivalents at 31 May		1,288	1,119	1,191	1,068

Notes

1.         Accounting Policies

General

Stagecoach Theatre Arts plc is a company incorporated in the United Kingdom under the Companies Act 2006.  The Group is primarily involved in operating a franchise network of part-time performing arts and sports schools.

The Company registered address is The Courthouse, Elm Grove, Walton-on-Thames, Surrey, KT12 1LZ.

The consolidated financial statements of the Group as at and for the year ended 31 May 2011 comprise the Company and its subsidiaries (together referred to as the 'Group').  The parent company financial statements present information about the Company as a separate entity and not about its 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').  The parent Company financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs') as applied in accordance with the provisions of the Companies Act 2006.

Basis of preparation

On publishing the parent company financial statements together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual statement of comprehensive income and related notes that form a part of the approved financial statements.

Except as described below, the same accounting policies set out below have, unless otherwise stated, been consistently applied to all the periods presented in the consolidated financial statements.

Going concern

The Group has sufficient 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 statement of comprehensive income

	2011	2010
	£'000	£'000
Current tax expense
Current year	190	222
Adjustments for prior years	1	5
Current tax expense	191	227
Deferred tax credit
Reversal and origination of temporary differences	(22)	(13)
Reduction in tax rate	1	-
Adjustment to tax charge in previous periods	(2)	(4)
Deferred tax credit	(23)	(17)
Total tax expense in statement of comprehensive income	168	210

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

Reconciliation of effective tax rate

The total charge for the period is lower (2010: higher) than the standard rate of corporation tax in the UK of 27.67% (2010: 28%).  The differences are explained below:

	2011	2010
	£'000	£'000
Profit for the year	482	517
Total income tax expense	168	210
Profit before income tax	650	727
Tax using the UK corporation tax rate of 27.67% (2010: 28%)	180	203
Effects of:
International subsidiaries tax rates differences	(11)	-
Unrelieved losses of international subsidiaries	-	3
Permanent tax differences	(1)	3
Reduction in tax rate	1	-
Adjustment to tax charge in previous periods	(1)	1
Total income tax expense	168	210

3.         Dividends

	2011	2010
	£'000	£'000
Amounts recognised as distributions to equity holders in the year
Final dividend for the year ended 31 May 2010 of 2p per ordinary share (2009: 2p).	199	199
Interim dividend for the year ended 31 May 2011 of 0.5p per ordinary share (2010: 0.5p).	50	50
	249	249
Amounts proposed as distributions to equity holders
Proposed final dividend for the year ended 31 May 2011 of 2p per ordinary share (2010: 2p).	199	199

The proposed final dividend had not been approved by shareholders at 31 May 2011 and therefore has not been included as a liability.  The comparative final dividend at 31 May 2010 was also not recognised as a liability in the prior year.

The proposed final dividend of 2p (2010: 2p) per ordinary share will be paid on 19 October 2011 to those shareholders on the register as at 23 September 2011, subject to approval of shareholders.

4.         Earnings per share

	2011	2010
Earnings
Profit for the year for basic and diluted earnings per share (£'000)	482	517
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	9,944	9,938
Dilutive effect of share options ('000)	139	80
Fully diluted weighted average number of shares used for diluted earnings per share ('000)	10,083	10,018
Basic earnings per share (pence)	4.8	5.2
Diluted earnings per share (pence)	4.8	5.2

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 average 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 2006. The information has however been extracted from the Group's statutory accounts for the year ended 31 May 2011 which were approved by the Board on 10 August 2011 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, are 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. 

 

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