Preliminary Results

Stagecoach Theatre Arts PLC 
17 August 2006


Stagecoach Theatre Arts plc - Final Results

17th August 2006

Stagecoach Theatre Arts plc ('Stagecoach Theatre Arts', 'Stagecoach' or the
'Group')

Preliminary Announcement of Final Results for the year ended 31st May 2006

Stagecoach Theatre Arts reports on the continuing growth in the number of
schools and students, whilst developing further its 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 10% to £24.1m

Group turnover £5.7m (2005: £5.7m)

Operating profit of £2,000 (2005: £58,000)

Loss before tax of £195,000 due to Exceptional costs of £184,000 (2005: profit
£60,000)

Total students up 7% to 35,709 (2005: 33,432)

633 Stagecoach and SportsCoach schools and 689 junior classes (2005: 586 and
628)

Launch of the first Early Sporties class in April 2005

Stagecoach Agency secures over 2,700 work placements or auditions for the year

Stagecoach holds its inaugural 'Foundation Course for Teachers of Performing
Arts' in collaboration with RADA and Trinity/Guildhall

Stagecoach students performed at The Drury Lane Theatre in London

David Sprigg, Joint Managing Director, commented:

'We have achieved another year of growth in the number of schools and students
within the core UK business, resulting in a 10% increase in Group network
turnover to £24.1m. We further developed our emerging divisions of SportsCoach,
Mini Stages and Germany, whilst undertaking a fundamental restructuring of our
US operations. In the year ahead we expect to see more growth in the core UK
business, whilst focussing on bringing the emerging divisions towards
profitability.'

Enquiries:

Stagecoach Theatre Arts:                              Tel: [phone]
David Sprigg, Joint Managing Director
Richard Dawson, Finance Director

Evolution Securities:                                   Tel: [phone]
Tom Price

JB Public Relations:                                   Tel: [phone]
John Burley


Chairman's Statement

I am pleased to report on the Group's results for the year ended 31 May 2006.
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 continuing growth in the number of schools and students was reflected in a
10 per cent increase in network turnover to £24.1 million (2005: £21.9 million).
Network turnover reflects total school fees earned over the year by our
franchisees, from the 35,709 students that now attend Stagecoach, SportsCoach
and Mini Stages schools. Group turnover £5.7 million (2005: £5.7 million).

Over the past five years the size of the Group has expanded considerably,
reporting an increase of annual network turnover by 136 per cent from £10.3
million in 2001 to £24.1 million in 2006.

Due to the further investment in and development of the emerging divisions, and
restructuring costs of Stagecoach USA and SportsCoach, the Group reports a loss
for the year of £195,000 (2005: £60,000 profit). The restructuring costs, which
included transferring managed schools to franchises and a reduction in staff
numbers and head office operations, were £184,000. Operating profit was £2,000
(2005: £58,000).

Your Board acknowledges that it has taken longer than expected for the divisions
to be self-sustaining, and we plan for each division to either contribute a
profit to the Group or to be restructured. This approach was evidenced in the
restructuring of the USA and SportsCoach divisions. Although this resulted in
one-off increased costs, SportsCoach is expected to move into operating profit
in the current year and the USA to significantly reduce its losses.

The business model of each division is the same as the core Stagecoach business,
based on economies of scale, requiring a certain number of franchised schools to
generate sufficient income to cover a predominantly fixed administrative cost
base. Your Board's primary objective continues to be to bring each division into
profitability as soon as possible.

Furthermore, your Board is taking steps to reduce Head Office overheads where
possible. A number of potential cost savings in salaries, premises and equipment
overheads have been identified, and plans are in place to reduce these costs.
Further details of the operations of the business are set out in the Joint
Managing Directors' Operating Review.

Loss per share was 2.2 pence (2005: loss 0.2 pence). Your Board does not propose
the payment of a final dividend (2005: nil).

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

Employees

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

During the year 47 new Stagecoach or SportsCoach schools, 51 Early Stages/
Sporties and 10 Mini Stages sessions were opened. There has been another 7 per
cent increase in students attending Stagecoach, SportsCoach and Mini Stages
schools, from 33,432 to 35,709 students, and a 10 per cent increase in network
turnover to £24.1 million.

Your Board anticipates further growth in the network in the year ahead, with 32
new Stagecoach and SportsCoach main schools, 6 Early Stages/Sporties, and 12
Mini Stages schools already contracted to open in September 2006.

The emerging divisions of SportsCoach, Mini Stages, USA and Germany remain
demanding on cash resources in the short term, although the medium to long term
earnings potential of the Group is being enhanced through the development and
expansion of these divisions.

A continuing increase in new franchises, schools and students, and hence a move
into profitability, from any one of these emerging divisions will have a
significant impact on the future earnings of the Group. Your Board expects
SportsCoach to be the first of these divisions to move into operational
profitability.

Graham Cole
Chairman

15 August 2006



Joint Managing Directors' Operating Review

We report on the principal operations and results of the Group for the year
ended 31 May 2006.

Operations

Group Overview

The group has reported an operating profit of £2,000 (2005: £58,000) which is
after meeting the cost of continued investment in the Franchisee network, which
during the year amounted to £175,000 as explained in the Financial Review below.

The Group comprises the core Stagecoach Theatre Arts business in the UK and four
emerging divisions in other disciplines or countries. Stagecoach, which
represents over 90 per cent of the business in terms of student numbers and
turnover, is the clear market-leader for providing performing arts tuition to
children in the UK. The emerging divisions are based upon the same franchise
business model as Stagecoach UK. The Group also runs a Montessori school at its
Head Office in Walton-on-Thames.

The core Stagecoach UK business still accounts for 91 per cent of the network's
students and turnover (2005: 94 per cent). SportsCoach has increased its
relative share of the Group total number of students from 3 per cent last year
to 4 per cent, and both USA and Germany have increased from 1 per cent to 2 per
cent of the total students.

The principle indicator of the Group's growth is the number of schools opened
during the year and the number of students attending those schools. During the
year a total of 29 new franchisees joined the network of schools, 47 new
Stagecoach or SportsCoach Schools opened, 51 new Early Stages or Early Sporties
and 10 new Mini Stages Sessions. The core Stagecoach UK business still accounts
for the majority of new school openings, as shown in the graph overleaf, however
we expect this trend to reverse over time as the emerging divisions expand.

During the year 39 Stagecoach UK main schools were opened. SportsCoach opened
three schools, Mini Stages expanded by 10 sessions, USA one school and Germany
six schools.

In addition to the above, 37, 4 and 3 new Early Stages classes opened during the
year in the UK, USA and Germany respectively, and 7 Early Sporties classes also
opened. These junior classes recruit students at a younger age, and are an
important feeder to the main schools.

Stagecoach Theatre Arts UK

The core Stagecoach UK business continues to perform strongly and has funded the
operational losses of the emerging divisions. Your Board requires each division
to move into profitability as soon as possible.

The number of UK Stagecoach Theatre Arts main schools (for 6 to 16 year olds)
and of students attending them has increased over the year to 573 schools at the
year end with 24,471 students (2005: 534 schools and 23,188 students).

The number of franchisees increased over the period under review from 220 to
241, 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 Stagecoach schools per franchisee remains level at 2.3 schools.
Including the 21 new franchisees that joined the network during the year there
are 48 franchisees operating only one school, highlighting the potential for
further growth within the existing UK network. There are several franchisees
that run five or six schools.

The average occupancy rate as at the year-end date is 42.7 students per school,
or 94.9 per cent (2005: 96.4 per cent). Although a small decrease from last
year, the percentage occupancy rate throughout the core Stagecoach UK network
remains strong.

We are committed to ensuring the highest standards of education throughout the
network, having provided Training Workshops for franchisees and teachers during
the year. In April, we held the inaugural 'Foundation Course for Teachers of
Performing Arts' in collaboration with RADA and Trinity/Guildhall. During the
year we also provided tailored marketing workshops for franchisees requiring
additional assistance with student recruitment. Such measures should have a
positive impact on the average occupancy rate across the network going forward.

Stagecoach enters its third year of partnership with First Choice, one of the
UK's leading tour operators, to offer Stagecoach classes within First Choice
holiday resorts. In Summer 2005 over 1,000 students attended the performing arts
workshops at First Choice resorts in Spain, Mallorca, Lanzarote and Turkey.

The number of Early Stages classes increased over the year by 37 classes to 611
at the year-end with 8,000 students attending (2005: 574 Early Stages classes
and 7,544 students). Early Stages classes provide performing arts tuition to
younger students aged 4 to 6 years and are an important feeder to the main
schools.

During the year we formalised independent inspections for the Early Stages
classes, as we undertake for our main schools network, thus further ensuring
quality control of the performing arts tuition provided.

The core Stagecoach UK business showed strong growth in all areas and reported
an increase in network turnover of 9 per cent to £22.1 million (2005: £20.3
million). The number of students attending Stagecoach schools in the UK,
including Early Stages classes, increased from 30,843 to 32,650 students.

After attributing a proportion of the Head Office overheads, the divisional
profit before tax of the core Stagecoach UK business was £922,000 (2005:
£918,000).

Mini Stages

Mini Stages, musical fun for six months to four-year-olds accompanied by a
parent, is the newest franchise offering by the Group.

Your Board expects that once the Mini Stages network is fully established across
the UK, not only will it provide new revenue streams as a stand-alone network
but also bring further awareness of Stagecoach Theatre Arts training to parents
of children at a younger age. The symbiotic relationship between Mini Stages and
Stagecoach schools should provide a competitive edge for the Stagecoach Group.

During the year significant changes to the franchise offering were made. They
included promoting weekday Mini Stages rather than weekends, and seeking
franchisees to teach the sessions as opposed to manage the operations. The Mini
Stages business model is such that new schools can open throughout the academic
year.

At year-end there were 19 Mini Stages schools (or venues), from which 45
teaching sessions were held, and a total of 442 students attending (2005: 13
venues, 35 sessions and 370 students). In addition the licensee in Malta, who
runs 11 Stagecoach schools, opened its first Mini Stages classes in January
2006, with already 98 Mini Stages students attending.

Each Mini Stages class (or session) comprises up to 15 students. The average
occupancy rate for the Mini Stages network as at the year-end date was 9.8
students per class, or 65 per cent capacity. The focus for the year ahead is to
assist franchisees with increasing student numbers across the network.

The network turnover of Mini Stages, representing the total student fees charged
across the network for the year increased by 68 per cent to £123,000 (2005:
£73,000).

This year represented one of investment of time and resources in restructuring
the Mini Stages concept and sale of the franchises. The business model of Mini
Stages is such that it requires a certain critical mass of schools opened to
meet its predominantly fixed cost base. Your Board aims to achieve a divisional
operating profit as soon as possible.

As a result of the changes in the franchise offering, the pipe line for new Mini
Stages franchises is encouraging with 12 new Mini Stages franchisees already
contracted to open their schools in September 2006.

The Mini Stages division reported a loss after the allocation of overheads of
£272,000 for the year (2005: loss of £267,000).

SportsCoach schools

This year represented one of consolidation and restructuring within the
SportsCoach franchise network, refining the franchise offering and developing
new marketing strategies for student recruitment. At year-end there were 34
schools, 8 Early Sporties and 1,360 students (2005: 33 schools, 1 Early Sporty
and 1,134 students).

During the year we reviewed the advertising and marketing material of
SportsCoach, so as to inform parents that SportsCoach is for children of all
abilities and those who wish to have fun in sports, not just children with
sporting ability. We also provided additional student recruitment training for
franchisees. As expected this has had a positive impact on occupancy levels,
increasing to 76.7 per cent compared to 71.7 per cent at year-end 2005. The
revised marketing strategy is now part of the standard franchise offering for
new SportsCoach franchisees.

Early Sporties, a fun introduction to sports for 4 to 6 year olds, was offered
to the franchise network after having been successfully piloted in April 2005.
This is equivalent to the hugely successful Early Stages classes for the main
Stagecoach Theatre Arts business, acting as an introduction to SportsCoach for
younger children. At year-end there were 8 Early Sporties classes with 109
students (85.2 per cent occupancy).

SportsCoach has teamed up with First Choice, one of the UK's leading tour
operators, to provide sporting activities for children aged 6-16 years at one of
their flagship European resorts for Summer 2006. The intention is to roll out
the programme to a further six resorts giving SportsCoach increased profile to
its target audience and getting youngsters inspired to join their local school
when returning to the UK.

Having successfully piloted the nationally recognised 'Junior Sports Leaders
Award', SportsCoach will be introducing this highly valued programme to the
network. The course takes students a year to complete and is fully approved by
the Qualification and Curriculum Authority. Our first successful candidates were
presented with their awards at SportsCoach Cheam in June.

The network turnover of SportsCoach, representing the total student fees charged
across the network for the year, increased by 21 per cent to £977,000 (2005:
£806,000).

SportsCoach division reported a loss for the year, after the allocation of
overheads, of £250,000 (2005: loss of £233,000). These losses included
re-organisational costs for SportsCoach, transferring managed schools to
franchises and a reduction in head office staffing, resulting in an estimated
one-off cost to the Group of £39,000.

We expect the SportsCoach division to be the first new division to contribute a
profit to the Group. There are 5 new SportsCoach franchise schools already
contracted to open in September 2006.

Stagecoach Theatre Arts USA

This year represented a period of major restructuring of the business operations
of the Stagecoach USA subsidiary, significantly reducing the US head office
operations.

As part of this process we transferred the three managed schools to franchise
schools, thus from the Summer Term 2006 onwards there are no managed school
operations in the USA. This has allowed us to significantly reduce the US head
office costs. We reduced the number of employees from three full-time to one
part-time Operations Officer, and subsequently reduced our head office overheads
and other direct costs associated with running managed schools. Such action,
together with a policy of writing off the stock value of the managed schools
transferred to franchisees, has significantly increased the accounting losses in
the year under review. The cost reduction benefits of this restructuring will be
evident in the year ahead.

As at the year-end there were 558 students attending Stagecoach USA's 13 schools
and 13 Early Stages classes (2005: 479 students attending 12 schools and 9 Early
Stages classes). The Stagecoach USA network also runs a successful Summer
Workshop programme, with nine weeks of workshops scheduled over the Summer 2006.

The average student numbers per school across the US network increased slightly
from 32.4 students to 32.5 students (or 72 per cent occupancy).

The main focus for the year ahead continues to be to increase the average
student numbers across the US network, so as to ensure maximum profitability for
existing franchisees, enabling them to open subsequent schools, and attract new
franchisees to the network.

The network turnover of Stagecoach USA, representing the total student fees
charged across the network for the year, increased by 59% to £382,000 (2005:
£241,000).

After accounting for the restructuring costs of £145,000, the wholly-owned
Stagecoach USA subsidiary reported an operational loss for the year of £304,000.
Adding back these exceptional items, the adjusted unaudited loss is estimated at
£159,000 (2005: loss of £154,000). We expect the losses to be significantly
reduced in the year ahead following the restructuring.

Stagecoach Theatre Arts Germany

This year represented the first full year of franchising in Germany for the
Stagecoach Group. During the year a further six main schools and three Early
Stages classes opened in Germany.

Stagecoach franchise schools are now operating across Germany, in Berlin,
Frankfurt, Hanover, Stuttgart and Erlangen, and managed schools in and around
Nuremburg.

In preparation for the expansion of the German Stagecoach network we have
increased our marketing activity for new franchisees. The network is expected to
grow further over the next year.

As at the year-end there were 591 students attending Stagecoach Germany's 13
schools and 12 Early Stages classes (2005: 334 students attending 7 schools and
9 Early Stages classes). The average student numbers per school across the
German network increased to 36.7 at the year-end (2005: 34.7 students).

The main focus for the year ahead will be to further expand the Stagecoach
network throughout Germany. Three new franchise schools are already contracted
to open in September 2006.

The network turnover of Stagecoach Germany, representing the total student fees
charged across the network for the year, increased by 70 per cent to £335,000
(2005: £197,000). The 90 per cent owned Stagecoach Germany subsidiary reported a
loss of £95,000 for the year (2005: loss of £112,000).

Other overseas operations

The Group continues to provide support for its other overseas operations and
interests in Stagecoach Theatre Arts schools in Australia, Gibraltar, Malta, the
Republic of Ireland and Spain. Collectively, these operations provide a small
profit to the Group.

Your Board has identified overseas licensing of the Stagecoach Theatre Arts
brand and use of our established systems as a possible future profit-centre for
the Group. As such we are looking for overseas people or organisations with a
background in the performing arts and some business experience who have a desire
to operate Stagecoach schools in their country.

Stagecoach Agency

As the biggest children's performing arts agency in the UK the Stagecoach Agency
has continued to expand its influence within the entertainment industry. In its
first full year of operation the Agency has secured over 2,700 professional
auditions or actual work placements for Stagecoach students.

By providing a comprehensive range of services to Casting Directors and
Production Companies the Stagecoach Agency is obtaining increasingly more
opportunities for Stagecoach school students to take part in a wide range of
entertainment platforms including; TV and Film, Commercials and Corporate
Videos, Theatre, Radio Dramas, Photo Shoots and Promotions, Musicals and
Voice-Overs.

Assignments won by the Agency within the year include parts for students in most
major television series and many other high profile productions, both domestic
and international. The Agency's success offers excellent publicity opportunities
for individual Stagecoach schools throughout the UK.

Financial Review

There was an increase in the number of schools and students across the Group and
a 10 per cent increase in network turnover to £24.1 million. Group turnover for
the year was £5.7 million (2005: £5.7 million).

The core Stagecoach UK business continues to fund the growth of the emerging
divisions. Your Board's primary objective is to bring each division into
profitability as soon as possible.

Furthermore, your Board has taken steps to reduce Head Office overheads where
possible. Further cost savings in salaries, premises and equipment costs are
expected in the year ahead.

The Group invested in and developed an online data management system for use by
the franchise network to manage their school records. This Internet system
allows franchisees to maintain their registers, monitor fees payable, manage
their school administration and correspond effectively with parents. The system
also provides important real-time management information for the Group. The
Group has also developed a new website for franchisees to attract and register
new students. The development costs of these systems are shown in the balance
sheet as fixed assets.

The emerging divisions were a draw on the Group's cash resources during the
year. As at 31 May 2006, the net cash balances of the Group were £45,000 (2005:
£504,000). With the exception of the new data management system, which was
partially funded by a bank loan, the Group had little capital expenditure during
the year. The Company continues to operate an overdraft facility of £800,000,
with increases of up to £1 million at peak requirements, to manage its working
capital.

The Group receives the majority of its cash in-flow three times a year, six
weeks into each academic term from franchise fees for that term. The positive
cash balance for the Group at 30 June 2006 was £1.1 million.

Operating profit for the year was £2,000 (2005: £58,000). After exceptional
costs and interest payments, loss before tax was £195,000 (2005: profit of
£60,000). This loss is attributed to the further investment in and development
of the emerging divisions, and in particular the exceptional fundamental
restructuring costs, primarily of Stagecoach USA, of £184,000. These
restructuring costs included transferring managed schools to franchises and a
reduction in staff numbers and head office operations going forward.

The Board has continued to invest in the infrastructure and resources for the
benefit of the Franchisee network and promote the continued growth in student
numbers, schools and territories. Although the AMP expenditure incurred in the
current year will be for the long-term benefit of the Franchisees and
Stagecoach, and will ultimately be funded through the annual AMP contributions,
accounting standards do not always allow for the deferral of such expenditure.
Consequently, the current year group profit and loss includes a charge of
£175,000 for AMP expenditure which although for the long-term benefit of the
Franchisees and the Group, cannot be deferred or capitalised.

The number of employees (full time equivalents) employed by the Group is 65 as
at 31 May 2006 (2005: 67 full time equivalent employees).

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 Educational Department is committed to being at the forefront of
standards of education in the performing arts.

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:

In June 2005, 500 students from 10 Stagecoach schools performed at Nottingham's
Royal Concert Hall in aid of charity.

The annual 'Easy Stages' show-case production in August 2005, being 'Gypsy
Blood', written and directed by Stagecoach's own Director of Education Veronica
Bennetts, featured 70 Stagecoach students from schools across the country and
overseas.

In August, 380 students from 12 Stagecoach schools performed at the Dance, Drama
and Music Extravaganza at Birmingham's NEC over the two day exhibition.

In November, 400 Stagecoach students performed a selection of dance and singing
routines at The Theatre Royal, Drury Lane, London, celebrating eighteen years of
Stagecoach Theatre Arts success.

In April and May 2006, Stagecoach students attended a post production workshop
at Les Miserables, where they met cast, crew and members of the creative team
after watching a matinee performance.

In May 2006, 130 students from several Stagecoach schools performed at The
Nottingham Playhouse in a charity concert in aid of Childline.

Stagecoach's training, together with these extra-curricular performing
opportunities, offers immense benefits to students in the growth of confidence
and 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.

Stephanie Manuel                           David Sprigg
Joint Managing Director                    Joint Managing Director

15 August 2006


Stagecoach Theatre Arts plc
Consolidated Profit and Loss Account
Year ended 31 May 2006
                                                                        Notes          2006              2005
                                                                                       £'000             £'000

Turnover                                                                2              5,673             5,746

Cost of sales                                                                          (3,330)           (3,480)

Gross profit                                                                           2,343             2,266

Administrative expenses                                                                (2,358)           (2,246)
Other operating income                                                                 17                38

Operating profit                                                                       2                 58

Exceptional costs                                                                      (184)             -

                                                                                       (182)             58

Interest receivable                                                                    11                14
Interest payable and similar charges                                                   (24)              (12)

(Loss)/profit on ordinary activities before taxation                                   (195)             60

Taxation                                                                3              (22)              (79)

Loss on ordinary activities after taxation                                             (217)             (19)

Minority interest                                                                      3                 7

Loss for the year transferred to reserves                                              (214)             (12)



Loss per share, pence - Basic                                           5              (2.2)             (0.2)

- Diluted                                                               5              (2.2)             (0.2)


A Statement of Recognised Gains and Losses is not presented as all recognised
gains and losses are included in the profit and loss account.

All amounts relate to continuing operations.



Stagecoach Theatre Arts plc
Consolidated Balance Sheet
As at 31 May 2006
                                                      Notes                  2006                         2005
                                                                 £'000       £'000            £'000       £'000

Fixed assets
Intangible fixed assets                                          735                          794
Tangible fixed assets                                            673                          112
                                                                             1,408                        906

Current assets
Stocks                                                           279                          262
Debtors                                                          2,128                        2,208
Cash at bank and in hand                                         304                          504

                                                                 2,711                        2,974

Creditors
Amounts falling due within one year                              (1,762)                      (1,362)

Net current assets                                                           949                          1,612

Total assets less current liabilities                                        2,357                        2,518

Creditors
Amounts falling due after one year                                           (57)                         -

Net assets                                                                   2,300                        2,518



Capital and reserves
Share capital                                                                494                          494
Share premium                                                                1,601                        1,601
Profit and loss account                                                      220                          435

                                                                             2,315                        2,530

Minority interests                                                           (15)                         (12)

Equity shareholders' funds                                                   2,300                        2,518


The financial statements were approved and authorised for issue by the board and
were signed on its behalf on 15 August 2006.



Stagecoach Theatre Arts plc
Consolidated Cash Flow Statement
Year ended 31 May 2006
                                                      Notes                  2006                         2005
                                                                 £'000       £'000            £'000       £'000


Net cash (outflow)/inflow from operating activities   6                      (14)                         417

Returns on investments and servicing of finance
Interest received                                                11                           14
Interest paid and interest element of finance lease              (24)                         (12)
rental repayments
                                                                             (13)                         2
Taxation
Corporation tax paid                                                         (59)                         (148)

Capital expenditure
Proceeds on disposal of fixed assets                             -                            25
Payments to acquire tangible fixed assets                        (454)                        (35)
                                                                             (454)                        (10)
Acquisitions and disposals
Purchase of subsidiary                                                       -                            (16)

Equity dividends paid                                                        -                            (195)

Net cash (outflow)/inflow before financing                                   (540)                        50

Financing
Gross proceeds from the issue of shares                          -                            64
Capital element of hire purchase payments                        -                            (26)
Proceeds from bank loan                                          100                          -
Repayment of bank loan                                           (19)                         -
                                                                             81                           38
(Decrease)/increase in cash at bank and in hand                              (459)                        88




Stagecoach Theatre Arts plc

Year ended 31st May 2006

Notes to the Financial Statements

Accounting Policies

Basis of preparation

The financial statements have been prepared in accordance with applicable
Accounting Standards and 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 2006 which were approved by the Board on 15th August
2006 and on which the Group's auditors have given an unqualified opinion.

Turnover by geographical location

                                                                               2006             2005
                                                                               £'000            £'000

UK                                                                             5,153            5,340
Europe                                                                         335              238
Rest of the world                                                              185              168

Total turnover                                                                 5,673            5,746

Turnover is analysed on an origination basis and is all derived from external
customers.

Taxation

a)     Analysis of the tax charge

The tax charge on the profit on ordinary activities for the year was as follows:

                                                                               2006             2005
                                                                               £'000            £'000

UK corporation tax       - current year tax                                    35               76
                         - prior year tax                                      (14)             (2)
                         - deferred tax                                        1                8
Germany corporation tax  - prior year tax                                      -                (3)

                                                                               22               79

UK corporation tax has been charged at 30% (2005: 30%).

b)     Reconciliation of the tax charge

                                                                               2006             2005
                                                                               £'000            £'000

(Loss)/profit on ordinary activities before tax                                (195)            60

(Loss)/profit on ordinary activities at standard rate                          (59)             18

of UK corporation tax of 30%
Effects of:
Unrelieved losses of overseas subsidiaries                                     74               43
Expenses not deductible for tax purposes                                       27               18
Adjustment to tax charge in previous periods                                   (14)             3
Marginal relief                                                                (6)              (3)
Current tax charge for year                                                    22               79

Dividends

Your Board does not propose the payment of a final dividend (2005: nil).

Loss per share

Basic loss per share, calculated in accordance with FRS22 (Earnings per share)
is 2.2 pence (2005: 0.2 pence). This is based on the loss on ordinary activities
after tax of £216,764 (2005: £19,273) apportioned over the weighted average
number of ordinary shares that were in issue for the period of 9,879,317 (2005:
9,773,723). Fully diluted loss per share is calculated at 2.2 pence (2005: 0.2
pence), based upon weighted average number of ordinary shares, including options
granted to employees, of 9,887,327 (2005: 9,842,631).

Reconciliation of operating profit to operating cash flows

                                                                               2006             2005
                                                                               £'000            £'000

Operating profit                                                               2                58
Exceptional costs                                                              (184)            -
Depreciation and amortisation of goodwill                                      102              103
Profit on disposal of fixed assets                                             -                (6)
(Increase)/decrease in stocks                                                  (16)             15
Decrease/(increase) in debtors                                                 65               (198)
Increase in creditors                                                          13               443
Foreign exchange differences                                                   4                2

Net cash (outflow)/inflow from operating activities                            (14)             417

Analysis of changes in net funds

                                                               At               Cashflow        At
                                                               1 June 2005                      31 May 2006
                                                               £'000            £'000           £'000

Cash at bank and in hand                                       504              (200)           304
Bank overdraft                                                 -                (259)           (259)

                                                               504              (459)           45

Bank loan due within one year                                  -                (24)            (24)
Bank loan due after one year                                   -                (57)            (57)

                                                               504              (540)           (36)












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