Half Yearly Report

RNS Number : 2253Y

Stagecoach Theatre Arts PLC

28 February 2012

 



Stagecoach Theatre Arts plc (AIM: STA)

("Stagecoach" or "the Group")

Interim Results

for the six months ended 30 November 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, which reflect total school fees earned over the period by franchisees, decreased slightly to £12.9 million (2010: £13.2 million) reflecting the reduction in student numbers. 

·     Group revenue decreased slightly to £2.8 million (2010: £2.9 million). 

·     Loss before tax was £66,000 (2010: profit £72,000) reflecting a 3.6% fall in turnover due to a small decrease in student numbers combined with a necessary and planned increase in advertising and marketing spend for future recruitment of new students across the franchise network. 

·     Loss per share during the period was 0.4 pence (2010: Earnings per share 0.6 pence). 

Operational

·    Total number of students attending schools during the Autumn Term 2011 was down slightly by 2.4% to 
38,291 students (2010: 39,221 students).  The net reduction in main schools reflects some closures or mergers of Stagecoach UK schools in those areas of the country hardest hit by the economic downturn.

·    The average occupancy remains at over 90% of all places filled. 

·    Following sustained investment in advertising and marketing for new students, the Group saw a modest 
increase in student numbers between Summer Term 2011 to Autumn Term 2011.

·    German operations continue to expand steadily, with another two more schools opening, giving a total of 26 
schools in Germany with 1,226 students attending as at the Autumn Term 2011 (Autumn Term 2010: 24 schools and 1,088 students). 

·    In North America, three new franchisees opened schools in Canada during the Autumn Term 2011.  The number of Stagecoach schools and students attending has increased to 16 and 954 respectively (Autumn Term 2010: 13 schools and 656 students). 

·    The Board remains committed to bringing each part of the business to profitability. 

Graham Cole, Chairman, commented:

"Trading has generally remained level during this difficult economic period, although we have felt the effects of the downturn on schools and student numbers in the UK.  However, we have demonstrated our resilience during previous recessions and throughout our 24 year history and are pleased that the demand for performing arts tuition remains strong." 

"We continue to increase our investment in advertising and marketing for students, both at home and overseas. The outlook for our operations in Germany and North America is encouraging.  We continue to offer the highest standards of education in performing arts and sports tuition for children." 

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

Results and Overview

Trading has generally remained level during this difficult economic period, although we have felt the effects of the downturn on schools and student numbers in the UK.  However, we have demonstrated our resilience during previous recessions and throughout our 24 year history and are pleased that the demand for performing arts tuition remains strong. 

We report on a loss before tax for the six months to 30 November 2011 of £66,000 (2010: profit before tax £72,000).  The reduction in profit results from a 3.6% fall in turnover due to a small decrease in student numbers, combined with a necessary and planned increase in advertising and marketing spend for future recruitment of new students across the franchise network. 

The total number of students attending our schools during the Autumn Term 2011 were down slightly by 2.4% to 38,291 students, compared to the prior period (2010: 39,221 students), although the average occupancy still remains at over 90% of all places filled.  With the sustained investment in advertising and marketing for students, we are pleased to report on a small increase of 216 students (0.6%) from the Summer Term 2011 to this Autumn Term 2011.

Network fees, which reflect total school fees earned over the period by our franchisees, decreased slightly to £12.9 million (2010: £13.2 million) reflecting the reduction in student numbers over the year.  Group revenue decreased slightly to £2.8 million (2010: £2.9 million). 

Loss per share for the six month period was 0.4 pence (2010: Earnings per share 0.6 pence). 

Operating Performance

UK Operations

The number of Stagecoach Theatre Arts schools in the UK and students attending during the Autumn Term 2011 decreased to 593 schools, 718 Early Stages classes and 34,047 students (2010: 611 schools, 722 Early Stages classes and 34,956 students).  The net reduction in main schools reflects some closures or mergers of Stagecoach UK schools in those areas of the country hardest hit by the economic downturn.

There has been a small decrease in both the average student numbers per main school to 41.2 students (2010: 41.5) and Early Stages students per class to 12.9 (2010: 13.0).  However, encouragingly, average students per main school have increased this Autumn Term 2011 since the low point of 40.7 students as at Summer Term 2011.

We have enjoyed another busy six months for large-scale performances and events across the network.  In June 2011, and again in November 2011, over 600 students performed at Her Majesty's Theatre in London's West End.  In August, we staged our annual showcase, the musical The Secret Garden, at the Leatherhead Theatre featuring 78 students from schools in the UK, Canada, Ireland, USA, Spain and Germany. 

Our SportsCoach network has 14 SportsCoach schools, 11 Early Sporties Classes and 581 students (2010: 18 schools, 9 Early Sporties and 740 students).  We also have 90 Mini Stages students attending classes operated at our Head Office and 110 Montessori nursery students (2010: 81 and 98 students respectively). 

International Operations

It is pleasing to see our German operations continue to expand steadily, with another two Stagecoach schools opening, giving a total of 26 schools in Germany with 1,226 students attending as at the Autumn Term 2011 (Autumn Term 2010: 24 schools and 1,088 students).  In North America, three new franchisees opened schools in Canada during the Autumn Term 2011.  Average student attendance across North America has improved, and the number of Stagecoach schools and students attending has increased to 16 and 954 respectively (Autumn Term 2010: 13 schools and 656 students). 

In our overseas markets, comprising Germany, USA, Canada, Malta, Ireland, Spain, Gibraltar, Greece, South Africa and Australia, there are now 68 Stagecoach schools, 69 Early Stages classes, 2 Further Stages classes, 9 Mini Stages sessions and a total of 3,463 students (2010: 63 Stagecoach schools, 59 Early Stages classes, 3 Further Stages classes, 12 Mini Stages sessions and a total of 3,346 students). 

Strategy

Your Board remains committed to bringing each part of our business to profitability.  We continue to invest in the German and North American markets, taking a long term view that these Stagecoach networks have the most potential to emulate the success of Stagecoach UK.  

Our key objectives remain as follows:

·     further growth in the UK, once the economic climate improves

·     growth from international operations

·     tight management of overheads, and thus maintaining our cash reserves

The Group also continues to support The Stagecoach Charitable Trust, which runs InterAct classes and theatre workshops, providing inclusive performing arts tuition to children of all abilities and needs.

Current Trading and Future Prospects

We continue to increase our investment in advertising and marketing for students, both at home and overseas.  Trading has remained broadly flat despite this difficult economic period, although we have felt the effects of the economic downturn on schools and student numbers in the UK.  The outlook for our operations in Germany and North America is encouraging.  We continue to offer the highest standards of education in performing arts and sports tuition for children. 

Graham Cole

Chairman

 

28 February 2012

Responsibility Statement of Directors

in respect of the Half-year Report

We confirm that to the best of our knowledge:

(a)  The condensed set of financial statements has been prepared in accordance with IAS34 "Interim Financial Reporting" as adopted by the EU.

(b)  The half-year management report includes a fair review of the information required by:

·   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed half-year financial statements; and a description of the principal risks and uncertainties of the remaining six months of the year; and

·   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By Order of the Board:

David Sprigg                                                                             Stephanie Manuel

Joint Managing Director                                                          Artistic Director         

                                                                                                  and Joint Managing Director

28 February 2012

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 November 2011

		Six months ended			Year ended
		30 Nov		30 Nov	31 May
		2011		2010	2011
	Notes	£'000		£'000	£'000
Network fees (see note)		12,909		13,201	29,304
Revenue	2	2,819		2,923	5,987
Cost of sales		(1,829)		(1,761)	(3,092)
Gross profit		990		1,162	2,895
Other income		10		10	20
Administrative expenses		(1,071)		(1,105)	(2,274)
Results from operating activities	2	(71)		67	641
Finance income		5		5	9
Net finance income		5		5	9
(Loss)/profit before income tax		(66)		72	650
Income tax income/(expense)	3	22		(14)	(168)
(Loss)/profit for the period to equity holders of the parent		(44)		58	482
Other comprehensive income/(expense)
Foreign currency translation differences for foreign operations		5		(7)	(14)
Total comprehensive (expense)/income for the period attributable to equity holders of the parent		(39)		51	468
(Loss)/earnings per share (pence)
-     Basic earnings per share	5	(0.4)		0.6	4.8
-     Diluted earnings per share	5	(0.4)		0.6	4.8

The above results relate to continuing operations.

Unaudited Condensed Consolidated Statement of Changes in Equity

For the six month period ended 30 November 2011

	Share capital	Share premium	Translation reserve	Profit and loss account	Total equity
	£'000	£'000	£'000	£'000	£'000
At 1 June 2010	497	1,619	(68)	1,460	3,508
Total comprehensive income for the period
Profit for the six months ended 30 November 2010	-	-	-	58	58
Other comprehensive income
Foreign currency translation differences for foreign operations	-	-	(7)	-	(7)
Contributions by and distributions to owners
Dividends paid	-	-	-	(199)	(199)
Share based payments	-	-	-	9	9
Balance at 30 November 2010 and 1 December 2010	497	1,619	(75)	1,328	3,369
Total comprehensive income for the period
Profit for the six months ended 31 May 2011	-	-	-	424	424
Other comprehensive income
Foreign currency translation differences for foreign operations	-	-	(7)	-	(7)
Contributions by and distributions to owners
Dividends paid				(50)	(50)
Share based payments	-	-	-	9	9
Balance at 31 May 2011 and 1 June 2011	497	1,619	(82)	1,711	3,745
Total comprehensive income for the period
Loss for the six months ended 30 November 2011	-	-	-	(44)	(44)
Other comprehensive income
Foreign currency translation differences for foreign operations	-	-	5	-	5
Contributions by and distributions to owners
Dividends paid	-	-	-	(200)	(200)
Share based payments	-	-	-	(3)	(3)
Shares issued	3	17	-	-	20
Balance at 30 Nov 2011	500	1,636	(77)	1,464	3,523

Unaudited Condensed Consolidated Statement of Financial Position

As at 30 November 2011

	30 Nov	30 Nov	31 May
	2011	2010	2011
	£'000	£'000	£'000
Assets
Property, plant and equipment	88	67	73
Intangible assets - Goodwill	981	981	981
Intangible assets - Computer software	163	142	67
Deferred tax assets	32	9	32
Total non-current assets	1,264	1,199	1,153
Inventories	171	245	206
Trade and other receivables	1,585	1,471	2,276
Cash and cash equivalents	1,827	1,586	1,288
Total current assets	3,583	3,302	3,770
Total assets	4,847	4,501	4,923
Equity
Share capital	500	497	497
Share premium	1,636	1,619	1,619
Translation reserve	(77)	(75)	(82)
Retained earnings	1,464	1,328	1,711
Total equity attributable to equity holders of the company	3,523	3,369	3,745
Liabilities
Trade and other payables	1,324	1,132	1,178
Total current liabilities	1,324	1,132	1,178
Total equity and liabilities	4,847	4,501	4,923

Unaudited Condensed Consolidated Statement of Cash Flows

For the six month period ended 30 November 2011

	Six months ended			Year ended
	30 Nov		30 Nov	31 May
	2011		2010	2011
	£'000		£'000	£'000
Cash flows from operating activities
(Loss)/profit for the period	(44)		58	482
Adjustment for:
Depreciation and amortisation	36		82	168
Foreign exchange differences	3		1	(4)
Finance income	(5)		(5)	(9)
Loss on disposal of property, plant and equipment	4		-	-
Impairment of territories held for re-sale	18		-	26
Employee share option scheme	19		9	18
Income tax (income)/expense	(22)		14	168
Operating profit before changes in working capital and provisions	9		159	849
Decrease/(increase) in inventories	17		(1)	11
Decrease in trade and other receivables	694		924	122
Increase/(decrease) in trade and other payables	192		(290)	(334)
Cash generated from the operations	912		792	648
Interest received	5		5	9
Income tax paid	(94)		(108)	(199)
Net cash from operating activities	823		689	458
Cash flows from investing activities
Acquisition of property, plant and equipment	(31)		(1)	(18)
Acquisition of intangible assets	(51)		(20)	(20)
Net cash used in investing activities	(82)		(21)	(38)
Cash flows from financing activities
Shares issued	20		-	-
Cancellation of share options	(22)		-	-
Dividends paid	(200)		(199)	(249)
Net cash used in financing activities	(202)		(199)	(249)
Net increase in cash and cash equivalents	539		469	171
Cash and cash equivalents at beginning of the period	1,288		1,119	1,119
Effect of exchange rate fluctuations on cash held	-		(2)	(2)
Cash and cash equivalents at end of the period	1,827		1,586	1,288

Notes to the Unaudited Condensed Consolidated Half-year Financial Statements

For the six month period ended 30 November 2011

1.       Accounting Policies

General

Stagecoach Theatre Arts plc is a company incorporated in the UK.  The Group is primarily involved in operating a franchise network of part-time performing arts and sports schools.

The condensed consolidated half-year financial statements for the six months ended 30 November 2011 consolidate those of the Company and its subsidiaries (together referred to as the 'Group').

Statement of compliance

The Group's consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').  These condensed consolidated half-year financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the EU.  They do not include all of the information for full consolidated annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 May 2011, which are available upon request from the Company's registered office or at www.stagecoach.co.uk.

The comparative figures for the financial year ended 31 May 2011 are not the Company's statutory accounts for that financial year and do not constitute the statutory accounts as defined in section 434 of the Companies Act 2006.  Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditors on those accounts was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

These condensed consolidated half-year financial statements were approved by the Board of Directors on 28 February 2012.

Basis of preparation

Except as described below, the same accounting policies and presentation methods of computation are followed in the condensed consolidated half-year financial statements as applied in the Group's latest consolidated annual audited financial statements for the year ended 31 May 2011.  

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 half-year report and annual financial statements.

Changes in accounting policy

In the current financial year the Group has adopted the following interpretations to existing standards, which became mandatory for the Group's accounting period beginning on 1 June 2011:

IAS 24 (Revised 2009) 'Related Party Transactions (Amendment)', clarifies the definitions of a related party.  The new definitions emphasise a symmetrical view of related party relationships as well as clarifying in which circumstances persons and key personnel affect related party relationships of an entity.  Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity.  The adoption of the amendment did not have any impact on the financial position or performance of the Group.

Measurement convention

The condensed consolidated half-year financial statements are presented in sterling, rounded to the nearest thousand and are prepared on the historical cost basis.

Use of estimates and judgements

The preparation of condensed consolidated half-year financial statements in conformity with Adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

2.       Segment Reporting

In respect of IFRS 8 'Operating Segments', the Board of Directors believe that the Group has one reportable group of related services and products, being children's education through the performing arts via franchising (Stagecoach, SportsCoach and Montessori) as all activities have similar economic characteristics.  The Stagecoach franchising operation includes the Stagecoach Agency and creative and educational activities, which are an integral part of the product offering to the students and are not reviewed as separate operations by the Board of Directors. 

Segment information is provided and reviewed on the basis of geographic areas: UK, the home country of the parent company, and International, the franchising operations in North America, Europe and the Rest of the World, being the basis on which the Group manages its worldwide interests.  International operations are considered to have similar long term economic characteristics and are aggregated below.

The Board of Directors review network fees and the statement of comprehensive income in these segments, and the statement of financial position and statement of cash flows on a Group basis.  The Board of Directors review internal management reports on a termly basis and senior management review these on a monthly basis.  The Group does not rely on one major customer.

The Group operations for the period are as follows:

	Six months ended						Year ended
	30 Nov 2011			30 Nov 2010			31 May 2011
	United Kingdom	International	Total	United Kingdom	International	Total	United Kingdom	International	Total
Student numbers (at period end)	34,828	3,463	38,291	35,875	3,346	39,221	34,771	3,304	38,075
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Network fees	11,766	1,143	12,909	12,209	992	13,201	26,940	2,364	29,304
Revenue	2,655	164	2,819	2,752	171	2,923	5,595	392	5,987
Results from operating activities	(66)	(5)	(71)	73	(6)	67	599	42	641
Finance income	5	-	5	5	-	5	9	-	9
(Loss)/profit before income tax	(61)	(5)	(66)	78	(6)	72	608	42	650
Depreciation and Amortisation	34	2	36	75	7	82	156	12	168
Non-current assets	992	240	1,232	949	241	1,190	881	240	1,121
Deferred tax assets	32	-	32	9	-	9	32	-	32
Total non-current assets	1,024	240	1,264	958	241	1,199	913	240	1,153

3.         Income tax income/(expense)

The UK income tax income/(expense) for the six month period is charged at 28% (six months ended 30 November 2010: 28%; year ended 31 May 2011: 27.67%), representing the best estimate of the average annual effective tax rate expected for the full financial year, applied to the pre-tax (loss)/income of the six month period.

	Six months ended			Year ended
	30 Nov		30 Nov	31 May
	2011		2010	2011
	£'000		£'000	£'000
UK income tax income/(expense)	22		(14)	(168)

4.         Dividends

	Six months ended			Year ended
	30 Nov		30 Nov	31 May
	2011		2010	2011
	£'000		£'000	£'000
Amounts recognised as distributions to equity holders in the period
Final dividend for the year ended 31 May 2011 of 2p per ordinary share (2010: 2p per ordinary share).	200		199	199
Interim dividend for the year ended 31 May 2011 of 0.5p per ordinary share.	-		-	50
	200		199	249
Amounts proposed as distributions to equity holders
Proposed interim dividend for the year ended 31 May 2011 of 0.5p per ordinary share.	-		50	-
Proposed final dividend for the year ended 31 May 2011 of 2p per ordinary share.	-		-	199

The comparative interim dividend at 30 November 2010 was not recognised as a liability in the prior year.

5.         (Loss)/Earnings per share

	Six months ended			Year ended
	30 Nov		30 Nov	31 May
	2011		2010	2011
Earnings
(Loss)/profit for the period for basic and diluted (loss)/earnings per share (£'000)	(44)		58	482
Number of shares
Weighted average number of shares used for basic earnings per share ('000)	9,978		9,944	9,944
Dilutive effect of share options ('000)	143		129	139
Fully diluted weighted average number of shares used for diluted earnings per share ('000)	10,121		10,073	10,083
Basic (loss)/earnings per share (pence)	(0.4)		0.6	4.8
Diluted (loss)/earnings per share (pence)	(0.4)		0.6	4.8

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

Diluted (loss)/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).

6.         Related Party Transactions

The Directors consider there to be no one individual or entity that ultimately controls the Group.

Directors of the Company and their immediate relatives control 61.37% (six months ended 30 November 2010: 61.87%; year ended 31 May 2011: 61.87%) of the voting shares of the Company.  The Directors are considered to be the key management personnel of the Group. 

Directors' rights to subscribe for shares in the company are indicated below:

Share Options

	Date of Grant	Exercise Price	Number of options	Dates when exercisable
Richard Dawson	27 Jan 05	67.5p	100,000	31 May 07 to 27 Jan 15
	4 Oct 06	32.5p	35,000	31 May 07 to 4 Oct 16
	29 Jan 09	46.5p	43,010	31 May 10 to 29 Jan 19
Manzoor Ishani	5 Aug 02	112.5p	44,444	5 Aug 05 to 5 Aug 12
	27 Jan 05	67.5p	100,000	31 May 07 to 27 Jan 15
	4 Oct 06	32.5p	100,000	31 May 07 to 4 Oct 16
	29 Jan 09	46.5p	43,010	31 May 10 to 29 Jan 19

Long-term Incentive Plan

	Date of Grant	Exercise Price	Number of options	Dates when exercisable
Richard Dawson	3 Feb 10	5.0p	27,103	10 Aug 10 to 2 Feb 2020
	11 Aug 10	5.0p	35,000	11 Aug 11 to 2 Feb 2020
	10 Aug 11	5.0p	35,000	10 Aug 12 to 2 Feb 2020
Manzoor Ishani	3 Feb 10	5.0p	28,000	10 Aug 10 to 2 Feb 2020
	11 Aug 10	5.0p	28,000	11 Aug 11 to 2 Feb 2020
	10 Aug 11	5.0p	28,000	10 Aug 12 to 2 Feb 2020

On 10 August 2011, Richard Dawson exercised 47,786 shares under option at the exercise price of 42.0 pence per shares and 7,897 shares under option at the exercise price of 5.0 pence per share, realising a gain of £3,200.  No options held by Directors lapsed during the period.  The mid-market price of the shares at 30 November 2011 was 41.5 pence and the range during the period was 41.5 pence to 46.0 pence.

During the period, the Directors' remuneration including benefits in kind was £292,240 (30 Nov 2010: £333,183).

At 30 November 2011, there were no payments due to Directors other than fees and expenses in the normal course of business.

The Group continues to support and provide management time to the Stagecoach Charitable Trust (SCT), the trustees of which include Stephanie Manuel and David Sprigg.  During the period, the Group donated £38,219 to SCT (30 Nov 2010: £34,710). 

 

END

 

 

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