Final Results
Stagecoach Theatre Arts PLC
15 August 2007
15 August 2007
Stagecoach Theatre Arts plc (STA.L)
('Stagecoach' or 'the Group')
Final Results 2007
Preliminary Announcement of Final Results
for the year ended 31 May 2007
Stagecoach Theatre Arts plc operates the UK's largest franchise network of
part-time performing arts schools for children aged between 4 and 16.
Highlights:
• Profit before tax of £310,000 (2006: loss of £213,000)
• Franchise network fees up 10% to £26.5m
• The core Stagecoach UK business, which accounts for 91% of network fees,
continues to grow strongly, with net profit up 120% to £1.1m (2006: £0.5m)
• Vigorous cost cutting exercise undertaken, with further benefits to be
realised next year
• 318 franchisees at year-end (2006: 288)
• Total students worldwide up 7% to 39,200 (2006: 36,700)
• Net cash inflow from operating activities of £473,000 (2006: outflow
£14,000)
• Group net cash balance of £1.3 million as at 30 June 2007
David Sprigg and Stephanie Manuel, Joint Managing Directors, commented:
'With over 2,000 more students enrolling in our Stagecoach Theatre Arts schools
in the UK this year, we see that the demand for performing arts tuition
continues to grow strongly. We implemented a programme of cost cutting, and the
financial benefits have started to take effect. The prospects for the
future look encouraging.'
Enquiries:
Stagecoach Theatre Arts: Tel: 01932 254 333
Richard Dawson, Finance Director 0777 564 3939
and Investor Relations
Smith & Williamson Corporate Finance Limited: Tel: 020 7131 4000
Robert Kidson
Siobhan Sergeant
Public Relations, Adventis Financial PR Tel: 020 7034 4758
Tarquin Edwards 07789 458364
Stagecoach Theatre Arts plc
Year ended 31 May 2007
Chairman's Statement
Overview
This year has been one of continuing growth in our core Stagecoach Theatre Arts
business together with a substantial reduction in our overheads. I am delighted
to report a return to profitability for the Group.
The increase in number of schools and students was reflected in a ten per cent
increase in network fees to £26.5 million (2006: £24.1 million). Network fees
reflect total school fees earned over the year by our franchisees from the
39,200 students that now attend Stagecoach, SportsCoach and Mini Stages schools
worldwide. Group turnover increased to £6.3 million (2006: £5.7 million).
The growth in the UK Stagecoach network and the cost savings achieved during the
year have returned the Group to profitability, reporting profit before tax of
£310,000 compared to a prior year loss of £213,000.
Since the year 2000, the Group has expanded considerably, increasing its annual
network fees by over 250 per cent from £7.5 million to £26.5 million in 2007.
The demand for private performing arts tuition continues to grow each year.
I reported in last year's statement that we required each part of our business
to either contribute a profit or to be restructured. We have continued with the
implementation of this key strategy. The benefits of the Stagecoach USA
restructuring and cost cutting in the prior year were realised in this financial
year, with the US subsidiary breaking-even in cash flow terms.
Your Board has restructured SportsCoach and Mini Stages in the final quarter,
enabling further cost savings. The existing SportsCoach and Mini Stages
franchisees are now being supported by the established Stagecoach UK franchise
department, thus reducing the overheads incurred in running them as separate
business units.
In addition to the restructuring your Board has undertaken a cost cutting
exercise over the year, reducing overheads where possible, including a reduction
in premises and renegotiation of office equipment hire. Over the year, five
senior manager positions that have been vacated have not been replaced. The
financial benefits of the restructuring and cost cutting will be further
realised in the year ahead.
Earnings per share was 1.1 pence (2006: loss 2.4 pence). Your Board does not
propose the payment of a final dividend (2006: 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
Your Board anticipates further growth in the Stagecoach Theatre Arts UK network,
with several new Stagecoach schools and Early Stages classes already contracted
to open in September 2007. The extensive programme of cost cutting continues
throughout the Group, and the benefits of this will be further realised in the
year ahead.
Graham Cole
Chairman
15 August 2007
Joint Managing Directors' Operating Review
We report on the operations and results of the Group for the year ended 31 May
2007.
Operations
Group Overview
The Group reports a return to profitability, with profit before tax of £310,000
(2006: loss of £213,000).
The Group comprises the core Stagecoach Theatre Arts franchise business in the
UK, which represents over 90 per cent of the business in terms of student
numbers and fees and is the clear market-leader for providing performing
arts tuition to children in the UK. The other franchises within the Group are
based upon the same business model as Stagecoach UK. The Group also runs a
Montessori school at its Head Office in Walton-on-Thames.
The principal indicator of the Group's growth is the number of schools opened
during the year and the number of students attending those schools. In September
2006, at the start of this new academic year, we opened 30 new Stagecoach
schools, the largest number of new openings in a term for nearly three years.
Stagecoach Theatre Arts UK
The core Stagecoach UK business continues to expand, with 34 new school openings
and 59 new Early Stages classes, together with an increase in average student
numbers from last year.
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 607 schools with
26,032 students (2006: 573 schools and 24,471 students).
Most franchisees run at least one Early Stages class, providing performing arts
tuition to younger students aged 4 to 6 years, alongside the main school. Early
Stages classes are an important feeder to the main schools. The number of Early
Stages classes increased this year to 670 with 8,713 students attending (2006:
611 Early Stages classes and 8,000 students). We have seen enormous growth in
this market over the past three years.
The total number of students attending Stagecoach schools, including Early
Stages classes, increased from 32,650 to 34,745 students.
The average occupancy rate at the main Stagecoach schools has increased to 42.9
students per school, or 95.3 per cent (2006: 94.9 per cent) based on an optimum
number of students per class of 45. The percentage occupancy rate throughout the
core Stagecoach UK network remains strong.
The number of franchisees increased over the period under review from 241 to
261, 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.
With several franchisees running five or six schools, this shows there is
considerable scope for further growth from the existing network.
Whilst continuing to grow the network, we are committed to maintaining the
highest standards of education throughout the network, including regular
unannounced school inspections, regional meetings and franchisee and teacher
training. Parents receive progress reports twice a year and students receive
medals for longevity and participation. The skills students learn at Stagecoach
help them perform better in life.
Stagecoach are pleased to have expanded its partnership operations with First
Choice, one of the UK's leading tour operators, to offer Stagecoach classes at
six First Choice overseas holiday locations.
The core Stagecoach UK business showed strong growth in all areas and reported
an increase in network fees of 10 per cent to £24.2 million (2006: £22.1
million), and a 26 per cent increase in operating profit before overheads to
£2.9 million (2006: £2.3 million).
After attributing all the Group overheads, the net profit before tax of the core
Stagecoach UK business was £1.1 million (2006: £0.5 million).
Stagecoach Agency
The Stagecoach Agency forms an integral part of the Stagecoach Theatre Arts
offering to students. As the biggest children's agency in the UK the Stagecoach
Agency has continued to expand its influence within the entertainment industry.
In its second year the Agency secured over 3,000 professional auditions or work
placements for Stagecoach school students.
The Agency provides a comprehensive range of services to Casting Directors and
Production Companies who in turn offer Stagecoach school students work
opportunities within a wide range of entertainment platforms. These include TV
and Film, Commercials and Corporate Videos, Theatre, Radio Dramas, Photo Shoots
and Promotions, Musicals and Voice-Overs.
Assignments won this year by the Agency include parts for students in most major
television series and many other high-profile productions, both domestic and
international. Such credits include TV roles in Eastenders, Dr Who, Torchwood,
Grange Hill, The Bill, Casualty and Hollyoaks; film credits include Harry Potter
and Hot Fuzz; and in theatre Billy Elliot, Annie, Chitty Chitty Bang Bang, Sound
of Music and Mary Poppins.
The Agency's growing success offers excellent publicity opportunities for
individual Stagecoach schools throughout the UK.
On 1 June 2007, the outstanding 25 per cent. share capital of the Stagecoach
Agency was purchased by the company, taking full control and ownership of the
Agency business.
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 its students with
opportunities to participate in special performances and events including:
• In June 2006, 400 students from all the UK regional choirs and Germany
took part in the first Stagecoach choir festival at Symphony Hall,
Birmingham.
• Also in June, 550 students from Oxfordshire and Buckinghamshire
performed at the New Theatre, Oxford in a production of dance, drama and
singing raising over £20,000 for charity.
• The annual 'Easy Stages' show-case production of Annie in August 2006
featured 70 Stagecoach students from schools across the UK and overseas.
• In September more than 100 students from the South East performed at The
Children's Society 125th Anniversary at Southwark Cathedral.
• In December 2006, 300 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.
• Also in December students filled the house at the Apollo Victoria
Theatre, London for a performance of 'Wicked' especially staged for
Stagecoach. The students also had the opportunity to meet several members of
the cast after the performance.
• In March 2007, 100 students of the Stagecoach Midlands Choir were
invited to perform at Crufts at Birmingham's NEC, as part of the BBC
televised 'Friends for Life'.
• In April and May 2007, Stagecoach students attended a pre production
workshop at The Blue Man Group where they met cast, crew and members of the
creative team before watching an evening performance.
• In May 2007, one of our regional Stagecoach choirs was invited to
perform at Disneyland Paris as part of its fifteen year anniversary.
The Stagecoach Foundation Course continues to be run twice yearly, with
significant workshop input from The Royal Academy of Dramatic Art ('R.A.D.A').
The course, designed with the particular needs of Stagecoach and part-time
theatre arts schools in mind, is becoming recognized nationally. It has
accreditation from Trinity/Guildhall as part of their A.T.C.L in Musical Theatre
(Associate of Trinity College London).
Regional teacher training workshops offer Stagecoach teachers and franchisees
in-service development by top leaders in performing arts. 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.
SportsCoach and Mini Stages franchises
In the latter part of the year, your Board restructured the SportsCoach and Mini
Stages activities. The purpose of these changes was to reduce the overheads and
other operating costs of running these networks, whilst still providing full
support to their franchisees.
Network fees of SportsCoach, representing the total student fees, increased
marginally to £997,000 (2006: £977,000). SportsCoach reported an operating loss,
after provisions, for the year of £190,000 (2006: loss of £52,000). At year-end
there were 29 schools, 8 Early Sporties and 1,191 students (2006: 34 schools, 8
Early Sporties and 1,360 students).
Network fees of Mini Stages increased to £141,000 (2006: £123,000). Mini Stages
reported an operating loss, after provisions, for the year of £210,000 (2006:
loss of £125,000). At year-end there were 19 Mini Stages schools, from which 73
teaching sessions were held, and a total of 723 students attending (2006: 19
venues, 45 sessions and 442 students).
Post year-end, the existing SportsCoach and Mini Stages franchisees are now
being supported by the experienced UK Stagecoach franchise department. Two
senior managers within these former divisions took voluntary redundancy at
year-end, and together with the other cost savings in overheads, we expect the
financial benefit of this restructuring to flow through next year.
Overseas operations
The Group's overseas operations include US and German subsidiary companies, each
running Stagecoach Theatre Arts franchise networks, and Stagecoach schools
operated under licence or direct franchise agreement in Australia, Canada,
Gibraltar, Republic of Ireland, Malta and Spain.
Significant restructuring of the overseas operations has been undertaken such
that the Group no longer runs any managed schools overseas. All overseas schools
are now operated under either a franchise or licence agreement. This allows the
Group to significantly reduce its overheads overseas, and move towards making a
profit from the overseas operations in the short term, whilst maintaining the
potential upside for expansion in these markets for the medium to long term.
The successful start of this strategy was evidenced this year following the
restructuring of the US subsidiary operations in the prior year. The remaining
three US managed schools were sold as franchises, and head office staff numbers
and other overheads were significantly reduced.
Stagecoach Germany expanded its network with three new school openings and two
new Early Stages. During the year, the Group acquired the outstanding 10% of
Stagecoach Germany share capital that it did not own. Taking full control of the
business allowed the Group to undertake a restructuring of the German operations
at the end of this year similar to that implemented in the USA. The German
managed schools were all either sold as franchises or closed in April 2007,
allowing a reduction in head office staff costs and other overheads.
Stagecoach USA and Stagecoach Germany reported operating losses, after year-end
provisions, of £75,000 and £153,000 respectively. Between these two overseas
markets, at year end there were 18 franchisees, 29 Stagecoach schools, 28 Early
Stages classes, 2 Further Stages classes and a total of 1,267 students (2006:
1,149 students).
Financial Review
Profitability
Network fees increased 10 per cent to £26.5 million (2006: £24.1 million). Group
turnover for the year increased to £6.3 million (2006: £5.7 million).
The core Stagecoach UK business continues to support the other activities.
However as the financial benefits of the restructuring takes effect the non-core
activities should move towards operational profitability. Your Board's primary
objective continues to be to bring each of these ancillary activities to
profitability as soon as possible.
Furthermore, your Board has taken steps to reduce Head Office overheads where
possible, with cost savings in salaries, premises and equipment costs being
achieved during the year.
Consequently, the Group moved back into profitability this year, reporting
profit before tax of £310,000 (2006: loss £213,000).
The Group is prepared for the transition to report under IFRS next year. The
Directors estimate that the profitability for this year under review would not
be materially different if reported under IFRS.
Cash balances
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 Group's
cash position significantly improved over the year, reporting year-end net cash
inflow from operating activities of £473,000.
The positive net cash balance for the Group at 30 June 2007 was £1.3 million.
The restructuring of the USA subsidiary at the end of the prior year had a
significant positive impact on reducing the cash outflow of the non-core
activities. The US subsidiary reported break-even cash flow for the year.
However, as the restructuring of the other non-core activities was not
implemented until the end of this year, the full financial benefits will not
start to flow through until next year.
Employees
The number of employees (full time equivalents) employed by the Group is 59 as
at 31 May 2007 (2006: 65 full time equivalent employees).
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.
Current Trading and Prospects
Post year-end we have continued with the cost cutting programme across all areas
of the Group, and have seen further growth in the core UK Stagecoach franchise
network. The prospects for the year ahead look encouraging.
Stephanie Manuel David Sprigg
Joint Managing Director Joint Managing Director
15 August 2007
Stagecoach Theatre Arts plc
Consolidated Profit and Loss Account
Year ended 31 May 2007
Notes 2007 2006
£'000 £'000
Restated
Network fees (see note) 26,544 24,125
======= =======
Turnover 2 6,324 5,673
Cost of sales (3,654) (3,330)
------- -------
Gross profit 2,670 2,343
Administrative expenses (2,364) (2,560)
Other operating income 22 17
------- -------
Operating profit/(loss) 328 (200)
Interest receivable 10 11
Interest payable and similar charges (28) (24)
------- -------
Profit/(loss) on ordinary activities before taxation 310 (213)
Taxation 3 (205) (22)
------- -------
Profit/(loss) on ordinary activities after taxation 105 (235)
Minority interest 10 3
------- -------
Profit/(loss) for the year 115 (232)
======= =======
Earnings /(loss) per share, pence - Basic 5 1.1 (2.4)
- Diluted 5 1.1 (2.4)
All amounts relate to continuing operations.
Note: Network fees reflect total school fees earned over the year by our
franchisees from the 39,200 students that attended Stagecoach, SportsCoach and
Mini Stages worldwide.
Stagecoach Theatre Arts plc
Consolidated Statement of Total Recognised Gains and Losses
As at 31 May 2007
2007 2006
£'000 £'000
Restated
Profit/(loss) for the year 115 (232)
Exchange differences on translation of foreign operations (1) (1)
------- -------
Total recognised gains and losses relating to the year 114 (233)
======= =======
Total gains and losses recognised in the year is attributable
to:
Equity holders of the parent 124 (230)
Minority interest (10) (3)
------- -------
114 (233)
======= =======
Stagecoach Theatre Arts plc
Consolidated Balance Sheet
As at 31 May 2007
Notes 2007 2006
£'000 £'000 £'000 £'000
Fixed assets
Intangible fixed assets 775 735
Tangible fixed assets 614 673
------- -------
1,389 1,408
Current assets
Stocks 298 279
Debtors 1,932 2,128
Cash at bank and in hand 341 304
------- -------
2,571 2,711
Creditors
Amounts falling due within one year (1,380) (1,762)
------- -------
Net current assets 1,191 949
------- -------
Total assets less current liabilities 2,580 2,357
Creditors
Amounts falling due after one year (131) (57)
------- -------
Net assets 2,449 2,300
======= =======
Capital and reserves
Share capital 494 494
Share premium 1,601 1,601
Profit and loss account 354 220
------- -------
2,449 2,315
Minority interests - (15)
------- -------
Equity shareholders' funds 2,449 2,300
======= =======
The financial statements were approved and authorised for issue by the board and
were signed on its behalf on 15 August 2007.
Stephanie Manuel David Sprigg
Director Director
Stagecoach Theatre Arts plc
Consolidated Cash Flow Statement
Year ended 31 May 2006
Notes 2007 2006
£'000 £'000 £'000 £'000
Net cash inflow/(outflow) from
operating 6 473 (14)
activities
Returns on investments and servicing
of finance
Interest received 10 11
Interest paid (28) (24)
------- -------
(18) (13)
Taxation
Corporation tax paid - (59)
Capital expenditure
Proceeds on disposal of fixed assets 1 -
Payments to acquire tangible fixed (205) (454)
assets ------- -------
(204) (454)
Acquisitions and disposals
Purchase of additional shares in (51) -
subsidiary ------- -------
Net cash inflow/(outflow) before 200 (540)
financing
Financing
Proceeds from bank loan 150 100
Repayment of bank loans (54) (19)
------- -------
96 81
------- -------
Increase/(decrease) in cash 296 (459)
======= =======
Stagecoach Theatre Arts plc
Year ended 31st May 2007
Notes to the Preliminary Results
1. Basis of preparation
The preliminary results have been based on accounting policies which are
disclosed in the Annual Report and Accounts 2007.
The financial statements have been prepared in accordance with applicable
Accounting Standards and under the historical cost convention. FRS20 'share
based payments' has also been adopted for the first time. The adoption of this
standard represenrs a change in accounting policy and the comparative figures
have been restated accordingly. 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.
2. Turnover by geographical location
2007 2006
£'000 £'000
UK 5,996 5,153
Europe 271 335
Rest of the world 57 185
------- -------
Total turnover 6,324 5,673
======= =======
Turnover is analysed on an origination basis and is all derived from external
customers.
3. Taxation
a) Analysis of the tax charge
2007 2006
£'000 £'000
UK corporation tax
Current tax on income for the period 167 35
Adjustments in respect of prior periods (37) (14)
------- -------
Total current tax 130 21
Deferred tax
Origination of timing differences 19 1
Adjustment in respect of previous years 56 -
------- -------
75 1
------- -------
Tax on profit on ordinary activities 205 22
======= =======
Deferred tax arose principally due to timing differences between capital
allowances and depreciation.
b) Factors affecting the tax charge for the current period
The current charge for the period is higher than the standard rate of
corporation tax in the UK 30% (2006: 30%). The differences are explained below:
2007 2006
£'000 £'000
Current tax reconciliation
Profit/(loss) on ordinary activities before tax 310 (213)
------- -------
Current tax at 30% (2006: 30%) 93 (64)
Effects of:
Unrelieved losses of overseas subsidiaries 53 74
Expenses not deductible for tax purposes 7 27
Depreciation in excess of capital allowances 8 -
Share Options 6 5
Adjustment to tax charge in previous periods (37) (14)
Marginal relief - (7)
------- -------
Total current tax charge for year 130 21
======= =======
4. Dividends
Your Board does not propose the payment of a final dividend (2006: nil).
5. Earnings/(loss) per share
Basic earnings per share, calculated in accordance with FRS 22 (Earnings per
share) is 1.1 pence (2006: loss per share 2.4 pence). This is based on the
profit on ordinary activities after tax of £105,313 (2006: loss after tax of
£234,890) apportioned over the weighted average number of ordinary shares that
were in issue for the period of 9,879,317 (2006: 9,879,317). Fully diluted
profit per share is calculated at 1.1 pence (2006: loss per share 2.4 pence),
based upon weighted average number of ordinary shares, including options granted
to employees, of 9,931,213 (2006: 9,887,327).
6. Reconciliation of operating profit/(loss) to operating cashflows
2007 2006
£'000 £'000
Operating profit/(loss) 328 (200)
Depreciation and amortisation of goodwill 198 102
Employee share option scheme 20 18
Loss on disposal of fixed assets 15 -
Increase in stocks (19) (16)
Decrease in debtors 281 65
(Decrease)/increase in creditors (354) 13
Foreign exchange differences 4 4
------- -------
Net cash inflow/(outflow) from operating activities 473 (14)
======= =======
7. Analysis of changes in net funds
At Cashflow At
1 June 2006 31 May 2007
£'000 £'000 £'000
Cash at bank and in hand 304 37 341
Bank overdraft (259) 259 -
---------- ------- ----------
45 296 341
Bank loans due within one year (24) (37) (61)
Bank loans due after one year (57) (59) (116)
---------- ------- ----------
(36) 200 164
========== ======= ==========
8. Extract from the Group's statutory accounts
The financial information presented in this preliminary announcement does not
constitute statutory accounts within the meaning of the Companies Act 1985. The
information has however been extracted from the Group's statutory accounts for
the year ended 31 May 2007 which were approved by the Board on 15 August 2007
and on which the Group's auditors have given an unqualified opinion.
9. Annual Report & 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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