RNS Number:6963L
Creative Education Corp Plc
29 April 2005
THE CREATIVE EDUCATION CORPORATION PLC
CHAIRMANS STATEMENT
FOR THE SIX MONTHS ENDED 31 JANUARY 2005
Review of the six months to 31 January 2005
Turnover for the period was #1.75 million, a 96% increase on the first half of
last year. This reflects the change in year end from August to July. The
results include one month of consolidated results from Academy Childcare Group
Plc ("Academy") and 3 months from Happy House Educational Care ("Happy House"),
both of which were acquired during the period. On a like for like basis turnover
increased by 48%, reflecting the strong progress made by the seven Primary Steps
nurseries which the group owned throughout the six months to January 2005 and
the equivalent period in the prior year. Average occupancy at these units
increased from 53% to 67%.
The loss before tax increased from #642,000 to #1.04 million, reflecting the
investment we have made to build an infrastructure capable of capitalising on
the significant consolidation opportunity that exists in our sector. The group
currently operates 34 nurseries and/or creches (up from 11 nurseries and 1
pre-prep school as at 31 January 2004) but has the infrastructure to manage a
considerably larger number of units.
During the period we acquired three Happy House nurseries and made an offer to
acquire the entire issued share capital of Academy other than the shares that we
already owned. At the same time we raised #4.32 million net of expenses by way
of a placing. Academy operates 12 nurseries and 1 children's creche. All the
nurseries we have acquired have been re-branded, or are in the process of being
re-branded, under the Primary Steps name.
The Happy House nurseries have progressed satisfactorily under CEC's ownership,
although occupancy levels at the time the acquisition was completed were lower
than we had hoped.
The existing Primary Steps nurseries have made considerable progress over the
last year although we believe that with the focus now on expansion of the Group,
and the integration of these acquisitions, their full potential will take
somewhat longer to realise.
Current trading and prospects
We were only able to take full operational responsibility of Academy at the end
of the period under review, the offer officially closing on 28 January 2005.
Since this time we have conducted a wide ranging strategic review of its
business. Their findings indicated that the process of turning around Academy's
performance would take longer than we had previously anticipated. However, we
have moved quickly to implement measures to improve the performance. These
include closing Academy's Head Office, reducing overheads and earmarking three
nurseries to be reduced in size to 80 places or fewer, in accordance with our
strategy of operating smaller units. We looked very carefully at two other
larger Academy nurseries, at Bluewater and Guildford, but concluded there was no
advantage to the group in retaining them, even at reduced capacity. On 13 April
2005 we announced an agreement to sell the Bluewater and Guildford nurseries for
#1.7m in cash, subject to OFSTED approval.
In addition, since the period end we have acquired the five-strong Head Start
group of nurseries for #1.5m. This has taken our total portfolio to 32 units,
offering a total of 1905 registered places (excluding the Bluewater and
Guildford nurseries).
Our overall occupancy rate is currently running at 63%, up from 58% at the end
of January. Nine of our original Primary Steps nurseries and all of the Head
Start nurseries currently have occupancy levels of at least 70% and the trend is
continuing to improve.
In accordance with our strategy of being a leading consolidator in the highly
fragmented nursery sector we continue to evaluate potential acquisition
opportunities. We have agreed a new #20m facility with Bank of Scotland,
including an #18m revolving credit facility for acquisitions. We continue to
believe our strategy of focusing on 50-80 place units is the way forward.
In summary, occupancy rates are rising, prices have been increased and margins
are improving and we believe we are in a strong position to remain a leading
consolidator in this sector. We are therefore confident about the group's
prospects for the future.
C Philips
Chairman
29 April 2005
Group Profit & Loss Account
As at 31 January 2005
26 weeks to 26 weeks to Year ended
31 January 29 February 31 July
2005 2004 2004
(Unaudited) (Unaudited)
# # #
Turnover 1,752,261 895,506 1,927,096
Administrative expenses (2,620,492) (1,530,306) (2,963,672)
Operating loss (868,231) (634,800) (1,036,576)
Share of operating loss in associated undertaking (159,018) - (299,076)
Other income 13,706 - 2,542
Interest payable and similar charges (27,891) (7,097) (5,445)
Loss on ordinary activities before taxation (1,041,434) (641,897) (1,338,555)
Tax on loss on ordinary activities - - -
Loss on ordinary activities after taxation (1,041,434) (641,897) (1,338,555)
Loss per share
- Basic (0.54) p (0.39) p (0.85) p
- Diluted (0.54) p (0.39) p (0.85) p
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
GROUP BALANCE SHEET
As at 31 January 2005
As at As at As at
31 January 29 February 31 July
2005 2004 2004
(Unaudited) (Unaudited)
# # #
Fixed assets
Intangible assets 7,982,336 4,141,043 4,050,204
Tangible assets 3,516,845 614,360 682,430
Investments
Investments in associate - - 78,160
Trade investments - 290,656 -
11,499,181 5,046,059 4,810,794
Debtors 648,416 122,918 313,773
2,668,084 631,721 145,247
3,316,500 754,639 459,020
Creditors: amounts falling due within one year (2,245,210) 331,135) (495,236)
Net current assets 1,071,290 423,504 (36,216)
Total assets less current liabilities 12,570,471 5,469,563 4,774,578
Creditors: amounts falling due after more than one year (2376,880) - -
10,193,591 5,469,563 4,774,578
Capital and reserves
Called up share capital 3,036,078 1,658,000 1,659,762
Share premium account 7,349,477 2,265,434 2,265,346
Merger reserve 2,377,314 2,800,000 2,510,771
Profit and loss account (2,569,278) (1,253,872) (1,661,301)
Shareholders' funds - equity interests 10,193,591 5,469,563 4,774,578
The interim accounts were approved by the board of The Creative Corporation PLC
on 28 April 2005.
GROUP CASH FLOW STATEMENT
For the six months ended 31 January 2005
26 weeks to 31 26 weeks to 29 Period ended 31 July
January 2005 February 2004 2004
(Unaudited) (Unaudited)
# # # # # #
Net cash outflow from operating 236,062 (1,018,101) (1,382,507)
activities
Returns on investments and
servicing of finance
Interest paid (27,891) (7,097) (5,445)
Interest received 13,706 - 2,542
Net cash outflow from returns (14,185) (7,097) (2,903)
on investments and servicing of
finance
Capital expenditure and
financial investment
Payments to acquire tangible (71,337) (180,224) (281,667)
fixed assets
Payments to acquire (6,874,084) - -
subsidiaries
Payments to acquire associated (80,858) - (377,236)
undertaking
Payments to acquire trade - (290,656)
investments
(7,026,279) (470,880) (658,903)
Net cash outflow before (6,804,402) (1,496,078) (2,044,313)
financing
Financing
Issue of ordinary share capital 6,885,610 2,431,170 2,439,980
Cost of share issue (425,163) (86,008) (93,145)
Debt due after 1 year:
Bank loan 2,376,880 - -
Other loan 150,000 - -
Debenture loans 400,000 - -
Net cash inflow from
financing 9,387,327 2,345,162 2,346,835
Increase in cash 2,582,925 849,084 302,522
NOTES TO THE GROUP ACCOUNTS
FOR THE SIX MONTHS ENDED 31 JANUARY 2005
1 Turnover
The total turnover of the group for the period has been derived from its
principal activity wholly undertaken in the United Kingdom.
2 Loss for the financial period
As permitted by section 230 of the Companies Act 1985, the holding
company's profit and loss account has not been included in these accounts.
The loss for the financial period is made up as follows:
26 weeks ended 26 weeks ended 29 Period ended
31 January 2005 February 2004 31 July 2004
(Unaudited) (Unaudited)
# # #
Holding company's loss for the financial period (782,448) (641,897) (1,039,479)
Loss in Subsidiaries (99,968) -
Share of loss in associate (159,018) - (299,076)
(1,041,434) (641,897) (1,338,555)
3 Earnings per share
The calculation of the basic earnings per share and diluted earnings per
share is based on the loss attributable to ordinary shareholders of
#1,041,434 (2004: Loss #1,338,555), divided by the weighted average number
of shares in issue during the period.
The weighted average number of shares used on the calculations are set out
below:
26 weeks ended 26 weeks
31 January 2005 ended 29
(Unaudited) February 2004
(Unaudited) Period ended
31 July 2004
Number of Number of Number of
Shares Shares shares
192,743,887 165,799,910 156,773,501
4 Nature of financial information
The interim figures for the six months ended 31 January 2005 and those for
the six months ended 29 February 2004, are unaudited.
The financial information set out herein does not comprise full accounts
within the meaning of section 240 of the Companies Act 1985. The
comparative figures for the year ended 31 July 2004 are extracted from the
audited accounts for that year, which have been filed with the Registrar of
Companies. The auditors' report on those audited accounts was unqualified
and did not contain any statement under section 237(2) or (3) of the
Companies Act 1985.
The Interim Report has been prepared on the basis of the accounting
policies set out in the most recent set of annual financial statements.
5. Copies of the interim report can be requested from the Company's registered
office: Aston House, Cornwall Avenue, London N3 1LF during normal business
hours.
Enquiries:
David Alexander, CEO - Creative Education
020 8864 5147
Olly Cairns - Corporate Synergy Plc
020 7626 2244
This information is provided by RNS
The company news service from the London Stock Exchange
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