TIDMLMR
RNS Number : 8279L
Luminar Group Holdings PLC
13 May 2010
Luminar Group Holdings plc
("Luminar" or "the Group")
Condensed consolidated financial information for the year ended 25 February 2010
Luminar Group Holdings plc ("Luminar" or "the Group") is the leading operator of
nightclubs in the UK, with 87 clubs as at 25 February 2010 trading predominately
under the brands of Oceana and Liquid.
Key Points:
· Profit before tax of GBP4.4m (2009: GBP20.3m) from continuing operations
before exceptional items, in line with market expectations
o Exceptional costs totalling GBP127.8m, primarily non-cash impairment of
specific assets and goodwill
o Statutory loss after discontinued operations, exceptional items (primarily
non-cash) and tax of GBP123.1m (2009:GBP21.5m)
· Sales 9.9% below last year on a same outlet basis across 85 clubs
o 15.4% decline in second half of the year resulting from lower customer
admissions
o Average sales per customer of GBP12.46 (2009: GBP12.29)
· Significant cost reduction programme
o Controllable operating costs reduced by GBP6m during the year
o Capital investment reduced to GBP4.2m (2009: GBP38.1m)
· Cash generation and equity issue has significantly reduced net borrowing
by 35% to GBP92.6m
o Continuing to trade within debt covenant tests
· Sales for first 10 weeks of current year 19.4% below prior year on a same
outlet basis
· New CEO appointed 8 March 2010
o Reappraisal of strategy and focus on key actions
o Four clubs sold or closed
o GBP10m of further cost savings planned for current year
Simon Douglas, Chief Executive, said:
"Luminar has a very good estate and dedicated people. Whilst our marketplace
remains challenging, we believe there is a substantial opportunity to leverage
Luminar's many strengths. By focusing on the operational basics and embracing
more modern marketing methods, we will engage and entertain our customers and
ensure our offer remains relevant. We are confident that this more focused
strategy, well executed, will restore value to our shareholders over time."
13 May 2010
+------------------------+---+-------------------+
| Enquiries: | | |
+------------------------+---+-------------------+
| | | |
+------------------------+---+-------------------+
| Luminar Group Holdings | | Tel: 01908 544100 |
| plc | | |
+------------------------+---+-------------------+
| Simon Douglas, Chief | | |
| Executive | | |
+------------------------+---+-------------------+
| Robert McDonald, | | |
| Finance Director | | |
+------------------------+---+-------------------+
| | | |
+------------------------+---+-------------------+
| College Hill | | Tel: 020 7457 |
| | | 2020 |
+------------------------+---+-------------------+
| Matthew Smallwood | | |
+------------------------+---+-------------------+
| Jamie Ramsay | | |
+------------------------+---+-------------------+
Overview
Luminar is the leading operator of late night venues in the UK, with high
quality trading clubs including the Oceana and Liquid brands.
The market for late night entertainment has continued to be exceptionally
challenging, especially since last September, and has caused our second half
results to be below our original expectations. There are many contributing
factors to the market weakness, including the general economic climate, youth
unemployment, a highly competitive environment and the severe winter weather.
In the light of these circumstances we have initiated a significant cost
reduction programme and commenced a strategic review of our business, the key
points of which are described below.
Our financial results for the year ended 25 February 2010 reflected this market
weakness, and were dominated by lower sales, which were caused by a lower number
of customer admissions. Once inside our clubs, it was encouraging to see that
sales per customer changed very little from the prior year, and that we were
able to maintain reasonable prices and margins.
In the circumstances, it has been necessary to impair certain asset values and
to fully provide against our investment in 3D Entertainment Group Ltd ("3DE"),
which caused a large exceptional charge for the year. 3DE, in which Luminar
holds a 49% investment, was placed in administration on 26 February 2010 and is
an example of how the recession has impacted our industry.
Trading since the year end has continued to be weak. In direct response to this
we have continued to reduce our costs and to exit certain properties that are
loss-making or where prospects are low. At the same time we are repositioning
and strengthening areas of our business for the future.
We continue to lead our market, our asset base is strong, and we see good
potential for recovery. The appointment of Simon Douglas as CEO on the 8 March
2010 has brought a fresh vision and perspective to the business. Whilst recovery
may take some time to deliver fully, there is a good base from which to grow and
a renewed focus that we feel confident will bring significant improvement over
time.
Operational Business Review
As at 25 February 2010, Luminar operated 87 late night venues in 76 towns and
cities, the largest estate of its kind in the UK. We traded 13 larger
nightclubs under the Oceana brand, and 34 under the Liquid brand, with all of
our clubs retaining an identity that reflects their local community. Our
customers are predominantly in the 18-24 year age group, including many
students, and some 63% of our drink sales are made after midnight. Our primary
income streams are the sale of drinks (67%) and admission charges on entry
(27%).
The late night entertainment market has contracted in the tight economy but
continues to be highly competitive, leading to a high level of promotional
discounting and often a low quality environment being offered by our
competitors. Luminar's operational strategy has been to provide a better
customer experience at reasonable prices, and to focus on providing strong
entertainment content and reasons to visit. Mainstream dancing sessions on
Fridays and Saturdays are supplemented by differentiated speciality sessions in
midweek, reaching out to wider markets.
During the year ended 25 February 2010 we operated 20,096 sessions and attracted
13.9m people to our venues. On a slightly smaller estate, overall admission
numbers reduced by 11.5% in the year, with the majority of the shortfall
occurring on weekend nights, which were 13.7% lower. Notwithstanding this the
overall sales per customer remained strong at GBP12.46, 17p above last years
level. The average retail selling price per measured drink (including VAT) was
GBP2.15 across the year, slightly lower than GBP2.20 in the prior year, with
broadly steady levels of consumption. Gross margins were 82.6%, slightly ahead
of last year.
Overall sales in the continuing business totalled GBP173.1m in the year, a
reduction of 10.4% on the prior year, or 9.9% on a same outlet basis across 85
venues which traded in both years. This included a significant deterioration in
trading from September. For the first half of the year same outlet sales fell
by 3.8%, but a sudden deterioration in September followed by severe winter
weather caused second half sales to be 15.4% below the same period in the prior
year.
The pattern of the slowdown in sales was consistent across the country, and
affected all regions and types of venue. Whilst timing coincided with a new
student academic year, the impact was most badly felt at weekends and therefore
appeared to be more a reflection of the general economic conditions and
nationwide recession, and in particular youth unemployment.
In view of the unexpected pressure on sales, the Group curtailed investment
plans in the second half of the year, ultimately restricting capital expenditure
to GBP4.2m in the year. In addition much tighter cost control was exerted in
operational costs, leading to a controllable cost reduction of GBP6.0m across
the year.
The results for the year do not do justice to the hard work and dedication shown
by our staff, sometimes in very difficult circumstances and late into the night.
We would like to thank them for their efforts.
Current Trading and Outlook
Current trading has continued to be difficult, as the market weakness has not
yet subsided and we see no improvement in customer sentiment. Same outlet sales
for the first 10 weeks of the new financial year to 6 May 2010 were 19.4% below
the same period for last year. The outlook for our customers continues to be
uncertain, youth unemployment remains at historically high levels, and spending
levels may be constrained for some time to come.
We are undertaking many focused initiatives to address this situation.
Significant cost reduction is underway, and is expected to reduce our costs by
some GBP10m in the current financial year on top of the savings made in the past
year. In particular, an initiative to reduce our central costs by GBP3m (25%)
has already been completed, and costs are being tightened throughout the
business.
We have also begun to address our underperforming and marginal sites. Since the
year end, four sites have been sold or returned to their landlords, removing a
profit drain and distraction on the business. A further five properties are
likely to be exited in the next three months.
In addition we have now appointed a new Marketing Director, with skills and
experience in the music and retailing industry. We have also moved to improve
our drinks range, to refocus our incentives, and to improve our customer
service.
These actions will improve our performance, and over time will contribute to
recovery.
Strategic Review
The recent changes in our market, the appointment of Simon Douglas as CEO, and
the reduction in profitability call for a reappraisal of the Group's strategy.
This will take some months to complete fully, particularly in the circumstances
where our immediate priority is being given to improving trading results.
Initial views have been formed however, and some clear strategic directions have
emerged which are compatible with short term priorities.
It is clear that Luminar has many strengths. We operate in a large, cash-rich
market, our assets are predominately modern and well invested, and we have some
talented and very experienced people. Our product is well established and will
stand the test of time.
Our biggest external challenge however, is that our market has become severely
affected by the recession and some structural change has increased competition
significantly. Our biggest internal challenge is to ensure that our venues
continue to be fashionable, relevant and appealing to our core market.
The key opportunities lie in being better at what we do, in leveraging our
strengths, and in going deeper or broader into our core market. These are
strategic directions that are equally appropriate for the short term focus.
There are four key areas where we will concentrate our efforts.
· Firstly, we will improve our operational template. We will improve our
product, critically our music, our drinks range, and our customer service
standards. We will engage our staff more, and encourage entrepreneurial talents
and local flair to lead the local markets.
· We will improve our marketing skills to make sure our clubs are
fashionable and relevant for our customers. We will enhance our brands, our key
activities, and develop associations with other brands that young people aspire
towards. Of vital importance will be the development of our online capability.
· We will develop our central head office infrastructure to add genuine
value to the nightclub operations. It must provide support that really makes a
difference, and be leaner, more effective, and simple.
· We will improve the use of our assets, rationalising our estate over
time, and extending into new and more prosperous areas. We will improve
relationships with landlords and develop properties more simply and cost
effectively, with modern materials.
We will approach these tasks by making use of the best information available,
seeking to build on fact rather than intuition and developing a professional
rigorous methodology.
Underlying this activity is the need to improve our financial model, to ensure
we have adequate and appropriate funding that enables the business to prosper.
As part of this, we must improve our cost base, and our efficiency.
These are strategic directions that we will expand on at a later date. But they
are also guiding actions now as we seek to improve performance.
Directorate
The Group has separately announced today that Robert McDonald has decided to
stand down as Finance Director and leave the Group to pursue other interests.
The Board would like to extend its thanks to Robert for the significant
contribution that he has made during his time in the business.
The Board is pleased to announce Philip Bowcock as his successor, with effect
from the 1st June 2010. Philip will work with Robert until the end of June when
Robert leaves the Group.
Philip has a strong commercial background in large multi-site businesses. He
joins Luminar from Barratt Developments plc where from August 2007 he has been
Group Financial Controller. Prior to this, he held senior finance roles at Tesco
and Hilton Group.
The Board was also pleased to announce on 6 May 2010 the appointment of John
Leach as Non Executive Director.
Financial Review
Presentation of financial results is focused on the continuing business, which
includes all our current trading operations and principally only excludes our
investment in 3DE and the residue of the major disposal to Cavendish Bars in
February 2008, the last part of which completed in May 2009.
Earnings before interest, tax, depreciation and amortisation ("EBITDA") from
continuing operations before exceptional items totalled GBP34.3m in the year
ended 25 February 2010, GBP17m (or 33%) below the previous year due principally
to lower admissions to our clubs. Depreciation and amortisation of GBP22.7m was
level (2009: GBP22.7m) as the investment programme reduced significantly. Net
interest costs reduced to GBP7.2m (2009: GBP8.3m) due to lower debt levels and
interest rates, and despite LIBOR on GBP140m of debt being hedged to fixed rate.
Net interest costs increased from the mid point of the financial year as we
provided against potential non-receipt of interest on the 3DE loan note,
effectively increasing our net interest costs in the second half by GBP0.9m.
Profit before tax from continuing operations before exceptional items was
GBP4.4m (2009: GBP20.3m) and a taxation credit of GBP0.7m (2009: GBP4.5m charge)
gave rise to profit for the year from continuing operations before exceptional
items of GBP5.1m (2009: GBP15.8m). Earnings per share from continuing
operations before exceptional costs were 6.2p (2009: 25.9p). Statutory loss
from continuing operations after exceptional items was GBP99.2m (2009: GBP7.4m
profit), giving rise to earnings per share of 120.4p loss (2009: 12.2p income).
Exceptional items within continuing operations totalled a net cost of GBP104.3m
after tax for the year ended 25 February 2010 (2009: GBP8.4m). This charge
followed a review of balance sheet values, triggered by lower profits, and the
majority related to impairment of specific asset values and goodwill. The major
exceptional items contributing to this charge are described in note 7 to the
accounts. The impairment review has also impacted the accounts of the parent
company, reducing distributable reserves to GBP28.4m.
Discontinued operations contributed a post tax loss of GBP0.4m plus exceptional
costs of GBP23.5m. The main element of the exceptional cost was a full
provision of GBP27.3m taken against our outstanding investment and receivables
from 3DE, which went into administration on 26 February 2010. It is too early
to say what recovery, if any, will be achievable on this debt. However, the
contingent liability previously carried to cover a loan guarantee provided to
3DE is now considered unnecessary.
The Group continues to be cash generative, with a net cash inflow after
exceptional items and investing activities of GBP13.7m for the year (2009:
GBP7.6m). Control and reduction of expenditure has been strong during the year,
with capital expenditure lowered to GBP4.2m (2009: GBP38.1m) in response to the
general economic climate.
In August 2009 the Group completed a successful equity raise of GBP35.7m (net of
costs). The primary purpose of raising the cash was to expand the estate
through acquisition and development. However, in view of the sudden market
deterioration in September, the proceeds of the equity raising have been
retained to reduce net borrowings.
Net borrowings have now reduced to GBP92.6m, a reduction of GBP49.2m (or 35%) in
the year. Gross borrowings have been lowered by GBP30m to GBP140m, in line with
our hedge arrangements, as it is more economic to hold a high cash balance than
to reduce borrowings under the loan facility. We have a single syndicated loan
facility, which runs to August 2012 with a maximum drawdown of GBP175m and
interest costs of up to LIBOR plus 0.75%. We continue to trade within covenants
tests, with an adjusted net debt to EBITDA ratio of 2.6x for the year ended 25
February 2010 compared with a covenant maximum of 3.0x. In view of current
trading levels we continue to actively monitor our covenants and work together
with our lenders to ensure adequate funding resources.
Our balance sheet includes a current tax liability of GBP42.8m (2009: GBP42.7m)
in respect of amounts potentially due to HMRC for tax years since 2004 which
remain under discussion. During the year we received a payment of GBP2.2m in
respect of financial year 2004, increasing the net tax creditor. Recent
discussions have increased the certainty of outcome for financial year 2005, and
we have reduced our provision accordingly by GBP2.1m. No additional provision
was required for financial year 2010.
In view of current trading the Group continues to conserve cash and does not
recommend a dividend payment at the current time.
Principal Risks and Uncertainties
The principal risk facing the Group is that of continued or worsening economic
uncertainty, particularly as it may affect young people. Whilst there is some
evidence at national level that conditions are improving, recovery remains
fragile and there is less evidence that it has yet had any positive affect on
our core market.
Should the spending propensity of young people reduce further, there is a risk
that the Group's sales and profitability could worsen to the extent that we are
no longer able to meet the requirements placed upon us by our current lenders.
The Board have considered this carefully.
As described above, the Group benefits from a syndicated loan facility of
GBP175m which extends until August 2012 and against which net borrowings are
currently GBP92.6m. The facility is subject to financial covenants, the most
significant of which requires net borrowings not to exceed three times the value
of adjusted EBITDA. At 25 February 2010 this covenant test ratio was 2.6x,
providing adequate headroom within the facility.
The Group's budgeted cash flow projections anticipate sufficient cash generation
to retain and increase covenant headroom over the course of the forthcoming
year. However, recent trading has fallen below budgeted levels and the market
continues to be volatile.
If these volatile conditions continue, the Directors have examined available
mitigating action through further cost reduction or retail price management but
recognise there is the potential for headroom on the facility to be eroded. In
these circumstances, it is likely that the Group would need to renegotiate the
terms of the facility and that this will have an impact on the cost of
borrowing. The Directors have considered the action the syndicate banks may
take in such a scenario and, having taken external advice on the matter,
concluded that it is highly likely that the banks will agree to renegotiate the
facilities.
On this basis, having examined evidence and made appropriate enquiries, the
Directors are satisfied that adequate financial resources are available to the
Group within circumstances that can be reasonably foreseen.
Forward Looking Statements
Certain statements in this consolidated financial information for the year ended
25 February 2010 are forward-looking. Although the Group believes that the
expectations reflected in these forward-looking statements are reasonable, it
can give no assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual results may
differ materially from those expressed or implied by these forward-looking
statements.
The Group undertakes no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Consolidated Income Statement
for the year ended 25 February 2010
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | Year ended 25 | Year ended 26 |
| | February 2010 | February 2009 |
+-----------------------+-------------------------------------+-------------------------------------+
| | | Pre- | Exceptional | | Pre- | Exceptional | |
| | | exceptional | items | | exceptional | items | |
| | | items | (note 7) | Total | items | (note 7) | Total |
| | Note | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Continuing | | | | | | | |
| operations | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Revenue | 1,2 | 173.1 | - | 173.1 | 193.2 | - | 193.2 |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Cost of | | (30.2) | - | (30.2) | (34.1) | - | (34.1) |
| sales | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Gross profit | | 142.9 | - | 142.9 | 159.1 | - | 159.1 |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Administrative | | | | | | | |
| expenses | | (131.3) | (114.6) | (245.9) | (130.5) | (9.8) | (140.3) |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Profit / | 1,2 | | | | | | |
| (loss) from | | 11.6 | (114.6) | (103.0) | 28.6 | (9.8) | 18.8 |
| operations | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Finance | 3 | 1.1 | - | 1.1 | 1.8 | - | 1.8 |
| income | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Finance | 3 | (8.3) | - | (8.3) | (10.1) | - | (10.1) |
| costs | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Profit / | | | | | | | |
| (loss) | | 4.4 | (114.6) | (110.2) | 20.3 | (9.8) | 10.5 |
| before | | | | | | | |
| taxation | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
| Tax on | 4 | 0.7 | 10.3 | 11.0 | (4.5) | 1.4 | (3.1) |
| profit / | | | | | | | |
| (loss) | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Profit / | | | | | | | |
| (loss) for | | | | | | | |
| the year | | | | | | | |
| from | | 5.1 | (104.3) | (99.2) | 15.8 | (8.4) | 7.4 |
| continuing | | | | | | | |
| operations | | | | | | | |
| attributable | | | | | | | |
| to equity | | | | | | | |
| shareholders | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| (Loss) from | | | | | | | |
| discontinued | | | | | | | |
| operations * | | (0.4) | (23.5) | (23.9) | (0.2) | (28.7) | (28.9) |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Profit / | | | | | | | |
| (loss) for | | | | | | | |
| the year | | 4.7 | (127.8) | (123.1) | 15.6 | (37.1) | (21.5) |
| attributable | | | | | | | |
| to equity | | | | | | | |
| shareholders | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Earnings per | | | | | | | |
| share from | 6 | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Basic | | | | (120.4) | | | 12.2p |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Diluted | | | | (120.4) | | | 12.2p |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Earnings per | 6 | | | | | | |
| share from | | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Basic | | | | (149.4) | | | (35.3p) |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
| Diluted | | | | (149.4) | | | (35.3p) |
+----------------+------+-------------+-------------+---------+-------------+-------------+---------+
* The (loss) from discontinued operations is stated post tax.
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 25 February 2010
+------------------------------+----+----------------+--------------+
| | | 25 February | 26 February |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+------------------------------+----+----------------+--------------+
| Loss for the year | | (123.1) | (21.5) |
+------------------------------+----+----------------+--------------+
| Other comprehensive income | | | |
+------------------------------+----+----------------+--------------+
| Cash flow hedges (net of | | (0.5) | (7.6) |
| tax) | | | |
+------------------------------+----+----------------+--------------+
| Other comprehensive Income | | | |
| from the period, net of tax | | (0.5) | (7.6) |
+------------------------------+----+----------------+--------------+
| | | | |
+------------------------------+----+----------------+--------------+
| Total Comprehensive Income | | | |
| for the year attributable to | | (123.6) | (29.1) |
| equity shareholders | | | |
+------------------------------+----+----------------+--------------+
Consolidated Balance Sheet
at 25 February 2010
+------------------------------+------+------------+-----------+
| | | 25 | 26 |
| | Note | February | February |
| | | 2010 | 2009 |
| | | GBPm | GBPm |
+------------------------------+------+------------+-----------+
| Non-current assets | | | |
+------------------------------+------+------------+-----------+
| Goodwill | | 130.8 | 171.9 |
+------------------------------+------+------------+-----------+
| Other intangible assets | | 2.6 | 3.1 |
+------------------------------+------+------------+-----------+
| Property, plant and | | 226.9 | 308.9 |
| equipment | | | |
+------------------------------+------+------------+-----------+
| Other non-current assets | | 1.9 | 3.9 |
+------------------------------+------+------------+-----------+
| Trade and other receivables | | - | 22.7 |
+------------------------------+------+------------+-----------+
| | | 362.2 | 510.5 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Current assets | | | |
+------------------------------+------+------------+-----------+
| Inventories | | 1.5 | 2.1 |
+------------------------------+------+------------+-----------+
| Trade and other receivables | | 5.6 | 7.4 |
+------------------------------+------+------------+-----------+
| Cash and cash equivalents | | 37.3 | 27.9 |
+------------------------------+------+------------+-----------+
| Cash deposits | | 10.0 | - |
+------------------------------+------+------------+-----------+
| | | 54.4 | 37.4 |
| | | | |
| Assets classified as held | 8 | 2.1 | 2.4 |
| for sale | | | |
+------------------------------+------+------------+-----------+
| Investment in associate held | | - | 3.6 |
| for sale | | | |
+------------------------------+------+------------+-----------+
| Total current assets held | | 2.1 | 6.0 |
| for sale | | | |
+------------------------------+------+------------+-----------+
| | | 56.5 | 43.4 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Current liabilities | | | |
+------------------------------+------+------------+-----------+
| Trade and other payables | | (14.1) | (17.8) |
+------------------------------+------+------------+-----------+
| Current tax liabilities | | (42.8) | (42.7) |
+------------------------------+------+------------+-----------+
| Deferred income | | (0.5) | (0.5) |
+------------------------------+------+------------+-----------+
| Provisions | | (2.3) | (1.5) |
+------------------------------+------+------------+-----------+
| | | (59.7) | (62.5) |
+------------------------------+------+------------+-----------+
| Liabilities classified as | 8 | (0.7) | (6.0) |
| held for sale | | | |
+------------------------------+------+------------+-----------+
| | | (60.4) | (68.5) |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Net current liabilities | | (3.9) | (25.1) |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Total assets less current | | 358.3 | 485.4 |
| liabilities | | | |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Non-current liabilities | | | |
+------------------------------+------+------------+-----------+
| Borrowings and loans | | (139.9) | (169.7) |
+------------------------------+------+------------+-----------+
| Derivative financial | | (13.8) | (13.2) |
| instruments | | | |
+------------------------------+------+------------+-----------+
| Deferred income | | (6.1) | (6.3) |
+------------------------------+------+------------+-----------+
| Obligations under finance | | (7.9) | (7.9) |
| leases | | | |
+------------------------------+------+------------+-----------+
| Provisions | | (2.9) | (0.7) |
+------------------------------+------+------------+-----------+
| Deferred tax liabilities | | (7.9) | (20.3) |
+------------------------------+------+------------+-----------+
| | | (178.5) | (218.1) |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Net assets | | 179.8 | 267.3 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Capital and reserves | | | |
+------------------------------+------+------------+-----------+
| Share capital | | 131.8 | 121.9 |
+------------------------------+------+------------+-----------+
| Share premium | | 25.8 | - |
+------------------------------+------+------------+-----------+
| Capital redemption reserve | | 42.1 | 42.1 |
+------------------------------+------+------------+-----------+
| Equity reserve | | 1.7 | 1.2 |
+------------------------------+------+------------+-----------+
| Retained earnings | | (21.6) | 102.1 |
+------------------------------+------+------------+-----------+
| Shareholders' equity | | | |
| | | 179.8 | 267.3 |
+------------------------------+------+------------+-----------+
The financial statements were approved by the Board of Directors on 12 May 2010.
Robert McDonald
Finance Director
Consolidated Cash Flow Statement
for the year ended 25 February 2010
+------------------------------+------+------------+-----------+
| | | Year ended | Year |
| | | 25 | ended |
| | Note | February | 26 |
| | | 2010 | February |
| | | GBPm | 2009 |
| | | | GBPm |
+------------------------------+------+------------+-----------+
| Cash flows from operating | | | |
| activities | | | |
+------------------------------+------+------------+-----------+
| Net cash inflow from | 9 | 23.3 | 42.1 |
| operations | | | |
+------------------------------+------+------------+-----------+
| Finance costs paid | | (8.2) | (10.1) |
+------------------------------+------+------------+-----------+
| Tax received | | 2.2 | - |
+------------------------------+------+------------+-----------+
| | | 17.3 | 32.0 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Cash flows from investing | | | |
| activities | | | |
+------------------------------+------+------------+-----------+
| Purchase of property, plant | | (3.9) | (36.8) |
| and equipment | | | |
+------------------------------+------+------------+-----------+
| Purchase of intangible | | (0.3) | (1.3) |
| assets | | | |
+------------------------------+------+------------+-----------+
| Net proceeds from sale of | | | |
| property, plant and | | 0.5 | 13.8 |
| equipment (including motor | | | |
| vehicles) | | | |
+------------------------------+------+------------+-----------+
| Acquisition of business | | - | (0.2) |
| units | | | |
+------------------------------+------+------------+-----------+
| Finance income received | | 0.1 | 0.1 |
+------------------------------+------+------------+-----------+
| | | (3.6) | (24.4) |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Cash flows from financing | | | |
| activities | | | |
+------------------------------+------+------------+-----------+
| Repayment of long-term | | (30.0) | - |
| borrowings | | | |
+------------------------------+------+------------+-----------+
| Drawdown of new facility | | | 25.0 |
| (post-issue costs) | | | |
+------------------------------+------+------------+-----------+
| Monies placed on deposit | | (10.0) | - |
+------------------------------+------+------------+-----------+
| Net proceeds from issue of | | 35.7 | - |
| shares | | | |
+------------------------------+------+------------+-----------+
| Dividends paid | | - | (11.8) |
+------------------------------+------+------------+-----------+
| | | (4.3) | 13.2 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Net increase in cash and | | | |
| cash equivalents | | 9.4 | 20.8 |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Cash and cash equivalents at | | 27.9 | 7.1 |
| beginning of year | | | |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| | | | |
+------------------------------+------+------------+-----------+
| Cash and cash equivalents at | | 37.3 | 27.9 |
| end of year | | | |
+------------------------------+------+------------+-----------+
Net Debt Statement
for the year ended 25 February 2010
The movement in net debt in the year was analysed as follows:
+-----------------------------------+------------+-----------+
| | Year ended | Year |
| | 25 | ended |
| | February | 26 |
| | 2010 | February |
| | GBPm | 2009 |
| | | GBPm |
+-----------------------------------+------------+-----------+
| Increase in cash in the year | (9.4) | (20.8) |
+-----------------------------------+------------+-----------+
| Non-cash changes - movement in | - | - |
| finance lease liabilities | | |
+-----------------------------------+------------+-----------+
| Cash inflow from increases in | - | 25.0 |
| debt (post-issue costs) | | |
+-----------------------------------+------------+-----------+
| Cash outflow from monies being | (10.0) | - |
| placed on deposit | | |
+-----------------------------------+------------+-----------+
| Cash outflow from repayment of | (30.0) | - |
| debt | | |
+-----------------------------------+------------+-----------+
| | | |
+-----------------------------------+------------+-----------+
| Movement in net debt in the year | (49.4) | 4.2 |
+-----------------------------------+------------+-----------+
| | | |
+-----------------------------------+------------+-----------+
| Opening net debt | 150.0 | 145.8 |
+-----------------------------------+------------+-----------+
| | | |
+-----------------------------------+------------+-----------+
| Closing net debt | 100.6 | 150.0 |
| | | |
+-----------------------------------+------------+-----------+
Consolidated Statement of Changes in Shareholders' Equity
for the year ended 25 February 2010
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| | Share | Share | Capital | Equity | Retained | Total |
| | capital | premium | redemption | reserve | earnings | |
| | | | reserve | | | |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Brought forward at | 134.2 | - | 29.8 | 1.2 | 142.7 | 307.9 |
| 29 February 2008 | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Total comprehensive | - | - | - | - | (29.1) | (29.1) |
| income for the year | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Share-based payment | - | - | - | 0.3 | - | 0.3 |
| charge | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Issue of shares out | | | | | | |
| of Luminar plc | - | - | - | (0.3) | 0.3 | - |
| Employee trust | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Dividends paid (note | - | - | - | - | (11.8) | (11.8) |
| 5) | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Cancellation of | (12.3) | - | 12.3 | - | - | - |
| deferred shares | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Carried forward at | 121.9 | - | 42.1 | 1.2 | 102.1 | 267.3 |
| 26 February 2009 | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Brought forward at | 121.9 | - | 42.1 | 1.2 | 102.1 | 267.3 |
| 27 February 2009 | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Total comprehensive | - | - | - | - | (123.6) | (123.6) |
| income for the year | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Share-based payment | - | - | - | 0.5 | - | 0.5 |
| charge | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Issue of shares | 9.9 | 25.8 | - | - | - | 35.7 |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Purchase of shares | | | | | | |
| through Employee | - | - | - | - | (0.1) | (0.1) |
| Benefit Trust | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
| Carried forward at | 131.8 | 25.8 | 42.1 | 1.7 | (21.6) | 179.8 |
| 25 February 2010 | | | | | | |
+----------------------+---------+---------+------------+---------+----------+------------------------------------------------------+
Notes to the Consolidated Financial Statements
for the year ended 25 February 2010
1 Basis of preparation
This consolidated financial information does not constitute the Company's
statutory accounts for the years ended 25 February 2010 or 26 February 2009 but
is derived from those accounts. Statutory accounts for 2009 have been delivered
to the registrar of companies, and those for 2010 will be delivered in due
course. The auditors have reported on those accounts; their reports were (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 237 (2) or (3) of the Companies
Act 1985 in respect of the accounts for 2009 nor a statement under section 498
(2) or (3) of the Companies Act 2006 in respect of the accounts for 2010.
This consolidated financial information for the year ended 25 February 2010 has
been prepared, except as described below, in accordance with the accounting
policies adopted in the annual financial statements for the year ended 26
February 2009, as described in those annual financial statements which have been
prepared in accordance with IFRSs as adopted by the European Union.
The following new standards, amendments to standards or interpretations are
mandatory for the first time for the financial year beginning 27 February 2009.
Revised IAS 1, Presentation of financial statements, effective for annual
periods beginning on or after 1 January 2009. This standard changes the
presentation of items of income and expenses in the statement of changes in
equity, requiring 'non-owner changes in equity' to be presented separately from
owner changes in equity. The standard also introduces additional requirements
for entities that are making restatements or reclassifications of comparative
information. This only affects the disclosure of items within the Group
financial statements.
IFRS 7, 'Financial instruments: Disclosures' - Increases the disclosure
requirements about fair value measurement and reinforces existing principles for
disclosure about liquidity risk. The amendment introduces a three-level
hierarchy for fair value measurement disclosure and requires some specific
quantitative disclosures for financial instruments in the lowest level in the
hierarchy. In addition, the amendment clarifies and enhances existing
requirements for the disclosure of liquidity risk primarily requiring a separate
liquidity risk analysis for derivative and non-derivative financial liabilities.
This only affects the disclosure of items within the Group financial statements.
Revised IAS 23, Borrowing costs, effective for annual periods beginning on or
after 1 January 2009. This standard requires an entity to capitalise borrowing
costs directly attributable to the acquisition construction or production of a
qualifying asset as part of the cost of that asset. The option of immediately
expensing those borrowing costs has been removed. This has had no impact on the
Group as these borrowing costs are already being capitalised.
Amendment to IFRS 2, Share-based payment, effective for annual periods beginning
on or after 1 January 2009. This standard deals with vesting conditions and
cancellations. It clarifies that vesting conditions are service conditions and
performance conditions only, and that all cancellations, whether by the entity
or by other parties, should receive the same accounting treatment. Adoption of
this standard has had no impact on the Group's accounting for the existing share
option schemes.
Amendment to IAS 32, Financial instruments: Presentation, effective for annual
periods beginning on or after 1 January 2009. This standard requires entities
to classify certain types of financial instruments as equity, provided they have
particular features and meet specific conditions. Adoption of this standard has
had no impact on the Group.
IFRIC 13, Customer loyalty programmes relating to IAS 18, Revenue, effective for
annual periods beginning on or after 1 January 2008. This standard deals with
the required accounting for customer loyalty programmes where goods or services
are sold together with a customer loyalty incentive. Adoption of this standard
has not had a material impact on the Group.
As a result of the deferred shares being redeemed and cancelled in July 2008,
issued share capital and capital redemption reserve comparatives have been
represented in this consolidated financial information for the year ended 25
February 2010.
The Group benefits from a syndicated loan facility of GBP175m which extends
until August 2012 and against which net borrowings are currently GBP92.6m. The
facility is subject to financial covenants, the most significant of which
requires net borrowings not to exceed three times the value of adjusted EBITDA.
At 25 February 2010 this covenant test ratio was 2.6x, providing adequate
headroom within the facility.
The Group's budgeted cash flow projections anticipate sufficient cash generation
to retain and increase covenant headroom over the course of the forthcoming
year. However, recent trading has fallen below budgeted levels and the market
continues to be volatile.
If these volatile conditions continue, the Directors have examined available
mitigating action through further cost reduction or retail price management but
recognise there is the potential for headroom on the facility to be eroded. In
these circumstances, it is likely that the Group would need to renegotiate the
terms of the facility and that this will have an impact on the cost of
borrowing. The Directors have considered the action the syndicate banks may
take in such a scenario and, having taken external advice on the matter,
concluded that it is highly likely that the banks will agree to renegotiate the
facilities.
On this basis, having examined evidence and made appropriate enquiries, the
Directors are satisfied that adequate financial resources are available to the
Group within circumstances that can be reasonably foreseen.
For this reason, the Directors continue to adopt the going concern basis in
preparing the Group's and the Company's financial statements.
2 Segmental reporting
For the year ended 26 February 2009, the Group early adopted IFRS 8 'Operating
segments'. IFRS 8 replaces IAS 14 'Segment Reporting'.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief
Operating Decision Maker (CODM) to allocate resources to the segments and to
assess their performance.
We report our segment information on the same basis as our internal management
reporting structure, which drives how our company is organised and managed.
The Group is principally engaged as owner, developer and operator of nightclubs
and themed bars in the UK. The CODM has been identified as the Senior Executive
Management (SEM) that exercises the day-to-day management function of the Group.
Operational and financial information, which is primarily at an individual unit
level, is received by the CODM on a monthly basis. Luminar do not distinguish
between geography or brand. The unit information does not meet the quantitative
thresholds as required by IFRS 8, as such management have judged it appropriate
to aggregate the financial information relating to all units into a single
reportable segment.
All revenue is earned from sales to external customers.
3 Net finance costs
Net finance costs relating to continuing operations were as follows:
+------------------------------------+------------+----------+
| | Year ended | Year |
| | 25 | ended |
| | February | 26 |
| | 2010 | February |
| | GBPm | 2009 |
| | | GBPm |
+------------------------------------+------------+----------+
| Interest payable on bank | (7.7) | (9.8) |
| borrowings | | |
+------------------------------------+------------+----------+
| Interest payable on obligations | (0.4) | (0.4) |
| under finance leases | | |
+------------------------------------+------------+----------+
| Amortisation of issue costs of the | (0.2) | (0.2) |
| bank loan | | |
+------------------------------------+------------+----------+
| Total borrowing costs | (8.3) | (10.4) |
+------------------------------------+------------+----------+
| Less amounts capitalised in the | - | 0.3 |
| cost of qualifying assets | | |
+------------------------------------+------------+----------+
| Finance costs | (8.3) | (10.1) |
+------------------------------------+------------+----------+
| Income on bank deposits | 0.1 | 0.1 |
| Interest on loan to associate | 0.9 | 1.7 |
| Fair value movement on derivatives | 0.1 | - |
| not hedge accounted for | | |
+------------------------------------+------------+----------+
| Finance income | 1.1 | 1.8 |
+------------------------------------+------------+----------+
| Net finance costs | (7.2) | (8.3) |
+------------------------------------+------------+----------+
Finance costs relating to discontinued operations, being interest payable on
obligations under finance leases, totalled GBPnil (2009: GBPnil).
Interest capitalised in the cost of qualifying assets is calculated using the
borrowing rate obtainable by the Group under its current facility at the start
of each financial year. Interest is calculated from the date capital
expenditure commences until the opening of the relevant unit.
4 Tax on (loss) / profit
(a) Analysis of charge in period
The taxation charge is based on the loss for the year and represents:
+------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | | |
| | GBPm | GBPm |
+------------------------------------+-----------+-----------+
| Current tax credit / (charge) | | |
+------------------------------------+-----------+-----------+
| - Continuing operations: | | |
+------------------------------------+-----------+-----------+
| - Current period | (3.0) | (6.6) |
+------------------------------------+-----------+-----------+
| - Adjustments from prior periods | 2.1 | 1.9 |
+------------------------------------+-----------+-----------+
| - Discontinued operations: | | |
+------------------------------------+-----------+-----------+
| - Current period | 3.0 | 0.2 |
+------------------------------------+-----------+-----------+
| | 2.1 | (4.5) |
+------------------------------------+-----------+-----------+
| | | |
+------------------------------------+-----------+-----------+
| Deferred tax credit | | |
+------------------------------------+-----------+-----------+
| - Continuing operations | 11.9 | 1.6 |
+------------------------------------+-----------+-----------+
| - Discontinued operations | 0.3 | 0.5 |
+------------------------------------+-----------+-----------+
| | 12.2 | 2.1 |
+------------------------------------+-----------+-----------+
| Total taxation credit/ (charge) | | |
+------------------------------------+-----------+-----------+
| - Continuing operations | 11.0 | (3.1) |
+------------------------------------+-----------+-----------+
| - Discontinued operations | 3.3 | 0.7 |
+------------------------------------+-----------+-----------+
| | 14.3 | (2.4) |
+------------------------------------+-----------+-----------+
(b) Tax on items (charged) / credited to equity
+------------------------------------+-----------+------------+
| | Year | Year ended |
| | ended | |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------+-----------+------------+
| Derivative financial instruments | (0.2) | 2.9 |
+------------------------------------+-----------+------------+
| | (0.2) | 2.9 |
+------------------------------------+-----------+------------+
The amounts charged (2009: credited) to equity relate to deferred taxation.
(c) Factors affecting tax charge for period
The tax assessed for the period is higher (2009: higher) than the standard rate
of corporation tax in the UK. The differences are explained as follows:
+------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | | |
| | GBPm | GBPm |
+------------------------------------+-----------+-----------+
| (Loss) / profit on ordinary | (110.2) | 10.5 |
| activities from continuing | | |
| operations before tax | | |
+------------------------------------+-----------+-----------+
| | | |
| (Loss) / profit on ordinary | | |
| activities multiplied by standard | 30.9 | (2.9) |
| rate of corporation tax in the UK | | |
| of 28% (2009: 28%)* | | |
+------------------------------------+-----------+-----------+
| | | |
| Effects of: | | |
+------------------------------------+-----------+-----------+
| Expenses not deductible for tax | (3.7) | (0.1) |
| purposes | | |
+------------------------------------+-----------+-----------+
| Non-deductible exceptional items | (11.5) | (2.7) |
+------------------------------------+-----------+-----------+
| Adjustments in respect of the | 2.1 | 1.9 |
| prior year | | |
+------------------------------------+-----------+-----------+
| Non-qualifying depreciation | (6.8) | 0.7 |
+------------------------------------+-----------+-----------+
| Total tax credit / (charge) from | 11.0 | (3.1) |
| continuing operations for the year | | |
+------------------------------------+-----------+-----------+
5 Dividends
+------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------+-----------+-----------+
| Ordinary shares - previous year | | |
| final dividend paid: nil pence per | | |
| share | - | 8.5 |
| (2009: 13.95 pence per share) | | |
+------------------------------------+-----------+-----------+
| | | |
+------------------------------------+-----------+-----------+
| Ordinary shares - current year | | |
| interim dividend paid: nil pence | | |
| per share | - | 3.3 |
| (2009: 5.37 pence per share) | | |
+------------------------------------+-----------+-----------+
| | | |
+------------------------------------+-----------+-----------+
| | - | 11.8 |
+------------------------------------+-----------+-----------+
The Directors are not proposing a final dividend in respect of the current
financial year.
6 (Loss) / Earnings per share
The basic earnings per share (EPS) is calculated by dividing the earnings
attributed to equity shareholders by the weighted average number of shares in
issue during the year. For diluted earnings per share the weighted average
number of ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group has two classes of dilutive
potential ordinary shares: share options granted to Directors and employees
where the exercise price is less than the average market price of the Group's
ordinary shares during the year, and the contingently issuable shares under the
Group's long-term incentive plan. At the year end an assessment is made as to
whether the performance criteria for the vesting of awards under the share
option schemes of the Group is likely to be met and any potential shares
unlikely to be exercised are excluded from the diluted EPS calculation.
An alternative measure of earnings per share has also been presented below, that
being earnings per share from continuing operations pre-exceptional items, as
the Directors believe that this measure of pre-exceptional earnings from
continuing operations is more reflective of the ongoing trading of the Group.
Reconciliation of the earnings and weighted average number of shares used in the
calculations are set out below:
+----------------------------+----------+-----------+----------+
| | Year ended 25 February 2010 |
+----------------------------+---------------------------------+
| | | Weighted | |
| | | average | |
| | | number | Per |
| | (Loss) / | of | share |
| | earnings | shares | amount |
| | GBPm | (in | (pence) |
| | | millions) | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS | | | |
+----------------------------+----------+-----------+----------+
| Loss attributable to | (123.1) | 82.4 | (149.4) |
| ordinary shareholders | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | (99.2) | 82.4 | (120.4) |
| continuing operations | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | (23.9) | 82.4 | (29.0) |
| discontinued operations | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| EPS from continuing | | | |
| operations pre-exceptional | | | |
| items | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | | | |
| continuing operations | 5.1 | 82.4 | 6.2 |
| pre-exceptional items | | | |
+----------------------------+----------+-----------+----------+
At 25 February 2010, as the Group is loss-making, any share options in issue are
considered to be "anti-dilutive" and as such, the calculation is the same for
both basic and diluted earnings per share.
+----------------------------+----------+-----------+----------+
| | Year ended 26 February 2009 |
+----------------------------+---------------------------------+
| | | Weighted | |
| | | average | |
| | | number | Per |
| | (Loss) / | of | share |
| | earnings | shares | amount |
| | GBPm | (in | (pence) |
| | | millions) | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS | | | |
+----------------------------+----------+-----------+----------+
| Loss attributable to | (21.5) | 60.9 | (35.3) |
| ordinary shareholders | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | 7.4 | 60.9 | 12.2 |
| continuing operations | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | (28.9) | 60.9 | (47.5) |
| discontinued operations | | | |
+----------------------------+----------+-----------+----------+
| | | | |
+----------------------------+----------+-----------+----------+
| EPS from continuing | | | |
| operations pre-exceptional | | | |
| items | | | |
+----------------------------+----------+-----------+----------+
| Basic and diluted EPS from | 15.8 | 60.9 | 25.9 |
| continuing operations | | | |
| pre-exceptional items | | | |
+----------------------------+----------+-----------+----------+
At 26 February 2009, as the Group was loss-making, any share options in issue
are considered to be "anti-dilutive" based on the exercise price and the
weighted average market price and as such, the calculation is the same for both
basic and diluted earnings per share.
All amounts included in the column headed '(Loss) / earnings' are taken from the
face of the Consolidated Income Statement.
7 Exceptional items
(a) Continuing operations
The Group incurred exceptional items on continuing operations as follows:
+---------------------------------------+-----------------------------+-----------------------------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | | |
| | GBPm | GBPm |
+---------------------------------------+-----------------------------+-----------------------------+
| Exceptional items relating to trading | | |
| | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Impairment of property, plant and | (63.8) | (7.4) |
| equipment | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Provision for loss on liquidation of | (0.8) | - |
| supplier | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Catch up of depreciation on units no | - | (0.5) |
| longer held for sale | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Costs relating to reorganisation and | (1.5) | (0.6) |
| rationalisation | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Impairment of goodwill | (41.1) | (0.7) |
+---------------------------------------+-----------------------------+-----------------------------+
| Impairment of lease premiums | (1.9) | - |
+---------------------------------------+-----------------------------+-----------------------------+
| Net movement on provision for onerous | (3.5) | (0.3) |
| lease commitments | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Legal settlement | - | (0.3) |
+---------------------------------------+-----------------------------+-----------------------------+
| Provision against carrying value of | (0.6) | - |
| memorabilia stock | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Provision against receivable due from | (0.7) | - |
| associate | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Costs relating to aborted projects | (0.7) | - |
+---------------------------------------+-----------------------------+-----------------------------+
| Pre-tax exceptional items relating to | (114.6) | (9.8) |
| continuing operations | | |
+---------------------------------------+-----------------------------+-----------------------------+
| Tax on exceptional items | 10.3 | 1.4 |
+---------------------------------------+-----------------------------+-----------------------------+
| Post-tax exceptional items relating | (104.3) | (8.4) |
| to continuing operations | | |
+---------------------------------------+-----------------------------+-----------------------------+
The impairment of property, plant and equipment of GBP63.8m (2009: GBP7.4m) and
impairment of lease premiums of GBP1.9m (2009: GBPnil) reflects the difference
between the value in use of the units and their carrying value. An impairment
review was triggered on these assets due to the tough trading conditions seen
through the year, resulting in reduced profit contributions.
Costs of reorganisation and rationalisation of GBP1.5m (2009: GBP0.6m) primarily
relate to redundancy and termination costs incurred in respect of internal
restructures. The prior year costs related mainly to previous restructures.
The impairment of goodwill of GBP41.1m (2009: GBP0.7m) has arisen following the
annual impairment test, which compared the carrying value of units to their
recoverable value (their value in use).
The charges arising from onerous lease commitments of GBP3.5m (2009: GBP0.3m)
were to recognise the obligation for rent, rates and other property related
holding costs on currently vacant or closed units, where the likelihood of
assignment of the lease or sub-let of the property is unlikely in the short
term. These units are closed or vacant due to them being unprofitable and
unsuitable for re-branding.
(b) Discontinued operations
The Group incurred exceptional items relating to discontinued operations as
follows:
+------------------------------------+-----------+-------------+
| | Year | Year ended |
| | ended | 26 February |
| | 25 | 2009 |
| | February | |
| | 2010 | GBPm |
| | | |
| | GBPm | |
+------------------------------------+-----------+-------------+
| Impairment of property, plant and | (0.3) | (1.5) |
| equipment | | |
+------------------------------------+-----------+-------------+
| Impairment of investment in | (3.6) | (24.1) |
| associate | | |
+------------------------------------+-----------+-------------+
| Provision against receivable due | (23.7) | - |
| from associate | | |
+------------------------------------+-----------+-------------+
| Costs relating to reorganisation | - | (0.7) |
| and rationalisation | | |
+------------------------------------+-----------+-------------+
| Net movement on provision for | 0.3 | (0.5) |
| onerous lease commitments | | |
+------------------------------------+-----------+-------------+
| Realised loss on disposal of the | - | (0.4) |
| Entertainment Division | | |
+------------------------------------+-----------+-------------+
| Realised profit on disposals | 0.3 | 0.7 |
+------------------------------------+-----------+-------------+
| | (27.0) | (26.5) |
+------------------------------------+-----------+-------------+
| | | |
+------------------------------------+-----------+-------------+
| Costs associated with the disposal | | |
| of companies: | | |
+------------------------------------+-----------+-------------+
| Provision for cash injection into | - | (1.4) |
| businesses | | |
+------------------------------------+-----------+-------------+
| Transaction costs including | - | (0.9) |
| advisors fees | | |
+------------------------------------+-----------+-------------+
| | - | (2.3) |
+------------------------------------+-----------+-------------+
| Indemnity provision | 0.5 | (0.5) |
+------------------------------------+-----------+-------------+
| | 0.5 | (2.8) |
+------------------------------------+-----------+-------------+
| | | |
+------------------------------------+-----------+-------------+
| Pre-tax exceptional items relating | | |
| to discontinued operations | (26.5) | (29.3) |
+------------------------------------+-----------+-------------+
| Tax on exceptional items | 3.0 | 0.6 |
+------------------------------------+-----------+-------------+
| Post-tax exceptional items | | |
| relating to discontinued | (23.5) | (28.7) |
| operations | | |
+------------------------------------+-----------+-------------+
The impairment of property, plant and equipment of GBP0.3m (2009: GBP1.5m) has
resulted from re-measuring to fair value less costs of sale units held for sale.
A non-cash impairment of GBP3.6m (2009: GBP24.1m) has been recognised against
the carrying value of the Group's investment in The 3D Entertainment Group
Limited, reflecting the fact that the company has gone into administration. A
further GBP23.7m (2009: GBPnil) has been provided against the carrying value of
the vendor loan note (and related accrued interest).
The credit in relation to the disposal of companies of GBP0.5m (2009: GBP2.8m
charge) relates to a release of brought forward provisions, for which the
relative amounts are no longer payable, due to the companies disposed of having
been placed into liquidation and administration during the year.
8 Discontinued operations and non-current assets held for sale
(a) Results of discontinued operations
The results of discontinued operations, which comprise those of the 26 units
sold to Cavendish Bars Limited for which the sale did not complete prior to this
financial year and other non-core units, either disposed of or held for sale,
forming part of the Group's plan to exit from non-core operations, included
within the Consolidated Income Statement were as follows:
+-------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | | |
+-------------------------------------+-----------+-----------+
| | GBPm | GBPm |
+-------------------------------------+-----------+-----------+
| Revenue | 0.5 | 1.4 |
+-------------------------------------+-----------+-----------+
| Administrative expenses | (1.2) | (1.7) |
+-------------------------------------+-----------+-----------+
| Finance costs | - | - |
+-------------------------------------+-----------+-----------+
| Loss before tax pre-exceptional | (0.7) | (0.3) |
| items | | |
+-------------------------------------+-----------+-----------+
| Attributable tax credit | 0.3 | 0.1 |
+-------------------------------------+-----------+-----------+
| Loss after tax pre-exceptional | (0.4) | (0.2) |
| items | | |
+-------------------------------------+-----------+-----------+
| Exceptional items (see note 7) | (26.5) | (29.3) |
+-------------------------------------+-----------+-----------+
| Attributable tax credit | 3.0 | 0.6 |
+-------------------------------------+-----------+-----------+
| Loss from discontinued operations | (23.9) | (28.9) |
+-------------------------------------+-----------+-----------+
The impairment of the Group's investment in The 3D Entertainment Group Limited,
and the provision against the related receivable balance, are the primary
reasons for the loss from discontinued operations (see Note 7, 'Exceptional
Items').
(b) Cash flow from discontinued operations
The Consolidated Cash Flow Statement includes the following cash flows arising
from discontinued operations:
+----------------------------------+-------------+------------+
| | Year ended | Year ended |
| | | |
+----------------------------------+-------------+------------+
| | 25 February | 26 |
| | 2010 | February |
| | | 2009 |
| | | |
+----------------------------------+-------------+------------+
| | GBPm | GBPm |
+----------------------------------+-------------+------------+
| Net cash flows from operating | (5.3) | (11.0) |
| activities | | |
+----------------------------------+-------------+------------+
| Net cash flows from investing | (0.1) | 3.5 |
| activities | | |
+----------------------------------+-------------+------------+
| | (5.4) | (7.5) |
+----------------------------------+-------------+------------+
(c) Assets and liabilities of units held for sale
As at 25 February 2010, five units (2009: nine units) were classified as held
for sale, of which four (2009: eight) of the units were reported within
discontinued operations, and the remaining unit was reported within continuing
operations.
The major classes of assets and liabilities comprising the units classified as
held for sale were as follows:
+----------------------------------+-------------+-----------+
| | 25 February | 26 |
| | 2010 | February |
| | | 2009 |
| | | |
+----------------------------------+-------------+-----------+
| | GBPm | GBPm |
+----------------------------------+-------------+-----------+
| Property, plant and equipment | 2.0 | 2.3 |
+----------------------------------+-------------+-----------+
| Inventories | - | - |
+----------------------------------+-------------+-----------+
| Trade and other receivables | 0.1 | 0.1 |
+----------------------------------+-------------+-----------+
| Cash and cash equivalents | - | - |
+----------------------------------+-------------+-----------+
| Total assets classified as held | 2.1 | 2.4 |
| for sale | | |
+----------------------------------+-------------+-----------+
| | | |
+----------------------------------+-------------+-----------+
| Trade and other payables | (0.1) | (0.1) |
+----------------------------------+-------------+-----------+
| Deferred income | - | - |
+----------------------------------+-------------+-----------+
| Provisions | (0.5) | (5.8) |
+----------------------------------+-------------+-----------+
| Deferred tax liabilities | (0.1) | (0.1) |
+----------------------------------+-------------+-----------+
| Total liabilities classified as | (0.7) | (6.0) |
| held for sale | | |
+----------------------------------+-------------+-----------+
| | | |
+----------------------------------+-------------+-----------+
| Net assets / (liabilities) | 1.4 | (3.6) |
| classified as held for sale | | |
+----------------------------------+-------------+-----------+
The total loss of GBP1.6m (2009: GBP2.0m) incurred in writing these assets down
to fair value less costs to sell has been included in exceptional items (see
note 7).
9 Cash flow from operating activities
a) Reconciliation of net cash inflow from operating activities
+------------------------------+------------+------------+
| | Year ended | Year ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------+------------+------------+
| Profit before taxation - | (110.2) | 10.5 |
| continuing operations | | |
+------------------------------+------------+------------+
| Loss before taxation - | (27.2) | (29.6) |
| discontinued operations | | |
+------------------------------+------------+------------+
| Loss before taxation | (137.4) | (19.1) |
+------------------------------+------------+------------+
| Depreciation and | 22.7 | 22.7 |
| amortisation | | |
+------------------------------+------------+------------+
| Amortisation of lease | 0.1 | 0.2 |
| premiums | | |
+------------------------------+------------+------------+
| Amortisation of issue costs | 0.2 | 0.2 |
+------------------------------+------------+------------+
| Net impairment of property, | 64.1 | 8.9 |
| plant and equipment | | |
+------------------------------+------------+------------+
| Impairment of goodwill | 41.1 | 0.7 |
+------------------------------+------------+------------+
| Impairment of other | 1.9 | - |
| non-current assets | | |
+------------------------------+------------+------------+
| Impairment of investment in | 3.6 | 24.1 |
| associate | | |
+------------------------------+------------+------------+
| Provision against | 24.4 | - |
| receivables due from | | |
| associate | | |
+------------------------------+------------+------------+
| Movement in accrued | - | (2.5) |
| transaction costs | | |
+------------------------------+------------+------------+
| Profit on sale of property, | (0.5) | (0.7) |
| plant and equipment | | |
+------------------------------+------------+------------+
| Loss on sale of motor | - | 0.1 |
| vehicles | | |
+------------------------------+------------+------------+
| Loss on disposal of | - | 0.1 |
| intangible assets | | |
+------------------------------+------------+------------+
| Non-cash charges for | 0.5 | 0.3 |
| share-based payments | | |
+------------------------------+------------+------------+
| Net finance costs | 7.2 | 8.3 |
+------------------------------+------------+------------+
| | 27.9 | 43.3 |
+------------------------------+------------+------------+
| Decrease in inventories | 0.6 | 0.2 |
+------------------------------+------------+------------+
| Decrease in receivables | 1.0 | 0.5 |
+------------------------------+------------+------------+
| (Decrease) / increase in | (4.0) | 3.2 |
| trade and other payables | | |
+------------------------------+------------+------------+
| Decrease in provisions | (2.2) | (5.1) |
+------------------------------+------------+------------+
| Net cash inflow from | 23.3 | 42.1 |
| operations | | |
+------------------------------+------------+------------+
b) Cash flows from continuing operations
To assist in the understanding of cash flows relating to the ongoing business of
the Group, the following tables outline the cash flows relating to discontinued
operations and exceptional items to be excluded in order to present operating
cash flows that relate to the Group's continuing business:
+------------------------------------+-----------+----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------+-----------+----------+
| Cash flows from operating | 17.3 | 32.0 |
| activities | | |
+------------------------------------+-----------+----------+
| Add: net cash flows from operating | | |
| activities - discontinued | 5.3 | 11.0 |
| operations (including exceptional | | |
| cash items) | | |
+------------------------------------+-----------+----------+
| Cash flows from operating | 22.6 | 43.0 |
| activities - continuing operations | | |
+------------------------------------+-----------+----------+
| Add: net exceptional cash flows | | |
| from operating activities - | 2.9 | 1.2 |
| continuing operations | | |
+------------------------------------+-----------+----------+
| Pre-exceptional cash flows from | | |
| operating activities - continuing | 25.5 | 44.2 |
| operations | | |
+------------------------------------+-----------+----------+
+------------------------------------+-----------+----------+
| | Year | Year |
| | ended | ended |
| | 25 | 26 |
| | February | February |
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------+-----------+----------+
| Net cash inflow from operations | 23.3 | 42.1 |
+------------------------------------+-----------+----------+
| Add: net cash flows from operating | | |
| activities - discontinued | 5.3 | 11.0 |
| operations (including exceptional | | |
| cash items) | | |
+------------------------------------+-----------+----------+
| Net cash inflow from operations - | 28.6 | 53.1 |
| continuing operations | | |
+------------------------------------+-----------+----------+
| Add: net exceptional cash flows | | |
| from operations - continuing | 2.9 | 1.2 |
| operations | | |
+------------------------------------+-----------+----------+
| Net pre-exceptional cash inflow | | |
| from operations - continuing | 31.5 | 54.3 |
| operations | | |
+------------------------------------+-----------+----------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MMGMKGZRGGZZ
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