RNS Number:9175M
Stagecoach Theatre Arts PLC
31 January 2008
31 January 2008
Stagecoach Theatre Arts plc (STA/L)
("Stagecoach" or "the Group")
Interim Results
for the half year ended 30 November 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:
* Significantly improved Group profit before tax of �261,000 (2006: loss
of �51,000), reflecting reduction in UK and overseas cost base and
continued increase in new schools and student numbers
* Franchise network fees (ie. underlying school fees throughout franchise
network) up 9.6% to �12.6m (2006: �11.5m)
* Earnings per share improved strongly to 1.7p (2006: loss 0.8p)
* Net cash balance increased to �1.2m (2006: �0.6m)
* Total student numbers worldwide up by 8% to over 40,000 (2006: 37,000),
as demand for performing arts tuition for children in the UK countries
continues to grow
* Launch of new retail offering - an on-line shop (www.stagecoachshop.co.uk)
offering children's merchandise to students and the general public
Overseas schools
* Stagecoach have entered into an Area Development Agreement with a US
corporation for them to open and operate Stagecoach Theatre Arts schools in
New Jersey and Pennsylvania, USA
* German subsidiary is trading well and looking to expand
* January 2008 - Granted exclusive franchise development rights for
Stagecoach Theatre Arts in Athens to a well-established Greek business with
a presence across Greece
David Sprigg, Joint Managing Director, commented:
"The Stagecoach UK business continues to expand as demand for tuition in the
performing arts continues to increase."
"The benefits of the restructuring and cost reductions throughout the Group are
evident in these results. Your Board intends to maintain a tight control over
costs, whilst continuing to expand the number of schools and capitalising on new
growth areas."
Enquiries:
Stagecoach Theatre Arts: Tel: 01932 254 333
www.stagecoach.co.uk 07775 643 939
Richard Dawson, Finance Director and Investor Relations
Smith & Williamson Corporate Finance Limited: Tel: 020 7131 4000
David Jones / Siobhan Sergeant
Public Relations, Adventis Financial PR Tel: 020 7034 4758
Tarquin Edwards 07879 458 364
Chairman's Statement
Results and Overview
I am delighted to report on an excellent performance by Stagecoach Theatre Arts.
The Group's results for the six months ended 30 November 2007 reflect continuing
growth in the number of Stagecoach Theatre Arts schools and the benefit of
reductions in our cost base over the past eighteen months. Consequently, the
Group reports significantly improved results for this half-year period.
There are now over 40,000 students attending Stagecoach Theatre Arts,
SportsCoach and Mini Stages schools throughout the Group (2006: 37,000
students), an increase of over 8%.
These interim results are our first set of results prepared on the basis of the
recognition and measurement requirements of International Financial Reporting
Standards as adopted by the EU ('Adopted IFRS'). While the application of
Adopted IFRS has no fundamental impact on the reported results for the Group,
the interim results of 2006 and full year results to 31 May 2007 have been
restated in accordance with Adopted IFRS. Reconciliation of prior periods'
results to those restated under Adopted IFRS is shown in note 8.
The network fees, which represent the underlying school fees throughout the
franchise network, were �12.6 million for the period, an increase of 9.6% (2006:
�11.5 million).
Group profit before tax was �261,000 (2006: loss before tax �51,000). The swing
from interim loss last year to profit this year predominantly reflects cutting
of UK and overseas overheads, in combination with a continued increase in new
schools and student numbers.
Group cash balances increased to �1.2 million (2006: �0.6 million).
Earnings per share were 1.7 pence (2006: loss per share 0.8 pence).
Operational Performance
UK Schools
The numbers of Stagecoach Theatre Arts schools in the UK and students attending
them have increased over the period to 620 schools, 681 Early Stages classes and
35,884 students (2006: 603 schools, 640 Early Stages classes and 33,972
students).
Across the Stagecoach Theatre Arts UK network, including the new schools opened
this Autumn Term, 95% of all available places are taken. Student numbers have
increased to 42.7 students per school, up from 42.0 for the previous year.
Similarly, Early Stages average student numbers have increased from 13.2 to 13.4
students per class.
The demand for performing arts tuition for children in the UK continues to
increase each year and given that Stagecoach Theatre Arts provides the highest
standards of education and service, and with schools geographically spread
across the UK, we are well positioned to continue to meet this increasing
demand.
Following the cost cutting exercise the Group no longer runs separate divisions
for SportsCoach and Mini Stages, thus improving operational efficiency and
reducing overheads.
The SportsCoach network has 27 SportsCoach schools, 10 Early Sporties Classes
and 1,097 students (2006: 1,360 students). There are 64 Mini Stages sessions and
625 students (2006: 523 students) and 84 Montessori nursery students.
The Stagecoach Agency maintains its status as the largest performing arts agency
for children in the UK, securing hundreds of professional auditions or actual
work placements each month for our Stagecoach students.
During the period we launched our own on-line shop, www.stagecoachshop.co.uk,
offering children's toys, clothing and literature and other merchandise to our
Stagecoach students and the general public. Plans are underway to increase the
range of products for purchase on the website to over 400 items.
We have seen an increased trend for potential students to make on-line
applications to join Stagecoach schools and a marked increase in the number of
hits on the main Stagecoach website (which is linked to the on-line Stagecoach
shop). It is expected that this trend of increased website hits will naturally
enhance awareness, and subsequently revenues, of the on-line Stagecoach shop.
Overseas schools
Following the restructuring in the prior year, the Stagecoach USA subsidiary
continues to trade at around breakeven. Post period-end we have entered into an
Area Development Agreement with a US corporation for them to open and operate
Stagecoach Theatre Arts schools in New Jersey and Pennsylvania.
Following the acquisition of the outstanding 10 per cent of Stagecoach Germany,
the German subsidiary is trading well and we are now looking to expand our
franchise network in Germany.
During January 2008, we granted exclusive franchise development rights for
Stagecoach Theatre Arts in Athens, Greece, to a Greek group that has the Western
Union Agency for the whole of Greece, among other business interests.
In all overseas markets there are 41 Stagecoach schools, 57 Early Stages
classes, 4 Further Stages classes and a total of 2,350 students.
Creative and Educational
The annual Easy Stages showcase production this year was 'Oliver' featuring 70
Stagecoach students from schools across the country and overseas. The Group
staged a number of other successful events during the period, including two
performances at Her Majesty's Theatre, London, where 16 Stagecoach schools from
around the UK took part in an evening of song and dance. In December 2007, 2,000
Stagecoach students from the Midlands raised the roof at Birmingham's National
Indoor Arena performing in aid of our children's charity, InterAct.
Creative Dance workshops for our principals and teachers have been held around
the country. These form part of our continuing training to maintain the highest
standards of performing arts tuition.
Our Stagecoach Theatre Arts Foundation Course, a course for performing arts
teachers, is recognised as being equal to Unit One of the Trinity/Guildhall
A.T.C.L. diploma in Teaching Theatre Arts. The Foundation Course continues to
gain industry recognition and popularity and has attracted many attendees from
outside the Stagecoach network, including overseas.
Dividend
No interim dividend has been proposed (2006: �nil).
Current trading and future prospects
The Stagecoach UK business continues to expand as demand for tuition in the
performing arts continues to increase.
The benefits of the restructuring and cost reductions throughout the Group are
evident in these results. Your Board intends to maintain a tight control over
costs, whilst continuing to expand the number of schools and capitalising on new
growth areas.
Graham Cole
Chairman
31 January 2008
Unaudited Consolidated Income Statement
Six months Six months Year
ended ended ended
30 Nov 2007 30 Nov 2006 31 May 2007
Notes
�'000 �'000 �'000
Network fees (see note) 12,627 11,548 26,544
====== ====== ======
Revenue 2 3,099 3,074 6,324
Cost of sales (1,798) (2,065) (3,654)
------ ------ -------
Gross profit 1,301 1,009 2,670
Other operating income 13 11 22
Administrative expenses (1,053) (1,062) (2,299)
------ ------ -------
Operating profit/(loss) 261 (42) 393
Finance income 7 3 10
Finance expenses (7) (12) (28)
------ ------ -------
Net financing costs - (9) (18)
------ ------ -------
Profit/(loss) before taxation 261 (51) 375
Taxation 3 (90) (30) (205)
------ ------ -------
Profit/(loss) after taxation 171 (81) 170
====== ====== =======
Attributable to:
Equity holders of the parent 171 (77) 180
Minority interest - (4) (10)
------ ------ -------
Profit/(loss) for the period 171 (81) 170
====== ====== =======
Earnings/(loss) per share, pence
- Basic and diluted 4 1.7 (0.8) 1.7
Note: Network fees represent total school fees earned over the period by our
franchisees from over 40,000 students (30 November 2006: 37,000) that attend
Stagecoach, SportsCoach and Mini Stages worldwide.
Unaudited Consolidated Statement of Recognised Income and Expense
Six months Six months Year
ended ended ended
30 Nov 2007 30 Nov 2006 31 May 2007
�'000 �'000 �'000
Foreign exchange translation 1 1 (1)
differences ----- ----- -----
Net income/(expense) recognised 1 1 (1)
directly in equity
Profit/(loss) for the period 171 (81) 170
----- ----- -----
Total income and expense 172 (80) 169
recognised for the period ===== ===== =====
Attributable to:
Equity holders of the parent 172 (76) 179
Minority interest - (4) (10)
----- ----- -----
Total income and expense 172 (80) 169
recognised for the period ===== ===== =====
Unaudited Consolidated Balance Sheet
30 Nov 2007 30 Nov 2006 31 May 2007
�'000 �'000 �'000
Assets
Intangible assets 1,441 1,455 1,505
Property, plant and equipment 92 107 90
----- ----- -----
Total non-current assets 1,533 1,562 1,595
----- ----- -----
Inventories 327 313 298
Trade and other receivables 1,016 1,288 1,932
Cash and cash equivalents 1,243 551 341
----- ----- -----
Total current assets 2,586 2,152 2,571
----- ----- -----
Total assets 4,119 3,714 4,166
===== ===== =====
Equity
Share capital 494 494 494
Share premium 1,601 1,601 1,601
Translation reserve (12) (12) (13)
Retained earnings 584 131 407
----- ----- -----
Total equity attributable to 2,667 2,214 2,489
equity holders of the parent
Minority interest - (19) -
----- ----- -----
Total equity 2,667 2,195 2,489
----- ----- -----
Liabilities
Long term loans and borrowings 83 152 116
Other payables 15 80 98
Deferred tax liabilities 64 2 64
----- ----- -----
Total non-current liabilities 162 234 278
===== ===== =====
Current portion of long term 63 54 61
loans and borrowings
Trade and other payables 1,227 1,231 1,338
----- ----- -----
Total current liabilities 1,290 1,285 1,399
----- ----- -----
Total liabilities 1,452 1,519 1,677
----- ----- -----
Total equity and liabilities 4,119 3,714 4,166
===== ===== =====
Unaudited Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
30 Nov 2007 30 Nov 2006 31 May 2007
�'000 �'000 �'000
Cash flows from operating activities
Profit/(loss) for the period 171 (81) 170
Adjustments for:
Depreciation and amortisation 77 63 140
Foreign exchange differences (1) 4 4
Employee share option scheme 6 - 20
Loss on disposal of property, - - 8
plant and equipment
Net financing costs - 9 18
Taxation 90 30 205
----- ----- -----
Operating profit before changes 343 25 565
in working capital and provisions
Increase in inventories (29) (34) (19)
Decrease in trade and other receivables 914 947 281
Decrease in trade and other payables (194) (351) (354)
----- ----- -----
Cash generated from operations 1,034 587 473
Interest received 7 3 10
Interest paid (7) (12) (28)
----- ----- -----
Net cash generated from 1,034 578 455
operating activities ===== ===== =====
Cash flows from investing activities
Proceeds from sale of property, - - 1
plant and equipment
Acquisition of additional (84) - (51)
shares in subsidiary
Acquisition of property, plant (15) (13) (21)
and equipment
Acquisition of intangible assets - (184) (184)
----- ----- -----
Net cash used in investing (99) (197) (255)
activities ----- ----- -----
Cash flows from financing activities
Proceeds from borrowings - 150 150
Repayment of borrowings (33) (25) (54)
----- ----- -----
Net cash (used in)/generated (33) 125 96
from financing activities ----- ----- -----
Net increase in cash and cash 902 506 296
equivalents
Cash and cash equivalents at 341 45 45
beginning of the period ----- ----- -----
Cash and cash equivalents at 1,243 551 341
end of the period ===== ===== =====
Notes to the Unaudited Interim Report
1. Accounting Policies
General
Stagecoach Theatre Arts plc is a company incorporated in the UK.
The interim financial statements for the six months ended 30 November 2007
consolidate those of the Company and its subsidiaries (together referred to as
the 'Group').
Basis of preparation
The financial statements are presented in sterling, rounded to the nearest
thousand and are prepared on the historical cost basis. The accounting policies
set out below have been consistently applied to all the periods presented.
The interim financial information does not constitute statutory accounts as
defined under section 240 of the Companies Act 1985.
The AIM rules require that the next annual consolidated financial statements of
the Group for the year ending 31 May 2008 be prepared in accordance with
International Financial Reporting Standards as adopted by the EU ('Adopted
IFRS').
The Group's consolidated financial statements were prepared in accordance with
United Kingdom Generally Accepted Accounting Principles (UK GAAP) until 31 May
2007. UK GAAP differs in some areas from Adopted IFRS. In preparing the 2007
consolidated interim financial statements, management has amended certain
accounting methods applied in the UK GAAP financial statements to comply with
Adopted IFRS.
The interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS in issue that either
are endorsed by the EU and effective (or available for early adoption) at 30
November 2007 or are expected to be endorsed and effective (or available for
early adoption) at 31 May 2008, the Group's first annual reporting date at which
it is required to use Adopted IFRS. The Adopted IFRS that will be effective (or
available for early adoption) in the annual financial statements for the year
ending 31 May 2008 are still subject to change and to additional interpretations
and therefore cannot be determined finally with certainty. Accordingly, the
accounting policies for that annual period will be determined finally only when
the annual financial statements are prepared for the year ending 31 May 2008.
The comparative figures for the year ended 31 May 2007 are not the Group's
statutory accounts for that financial year. Those accounts, which were prepared
under UK Generally Accepted Accounting Practice, have been reported on by the
Group's auditors and delivered to the Registrar of Companies. The auditors'
report on those financial statements was unqualified and did not include a
statement under section 237(2) or (3) of the Companies Act 1985.
Transition to Adopted IFRS
An explanation of how the transition to Adopted IFRS has affected the reported
financial position, financial performance and cash flows of the Group is
provided in note 8. The Group's date of transition to Adopted IFRS is 1 June
2006.
IFRS 1 grants certain exemptions from the full requirements of Adopted IFRS in
the transition period.
The following exemptions have been taken:
Share-based payments
The Group has taken the exemption not to apply IFRS 2 'Share-based Payment' to
equity-settled share options granted before 7 November 2002 or granted after
that date but which had vested by the transition date.
Business combinations
The Group has chosen not to restate business combinations completed prior to the
transition date on an Adopted IFRS basis.
The transition to Adopted IFRS did not result in substantial changes to the
Group's accounting policies under UK GAAP and as set out in the Group's
financial statements of the year ended 31 May 2007. In summary the changes are:
* IAS 1 'Presentation of Financial Statements' and IAS 7 'Cash Flow
Statements' have affected the overall presentation of the financial
statements and certain disclosures.
* The adoption of IFRS 3 'Business Combinations', IAS 36 'Impairment of
Assets' and IAS 38 'Intangible Assets' have resulted in a change in the
accounting policy for goodwill. Under UK GAAP, goodwill was amortised on a
straight line basis over a period of 20 years and assessed for an indication
of impairment at each balance sheet date. In accordance with the provisions
of IFRS 3 and IFRS 1, the Group ceased amortisation of goodwill from 1 June
2006. Accumulated amortisation as at 31 May 2007 has been eliminated with a
corresponding decrease in the cost of goodwill. From the year ended 31 May
2007 onwards, goodwill is tested for impairment at each balance sheet date,
as well as when there are indications of impairment. The Group has
reassessed the useful lives of its intangible assets in accordance with the
provisions of IAS 38. No adjustment resulted from this reassessment.
* The transition to Adopted IFRS has resulted in the recognition of a
liability in respect of the minority put and call option agreement, because
minority interests are considered to be part of Group equity under IFRS.
* Development costs that do not meet the criteria of IAS 38 'Intangible
Assets' have not been recognised at the transition date.
The remaining standards are either not applicable to the business or have no
material effect on the Group's policies.
Basis of consolidation
Subsidiaries are those entities controlled by the Group. Control exists when the
Group has the power, directly and indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the consolidated interim financial statements from the date that
control commences until the date that control ceases.
All changes in the accounting policies have been made in accordance with the
transition provisions in the respective standards. The revised accounting
policies now followed by the Group are shown below.
Revenue
Group revenue comprises income earned for franchising services, tuition fees and
agency revenues, net of value added tax, discounts and after eliminating
revenues within the Group. Revenue is recognised as follows:
Management fees
Revenue represents invoiced management fees based on franchisees' school fees
and is recognised in the period in which the related classes run.
Initial franchise fees and re-sale of schools
Revenue is recognised upon the execution of the individual franchise agreements,
and attendance on the franchisee training course for new franchisees, which is
the date when the Group has performed substantially all services and satisfied
substantially all conditions relating to a sale.
Other
Revenues derived from other incidental franchising services are recognised as
and when services are rendered.
Tuition fees
Revenue from the Group's operating schools is recognised in the period in which
the related classes run.
Agency revenues
Revenue represents licence fees, agency commission for work obtained for and
performed by the students and fees for the production of a brochure containing
portfolios of the students. Licence fees and agency commission are recognised as
and when services are rendered. Fees for the production of the brochure are
recognised in the financial year during which the brochure is published.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are
retained by the lessor are classed as operating leases. Rentals payable under
operating leases are charged to the income statement on a straight-line basis
over the term of the relevant lease.
Net financing costs
Net financing costs comprise interest payable and interest receivable on funds
invested.
Interest income and interest payable is recognised in the income statement as it
accrues, using the effective interest method.
Share based payments
The share options programme allows employees to acquire shares of the Company.
The fair value of options granted after 7 November 2002 and not yet vested as at
1 June 2006 is recognised as an employee expense with a corresponding increase
in equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The
fair value of the options granted is measured using an option pricing model,
QCA-IRS Option Valuer model, taking into account the terms and conditions upon
which the options were granted. The amount recognised as an expense is adjusted
to reflect the actual number of share options that vest except where variations
are due only to share prices not achieving the threshold for vesting.
The Company has not granted any cash-settled share based payments.
Taxation
The income tax expense for the year represents the sum of current and deferred
tax. Tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Foreign currency translation
Transactions in foreign currencies are translated at the rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated at the rates of exchange ruling at the balance
sheet date and the gains or losses on translation are included in the income
statement in administration expenses.
On consolidation, results of foreign subsidiary undertakings are translated at
the average rates of exchange during the year. The assets and liabilities of
overseas subsidiary undertakings are translated at rates ruling at the balance
sheet date. Exchange differences arising from the retranslation of the opening
net investments in foreign subsidiary undertakings and between the results for
the year translated at average and closing rates are disclosed as movements in
the translation reserve within equity.
Segment reporting
A segment is a distinguishable component of the Group that is engaged in
providing related products or services (business segment) or in providing
products or services within a particular economic environment (geographical
segment) which is subject to risks and rewards that are different from those of
other segments.
Based on management's assessment of the risks and returns the consolidated
entity operates in one reportable business segment being franchising (primary
segment) and in four geographic segments (secondary segments), the United
Kingdom, Continental Europe, the Americas and the rest of the world.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the identifiable assets, liabilities and contingent
liabilities of the subsidiary or business. Goodwill on acquisition is recognised
as an intangible asset and is tested for impairment at each balance sheet date.
Goodwill is stated at cost less accumulated impairment losses. Any impairment is
recognised immediately in the income statement and may not be subsequently
reversed. On the disposal of a subsidiary or business, the attributable goodwill
is included in determination of the profit or loss on disposal.
IFRS 1 grants certain exemptions from the full requirements of Adopted IFRS in
the transition period. The Group elected not to restate business combinations
that took place prior to 1 June 2006. In respect of acquisitions prior to that
date, goodwill is included on the basis of its deemed cost, which represents the
amount recorded under UK GAAP which was broadly comparable save that only
separable intangibles were recognised and goodwill was amortised. On transition,
amortisation of goodwill ceased.
Computer software
Acquired computer software licenses are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software. Costs that are
directly associated with the production of identifiable and unique software
products controlled by the Group, and that it is estimated will generate
economic benefits exceeding costs beyond one year, are recognized as intangible
assets.
Computer software is stated at cost and amortised on a straight line basis over
its estimated useful life, not exceeding five years.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and impairment. Depreciation is provided at the following annual rates in order
to write off the cost of each asset over its estimated useful life or over the
lease term, whichever is shorter:
Improvements to property - over the term of the lease
Wardrobe and Props - 10% - 25 % on reducing balance
Fixtures and equipment - 15% on reducing balance
Motor vehicles - 25% on reducing balance
Computer equipment - 33% on reducing balance
Inventories
Inventories of goods and territories for re-sale are stated at the lower of cost
and net realisable value.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and
are tested at each balance sheet date for impairment. Assets that are subject to
amortisation or depreciation are reviewed for impairment whenever there is an
indication of impairment to determine whether events or changes in circumstances
indicate that the carrying amount may not be recoverable. If any such conditions
exist, the recoverable amount of the asset is estimated in order to determine
the extent, if any, of the impairment loss. Where the asset does not generate
cash flows that are independent from other assets, estimates are made of the
cashflows of the cash generating unit to which the asset belongs.
The recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. In assessing value in use, estimated future cash flows are
discounted to their present value using a discount rate appropriate to the
specific asset or cash generating unit.
If the recoverable amount of an asset or cash generating unit is estimated to be
less than its carrying amount, the carrying amount of the asset or cash
generating unit is reduced to its recoverable amount. Impairment losses are
recognised immediately in the income statement.
In respect of assets other than goodwill, an impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset's
carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been
recognised. Impairment losses in respect of goodwill are not reversed.
Trade and other receivables
Trade and other receivables are stated at nominal value (discounted if material)
less provision for impairment. A provision for impairment of receivables is
established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivables. The
amount of provision is recognised in the income statement in administrative
expenses.
Cash and cash equivalents
Cash and cash equivalents include cash-in-hand, cash balances and call deposits
with maturity of less than or equal to three months. Bank overdrafts that are
repayable on demand and form an integral part of the Group's cash management are
included as a component of cash and cash equivalents for the purpose of the
statement of cash flows.
Trade and other payables
Trade and other payables are stated at nominal value (discounted if material).
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, long term
borrowings are stated at amortised cost with any difference between cost and
redemption value being recognised in the income statement over the period of the
borrowings on an effective interest basis.
Borrowings are classified as non-current liabilities where the Group has an
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Other financial instruments: recognition and measurement
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
The Group does not hold or issue derivative financial instruments for trading
purposes.
2. Segment Reporting
Primary reporting format - business segments
The Group operates as one business segment franchising (Stagecoach, SportsCoach
and Mini Stages). This is the Group's primary segment, as no other activities
are significant enough to report separately. The unallocated segment relates to
a nursery school business and corporate overheads, assets and liabilities.
The segment results for the six months ended 30 November 2007 are as follows:
Franchising Unallocated Total
�'000 �'000 �'000
Network fees 12,498 129 12,627
------ ----- ------
Revenue 2,970 129 3,099
------ ----- ------
Operating profit/(loss) 1,004 (743) 261
------ ----- ------
Total assets 2,763 1,356 4,119
Total liabilities (805) (647) (1,452)
------ ----- ------
Net assets 1,958 709 2,667
------ ----- ------
Other segment items:
Capital expenditure 99 - 99
Depreciation and amortisation 70 7 77
The segment results for the six months ended 30 November 2006 are as follows:
Franchising Unallocated Total
�'000 �'000 �'000
Network fees 11,435 113 11,548
------ ----- ------
Revenue 2,961 113 3,074
------ ----- ------
Operating profit/(loss) 763 (805) (42)
------ ----- ------
Total assets 3,114 600 3,714
Total liabilities (973) (546) (1,519)
------ ----- ------
Net assets 2,141 54 2,195
------ ----- ------
Other segment items:
Capital expenditure 197 - 197
Depreciation and amortisation 56 7 63
Secondary reporting format - geographical segments
The Group's operations are based in four main geographical areas. The UK is the
home country of the Parent Company. Revenue is analysed on an origination basis
and is all derived from external customers. Segment assets, which comprise total
assets, including capital expenditure, are allocated on the basis of location.
The main operations in the principal territories for the six months are as
follows:
Network fees Revenue Operating profit/
(loss)
30 Nov 30 Nov 30 Nov 30 Nov 30 Nov 30 Nov
2007 2006 2007 2006 2007 2006
�'000 �'000 �'000 �'000 �'000 �'000
United Kingdom
Stagecoach 11,561 10,570 2,749 2,591 409 134
SportsCoach 377 460 109 133 (28) (40)
Mini Stages 65 61 19 103 (32) (56)
Montessori 129 113 129 113 13 13
------ ------ ----- ----- ---- ----
United Kingdom total 12,132 11,204 3,006 2,940 362 51
Europe 345 188 45 109 (77) (61)
Americas 128 137 44 21 (28) (36)
Rest of the world 22 19 4 4 4 4
------ ------ ----- ----- ---- ----
12,627 11,548 3,099 3,074 261 (42)
====== ====== ===== ===== ==== ====
Segment assets Capital Expenditure
Six months ended Year Six months ended Year
ended ended
30 Nov 30 Nov 31 May 30 Nov 30 Nov 31 May
2007 2006 2007 2007 2006 2007
�'000 �'000 �'000 �'000 �'000 �'000
United Kingdom 3,950 3,457 3,985 99 197 256
Europe 87 133 123 - - -
Americas 82 124 58 - - -
Rest of the world - - - - - -
----- ----- ----- --- --- ---
4,119 3,714 4,166 99 197 256
===== ===== ===== === === ===
3. Taxation
The income tax expense is based on an effective annual tax rate estimated
individually for each tax jurisdiction in which the group operates and applied
to the pre-tax profits of the relevant entity.
Six months Six months Year ended
ended ended
30 Nov 2007 30 Nov 2006 31 May 2007
�'000 �'000 �'000
UK taxation 90 30 205
=== === ===
4. Earnings/(loss) per share
Earnings/(loss) per share has been calculated on profits/(losses) for the period
divided by the weighted average number of ordinary shares in issue of 9,879,317
(2006: 9,879,317). The average market value of the company's shares during the
period was less than the average exercise price for the company's options,
consequently these options are deemed to be non-dilutive.
5. Acquisition of minority interests
On 1 June 2007 the Company exercised the put and call option agreement, which
existed at the year end, and purchased the remaining 25 per cent in Stagecoach
Agency (UK) Limited from the minority shareholders for �165,875 (�84,125 was
paid during the period and �81,750 is due on 1 July 2008), resulting in goodwill
of �165,897. The net assets of Stagecoach Agency (UK) Limited were hived-up into
the Company's operations on 1 June 2007.
6. Responsibility
The Directors of the company accept responsibility for the information contained
in this document and to the best of their knowledge and belief (having taken all
reasonable care to ensure that such is the case) the information contained in
this document is in accordance with the facts and does not omit anything likely
to affect the import of such information.
7. Availability of Interim Report
Copies of these results together with the Chairman's statement are available
from the Company's registered office at The Courthouse, Elm Grove,
Walton-on-Thames, Surrey KT12 1LZ, and are posted on the Company's website,
www.stagecoach.co.uk.
8. Transition to Adopted IFRS
As stated in note 1, the interim financial information has been prepared on the
basis of the recognition and measurement requirements of Adopted IFRS.
The accounting policies set out in note 1 have been applied (subject to IFRS 1
exemptions taken) in preparing the financial statements for the six months ended
30 November 2007, the comparative information presented in these financial
statements for the six months ended 30 November 2006 and the preparation of the
opening IFRS balance sheet at 1 June 2006 (the Group's transition date). The
changes in accounting policies as a consequence of the transition to Adopted
IFRS and the reconciliations of the effects of the transition to Adopted IFRS on
the Group's financial statements are presented below.
The transition to Adopted IFRS resulted in the following changes in accounting
policies:
(a) Goodwill is not amortised but measured at cost less impairment losses.
Under UK GAAP, goodwill was amortised on a straight line basis through profit
and loss over its estimated useful economic life of 20 years. The effect of the
change is an increase in intangible assets, equity and profit before tax of
�22,555 at 30 November 2006 and �46,001 at 31 May 2007. The change does not
affect intangible assets, equity or profit before tax at 1 June 2006. The change
has no tax effect as deferred taxes are not recognised for temporary differences
arising from goodwill for which amortisation is not deductible for tax purposes.
(b) Computer software has been reclassified from tangible fixed assets to
intangible fixed assets. The effect of the change is an increase in intangible
assets and a decrease of tangible assets of �567,041 at 1 June 2006, �584,605 at
30 November 2006 and �524,170 at 31 May 2007. The change does not affect equity
or profit before tax of any period.
(c) Development costs which do not meet the recognition criteria under IAS
38 have not been recognised at the transition date which has resulted in a
decrease in equity and intangible assets of �24,823 at 1 June 2006, an increase
in profit before tax of �6,206 at 30 November 2006 and �18,921 at 31 May 2007
and a decrease of intangible assets and equity of �18,617 at 30 November 2006
and �5,902 at 31 May 2007. The change has no tax effect as deferred taxes were
not recognised under UK GAAP for temporary differences arising from development
costs for which amortisation was not deductible for tax purposes.
(d) The translation reserve is shown as separate reserve component of
equity.
(e) The put and call option agreement for the purchase of minority interest,
has been recognised as a liability. The effect of the change is an increase in
non-current liabilities and intangible assets of �156,486 at 1 June 2006, an
increase in non-current liabilities and current liabilities of �80,556 at 30
November 2006 and �82,949 at 31 May 2007 and an increase of intangible assets of
�161,112 at 30 November 2006 and �165,898 at 31 May 2007. The change does not
affect equity or profit before tax of any period.
(f) The deferred tax liability has been reclassified from current
liabilities to non-current liabilities. The effect of the change is an increase
in non-current liabilities and a decrease of current liabilities of �1,852 at 1
June 2006 and at 30 November 2006 and �63,252 at 31 May 2007. The change does
not affect equity or profit before tax of any period.
Reconciliation of Profit
Six months ended Year ended
30 November 2006 31 May 2007
(comparable interim period (end of last period
under UK GAAP) presented under UK GAAP)
Note Under Effect of Under Under Effect of Under
UK GAAP transition IFRS UK GAAP transition IFRS
to IFRS to IFRS
�'000 �'000 �'000 �'000 �'000 �'000
Revenue 3,074 - 3,074 6,324 - 6,324
Cost of sales (2,065) - (2,065) (3,654) - (3,654)
------- ---- ------- ------- ---- -------
Gross profit 1,009 - 1,009 2,670 - 2,670
Other operating
income 11 - 11 22 - 22
Administrative
expenses a, c (1,091) 29 (1,062) (2,364) 65 (2,299)
-------- ---- ------- ------- ---- -------
Operating (loss)/profit (71) 29 (42) 328 65 393
Finance income 3 - 3 10 - 10
Finance expenses (12) - (12) (28) - (28)
-------- ---- ------- ------- ---- -------
Net financing costs (9) - (9) (18) - (18)
-------- ---- ------- ------- ---- -------
(Loss)/profit before (80) 29 (51) 310 65 375
taxation
Taxation (30) - (30) (205) - (205)
-------- ---- ------- ------- ---- -------
(Loss)/profit after (110) 29 (81) 105 65 170
taxation ======== ==== ======= ======= ==== =======
Attributable to:
Equity holders of the (106) 29 (77) 115 65 180
parent
Minority interest (4) - (4) (10) - (10)
-------- ---- ------- ------- ---- -------
(Loss)/profit for the (110) 29 (81) 105 65 170
period ======== ==== ======= ======= ==== =======
(Loss)/earnings per share, pence
Basic (1.1) 0.3 (0.8) 1.1 0.6 1.7
Diluted (1.1) 0.3 (0.8) 1.1 0.6 1.7
Reconciliation of Equity
As at 1 June 2006 As at 30 November 2006 As at 31 May 2007
(date of transition) (comparable interim (end of last period
period under UK GAAP) presented under UK
GAAP)
Notes Under Effect of Under Under Effect of Under Under Effect of Under
UK transition IFRS UK transition IFRS UK transition IFRS
GAAP to IFRS GAAP to IFRS GAAP to IFRS
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Assets
Intangible a, b 735 698 1,433 705 750 1,455 775 730 1,505
assets
c, e
Property, b 673 (567) 106 692 (585) 107 614 (524) 90
plant and ---- ----- ----- ----- ----- ----- ---- ----- -----
equipment
Total 1,408 131 1,539 1,397 165 1,562 1,389 206 1,595
non-current ----- ----- ----- ----- ----- ----- ----- ----- -----
assets
Inventories 279 - 279 313 - 313 298 - 298
Trade and 2,128 - 2,128 1,288 - 1,288 1,932 - 1,932
other receivables
Cash and 304 - 304 551 - 551 341 - 341
cash equivalents ----- ----- ----- ----- ----- ----- ----- ----- -----
Total 2,711 - 2,711 2,152 - 2,152 2,571 - 2,571
current assets ----- ----- ----- ----- ----- ----- ----- ----- -----
Total assets 4,119 131 4,250 3,549 165 3,714 3,960 206 4,166
===== ===== ===== ===== ===== ===== ===== ===== =====
Equity
Share capital 494 - 494 494 - 494 494 - 494
Share premium 1,601 - 1,601 1,601 - 1,601 1,601 - 1,601
Translation d - (12) (12) - (12) (12) - (13) (13)
reserve
Retained a, c 220 (13) 207 115 16 131 354 53 407
earnings d ----- ----- ----- ----- ----- ----- ----- ----- -----
2,315 (25) 2,290 2,210 4 2,214 2,449 40 2,489
Minority interest (15) - (15) (19) - (19) - - -
----- ----- ----- ----- ----- ----- ----- ----- ------
Total equity 2,300 (25) 2,275 2,191 4 2,195 2,449 40 2,489
----- ----- ----- ----- ----- ----- ----- ----- ------
Long term e 57 - 57 152 - 152 116 - 116
loans and
borrowings
Other payables - 156 156 - 80 80 15 83 98
Deferred tax f - 2 2 - 2 2 - 64 64
----- ---- ---- ---- ----- ----- ----- ------ -----
Total non-current 57 158 215 152 82 234 131 147 278
liabilities ===== ==== ==== ==== ===== ===== ===== ====== =====
Loans and 283 - 283 54 - 54 61 - 61
borrowings
Trade and f 1,479 (2) 1,477 1,152 79 1,231 1,319 19 1,338
other payables ----- ----- ----- ----- ----- ----- ----- ------ -----
Total current 1,762 (2) 1,760 1,206 79 1,285 1,380 19 1,399
liabilities ----- ----- ----- ----- ----- ----- ----- ------ -----
Total 1,819 156 1,975 1,358 161 1,519 1,511 166 1,677
liabilities ----- ----- ----- ----- ----- ----- ----- ------ -----
Total equity 4,119 131 4,250 3,549 165 3,714 3,960 206 4,166
and liabilities ===== ===== ===== ===== ===== ===== ===== ====== =====
As at Six months ended Year ended
1 June 2006 30 November 2006 31 May 2007
(date of transition) (comparable interim (end of last period
period under UK GAAP) presented under UK GAAP)
Effect of Effect of Effect of
transition transition transition
to IFRS to IFRS to IFRS
�'000 �'000 �'000
Total equity UK GAAP 2,300 2,191 2,449
Goodwill not - 23 46
amortised after date of
transition
Development costs (25) (19) (6)
not recognised ----- ----- -----
Total equity IFRS 2,275 2,195 2,489
===== ===== =====
There are no material adjustments to the cash flow statement in either period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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