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Goals Soccer Centres PLC
21 March 2017
 

Goals Soccer Centres plc

On track with new strategy

 

Goals Soccer Centres plc ("Goals", the "Company" or the "Group") a leading operator of outdoor small-sided soccer centres with 48 sites, including two in California, USA, announces its final results for the period ended 31st December 2016.

 

Statutory measures

 

2016

2015

Change

Sales

£33.5m

£33.0m

1.6%

Operating Profit/(loss)

£4.2m

(£5.4m)

 

Profit/(loss) Before Tax

£3.7m

(£6.2m)

 

Diluted Earnings Per Share

4.1p

(10.4p)

 

Net Cash Flow from Operating Activities

£8.0m

£10.6m

(25.0%)

 

Underlying Measures*

 

2016

2015

Change

H2

H1

Sales

£33.5m

£33.0m

1.6%

3.7%

(0.5%)

Like-for-like sales1 growth

0.5%

(4.9%)

5.4%

2.9%

(2.0%)

Underlying EBITDA2

£11.2m

£11.8m

(4.9%)

0.2%

(9.8%)

Underlying Profit Before Tax3

£7.8m

£8.3m

(6.1%)

4.5%

(15.0%)

Underlying Diluted Earnings Per Share4

9.7p

14.3p

(32.6%)

 

 

Underlying Free Cash Flow

£9.4m

£10.6m

(11.5%)

 

 

 

Financial Summary

 

·     Profit before tax increased by £9.9m to £3.7m (2015: loss £6.2m);

·     Returned to sales growth increasing by 1.6% to £33.5m (2015: £33.0m);

·     Returned to like-for-like sales1 growth increasing by 0.5% (2015: -4.9%);

·     Recovery in H2 with like-for-like1 sales, Underlying EBITDA2 and Underlying Profit Before Tax3 increasing by  2.9%, 0.2% and 4.5% respectively;

·     Exceptional and non-recurring charges of £3.9m (2015: £14.5m) relating to a non-cash impairment of £2.5m, restructuring and strategic projects totalling £1m and non-recurring costs of £0.5m relating to the development and rollout of new brand and values.

 

Corporate Summary

 

·     Strategic Business Review completed with a new 5 year strategic plan set;

·     Balance sheet strengthened through a successful share placing which raised gross proceeds of £16.75m;

·     Board restructured and strengthened with the appointment of Mark Jones as CEO, further supported by the appointments of Michael Bolingbroke as Senior Independent Director and Scott Lloyd and Christopher Mills as Non-Executive Directors;

·     Arena modernisation programme well advanced with £5.1m invested and 136 pitches refurbished during the year;

·     New "Clubhouse 2020" concept underway in three sites. Rollout planned over next 18 months, subject to initial results;

·     Construction completed on second USA club in Pomona, California which opened in February 2017;

·     Construction of our third USA club, in Rancho Cucamonga, California to commence during H1 2017;

·     No dividend proposed for 2016.

 

Nick Basing, Chairman said:

 

"2016 has been a huge period of transformational Change. Its a good start to report profit growth and positive trend in like-for-like sales.  These results are early but encouraging evidence of our new strategy starting well. The business is on its way to being fit for purpose."

 

Mark Jones, Chief Executive said:

 

"In the last six months we have made good headway executing our plan: 136 pitches re-laid resulting in a much more attractive proposition for customers; development of the new Clubhouse format which will be trialled later this year; and progress on the food and beverage proposition.  Additionally, we have had a successful launch of our second club in the USA and are due to commence consruction of our third club in H1 2017. We are delivering a better product which is already showing in the numbers and are confident that we can realise our ambitions."

 

 

21st March 2017

 

 

Enquiries:

 

Goals Soccer Centres plc

01355 234 800

Nick Basing, Chairman

Mark Jones, CEO

 

Bill Gow, CFO

 

 

 

Canaccord Genuity Limited (Nominated Adviser and Broker)

Bruce Garrow

Chris Connors

Richard Andrews

020 7523 8350

 

 

Instinctif Partners

Matthew Smallwood

Guy Scarborough

020 7457 2020

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

*Notes supporting underlying performance measures which are used throughout the annual report and financial statements. The Board believes that these measures provide useful information as they are used internally to evaluate performance of the Group:

 

1. 2016 like-for-like sales are based on clubs opened prior to 1 January 2015

   2015 like-for-like sales are based on clubs opened prior to 1 January 2014

 

2016

2015

 

£000

£000

 

 

 

Total sales

33,532

33,013

Clubs opened post 1 January 2015

(884)

(525)

 

              

              

Like-for-like sales

32,648

32,488

 

              

              

 

2. Underlying EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation adjusted for the impact of the exceptional items, non-recurring costs and loss on disposal as shown below:

 

 

2016

2015

 

£000

£000

 

 

 

Operating profit/(loss)

4,211

(5,432)

Depreciation

2,729

2,600

Amortisation

204

199

Loss on disposal (note 3)

124

-

Non-recurring costs (note 3)

450

-

Exceptional items (note 6)

3,516

14,450

 

              

              

Underlying EBITDA

11,234

11,817

 

              

              

 

3. Underlying Profit Before Tax is Profit/(loss) Before Tax adjusted for the impact of the exceptional items, non-recurring costs and loss on disposal as shown below:

 

 

2016

2015

 

£000

£000

 

 

 

Profit Before Tax

3,664

(6,181)

Loss on disposal (note 3)

124

-

Non-recurring costs (note 3)

450

-

Exceptional items (note 6)

3,516

14,450

 

              

              

Underlying Profit Before Tax

7,754

8,269

 

              

              

 

4. Underlying diluted earnings per share is diluted earnings per share adjusted for the net of tax impact of the exceptional items, non-recurring costs and loss on disposal as shown below:

 

2016

2016

2015

2015

 

Underlying

Underlying

Underlying

Underlying

 

Profit

EPS

Profit

EPS

 

£000

p

£000

p

 

 

 

 

 

Adjusted diluted underlying earnings per share

6,563

9.7p

8,368

14.3p

 

Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year plus the dilutive element of all outstanding relevant share options outstanding during the year.  For the year ended 31 December 2016 this was 67,663,242 (2015: 58,609,677).

 

5. Underlying free cash flow is net cash flow from operating activities adjusted for the cash impact of the exceptional items and non-recurring costs:

 

 

2016

2015

 

£000

£000

 

 

 

Net cash flow from operating activities

7,985

10,643

Non-recurring costs (note 3)

450

-

Non-impairment exceptional items (note 6)

982

-

 

              

              

Underlying Free Cash Flow

9,417

10,643

 

              

              

Chairman's Statement

2016 has been a pivotal year for the Company. Early in the year I outlined the five key short term priorities of the Company:

 

·      appoint a new Chief Executive Officer and new Non-Executive Directors;

·      complete an in-depth independent strategic business review;

·      develop the overall investment case;

·      complete the US business plan; and

·      implement a near-term operational improvement plan.

 

I'm pleased to confirm that these initiatives have now all been achieved or implemented and has seen the Group return to like-for-like sales1 growth in H2.

 

During the period, I commissioned key members of management and independent advisors to undertake an in-depth review of the business. A detailed strategic plan for the Group was developed with the intention of strengthening the Company's market leading position, improving Return on Capital Employed and increasing value for shareholders over the longer term. The Company set the following four strategic priorities:

 

·      Grow and innovate the UK core estate - through refurbishment of the existing buildings to a new upgraded brand format, accelerating the Arena modernisation programme and introducing new innovative technology to enhance the customer experience;

 

•      Develop new capabilities and gain competitive advantage - through developing value added propositions aimed at underdeveloped growth segments, relaunching quality offering for advanced booked customers, upgrading IT systems to achieve deeper digital connectivity and refreshing and reinvigorating the operating environment;

 

•      International expansion of clubs and brand - through exploiting our early mover advantage in California, with a club to be opened in Pomona, Los Angeles in early 2017 and investigating market potential to leverage the Goals brand in Asia and explore other regions for market entry through capital efficient routes; and

 

•      Unlock underlying asset potential - through the development of additional revenue generating lines of business, explore development potential across the property estate and remain open to potential accretive, complementary business opportunities.

 

The results of the Strategic Business Review and our strategic priorities were announced to shareholders on 3rd June 2016. Following which the Company raised gross proceeds of £16.75m to deleverage the balance sheet and allow us to invest in our core proposition.

 

During the year, we significantly strengthened the Board with the key appointments of Mark Jones as Chief Executive Officer; further supported by the appointments of Michael Bolingbroke as Senior Independent Director and Scott Lloyd and Christopher Mills as Non-Executive Directors.

 

Phil Burks, Keith Edelman and Alex Short all stood down from the Board during the period. I would like to acknowledge, on behalf of the board, our thanks for their contribution during their term.

 

Morris Payton also stepped down from the Board in 2016 but remains an executive within the Company. He has been a tremendous asset to the Company for many years and I thank him for his ongoing service. Shortly after the financial year end Keith Rogers stepped down from the Board. On behalf of the board I would like to acknowledge and express our sincere gratitude to Keith for his invaluable and constructive contribution to the board over the years.

 

Finally, I would like to thank all of our employees who have provided huge support and backing to the changes made during this pivotal year for the Company. It has been a pleasure to work with everyone.

 

Nick Basing
Chairman
21 March 2017

Chief Executive Officer's Review

I'm pleased to confirm that, after a strong recovery in H2, the Group has returned to like-for-like growth with Group like-for-like sales for the year increasing by 0.5% and total sales increasing by 1.6% to £33.5m (2015: £33.0m).

 

During my first 6 months, I have focussed on implementing and delivering the key outputs of the strategic review.

 

A key element of our strategy is to re-invest in our business through our Arena modernisation programme. In 2016 we completed the modernisation of 136 pitches, with the upgrades including ProTurf, shock absorbers and enhanced lighting improving the playing characteristics of the pitch. We have now invested £5.1m on pitch refurbishment, more than has been spent cumulatively over the past ten years. Importantly this has reduced the average pitch age from 7.0 years to 4.3 years with this becoming a key performance indicator for the business. The feedback from our customers has been extremely positive and we continue to view the Arena investment as a driver for greater player attraction and retention.

 

In 2016 we developed our new brand vision and team values in association with leading creative agency McCann. In Q4 we also took the opportunity to launch our new team values to our frontline teams which has been well received and aligns our team members with the new strategy for the business going forward. Goals has also established its 'Future Leaders' training programme which will ensure that the business has the best 'bench' of talented people who are identified to progress onto more senior roles when they are ready.

 

The brand work with McCann has ensured that we have a robust customer-led brand story where we aim to give customers the chance to feel like the "pro" they dream they could be. Our efforts as a brand are to ensure that "The game means more'. Our new brand logo will be launched in April 2017 at our Ruislip club and will be supported by an updated consumer website with improvements in speed, ease of navigation, better payment methods and bespoke marketing.

 

We will bring to life our brand vision through the development of our "Clubhouse 2020" concept where we partnered with Harrison Fraser, one of the UK's leading destination design agencies. After extensive work and research initial designs are now complete. Our goal is to create a welcoming environment to our customers to increase dwell time and ancillary spend but also to create a welcoming clubhouse feel. Our vision is to create and develop Goals into a leisure destination brand rather than solely a football business. We have also made and are in the process of making significant improvements to our food and beverage offering with an emphasis on better products, better value pricing and better service. Many of our clubhouses require modernisation to provide an attractive pre and post-game environment for our customers to enjoy the additional products on offer. We envisage that Clubhouse 2020 will do this for the benefit of customers and shareholders alike.

 

Subject to planning and licensing permissions, the concept will be trialled at our Ruislip, Beckenham and Glasgow South clubs in H1 2017 at a total cost of £1.1m. Thereafter we anticipate that one further club will open in August 2017 at a cost of £0.5m; after customer feedback and cost value engineering the concept will be rolled out across the estate over the following 18 months at appropriate clubs at a further cost of around £6.5 million, financed from existing cash resources.

 

We also undertook a full review of each of our revenue streams and we now have plans in place to enhance each of these streams through deeper digital connectivity, product innovations and improved staff training. We have improved products from leagues to children's parties and have taken steps to improve, differentiate and enhance the experience for customers at all stages of their interaction with the Goals brand.

 

The USA remains a key growth market for the Company. After a number of years of strong performance in the USA sales declined by 4.3% in constant currency last year. We have identified the issues and taken steps to strengthen the US business with the appointment of a new senior level operations executive and we are now planning additional support from the UK business to help improve performance.

 

Construction of our second USA club, in Pomona, Los Angeles, completed in early February 2017 at a cost of $4.2m (£3.3m) significantly less than our original South Gate site. It is an excellent location. Whilst it is still very early days, initial signs are encouraging and the first few weeks are in line with the trend seen during the South Gate opening phase.

 

Construction of our third USA club, in Rancho Cucamonga, Los Angeles is due commence during H1 2017 at a cost of $3.8m (£3.0m). It is an excellent location adjacent to the Quakes baseball stadium and will include a bar.

 

Looking forward, our international expansion plans will initially be focused on the US and we have a pipeline of options for future openings as we seek to grow our US business in a controlled and measured manner, reflected on our experiences at Pomona. Work has already begun on a programme to significantly reduce the construction costs of the next generation of clubs to $3.2m (£2.6m).

 

In the UK, we also took steps to realign our support office teams to reduce costs and better support our club teams, but we were also able to strengthen our operations, marketing and catering team as we ensure we have the right support for the Clubhouse 2020 project.

 

In addition to financial measures we have implemented a number of important non-financial key performance indicators that we continue to closely monitor and are pleased that our Net Promotor Score (NPS) for the year stood at 46% which compares well with leisure industry averages.

 

These actions and areas of focus, together with other operational changes, have been instrumental in the improvement in our underlying performance, however our task has only just begun to put the businesses in a position where it can achieve the returns we believe it is capable of.

 

I would like to thank all of the Goals team for the strong welcome they have given me as Chief Executive Officer and for their continued hard work and dedication in driving through the significant changes that we have made.

 

Outlook

 

Our strategic plan outlined in June 2016 is still in the early stages of implementation, however we are pleased that Group total and like-for-like sales1 sales for the first 11 weeks of 2017 are above the revenue levels achieved during the strong start of last year.

 

We look forward to delivering continued progress in 2017, investing to drive returns for shareholders, as we move our focus to upgrading our clubhouses to the Clubhouse 2020 format in the UK and growing our business in the USA. We look forward to the future with growing confidence.

 

Mark Jones

Chief Executive Officer
21 March 2017

 

Chief Financial Officer's Review

I am pleased to report that, following a strong recovery in H2, Group sales for the year increased by 1.6% (H1: -0.5%, H2 +3.7%) to £33.5m (2015: £33.0m) and Group like-for-like sales1 returned to growth increasing by 0.5% (H1: -2.0%, H2 +2.9%). 

 

Group operating profit increased to £4.2m (2015: £5.4m loss). Underlying Club EBITDA declined by 3.2% to £14.4m (2015: £14.9m), Head Office costs increased by 1.4% to £3.2m (2015: £3.1m) and Underlying Group EBITDA2 declined by 4.9% to £11.2m (2015: £11.8m). This decline has been driven by an increase in like-for-like UK club overheads of £0.9m (7.1%) following the introduction of the Living Wage during the year. The ongoing increases in Living Wage and anticipated increases in Business Rates are likely to produce overhead headwinds for the foreseeable future. Underlying Group EBITDA2 grew by 0.2% in H2 (H1: -9.8%) due to the strong recovery in Group sales.

 

Financial expenses reduced to £0.5m (2015: £0.7m) as debt reduced from £36.7m to £24.0m primarily due to a successful share placing of 16.75m shares at a price of 100p in June 2016. Current net debt to Underlying EBITDA2 is 2.1 times (2015: 3.1 times) with Underlying EBITDA2 to bank interest cover being 20.8 times during the 12 months ended 31 December 2016 (2015: 16.3 times).

 

Group Profit Before Tax was £3.7m (2015: £6.2m loss). Underlying Profit Before Tax3 reduced by 6.1% to £7.8m (2015: £8.3m) but grew by 4.5% in H2. Underlying earnings per share4 declined by 32.6% to 9.7p (2015: 14.3p) due to the decline in Underlying profit of 6.1%, an increase in the underlying tax rate of 13.8% and an increase in the diluted weighted average number of ordinary shares of 15.4%.

 

The tax charge for the period translated to an effective rate of 24% (2015: 1.6%).  This rate is 4% higher than the UK corporation tax rate due to non-deductible exceptional costs and adjustments to prior year balances of 8% and 7% respectively offset by a deferred tax adjustment of 11% resulting from the reduction in future corporation tax rates substantively enacted at 31 December 2016. The effective rate is expected to reduce in 2017 to be in line with the standard UK corporation tax rate.

 

The Group's balance sheet is well capitalised with net assets of £91.7m (2015: £72.7m). The Group has a long term non-amortising bank facility with Bank of Scotland of £42.5m which expires in July 2019. Net debt at the end of the period stood at £24.0m (2015: £36.7m). In addition, the group has access to a £2.0m overdraft facility. Our exposure to recent exchange rate fluctuations has been mitigated by borrowing the development costs of the new club at Pomona in US dollars.

 

The IASB has issued IFRS 16 'Leases' which provides a new model for lease accounting in which all leases, other than short-term and small-ticket-item leases, will be accounted for by the recognition on the balance sheet of a right-to-use asset and a lease liability, and the subsequent amortisation of the right-to-use asset over the lease term. IFRS 16 is expected to become effective for the group's year ending 31 December 2020 and is expected to have a significant effect on the group's financial statements, increasing the group's recognised assets and liabilities and potentially affecting the presentation and timing of recognition of certain amounts in the income statement.

 

The Group incurred total exceptional costs of £3.5m (2015: £14.5m). £2.5m (2015: £14.5m) of this was a non-cash asset impairment charge which principally relates to one club that has underperformed. £1m (2015: £nil) was a cash charge of which £0.9m related to restructuring costs to implement the outcome of the strategic review and £0.1m related to separate strategic projects.

 

The Group incurred non-recurring costs in relation to the development and rollout of the new Goals brand and values of £0.5m (2015: £nil) and incurred a loss on disposal of old pitch surfaces of £0.1m (2015: £nil) following the modernisation of 136 pitches during the year.

 

The Board continues to focus on strong cash generation. Underlying free cash flow5 declined by 11.5% to £9.4m (2015: £10.6m). The Group invested £10.2m in capital expenditure (2015: £7.6m) during the period. £3.7m (2015: £5.3m) was incurred on our new clubs, £0.2m on information technology, and £6.3m on upgrading our mature clubs. The Group invested £0.3m on software development systems during the period.

 

Goals UK

As a result of the strong recovery in H2, UK sales for the year increased by 1.3% (H1: -0.5%, H2: +3.1%) to £32.3m (2015: £31.9m) and like-for-like sales increased by 0.2% (H1: -2.1%, H2 +2.5%).

 

Despite an increased proportion of lower margin bar and vending sales our overall gross profit margin remained constant at 89%.

 

The increase in Living Wage pay rates produced some headwinds and resulted in a £0.6m (9.4%) increase in club salary costs. A strong focus on overhead costs was maintained throughout the year and this combined with other efficiency measures restricted the increase in like-for-like overheads to 7.1% and average overheads per club to 5.0% (2016: £321,000; 2015: £306,000). Consequently, average EBITDA per club fell 4.2% to £304,000 (2015: £317,000).

 

As the ongoing increases in Living Wage and anticipated increases in Business Rates are likely to produce overhead headwinds for the foreseeable future, £0.5m of efficiency savings have been targeted and further ongoing savings will be targeted to mitigate the impact of this.

 

Goals USA

After a number of years of relatively strong performance in the USA sales declined by 4.3% to $1,687,000 (2015: $1,783,000). Club overheads increased by 8.3% (2016: $854,000; 2015: $789,000), resulting in a decline in club EBITDA of 20.2% (2016: $677,000; 2015: $848,000). We remain confident in the USA model and have taken steps to strengthen the US business with the appointment of a new senior level operations executive. The Group benefited from the decline in the value of sterling and when converted to sterling sales grew by 8.2% to £1.3m (2015: £1.2m).

 

Dividend

Although like-for-like sales have stabilised there is still much work to do to deliver the returns the Board believes the business is capable of achieving. The Directors are therefore not recommending a final dividend in relation to the 2016 period. The Directors intend to recommence dividends when appropriate.

 

 

William BG Gow
Chief Financial Officer
21 March 2017

 

Consolidated income statement

for the year ended 31 December 2016

 

 

 

Note

Before

Exceptional

items

 

Exceptional

items

(note 6)

 

 

Before

Exceptional

items

Exceptional

items

(note 6)

 

 

 

 

2016

 

2016

 

2016

 

2015

 

2015

 

2015

 

 

£000

 

£000

 

£000

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

33,532

 

-

 

33,532

 

33,013

 

-

 

33,013

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(3,669)

 

-

 

(3,669)

 

(3,688)

 

-

 

(3,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

29,863

 

-

 

29,863

 

29,325

 

-

 

29,325

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

(22,136)

 

(3,516)

 

(25,652)

 

(20,307)

 

(14,450)

 

(34,757)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit/(loss)

3

7,727

 

(3,516)

 

4,211

 

9,018

 

(14,450)

 

(5,432)

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial expense

5

(547)

 

-

 

(547)

 

(749)

 

-

 

(749)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

 

7,180

 

(3,516)

 

3,664

 

8,269

 

(14,450)

 

(6,181)

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxation

6

(1,076)

 

197

 

(879)

 

99

 

-

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for year attributable to equity holders of the parent

 

6,104

 

 

(3,319)

 

2,785

 

8,368

 

 

(14,450)

 

(6,082)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

8

9.1p

 

(5.0p)

 

4.1p

 

14.3p

 

(24.7p)

 

(10.4p)

Diluted

8

9.0p

 

(4.9p)

 

4.1p

 

14.3p

 

(24.7p)

 

(10.4p)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes form an integral part of these financial statements.

 

 

Statement of comprehensive income/expense

for the year ended 31 December 2016

 

 

 

2016

 

2015

 

 

£000

 

£000

 

 

 

 

 

Profit/(loss) for the year

 

2,785

 

(6,082)

Items that will be subsequently reclassified to profit or loss

 

 

 

 

Exchange differences on translation of foreign operations

 

443

 

12

Recognition of share based payment costs

 

22

 

56

Deferred tax movements on items taken directly to equity

 

(7)

 

(11)

Other comprehensive income for the year

 

458

 

57

 

 

 

 

 

Total comprehensive income/(expense) attributable to equity holders of the parent

 

3,243

 

 

(6,025)

 

 

 

 

 

 

Balance sheets

at 31 December 2016

 

Note

Group

Company

 

 

2016

 

2015

 

2016

 

2015

Assets

 

£000

 

£000

 

£000

 

£000

Non-current assets

 

 

 

 

 

 

 

 

Property, plant and equipment

9

115,285

 

108,474

 

108,880

 

105,275

Intangible assets

10

5,089

 

4,959

 

5,017

 

4,903

Investments in subsidiaries

 

-

 

-

 

2,691

 

2,691

Other non-current receivables

 

708

 

433

 

708

 

433

Total non-current assets

 

121,082

 

113,866

 

117,296

 

113,302

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Inventories

 

1,441

 

1,381

 

1,433

 

1,373

Trade and other receivables

 

5,721

 

4,890

 

9,818

 

6,218

Cash and cash equivalents

 

1,929

 

2,074

 

1,797

 

1,994

Total current assets

 

9,091

 

8,345

 

13,048

 

9,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

130,173

 

122,211

 

130,344

 

122,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank overdraft

 

(1,924)

 

(2,031)

 

(1,924)

 

(2,031)

Trade and other payables

 

(4,516)

 

(3,039)

 

(4,438)

 

(2,969)

Current tax payable

 

(388)

 

(234)

 

(475)

 

(234)

Total current liabilities

 

(6,828)

 

(5,304)

 

(6,837)

 

(5,234)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Other interest-bearing loans and borrowings

 

 

(23,998)

 

(36,691)

 

(23,998)

 

(36,691)

Deferred tax liabilities

11

(7,670)

 

(7,478)

 

(7,670)

 

(7,478)

Total non-current liabilities

 

(31,668)

 

(44,169)

 

(31,668)

 

(44,169)

 

 

 

 

 

 

 

 

 

Total liabilities

 

(38,496)

 

(49,473)

 

(38,505)

 

(49,403)

 

 

 

 

 

 

 

 

 

Net assets

 

91,677

 

72,738

 

91,839

 

73,484

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

12

188

 

146

 

188

 

146

Share premium

 

53,208

 

37,554

 

53,208

 

37,554

Retained earnings

 

37,957

 

35,157

 

38,443

 

35,784

Translation reserve

 

324

 

(119)

 

-

 

-

 

 

 

 

 

 

 

 

 

Total equity

 

91,677

 

72,738

 

91,839

 

73,484

These financial statements were approved by the board of directors on 21 March 2017 and were signed on its behalf by:

 

 

 

William BG Gow

Chief Financial Officer

Company registered number:  SC202545

 

The accompanying notes form an integral part of these financial statements.

Statements of cash flow

for the year ended 31 December 2016

 

 

Note

Group

 

Company

 

 

2016

 

2015

 

2016

 

2015

 

 

£000

 

£000

 

£000

 

£000

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit/(loss) for the year

 

2,785

 

(6,082)

 

2,644

 

(6,333)

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation

9

2,729

 

2,600

 

2,602

 

2,489

Amortisation

10

204

 

199

 

197

 

199

Loss on disposal

3

124

 

-

 

124

 

-

Non cash exceptional items

 

2,100

 

14,450

 

2,100

 

14,450

Financial expense

5

547

 

757

 

537

 

749

Income tax benefit

 

879

 

(99)

 

853

 

(194)

Unrealised foreign exchange gain

 

(223)

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

9,145

 

11,825

 

9,057

 

11,360

(Increase)/decrease in trade and other receivables

 

(1,088)

 

11

 

(3,874)

 

(319)

(Increase) in inventory

 

(60)

 

(233)

 

(60)

 

(227)

Increase in trade and other payables

 

505

 

217

 

506

 

232

 

 

 

 

 

 

 

 

 

 

 

8,502

 

11,820

 

5,629

 

11,046

Income tax paid

 

(513)

 

(1,177)

 

(400)

 

(1,080)

 

 

 

 

 

 

 

 

 

Net cash from operating activities

 

7,989

 

10,643

 

5,229

 

9,966

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

(10,175)

 

(7,645)

 

(7,489)

 

(7,090)

Acquisition of software

 

(322)

 

(779)

 

(311)

 

(723)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(10,497)

 

(8,424)

 

(7,800)

 

(7,813)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Issue of share capital

12

16,750

 

-

 

16,750

 

-

    Share issue costs

12

(1,040)

 

-

 

(1,040)

 

 

    Loan movement

13

(12,693)

 

(120)

 

(12,693)

 

(120)

Interest paid

 

(547)

 

(756)

 

(537)

 

(749)

Dividends paid

 

-

 

(1,169)

 

-

 

(1,169)

 

 

 

 

 

 

 

 

 

Net cash generated by/(used in) financing activities

 

2,470

 

(2,045)

 

2,480

 

(2,038)

Net (decrease)/increase in cash and cash equivalents

13

(38)

 

174

 

(90)

 

114

Cash and cash equivalents at start of year

 

43

 

(131)

 

(37)

 

(151)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at year end

13

5

 

43

 

(127)

 

(37)

 

 

 

 

 

 

 

 

 

                     

 

Statements of changes in equity

for the year ended 31 December 2016

 

 

Share

capital

Share

premium

account

Retained

earnings

Translation reserve

Total

 

 

£000

£000

£000

£000

£000

Group

 

 

 

 

 

At 1 January 2016

146

37,554

35,157

(119)

72,738

 

              

              

              

              

              

Comprehensive income

 

 

 

 

 

Profit for the year

-

-

2,785

-

2,785

Exchange difference on translation of foreign operation

 

-

 

-

 

-

 

443

 

443

Share based payments

-

-

22

-

22

Deferred tax on share based payments

-

-

(7)

-

(7)

 

              

              

              

              

              

Total comprehensive income for the year

-

-

2,800

443

3,243

 

 

 

 

 

 

Transactions with shareholders

 

 

 

 

 

Issue of share capital (note 23)

42

15,654

-

-

15,696

Dividends paid

-

-

-

-

-

 

              

              

              

              

              

Total transactions with shareholders

42

15,654

-

-

15,696

 

              

              

              

              

              

At 31 December 2016

188

53,208

37,957

324

91,677

 

              

              

              

              

              

 

 

 

Share

capital

Share

premium

account

Retained

earnings

Total

 

£000

£000

£000

£000

Company

 

 

 

 

At 1 January 2016

146

37,554

35,784

73,484

 

              

              

              

              

Comprehensive income

 

 

 

 

Profit for the year

-

-

2,644

2,644

Share based payments

-

-

22

22

Deferred tax on share based payments

-

-

(7)

(7)

 

              

              

              

              

Total comprehensive income for the year

-

-

2,659

2,659

 

 

 

 

 

Transactions with shareholders

 

 

 

 

Issue of share capital (note 22)

42

15,654

-

15,696

Dividends paid

-

-

-

-

 

              

              

              

              

Total transactions with shareholders

42

15,654

-

15,696

 

              

              

              

              

At 31 December 2016

188

53,208

38,443

91,839

 

              

              

              

              

 

 

 

Share

capital

Share

premium

account

Retained

earnings

Translation reserve

Total

 

 

£000

£000

£000

£000

£000

Group

 

 

 

 

 

At 1 January 2015

146

37,554

42,547

(315)

79,932

 

              

              

              

              

              

Comprehensive income

 

 

 

 

 

Loss for the year

-

-

(6,082)

-

(6,082)

Exchange difference on translation of foreign operation

 

-

 

-

 

-

 

12

 

12

Share based payments

-

-

56

-

56

Deferred tax on share based payments

-

-

(11)

-

(11)

 

              

              

              

              

              

Total comprehensive (expense)/income for the year

-

-

(6,037)

12

(6,025)

 

 

 

 

 

 

Transactions with shareholders

 

 

 

 

 

Dividends paid

-

-

(1,169)

-

(1,169)

 

 

 

 

 

 

 

              

              

              

              

              

Total transactions with shareholders

-

-

(1,169)

-

(1,169)

 

              

              

              

              

              

At 31 December 2015

146

37,554

35,157

(119)

72,738

 

              

              

              

              

              

 

 

 

 

Share

capital

Share

premium

account

Retained

earnings

Translation

reserve

Total

 

 

£000

£000

£000

£000

£000

Company

 

 

 

 

 

 

At 1 January 2015

 

146

37,554

43,242

-

80,942

 

 

              

              

              

              

              

Comprehensive income

 

 

 

 

 

 

Loss for the year

 

-

-

(6,334)

-

(6,334)

Exchange difference on translation of amounts due from subsidiary

 

 

-

 

-

 

-

 

-

 

-

Share based payments

 

-

-

56

-

56

Deferred tax on share based payments

 

-

-

(11)

-

(11)

 

 

              

              

              

              

              

Total comprehensive (expense) for the year

 

-

-

(6,289)

-

(6,289)

 

 

 

 

 

 

 

Transactions with shareholders

 

 

 

 

 

 

Dividends paid

 

-

-

(1,169)

-

(1,169)

 

 

 

 

 

 

 

 

 

              

              

              

              

              

Total transactions with shareholders

 

-

-

(1,169)

-

(1,169)

 

 

              

              

              

              

              

At 31 December 2015

 

146

37,554

35,784

-

73,484

 

 

              

              

              

              

              

 

Notes

(forming part of the financial statements)

 

1          Accounting policies

Goals Soccer Centres plc (the "Company") is a company domiciled in the United Kingdom. The consolidated financial statements for the year ended 31 December 2016 comprise those of the company and its subsidiaries (together referred to as the Group).  The parent company's financial statements present information about the company as a separate entity and not about the Group.  Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own income statement and related notes.

Statement of compliance

Both the parent company financial statements and Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("adopted IFRSs") that are effective (or available for early adoption) at 31 December 2016.  Based on these adopted IFRSs, the directors have applied the accounting policies, as set out below. The adopted IFRSs have been applied in accordance with the provisions of the Companies Act 2006.

The financial statements for the year ended 31 December 2016 were approved by the board of directors on 21 March 2017.

Basis of preparation

The financial statements are prepared on the historical cost basis except for derivative financial instruments which are stated at their fair value. The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

These financial statements of the Group and Company are presented in pounds sterling.  All financial information has been rounded to the nearest thousand.

The accounting policies have been applied consistently to all periods presented, except for the adoption of the standards described below which have had no impact on the reported numbers but may affect the accounting for future transactions and events.

Going concern

The Group and Company meet their overall funding requirements through their facility arrangements.  The directors have reviewed the Group and Company's forecasts and projections which indicate that the Group and Company are expected to be able to operate within their current facilities for the next twelve months.

After making enquiries, the directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the next twelve months.  Accordingly they continue to adopt the going concern basis in preparing the financial statements.

2          Segmental reporting

IFRS 8 'Operating Segments' requires a "management approach" under which segment information is presented on the same basis as that used for internal reporting purposes to the Chief Operating Decision Maker, which is the Board.  As each club has similar economic characteristics, provides the same services to similar customers and operates in a similar manner, the directors, therefore, consider that there is one reporting segment relating to the operation of outdoor soccer centres which includes the one (2015: one) club outside of the UK.

 

Geographical information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers and segment assets are based on the geographical location of the assets.

 

2016

2015

 

£000

£000

Revenues

 

 

United Kingdom

32,277

31,860

United States

1,255

1,153

 

              

              

 

33,532

33,013

 

              

              

Non-current assets

 

 

United Kingdom

117,295

110,611

United States

6,477

3,255

 

              

              

 

121,772

113,866

 

              

              

The non-current assets represent property, plant and equipment, intangible assets and other non-current receivables.

 

 

3          Operating profit/(loss)

 

2016

2015

 

£000

£000

Operating profit/(loss) is stated after charging:

 

 

Auditor's remuneration:

 

 

                - audit of these financial statements

36

36

Amounts receivable by auditors and their associates in respect of

                - audit related assurance services (half year review)

               - other services relating to taxation compliance

               - other services relating to tax advisory

 

5

7

11

 

5

7

17

Depreciation

2,729

2,600

Amortisation

204

199

Loss on sale of tangible fixed assets

124

-

Rental under operating leases

 

 

                - plant and machinery

232

197

                - others

3,090

2,866

 

              

              

 

Underlying earnings before interest, tax, depreciation and amortisation ("EBITDA") is calculated as follows:

 

2016

2015

 

£000

£000

 

 

 

Operating profit/(loss)

4,211

(5,432)

Depreciation

2,729

2,600

Amortisation

204

199

Loss on disposal

124

-

Non-recurring costs

450

-

Exceptional items (note 6)

3,516

14,450

 

              

              

Underlying EBITDA

11,234

11,817

 

              

              

Underlying profit before tax ("Underlying PBT") is calculated as follows:

 

2016

2015

 

£000

£000

 

 

 

Profit/(loss) before tax

3,664

(6,181)

Loss on disposal

124

-

Non-recurring costs

450

-

Exceptional items (note 6)

3,516

14,450

 

              

              

Underlying PBT

7,754

8,269

 

              

              

 

Contained within operating expenses are the following main costs associated with the sites:

 

Group

2016

2015

 

£000

£000

 

 

 

Club wages and salaries

6,898

6,247

Rent, rates and insurance

5,788

5,379

 

              

              

 

12,686

11,626

 

              

              

 

4              Exceptional items

 

2016

2015

 

£000

£000

Exceptional items comprise:

 

 

 

 

 

- Restructuring costs

897

-

- Strategic projects

85

-

- Impairment of underperforming clubs

2,534

8,124

- Impairment of software provision

-

750

- Impairment of Pro 5 goodwill

-

3,100

- Development costs written off

-

2,476

 

              

              

 

3,516

14,450

 

              

              

During 2016, the directors reviewed the carrying value of each club operated by the Company, resulting in an impairment charge of £2.5m. This principally relates to one club which has underperformed. In addition, restructuring costs of £0.9m were incurred to implement the outcome of the strategic review. A further £0.1m was incurred on separate strategic projects.

The Company incurred non-recurring costs in relation to the development and rollout of the new Goals brand and values of £0.5m (2015: £nil). The Company completed the modernisation of 136 pitches during the year resulting in a loss on disposal of £0.1m (2015: £nil) on old pitch surfaces. These costs have not been included within exceptional items but have been added back to calculate underlying profits.

In 2015 the directors reviewed the value in use of the software development cost incurred by the Company, goodwill incurred on the acquisition of Pro5 Soccer, the carrying value of each club operated by the Company and UK pipeline costs. This resulted in impairment charges of £14.5m.

 

5          Financial expense

 

2016

2015

 

£000

£000

Financial expense

 

 

Interest on bank loans and overdrafts

514

719

Amortisation of finance costs

33

30

 

              

              

 

547

749

 

              

              

 

6          Taxation

 

2016

2015

 

£000

£000

Recognised in the income statement

 

 

Current year

567

1,043

Adjustments for prior year

127

125

 

              

              

Current tax expense

694

1,168

 

              

              

Deferred tax (note 20)

 

 

Origination and reversal of timing differences

476

(351)

Adjustments for prior year

132

(45)

Reduction in tax rate

(423)

(871)

 

              

              

Deferred tax expense/(benefit)

185  

(1,267)

 

              

              

Tax expense/(benefit) in income statement

879

(99)

 

              

              

Reconciliation of effective tax rate

 

2016

2015

 

£000

£000

 

 

 

Profit/(Loss) for the year

2,785

(6,082)

Total income tax expense/(benefit)

879

(99)

 

              

              

Profit/(loss) excluding taxation

3,664

(6,181)

 

              

              

 

 

2016

2016

2015

2015

 

%

£000

%

£000

 

 

 

 

 

Income tax using company's standard tax rate

20.0

733

20.25

(1,252)

Effects of:

 

 

 

 

Non-deductible expenses

8.46

310

(30.55)

1,884

Other differences - adjustments to prior year balances

7.07

259

(2.20)

140

Other differences - difference in tax rates

(11.54)

(423)

14.10

(871)

 

              

              

              

              

Total tax expense/(benefit)

23.99

879

1.60

(99)

 

              

              

              

              

Income tax recognised directly in equity

 

2016

2015

 

£000

£000

 

 

 

Taxation credit on share based payments

7

(11)

 

              

              

A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the company's future current tax charge accordingly. The deferred tax liability at 31 December 2016 has been calculated based on these rates.

7          Dividends

 

 

2016

2015

 

 

£000

£000

 

 

 

 

 

Dividends paid - 2014 final (1.325p per ordinary share)

-

774

 

                         - 2015 interim (0.675p per ordinary share)

-

395

 

 

              

              

 

 

-

1,169

 

 

              

              

No final dividend for 2016 has been proposed (2015: £nil).

 

             

8          Earnings per share

Basic earnings per ordinary share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year which was 67,251,945 (2015: 58,465,060).

 

 

2016

2016

2015

2015

 

Profit for

Earnings

Loss for

Earnings

 

the year

per share

the year

per share

 

£000

p

£000

p

 

 

 

 

 

Basic earnings per share

2,785

4.1p

(6,082)

(10.4p)

Adjusted basic earnings per share *

6,875

9.8p

8,368

14.3p

Diluted earnings per share

2,785

4.1p

(6,082)

(10.4p)

Adjusted diluted earnings per share **

6,875

9.7p

8,368

14.3p

 

 

Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year plus the dilutive element of all outstanding relevant share options outstanding during the year.  For the year ended 31 December 2016 this was 67,663,242 (2015: 58,609,677).

 

The diluted weighted average number of shares is calculated as follows:

 

Number

 

 

2016

2015

 

 

 

 

 

Weighted average number of shares in issue during the year

67,251,945

58,465,060

 

Effect of dilutive share options

411,297

144,617

 

 

              

              

Diluted weighted average number of shares

67,663,242

58,609,677

 

 

              

              

           

 

* Adjusted basic earnings per share is calculated by adding back the exceptional items, non-recurring costs and loss on disposal to the earnings attributable to ordinary shareholders and dividing by the weighted average number of ordinary shares in issue during the year.

 

** Adjusted diluted earnings per share is calculated by adding back the exceptional items, non-recurring costs and loss on disposal to the earnings attributable to ordinary shareholders and dividing by the weighted average number of ordinary shares in issue during the year plus the dilutive element of all outstanding relevant share options outstanding during the year.

 

9          Property, plant and equipment

 

 

 

Fixtures

Assets in

 

Group

 

Leasehold

and

course of

 

 

 

property

fittings

construction

Total

 

 

£000

£000

£000

£000

Cost

 

 

 

 

 

At 1 January 2015

 

120,836

12,824

6,010

139,670

Additions

 

7,121

524

-

7,645

Transfers

 

1,509

-

(1,509)

-

Disposals

 

-

-

(1,689)

(1,689)

Foreign exchange

 

7

-

-

7

 

 

              

              

              

              

At 31 December 2015

 

129,473

13,348

2,812

145,633

 

 

              

              

              

              

Cost

 

 

 

 

 

At 1 January 2016

 

129,473

13,348

2,812

145,633

Additions

 

2,206

5,866

3,042

11,114

Disposals

 

(1,762)

(2,403)

(261)

(4,426)

Foreign exchange

 

876

(113)

(27)

736

 

 

              

              

              

              

At 31 December 2016

 

130,793

16,698

5,566

153,057

 

 

              

              

              

              

Depreciation

 

 

 

 

 

At 1 January 2015

 

15,461

8,663

1,950

26,074

Charge for year

 

1,966

634

-

2,600

Impairment (note 12)

 

8,124

-

2,050

10,174

Disposals

 

-

 

(1,689)

(1,689)

Foreign exchange

 

-

-

-

-

 

 

              

              

              

              

At 31 December 2015

 

25,551

9,297

2,311

37,159

 

 

              

              

              

              

At 1 January 2016

 

25,551

9,297

2,311

37,159

Charge for year

 

2,010

719

-

2,729

Impairment (note 12)

 

2,100

-

-

2,100

Disposals

 

(1,762)

(2,278)

(261)

(4,301)

Foreign exchange

 

82

3

-

85

 

 

              

              

              

              

At 31 December 2016

 

27,981

7,741

2,050

37,772

 

 

              

              

              

              

Carrying amounts

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

102,812

8,957

3,516

115,285

 

 

              

              

              

              

At 31 December 2015

 

103,922

4,051

501

108,474

 

 

              

              

              

              

 

 

 

 

Fixtures

Assets in

 

Company

 

Leasehold

and

course of

 

 

 

property

fittings

construction

Total

 

 

£000

£000

£000

£000

Cost

 

 

 

 

 

At 1 January 2015

 

116,187

12,499

5,637

134,323

Additions

 

6,732

358

-

7,090

Disposals

 

-

-

(1,689)

(1,689)

Transfers

 

1,898

 

(1,898)

-

 

 

             

              

              

              

At 31 December 2015

 

124,817

12,857

2,050

139,724

 

 

              

              

              

              

At 1 January 2016

 

124,817

12,857

2,050

139,724

Additions

 

2,054

5,860

518

8,432

Disposals

 

-

(2,083)

-

(2,083)

 

 

             

              

              

              

At 31 December 2016

 

126,871

16,634

2,568

146,073

 

 

              

              

              

              

Depreciation

 

 

 

 

 

At 1 January 2015

 

13,417

8,369

1,689

23,475

Charge for year

 

1,891

598

-

2,489

Impairment (note 12)

 

8,124

-

2,050

10,174

Disposal

 

-

-

(1,689)

(1,689)

 

 

              

              

              

              

At 31 December 2015

 

23,432

8,967

2,050

34,449

 

 

              

              

              

              

At 1 January 2016

 

23,432

8,967

2,050

34,449

Charge for year

 

1,894

708

-

2,602

Impairment

 

2,100

-

-

2,100

Disposal

 

-

(1,958)

-

(1,958)

 

 

              

              

              

              

At 31 December 2016

 

27,426

7,717

2,050

37,193

 

 

              

              

              

              

Carrying amounts

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

 

99,445

8,917

518

108,880

 

 

              

              

              

              

At 31 December 2015

 

101,385

3,890

-

105,275

 

 

              

              

              

              

 

Assets under construction for both the Group and the Company comprises the cost of redevelopment of current sites and development of new sites.

10         Intangible assets

 

Goodwill

Software

development

Total

 

£000

£000

£000

Group

 

 

 

 

 

 

 

Deemed cost

 

 

 

At 1 January 2015

5,719

3,642

9,361

Additions

-

779

779

 

              

              

              

At 31 December 2015

5,719

4,421

10,140

 

              

              

              

At 1 January 2016

5,719

4,421

10,140

Additions

-

322

322

Foreign exchange

-

16

16

 

              

              

              

At 31 December 2016

5,719

4,759

10,478

 

              

              

              

Amortisation

 

 

 

At 1 January 2015

-

1,132

1,132

Amortisation for the year

-

199

199

Impairment

3,100

750

3,850

 

              

              

              

At 31 December 2015

3,100

2,081

5,181

 

              

              

              

At 1 January 2016

3,100

2,081

5,181

Amortisation for the year

-

204

204

Foreign exchange

-

4

4

 

             

            

            

At 31 December 2016

3,100

2,289

5,389

 

              

            

             

Carrying amount

 

 

 

At 31 December 2016

2,619

2,470

5,089

 

              

              

              

At 31 December 2015

2,619

2,340

4,959

 

              

              

              

 

 

Goodwill

Software

development

Total

 

£000

£000

£000

Company

 

 

 

 

 

 

 

Deemed cost

 

 

 

At 1 January 2015

5,719

3,642

9,361

Additions

-

723

723

 

              

              

              

At 31 December 2015

5,719

4,365

10,084

 

              

              

              

At 1 January 2016

5,719

4,365

10,084

Additions

-

311

311

 

              

              

              

At 31 December 2016

5,719

4,676

10,395

 

              

              

              

Amortisation

 

 

 

At 1 January 2015

-

1,132

1,132

Amortisation for the year

-

199

199

Impairment

3,100

750

3,850

 

             

            

            

At 31 December 2015

3,100

2,081

5,181

 

              

              

              

At 1 January 2016

3,100

2,081

5,181

Amortisation for the year

-

197

197

 

             

            

            

At 31 December 2016

3,100

2,278

5,378

 

              

             

            

Carrying amount

 

 

 

At 31 December 2016

2,619

2,398

5,017

 

              

              

              

At 31 December 2015

2,619

2,284

4,903

 

              

              

              

 

Impairment testing

Goodwill is allocated to the five operating units which the company acquired in 2001 (£1.8 million) and the three operating units acquired in 2008 through the acquisition of Pro 5 Soccer (£0.8 million) which represents the lowest level within the company at which goodwill is monitored for internal management purposes.

The recoverable amount of the cash-generating units was based on their value in use. 

Value in use was determined by discounting the future cash flows generated from the continuing use of individual units and was based on the following key assumptions:

·    Cash flows were based on budgeted operating results for the coming year that are then projected forward for a 30 year period using a constant growth rate of 2%. This growth rate does not exceed the long-term average growth rate for the industry.  Management believes that this forecast period is justified due to the long-term nature of the business.

·    A pre-tax discount rate of 9.5% (2015: 9.5%) was applied in determining the recoverable amount.  The discount rate was based on a comparable industry average weighted average cost of capital adjusted for relevant risk factors.

 

The values assigned to the key assumptions represent management's estimate of future trading conditions and are based on both external and internal sources.

·    The review of the units which the company acquired in 2001 demonstrated headroom such that the estimated carrying value is not significantly sensitive to changes in assumptions.  The discount rate would have to increase to 21.50% before the headroom reached break even.

·    In 2016 the review of the three operating units acquired in 2008 through the acquisition of Pro 5 Soccer resulted in a goodwill impairment charge of £nil (2015: £3.1m).

·    In 2016 the value in use of the software development costs was reviewed by assessing whether the software is up to date and used by the business on a regular basis. There was no impairment of software in the year (2015: £750k).

·    In 2016 the review of the other operating units resulted in an impairment of the tangible fixed assets of five sites of £2.5m (2015: £8.1m) due to a reduction in the profitability of these clubs.

 

11         Deferred tax liabilities

Group and Company

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

 

 

Assets

Liabilities

Net

 

2016

2015

2016

2015

2016

2015

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

Share based payments

4

11

-

-

4

11

Property, plant and equipment

-

-

(7,697)

(7,510)

(7,697)

(7,510)

Other temporary differences

23

21

 

-

23

21

 

              

              

             

              

              

              

Net tax assets/(liabilities)

27

32

(7,697)

(7,510)

(7,670)

(7,478)

 

              

              

              

              

              

              

 

Movement in deferred tax during the year

 

At 1 January 2016

Recognised in income

Recognised in equity

At 31 December 2016

 

 

 

 

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

Share based payments

 

11

-

(7)

4

 

 

Property, plant and equipment

 

(7,510)

(187)

-

(7,697)

 

 

Other temporary differences

 

21

2

-

23

 

 

 

 

            

            

            

            

 

 

 

 

(7,478)

(185)

(7)

(7,670)

 

 

 

 

            

            

            

            

 

 

Movement in deferred tax during the prior year

 

At 1 January 2015

Recognised in income

Recognised in equity

At 31 December 2015

 

 

 

 

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

Share based payments

 

11

(11)

11

11

 

 

Property, plant and equipment

 

(8,881)

1,371

-

(7,510)

 

 

Other temporary differences

 

114

(93)

-

21

 

 

 

 

            

            

            

            

 

 

 

 

(8,756)

1,267

11

(7,478)

 

 

 

 

              

            

            

              

 

                                       

 

12           Share capital

 

 

 

2016

 

2015

 

 

 

Number

£000

Number

£000

 

 

 

 

 

 

 

 

 

Allotted, called up and fully paid

 

 

 

 

 

 

Ordinary shares of 0.25p (2015: 0.25p) each

75,215,060

188

58,465,060

146

 

 

 

              

              

              

              

 

The holders of the ordinary shares are entitled to dividends from time to time and entitled to one vote per share at meetings of the company.

 

16.75 million shares were placed at 100 pence per share on 23 June 2016 to deleverage the balance sheet and provide additional finance to invest. This resulted in additional share premium of £15,696,000, having deducted share issue costs of £1,054,000.

 

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.  The Board of Directors monitors the return on capital.  The Board of Directors also monitors the level of dividends to ordinary shareholders. 

 

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Board considers its borrowings and share capital to be the capital base of the Company.

 

The Company is subject to externally imposed capital requirements through bank covenants which are tested on a quarterly basis. The company prepared three year financial forecasts to ensure that there is sufficient on-going headroom against these covenants.

             

13         Notes to the statements of cash flows

(a)        Net debt

Group

 

 

 

At beginning

of year

Trading

cashflow

At end of

year

 

 

 

£000

£000

£000

 

 

 

 

 

 

Cash at bank and in hand

 

 

2,074

(145)

1,929

Overdraft

 

 

(2,031)

107

(1,924)

 

 

 

              

              

              

 

 

 

43

(38)

5

 

 

 

 

 

 

Borrowings

 

 

(36,691)

12,693

(23,998)

 

 

 

              

              

              

Net debt

 

 

(36,648)

12,655

(23,993)

 

 

 

              

              

              

 

Company

 

 

 

At beginning

of year

Trading

cashflow

At end of

year

 

 

 

£000

£000

£000

 

 

 

 

 

 

Cash at bank and in hand

 

 

1,994

(197)

1,797

Overdraft

 

 

(2,031)

107

(1,924)

 

 

 

              

              

              

 

 

 

(37)

(90)

(127)

 

 

 

 

 

 

Borrowings

 

 

(36,691)

12,693

(23,998)

 

 

 

              

              

              

 

 

 

(36,728)

12,603

(24,125)

 

 

 

              

              

              

 

 (b)       Net debt reconciliation of net cash flow to movement in net debt

 

Group

 

 

2016

2015

 

 

£000

£000

 

 

 

 

(Decrease)/increase in cash and cash equivalents in the year

 

(39)

174

Cash inflow from bank and other finance net of finance costs paid

 

12,678

120

 

 

              

              

Change in net debt resulting from cash flows

 

12,639

294

Additional finance costs (prepaid)

 

47

-

Amortisation of finance costs

 

(33)

-

 

 

              

              

Movement in net debt in the year

 

12,654

294

Net debt at the start of the year

 

(36,648)

(36,942)

 

 

              

              

Net debt at the end of the year

 

(23,994)

(36,648)

 

 

              

              

 

Company

 

 

2016

2015

 

 

£000

£000

 

 

 

 

(Decrease)/increase in cash and cash equivalents in the year

 

(90)

114

Cash flow from bank finance net of finance costs paid

 

12,678

120

 

 

              

              

Change in net debt resulting from cash flows

 

12,588

234

Additional finance costs (prepaid)

 

47

-

Amortisation of finance costs

 

(33)

-

 

 

              

              

Movement in net debt in the year

 

12,603

234

Net debt at the start of the year

 

(36,728)

(36,962)

 

 

              

              

Net debt at the end of the year

 

(24,125)

(36,728)

 

 

              

              

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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