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17 Nov 2009 07:00
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ARENA LEISUREΒ PLC
INTERIM MANAGMENT STATEMENT
Arena Leisure Plc ('Arena'Β or the 'Group'),Β the UK's leading operator of horseracing fixtures which owns and operates seven racecourses in the UK comprising Doncaster, Royal Windsor, Lingfield Park, Southwell, Wolverhampton, FolkestoneΒ and Worcester,Β today announces its Interim Management Statement for the period from 1 July 2009 to 16Β NovemberΒ 2009Β (the 'period').
Overview
Arena tradedΒ in line with expectationsΒ over the period,Β with public attendances continuing to prove resilient to the underlying economic conditions. The Group benefited from hosting additional fixtures,Β compared to the same period in 2008.Β Together withΒ the industry related revenue streams from both media rights and the Levy, operational efficiencies helped mitigate the anticipated shortfalls on hospitality business.
During the period Arena announced its transformational media rights deal with SIS that is expected to deliver revenues of Β£106m over the five years from 2012,Β including Β£32m in upfront payments.
Trading Update
During the four months toΒ 31 October 2009,Β Arena hosted 106 fixtures (2008: 95),Β including 13Β additional,Β unscheduled fixturesΒ (2008:Β nil),Β resulting in 303Β fixturesΒ hosted overΒ the 10Β months to 31 October 2009Β (2008:Β 300). Total attendancesΒ at Arena'sΒ racecourses in the periodΒ wereΒ 279,000Β (2008:Β 259,000)Β including 53,000 at the four days of the St Leger festival at DoncasterΒ RacecourseΒ (2008: 59,000).Β Β The total attendance on the St LegerΒ SaturdayΒ was 1,000 higher than in 2008 at 27,000. For theΒ 10 monthsΒ toΒ 31 October 2009Β total attendances at Arena'sΒ racecoursesΒ wereΒ marginallyΒ ahead ofΒ the same period inΒ 2008 atΒ 567,000Β (2008:Β 564,000) and the average attendanceΒ was consistent with 2008Β levelsΒ atΒ 1,871Β (2008:Β 1,878). AsΒ expected, corporate and private hospitality businessΒ over the periodΒ continued toΒ beΒ impacted by the economic conditions. OverΒ theΒ 10 monthsΒ toΒ 31Β October 2009Β theΒ Group'sΒ hospitalityΒ customersΒ amounted toΒ 34,000Β (2008:Β 48,000).Β The Group has been able to mitigate some of this shortfall through reduced operational costs andΒ byΒ utilising the benefits ofΒ itsΒ in-house catering operation.
Income in the year to date from media rightsΒ sold to licensed betting officesΒ isΒ ahead of 2008 levels reflectingΒ aΒ contractual increase (4.0% for the year)Β andΒ anΒ increasedΒ averageΒ number of races stagedΒ per fixture. On 22 July 2009, Arena announced its new contract with SIS for the provision of horse racing content from the Group's seven racecourses into licensed betting offices in the UK and Ireland. The contract will replace Arena's current contract at its expiry on 31 December 2011 and has aΒ five yearΒ term. Total revenues receivableΒ over the length of the contractΒ are estimated at Β£106m, which compares toΒ estimatedΒ revenues under the existing five year contract of Β£55m,Β andΒ willΒ result in an annual increase in profitability of an estimated Β£10mΒ from 2012. On signing,Β Arena received an initial advanced payment from SIS of Β£12.5m. Further advanced payments of Β£12.5m and Β£7.0m are due on 22 July 2010 and 22 July 2011 respectively and are dependent upon the provision of appropriate security by Arena. The balance of the estimated revenues will be received by Arena throughout the five year term on a per race basis.
Development Projects
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The Lingfield Park Marriott Hotel and Country Club development isΒ progressingΒ well and the hotelΒ is expected toΒ be operational by MayΒ 2010. A general managerΒ has beenΒ appointedΒ and theΒ recruitment of theΒ management teamΒ and hotelΒ employeesΒ willΒ beΒ phasedΒ through to the opening date. During theΒ non-revenue generatingΒ pre-opening periodΒ the Group expects to incur costs of Β£0.7mΒ (2009: Β£0.2m, 2010: Β£0.5m)Β which includes the initial set-up of the hotel operations, training of the staff and sales and marketing activities. We expect that the hotel will deliver a positive contribution to Group profitsΒ in the 2011 financial yearΒ and reach a stabilised level of earningsΒ byΒ 2013.
In line withΒ Arena'sΒ strategy to realise value from surplus land assets, aΒ smallΒ plot of land adjacent to Lingfield Park RacecourseΒ was sold on 13 November 2009Β for gross proceeds of Β£0.6m,Β realising aΒ profit of aroundΒ Β£0.4m. The proceeds of the sale will be used to reduce the Group's net borrowings.
Funding
The Group is well financedΒ andΒ total available facilitiesΒ at 31 October 2009 wereΒ Β£59.0m of which Β£42.6m was drawn. The Group has compliedΒ with all banking covenantsΒ and hasΒ sufficientΒ committedΒ facilities toΒ meet all financing obligations as they fall due.
Outlook
Despite tough trading conditions, trading for the period has been in line with expectations and we expect this trend to continue for the remainder of the year.
TheΒ transformationalΒ media rights contract with SIS has shown thatΒ Arena's product is a valuable and significant component of UK racing's offering to bookmakers and the deal has crystallised this future value for shareholders as well as immediately strengthening the Group's balance sheet.
Β
17 November 2009
Enquiries:
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Arena Leisure Plc |
Tel: 020 7632 2080 |
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Mark Elliott, Chief Executive |
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Tony Harris, Finance Director |
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College Hill |
Tel: 020 7457 2020 |
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Justine Warren |
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Matthew Smallwood |
Forward-looking statements
This report may contain certain statements about the future outlook for Arena. AlthoughΒ ArenaΒ believes itsΒ expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
www.arenaleisureplc.com
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