ARE.L Regulatory News (ARE)

9 Jan 2008 07:00

Arena Leisure PLC09 January 2008 Arena Leisure PLC ('Arena' or 'the Group') Pre-close Statement and Management Contract for Great Leighs Racecourse Arena, the operator of seven UK racecourses and one-quarter of the UK's annualhorseracing fixtures, today issues a pre-close statement for the year ended 31December 2007 and is pleased to announce that performance during this period hasbeen in line with market expectations. Arena also announces that its preliminaryresults will be issued on 6 March 2008. Strategically, Arena has had a very successful year, making considerableprogress with several key initiatives that will significantly enhance theGroup's future earnings. Doncaster Racecourse re-opened on time following a major redevelopment programmeand successfully staged the St Leger festival in mid-September. Attendances weregenerally higher than expected, which bodes well for the future, although theresulting additional revenues were matched by one-off opening costs that weregreater than expected. Planning permission was received in March for afour-star, 120-bedroom hotel which, together with the associated 34-unitresidential development, will complement the exciting redevelopment of DoncasterRacecourse. At Wolverhampton Racecourse, planning permission was received for an expansionof the existing hotel from 54 to 170-bedrooms, the construction of a newconference, exhibition and banqueting suite, a new leisure facility featuring aswimming pool, and the incorporation of a casino, thereby creating the UK'sfirst 'racino'. The City of Wolverhampton, which was one of the locationsrecommended for a 'small' casino, still awaits the endorsement of Parliament. Finally, detailed planning permission was received in November for a 116-bedroomhotel, leisure and golf club development at Lingfield Park, with work expectedto commence at the end of January 2008. Arena is in discussions with a number of lending institutions to secure theappropriate funding for these exciting developments and it is expected that thisprocess will be completed in time for the preliminary results announcement. In March, Arena successfully created its own catering business and took over theoperation of all food and beverage activities at six of its racecourses with theaim of providing a superior customer product. Further improvements areanticipated which will increase the long term profitability of Arena'sracecourse operations. The set-up costs of the catering operation in 2007, whichwere exacerbated by start-up costs incurred on the re-opening of DoncasterRacecourse, will result in the new operation contributing a small loss in 2007,following the payment of notional royalties to the racecourses that it serves.The business is expected to trade profitably in 2008. As identified in both the June trading update and the July interim results announcement, trading in the key summer months was impacted by the severe wet weather conditions. In June, it was anticipated that profit before interest and tax for the year ended 31 December 2007 would be in the region of £6 million - an increase of around 6.5% compared to 2006. In July, following further adverse weather, this estimate was described as "remaining an achievable, if now somewhat more difficult, target". In October, Arena negotiated a settlement with its insurers for a total sum of £6.6 million following the closure of Southwell Racecourse due to the effects of severe flooding. This sum covered the financial impact of both business interruption and the physical repair and replacement of assets; the latter resulting in a gain through the profit and loss account due to the 'new-for-old' nature of the policy. The settlement allowed an accelerated refurbishment programme and the re-opening of the racecourse in mid-December. Given the scale of developments now in the pipeline for 2008/9, the Board hasdecided to defer consideration of any major enhancements at Royal WindsorRacecourse for at least one year. It has also decided to write-down the carryingvalue of related development costs incurred in prior years by approximately £1million. This is more than offset by the gain arising from the Southwellinsurance settlement. Following a busy Christmas period, it is expected that profit before interest and tax for the year ended 31 December 2007 will be in the region of £6 million, in line with market expectations. This includes a small net contribution arising from the gain on the damaged assets element of the insurance settlement at Southwell Racecourse net of the write-down of the Royal Windsor development costs. New Contract Arena today also announces an increase in its racecourse portfolio through thesigning of an initial one-year contract to oversee the management of racingoperations at the brand new Great Leighs Racecourse at Chelmsford in Essex. With the construction of this floodlit all weather racecourse nearingcompletion, Arena will bring its world-class expertise in the management of allweather tracks to assist Great Leighs in preparing the course for its openingfixture on 18 March 2008 and the approximate 80-days racing it is set to stageeach year. This arrangement reflects Arena's status as the clear market leaderin all weather racing in the UK and is expected to net the Group a profit ofaround £0.25m. Arena will work alongside the commercial and marketing teamsalready in place at the course, with Great Leighs' management retainingresponsibility for all commercial arrangements and on-going developments. Outlook It is too early in 2008 to draw any conclusions on trading. However, the year has started well with an additional 11 fixtures gained for the first three months of this year following the delayed opening of Great Leighs and with the new contract to oversee the management of that racecourse's racing operations. Despite the weather related challenges that arose in 2007, the Group achieved many of its objectives. With Doncaster Racecourse successfully re-opened and with a full year of operations ahead, Southwell and Worcester Racecourses restored following the summer flood damage and the major hotel-based developments commencing, the Board is optimistic that the Group will continue to move forward in 2008. - Ends - For further information please contact: Arena Leisure Plc Tel: 020-7632-2080 Mark Elliott, Chief Executivee-mail: contact@arenaleisureplc.com Bell Pottinger Corporate & Financial Tel: 020-7861-3232David Rydell / Olly Scott www.arenaleisureplc.com This information is provided by RNS The company news service from the London Stock Exchange