GOAL.L Regulatory News (GOAL)

25 Feb 2008 07:00

Goals Soccer Centres PLC25 February 2008 Goals Soccer Centres plc Preliminary results for the year ended 31 December 2007Goals nets 42% profit increase Goals Soccer Centres plc ("Goals" or the "Company") is the premier operator of 'next generation' 5-a-side soccer centres across the UK. Goals currently operates 28 centres and has established a well progressed pipeline of sites to continue its proven rollout concept in the UK. Key points Financial Prime locations, quality facilities and outstanding customer service haveresulted in another record result underpinning our market position for thelong-term. • Sales up 26% to £20.0m (2006: £16.0m) • Like for like sales growth of 7% • Operating Profit up 38% to £8.4m (2006: £6.1m) • Profit before tax up 42% to £7.0m (2006: £4.9m) • Basic earnings per share up 50% to 11.7p (2006: 7.8p) • Final ordinary dividend proposed in respect of the current year of 1p per share making 1.5p for the full year, an increase of 58% on the previous year dividend UK Rollout Small-sided football continues to grow in both stature and popularity. The Boardbelieves that Goals' next generation" concept continues to be well placed tocapitalise on this trend. • Four centres opened since December 2006 at Birmingham Perry Barr, Hayes, Beckenham North and Chingford • Three centres added during the first quarter of 2008 at Bristol South, Bristol North and Stoke through the acquisition of Pro5, an independent operator • On schedule to add a minimum of a further three centres during 2008, one is already under construction and construction is expected to commence on two during the second quarter of 2008 • On schedule to open a minimum of six centres during 2009 International Opportunities Management's focus is firmly fixed on the market opportunity in the UK. Inaddition it is apparent that the popularity and success of the Goals concept arebeing recognised in many countries. As a consequence we have been presented witha number of well progressed proposals with identified sites seeking to use theGoals brand, systems and knowledge in markets outside the UK. • Goals has entered into an agreement to grant a Master Franchise for South Africa. The franchisee plans to open several centres prior to the World Cup in 2010. Negotiations are advanced to secure a site adjacent to the World Cup Stadium. • Subsequent to the year end Goals has entered into a Joint Venture in the USA to open a pilot centre in Los Angeles. Once the commercial viability of the initial facility has been confirmed it is intended to rollout a number of centres across California. Current Trading • Trading has remained strong since the year end Keith Rogers, Managing Director of Goals said: "I am delighted to report another record set of results for the Company withprofits up 42%. This is another outstanding performance, demonstrating thecontinued demand in the market for our 'next generation' concept. The Companyhas continued to trade strongly since the year end." 25 February 2008 Enquiries: Goals Soccer Centres Keith Rogers, Managing Director 020 7457 2020 (today) keith@goalsfootball.co.ukWilliam Gow, Finance Director 01355 234 800 (thereafter) bill@goalsfootball.co.uk College Hill Matthew Smallwood 020 7457 2020 matthew.smallwood@collegehill.com KBC Peel Hunt (Nominated Advisor and 020 7418 8900Broker) David Davies david.davies@kbcpeelhunt.comMatthew Goode matt.goode@kbcpeelhunt.com Chairman's statement I am very pleased to report another successful year in 2007, furtherstrengthening our leading position within the fast growing 5-a-side soccermarket. Significant growth in sales, underpinned by strong like-for-likeincreases and new branch openings, has once again resulted in record profits. A great result for the 2007 season! This has been another record year as Goals continues to deliver strong financialperformance. Sales increased by 26% to £20.0m (2006: £16.0m). Operating Profitincreased by 38% to £8.4m (2006: £6.1m). This resulted in a 42% increase inprofit before tax to £7.0m (2006: £4.9m) and a 50% increase in basic earningsper share to 11.7p (2006: 7.8p). The Board intends the Company will continue to retain the majority ofdistributable profits and cash flows to contribute towards the funding of itsplanned rollout of new centres. However, the Directors are proposing a finalordinary dividend in respect of the current year of 1p per share making 1.5p forthe full year (2006: 0.95p). This represents a 58% increase and the Boardintends to continue to propose to pay dividends each year growing at least asfast as earnings. Subject to approval at the Annual General Meeting to be held on 23 April 2008,the final dividend of 1p per share will be paid on 30 April 2008 to shareholderson the register on 4 April 2008. The Directors believe that Goals is well placed to continue to increase revenuesnot only from developing its pipeline of new sites but also from its existingcentres. Our focus on customer retention and maximising pitch utilisationcontinues to reap rewards. I am pleased to report that like-for-like salesincreased by 7% during the year. Our focus on prime locations, qualityfacilities and outstanding customer service has led to strongly increasedrevenues from existing centres and new openings. Taking 5-a-side into the premier league Football is the most popular sport in the UK and 5-a-side football continues togrow rapidly amongst all age groups and both genders. The Board believes theunique Goals concept positions the Company well to capitalise on this popularityand exploit the continuing major commercial opportunity to satisfy significantpotential and latent demand in the market. At Goals we are passionate about football. Our mission statement "Taking5-a-side into the premier league" encapsulates our commitment to providing highquality and exciting 5-a-side venues. Our delivery of a total footballexperience is successful in attracting not only current 11-a-side players, butattracting new and returning players of all ages to the game. Goals high standards have been recognised by the Football Association and duringthe year Goals became the first operator in the industry to be awarded the SmallSided Football Award for all eligible (open at least 6 months) venues inEngland; a unique market position. The Board recognises the long term potential of the small sided football market.Goals is the premier operator in the UK - a position maintained by ourcommitment to prime locations, quality facilities and excellent customerservice. We believe that this will continue to underpin Goals premier marketposition over the long term. It is our aim to continually exceed customerexpectations and to provide the best possible customer experience. Our strategy remains unchanged: • To continue to innovate and lead the industry, • To accelerate our rollout of "next generation" soccer centres in prime locations, • To maximise revenue from existing centres through outstanding customer service, • To continue to build a positive national 5-a-side brand and to develop marketing partnerships with operators of recognised complementary brands, • To respond to appropriate low risk international opportunities • To continue to generate high returns on capital. We continue to make excellent progress in all these areas. The small sided game continues to grow in both stature and popularity. TheFootball Association and UMBRO launched the inaugural 'FA UMBRO Fives' duringthe year. This exciting new event, heralded as The FA Cup of five-a-sidefootball - proved a great success, with almost 1,800 teams entering from acrossEngland. The finals were played at Wembley Stadium in front of several thousandspectators. The 2008 competition is due to commence in May with the finals againplayed at Wembley Stadium. Our brand partnerships with FourFourTwo, the UK's largest circulation footballmagazine, and UMBRO, the Football Association's "Official Partner for SmallSided Football" are proving successful. This has led to many joint initiativesaimed at increasing both participation in grassroots football and awareness ofthe Goals brand nationally. These partnerships are in line with Goals' strategyof working with brands enjoying a strong association with football andcomplement our sponsorship agreement with Powerade, "The Official Sports Drink"of the UEFA European Championship. 5-a-side is now a whole new ball game Goals is the premier operator in the market. Our "next generation" offeringcomprises premier locations, the latest artificial pitch technology, highquality facilities and superior customer service. During 2007, we continued toevolve and improve the Goals concept. We continue to invest in our advanced management and communication systems toimprove customer experience and increase income. Our management systems have nowbeen fully migrated and integrated into our central web based SmartCentresystem. This powerful management tool is the culmination of several years workand provides a company wide management system hosted from a central location butaccessible using web technology. Online booking for our customers is being rolled out across the centres and isproving to be extremely popular. New signings Since the Company listed on AIM in December 2004 we have added 17 additionalcentres representing a 154% increase. Goals continues to develop its strong site pipeline to provide for future centreopenings. We have developed a well defined and proven site selection strategywhich is fundamental to the ongoing success of the business. We continue to besuccessful in identifying and developing high profile sites in densely populatedareas. Our reputation has enabled us to pursue sites through partnership arrangementswith the private sector, schools, local authorities and colleges. In 2006 the Company was selected by The Royal Parks to develop a facility in TheRegent's Park, London in line with The Royal Parks master plan. The proposalswere refused by Westminster City Council Planning Committee in December 2007.The Company are currently reviewing a number of options with The Royal Parks onhow to proceed. Since December 2006 we have opened centres in Birmingham, Hayes, Beckenham andChingford. In February 2008 the Company completed the acquisition of Pro5 Soccer. Pro5 is along established operator which has two well located centres in Bristol and onein Stoke-on-Trent. Pro5 was identified by the Directors as a target a number ofyears ago and discussions were entered into at that time. Our site pipeline continues to strengthen and we are confident we will add afurther three centres during 2008. Goals Dudley is already under constructionand it is anticipated that construction of a further two centres will commencein the second quarter of 2008. We are confident we will open a minimum of sixcentres during 2009. International Opportunities Management's focus is firmly fixed on the market opportunity in the UK . Inaddition it is apparent that the popularity and success of the Goals concept arebeing recognised in many countries. As a consequence we have been presented witha number of well progressed proposals with identified sites seeking to use theGoals brand, systems and knowledge in markets outside the UK. Football is the most popular sport in the world and the Directors recognise theinternational potential of Goals' well developed 5-a-side concept. Our strategyis to capitalise on this potential by entering into strategic franchisearrangements with experienced, well funded companies in areas where we believethere is a significant, low-risk market opportunity, and where no capitalinvestment is required by Goals. Goals has entered into an agreement to grant a Master Franchise for SouthAfrica. The franchisee plans to open several centres ahead of the World Cup in2010 with the initial centres to be established in Cape Town, Durban andJohannesburg. Negotiations are advanced to secure a site adjacent to the WorldCup Stadium. In return for licensing the Goals brand name, systems andknowledge, Goals will receive recurring franchise fees and an option to acquireequity at zero cost. In the USA, the Directors initially entered into discussions with a well fundedand experienced partner, that would have resulted in a Master Franchise for thePacific and Mountain time zones. However, following a detailed market analysisindicating significant latent demand, the Directors believe that the scale andscope of the opportunity in these areas justify a higher level of involvement. As a result the Company has now entered into a Joint Venture, to open a pilotcentre in Los Angeles, in respect of which legal negotiations are well advanced.Once the commercial viability of this initial facility has been confirmed it isintended to roll out a number of centres across California. Goals in the community Our commitment to youth sports development in the communities in which weoperate is evidenced by our Community Access Policy providing free access to keyuser groups during off-peak hours. By working in partnership with schools, localauthorities and government bodies we have improved access for children toquality sports facilities. Every week, thousands of children benefit from free use of Goals' state of theart facilities. We therefore take our corporate and social responsibilitiesseriously and will only enter into partnership and sponsorship arrangementswhich meet our strict ethical codes. It is the policy of Goals to strive for environmental excellence in all aspectsof management and operation. In recent years the Company has continuouslyimproved environmental performance through an ongoing reduction in businesscosts and waste. The Board plan to continue to increase awareness ofenvironmental issues across the Company. The Board recognises the significance of effective health and safety managementand is committed to providing a safe, secure and healthy environment for bothcustomers and employees. The Company has a detailed health and safety managementplan in place and this is reviewed regularly by the Board. A team game The Directors continue to strengthen the management team to match the Company'scontinued growth. The delivery of a quality service and experience to ourcustomers is down to the professionalism, knowledge and passion of our staff.Our future staff requirements are provided through ongoing training andpromotion from within. I should like to thank all Goals staff for their majorpart in delivering another year of operational and financial success. Financial review This is the first Goals Soccer Centres' audited financial report presented underInternational Financial Reporting Standards as adopted by the EU ("adopted IFRS") and, as with other companies reporting for the first time in this new format,this has involved restating our base figures for prior periods. The main changeswhich shareholders will note are changes in accounting for goodwillamortisation, interest rate swaps, deferred tax and borrowing costs. A fullanalysis of these changes is detailed in note 16. This has been another record year as the Goals concept continues to deliverstrong financial performance. Sales increased by 26% to £20.0m (2006: £16.0m). This included a contribution of£0.9m from the new centres opened during the year. This strong performance is further evidence of the Company's proven "nextgeneration" concept and the focus on increasing revenues not only fromdeveloping its pipeline of new sites but also from its existing centres. Ourstaff continue to focus on customer retention and maximising pitch utilisationand our systems are designed to assist the staff to achieve this objective. I am pleased to report like-for-like sales growth of 7% (2006: 9%) for the fullyear. We reported like-for-like sales growth in the first 6 months of the yearof 10%; however, this was against a lower comparative of 5% due to the impact ofthe World Cup in June 2006. Like-for-like sales growth in the second 6 monthsof the year were 4%, however, this was against a higher comparative of 13% dueto the post World Cup benefit in the second half of 2006. Operating Profit increased by 38% to £8.4m (2006: £6.1m). The gross profitmargin increased by 1% to 88% due to a minor change in the sales mix. Operatingprofit margin increased from 38% to 42%, benefiting from the increased grossprofit margin, economies of scale, increased utilisation and tight cost control. The company operates various share option schemes for Senior Management. Theshare based payment charge during the year was £220,000 (2006: £203,000). Profit on ordinary activities before tax has risen by 42% to £7.0m (2006:£4.9m). The tax charge for the year is at an effective rate of 30.2% (2006:33.3%). This resulted in a 50% increase in basic earnings per share to 11.7p(2006: 7.8p) and a 50% increase in diluted earnings per share to 11.2p (2006:7.5p). Cash inflow from operating activities increased by 16% to £8.1m (2006: £7.0m).This was the first year in which the Company was required to pay taxation inquarterly instalments. The whole liability for the 2006 year end of £0.7m andthe first two quarterly instalments for the 2007 year end totalling £0.8m werepaid during the second half of the financial year (2006: £0.3m). Cash inflowfrom operating activities before tax increased by 32% to £9.7m (2006: £7.3m) We invested £10.6m in capital expenditure during the year (2006: £13.7m), £8.8m(2006: £12.6m) of which relates to investment in new centres and £0.4m of whichrelates to information technology systems. Net debt at 31 December 2007 was £28.2m (2006: £23.9m). This level of debtrepresents 115% (2006: 124%) of shareholders' funds and 53% (2006: 53%) oftangible fixed assets. We have put in place a new £40m five year revolvingcredit facility with HBOS. This will fully fund our development plans andprovide a contingency for further centre openings. EBITDA interest cover forthe year was 7 times (2006: 6.3 times). The Company has interest rate hedging inplace which fixes borrowing costs at 5.85% on £10m and the balance is at amargin of 1.1% over LIBOR. Current trading The Company has continued to trade strongly since the year end. We remainconfident in our business model and product, and look forward to 2008 and beyondwith enthusiasm in terms of trading performance and new centre openings. Sir Rodney Walker 22 February 2008Chairman The preliminary announcement was approved by the Board of Directors on 22February 2008. Goals Soccer Centres PlcIncome statementfor the year ended 31 December 2007 Note 2007 2006 £000 £000 Revenue 2 20,048 15,952 Cost of sales (2,426) (2,098) Gross profit 17,622 13,854 Administrative expenses (9,195) (7,770) Operating profit 3 8,427 6,084 Financial expense 4 (1,424) (1,152) Profit before income tax 7,003 4,932 Income tax 5 (2,115) (1,684) Profit for the year attributable to equity holders of thecompany 13 4,888 3,248 Earnings Per Share Basic 7 11.7p 7.8p Diluted 7 11.2p 7.5p Statement of recognised income and expensefor the year ended 31 December 2007 2007 2006 £000 £000 Effective portion of changes in fair value of cash flow hedges (97) 259Tax effect of change in fair value of cash flow hedges 29 (78)Net (expense)/income recognised directly in equity (68) 181 Profit for the year 4,888 3,248 Total recognised income and expense for the year attributable to equityholders of the company 4,820 3,429 Goals Soccer Centres PlcBalance sheet at 31 December 2007 Note 2007 2006Assets £000 £000Non-current assetsProperty, plant and equipment 8 53,453 44,698Intangible assets 9 1,848 1,848Other financial assets 112 209 Total non current assets 55,413 46,755 Current assetsInventories 303 240Trade and other receivables 912 650Cash and cash equivalents 393 333Total current assets 1,608 1,223 Total assets 57,021 47,978 Current liabilitiesBank overdraft (547) (541)Other interest-bearing loans and borrowings 11 (325) (1,145)Trade and other payables (2,089) (2,547)Current tax payable (632) (1,077) Total current liabilities (3,593) (5,310) Non-current liabilitiesOther interest-bearing loans and borrowings 11 (27,749) (22,521)Tax payable (264) (307)Deferred tax liabilities 10 (984) (597)Total non current liabilities (28,997) (23,425) Total liabilities (32,590) (28,735) Net assets 24,431 19,243 EquityShare capital 12 104 104Share premium 13 12,679 12,679Other reserve 13 78 146Retained earnings 13 11,570 6,314 Total equity attributable to equity holders of thecompany 24,431 19,243 Goals Soccer Centres PlcCash flow statementfor the year ended 31 December 2007 Note 2007 2006 £000 £000Cash flows from operating activitiesProfit for the year 4,888 3,248Adjustments for:Depreciation 1,435 1,110Financial expense 1,424 1,158Equity settled share-based payment expense 220 203Income tax expense 2,115 1,684 10,082 7,403 Increase in trade and other receivables (262) (345)Increase in inventory (63) (119)(Decrease) / increase in trade and other payables (105) 396 9,652 7,335Income tax paid (1,513) (349) Net cash from operating activities 8,139 6,986 Cash flows from investing activitiesAcquisition of property, plant and equipment (10,591) (13,729) Net cash used in investing activities (10,591) (13,729) Cash flows from financing activitiesLoans received 5,228 8,430Repayment of borrowings (820) (60)Interest paid (1,420) (1,278)Dividends paid (482) (335) Net cash from financing activities 2,506 6,757 Net increase in cash and cash equivalents 14 54 14Cash and cash equivalents at start of year (208) (222) Cash and cash equivalents at year end (154) (208) Notes(forming part of the financial statements) 1. Accounting policies Goals Soccer Centres PLC (the "Company") is a company domiciled in the UnitedKingdom. Statement of compliance The financial statements have been prepared and approved by the directors inaccordance with International Financial Reporting Standards as adopted by the EU("adopted IFRSs") effective (or available for early adoption) at 31 December2007. The financial statements for the year ended 31 December 2007 were approved bythe board of directors on 22 February 2008. Basis of preparation The financial statements are prepared on the historical cost basis except forderivative financial instruments which are stated at their fair value. Thepreparation of the financial statements requires the directors to makejudgements, estimates and assumptions that affect the application of policiesand reported amounts of assets and liabilities, income and expenses. Theestimates and associated assumptions are based on historical experience andvarious other factors that are believed to be reasonable under thecircumstances, the results of which form the basis of making the judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates. The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2007 or 31 December 2006.Statutory accounts for the year ended 31 December 2006, which were preparedunder UK GAAP, have been delivered to the registrar of companies, and those forthe year ended 31 December 2007, prepared under International FinancialReporting Standards as adopted by the EU, will be delivered in due course. Theauditors have reported on those accounts; their reports were (i) unqualified,(ii) did not include references to any matters to which the auditors drewattention by way of emphasis without qualifying their reports and (iii) did notcontain statements under section 237(2) or (3) of the Companies Act 1985. 2. Segmental reporting All turnover and operating profit is derived from the operation of outdoorsoccer centres within the United Kingdom. Revenue recognised in the income statement is analysed as follows: 2007 2006 £000 £000 Rendering of services 16,399 12,894Sale of goods 3,649 3,058 20,048 15,952 3. Operating profit 2007 2006 £000 £000Operating profit is stated after charging: Auditors' remuneration: - audit of these financial statements 38 30Amounts receivable by auditors and their associates in respect of - other services relating to taxation 8 8 - services relating to corporate finance transactions entered - 30 into or proposed to be entered intoDepreciation 1,435 1,110Rental under operating leases - plant and machinery 38 33 - others 811 742 Earnings before interest, tax, depreciation and amortisation ("EBITDA") iscalculated as follows: 2007 2006 £000 £000 Operating profit 8,427 6,084Depreciation 1,435 1,110 9,862 7,194 4. Financial expense 2007 2006 £000 £000Recognised in income statementInterest on bank loans and overdrafts 1,375 1,095Interest on all other loans 49 57 1,424 1,152 Recognised directly in equity (hedging reserve)Effective portion of changes in cash flow hedges (97) 259 5. Income tax 2007 2006 £000 £000Recognised in the income statementCurrent tax expenseUK corporation tax at 30% - current year 1,441 1,090 - prior year (373) (32) 1,068 1,058 Deferred tax (note 10)Temporary differences:- current year 915 626- prior year 322 -Reduction in year end balance due to change in rate to 28% (190) - Total deferred tax 1,047 626 Total tax in income statement 2,115 1,684 Reconciliation of effective tax rate 2007 2006 £000 £000 Profit for the year 4,888 3,248Total income tax expense 2,115 1,684 Profit excluding taxation 7,003 4,932 2007 2006 % £000 % £000 Income tax using company's standard taxrate 30.0 2,100 30% 1,480 Effects of:Non-deductible expenses 3.6 255 5.5% 270Change in rate - deferred taxation (2.7) (190) - -Other differences - adjustments to prioryear balances (0.7) (50) (0.7) (32)Other items - - (0.7) (34) Total tax expense 30.2 2,115 34.1 1,684 Income tax recognised directly in equity 2007 2006 £000 £000 Taxation on share based payments 630 823Taxation on financial assets/liabilities 29 (78) 659 745 6. Dividends 2007 2006 £000 £000 Dividends paid - 2005 final (0.5p per ordinary share) - 209 - 2006 interim (0.3p per ordinary share) - 126 - 2006 final (0.65p per ordinary share) 272 - - 2007 interim (0.50p per ordinary share) 210 - 482 335 The directors have proposed a final ordinary dividend of £419,000 (1.0p perordinary share) (2006: £272,200 (0.65p per ordinary share)). This has not beenincluded as a liability as it was not approved before the year end. 7. Earnings per share Basic earnings per 0.25p ordinary share is calculated by dividing the earningsattributable to ordinary shareholders by the weighted average number of ordinaryshares in issue during the year which was 41,883,788, (2006: 41,883,788). 2007 2007 2006 2006 Profit for Earnings Profit for Earnings the year per share the year per share £000 p £000 p Basic earnings per share 4,888 11.7 3,248 7.8 Diluted earnings per share 4,888 11.2 3,248 7.5 Diluted earnings per share is calculated by dividing the earnings attributableto ordinary shareholders by the weighted average number of ordinary shares inissue during the year plus the dilutive element of all outstanding relevantshare options outstanding during the year. For the year ended 31 December 2007this was 43,853,571 (2006: 43,503,685). The diluted weighted average number of shares is calculated as follows: 2007 2006Weighted average number of shares in issue and total number of ordinaryshares in issue at the beginning and end of the year 41,883,788 41,883,788Effect of dilutive share options 1,969,783 1,619,897Diluted weighted average number of shares 43,853,571 43,503,685 8. Property, plant and equipment Property, plant and equipment Freehold and Fixtures Assets in leasehold and course of property fittings construction Total £000 £000 £000 £000CostAt 1 January 2006 27,905 4,829 1,440 34,174Additions 10,498 1,666 2,165 14,329Disposals - (31) - (31)Transfers 906 113 (1,019) - At 31 December 2006 39,309 6,577 2,586 48,472 At 1 January 2007 39,309 6,577 2,586 48,472Additions 5,933 1,531 2,726 10,190Disposals - (603) - (603)Transfers 2,514 (461) (2,053) - At 31 December 2007 47,756 7,044 3,259 58,059 DepreciationAt 1 January 2006 1,455 1,240 - 2,695Charge for year 595 515 - 1,110Disposals - (31) - (31) At 31 December 2006 2,050 1,724 - 3,774 DepreciationAt 1 January 2007 2,050 1,724 - 3,774Charge for year 820 615 - 1,435Disposals - (603) - (603) At 31 December 2007 2,870 1,736 - 4,606 Carrying amounts At 31 December 2007 44,886 5,308 3,259 53,453 At 31 December 2006 37,259 4,853 2,586 44,698 The carrying amount freehold and leasehold property comprises: 2007 2006 £000 £000 Freehold 956 1,011Long leasehold 43,930 36,248 44,886 37,259 9. Intangible fixed assets Goodwill 2007 2006 £000 £000Deemed costAt beginning and end of year 1,848 1,848 Impairment testing Goodwill is allocated entirely to the five operating units which the companyacquired in 2001 which represents the lowest level within the company at whichgoodwill is monitored for internal management purposes. The recoverable amount of the cash-generating unit was based on its value inuse. The value in use was determined to be higher than its carrying amount sono impairment loss was recognised. 10 Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net 2007 2006 2007 2006 2007 2006 £000 £000 £000 £000 £000 £000 Share based payments 1,817 1,060 - - 1,817 1,060Property, plant and equipment - - (2,767) (1,594) (2,767) (1,594)Cash flow hedge - - (34) (63) (34) (63) Net tax assets/(liabilities) 1,817 1,060 (2,801) (1,657) (984) (597) Movement in deferred tax during the year At 1 January 2007 Recognised Recognised At 31 in income in equity December 2007 £000 £000 £000 £000 Share based payments 1,060 126 631 1,817Property, plant and equipment (1,594) (1,173) - (2,767)Cash flow hedge (63) - 29 (34) (597) (1,047) 660 984 Movement in deferred tax during the prior year At 1 January 2006 Recognised Recognised At 31 in income in equity December 2006 £000 £000 £000 £000 Share based payments 237 - 823 1,060Property, plant and equipment (968) (626) - (1,594)Cash flow hedge 15 - (78) (63) (716) (626) 745 (597) 11. Other interest bearing loans and borrowings This note provides information about the contractual terms of the Company'sinterest - bearing loans and borrowings, which are measured initially at fairvalue and subsequently at amortised cost. 2007 2006 £000 £000Current liabilitiesVendor loan notes - Class B 325 1,145 Non current liabilitiesSecured bank loans 27,749 22,521 Secured bank loans are stated net of unamortised finance costs of £96,000 (2006:£95,000). Terms and debt repayment schedule Nominal interest Year of Carrying Carrying rate maturity Face value amount Face value Amount 2007 2007 2006 2006 £000 £000 £000 £000 Secured bank loans LIBOR +1.1% 2012 27,749 27,845 22,521 22,616Loan notes LIBOR 2011 325 325 1,145 1,145 28,074 28,170 23,666 23,761 All debt is denominated in GBP. The vendor loan notes redemption date is 30 November 2011 however note holderscan serve written notice on the company requiring redemption at par at any timeon or after six months following the issue of the loan note. The loan notes areguaranteed by the Bank of Scotland. Subsequent to the year end, the loan noteshave been fully repaid The bank loans are secured by a fixed charge over the heritable, freehold andleasehold property, a floating charge and a composite guarantee. Subsequent to the year end the company increased its down loan facilities to£40,000,000. The bank loan facility has a term of 5 years with one bulletpayment in February 2013. 12. Share capital 2007 2006 Number £000 Number £000AuthorisedOrdinary shares of 0.25p (2006: 0.25p) each 64,000,000 160 64,000,000 160 Allotted, called up and fully paidOrdinary shares of 0.25p (2006: 0.25p) each 41,883,788 104 41,883,788 104 The holders of the ordinary shares are entitled to dividends from time to timeand entitled to one vote per share at meetings of the company. The company hasalso issued share options. 13. Reconciliation of movement in capital and reserves Share Share Profit and loss Other Total capital premium account reserve £000 £000 £000 £000 £000Reconciliation of movement incapital and reservesAt 1 January 2006 104 12,679 2,375 (35) 15,123Profit for the year - - 3,248 - 3,248Dividends - - (335) - (335)Share based payments - - 203 - 203Effective portion of changes infair value of cash flow hedges - - - 259 259Deferred tax on cash flow hedge - - - (78) (78)Deferred tax on share options - - 823 - 823 At 31 December 2006 104 12,679 6,314 146 19,243 At 1 January 2007 104 12,679 6,314 146 19,243Profit for the year - - 4,888 - 4,888Dividends - - (482) - (482)Share based payments - - 220 - 220Effective portion of changes infair value of cash flow hedges - - - (97) (97)Deferred tax on cash flow hedge - - - 29 29deferred tax on share options - - 630 - 630 At 31 December 2007 104 12,679 11,570 78 24,431 Share premium The share premium arose primarily on 31 December 2004 when the Company wasfloated on AIM. Other reserve The hedging reserve comprised the effective position of the cumulative netchange in the fair value of cash flow hedging instruments relating to hedgingtransactions that have not yet occurred. 14(a). Net debt At beginning Trading Non cash At end of of year cashflow movement year £000 £000 £000 £000 Cash at bank and in hand 333 60 - 393Overdraft (541) (6) - (547) (208) 54 - (154) Revolving credit facility (22,521) (5,204) (24) (27,749)Vendor loan (1,145) 820 - (325) (23,666) (4,384) (24) (28,074) (23,874) (4,330) (24) (28,228) 14(b). Net debt reconciliation of net cash flow to movement in net debt 2007 2006 £000 £000 Increase in cash in the year 54 14Cash inflow from bank finance net of finance costs paid (5,204) (8,416)Loan notes and vendor loans redeemed 820 60 Change in net debt resulting from cash flows (4,330) (8,342)Non cash movement - amortisation of finance costs (24) (2) Movement in net debt in the year (4,354) (8,344)Net debt at the start of the year (23,874) (15,530) Net debt at the end of the year (28,228) (23,874) 15. Subsequent event On 21 February 2008 the Company acquired the entire share capital of Pro-5Soccer Limited and Deltavon Limited for a consideration of £6 million includingexpenses of £0.1 million. The consideration is payable in cash. The principalassets acquired were three five-a-side football centres together with therelated working capital (which is insignificant) and debt of £1.7 million.Given the proximity of the acquisition to the date of the approval of thefinancial statements the determination of fair values in accordance with IFRShas not yet been completed. 16. Explanation of transition to IFRS The rules for first time adoption of IFRS are set out in IFRS 1 "First-timeadoption of International Financial Reporting Standards". In general a companyis required to determine its IFRS accounting policies and apply theseretrospectively to determine its balance sheet, at the date of transition, underIFRS. The standard allows a number of exceptions to this general principle toassist companies in the transition period. The 2006 comparative information has,as permitted by IFRS 1, been prepared taking advantage of the exemption not torestate business combinations prior to 1 January 2006. The restatement isdifferent to that presented previously as the previous restatement presentedwithin the company's interim results was prepared on the assumption that IAS 23(revised): Borrowing costs would be endorsed. As this standard has not beenendorsed by the EU the company have been unable to take advantage of thetransitional provisions of IAS 23 (revised): Borrowing costs and has thereforeadopted the requirements of IAS 23: Borrowing costs. The accounting policiesset out in note 1 have been applied consistently in the transition to adoptedIFRS including the opening IFRS balance sheet and comparative information. The reconciliations of equity at 1 January 2006 (date of transition to IFRS) andat 31 December 2006 (date of last UK GAAP financial statements) and thereconciliation of profit for the year ended 31 December 2006 are required underIFRS in the year of transition. No adjustments have been made for changes in estimates made at the time ofapproval of the last UK GAAP financial statements on which the IFRS comparativeinformation is based. Reconciliation of equity at 1 January 2006 (date of transition to IFRS) Previously IAS 12 IAS 23 IAS 38 IAS 39 Effect of Restated reported Deferred Borrowing Intangible Financial Transition under IFRS under UK Tax costs Assets Instruments to IFRS GAAP * £000 £000 £000 £000 £000 £000 £000Non-current assetsProperty, plant andequipment 31,221 258 258 31,479Intangible assets 1,848 1,848 33,069 258 258 33,327 Current assetsStocks 121 121Trade and other receivables 608 608Cash and cash equivalents 216 216 945 945 Total assets 34,014 258 258 34,272 Current liabilitiesBank overdraft (438) (438)Trade and other payables (1,898) (1,898)Tax payable (367) (367) (2,703) (2,703) Non-current liabilitiesOther interest-bearing loans and borrowings (15,308) (15,308)Tax payable (372) (372)Deferred tax liabilities (891) 237 (77) 15 175 (716)Other financial liabilities (50) (50) (50) (16,571) 237 (77) (35) 125 (16,446) Total liabilities (19,274) 237 (77) (35) 125 19,149 Net assets 14,740 237 181 (35) 383 15,123 EquityShare capital 104 104Share premium 12,679 12,679Other reserve (35) (35) (35)Retained earnings 1,957 237 181 418 2,375 Total equity 14,740 237 181 (35) 383 15,123 • In IFRS Format Reconciliation of equity at 31 December 2006 (date of last UK GAAP financialstatements) Previously IAS 12 IAS 23 IAS 38 IAS 39 Effect of Restated reported Deferred Borrowing Intangible Financial Transition under IFRS under UK Tax costs Assets Instruments to IFRS GAAP* £000 £000 £000 £000 £000 £000 £000Non-current assetsProperty, plant andequipment 44,317 381 381 44,698 Intangible assets 1,726 122 122 1,848Other financial assets - 209 209 209 46,043 381 122 209 712 46,755 Current assetsStocks 240 240Trade and other receivables 650 650Cash and cash equivalents 333 333 1,223 1,223 Total assets 47,266 381 122 209 712 47,978 Current liabilitiesBank overdraft (541) (541)Other interest-bearing loans and borrowings (1,145) (1,145)Trade and other payables (2,547) (2,547)Tax payable (1,077) (1,077) (5,310) (5,310) Non-current liabilitiesOther interest-bearingloans and borrowings (22,521) (22,521)Tax payable (307) (307)Deferred tax liabilities (1,480) 1,060 (114) (63) 883 (597) (24,308) 1,060 (114) (63) 883 (23,425) Total liabilities (29,618) 1,060 (114) (63) 883 (28,735) Net assets 17,648 1,060 267 122 146 1,595 19,243 EquityShare capital 104 104Share premium 12,679 12,679Other reserve - 146 146 146Retained earnings 4,865 1,060 267 122 - 1,449 6,314 Total equityattributable to equityholders of the parent 17,648 1,060 267 122 146 1,595 19,243 * In IFRS Format Reconciliation of profit for the year ended 31 December 2006 Previously IAS 23 IAS 38 Restated reported under Borrowing Intangible under IFRS UK GAAP costs Assets £000 £000 £000 £000 Revenue 15,952 15,952Cost of sales (2,098) (2,098) Gross profit 13,854 13,854 Administrative expenses (7,885) (7) 122 (7,770) Operating profit before net financing costs 5,969 (7) 122 6,084 Net financing costs (1,282) 130 (1,153) Profit before tax 4,687 123 122 4,932 Taxation (1,647) (37) (1,684) Profit after Tax 3,040 86 122 3,248 Earnings Per Share Basic 7.3p 7.8p Diluted 7.0p 7.5p Deferred Tax The scope of IAS 12, "Income Taxes" is wider than the corresponding UK GAAPstandards, and requires deferred tax to be provided on all temporary differencesrather than just timing differences (under UK GAAP). Under UK GAAP, the companywas only able to recognise a deferred tax asset on the allowable tax deductionthat the Company would receive if the share options within the various shareoption schemes operated by the Company were exercised up to the value of theshare based payment charge in the income statement with the remainder being apermanent difference. Under IFRS, the full deferred tax asset is recognisedwith the value of the share based payment charge in the income statement withthe remainder being recognised through equity. The impact on the IFRS openingbalance sheet at 1 January 2006 is to reduce the deferred tax liability by£237,000 (31 December 2006 by £1,060,000) and increase retained earnings by£237,000 (31 December 2006 by £1,060,000). Intangible assets Under UK GAAP, goodwill was amortised over its useful economic life, notexceeding 20 years. As of 1 January 2006, under IFRS 3 "Business Combinations"goodwill is not amortised but tested annually for impairment. Accordingly, thegoodwill amortisation charge for the year ended 31 December 2006 of £122,000 hasbeen reversed. All goodwill has been tested for impairment at 1 January 2006 andat 31 December 2006 and no impairments have been identified. Financial Instruments Under UK GAAP, the fair value of cash flow hedges that hedge exposure tovariability in cash flows that is attributable to a particular risk associatedwith a recognised asset or liability was recognised on an accruals basis. As of1 January 2006, under IAS 39 "Financial Instruments: Recognition and Measurement" derivatives are carried at fair value and the portion of the gain or loss onthe hedging instrument that is determined to be an effective hedge is recognisedin equity, with any ineffective portion recognised in the consolidated incomestatement. When hedged cash flows result in the recognition of a non financialasset or liability, the associated gains or losses previously recognised inequity are included in the initial measurement of the asset or liability and forall other cash flow hedges, the gains or losses that are recognised in equityare transferred to the consolidated income statement in the same period in whichthe hedged cash flows affect the consolidated income statement. Accordingly, thefollowing have been recognised in the balance sheet: • a financial liability of £50,000 and a related deferred tax asset of £15,000 at 1 January 2006; and • a financial asset of £209,000 and a related deferred tax liability of £63,000 at 31 December 2006 Borrowing costs On transition to IFRS the Company capitalised interest on qualifying assets andhas restated prior year comparatives accordingly. Interest of £130,000 hastherefore been capitalised in the year ended 31 December 2006 and a depreciationcharge of £7,000 included in the profit and loss account (cumulative to 31December 2005: £258,000). A tax charge of £37,000 was included in the profitand loss account for the year ended 31 December 2006 (cumulative to 31 December2005: £77,000). Explanation of material adjustments to the cash flow statement for 2006 There are no material differences between the cash flow statements presentedunder IFRSs and the cash flow statements presented under UK GAAP other than thechanges in format between UK GAAP and IFRS. 17. Annual Report and Accounts The Annual Report and Accounts for the year ended 31 December 2007 will beposted to shareholders in March 2008. Additional copies will be available viathe company's website, www.goalsplc.co.uk, or from the Company Secretary at theCompany's registered office Orbital House, Peel Park, East Kilbride, G74 5PR. 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