GOAL.L Regulatory News (GOAL)

3 Sep 2007 07:01

Goals Soccer Centres PLC03 September 2007 Goals Soccer Centres plc Interim Results for the 6 months ended 30 June 2007 Goals nets another great result! 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 23 centres and has an established and well progressed pipeline of sites to continue the rollout of its proven concept. Key Points Financial Prime locations, quality facilities and outstanding customer service hasresulted in another record result underpinning our premier market position forthe long-term. • Sales up 31% to £9.7m (2006: £7.4m) • Operating profit up 39% to £3.7m (2006: £2.7m) • Profit before tax up 47% to £3.1m (2006: £2.1m) • Basic earnings per share up 58% to 5.2p (2006: 3.3p) • Strong financial performance driven by like for like sales growth of 10% and new openings • Ordinary dividend of 0.5p per share (2006: 0.3p), an increase of 67% on the previous year's interim dividend Rollout Small-sided football continues to grow in both stature and popularity. The Boardbelieves that Goals "next generation" concept is well placed to capitalise onthis trend. • 2 new centres opened during the current year at Birmingham Perry Barr and Hayes, West London • 2 further centres under construction at Chingford, North London and Sydenham, South London and on schedule to open prior to the end of the current financial year • an additional centre is expected to be announced shortly • pipeline continues to strengthen and we are confident we will open a further 5 centres during 2008 and increase the rate of openings thereafter Keith Rogers, Managing Director of Goals said: "This is an outstanding performance, demonstrating the continued demand in themarket for our 'next generation' concept. There remains much opportunity andpotential to continue to grow our business and to deliver growing returns forshareholders. Significant progress has been made with our rollout. Two new centres were openedduring the period, two are under construction and our pipeline continues tostrengthen. The Company continues to trade strongly in the second half of the financial year" 3 September 2007 Enquiries: Goals Soccer Centres plc Today: 020 7457 2020 Thereafter: 01355 234 800Keith Rogers, Managing DirectorBill Gow, Finance Director KBC Peel Hunt Tel: 020 7418 8900Matt Goode College Hill Tel: 020 7457 2020Matthew Smallwood Chairman's statement I am pleased to report an excellent first half of 2007 which has seen GoalsSoccer Centres' further strengthen its premier position in the market anddeliver another record set of results. Sales increased by 31% to £9.7m (June 2006: £7.4m). We believe that Goals iswell placed to increase revenues not only from developing its pipeline of newsites but also from its existing portfolio of centres. Our staff and systems arefocused on maximising utilisation and I am pleased to report that like-for-likesales increased by approximately 10% during the period. Operating profit increased by 39% to £3.7m (June 2006: £2.7m). Our operatingmargin increased to 38% (June 2006: 36%) due to tight cost control and our highoperational gearing arising from having a relatively fixed central cost base. This strong performance is further evidence of the Company's proven "nextgeneration" concept and the high level of pitch utilisation achieved throughinnovative marketing and advanced management systems. The Directors believe thatGoals is well placed to increase revenues not only from developing its pipelineof new sites but also from its existing centres. Our focus on customer retentionand maximising pitch utilisation continues to reap rewards. Profit before income tax increased by 47% to £3.1m (June 2006: £2.1m). Basicearnings per share have increased by 58% to 5.2p (2006: 3.3p). The tax charge for the period is an effective rate of 30% (year ended December2006 34%). The effective rate has reduced reflecting the impact of the change inthe corporation tax rate on the deferred tax balance and a reduction in theimpact of ineligible expenses Cash generated from operations increased by 35% to £4.9m (June 2006: £3.6m). Weinvested £4.7m in capital expenditure during the period, £4m of which relates toinvestment in new centres. Net debt (see note 12) at 30 June 2007 was £24.5m. This level of debt represents112% of shareholders' funds and 51% of tangible fixed assets. EBITDA (Earningsbefore interest, tax, depreciation and amortisation) interest cover for theperiod was 6.9 times (30 June 2006: 5.8 times). IFRS This is the first Goals Soccer Centres' 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. The value of Goodwill was previously amortised over a period of 20 years. Thevalue of Goodwill has been reviewed at 30 June 2006, 31 December 2006 and 30June 2007 and as there has been no indication of impairment, no impairmentcharge has been recognised in the income statement for the period from 1 January2006 to 30 June 2007. The Company uses interest rate swaps to hedge cash flows in line the Company'streasury policy. The portion of the gain or loss on the hedging instrument thatis determined to be an effective hedge as defined by IAS 39 "FinancialInstrument: Recognition and Management" is recognised in equity. At 30 June 2007£0.4m (30 June 2006: £0.1m) was recognised in equity. A deferred tax asset has been recognised on the allowable tax deduction that theCompany would receive if the share options within the various share optionschemes operated by the Company were exercised. At 30 June 2007 the deferredtax asset in relation to share options was £1.7m. 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 in popularity amongst all age groups. Recent surveys by TheFootball Association confirm that small-sided football has surpassed 11-a-sideto become the most commonly played form of the game in England. 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 as Goalshas become the first operator in the industry to be awarded the Small SidedFootball Award for all its venues in England; a unique market position. The Board believes the unique Goals concept positions the Company well tocapitalise on this popularity and exploit the continuing major commercialopportunity to satisfy significant potential and latent demand in the market. 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 focused and straightforward: • 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 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 period. This exciting new event, heralded as The FA Cup of five-a-sidefootball - proved a great success, with almost 1800 teams entering from acrossEngland. The finals were played at Wembley Stadium. Our brand partnership with UMBRO, the Football Association's "Official Partnerfor Small Sided Football" is proving a fruitful relationship for both partners.This has led to many joint initiatives aimed at increasing both participation ingrassroots football and awareness of the Goals brand nationally. Thispartnership is in line with Goals' strategy of working with brands enjoying astrong association with football. During the period we signed our second Brand Partnership with FourFourTwo, theUK's largest circulation football magazine with over 580,000 readers monthly.These partnerships complement our sponsorship agreement with Powerade, 'TheOfficial Sports Drink' of The 2008 UEFA European Championship. New Signings 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. Since the start of the year we have opened a centre at Birmingham Perry Barr andin Hayes, West London. Two further centres are under construction in London(Sydenham and Chingford) and will open prior to the end of the current financialyear. An additional centre is expected to be announced shortly. Our site pipeline continues to strengthen and we are confident we will open aminimum of five centres during 2008 and increase the rate of openingsthereafter. We have opened 12 new centres since the Company listed on AIM in December 2004bringing the current total operating to 23 (an increase of 109%). Working 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. The delivery of a quality service and experience to our customers is down to theprofessionalism and dedication of our staff. Our future staff requirements areprovided through ongoing training and promotion from within. I would again liketo thank all Goals staff for their major contribution to the ongoing success ofGoals. Dividend 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. An interim ordinary dividend of 0.5p per sharewill be paid on 26 October 2007 to shareholders on the register on 25 September2007. The Board intends the Company to pay dividends each year growing at leastas fast as earnings. Outlook The Company has continued to trade strongly since the period end. We believe inour business model and product, and look forward to the remainder of 2007 andbeyond with confidence and enthusiasm. Sir Rodney WalkerChairman Goals Soccer Centres PLCUnaudited income statementFor the six months ended 30 June 2007 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2007 2006 2006 Note £000 £000 £000 Revenue 9,737 7,452 15,952 Cost of sales (1,266) (976) (2,098) Gross profit 8,471 6,476 13,854 Administrative expenses (4,727) (3,791) (7,763)Operating profit 3,744 2,685 6,091 Financial expense (639) (571) (1,282) Profit before income tax 3,105 2,114 4,809 Income Tax 3 (930) (705) (1,647) Profit for the period 2,175 1,409 3,162attributable to equityholders of the parent Earnings Per ShareBasic 5 5.2p 3.3p 7.6p Diluted 5 5.0p 3.2p 7.3p Goals Soccer Centres PLCUnaudited Balance sheetat 30 June 2007 30 June 2007 30 June 2006 31 December 2006Assets Note £000 £000 £000Non-current assetsProperty, plant and equipment 6 47,480 37,986 44,317Intangible assets 7 1,848 1,848 1,848Deferred tax asset 8 358 - -Other financial assets 9 356 106 209 Total non current assets 50,042 39,940 46,374 Current assetsStocks 182 157 240Trade and other receivables 446 497 650Cash and cash equivalents 612 438 333Total current assets 1,240 1,092 1,223 Total assets 51,282 41,032 47,597 Current liabilitiesBank overdraft (494) (911) (541)Other interest-bearing loans andborrowings (855) - (1,145)Trade and other payables 10 (1,807) (1,317) (2,547)Tax payable (2,120) (1,072) (1,077)Total current liabilities (5,276) (3,300) (5,310) Non-current liabilitiesOther interest-bearing loans andborrowings (23,832) (20,333) (22,521)Tax payable (307) (371) (307)Deferred tax liabilities 8 - (312) (420) Total non current liabilities (24,139) (21,016) (23,248) Total liabilities (29,415) (24,316) (28,558) Net assets 21,867 16,716 19,039 EquityShare capital 104 104 104Share premium 12,679 12,679 12,679Other reserve 356 106 209Retained earnings 8,728 3,827 6,047 Total equity attributable to equity 21,867 16,716 19,039holders of the parent Cash Flow StatementFor the six months ended 30 June 2007 Note 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000Cash flows from operating activities Profit for the period 2,175 1,409 3,162Adjustments forDepreciation 662 609 1,103Financing costs 639 571 1,282Equity settled share-based payment expense 100 92 203Taxation 930 705 1,647 4,506 3,386 7,397 Decrease / (Increase) in trade and other receivables 204 111 (345)Decrease / (Increase) in stock 58 (36) (119)(Decrease) / increase in trade and other payables 137 167 395 4,905 3,628 7,328Income tax paid - - (349) Net cash from operating activities 4,905 3,628 6,979 Cash flows from investing activitiesAcquisition of property, plant and equipment (4,705) (8,130) (13,722) Net cash used in investing activities (4,705) (8,130) (13,722) Cash flows from financing activitiesLoans received 1,324 5,030 8,430Repayment of borrowings (290) - (60)Interest paid (636) (569) (1,278)Dividends paid (272) (210) (335) Net cash from financing activities 126 4,251 6,757 Net increase / (decrease) in cash and cash equivalents 326 (251) 14Cash and cash equivalents at start of period (208) (222) (222) Cash and cash equivalents at period end 12 118 (473) (208) Statement of Recognised Income and Expensefor the six months ended 30 June 2007 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Effective portion of changes in fair value of cash flow hedges 147 156 259Net income recognised directly in equity 147 156 259 Profit for the year 2,175 1,409 3,162 Total recognised income and expense for the periodattributable to equity holders of the parent 2,322 1,565 3,421 Notes to the Unaudited Interim Report 1. Significant accounting policies Goals Soccer Centres PLC (the "Company") is a company domiciled in the UnitedKingdom. Statement of compliance The directors of the company have decided that, as permitted under the CompaniesAct 1985 and the AIM Rules that the next annual financial statements of thecompany, for the year ending 31 December 2007, will be prepared in accordancewith International Financial Reporting Standards (IFRSs) as adopted by the EU("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 30 June 2007that are effective (or available for early adoption) at 31 December 2007, theGroup's first annual reporting date at which it has decided to use adoptedIFRSs. Based on these adopted IFRSs, the directors have applied the accountingpolicies, as set out below, which they expect to apply when the first annualIFRS financial statements are prepared for the year ending 31 December 2007. Inparticular, the directors have assumed that the Amendment to IAS 23 "Borrowingcosts" issued by the International Accounting Standards Board will be adopted bythe EU such that it will be available for use in the annual IFRS financialstatements for the year ending 31 December 2007. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ended 31 December 2007are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 December 2007. The interim report for the six months ended 30 June 2007 was approved by theboard of directors on the 31 August 2007. Comparative figures The comparative figures for the year ended 31 December 2006 are not theCompany's statutory accounts for that financial year. Those statutory accounts,which were prepared under UK Generally Accepted Accounting Practices ("UK GAAP"or "previous GAAP"), have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters which the auditorsdrew attention to by way of emphasis without qualifying their report and (iii)did not contain a statement under section 237(2) or (3) of the Companies Act1985. Impact of IFRS As required by IFRS 1, an explanation of how the transition to IFRS has affectedthe reported financial position, financial performance and cash flows of theGroup is provided in note 13. This note includes reconciliations of equity andprofit or loss for comparative periods reported under UK GAAP to those reportedfor those periods under IFRS. Basis of preparation The interim statements are prepared on the historical cost basis except forderivative financial instruments which are stated at their fair value. Thepreparation of the interim statements requires the directors to make judgements,estimates and assumptions that affect the application of policies and reportedamounts of assets and liabilities, income and expenses. The estimates andassociated assumptions are based on historical experience and various otherfactors that are believed to be reasonable under the circumstances, the resultsof which form the basis of making the judgements about carrying values of assetsand liabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates. This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRSs in issue that either are adopted by the EU and effective(or available for early adoption) at 30 June 2007 or are expected to be adoptedand effective (or available for early adoption) at 31 December 2007, the Group'sfirst annual reporting date at which it is required to use accounting standardsadopted by the EU. Based on these recognition and measurement requirements thedirectors have made assumptions about the accounting policies expected to beapplied when the first annual financial statements are prepared in accordancewith accounting standards adopted by the EU for the year ending 31 December2007. These are set out below. The accounting policies set out below have been applied consistently to allperiods presented in these interim statements. Revenue Revenue represents the value of goods and services supplied to customers (net ofValue Added Tax). The Company's revenue comprises revenues from customers'utilising the Company's next generation football facilities and secondaryrevenue associated with this utilisation. Revenue from utilisation of the football facilities includes: revenue fromleagues operated by the Company; revenue from customers who use the facilitiesto play on a non league basis; Corporate Events; Children's Birthday Parties;and Children's Coaching. Revenue is recognised for use of the footballfacilities when each game is complete. Secondary revenue includes: soft drink vending; confectionery vending; barrevenue and revenue from sales of football equipment. Revenue is recognised forsecondary sales at the time the goods change hands. Taxation The tax expense represents the sum of the current taxes payable and deferredtax. The current tax payable is based on taxable profit for the year. Taxable profitdiffers from net profit as reported in the income statement because it excludesitems of income or expense that are taxable or deductible in other years and itfurther excludes items that are never taxable or deductible. The Company'sliability for current tax is calculated using tax rates that have been enactedor substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. The carrying amount of deferred tax assets is reviewed at eachbalance sheet date and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the assetto be recovered. Deferred tax is calculated at the tax rates that are expectedto apply in the period when the liability is settled or the asset is realised.Deferred tax is charged or credited in the income statement, except when itrelates to items charged or credited directly to equity, in which case thedeferred tax is also dealt with in equity. Goodwill Goodwill on acquisitions represents the excess of the cost of acquisition overthe Company's interest in the fair value of the identifiable assets andliabilities and contingent liabilities at the date of acquisition. Goodwill isstated at cost less any accumulated impairment losses. The value of Goodwill is reviewed at each balance sheet date to determinewhether there is an indication of impairment. An impairment is recognisedwhenever the carrying amount of the asset exceeds its recoverable amount. Therecoverable amount is the greater of the net selling price or the value in use.In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and risks specific to the cash-generatingunit. Any impairment is recognised immediately the income statement and is notsubsequently reversed. Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulateddepreciation and any accumulated impairment losses. Depreciation is charged tothe income statement on a straight-line basis over the estimated useful lives ofeach part of an item of property, plant and equipment. The estimated usefullives are as follows: Land and buildings (long leasehold) - 50 years Fixtures and fittings: - pitches - 7 years - office furnishings - 10 years - fixtures and fittings - 10 years - computer equipment - 4 years - plant and machinery - 4 years Assets under construction are transferred to the relevant asset category whenthey become operational and are depreciated from that date. Inventories Inventories are stated at the lower of cost and net realisable value. Cost isdetermined on a first-in-first-out basis. Net realisable value is the amountthat can be realised from the sale of inventory in the normal course of businessafter allowing for the costs of realisation. Trade and other receivables Trade and other receivables are initially recognised at their fair value andthen stated at amortised cost. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with anoriginal maturity of three months or less. Bank overdrafts that are repayable ondemand and form an integral part of the Company's cash management are includedas a component of cash and cash equivalents for the purpose of the statement ofcash flows. Trade and other payables Trade and other payables are initially recognised at fair value and then statedat amortised cost Provisions A provision is recognised in the balance sheet when the Company has a presentlegal or constructive obligation as a result of a past event, and it is probablethat an outflow of economic benefits will be required to settle the obligation. Finance costs Interest is recognised in income or expense using the effective interest methodexcept that from 1 January 2007, the designated date, borrowing costs directlyattributable to the acquisition or construction of qualifying assets arecapitalised during the period of construction The construction of new centresare treated as qualifying assets as they necessarily take a substantial periodof time to prepare for intended use. The amount of finance costs capitalised isdetermined by applying the interest rate applicable to appropriate borrowings tothe accumulated expenditure on those assets for that period. Pensions Contributions to stakeholders or other personal pension plans are expensed asincurred. Leasing Operating lease rentals are charged to the profit and loss account on a straightline basis over the period of the lease. Derivative financial instruments Derivative financial instruments are measured initially at fair value andcomprise interest rate swaps. These derivative financial instruments aredesignated as cash flow hedges in line with the Company's treasury policy. The portion of the gain or loss on the hedging instrument that is determined tobe an effective hedge, as defined by IAS 39 "Financial Instruments: Recognitionand Measurement", is recognised in equity, with any ineffective portionrecognised in the consolidated income statement. When hedged cash flows resultin the recognition of a non financial asset or liability, the associated gainsor losses previously recognised in equity are included in the initialmeasurement of the asset or liability. For all other cash flow hedges, the gainsor losses that are recognised in equity are transferred to the income statementin the same period in which the hedged cash flows affect the income statement. Any gains or losses arising from changes in fair value of derivative financialinstruments not designated as hedges are recognised in the income statement. Share-based payments The share option schemes allow employees to acquire shares of the Company. Thefair value of options granted is recognised as an employee expense with acorresponding increase in equity. The fair value is measured at grant date andspread over the period during which the employees become unconditionallyentitled to the options. The fair value of the options granted is measuredusing an option pricing model, taking into account the terms and conditions uponwhich the options were granted. The amount recognised as an expense is adjustedto reflect the actual number of share options that vest except where forfeitureis only due to share prices not achieving the threshold for vesting. Dividends on shares presented within shareholders' fundsDividends unpaid at the balance sheet date are only recognised as a liability atthat date to the extent that they are appropriately authorised and are no longerat the discretion of the Company. Unpaid dividends that do not meet thesecriteria are disclosed in the notes to the financial statements. 2. Segmental reporting All turnover and operating profit is derived from the operation of outdoorsoccer centres within the United Kingdom. 3. Tax Corporation tax for the interim period is charged at 30% (June 2006: 33%),representing the estimated effective tax rate for the full financial year.Deferred tax is recognised at 28% (June 2006 and December 2006: 30%) followingthe change in the UK corporation tax rate from April 2008 which wassubstantively enacted by 30 June 2007. The impact of the change in rate is acredit of £100,000 to the income statement and a debit of £70,000 to equity inrespect of share based payments. 4. Dividends 6 months ended 6 months ended 30 Year ended 30 June June 31 December 2007 2006 2006 £000 £000 £000 Dividends paid - 2005 final - 209 209 - 2006 interim - 126 - 2006 final 272 - - 272 209 335 The proposed interim dividend of 0.5p (2006: 0.3p) per share will be paid on 26October 2007 to shareholders on the register at close of business on 25September 2007. The interim dividend was approved by the Board on 31 August 2007and has not been included as a liability as at 30 June 2007. 5. Earnings per share 6 months ended 6 months ended Year ended 30 June 2007 30 June 2006 31 December 2006 Profit for the financial period (£'000) 2,175 1,409 3,162 _________ _________ _________ Weighted average number of shares 41,883,788 41,883,788 41,883,788Dilutive share options 1,946,404 1,536,407 1,619,897 _________ _________ _________ 43,830,192 43,420,195 43,503,685 Basic earnings per share 5.2p 3.3p 7.6pDiluted earnings per share 5.0p 3.2p 7.3p Diluted earnings per share is calculated using the profit for the financialperiod divided by the weighted average number of shares in issue for the periodended 30 June 2007 plus all outstanding relevant share options at that date. 6. Property, plant and equipment Assets Land and Fixtures in course of buildings and fittings construction Total £000 £000 £000 £000CostAt beginning of period 38,921 6,577 2,586 48,084Additions 998 418 2,409 3,825Disposals / transfers 2,143 (355) (1,942) (154) At end of period 42,062 6,640 3,053 51,755 DepreciationAt beginning of period 2,043 1,724 - 3,767Charge for period 421 241 - 662Disposals / transfers - (154) - (154) At end of period 2,464 1,811 - 4,275 Net book valueAt 30 June 2007 39,598 4,829 3,053 47,480 At 31 December 2006 36,878 4,853 2,586 44,317 From 1 January 2007 the Company has adopted the amendment to IAS 23 "Borrowingcosts" and capitalised borrowing costs in relation to the construction of newcentres. During the period to 30 June 2007, £0.1m of interest was capitalised. 7. Intangible assets Goodwill £000Deemed costAt beginning and end of each period 1,848 8. Deferred tax asset / (liability) Deferred tax assets and liabilities are attributable to the following: 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Property, plant and equipment (1,380) (891) (1,480)Share based payments 1,738 579 1,060 Net deferred tax assets/(liabilities) 358 (312) (420) 9. Other financial assets 30 June 30 June 31 December 2007 2006 2006 Fair Value Fair Value Fair Value £000 £000 £000 Interest rate derivatives - asset 356 106 209 The Company has entered into a £10m interest rate swap at 4.75% with an expirydate of 30 October 2009. 10. Trade and other payables 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Trade payables 662 563 768Other taxes and social security 454 143 218Other creditors 29 - 40Accruals and deferred income 662 611 1,521 1,807 1,317 2,547 11. Reconciliation of equity 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Opening total equity 19,039 14,927 14,927Total recognised income and expense for 2,322 1,565 3,421the periodReversal of share based payments charge 100 91 203Deferred tax on share options 678 342 823Dividends (272) (209) (335) Closing total equity 21,867 16,716 19,039 12. Movement in net debt Net debt is defined as cash and cash equivalents less interest bearing loans andborrowings. At beginning Cashflow Non cash At end of of period movement period £000 £000 £000 £000 Cash at bank and in hand 333 279 - 612Overdraft (541) 47 - (494) Cash and cash equivalents (208) 326 - 118 Revolving credit facility (22,521) (1,324) 13 (23,832)Vendor loan (1,145) 290 - (855) (23,874) (708) 13 (24,569) 13. 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 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. In addition to the above reconciliations, thereconciliation of equity at 30 June 2006 and the reconciliation of profit forthe six months ended 30 June 2006 have been included below to enable acomparison of the 2006 interim figures with the corresponding period of theprevious financial year. 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 38 IAS 39 Effect of Restated reported Deferred Intangible Financial Transition under IFRS under UK Tax Assets Instruments to IFRS GAAP * £000 £000 £000 £000 £000 £000Non-current assetsProperty, plant and equipment 31,221 31,221Intangible assets 1,848 1,848 33,069 33,069 Current assetsStocks 121 121Trade and other receivables 608 608Cash and cash equivalents 216 216 945 945 Total assets 34,014 34,014 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 (15,308) (15,308)borrowingsTax payable (372) (372)Deferred tax liabilities (891) 237 237 (654)Other financial liabilities (50) (50) (50) (16,571) 237 (50) 187 (16,384) Total liabilities (19,274) 237 (50) 187 (19,087) Net assets 14,740 237 (50) 187 14,927 EquityShare capital 104 104Share premium 12,679 12,679Other reserve (50) (50) (50)Retained earnings 1,957 237 237 2,194 Total equity 14,740 237 (50) 187 14,927 * In IFRS Format Reconciliation of equity at 30 June 2006 Previously IAS 12 IAS 38 IAS 39 Effect of Restated reported Deferred Intangible Financial Transition under under UK Tax Assets Instruments to IFRS IFRS GAAP* £000 £000 £000 £000 £000 £000Non-current assetsProperty, plant and equipment 37,986 37,986Intangible assets 1,787 61 61 1,848Other financial assets 106 106 106 39,773 61 106 167 39,940 Current assetsStocks 157 157Trade and other receivables 497 497Cash and cash equivalents 438 438 1,092 1,092 Total assets 40,865 61 106 167 41,032 Current liabilitiesBank overdraft (911) (911)Trade and other payables (1,317) (1,317)Tax payable (1,072) (1,072) (3,300) (3,300) Non-current liabilitiesOther interest-bearing loans and (20,333) (20,333)borrowingsTax payable (371) (371)Deferred tax liabilities (891) 579 579 (312) (21,595) 579 579 (21,016) Total liabilities (24,895) 579 579 (24,316) Net assets 15,970 579 61 106 746 16,716 EquityShare capital 104 104Share premium 12,679 12,679Other reserve 106 106 106Retained earnings 3,187 579 61 640 3,827 Total equity attributable to 15,970 579 61 106 746 16,716equity holders of the parent * In IFRS Format Reconciliation of equity at 31 December 2006 (date of last UK GAAP financialstatements) Previously IAS 12 IAS 38 IAS 39 Effect of Restated reported Deferred Intangible Financial Transition under IFRS under UK Tax Assets Instruments to IFRS GAAP* £000 £000 £000 £000 £000 £000Non-current assetsProperty, plant and equipment 44,317 44,317Intangible assets 1,726 122 122 1,848Other financial assets 209 209 209 46,043 122 209 331 46,374 Current assetsStocks 240 240Trade and other receivables 650 650Cash and cash equivalents 333 333 1,223 1,223 Total assets 47,266 122 209 331 47,597 Current liabilitiesBank overdraft (541) (541)Other interest-bearing loans and (1,145) (1,145)borrowingsTrade and other payables (2,547) (2,547)Tax payable (1,077) (1,077) (5,310) (5,310) Non-current liabilitiesOther interest-bearing loans and (22,521) (22,521)borrowingsTax payable (307) (307)Deferred tax liabilities (1,480) 1,060 1,060 (420) (24,308) 1,060 1,060 (23,248) Total liabilities (29,618) 1,060 1,060 (28,558) Net assets 17,648 1,060 122 209 1,391 19,039 EquityShare capital 104 104Share premium 12,679 12,679Other reserve - 209 209 209Retained earnings 4,865 1,060 122 1,182 6,047 Total equity attributable to 17,648 1,060 122 209 1,391 19,039equity holders of the parent * In IFRS Format Reconciliation of profit for the six months ended 30 June 2006 Previously IAS 38 Restated reported Intangible under IFRS under UK Assets GAAP £000 £000 £000 Revenue 7,452 7,452 Cost of sales (976) (976) Gross profit 6,476 6,476 Administrative expenses (3,852) 61 (3,791) Operating profit before net financing 2,624 61 2,685costs Net financing costs (571) (571) Profit before tax 2,053 61 2,114 Taxation (705) (705) Profit after Tax 1,348 61 1,409 Earnings Per ShareBasic 3.2p 0.1p 3.3pDiluted 3.1p 0.1p 3.2p Reconciliation of profit for the year ended 31 December 2006 Previously IAS 38 Restated reported Intangible under IFRS under UK Assets GAAP £000 £000 £000 Revenue 15,952 15,952Cost of sales (2,098) (2,098) Gross profit 13,854 13,854 Administrative expenses (7,885) 122 (7,763) Operating profit before net financing costs 5,969 122 6,091 Net financing costs (1,282) (1,282) Profit before tax 4,687 122 4,809 Taxation (1,647) (1,647) Profit after Tax 3,040 122 3,162 Earnings Per Share Basic 7.3p 0.3p 7.6pDiluted 7.0p 0.3p 7.3p 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). As a result a deferred taxasset is recognised in respect of the Company's liabilities under share optionschemes. The impact on the IFRS opening balance sheet at 1 January 2006 is toreduce the deferred tax liability by £237,000 (June 2006 by £579,000, December2006 by £1,060,000) and increase retained earnings by £237,000 (30 June 2006 by£579,000 and 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 buttested annually for impairment. Accordingly, the goodwill amortisation charge for the year ended 31December 2006 of £122,000 (June 2006: £61,000) has been reversed. All goodwillhas been tested for impairment at 1 January 2006 and at 31 December 2006 and noimpairments 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 of 1 January 2006, under IAS 39 "Financial Instruments: Recognition andMeasurement" derivatives are carried at fair value and the portion of the gainor loss on the hedging instrument that is determined to be an effective hedge isrecognised in equity, with any ineffective portion recognised in theconsolidated income statement. When hedged cash flows result in the recognitionof a non financial asset or liability, the associated gains or losses previouslyrecognised in equity are included in the initial measurement of the asset orliability and for all other cash flow hedges, the gains or losses that arerecognised in equity are transferred to the consolidated income statement in thesame period in which the hedged cash flows affect the consolidated incomestatement. Accordingly, the following have been recognised in the balance sheet: • a financial liability of £50,000 at 1 January 2006; • a financial asset of £106,000 at 30 June 2006; and • a financial asset of £209,000 at 31 December 2006. 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 presentation between UK GAAP and IFRS. 14. Interim report A copy of the interim report will be posted to shareholders in October 2007.Additional copies will be available via the Company's website,www.goalsplc.co.uk, or from the Company Secretary at the Company's registeredoffice Orbital House, Peel Park, East Kilbride, G74 5PR. KPMG Audit Plc 191 West George Street Glasgow G2 2LJ United Kingdom Independent review report to Goals Soccer Centres plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the income statement, balancesheet, cashflow statement, statement of recognised income and expense and therelated notes. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMRules which require that the interim report must be presented and prepared in aform consistent with that which will be adopted in the company's annual accountshaving regard to the accounting standards applicable to such annual accounts. As disclosed in note 1 to the financial information, the next annual financialstatements of the group will be prepared in accordance with IFRSs as adopted bythe European Union. The accounting policies that have been adopted in preparing the financialinformation are consistent with those that the directors currently intend to usein the next annual financial statements. There is, however, a possibility thatthe directors may determine that some changes to these policies are necessarywhen preparing the full annual financial statements for the first time inaccordance with IFRSs as adopted by the European Union. This is because, asdisclosed in note 1, the directors have anticipated that certain standards,which have yet to be formally adopted by the EU, will be so adopted in time tobe applicable to the next annual financial statements. Review work performed We conducted our review having regard to the guidance 'contained in Bulletin1999/4: Review of interim financial information issued by the Auditing PracticesBoard for use in the UK. A review consists principally of making enquiries ofmanagement and applying analytical procedures to the financial information andunderlying financial data and based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (UK and Ireland) and therefore provides a lower level of assurance thanan audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. KPMG Audit PlcChartered Accountants This information is provided by RNS The company news service from the London Stock Exchange