Profits jump for racecourse firm
THE £167m takeover of racecourse operator Arena Leisure is expected to complete by the end of the month, the company said today.
Announcing its full year results, the company said subject to approval by the courts and the Office of Fair Trading, the deal should complete on March 30.
The offer has been submitted by Aldersgate Investments, the investment vehicle of the Reuben Brothers, and values the company at 44.25p per share.
Arena, which operates seven courses around the UK including Wolverhampton, Worcester and Doncaster, said the offer was fair and reasonable and was the best shareholders could expect in the current climate.
The company’s final results for 2011 show a pre-tax profit increase of 14.6% to £4.2m (2010: £3.6m). This was despite a £2.5m fall in revenue to £61.5m (2010: £64m).
The drop in revenue followed a £7.3m reduction in funding from the Levy, a large proportion of which impacted prize money payments in the year. However, this was offset by growth in admission and catering incomes, which accounted for a £2.9m increase. The first full year of operation of the Lingfield Marriott Hotel and Country Club added £1.8m, while further growth was achieved from media rights, sponsorship and non-racing activities.
“This good operating performance generated in total an additional £2.2m profit, which is a creditable result in difficult economic conditions, although unfortunately overshadowed by the £2.8m negative profit impact caused by reduced Levy income,” said the firm.
Earnings per share increased by 12.7% to 1.15p (2010: 1.02p), however, in accordance with the terms of the offer, no final dividend is proposed (2010: 0.38p per share).
Net borrowings reduced by £9.3m to £30.5m at year-end (December 31, 2010: £39.8m).
The year saw record total attendances at the group’s racecourses of 683,000, representing a 7.8% increase (2010: 634,000). Average attendance per fixture also increased by 7.8% to a record 1,941 (2010: 1,800) ahead of the market average growth of 1%. Hospitality attendance increased by 14% to 51,500 (2010: 45,200).
Combined admission and catering incomes increased by 14% to £23.4m (2010: £20.5m).
This year, the group has secured 345 fixtures (2011: 352 staged, 353 scheduled), while the estimated yield for the Levy in 2012/13 is £72.4m (2011/12: £71.4m).
The group has also concluded a five-year media rights agreement with SIS, which is expected to provide an estimated annual uplift in income of £10m
It is also contracted to provide catering services to two Olympic and Paralympic venues in 2012, with an estimated net profit contribution of £0.5m to £1m
Mark Elliott, chief executive of Arena Leisure, said: “This has been another year of progress in which the group has continued its track record of operational outperformance in spite of the difficult trading environment and ongoing Levy challenges. Arena continues to demonstrate industry-leading growth with record attendances at its racecourses and growth in both hospitality and catering revenue.
“The offer from Aldersgate Investments represents a fair and reasonable opportunity for shareholders to realise value that would not otherwise be available in the current market.”
