News blog
Stagecoach Theatre Arts
- BY: Andrew Hore |
- POSTED: 29/01/2009 |
Stagecoach Theatre Arts reported higher profits for the six months to November 2008.
Profits increased 28% to £333,000 in the six months to November 2008, helped by lower admin costs. The cost cutting offset the effect of revenues dipping from £3.09m to £3.05m.
Existing franchises generated higher revenues. Overall network franchise revenues improved from £12.6m to £13.3m. Parents try to continue to send their children to Stagecoach unless they are hit by severe financial problems, such as redundancy. This is likely to hit some franchises but others may still continue to grow.
The decline in group revenues was due to fewer new franchises and re-sales of existing franchises because of the new franchisees found it difficult to raise money from banks.
Net cash is £1.3m and the business remains cash generative. A maiden interim dividend of 0.5p a share was announced and a total dividend of 2.6p a share is forecast for this year.
Stagecoach is extending its market by offering courses to 16-18 year olds. These are part time courses over two years. They involve classes on Saturday mornings for 32 weeks of each year and six weeks of residential training across the two year period. The resulting qualification is equivalent to an A level.
The total cost of the course is £9,500 and is payable in two instalments at the start of each year. This enables Stagecoach to continue to generate revenues from students who would have been too old for the normal classes.
Independent research firm Hardman & Co’s full year profit forecast is being maintained at £720,000, against £710,000 the previous year. This suggests a small decline in profits in the second half. It is appropriate to be cautious about the short-term outlook for fees from new franchisees.
Hardman has cut its 2009-10 profit forecast from £900,000 to £730,000 to reflect its caution.
Shares in the company rose 1p to 46.5p each, which values Stagecoach at £4.6m.
The shares are trading on nine times 2008-09 prospective earnings and have a forecast yield of 5.6%.
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