News blog
Stagecoach Theatre Arts
- BY: Andrew Hore |
- POSTED: 06/08/2009 |
Demand for student places at Stagecoach Theatre Arts is holding up well.
The children’s theatre and dance schools franchise owner is finding that parents are still willing to continue to pay for their children to attend schools although it will be difficult to increase individual fees at the moment. Cost cutting has enabled profits to improve from £707,000 to £726,000 in the year to May 2009, even though revenues dipped from £6.33m to £6.2m. A fall in initial franchise fees from new UK franchisees of around £200,000 was partly offset by higher recurring franchise fees. Network turnover increased from £28.5m to £29.4m. STA gets a 12.5% ongoing fee.
There are 617 franchised schools in the UK and the strategy is to increase this to 1,000. Some smaller competitors are finding trading tough. There were 35,082 UK students at the end of May 2009. Including international students the total is 38,927, which is 4% lower than the same time last year.
The international operations improved their performance with the US moving back into profit and other international markets making a slightly larger contribution. Germany is still loss-making.
The SportsCoach franchise is still small but it improved its profit. This is an area which could be expanded. Two new SportsCoach schools are opening in September. The online store has not grown as fast as hoped because of the tough economic conditions.
Daniel Stewart has been appointed joint broker and has started analyst coverage. Both Hardman and Daniel Stewart are predicting flat profits this year. They expect profits to start growing again in 2010-11. Daniel Stewart is most optimistic pencilling in a £900,000 profit.
At 54.5p a share, STA is valued at £5.41m and the shares are trading on just over 10 times earnings, falling to less than nine in 2011-12.
Net cash edged up to £987,000 even though the timing of tax payments meant that there was an unusually high cash outflow. Cash should improve to £1.3m by the end of May 2010.
The dividend remains an attraction. At 2.5p a share, this represents a yield of 4.6%. The dividend is likely to be maintained this year but the strong cash position may give scope for a small increase if the outlook is positive in a year’s time.
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