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Small Cap Focus: Stagecoach Theatre Arts' profitable role By Andrew Hore Date: Thursday 14 Aug 2008 Children’s theatre and dance schools franchise owner Stagecoach Theatre Arts nearly doubled its profits last year and demand from children and parents for its theatre schools remains strong. Stagecoach was founded by joint managing director Stephanie Manuel 20 years ago and joined Aim in 2001. It had grown strongly but like many growth companies it lost its focus when it tried to expand too quickly. The group fell into loss but it is back to making profits again. International expansion didn’t go as planned and management took its eye off the ball in the UK. The UK performance improved significantly last year as cost savings came through, and the US and German business are heading towards breakeven. Stagecoach is a straightforward franchise business. Anyone chosen as a franchisee has to pay an initial fee of £16,500 + VAT. In all, start-up costs are estimated at £25,000. The continuing franchise fee is 12.5% of revenues and on top of that is a fee of 2.5% of revenues that goes towards advertising and marketing. Stagecoach has 621 part-time schools in the UK as well as 698 Early Stages classes for younger children. This business is still growing and there is scope for more franchisees. Including the international businesses Stagecoach has around 40,600 students. An agency business helps the students get parts in TV programmes, theatre and films including Dr Who and The Golden Compass. The agency loses money but this effectively a marketing cost for the group. According to Stagecoach, a franchisee can make a profit of £17,000 on turnover of £48,000 for a three hour weekly school plus one Early Stages class. Franchisees run an average of 2.3 schools each. Group pre-tax profits increased from £375,000 to £707,000 in the year to May 2008. This was around 30% higher than forecast although management had already said in June that it would beat the forecast - but not said exactly how well it had done. Group revenues were flat at £6.33m but the underlying franchise fees grew by £300,000. The revenue of the whole network of franchises increased from £26.5m to £28.5m. Net cash is £916,000 and a dividend of 2p a share was announced. Restructuring of the business helped management to cut costs. The head office was merged onto one site and the number of direct employees of the company has fallen. The US and German businesses are managed from the UK. An improved management information system has also helped keep down costs and enables Stagecoach to know whenever a franchisee signs up a new student. The past international experience means that the management is better placed to know how to expand overseas. It already has licences or direct franchises in Australia, Ireland, Spain and Greece among others. Stagecoach will be more cautious and won’t be setting up its own cost base in new countries. Stagecoach has developed other franchise operations but they remain small compared with the core Stagecoach business. SportsCoach is a sporting version of the Stagecoach franchise which appeals to children not interested in the theatre. Longer-term, management has high hopes for its new retail website, www.stagecoachshop.co.uk. Stagecoach doesn’t take any of the stock onto its own books so this reduces the financial worries about the venture. The business has a ready-made audience of children and their families. The website sells clothing, toys and plays. It hasn’t made a significant contribution yet. Further growth in profits will come from expanding the UK business and improving the performance of the international operations. This will come from adding new countries and stemming the losses in the US and Germany. The US lost £78,000 last year but could breakeven this year. Germany lost £105,000 but it may take longer to bring that business into profit. Hardman & Co has maintained its 2008-09 profit forecast at £720,000, rising to £900,000 next year. This should leave scope for an upgrade of the current year forecast at the time of the interims, particularly if the losses in Germany and the US are reduced. At 68.5p, the shares are trading on 13 times prospective 2008-09 earnings and yield around 3%. It is right to be cautious about the UK because of the current economic conditions but historically pupil numbers have held up well in tougher times. Many of the franchisees have waiting lists any way. The long-term outlook for Stagecoach is positive. View Online at Digital Look |
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| Launch of Stagecoach Shop. 07 November 2007 "Stagecoach launches www.stagecoachshop.co.uk, a new on-line shop offering children's toys, clothing and literature and other merchandise to Stagecoach students and the general public." Stagecoach Theatre Arts plc, the AIM-listed company which is the UK's largest franchise operator of a network of part-time performing arts schools for children aged between 4 and 16, announces the launch of Stagecoach Shop (www.stagecoachshop.co.uk), a new web-based retail platform offering children's toys, clothing and literature/plays and other merchandise to Stagecoach's 40,000 students and to the general public. Stagecoach Shop now offers four new product ranges, namely dolls/puppets, clothes, make-up and books/plays to its captive audience of students and their parents, as well as the general public, as the Company looks to develop new revenue streams from merchandising. The Company has seen an increasing trend for potential students to make on-line applications to join Stagecoach schools and a marked increase in the number of hits on the main Stagecoach website (which is linked to the Stagecoach Shop), which currently sees volumes of over 5,000 hits per week. Stagecoach Shop is a joint venture with a current supplier of merchandise to the Stagecoach students and provides a complementary service to the stage schools at a minimum level of capital investment. This model has been successfully developed by other franchisors in the US, in particular. David Sprigg, Joint Managing Director, commented: "I am very pleased to see Stagecoach launching its own on-line shop and I look forward to its future successful growth and development. As our student body and more importantly, their parents, increasingly shop on line, this new retail offering is a natural extension to our business and I believe it offers an exciting potential new revenue stream." For further information visit www.stagecoach.co.uk or enquiries to: Stagecoach Theatre Arts: Tel: 07775 643 939 Richard Dawson, Finance Director and Investor Relations Smith & Williamson Corporate Finance Limited: Tel: 020 7131 4000 Robert Kidson Siobhan Sergeant Siobhan Sergeant Public Relations, Adventis Financial PR Tel: 020 7034 4758 / 07879 458 364 Tarquin Edwards View Online at Digital Look |
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Stagecoach signs up to Stage and CDET’s drive to improve school standards By Nuala Calvi Published Tuesday 6 March 2007 at 12:45 Stagecoach Theatre Arts, the UK’s biggest part-time stage school operator, is to sign up to the National Council for Drama Education and Training and The Stage’s drive to improve standards at musical theatre and dance schools across the country. Directors of the company have confirmed that all 14 of the institutions they run directly will apply for Recognised School Status under the scheme, certifying that they meet basic teaching and health and safety standards, while the remaining 591 outlets in the franchise are being advised to follow suit.Stagecoach Theatre Arts founder Stephanie Manuel said: “I am very pleased that some kind of regulation is now in place for training establishments and I think this will push up standards across the sector. “We all know how necessary it is that there are basic standards of safety in any educational establishment, which is why we are applying for RSS.” Some 25 schools have now acquired RSS and a further 200 have contacted CDET about applying. The benchmark, which is also supported by Dancing Times, costs £100 a year and is designed to help parents choose safe, good quality dance, drama and music training for their children. Schools must be able to show that they meet a list of terms and conditions and any complaints from students about institutions failing to live up to their claims will be referred to a special CDET panel, which can withdraw the status. CDET director Sean Williams said: “What’s happening now is that a lot of schools are saying they meet most but not all of the requirements. Over the next three or four months many of them will be putting those final details into place and we will get a surge of new people signed up. “Getting Stagecoach on board is a huge step forward. It’s the biggest provider of pre-vocational training and education in the country and the fact they are committing to this is a very important example to everyone else in the field.” View Online at The Stage |
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