Weather hits Goals profits but fails to halt growth

Five-a-side football operator Goals Soccer Centres took a £1.7 million profit hit last year as poor weather kept players away but the firm pushed on with expansion at home and abroad.

The East Kilbride-based firm, which runs 41 centres in the UK, opened five British sites in 2010 as well as its first American venture. It also launched a franchise in Ireland.

Yesterday the company posted full-year results which showed operating profit fell by 6 per cent to 10m.

Like-for-like sales were down 4 per cent but Goals believes they would have risen if it were not for the double dose of snow that stopped customers reaching its centres at both the start and end of 2010.

Total sales were up 6 per cent to 27.8m thanks to the new centres it opened south of the Border.

Three more sites, delayed because of the snow, were opened at the start of this year, and the company reported sales for the first 55 days of 2011 were up 15 per cent - or 5 per cent at established sites - on last year's snow affected figures.

Managing director Keith Rogers claimed the weather was a "once in a decade" phenomenon and would not impact on the company's prospects.

"Underlying performance has been very strong," he said.

"We've just undergone our biggest opening programme ever. We've opened eight centres since the start of last year, a 25 per cent increase in our capacity, and that's going to drive growth in the next couple of years."

Rogers said the new centres became profitable almost immediately and, with an average lease on the sites of 62 years, would continue generating income for many years to come, with an estimated 20 per cent annual return on capital.

The company plans to open four centres a year, excluding the three delayed openings from 2010, at an average cost of 2.2m each.

So far the investments have been financed partly by borrowing, but Rogers said Goals had now reached the "milestone" point were it could fund growth entirely from cash flow.

And he said there was potential for at least a further 150 centres in the UK alone. The company now claims a 42 per cent share of the UK five-a-side football market.

It held its final dividend at 1.175p per share, making 1.85p for the full year.

Rogers said Goals' site in Los Angeles, which opened in June, was growing in line with expectations, and the company had about a dozen further US locations earmarked for development once its first foray was established."We see the opportunity in America as being so good and so large it's not something we want to give away with a franchise," Rogers added.

Analysts recommended buying shares in the Aim-quoted company, with both Numis and Peel Hunt saying it was significantly undervalued.

Peel Hunt analyst Paul Hickman said: "Goals has come through the most challenging economic and weather conditions in good shape."