Companies: GOAL   

Five-a-side soccer business Goals floated on AIM at 62p in late 2004 and was then recommended by Growth Company Investor at 262p in May 2006. Stellar share price growth since reflects staggering growth rates built on the popularity of small-sided football and management’s sure-footed site selection.

Goals netted a 78% profits increase for investors during a record year to December, delivering pre-tax profits of £4.7m on sales lifted 43% to £16m – adjusted basic earnings burgeoned by 79% to 7.5p. Like-for-like growth was strong at 9% and gross margins were maintained at 87%.

The group now runs 22 ‘next generation’ sites, including five centres added last year. Chief executive Keith Rogers said the pipeline of new sites is strong, with an additional five centres set to open this year and at least five slated for 2008, with the rate of openings likely to ramp up thereafter.

Looking to build Goals into a national five-a-side brand, Rogers said the results demonstrated market demand for the ‘next generation’ concept. He has carefully secured branding tie-ups with both UMBRO and Powerade, and sees plenty of growth ahead for shareholders with the popularity of small-sided football continuing to grow.

Though the bulk of distributable profits and cash flows will be used to fund the roll-out of new centres, the 2006 dividend was raised by 90% to 0.95p and investors can expect dividends to grow at least as fast as earnings each year. Trading on 48 times 2006 earnings, Goals is looking pricey and given the unpredictability of the market, investors sitting on bumper gains should book some profits. Having said that, the growth opportunity remains immense and investors who bought on our advice should retain healthy stakes.