Final Results

23rd Jun 2009 15:00



ADDleisure Plc / Epic: ADE.L / Index: AIM / Sector: Leisure

23 June 2009

ADDleisure Plc ('ADDleisure' or 'the Group')

Final Results for the 17 months ended 31 December 2008

ADDleisure Plc, the AIM traded company formed to develop products and services in the health and wellness sector, announces its audited final results for the 17 months to 31 December 2008 in accordance with the Group's amended accounting reference date, 31 December, which was enacted on 22 January 2009. 

Overview

Fitbug concept receiving strong private and public sector support - programmes initiated by Primary Care Trusts (PCTs) and high profile multi-national organisations producing encouraging results

 

Acquisition of ClubRunner (Europe) Limited by Digital Plantations and subsequent rebranding as Ez-Runner

 

Ez-Runner awarded high profile contracts post period end including agreement to supply its total business-wide software solution to all UK based Virgin Active Health Clubs

 

Financial performance:

Revenue for 17 month period £2,835,000 (12 months to 31 July 2007: £1,324,000)

Pre-tax loss for 17 month period £5,999,000 (12 months to 31 July 2007: £201,000)

Cash position at 31 December 2008 was £871,000 (2007: £4,292,000)

 

Group structure reorganised on 1 April 2009 with the joint venture companies with Bupa, ADD Wellness Holdings Limited and Movers and Shapers Limited being place into administration and Fitbug Limited being acquired from the administrator

Post reorganisation, the Group was loaned £800,000 by Bupa and £200,000 by directors during May 2009 to strengthen balance sheet and accelerate development of Fitbug and Ez-Runner

CHAIRMAN'S STATEMENT

The health and leisure industry remains an area of great opportunity and we have used the period under review to develop our offering to meet the needs of our customers more effectively, be they individual Fitbug owners or one of the large organisations on our ever growing register of both public and private sector clients at Fitbug and Ez-Runner. In tandem with the development of our products, we have, post period, made significant strides in reducing overheads, streamlining the ADDleisure business model and refining our marketing and sales strategies. I am confident that the steps that we have put in place in recent months will not only enable us to gain market share in the health and wellbeing arena but also provide the Group with a stable financial foundation to build on in the future.

In line with our strategy of streamlining the business and concentrating on our main revenue generators, the Group underwent a restructuring process post period end, resulting in the Group solely focussing on Fitbug, the online personal health and well-being coach and Ez-Runner, the multi-lingual leisure management software business. Despite the Directors continued belief that the Group's third investment, Movers & Shapers Limited ('Movers & Shapers'), could offer attractive growth prospects, it was agreed that, due to current weak consumer confidence coupled with the funding required to get the concept to critical mass, it was prudent to prioritise and concentrate on the development of the Group's core activities of Fitbug and Ez-Runner.

Consequently, Movers & Shapers was put into administration at the beginning of April 2009, together with ADDWellness Holdings Limited, the joint venture between ADDleisure and Bupa which acted as the holding company for Movers & Shapers and Fitbug Limited. Following the sale of Fitbug to ADDleisure, the Company now owns 100% of Fitbug. This process has rationalised the organisation of the Group and will provide us with a simpler and more coherent structure to grow the business moving forward. Importantly, Bupa has maintained its support of the Group and the development of Fitbug and Ez-Runner through its 28.9% holding in ADDleisure, the parent company, and also through a loan of £800,000 in May 2009. 

The development of both Fitbug and Ez-Runner continued over the period, increasing their market presence and exposure in new and exciting arenas at the same time as refining and improving their technological advantages. The acquisition of ClubRunner (Europe) Limited ('ClubRunner'), by the then named Digital Plantation and now rebranded as Ez-Runner, in October 2008, is already bearing fruit. The agreement to supply a total business-wide software solution to all UK based Virgin Active Health Clubs was a signal achievement for Ez-Runner; justifying our commitment to investing in leading-edge technology in tandem with the operational management to deliver quality services and support.

Fitbug has also made several exciting forays into new areas of operation with programmes introduced by several Primary Care Trusts ('PCTs') in the fields of patient, community and workplace health and also by several large international corporations. The combination of private and public sector support for our Fitbug concept reinforces our belief that a fit and healthy lifestyle is increasingly being recognised by all groups of society and that we are ideally positioned to capitalise on this. The Fitbug activity and nutrition balance solution is increasingly being seen as a serious option in the current emphasis on combating obesity. 

The Group's financial results for the 17 months to 31 December 2008 show a pre-tax loss of £5,999,000 (12 months to July 2007: loss of £201,000) which includes an impairment loss of £1,820,000 on joint venture loans and receivables, on revenue of £2,835,000 (12 months to July 2007: £1,324,000). The Group's cash position at 31 December 2008 was £871,000 (2007: £4,292,000).

We remain committed to developing our offering further over the next financial year and believe that we are well positioned to do so following the loan of £1 million from Allan Fisher and David Turner (£200,000) and Bupa (£800,000), which was received by 21 May 2009, thereby strengthening the balance sheet of the Group and providing sufficient cash to continue operating. The cost saving exercises that we have implemented post period are also beginning to deliver financial rewards. With this taken into account, I believe that ADDleisure has the potential to provide value for its shareholders as we strengthen our position as an innovative provider of exciting products in the health and wellness arena.

Electronic Communications

The Directors wish to utilise the new provisions of the Companies Act 2006 to allow them to send notices, documents and information electronically, thereby reducing printing and postage costs. Resolution 7 is being proposed as a special resolution at the Annual General Meeting to adopt new articles of association of the Company which will authorise the Company, subject to certain conditions, to send notices, documents and information by making them available on the Company's website to those shareholders who are deemed to have consented to receiving such notices, documents and information in this way.

I would like to take this opportunity to thank our shareholders for their support, and the ADDleisure team for their hard work, determination and loyalty.

Allan Fisher

Chairman

22 June 2009

OPERATIONS REVIEW

Fitbug Limited ('Fitbug') 

Fitbug, which offers online health and well-being coaching services, continues to develop and expand its offering to an ever growing audience, currently 22,000 members, mainly focussing on the corporate wellness and health insurance sectors, with increasing effort being placed on the public health arena. In the past 17 months Fitbug has invested more in enhancing its core technology and also piloting its offering with various large multi-national corporates and progressing a number of other initiatives.

The quality of Fitbug's offering and the potential benefits of its services have been highlighted by the signing of various agreements with high profile organisations in a number of differing sectors, ranging from workplace health, to fitness operators, government and public sector healthcare providers. Significantly, the Fitbug concept has been trialled as part of a corporate health initiative by a major supermarket group for a staff health programme and employed across thirty countries by a leading global energy company with extremely encouraging results. In addition, in June 2008, Fitbug extended its original three year agreement with PruHealth, a leading private medical insurance company for a further five years taking the agreement to 2013.

Another important facet of the Company's ongoing strategy is the involvement of PCTs and local authorities, where results from various initiatives have proved particularly exciting and led to further adoption. Chronically ill patients suffering from obesity related conditions, including diabetes and heart disease, used Fitbug as part of a weight management programme over a 12 month duration. The findings from the patients taking part in the pilot were extremely positive, with many individuals seeing dramatic improvements in their conditions. Since these findings, Fitbug has expanded its efforts in this sector and has recently been awarded contracts within other PCTs including Wolverhampton, Lambeth and County Durham. Programmes in this sector centre on weight management, exercise referral and workplace health. 

The Fitbug team remains dedicated to improving and increasing the functionality of the service, and in line with this, a new model 'Bug', supported by a new online platform, is due to be launched during the 2009 financial year. Both new components will increase functionality and improve usability, plus the new architecture will allow Fitbug to meet the demands of the market for the foreseeable future and expand in line with future expectations.

Ez-Runner Limited (formerly Digital Plantation Limited) ('Ez-Runner')

This has been a transformational year for Ez-Runner, formerly known as Digital Plantation Limited. The newly named Ez-Runner continues to grow and build its market presence in intelligent management software business. Ez-Runner has developed end-to-end intelligent web-based resource management systems, designed to improve efficiency and maximise yield through integrated booking, POS and stock control, membership, communications, reporting and this unique and innovative offering is increasingly being recognised as an essential tool for many companies operating within the health and leisure sectors.

The re-branding of Digital Plantation Limited was adopted following the acquisition of ClubRunner (Europe) Limited ('ClubRunner'), a leading leisure management software provider, in October 2008. Specialists in health club management software, ClubRunner provided IT solutions across the leisure industry including the hotel, health and fitness, play and golf markets, which complemented the Company's range of proprietary intelligent booking software specialising in the day and destination spa markets. The Board of ADDleisure saw considerable synergies between the two companies and that a merger of the two companies would significantly strengthen their capabilities of attracting major new corporate clients in both the UK and internationally.

The combination of innovative software and established trading records brought together in the merger has already resulted in a major new agreement with Virgin Active Health UK Clubs ('Virgin Active'). This agreement, signed post period end, saw Virgin Active adopt the latest developments from Ez-Runner's in-house development and deployment teams to provide one central and online platform for its operations. Its principal aim is to improve efficiency through standardising the membership system used throughout Virgin Active's estate in the UK, reducing the total number of systems and enabling common membership policies and business processes to be adopted. Additionally, Ez-Runner has installed its software in the David Lloyd Spas and is in ongoing negotiations with various other potential clients.

Movers and Shapers Limited ('Movers & Shapers')

Movers & Shapers, the Company's former third investment, was designed to deliver a simple but comprehensive approach to health and well-being for consumers all encompassed within convenient high street studios. Progress was made rolling out the Movers & Shapers studios over the period, with numbers in the UK increasing from an initial two stores in Stanmore and Vauxhall in January 2008, to five in July 2008 with the opening of the West Hampstead, Marble Arch and Stratford-upon-Avon stores. The Company operated nine high street studios by January 2009, following the opening of stores in Barnes, Winchester, Muswell Hill and Loughton, Essex. 

Whilst the Board was keen to progress the roll-out of stores to more locations, weak consumer confidence coupled with difficulties in raising bank finance to fund capital expenditure led to the Board taking the difficult decision to put Movers & Shapers into administration at the beginning of April 2009. Of the nine Movers & Shapers stores that the Company developed, six, along with certain business assets of Movers & Shapers, were sold with the three remaining stores closing at the time of the announcement.

** E N D S **

For further information visit www.addleisure.com or contact:

Mike Mills	ADDleisure Plc	Tel: 020 7449 1000
Mark Percy	Seymour Pierce	Tel: 020 7107 8000
Susie Callear	St Brides Media & Finance Ltd	Tel: 020 7236 1177

Consolidated Income Statement

For the 17 months ended 31 December 2008

	Notes	17 months December 31	12 months July 31
		2008	2007
		£'000	£'000
Revenue		2,835	1,324
Cost of sales		(677)	(413)
		_____	_____
Gross profit		2,158	911
Other income: Gain on disposal of subsidiaries to joint venture		-	1,942
Operating and administrative expenses		(8,384)	(3,057)
		_____	_____
Loss from operations		(6,226)	(204)
Finance income		300	12
Finance expense		(73)	(9)
		_____	_____
Loss before tax		(5,999)	(201)
Income tax credit	5	46	34
		_____	_____
Loss for the period/year		(5,953)	(167)
		_____	_____
Attributable to:
- (Loss)/profit applicable to the parent's interest in the group		(5,317)	285
- Losses in the subsidiaries applicable to the minority interests in excess of the minorities' interests in the equity of those subsidiaries		(636)	(452)
		_____	_____
Losses attributable to the equity holders of the parent		(5,953)	(167)
		_____	_____
Basic and diluted loss per share in pence	4	(2.9)	(0.1)
		_____	_____

All amounts relate to continuing activities.

Consolidated Statement of Changes in Equity

For the 17 months ended 31 December 2008

 

Consolidated Balance Sheet

As at 31 December 2008

		As at 31 December	As at 31 July
		2008	2007
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		131	97
Intangible assets		928	670
Trade and other receivables		-	568
		_____	_____
		1,059	1,335
		_____	_____
Current assets
Inventories		58	20
Trade and other receivables		961	756
Cash and cash equivalents		880	4,292
		_____	_____
		1,899	5,068
		_____	_____
Total assets		2,958	6,403
		_____	_____
Liabilities
Non-current liabilities
Borrowings		(161)	(296)
Contingent consideration		(666)	-
		_____	_____
		(827)	(296)
Current liabilities
Trade and other payables		(2,099)	(721)
Borrowings		(150)	(18)
		_____	_____
		(2,249)	(739)
		_____	_____
Total liabilities		(3,076)	(1,035)
		____	____
Net (liabilities)/assets		(118)	5,368
		____	____
Capital and reserves attributable to equity holders of the company
Share capital		1,048	1,013
Share premium		4,749	4,447
Merger reserve		1,319	1,319
Excess of minorities interest in losses over their equity interest in subsidiaries		(798)	(406)
Retained deficit		(6,436)	(1,005)
		_____	_____
Total equity		(118)	5,368
		_____	_____

Consolidated Cash Flow Statement

For the 17 months to 31 December 2008

Consolidated Cash Flow
			17 months ended 31 December	12 months ended 31July
	Notes		2008	2007
			£'000	£'000
Cash flows from operating activities
Loss before taxation			(5,999)	(201)
Adjustments for:
- Depreciation and amortisation			160	175
- Impairment charge			1,118	396
- Share-based payments			130	87
- Finance income			(300)	(12)
- Finance expense			73	9
- Goodwill disposal			-	595
- Gain on disposal of subsidiaries			-	(1,942)
			____	____
Cash flows from operating activities before changes in working capital and provisions			(4,818)	(893)
(Increase)/decrease in inventories			(38)	48
Decrease/(increase) in trade and other receivables			671	(784)
Increase in trade and other payables			989	363
			____	____
Cash flow from operating activities			(3,196)	(1,266)
Corporation tax credit received			46	34
			____	_____
Net cash used in operations			(3,150)	(1,232)
			____	_____
Cash flow from investing activities
Purchase of property, plant and equipment			(593)	(110)
Acquisition of subsidiary			(583)	-
Cash acquired from acquisition of subsidiary			293	-
Development costs			-	(28)
Finance income			300	12
			____	_____
Net cash used in investing activities			(583)	(126)
			____	_____
Cash flow from financing activities
Issue of ordinary shares for cash			337	3,280
Share issue costs			-	(64)
Cash acquired through joint venture issuing shares for cash			-	1,835
Loan proceeds			-	125
Loan repayment			-	(200)
Capital repayments of finance lease obligations			(7)	(26)
Finance expense			(18)	(5)
			____	_____
Net cash generated from financing activities			312	4,945
			____	_____
Net decrease in cash and cash equivalents			(3,421)	3,587
Cash and cash equivalents at beginning of period/year			4,292	705
			____	____
Cash and cash equivalents at end of period/year			871	4,292
			____	____

Notes to the Consolidated Financial Statements

For the 17 months to 31 December 2008

1.	General Information

ADDleisure Plc ('the Company'), its subsidiaries and joint ventures (together 'the Group') develops products and services in the health and leisure sectors and has its main centre of operation in the UK. 

The Company is a public limited company which is listed on the AIM market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is Unit 10 Utopia Village, 7 Chalcot Road, London NW1 8LH. 

2.	Annual Accounts & Notice of Annual General Meeting

The abridged financial information set out herein has been extracted from financial statements approved by the directors on 22 June 2009, and which will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on these accounts and their report was unqualified and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985, s 237 (2) or (3).

The financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 and has been prepared on the basis of the accounting policies set out in the financial statement for the year ended 31 December 2008. The Annual Report and Financial Statement will be posted to shareholders shortly and thereafter will be available from the Company's registered office, and from the Company's website, www.addleisure.com.

The Annual General Meeting will be held at 10 a.m. on Wednesday 29 July 2009 at the Company's registered address, 10, Utopia Village, 7 Chalcot Road, London NW1 8LH.

3.	Segmental Information

The Group operates primarily within the UK and has 4 main business segments.

The segment results for the 17 months ended 31 December 2008 are as follows:

					2008
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Consulting	Total
Revenue	978	446	1,243	168	2,835
Segment results	(974)	(1,157)	(1,252)	140	(3,243)
Unallocated administrative expenses					(2,983)
Finance income					300
Finance expense					(73)
Loss before income tax					(5,999)
Income tax					46
Loss for the period					(5,953)

The segment results for the year ended 31 July 2007 are as follows:

					2007
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Consulting	Total
Revenue	534	150	591	49	1,324
Segment results	(448)	(214)	(842)	26	(1,478)
Unallocated administrative expenses					(668)
Gain on disposal of subsidiaries to joint venture					1,942
Finance income					12
Finance expense					(9)
Loss before income tax					(201)
Income tax					34
Loss for the year					(167)

Other segment items included in the income statement are as follows:

					2008
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Unallocated	Total
Depreciation	5	76	27	52	160
Amortisation	-	-	-	-	-
Impairment of intangible assets and property, plant and equipment (note 14)	322	750	46	-	1,118

					2007
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Unallocated	Total
Depreciation	4	10	3	40	57
Amortisation	64	-	57	-	121
Impairment of goodwill	-	-	390	-	390

Analysis of revenue by category	2008	2007
	£'000	£'000
Sale of services	2,185	1,224
Sale of goods	650	100

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, trade and other receivables, and cash & cash equivalents. Unallocated assets primarily comprise cash & cash equivalents, trade & other receivables.

Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as trade & other payables, interest bearing loans & other borrowings.

Capital expenditure comprises additions to property, plant and equipment. 

The segment assets and liabilities at 31 December 2008 and capital expenditure for the period then ended are as follows:

					2008
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Consulting	Total
Total assets	354	191	1,842	182	2,569
Total liabilities	(458)	(418)	(1,513)	(8)	(2,397)
Capital expenditure	5	498	18	65	586

Segment assets and liabilities are reconciled to entity assets and liabilities as follows:

	Assets	Liabilities
Segment assets/liabilities	2,569	(2,397)
Unallocated (cash, borrowings, etc):	389	(679)
Total	2,958	(3,076)

The segment assets and liabilities at 31 July 2007 and capital expenditure for the year then ended are as follows:

					2007
	£'000	£'000	£'000	£'000	£'000
	Fitbug	Movers & Shapers	Ez-Runner	Consulting	Total
Total assets	1,031	427	334	77	1,869
Liabilities	(142)	(57)	(485)	(19)	(703)
Capital expenditure	38	94	6	-	138

Segment assets and liabilities are reconciled to entity assets and liabilities as follows:

		2007
	Assets	Liabilities
	£'000	£'000
Segment assets/liabilities	1,869	(703)
Unallocated (cash, borrowings, etc):	4,534	(332)
Total	6,403	(1,035)

4.	Loss per share

Basic loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders of the parent divided by the weighted average number of shares in issue during the period. For diluted loss per share, the weighted average number of ordinary shares in issue would be adjusted to reflect the impact of conversion of dilutive potential ordinary shares. At 31 December 2008 there were 27,461,359 warrants and 11,251,414 share options which could be potentially dilutive in the future, but as they are currently anti-dilutive, they have been excluded from the following calculations.

Adjusted (loss)/earnings per share

The loss attributable to the equity holder of the parent has been increased by the losses attributable to the shares owned by the minority interest that have been re-allocated to the parent in accordance with IAS 27. An alternative earnings per share has been calculated that shows the loss attributable to the parent's percentage interest in the equity of the Group.

 

		17 months to December 31	12 months to July 31
		2008	2007
		£’000	£’000
Loss for the period attributable to the equity holders of the parent		(5,953)	(167)
Add back the minority’s share of losses in subsidiaries that have been re-allocated to the equity holders of the parent		636	452
		_____	_____
Adjusted (loss)/profit for the period attributable to the equity holders of the parent		(5,317)	285
		­­____	____
Weighted average number of equity shares	208,575,347			124,444,247
Basic and diluted loss per share in pence	(2.9)			(0.1)
Adjusted basic and diluted (loss)/earnings per share in pence	(2.5)			0.2

As of 22 June 2009, no shares have been issued since 31 December 2008.

5.

Taxation

	2008	2007
	£'000	£'000
Current tax on losses of the period	-	-
Adjustment in respect of previous period	(46)	(34)
	____	____
Current tax credit	(46)	(34)
Deferred tax	-	-
	____	____
Credit for the period/year	(46)	(34)

The tax assessed for the period differs from the applicable rate of corporation tax in the UK. The differences are explained below:

	2008	2007
	£'000	£'000
Loss before tax	(5,999)	(201)
	____	_____
Loss at the applicable rate of corporation tax in the UK operation 28~30% (2007: 30%)	(1,200)	(60)
Effects of:
Gain not taxable	-	(589)
Expenses not deductible for tax purposes	32	35
Research and development tax credit claim	(46)	(34)
Goodwill amortisation and impairment	577	125
Tax losses disposed with subsidiaries	-	264
Tax losses carried forward	554	225
Unwinding of contingent consideration discount	10	-
Depreciation in excess of capital allowances	27	-
	____	____
Income tax credit for the period	(46)	(34)

Subject to the agreement of HM Revenue and Customs, the Group has tax losses of approximately £4,170,000 (2007: £1,600,000) to carry forward against future taxable profits. The Group has not recognised a deferred tax asset due to there being insufficient evidence of short term recoverability.

6.	Post-balance sheet events

On 1 April 2009, the Group announced a restructuring. ADD Wellness Holdings Limited, the joint venture company with Bupa, and its wholly owned subsidiary, Movers and Shapers Limited were placed into administration. On the same day ADDLeisure plc purchased the entire share capital of Fitbug Limited from the ADD Wellness administrator for £1 and the intercompany loan account from ADD Wellness to Fitbug of £3,473,000 for £250,000.

At 31 March 2009 the provisional net liabilities of Fitbug were:

Fitbug Limited Acquisition	£000	£000
Fair value of assets acquired
Fixed assets	128
Inventories	76
Debtors	442
Bank deposits	228
Creditors	(4,886)
Net liabilities		(4,012)
Consideration paid
Cash payments		nil
Excess of consideration paid over net liabilities		(4,012)

Following the reconstruction of the Group on 1 April 2009 a loan of £1,000,000 was raised from Bupa, £800,000, and Allan Fisher and David Turner each loan £100,000. The loan is for 3 years with interest at 5% above LIBOR and all interest is to be rolled up until repayment of the loan in full or part.

The acquisition of ClubRunner was not completed until 31 March 2009 at which time the consideration shares were issued. As a consequence, ADDleisure's shareholding in Digital/Ez-Runner was: -

50.2% 1 August to 7 October 2008

66.9% 8 October to 31 March 2009

50.2% 1 April 2009 onwards

As a result of the above the value of minority interest is affected, moving to 33.1% for the period 8 October 2008 to 31 March 2009 and then reverting to 49.8% with effect from 1 April 2009.

ENDFR ZGGZVFFGGLZM

---

Related Shares:

BIDS.L