Final Results

Fitbug Holdings Plc / Epic: FITB.L / Index: AIM / Sector: Leisure

4 June 2010

Fitbug Holdings Plc ('Fitbug' or 'the Company')

Final Results for the 12 months ended 31 December 2009

Fitbug Holdings Plc, formerly ADDLeisure plc, the AIM traded company operating in the health and wellness sector announces its results for the 12 months ended 31 December 2009.

Overview

·; Name change to Fitbug Holdings plc to reflect the Group's new focus on its primary subsidiary Fitbug Limited

·; 'Nectar Fitbug' site launched in January 2010 with Nectar, the UK's leading coalition loyalty programme

·; Primary Care Trusts have had promising results from the introduction of Fitbug's weight management service

·; Launched Fitbug Version 4.0 in the US and developed proprietary hardware

·; Implemented new distribution agreements with Yorbody and The Vitality Group

·; Post-tax loss of £2,608,000 (17 months to 31 December 2008: loss of £5,083,000), of which £902,000 is from discontinued operations (17 months to 31 December 2008: £3,779,000).

Chairman's Statement

The new focus on Fitbug has enhanced progression of the service significantly. A number of new high profile clients both in the UK and overseas have committed to the Fitbug service, including Yorbody (Netherlands and Belgium), The Vitality Group (US) and of course, Nectar, the UK's leading coalition loyalty programme. Furthermore we remain in discussions with a major US insurance company alongside other potential new customers. We developed proprietary hardware for Fitbug and established a new software platform, Version 4.0, which has enabled the move into new markets and will be key to the expansion of the service.

The difficult trading conditions meant that we experienced a prolonged sales process with many potential customers, with some deferring decisions until an improvement in their own business. Nonetheless we have seen success with the introduction of our weight management service to Primary Care Trusts ('PCTs') and are looking to expand this offering past its origins in the public sector.

The support of shareholders has allowed us to weather the market conditions and as part of the restructuring at the end of 2009, we were able to raise £1.2 million and complete a capital reorganisation. While it is a challenging environment to operate in at present, we have a strong customer base and have confidence that the Fitbug service will remain in demand as 'health' continues to be an increasingly important issue for individuals, employers, insurers and indeed healthcare providers alike.

I would like to thank both our shareholders and staff for their continued support and efforts during this transformational phase of the business.

Allan Fisher

Chairman

4 June 2010

Operations Review

The deal with Nectar, providing a white label version of the Fitbug service, demonstrated the variety of channels that are open to the Company when developing wellbeing programmes with customers. The 'Nectar Fitbug' branded site, for use by Nectar's collectors, went live in January 2010 and has been contributing revenues since that point. The service is now firmly bedded with Nectar and marketing activities to their membership base will continue throughout 2010. Fitbug is working closely with Nectar in developing this channel and the Board expects to see a strong increase in take-up as users are encouraged to receive points while improving their health.

In addition to working with Nectar, Fitbug's distribution agreements with Yorbody in The Netherlands and Belgium and Holmes Place International in the Middle East have both launched during the first quarter and both are expected to gain momentum during the course of the year.

The latest edition of the software was launched post-period end. Fitbug Version 4.0 allows the roll-out of multi-lingual and white-label sites. The launch of the fitbug.com site in the US and the white label solutions for both Holmes Place and Yorbody demonstrate the potential of the new service which allows the Company to open up new partnerships with organisations who can benefit from Fitbug's technology. The Board also believes that Version 4.0 will be instrumental in increasing membership engagement, with community functions such as recipe sharing, health tips and superior back-end functions that provide enhanced reporting. Fitbug Version 4.0 is scheduled for launch in the UK in the second half of 2010.

In hand with the fitbug.com launch in the US, The Vitality Group ('TVG') introduced the Fitbug service in line with its own health enhancement programme - one of the world's longest running. TVG is the US sister company to PruHealth and a subsidiary of South Africa-based health insurer Discovery Holdings Limited. The Vitality Group's programme is similar to that offered in the UK by PruHealth, whereby participants earn reward points for engaging in a healthy lifestyle. By hitting certain step thresholds, TVG members earn 'Vitality Bucks' which can be redeemed for prizes.

The Company's weight management service has been implemented at a number of PCTs and provides a new method to help patients progressively reduce obesity in a healthy manner and increase their levels of activity. The Board is extremely pleased with Fitbug's success in this area and believes that the service is considerably ahead of other weight management programmes as shown by the data received from the initial courses.

In the public health arena, tenders were won with Wolverhampton, Kirklees and Barnsley PCTs and courses are now running in all locations, with patients being referred onto Fitbug's 12 week programme by their GPs. Initial results are extremely encouraging and we are now building an evidence base which will be essential to growing this channel. With the ongoing issues surrounding obesity and related health issues, the Board expect PCTs throughout the UK to continue investing in such programmes in the long term.

Towards the end of 2009, Fitbug completed a pilot programme with NHS Choices which encouraged lifestyle changes through an interactive kiosk with games that were powered by Fitbug step data. The programme was independently evaluated and received extremely positive feedback and as a result Fitbug is now in talks with the Department of Health as to how they intend to capitalise on the successful pilot and expand the scheme.

With an updated product and a number of high profile customers, Fitbug continues its efforts to develop the pipeline of new prospects across both the private and public sectors.

Board Changes

Andrew Brummer joined the Board in October 2009 as Finance Director. Andrew was Financial Controller and Finance Director designate since May 2009 when Mike Mills retired from the position. Paul Landau, Fitbug's Managing Director and founder, also joined the Board as part of the Company's focus on Fitbug.

Due to promotion within BUPA, Stephen Flanagan stepped down from the Board, additionally David Cummin resigned following the restructuring at the end of 2009.

Financial Review

The Group's financial results for the year ended 31 December 2009 show a post-tax loss of £2,608,000 (17 months to 31 December 2008: loss of £5,083,000), this includes a loss of £902,000 (2008: loss of £3,779,000) relating to discontinued operations. Revenues for the year from continuing operations increased 8% pro-rata to £871,000 (17 months to 31 December 2008: £1,141,000), with £1,382,000 from discontinued operations (17 months to 31 December 2008: £1,694,000). The Group's cash position at 31 December 2009 was £550,000 (2008: £880,000).

In December 2009, as part of the strategic focus on Fitbug, the Company raised £1.2 million through a placing of 12,000,000 new ordinary shares with new and existing shareholders. Additionally, in order to strengthen the balance sheet and facilitate shareholders' ability to trade the Company's shares on the open market, the Company completed a capital reorganisation and capitalised certain outstanding loans.

As a result of the capital cancellation in February 2010, the balance on distributable reserves of the parent company would have been £305,000 as at 31 December 2009 and not (£6,813,000) as shown in the Company's balance sheet at that date.

The report and accounts for the year ended 31 December 2009 will be sent to shareholders by 30 June 2010 and will be available on the Company's website at www.fitbugholdings.com.

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

Consolidated Statement of Changes in Equity

For the year ended 31 December 2009

Notes to the Consolidated Financial Statements for the year to 31 December 2009

1. General Information

Fitbug Holdings Plc is a company incorporated in the UK and its activities are as described in the chairman's statement.

The preliminary announcement of results is not the company's statutory accounts. Statutory accounts for the year ended 31 December 2009 have not been delivered to the Registrar of Companies. The auditors have reported on the statutory accounts for the year ended 31 December 2009 on 3 June 2010 and their report was qualified and included a reference to a matter to which the auditor drew attention by way of emphasis without further qualifying the report. Their report did not contain a statement under section 498 (2) (accounting records or returns inadequate or accounts or directors' remuneration report not agreeing with records and returns), or Section 498 (3) (failure to obtain necessary information and explanations).

Qualification

The auditors' report was qualified because the auditors were not able to verify the loss from discontinued activities between the trading loss for the year and the net loss arising as a result of the discontinuance.

Emphasis of matter

The auditors' report drew attention by emphasis of matter to issues surrounding going concern as set out in note 2.

2. Basis of Accounting

The final results of the company for the year ended 31 December 2009 have been prepared on a historical cost basis and are in accordance with International Financial Reporting Standards ('IFRS's) as adopted by the EU. These have been applied consistently except where otherwise stated. 

First time application of new financial reporting standards

The group has adopted IAS 1 (revised) for the first time in the current year. Whist this has resulted in a change in the terms used to describe the primary financial statements, it has not affected the reported results.

The results are otherwise prepared in accordance with the same accounting policies as applied in its audited results for the period ended 31 December 2008.

Going concern

The financial statements have been prepared on the going concern basis which assumes that the Group and the Company will have sufficient resources to enable them to continue trading for the foreseeable future. The directors took a number of positive steps to secure the position of the Group and on the basis of these measures and others to be implemented this year, consider it appropriate that the financial statements should be prepared on the going concern basis. These measures include:

• freeze on new development without a proven business case;

• the directors' agreement since March 2009 to a reduction in the level of their remuneration which will continue until cash breakeven is achieved;

• a review of all operating costs to reduce expenditure especially in relation to marketing and professional fees;

• sub-lease of surplus space to mitigate property costs;

During the year the Company received a loan advance of £800,000 from its 23.9% shareholder BUPA Finance Plc. £300,000 of this loan was settled by the way of new equity in the Company at the time of placing in December 2009. The balance is not repayable until 1 April 2012.

Based on their forecasts, the directors believe that the combination of these factors will provide sufficient working capital to enable the Company and the Group to continue trading. However, these forecasts are necessarily based on the achievement of timings and revenue targets some of which, although believed to be reasonable by the directors, are nevertheless outside the Group's direct control. If significant delays were to take place, these may render the Group's cash resources insufficient. The directors would also consider seeking further funds from the issue of new equity to fund ongoing development. If, as a result insufficient funds were available such that, the Group and the Company are unable to continue as going concerns, then adjustments would be necessary to write assets down to their recoverable amounts, non-current assets and liabilities would be re-classified as current assets and liabilities and provisions would be required for any costs associated with closure.

3 Discontinued operations

Disposal of joint venture

On 1 April 2009, the Group announced a restructuring. ADD Wellness Holdings Limited; the joint venture company with BUPA Finance plc ("BUPA"), and its wholly owned subsidiary, Movers and Shapers Limited were placed into administration. ADD Wellness Holdings Limited acted as the holding company for Movers and Shapers Limited and Fitbug Limited. Movers and Shapers Limited focused on the Group's high street wellbeing concept.

Following the restructuring, the Group now owns 100% of Fitbug Limited which was previously wholly owned by ADD Wellness Holdings Limited.

The disposal of the joint venture is consistent with the group's strategy of streamlining the business and concentrating on the main revenue streams.

Disposal of Ez-Runner Limited

On the 5 October 2009, Ez-Runner Limited was placed into administration. Ez-Runner Limited was a leisure management software business.

Analysis of profit for the year from discontinued operations

The combined results of the discontinued operations (i.e. ADD Wellness Holdings Limited, Movers and Shapers Limited and Ez-Runner Limited) included in the Statement of Comprehensive Income are set out below. The results of ADD Wellness Holdings Limited and Movers and Shapers Limited are included on the proportionate consolidation basis described in note 2. The comparative loss and cash flows from discontinued operations have been re-presented to include those operations classified as discontinued in the current period.

4. Loss per share

The loss per share from continuing and discontinued operations is based on a loss of the year attributable to equity holders of the Parent Company of £2,608,000 (2008: £5,083,000) and the weighted average number of ordinary shares in issue for the year of 20,987,194 (2008: 20,857,535 as adjusted for the share consolidation in the year). The loss per share from continuing operations is based on a loss for the year of £1,706,000 (2008: £1,304,000) and the same number of ordinary shares.

The exercise of the outstanding options would reduce the loss per share and hence have an anti-dilutive effect.

There are 1,450,000 (2008: 11,251,414) shares that could potentially be issued under the terms of options that will potentially reduce future earnings per share. As of 3 June 2010, no shares have been issued since 31 December 2009.

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