16th Nov 2005 07:02
ADDleisure PLC16 November 2005 ADDleisure Plc / Epic: ADE.L / Index: AIM / Sector: Leisure 16th November 2005 ADDLEISURE PLC ("ADDleisure" or "the Company") PRELIMINARY RESULTS ADDleisure Plc, a holding company formed to develop products and services in thehealth and leisure sectors, announces its results for the year ended 31 July2005. Overview • Loss of £0.7m reflecting the impact of initial investments together with brand development and launch costs • Healthy cash position of £0.6m • Encouraging performance from all three investment products - Fitbug, Ez-Book and Power Plate • Agreements signed with leading operators in the health and leisure sectors • Developing exciting strategic alliances which should create a strong pipeline of orders • Continuing to look for other opportunities to grow the Company Chairman's Statement The Company marked its first year as an AIM listed entity with a number ofpositive achievements. As shareholders will be aware, ADDleisure was establishedto invest in early stage businesses which may be challenging but which couldalso deliver generous returns. I am delighted to say that the ventures we haveundertaken to date have shown every prospect of delivering solid and consistentrewards for shareholders, enabling us to become a leading investor in the healthand leisure sectors. Financial Performance The results for the 12 months to 31 July 2005 reflect the impact of initialinvestments made by the Group together with brand development and launch costs.In line with the Board's expectations, the Group finished the period with a lossof £0.7m. The balance sheet remains in a healthy state with no debt and cash inthe bank. There is no dividend. Investments Fitbug Limited ("Fitbug") (75% stake) Launched in the UK in early 2005, Fitbug is "your online personal health andwell-being coach" designed for people who know that they should be doing moreand eating better. We have identified and begun to implement a number ofdistinct routes to market for the product, which combines an interactivepedometer and web technology to measure activity, provide feedback and motivateusers towards a healthier lifestyle. In view of the acceptance we have receivedfrom several key sources, we decided to make additional funds available toFitbug to accelerate its market penetration and fully exploit its potential. Over the past six months we have tested various sales channels in the UK andhave recently achieved a notable breakthrough in the corporate sector withFitbug memberships being provided to a number of employees at both the FordMotor Company and, since the year end, O2 plc. Essentially, Fitbug provides acost effective and dynamic health and well-being benefit that companies canoffer their employees which is unlimited in terms of reach and brings a strongelement of fun to the workplace. These early adopters of Fitbug's corporateoffering have encouraged us to expand our sales effort in this sector. In June, we launched the Health Professional module, which allows personaltrainers, corporate health & well-being managers and medical practitioners tofollow their clients' activity levels and well-being outside of trainingsessions or consultations. Premier Training International, the UK's leadingfitness professional training provider has agreed to educate its students on thebenefits of employing Fitbug as part of their personal training qualificationand we are hopeful that this will provide a significant distribution andmarketing network for the product in the long term, once the training programmeis launched. We are continuing to develop relationships with a number of other healthprofessionals and will look to run trials with Primary Care Trusts as well asthe private sector during the current financial year. Fitbug offers the abilityto monitor the health and well-being of patients with specific health conditionsand motivate them towards recovery by prescribing activity as a more viablealternative to traditional exercise referral schemes. Following the initial start-up period and having received feedback from users,we launched version two of the fitbug.co.uk website in September and the newlook and feel has been well received. We remain committed to the development offitbug.co.uk as a health and well-being portal and continue to look atadditional hardware integration opportunities using devices such as bloodpressure monitors, body fat composition and heart rate monitors. Digital Plantation Limited ("Digital") (50.2% stake) Although this is a new investment, we are greatly encouraged by the level ofinterest being shown in the product, an intelligent booking system sold underthe Ez-Book brand and used in the health and leisure sectors. The system isdesigned to meet the requirements of today's leisure operators by improvingefficiency and maximising yields. It is able to facilitate web bookings and SMSmessaging, offering versatility and strong communication opportunities to theoperator, and convenience to the consumer. The software is sold on either an outright purchase or rental basis, with a saleoften preceded by a trial to prove the intelligent booking concept. Spaoperators have indicated keen interest in the product reflected in orders fromNirvana Spa, Champneys and Serve Health & Beauty. The Company has also wonopportunities to trial the software with several other leading operators. Sincethe year end, Centre Parcs has commenced a trial at its first Spa location inCheltenham while Whitbread plc is trialling Ez-Book at three spas within itsDavid Lloyd clubs. A trial at four Mitchell & Butlers' Hollywood Bowl outlets isprogressing well and a decision regarding a roll out across the Hollywood Bowlestate is expected shortly. The endorsement by several leading operators in the health spa and broaderleisure sector is particularly pleasing. The Company is now widening theapplication of the software to other companies in the retail and service sectorswhich would benefit from efficient allocation of a limited number of resourcesand cutting-edge booking functionality. Liberation Fitness Systems Limited ("Liberation") (41.8% stake) Liberation, which has the rights to market Power Plate, a product which usesadvanced vibration technology to stimulate muscular and circulatory responses,is performing well. As a result we fully expect the business to be profitable in2005/2006. During the year Liberation extended the rights to distribute Power Plate toAustralia, Israel, the Czech Republic, Hungary and Poland, in addition to itsmain home markets of the UK and Ireland. Several of the leading health clubchains have now placed initial orders for the commercial unit and we areencouraged by early orders received from our new territories. The product hasnow gained acceptance by professional sports teams, training centres,rehabilitation centres and gyms, whilst media coverage has been strong andfavourable. A training studio was opened in Crawford Street, London W1 and is gaining inpopularity, attracting amongst others, a number of high profile celebrities. Theability to significantly cut down on the time required for an effective workout,compared to a conventional gym session, is proving attractive as are thebenefits for physical therapy, stress-relief, anti-aging, sports rehabilitationand beauty and spa conditioning. We are currently looking at opportunities toexpand the studio concept. Additional Activities ADDleisure Consulting In order to utilise our team's extensive experience in the European leisureindustry and generate additional revenue for the Group, we recently establishedADDleisure Consulting. This division offers a broad range of services to clientsincluding feasibility studies, market research, corporate strategy, IT andleisure property consultancy. As well as drawing on the experience and knowledge of the main Board, we areable to utilise the services of a diverse team of consultants who have workedwith leading hotel groups, leisure and fitness chains and blue chip retailorganisations. Since the year end we have completed our first assignment which was to produce awell-being strategy paper for a major hotel group. This is an exciting base uponwhich to build and over the course of the current financial year, we will beworking to market our consultancy service and develop awareness of our offering. Current Trading The Group was not actively trading for much of last year so the progress we havemade gives us considerable confidence for the future. We have three maininvestment products in Fitbug, Ez-Book and Power Plate, all of which areestablishing themselves with leading operators in the health and leisuresectors. We have an encouraging pipeline of orders and are developing excitingstrategic alliances. Additionally, although the consultancy division is takingits first steps, we feel it has the ability to generate significant income goingforward. Whilst your Board is working hard to realise the excellentopportunities afforded to us by our current investments, we are continually onthe look out for other opportunities to grow the Company and enhance shareholdervalue. Finally, I would like to take this opportunity to sincerely thank all our stafffor their continued hard work and our shareholders for their ongoing support. Allan FisherChairman16 November 2005 Consolidated profit and loss account for the year ended 31 July 2005 Note Acquisitions and total Period from 1 October 2003 to Year ended 31 July 2005 31 July 2004 £'000 £'000 Turnover 285 -Cost of sales 147 - _______ _______ Gross profit 138 - Administrative expenses 1,000 1 _______ _______ Operating loss (862) (1)Share of operating loss in associated undertaking (76) - _______ _______ Loss on ordinary activitiesbefore interest (938) (1) Interest receivable 30 - _______ _______ Loss on ordinary activities before taxation (908) (1) Taxation - - _______ _______ Loss on ordinary activities after taxation (908) (1)Minority interest 159 - _______ _______ Loss sustained (749) (1) _______ _______ Loss per shareBasic and fully diluted (pence) 3 0.8 Nil _______ _______ All recognised gains and losses for the current and prior year are included inthe profit and loss account. Consolidated balance sheet at 31 July 2005 Note 2005 2005 2004 2004 As restated As restated £'000 £'000 £'000 £'000Fixed assetsIntangible assets 738 -Tangible assets 49 - _______ _______ 787 -Investment in associate 26 - _______ _______ 813Current assetsStocks 203 -Debtors 161 -Cash at bank and in hand 647 600 _______ _______ 1,011 600Creditors: amounts falling duewithin one year 223 1 _______ _______ Net current assets 788 599 _______ _______ Total assets less current liabilities 1,601 599 Creditors: amounts falling dueafter more than one year 52 - _______ _______ 1,549 599 _______ _______Capital and reservesCalled up share capital 550 350Share premium account 1,575 -Merger reserve 250 250Profit and loss account (750) (1) _______ _______ Shareholders' funds (equity) 4 1,625 599Minority interests (equity) (76) - _______ _______ 1,549 599 _______ _______ Consolidated cash flow statement for the year ended 31 July 2005 Note Year ended 31 Year ended 31 Period from 1 Period from 1 Jul 2005 Jul 2005 Oct 2003 to 31 Oct 2003 to 31 Jul 2004 Jul 2004 £'000 £'000 £'000 £'000 Net cash outflow fromoperating activities 5 (918) - Returns on investments andservicing of financeInterest received 30 - Capital expenditure andfinancial investmentPurchase of tangible fixed assets (61) -Development costs (222) - _______ _______Net cash outflow from capital expenditureand financial investment (283) - Acquisitions and disposalsPurchase of subsidiary undertakings (607) -Cash acquired with subsidiaries 158 500Acquisition of associate (102) - _______ _______Net cash (outflow)/inflowfrom acquisitions and disposals (551) 500 _______ _______Cash (outflow)/inflow before financing (1,722) 500 FinancingIssue of ordinary share capital 2,000 75Issue costs (225) -Capital element of finance lease rental (6) -payments _______ _______Cash inflow from financing 1,769 75 _______ _______ Increase in cash in the year 6,7 47 575 _______ _______ Notes 1 Accounting policies The financial statements have been prepared under the historical cost conventionand are in accordance with applicable accounting standards. The principalaccounting policies are: Basis of consolidation The consolidated financial statements incorporate the results of ADDleisure plcand all of its subsidiary and associated undertakings as at 31 July 2005 usingthe acquisition or merger method of accounting as required. Where theacquisition method is used, the results of subsidiary undertakings are includedfrom the date of acquisition. Goodwill Goodwill arising on an acquisition of a subsidiary undertaking, or associateundertaking or joint venture is the difference between the fair value of theconsideration paid and the fair value of the assets and liabilities acquired. Itis capitalised and amortised through the profit and loss account over thedirectors' estimate of its useful economic life which is 10 years. Impairmenttests on the carrying value of goodwill are undertaken: • at the end of the first full financial year following acquisition; • in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Associates An entity is treated as an associated undertaking where the Group has aparticipating interest and exercises significant influence over its operatingand financial policy decisions. In the Group accounts, interests in associated undertakings are accounted forusing the equity method of accounting. The consolidated profit and loss accountincludes the Group's share of the operating results, interest, pre-tax resultsand attributable taxation of such undertakings based on audited financialstatements. In the consolidated balance sheet, the interests in associatedundertakings are shown as the Group's share of the identifiable net assetsincluding any unamortised premium paid on acquisition. Turnover Turnover represents sales to external customers at the invoiced amount lessvalue added tax or local taxes on sales. Annual subscriptions for services arerecognised in equal monthly amounts. Some sales of software include amaintenance element, which is spread over the duration of the maintenancecontract. Depreciation Depreciation is provided to write off the cost or valuation, less estimatedresidual values, of all tangible fixed assets, except for investment propertiesand freehold land evenly over their expected useful lives. It is calculated atthe following rate: Fixtures, fittings and equipment - 33-1/3% per annum Valuation of investments Investments held as fixed assets are stated at cost less any provision forimpairment in value. Stocks Stocks are valued at the lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out basis. Netrealisable value is based on estimated selling price less additional costs tocompletion and disposal. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date except that therecognition of deferred tax assets is limited to the extent that the Groupanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences Deferred tax balances are not discounted. Leased assets Where assets are financed by leasing agreements that give rights approximatingto ownership (finance leases), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable over the term of the lease. The corresponding leasingcommitments are shown as amounts payable to the lessor. Depreciation on therelevant assets is charged to the profit and loss account. Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the profit and loss account overthe period of the lease and is calculated so that it represents a constantproportion of the balances of capital repayments outstanding. The capitalelement reduces the amounts payable to the lessor. All other leases are treated as operating leases. Their annual rentals arecharged to the profit and loss account on a straight line basis over the term ofthe lease. Share based employee remuneration When shares and share options are awarded to employees a charge is made to theprofit and loss account based on the difference between the market value of theCompany's shares at the date of grant and the option exercise price inaccordance with UITF Abstract 17 (Revised 2005) 'Employee Share Schemes'. Thecredit entry for this charge is taken to the profit and loss reserve andreported in the reconciliation of movements in shareholders' funds. Research and development Expenditure on pure and applied research is charged to the profit and lossaccount in the year in which it is incurred. Development costs are charged to the profit and loss account in the year ofexpenditure, unless individual projects satisfy all of the following criteria: • the project is clearly defined and related expenditure is separately identifiable; • the project is technically feasible and commercially viable; • current and future costs are expected to be exceeded by future sales; and • adequate resources exist for the project to be completed. In such circumstances the costs are carried forward and amortised over a periodnot exceeding three years commencing in the year the Group starts to benefitfrom the expenditure. 2 Prior period adjustment The 2004 comparative figures have been revised to eliminate the goodwill andassociated merger reserve arising in the consolidated financial statements by£2,000,000 as this was incorrectly recorded. This adjustment has no effect onprior period profit. 3 Earnings per share Earnings per ordinary share have been calculated using the weighted averagenumber of shares in issue during the relevant financial periods. The weightedaverage number of equity shares in issue, is 93,095,890 (2004 - 21,780,822) andthe loss, being loss after tax and minority interests £749,000, (2004 - loss£1,000). The effect of all options and warrants outstanding as at 31 July 2005is anti-dilutive. 4 Reconciliation of movements in shareholders' funds 2004 2005 As restated £'000 £'000Loss for the year (749) (1)New share capital subscribed (nominal value £200,000) 1,775 575 _______ _______Net addition to shareholders' funds 1,026 574Opening shareholders' funds 599 25 _______ _______ Closing shareholders' funds 1,625 599 _______ _______ 5 Reconciliation of operating loss to net cash outflow from operating activities Period from 1 October 2003 Year ended 31 July to 31 July 2004 2005 £'000 £'000 Operating loss (862) (1)Amortisation - goodwill 18 - - development costs 37 -Depreciation 16 -Movement in: stocks (190) - debtors (75) - creditors 138 1 _______ _______Net cash outflow from operating activities (918) - _______ _______ 6 Reconciliation of net cash inflow to movement in net funds Period from 1 October 2003 Year ended 31 July to 31 July 2004 2005 £'000 £'000 Increase in cash in the year 47 575 Cash outflow from changes in funds 6 - _______ _______Movement in net funds resulting from cash flows 53 575Inception of finance leases (39) -Acquisition of loans in subsidiary (32) - _______ _______ Movement in net funds (18) 575Opening net funds 600 25 ______ _______ Closing net funds 582 600 _______ _______ 7 Analysis of net funds At Other non-cash 1 August 2004 Cash items £'000 At 31 July £'000 flow 2005 £'000 £'000 Cash at bank and in hand 600 47 - 647 Finance leases - 6 (39) (33) Loans in subsidiary - - (32) (32) _______ _______ _______ _______ Total 600 53 (71) 582 _______ _______ _______ _______ * * ENDS * * Contacts: Ben Margolis ADDleisure Plc Tel: 020 7449 1000 Isabel Crossley St. Brides Media & Finance Ltd Tel: 020 7242 4477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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