29th Jan 2008 08:02
ADDleisure PLC29 January 2008 ADDleisure Plc / Epic: ADE.L / Index: AIM / Sector: Leisure 29 January 2008 ADDleisure Plc ('ADDleisure' or 'the Company') Final Results ADDleisure Plc, the AIM traded company formed to develop products and servicesin the health and leisure sectors, announces its results for the year ended 31July 2007. Overview •UK market leader in health and care, BUPA Finance plc, took a 29.9% stake in the Company and a 50% stake in a new joint venture company, ADD Wellness Holdings Limited, formed to exploit Fitbug and Movers & Shapers •Fitbug, the online personal health and well-being coach, won a number of new blue-chip corporate clients including BP and Time Warner •Movers & Shapers, the new high street well-being concept, signed an agreement with Alliance Boots plc to pilot the concept with a view to rolling it out nationwide •Reaping the benefit of past investment in key products and services, the disposal of Fitbug Limited and Movers and Shapers Limited to ADD Wellness Holdings Limited generated a gain of £1,951,000 •ez-Systems, the intelligent management software, signed up various new contracts in the health and fitness sector and further expanded reach to include new markets •Appointments made throughout all divisions to support growth within existing and new markets, including sales, development and support •Turnover for the year ended 31 July 2007 up 54% to £1,311,000 (2006: £852,000) •Continued investment in products, services and people resulted in the Group reporting pre-tax losses of £2,162,000 (2006: loss of £1,041,000) for the year ended 31 July 2007 •Net assets increased from £1,221,000 to £5,358,000 •Strong cash position with £2,494,000 in the bank (2006: £705,000). Additionally ADD Wellness Holdings Limited provided with cash balances of £3,420,000 to finance the future development of Fitbug and Movers & Shapers •Committed to growth strategy - developing existing products and services, whilst remaining alert to new investment opportunities Chairman's Statement This financial year has been a period of progress as we drive towards becomingthe leading investor in and provider of wellness products and services. Theperiod has seen us opening two new concept well-being studios called "Movers &Shapers" which will be rolled out over the coming years nationwide. Fitbug andez-Systems have continued to sign agreements with blue-chip corporatesinterested in developing our ideas and we have expanded the teams to generatefurther access into our expanding markets in the year. The most importantdevelopment was our agreement with BUPA Finance plc ('BUPA'), the UK marketleader in health and care, which recognised our potential and took a 29.9% stakein the Company as well as a 50% stake in a joint venture formed to exploit twoof our key investments, Fitbug and Movers & Shapers. This partnership, whichcombines our management team and unique products and services with BUPA'sbreadth of experience and market position in the health and care industry, aswell as its distribution, represents a major step forward for the Company andwas completed on 18 July 2007. It not only represents a formal endorsement by amajor institution of the platform we have successfully developed since 2004, butit provides the Company with the additional financial resources with which totarget new opportunities, the ability to expand the geographical reach of ouroperations and the financial flexibility to achieve our objectives at alllevels. As a consequence of the agreement with BUPA, the Group's interests inFitbug and Movers & Shapers are now held through ADD Wellness Holdings Limitedand the Group's net asset value has been enhanced dramatically. As thetransaction results in a deemed disposal of part of our previous equity holdingsit gives rise to a gain of £1.95 million, which has been recognised directly inreserves. Operations Overview Over the past few years we have invested considerable time and money in our keyproducts and services. Whilst this process is ongoing we are moving into thenext phase of the business and are reaping the benefits of our commitment to ourproducts in this exciting sector. The Operations Review, which follows myreport, gives a full overview of each investment's progress. To name but a fewhighlights, Fitbug, the online personal health and well-being coach, won anumber of new corporate clients including BP and Time Warner, whilst Movers &Shapers, our new high street well-being concept, signed an agreement withAlliance Boots plc to pilot the concept with a view to rolling it out on anational basis. Additionally, ez-Systems signed up various new contracts in theHealth and Fitness sector including Greens Health and Fitness Chain and the SohoGyms chain, and further expanded its reach to new markets including the medicalmarket. Looking forward, we are increasingly confident in our offerings and theirability to help the nation improve their health and fight back againstconditions such as obesity. BUPA, which has over eight million customers in 190countries, offering health insurance, care homes, workplace health and childcareservices, will no doubt help us achieve our goals as we focus on making ourbrands household names throughout the UK and internationally. The Team As part of the restructuring of the business, Ben Margolis, who was the CFO andCompany Secretary seeing the Company through its flotation and up to completionof the BUPA transaction, has decided to take on the exciting position of ChiefExecutive of Movers & Shapers. As his replacement, we are delighted to welcomeMike Mills, FCCA, to the team. Mike has held a number of directorship positionson fully listed and AIM listed companies within the leisure sector including LAFitness plc where he worked alongside our CEO David Turner. We were also pleased to welcome Stephen Flanagan to the Board as a Non-ExecutiveDirector. Stephen has been with BUPA for 10 years and is currently theCommercial Director for its UK Health insurance business as well as the ManagingDirector of its risk business, BUPA Health Assurance, and Managing Director ofits health screening and occupational health business, BUPA Wellness. Prior tothis he was with British Airways for 17 years where he held a number of seniorpositions. Since the year end Michael Warshaw, who was previously a consultant to theCompany and Chairman of Molton Brown, has joined the main board as aNon-Executive Director assuming the role of Deputy Chairman. Further appointments have been made throughout all our divisions to supportgrowth within existing and new markets, including sales, development andsupport. Financial Performance and Business Re-organisation Continued investment in the Group's products and services and spending on salesand marketing resulted in the Group reporting pre-tax losses of £2,162,000(2006: loss of £1,041,000) for the year ended 31 July 2007. However, we saw amarked improvement in turnover which increased by 54% to £1,311,000 (2006:£852,000). The Group's cash position remains strong with £2.5 million in the bank followingBUPA's £3 million investment by way of a placing to acquire a 29.9% stake in theCompany. BUPA was also given an option to subscribe for additional new OrdinaryShares in order to maintain its percentage interest in the shares of theCompany. Following an internal re-organisation and the acquisition of certain minorityinterests by the Company, we established a new joint venture company, ADDWellness Holdings Limited, which owns two product and service propositions:Fitbug Limited and Movers and Shapers Limited. At the same time, BUPA invested afurther £3.7 million to acquire a 50% equity stake in ADD Wellness HoldingsLimited recognising the intrinsic value of the Fitbug and Movers and Shapersbusinesses. ADD Wellness Holdings Limited held cash balances of £3.4 million asat 31 July 2007 to finance the future development of Fitbug and Movers &Shapers. The net asset position of the Group has increased dramatically from £1,221,000to £5,358,000 as a result of the investments by BUPA in ADD Wellness HoldingsLimited and ADDleisure plc. The nature of the businesses is essentially a start up and at this stage of theGroup's development the nature and scope of Key Performance Indicators ('KPIs')is under ongoing development. Currently the KPIs utilised in the business arethe performance to budget of sales, EBITDA and cashflow. Prospects The UK health and fitness industry, now valued at over £3.4 billion (AMAResearch 2007), is witnessing significant changes as the demand for newequipment and motivational ideas to address health issues, including obesity,increases. In line with this, as a group specialising in health, wellbeing andleisure products and services, we are ideally placed to take advantage of thesechanges. We remain committed to our growth strategy, developing existing products andservices, whilst remaining alert to new investment opportunities. Our targetthis year is to focus on consolidating the propositions and key markets for ourexisting products and crystallising the synergies and benefits of ourpartnership with BUPA. We are confident that the benefits in terms of increasedgroup performance will flow through as a result of the time and energy that wehave expended to bring our exciting range of products to market. Our partnershipwith BUPA illustrates our position as an innovative company to watch as we moveinto new territories and break down old barriers and ideas surrounding thehealth and wellness markets. We are truly excited about our prospects and lookforward to continued development throughout 2007-2008. Allan Fisher Chairman 29 January 2008 Operations Review Fitbug Limited ("Fitbug") (50/50 ADDleisure/BUPA) Fitbug offers online personal health and well-being services by combininginteractive tracking devices and web technology to measure activity and healthindicators, provide feedback and motivate the user towards a healthierlifestyle. During the year, Fitbug made significant progress, developing its coretechnology and enabling marketing activities aimed at increasing its exposure tothe UK corporate markets. The corporate market has seen the most notable growth,helped by the initiation of a new corporate programme, Fitbug@Work. As a result,Fitbug attracted a number of new high profile corporate clients including BP andTime Warner. The corporate programme uses a most significant development, theFitbug Lab. The Lab automatically collects information from each client as totheir weight, blood pressure, pulse and body fat. Other measurements such asbody mass index are calculated and this information is retained on the clients'individual record and emailed to them on completion. Fitbug's three-year agreement with PruHealth, a leading innovative privatemedical insurance provider, is paying dividends with an increasing number ofPruHealth customers signing up to Fitbug in order to receive a reduction infuture premiums or cash-back based on achievement of certain activity levelsmeasured by the product. Fitbug has a number of exciting initiatives which it aims to action in thecoming months, including integrating the product with certain BUPA offerings,expansion into new markets and further developing its hardware to allow newtypes of activity to be tracked and more in-depth feedback reports to begenerated. These ongoing enhancements to the interfaces to reportingcapabilities will play a key role in developing the corporate scheme. Movers and Shapers Limited ("Movers & Shapers") (50/50 ADDleisure/BUPA) Movers & Shapers was created to find a solution to delivering a fitness andwellness product to High Street retail. Combining fast-track resistance trainingon state-of-the-art equipment with convenient cardiovascular exercise, itprovides a complete approach to well-being, shape, fitness and nutrition,enabling clients to achieve their personal goals. The concept has been designedto be able to grow as a chain and the product and processes have been developedwith roll-out in mind. Conveniently located on the high street, within retail stores or in corporateoffices, Movers & Shapers offers a select range of specialist well-beingproducts, all geared towards achieving results without the need for dramaticlifestyle changes. The effects of the products can be demonstrated with twosweat-free half hour sessions a week at the studio with group personalisedtraining that uniquely combines Fitbug and Power Plate technologies. Movers & Shapers has two studios in north and central London and aims to open afurther three across London by spring 2008 as part of a national roll-outprogramme. A new pilot studio will open under franchise at Bankside, SE1 inFebruary 2008. The directors continue to talk to major retail chains regarding concessionopportunities. In line with this growth strategy, an agreement was signed withAlliance Boots plc to pilot the proprietary concept in early 2008, with the aimof rolling it out nationwide. Movers & Shapers is also launching a proposition this year to install studiosinto corporate locations. The directors believe this will be of particularinterest to companies as the corporate studios are space efficient and offer 30minute, desk-to-desk, sweat-free workouts. Internationally, the concept is being rolled out in Hong Kong through a 50/50joint venture agreement with a local party. The joint venture's first studio incentral Hong Kong is trading well and a lease on a second studio was recentlysigned. Additionally, Movers & Shapers is exploring opportunities to expand intoChina and throughout Asia including potential franchises. Digital Plantation Limited ("Digital") (50.2% Investment) Digital's intelligent management software, has undergone a re-branding exerciseduring the year to capture the essence of the application's flexibility andfunctionality. Formerly known as ez-Book, the newly named ez-Systems applicationfacilitates advance booking functionalities, utilising various mediums includingthe web and SMS messaging to improve the operating efficiency of customer facingbusinesses. ez-Systems now supplies an end-to-end intelligent web-based resource managementsystem, designed to improve efficiency and maximize yield through integratedbooking, POS and stock control, membership, communications, reporting and webmodules. This modular approach maintains ez-Systems flexibility to allow clientsto pick and choose which modules are most appropriate for them and creates aproduct fluidity that can be easily adaptable for the differing requirements ofvarious sectors. With its continued development, the software package continues to increase itspresence within the Health and Fitness sector, with key signings this yearincluding Greens Health and Fitness Chain (De Vere), the Soho Gyms chain andWimbledon Racquets and Fitness Club. ez-Systems also continues to diversify inkey strategic sites within the Local Authority and Trust sectors such asGreenwich and Pendle Leisure, and has formed a strategic partnership withequipment suppliers, PTE plc and Alliance Leisure, to promote the ez-Systemsproduct within these fields. Opportunities within the medical market have alsobeen exploited and ez-Systems is currently in the process of a UK wide rolloutfor SK:N, the leading UK laser care medical professionals. Other sectors are now also showing positive interest within the product, such asthe sailing and cruise line markets with a pilot contract secured with Cunardfor the launch of its new liner, the Queen Victoria. These, along with thepartnerships being adopted by those companies such as PTE and Alliance Leisure,show real potential in how ez-Systems networks are being expanded. Consolidated profit and loss account For the year ended 31 July 2007 Note 2007 2006 As restated £'000 £'000 Turnover: Group and share of joint venture 1,324 852Less: share of joint venture turnover (13) - -------- ---------Turnover 1,311 852Cost of sales (410) (311) -------- ---------Gross profit 901 541 Administrative expenses (3,053) (1,916) -------- ---------Group operating loss (2,152) (1,375)Share of operating loss in joint venture (13) -Profit on disposal of associated undertaking - 322 -------- ---------Loss on ordinary activities before interest (2,165) (1,053) Interest payable - Group (5) (3) - Joint venture (4) -Interest receivable - Group 12 15 -------- ---------Loss on ordinary activities before taxation (2,162) (1,041) Taxation on loss on ordinary activities 34 12 -------- ---------Loss on ordinary activities after taxation (2,128) (1,029) Minority interest 452 314 -------- ---------Loss for the financial year (1,676) (715) -------- --------- Loss per shareBasic and fully diluted (pence) 3 (1.3) (0.6) -------- --------- Consolidated statement of total recognised gains and losses For the year ended 31 July 2007 Note 2007 2006 As restated £'000 £'000Loss for the financial year - Group (1,659) (715) - Joint venture (17) - -------- ---------- (1,676) (715) Gain on disposal of subsidiary companies to joint 1,951 -venture -------- ---------- 275 (715) ---------- Prior year adjustment - share based payments 2 (88) --------Total gains and losses recognised since lastfinancial 187statements -------- Consolidated balance sheet at 31 July 2007 Note 2007 2007 2006 2006 === ====== ====== ====== ====== ====== £'000 £'000 £'000 £'000 === === ======= ======= ======= =======Fixed assets============== === === === === ===Intangible assets 46 771=================== === === ==== === =====Tangible assets 39 79================= === === ==== === ==== === === -------- === -------- 85 850 === === === === === === ===Investment in joint venture === === === === === - share of gross assets 2,766 - === === === - share of gross liabilities (1,065) - === -------- === -------- === 1,701 - === === === === === -------- === -------- 1,786 850 === ===Current assets ===Stocks - 68 ===Debtors due after more than one 1,137 -year ===Debtors due within one year 954 221 ===Cash at bank and in hand 2,494 705 === === -------- -------- 4,585 994 === ===Creditors: amounts falling due (554) (363) ===within one year === === -------- --------Net current assets 4,031 631 === === === -------- === --------Total assets less current 5,817 1,481liabilities === === === === === === ===Creditors: amounts falling due (459) (260) === ===after more than one year === === === === -------- === -------- 5,358 1,221 === === -------- -------- === === === === ===Capital and reserves === === === === ===Called up share capital 1,013 606 === ===Share premium account 4,447 1,575 === ===Merger reserve 1,319 757 === ===Profit and loss account (1,015) (1,377) === === -------- --------Shareholders' funds 4 5,764 1,561 ===Minority interests (406) (340) === === === === -------- -------- 5,358 1,221 === === -------- -------- Consolidated cash flow statement For the year ended 31 July 2007 Note 2007 2007 2006 2006 £'000 £'000 £'000 £'000Net cash outflow from 5 (1,385) (888)operating activities Returns on investments andservicing of financeInterest received 12 15Interest paid (5) (3) ------- -------- Net cash inflow from returns on 7 12investments and servicing offinance TaxationCorporation tax credit received 34 12 Capital expenditure andfinancial investmentPurchase of tangible fixed assets (91) (30)Development costs (28) (70)Proceeds from sales of fixed assets - 5 ------- -------- Net cash outflow from capital (119) (95)expenditure and financialinvestment Acquisitions and disposalsDisposal of subsidiary cash tojoint 137 -ventureCash acquired with subsidiaries - 500Disposal of associate - 348 ------- --------Net cash inflow 137 848from acquisitions and disposals -------- --------Cash outflow before financing (1,326) (111) FinancingIssue of ordinary share capital 3,280 -Issue costs (64) (15)Capital element of finance leaserental (26) (16)paymentsLoan proceeds 125 200Loan repayments (200) - ------- --------Cash inflow from financing 3,115 169 -------- --------Increase in cash in the year 6,7 1,789 58 -------- -------- Notes 1 Status of financial information The financial information contained in this preliminary announcement does notconstitute the company's consolidated financial statements for the year ended 31July 2007 or 31 July 2006 but is derived from those financial statements. Thefinancial statements for the year ended 31 July 2006 have been delivered to theRegistrar of Companies. The financial statements for the year ended 31 July 2007will be delivered following the company's Annual General Meeting. The auditorshave reported on those financial statements; their reports were unqualified anddid not contain statements under section 237(2) or (3) of the Companies Act1985. 2 Changes to accounting policies FRS 20 'Share-based payment' has been adopted with effect from 1 August 2006. FRS 20 requires that the fair value of equity-settled share-based payment, suchas share option awards, is determined at the date of grant and is expensed on astraight-line basis over the vesting period based on the company's estimate ofthe options that will eventually vest. In the case of options granted, thedirectors have chosen to measure the fair value by using a Black-Scholes pricingmodel. Prior to 1 August 2006, the company accounted for share options under theprovisions of UITF Abstract 17 which required that a charge be 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. The effect of applying FRS 20 in the year ended 31 July 2007 is to increase theloss for the year by £87,000. The effect on cash balances, net assets andretained reserves is nil as the credit entry is recognised in the profit andloss reserve. Comparative figures for the year ended 31 July 2006 have been restated toreflect the adoption of FRS 20. This has the effect of increasing administrativeexpenses by £88,000. There is no effect on cash balances, net assets andretained reserves as the credit entry was charged to the profit and lossreserve. 3 Loss per share Loss per ordinary share has been calculated using the weighted average number ofshares in issue during the relevant financial years. The weighted average numberof equity shares in issue, was 124,444,247 (2006 - 110,032,822) and the loss,being loss after tax and minority interests, £1,676,000 (2006 - loss £715,000 asrestated). The effect of all options and warrants outstanding as at 31 July 2007is anti-dilutive. 4 Reconciliation of movements in shareholders' funds Group Group Company Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000 (Loss)/profit for the year (1,676) (715) 233 (399)Gain on disposal of subsidiaries to jointventure 1,951 - - -New share capital subscribed 3,841 563 3,841 563Credit to equity in connection with shareoptions issued 87 88 87 88 ------- ------ -------- --------Net addition/(reduction) to shareholders'funds 4,203 (64) 4,161 252Opening shareholders' funds 1,561 1,625 2,628 2,376 ------- ------ -------- --------Closing shareholders' funds 5,764 1,561 6,789 2,628 ------- ------ -------- -------- 5 Reconciliation of operating loss to net cash outflow from operatingactivities 2007 2006 As restated £'000 £'000 Operating loss (2,152) (1,375)Amortisation and - goodwill 415 51impairment - development costs 121 114Depreciation 54 31Share-based payments 87 88Decrease in stocks 27 135Increase in debtors (321) (60)Increase in 384 128creditors -------- ---------Net cash outflow (1,385) (888)from operating -------- ---------activities 6 Reconciliation of net cash inflow to movement in net funds 2007 2006 £'000 £'000 Increase in cash in the year 1,789 58Cash outflow/(inflow) from changes in funds 101 (184) ------- --------Movement in net funds resulting from cash flows 1,890 (126)Debt disposed with subsidiaries 32 -Inception of finance leases - (36) ------- --------Movement in net funds 1,922 (162)Opening net funds 420 582 ------- --------Closing net funds 2,342 420 ------- -------- 7 Analysis of net funds At Cash Disposals of At 1 August flow subsidiary 31 July 2006 £'000 (excluding 2007 £'000 cash and £'000 overdrafts) £'000 Cash at bank and in hand 705 1,789 - 2,494Finance leases (53) 26 - (27)Directors' loans (32) (125) 32 (125)Other loans (200) 200 - - -------- ------ ---------- ------- Total 420 1,890 32 2,342 -------- ------ ---------- ------- The Report and Accounts for the year ended 31 July 2007 are being posted toshareholders on 31 January 2008 and are available on the Company's websitewww.addleisure.com. * * ENDS * * For further information visit www.addleisure.com or contact: Mike Mills, FD ADDleisure Plc Tel: 020 7449 1000 Mark Percy Seymour Pierce Tel: 020 7107 8000 Isabel Crossley/Susie Callear St. Brides Media & Finance Tel: 020 7236 1177 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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