Half Yearly Report

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

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

Interim Results

Fitbug Holdings Plc, the AIM traded provider of online personal health and well-being services, announces its results for the six months ended 30 June 2010.

Overview

·; Strong growth in group sales - 91% increase in revenues in the period to £798,000 (2009: £417,000)

·; 17 % reduction in overheads in administrative expenses

·; Increasing demand from blue-chip corporate clients for Fitbug's workplace health programme and 'online games' initiatives designed to incentivise employees to increase their activity levels

·; Extending geographic reach -  April 2010 launched white label offering of Fitbug technology through Holmes Place International, a leading fitness club operator in the Middle East and Europe

·; Increasing online personal health and well-being services offered in the US:

o Launched a US version of Fitbug.com with The Vitality Group, the developer of the world's longest-standing health enhancement programme

o Distribution agreement signed with US manufacturing company SCIFIT to market Fitbug for medical rehabilitation programmes

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

·; Strong pipeline of new business commencing 2011 which will positively impact FY2011 financials

Chairman's Statement

I am pleased to report that Fitbug Holdings Limited has made strong progress over the period, both in terms of consolidating its existing business model, and forging new partnerships and alliances to broaden our geographic and market presence across a range of sectors. I believe that this is testament to the considerable potential and scope encompassed by our pioneering online coaching service and a technology platform which is enabling expansion into new areas. The strong upswing in economic growth during 2010 has also been advantageous for Fitbug as corporate appetite for our product improves. Employers are once again looking for health and well-being solutions to incentivise their staff and with this in mind; we remain focussed on securing new corporate clients to capitalise upon this exciting opportunity.

There has been an increasing demand from corporate clients for 'games' initiatives and online competitions designed to incentivise employees to increase their activity levels in an enjoyable and highly visible way. We have recently been working with several leading global corporations across an array of sectors, including a global credit card provider and a multinational retailer, to create virtual journeys and competitions for their employees. Our online challenges provide us with an innovative solution, unique in the market place, and we hope that going forward, we will be able to extend our affiliations with these prestigious companies as the potential of our product become more widely recognised.

We have achieved excellent progress and international traction following the April 2010 launch of a white label offering of Fitbug technology through Holmes Place, a leading international health and fitness club operator in the Middle East. Importantly, this agreement with Holmes Place underpins the flexibility and potential of Fitbug's technology as the Company looks to increase its international reach. By offering the Fitbug product through well known health and fitness facilities, I am confident that our product will continue to gain recognition as an integral wellness tool within new regional markets.

The lucrative US market has been an area that we are actively focussed on growing. Over the year we launched a US website with The Vitality Group ('TVG'), the developer of the world's longest-standing health enhancement programme. This relationship has gained traction, with several clients now expanding their Fitbug programmes following successful pilot programmes. In addition, we continue discussions with a number of other significant organisations within the US.

Another milestone agreement for us in the United States was the distribution agreement that we signed with SCIFIT, a leading manufacturer and provider of fitness equipment and wellness programmes with a primary focus on the uniformed services and education markets. Fitbug's ability to provide exercise and medical professionals with a tool which creates non-gym based programmes that allow individuals to be monitored and their progress charted has been of particular interest to SCIFIT who will market Fitbug primarily for medical rehabilitation programmes. This is an excellent opportunity to extend our reach in the medical and rehabilitation arena, and we are encouraged by the feedback that we have had so far with SCIFIT, indicating that this may be another avenue for Fitbug to concentrate on during the coming months.

Our long-standing relationship with PruHealth, whereby PruHealth participants earn reward points for engaging in a healthy lifestyle, continues to be an integral facet of our business. Prudential's acquisition of Standard Life Healthcare, which has seen the number of lives covered by PruHealth increase to 700,000 offers a significant potential growth opportunity for Fitbug. We are hopeful that this will increase the visibility of Prudential's programme and lead to increased sales and recognition for our product as a leading health promotion tool. 

Our weight management service aimed primarily at Primary Care Trusts ('PCTs') looking for solutions to reduce obesity within the community has been successful and the results continue to be extremely positive. Going forward, I believe that the success of the programme will lead to further opportunities in other regions of the UK. In line with this, in April Competition Line, a leading UK provider providing of fitness facilities in the public sector, began utilising our programme and, following successful pilot trials, they are looking to roll it to further facilities across the UK.

Financial Review

The results for the six months to 30 June 2010 show that revenue increased by 91% to £798,000 (2009: £417,000). Gross profit margins remained stable despite winning significant PCT business which is generally lower than other sales channels. A sharp focus on disciplined financial management also resulted in overhead and administrative expenses from continuing operations falling by 17% in the period.

As a result the pre-tax loss for the period was £291,000 (2009: loss of £1,059,000). At the end of the period, the Group's cash position was £165,000 (2009: £294,000).

Overview

During the second half of the financial year, we expect to continue to close the gap towards a break-even position, while capitalising on long-term growth opportunities in the UK and overseas. Fitbug currently has a very encouraging sales pipeline having lined up a number of deals which will begin in 2011 which should generate significant revenue in the first half of 2011 and in turn should move Fitbug into profitability. Over the second half of this year, we are focussed on managing our costs so that we can prepare ourselves for deal flow over the coming year.

I would finally like to thank my fellow Directors, the Fitbug management team, our advisers and our shareholders, for their continued support over the period. I look forward to updating shareholders regularly on the progress of Fitbug as we look to broaden our reach, extend our offering and strengthen the areas of our core business over the remainder of the financial year and beyond.

Allan Fisher

Chairman

29 September 2010

** E N D S **

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

Fitbug Holdings plc

Consolidated statement of comprehensive income

for the period ended 30 June 2010

Fitbug Holdings plc

Consolidated statement of changes in equity

for the six months ended 30 June 2010

Fitbug Holdings plc

Consolidated Balance Sheet

at 30 June 2010

Fitbug Holdings plc

Consolidated cash flow statement

for the six months ended 30 June 2010

Fitbug Holdings plc

Unaudited notes forming part of the consolidated interim financial statements

for the six months ended 30 June 2010

1 BASIS OF PREPARATION

Fitbug Holdings plc is a company incorporated in the United Kingdom under the Companies Act 2006. Its registered office address is Unit 10 Utopia Village, 7 Chalcot Road, London NW1 8LH.

The condensed consolidated interim financial statements of the company for the six months ended 30 June 2010 comprise the company and its subsidiaries (together referred to as "the group"). These interim statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The interim financial information has been prepared using the same accounting policies, presentation, method of computation and estimation techniques as are expected to be adopted in the group financial statements for the year ending 31 December 2010 and which were adopted in the audited group financial statements for the year ended 31 December 2009.

The financial information for the year ended 31 December 2009 has been extracted from the statutory accounts for that period. The auditors have reported on the statutory accounts for the year ended 31 December 2009 and their report was qualified as 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. The auditors' report also drew attention by emphasis of matter to issues surrounding the ability of the company to continue as going concern. A copy of those financial statements has been filed with the Registrar of Companies. 

The condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted in the EU. While the financial figures included in this half yearly report have been computed in accordance with IFRSs as adopted in the EU applicable to interim periods, this half yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

The presentation of the comparatives for the six months ended 30 June 2009 has been restated to reflect the impact of discontinued operations and restated to correct the accounting error referred to in note 23 to the financial statements whereby the profit for the six months ended 30 June 2009 was over-stated by £870,000 as a result of an error in the opening balance sheet at 31 December 2008 in respect of liabilities incorrectly recognised relating to loans made to joint venture entities. Furthermore, goodwill of £207,000, previously recognised on the acquisition of the 50% interest in Fitbug Limited at 30 June 2009, has now been written off in the results for the period ended 30 June 2009 consistent with the policy adopted in the financial statements for the year ended 31 December 2009.

2 LOSS PER SHARE

The loss per share from continuing and discontinued operations is based on a loss for the period attributable to equity holders of the Parent Company of £291,000 (2009 - loss of £1,059,000) and the weighted average number of shares being 37,985,195 ordinary shares issued for the period ended 30 June 2010 (2009 - 20,962,195 as adjusted for the share consolidation in the year).The loss per share from continuing operations is based on a loss for the period of £333,000 (2008: 715,000) and the same number of ordinary shares.

3 GOING CONCERN

The condensed interim financial statements for the six months ended 30 June 2010 have been prepared on the assumption that the group will be able to continue trading as a going concern for the foreseeable future. At that date the group had net liabilities of £369,000, which includes a £500,000 loan from Bupa Finance plc, a 23.85% shareholder in the business, and limited available cash resources. The directors have identified an immediate requirement for the injection of further cash resources to enable the group to continue trading. Advance discussions are ongoing with several potential investors which the directors are optimistic will raise sufficient new equity and loan capital to enable the Group to continue to trade and exploit a number of new contract opportunities as described in the business review.