RNS Number:0219N
Fitness First Plc
29 June 2000
FITNESS FIRST PLC
("Fitness First" or the "Company")
Interim Results For The Half Year Ended 30 April 2000
Fitness First Plc, Europe's largest health and fitness club operator,
announces 117% increase in pre-tax profits to #5.03 million and
expansion into Asia through the acquisition of SPORTathlon Holdings Ltd.
29 June 2000
Half Year Ended 30 April 2000
1999 2000 Increase
Turnover #11.9 m #24.4 m 106%
Pre-tax profit #2.32 m #5.03m 117%
Earnings per share 6.09p 10.39p 71%
* Now the largest health and fitness club operator in Europe, both by number
of members and number of clubs; as well as market leader in both the UK and
Germany.
* In the past 12 months, total group membership has doubled from 110,000 to
220,000.
* Expansion into Asia through the acquisition today of SPORTathlon Holdings
Ltd of Hong Kong which primarily engages in the operation of health and
fitness clubs, spas and the sale of fitness equipment in Hong Kong,
Singapore, Thailand, Philippines and China. The company has 7 health clubs;
3 in Hong Kong, 2 in Singapore and 2 in Thailand with 4,600 members.
* Vigorous expansion across Europe, fuelled by increasing demand for health
and fitness facilities; resulting in the Company's strongest organic growth
to date for a six month period in both the UK and Germany.
* European expansion programme in place for club openings in the new markets
of Holland, France and Spain.
* Banking facilities and funding in place of #68 million, to assist the
Company's rapid growth programme.
* At 30 April 2000, the Company operated 93 clubs (April 1999: 51): 63 in the
UK, 27 in Germany and 3 in Belgium. Since this date, an additional 3 clubs
have opened in the UK, 1 in Germany and 1 Belgium; bringing the total to
98.
* At 30 April 2000, total current membership exceeded 205,000 (April 1999:
102,000): 150,000 in the UK, 50,000 in Germany and 5,000 in Belgium. In the
past 12 months, membership figures have doubled from 110,000 to 220,000.
* An additional 16 clubs are currently under development: 8 in the UK, 4 in
Germany, 3 in Spain and 1 in Holland. Development will also begin shortly
on 2 clubs in France.
Mike Balfour, Managing Director of Fitness First, commented:
"We are pleased to announce another set of impressive results, along with
further significant expansion of our European operations, on which we will
continue to build.
"Our acquisition today of SPORTathlon provides Fitness First with an excellent
platform from which to develop a chain of health and fitness clubs across
Asia, as well as introducing our quality, 'Affordable Fitness' concept into
this large market.
"The fitness market remains buoyant, with a continued strong appetite for
membership at each of the clubs we open. In light of this, there continues to
be considerable opportunities for us to enhance our leading market position in
the underdeveloped and fragmented health and fitness markets of Europe and
Asia."
Enquiries:
Fitness First Today: 020 7457 2345
Michael Balfour, Managing Director 01202 845000
Christopher Pearce, Chairman 01932 865065
Investec Henderson Crosthwaite - Corporate Finance 020 7597 5181
Andrew Edwards
Gavin Anderson & Company 020 7457 2345
Marc Popiolek/Rebecca Penney
Notes to Editors:
Fitness First:
* Fitness First was floated on the Alternative Investment Market in October
1996 at a price of 80 pence per share. In February 1999 the Company moved
to the Official List. On the basis of the closing share price on 28 June
2000 of 1090 pence, the Group has a market capitalisation of approximately
#490.0 million.
* Founded in 1992, Fitness First was created with the objective of developing
a chain of health and fitness clubs to focus on the concept of quality
"Affordable Fitness", providing health and fitness club facilities that
tend to be in most demand for a relatively modest subscription fee of
around #31 per month (#39 in London) and a joining fee of typically #40.
* A typical Fitness First health club, with a fit out costing between
#600,000 to #1.2 million for a leasehold site and on average #2.2 million
for a freehold site, provides a large gymnasium with a wide variety of
cardiovascular and resistance equipment, a large air conditioned
aerobics studio and luxury changing facilities leading on to a health
spa consisting of a large sauna, steam room and whirlpool bath.
Also provided are extensive free parking, creche, lounge area with
complimentary soft drinks, beauty salon and a members' video library
consisting of over 600 titles.
* Fitness First currently operates 66 clubs in the UK, by location:
Aintree, Bangor, Belfast, Berkhamsted, Birmingham, Bournemouth, Bow Wharf,
Bradford, Bristol, Brixton, Bromborough, Bunhill Row, Burton On Trent,
Camberley, Camden, Chalk Farm, Chatham, Chelmsford, Chesterfield, Clapham
Junction, Coventry, Derby, Dundee, Edinburgh, Fareham, Glasgow, Godalming,
Halifax, Harrow, Hartlepool, Holloway, Huddersfield, Ilford, Ipswich,
Kilburn, Kingly Street, Kingsbury, Leeds, Lewisham, Luton, Mere Green,
Mitcham, Newport, Northampton, Nottingham, Pinner, Poole, Preston, Purley,
Rochdale, Rotherham, Runcorn, Sheffield, Shrewsbury, Southampton, Southend,
Stoke On Trent, Swindon, Telford, Tottenham, Walworth Road, Wednesbury,
Whitefield, Wolverhampton, Wrexham, York.
A further 8 clubs are currently under construction.
* In August 1998, Fitness First became the first UK health and fitness club
operator to take a significant step into Europe with a 50% acquisition of
The Fitness Company Freizeitanlagen GmbH ("The Fitness Company") in
Germany. In February 2000, Fitness First made arrangements to acquire the
balance of shares in The Fitness Company in Germany and raised a further
#25.4m to accelerate the expansion programme in Continental Europe.
The Fitness Company currently operates 28 clubs throughout Germany with
55,000 members and 4 clubs under construction.
* In October 1999, Fitness First announced its 40% joint venture with Passage
Invest NV to develop a chain of fitness clubs in Belgium and Luxembourg.
The Clubs operate under the name Passage Fitness.
* Passage Fitness, Belgium, currently operates four clubs located in Gent,
Waregem, Kortrijk and Roeselare. Total membership exceeds 5,000.
* UK membership has increased to over 160,000 and when added to the 55,000
members in Germany and the 5,000 in Belgium, gives Fitness First a total
membership in excess of 220,000.
* Construction has begun on 3 sites in Spain and 1 in Holland, and
development will begin shortly on 2 sites in France.
* Fitness First has now appointed General Managers in Spain, Holland, France
and Italy and has or is in the process of forming the appropriate corporate
structure.
* Fitness First has now opened its own residential training academy,
adjoining its Chesterfield club. The Fitness First Training Academy, which
also accommodates up to 40 people, provides staff with courses in
management, sales and fitness training.
CHAIRMAN'S STATEMENT
Financial Results
I am pleased to report that Fitness First Plc enjoyed a strong
trading performance during the six months to 30 April 2000 with pre-tax
profits 117% higher at #5.03m (1999: #2.32m). Pre-tax profits restated
after deduction of #328,000 for goodwill amortisation, as now required under
FRS10, increased 103% to #4.702m.
During the period, turnover grew 106% to #24.4m (1999: #11.9m) with a rise in
earnings per share from 6.09p in 1999 to 10.39p, an increase of 71%. Pre-tax
margins, before goodwill, improved to 20.6%, from 19.5% for the same period in
the previous year.
In the UK, 16 clubs were opened in the period, taking the total to 63 -
Bangor,Purley, Lewisham, Mitcham, Wolverhampton, Bradford, Mere Green,
Godalming, York,Aintree, Poole, Burton, Runcorn, Stoke, Newport and
Chesterfield. This is the largest number of openings that the Group has
undertaken in a six month period and compares with 9 clubs opened in the same
period in 1999.
Adjoining the new 2,000 sq metre club at Chesterfield, we have built an
Academy for staff training and development. The Academy has on-site
accommodation for 40 people and is already fully utilised 'in-house'
to hold courses in management, staff and fitness training.
A further 7 clubs opened in Germany - Wilhemshaven, Fulda, Kaiserlauten,
Kolne (Cologne), Bocholt, Monchengladbach, and Gottingen. This compares to
5 clubs opened in the same period in 1999. In April 2000, to complement
the organic expansion, The Fitness Company purchased a private company
with 5 clubs in Berlin for DM10m (#3.17m). This further consolidates
The Fitness Company's position as the leading operator in Germany with 27
clubs (April 1999: 11).
Since 30 April, a further 5 clubs have opened - 3 in the UK, 1 in Germany and
the first new club to be built in Belgium since the acquisition of the
interest in Passage Group in November 1999. The total number of clubs in the
Group now stands at 98 (1999: 51) - 66 in the UK, 28 in Germany and 4 in
Belgium.
Operations
The demand for Fitness First facilities across Europe continues to be strong,
with the health and fitness market making good progress. During the six
months to 30 April 2000, membership rose 72% in the UK from 87,000 to 150,000,
and in Continental Europe from 20,000 to 55,000, with Germany accounting for
50,000 members.
Developments
This was a particularly active period for Fitness First with the
Directors vigorously pursuing the strategy of rolling out the affordable
fitness formula across Europe to address the increasing demand for
facilities.
In November 1999, Fitness First announced its entry into Belgium with
the acquisition of a 40% stake in Passage Invest NV, an operator of 3
clubs. Additional equity capital has been provided which when added
with bank facilities, should allow it to expand to approximately 10 clubs by
the end of 2001. A further 3 sites have been secured in Brussels,
Roeselare and Aalst. The first new club based on the Fitness First concept
has opened and the other 2 will be open by the year end. In Spain 3 clubs are
currently under construction with the first ready to open by Christmas 2000.
In February 2000, Fitness First made arrangements to acquire the balance of
shares in The Fitness Company in Germany and raised a further #25.4m to
accelerate the expansion programme in Continental Europe.
The Group strategy is focused to create a platform for expansion in the
principal European countries and to then replicate our successful club
roll-out programme in each country. We have appointed General Managers to run
our operations in Spain, Holland, France and Italy. We have commenced the
development of our first club in Holland, and we are shortly to begin
development of 2 clubs in France.
Dividend Policy
In view of the outstanding opportunities to continue the expansion programme
across Europe, the Directors consider that the profits generated by the Group
should be invested in further club openings.
Appointment of Director
I am pleased to announce the appointment of John Denning to the Board as a non
executive Director. He is currently Managing Director of Bass Leisure Retail,
a Director of Britvic Holdings and Chairman of Bass (Channel Islands) Ltd. He
will bring valuable experience to our Board.
Prospects
In the Chairman's Statement in January, the Board projected that Fitness First
would have 105 clubs open by the year end. We remain confident that this
target will be met.
The fitness market continues to be buoyant, with a strong demand for
membership in each of the clubs we open. Since 30 April our membership levels
have risen to 220,000 - an increase of 100% over the 110,000 total in June
1999 - 160,000 in the UK and 60,000 in Continental Europe. This makes Fitness
First the largest independent health club operator in Europe both by number of
members and number of clubs.
Our clubs are focused to provide the best membership value in health and
fitness. There are considerable opportunities for Fitness First to further
extend its leading position in the fragmented and underdeveloped health and
fitness market in the UK and Continental Europe, and the trading prospects
remain most encouraging.
Christopher Pearce, Chairman
29 June 2000
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 6 months to 30 April 2000
Audited Unaudited Unaudited
Year to 6 months to 30 April 2000 6 months to
31 Oct Before 30 April 1999
1999 goodwill Goodwill (Restated)
amortisation amortisation Total #'000
#'000 #'000 #'000
(Restated)
#'000
Turnover: Group
and share of
31,316 joint ventures 26,568 - 26,568 13,825
Less: Share of
joint ventures'
(4,155) turnover (2,173) - (2,173) (1,956)
27,161 GROUP TURNOVER 24,395 - 24,395 11,869
Operating
(20,819)charges (19,466) (328) ( 19,794) (9,307)
OPERATING
6,342 PROFIT 4,929 (328) 4,601 2,562
Share of profit
of joint
ventures and
associated
605 undertakings 112 - 112 310
PROFIT ON
ORDINARY
ACTIVITIES
6,947 BEFORE INTEREST 5,041 (328) 4,713 2,872
Interest
receivable and
331 similar income 430 - 430 30
Interest
payable and
(950) similar charges (441) - (441) (582)
PROFIT ON
ORDINARY
ACTIVITIES
6,328 BEFORE TAXATION 5,030 (328) 4,702 2,320
(521) Taxation (440) - (440) (192)
PROFIT FOR THE
FINANCIAL
PERIOD AFTER
5,807 TAXATION 4,590 (328) 4,262 2,128
Earnings per
ordinary share
before goodwill
15.82p amortisation 10.39p 6.09p
Earnings per
ordinary share
after goodwill
15.82p amortisation 9.65p 6.09p
Diluted
earnings per
ordinary share
before goodwill
15.57p amortisation 10.19p 5.99p
Diluted
earnings per
ordinary share
after goodwill
15.57p amortisation 9.46p 5.99p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the 6 months to 30 April 2000
Audited Unaudited 6 months to 30 Unaudited 6 months to 30
Year to April 2000 April 1999
31 October #'000 #'000
1999 (Restated)
#'000
(Restated)
Profit for
the
financial
5,807 period 4,262 2,128
Currency
translation
differences
on foreign
currency net
(305) investments (468) (260)
Adjustment on
acquisition
- of subsidiary (196) -
Total
recognised
gains and
losses
relating to
5,502 the period 3,598 1,868
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the 6 months to 30 April 2000
Audited Unaudited Unaudited As at
As at As at 30 April 1999
31 30 April 2000 #'000
October #'000 (Restated)
1999
#'000
(Restated)
5,807 Profit for the financial period 4,262 2,128
(305) Other recognised gains and losses (664) (260)
41,130 Shares issued 39,332 45
(995) Share issue costs (475) -
- Shares to be issued 27,010 -
(9) Goodwill on investment in joint venture - -
45,628 Net additions to shareholders' funds 69,465 1,913
Opening shareholders' funds as previously
27,186 stated 73,109 27,186
(318) Prior period adjustment (613) (318)
26,868 As restated 72,496 26,868
45,628 Net addition to shareholders' funds 69,465 1,913
72,496 Closing shareholders' funds 141,961 28,781
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 30 April 2000
Audited Unaudited
As at As at
31 October 30 April 2000
1999 #'000
#'000
(Restated)
FIXED ASSETS
- Intangible assets 38,497
65,588 Tangible assets 99,364
INVESTMENTS
Investments in joint ventures:
6,285 Share of gross assets 729
(3,304) Share of gross liabilities (146)
2,981 583
Investment in loan notes in
737 joint venture -
Investment in associated
57 undertakings 963
3,775
1,546
69,363
139,407
CURRENT ASSETS
108 Stocks 346
1,231 Debtors 4,475
15,479 Cash at bank and in hand 24,278
16,818 29,099
CREDITORS: amounts falling due
(12,364) within one year (18,917)
4,454 NET CURRENT ASSETS 10,182
TOTAL ASSETS LESS CURRENT
73,817 LIABILITIES 149,589
CREDITORS: amounts falling due
(1,321) after more than one year (7,628)
72,496 141,961
CAPITAL AND RESERVES
10,568 Called up share capital 11,421
- Shares to be issued 27,010
60,200 Share premium account 98,204
1,728 Profit and loss account 5,326
72,496 TOTAL EQUITY SHAREHOLDERS' FUNDS 141,961
The interim results were approved by the Board on 29 June 2000.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months to 30 April 2000
Audited Unaudited 6 months to Unaudited 6 months to
Year to 30 April 2000 30 April 1999
31 October #'000 #'000
1999 (Restated)
#'000
(Restated)
Net cash inflow
from operating
12,139 activities 5,122 1,790
Returns on
investments and
servicing of
(701) finance (44) (457)
- Taxation (59) -
(27,529) Capital expenditure (21,983) (10,113)
Acquisitions and
(9) disposals (12,988) -
Cash outflow before
management of
liquid resources
(16,100) and financing (29,952) (8,780)
(13,000) Management of (6,500) -
liquid resources
21,038 Financing 38,388 6,310
Increase/(decrease)
(8,062) in cash 1,936 (2,470)
Reconciliation of operating profit to net cash inflow
from operating activities
6,342 Operating profit 4,601 2,562
Depreciation and
amortisation
2,305 charges 2,438 995
(10) Increase in stocks (112) (42)
(Increase)/decrease
120 in debtors (1,357) 617
(Decrease)/increase
3,400 in creditors (443) (2,324)
Profit on disposal
(18) of fixed assets (5) (18)
12,139 5,122 1,790
Reconciliation of
net cash flow to
movement in net
cash/(debt)
Increase/(decrease)
in cash in the
(8,062) period 1,936 (2,470)
Cash inflow/(outflow)
from increase/(decrease)
in debt and
19,097 lease financing 470 (6,265)
Cash outflow from
increase in liquid
13,000 resources 6,500 -
Movement in debt
arising from cash
24,035 flows 8,906 (8,735)
Loans and finance
leases acquired
- with subsidiary (4,522) -
New finance on
leases and hire
(2,502) purchase contracts (3,148) (968)
Movement in debt in
21,533 the period 1,236 (9,703)
Net cash/(debt) at
beginning of
(9,820) period 11,713 (9,820)
Net cash/(debt) at
11,713 end of period 12,949 (19,523)
NOTES TO THE UNAUDITED INTERIM RESULTS
1. The results and summary balance sheet incorporate the unaudited accounts
of Fitness First Plc and all its subsidiaries made up to 30 April 2000, and
have been prepared on a basis consistent with the audited financial statements
for the year ended 31 October 1999.
2. The results for the year ended 31 October 1999 have been extracted from
the audited financial statements for that year, which have been filed with
the Registrar of Companies. The auditors' report on these accounts was
unqualified.
3. The Company has adopted FRS15 and UITF23 during the period which have
given rise to a prior period adjustment of #613,000 to shareholders' funds as
at 31 October 1999 (#450,000 as at 30 April 1999), the effect of which has
been to reduce the previously reported profit for the financial year ended 31
October 1999 by #295,000 (six months ended 30 April 1999 - #132,000).
4. On 1 March 2000 the Company acquired the remaining 50% of its German
joint venture, Fitness Company Freitzeitanlagen GmbH for #40.8m, excluding
expenses. The consideration paid comprised a mixture of cash (#13.8m) and
shares to be issued (#27.0m) and gave rise to goodwill on acquisition of
#38.3m. In the current period the acquisition contributed #2,592,000 of
turnover and #516,000 of operating profit before goodwill amortisation of
#328,000.
5. Earnings per share are based on an average number of shares in issue
of 44,161,518 (1999: 34,915,643) and profits on ordinary activities after
taxation of #4,262,000 (1999: #2,128,000) and #4,590,000 excluding goodwill
amortisation.
6. Diluted earnings per share has been calculated using a diluted
average number of shares in issue of 45,045,183 (1999: 35,535,309) and
profits on ordinary activities after taxation of #4,262,000 (1999:
#2,128,000) and #4,590,000 excluding goodwill amortisation.
7. The unaudited Profit and Loss Account for each of the six month periods
and the unaudited Balance Sheet as at 30 April 2000 do not amount to full
accounts within the meaning of section 240 of the Companies Act 1985 and have
not been delivered to the Registrar of Companies.
8. Copies of this statement are being sent to all shareholders and copies
are available from the Company's registered office at 58 Fleets Lane,
Fleetsbridge, Poole, Dorset, BH15 3BT.
NOTES TO THE UNAUDITED INTERIM RESULTS
INDEPENDENT REVIEW REPORT BY THE AUDITORS TO FITNESS FIRST Plc
Introduction
We have been instructed by the Company to review the financial information
for the six months ended 30 April 2000 set out on pages 3 to 7, and we have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities The interim report, including the financial
information contained therein, is the responsibility of, and has been
approved by, the Directors. The Listing Rules of the UK Listing
Authority require that the accounting polices and presentation applied to
the interim figures should be consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in
Bulletin 1999/4 issued by the Auditing Practices Board. A review consists
principally of making enquiries of Group management and applying analytical
procedures to the financial information and underlying financial data and
based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 April 2000.
DELOITTE & TOUCHE Mountbatten House
Chartered Accountants 1 Grosvenor Square
29 June 2000 Southampton
Hampshire
SO15 2BZ
END
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