RNS Number:7675Q
Fitness First Plc
31 January 2002
31 January 2002
Not for release, publication or distribution in or into the United States,
Canada, the Republic of Ireland, Australia or Japan
Fitness First PLC
("Fitness First" or the "Company")
Preliminary Announcement of Final Results For the Year Ended 31 October 2001
Placing of 18,750,000 Ordinary Shares incorporating an Open Offer at 412p per
share to raise approximately £75 million (net of expenses)
FINANCIAL HIGHLIGHTS
Year Ended 31 October 2001
2001 2000 Increase
(Audited) (Audited)
Turnover £133.1m £65.3m 104%
Pre-tax profit* £20.6m £12.8m 60%
Earnings per share* 17.8p 12.6p 41%
Clubs 200 115 74%
Membership 440,000 237,000 86%
*Before goodwill amortisation
- Fitness First is one of the leading operators of fitness clubs in
the world.
- Total Group membership is now over 500,000, an increase of 67%
(Jan 2001: 300,000).
- Continued strong expansion programme during the year. At 31
October 2001, the Group operated 200 clubs (Oct 2000: 115) an increase
of 85 clubs.
- Since the year-end, a further 25 clubs have opened. An additional
55 clubs are expected to open during the year to bring the total number
in operation to 280 by 31 October 2002.
- The 11 clubs acquired in Australia (Nov 2000) reported an
operating profit for the year of £2.6m. The clubs were previously loss
making prior to their acquisition by the Group.
- Unsecured bank facilities of £180m arranged during the year.
- During 2001, over 2000 new jobs were created within the Group,
bringing the total number of employees to 6,300.
- Based on the Company's plans, over 2,200 additional jobs will be
created during 2002, including approximately 700 in the UK.
- Club locations
October January 2002 October 2002
2001 Year End Target
UK 100 112 128
Continental Europe:
Germany 43 45 57
Belgium 11 13 16
Spain 8 9 14
Netherlands 3 3 6
Italy 5 6 9
France 4 5 8
Far East 11 15 20
Australia 15 17 22
TOTAL 200 225 280
PLACING AND OPEN OFFER
- Fitness First announces today a Placing of 18,750,000 new shares
at 412p per share incorporating an Open Offer of 9,197,101 of those New
Shares on the basis of
- 1 New Ordinary Share for every 10 Existing Ordinary Shares
- The purpose of the Placing and the Open Offer is to allow the
Group to maintain the rollout of its health clubs in the UK and
internationally. The Directors believe that this additional funding will
allow the Group to consolidate its position as one of the leading health
club operators in the world.
- The Placing and Open Offer has been fully underwritten by Investec
and Dresdner Kleinwort Wasserstein. It is expected that dealings in the
New Ordinary Shares will commence on 26 February 2002.
Mike Balfour, Chief Executive of Fitness First, commented:
"I am delighted to announce another excellent set of results, showing a
substantial increase in turnover and profit.
The Placing and Open Offer, together with the new banking facilities arranged in
October 2001, will allow the Group to continue its expansion of fitness clubs in
line with strong market demand. The new funding will assist Fitness First to
capitalise on the excellent growth prospects for the health and fitness sector.
With Fitness First's model of high quality and value for money fitness clubs, we
are well placed to develop further our market position on an international
scale. In the light of the Group's strong current trading and strategy for
expansion, we believe that our prospects for the financial year are most
encouraging."
Enquiries:
Fitness First Plc
Michael Balfour, Chief Executive Today: 020 7457 2345
Colin Child, Finance Director Thereafter: 01202 845103
Investec Henderson Crosthwaite 020 7597 5970
Andrew Edwards Investment Banking
Patrick Robb Corporate Broking
Dresdner Kleinwort Wasserstein 020 7623 8000
Charles Batten
Barry Saint
Gavin Anderson & Company 020 7457 2345
Rebecca Penney/Amelia Hine
Notes to Editors:
Fitness First:
- Fitness First was floated on the Alternative Investment Market in
October 1996 at a price of 40 pence per share. In February 1999, the
Company moved to the Official List. On the basis of the closing share
price on 30 January 2002 of 440 pence, the Group has a market
capitalisation of approximately £405 million.
- Founded in 1992, Fitness First was created with the objective of
developing a chain of health and fitness clubs to focus on the model of
high quality and value for money, providing health and fitness club
facilities that tend to be in most demand for a relatively modest
subscription fee of around £33 per month (£42 in London) and a joining
fee of typically £40.
- A typical Fitness First health club follows a consistent format of
providing high quality facilities that are typically most used by club
members, including a well-equipped gymnasium, aerobics studios, luxury
changing facilities, spa area, lounge and beauty salon. Clubs have a
free video and DVD library, 16-channel entertainment system and provide
complimentary soft drinks, coffee and tea.
- Fitness First currently operates 112 clubs in the UK and 113 clubs
overseas, making a total of 225 clubs.
- 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 45 clubs throughout Germany with
95,000 members and has 12 clubs under construction.
- In November 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 and
membership exceeds 20,000. Passage Fitness, Belgium currently operates
13 clubs.
- In June 2000, Fitness First purchased 90% of the shares of
SPORTathlon, a Hong Kong based company with health club operations in
Hong Kong, Singapore, Thailand, the Philippines and China with a total
of 5,000 members, for a purchase consideration of £3.2 million. The
Company currently operates 15 clubs with 22,000 members in the Far East.
- In November 2000, Fitness First acquired 11 clubs in Australia
together with a number of development sites, with over 45,000 members
which were previously operated by Healthland International, making
Fitness First the leading health club operator in Australia. The Company
currently operates 17 clubs with over 80,000 members in Australia.
Not for release, publication or distribution in or into the United States,
Canada, the Republic of Ireland, Australia or Japan
None of the Ordinary Shares or the New Ordinary Shares has been, nor will be,
registered in the United States under the United States Securities Act of 1933,
as amended (the "Securities Act"), or under the securities laws of Canada,
Australia, the Republic of Ireland or Japan and they may not, subject to certain
exceptions, be offered or sold directly or indirectly within the United States,
Canada, Australia, the Republic of Ireland or Japan or to, or for the account or
benefit of any national, citizen or resident of the United States, Canada,
Australia, the Republic or Ireland or Japan. This press release does not
constitute an offer to sell or issue or the solicitation of an offer to buy or
subscribe for Ordinary Shares in any jurisdiction in which such offer or
solicitation is unlawful.
Investec Henderson Crosthwaite, a division of Investec Bank (UK) Limited, and
Dresdner Kleinwort Wasserstein Limited, who are authorised by the Financial
Services Authority Limited, are acting for Fitness First Plc in connection with
the Placing and the Open Offer and are not acting for any person other than
Fitness First Plc and will not be responsible to any person other than Fitness
First Plc for providing the protections afforded to their customers or for
providing advice to any other person in connection with the Placing and the Open
Offer.
31 JANUARY 2002
FITNESS FIRST PLC ("FITNESS FIRST" or the "COMPANY")
Placing of 18,750,000 New Ordinary Shares at 412p per share and Open Offer of
9,197,101 of those New Ordinary Shares at 412p per share on the basis of 1 New
Ordinary Share for every 10 existing Ordinary Shares
Preliminary Announcement of Final Results for the year ended 31 October 2001
Introduction
The Board of Fitness First is pleased to announce that it proposes to raise
approximately £77.25 million (£75.0 million net of expenses) through the Placing
and the Open Offer which have been fully underwritten by Investec and Dresdner
Kleinwort Wasserstein. The Placing and the Open Offer are conditional, inter
alia, on the passing of the first Resolution to be proposed at an EGM to be
convened on 25 February 2002.
Information on Fitness First
Fitness First is one of the leading operators of fitness clubs in the world,
with operations in the UK, continental Europe, the Far East and Australia. As at
31 October 2001, the Group operated 200 clubs, 100 of which were in the UK, and
had over 440,000 members. As at the date of this announcement, the number of
clubs has increased to 225 and membership to over 500,000. The Group operates
high quality, well-equipped, value-for-money fitness clubs targeting the
convenience segment of the health club industry.
Background to, and reasons for, the Placing and the Open Offer
The funds received by the Company from the Placing and the Open Offer will allow
it to maintain the rollout of its health clubs in the UK and internationally.
The Directors believe that this will allow the Group to consolidate its position
as one of the leading health club operators in the world, and will also enhance
the Group's future financial performance.
With the net proceeds of the Placing and the Open Offer, combined with the
existing debt facilities, the Board plans to open 80 clubs in the year ending 31
October 2002 and a similar number in the year ending 31 October 2003. By 31
October 2003, the Board believes that the Group will have approximately 360
clubs open, of which around 200 will be outside the UK.
The Company announced on 25 October 2001 that it had arranged an additional £80
million in unsecured bank facilities, bringing the total borrowed funds
available to Fitness First to in excess of £180 million. As at 31 December 2001,
the Group had outstanding borrowed funds of approximately £135 million. The
Board believes that the Company's financing arrangements should consist of an
appropriate balance of debt and equity. It is intended that the proceeds of the
Placing and the Open Offer, together with the existing debt facilities, will
finance the Group's continued expansion plans. Pending such use, the net
proceeds of the Placing and the Open Offer will be placed on deposit by the
Company.
Current trading and prospects
As stated in the preliminary results announcement set out below, the Group
continues to trade strongly in each of the markets in which it operates fitness
clubs with further increases in both club numbers and members having been
recorded since the financial year end.
Given the current trading of the Group and the strategy for expansion of the
Group through the rollout of the business model, the Directors believe that the
prospects for the Group are most encouraging.
The Placing and the Open Offer
The Company is proposing to raise approximately £77.25 million (before expenses)
by the issue of 18,750,000 New Ordinary Shares pursuant to the Placing and the
Open Offer. 11,040,889 New Ordinary Shares have been placed firm at the Issue
Price with institutional and certain other investors pursuant to the Firm
Placing and are not being offered to Shareholders under the Open Offer whilst
the remainder, being 7,709,111 New Ordinary Shares, have been conditionally
placed at the Issue Price with institutional and certain other investors, but
are subject to clawback to satisfy valid applications by Qualifying Shareholders
under the Open Offer. The Placing and the Open Offer have been fully
underwritten by Investec and Dresdner Kleinwort Wasserstein.
Qualifying Shareholders are being given the opportunity to subscribe under the
Open Offer for the New Ordinary Shares at the Issue Price pro rata to their
existing shareholdings on the basis of:
1 New Ordinary Share for every 10 existing Ordinary Shares
held at the close of business on the Record Date and so in proportion for any
other number of existing Ordinary Shares then held. Entitlements to Open Offer
Shares will be rounded down to the nearest whole number of Open Offer Shares.
Fractional entitlements to Open Offer Shares will not be allotted and will be
aggregated and placed for the benefit of the Company. The Open Offer Shares will
be issued credited as fully paid and will rank pari passu in all respects with
the existing Ordinary Shares, including the right to receive all dividends and
other distributions declared or paid thereon following Admission. No temporary
documents of title will be issued.
Shareholders should note that the Open Offer is not a rights issue. Entitlements
under the Open Offer are not transferable unless to satisfy bona fide market
claims and the Application Form, not being a document of title, cannot be
traded. Qualifying Shareholders should be aware that in the Open Offer, unlike
in a rights issue, any Open Offer Shares not applied for will not be sold in the
market or placed for the benefit of Qualifying Shareholders who do not apply
under the Open Offer, but will be subscribed for the benefit of the Company at
the Issue Price.
Irrevocable undertakings have been obtained from Christopher Pearce, Michael
Balfour and Malcolm Guscott and certain other Shareholders not to take up their
entitlements under the Open Offer of in aggregate 1,487,990 Open Offer Shares,
together representing approximately 1.29 per cent. of the enlarged issued share
capital of the Company. Such Open Offer Shares will be placed firm by Investec
Henderson Crosthwaite and Dresdner Kleinwort Wasserstein, pursuant to their
obligations under the Placing and Open Offer Agreement.
Nigel Cartwright, John Denning, Walter Goldsmith and Sean Phillips have
indicated their intentions to take up their entitlements under the Open Offer
of, in aggregate, 12,491 Open Offer Shares.
Mr Child, the Group's Finance Director, has indicated his intention to acquire
25,000 New Ordinary Shares in the Firm Placing at the Issue Price. At present
Colin Child does not hold any Ordinary Shares.
Mr Child will be granted options over 200,000 Ordinary Shares under the
Company's Unapproved Share Option Scheme at an exercise price equal to the
closing price, to be derived from the London Stock Exchange's Daily Official
List at the close of trading today.
Applications will be made to the UK Listing Authority and to the London Stock
Exchange for the admission of all the New Ordinary Shares to (i) listing on the
Official List; and (ii) trading on the London Stock Exchange's markets for
listed securities. It is expected that Admission will take place, and that
dealings in the New Ordinary Shares will commence, on 26 February 2002.
The Placing and the Open Offer are conditional, inter alia, upon:
a. the passing of the first of the Resolutions;
b. the obligations to make the Placing under the Placing and Open Offer
Agreement becoming unconditional, save for Admission, by no later than 26
February 2002 (or such later date, being no later than 5 March 2002, as the
Company, Investec Henderson Crosthwaite and Dresdner Kleinwort Wasserstein
may agree) and that agreement not having been terminated in accordance with
its terms; and
(c) Admission.
Extraordinary General Meeting
An extraordinary general meeting to approve the Resolutions will be convened to
be held at the offices of Ashurst Morris Crisp, Broadwalk House, 5 Appold
Street, London EC2A 2HA at 10.30 a.m. on 25 February 2002.
Prospectus
It is expected that the Prospectus, setting out full details of the Placing and
the Open Offer and containing further information on the Company, will be posted
to Shareholders later today, accompanied in the case of Qualifying Shareholders
by the Application Form. Application Forms will be personal to Qualifying
Shareholders and may not be transferred except to satisfy bona fide market
claims.
Expected timetable of principal events
Record Date for the Open Offer 28 January 2002
Latest time for splitting Application Forms 3.00 p.m. on 19 February 2002
(to satisfy bona fide market claims only)
Latest time and date for receipt of Application Forms and 3.00 p.m. on 21 February 2002
payment in full under the Open Offer
Latest time and date for receipt of Forms of Proxy for the 10.30 a.m. on 23 February 2002
EGM
Extraordinary General Meeting 10.30 a.m. on 25 February 2002
Admission and commencement of dealings in the New Ordinary 26 February 2002
Shares
CREST accounts credited for the New Ordinary Shares 26 February 2002
Annual General Meeting 12 noon on 4 March 2002
Definitive share certificates in respect of New Ordinary by 5 March 2002
Shares held in certificated form to be despatched by
Definitions
The following definitions apply throughout this announcement, unless the context
otherwise requires:
"Act" the Companies Act 1985 (as amended)
"Admission'' admission of the New Ordinary Shares to listing on the Official List and trading on
the London Stock Exchange's markets for listed securities
"AIM'' the Alternative Investment Market of the London Stock Exchange
"Application Form'' the application form accompanying the Prospectus for use by Qualifying Shareholders
in relation to the Open Offer
"Board'' or "Directors'' the directors of the Company as at the date of this announcement
"Company'' or "Fitness First'' Fitness First Plc
"CREST'' the relevant system (as defined in the Uncertified Securities Regulations 1995) in
respect of which CRESTCo Limited is the operator for the purposes of such
Regulations
"Dresdner Kleinwort Wasserstein'' Dresdner Kleinwort Wasserstein Limited
"Existing Ordinary Shares'' the 96,472,610 Ordinary Shares in issue at the date of this announcement
"Extraordinary General Meeting'' or the extraordinary general meeting of the Company to be held at 10.30 a.m. on 25
"EGM'' February 2002, notice of which is to be set out in the Prospectus
"Firm Placed Shares'' 11,040,889 New Ordinary Shares which have been placed firm by Investec Henderson
Crosthwaite and Dresdner Kleinwort Wasserstein
"Firm Placing'' the conditional placing by Investec Henderson Crosthwaite and Dresdner Kleinwort
Wasserstein of the Firm Placed Shares on behalf of the Company pursuant to the
Placing and Open Offer Agreement
"Form of Proxy'' the form of proxy for use by Shareholders in connection with the Extraordinary
General Meeting
"Group'' Fitness First, its subsidiaries and its associated undertakings as at the date of
this announcement
"Investec'' Investec Bank (UK) Limited
"Investec Henderson Crosthwaite'' Investec Henderson Crosthwaite, a division of Investec
"Issue Price'' 412p per New Ordinary Share
"Listing Rules'' the rules and regulations made by the UK Listing Authority under Part VI of the
Financial Services and Markets Act 2000, as amended from time to time
"London Stock Exchange'' London Stock Exchange plc
"New Ordinary Shares'' the 18,750,000 new Ordinary Shares of 12.5p each to be issued by the Company
pursuant to the Placing and the Open Offer
"Official List'' the Official List of the UK Listing Authority
"Open Offer'' the conditional open offer being made by Investec Henderson Crosthwaite and Dresdner
Kleinwort Wasserstein, as agents for the Company, to Qualifying Shareholders to
subscribe for the Open Offer Shares at the Issue Price and on the terms and
conditions set out in the Prospectus and in the Application Form
"Open Offer Shares'' 7,709,111 New Ordinary Shares which have been conditionally placed (subject to
clawback to satisfy valid applications by Qualifying Shareholders), by Investec
Henderson Crosthwaite and Dresdner Kleinwort Wasserstein pursuant to the Placing and
Open Offer Agreement
"Ordinary Shares'' ordinary shares of 12.5p each in the capital of the Company
"Overseas Shareholders'' Shareholders who are resident in, or citizens of, countries other than the UK
"Placing'' the conditional placing by Investec Henderson Crosthwaite and Dresdner Kleinwort
Wasserstein on behalf of the Company of the New Ordinary Shares at the Issue Price
"Placing and Open Offer Agreement'' the agreement dated 31 January 2002 between (1) the Company and (2) Investec
Henderson Crosthwaite and (3) Dresdner Kleinwort Wasserstein relating to the Placing
and the Open Offer
"Prospectus" the prospectus dated 31 January 2002 to be posted to Shareholders setting out
details of the Placing and the Open Offer
"Qualifying Shareholders'' Shareholders on the register of members of Fitness First on the Record Date (except
for certain overseas Shareholders)
"Record Date'' the record date for the Open Offer, being the close of business on 28 January 2002
"Receiving Agent'', "Registrars'' Capita IRG Plc
or "Capita IRG''
"Resolutions'' the resolutions to be proposed at the EGM
"Securities Act'' the US Securities Act of 1933, as amended
"Shareholder(s)'' holder(s) of Ordinary Shares
"Share Option Schemes'' the Company's 1996 Executive Share Option Scheme and the Company's 2000 Approved
Share Option Scheme
"UK Listing Authority'' the Financial Services Authority acting in its capacity as the competent authority
for the purpose of Part IV of the Financial Services and Markets Act 2000 and in the
exercise of its functions in respect of the admission to the Official List otherwise
than in accordance with Part VI of the Financial Services and Markets Act 2000
"United Kingdom'' or "UK'' the United Kingdom of Great Britain and Northern Ireland
"United States'' or "US'' or "USA'' the United States of America, its territories and possessions, any state of the
United States of America and District of Columbia and all other areas subject to its
jurisdiction
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2001
The following is extracted from the Chairman's Statement and Chief Executive's
Review to be sent to Shareholders later today in the report and accounts for the
Company for the year ended 31 October 2001.
"I am pleased to report that Fitness First continued its successful growth and
consolidated its position in each of the markets where it operates. We have
become the largest fitness club operator in Europe and are now one of the
leading operators in the world.
At 31 October 2001 the Group operated 200 clubs, 100 of which were located
outside of the UK. Since then a further 25 clubs have opened and, with a
considerable "pipeline" of new clubs in place, we are well on track to achieve
our target of 280 clubs by the end of the current financial year.
Fitness First had over 440,000 members at 31 October 2001 of whom 50% were in
the UK. By 31 January 2002 membership has grown by 60,000 to over 500,000.
Financial Results
During the year ended 31 October 2001 the Group's turnover increased by over
100% to £133.1m (2000: £65.3m). Pre tax profit, before goodwill amortisation,
was £20.6m (2000: £12.8m) an increase of over 60%. Earnings per share, before
goodwill amortisation, rose by over 40% to 17.8p per share (2000: 12.6p). The
Board continues to believe that shareholder returns can be maximised by
reinvesting the Group's profits and the strong cash flows generated during the
year in further club openings. Accordingly, a dividend for the year ended 31
October 2001 is not being declared.
The Group's operating cash flows remain strong with £42.9m generated during the
year (2000: £22.2m). For the year ended 31 October 2001 capital expenditure of
£119.6m was incurred (2000: £51.7m) largely on new clubs. The level of capital
expenditure for the current year is expected to continue at a little below the
2001 level as the new club opening programme is maintained.
During the year we increased the unsecured bank facilities available to the
Group to £180m. We were pleased with the support we received from the expanded
banking group in arranging these facilities in difficult market conditions.
Expansion
During the year the Group continued its rapid expansion, capitalising on the
growing awareness of the benefits of regular exercise and a healthier lifestyle.
These factors together with a greater recognition of the Fitness First brand
ensured that our new club opening programme met our expectations.
The Group has successfully grown in all its international markets, building on
the strategic platforms established in the previous financial year. On 1
November 2000 we completed the acquisition of 11 high quality clubs in Australia
which were making losses at the time of acquisition. These were extensively
reorganised with a number of major initiatives to increase revenue and reduce
costs being implemented. Following these management actions the Australian
operation has reported an operating profit for the year of £2.6m. This is an
outstanding achievement from the local management team and all the staff.
Operational Review
During 2001 Fitness First increased the number of clubs by 85, taking the total
to 200. Since the year end a further 25 clubs have opened and we are well
positioned to meet our projections of having 280 clubs open by the end of the
current financial year.
We build high specification clubs following our normal format. This typically
comprises a well equipped gymnasium, aerobics studio, luxury changing
facilities, spa area, beauty salons and members' lounge.
In 2001 we have consolidated our position as a leading international health club
operator and made considerable progress in growing in all our markets.
UK Review
We have maintained our excellent record of growth in the UK, both operationally
and financially, with the opening of 28 new clubs taking the total to 100 at the
year end and generating an operating profit of £20.1m for the year (2000:
£12.6m). At the time of this announcement the number of clubs has grown to 112.
At the end of the financial year membership stood at 220,000 and by the date of
this announcement had grown to 240,000, an increase of 33% on this time last
year. Membership numbers at our mature clubs and our new clubs remain strong and
we continue to enjoy rapid "fill rates'' at our new club openings.
The awareness of the Fitness First brand in the UK continues to grow, aided by a
greater geographic spread of clubs. During the year we opened clubs as far
afield as Inverness and Exeter but there are still over 120 towns and cities
where we have yet to open a club and which have suitable demographics for at
least one Fitness First club. In addition there are over 60 towns and cities
where we currently have fewer clubs than the population size would support. We
do therefore believe that we can, over the next five to six years, have over 250
operating clubs in the UK and there will still be potential for further growth.
Continental European Review
Our German operation had another strong year of growth with the number of clubs
operating increasing by 13 to 43, with a further two clubs opening since the
year end. Membership numbers in Germany have increased from 65,000 at this time
last year to 95,000 at the date of this announcement, an increase of 46%, and we
have a further 12 clubs under construction. The German operation reported an
operating profit of £4.4m for the year which represents an increase of over 100%
on the corresponding period.
Our Belgian associate opened five new clubs during the year and two further
clubs since the year end bringing the current total to 13. At the date of this
announcement membership has grown to 20,000 from 10,000 at the same time last
year, an increase of 100%. Since the year-end we have exercised our option and
increased our shareholding from 40% to 52%. The company will now be branded as
Fitness First - Passage and its results will be consolidated within the Group's
results.
The new start up operations that we established in Spain, The Netherlands,
France and Italy during the previous financial year have all made good progress
with a total of 23 clubs now open. As I have previously reported, the markets in
each of these countries are still in the early stages of development. We
therefore expect that until these markets become more mature it will take our
new clubs longer to fill compared with more established markets such as the UK.
However I am pleased to report that we now have over 45,000 members in the 23
clubs, all of which opened during the year and which is better than we
projected.
I am also pleased to report that for example in Spain, of the eight clubs we
operated at the year end, all of which were less than one year old, five are
already profitable and the eight clubs as a whole are making a positive
contribution to the Group's results. This is very encouraging and is ahead of
our original expectations. As we open more clubs in these new territories we
gain valuable experience of the sometimes subtle differences in these markets.
This learning process is already proving beneficial; for example two of the
newest clubs in Spain opened with over 2,000 members each and our latest club
has opened with 2,500 pre-sold memberships. This success was a result of
adapting our standard new club marketing process to reflect the local market .
These new European operations reported an operating loss for the year of £1.5m
which reflects both the start-up costs of the country offices and initial
trading losses of the new clubs. As the number of clubs operating in each region
increases during 2002 and we achieve a critical mass in each country, we expect
these losses to be eliminated.
I should add that the 2001 losses represent a very modest "investment'' in
establishing these operations, and based on recent trading results we remain
confident that these new markets will generate good results and provide the
Group with exciting growth prospects.
This has been an extraordinarily busy time for our new management teams and
staff in these countries and I should like to congratulate them on the
successful launch of Fitness First in their markets.
Far East
During the year SPORTathlon, our Far East operation, opened four Fitness First
clubs and since the year end a further four clubs have opened taking the total
to eight new Fitness First clubs - three in Hong Kong, two in Thailand and one
in each of Malaysia, Philippines and China. In comparison with the existing
operators in these countries our clubs are of an extremely high specification
and yet maintain our value for money membership structure.
The new clubs have performed well and the eight new clubs, which all opened
since August 2001, now have a total of over 14,000 members. Although we are
adopting a prudent approach to the rollout programme of new clubs in this region
we believe our growth prospects are excellent. SPORTathlon reported an operating
profit of £0.7m for the year, which is after the early period losses incurred on
opening the new Fitness First clubs.
Australia
The new management team in Australia have added a further six clubs to the
business which takes the number of clubs to 17 and increased the membership from
45,000 at the time of acquisition to 80,000 at the date of this announcement.
The financial performance of this business has significantly exceeded our
initial expectations for its first year within the Group reporting an operating
profit of £2.6m for the year.
Management
One of the key reasons for the success of Fitness First has been its management
and employees. During the year we have continued to enhance and strengthen the
senior management with appointments from within the industry and other service
related sectors. In a rapidly growing international Group we are now able to
provide exciting career opportunities for all our staff. We remain determined to
enable our employees to achieve their full potential in the fitness industry and
we continue to invest heavily in their training and development.
Due to family commitments Malcolm Guscott, Property Director, has decided to
retire from the Board at the Company's AGM in March. Malcolm has made a
considerable contribution to the Group's success since he joined in 1994 not
only identifying numerous successful club sites but also in establishing a first
class property team to succeed him. I should like to thank Malcolm for his
diligence and commitment and wish him well in the future.
During 2001 we welcomed over 2,000 new colleagues into Fitness First. Based on
our plans for 2002 over 2,200 new jobs will be created by Fitness First, of
which at least 700 will be in the UK. I would particularly like to take this
opportunity to sincerely thank all of the Group's 6,300 employees around the
world. Their enthusiasm, commitment, professionalism and positive attitude make
Fitness First the success it is.
Current Trading
The current financial year has started well and the Group's prospects for the
financial year as a whole look most encouraging with demand for our facilities
remaining buoyant. With an excellent pipeline of new clubs and an established
successful formula, Fitness First can further extend its impressive growth
record. The prospects for the Group are favourable and your Directors are
confident of a strong performance in the current year.
Outlook
During 2001 we have again demonstrated that the Fitness First model of providing
high quality, value for money facilities can be successfully "rolled out'' in
both the UK and internationally. The prospects for the Group are extremely
attractive especially given the growing trend of people around the world wishing
to improve their lifestyles and achieve a healthier life through regular
exercise. This trend can only be accelerated as a result of the increasing
awareness of the health problems caused by obesity, stress and heart disease
which are becoming more prevalent across the world.
I am convinced that through Fitness First maintaining its high standards and
remaining focused on our core product within this still young market we can
continue to deliver substantial earnings growth for shareholders and further
consolidate and expand our international position.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 October 2001
2001 2001 Goodwill 2001 2000
Before goodwill amortisation Total Total
£000 £000 £000 £000
Turnover: Group and share of joint venture 133,352 - 133,352 67,776
Less: Share of joint venture's turnover (293) - (293) (2,509)
----------------- ----------------- ------------- ------------
Group turnover - continuing operations 114,675 - 114,675 65,267
- acquisitions 18,384 - 18,384 -
----------------- ----------------- ------------- ------------
133,059 - 133,059 65,267
Cost of sales (9,234) - (9,234) (2,680)
----------------- ----------------- ------------- ------------
Gross profit 123,825 - 123,825 62,587
Administrative expenses (100,444) (2,441) (102,885) (51,013)
----------------- ----------------- ------------- ------------
Operating profit- continuing operations 20,784 (2,286) 18,498 11,574
- acquisitions 2,597 (155) 2,442 -
----------------- ----------------- ------------- ------------
23,381 (2,441) 20,940 11,574
Share of profit of joint venture and associated (47) (19) (66) (14)
undertakings
----------------- ----------------- ------------- ------------
Profit on ordinary activities before interest 23,334 (2,460) 20,874 11,560
Interest receivable and similar income 628 - 628 831
Interest payable and similar charges (3,408) - (3,408) (1,071)
----------------- ----------------- ------------- ------------
Profit on ordinary activities before taxation 20,554 (2,460) 18,094 11,320
Tax on profit on ordinary activities (3,062) - (3,062) (1,132)
----------------- ----------------- ------------- ------------
Profit on ordinary activities after taxation 17,492 (2,460) 15,032 10,188
Equity minority interests (306) - (306) (23)
----------------- ----------------- ------------ ------------
17,186 (2,460) 14,726 10,165
========= ========= ======= =======
Earnings per share 17.8p (2.5p) 15.3p 11.0p
========= ========= ======= =======
Diluted earnings per share 17.5p (2.5p) 15.0p 10.8p
========= ========= ======= =======
CONSOLIDATED BALANCE SHEET
31 October 2001
2001 2000
£000 £000
Fixed assets
Intangible assets 46,949 44,094
Tangible assets 250,622 128,507
Investments 2,223 1,495
------------ ------------
299,794 174,096
------------ ------------
Current assets
Stocks 2,697 1,297
Debtors 12,313 3,937
Cash at bank and in hand 10,384 17,857
------------ ------------
25,394 23,091
Creditors: amounts falling due within one year (56,920) (30,288)
------------ ------------
Net current liabilities (31,526) (7,197)
------------ ------------
Total assets less current liabilities 268,268 166,899
Creditors: amounts falling due after more than (104,277) (19,137)
one year
Minority interests
Equity minority interests (965) (139)
------------ ------------
163,026 147,623
======= =======
Capital and reserves
Called up share capital 11,496 11,457
Shares to be issued 27,010 27,010
Share premium account 98,586 98,383
Profit and loss account 25,934 10,773
------------ ------------
Equity shareholders' funds 163,026 147,623
======= =======
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 October 2001
2001 2000
£000 £000
Net cash inflow from operating activities 42,940 22,193
Returns on investments and servicing of (2,650) (190)
finance
Taxation (1,896) (257)
Capital expenditure (119,627) (51,733)
Acquisitions and disposals (5,406) (4,785)
------------- -----------
Cash outflow before management of liquid (86,639) (34,772)
resources and financing
Management of liquid resources 3,188 9,812
Financing 81,983 33,612
------------- -----------
(Decrease)/increase in cash in the year (1,468) 8,652
======== =======
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Year ended 31 October 2001
2001 2000
£000 £000
(Decrease)/increase in cash in the year (1,468) 8,652
Cash outflow from decrease in liquid resources (3,188) (9,812)
Cash inflow from increase in debt and lease financing (82,011) (8,330)
---------- -----------
Movement in debt arising from cash flows (86,667) (9,490)
Loans and finance leases acquired with subsidiaries (1,856) (6,637)
Exchange differences (40) 65
New finance leases and hire purchase contracts (584) (4,774)
------------ -----------
Movement in debt in the year (89,147) (20,836)
Net (debt)/cash at beginning of year (9,860) 10,976
------------ ------------
Net debt at end of year (99,007) (9,860)
======= ========
NOTES TO THE PRELIMINARY STATEMENTS
31 October 2001
1) The statutory accounts for 2000 have been delivered to the
Registrar of Companies and those for 2001 will be delivered shortly. The
auditors have reported on those accounts; their reports were unqualified
and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
Financial information contained in the preliminary announcement of
results does not constitute statutory accounts but is derived from those
accounts.
2) Earnings per share are based on an average number of shares in
issue of 96,339,000 (2000 - 92,122,000) and profits on ordinary
activities after taxation and minority interests of £14,726,000 (2000 -
£10,165,000) and £17,186,000 (2000 - £11,646,000) excluding goodwill
amortisation.
Diluted earnings per share has been calculated using a diluted average
number of shares in issue of 98,427,000 (2000 - 93,808,000) and profits
on ordinary activities after taxation and minority interests of
£14,726,000 (2000 - £10,165,000) and £17,186,000 (2000 - £11,646,000)
excluding goodwill amortisation.
3) Copies of this announcement are available from the offices of the
Company's financial advisers Investec Henderson Crosthwaite, 2 Gresham
Street, EC2 and Desdner Kleinwort Wasserstein, 20 Fenchurch Street, EC3
for a period of 14 days from the date of this announcement.
4) The annual report and accounts will be posted to shareholders
today. Copies will be available on request from the Company Secretary at
58 Fleets Lane, Fleetsbridge, Poole, Dorset, BH15 3BT.
This information is provided by RNS
The company news service from the London Stock Exchange
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