RNS Number:8228X
Fitness First Plc
27 June 2002
FITNESS FIRST PLC
("Fitness First" or the "Company")
Interim Results For The Half Year Ended 30 April 2002
27 June 2002
Six Months Ended 30 April 2002 2001 Increase
Turnover £101.8m £60.7m +68%
Pre-tax profit* £11.7m £8.0m +47%
Earnings per share* 7.3p 5.3p** +38%
Clubs 248 156 +59%
Membership 602,000 365,000 +65%
*Before goodwill amortisation
**Restated for FRS 19 Deferred Tax
• Fitness First, firmly established as the largest fitness club operator
in Europe and one of the leading operators in the world with currently
270 clubs and total membership in excess of 632,000.
• During the half-year, UK membership grew to 270,000 (April 2001:
200,000), an increase of 35% and operating profits increased by 49% to
£11.5m (April 2001: £7.7m).
• Two recent acquisitions:
- "Just for Ladies" in February, comprising five ladies only
health clubs
- "Curzons" in May, comprising 12 central London health clubs
• Operating profits for German clubs increased by 26% to £2.7m (April
2001: £2.1m).
• Significant momentum in Spain, The Netherlands and Italy, reporting
aggregate operating profits of £0.6m (April 2001: £0.4m operating loss).
• France slower than expected, £0.9m loss, will move into profit next
year.
• Australian operations reported operating profits up threefold to £2.5m
(April 2001: £0.8m).
• An additional 32 clubs are expected to open by 31 October 2002, bringing
the total to 80 new clubs worldwide by the year-end. With the recent
acquisitions, close to 300 clubs are expected to be open by the
year-end.
• In March, a further £75m of equity finance was successfully raised
through a Placing and Open Offer that, together with additional debt
finance, should ensure that the Group is able to meet its growth plans
in the medium term.
• Colin Child, currently Finance Director, becomes Chief Operating Officer
in September. Tim Newman, previously Chief Financial Officer of NOP
World, part of United Business Media Plc, will succeed Colin as Finance
Director.
Mike Balfour, Chief Executive of Fitness First, commented:
"We are pleased to announce our strong trading results for the first half of the
year and to demonstrate our continued success in club openings and attracting
members on an international scale. With the 48 clubs we have opened organically
in the year to date, we are well positioned to reach our target of opening 80
clubs per annum.
"The appointments of Colin Child as Chief Operating officer and Tim Newman as
Finance Director will enable the Group Board to focus on strategic developments
whilst maintaining strong operational boards at a subsidiary level."
Enquiries:
Fitness First Plc
Michael Balfour, Chief Executive Today: 020 7554 1400
Colin Child, Finance Director Thereafter: 01202 845103
Gavin Anderson & Company 020 7554 1400
Rebecca Penney/Amelia Hine
Notes to Editors:
Fitness First:
- Fitness First was floated on the Alternative Investment Market in
October 1996 at an equivalent 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
26 June 2002 of 400 pence, the Group has a market capitalisation of
approximately £460 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 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 270 clubs of which 135,
including "Just for Ladies" and "Curzons", 135 clubs are located overseas.
Fitness First is also located and has significant presence in Germany, Belgium,
Spain, The Netherlands, Italy, France, Australia and Asia.
June '02
Clubs
UK 118
Continental Europe:
Germany 53
Belgium 15
Spain 10
Netherlands 6
Italy 6
France 8
Far East 18
Australia 19
Just for Ladies 5
Curzons 12
TOTAL 270
C H A I R M A N' S S T A T E M E N T
I N T E R I M R E S U L T S
SIX MONTHS ENDED 30 APRIL 2002
Fitness First has continued to grow in all of the markets in which we operate.
We are now firmly established as the largest fitness club operator in Europe and
one of the leading operators in the world.
At 30 April 2002 the Group operated 248 Fitness First clubs, an increase of 48
since the year end, in 14 countries around the world. In addition to these
clubs we acquired five ladies only health clubs in February, that trade under
the "Just for Ladies" brand. In May we announced the acquisition of 12 clubs,
trading as Curzons in London. These clubs will be upgraded and integrated into
Fitness First's existing network of clubs in London. We remain on schedule to
achieve our projection of around 80 new Fitness First clubs by the financial
year end.
Membership numbers have continued to grow through a combination of good growth
at existing clubs and through new club openings. At 30 April we had 602,000
members, an increase of 65% on the 365,000 members at 30 April 2001. Since the
period end membership numbers have grown to 632,000 including 18,000 at the
clubs recently acquired.
Financial Results
Turnover in the six months to 30 April 2002 increased by 68% to £101.8m (2001:
£60.7m) and pre tax profits, before the amortisation of goodwill, rose by 47% to
£11.7m (2001: £8.0m). Earnings per share, before goodwill amortisation,
increased by 38% to 7.3p (2001: 5.3p, as restated).
During the period, the Group has adopted the FRS 19, Accounting Standard for "
Deferred Tax" which requires full provision for deferred tax assets and
liabilities arising from timing differences. Comparative numbers for 2001 have
been restated in accordance with the Standard. The actual tax payable by the
Group is significantly lower than the tax provision required by FRS 19.
In February this year we successfully raised a further £75m of equity finance
through a Placing and Open Offer which, together with additional debt finance,
should ensure that the Group is well placed to meet the anticipated growth of
the business. Net debt at 30 April was £100.7m (2001: £46.1m) which reflects a
greater than usual weighting of capital expenditure on new club openings in the
first half of this year.
The Board believes that shareholder returns continue to be maximised through the
policy of reinvesting profits and cash flows in opening additional clubs and
accordingly, as in previous periods, a dividend will not be declared for the
interim period.
Operational Review
UK Review
The Group's UK operations have continued to achieve good growth in membership
numbers and financial performance reporting an operating profit of £11.5m (2001:
£7.7m). Like for like revenue at clubs open over two years increased by 4% in
the period. During the period we opened 15 new clubs with a further 3 clubs
opening by the date of this report. Membership numbers have grown to 270,000 at
30 April 2002 (2001: 200,000), an increase of 35% over 2001. The rapid rate at
which our new clubs fill has been maintained at levels similar to the previous
financial year reflecting the growing awareness of the Fitness First brand and
the benefits of regular exercise.
Continental Europe Review
The German operations continue to perform strongly with nine new clubs opening
in the six months to 30 April. A further five clubs are scheduled to open by
the year end taking the total to 57 clubs. The German business has reported an
operating profit of £2.7m for the first half year (2001: £2.1m) an increase of
26% on the corresponding period. Like for like revenue at the German clubs open
over two years increased by 8% during the half year.
The Continental European operations in Spain, Italy and The Netherlands have all
performed very well in the first half. All these businesses have become
profitable in a short period reporting aggregate operating profits of £0.6m
(2001: £0.4m operating loss). The roll out of further new clubs in these
countries continues with a total of 9 additional clubs anticipated to open in
these countries by the year- end.
The Group's start up operations in France have incurred greater than anticipated
losses of £0.9m. This has been caused by delays in the opening of new clubs and
a slower than expected fill rate. Action has been taken to reduce these losses,
including changes in the local management team. On the basis of our current
projections we anticipate that losses will continue in the second half at a
similar level to the first six months and that France should then move into
profit later next financial year. More encouragingly, the three most recent
clubs opened in mid March, in the Paris region, are performing better than the
earlier clubs. For the moment we consider it prudent to move the existing clubs
into profit before committing further investment, but remain confident that the
Fitness First concept will be successful in France.
The Group's Belgian operation - Passage Fitness First - became a 52% subsidiary
in November 2001 and accordingly its results are consolidated for the first
time. The operation reported a small operating loss of £0.1m in the first half,
reflecting the impact of the four new clubs that opened in the period, but has
since moved into profit.
Far East Review
The Far East operations continue to perform well with seven new clubs opening in
the period. The initial opening losses at these new clubs have inevitably had
an impact on operating profits in the first half year being £0.1m (2001: £0.3m),
but this operation remains on target to meet our expectations for the year. The
three new clubs in Hong Kong have now all become profitable and the other new
clubs in the Region have opened well.
Australia
The Group's Australian clubs have reported excellent operating profits for the
period of £2.5m (2001: £0.8m). The four new Fitness First clubs opened during
the period have all filled well. We anticipate having a total of 23 clubs open
in Australia by the year end and the outlook for this business is very positive.
Strategy
The Group's strategy remains focussed on the successful formula of largely
organic growth based on prudent financial management. Where appropriate we may
make strategic acquisitions, but these are likely to be small in size. With
operations in 14 different countries we have the flexibility to reallocate
investment capital to maximise investment returns.
Management
As the Group continues to grow and develop it is important that we review our
management structure to ensure it meets our current and prospective needs. I am
pleased to announce that Colin Child, who has been Finance Director since
January 2001, will become Chief Operating Officer and continue to work closely
with Mike Balfour, Chief Executive Officer.
Tim Newman, who joins the Company in September, will succeed Colin as Finance
Director. Tim (42) has considerable financial, treasury and tax experience of
international companies, having previously been Chief Financial Officer of NOP
World, part of United Business Media Plc. Prior to this he was Group Treasurer
at United Business Media Plc and Hammerson Plc.
Following the growth and success of Fitness First since flotation and the spread
of our international geographic coverage, we believe it is increasingly
important to have strong operational management Boards capable of taking the
necessary day to day operational decisions for the Company. These Boards are in
turn overseen by the Plc Board whose role becomes more focused on setting the
strategy of the Group. We have therefore asked both Nigel Cartwright and Sean
Phillips to step down from the Plc Board, so that their invaluable contributions
may be better utilised in the more regular operational management board
meetings.
Current trading and outlook
The year has started well as the Group continues to enjoy the strong growth
within this global industry. The worldwide demand for good fitness facilities
remains strong as more people, companies and governments recognise the benefits
of healthier lifestyles and the dangers of inactivity and obesity. As this
trend gathers momentum we envisage the demand for our facilities and services to
continue well into the future. Our pipeline of new clubs remains strong, which
together with our clear strategy will assure us of continued growth. The
performance in both the UK and overseas operations continues to move at a fast
pace and we expect the Group's operation in France to move into profit later
next year. The prospects for the Group remain good and your Board is confident
of delivering further increases in profits.
Christopher Pearce
Chairman
27 June 2002
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the 6 months to 30 April 2002
Audited Unaudited Unaudited
Year to 6 months to 30 April 2002 6 months to
31 October Before 30 April
2001 goodwill Goodwill 2001
(Restated) amortisation amortisation Total (Restated)
£000 £000 £000 £000 £000
GROUP TURNOVER
133,059 - continuing operations 97,227 - 97,227 60,662
- - acquisitions 4,616 - 4,616 -
133,059 101,843 - 101,843 60,662
(112,119) Operating charges (87,099) (1,248) (88,347) (52,528)
OPERATING PROFIT
20,940 - continuing operations 14,769 (1,235) 13,534 8,134
- - acquisitions (25) (13) (38) -
20,940 14,744 (1,248) 13,496 8,134
Share of profit of joint ventures and
(66) associated undertakings 27 - 27 (86)
PROFIT ON ORDINARY ACTIVITIES BEFORE
20,874 INTEREST 14,771 (1,248) 13,523 8,048
(2,780) Net interest (3,021) - (3,021) (1,243)
PROFIT ON ORDINARY ACTIVITIES BEFORE
18,094 TAXATION 11,750 (1,248) 10,502 6,805
(7,216) Taxation (note 4) (3,995) - (3,995) (2,812)
PROFIT FOR THE FINANCIAL PERIOD AFTER
10,878 TAXATION 7,755 (1,248) 6,507 3,993
(306) Equity minority interests (226) - (226) (131)
10,572 RETAINED PROFIT FOR THE FINANCIAL PERIOD 7,529 (1,248) 6,281 3,862
Earnings per ordinary share before
13.5p goodwill amortisation 7.3p 5.3p
Earnings per ordinary share after goodwill
11.0p amortisation 6.1p 4.0p
Diluted earnings per ordinary share before
13.2p goodwill amortisation 7.3p 5.2p
Diluted earnings per ordinary share after
10.7p goodwill amortisation 6.1p 4.0p
UNAUDITED CONSOLIDATED BALANCE SHEET
30 April 2002
Audited Unaudited Unaudited
31 October 2001 30 April 2002 30 April 2001
(Restated) (Restated)
£000 £000 £000
FIXED ASSETS
46,949 Intangible assets 48,747 46,383
250,622 Tangible assets 323,598 174,574
2,223 Investments 848 2,189
299,794 373,193 223,146
CURRENT ASSETS
2,697 Stocks 3,609 1,455
12,313 Debtors 16,379 7,466
10,384 Cash at bank and in hand 9,724 8,652
25,394 29,712 17,573
(56,920) CREDITORS: amounts falling due within one year (47,404) (36,696)
(31,526) NET CURRENT LIABILITIES (17,692) (19,123)
268,268 TOTAL ASSETS LESS CURRENT LIABILITIES 355,501 204,023
(104,277) CREDITORS: amounts falling due after more than one year (104,189) (49,126)
(12,940) PROVISIONS FOR LIABILITIES AND CHARGES: Deferred tax (14,845) (10,405)
(965) MINORITY INTERESTS (2,901) (805)
150,086 233,566 143,687
CAPITAL AND RESERVES
11,496 Called up share capital 14,470 11,496
27,010 Shares to be issued - 27,010
98,586 Share premium account 198,303 98,575
12,994 Profit and loss account 20,793 6,606
150,086 EQUITY SHAREHOLDERS' FUNDS 233,566 143,687
The interim results were approved by the Board on 27 June 2002.
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months to 30 April 2002
Audited Unaudited 6 Unaudited 6
Year to months to 30 months to 30
31 October 2001 April 2002 April 2001
£000 £000 £000
42,940 Net cash inflow from operating activities 12,253 16,722
(2,650) Returns on investments and servicing of finance (1,963) (1,243)
(1,896) Taxation (1,323) (465)
(119,627) Capital expenditure (77,735) (45,223)
(5,406) Acquisitions (425) (5,020)
(86,639) Cash outflow before management of liquid resources and financing (69,193) (35,229)
3,188 Management of liquid resources - 3,188
81,983 Financing 68,226 29,486
(1,468) Decrease in cash (967) (2,555)
Reconciliation of operating profit to net cash inflow from operating
activities
20,940 Operating profit 13,496 8,134
11,555 Depreciation 9,824 5,265
2,441 Goodwill amortisation 1,248 1,195
(1,400) Increase in stocks (781) (134)
(8,046) Increase in debtors (3,231) (3,078)
17,450 (Decrease)/increase in creditors (8,303) 5,340
42,940 Net cash inflow from operating activities 12,253 16,722
Reconciliation of net cash flow to movement in net debt
(1,468) Decrease in cash in the period (967) (2,555)
Cash outflow/(inflow) from decrease/(increase) in debt and lease
(82,011) financing 8,365 (29,440)
(3,188) Cash inflow from decrease in liquid resources - (3,188)
(86,667) Movement in debt arising from cash flows 7,398 (35,183)
(1,856) Loans and finance leases acquired with subsidiaries (4,364) (1,856)
- Loan notes issued to acquire subsidiary (1,609) -
(584) New finance leases and hire purchase contracts (3,154) -
(40) Exchange difference - 166
(89,147) Movement in debt in the period (1,729) (36,873)
(9,860) Net debt at beginning of period (99,007) (9,860)
(99,007) Net debt at end of period (100,736) (46,733)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the 6 months to 30 April 2002
Audited Unaudited 6 Unaudited 6
Year to months to 30 months to 30
31 October 2001 April 2002 April 2001
(Restated) (Restated)
£000 £000 £000
14,726 Profit for the financial period as previously reported 6,281 5,481
(4,154) Prior period adjustment (note 4) - (1,619)
10,572 As restated 6,281 3,862
435 Currency translation differences on foreign currency net investments 990 757
- Adjustment on acquisition of subsidiary 528 -
11,007 Total recognised gains and losses relating to the period 7,799 4,619
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the 6 months to 30 April 2002
Audited Unaudited Unaudited
As at As at As at
31 October 2001 30 April 2002 30 April 2001
(Restated) (Restated)
£000 £000 £000
10,572 Profit for the financial period 6,281 3,862
435 Other recognised gains and losses 1,518 757
242 Shares issued 102,874 242
- Share issue costs (183) (11)
- Shares to be issued (27,010) -
11,249 Net additions to shareholders' funds 83,480 4,850
147,623 Opening shareholders' funds as previously stated 163,026 147,623
(8,786) Prior period adjustment (note 4) (12,940) (8,786)
138,837 As restated 150,086 138,837
11,249 Net additions to shareholders' funds 83,480 4,850
150,086 Closing shareholders' funds 233,566 143,687
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 2002,
and have been prepared on a basis consistent with the audited financial
statements for the year ended 31 October 2001 except for the adjustments
referred to in note 4 below resulting from the Group's compliance with FRS 19
"Deferred tax".
2. The results for the year ended 31 October 2001 have been
extracted from the audited financial statements for that year, which have been
filed with the Registrar of Companies, except for the adjustments referred to in
note 4 below resulting from the Group's compliance with FRS 19. The auditors'
report on these accounts was unqualified.
3. The unaudited Profit and Loss Account for each of the six month
periods and the unaudited Balance Sheets as at 30 April 2002 and 30 April 2001
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.
4. The Group has adopted FRS19 during the period which has given
rise to a prior period adjustment of £12,940,000 to shareholders' funds as at 31
October 2001 (£10,405,000 as at 30 April 2001), the effect of which has been to
reduce previously reported profit after tax for the financial year ended 31
October 2001 by £4,154,000 (six months ended 30 April 2001: £1,619,000).
The estimated effective tax rate for the Group on profits before goodwill
amortisation for the year ended 31 October 2002 is 34% (2001: 35.1% as
restated). This has been applied to the profits arising for the six months
ended 30 April 2002. The estimated effective tax rate has increased from 17.8%
to 34% as a result of applying FRS 19.
5. A geographical analysis of turnover, profit before tax and net
assets is set out below:
Turnover Profit before tax * Net assets
2002 2001 2002 2001 2002 2001
£000 £000 £000 £000 £000 £000
United Kingdom 49,210 34,155 8,143 5,618 165,117 125,301
Other European
Countries 31,215 13,664 1,353 1,340 49,867 12,442
Far East and Australia 21,418 12,843 2,254 1,052 18,582 5,944
101,843 60,662 11,750 8,010 233,566 143,687
* Profit before tax is stated before amortisation of goodwill of
£13,000 (2001: nil), £1,098,000 (2001: £1,076,000) and £137,000 (2001: £129,000)
in the United Kingdom, other European countries and the Far East and Australia
respectively.
6. Earnings per share are based on an average number of shares in
issue of 102,823,940 (2001: 96,203,756) and profits on ordinary activities
after taxation and minority interests of £6,281,000 (2001: £3,862,000) and
£7,529,000 (2001: £5,067,000) excluding goodwill amortisation. Diluted earnings
per share has been calculated using a diluted average number of shares in issue
of 103,745,661 (2001: 96,959,051) and profits on ordinary activities after
taxation and minority interests of £6,281,000 (2001: £3,862,000) and £7,529,000
(2001: £5,067,000) excluding goodwill amortisation.
7. In November 2001 the Company exercised its option under the
original terms of the acquisition to increase its shareholding in Passage Invest
NV from 40% to 52% for nil consideration and this Company has therefore been
consolidated as a subsidiary undertaking from this date. After provisional fair
value adjustments, the negative goodwill arising on this acquisition was
£64,000.
On 28 February 2002 the Company acquired 85% of Just For Ladies Limited and
Capitalbody Limited for a consideration of £2,061,000 (including estimated
deferred consideration of £400,000), giving rise to goodwill on acquisition of
£1,485,000.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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