BIDS.L Regulatory News (BIDS)

13 Apr 2005 07:00

ADDleisure PLC13 April 2005 ADDleisure Plc ("ADDleisure" or "the Company") ACQUISITION OF 50.2 PER CENT. OF THE ISSUED SHARE CAPITAL OF DIGITAL PLANTATION LIMITED APPROVAL OF A SUBSTANTIAL PROPERTY TRANSACTION UNDER SECTION 320 OF THE ACT EXTRAORDINARY GENERAL MEETING This summary should be read in conjunction with the full text of the followingannouncement. A complete list of definitions is set out in the circular issuedby the Company on today's date. ADDleisure, a holding company formed to capitalise on opportunities in theleisure, health and fitness sectors, will, subject to shareholder approval,acquire a 50.2% stake in Digital Plantation Limited ('Digital'), a companyengaged in the design and development of intelligent booking system software for£500,000. Digital was established in 2003 by David Cummin, also a founding director ofADDleisure, to exploit the opportunities for supplying new software systems intothe health and leisure markets. Digital's system, Ez-book, is specificallydesigned to meet the needs of today's leisure operator by improving efficiencyand maximising yield. Importantly in today's market, it is fully scalable,maintains a central database for marketing and is upgradeable. Further, it canbe easily integrated with third party systems and has remote access. From theuser's point of view it is able to facilitate web bookings and SMS messaging.These attributes are considered as important as the functionality of thesoftware itself. Over the last nine months, Ez-Book has been marketed and sold whilst still inthe development stage and the system has already been purchased by certainleading leisure operators and is under commercial trial with another largeleisure operator across three of its sites. The independent Directors have noted the recent emergence of Digital within theindustry and believe that, with the main development stage firmly behind it andendorsement of the product from key customers, Digital has the potential toestablish itself as a leading player. ADDleisure will, subject to shareholder approval, also enter into a put optionagreement (the "Option") with David Cummin whereby ADDleisure can sell its stakein Digital back to David Cummin for £500,000 if the aggregate of Digital'sprofits on ordinary activities before taxation less losses for the three yearsfrom 1 August 2005, are less than £600,000. David Cummin said: "Operators in the health and leisure sectors are looking tomaximise profitability through efficient use of resources, such as staffing andtreatment facilities and effective yield management whilst constantly strivingto improve the customer experience. Digital is in a unique position to assist." ADDleisure Chairman Allan Fisher commented: "The acquisition of Digital fitswell with our strategy. We believe leisure operators will rely increasingly ontechnology and informed data management to grow their operations and supportmargins. The complexities of running a modern day spa or leisure operation havenot been supported to date by intelligent booking systems. Digital's Ez-bookallows the operator to manage resources effectively and maximise yield throughits cutting edge technology." Contacts:Ben Margolis ADDleisure Tel: 020 7449 1000Isabel Crossley/Hugo de Salis St Brides Media & Finance Tel: 020 7242 4477 Introduction ADDleisure is pleased to announce that the opportunity has arisen for theCompany to acquire 50.2 per cent. of the issued share capital of Digital forcash consideration of £500,000 from David Cummin. David Cummin is a director of both Digital and the Company and is the registeredand beneficial owner of the entire issued share capital of Digital. UnderSection 320 of the Act, the Company may only enter into the acquisitionagreement (the "Acquisition Agreement") to acquire the shares in Digital ifauthorised by a resolution of the Shareholders of the Company in generalmeeting. An extraordinary general meeting of the Company will be held at 10.00 a.m. on 5May 2005 at the offices of Finers Stephens Innocent LLP, 179 Great PortlandStreet, London W1W 5LS at which an ordinary resolution to approve the enteringinto by the Company of the Acquisition Agreement and the Option will be proposed("EGM"). Under the AIM Rules the proposed acquisition is also a related party transactionand the independent Directors consider, having consulted with Seymour PierceLimited, the Company's nominated adviser, that the terms of the Acquisition arefair and reasonable insofar as the Shareholders are concerned. Information on and reasons for the acquisition of the share interest in Digital Digital is engaged in the design and development of computer software and theprovision of consultancy services in the health spa and broader leisureindustry. Its principal product, Ez-Book, is an intelligent booking system designedspecifically to meet the needs of today's leisure operator by improvingefficiency and maximising yield. Importantly in today's market, it is fully scalable, maintains a centraldatabase for marketing and is upgradeable. Further, it can be easily integratedwith third party systems and has remote access. From the user's point of view itis able to facilitate web bookings and SMS messaging. These attributes areconsidered as important as the functionality of the software itself. Over the last nine months, Ez-Book has been marketed and sold whilst still inthe development stage and the system has already been purchased by certainleading leisure operators and is under commercial trial with another largeleisure operator across three of its sites. The independent Directors have noted the recent emergence of Digital within theindustry and believe that, with the main development stage firmly behind it andendorsement of the product from key customers, Digital has the potential toestablish itself as a leading player. David Cummin currently owns all of the issued share capital of Digital. In theyear to 30 June 2004 the net pre-tax loss of Digital was £18,605. Under the terms of the Acquisition Agreement, the purchase price is to be paidin cash upon completion, financed out of the Company's existing resources. The acquisition The Acquisition Agreement will contain normal commercial warranties which are tobe given by David Cummin and he will also enter into a separate taxationindemnity in respect of the taxation liabilities of Digital prior to completionof the acquisition, such warranties and indemnity being limited as to time andamount. On completion of the Acquisition Agreement, the Company and David Cumminwill also enter into an option whereby David Cummin will be required to buy-backthe shares in Digital from the Company in certain circumstances ("the Option").Under the terms of the Option if the aggregate net profits minus losses ofDigital for its ordinary activities before taxation for the three years ending31 July 2008 are less than £600,000 or if Digital makes a loss during suchperiod, the Company can require that David Cummin purchase its interest in theshare capital of Digital (together with any other shares in Digital which maythen have been subscribed by the Company) from the Company for £500,000 plus anamount (if any) equal to the aggregate of all monies paid by ADDlesisure insubscribing for any additional shares in Digital in the future, which is payablein cash. Shareholders will also be asked at the EGM to approve the Companyentering into the Option. Prospects of the Group The Acquisition fits well into the stated strategy of your Board to capitaliseon new opportunities in the leisure, health and fitness sectors at attractiveprices and should contribute profits from early 2006. Following the completion of the Acquisition Agreement, the Company intends togrant the EMI Option to Richard Southward, one of the employees of Digital, inrespect of 2,000,000 Ordinary Shares at a price of 5p per ordinary share. Irrevocable Undertakings The Company has received an irrevocable undertaking to vote in favour of theResolution to be proposed at the EGM from Reverse Take-Over Investments Plcwhich has a beneficial interest in the ordinary share capital of the Company inrespect of 20,000,000 ordinary shares, representing approximately 20 per cent.of the current issued share capital of the Company. The Company has also received an irrevocable undertaking to vote in favour ofthe Resolution to be proposed at the EGM from David Cummin who has a beneficialinterest in the ordinary share capital of the Company in respect of 16,666,667ordinary shares, representing approximately 16.66 per cent. of the currentissued share capital of the Company. Action to be taken A circular has today been posted to shareholders of the Company together with aform of proxy for use by shareholders in connection with the EGM. Whether or notshareholders intend to be present at the meeting, they are asked to complete andreturn the form of proxy in accordance with the instructions printed thereon andreturn it to the Company's registrars, Capita Registrars, The Registry, 34Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible and, in any event,so that it is received by no later than 10.00 a.m. on 3 May 2005. The return ofa completed form of proxy will not prevent Shareholders from attending theExtraordinary General Meeting and voting in person if they so wish. Recommendation The independent Directors, having consulted with Seymour Pierce Limited, theCompany's nominated adviser, consider that the acquisition is in the bestinterests of the Company and its shareholders as a whole and that the terms ofthe acquisition are fair and reasonable. Accordingly, the independent Directorsunanimously recommend that shareholders vote in favour of the Resolution to beproposed at the EGM, as they intend to do in respect of their own beneficialholdings amounting to 33,433,333 ordinary shares, representing approximately33.43 per cent. of the Company's existing issued ordinary share capital. In aggregate, the Company has received irrevocable undertakings to vote infavour of the Resolution amounting to 70,100,000 ordinary shares, representing70.1 per cent. of the Company's existing issued ordinary share capital. Notes: ADDleisure was launched on AIM last October to take advantage of opportunitiesin the leisure, health and fitness sectors. The Company was set up by AllanFisher and David Turner, co- founders of Holmes Place and LA Fitnessrespectively, and David Cummin, a founder member of Membertrack, a leading clubmembership software provider. Membertrack was the first to market with itsWindows based solution in 1992. In 2000 David Cummin sold his interest inMembertrack to Gladstone plc for £8.75 million. In addition to Digital, ADDleisure has invested in two products. It has a 42%stake in Liberation Fitness Systems which markets and distributes Power Plateproducts in the UK, which stimulate muscle activity by vibration technology. Italso has a 75% interest in Fitbug, which utilises the UK's first interactivepedometer to offer a personal health and well-being coach to its members. This information is provided by RNS The company news service from the London Stock Exchange