BIDS.L Regulatory News (BIDS)

14 Nov 2006 07:02

ADDleisure PLC14 November 2006 ADDleisure plc / Epic: ADE.L / Index: AIM / Sector: Leisure 14th November 2006 ADDLEISURE PLC ('ADDleisure' or 'the Company') FINAL RESULTS ADDleisure plc, the AIM traded company formed to develop products and servicesin the health and leisure sectors, announces its final results for the yearended 31 July 2006. Chairman's Statement I am delighted to report on the Company's progress towards fulfilling itsobjective of becoming a leading investor in and provider of health and leisureproducts and services. During the period under review we have:- • continued to devote time and energy into developing our existing investments; • established further key relationships with blue-chip companies; • strengthened our team; and • developed innovative concepts. We also realised our investment in Liberation Fitness Systems making a healthyreturn through the sale of our stake, which we feel underpins our ability toidentify investment opportunities. Importantly, since the period end, we have launched new products and initiativesthrough both our Fitbug and Digital Plantation subsidiaries and excitinglyopened our first Movers & Shapers centre in London's West End. A second Londonsite will open next month as will our first centre in Hong Kong. Thesedevelopments underpin our vision of leveraging our combined managementexperience in the sector in order to develop market-leading products andservices to both the consumer and business sectors against a background ofcontinuing focus on the nation's health issues. Financial Performance Our three businesses remain in an early stage of development. Nevertheless, I ampleased to report an increase in turnover to £0.9 million from £0.3 million inthe previous year. Operating losses have widened as we continue to build theinfrastructure to support our developing market opportunities. The directors do not recommend the payment of a dividend. Investments Fitbug Limited ("Fitbug") (75% stake): Fitbug, a developer of online personal health and well-being services, continuesto gain recognition within the health, leisure and corporate sectors as aninnovator of serious alternatives to conventional fitness offerings. Fitbugcombines interactive tracking devices and web technology to measure activity andhealth indicators, provide feedback and motivate the user towards a healthierlifestyle. In June we signed a three year agreement with PruHealth, a leading innovativeprivate medical insurance company. PruHealth, a joint venture between PrudentialUK and Discovery of South Africa, offers a unique form of health insurance whichrewards members with lower private medical insurance premiums for taking care oftheir health. For PruHealth customers, using Fitbug can lead to a reduction infuture premiums or cash back. PruHealth subsidise the purchase of the FitbugMembers Pack and pay members' monthly subscription fees. Sales of PruHealth'sprivate medical insurance product remain very strong, with nearly 80,000individuals now covered and we have been encouraged by initial adoption of theFitbug service. During the year Fitbug has continued to invest in the development of a range ofalternative and complementary tracking devices to integrate with its webservices, including the "Fitbug Lab", developed in conjunction with a USA-basedleader in the design of networked, self-service technologies. The Fitbug Lab isa self-service kiosk, which conducts discreet health checks quickly andunobtrusively, gathering key health information from the user including weight,blood pressure, body fat percentage, resting heart rate and Body Mass Index.Data from the Fitbug Lab can be automatically uploaded to members' personal webpages at fitbug.co.uk, enabling users to keep track of key health indicatorsover time and allowing data transfer to health professionals. Fitbug Lab will bemarketed to corporate, retail and professional health sectors during 2007. In November 2005, Fitbug granted a licence to Brunswick New Technologies' ('BNT'), a unit of Brunswick Corporation (NYSE: BC), to market Fitbug in the USA. BNT moved aggressively to launch the programme by establishing the requiredinfrastructure to facilitate sales, marketing and distribution of Fitbug. InApril, Brunswick Corporation announced plans to sell BNT as it was not one ofits core business segments, resulting in Fitbug's contract with BNT beingterminated. With much of the infrastructure in place including a fullydeveloped USA website and interesting new business prospects, we are now lookingfor a new partner in the USA to take advantage of the opportunities available. Version 3 of fitbug.co.uk is currently under development and will go live inJanuary 2007 with a significantly enhanced user interface. Following a year ofintense development effort, the Company is looking to grow direct sales toconsumers in the coming year, capitalising on Fitbug's enhanced profile gainedthrough increased media exposure such as Channel Five's Diet Doctors serieswhilst further penetrating the market for corporate employee health andwell-being services. Digital Plantation Limited ("Digital") (50.2% stake): Digital's intelligent management software, Ez-Book facilitates advanced bookingfunctionalities, utilising various mediums including the web and SMS messaging,to improve the operating efficiency of customer-facing businesses. Ez-Bookallows operators to maximise profitability whilst improving customer servicethrough excellent customer relationship management. During the year we continued to develop the Ez-Book product for the leisuresector. We recently launched three versions of the software in response tomarket demand to improve accessibility for businesses with differing levels ofoperating complexity. Our three products are as follows:- EZLITE - A functional site management system for the smaller business thatallows effective intelligent resource management of all staff and site areascontaining a booking and till system so as to maximise yield. Typically utilisedby personal training businesses and health and beauty salons. EZTRACK - An intelligent hybrid of prospecting and CRM systems, encompassing allbooking functionalities within a member/client database, allowing effective cash/subscription management, access control and retention capacities with a bespokedata interrogation capacity. Developed for single site and small chain leisureoperators including spas and gyms. TOTAL SOLUTIONS - A total site management system incorporating all aspects ofmembership management, booking and payment systems, stock evaluation andcontrol, linked to a bespoke reporting tool that allows total yield and resourcemanagement functionality. Total Solutions has been developed for multi-siteleisure venue operators and smaller operators looking for a sophisticatedsystem. Ez-Book has been successfully marketed both in the UK and internationally to awide range of spas, health clubs and entertainment venues and during the year wesigned agreements with leading operators including Mitchells and Butlers plc,which is using Ez-Book at its Hollywood Bowl venues. We are confident in ourability to become a preferred supplier of software services within the sectorand have recently added to our sales team accordingly. Furthermore, we areencouraged by the pipeline of new business opportunities for our products. Liberation Fitness Systems Limited ("Liberation"): As a result of the merger between Liberation, Power Plate International BV andPower Plate North America Inc. in February 2006 we realised US$608,000 on thesale of our 41.8% stake in Liberation representing a 240% profit on our originalinvestment. We continue to enjoy an excellent relationship with the newly formedentity, which is enabling us to use Power Plate technology in our new Movers &Shapers centres. Movers and Shapers Ltd ("Movers & Shapers" - previously In Moments Limited) (90%stake): In July we acquired a 90% stake in In Moments Limited, now Movers and Shapers, acompany formed to develop and exploit new health and fitness related retailopportunities. Movers & Shapers is creating a groundbreaking retail concept for health andfitness services through its new shape and vitality centres. Offeringpersonalised training to the public, these centres will offer comprehensivefitness services featuring both cardio-vascular and resistance programmes,combining our own Fitbug technology ("movement") and Power Plate equipment ("shape"). Ez-Book software is being utilised at each site to maximise operatingefficiency and facilitate excellent customer service. Centres will beapproximately 600 - 1,000 square feet and conveniently located on the highstreet or within existing retail stores. Compared to conventional health clubsettings, our Movers & Shapers centres offer an intimate and non-intimidatingenvironment. Requiring just two short sessions per week, the initiative offers afast track fitness programme to consumers focussed on body shape and fitness.This new concept further highlights our commitment and ambition to focus onconsumers' increasing desire for more accessible health and fitness facilities. We opened our first centre in the UK in Crawford Street, London, W1 last month,and will open our next centre in Stanmore, North West London, shortly. Initialfeedback has been highly encouraging. Since the year end, we have entered intoa joint venture agreement with a local party in Hong Kong to gain access to theHong Kong/Chinese market. Our first centre in Central Hong Kong will openshortly. The Team We were delighted to appoint Michael Warshaw as a consultant to the Companyfollowing the acquisition of In Moments Limited. Michael's track record inconsumer-facing businesses, most recently through Molton Brown, speaks foritself and his knowledge and focussed approach is proving invaluable across allour divisions. In Moments was acquired for consideration of the issue of 11.25million new ordinary shares in the Company at an issue price of 5 pence pershare and the grant of 3.5 million warrants to subscribe new ordinary shares,exercisable at 5 pence per share. At the time of the acquisition In Moments hadnet assets of £0.5 million made up wholly of cash. Since the year end we have also appointed a new Chief Operating Officer inDigital who is focussed on streamlining process and managing the projectdelivery and support teams through the next stage of growth. Such a role will bepivotal as we turn current leads into sales to ensure efficient and excellentservice delivery to our clients. Prospects The public's increasing awareness of body image, together with escalatingpolitical and social awareness and debate around obesity, continues to drive thedemand for health and fitness products and services. With its excitingportfolio of investments and highly experienced and innovative team, I believethat your Company remains well positioned to take advantage of the significantpotential within the sector. Looking forward, we have a number of newinitiatives underway focussed towards the retail and corporate markets and weare looking at different options to strengthen the balance sheet to takeadvantage of such opportunities. I believe that, following an extendeddevelopment phase, the next 12 months will see increasing levels of activityacross all our divisions, and I look forward to updating shareholders again inthe near future. Finally, I would once again like to sincerely thank all our staff for theircontinued hard work and our shareholders for their ongoing support. Allan FisherChairman14 November 2006 Consolidated profit and loss accountFor the year ended 31 July 2006 Note Acquisitions and total 2005 2006 £'000 £'000 Turnover 852 285Cost of sales (311) (147) _______ _______ Gross profit 541 138 Administrative expenses (1,828) (1,000) _______ _______ Operating loss (1,287) (862)Share of operating loss in associated undertaking - (76)Profit on disposal of associated undertaking 322 - _______ _______ Loss on ordinary activities before interest (965) (938) Interest payable (3) -Interest receivable 15 30 _______ _______ Loss on ordinary activities before taxation (953) (908) Taxation 12 - _______ _______ Loss on ordinary activities after taxation (941) (908)Minority interest 314 159 _______ _______ Loss sustained (627) (749) _______ _______ Loss per shareBasic and fully diluted (pence) 2 (0.6) (0.8) _______ _______ All recognised gains and losses for the current and prior year are included inthe profit and loss account. Consolidated balance sheet at 31 July 2006 Note 2006 2006 2005 2005 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 771 738Tangible assets 79 49 _______ _______ 850 787Investment in associate - 26 _______ _______ 850 813Current assetsStocks 68 203Debtors 221 161Cash at bank and in hand 705 647 _______ _______ 994 1,011Creditors: amounts falling duewithin one year (363) (223) _______ _______Net current assets 631 788 _______ _______ Total assets less current liabilities 1,481 1,601 Creditors: amounts falling dueafter more than one year (260) (52) _______ _______ 1,221 1,549 _______ _______Capital and reservesCalled up share capital 606 550Share premium account 1,575 1,575Merger reserve 757 250Profit and loss account (1,377) (750) _______ _______ Shareholders' funds (equity) 3 1,561 1,625Minority interests (equity) (340) (76) _______ _______ 1,221 1,549 _______ _______ Consolidated cash flow statement for the year ended 31 July 2006 Note 2006 2006 2005 2005 £'000 £'000 £'000 £'000 Net cash outflow from operating 4 (888) (918)activities Returns on investments and servicing of financeInterest received 15 30Interest paid (3) - _______ _______Net cash inflow from returns on 12 30 investments and servicing of finance TaxationCorporation tax credit received 12 - Capital expenditure and financial investmentPurchase of tangible fixed assets (30) (61)Development costs (70) (222)Proceeds from sales of fixed assets 5 - _______ _______Net cash outflow from capital expenditure (95) (283)and financial investment Acquisitions and disposalsPurchase of subsidiary undertakings - (607)Cash acquired with subsidiaries 500 158Acquisition of associate 348 (102) _______ _______Net cash inflow/(outflow) fromacquisitions and disposals 848 (551) _______ _______ Cash outflow before financing (111) (1,722) FinancingIssue of ordinary share capital - 2,000Issue costs (15) (225)Capital element of finance lease rental (16) (6)paymentsLoan 200 - _______ _______Cash inflow from financing 169 1,769 _______ _______ Increase in cash in the year 5,6 58 47 _______ _______ Notes 1 Accounting policies The financial statements have been prepared under the historical cost conventionand are in accordance with applicable accounting standards. The principalaccounting policies are: Basis of consolidation The consolidated financial statements incorporate the results of ADDleisure plcand all of its subsidiary and associated undertakings as at 31 July 2006 usingthe acquisition or merger method of accounting as required. Where theacquisition method is used, the results of subsidiary undertakings are includedfrom the date of acquisition. Goodwill Goodwill arising on an acquisition of a subsidiary undertaking, or associateundertaking or joint venture is the difference between the fair value of theconsideration paid and the fair value of the assets and liabilities acquired.It is capitalised and amortised through the profit and loss account over thedirectors' estimate of its useful economic life which is 10 years. Impairmenttests on the carrying value of goodwill are undertaken: • at the end of the first full financial year following acquisition; • in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Associates An entity is treated as an associated undertaking where the Group has aparticipating interest and exercises significant influence over its operatingand financial policy decisions. In the Group accounts, interests in associated undertakings are accounted forusing the equity method of accounting. The consolidated profit and loss accountincludes the Group's share of the operating results, interest, pre-tax resultsand attributable taxation of such undertakings based on audited financialstatements. In the consolidated balance sheet, the interests in associatedundertakings are shown as the Group's share of the identifiable net assetsincluding any unamortised premium paid on acquisition. Turnover Turnover represents sales to external customers at the invoiced amount lessvalue added tax or local taxes on sales. Annual subscriptions for services arerecognised in equal monthly amounts. Some sales of software include amaintenance element, which is spread over the duration of the maintenancecontract. Depreciation Depreciation is provided to write off the cost or valuation, less estimatedresidual values, of all tangible fixed assets, except for investment propertiesand freehold land evenly over their expected useful lives. It is calculated atthe following rate: Fixtures, fittings and equipment - 33 1/3% per annum Valuation of investments Investments held as fixed assets are stated at cost less any provision forimpairment in value. Stocks Stocks are valued at the lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out basis. Netrealisable value is based on estimated selling price less additional costs tocompletion and disposal. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date except that therecognition of deferred tax assets is limited to the extent that the Groupanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are not discounted. Leased assets Where assets are financed by leasing agreements that give rights approximatingto ownership (finance leases), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable over the term of the lease. The corresponding leasingcommitments are shown as amounts payable to the lessor. Depreciation on therelevant assets is charged to the profit and loss account. Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the profit and loss account overthe period of the lease and is calculated so that it represents a constantproportion of the balances of capital repayments outstanding. The capitalelement reduces the amounts payable to the lessor. All other leases are treated as operating leases. Their annual rentals arecharged to the profit and loss account on a straight line basis over the term ofthe lease. Share based employee remuneration When shares and share options are awarded to employees a charge is made to theprofit and loss account based on the difference between the market value of theCompany's shares at the date of grant and the option exercise price inaccordance with UITF Abstract 17 (Revised 2006) 'Employee Share Schemes'. Thecredit entry for this charge is taken to the profit and loss reserve andreported in the reconciliation of movements in shareholders' funds. Research and development Expenditure on pure and applied research is charged to the profit and lossaccount in the year in which it is incurred. Development costs are charged to the profit and loss account in the year ofexpenditure, unless individual projects satisfy all of the following criteria: • the project is clearly defined and related expenditure is separately identifiable; • the project is technically feasible and commercially viable; • current and future costs are expected to be exceeded by future sales; and • adequate resources exist for the project to be completed. In such circumstances the costs are carried forward and amortised over a periodnot exceeding three years commencing in the year the Group starts to benefitfrom the expenditure. Foreign currency Foreign currency transactions of individual companies are translated at therates ruling when they occurred. Foreign currency monetary assets andliabilities are translated at the rate of exchange ruling at the balance sheetdate. Any differences are taken to the profit and loss account. The results of overseas operations are translated at the average rates ofexchange during the year and the balance sheet translated into sterling at therate of exchange ruling on the balance sheet date. Exchange differences whicharise from translation of the opening net assets and results of foreignsubsidiary undertakings are taken to reserves. All other differences are taken to the profit and loss account with theexception of differences on foreign currency borrowings used to finance orprovide a hedge against foreign equity investments, which are taken directly toreserves to the extent of the exchange difference arising on the net investmentin these enterprises. Tax charges or credits that are directly and solelyattributable to such exchange differences are also taken to reserves. Financial instruments Financial instruments are measured initially and subsequently at cost. 2 Earnings per share Earnings per ordinary share have been calculated using the weighted averagenumber of shares in issue during the relevant financial periods. The weightedaverage number of equity shares in issue, is 110,032,822 (2005 - 93,095,890) andthe loss, being loss after tax and minority interests £627,000, (2005 - loss£749,000). The effect of all options and warrants outstanding as at 31 July2006 is anti-dilutive. 3 Reconciliation of movements in shareholders' funds 2006 2005 £'000 £'000 Loss for the year (627) (749)New share capital subscribed 563 1,775 _______ _______ Net (decrease)/increase in shareholders' funds (64) 1,026Opening shareholders' funds 1,625 599 _______ _______ Closing shareholders' funds 1,561 1,625 _______ _______ 4 Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 £'000 £'000 Operating loss (1,287) (862)Amortisation - goodwill 51 18 - development costs 114 37Depreciation 31 16Movement in: stocks 135 (190) debtors (60) (75) creditors 128 138 _______ _______ Net cash outflow from operating activities (888) (918) _______ _______ 5 Reconciliation of net cash inflow to movement in net funds 2006 2005 £'000 £'000 Increase in cash in the year 58 47 Cash outflow from changes in funds (184) 6 _______ _______ Movement in net funds resulting from cash flows (126) 53Inception of finance leases (36) (39)Acquisition of loans in subsidiary - (32) _______ _______ Movement in net funds (162) (18)Opening net funds 582 600 ______ _______ Closing net funds 420 582 _______ _______ 6 Analysis of net funds Other At Cash non-cash At 31 July 1 August 2005 flow items 2006 £'000 £'000 £'000 £'000 Cash at bank and in hand 647 58 - 705 Finance leases (33) 16 (36) (53)Loans in subsidiary (32) - - (32)Other loans - (200) - (200) _______ _______ _______ _______ Total 582 (126) (36) 420 _______ _______ _______ _______ * * ENDS * * Contacts: Isabel Crossley St. Brides Media Tel: 020 7242 4477 Ben Margolis ADDleisure plc Tel: 020 7449 1000 This information is provided by RNS The company news service from the London Stock Exchange