RNS Number:7136L
Springhealth Leisure PLC
30 May 2003
30 May 2003
SPRINGHEALTH LEISURE PLC
INTERIM RESULTS FOR THE SIX MONTHS TO
28 FEBRUARY 2003
SpringHealth Leisure PLC, the health and fitness club operator
announces interim results for the six months ended 28 February 2003.
* Turnover up to #6.1m (2002: #6.0m)
* EBITDA increased to #622,000 (2002: #460,000)
* Operating profit before goodwill amortisation improved to #28,000
(2002: Loss #72,000)
* Loss before tax, goodwill amortisation and the provision for loss on
sale of fixed assets was #222,000 (2002: Loss #341,000)
* Successfully completed sale of two clubs for #2.45m in April 2003 with
the proceeds used to reduce debt.
John Lowther, Chief Executive, commented:
"The results reflect the very competitive market conditions we have seen
throughout the period. Consumers now have a greater choice of clubs within easy
travelling distance and this has led to more aggressive discounting of price,
particularly in joining fees.
We do not anticipate a significant improvement in market conditions in the
foreseeable future and in such a climate, our outlook must be cautious. We
continue to hold the view that our positioning as an affordable, mid-market
product, offers us the best prospects for the future and our focus will be to
increase the profitability of the clubs through local marketing and on the
reduction of our borrowings."
Enquiries to:
John Lowther, Chief Executive Tel: 07710 601563
SpringHealth Leisure PLC
Tarquin Edwards/John Bick Tel: 020 7929 5599
Holborn
SPRINGHEALTH LEISURE PLC
INTERIM RESULTS FOR THE SIX MONTHS TO
28 FEBRUARY 2003
Market conditions proved difficult during the period with increased levels of
competition and economic uncertainty affecting pricing, secondary spend and
customer retention levels in the industry. Although Springhealth's mid-market
position continues to represent good value, underlying market conditions have
affected trading in the period. In particular, we have seen increased
discounting of joining fees and free membership periods offered by our
competitors, which in turn has limited our joining fee income and net membership
growth.
In February 2003, the Board announced that it had conditionally agreed to sell
two of its clubs in order to reduce the Group's level of debt. The sale of the
two clubs, Bristol and Leicester, was completed in April 2003 for a
consideration of #2.4m, net of expenses. The net assets of the clubs at the date
of sale were #5.2m and consequently, a provision for loss on sale of the assets
has been made at the half year of #2.8m. The proceeds from the sale, which were
received after the balance sheet date, will be used to reduce the Group's debt.
The effect of these disposals is to refocus SpringHealth's operations
geographically around London and the North East. The Board believes that this
will provide the company with the ability to devote its financial and managerial
resources on optimising the operation of its current portfolio of clubs.
Results
Turnover in the fourteen clubs grew to #6.1 million (2002: #6.0 million) in the
first six months of the year, reflecting flat membership levels and joining fee
income reducing to 3% of sales (2002: 4%) due to the competitive marketplace.
Secondary income reduced by 1% of sales on a like-for-like basis as a result of
outsourcing catering at three of the clubs.
Earnings before interest, tax, depreciation and amortisation ("EBITDA")
increased to #622,000 (2002: #460,000) and the operating profit before goodwill
amortisation improved to #28,000 (2002: Loss #72,000). The loss before tax,
goodwill amortisation and the provision for loss on sale of fixed assets was
#222,000 (2002: Loss #341,000).
Following negotiations started before the balance sheet date, the Bristol and
Leicester clubs were sold in April 2003. Accordingly, we have provided for the
anticipated loss on disposal of #2.8m at the half year.
During the period the Group repaid #1.7m of Loan Notes with a fixed coupon of
7%. The repayment was partially financed by a short-term bank loan which was
repaid after the balance sheet date from the proceeds of the sale of the two
clubs. Following the sale of the clubs, we anticipate that gearing will reduce
to approximately 32%.
Current Trading and Prospects
Market conditions continue to be competitive and the Board does not foresee a
significant improvement in the near future. The Board believes that the current
mid-market positioning of its health clubs remains the most appropriate model
and will continue to focus attention on maximising the efficiency of our
operations and marketing to increase profitability ahead of any possible upturn
in the economy.
John Lowther, Chief Executive
30 May 2003
Consolidated Profit & Loss Account (Unaudited)
For the six months ended 28 February 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 2003 28 February 31 August
Note #'000 2002 2002
#'000 #'000
Turnover 6,088 6,010 12,509
Administrative expenses (6,481) (6,515) (13,579)
Operating loss 5 (393) (505) (1,070)
Provision for loss on disposal of fixed assets 3 (2,833) - (3)
Loss on ordinary activities before interest (3,226) (505) (1,073)
Interest receivable 5 31 44
Interest payable & similar charges (255) (300) (580)
Loss on ordinary activities before taxation (3,476) (774) (1,609)
Taxation 45 (19) 6
Loss for the period (3,431) (793) (1,603)
Loss per share
Basic and diluted (pence) 4 (23.29) (5.38) (10.88)
All amounts relate to continuing activities
All recognised gains and losses are included in the Profit and Loss Account
Consolidated Balance Sheet (Unaudited)
As at 28 February 2003
Unaudited Unaudited Audited
As at As at As at
28 February 28 February 31 August
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Intangible assets 12,521 15,487 14,695
Tangible assets 10,809 12,122 12,270
23,330 27,609 26,965
Current assets
Stocks 86 130 94
Debtors 320 392 577
Cash at bank & in hand - 702 443
406 1,224 1,114
Creditors: Amounts falling due within one
year (4,263) (3,775) (4,013)
Net current assets /(liabilities) (3,857) (2,551) (2,899)
Total assets less current liabilities 19,473 25,058 24,066
Creditors: Amounts falling due after more
than one year (4,542) (5,830) (5,659)
Provisions for liabilities and charges
Deferred tax (63) (119) (108)
14,868 19,109 18,299
Capital & reserves
Called up share capital 1,473 1,473 1,473
Share premium account 15,721 15,721 15,721
Merger reserve 5,600 5,600 5,600
Profit & loss account (7,926) (3,685) (4,495)
Equity shareholders' funds 14,868 19,109 18,299
Reconciliation of Movements in Shareholders' Funds (Unaudited)
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 2003 28 February 31 August
#'000 2002 2002
#'000 #'000
Loss for the period (3,431) (793) (1,603)
Net reduction to shareholders' funds (3,431) (793) (1,603)
Opening shareholders' funds 18,299 19,902 19,902
Closing shareholders' funds 14,868 19,109 18,299
Consolidated Cash Flow Statement (Unaudited)
For the six months ended 28 February 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 2003 28 February 31 August
#'000 2002 2002
#'000 #'000
Net cash inflow / (outflow) from operating
activities 587 (71) 902
Returns on investments & servicing of finance
Interest received 5 31 44
Interest paid (255) (300) (580)
Net cash outflow from returns on investments &
servicing of finance (250) (269) (536)
Capital expenditure
Purchase of tangible fixed assets (220) (1,262) (2,143)
Sale of tangible fixed assets 7 - 3
Net cash outflow from capital expenditure (213) (1,262) (2,140)
Net cash inflow/ (outflow) before financing 124 (1,602) (1,774)
Financing
Increase in loan 1,400 - -
Repayment of loans (1,869) (160) (331)
Capital element of finance lease rental payments (168) (151) (67)
Net cash outflow from financing (637) (311) (398)
Decrease in cash (513) (1,913) (2,172)
NOTES
1. The financial information contained in this announcement does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The financial information for the six month period
ended 28 February 2003 has been prepared on a basis consistent with the
audited financial statements for the year ended 31 August 2002 and the six
month period ended 28 February 2002. The financial information for the year
ended 31 August 2002 has been extracted from the audited financial
statements for that year, which have been filed with the Registrar of
Companies and which contain an unqualified audit report.
2. The Board is not recommending that a dividend is paid in respect of the
period under review.
3. The provision for loss on disposal of fixed assets relates to the sale of
two clubs where negotiations to sell began before the balance sheet date
but whose sale was not completed until April 2003.
4 The Loss per Ordinary Share has been calculated using the weighted average
number of Equity Shares in issue during the relevant financial periods.
The weighted average number of Equity Shares in issue was 14,731,536 (2002
- 14,731,536) and the loss after tax was #3,431,000 (2002 - Loss:#793,000).
5. Reconciliation of operating loss to net cashflow from operating activities:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 2003 28 February 31 August
#'000 2002 2002
#'000 #'000
Operating loss (393) (505) (1,070)
Depreciation 594 532 1,136
Amortisation of intangible assets 421 433 865
Impairment of fixed and intangible assets - - 483
Decrease/ (increase) in stocks 8 (38) (2)
Decrease / (increase) in debtors 243 60 (111)
Decrease in creditors (286) (553) (399)
Net cash (outflow) / inflow from operating 587 (71) 902
activities
6. Reconciliation of net cashflow to movements in net debt
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
28 February 2003 28 February 31 August
#'000 2002 2002
#'000 #'000
Decrease in cash (513) (1,913) (2,172)
New loan (1,400) - -
Loan payments during period 1,869 160 331
Finance Lease payments during period 168 151 67
Movement in net debt in the year 124 (1,602) (1,774)
Net debt at the beginning of period (7,310) (5,536) (5,536)
Net debt at the end of period (7,186) (7,138) (7,310)
Analysis of changes in net debt
Other
31 August non-cash 28 February
2002 Cash Flow transactions 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 443 (443) - -
Bank overdraft - (70) (70)
Debt due after one year (5,235) - 1,035 (4,200)
Debt due within one year (2,043) 469 (1,035) (2,609)
Finance leases (475) 168 - (307)
(7,310) 124 - (7,186)
7. Copies of this statement are being sent to all shareholders and copies are
available from the Company's registered office at 42-46 High Street, Esher,
Surrey KT10 9QY.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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