MAZARAN LEISURE PLC
21 October 1999
MAZARAN LEISURE PLC
(FORMERLY SOUTH COUNTRY HOMES PLC)
REPORT & FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED 31 AUGUST 1999
Chairman's Statement
As we announced last month, the Board of Mazaran has brought forward the year
end to 31 August 1999 and therefore these results cover a nine month period
only. The period under review has seen a total transformation of the original
residential property business, then named South Country Homes plc, into the
growing health and fitness operator, Mazaran Leisure plc.
This transformation, of course, has not been without its costs. Results for
the nine month period have been adversely affected by many changes that have
taken place including the move to AIM, the costs of acquiring three health and
fitness businesses, abortive acquisition costs, the disposal of our property
investment portfolio and general corporate restructuring.
For the nine months to the end of August we produced a pre-tax loss of
£620,000 compared to losses for the twelve months to 30 November 1998 of
£134,000. No dividend is proposed; it will be the policy of the Board to pay
dividends when it is prudent to do so.
As I have indicated, the period under review has been an extremely active one
particularly since April when the original business' property investments were
sold.
This marked the end of South Country Homes and the start of Mazaran Leisure
with the appointment of a new management team, headed by Chief Executive,
Richard Yerbury.
Shareholders will be aware that as a part of the proposed restructuring of the
original business, we successfully raised £6m gross through a share issue in
March, which, initially, enabled us to acquire Pools on the Park, a leisure
management business that undertakes a long term contract for the London
Borough of Richmond. I am pleased to say Pools on the Park continued to trade
well and the management has maintained a high level of client service. Despite
a variable summer, results from this business are broadly in line with
expectations.
In addition to Pools on the Park we acquired two health and fitness centres
during the period for a total consideration of £1.6m in Heathrow and
Chelmsford, whilst two more in Brentwood and in Bristol, have been purchased
since the balance sheet date. These four centres, together with Pools on the
Park, are providing the platform for the Mazaran brand of health and fitness
centres.
All of these additional sites, with the exception of Brentwood, are existing
health & fitness centres based in excellent locations with potential for
further development. At Brentwood we have acquired a building previously used
as a health club and a children's gym as well as an adjoining bar/restaurant.
At Heathrow, where we acquired the Morley's Health Club, business has remained
steady despite the significant upheaval caused by the refurbishment of the
centre. We have decided to terminate the sub-lease which will enable us to
increase our gym areas. This is the first club to be launched under the
Mazaran brand and is acting as a benchmark for both the product and the brand.
Planning for the refurbishment of our Chelmsford and Brentwood clubs is well
advanced, while the Bristol work is already underway and they will all be re-
launched as Mazaran health and fitness centres within the next six months.
However, in addition to the existing space, a second phase of development is
possible, subject to planning, at both Brentwood and Bristol.
It is our intention, once we have fully integrated our recent acquisitions
into the Mazaran brand, to continue our programme of expansion both through
the purchase of existing centres where we see potential for growth and
development as part of the Mazaran Leisure concept and through long term local
authority opportunities such as Richmond. Of course, identifying suitable
centres and the negotiation of local authority contracts takes time, but we
are alert to the opportunities of expansion through portfolio acquisition.
The health and fitness market is a highly fragmented one and we believe there
are substantial opportunities to create a well branded leisure group through
the acquisition of individual existing centres as well as small chains of
clubs where, under the Mazaran brand integrated management and marketing can
deliver above average growth. With this in mind, I view the future with
confidence.
Sandy Anderson 21 October 1999
Chairman
Consolidated Profit & Loss Account (unaudited)
for the nine months ended 31 August 1999
Year
Cont- Discon- ended 30
inuing Acquis- tinued November
Note operations itions operation Total Total
1999 1999 1999 1999 1998
£'000 £'000 £'000 £'000 £'000
Turnover 1, 2 - 1,063 31 1,094 87
Administrative expenses 1 (515) (1,164) (28) (1,707) (373)
_______ _______ _______ _______ _______
(515) (101) 3 (613) (286)
Other operating income - 17 - 17 -
_______ _______ _______ _______ _______
Operating (loss)/profit (515) (84) 3 (596) (286)
(Loss)/profit on disposal
of fixed assets - - (51) (51) 140
_______ _______ _______ _______ _______
Loss on ordinary activities
before interest and
other income (515) (84) (48) (647) (146)
Interest receivable 46 12
Interest payable and
similar charges (19) -
_______ _______
Loss on ordinary activities
before taxation 2 (620) (134)
Taxation on loss from
ordinary activities (31) -
_______ _______
Loss for the period (651) (134)
Dividends - -
_______ _______
Retained loss (651) (134)
======= =======
Earnings per share 3
Basic (4.13) (1.66)
Diluted (4.13) -
======= =======
Consolidated Statement of Total Recognised Gains and Losses and
Note of Historical Cost Profits and Losses (unaudited)
for the nine months ended 31 August 1999
Year
ended 30
Group November
Note 1999 1998
£'000 £'000
Consolidated Statement of Total Recognised
Gains and Losses
Loss for the financial period (651) (134)
Unrealised surplus on revaluation of properties - 32
_______ _______
Total recognised gains and losses for the period (651) (102)
======= =======
Note of historical cost profits and losses
Reported loss on ordinary activities
before taxation 2 (620) (134)
Realisation of property revaluation gains of
previous years (41) (18)
_______ _______
Historical cost loss on ordinary activities
before taxation (661) (152)
======= =======
Retained historical cost profit for the period after
taxation and dividends (692) (152)
======= =======
Consolidated Balance Sheet (unaudited)
at 31 August 1999
Note 1999 30 November 1998
£'000 £'000 £'000 £'000
Fixed Assets
Intangible assets 4,158
Tangible assets 1,364 874
_______ _______
5,522 874
Current Assets
Stocks 8 -
Debtors 183 9
Cash at bank and in hand 2,209 407
_______ _______
2,400 416
Creditors: Amounts falling due within
one year (689) (202)
_______ _______
Net current assets 1,711 214
_______ _______
Total assets less current liabilities 7,233 1,088
Creditors: Amounts falling due after
more than one year (369) -
_______ _______
6,864 1,088
======= =======
Capital and Reserves
Called up share capital 485 162
Share premium account 7,340 1,236
Revaluation reserve - (41)
Profit and loss account (961) (269)
_______ _______
Equity shareholders' funds 5 6,864 1,088
======= =======
Company Balance Sheet (unaudited)
at 31 August 1998
Note 1999 30 November 1998
£'000 £'000 £'000 £'000
Fixed Assets
Intangible assets 701 -
Tangible assets 899 874
Investments 3,886 -
_______ _______
5,486 874
Current Assets
Stocks 2 -
Debtors 144 9
Cash at bank and in hand 1,942 407
_______ _______
2,088 416
Creditors: Amounts falling due within
one year (740) (202)
_______ _______
Net current assets 1,348 214
_______ _______
Total assets less current liabilities 6,834 1,088
======= =======
Capital and Reserves
Called up share capital 485 162
Share premium account 7,340 1,236
Revaluation reserve - (41)
Profit and loss account (991) (269)
_______ _______
Equity shareholders' funds 5 6,834 1,088
======= =======
Consolidated Cashflow Statement (unaudited)
for the nine months ended 31 August 1999
Year ended
30 November
Note 1999 1998
£'000 £'000 £'000 £'000
Net cash outflow from
operating activities 6 (405) (104)
Returns on investments and
servicing of finance
Interest received 46 12
Interest paid (19) -
_______ _______
Net cash inflow from returns on
investment and servicing of finance 27 12
Taxation - (9)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (40) (3)
Sale of tangible fixed assets 818 335
_______ _______
Net cash inflow from capital expenditure
and financial investment 778 332
Acquisitions and disposals
Purchase of businesses (1,638) -
Net cash acquired with businesses - -
Purchase of subsidiary undertakings (536) -
Net cash acquired with
subsidiary undertakings 540 -
_______ _______
Net cash outflow from acquisitions
and disposals (1,634) -
_______ _______
Net cash (outflow)/inflow before financing (1,234) 231
Financing
Issue of ordinary share capital 3,077 -
Decrease in loan (41) -
_______ _______
Net cash (outflow)/inflow from financing 3,036 -
_______ _______
Increase in cash 7 1,802 231
======= =======
Notes Forming Part of the Preliminary Announcement
for the nine months ended 31 August 1999
1. Corresponding Figures
The analysis between continuing and discontinued operations for the year ended
30 November 1998 is shown below. Acquisitions made in the year ended 30
November 1998 are shown as part of continuing activities and activities
discontinued in the period ended 31 August 1999 are shown as part of
discontinued activities.
Discon-
Continuing tinued Total
in 1999
£'000 £'000 £'000
Turnover - 87 87
Administrative expenses (296) (77) (373)
_______ _______ _______
Operating loss (296) 10 (286)
======= ======= =======
2. Turnover, Profit & Net Assets
Turnover Pre-Tax Profit Net Assets
1999 1998 1999 1998 1999 1998
£'000 £'000 £'000 £'000 £'000 £'000
Property management 31 87 (48) (134) - 1,088
Health club and leisure
Management 1,063 - (572) - 6,864 -
_______ _______ _______ _______ _______ _______
1,094 87 (620) (134) 6,864 1,088
======= ======= ======= ======= ======= =======
All activities were carried out in the UK.
3. Earnings per Share
Earnings per Ordinary Share have been calculated using the weighted average
number of Shares in issue during the relevant financial periods. The weighted
average number of Equity Shares in issue is 15,746,226 (1998 - 8,075,000) and
the earnings being loss after tax are (4.13)p (1998 - (1.66)p).
There is no dilutive effect as the group incurred a loss for the period.
4. Goodwill
Goodwill arising on acquisitions is the difference between the fair value of
the consideration paid and the fair value of the assets and liabilities
acquired. It is amortised through the profit and loss account over the
Directors' estimate of its useful economic life, which is 20 years, or in the
case of Mazaran Leisure Management Limited, over the period of the management
contract to 2008.
5. Reconciliation of movement in shareholders' funds
Group Company
1999 1998 1999 1998
£'000 £'000 £'000 £'000
Loss for the period (651) (134) (681) (134)
Other net recognised gains and losses
relating to the period - 32 - 32
Issue of shares 6,427 - 6,427 -
_______ _______ _______ _______
Net additions to shareholders' funds 5,776 (102) 5,746 (102)
Opening shareholders' funds 1,088 1,190 1,088 1,190
_______ _______ _______ _______
Closing shareholders' funds 6,864 1,088 6,834 1,088
======= ======= ======= =======
6. Reconciliation of operating loss to net cash outflow
from operating activities
1999 1998
£'000 £'000
Operating loss (596) (214)
Revaluation surplus - (72)
Depreciation 87 -
Amortisation of intangible assets 144 -
Decrease/(increase) in stocks (8) -
Decrease/(increase) in debtors (149) (1)
(Decrease)/increase in creditors 117 183
_______ _______
Net cash outflow from operating activities (405) (104)
======= =======
7. Reconciliation of net cash flow to movements in net funds
1999 1998
£'000 £'000
Increase in cash 1,802 231
Loans acquired with subsidiary (515) -
Loan payments during the period 41 -
Net funds at 1 December 1998 407 176
_______ _______
Balance at 31 August 1999 1,735 407
======= =======
8. Statutory information
The financial information has been extracted from the full financial
statements for the nine months ended 31 August 1999. Subject to the new
accounting policy for goodwill set out in note 5 above, they have been
prepared on the basis of the accounting policies as set out in the financial
statements for the year ended 30 November 1998. The full financial statements
for the period ended 31 August 1999 have not yet been reported on by the
auditors and have not yet been filed with the Registrar of Companies. The
figures and financial information for the year ended 30 November 1998 do not
constitute the financial statements for that year. Those financial statements
have been delivered to the Registrar of Companies and received an unqualified
audit report.
Contact: Mazaran Leisure plc Tel: 01189 657765
Richard Yerbury, Chief Executive
Baron Phillips Associates Tel: 020 7224 1302
Baron Phillips