Topnotch Health Clubs PLC
15 January 2001
Topnotch health clubs plc
('Topnotch' or 'the Company')
Interim Results for the six months ended 31 October 2000
Topnotch health clubs plc, the fast expanding operator of quality,
affordable health and fitness clubs that 'Dare to be Different',
announces its interim results for the six months ended 31 October
2000.
Highlights
* Number of clubs doubled to 16 in first half by acquisition and
organic development
* Total membership increased by 156% to 22,912 (1999: 8,937)
* Like-for-like club membership increased by 7.3% to 8,230 (1999:
7,668)
* Turnover increased by 167% to £3.8m (1999: £1.4m)
* Like-for-like turnover increased by 8.1% to £1.3m (1999:
£1.2m)
* Like-for-like club contribution increased by 10.7% to
£314,000 (1999: £284,000)
* Operating profit (before exceptional and pre-opening
expenses) of £101,000 (1999: operating loss on same basis
£53,000)
* Pre tax loss reduced by 72% to £69,000 (1999: £253,000)
* Loss per share reduced to 0.42p (1999: 2.58p)
* Cash flow from operations increased to £1.17m (1999:
£128,000)
* Good progress made in re-branding and refurbishing acquired
clubs - programme expected to be largely complete by the end of
April 2001
* New Topnotch clubs to open at Tower 42 office development in
City of London and Sol Central leisure development, Northampton,
in July and September 2001 respectively
* Negotiations for the acquisition of further sites
progressing - Company well ahead of growth targets outlined at
flotation in March 2000
Charlie Scott, Chairman, commented: 'The health and fitness
market remains buoyant, with continued strong demand for
memberships both in our existing and newly developed clubs. We
are encouraged by the availability of potential new sites and
individual acquisition opportunities and are very pleased with
the underlying growth in club profitability for the clubs open
throughout both respective periods. The Board is confident of
achieving further progress for the year as a whole.'
Enquiries:
Topnotch health clubs plc (15.01.01) 020 7601 1000
Matthew Harris, Chief Executive (thereafter) 020 8232 6802
Square Mile BSMG 020 7601 1000
Kevin Smith/Anna Watson
Topnotch health clubs plc
('Topnotch' or 'the Company')
Interim Results for the six months ended 31 October 2000
CHAIRMAN'S AND CHIEF EXECUTIVE'S JOINT STATEMENT
We are pleased to present the interim results of the Company for
the six months ended 31 October 2000. This has been a very busy
period for Topnotch, during which we acquired a further six
clubs, all of which are in the process of being converted to our
'Dare to be different' format. We also opened two organically
developed clubs. As a result of this corporate activity we are
already well ahead of the growth objectives set at the time of
flotation in March 2000.
Financial Results
Total turnover increased by 167% to £3.8m in the first six months
of the year (1999: £1.4m), with turnover on a like-for-like basis
(clubs open in both respective six month periods) increasing by
8.1% to £1.3m.
During the period the Company incurred total exceptional costs of
£136,000 (1999: nil) relating to the integration of the acquired
clubs (£57,000) and professional fees incurred in connection with
the acquisition of new sites where completion is uncertain
(£79,000). Pre-opening costs of £75,000 (1999: £64,000) were
also incurred. Adjusting for these costs, the Company reported a
£154,000 improvement in underlying operating profit to £101,000
(1999: loss £53,000). Like-for-like club contribution, before
overhead cost allocation, increased by 10.7% to £314,000 (1999:
£284,000). The loss before tax in the period was better than
market expectations, falling 72% to £69,000 (1999: £253,000).
There is no tax charge in the period (1999: nil). Loss per share
was 0.42p (1999: 2.58p).
In line with the stated policy at the time of flotation, no
interim dividend is being proposed.
Cash flow from operations increased by 813% to £1,169,000 (1999:
£128,000) as a result of maturing clubs and the addition of eight
operational clubs acquired since the 1999 half year end.
Fixed assets increased by 60% to £12.7m since the last year end
after the acquisition of six clubs and the organic development of
two clubs. A total of £5.1m was spent on capital expenditure, of
which £2.2m was for acquisitions, £1.9m on conversion of organic
clubs and £1.0m on part refurbishment of Birmingham West and the
other acquired clubs. Although we had positive cash balances at
the end of the half year, we have subsequently put in place a new
£5.25m bank facility to fund future development.
Operational Review
Topnotch expanded rapidly in the first half increasing its club
portfolio from eight clubs at the last year end to a total of
sixteen.
We achieved this through the acquisition of clubs in central
Birmingham, Bournemouth, Bristol, Croydon, Fulham and Wembley, as
well as opening organically developed clubs in New Malden and
Maidstone.
Total membership increased by 156% to 22,912 (1999: 8,937). Like-
for-like membership increased by 7.3%.
London Bridge completed its thirteenth month of operation at the
half year end with over 2,500 members and producing a return on
capital ahead of our model club. Although it is early days for
the start of the New Malden and Maidstone clubs, we are in line
with our model club profile. Topnotch's model club format is
based upon a 16-20,000 sq.ft. health and fitness club targeting
the convenience/value for money segment of the market.
The club at the Whiteleys retail development at Bayswater in West
London acquired in March 2000 has now been refurbished and
rebranded under the Topnotch name, including the introduction of
our 'PowerZone', 'Planet Spin', 'Ironworks' and 'Knockout Zone'
themed concepts. The introduction of Topnotch procedures
following a period of staff retraining has greatly improved
efficiency and reduced costs. These measures have contributed to
a significantly improved performance, with the club now
profitable at club contribution level. We believe that the
situation at Bayswater is a good indicator of our ability to turn
around under-performing clubs and the experience gained is being
put to good use throughout our acquired estate.
Good progress has been made with the integration of the 'Dare to
be different' culture into the acquired clubs and the
implementation of Topnotch staffing structures, sales systems
with annual membership contracts, employee training programmes
and of our '321' and 'PT Maxx' personal training programmes.
Birmingham West, acquired in April 2000, was closed in September
for substantial refurbishment and the addition of a swimming
pool, with phase one of the work completed in December. The pool
complex is nearing completion and is expected to open in January.
Bristol is currently being refurbished and expanded with Topnotch
themed zones, which include the 'PowerZone' nightclub themed gym,
the 'Planet Spin' spinning studio, the 'Ironworks' free weights
area, the ladies-only gym, 'Pilates @ Topnotch' and the 'Knockout
Zone' boxing area.
In July 2000 the Company announced the acquisition of five health
and fitness clubs from Cannons Group PLC. The clubs are situated
in central Birmingham, Bournemouth, Croydon, Fulham and Wembley
and have an average size of approximately 16,000 sq.ft. Each
of these clubs will be refurbished and rebranded as a Topnotch
facility and all have already adopted our staffing and sales
systems. The four clubs other than Fulham will offer Topnotch
themed zones by Spring 2001. Fulham, which requires a larger
refurbishment, will be completed by Autumn 2001. All of these
clubs will remain open during their refurbishments, which will be
financed from existing bank facilities.
Since the half year end we have announced the completion of
agreements to lease space at Tower 42 in the City of London and
at the Sol Central leisure development in Northampton, which will
open in July and September 2001 respectively.
Both of these new projects are prestigious new developments. We
are also in negotiations on a number of other sites that will
ensure we continue to meet our growth target of opening or
acquiring four new clubs per annum for the next two years.
A further strengthening of the operational management team has
been achieved with the appointment of a Human Resources Manager
and the promotion of certain club Business Managers to new roles
that also include regional club responsibilities.
The health and fitness market remains buoyant, with continued
strong demand for memberships both in our existing and newly
developed clubs. We are also encouraged by the availability of
potential new sites and individual acquisition opportunities.
The Board is confident of achieving further progress for the year
as a whole and is pleased with the underlying growth in club
profitability for the clubs open throughout both respective
periods.
Enquiries:
Topnotch health clubs plc (15.01.01) 020 7601 1000
Matthew Harris, Chief Executive (thereafter) 020 8232 6802
Square Mile BSMG 020 7601 1000
Kevin Smith/Anna Watson
Topnotch health clubs plc
Consolidated profit and loss account
6 months ended Year ended
31 October 2000 31 October 1999 30 April 2000
(unaudited) (audited) (audited)
£000 £000 £000
Turnover 3,804 1,418 3,511
Cost of sales (1,222) (507) (1,024)
________ ________ _______
Gross profit 2,582 911 2,487
Selling and distribution costs (528) (320) (671)
Administrative expenses - other (2,072) (732) (1,867)
- exceptional (136) - -
- total (2,208) (732) (1,867)
Other operating income 44 24 56
________ _________ ________
Operating (loss)/profit (110) (117) 5
Interest receivable 66 12 59
Interest payable and similar
charges (25) (148) (280)
________ _________ ________
Loss on ordinary activities
before taxation (69) (253) (216)
Taxation - _ _
________ _________ ________
Loss for the period (69) (253) (216)
Loss per share - basic (0.42)p (2.58)p (1.99)p
Topnotch health clubs plc
Summary consolidated balance sheet
__________________________________
As at As at As at
31 October 2000 31 October 1999 30 April 2000
(unaudited) (audited) (audited)
£000 £000 £000
Fixed assets
Intangible assets 83 6 85
Tangible assets 12,694 4,912 7,891
_____________ ______________ _____________
12,777 4,918 7,976
_____________ ______________ _____________
Current assets
Stocks 44 18 24
Debtors due within one year 554 306 317
Cash at bank and in hand 321 25 4,433
_____________ ______________ _____________
919 349 4,774
Creditors: amounts falling due
within one year (2,893) (2,704) (1,831)
______________ ______________ _____________
Net current (liabilities)/assets (1,974) (2,355) 2,943
_____________ ______________ _____________
Total assets less current liabilities 10,803 2,563 10,919
Creditors: amounts falling due
after more than one year (164) (2,006) (211)
______________ ______________ _____________
10,639 557 10,708
Represented by:
Equity shareholders' funds 10,639 557 10,708
Topnotch health clubs plc
Summary consolidated cash flow statement
6 months ended Year ended
31 October 2000 31 October 1999 30 April 2000
(unaudited) (audited) (audited)
£000 £000 £000
Net cash inflow from
operating activities 1,169 128 583
Returns on investments and
servicing of finance
Interest received 66 12 59
Interest paid (8) (134) (260)
Interest element of finance lease
and hire purchase payments (17) (16) (33)
_______________ _______________ _____________
41 (138) (234)
_______________ _______________ _____________
Taxation
UK corporation tax repaid - - 52
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (2,881) (1,345) (2,575)
Sale of tangible fixed assets - - 4
______________ ________________ _____________
(2,881) (1,345) (2,571)
______________ ________________ _____________
Acquisitions and disposals
Purchase of subsidiary
undertaking - - (496)
Cash acquired with subsidiary - - 24
Purchase of business (2,234) - (763)
_____________ ________________ _____________
(2,234) - (1,235)
_____________ ________________ _____________
Decrease/(increase) in short
term deposits 3,358 - (3,358)
_____________ ________________ _____________
Cash inflow/(outflow) from
management of liquid resources 3,358 - (3,358)
_____________ ________________ _____________
Financing
Bank loans advanced - 377 1,153
Repayment of bank loans (114) (90) (2,493)
Capital element of finance lease
and hire purchase payments (93) (101) (216)
Issue of ordinary shares - - 11,075
Share issue costs - - (961)
Redemption of 8% loan notes - - (1,900)
_____________ ________________ _____________
(207) 186 6,658
_____________ ________________ _____________
Decrease in cash (754) (1,169) (106)
Notes to the interim results
1. No dividend was paid during the period under review.
2. Loss per share has been computed on the basis of the net loss for
the period of £69,000. No diluted loss per share has been presented as
potentially issuable ordinary shares would have no dilutive effect
during current and prior periods.
3. This statement does not comprise statutory accounts as defined in
S240 of the Companies Act 1985. The financial information for the year
ended 30 April 2000 has been extracted from the full audited financial
statements which have been filed with the Registrar of Companies and
which contain an unqualified audit report.
4. The results for the period ended 31 October 2000 are unaudited.
The results for the comparative six month period were audited in
preparation for the flotation.
5. The financial information included herein has been prepared on a
consistent basis and using the same accounting policies as the audited
financial statements for the year ended 30 April 2000.
6. Exceptional administrative costs of £136,000 relate to the
integration of acquired clubs (£57,000) and professional fees incurred
in connection with potential new sites (£79,000).
7. The financial information included herein was approved by the
Directors on 12 January 2001.
8. The Interim Report will be mailed to all shareholders and will
also be available at Topnotch health clubs plc, 1&2 Windsor Close,
West Cross Centre, Great West Road, Brentford, Middlesex TW8 9DZ.