Summary of Results
This was another year of continued growth for the Group,
with 5 year compound average annual growth (CAGR) of
13.7% of revenue and 11.3% of EBITDA pre-exceptional
items over the financial years 2004-2009. This was despite
a reduction in number of clubs, with 14 new clubs opening
offset by closure of 20 underperforming tail clubs. The
growth reflected the benefits of the continuing investment
programme in our existing clubs, a tight control of
controllable costs and foreign exchange benefits.
Financing charges in the year were £140.2m (2008:
£125.4m) reflecting lower interest cashflows of £42.3m
(2008: £46.0m) offset by increased interest on Preference
shares and Eurobonds and an exceptional provision for VAT
on debt arrangement fees of £2.5m.
There was a goodwill impairment of £104.9m relating to
the European businesses, as a result of declining business
The tax charge for the year was £10.6m (2008: £2.6m)
reflecting higher overseas tax payments and non-recurring
adjustments in 2008 relating to prior years.
It shows that Fitness First are at the forefront when it comes to tackling climate change and have proactively taken action by
reducing the carbon emissions that they are directly responsible for rather than just paying others to off-set our emissions.
1 Asia includes Thailand, Hong Kong, Singapore, Indonesia, Philippines
2 Europe includes Belgium, Netherlands, Luxembourg, Italy, Spain and
3 Other includes India, Franchise Income, China (2 clubs which have
closed subsequently) and Group Head Office costs. (In note 2 to the
financial statements on page 54, India, Franchise Income and China are
included within Asia.)
Cash and Capital Expenditure
Free cash flow was £42.7m (2008: £26.3m).
Operating (loss) / profit
Goodwill amortisation – regular charge
Depreciation – regular charge
EBITDA before exceptional items
Free cash flow
Acquisitions / disposals
FX and fair value adjustments
Non-cash changes to net debt
Increase / (decrease) in net debt
Closing net debt
Capital investment in the year was £59.9m (2008: £79.1m),
reflecting a reduced opening programme for new clubs.
Expenditure on existing clubs for maintenance and equipment
upgrades was marginally up on 2008 as we continue to maintain
high quality clubs with up to date equipment.
New clubs / relocations
Head office / IT
At 31st October 2009, the Group had net debt of £1,297.2m
Bank loans and overdrafts
Obligations under finance leases
and hire purchase contracts
15% cumulative redeemable
The bank loans are secured by fixed and floating charges over the
Group’s assets in certain jurisdictions. The finance leases and hire
purchase contracts are secured on the assets concerned.
The principle bank loans include a £40.3m Term Loan A
repayable in two equal instalments in April 2010 and October
2010, a £550.3m Term Loan B repayable in November 2013, a
£52.7m capex loan repayable in November 2011 and a £20m
revolving Credit Facility repayable in November 2012. These
loans are denominated in Sterling, Euros, Australian Dollars and
US Dollars. The £20.2m first instalment of the Term Loan A was
repaid on 30th April 2010.
The principle covenants on the bank loans are a debt to Ebitda
covenant, interest cover, and cash cover. The group has met all
covenant requirements under these agreements.
Debt maturity profile
As at 31 October 2009, 71.6% of the floating rate borrowings
In addition, the Group continues to match its borrowings to the
underlying asset base of the Group creating a natural hedge to
currency exposure, but it is not the policy of the Group to hedge
the translation of overseas earnings into Sterling.
Credit risk of third parties that the Group deals with is managed by
setting a credit limit using published credit ratings.