Clubhaus, the leisure group, has announced preliminary results for the year ended 30th September 2003.
Paul Sellars, who was appointed as a non-executive director of Clubhaus PLC on 30th July 2002, has become the non-executive Chairman of Clubhaus, replacing John Hume who remains as a non-executive director of the Company.
Commenting on the results, the new Chairman said, “Having successfully disposed of our non core assets in 2002, the true value of our strategy and business model is starting to be revealed. Our strategy this year has been twofold. Our first aim has been to focus on maximizing returns from our core UK Country Clubs. All the key metrics from these clubs are moving in the right direction; sales, member subscriptions, profit margins and cash generation.
The second part of our strategy is to develop our four clubs which do not currently offer health and fitness facilities. Our capital structure has prevented us from making further progress with these clubs during 2003, but the Board is currently reviewing options, including the possible sale of the Company, to enable it to execute on this part of the strategy.”
The financial year to 30 September 2003 is the first full trading period following the group’s restructuring in May 2002 and therefore does not include contributions from those non-core operations which were sold during 2002.
Our operating strategy during the past year has been to focus our attention on our UK Country Clubs and to improve returns from these businesses. We are therefore pleased to report a successful year at all 11 Clubs, in spite of the continued backdrop of a challenging trading environment in the leisure sector.
The group results show a decline in turnover from £34.1 million in 2002 to £27.1 million in 2003, reflecting the disposals of non-core assets, which last year generated turnover of £9.1 million. However, the benefit of these disposals is shown in the 35% decrease in group costs and the fact that Clubhaus returned an operating profit of £3.7 million against a loss of £1.5 million in 2002.
Overall like for like operating profit from continuing operations almost trebled when the 2002 exceptional costs are excluded. The 11 core clubs generated a like for like 26% increase in EBITDA from an 8% increase in turnover, reflecting a stable cost environment in an operationally leveraged business. The success of the clubs has strengthened our belief that the business model possesses enormous potential.
Net debt in the period has been reduced in cash terms by £4.6 million. Closing debt of £54.9 million comprises bank debt, the remaining high yield bonds and a small amount of finance leases.
Notwithstanding the strong operating performance, the Group reported a small pre-tax loss of £0.7 million (2002: £14.3 million) for the period, owing in the main to the continuing high interest burden.
In addition, FPD Savills have carried out an FRS 15 valuation of the fixed assets, resulting in a valuation of £71.1 million compared to a book value of £73.1 million. The small decline is attributable to a slight softening in the market, partially offset by the successful trading during the period.
During the year, the Company completed the successful disposal of all of its non-core businesses. In the interim report, published on 16 May 2003, the Chairman made reference to two key strategic objectives, namely the continued focus on the core business of the UK Country Clubs and the development of those four clubs currently not offering health and fitness facilities. The operating results stated above demonstrate the success achieved in the first of these aims, but unfortunately our ability to execute on the second aim has been restricted by the group’s capital structure.
On 24 September 2003, the Board announced that it had appointed Close Brothers Corporate Finance Ltd to assist the Board in reviewing the options available to best allow Clubhaus to implement this second element of its strategy. As a result of this review, the Company has received various preliminary expressions of interest in the purchase of the Company. We are currently reviewing these proposals and a further announcement will be made in due course. However, it should be noted that the level of expressions of interest so far received is currently materially below the gross fixed asset value as recorded in these accounts.
During the year, there were two additions to the Board. In December 2002, Thierry Delsol joined the board in an executive capacity as Chief Operating Officer. In May 2003, Paul Stephens joined the board in an executive capacity as Finance Director.
In addition, following an earlier announcement today, I have taken over from John Hume as Non-Executive Chairman with effect from this morning. John will stay on the Board as a Non-Executive Director and we would all like to thank him for his guidance over the past 18 months as Chairman.
I would like to join with my colleagues on the Board in thanking all of the Clubhaus employees for their efforts during what has been a challenging trading environment for the leisure sector. The performance of the core clubs during the year, as well as the successful conclusion of the non-core asset disposals, has been a testament to their skill, determination and desire to succeed.
Notwithstanding our expensive and restrictive levels of debt, Clubhaus now has a clear business focus and a profitable business model with exciting potential. The coming months will determine how that potential is realised.
PAUL SELLARS, Chairman, 22 December 2003.