PULSE_FITNESS_HOLDINGS_LI - Accounts
PULSE_FITNESS_HOLDINGS_LI - Accounts
Company Registration No. 02141942 (England and Wales)
FOR THE YEAR ENDED 31 DECEMBER 2014
DIRECTORS AND ADVISERS
Directors
Secretary
Company number
Registered office
Auditors
Bankers
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditors' report
4 - 5
Consolidated profit and loss account
6
Balance sheets
7 - 8
Consolidated cash flow statement
9
Notes to the consolidated cash flow statement
10
Notes to the financial statements
11 - 21
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
- 1 -
The directors present their report and financial statements for the year ended 31 December 2014.
Review of the business
The directors are pleased to report turnover for 2014 of £4.3m, representing an 11% growth over the prior year. This has been driven by a combination of a significant redevelopment project on top of the stable revenues derived from membership income and operational support to our leisure partners.
The groups subsidiary, Rock Merchanting Limited was created in 1959 and since then, Rock Merchanting has been a valuable resource to its leisure industry Partners. Despite the recent economic instability, Rock Merchanting has supported its leisure partners, retaining and maintaining its existing membership community and attracting new memberships within their leisure centres, by a mix of innovative sales and marketing strategies alongside a focus on the provision of quality gym operations. Rock Merchanting’s offering is based on assisting its leisure partners to ensure efficient and effective operational management processes and value for money marketing strategies.
Principal risks and uncertainties
The directors have considered the exposure of the group to risks. The principal risks are foreign currency risk, credit risk and liquidity risk. The group is funded through its retained earnings and borrowings. The directors regularly monitor cash flow projections of the group in order to ensure that it has sufficient available funds for its continuing operations. The group is exposed to direct currency risk. However it manages to safeguard itself by using amounts received in foreign currencies from its customers to pay overseas suppliers. The group has policies in place such that credit checks are made on all potential customers prior to sales being made. Key suppliers are also subject to credit checks in order to mitigate supply chain failure.
Position of the group at the year end
The group has significant net assets which demonstrates that the group is in a strong financial position and has the ability to both invest in the company's future and commit to future customer projects. Overall the directors are delighted with the groups performance and look forward to healthy profits in the future as the group continues to prosper.
Future developments
Looking forward, the directors will continue to assist its current leisure partners with efficient and effective operational support as well as innovative and effective membership and marketing strategies. In addition the groups subsidiary, Rock Merchanting is well placed to provide a suite of operational support and financing options for future prospective leisure partners.
On behalf of the board
Director
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
- 2 -
The directors present their report and financial statements for the year ended 31 December 2014.
Principal activities and review of the business
The principal activity of the group is that of providing operational support and management of leisure facilities. Activities such as direct debit management, sales and marketing support, training services, operational management and the supply of leisure management software.
Results and dividends
The consolidated profit and loss account for the year is set out on page 6.
Directors
The following directors have held office since 1 January 2014:
Auditors
The auditors, Cowgill Holloway LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 3 -
Statement of disclosure to auditors
On behalf of the board
Director
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF PULSE FITNESS HOLDINGS LIMITED
- 4 -
We have audited the group and parent company financial statements (the "financial statements") of Pulse Fitness Holdings Limited for the year ended 31 December 2014 set out on pages 6 to 21. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on pages 2 - 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
-
give a true and fair view of the state of the group's and parent company's affairs as at 31 December 2014 and of the group's profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF PULSE FITNESS HOLDINGS LIMITED
- 5 -
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
-
the parent company financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
for and on behalf of Cowgill Holloway LLP
Chartered Accountants
Statutory Auditor
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2014
- 6 -
2014
2013
Notes
£
£
Turnover
2
4,340,477
3,915,200
Cost of sales
(3,715,080)
(3,079,066)
Gross profit
625,397
836,134
Administrative expenses
(532,873)
(626,850)
Operating profit
3
92,524
209,284
Interest payable and similar charges
4
(4,507)
(5,234)
Profit on ordinary activities before taxation
88,017
204,050
Tax on profit on ordinary activities
5
(20,422)
48,659
Profit on ordinary activities after taxation
67,595
252,709
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the profit and loss account.
BALANCE SHEETS
AS AT
31 DECEMBER 2014
- 7 -
Group
Company
2014
2013
2014
2013
Notes
£
£
£
£
Fixed assets
Tangible assets
8
1,230,081
1,449,355
-
-
Investments
9
500,000
500,000
1,730,081
1,949,355
Current assets
Debtors
10
954,447
553,498
-
-
Cash at bank and in hand
55,061
228,583
-
-
1,009,508
782,081
-
-
Creditors: amounts falling due within one year
11
(999,550)
(1,037,049)
(102,179 )
(102,179 )
Net current assets/(liabilities)
9,958
(254,968)
(102,179 )
(102,179 )
Total assets less current liabilities
1,740,039
1,694,387
Provisions for liabilities
12
(59,167)
(81,110)
-
-
1,680,872
1,613,277
Capital and reserves
Called up share capital
13
4
4
Profit and loss account
14
1,680,868
1,613,273
Shareholders' funds
15
1,680,872
1,613,277
BALANCE SHEETS (CONTINUED)
AS AT
31 DECEMBER 2014
- 8 -
Approved by the Board and authorised for issue on 12 August 2015
Director
Company Registration No. 2141942
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
- 9 -
2014
2013
£
£
£
£
Net cash (outflow)/inflow from operating activities
(78,307)
455,782
Returns on investments and servicing of finance
Interest paid
-
(5,234)
Net cash outflow for returns on investments and servicing of finance
-
(5,234)
Taxation
-
(9)
Capital expenditure
Payments to acquire tangible assets
(95,215)
(275,292)
Receipts from sales of tangible assets
-
43,453
Net cash outflow for capital expenditure
(95,215)
(231,839)
Net cash (outflow)/inflow before management of liquid resources and financing
(173,522)
218,700
(Decrease)/increase in cash in the year
(173,522)
218,700
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
- 10 -
1
Reconciliation of operating profit to net cash (outflow)/inflow from operating activities
2014
2013
£
£
Operating profit
92,524
209,284
Depreciation of tangible assets
314,489
332,475
Increase in debtors
(400,949)
(47,723)
Decrease in creditors within one year
(84,371)
(38,254)
Net cash (outflow)/inflow from operating activities
(78,307)
455,782
2
Analysis of net funds
1 January 2014
Cash flow
Other non-cash changes
31 December 2014
£
£
£
£
Net cash:
Cash at bank and in hand
228,583
(173,522)
-
55,061
Net funds
228,583
(173,522)
-
55,061
3
Reconciliation of net cash flow to movement in net funds
2014
2013
£
£
(Decrease)/increase in cash in the year
(173,522)
218,700
Movement in net funds in the year
(173,522)
218,700
Opening net funds
228,583
9,883
Closing net funds
55,061
228,583
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 11 -
1
Accounting policies
1.1
Accounting convention
1.2
Compliance with accounting standards
The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), which have been applied consistently (except as otherwise stated).
1.3
Basis of consolidation
The consolidated profit and loss account and balance sheet include the financial statements of the companyand its subsidiary undertakings made up to 31 December 2014. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from the date control passes. Intra-group sales and profits are eliminated fully on consolidation.
1.4
Turnover
Management income is recognised as it is earned.
1.5
Goodwill
1.6
Patents
1.7
Tangible fixed assets and depreciation
Fitness equipment
Cost less residual value of 35% depreciated over 5 years
Fixtures, fittings & equipment
Written off on a straight line basis over 5 years
1.8
Leasing
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
1.9
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
1
Accounting policies
(Continued)
- 12 -
1.10
Long term contracts
Amounts recoverable on long term contracts, which are included in debtors, are stated at the net sales value of the work done after provision for contingencies and anticipated future losses on contracts, less amounts received as progress payments on account. Excess progress payments are included in creditors as payments on account.
1.11
Pensions
The Group operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
1.12
Deferred taxation
Deferred tax is recognised in respect of all timing differences which have originated but not reversed at the balance sheet date. Timing differences are differences between taxable profits and the results as stated in the financial statements which arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognised only when it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates which are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws which have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non - discounted basis.
Deferred tax is measured at the average tax rates which are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws which have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non - discounted basis.
2
Turnover
The total turnover of the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
3
Operating profit
2014
2013
£
£
Operating profit is stated after charging:
Depreciation of tangible assets
314,489
332,475
Fees payable to the group's auditor for the audit of the group's annual accounts
8,500
8,800
4
Interest payable
2014
2013
£
£
Other interest
4,507
5,234
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 13 -
5
Taxation
2014
2013
£
£
Domestic current year tax
U.K. corporation tax
42,365
67,774
Adjustment for prior years
-
40,617
Total current tax
42,365
108,391
Deferred tax
Deferred tax charge/(credit) current year
(21,943)
(157,050)
20,422
(48,659)
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation
88,017
204,050
Profit on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 21% (2013 - 23%)
18,484
46,932
Effects of:
Non deductible expenses
419
12
Depreciation add back
66,043
76,469
Capital allowances
(42,913)
(55,710)
Adjustments to previous periods
-
96,466
Dividends and distributions received
-
(55,849)
Other tax adjustments
332
71
23,881
61,459
Current tax charge for the year
42,365
108,391
6
(Loss)/profit for the financial year
As permitted by section 408 Companies Act 2006, the holding company's profit and loss account has not been included in these financial statements. The (loss)/profit for the financial year is made up as follows:
2014
2013
£
£
Holding company's (loss)/profit for the financial year
-
242,820
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 14 -
7
Intangible fixed assets
Group
Patents
Goodwill
Total
£
£
£
Cost
At 1 January 2014 & at 31 December 2014
17,136
874,093
891,229
Amortisation
At 1 January 2014 & at 31 December 2014
17,136
874,093
891,229
Net book value
At 31 December 2014
-
-
-
At 31 December 2013
-
-
-
Company
Patents
£
Cost
At 1 January 2014 & at 31 December 2014
Amortisation
At 1 January 2014 & at 31 December 2014
Net book value
At 31 December 2014
-
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 15 -
8
Tangible fixed assets
Group
Facility fittings & fitness equipment
Fixture and fittings
Total
£
£
£
Cost
At 1 January 2014
2,740,133
137,050
2,877,183
Additions
89,015
6,200
95,215
At 31 December 2014
2,829,148
143,250
2,972,398
Depreciation
At 1 January 2014
1,299,028
128,800
1,427,828
Charge for the year
307,814
6,675
314,489
At 31 December 2014
1,606,842
135,475
1,742,317
Net book value
At 31 December 2014
1,222,306
7,775
1,230,081
At 31 December 2013
1,441,105
8,250
1,449,355
9
Fixed asset investments
Group
Preference shares in related company
£
Cost
At 1 January 2014 & at 31 December 2014
500,000
Net book value
At 31 December 2014
500,000
At 31 December 2013
500,000
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
9
Fixed asset investments
(Continued)
- 16 -
Company
Shares in group undertakings
£
Cost
At 1 January 2014 & at 31 December 2014
490,500
Net book value
At 31 December 2014
At 31 December 2013
In the opinion of the directors, the aggregate value of the company's investment in subsidiary undertakings is not less than the amount included in the balance sheet.
Holdings of more than 20%
The company holds more than 20% of the share capital of the following companies:
Company
Country of registration or incorporation
Shares held
Class
%
Subsidiary undertakings
Ordinary
The principal activity of these undertakings for the last relevant financial year was as follows:
Principal activity
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 17 -
10
Debtors
Group
Company
2014
2013
2014
2013
£
£
£
£
Trade debtors
249,983
228,437
-
-
Other debtors
704,464
299,720
-
-
Prepayments and accrued income
-
25,341
-
-
954,447
553,498
-
-
Amounts falling due after more than one year and included in the debtors above are:
2014
2013
2014
2013
£
£
£
£
Trade debtors
4,998
17,446
-
-
Included in trade debtors is £23,751 (2013: £36,199) which is secured on assets sold by the group on a hire purchase agreement.
11
Creditors : amounts falling due within one year
Group
Company
2014
2013
2014
2013
£
£
£
£
Trade creditors
283,372
214,985
-
-
Amounts owed to related undertakings
-
75,000
Corporation tax
176,207
133,842
-
-
Taxes and social security costs
216,493
173,133
-
-
Other creditors
-
132,687
-
-
Accruals and deferred income
323,478
307,402
-
-
999,550
1,037,049
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 18 -
12
Provisions for liabilities
Group
Deferred taxation
£
Balance at 1 January 2014
81,110
Profit and loss account
(21,943)
Balance at 31 December 2014
59,167
The deferred tax liability is made up as follows:
Group
Company
2014
2013
2014
2013
£
£
£
£
Accelerated capital allowances
59,167
81,110
-
-
13
Share capital
2014
2013
£
£
Allotted, called up and fully paid
14
Statement of movements on profit and loss account
Group
Profit
and loss
account
and loss
account
£
Balance at 1 January 2014
1,613,273
Profit for the year
67,595
Balance at 31 December 2014
1,680,868
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
14
Statement of movements on profit and loss account
(Continued)
- 19 -
Company
Profit
and loss
account
and loss
account
£
Balance at 1 January 2014
Balance at 31 December 2014
15
Reconciliation of movements in shareholders' funds
2014
2013
Group
£
£
Profit for the financial year
67,595
252,709
Opening shareholders' funds
1,613,277
1,360,568
Closing shareholders' funds
1,680,872
1,613,277
2014
2013
Company
£
£
(Loss)/Profit for the financial year
-
Opening shareholders' funds
Closing shareholders' funds
16
Contingent liabilities
Group
Pulse Fitness Holdings Limited is the holding company of Rock Merchanting Limited. Rock Merchanting Limited has entered into a multilateral guarantee with The Royal Bank of Scotland Plc for the liabilities and obligations of the company Pulse Fitness Limited. At 31 December 2014, the amount due to The Royal Bank of Scotland Plc under these guarantees amounted to £1,330,703 (2013: £676,892).
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 20 -
17
Employees
Number of employees
The average monthly number of employees (including directors) during the year was:
2014
2013
Number
Number
Commercial
19
22
Client support
152
160
171
182
Employment costs
2014
2013
£
£
Wages and salaries
2,081,235
2,045,157
Social security costs
116,729
126,874
2,197,964
2,172,031
The Directors did not receive any remuneration in the year (2013: £nil).
18
Control
Pulse Fitness Holdings Limited, a company registered in England & Wales, is ultimately controlled by C P Johnson and D M Johnson. Pulse Fitness Holdings Limited in the ultimate parent company of its sole subsidiary, Rock Merchanting Limited, a company also registered in England & Wales.
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014
- 21 -
19
Related party relationships and transactions
Group
The group is related to Pulse Fitness Limited, Pulse Fitness Equipment Group Limited and Pulse Soccer Limited by virtue of common control.
During the year, the group was recharged expenses by Pulse Fitness Limited amounting to £223,589 (2013: £173,924). Additionally the group companies purchased fixed assets and services from Pulse Fitness Limited amounting to £1,177,576 (2013: £728,692) and made sales amounting to £nil (2013: £45,453) to Pulse Fitness Limited. All purchases and sales were received on an arms length basis. Additionally during the year the group had made transfers amounting to £1,805,907 (2013: £803,727) to Pulse Fitness Limited. The group continues to hold 500,000 preference shares within Pulse Fitness Limited.
Included within debtors at the year end is a balance of £704,464 (2013: £299,720) due from Pulse Fitness Limited.
The directors CP Johnson and DM Johnson have provided a joint and several personal guarantee of £500,000 (2013: £500,000) to the company bankers.
Also during the year the company was charged management fees totaling £50,000 (2013: £75,000) from Pulse Soccer Limited. At the balance sheet date the company owed Pulse Soccer Limited £nil (2013: £75,000). This balance is non interest bearing, unsecured and repayable on demand.
.
Company
The company has taken advantage of the exemption in Financial Reporting Standard Number 8 from the requirement to disclose transactions with group companies on the grounds that consolidated financial statements are prepared by the ultimate parent company.