Health club operator Esporta today said it had received approaches from a number of possible bidders as it welcomed a new chief executive on board.
Shares in Esporta were lifted by the prospect of a bidding war despite a second profit warning from the group in the space of four months.
Esporta said revenue in the fourth quarter of 2001 was 4% below expectations as it battled tough trading conditions and struggled to attract new members.
“This shortfall will directly affect profits before exceptional charges,” a statement from the Wokingham-based firm said.
The warning follows a similarly gloomy update in October when Esporta said profits for the year would be “significantly below” market forecasts.
Graham Coles quit as chief executive a week later and he was replaced today by Maurice Kelly, formerly boss of internet chain easyEverything.
Esporta said its board would evaluate any firm approach for the business as part of a review being led by Kelly.
“The board will then determine the course of action that it believes will provide the best value for shareholders,” Esporta said.
Esporta chairman John Grieves said the group had received approaches from “more than one” party but refused to disclose any further information.
Whitbread, which owns the David Lloyd health clubs, has previously been linked with the group but today refused to say whether it was interested.
Grieves said he was “confident about the future” regardless of a bid but this comments came as the group said the level of new members in its clubs was disappointing, particularly at new sites in Leeds and Wandsworth, south London.
The group is writing down the value of a handful of clubs, including Milton Keynes, Stoke and a site in Stockholm, “in light of the trading performance”.
The write-downs total £6m and form part of £11m-worth of one-off costs that will also hit Esporta’s 2001 results.
Total membership across Esporta’s 44 clubs on 31 December was 182,000, 28% above the level recorded in 2000, with a retention rate of 67%.
Shares in the group edged ahead 1p to 67.5p but David Pope of Brewin Dolphin said bid talk was the reason for the rise.
“I think the market is waiting for a third party to come in and take this business over and that is supporting the share price.”
He still expects Esporta to achieve pretax profits of around £5.5m for 2001 but is lowering his forecast for 2002 by £2m to £6m.
EGi News 11/01/02
