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£4
MILLION CHISWICK RIVERSIDE WRITE-OFF STUNS
ESPORTA
Health
Club group's independence under threat due
to massive provision and slow growth in new
memberships
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At
the same time as appointing
a new chief executive, the Esporta
group has revealed that they
will be making a massive provision
as a result of the deterioration
in the secondary market for
resaleable membership of the
Riverside Club.
The
new CEO, Maurice Kelly, who
has joined from internet cafe,
easyeverthing, will be finding
his new role anything but easy
with the group struggling to
get new members and under threat
of a take-over. Close to a third
of members are not renewing
according to the company.
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"over
67% of those
who were members
of Esporta twelve
months ago have
been retained
as members of
Esporta today,
but the level
of new joiners
has continued
to be disappointing."
Esporta trading
statement
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Esporta
purchased the Riverside club in recent years
but were receiving complaints from members
who were unable to resell memberships on a
timely basis. They therefore took the decision
to offer to redeem rights to membership sold
under the resaleable membership category. Competition
from new clubs in the area such as the Park
Club may have had an impact.
Historically, the company had not recognised
any liability in respect of these rights, as
there had previously been a ready market for
transfers of those rights to replacement members.
In a recent trading statement they revealed
that the company had decided to take a £4
million charge (after discounting) for this
liability in their 2001 accounts.
City
analysts described the trading statement as
"disastrous". Further charges are
also expected for severance and recruitment
payments to senior directors as well as a reduction
in the value of the clubs. The company confirmed
that it has received approaches that may lead
to offers being made for the business. City
analysts believe the business could interest
other health club operators or a company looking
to realise value from the freehold properties
held by the company.
Esporta
Web Site
The
Hogarth Group
The
Park Club
June 7th 2002
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