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2022-12-31-accounts

Consolidated Financial Statements of Fusion Lifestyle Group

For the year ended 31 December 2022

Fusion Lifestyle

Registered number: 05324416 Charity Registered number: 1107737 (A company limited by guarantee)

Contents

Page
Reference and administrative details of the company, its trustees and advisers 1
Trustees' report incorporating the strategic report 2 – 18
Independent auditor's report 19 – 22
Consolidated statement of financial activities (incorporating consolidated income 23and expenditure account)
Consolidated balance sheet 24
Company balance sheet 25
Consolidated cash flow statement 26
Notes to the financial statements 27-50

Fusion Lifestyle

(A company limited by guarantee)

Reference and administrative details of the company, its trustees and advisers For the year ended 31 December 2022

Nominated Trustees during the year under review

Mr Michael Nelson Ms Lorraine Zuleta – resigned 31 January 2022 Mr Jonathan Clarke Ms Harriet Kemp Mr Nicholas E J Wells – resigned 28 June 2023 Ms Christine Longmire Mr Ashish Devani – resigned 18 November 2023 Ms Jo-Ann Sadleir – appointed 6 February 2024

Company registration number

05324416

Charity registered number

1107737

Registered office

3 & 4 Blake House Schooner Court, Crossways Business Park, Dartford, DA2 6QQ

Chief executive

Mr A Cawley

Independent auditor

McCabe Ford Williams, Building 1063, Cornforth Drive, Kent Science Park, Sittingbourne, Kent, ME9 8PX

Bankers

National Westminster Bank, 280 Bishopsgate, London, EC2M 4RB

Solicitors

Winckworth Sherwood, Minerva House, 255 Blackfriars Road, London, SE1 9AX

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic report For the year ended 31 December 2022

The Trustees present their annual report together with the audited financial statements of Fusion Lifestyle (the charity) and its subsidiaries for the year ended 31 December 2022, which are also prepared to meet the requirements for a directors' report and accounts for Companies Act purposes.

The financial statements comply with the Charities Act 2011, the Companies Act 2006, the charity's governing document, and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (effective January 2019).

The accounting reference date is 29 December 2022, however, as is permitted the accounts have been made up for the period 1 January 2022 to 31 December 2022. Structure, governance and management

Fusion Lifestyle is a charity and charity limited by guarantee. The governing documents are its Memorandum and Articles of Association which were adopted on 5 January 2005. The group comprises of Fusion Lifestyle, Active Life (wholly owned subsidiary) that provides leisure facilities and community led projects across Kent and Virgin Active Management Limited, which operates a small pension scheme and is a non-trading entity within the Fusion group.

The Members are the guarantors of the charity and each has undertaken to contribute such amount as may be required (but not exceeding £1) to the charity's assets if it should be wound up while he or she is a member or within one year after he or she should cease to be a member, for payment of the charity's debts and liabilities contracted before he or she ceased to be a member and of the costs, charges and expenses of the winding up and for the adjustments of the rights of the contributories amount themselves.

The Trustees are the Trustees of Fusion Lifestyle in accordance with the Charities Act 2011 and they are also directors in accordance with the Companies Act 2006. The Board is made up of voluntary individuals with relevant corporate skills and an interest in our work.

Method of recruitment and appointment

Board members are recruited through open advertisement in our facilities, local press and national press. Selection is conducted by a board committee (supported by the executive team (ET) and independent advisors as appropriate) which evaluates the skills and experience of applicants against relevant criteria using assessments, tests and interviews.

Policies adopted for the induction and training of Trustees

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

All board members receive induction and training conducted by the charity secretary, legal advisors, chair and executive team. Training includes briefing on charitable, statutory and fiduciary duties, the role of board members along with business planning and strategy.

Organisational structure and decision making

Day-to-day management of the organisation in pursuit of the Business Plan is delegated to the Chief Executive within agreed parameters and constraints. The Chief Executive reports to the sub-committees and to the Board.

Risk management

The Trustees are responsible for identifying major risks to which the charity is exposed and for reviewing the systems in place to mitigate these risks. Risk assessment is conducted by the Trustees and Chief Executive as part of annual business planning and appropriate action plans and systems of control established. These are kept under review by the Trustees on an ongoing basis and are subject to continuous independent audit and scrutiny.

Objectives and Activities

Policies and objectives

Our Vision

To be the first-choice leisure organisation, delivering excellent standards in healthy active leisure.

What does this mean?

Our Mission

To provide inclusive and accessible sport and leisure for health, vitality, and wellbeing.

What does this mean?

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Our Values

We hold our three Core Values close to our heart and we look for team members who will live and breathe these.

Policies and objectives – continued

The charity’s objectives are based on four key pillars that each cover both the short and long term given the financial position of the group.

The 4 key pillars are:

The four pillars are detailed further within the funds materially in deficit paragraph within the financial review of the report.

The charity’s principal objects are:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Community services are provided from a range of facilities operated both independently and in partnership with educational establishments and local authorities. The facilities are in various locations including Bedfordshire, Buckinghamshire, Bath, City of London, Devon, Essex, Ipswich. Kent, London Borough of Enfield, London Borough of Haringey, London Borough of Lambeth, Leicestershire, Newcastle, Oxford, Somerset and Surrey.

The charity operates a diverse range of over 60 community sport and leisure facilities, including:

Financial risk management objectives and policies

The charity uses financial instruments, comprising borrowings, finance leases, cash and various other items such as trade debtors and creditors that arise directly from

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

its operations. The main purpose of these financial instruments is to raise finance for the charity's operations. The main risks arising from the group's financial instruments are interest rate risk and liquidity risk.

Interest rate risk

The charity finances its operations through a mixture of reserves, bank borrowings and finance leases. The charity's exposure to interest rate fluctuations on its bank borrowings is managed using fixed interest rates.

Liquidity risk

The charity seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable commitments and to invest in assets that enhance safety and maximise profitability. The charity policy throughout the year has been to ensure that an appropriate mix of both debt and cash is available, which aligns with the charity's investment strategy. Short term flexibility is achieved through the charity's cash reserves and was significantly supplemented by medium term lending from the Coronavirus Large Business Interruption Loan Scheme (CLBILS) in late 2020.

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Strategic Report

Achievements and performance in 2022

Once again, activity in 2022 was dominated and shaped by the Covid 19 pandemic and the impact felt across the Leisure sector. The effect of the Omicron strain at the start of the year was to significantly reduce normal customer revenues during the first quarter of the year. Despite the impact of the crisis, the organisation has remained resolute and managed to grow trading income by 65% year on year and received the following nominations.

UKActive Awards

To support the operational delivery cost base also grew by 30% year on year to reflect the increase in activity across the portfolio. In addition, significant investment was made available to the four contracts awarded 5-year and 3-year extensions respectively in early 2022. In addition, the organisation received little donation income throughout the year and had to rely on effective working capital management amidst challenging and turbulent macro-economic condition.

Thereafter management focus was on growing income and preserving cash. Income growth in 2022 reflects the partial recovery of the membership and various localised strategic recovery plans. Expenditure reflects the significant cost of maintaining fully operational sites and where necessary, lifecycle costs to maintain aging assets across the estate.

In response to these challenges the group and charity has further implemented comprehensive improvements to its operations. The customer journey has been overhauled with radical changes to booking and admissions systems that place greater emphasis on pre-booking and on-line transactions. Opening hours and activity programmes have been modified and aligned closely with customer demand with agile response built-in to manage fluctuations in that demand.

Customer feedback on the new protocols is positive, both in terms of safety and quality of experience. The changes to operating protocols and the revised demand levels following multiple national lockdowns in 2021 have had significant consequences on the organisations cost base, particularly staffing and energy costs. The resulting consequence has led to significant full year operational losses. These

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

unsustainable losses were the catalyst to seek financial support from our Local Authority partners in the form of management fee relief.

In terms of new business, 2022 saw the award of Cleveland Pools – a fully restored national heritage lido in the heart of Bath. The contract operates on a 125-year long term lease and is viewed as a key strategic site with other heritage site opportunities in the pipeline, including Broomhill Lido in Ipswich.

Fusion is the nominated partner to Ipswich Borough Council to work on the restoration of an old derelict site into a new “state of the art” lido for the wider benefit of the local community and tourists with works expected to start in late 2024. The events of 2022 have culminated in the Group making a deficit of £6.9m. This deficit is disappointing but still a significant improvement on prior year trading losses of c.£13m (after excluding government grants and insurance income).

2022 KPIs

During normal operations Management is targeted on:

Now the business is fully operational and trading under normal conditions, focus has once again returned to ensuring these metrics meet expectation levels. In 2023 and beyond, the focus remains on EBITDA performance and treasury management to ensure key business plan and revised financial covenants are met for the longer-term stability of the organisation. Public benefit

In setting our objectives for the year and planning our activities, the Trustees have considered the Charity Commission guidance on public benefit, including the guidance ‘Public Benefit: running a charity (PB2)’. Fusion sets out to have a positive impact on the local communities living around the facilities it manages. Our objective is to deliver high quality sport, health and wellbeing services that are inclusive and accessible to all without stigma or inequity. We overcome barriers to participation, including socio-economic, age, gender, disability, cultural and ethnicity.

Despite the financial difficulties encountered in 2022, Fusion managed to deliver many of its normal communitybased activities. However, overall programme and attendance were massively reduced compared to previous years. Our public benefit is summarised under the headings below:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

In 2022 our Social Value Contribution was estimated to be over £70 million. Social Value displays the value generated through physical activity at the leisure centres in monetary terms, based on research conducted by Sheffield Hallam University.

The four categories that make up social value are:

The more people visit, and especially those disadvantaged by health inequalities, the more the benefits multiply to the wider economy. We should add that figures are based on tracked visits where we have unique data information on individuals accessing facilities so elements of the value we add, especially community-based outreach are not calculated and would be of additional benefit.

Investment

Over the past 20 years Fusion has completed c£200m of investment with our local authority partners and funding bodies such as Sport England & Heritage Lottery Fund. This programme has brought significant and improved amenity to our local communities, adding to the quality and variety of services, and enhancing community wellbeing. We have re-instated 17 disused and dilapidated facilities, bringing to the community new and enlarged swimming pools, health and fitness facilities, children’s activity facilities, sports halls, outdoor sports amenities and cafés.

In 2022 Fusion invested over £3m in new gym kit and refreshed studios across the 4 extended contracts. Fusion has similar projects in the pipeline which it plans to progress once the charity starts to generate a significant uptick in trading performance, culminating in sustained month on month profitability and improving cash reserves to meet its short to mid-term obligation and secure new debt finance.

Affordability and Equity of Access

A concessionary pricing structure is in place across the portfolio to enable all disadvantaged and low-income communities’ full access to our services.

In 2022 Fusion operated:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Young People

Targeted activities included:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Disabled People

In 2022 activities to promote accessibility and awareness included:

Older People

In 2022 activities to promote accessibility and awareness included:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Women

In 2022 activities to promote accessibility and awareness included:

Community and Health Programme

Fusion promotes sport and active leisure participation to the widest possible community and engages with those who do not normally take part in active leisure.

In 2022 our programme included:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Fusion also started the Fusion Sporting Academy which helps athletes to become a success in their chosen discipline. Fusion is keen to support local sports talent to help aspiring individuals become national and international competitors.

Financial review

Principal risks and uncertainties

The principal risks and uncertainties facing the company are:

In 2022 Fusion has actively responded to the pandemic and it associated disruption and challenges. The business has been restructured in response to reduced participation which is expected to steadily recover over the coming years. The charity has remained resolute and robust in the face of extremely difficult trading conditions.

Operating protocols have been overhauled and remain under constant review by our experienced Health and Safety team to ensure our facilities are safe for the benefit of our staff and customers. The customer journey has been changed radically with greater emphasis on pre-booking and on-line transactions. The charity now has a clearly defined Digital & Business Transformation project that will include new websites and mobile application platforms alongside improved business practises managed within a new ERP system. The project goes live in late 2023 and expected to take between 18 and 24 months to complete.

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic report

For the year ended 31 December 2022

In the short to medium term Fusion is principally concerned with the following:

To the extent that if revenues do not gain significant traction, Fusion can flex its cost base to protect cash generation as it did during the last 2 years.

Fusion can flex wet and dry side programmes at short notice to reduce instructor and space costs. Fusion’s key supply contracts contain volume variance mechanisms to reduce contractual payment where there is reduced activity or sites to cover.

Fusion received c.9.2 million visitors in 2022 performing physical activities across 60 sites ranging from ice rink to outdoor lidos in 2022. This environment combined with improved health & safety regimes pose new challenges alongside maintaining exacting standards across the workforce. The charity uses its in-house and external technical experts to:

A significant part of the charity training and induction activity is focused on health & safety and seeks to embed the relevant knowledge and behaviours in each staff member.

Reserves policy

Each year the Trustees review the risks and opportunities facing the charity and those that have crystallised in previous years and set the reserves target accordingly. These targets have been updated to reflect the requirements of the new facility extension (CLBILS) agreement secured with the bank.

The Trustees do not have a reserves policy in place due to the current financial position of the group and charity. The focus is on maintaining cashflow in the short term as detailed later in the report with a view to improving the financial position in the medium to long term whilst meeting the covenants below.

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Gross Leverage: (i) Gross Borrowings to (ii) EBITDA for each 12-month period ending on the last day of a financial quarter, with first testing on the revised date of 30 September 2024.

Cash Flow Available for Debt Service/Debt Service Coverage: (i) CFADS to (ii) Debt Service Liability for each 12-month period ending on the last day of a financial quarter, with first testing on 31 March 2024.

Fixed Charge Cover: (i) EBITDA adding back Rent costs and Management Fees payable to Councils, to (ii) Borrowing Costs plus Rent costs and Management Fees payable to Councils for each 12-month period ending on the last day of a financial quarter, with first testing on 31 March 2024.

On 31 December 2022 net reserves were £10.9m in deficit (2021: £4m) all of which were unrestricted funds meaning the group and held £nil restricted funds (2021: £nil). The pension reserve, which is considered part of unrestricted funds, was £nil (2021: £204k in deficit).

Going concern

The continued recovery from the COVID-19 pandemic along with the impact of the cost of living crisis and the war in Ukraine negatively impacted the group and charity’s results in the current financial year. Management has produced forecasts that have been sensitised to reflect plausible downside scenarios and the wider economic conditions, which have been reviewed by the directors. These demonstrate the Group is forecast to generate further losses and reduced cash reserves in the period ending 31 March 2024.

Securing Management Fee support packages with Local Authorities is essential to ensure the Group has sufficient cash reserves to enable the Group to meet both its short and mid-term obligations as they fall due and continue to operate as a going concern.

In addition, the charity has been in extensive renewal negotiations with the bank to refinance the £13m CLBILS loan which had been due to be repaid in full by November 2023. Discussions with the bank regarding the loan facility have now concluded and an 18-month extension until May 2025 has been agreed. New financial covenants have been placed on the organisation that align to the revised 5-year business and financial projections, prepared by the Executive Team (ET) and shared with the bank, external independent auditors and our Local Authority partners.

On the basis the facility extension agreement has now been awarded, the Trustees are satisfied that the Group has adequate resources to continue to operate for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing these financial statements. The refinancing of the loan and the revised financial covenants do still represent a material uncertainty, along with other events and conditions detailed in accounting policy 1.2, that may cast doubt on the group and

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

charitable Charity’s ability to continue as a going concern and therefore whether the group and charitable Charity will realise its assets and settle its liabilities in the ordinary course of business at the amounts recorded in the financial statements.

Fund materially in deficit

As shown in the reverse policy, at 31 December 2022 net reserves were £10.9m in deficit. The going concern section above details reasoning for the deficit and actions taken. These actions support the group and Charity’s revised business plans and financial projections, in which the business is forecasted to be cash generative, able to service fixed charges with a suitable cover margin and generate a low surplus from the 2025/26 financial year. Although there is still the inherent risk that that the wider economy and consumer spending will remain suppressed given a backdrop of high interest rates and inflation, that have significantly impacted consumer spending and contributed to a cost-of-living crisis.

The charity’s long term Business Plan comprises of four key pillars:

1. Engaged, Agile and Motivated workforce 2. Revenue Development 3. Product Development and Systems Innovation 4. Environmental Footprint

These four strategic pillars are underpinned by detailed strategic objectives to address short, medium and long-term priorities.

Examples include:

The Charity’s objectives will deliver exciting new products and services which are aligned to their vision, mission and values, and will deliver their ambitious plans for the next 5 years.

Management regularly monitors performance of the business plan with the senior leadership teams to further enhance both strategic (long-term) and tactical (short term) decision making. In addition, project steering committee meetings have been

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

established to ensure key project milestone events are consistently met or rescheduled to support other critical project workflow streams.

Despite the challenging outlook the Trustees and Management remain confident about the long-term viability of the business and its future development prospects, subject to securing the proposed management fee support packages presented to a select few Local Authority partners.

Related parties and co-operating with other organisations

None of our trustees receives remuneration or other benefit from their work with the charity. Any connection between a trustee or senior manager of the charity must be disclosed to the full board of trustees in the same way as any contractual relationship with a related party. In the current year, no such related party transactions were reported.

Pay policy for senior staff

The pay and remuneration of key management personnel is set with reference to:

Annual pay reviews take account of the following:

Funding sources

Fusion normally funds its activity from a mix of working capital, cash reserves and external finance for long term investments. In 2022 the charity did not receive any major grants and the business was funded by working capital. This led to a significant reduction in cash reserves as outlined in the consolidated balance sheet (page 24).

Expenditure & key objectives

Most expenditure is incurred directly in the staffing and maintenance of the facilities where our services are delivered. Additionally, Fusion invests in:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Plans for future

Fusion's overarching strategy is to achieve its new financial covenants through a combination of targeted income growth and tight fiscal control on all expenditure. In addition, the charity must ensure it maintains strong cash reserves as part of its new covenant targets.

To achieve this, the business will follow six key strategies:

The four pillars will be the group’s main focus to achieve its objectives for the foreseeable future as the group continues to work through the challenging environment it finds itself in. The four pillars are detailed further within the funds materially in deficit paragraph within the financial review of the report.

Gender pay gap

Fusion is committed to being an inclusive workplace. The Gender Pay Gap Reporting is just one way of us monitoring and demonstrating inclusivity.

We are pleased the Civil Society recognised Fusion had the highest median gender pay gap from all charities in the UK in favour of women.

This means Women earn £1.39 for every £1 that men earn when comparing median hourly pay. Their median hourly pay is 39% higher than men's.

Promoting the success of the company

Strategy and business objectives are agreed by the board of management annually and set out in the organisation's business plan. The Board meets quarterly to review progress and to make decisions accordingly. Board Papers and discussion as a matter of course have regard to:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Employee involvement and employment of people with disabilities

All employees have the opportunity for training, career development and promotion in accordance with their skills and ability. The charity keeps all employees informed of matters affecting them by daily site meetings, weekly bulletins and quarterly corporate newsletters and takes account of their views.

The charity recognised its responsibility under the Disability Discrimination Act 1995 and has continued to ensure that disabled employees are given consideration on an equal basis with other candidates in respect of all areas of employment, including recruitment, training, career development and promotion. We endeavour to promote continuing employment and where necessary, arrange appropriate training for employees who have become disabled during their employment.

The charity has implemented a range of detailed policies in relation to all aspects of personnel matters including:

In accordance with the charity's Equal opportunities policy, the charity has long established fair employment practices in the recruitment, selection, retention, and training of disabled staff.

Full details of these policies are available from the charity's offices.

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic

report

For the year ended 31 December 2022

Engagement with suppliers, customers and others in a business relationship with the charity

Key suppliers are subject to competitive selection and in exceptional cases, long term contracts will be awarded. Monthly meetings review contract delivery and Fusion business performance. With key suppliers there is an elevated level of collaboration on the development of product and service specification to ensure they meet long term business and customer needs.

Relationships with suppliers is critical to maintaining operational standards. Despite the financial pressures Fusion has not requested the write-off of any trade creditor balances and has entered agreed staged payment plans to ensure all debts are eventually honoured in full.

Under normal circumstance the nature of Fusion business activity necessitates significant direct and close interaction between our staff and our customers which is why staff selection and training focuses on customer engagement. These interactions have had to be moderated post-Covid and therefore there is more reliance on digital media and in particular social media posts on relevant local material.

Fusion encourages all forms of customer feedback, previously including “Meet the Manager” events. Most of this feedback is on-line. Fusion has built an application that collates all feedback irrespective of medium which permits daily reporting and management response.

Streamlined energy and carbon reporting

UK Greenhouse gas emissions and energy use data for the period 1 January to 31 December:

ecember:
2022 2021
Energy consumption used to calculate emissions
(kWh)		 97,765,863 78,388,
370
Energy consumption break down (kWh):
Gas 71,624,18957,335,
208
Electricity 25,761,14520,801,
957
transport fuel 380,529 251,205
Scope 1 emissions in metric tonnes CO2e
gas consumption 12,892 10,502
fugitive Emissions nil Nil
Total scope 1 12,892 10,502

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic report

For the year ended 31 December 2022

Scope 2 emissions in metric tonnes
CO2e Purchased electricity		 4,982 4,417 4,417
Scope 3 emissions in metric tonnes CO2e
Business travel in employee owned vehicles 94 452
Emissions from transmissions and distribution of 456 -
electricity Total scope 3 550 452
Streamlined energy and carbon reporting
Total gross emissions in metric tonnes CO2e 18,424 15,37
0
Intensity ratio
Tonnes CO2e per leisure centre visit 0.0021 0.003
5

Quantification and Reporting Methodology

We have followed the HM Government Environmental Reporting Guidelines March 2019. We have also used the GHG Reporting Protocol – Corporate Standard and the 2022 Government GHG Conversion Factors for Company Reporting.

Electricity and gas kWh is measured by using Half-Hourly data where available, with in-house meter reads used as a secondary measure. Electricity emissions include those associated with transmission and distribution.

Business travel emissions are calculated as per greenhouse gas reporting conversion factors 2022.

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per leisure centre visit.

Measures taken to improve energy efficiency

Fusion Lifestyle operate an Environmental Management System as part of our Integrated Management System (IMS) and are certified to ISO14001:2015 with annual audits in place to assess compliance against this standard. Furthermore there is an Environmental Strategy in place which covers the period 2012-2024 which sets

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic report

For the year ended 31 December 2022

out the processes and actions Fusion take to improve environmental and energy management. An Energy Strategy is also being developed in collaboration with an external consultancy. This started in late 2021 and will continue to be developed through into 2023.

We develop centre-specific management plans in the form of our Environmental Implementation Plans (EIP). The EIP incorporates Fusion-wide corporate environmental objectives and targets, supported by centre specific targets. The centre-specific targets reflect and complement the corporate targets, while giving the local centre management the opportunity to customise their environmental plans to fit their own needs, priorities and aims.

We embed energy efficiency behaviours into daily activities through our daily F360 standards checks. Furthermore, the Energy & Environment manager undertakes ongoing monitoring of energy consumption through half-hourly AMR data to identify sites which could reduce their energy consumption. A programme of in-house site energy audits was also developed to monitor compliance with operational standards and to identify measures to improve energy efficiency.

Fusion Lifestyle looks to implement energy efficiency measures where technically and financially feasible. Currently we are looking to install Solar PV on six sites in the South West. Another project was successful with an application to the Salix PSDS Phase 3b funding and Fusion were awarded c.£650k in order to install energy efficiency measures and decarbonisation works as part of a wider redevelopment at one of our leisure centres.

Trustees' responsibilities statement

The Trustees (who are also directors of Fusion Lifestyle for the purposes of company law) are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Trustees to prepare financial statements for each financial year. Under that law the trustees 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 Trustees 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 incoming resources and application of resources, including the income and expenditure, of the company for that period. In preparing these financial statements, the Trustees are required to:

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Fusion Lifestyle

(A company limited by guarantee)

Trustees' Report incorporating the strategic report

For the year ended 31 December 2022

The Trustees 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trustees are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement as to disclosure of information to auditors

The Trustees confirm that:

Auditor

McCabe Ford Williams were appointed auditors on 21 October 2019 to fill a casual vacancy in accordance with section 485(3) of the Companies Act 2006.

This report, incorporating the Group strategic report, was approved by the Trustees, in their capacity as company directors, on 11 March 2024 and signed on their behalf on 11 March 2024 by:

Mike Nelson

Mr M Nelson

Chairman

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Independent Auditor's Report to the Members of Fusion Lifestyle

Opinion

We have audited the financial statements of Fusion Lifestyle (the 'parent charitable company') and its subsidiaries ( the 'group') for the year ended 31 December 2022 which comprise the Consolidated Statement of Financial Activities, Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Cash Flow Statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102; The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1.2 in the financial statements which indicates that the continued recovery from the COVID-19 pandemic which had previously negatively impacted results, along with impact of the cost of living crisis and the war in Ukraine, detrimentally impacted the group and charity’s results in the current financial year. As stated in note 1.2 these events or conditions, along with other matters as set forth in note 1.2 indicate that a material uncertainty exists which may cast significant doubt on the Group and parent charitable company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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Independent Auditor's Report to the Members of Fusion Lifestyle

Other information

The trustees are responsible for the other information. The other information comprises the information included in the Trustees Report, other than the financial statements and our independent auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the group and parent charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report included in the Trustees' Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

25

Independent Auditor's Report to the Members of Fusion Lifestyle

Responsibilities of trustees

As explained more fully in the trustees' responsibilities statement set out on page 18 the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group and the parent charitable company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or parent charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an independent auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Auditor's responsibilities for the audit of the financial statements - continued

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

26

Independent Auditor's Report to the Members of Fusion Lifestyle

and parent charitable company, including, but not limited to, the Companies Act 2006 and UK tax legislation;

We assessed the susceptibility of the Group's and parent charitable company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

To address the risk of fraud through management bias and override of controls, we:

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the Committee of Management and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

27

Independent Auditor's Report to the Members of Fusion Lifestyle

Use of our report

This report is made solely to the charitable 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 auditor's 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.

Clair Rayner FCA DChA (Senior Statutory Auditor) for and on behalf of McCabe Ford Williams Statutory Auditors and Chartered Accountants Building 1063 Cornforth Drive Kent Science Park SITTINGBOURNE ME9 8PX

Date: 11 March 2024

28

Independent Auditor's Report to the Members of Fusion Lifestyle

29

Fusion Lifestyle

(A company limited by guarantee)

Consolidated Statement of Financial Activities (incorporating consolidated income and expenditure account)

For the year ended 31 December 2022

Unrestricte
d
funds
Note
2022
£000
Income:
Income from charitable
activities:
Community sports services
3
50,734
Investment income
4
4
Donation income
5
7
Other income
6
-
Total income
50,745
Expenditure on:
Expenditure on charitable
activities:
Operation of community sports
services
7
57,952
Total expenditure
57,952
Net income and net
movement in funds for the
year
(7,207)
Actuarial (losses)/gains on
292		 Restricte
d

funds

2022

£000

-

-

35

-


35


-

-
~~3~~
5
~~3~~
5		 Total

funds

2022

£000
50,73
4
4

42
-

50,78
0




57,98
7

57,98
7

(7,207
)
292		 Total
funds
202
1
£000
30,76
0
1
10,66
1
2,50
0
43,92
2
43,87
9
43,87
9
43
594

30

defined benefit pension schemes

Net movement in funds
(6,915
)
-
Reconciliation of funds:
Total funds brought forward
As previously reported
(4,003)
-
Prior period adjustment
-
-
-
Total funds carried forward
All income and expenditure derive from continuing activities.
(4,00
~~3)~~
~~(1~~
0
~~,91~~
8
~~)~~
~~-~~
(6,915
)




(4,003
)
-
(4,00
~~3)~~
~~(1~~
0
~~,91~~
8
~~)~~		 637
(3,87
0)
(77
0)

(4,640)
~~(400~~
~~)~~
~~,~~
3

31

The consolidated Statement of Financial Activities includes all gains and losses recognised in the year.

The notes on pages 27 to 50 form part of these financial statements.

Fusion Lifestyle (Registered no. 05324416)

(A company limited by guarantee)

Consolidated Balance Sheet

As at 31 December 2022

As at 31 December 2022
2022 2021
Note £000 £000 £000 £000
Fixed assets
Intangible assets 333 402
11
19,8
Tangible assets 12 21,114 86
21,447 20,2
88
Current assets
Stocks 124 73
Debtors 14 4,933 2,320
Cash at bank and in hand 623 6,628

32

Net assets excluding pension
liability
Net current assets/(liabilities)
Total assets less current
liabilities
Creditors: amounts falling due after
one year
16
Accruals and deferred income
18
Provisions for liabilities
19
Defned beneft pension scheme liability
Net assets including pension liability
Charity Funds
Restricted funds
Unrestricted funds:
Unrestricted funds excluding pension
liability
Pension reserve
Total unrestricted funds
Total funds of the group
21


Creditors: amounts falling due
within one year
15



~~(1~~
0
~~,91~~
8
~~)~~
~~-~~
~~(10,91~~
8)
20,026
21,8
11
(20,990)
(19,38
6)
(8,854)
(6,22
4)
(1,100)
-
28
-
-
(10,918)
(3,799)
-
(204)
~~(1,4~~
21
~~)~~
~~1,52~~
3
~~(3,79~~
9
~~)~~
~~(20~~
4
~~)~~
~~(4,00~~
3
~~)~~
~~(10,91~~
8)

~~(4,00~~
3
~~)~~
~~(10,91~~
8)
~~(4,00~~
3
~~)~~

5,680
9,021
(7,101)
(7,498)		 ~~(1~~
0
~~,91~~
8
~~)~~
~~-~~
~~(10,91~~
8)
20,026
21,8
11
(20,990)
(19,38
6)
(8,854)
(6,22
4)
(1,100)
-
28
-
-
(10,918)
(3,799)
-
(204)
~~(1,4~~
21
~~)~~
~~1,52~~
3
~~(3,79~~
9
~~)~~
~~(20~~
4
~~)~~
~~(4,00~~
3
~~)~~
~~(10,91~~
8)

~~(4,00~~
3
~~)~~
~~(10,91~~
8)
~~(4,00~~
3
~~)~~

5,680
9,021
(7,101)
(7,498)
~~,~~
3

~~(400~~
~~)~~
~~,~~
3

The financial statements were approved by the Trustees on 11 March 2024 and signed on their behalf by Mike Nelson.

Mike Nelson

The notes on pages 27 to 50 form part of these financial statements.

Fusion Lifestyle (Registered no. 05324416)

(A company limited by guarantee)

Company Balance Sheet

As at 31 December 2022

2022

2021

33

Note
Fixed assets
Intangible assets
11
Tangible assets
12
Investments
13
Current assets
Stocks
Debtors
14
Cash at bank and in hand
Creditors: amounts falling due within
one year
15
Net assets/(liabilities)
Total assets less current liabilities
Creditors: amounts falling due after
one year
16
Accruals and deferred income
18
Provisions for liabilities
19
£000
116
4,953
83
5,152
(6,819)
£000
116
4,953
83
5,152
(6,819)		 £000
333
20,932
729
21,994

(1,667)
20,327
(20,990)
(8,367)
(1,100)
 £000
£000
379
19,624
729
20,732
71
3,197
5,038
8,306
(7,170)
1,136
21,868

(19,386
)
(5,783)
-


(10,130) (3,301)

34

Net assets excluding pension
liability
Defned beneft pension scheme
liability
28
-

Net assets including pension
liability)
(10,130)
The funds of the charity
Restricted funds:
-
-
Unrestricted funds:
Unrestricted funds excluding pension
asset /
-
-
(liabili
ty)
(10,130)

(3,301)
Pension reserve
-

(204)
Total unrestricted funds
(10,130)
Total charity funds
21
~~(10,1~~
30)		 Net assets excluding pension
liability
Defned beneft pension scheme
liability
28
-

Net assets including pension
liability)
(10,130)
The funds of the charity
Restricted funds:
-
-
Unrestricted funds:
Unrestricted funds excluding pension
asset /
-
-
(liabili
ty)
(10,130)

(3,301)
Pension reserve
-

(204)
Total unrestricted funds
(10,130)
Total charity funds
21
~~(10,1~~
30)		 (204)
(3,505)
(3,505)
~~(3,50~~
5)

The financial statements were approved by the Trustees on 11 March 2024 and signed on their behalf by Mike Nelson. Mike Nelson

The notes on pages 27 to 50 form part of these financial statements.

35

Fusion Lifestyle

(A company limited by guarantee)

Cash fows from investing activities:
Purchase of intangible fxed assets (31) -
Cash fows from operating activities
Purchase of tangible fxed assets
Interest received
Interest paid		 **Note ** ~~(~~
6
~~,31~~
8
~~)~~
202
~~2~~
£00
0
~~(5,32~~
5)
~~4~~
(96		 ~~(2,64~~
5
~~)~~
202
~~1~~
£00
0
~~(2,03~~
7)
~~1~~
(60
~~6)~~ 5,68
~~9)~~
Consolidated Statement of Cash
Net cash provided by operating activities
22		 Flows
497		 4
Cash fows from fnancing activities:
Repayments of borrowings (669) (1,16
~~3)~~
Repayment of loan and fnance lease (966) ~~(2,08~~
(92
obligations
Cash infows from new fnance leases		 1,451 5)
2)
-
For the year ended 31 December 2022
Change in cash and cash equivalents in (6,005) 954
the year
Net cash used in investing activities
Cash and cash equivalents brought forward		 ~~6~~
2
~~3~~
~~6,628~~		 ~~6,62~~
8
5,67
~~4~~
Net cash provided/(used) by fnancing activities (184)
Cash and cash equivalents carried forward23

36

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

1. Accounting Policies

Fusion Lifestyle is a private company limited by guarantee, registered in England and Wales. The company is also a charity registered in England and Wales. The company number, charity number and registered office can be found on the company information page. The presentation currency is GBP and numbers

are rounded to the nearest thousand.

1.1 Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention, unless otherwise stated in the relevant notes(s) to these accounts.

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (effective 1 January 2019) – (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland and the Companies Act 2006.

Fusion Lifestyle meets the definition of a public benefit entity under FRS102.

The Statement of financial activities (SOFA) and Balance sheet consolidate the financial statements of the company and its subsidiary undertakings. The results of the subsidiaries are consolidated on a line by line basis.

No separate SOFA has been presented for the company alone as permitted by section 408 of the

Companies Act 2006.

1.2 Going concern

The continued recovery from the COVID-19 pandemic along with the impact of the cost of living crisis and the war in Ukraine negatively impacted the group and charity’s results in the current financial year.

Securing support packages with Local Authorities is essential to ensure the Group has sufficient cash reserves to enable the Group to meet both its short and mid-term obligations as they fall due and continue to operate as a going concern.

37

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

In addition, the charity has been in extensive renewal negotiations with the bank to re-finance the £13m CLBILS loan which had been due to be repaid in full by November 2023. Discussions with the bank regarding the loan facility have now concluded and an 18-month extension until May 2025 has been agreed. New financial covenants have been placed on the organisation that align to the revised 5-year business and financial projections, prepared by the Executive Team (ET) and shared with the bank, external independent auditors and our Local Authority partners.

The Trustees consider it appropriate to prepare the financial statements of the group on the basis that it

is a going concern. However, there are material uncertainties that may impact this assessment as follows:

1.2 Going concern - continued Current material uncertainties:

Potential impact:

38

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

The Board and Executive Team have implemented and/or plan to implement the following measures arising from the above:

liabilities.

1.2 Going concern - continued

39

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

plan. Final contract variations will be secured from Councils outlining the agreed reprofiled payment plans.

Although it is not certain that these efforts will be successful, the Board and the Executive Team have determined that the actions that it has taken should be sufficient to mitigate the uncertainties and has therefore prepared the financial statements on a going concern basis.

There are material uncertainties related to the events and conditions set out above that may cast significant doubt upon the group and charity’s ability to continue as a going concern and therefore whether the group will realise its assets and settle its liabilities in the ordinary course of business at the

amounts recorded in the financial statements.

1.3 Fund accounting

General funds are unrestricted funds which are available for use at the discretion of the Trustees in furtherance of the general objectives of the company and which have not been designated for other purposes.

Designated funds comprise unrestricted funds that have been set aside by the trustees for particular purposes. The designated funds are set aside for the defined benefit pension liability detailed in the notes to the financial statements.

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the Charity for particular purposes. The cost of raising and administering such funds are charged against the specific fund. The aim and use of each restricted fund, where relevant, is set out in the notes to the financial statements

1.4 Income Recognition

All incoming resources are included in the Statement of financial activities when the Group has entitlement to the funds, receipt is probable and the amount can be measured with sufficient reliability.

Leisure centre income received in advance for courses and memberships is deferred and recognised in the period in which the service is performed. The value of deferred income at 31 December 2022 is reported in note 18.

40

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Grants and management fees receivable in respect of specified period relating to the general activities of the company are recognised in the Statement of Financial Activities in the period in which they become receivable.

1.5 Government Grants

Government grants are recognised when the performance related conditions imposed upon the receipt of the grant have been met. Where these have not been satisfied, these grants are recognised as liabilities. If grants are not conditional on future performance related conditions, then income is recognised when

the grant proceeds are receivable.

1.6 Resources expended

All expenditure (including staff restructuring costs) is recognised where a present legal or constructive obligation exists at the reporting date as a result of a past event and it is probable (more likely than not) that a transfer of economic benefits, often cash, will be required in settlement and can be measured or estimated reliably.

1.7 Intangible fixed assets and amortisation

years).

1.8 Tangible fixed assets and depreciation

Tangible fixed assets are carried at cost, net of depreciation and any provision for impairment.

Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated

residual value, over their expected useful lives on the following bases: Leasehold Improvements - Over remaining term of lease

41

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Equipment - Over 3/5/10 years Computer Systems - Over 3 years

Fixed assets are recognised when: a resource is controlled by the charity as a result of a past event or transaction, for example a past gift or purchase; it is probable that the expected future economic benefits associated with the asset will flow to the charity; and the historical cost or fair value of the asset can be measured reliably. The buildings and plant at the centres are leased to the company as part of the overall contractual relationship with the Authority but the Authority maintains ultimate risks and rewards of these assets. Accordingly, the access which the company has to these assets is to enable it to operate the leisure centres and deliver the public service it is contracted to provide. The company does not own these public service assets. These assets are therefore not recognised on the company's Balance Sheet. Impairment reviews are carried out when there is an indication that impairment exists and impairment losses identified are immediately expensed.

1.9 Leasing and hire purchase

All other leases are regarded as operating leases and the payments made under them are charged to the

Statement of Financial Activities on a straight line basis over the lease term.

1.10 Stocks

Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete

and slow moving stocks.

42

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

1.11 Liabilities

Liabilities are recognised when there is a legal or constructive obligation to pay cash or other assets, and

are carried at the present value of the obligation until the obligation is extinguished.

1.12 Pensions

The company operates both defined benefit and defined contribution pension schemes.

The company has admitted body status and contributes on behalf of its employees to a number of local government pension schemes. In respect of those schemes where the local authority has indemnified the company against changes in the employer contribution rate and any liability which may become payable as a result of the termination or expiry of a contract, the company has no further liability to fund the scheme beyond its contributions paid in the year. The amount charged to the statement of financial activities therefore represents the contribution payable to the scheme during the year.

For those schemes where the company is not fully indemnified, scheme assets are measured at fair values. Scheme liabilities are measured annually on an actuarial basis using the projected unit method and are discounted at appropriate high quality corporate bond rates. The net surplus or deficit, after taking account of any contractual indemnity provided by the local authority, is presented separately from other net assets on the balance sheet. The current service cost and costs from settlements and curtailments are charged to the Statement of Financial Activities. Interest on scheme liabilities and the expected return on scheme assets are also included in the Statement of Financial Activities. Actuarial gains and losses are reported as other recognised gains and losses in the Statement of Financial Activities. Refer to note 28 for the reconciliation in the Statement of Financial Activities and the changes impacted under FRS 102.

Contributions to defined contribution schemes are charged to the Statement of Financial Activities as incurred. These include contributions to the stakeholder pension scheme and employees’ personal

pension schemes.

1.13 Basis of consolidation

The financial statements consolidate the accounts of Fusion Lifestyle and all of its subsidiary undertakings ('subsidiaries').

43

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

The results of subsidiaries acquired during the period are included from the effective date of acquisition.

The company has taken advantage of the exemption contained within 408 of the Companies Act 2006 not to present its own Income and expenditure account.

The income and expenditure for the period dealt with in the accounts of the company was a deficit of

£6,625K (2021: £710K surplus).

1.14 Investments

Investments in subsidiaries are valued at cost less provision for impairment.

1.15 Taxation

The company is a registered charity and is subject to neither corporation tax nor income tax on its

charitable activities.

1.16 Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transactions costs, and are measured subsequently at amortised cost using the

effective interest method, less any impairment.

1.17 Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transactions costs, and are measured subsequently at amortised

cost using the effective interest method.

1.18 Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three

44

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

1.19 Accruals and deferred income

Costs are accrued into the accounts to conform with the matching concept and reflect liabilities where a service or goods have been received but no invoice has yet been raised. Memberships can be payments

taken in advance but the income recognition is spread over the average length of the membership.

1.20 Provisions

Where a contract is identified as onerous at the balance sheet date and the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, a

provision for the least net cost of exiting the contract is made.

2. Judgements in applying accounting policies and key sources of estimation uncertainty

There are a number of actuarial assumptions used in the quantification of the group's pension commitments which are described in note 28. The onerous contract provision has been calculated on the basis of the least net cost of exiting the contract. The estimate is based on forecasts to contract exit and planned preventative maintenance reports. There are other material judgements and

45

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

estimates applied in the preparation of these accounts, including depreciation, prepayments and accrued income and accruals and deferred income.

3. Income from charitable activities


Community sports services
4.
Investment income
Deposit account interest
5.
Donation income
Grant income
Donations		 Total
Total
fundsfunds
2022
2021
£000
£000
50,734
30,760
2022
2021
£000
£000
4
1
2022
2021
£000
£000
35
10,661
7
-
~~42~~
~~10,661~~

In 2022 the Group Life received £7,371 of other donations (unrestricted) (2021: £nil) and £34,648 (2021: £nil) (restricted) of Holiday Activities and Food Programme funding, £nil (2021 - £4.6M) of grant funding as part of the National Leisure Recovery Fund (NLRF), £nil (2021 - £3.3M) of grant funding from the government’s Coronavirus Job Retention Scheme (CJRS) and £nil (2021 - £2.7M) of other grants & donations.

2022 2021
£000 £000

6. Other income

46

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Insurance claim - 2,500

In 2022, the Group received £Nil (2021 - £2.5M) of income related to a Covid Business Interruption Claim on its insurance policy.

7. Summary by expenditure type

Staf costs Support Direct Fixed Total Totalcosts costs Totalcosts costs asset fundsfunds asset fundsfunds
£000 £000 £000 disposal 2022 2021
£000 £000 £000
Community sports service 24,041 31,873 2,038
35		 57,987 43,879

All support costs relate to the sole charitable activity of the company, being the provision of leisure facilities.

8. Analysis of support and governance costs

General Governance General Governance Total Total
support function 2022 2021
£000 £000 £000 £000
IT costs 1,620 - 1,620 1,514
Finance costs 1,514 - 1,514 1,030
Marketing materials 848 - 848 690
Administration 4,859 - 4,859 3,288
Other staf related costs 917 - 917 581
Facilities management costs 17,899 - 17,899 9,646
Amortisation 100 - 100 185
Depreciation 4,063 - 4,063 5,009

47

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Auditor Fees
Trustee expenses		 -
-
~~3~~
1
~~,82~~
0		 53
-
~~5~~
3		 53
-
~~31,873~~
 48
-
~~21,991~~

Support costs are allocated to the charitable activities on the basis of headcount or on the estimated service delivered by the support service or other bases if these are more appropriate. The audit fees include £16K in relation to work in the subsidiary companies (2021: £14k).

9. Net incoming/(outgoing) resources

This is stated after charging:
2022
 2021
£000 £000
Depreciation of tangible fxed assets:
- owned by the group 4,063 5,009
Auditor's remuneration:
- Company
37
34
- Subsidiary
16
14
Amortisation of pre-contract costs 78 94
Amortisation of goodwill 23 90
48

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

10. Staff costs

Staff costs were as follows:

Wages and salaries

Social security costs
Other pension costs

Staf restructuring costs
 2022
£000
21,913

1,314
649
23,876

165
~~24,041~~
 2021
£000
18,382
1,080
790
20,252
259
~~20,511~~

The average number of persons employed by the company during the year was as follows:

2022
 2021
No.
 No.
1,865 1,331

10. Staff costs - continued

49

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

During the current year, the company entered into further settlement agreements with staff, which gave rise to ex-gratia payments totalling £68K (2021: £259K). The board considered that the settlement agreements were in the best interest of the charity.

During the current year, the company entered into further settlement agreements with staff, which gave rise to contractual payments totalling £95K. (2021: £Nil).

During the year no Trustees received any remuneration (2021: £Nil) and no Trustees received any benefits in kind (2021: £Nil). No Trustees (2021: none) were reimbursed expenses in respect of trustee meetings.

The number of higher paid employees was:

2022
 2021
No.
 No.
In the band £60,001 - £70,000 3 5
In the band £70,001 - £80,000 - 4
In the band £80,001 - £90,000 1 2
In the band £90,001 - £100,000 - 1
In the band £120,001 – £130,000
1		 2
In the band £140,001 – £150,000
1		 1
In the band £170,001 – £180,000
-		 1

The number of employees earning in excess of £60,000 (for the year) to whom the retirement benefits are accruing under defined benefit schemes is nil (2021 - nil).

Total contributions to defined contribution schemes for those higher paid employees included above amounted to £30K (2021 - £81K).

The highest paid employee received remuneration of £182K (2021 - £242K).

The key management personnel of the charity comprise the Trustees, the Chief Executive Officer and the Director of Finance & Resources. The total employee benefits for these personnel were £327K (2021 -

£675K). The Trustees received no remuneration.

50

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

11. Intangible fixed assets

Pre contract
costs
Goodwill
Group
£000
£000

Cost
At 1 January 2022
1,387
700
Additions
31
-
Disposals
-
-
At 31 December 2022

Amortisation
At 1 January 2022
1,008
677
Charge for the year
77
23
Disposals
At 31 December 2022

Carrying amount
At 31 December 2022
333
-
At 31 December 2021

Pre contract costs
Company £000 Cost
At 1 January 2022
1,387
Additions
31
Disposals
-
~~1,4~~
18
~~70~~
0
~~1,08~~
5
~~70~~
0
~~37~~
9
~~2~~
3		 Total
£000
2,087
31
-
~~2118~~
~~,~~
1,685
100
-
~~1785~~
~~,~~
333
~~40~~
2

51

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

At 31 December 2022
Amortisation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
Carrying amount
At 31 December 2022
379		 1,008
78
-
1,086
333
At 31 December 2021
~~1,41~~
8

52

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

12. Tangible fixed assets

Assets in

61,34
At 31 December 2022
31,503		 424 2 25,927 3,484 0
Depreciation
At 1 January 2022 14,373 - 2 18,780 3,049 36,20
4
Charge for the year 1,910 - - 1,906 247 4,065
Disposals (10) - - (31) - (41)
Leasehold course
of
improvements		 Motor
vehicle
s		 EquipmentComputer
systems		 Total
construc
tion
Group £000 £000
£000 £000 £000 £000
Cost
At 1 January 30,217 185 2 22,314 3,372 56,09
2022 0
Additions 1,296 251 - 3,666 112 5,325
Transfer of
assets
completed in - - - - - -
year
Disposals (10) (12) - (53) - (75)
40,22
At 31 December 2022
16,273		 - 2 20,655 3,296 6
Net book value
At 31 December 2022
15,230		 424 - 5,272 188 21,11
4
At 31 December 2021
15,844		 185 - 3,534 323 19,88
53

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

6

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:

2022
Group
£000


Land and buildings
929
Furniture, fttings and equipment
2,274
3,203		 2021
£000
1,032
1,315
2,347

Depreciation charged for the year amounted to £96K (2021 - £96K) and £758K (2021 - £624K) for leasehold improvements and equipment held under finance leases or hire purchase contracts respectively.

12. Tangible fixed assets – continued

54
Leasehold Assets in
improveme course of
Motor
vehicle
s
Compute
r Equipment
system
s
nts
construction
Company
£000
£000
£000
£000

Cost
At 1 January 2022
30,077
185
2
21,810
3,372
Additions
1,296
251
-
3,659
112
Transfer of assets
completed in
year
-
-
-
-
-
Disposals
(10)
(12)
-
(53)
-
At 31 December
2022
31,363
424
2
25,416
3,484
Depreciation
At 1 January 2022
14,216
-
2
18,553
3,052
Charge for the
year
1,910
-
-
1,817
248
(10)
-
-
(31)
-		 Total
£~~000~~
55,446
60,6
89
5,318
-
(75)
35,8
23

3,97
5
(41)

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

At 31 December
2022

Net book value
At 31 December
2022

At 31 December
2021
 16,116
15,247

15,861		 -
2
424
-
185
-		 20,339
5,077

3,257
 3,300

184

320
 39,757
20,932
19,624

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


Company

Land and buildings
Furniture, fttings and equipment		 2022

£000

929
2,105
3,034		 2021
£000
1,032
1,078
2,110

Depreciation charged for the year amounted to £96K (2021 - £96K) and £690K (2021 - 548K) for leasehold improvements and equipment held under finance leases or hire purchase contracts respectively.

13. Investments in subsidiaries

Company Cost

At 1 January 2022

At 31 December 2022

The invest ment above relates entirel y to the Active Life subsidi ary.

55

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Subsidiaries

Percentage Percentage Turnover Turnover
Company name Country
Shareholding Description		 2022
£000
Virgin Active Management England 100% Sports and leisure 43
Limited facilities
Registered number:
02353684

Active Life England 100% Sports and leisure 3,790 Charity registered number: facilities

04376721

14. Debtors

Shares in group undertakings £000

56

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022 729

729

Net Asse ts 202 Profit/ 2 (Loss) £00 2022 0 £000 nil nil

(237) (59)

237)
(59)
Group Company
2022 2021 20222021
£000 £000 £000 £000
Trade debtors 1,375 405 1,347 394
Amounts owed by group undertakings - - 79 900
Other debtors 235 122 235 122
Prepayments and accrued income 3,279 1,793 3,248 1,781
VAT recoverable 44 - 44 -
~~,~~
~~493~~		 ~~2,32~~ ~~,~~
~~495~~		 ~~,319~~
3 0 3 7

57

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

15. Creditors: Amounts falling due within one year

15.
Creditors:
Amounts falling due within one year
Group Company
2022 202120222021
£000 £000 £000 £000
Bank loans - - - -
Other loans 644 669 644 657
Net obligations under fnance leases and
hire purchase contracts 725 827 725 780
Trade creditors 5,007 3,007 4,773 2,865
Amounts owed to group undertakings - - - -
Other taxation and social security 294 386 263 352
Other creditors 431 2,609 414 2,516
7,101 7,498 6,819 7,170

16. Creditors: Amounts falling due after more than one year

Group Company
2022 2021 20222021
£000
 £000 £000 £000

58

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Bank loans 13,000 13,000 13,000 13,000
Other loans 5,364 6,007 5,364 6,007
Net obligations under fnance leases and
hire purchase contracts 965 379 965 379
Other creditors 1,661 - 1,661 -
~~20,990~~ ~~19,38~~ ~~20,990~~ ~~19,38~~
6 6

Bank and other loans are repayable as follows:

Less than 1 year
1 to 5 years
Over 5 years
Total		 Group
2022
2021
£000
£000
644
669
13,711
14,165
4,653
4,842		 Company
2022
2021
£000
£000
644
657
13,711
14,165
4,653
4,842
~~19,008~~
~~19,664~~
~~19,008~~
~~19,676~~

16. Creditors: Amounts falling due after more than one year - continued

In the year ended 31 December 2020 the entity secured a Coronavirus Large Business Interruption Loan (CLBIL) of £13,000,000 repayable over 3 years. Interest is charged at 1.7% over the Bank of England base rate for the first 12 months and 2.2% thereon. The CLBILS loan has been refinanced post year-end and is now extended for repayment to May 2025 with no capital repayments prior to this date. Interest from December 2023 is charged at 3.20% above the Bank of England base rate. As at 31 December 2022 the amounts due in one to five years total £13,000,000 (2021: £13,000,000), included under bank loans. This is secured by fixed and floating charges over all the company’s assets.

Included within other loans are amounts owed of £5,523,527 owed to a local authority partner (2021: £5,676,295). The facility is for 24 years. Interest is charged at 4.40% fixed rate.

59

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Also included within other loans are amounts owed to a Local Authority partner of £484,209 (2021: £988,188). The facility is for 7 years. Interest is charged at 3.90% above the Bank of England base rate. This is secured by fixed charges over all the company’s assets.

Finance leases includes one finance lease under a floating rate of interest and its outstanding liability at 31[st] December 2022 was £225k. All the other finance leases are fixed rate with terms between 3 and 5 years.

Obligations under finance leases and hire purchase contracts, included above, are payable as follows:

Less than 1 year
1 to 5 years
Over 5 years
Total
1,6901,206		 Group
2022
2021
£000
£000
725
827
965
379
-
-		 Company
2022
£000
725
965
-
1,690

17. Secured debts

The following secured debts are included within creditors:

Bank loans
Other loans
Rent deposit deed		 2022
£000
13,000
484
-
13,484		 2021
£000
13,000
988
25
14,013

60

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

17. Secured debts - continued

Bank loan

The National Westminster Bank PLC Coronavirus Large Business Interruption Loan has leasehold interest in Frome Leisure Centre and all other land listed in the schedule to the instrument. Contains fixed and floating charges covering all the property or undertaking of the company, also containing a negative pledge.

Other loans

The Alliance and General Leasing Limited Mendip District Council loan is secured by fixed charges over all the company’s assets, also containing a negative pledge.

Broomhill lido

The Trustees of the National Heritage Memorial Fund have a charge over the freehold property know as Broomhill Lido, in respect of grant monies of up to £3,496,300 to be used for the restoration of the lido, this grant had not been received as at the balance sheet date.

Rent deposit deed

The James Viventi and Giorgio Viventi rent deposit deed is secured to the landlord as security for the performance of its obligations in the lease and in this deed.

18. Accruals and deferred income

Group
2022
2021
£000
£000
Accruals
8,314
5,911
Deferred income
540
313
496
264

~~8,85~~
4
~~6,22~~
4
~~8,36~~
7
~~5,78~~
3		 Group Company
2022
2021
£000
£000

7,871
5,519

61

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Deferred income was broken down as follows:

Group
2022
2021
£000
£000
Deferred Income as at 1 January
313
358
Resources deferred in the year
540
313
Amounts released from previous periods
(313)
(358)
Deferred income as at 31
December
~~54~~
0
~~31~~
3		 Group
2022
2021
£000
£000
Deferred Income as at 1 January
313
358
Resources deferred in the year
540
313
Amounts released from previous periods
(313)
(358)
Deferred income as at 31
December
~~54~~
0
~~31~~
3		 Company
2022
2021
£000
£000

264
358

496
264

(264)
(358)
~~54~~
~~31~~		 ~~49~~
~~26~~
0

3		 6

4

18. Accruals and deferred income – continued

The group deferred income figure of £540K (2021: £313K) relates to income received in advanced to be credited to the revenue account in the future as and when appropriate. This figure consists of annual management fees for various contracts released over the term of the contract; memberships paid by customers for use over a period of time; invoiced income where the prepaid event has not yet occurred; member card balances as credit to use at leisure centres for future sales.

19. Provisions for liabilities

Onerous Contracts
At 1 January 2022
Charged to proft and loss
62		 2022
£000
-
~~1,1~~
00
~~1,1~~
00		 2021
£000
-
~~-~~

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

At 31 December 2022

The charitable company were in discussions at the balance sheet date which will lead to an exit from a Local Authority contract in 2024. The provision is expected to unwind in 2024.

20. Statement of Funds

Group Brought Income Expense Gains/ Carried
Forward (Losses) Forward £000
£000 £000		 £000£000
Unrestricted funds
General Funds - all (3,799) 50,745 (57,864) - (10,918)
Pension reserve (204) - (88)
292
-
**Restricted funds **
HAF Programme - 35 (35) - -
(10,9
(4,003) 50,780 (57,987) 292 18)
Carrie
Company Brought Income
Expense		 Gains/ d
Forward (Losses)
Forwar
£000 £000 £000 £000 d
£000
Unrestricted funds
(10,1
General Funds - all (3,301) 46,977
(53,806)		 - 30)
(204) - (88) 292 -
Pension reserve (10,1
(3,505) 46,977 (53,894) 292 30)

20. Statement of Funds - continued

The nature and purpose of each restricted fund is as follows:

63

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Holiday Activities and Food (HAF) Programme funding has been received in order to coordinate and provide free holiday provision, including healthy food and enriching activities.

21. Analysis of net assets between funds

Group

64

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Unrestric
ted
Funds		 Restric
ted
Funds		 2022
Funds		 2021
Funds
£000 £000 £000 £000
21,447 - 21,44 20,288
Fixed Assets 7
5,680 - 5,680 9,021
Current Assets
(7,101) - (7,101 (7,498)
Current Liabilities )

65

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Long Term Liabilities

Pension Asset / (Liability)

Total

Company

Fixed Assets

~~(30,944)~~ ~~-~~ ~~(30,944~~ ~~(25,610)~~
(10,918)
-		 )
(10,91		 (4,003)
- - -
8)		 (204)
Unrestricte Restricted 2022 2021
d Funds Funds Funds Funds
£000 £000 £000 £000
21,994 - 21,99 20,732
4
5,152 - 5,15 8,191
2
(6,819) - (6,819 (7,170)
)
(30,457)
-		 (30,457 (25,169)
66 )
- - - (204)
(10,130)
-		 (10,13 (3,505)
0)

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Current Assets

Current Liabilities

Long Term Liabilities

Pension Asset / (Liability)

Total

22.
Reconciliation of net movement in funds to net cash flow from operating activities		 22.
Reconciliation of net movement in funds to net cash flow from operating activities
2022 2021
£000 £000
Net incoming/(outgoing) resources (6,915) 637
Movements on defned beneft scheme (incl. actuarial adjustments)(206) (501)
Interest received (4) (1)
Interest paid 966 609
Amortisation of intangible fxed assets 100 185
Depreciation of tangible fxed assets 4,062 5,009
Loss on disposal of assets (tangible & intangible) 35 42
(Increase)/Decrease in stocks (51) (73)
(Increase) / Decrease in debtors (2,613) 837
(Decrease)/Increase in creditors (excl. bank loans, other loans &
hire purchase liabilities) 4,023 (1,060)
Movement in provisions 1,100 -

67

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Net cash used in operating activities

Net cash used in operating activities ~~497 5,68~~ 4 Analysis of cash and cash equivalents 2022 2021 £000 £000 Cash in hand 623 6,628 Total 623 6,628 Analysis of changes in net debt 31.12.2021 Cash Flows Non-Cash Changes 31.12.2022 New Other Finance Non-Cash Leases Changes Cash in hand 6,628 (6,005) - - 623 Debt due within one year (1,496) 127 - - (1,369) Debt due greater than (19,386) (1,394) 1,451 - (19,329) one year (19,329) one year 19,329) one year ,329) one year 329) one year ) one year one year year ear ~~(14,25 (7,272 1,45 - (20,07)~~ 4) ) 1 5

23. Analysis of cash and cash equivalents

24. Analysis of changes in net debt

Debt due within one year (1,496) 127 - - (1,369) Debt due greater than (19,386) (1,394) 1,451 - (19,329) one year (19,329) one year 19,329) one year ,329) one year 329) one year ) one year one year year ear

25. Contingent liabilities

At the balance sheet date contingent liabilities existed in respect of guarantee and performance bonds amounting to £745K (2021 - £745K). At the balance sheet date the bonds not secured totalled £445K.

26. Operating lease commitments

Total future minimum lease payments under non-cancellable leases:

2022

2021

68

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Expiring: £000 £000 within 1 year 638 217 between one and five years

1,150 1,505 in more than 5 years 15,162 13,519

Total

~~16,9 15,24~~ 50 1

27. Capital commitments

The company had £nil capital commitments in place as at 31 December 2022 (2021 - £36K).

28. Pension commitments

Fusion Lifestyle is an admitted body in 9 defined benefit local government pension schemes. In 8 of these schemes the local council has fully indemnified the company against funding liabilities arising at any time. For those schemes where Fusion is not indemnified a full actuarial valuation was carried out at 31 March 2019 and updated at 31 December 2022 by a qualified independent actuary.

Tunbridge Wells Borough Council has given a legal undertaking indemnifying the company in respect of pension contributions in so far as and to the extent that these may affect pension benefits accrued before 1 October 2006, the transfer date of the Leisure Services from Tunbridge Wells Borough Council to the company. At 1 October 2006 the pension liability for which Tunbridge Wells Borough Council is responsible amounted to £223K. At 31 December 2022 the deficit had become a surplus of £1,972K meaning the indemnity is not recognised in the financial statements unlike in prior periods where the pension scheme was a liability.

As part of the acquisition of Virgin Active Management Limited, the Group assumed pension liabilities relating to employees of that company of £189K. At 31 December 2022 the scheme was valued with a £425K surplus. This surplus is not recoverable by the scheme employer and therefore a nil asset/liability is recognised in these accounts.

These surpluses may be recoverable by the scheme employer and this may be via future reduced contribution rates, but the scheme employer has not been alerted to any such reductions and the actuary confirms that the asset may have a ceiling which is less than its value. Accordingly, in the absence of a ceiling report a nil value is recognised in the accounts.

69

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

28. Pension commitments - continued

The amounts recognised in the Balance sheet are as follows:

Present value of funded obligations
Fair value of scheme assets
(Defcit) / surplus in schemes
Surplus not recognised
Indemnity
Net (liability) / surplus		 2022
2021
£000
£000
2,801
5,603
5,198
5,510
2,397
(93
)
(2,397)
(33
4)
-
(42
7)
-
22
3
-
(20
4)

The amounts recognised in the Statement of financial activities are as follows:

Service cost
Interest on obligation
Administration expenses
Expected return on scheme assets
Total		 2022
2021
£000
£000
(35)
(35)
(7)
(12)
(46)
(46)
-
-
(93)
(8
~~8~~
)

70

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

For the year ended 31 December 2022
Actual return on scheme assets 223 297
Movements in the present value of the defned beneft obligation were as follows:
2022
 2021
£000
 £000
Opening defned beneft obligation 5,603 6,114
Interest cost 103 79
Contributions by scheme participants 4 4
Actuarial gains (2,851) (475)
Benefts paid (101) (56)
Experience Gain on defned beneft contribution 8 (98)
Current service cost 35 35
Closing defned beneft obligation ~~2,80~~ ~~5,603~~
1
28.
Pension commitments continued
Changes in the fair value of scheme assets were as follows:
2022 2021
£000
 £000
Opening fair value of scheme assets 5,510 5,255
Expected return on assets 15 13
Contributions by employer 54 63
Contributions by scheme participants 4 4
Admin expenses (46) (53)

71

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Interest costs 81 54
Return on assets (319) 230
Benefts paid (101) (56)
5,198 5,510
The major categories of scheme assets as a percentage of total scheme assets are as follows:
2022
 2021
% %
Equities 55.8% 51.5%
Property 8.4% 8.7%
Government bonds 0.5% 0.5%
Cash and other assets 12.6% 14.1%
Other bonds 22.7% 25.2%
100.0% 100.0%
Principal actuarial assumptions at the Balance sheet date (expressed as weighted averages):
2022 2021
% %
Discount rate at 31 December 4.79% 1.88%
Expected return on scheme assets at 31 December 4.79% 1.88%
Future salary increases 3.70% 3.65%
Future pension increases 2.83% 3.08%

72

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

Infation (CPI) 2.76% 2.80%
28. Pension commitments continued
Assumed life expectations from age 65 are: 2022 2021
years years
Retiring today: Males 21.1 21.9
Females 23.6 24.1
Retiring in 20 years: Males 22.4 23.3
Females 25.1 25.5
Amounts for the current and previous four periods are as follows:
Defned beneft pension schemes
2022 2021 2020 2019 2018
£000 £000 £000 £000 £000
Defned beneft obligation (2,801) (5,603) (6,114) (5,432) (4,671)
Scheme assets 5,198 5,510 5,255 4,895 4,266
Surplus not recognised in
Fusion Lifestyle (1,972) - - - -
Virgin Active Management
(425)		 (334) (69) (162) (116)
(Defcit) / Surplus - (427) (928) (698) (521)
Experience adjustments on
scheme liabilities 8 (98) (437) - -
Experience adjustments on
scheme assets - - - - -

73

Fusion Lifestyle

(A company limited by guarantee)

Notes to the Financial Statements

For the year ended 31 December 2022

29. Controlling party

There is no ultimate controlling party. The company is controlled by the Board of Trustees.

30. Post Balance Sheet Events

After the balance sheet date, two local authority contracts will be exited before the contractual end date. This is primarily due to commercial reasons.

After the balance sheet date, Fusion Lifestyle also agreed to settle outstanding payment for services amounting to £352K . This is an adjusting event recognised in the financial statements.

74