Shares in fully-listed sports and leisure club operator Crown Sports today slid in early dealings on news of a £14.8 million preliminary loss, although the company remains upbeat, writes James Crux.

Crown's (CSP) full-year figures to December bore the blemishes of a number of exceptional hits totalling £19.4 million. These dragged the group into a £14.8 million pre-tax loss (£200,000 profit). But deputy chairman Martin Knight prefers to look on the bright side: 'We've dug holes, we've bedded in and we've taken our medicine.'

As part of its strategy to hit a target of 250,000 members, Crown took stakes in rivals Esporta and Clubhaus with the aim of eventually taking control of them. 'We saw them as animals that were wounded beasts in the jungle,' explains Knight, 'and we wanted to use our shares as an acquisition currency dependent on our own share price.'

Shares in both businesses have since slumped. In today's figures, Crown has written down their value. Its stake in Esporta has been written down £5.1 million to £11.6 million. In the case of beleaguered Clubhaus, a total cost of £1.9 million has been completely written off.

Elsewhere, Crown has written down the value of horse-racing telephone betting arm the Winning Line and publishing business Crown Content by £3.1 million. Their products were not deemed attractive enough to club members.

These one-off hits masked a strong operational performance by Crown, which is 'unrecognisable' from the business that existed at the end of 2000. Seven businesses were integrated in 2001.

Profits before tax and exceptionals rose from £400,000 to £4.5 million, operating profit before exceptionals jumped to £6.5 million (£1 million) and turnover leapt from £3.5 million to £31.6 million on the back of a 117 per cent rise in membership to 76,000.

Knight says each of the club businesses acquired – Fitness Express, Axis and Trainstation – met expectations and enhanced earnings. He also admitted: 'We're in discussions with potential targets.'

The shares, which fell by 0.75p to 12.5p, are trading well below their year-end net asset value of 21p. Their 52-week highs and lows are 27.5p and 12.5p.