Gym Group (GYM) is pressing ahead with expansion plans. During 2018 it opened 17 new gyms and acquired 13 from easyGym, bringing the total estate to 158 locations. The average number of members was up by nearly a third to 693,000, with 11.7 per cent of members taking up the premium LIVE IT option. The company is aiming to open another 15 to 20 new sites during the current financial year, with one “small box” option. Chief executive Richard Darwin said he doesn’t expect the company to turn to outside funding this year, after it raised equity in 2018, and future openings should be funded through cash generated.
The company will continue to target a return on capital employed on mature estate of at least 30 per cent, after it achieved 31 per cent during the reported period. But new openings haven’t been without challenges. Mr Darwin said the group decided to accelerate the rate of conversions of Lifestyle gyms into Gym Group branding, and these refurbishments took longer than anticipated, as did membership uplift after reopening. The cash profits margin on mature sites also slipped from 47 per cent to 45.3 per cent.
Analysts at Numis expect pre-tax profits of £20.4m for 2019, giving EPS of 11.3p, compared with £14.4m and 8.3p in 2018.
| GYM GROUP (GYM) | ||||
| ORD PRICE: | 215p | MARKET VALUE: | £ 296m | |
| TOUCH: | 214-215p | 12-MONTH HIGH: | 345p | LOW: 185p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 31% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 46 | -9.4 | -18.0 | nil |
| 2015 | 60 | -12.4 | -19.0 | nil |
| 2016 | 74 | 6.9 | 4.5 | 1.0 |
| 2017 | 91 | 9.2 | 5.6 | 1.2 |
| 2018 | 124 | 10.0 | 5.4 | 1.3 |
| % change | +36 | +8 | -4 | +8 |
| Ex-div: | 23 May | |||
| Payment: | 14 Jun | |||
| *Includes intangible assets of £76.1m, or 55p a share | ||||
