Any avid gym-goer will tell you it’s almost impossible to lose flab while you bulk up, but for Gym Group (GYM), these frustrations do not seem to hold true. Expansion of its operations has been a key part of the growth story in recent years, but the group has managed to improve margins while adding to its network of low-cost gyms.
The group has opened nine gyms since 1 January, bringing the total to 166 as of the end of August. Membership has also improved, climbing more than a tenth to 796,000. However, despite the lower membership prices that are typical of a new opening, average monthly revenue per member climbed 6 per cent to £15.47.
Management said further improvements in profitability were coming. Typically a new gym takes two years to reach maturity, when it charges higher prices and boasts a higher cash profit margin - 45 per cent versus 41.2 per cent for Gym Group’s sites overall. The group’s network is only around two-thirds mature, but that proportion is set to increase through to 2020.
Broker Numis is forecasting adjusted pre-tax profits of £20.4m for the full year, giving EPS of 11.3p. This is up from £14.4m and 8.3p in 2018.
| GYM GROUP (GYM) | ||||
| ORD PRICE: | 245p | MARKET VALUE: | £ 338m | |
| TOUCH: | 244-245p | 12-MONTH HIGH: | 345p | LOW: 185p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 57 | |
| NET ASSET VALUE: | 105p* | NET DEBT: | 33% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 58.3 | 3.09 | 1.70 | 0.35 |
| 2019 | 74.0 | 5.58 | 3.00 | 0.45 |
| % change | +27 | +81 | +76 | +29 |
| Ex-div: | 05 Sep | |||
| Payment: | 11 Oct | |||
| *Includes intangible assets of £85.9m, or 62p a share | ||||
