Good morning! 

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Today I'm planning to look at:


  • Share price: 325p (unch.)
  • No. of shares: 138 million
  • Market cap: £448 million

2018 Interim Results

This is the innovative low-cost gym chain which is currently experiencing rapid growth.

It's one that got away from me, as I was dabbling in the shares below 200p last year. I couldn't quite convince myself to hold on to them, however. I'd be up by nearly 80% if I had.

There could still be a fine opportunity from current levels. So let's take a look at these results.

The company says it is on track to meet market expectations.


  • Revenue +36%. An important figure but the group is expanding its estate and has grown by acquisition. So it's not a "like-for-like" number.
  • EBITDA margin falls to 30%, "reflecting immature estate profile" and the effect of converting gyms from an acquisition it made last year.
  • Adjusted PBT of £7 million.

The adjusted PBT is calculated after adding back in amortisation of acquired intangibles plus exceptional items.

Having looked into it, I think the adjustments aren't terribly out of the ordinary. Note however that exceptional items were pretty big last year (£1.7 million) and are already £1 million in H1 of this year. They are likely to drag on results for as long as The Gym is making acquisitions and lots of changes to its estate. But hopefully these expenses will lead to a lot more profits in the future.

  • Small interim dividend. The company has been raising new equity for growth, so the dividend doesn't really matter. It's all about getting bigger for now, rather than producing an income stream.
  • 6 new gyms and 13 gyms acquired (total: 147). Still targeting 15 to 20 organic openings for 2018 (will need to do better than 6 in H2!)
  • CFO becoming CEO. 

There's no reason for the shares to move anywhere today as things are motoring along as expected.

It's a fine pace of growth. As the CEO points out, the number of sites has increased…

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