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Gym Group on track to meet 2019 targets after strong first half

"I am excited about the potential of the company and look forward to delivering another year of strong profitable growth for shareholders," said chief executive Richard Darwin.
Gym Group has been building strength

The Gym Group PLC (LON:GYM) said it was on track to meet its 2019 targets as it reported a 26.9% rise in revenue for the first half.

In a trading update for the half-year ended June 30, the low-cost gym operator posted revenue of £74.0mln for the period, up from £58.3mln a year ago.

Total membership numbers increased 10.6% to 796,000 as the company grew its gym estate to 165 from 147 last year, including eight new site openings in the first half and the gyms acquired from easyGym last July.

READ: Gym Group’s revenues and profits surge as gymgoers flock to its no-frills fitness clubs

Excluding memberships from sites bought from easyGym, average members for the first half amounted to 797,000, up 20.0% on the prior year.

Some 135,000 customers signed up to the company’s premium membership, Live It, in the first half. The package now represents 16.9% of total membership, compared to 11.7% last December.

Growth in Live It members led to a 5.6% increase in average revenue per member per month to £15.47.

The group said it remains on course to open 15-20 standard size gyms in 2019 as well as its first "small box" gym towards the end of the year.

"I am pleased with the pace of growth and the delivery of our rollout which builds on the strong platform and systems put in place to expand the business in 2018," said chief executive Richard Darwin.

He added: "I am excited about the potential of the company and look forward to delivering another year of strong profitable growth for shareholders."

Peel Hunt reiterated a 'buy' rating and target price of 350p, saying gym membership numbers were ahead of its forecast. The broker also held its pre-tax profit estimate for the 2019 financial year at £20.1mln but expects pre-tax profit to nearly double over the next three year. 

"For clarity, the company expects all forecasts to switch to an IFRS16 basis in the autumn, but that should not disguise the pace of the company’s outperformance," Peel Hunt said.

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