The Gym Group plc Acquisition of 18 gyms from Lifestyle Fitness (8565Q)
15 September 2017 - 4:00PM
UK Regulatory
TIDMGYM
RNS Number : 8565Q
The Gym Group plc
15 September 2017
15 September 2017
The Gym Group Plc
("the Group")
Acquisition of 18 gyms from Lifestyle Fitness
Significant acceleration of new site rollout
The Gym Group ("TGG"), the fast growing, nationwide operator of
98 low cost gyms branded "The Gym", announces that it has acquired
18 gyms (1) from Lifestyle Fitness for a total cash consideration
of GBP20.5m (the "Acquisition"). TGG has entered into a binding
sale and purchase agreement with Competition Line (U.K.) Limited
("CLL") the owner of the sites and the deal is expected to complete
on 29 September 2017.
TGG has grown rapidly since the opening of its first site in
Hounslow in 2008 and has become the second largest player in the
low cost gym market. It expects to open 20 new sites under its
organic rollout programme in 2017, having opened 15 new sites in
2016 and 19 new sites in 2015.
The Group, as part of its stated strategy, has also sought to
identify bolt-on acquisitions as a way of accelerating its
rollout.
As a result of the Acquisition:
-- All 18 sites, which are high quality, well invested locations
mainly in the Midlands and North of England (2) will transfer as
going concerns including the existing membership. Staff dedicated
to the sites will also transfer to TGG along with 5 other central
staff. CLL will support the integration of the sites through a
Transitional Services Agreement ("TSA").
-- 10 of the sites will be converted to The Gym brand
immediately following assignment of the leases. The Group expects
these sites will have been converted by the end of Q1 2018. These
10 sites are anticipated to have the potential to perform strongly
with maturity expected to be shorter than the Group's normal
two-year profile due to the existing membership base. Each
conversion is expected to cost GBP450k.
-- A further 8 sites will continue to operate under the
Lifestyle Fitness brand and will be considered for conversion to
The Gym brand in due course. Each of these gyms will be provided
with some initial capital investment, primarily in gym equipment,
expected to total GBP110k per site.
-- The 18 sites being acquired earned site EBITDA (excluding
central costs) of GBP3.45m in the 12 months to 31 December 2016 (3)
with revenues of GBP11.1m and a net book value of GBP19.2m.
-- The Acquisition is to be funded from the Group's existing
financing facilities. In addition, the Group has extended its
existing capex facility by a further GBP10m.
-- The Acquisition is expected to be significantly earnings
enhancing by 2019 as a result of the expected growth in membership
of the acquired sites.
(1) The headline prices per month for the 18 sites being
acquired mostly range between GBP20 - GBP25 per month for members
not entering into contracts. As a result of the majority of no
contract prices being greater than GBP20, The Leisure Database
Company ("LDC") in its analysis of the market does not define
Lifestyle Fitness as a low cost gym. Lifestyle also offers 12 month
contracts where the headline prices per month mostly range between
GBP15 and GBP20.
(2) In addition one site in London and one in Scotland
(3) Extracted from the accounts of Competition Line (U.K.)
John Treharne, CEO of The Gym Group, commented:
"Lifestyle is an excellent and complementary fit with our
existing estate. These are well invested gyms in strong locations
with an established membership. The acquisition strengthens The Gym
Group's position in the Midlands and North in areas where we are
currently underrepresented and accelerates our expansion plan. The
addition of these gyms is anticipated to be significantly earnings
enhancing by 2019."
For further information, please contact
The Gym Group via Instinctif
John Treharne, CEO
Richard Darwin, CFO
Numis
Oliver Cardigan
Oliver Hardy
Toby Adcock 020 7260 1000
Instinctif
Matthew Smallwood
Justine Warren 0207 457 2020
Forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature, such
statements involve risk and uncertainty since they relate to future
events and circumstances. Actual results may, and often do, differ
materially from any forward-looking statements.
Any forward-looking statements in this announcement reflect
management's view with respect to future events as at the date of
this announcement. Save as required by law or by the Listing Rules
of the UK Listing Authority, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement following any change in its expectations or to reflect
subsequent events or circumstances following the date of this
announcement.
Inside Information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No.596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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