Countryside Partnerships Share Discussion Threads

[sportbilly1976] 14/4/2004 14:32

MM's pulling price down or a tree shake to get some cheap stock?? - not many sellers coming through - was expecting more considfering the rise over the past 2 days.....

still looking upwards for rest of pm and again tomorrow..

[sportbilly1976] 14/4/2004 14:15

what free float?

[tonyx] 14/4/2004 13:20

yep-the price was 10.75/11p at the time so they had to pay a 1p premium.

Looks like the free float of shares is diminishing.

[pointscorer] 14/4/2004 13:12

Anyone notice the 50k that was bought @ 12p??

[tonyx] 14/4/2004 13:00

Bought some of these earlier-nice one to tuck away. Looks like every 10-15K bought ticks it up.

[sportbilly1976] 14/4/2004 12:12

up and away today !!!! - no one on the risers board!!

[sportbilly1976] 14/4/2004 11:58

Hadn't noticed the part in the title post about 84% of the shares being held by just 6 shareholders - this could have a massive effect on the share price movements if demand creeps up - and 2 days on the leader board is not going to distract attention form this stock

[sportbilly1976] 14/4/2004 11:24

in for a few at 10.75 - notice that it is still trading at 50% discount to NAV - despite the recent strong rise!!

[mufmitz] 13/4/2004 14:55

I have just bought 8K at about 9p! Dosh rescued from HER.

[terry moon] 13/4/2004 07:39

Looking strong this am on recovery - tipped in weekend press added more this am.

[jeff24] 01/4/2004 08:04

One web site that seems better than most is this one.

[joeyp] 28/12/2003 20:41

Hi,

I am currently studying for a Diploma in Management Studies at UCE in Birmingham and have a financial project to complete. The two companies that I have chosen off the FTSE Index are L A Fitness and Crown Sports to compare and report on.

Wonder Boy - It seems that you have a great deal of knowledge of these two companies and I would be grateful if you could share with me some of the website addresses you access for up-to-date information. I have made a note of leisureopportunities.com which you mention above but would be grateful for any others you may know of.

Thanks!!

[wonder boy] 24/9/2003 17:33

Here's what LeisureOpportunities.com said about results:

Crown Sports has reported a 53 per cent increase in operating profits in its interim results for the first six months of 2003.

The operator, which completed the disposal of its non-core assets with the sale of Crown Content in August, is now entirely focussed on health and fitness. The disposals reduced group borrowings from £34.96m at the end of 2002 to £1m, reducing gearing from 68 per cent to 36 per cent.

The group experienced a 7 per cent like for like turnover decline in the health and fitness business, but there was a 44 per cent increase in operating profit due to a 38 per cent improvement in retention rates and a 3 per cent growth in membership at Dragons clubs. This growth has been attributed to improving service levels and the more stable nature of the operator's older customer base.

"The results for the first six months of 2003 reflect a group which is entirely different in structure from the corresponding period in 2003," says chairman, Ray Pierce. "Dragons is now well positioned to exploit its market positioning to deliver strong growth and financial performance."

[wonder boy] 24/9/2003 17:30

Any opinions on results? Not had time to have a proper look yet but they seem fairly good, even if not as great as I had hoped. Will be interesting to see where the share price is after the next (traditionally stronger) half year.

[wonder boy] 16/9/2003 10:48

CSP have bought results forward to Thursday, a week earlier than scheduled. Anyone know if it's common for company's to do this? If not, is it usually a good, bad or indifferent sign? Cheers

[wonder boy] 09/9/2003 12:37

Hi Spooky. Glad to have someone to talk to on here, been VERY quiet! Do you hold any CSP?

Currently on my hols (paid for by LA Fitness profits) but I'll try to respond quickly to the points you've raised:

1) Debt in 2002 report was #35 million. Subtract the proportion of the proceeds from the Crown Golf and Crown Content disposals, that the company have stated will be used to pay down debt, leaves debt figure of #20 million. Should be reduced further this year from positive cashflow (interest charge will be approx #1.7 million less than in 2002 and renovation costs have been to the best of my knowledge virtually zero). Maybe #15 million is a tad optimistic, I'll agree to meet you halfway, #17.5 million.

2) Unfortunatley I don't have a copy of the accounts to hand. To get #6 million operating profits, I think I would probably have taken 2002 revenues from the continued operations, subtracted half of the 2002 centralised costs (only taking half because the cost rationalisation programme and 3 disposals would have reduced such costs significantly), and subtracted 90% of the 2002 costs linked to those continued operations (90% because of rationalisation programme). Will have a proper look when I get home.

3) My understanding is that there is no single correct method for calculating the P/E, the important thing is that you are consistent in your approach. Using the method I have above (i.e. market cap / operating profit), LA Fitness trades on an historic P/E of 11, CSP an historic P/E of 5.

4) I would be interested to know why you think CSP is more exposed than LFS to individual balance sheet pressure. The typical LFS customer is a 20-something, city worker living in rented accomodation. CSP customers tend to be older and own their own homes. LFS customers are more likely to lose their job, move away etc than CSP customers. Also CSP has the advantage that its Fitness Express gyms recieve fixed payments from the gym owners regardless of 'footfall'. And finally, a mate of mine works in the Brentwood Dragons and she is always complaining that they are "sooooo busy".

CSP are up another 3.5% today. Mid price is now 7.5p, or 36% higher than when I started this thread 4 weeks ago! Set a target price of 14p.

[spooky] 08/9/2003 09:30

Operating profits for 2003 will possibly be £6 million or there abouts,but you need to allow for tax and central costs before working out the PE.Tax losses may well impact the tax charge short term but you really need to allow for it when valuing the business.Debt will depend on this years cashflow but will probably end closer to £20 million than £15m.The demographic of their membership and it's geographic concentration in the south east is a concern.Individual balance sheets are under pressure and i know that renewals have been under severe pressure this year within the industry,there is every reason to suspect that Dragon will have suffered as much as others.Interestingly the other stock you showed an interest in ,LA is perhaps less exposed in this way.Anyway shares do look too cheap,but as you say they are illiquid.

[spooky] 05/9/2003 14:23

Interesting thread which no one else appears willing to acknowledge.I have a couple of questions.How do you get to a debt level of £15 million?And secondly how do you project a figure of £6 million for current year operating profits?

[wonder boy] 02/9/2003 09:17

Come on! Somebody must hold or follow these. The company received a £42 million takeover offer in December 2002. The company has made terrific progress since then but it's share price has lagged behind. Currently valued at just £20 million.

[wonder boy] 26/8/2003 10:26

CSP hold 4,100,000 Clubhaus shares worth about GBP33,000. Not a great deal, infact they add about 0.01p per CSP share.

[wonder boy] 14/8/2003 23:49

Think CSP own a significant proportion of Clubhaus. They wrote off the investment in their last accounts but Clubhaus are staging a recovery. Anyone know how I can find out what proportion of Clubhaus equity is held by CSP? I've tried CSP, Clubhaus and IRG (the registrars) but had no luck. Cheers.

[wonder boy] 13/8/2003 08:42

An old article (March 2003) but you wont find this information anywhere else i.e. Crown Sports website or last set of accounts. Particularly interesting because this is a Best Western hotel. Best Western are possibly the largest hotels group in the world. Could this be the first tie up of many between Best Western and CSP? Currently trying to find out how many further gyms they've opened this year:

"Fitness Express to Open Gym in Listed Hotel...Fitness Express, part of the Crown Sports group, is set to open a new health and fitness club at the Cambridge Quy Mill Hotel in Stow-Cum-Quy, Cambridgeshire... Facilities will include a central 12m swimming pool, a large gym, fully-equipped by Precor plus a sauna, steam room and spa pool...Fitness Express is now offering a range of tailor-made services, including market analysis, feasibility studies and complete contract management."

[wonder boy] 12/8/2003 09:12

What does the company do?

Crown Sports plc owns and operates 22 mid-sized health and fitness clubs across the UK trading under the Dragons name, it also oversees a further 27 health and fitness clubs based in Europe and the Middle East on a contract management basis. The company is now focused entirely on these core businesses following the disposal of the golf, sports publishing and sports betting businesses during 2003.

How much is the company valued at?

With 291 million shares in issue and a current share price of 6.375p, CSP is valued at £18.55 million.

What is the Net Asset Value (NAV)?

Net assets at 31 December 2002 were £51.12 million. Since this date the company has disposed of Crown Golf, the Winning Line and Crown Content decreasing NAV by £17.2 million. Current NAV is therefore £33.92 million (or 11.66p per share). Approximately 93% of assets are good quality tangible assets including 11 health and fitness club freeholds and 7 long leaseholds (i.e. greater than 50 years). These clubs are typically based in the Home Counties around London and with property prices booming in the last few years they could be worth considerably more than their book value (I intend to do more research here).

Are revenues growing?

Turnover at the core business was £28.1 million in 2002 (2001: £21.6 million), an increase of 30% on the year. I expect further revenue growth this year as the company benefits from having fully integrated the 7 health and fitness clubs acquired in 2001 and completed major refurbishment works on 5 further clubs.

What about costs?

Management implemented a major cost reduction programme mid-2002 the results of which will only be fully reflected in the 2003 accounts. Costs reduction measures include elimination of layers of management, reducing central overheads and improving buying terms. Exceptional costs of £8.4million in 2002 relate almost entirely to bid defence costs, acquisition/disposal costs and impairment of fixed assets relating to the disposed businesses only i.e. they truly are exceptional costs and will not be repeated in 2003.

Will improved revenue and costs translate to profits and cash flow?

The group made an operating profit before exceptional items of £4.3 million in 2002, after exceptionals (which I stress again relate almost entirely to the businesses disposed of in 2003 and are not repeatable) the company made a £6.2 million loss. Stripping out the revenues and costs of the disposed businesses, subtracting the exceptional items and assuming constant costs and revenues in the core businesses (remember costs should be substantially lower in 2003), operating profit for 2003 will be about £6 million. This puts CSP on a prospective P/E of just 3! Negative cash flow of £2.3 million in 2002 should be reversed this year because of substantially reduced debt financing requirements and a reduced need for refurbishment and integration works.

What are the prospects for growth?

CSP has a reputation for growth via acquisition. The reduction in debt (see below) means that CSP is again in a position to grow its business. I believe the health and fitness industry has solid long-term growth prospects and CSP has the management to exploit this (they previously turned Sportsmedia from a £20 million operation into a FTSE 350 company). In addition CSP is in talks with several companies about managing their gyms on a contract basis, an area in which CSP is considered the industry leader.

Any potential issues with the company / industry?

Not really. The disposal programme is now complete and has allowed the company to reduce debt from £60.2 million at 31 December 2001 to approximately £15 million now. The company has banking facilities totalling £53 million including a £40 million loan repayable over 7 years – this company is not going into liquidation in the foreseeable future. The health and fitness market is maturing in the UK but CSP is expanding into Europe and the Middle East via contract management. Margins may have come under pressure but management have acted quickly to reduce costs. One potential issue is that approximately 84% of shares are held by just 6 shareholders. However, these investors appear to be in for the long haul, and if that proves to be correct the share price should benefit from the limited free float through gearing (i.e. small increase in demand for shares will result in large price increase because of restricted supply).

Conclusion:

The company has been undervalued in recent years because of worries about high debt levels and a somewhat confusing 'sports conglomerate' strategy. The completion of the disposal programme has resolved these issues and the company is ripe for a re-rating. CSP is a much leaner and more focused company. It has a solid asset base and good growth prospects.

Do your own research and be happy with your findings.

[wonder boy] 11/8/2003 13:46

Belcher,

Bought in first thing this morning (before the 13% rise). These shares offer terrific value in my opinion! Not going to blindly ramp them though, I will post my research on here when I get the time (later this week).

Like you, I was concerned with the small free float at first. However, both Bennelong and Sports Assets (whose combined holding represents over 50% of the total share capital) seem to be in these for the long haul. Infact I believe one of them could eventually try to bid for CSP, Bennelong have already tried it once! The advantage of a small free float where the large holders do not sell is gearing (i.e. small rise in demand for shares causes a leap in the price because supply is restricted).