Bottom Line: Making net gains

DAVID LLOYD Leisure uses the 1991 national census to feed profiles of its members into a computer and asks it to find concentrations of similar social types around the country.

It is typical of the meticulous planning which the company puts into finding the best locations for its tennis and fitness clubs, and it is clearly working.

The seasonally unfavourable first half produced a 53 per cent increase in taxable profits to pounds 2.96m, including contributions from two new clubs. Organic profits growth in established clubs was a healthy 13 per cent.

The company faces two main obstacles to its growth - the bureaucratic minefield of local authority planning departments and increasing competition from smaller operators.

The balance sheet is only 14 per cent geared. Once Lloyd increases the number of its clubs from 12 to about 15 its cash flow should be strong enough to fund two new sites a year at least.

Lloyd should lift full-year profits by 32 per cent to pounds 7.5m and earnings per share from 10.85p to 12p. The shares are worth buying even though at 241p, up 2p, they sport a fancy p/e of 20 and yield a mere 2 per cent.