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TWST: Can we begin with an introduction to LA Fitness (London: LFS.L) and an overview of how the company is positioned today?

Mr. Turok: I set the company up in 1990. In 1996, when we had three clubs, we decided to substantially expand the company. We raised venture capital money via 3I, a venture capital house, following which we were able to expand the business to 15 clubs. In October 1999, we listed on the London Stock Exchange, raising GBP15 million worth of new money. A year later, we returned to the market to raise a further GBP10 million to enable us to continue to expand our estate from the 24 clubs we had at that time. Today, we have 54 clubs and 135,000 members. Our strategy is to continue to rollout out organically

TWST: Can we take a brief step back for a moment? You just mentioned that the health-and-fitness sector has experienced fast growth. What’s you opinion of the current state of the market and, going forward, what trends suggest further potential growth?

Mr. Turok: The market was primarily started by the premium operators, David Lloyd in particular, and the market grew very quickly with public companies being listed by entrepreneurs with a view to raising money from the stock market in order to substantially accelerate these businesses, which by nature are very capital intensive. Unfortunately, due to a number of disappointments from the operators, listed health-and-fitness companies have fallen out of favor with investors, which has unfortunately affected the stock prices of all of the health-and-fitness operators. In the meantime, the private venture capital funds have come along and recognised the huge value in these companies because the stock market de-rating of the fitness operators has gone far too far. As a result, within the UK what is happening is that venture capital houses are snapping up the large health-and-fitness operators at extremely low prices, and in fact consolidation is occurring as a result, primarily amongst the larger premium players with de-rated stock prices. And of course share holders are looking forward to receiving a cash offer and getting out. The only two fitness stocks of any size that will be left are Fitness First and LA Fitness. We really sit very much on the mass-market, affordable rollout model: LA Fitness is an organic rollout model structure which focuses on replicating a broadly similar offering and just focusing on return on investment and price per member, i.e. charging a higher price in a more prestigious or higher demographic area and charging a lower amount conversely in a slightly lower demographic catchment. Broadly, it would appear now that the premium end of the UK health and fitness market will now grow within the private arena. The premium end is primarily semi-mature, given that England is a pretty small country and availability of sites of 40,000-plus square foot is fairly limited. Whereas, at the affordable end of the spectrum, site availability for say 15,0000 – 20,000 square foot clubs is substantially greater and there is still substantial growth available in that market.

TWST: What would be the summary then of the direction you’ll be moving in over the next couple of years? What are the specific milestones that you have penciled into the agenda?

Mr. Turuk: Subject to market conditions, the opportunity is available for us to get to a 100 clubs. We have just put in place a GBP90 million debt facility and that gives us sufficient firepower to comfortably achieve 100 clubs, and again just continuing to organically roll out within the UK. We have dipped our toes in the water in Europe in Spain where we have one club open and two others under construction as we speak. But the core focus is in the UK to continue organically rolling out until we hit at least a 100 clubs.