TIDMGYM
RNS Number : 1415T
Gym Group PLC (The)
16 March 2023
16 March 2023
The Gym Group plc
('The Gym Group', 'the Group' or 'the Company')
2022 Full Year Results
The Gym Group, the nationwide operator of 230(1) low cost, high
quality, 24/7 no contract gyms, announces its full year results for
the year ended 31 December 2022.
Key financial metrics(2)
Year ended 31 December 2022 Year ended 31 December 2021 Movement
%/GBPm
Revenue (GBPm) 172.9 106.0 +63%
Group Adjusted EBITDA (GBPm) 71.3 35.4 +101%
Group Adjusted EBITDA Less Normalised Rent
(GBPm) 38.0 5.7 +32.3
Adjusted Loss for the year (GBPm) (6.9) (28.5) +21.6
Basic and Diluted Adjusted Loss per share (p) (3.9) (16.7) +12.8
Statutory Loss after tax (GBPm) (19.3) (35.4) +16.1
Basic and Diluted Statutory Loss per share (p) (10.9) (20.7) +9.8
Free cash flow (GBPm) 16.6 2.0 +14.6
Non-Property Net Debt (GBPm) (76.1) (44.1) -32.0
----------------------------------------------- ---------------------------- ---------------------------- ---------
Financial highlights
-- Membership ended the year at 821,000, an increase of 14.3% from
the end of the previous year (Dec 2021: 718,000)
-- Yield continued to strengthen with average price of a standard
DO IT membership increasing to GBP21.49 at 31 December 2022 (Dec
2021: GBP19.27) and LIVE IT penetration growing to 29.6% of total
membership (Dec 2021: 27.1%)
-- Revenue and EBITDA Less Normalised Rent both significantly ahead
of the prior year reflecting the higher number of trading days
and post Covid-19 recovery; s tatutory loss after tax reduced
significantly
-- Free cash flow generation of GBP16.6m partially funds the site
rollout programme and investment in technology
-- Non-Property Net Debt increased to GBP76.1m (Dec 2021: GBP44.1m)
to fund the remainder of the site rollout programme and acquisition
of three sites from Fitness First
Strategic and operational highlights
-- 281 new site openings in 2022 - highest number in a single year
-- Successful delivery of the new technology platform and brand
relaunch
-- Our high margin, low cost model has demonstrated its ability
to drive strong financial returns
-- Visit frequency and satisfaction scores remain materially higher
than pre Covid-19 scores
-- Focus on sustainability continues with GBP3.3m of social value(3)
per gym created in 2022; UK's first carbon neutral gym chain
Outlook and current trading
-- Uneven start to 2023 vs Board expectations, with membership at
the end of February of 890,000, up 8.4% from the end of 2022
(2022: 14.9%)
-- Revenue after two months up 18.7% year on year, reflecting membership
growth of 8% and yield growth (ARPMM) of 10%; LFL revenue for
the two months reached 97% of the pre Covid-19 level, driven
by increases in ARPMM whilst remaining the lowest cost nationwide
gym chain
-- As previously disclosed, energy costs anticipated to be c.GBP10m
higher in 2023 compared to 2022; 96% hedged for FY23
-- Expect current difficult macroeconomic environment and its impact
on consumer demand to continue throughout the year; therefore
now anticipate full year revenue increases from yield improvements
and new site openings to be broadly offset by cost increases
-- As previously indicated, intend to take a more measured approach
to new site openings in 2023; anticipate opening up to 12 sites,
with all openings being self-financed
-- Leverage(4) expected to remain within the range of 1.5 to 2.0x
John Treharne, Chair of The Gym Group, commented:
"This time last year, we reflected on emerging from the pandemic
and indicated that we hoped 2022 would see a return to a more
normal trading environment. It is now clear that it will take a
longer time to return to pre Covid-19 levels as a result of both
the changes to customers' everyday lives and lifestyles and the
macroeconomic headwinds that we are all facing. Therefore, it is
right to manage the business tightly in 2023 and to focus on
providing low cost, high quality, 24/7 gyms to our members. Against
that backdrop I am proud of the progress TGG has made through the
year successfully completing our biggest ever site opening
programme, growing member numbers and yield, and delivering on a
number of key projects.
Richard was instrumental in delivering this programme and leaves
the business in robust order. We thank him for his contribution
over many years and wish him well. We are making good progress in
the search for our new CEO and we will update the market at the
appropriate time ."
A live audio webcast of the analyst presentation will be
available at 9:00 a.m. today via the following link:
https://brrmedia.news/The_Gym_Group_FYResults .
For further information, please contact:
The Gym Group via Tulchan Communications
John Treharne, Chair
Richard Darwin, CEO
Luke Tait, CFO
Tulchan Communications
James Macey White
Laura Marshall +44 (0) 207 353 4200
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.
Market abuse regulation information
The information contained in this announcement is deemed by the
Company to constitute inside information as stipulated under the UK
version of the Market Abuse Regulation (EU) No. 596/2014 as it
forms part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this inside
information is now considered to be in the public domain. Katy
Tucker, Company Secretary, is responsible for the release of this
announcement for the purposes of such regulation.
(1) As at 15 March 2023 - includes two openings and one closure
in January 2023; 229 sites as at 31 December 2022 - 25 organic
openings in the year plus three sites acquired from Fitness First
and one closure (31 Dec 2021: 202).
(2) For a summary of KPI definitions used in the table see the
'Definition of non-statutory measures' section.
(3) A measure of the value we are creating through regular
exercise in the communities in which we operate. It is derived
using a model created by Sheffield Hallam University and used
extensively by Sport England, local authorities and the UK
Government. GBP756m total value created in 2022 divided by 229
sites open at year end.
(4) Calculated as Non-Property Net Debt : Group Adjusted EBITDA
Less Normalised Rent.
Chair of the Board's Statement
2022 was the first year in three that we have been fully open,
as we moved into the post-pandemic trading environment, and we are
proud to have delivered on several major projects, including
opening our highest ever number of sites in a year. 2022 brought
its own challenges with the war in Ukraine and macroeconomic
pressures on consumers. These pressures have encouraged us to focus
on what we do best and play to our strengths as we move into
2023.
Despite cost-of-living pressures for UK consumers, we see that
many still regard their gym membership as essential, whilst seeking
value for money. We are well placed to provide this low cost, high
value gym experience to customers, which is reflected in high
member satisfaction scores and in maintaining our position as the
lowest cost nationwide 24/7 gym.
As we saw in 2008-2009, we expect the low cost gym sector to be
more resilient to a challenging macroeconomic environment as UK
consumers prioritise value and seek lower cost alternatives for
their gym memberships. At the end of 2022, we achieved
like-for-like revenue at 90% of pre Covid-19 levels, with 821,000
members and 229 open gyms.
Industry and market trends
What seems evident from looking at the sector, both in the UK
and across Europe, is that value remains a key purchase decision
driver. The pandemic shone a light on the importance of health and
wellbeing for people's physical and mental health, which is why
fitness remains a protected category of spend. As energy costs put
pressure on operators' facilities and opening times, providing 24/7
access and flexible, no contract, low cost memberships will be most
appealing to consumers when considering changing their gym
provider.
Strategic progress
As we emerged from the Covid-19 pandemic in 2022, we saw an
opportunity to invest to support our strategic ambitions. We opened
28 new gyms in the year and implemented a number of yield
optimisation initiatives. Our brand transformation launched in
August 2022 and brand awareness metrics are encouraging,
positioning us well across all channels. Our new consumer-facing
website launched in April 2022, which is a step change in our
technology investment, and ongoing technology improvements mean we
can support our inclusive product and great member experience.
We will continue to be sector leaders for sustainability,
delivering on our founding mission to break down barriers to
fitness with a welcoming, accessible experience. We will also
continue to implement pioneering environmental, social and
governance ('ESG') initiatives to support our people, our members
and the environment. In 2022, we announced that we were the UK's
first carbon neutral gym chain. The pandemic has heightened focus
on the UK's health, and fitness facilities have an increasingly
important role to play in the communities around them. ESG metrics
now form part of our key performance indicators ('KPIs') so that
all areas of the business are engaged in achieving our
sustainability objectives.
Our work as a Board
Over 2022 and to date, there have been several changes to our
Board. I am pleased to say that the values of the organisation
continue to be reflected by every Board Director - realness,
friendliness, taking the first step and challenging our limits -
and I take this opportunity to thank those Directors who left us in
the year, Mark George, Rio Ferdinand and Penny Hughes, for their
service and contribution.
Executive changes
In April 2022, Ann-marie Murphy was promoted to the plc Board as
Chief Operating Officer ('COO'), and in her first year as an
Executive Director has focused on driving operational performance.
Luke Tait joined us as Chief Financial Officer ('CFO') in October
2022, joining us from casual dining brand Nandos. Even though Luke
has only been with us a short time, he has shown commitment and
diligence through the budget and financial year end process.
I wish to express my thanks to Richard Darwin for more than
seven years of leadership of the Gym Group, both as Chief Executive
Officer ('CEO') since 2018 and formerly CFO since our IPO in 2015.
Richard has overseen our growth from 63 to 230 sites today,
navigating the challenges of the Covid-19 pandemic. He continues to
support the transition and will leave The Gym Group in due course.
We are making good progress in the search for our new CEO and we
will update the market at the appropriate time.
We have strengthened our Executive Committee with two new
members, Emily Kortlang and Nick Shelmerdine, adding marketing and
strategy leadership to the discussions. I have taken the role of
Executive Chair to support with the transition to a new CEO.
Board changes
In July 2022, Penny Hughes stepped down after six years as The
Gym Group Chair, and I thank Penny for her extraordinary
leadership. Penny was integral to helping The Gym Group scale
successfully and develop the capabilities we rely on today; and I
was delighted to take the helm as Chair.
In August 2022, we welcomed two new Non-Executive Directors
('NEDs'), Elaine O'Donnell and Richard Stables, to our Board.
Elaine is a chartered accountant and an experienced Audit Committee
and Board Chair who draws on her expertise at a broad range of
businesses, and as a former partner at EY, to strengthen our
Committees' and Board's debates. Richard is an expert corporate
financier with over 30 years' experience in the City and brings his
market insight and knowledge to our Board strategy and planning.
Rio Ferdinand stepped down in August owing to his increasing
external commitments and I also want to thank Rio for his
significant contribution and wish him well.
On 6 February 2023, we appointed a new NED - Simon Jones,
Managing Director for Premier Inn and Restaurants, UK and Global
Commercial Director at Whitbread - who will be a valuable addition
to our first class Board team, bringing his vast experience from
such a leading UK hospitality brand, which similarly delivers great
value with high quality for their customers.
Looking forward
This time last year, we reflected on emerging from the pandemic
and indicated that we hoped 2022 would see a return to a more
normal trading environment. As the trading environment has
normalised, it is now clear that it will take longer to return to
pre Covid-19 levels as a result of both the changes to consumers'
everyday lives and lifestyles and the macroeconomic headwinds that
we are facing. As we look to the future, we will continue to
identify opportunities to attract new members, optimise yield and
maximise operational efficiency as has always been fundamental to
our low cost model, to mitigate the economic pressures going into
2023. We are confident that we remain well placed to face these
challenges and take advantage of the significant long term sector
growth ahead.
Chief Executive's Review
The Gym Group is in a strong position going into 2023 despite
the difficult economic environment which has caused challenges for
all consumer businesses. Looking back to the start of 2021, we were
commencing the third of the Covid-19 lockdowns and our recovery
trajectory was uncertain. However, by the end of 2022, we were
operating from 229 sites across the UK and generated revenue in the
year that was 13% higher than in 2019. Our business also returned
to generating free cash flow in the year. Our operating environment
has changed post Covid-19, but through this period of transition,
The Gym Group is one of the leading operators in our sector.
Membership grew during the year from 718,000 at the end of
December 2021 to 821,000 at the end of December 2022, assisted by
some further post Covid-19 membership recovery, yield optimisation
and the strongest site opening programme in our history. Also in
the year, we delivered on two transformational initiatives - the
relaunch of the brand and the new technology infrastructure. Both
initiatives will enable the business to trade more effectively over
the coming years. The relaunch of the brand under The Gym Group
name means we have a distinctive and memorable brand and visual
identity that will build brand awareness in a crowded consumer
market. The launch of our new technology infrastructure means that
we have a modern, sophisticated website and app that will enable us
to deliver highly effective levels of member acquisition.
It is now apparent that some members have not come back to
in-gym workouts post Covid-19; therefore our work to recover pre
Covid-19 levels of profitability is continuing. For sites open in
2018, the like-for-like revenue recovery (vs 2019) is 90%,
reflecting membership volume recovery of c.81% of 2019 levels, with
yield at c.110%. Some of the members have been displaced because
they have not fully returned to office working - just 16 sites out
of our 154 sites that were open pre Covid-19 are significantly
workforce-dependent and the rest are located in residential areas
or have a strong student membership. We believe that there is
further membership recovery to come in the medium term but this has
been slowed in the short term by the cost-of-living pressures which
are having an impact on underlying demand.
Despite these trends, the market dynamics for our business are
very strong and we are growing our share within the market. The Gym
Group's share of the low cost gym market by number of sites is
currently 29.3%, up from 16.7% in 2016. The demand for health and
fitness is expected to continue to increase because of the health
shock that the pandemic has given so many people; and within health
and fitness, low cost gyms were the part of the market that grew
most rapidly pre Covid-19. We also continue to see a good supply of
sites in the locations that are most suitable for us.
As a result of our year of recovery, the business has resumed
generating free cash flow to invest into our site expansion. 2022
has been a year of significant investment with 28 new sites and the
additional spend on the technology infrastructure and brand
relaunch. At the end of 2022, our Non-Property Net Debt was
GBP76.1m including GBP11.5m of finance leases. In 2022, because of
the timing of recovery, part of this growth was funded from our
debt facilities. However, as we move into 2023, we plan to revert
to self-financing our growth from free cash flow generation.
Our confidence about the future growth potential of this
business comes from having a high quality offer for members at an
affordable price. This means that, with high levels of
satisfaction, members will rejoin a number of times throughout
their lifetime. Rejoiner rates are currently around 42% of new
member acquisition, reflecting our success in driving multiple join
events. Our member satisfaction ('OSAT') scores are at an all-time
high post Covid-19 and our members are visiting the gyms on average
12% more often than they were in 2019. All this ensures we are in a
strong position to trade through the current economic difficulties
and expand into the future. At this time, our low price model is
more relevant than ever.
The financial results for 2022 reflect the year of recovery.
Revenue was GBP172.9m (2021: GBP106.0m) up 63%, and Group Adjusted
EBITDA Less Normalised Rent was GBP38.0m compared with GBP5.7m in
2021. The Adjusted Loss for the year was GBP6.9m (2021: loss of
GBP28.5m) and the Statutory Loss was GBP19.3m (2021: loss of
GBP35.4m).
Strategic priorities
Our business has a clear set of strategic priorities that were
articulated at the Capital Markets Day in May 2022. Significant
progress has been made against these strategic priorities with the
successful delivery of two transformational initiatives in the
year, yield optimisation and the scale of the organic rollout.
Whilst the short term economic situation is expected to remain
challenging through 2023, the longer term market opportunity will
only be enhanced by the current economic conditions and its impact
on weaker competitors; we expect to continue to grow market share
as a result.
i) Market opportunity and organic rollout
Our positioning in the market as a high quality, affordable gym
priced at an average headline price of GBP21.49 per month is
compelling and puts us in a strong position to continue to grow
rapidly over the coming years. At the end of December 2022, our
market share was 29.3% of the low cost market by number of sites
(total market estimated at 781 sites across the UK). We believe
that the UK low cost gym market has the potential to continue to
grow strongly over the coming years and, as one of the few
operators expanding, we expect our market share to also grow.
Our ability to expand rapidly and take advantage of the market
opportunity is partly driven by our ability to identify the right
locations and build the appropriate format for that location and
open sites ranging from 7,000 to 21,000 sq. ft. This means that we
can expand in smaller locations, as we have done in 2022 in towns
such as Leyland, Lancashire and Glenrothes, Scotland (each around
8,000 sq. ft), as well as in larger sites such as the conversion of
an existing gym in Paddington (21,000 sq. ft). This flexibility of
gym format enables us to access more catchments across the country
and increases our addressable market. Given the economic
environment, we intend to be selective in terms of the sites that
we open in the next year and continue to choose sites that will
trade well at affordable rents. Our disciplined approach to rents
continues the approach we have adopted successfully throughout our
history and is reflected in a favourable rent profile in our
estate.
We are pleased with the quality of our site rollout in 2022, and
the 28 sites that we have opened in the year are performing
according to our expectations. Five of the 28 sites are in
residential areas of London and include the three sites that we
acquired from Fitness First in March 2022 - these sites in Romford,
Leyton and Harringay have already doubled their number of members
compared to the member numbers pre-acquisition and will be strong
sites over the coming years for our business.
ii) Optimising yield and profitability through a new price product architecture
Having the formats, the brand and the technology platform in
place gives us opportunity to concentrate our next set of
technology developments on more member-facing initiatives that will
drive our yield and hence our profitability. These developments are
being made on the back of extensive research with members and
non-members, as well as detailed analysis in partnership with a
well known industry consultant. The research we undertook confirmed
what we already knew - that the value of the offering that we
deliver and the quality of our proposition are very strong. As a
result, we are implementing a well thought out strategy on yield to
improve our profitability.
The first step taken during 2022 was to increase average
headline price by approximately GBP2 per month on average for new
members, and also to implement some repricing of the existing
membership. Despite these increases, we remain the lowest priced
24/7 nationwide gym operator, ensuring that we provide excellent
value for money at a time of squeezed discretionary incomes.
Secondly, we recently introduced a new pay up front product on the
back of this research - this is a very cost-effective product that
will demonstrate the value of our offering versus the higher price
competitors, whilst also giving us the benefit of increased tenure
from those that take it up. Thirdly, in the Summer of 2023, we are
planning to introduce a three tier price architecture that will
give more choice to members and will include a lower entry price as
well as an upper end premium product. This premium product will
build on the already successful LIVE IT product that is currently
taken up by around 30% of our membership base but with more product
elements within it. This new price product architecture will
require trialling and so is not expected to have initial yield
uplift, but we expect it to increase the commercial flexibility of
our trading and further increase our yields in the coming
years.
iii) Developing the technology platform
The first of our transformational initiatives in 2022 was the
launch of our new technology infrastructure. This project delivered
an enhanced technology platform with mobile-centric developments
for the website and the members area and further enhancements to
the app. The rationale for this significant piece of development
was to ensure improvements in site speed, gain search engine
optimisation ('SEO') benefits and increase conversion rates. This
project was implemented successfully and has already given us the
ability to identify and make material improvements to our member
acquisition journey.
I am also pleased with the progress that we have made with our
app. Our app score rating is 4.7 on Apple and 4.6 on Android, among
the highest in the industry and with well-used features such as
site capacity, workout recording and class booking. We have also
incorporated over 200 new Fiit videos into the app for our members
to use and the technology platform has also enabled the integration
of the Fiit offer into our LIVE IT product.
iv) Rolling out the new brand
The brand transformation was the second transformational project
of the year with a successful relaunch in August 2022. The
rationale for this initiative was to enhance our brand awareness
and marketing effectiveness which had been held back by our
previous generic brand. A unique brand name also gives us
considerable SEO benefits by being able to drive more organic
traffic to our site, particularly important as the cost of buying
search terms through the big technology platforms continues to
increase ahead of inflation. There were two significant parts to
the project - designing and launching a new visual identity and
then developing the new creative platform that was part of the
first marketing campaign. I am confident that the new visual
identity will serve this business well over the coming years - all
sites have now been externally rebranded and other assets in use
throughout the business have been updated. The new 'Gym Face'
advertising campaign was rolled out in September and October. The
same creative campaign was used for the important January and
February peak trading period in 2023.
Our latest brand awareness metrics are encouraging with a 5.6
percentage points increase in prompted awareness in the 12 months
since February 2022 - positioning us to trade very well across all
channels and ultimately drive revenue growth.
Sustainability
We are very proud of our sustainability work centred around our
purpose of breaking down barriers to fitness for all. The Gym Group
is dedicated to increasing the social value it generates, while
helping members to get great value from their gym memberships. One
aim is to increase the percentage of members visiting our gyms at
least four times per month and we are delighted that, through our
initiatives, we have seen a 12% increase in member usage of our
gyms in 2022.
We are proud to be the first carbon neutral gym chain in the UK
and during the year, our work on carbon reduction and the net zero
commitment to the Science Based Target initiative ('SBTi') has
intensified. We are now working on verification by SBTi, whilst at
the same time implementing energy saving programmes like our recent
'20 is Plenty' campaign which has seen us increasing the
temperature in our gyms during the summer months from 19 C to 20 C.
Our commitment to net zero is now for us to reach this target by
2045 but we plan to have decarbonised our own business by 2035.
One of the key strengths of The Gym Group is our unique team and
culture, and we were delighted to have retained high levels of
engagement in our annual employee survey and to be recognised by
Glassdoor in 2022 as number 25 in their list of the Best Places to
Work in the UK (the only leisure business placed in the top 50). We
also retained our Investors in People Gold award during the
year.
Summary
The tough trading environment and economic circumstances over
the past few months have made 2022 a challenging year for all and I
am grateful for the support of our teams across our whole business.
The commitment of our teams to ensuring great member service is
also enabling us to achieve record OSAT scores and is another
reason for our confidence about how we expect to trade well through
the difficult economy.
Our business is as well positioned as any in our sector to
flourish as the economy emerges from the dual impact of the
cost-of-living crisis and the pandemic. We have a clear set of
strategic priorities to improve this business and continue to add
greater capability to trade effectively. This is my last report as
CEO after nearly eight years with the business, but my confidence
about the quality of the estate we have built and the foundations
we have put in place is stronger than ever. The January and
February 2023 trading period has demonstrated our ability to drive
revenue growth to offset energy and other cost pressures that we
are having to absorb. With increases in both membership and yield
despite the economic headwinds, we are taking advantage of the
strong market position that we have built within the wider health
and fitness sector. I have confidence that the business will
continue to grow strongly in future years.
Financial Review
Presentation of results
This Financial Review uses a combination of statutory and
non-statutory measures to discuss performance in the year. The
definitions of the non-statutory key performance indicators can be
found in the 'Definition of non-statutory measures' section. To
assist stakeholders in understanding the financial performance of
the Group, aid comparability between years and provide a clearer
link between the Financial Review and the consolidated financial
statements, we have also adopted a three-column format to
presenting the Group Income Statement in which we separately
disclose underlying trading and non-underlying items.
Non-underlying items are income or expenses that are material by
their size and/or nature and that are not considered to be incurred
in the normal course of business. These are classified as
non-underlying items on the face of the Group Income Statement
within their relevant category. Non-underlying items include
restructuring and reorganisation costs (including site closure
costs), costs of major strategic projects and investments,
impairment of assets, amortisation and impairment of business
combination intangibles, remeasurement gains or losses on
borrowings, and refinancing costs. Further details on
non-underlying items are provided later in this report.
Summary
Year ended 31 December 2022 Year ended 31 December 2021 Movement
%/GBPm
------------------------------------------ ---------------------------- ---------------------------- ---------
Total number of gyms at year end 229 202 +27
Total number of members at year end ('000) 821 718 +14%
Revenue (GBPm) 172.9 106.0 +63%
Group Adjusted EBITDA (GBPm) 71.3 35.4 +101%
Group Adjusted EBITDA Less Normalised Rent
(GBPm) 38.0 5.7 +32.3
Adjusted Loss before tax (GBPm) (5.5) (36.8) +31.3
Adjusted Loss for the year (GBPm) (6.9) (28.5) +21.6
Statutory Loss before tax (GBPm) (19.4) (44.2) +24.8
Statutory Loss for the year (GBPm) (19.3) (35.4) +16.1
Net cash inflow from operating activities
(GBPm) 65.4 38.9 +26.5
Free cash flow (GBPm) 16.6 2.0 +14.6
Non-Property Net Debt (GBPm) (76.1) (44.1) -32.0
------------------------------------------- ---------------------------- ---------------------------- ---------
Results for the year
Year ended 31 December Year ended 31 December
2022 2021
Underlying Non-underlying Total Underlying Non-underlying Total
result items result items
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 172.9 - 172.9 106.0 - 106.0
Cost of sales (2.0) - (2.0) (1.7) - (1.7)
------------------------------- ----------- --------------- -------- ----------- --------------- -------
Gross profit 170.9 - 170.9 104.3 - 104.3
Other income 0.8 - 0.8 7.3 - 7.3
Operating expenses
before depreciation,
amortisation and impairment (101.8) (4.4) (106.2) (79.1) (2.3) (81.4)
Depreciation, amortisation
and impairment (59.3) (8.5) (67.8) (52.7) (4.2) (56.9)
------------------------------- ----------- --------------- -------- ----------- --------------- -------
Operating profit/(loss) 10.6 (12.9) (2.3) (20.2) (6.5) (26.7)
Finance costs (16.1) (1.0) (17.1) (16.6) (0.9) (17.5)
Loss before tax (5.5) (13.9) (19.4) (36.8) (7.4) (44.2)
Tax (charge)/credit (1.4) 1.5 0.1 8.3 0.5 8.8
------------------------------- ----------- --------------- -------- ----------- --------------- -------
Loss for the year
attributable to shareholders (6.9) (12.4) (19.3) (28.5) (6.9) (35.4)
Loss per share
Basic and diluted
(p) (3.9) (10.9) (16.7) (20.7)
------------------------------- ----------- --------------- -------- ----------- --------------- -------
Revenue
Revenue in the year increased to GBP172.9m (2021: GBP106.0m),
reflecting a full year of open trading days compared with 72% in
the prior year and a return to more normal seasonal trading
patterns. However, changes in customer behaviour as a result of the
structural shift in working patterns and the difficult
macroeconomic environment, meant that like-for-like revenue in the
gyms that were open up to the end of 2018 only reached 90% of 2019
revenue.
Average membership numbers in the 12 months to 31 December 2022
were 808,000 compared with 681,000 in 2021; and we closed the year
with 821,000 members, up 14% on 31 December 2021.
The average headline price of a standard DO IT membership
increased to GBP21.49 per month in December 2022 compared with
GBP19.27 in December 2021, reflecting the yield optimisation
initiatives we put in place during the year to increase the price
for new members by approximately GBP2 per month across the majority
of our sites and to reprice some of the existing membership base.
As a result of these increases, Average Revenue Per Member Per
Month ('ARPMM') in the second half of the year was GBP18.30
compared with GBP17.60 in the second half of 2021(1) . Despite the
increases implemented, we remain the lowest priced low cost gym
operator in the UK.
Demand for our premium membership product continued to grow
during the year such that in December 2022, the proportion of
members taking our LIVE IT membership was 29.6% compared with 27.1%
in December 2021.
Cost of sales
Cost of sales, which includes the costs associated with the
generation of ancillary income as well as call centre costs and
payment processing costs, were GBP2.0m (2021: GBP1.7m) reflecting
the revenue recovery and increased trading days. However, the year
on year increase was lower than expected as a result of improved
stock management.
Other income
Other income in the year amounted to GBP0.8m (2021: GBP7.3m).
The prior year income consists largely of income received under the
various Covid-19 related Government grant schemes. As all gyms were
open throughout the current year, no grants have been received in
2022.
Underlying operating expenses before depreciation, amortisation
and impairment
Underlying operating expenses before depreciation, amortisation
and impairment are made up as follows:
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
---------------------------------------------------- ------------- -------------
Site costs before Normalised Rent 85.0 60.2
Site Normalised Rent 32.9 29.3
---------------------------------------------------- ------------- -------------
Site costs including Normalised Rent 117.9 89.5
Central support office costs 15.4 16.0
Central support office Normalised Rent 0.4 0.4
---------------------------------------------------- ------------- -------------
Central support office costs including Normalised
Rent 15.8 16.4
Share based payments 1.4 2.9
---------------------------------------------------- ------------- -------------
135.1 108.8
Less: Normalised Rent (33.3) (29.7)
---------------------------------------------------- ------------- -------------
Underlying operating expenses before depreciation,
amortisation and impairment 101.8 79.1
---------------------------------------------------- ------------- -------------
Site costs including Normalised Rent
Site costs including Normalised Rent in 2022 increased to
GBP117.9m (2021: GBP89.5m) as we returned to more normal operating
conditions, with sites open for the whole year. Utilities costs
were GBP2.8m higher year on year, reflecting not only the increased
number of trading days but also the significant increases in
wholesale gas and electricity prices as a result of geopolitical
events. As a result of the Group's utilities hedging, the impact of
the price increases was contained to Q4 2022. However, as
previously indicated, we expect utility costs to increase by a
further GBP10m in 2023. Business rates also increased year on year
as Covid-19 related Government support was removed. Staff and
cleaning cost increases reflected the rise in the National Living
Wage as well as the return to normal trading and removal of the
furlough scheme. New openings in 2021 and 2022 also contributed to
site cost increases year on year.
Site Normalised Rent costs, which are defined as the contractual
rents that would have been paid in normal circumstances without any
agreed deferments, recognised in the monthly period to which they
relate, amounted to GBP32.9m in the year (2021: GBP29.3m). The
increase year on year largely reflects the growing gym
portfolio.
Central support office costs including Normalised Rent
Central support office costs in the year were broadly in line
with the prior year at GBP15.8m (2021: GBP16.4m).
Share based payments
Share based payment costs in the year amounted to GBP1.4m (2021:
GBP2.9m). The reduction year on year reflects the impact of leavers
in the year as well as share price movements.
Underlying depreciation and amortisation
Underlying depreciation and amortisation charges in the year
amounted to GBP59.3m (2021: GBP52.7m). The increase year on year
reflects the increased gym portfolio, as well as accelerated
depreciation and amortisation on a number of assets that have been
replaced following the launch of the new consumer website and
brand.
Group Adjusted EBITDA Less Normalised Rent
The Group's key profit metric is Group Adjusted EBITDA Less
Normalised Rent as the Directors believe that this measure best
reflects the underlying profitability of the business. Group
Adjusted EBITDA Less Normalised Rent is reconciled to statutory
operating loss as follows:
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
Operating loss (2.3) (26.7)
Non-underlying operating items 12.9 6.5
Share based payments 1.4 2.9
Underlying depreciation and amortisation 59.3 52.7
Group Adjusted EBITDA 71.3 35.4
Normalised Rent (33.3) (29.7)
------------------------------------------ ------------- -------------
Group Adjusted EBITDA Less Normalised
Rent 38.0 5.7
------------------------------------------ ------------- -------------
Group Adjusted EBITDA Less Normalised Rent was GBP38.0m (2021:
GBP5.7m) and reflects the increased site profitability as a result
of revenue recovery and the higher proportion of open trading
days.
Underlying finance costs
Underlying finance costs amounted to GBP16.1m (2021: GBP16.6m).
The implied interest relating to our property and capital leases
was GBP13.3m (2021: GBP14.0m). Finance costs associated with our
bank borrowing facilities were GBP2.8m (2021: GBP2.6m) comprising
interest costs and fee amortisation.
In May 2022, the Group made certain changes to its revolving
credit facility ('RCF'). These included a one-year extension of
Facility A (GBP70m) to October 2024; the cancellation in full of
the temporary Facility B (GBP30m) and replacement with a new GBP10m
facility to October 2024; and further relaxation of finance lease
restrictions. Funds borrowed under the RCF now bear interest at a
minimum rate of 2.85% (previously 2.60% whilst Facility B was in
place).
Non-underlying items
Non-underlying items are costs or income which the Directors
believe , due to their size or nature, are not the result of normal
operating performance. They are therefore separately disclosed on
the face of the income statement to allow a more comparable view of
underlying trading performance.
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
Affecting operating expenses before depreciation,
amortisation and impairment
Costs of major strategic projects and investments 4.6 1.8
Restructuring and reorganisation (income)/costs
(including site closures) (0.2) 0.5
4.4 2.3
Affecting depreciation, amortisation and
impairment
Impairment of property, plant and equipment,
right-of-use assets and intangible assets 8.3 4.0
Amortisation of business combination intangible
assets 0.2 0.2
8.5 4.2
Affecting finance costs
Remeasurement of borrowings 0.9 0.8
Refinancing costs 0.1 0.1
1.0 0.9
Total all non-underlying items before tax 13.9 7.4
Tax credit on non-underlying items (1.5) (0.5)
--------------------------------------------------- ------------- -------------
Total all non-underlying items 12.4 6.9
--------------------------------------------------- ------------- -------------
Non-underlying items affecting operating expenses before
depreciation, amortisation and impairment in the year amounted to
GBP4.4m (2021: GBP2.3m).
The costs of major strategic projects and investments of GBP4.6m
(2021: GBP1.8m) includes GBP4.0m (2021: GBP0.5m) in relation to the
Group's brand transformation. The total costs incurred in the year
in respect of this project were GBP6.5m of which GBP4.0m is
reflected in the income statement and relates to the relaunch of
the brand and creation of the Group's visual identity and marketing
assets, and GBP2.5m is included in property, plant and equipment
and relates predominantly to new site signage. The remainder of the
costs included in other strategic initiatives in the year largely
relate to the integration of the three sites acquired from Fitness
First in March 2022.
The credit in restructuring and reorganisation costs in the year
reflects lease surrender income and costs associated with the
closure of a small number of gyms, together with the profit on
remeasurement of one of the Group's leases. Also included here are
the costs associated with the various Board changes that occurred
during the year.
Non-underlying costs affecting depreciation, amortisation and
impairment in the year amounted to GBP8.5m (2021: GBP4.2m), of
which GBP8.2m (2021: GBP4.0m) relates to the impairment of 13 sites
where slower recovery from Covid-19 and changes in hybrid working
patterns have impacted on performance. Also included here is the
amortisation of business combination intangibles acquired as part
of the Lifestyle, easyGym and Fitness First acquisitions .
Non-underlying items affecting finance costs amounted to GBP1.0m
(2021: GBP0.9m) and largely reflect the remeasurement of the
Group's RCF following the changes agreed with the lenders .
Taxation
The tax credit for the year was GBP0.1m (2021: credit of
GBP8.8m), representing an effective tax rate of 0.5% (2021: 19.9%).
The trading losses incurred as a result of the Covid-19 pandemic,
together with the introduction in March 2021 of the temporary
enhanced capital allowances regime ('super-deduction tax break'),
have resulted in significant tax losses to carry forward which are
not anticipated to be fully utilised during the three years covered
by the Group's financial plan. Losses for which no deferred tax
asset is recognised equate to GBP20.2m, resulting in an
unrecognised deferred tax asset of GBP5.1m using a 25% tax rate.
There is no time limit for utilising trade losses in the UK.
Earnings
As a result of the factors discussed above, the statutory loss
before tax was GBP19.4m (2021: loss of GBP44.2m) and the statutory
loss after tax was GBP19.3m (2021: loss of GBP35.4m).
Adjusted loss before tax is calculated by taking the statutory
loss before tax and adding back the non-underlying items. Adjusted
loss before tax was GBP5.5m (2021: loss of GBP36.8m). Adjusted loss
after tax was GBP6.9m (2021: loss of GBP28.5m).
The basic and diluted loss per share was 10.9p (2021: loss of
20.7p), and the basic and diluted adjusted loss per share was 3.9p
(2021: loss of 16.7p).
Dividend
It is a condition of the new GBP10m additional facility under
the RCF that the Company shall not declare or pay a dividend.
Although this facility is currently undrawn, the Directors would
like to continue to have access to it as necessary and, as a
result, the Directors are not proposing a final dividend in respect
of 2022.
Acquisition of sites operating under the Fitness First brand
On 22 March 2022, the Group acquired three sites operating under
the Fitness First brand for cash consideration of GBP5.4m. The
sites are located in residential areas of East London, where we
have traditionally been very successful. The gyms were converted to
The Gym Group format in late 2022. A transitional services
agreement ('TSA') was in place during the period between
acquisition and conversion.
A valuation has been performed on the tangible and intangible
assets acquired in the transaction, resulting in goodwill of
GBP4.1m. Further information is included in note 8 to the
consolidated financial Information.
Cash flow
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
-------------------------------------------- ------------- -------------
Group Adjusted EBITDA Less Normalised
Rent 38.0 5.7
Rent working capital (2.1) (2.9)
Movement in other working capital (3.2) 7.4
Maintenance capital expenditure (8.7) (3.9)
-------------------------------------------- ------------- -------------
Group operating cash flow 24.0 6.3
Non-underlying items (5.3) (2.2)
Interest paid (2.9) (2.0)
Taxation 0.8 (0.1)
Free cash flow 16.6 2.0
Expansionary capital expenditure funded
by leases (8.0) (7.2)
Expansionary capital expenditure funded
by other sources (35.0) (21.8)
Refinancing fees (0.7) (0.1)
Proceeds from disposal of equipment 0.4 -
Net consideration paid on acquisition (5.4) -
Net proceeds from issue of Ordinary shares 0.1 30.3
Cash flow before movement in debt (32.0) 3.2
Net increase in finance lease indebtedness 5.1 6.4
Net drawdown of borrowings 25.0 (6.0)
Net cash flow (1.9) 3.6
-------------------------------------------- ------------- -------------
The Group operating cash inflow in the year was GBP24.0m (2021:
inflow of GBP6.3m) as the improved EBITDA Less Normalised Rent was
partially offset by working capital outflows and higher maintenance
capital expenditure.
The outflow on rent working capital of GBP2.1m in the year
(2021: outflow of GBP2.9m), reflects the continued unwind of
deferred rents from 2020 and 2021. As at 31 December 2022, only
GBP0.1m of rent deferrals remained outstanding (31 December 2021:
GBP2.1m). The net outflow on working capital (excluding rent) in
the year was GBP3.2m (2021: inflow of GBP7.4m) and reflects a
return to more normal trading patterns.
Fixed asset additions in respect of maintenance capital
expenditure in the year amounted to GBP11.9m (2021: GBP4.7m) as we
returned to more typical levels of maintenance to mirror the return
to regular operations. Adjusting for the movement in capital
creditors, the cash flow from maintenance capital expenditure was
GBP8.7m (2021: GBP3.9m).
Fixed asset additions in respect of expansionary capital
expenditure in the year amounted to GBP46.5m (2021: GBP29.4m) and
relate to the Group's investment in the fit-out of new gyms and
investment in our technology and brand transformation projects .
The fit-out costs are stated net of landlord contributions towards
building costs. During the year, we opened 28 new gyms and
substantially completed work on a further two sites which were
opened in January 2023, spending a total of GBP35.2m, of which
GBP8.0m was funded by finance leases (2021: GBP7.2m). The
investment in technology in the year of GBP8.8m relates largely to
enhancements made to the member experience, including improvements
to the Group's website and new functionality in the app. GBP2.5m
was spent on the brand transformation, largely in respect of new
site signage. Adjusting for the movement in capital creditors, the
cash flow from expansionary capital expenditure was GBP43.0m (2021:
GBP29.0m), including the amount funded by finance leases.
The net consideration paid on acquisition of GBP5.4m relates to
the acquisition of three sites from Fitness First in March 2022.
Included within the expansionary capital expenditure above was
GBP2.1m of conversion costs.
Balance sheet
As at As at
31 December 31 December
2022 2021
GBPm GBPm
------------------------- ------------- -------------
Non-current assets 580.4 549.9
Current assets 15.2 14.8
Current liabilities (64.7) (57.4)
Non-current liabilities (396.9) (355.2)
-------------------------- ------------- -------------
Net assets 134.0 152.1
-------------------------- ------------- -------------
Non-current assets increased in the year by GBP30.5m to
GBP580.4m. GBP9.5m of the increase relates to the fair value
accounting in relation to the acquisition of the three sites from
Fitness First and a further GBP2.1m relates to the conversion of
those sites to The Gym Group format and brand. Full details of the
fair values of all assets acquired as part of the Fitness First
transaction are set out in note 8 to the consolidated financial
information. Right-of-use assets and Property, plant and equipment
also increased as a result of opening 25 organic sites in the year,
but this increase was partially offset by the impairment charge
discussed under Non-underlying items earlier in this report. As
noted in the Taxation section, the Group has an unrecognised
deferred tax asset of GBP5.1m at 31 December 2022.
Non-current liabilities increased by GBP41.7m in the year, to
GBP396.9m partly reflecting the increased lease liabilities from
the new and acquired sites. Drawings under the RCF also increased
by GBP25.0m in the year to fund both the acquisition of the sites
from Fitness First and part of the organic site rollout.
As at 31 December 2022, the Group had Non-Property Net Debt of
GBP76.1m (31 December 2021: GBP44.1m) comprising drawn facilities
of GBP70.0m and finance leases of GBP11.5m, less cash of
GBP5.4m.
Going concern
The Board has reviewed the financial plan and downside scenarios
of the Group and has a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
period to 30 June 2024. As a result, the Directors continue to
adopt the going concern basis in preparing the consolidated
financial statements. In making this assessment, consideration has
been given to the current and future expected trading performance;
the Group's current and forecast liquidity position and the support
received to date from our lenders and shareholders; and the
mitigating actions that can be deployed in the event of reasonable
downside scenarios. Further detail is provided in note 2 of the
consolidated financial information.
Trading update and outlook
The business has had an uneven start to the new financial year
when compared with Board expectations, with membership at the end
of February 2023 of 890,000, up 8.4% from the end of 2022 (2022:
14.9%). Revenue after two months has grown 18.7% year on year,
reflecting membership growth of 8% and yield growth (ARPMM) of 10%.
Like-for-like revenue for the two months reached 97% of the pre
Covid-19 level, driven by increases in ARPMM whilst remaining the
lowest cost nationwide gym chain.
We continue to expect energy costs to be c.GBP10m higher in 2023
compared to 2022 and are now 96% hedged for FY23. We also expect
that the current difficult macroeconomic environment and its impact
on consumer demand will continue throughout the year. Therefore, we
now anticipate the full year revenue increases from yield
improvements and new site openings to be broadly offset by cost
increases.
We intend to take a more measured approach to our new site
openings in 2023 and anticipate opening up to 12 new sites, with
all openings being self-financed. As a result, leverage (calculated
as Non-Property Net Debt : Group Adjusted EBITDA Less Normalised
Rent) is expected to remain within the range of 1.5 to 2.0x.
(1) Due to the Government-enforced closures in the first 3.5
months of 2021, the full year ARPMM for 2021 is distorted and does
not provide a meaningful year on year comparator.
Definition of non-statutory measures
-- Group Adjusted EBITDA - operating profit/loss before depreciation,
amortisation, share based payment costs and non-underlying items.
-- Normalised Rent - the contractual rent that would have been
paid in normal circumstances without any agreed deferments, recognised
in the monthly period to which it relates.
-- Adjusted Loss/Profit before Tax - loss/profit before tax before
non-underlying items.
-- Adjusted Earnings - loss/profit for the period before non-underlying
items and the related tax effect.
-- Basic Adjusted EPS - Adjusted Earnings divided by the basic
weighted average number of shares.
-- Group Operating Cash Flow - Group Adjusted EBITDA Less Normalised
Rent, movement in working capital and maintenance capital expenditure.
-- Free Cash Flow - Group Operating Cash Flow less cash non-underlying
items, bank and non-property lease interest and tax.
-- Non-Property Net Debt - bank and non-property lease debt less
cash and cash equivalents.
-- Maintenance capital expenditure - costs of replacement gym equipment
and premises refurbishment.
-- Expansionary capital expenditure - costs of fit-out of new gyms
(both organic and acquired), technology projects and other strategic
projects. It is stated net of contributions towards landlord
building costs.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Year ended 31 December Year ended 31 December
2022 2021
Non-underlying Non-underlying
(note (note
Underlying 5) Total Underlying 5) Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 4 172.9 - 172.9 106.0 - 106.0
Cost of sales (2.0) - (2.0) (1.7) - (1.7)
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Gross profit 170.9 - 170.9 104.3 - 104.3
Other income 0.8 - 0.8 7.3 - 7.3
Operating expenses
before depreciation,
amortisation and impairment (101.8) (4.4) (106.2) (79.1) (2.3) (81.4)
Depreciation, amortisation
and impairment (59.3) (8.5) (67.8) (52.7) (4.2) (56.9)
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Operating profit/(loss) 10.6 (12.9) (2.3) (20.2) (6.5) (26.7)
Finance costs (16.1) (1.0) (17.1) (16.6) (0.9) (17.5)
Loss before tax (5.5) (13.9) (19.4) (36.8) (7.4) (44.2)
Tax (charge)/credit 6 (1.4) 1.5 0.1 8.3 0.5 8.8
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Loss for the year
attributable to equity
shareholders (6.9) (12.4) (19.3) (28.5) (6.9) (35.4)
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Other comprehensive
income for the year
Items that may be
reclassified to profit
or loss
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Changes in the fair
value of derivative
financial instruments (0.1) - (0.1) 0.1 - 0.1
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Total comprehensive
expense attributable
to equity shareholders (7.0) (12.4) (19.4) (28.4) (6.9) (35.3)
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Loss per share (p) 7
Basic and diluted (3.9) (10.9) (16.7) (20.7)
------------------------------ ----- ----------- --------------- -------- ----------- --------------- -------
Reconciliation of Operating Loss to Group Adjusted EBITDA Less
Normalised Rent(1)
Year ended Year ended
31 December 31 December
2022 2021
Note GBPm GBPm
Operating loss (2.3) (26.7)
Add back: Non-underlying operating items 5 12.9 6.5
Share based payments (included
in Operating expenses) 14 1.4 2.9
Underlying depreciation and
amortisation 9,10 59.3 52.7
Group Adjusted EBITDA 71.3 35.4
Less: Normalised Rent(2) (33.3) (29.7)
----------- -------------------------------- ----- ------------- -------------
Group Adjusted EBITDA Less Normalised
Rent(1) 38.0 5.7
--------------------------------------------- ----- ------------- -------------
1 Group Adjusted EBITDA Less Normalised Rent is a non-statutory
metric used internally by management and externally by investors.
It is calculated as operating profit before depreciation,
amortisation, share based payments and non-underlying items, and
after deducting Normalised Rent
2 Normalised Rent is the contractual rent that would have been
paid in normal circumstances without any agreed deferments,
recognised in the monthly period to which it relates.
Consolidated Statement of Financial Position
As at 31 December 2022
31 December 31 December
2022 2021
Note GBPm GBPm
--------------------------------- ----- ------------ ------------
Non-current assets
--------------------------------- ----- ------------ ------------
Intangible assets 8 92.7 86.0
Property, plant and equipment 9 181.0 165.6
Right-of-use assets 10 289.4 281.2
Investments in financial assets 12 1.0 1.0
Deferred tax assets 6 16.3 16.1
--------------------------------- ----- ------------ ------------
Total non-current assets 580.4 549.9
Current assets
--------------------------------- ----- ------------ ------------
Inventories 0.9 0.3
Trade and other receivables 8.9 6.3
Income taxes receivable - 0.9
Cash and cash equivalents 5.4 7.3
--------------------------------- ----- ------------ ------------
Total current assets 15.2 14.8
Total assets 595.6 564.7
--------------------------------- ----- ------------ ------------
Current liabilities
--------------------------------- ----- ------------ ------------
Trade and other payables 38.8 30.4
Lease liabilities 10 25.3 27.0
Provisions 0.6 -
Total current liabilities 64.7 57.4
Non-current liabilities
--------------------------------- ----- ------------ ------------
Borrowings 11 70.0 44.3
Lease liabilities 10 325.1 309.3
Provisions 1.8 1.6
Total non-current liabilities 396.9 355.2
Total liabilities 461.6 412.6
--------------------------------- ----- ------------ ------------
Net assets 134.0 152.1
--------------------------------- ----- ------------ ------------
Capital and reserves
--------------------------------- ----- ------------ ------------
Own shares held 0.1 0.1
Share premium 189.8 189.7
Hedging reserve - (0.1)
Merger reserve 39.9 39.9
Retained deficit (95.8) (77.5)
--------------------------------- ----- ------------ ------------
Total equity shareholders'
funds 134.0 152.1
--------------------------------- ----- ------------ ------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Own shares Share Hedging Merger Retained
held premium reserve reserve deficit Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ----- ----------- --------- --------- --------- --------- -------
At 1 January 2021 0.1 159.5 (0.2) 39.9 (44.9) 154.4
Loss for the year - - - - (35.3) (35.3)
Other comprehensive
income for the year - - 0.1 - - 0.1
----------------------- ----- ----------- --------- --------- --------- --------- -------
Total comprehensive
expense - - 0.1 - (35.3) (35.2)
Issue of Ordinary
share capital - 30.2 - - - 30.2
Share based payments - - - - 2.4 2.4
Deferred tax on
share based payments - - - - 0.3 0.3
----------------------- ----- ----------- --------- --------- --------- --------- -------
At 31 December
2021 0.1 189.7 (0.1) 39.9 (77.5) 152.1
Loss for the year - - - - (19.4) (19.4)
Other comprehensive
income for the year - - 0.1 - - 0.1
----------------------- ----- ----------- --------- --------- --------- --------- -------
Total comprehensive
expense - - 0.1 - (19.4) (19.3)
Issue of Ordinary
share capital - 0.1 - - - 0.1
Share based payments 14 - - - - 1.7 1.7
Deferred tax on
share based payments - - - - (0.6) (0.6)
----------------------- ----- ----------- --------- --------- --------- --------- -------
At 31 December
2022 0.1 189.8 - 39.9 (95.8) 134.0
----------------------- ----- ----------- --------- --------- --------- --------- -------
Consolidated Cash Flow Statement
For the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
Note GBPm GBPm
----------------------------------------------- ----- ------------- -------------
Cash flows from operating activities
Loss before tax (19.4) (44.2)
Adjustments for:
Finance costs 17.1 17.5
Non-underlying operating items 12.9 6.5
Underlying depreciation of property, plant
and equipment 9 26.4 23.6
Underlying depreciation of right-of-use
assets 10 28.1 23.5
Underlying amortisation of intangible assets 4.8 5.4
Share based payments 14 1.4 2.9
Rent concessions 10 (0.5) (1.6)
(Profit)/loss on disposal of property, plant
& equipment and right-of-use assets (0.4) 0.4
Increase in inventories (0.6) -
Increase in trade and other receivables (3.1) (0.3)
Increase in trade and other payables 3.2 10.1
Payment of deferred consideration - (2.6)
----------------------------------------------- ----- ------------- -------------
Cash generated from operations 69.9 41.2
----------------------------------------------- ----- ------------- -------------
Tax received/(paid) 0.8 (0.1)
Net cash inflow from operating activities
before non-underlying items 70.7 41.1
Non-underlying items (5.3) (2.2)
----------------------------------------------- ----- ------------- -------------
Net cash inflow from operating activities 65.4 38.9
----------------------------------------------- ----- ------------- -------------
Cash flows from investing activities
Business combinations 8 (5.4) -
Purchase of property, plant & equipment 9 (36.5) (20.5)
Purchase of intangible assets (7.2) (5.2)
Proceeds from disposal of property, plant
& equipment 0.4 -
Net cash outflow used in investing activities (48.7) (25.7)
----------------------------------------------- ----- ------------- -------------
Cash flows from financing activities
Repayment of lease liability principal (27.4) (17.7)
Lease interest paid (13.3) (14.2)
Bank interest paid (2.3) (1.8)
Payment of financing fees (0.7) (0.2)
Drawdown of bank loans 30.5 30.0
Repayment of bank loans (5.5) (36.0)
Proceeds of issue of Ordinary shares 0.1 31.2
Costs associated with share issue - (0.9)
Net cash outflow used in financing activities (18.6) (9.6)
----------------------------------------------- ----- ------------- -------------
Net (decrease)/increase in cash and cash
equivalents (1.9) 3.6
Cash and cash equivalents at the start of
the year 7.3 3.7
----------------------------------------------- ----- ------------- -------------
Cash and cash equivalents at the end of
the year 5.4 7.3
----------------------------------------------- ----- ------------- -------------
Notes to the Consolidated Financial Information
1. General information
The Gym Group plc ('the Company') and its subsidiaries ('the
Group') operate low cost, high quality, 24/7, no contract gyms. The
Company is a public limited company whose shares are publicly
traded on the London Stock Exchange and is incorporated and
domiciled in the United Kingdom. The registered address of the
Company is 5th Floor, OneCroydon, 12-16 Addiscombe Road, Croydon,
CR0 0XT, United Kingdom.
The financial information set out above does not constitute
statutory accounts for the years ended 31 December 2022 or 2021
within the meaning of sections 435(1) and (2) of the Companies Act
2006 nor does it contain sufficient information to comply with the
disclosure requirements of International Financial Reporting
Standards.
An unqualified report on the consolidated financial statements
for each of the years ended 31 December 2022 and 2021 has been
given by the Group's auditor, Ernst & Young LLP. Each year's
report did not include a modified opinion and did not contain any
statement under section 498(2) or (3) of the Companies Act
2006.
The consolidated financial statements for the year ended 31
December 2021 have been filed with the Registrar of Companies, and
those for 2022 will be delivered in due course subject to their
approval by the Company's shareholders at the Company's Annual
General Meeting on 11 May 2023.
2. Basis of preparation
The financial statements have been prepared in accordance with
the Listing Rules and the Disclosure Guidance and Transparency
Rules of the United Kingdom Financial Conduct Authority (where
applicable) and United Kingdom adopted international accounting
standards. The accounting policies applied are consistent with
those described in the Annual Report and Accounts of the Group for
the year ended 31 December 2021. The functional currency of each
entity in the Group is pounds sterling. The consolidated financial
statements are presented in pounds sterling and all values are
rounded to the nearest one hundred thousand pounds, except where
otherwise indicated.
The consolidated financial statements have been prepared on a
going concern basis under the historical cost convention as
modified by the recognition of derivative financial instruments,
financial assets and other financial liabilities at fair value
through the profit and loss and the recognition of financial assets
at fair value through other comprehensive income.
The consolidated financial statements provide comparative
information in respect of the previous year.
Going concern
In assessing the going concern position of the Group for the
year ended 31 December 2022, the Directors have considered the
following:
-- the Group's trading performance in FY22 and throughout the traditional
January and February 2023 peak period;
-- future expected trading performance to June 2024 (the going concern
period), including membership levels and behaviours in light
of the current difficult macro-economic environment; and
-- the Group's financing arrangements and relationship with its
lenders and shareholders.
2022 was a year of significant recovery and growth for The Gym
Group, with membership at the end of December 2022 reaching
821,000, an increase of 14.3% from the end of December 2021.
Average Revenue per Member per Month for the year ('ARPMM') was
GBP17.82 and for the second half of the year was GBP18.30, up 4.5%
on the second half of the prior year. LIVE IT, the premium price
product, ended the year at 29.6% of total membership compared with
27.1% in December 2021. As a result, revenue and Group Adjusted
EBITDA both increased significantly. The Group also reported strong
cash generation, with free cash flow of GBP16.6m being generated
and used to part-fund the 25 new organic site openings as well as
our investment in the new technology and brand. The remaining
organic site openings and the acquisition of the three sites
previously trading under the Fitness First brand were funded
through an increase in the Group's borrowings. All sites opened in
the year are performing in line with our expectations.
In May 2022, the Group agreed with its lenders certain changes
to the Group's Revolving Credit Facility ('RCF'). As a result, the
Group now has access to a combined GBP80m facility which matures in
October 2024. The Group also currently has access to GBP13m of
finance lease facilities (GBP15m permitted under the RCF). As at 31
December 2022, the Group had Non-Property Net Debt (including
finance leases) of GBP76.1m, with GBP15.4m of headroom (calculated
off bank debt less cash) under the RCF. The RCF is subject to
quarterly financial covenant tests on leverage (Net Debt to Group
Adjusted EBITDA Less Normalised Rent), fixed charge cover (Adjusted
EBITDAR to Net Finance Charges and Normalised Rent) and minimum
liquidity. Whilst the going concern assessment covers the period to
the end of June 2024, the Directors have considered the fact that
the Group's RCF facility is currently expected to expire in October
2024 and concluded that there is a realistic prospect that this
will be extended or refinanced before that time.
Following the January and February 2023 peak trading period,
closing membership at 28 February 2023 was 890,000, an increase of
8.4% on the position at 31 December 2022. However, demand has been
impacted by the cost-of-living pressures felt by many; and the
Directors expect the current difficult macroeconomic environment
and consumer behaviour to continue. As a result, we have taken a
cautious approach to preparing the three year financial plan that
underpins the going concern review.
The base case forecast for the period to 30 June 2024
anticipates continued growth in yields across the whole estate as a
result of pricing actions that have already been taken. However,
modest increases in membership levels are driven largely by the
sites opened in 2022 and not by growth in the mature estate. In
addition, the Directors have taken a more measured approach to new
site openings throughout the plan period, with all new sites
assumed to be self-financed. Under this scenario, all financial
covenants are passed with a reasonable level of headroom and the
Group can operate within its financing facilities.
The Directors have considered a downside scenario which
anticipates a more significant cost-of-living downturn throughout
the period under review. Under this scenario, membership numbers in
the mature estate start to deviate from the base case from March
2023 such that they are approximately 10% lower by the end of 2023.
Yields do continue to increase but at a much lower level than under
the base case. Under this scenario, the number of new site openings
is reduced and discretionary performance-related bonuses removed to
ensure that all financial covenants continue to be passed and the
Group continues to operate within its financing facilities.
The Directors have also considered a reverse stress test
scenario to ascertain the extent of the downturn in trading that
would be required to breach the Group's banking covenants or
liquidity requirements. Mitigating actions assumed in this scenario
include moving to a minimum level of maintenance and IT capital
expenditure; reducing controllable operating costs and marketing
expenditure; and pausing the new site opening programme in order to
preserve cash. In this scenario, the number of new members each
month would have to decline by 16.5% compared to the base case (the
equivalent of membership reducing to 73% of the February 2023
closing membership number) before the leverage covenant would be
breached in June 2024. However, the Group would remain within its
liquidity limits.
In the event of a reverse stress test scenario, the Directors
would introduce additional measures to mitigate the impact on the
Group's liquidity, covenants and cash flow, including: (i) further
reductions in controllable operating costs, marketing and capital
expenditure; (ii) discussions with lenders to secure additional
debt facilities and/or covenant waivers; (iii) deferral of, or
reductions in, rent payments to landlords; and (iv) the potential
to raise additional funds from third parties. The Directors
consider the reverse stress test scenario to be highly
unlikely.
Conclusion
The Board has reviewed the financial plan and downside scenarios
of the Group and has a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
period to 30 June 2024. As a result, the Directors continue to
adopt the going concern basis in preparing the consolidated
financial statements. In making this assessment, consideration has
been given to the current and future expected trading performance;
the Group's current and forecast liquidity position and the support
received to date from our lenders and shareholders; and the
mitigating actions that can be deployed in the event of reasonable
downside scenarios.
3. New and amended IFRS standards that are effective for the current year
There were no new standards or amendments to standards in the
year that had a material impact on the Group's consolidated
financial statements for the year ended 31 December 2022.
4. Revenue
The principal revenue streams for the Group are membership
income, rental income from personal trainers and ancillary income.
The majority of revenue is derived from contracts with customers
and all revenue arises in the United Kingdom.
Disaggregation of revenue
In the following table, revenue is disaggregated by major
products and service lines and timing of revenue recognition.
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
----------------------------------------- ------------- -------------
Major products/service lines
Membership income 162.5 100.8
Rental income from personal trainers 7.8 4.0
Ancillary income 2.6 1.2
----------------------------------------- ------------- -------------
172.9 106.0
----------------------------------------- ------------- -------------
Timing of revenue recognition
Products transferred at a point in time 3.1 1.8
Products and services transferred over
time 169.8 104.2
----------------------------------------- ------------- -------------
172.9 106.0
----------------------------------------- ------------- -------------
Contract liabilities at 31 December 2022 amounted to GBP11.0m
(2021: GBP8.4m).
5. Non-underlying items
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
------------------------------------------------ ------------- -------------
Affecting operating expenses before
depreciation, amortisation and impairment
Costs of major strategic projects and
investments 4.6 1.8
Restructuring and reorganisation (income)/costs
(including site closures) (0.2) 0.5
Total affecting operating expenses before
depreciation, amortisation and impairment 4.4 2.3
Affecting depreciation, amortisation
and impairment
Impairment of property, plant & equipment,
right-of-use assets and intangibles 8.3 4.0
Amortisation of business combination
intangible assets 0.2 0.2
------------------------------------------------ ------------- -------------
Total affecting depreciation, amortisation
and impairment 8.5 4.2
------------------------------------------------ ------------- -------------
Total affecting operating expenses 12.9 6.5
Affecting finance costs
Remeasurement of borrowings 0.9 0.8
Refinancing costs 0.1 0.1
Total affecting finance costs 1.0 0.9
Total all non-underlying items before
tax 13.9 7.4
Tax on non-underlying items (1.5) (0.5)
------------------------------------------------ ------------- -------------
Total non-underlying charge in income
statement 12.4 6.9
------------------------------------------------ ------------- -------------
In addition to the GBP4.4m of non-underlying items affecting
operating expenses before depreciation, amortisation and
impairment, there was GBP0.9m of cash outflow in the year in
relation to prior year creditors, bringing the total amount of cash
flow on non-underlying operating items to GBP5.3m. Depreciation,
amortisation and impairment and remeasurement of borrowings are
non-cash items.
The costs of major strategic projects and investments of GBP4.6m
(2021: GBP1.8m) includes GBP4.0m (2021: GBP0.5m) in relation to the
Group's brand transformation. The total costs incurred in the year
in respect of this project were GBP6.5m of which GBP4.0m is
reflected in the income statement and relates to the relaunch of
the brand and creation of the Group's visual identity and marketing
assets, and GBP2.5m is included in property, plant and equipment
and relates predominantly to new site signage. The remainder of the
costs included in other strategic initiatives in the year largely
relate to the integration of the three sites acquired from Fitness
First in March 2022.
The credit in restructuring and reorganisation costs in the year
reflects lease surrender income and costs associated with the
closure of a small number of gyms, together with the profit on
remeasurement of one of the Group's leases. Also included here are
the costs associated with the various Board changes that occurred
during the year.
Non-underlying costs affecting depreciation, amortisation and
impairment in the year amounted to GBP8.5m (2021: GBP4.2m), of
which GBP8.2m (2021: GBP4.0m) relates to the impairment of 13 sites
where slower recovery from Covid-19 and changes in hybrid working
patterns are impacting performance. Also included here is the
amortisation of business combination intangibles acquired as part
of the Lifestyle, easyGym and Fitness First acquisitions .
Non-underlying items affecting finance costs amounted to GBP1.0m
(2021: GBP0.9m) and largely reflect the remeasurement of the
Group's RCF following the changes agreed with the lenders .
6. Taxation
The tax credit in the consolidated statement of comprehensive
income is broken down as follows:
Year ended Year ended
31 December 31 December
2022 2021
GBPm GBPm
--------------------------------------- ------------- -------------
Current income tax
Current tax on profits for the year (0.1) 0.3
Adjustments in respect of prior years - 0.3
--------------------------------------- ------------- -------------
Total current income tax (0.1) 0.6
Deferred tax
Origination and reversal of temporary
differences (0.3) 7.7
Change in tax rates 0.5 3.0
Adjustments in respect of prior years - (2.5)
--------------------------------------- ------------- -------------
Total deferred tax 0.2 8.2
Tax credit 0.1 8.8
--------------------------------------- ------------- -------------
The tax credit for the year was GBP0.1m (2021: credit of
GBP8.8m), representing an effective tax rate of 0.5% (2021:
19.9%).
The net deferred tax asset recognised at 31 December 2022 was
GBP16.3m (2021: GBP16.1m). This comprised deferred tax assets in
respect of tax losses and other temporary differences where the
Directors believe it is probable that these will be recovered
within a reasonable period. Short term timing differences are
generally recognised ahead of losses on the basis that they are
likely to reverse more quickly. In assessing the probability of
recovery, the Directors have reviewed the Group's three year
financial plan that underpins both the Going concern and Viability
assessments, and the goodwill, property, plant and equipment
impairment testing. The use of a three year period is also
consistent with that used to assess the longer term viability of
the Group. The Directors believe this detailed plan provides
convincing evidence to recognise the amount of deferred tax assets
that are forecast to be recovered over this three year period. In
particular, this plan anticipates continued growth in yields across
the whole estate and additional members from new site openings over
the next three years.
The trading losses incurred as a result of the Covid-19
pandemic, together with the introduction in March 2021 of the
temporary enhanced capital allowances regime ('super-deduction tax
break'), have resulted in significant tax losses to carry forward
which are not anticipated to be fully utilised during the three
years covered by the Group's financial plan. Losses for which no
deferred tax asset is recognised equate to GBP20.2m, resulting in
an unrecognised deferred tax asset of GBP5.1m using a 25% tax rate.
There is no time limit for utilising trade losses in the UK.
7. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average number
of Ordinary shares outstanding during the year, excluding unvested
shares held pursuant to The Gym Group plc's share based long term
incentive schemes.
Diluted loss per share is calculated by adjusting the weighted
average number of Ordinary shares outstanding to assume conversion
of all dilutive potential Ordinary shares. During the year ended 31
December 2022, the Group had potentially dilutive shares in the
form of share options and unvested shares issued pursuant to The
Gym Group plc's share based long term incentive schemes. As the
Group is in a loss-making position, all potential dilutive share
options will not be dilutive.
Year ended Year ended
31 December 31 December
2022 2021
Loss (GBPm)
Loss for the year attributable to equity
shareholders (19.3) (35.4)
Adjustment for non-underlying items 12.4 6.9
------------------------------------------ ------------- -------------
Adjusted loss for the year attributable
to equity shareholders (6.9) (28.5)
Weighted average number of shares
Basic and diluted weighted average
number of shares 177,251,348 171,060,028
Earnings per share (p)
Basic and diluted loss per share (10.9) (20.7)
Adjusted basic and diluted loss per
share (3.9) (16.7)
------------------------------------------ ------------- -------------
At 31 December 2022, 6,804,605 share awards (2021: 5,260,315)
were excluded from the diluted weighted average number of Ordinary
shares calculation because their effect would be anti-dilutive.
8. Business combinations
On 22 March 2022, the Group acquired the trade and assets of
three sites trading under the Fitness First brand. The property
lease agreements in respect of these gyms have been transferred to
the Group and the gyms have been rebranded to operate under The Gym
Group brand. The details of the transaction, the purchase
consideration, the net assets acquired, and the goodwill arising
are as follows:
Fair value
recognised
on acquisition
GBPm
Assets
Intangible assets 0.3
Property, plant and equipment 1.2
Right-of-use assets 3.3
Deferred tax assets 0.6
------------------------------------------------- ----------------
5.4
Liabilities
Trade and other payables (0.6)
Lease liabilities (3.3)
Provisions (0.2)
(4.1)
Total identifiable net assets at fair value 1.3
------------------------------------------------- ----------------
Goodwill arising on acquisition 4.1
Purchase consideration paid - satisfied by cash 5.4
Net cash flow arising on acquisition
Cash consideration (5.4)
------------------------------------------------- ----------------
Net cash outflow (5.4)
------------------------------------------------- ----------------
A reconciliation of the carrying amount of goodwill at the
beginning and end of the year is presented below:
Goodwill
GBPm
Gross and net carrying amount
At 1 January 2022 77.7
Acquisition of sites trading under the Fitness First
brand 4.1
At 31 December 2022 81.8
------------------------------------------------------ ---------
The Group measured the acquired lease liabilities using the
present value of the remaining lease payments at the date of
acquisition. The right-of-use assets were measured at an amount
equal to the lease liabilities.
The sites contributed revenues of GBP1.3m and net loss of
GBP0.1m to the Group's results for the period from 22 March 2022 to
31 December 2022. The additional revenue that would have been
recognised if the sites had been acquired on 1 January 2022 is
GBP0.4m. No additional net profit or losses would have been
recognised.
The goodwill recognised is primarily attributed to the synergies
and economies of scale expected from combining each gym within the
Group's operations, the premium associated with advantageous site
locations, potential growth opportunities offered by each gym and
the assembled workforce. It will not be deductible for tax
purposes.
Acquisition-related costs of GBP1.3m were incurred during the
second half of 2021 and were treated as non-underlying items in the
financial statements. No additional costs have been recognised in
2022.
9. Property, plant and equipment
Fixtures,
Assets Leasehold fittings Gym and Computer
under construction improvements and equipment other equipment equipment Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- -------------------- -------------- --------------- ----------------- ----------- --------
Cost
----------------------------------------------------------------------------------------------------------------------
At 1 January
2021 2.3 191.9 11.3 84.5 3.6 293.6
Additions 1.9 16.4 0.2 2.5 0.7 21.7
Disposals (0.1) (1.5) - (0.5) - (2.1)
Transfers (2.0) 1.9 - 0.1 - -
At 31 December
2021 2.1 208.7 11.5 86.6 4.3 313.2
Additions 2.0 31.9 0.5 7.4 1.3 43.1
Business
combinations - 1.1 - 0.1 - 1.2
Disposals - (2.6) (0.4) (4.2) - (7.2)
Transfers (1.8) 1.7 0.1 -
At 31 December
2022 2.3 240.8 11.6 90.0 5.6 350.3
--------------------- -------------------- -------------- --------------- ----------------- ----------- --------
Accumulated depreciation
----------------------------------------------------------------------------------------------------------------------
At 1 January
2021 - (63.0) (8.0) (48.4) (2.9) (122.3)
Charge for
the year - (14.6) (1.1) (7.4) (0.5) (23.6)
Impairment - (2.8) - (0.4) - (3.2)
Disposals - 1.2 - 0.3 - 1.5
At 31 December
2021 - (79.2) (9.1) (55.9) (3.4) (147.6)
Charge for
the year - (16.4) (0.9) (8.5) (0.6) (26.4)
Impairment - (2.2) - (0.3) - (2.5)
Disposals - 2.6 0.4 4.2 - 7.2
At 31 December
2022 - (95.2) (9.6) (60.5) (4.0) (169.3)
--------------------- -------------------- -------------- --------------- ----------------- ----------- --------
Net book value
----------------------------------------------------------------------------------------------------------------------
At 31 December
2021 2.1 129.5 2.4 30.7 0.9 165.6
At 31 December
2022 2.3 145.6 2.0 29.5 1.6 181.0
--------------------- -------------------- -------------- --------------- ----------------- ----------- --------
Included within additions for the year is GBP0.2m of capitalised
interest (2021: GBPnil) and GBP6.2m of accrued capital expenditure
(2021: GBP2.2m). In the prior year, there was also GBP0.1m of
capital contributions from landlords not yet received.
Outstanding capital commitments at 31 December 2022 totalled
GBP0.8m (2021: GBP2.9m).
During the year a total impairment loss of GBP8.2m was
recognised relating to 13 sites which have been particularly hard
hit by the Covid-19 pandemic and where recovery is slower than in
the rest of estate. Of the total impairment charge recognised in
the year of GBP8.2m, GBP2.5m was allocated against property, plant
and equipment and GBP5.7m was allocated against right-of-use
assets. The total recoverable amount of the affected CGUs was
GBP7.7m.
10. Right-of-Use Assets and Leases
Amounts recognised in the consolidated statement of financial
position in respect of right-of-use assets are as follows:
Property Non-property
leases leases Total
GBPm GBPm GBPm
-------------------------- --------- ------------- --------
Cost
-------------------------- --------- ------------- --------
At 1 January 2021 345.4 - 345.4
Additions 42.8 7.2 50.0
At 31 December 2021 388.2 7.2 395.4
Additions 33.5 8.1 41.6
Business combinations 3.3 - 3.3
Disposals (4.5) - (4.5)
At 31 December 2022 420.5 15.3 435.8
-------------------------- --------- ------------- --------
Accumulated depreciation
-------------------------- --------- ------------- --------
At 1 January 2021 (89.8) - (89.8)
Charge for the year (23.3) (0.2) (23.5)
Impairment (0.9) - (0.9)
At 31 December 2021 (114.0) (0.2) (114.2)
Charge for the year (26.5) (1.6) (28.1)
Impairment (5.7) - (5.7)
Disposals 1.8 - 1.8
Transfers (0.2) - (0.2)
At 31 December 2022 (144.6) (1.8) (146.4)
-------------------------- --------- ------------- --------
Net book value
-------------------------- --------- ------------- --------
At 31 December 2021 274.2 7.0 281.2
At 31 December 2022 275.9 13.5 289.4
-------------------------- --------- ------------- --------
See note 9 for information on the impairment charge.
The split of lease liabilities between current and non-current
is as follows:
31 December 31 December
2022 2021
GBPm GBPm
------------------------- ------------ ------------
Current 25.3 27.0
Non-current 325.1 309.3
-------------------------- ------------ ------------
Total Lease liabilities 350.4 336.3
-------------------------- ------------ ------------
The maturity analysis of lease liabilities is as follows:
31 December 31 December
2022 2021
GBPm GBPm
----------------------------- ------------ ------------
Within one year 40.4 39.1
Greater than one year but
less than two years 43.4 37.8
Greater than two years but
less than three years 40.5 37.8
Greater than three years
but less than four years 38.6 35.4
Greater than four years but
less than five years 38.7 35.5
Five years or more 246.0 242.7
447.6 428.3
Less: unearned interest (97.2) (92.0)
------------------------------ ------------ ------------
Total Lease liabilities 350.4 336.3
------------------------------ ------------ ------------
During the year, the Group entered into additional leasing
arrangements with a total available facility of GBP3.0m to finance
the fit-out of new gyms, increasing the total facilities to
GBP12.5m (2021: GBP9.5m). As at 31 December 2022, the amount
outstanding on these facilities was GBP11.5m (2021: GBP6.4m).
11. Borrowings
The carrying value of the Group's bank borrowings at 31 December
2022 was GBP70.0m (2021: GBP44.3m).
The Group has in place a Revolving Credit Facility ('RCF') which
is syndicated to a three-lender panel of NatWest, HSBC and Banco de
Sabadell. Until May 2022, the Group had GBP100m of available
facilities under the RCF and it was due to mature in 2023. In May
2022, the Group agreed changes to its RCF facility with its lenders
which included a one-year extension of Facility A (GBP70m) to
October 2024; the cancellation in full of the temporary Facility B
(GBP30m) and replacement with a new GBP10m Facility to October
2024; and further relaxation of finance lease restrictions.
The funds drawn under the RCF bear interest at a minimum annual
rate of 2.85% (2021: 2.60%) above the Sterling Overnight Index
Average ('SONIA') plus a credit adjustment spread. The average
interest rate paid in the year on drawn funds was 4.46% (2021:
2.67%). Undrawn funds bear interest at a minimum annual rate of
1.14% (2021: 0.91%).
The Group's borrowings are held at amortised cost using the
effective interest method. Each reporting period, the Group reviews
its cash flow forecasts and if these have changed since the
previous reporting period, the borrowings are remeasured using the
original effective interest rate. Any remeasurement of borrowings
is treated as non-underlying and excluded from adjusted
earnings.
The RCF is subject to financial covenants relating to adjusted
leverage, fixed charge cover and minimum liquidity.
At 31 December 2022, the Group had drawn down GBP70.0m under the
RCF (2021: GBP45.0m), leaving GBP10.0m (2021; GBP55.0m) undrawn and
available. The GBP70.0m is repayable in October 2024.
Non-Property Net Debt at the year end was as follows:
31 December 31 December
2022 2021
GBPm GBPm
--------------------------------- ------------ ------------
Bank borrowings 70.0 45.0
Less: Cash and cash equivalents (5.4) (7.3)
---------------------------------- ------------ ------------
Non-Property Net Debt excluding
non-property leases 64.6 37.7
Non-property leases (note
10) 11.5 6.4
---------------------------------- ------------ ------------
Non-Property Net Debt 76.1 44.1
---------------------------------- ------------ ------------
12. Financial instruments and investments in financial assets
IFRS 7 requires fair value measurements to be recognised using a
fair value hierarchy that reflects the significance of the inputs
used in the value measurements:
-- Level 1: quoted prices in active markets for identical assets
or liabilities
-- Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable market data)
There were no transfers between levels throughout the periods
under review.
With the exception of the Group's borrowings, the carrying value
of financial assets and liabilities equal their fair value. The
carrying value and fair value of borrowings at 31 December 2022 was
GBP70.0m (2021: carrying value of GBP44.3m; fair value of
GBP45.0m). The fair values of financial derivatives and borrowings
have been calculated by discounting the future cash flows at
prevailing market interest rates. Other than the fair value of
financial assets at fair value through profit and loss that are
categorised as Level 3, the fair value of all other financial
assets and liabilities are categorised as Level 2.
In February 2020, the Group purchased convertible loan notes in
Fiit Limited for cash consideration of GBP1.0m. These notes are
measured at fair value through profit and loss and the carrying
value at 31 December 2022 was GBP1.0m (2021: GBP1.0m). This is a
level 3 valuation under the fair value hierarchy and was determined
based on the performance of the business post-acquisition against
the business plan produced at the time of the investment. The range
of sensitivity in the valuation of 31 December 2022 to reasonably
possible changes in the assumptions used is not considered to be
material.
13. Issued capital
The total number of shares in issue as at 31 December 2022 was
178,039,002 (2021: 177,519,174).
14. Share based payments
The Group operates share based compensation arrangements under
The Gym Group plc Share Incentive Plan (SIP), The Gym Group plc
Performance Share Plan (PSP), The Gym Group plc Restricted Stock
Plan (RSP), The Gym Group plc Long Service Award Plan and The Gym
Group plc Save as You Earn Plan (SAYE) . During the year, a total
of 3,453,795 shares were granted under the PSP, the RSP, the SIP
and SAYE. These grants and their vesting criteria are similar in
nature to those awarded during 2021.
For the year ended 31 December 2022, the Group recognised a
total charge of GBP1.4m (2021: GBP2.9m) in respect of the Group's
share based payment arrangements and related employer's national
insurance.
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(END) Dow Jones Newswires
March 16, 2023 03:00 ET (07:00 GMT)
Grafico Azioni The Gym (LSE:GYM)
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