TIDMGYM
RNS Number : 5843E
Gym Group PLC (The)
09 November 2020
9 November 2020
The Gym Group plc
Operations and Trading Update
The Gym Group plc ("the Company"), the no-contract, nationwide
operator of 183 low cost gyms, confirms that it closed its 167 gyms
in England on 4 November 2020, following the introduction of the
4-week lockdown announced by the UK Government on 31 October. The
Company's three gyms in Wales closed on 26 October as part of a
2-week lockdown announced by the Welsh Assembly; its 13 gyms in
Scotland remain open. During this closure period the Company will
manage its cash outflow by minimising operating costs and using the
government furlough scheme. It expects its monthly cash burn during
closure to be around GBP6.0 million.
Operating in a Covid-secure way
-- Since re-opening on 25 July 2020, the Company has had over 10
million visits with very positive feedback from colleagues and
members about the many measures taken to ensure gyms are
Covid-secure.
-- Across the UK Health and Fitness sector, adherence to
Covid-secure procedures has been strong and in the week ending 11
October industry data shows cases of Covid-19 were only 2.88 per
100,000 visits. This sector-wide data convinced government to keep
gyms open in all areas of the UK, including Tier 3 regions, until
the most recent announcement of a national lockdown.
-- In recent weeks the Company successfully re-started 24-hour
operations in a number of sites and expects to roll this out more
widely upon re-opening.
Membership
-- The estate re-opened on 25 July 2020 with 658,000 members.
574,000 of these were ongoing paying members; this excludes members
who had opted to freeze their membership without charge ("Free
Freeze") and students whose fixed term contracts had been extended
to October/November 2020 due to the initial lockdown ("Prior Year
Students").
-- Membership grew from reopening until the second half of
September, when the emergence of a second wave of Covid-19 meant
member levels started to decline with total membership on 31
October 2020 of 639,000. Despite this, over the three-month period
ongoing paying members were up 2.4% at 588,000 compared to
re-opening (25 July 2020: 574,000).
25 Jul 31 Aug 30 Sep 31 Oct
2020 2020 2020 2020
Ongoing paying members 574,000 602,000 600,000 588,000
-------- -------- -------- --------
Free Freeze 47,000 37,000 29,000 31,000
-------- -------- -------- --------
Prior Year Students 37,000 37,000 36,000 20,000
-------- -------- -------- --------
Total membership 658,000 676,000 665,000 639,000
-------- -------- -------- --------
Financial Update
-- Since re-opening, the Company has traded profitably and cash
generatively. It has invested GBP4.0 million of capital between 31
July and 31 October in the completion of four new sites (opened in
August), the redevelopment of its London Oxford Street gym and
ongoing technology and maintenance investments. In addition GBP4.5
million of the GBP9.4 million of rent deferred from H1 2020 has now
been repaid.
-- At 31 October 2020 net debt reduced to GBP32.0 million ( 31
July 2020: GBP35.7 million) versus GBP100.0 million of total
borrowing capacity.
-- The Company remains in compliance with its bank covenants
having met its Q3 EBITDA covenant test. The Company's current bank
facility covenant tests are based on EBITDA performance following
re-opening after an initial lockdown and were established on the
basis that gyms would be open and trading throughout Q4. The
Company has had constructive initial discussions with its lending
banks about resetting future covenant tests to give the business
additional flexibility to accommodate this latest lockdown and
further potential Covid-related regional or national
restrictions.
Future Expansion
-- Contractors are on site in Chichester and are about to start
two further builds in York and Sydenham; all three sites, which
have leases signed since reopening, are expected to open in Q1
2021.
-- The Company continues to see an opportunity to access
attractive potential new sites and is building a pipeline for new
openings in 2021; four additional sites have leases exchanged with
several more under negotiation.
Richard Darwin, CEO of The Gym Group, commented:
" In the three months since reopening The Gym Group has seen
good levels of membership demand reinforcing the beneficial role
that affordable fitness makes to physical and mental well-being.
Covid-secure measures are working very well across the sector
enabling gyms to remain open even with regional Tier 3
restrictions, encouraging us that we should be able reopen quickly
once the national lockdown is over. The business has traded
profitably during the period and we are confident that our strong
financial position, with very low levels of net debt and close to
GBP70 million of unused facilities, will provide the platform to
resume our growth path once we reopen."
For further information, please contact:
The Gym Group: via Instinctif
Richard Darwin, CEO
Mark George, CFO
Instinctif Partners:
Matthew Smallwood, Justine Warren 0207 457 2005/10
Numis:
Luke Bordewich, George Price 0207 260 1366
Peel Hunt:
Dan Webster, George Sellar 0207 418 8900
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