The Gym Group plc Pre-Close Trading Update (0620N)
January 15 2019 - 1:00AM
UK Regulatory
TIDMGYM
RNS Number : 0620N
The Gym Group plc
15 January 2019
15 January 2019
The Gym Group plc
Pre-Close Trading Update
The Gym Group plc ("the Company" or "TGG"), the fast growing, no
contract, 24/7, nationwide operator of 159(1) low cost gyms,
announces its pre-close trading update for the year ended 31
December 2018.
Financial
-- Total year-end membership numbers ahead by 19.3% to 724,000
(Dec 2017: 607,000); Average Members of 693,000 (Dec 2017:
528,000) up 31.2%(2) .
-- Total revenue growth of 35.6% to GBP123.9m for the year.
-- Year-end net debt of GBP46.0m (2017: GBP37.5m) following the
easyGym acquisition and investment in 17 new site openings.
Operational
-- Site numbers expanded by 23% to 158 at year end (2017: 128)
with 17 organic openings and 13 sites acquired from easyGym.
With growth from organic openings and two acquisitions in
consecutive years, our estate has more than doubled over the
last three years. We estimate our share of the low-cost gym
market has increased to 24.2% (2017: 22.4%).
-- The new openings programme has been more weighted towards
the end of the year than originally planned and this has resulted
in fewer trading weeks than expected in the second half. The
growth profile of our 2018 sites, once opened, has been encouraging,
and our 2017 sites are exceeding expectations, demonstrating
that we are continuing to find good sites for new gyms.
-- Following the decision earlier in the year to convert the
remaining sites acquired from Lifestyle Fitness to The Gym
brand, all 18 acquired sites have now been converted. This
will enable these gyms to benefit in 2019 from our brand marketing,
systems and model, although it resulted in more weeks of site
closures than initially expected in 2018.
-- Following a successful trial, LIVE IT. - our premium pricing
product - was rolled out nationally by the end of May. The
uptake has been encouraging with 11.7% of members subscribing
to LIVE IT. memberships by the end of 2018, contributing to
an average revenue per member per month increase of 3.3% to
GBP14.89 (2017: GBP14.41).
-- The pipeline of new sites continues to be strong and we expect
to open 15 to 20 new gyms in 2019.
easyGym acquisition
-- Following the announcement of the acquisition of 13 sites
from easyGym in June 2018, we have now completed the conversion
of 10 sites to The Gym branding, with good feedback from members.
Of the three remaining sites, one will be converted in H1
2019 with two sites continuing to trade under the easyGym
brand pending lease extension discussions.
New Gym Team ("NGT") Operating Model
-- The trial of the new operating model (NGT) for Personal Trainers
("PTs") has continued to be rolled out as planned during the
second half with 24 sites operating under the new model at
the year end. We believe the new model will give TGG a competitive
advantage in the recruitment of the best PTs, enabling the
delivery of an even better member experience in our gyms.
The initial results from the trial gyms have been encouraging,
with member satisfaction levels higher than our company average.
-- We plan to roll out NGT to the rest of the gym estate in 2019,
starting in April after the busy beginning of the year. As
part of the evolution of the NGT model following the trial,
we are reducing the rent PTs pay to TGG each month. We believe
this will enable TGG to offer the most compelling and sustainable
PT model for both our PTs and our members. This change will
result in an incremental annual cost to TGG of GBP1 million
in 2019 and thereafter.
Full Year Results Outlook
As a result of the performance outlined above, and taking into
account the later second half weighted 2018 openings programme and
one-off impact associated with the Lifestyle conversions, we expect
full year Group Adjusted EBITDA for 2018 to be approximately
GBP37m. The Company will announce its preliminary results on
Tuesday 19th March 2019.
Richard Darwin, CEO of The Gym Group, commented:
"The Gym Group continues to deliver strong, profitable growth
whilst also establishing the platform for a bigger business in the
future. The pace of expansion was significant in 2018: we opened 17
new gyms, converted the acquired Lifestyle sites, acquired easyGym
and over the last 30 months have doubled the number of gyms in our
estate. We have recently reached the milestone of 750,000 members,
demonstrating the ongoing appeal of our business model.
Looking forward we have a good pipeline of new sites and expect
to open a further 15-20 gyms in 2019. We are well placed to
continue to generate high levels of growth whilst maintaining
strong returns on capital. We are confident that in 2019 we will
continue to develop and build the business to deliver another year
of profitable growth for shareholders."
Investor and analyst conference call
A conference call for analysts and investors will be held at
8.00am (GMT) today. To join, please dial: UK dial-in number: 0800
376 7922, International dial-in number: +44 (0) 207 1 92 8000
Conference ID: 7068798
A recording of the call will be available on the Company's
website later today.
(1) 158 as of 31 Dec 2018 plus 1 new site opened in January
2019
(2) Average Members excludes sites not open at the period end
For further information, please contact:
The Gym Group: via Instinctif
Richard Darwin, CEO
Mark George, CFO
Instinctif Partners:
Matthew Smallwood, Justine Warren,
Tom Berger 0207 457 2020
Numis:
Luke Bordewich, George Price 0207 260 1366
Peel Hunt:
Dan Webster, George Sellar 0207 418 8900
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END
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