Gym Group Plc · LSE:GYM
Gym — The Gym Group — FY2020 Earnings Presentation
32 slides from Gym's earnings presentation, Mar 18, 2021
Slide 1: The Gym Group plc Full Year Results
THE GYM GROUP PLC FULL YEAR RESULTS
Slide 2: Forward-Looking Statement Disclaimer
FORWARD-LOOKING STATEMENT DISCLAIMER This presentation and information communicated Nothing contained in this presentation or verbally to you may contain certain projections communicated verbally should be construed as and other forward-looking statements with respect a profit forecast or profit est
Slide 3: Introduction
INTRODUCTION A FINANCIALLY RESILIENT BUSINESS THROUGH COVID… TRADING DAYS IN 2020 2020 • Entered 2020 in a position of strength Jan Feb Mar Apr 100% 100% 66% 0% • Membership resilient despite 45% loss of trading days May Jun Jul Aug 0% 0% 17% 91% – Dec20 membership at 73% of Dec19 level Sep Oct Nov
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Slide 5: Financial Summary
FINANCIAL SUMMARY MEMBERS REVENUE GROUP ADJUSTED EBITDA LESS NORMALISED RENT 578,0001 £80.5M (£10.2M) 216,000 VS PY £72.6M VS PY £58.7M VS PY (Dec 2019: 794,000) (Dec 2019: £153.1m) (Dec 2019: £48.5m) ADJUSTED PBT NON-PROPERTY NET DEBT LIQUIDITY (£46.5M) £47.3M £52.7M £60.5M VS PY £0.1M VS
Slide 6: Group Income Statement
GROUP INCOME STATEMENT • Significant reduction in EBITDA and £'m FY 2020 FY 2019 % Change earnings reflecting reduced revenue Revenue 80.5 153.1 (47.5%) as a result of closures Cost of sales (2.1) (1.4) 47.3% Gross profit 78.4 151.7 (48.3%) • A number of actions taken to Site costs (excl. exceptiona
Slide 7: Yield Continues to Grow
YIELD CONTINUES TO GROW AVERAGE REVENUE PER MEMBER PER MONTH (EXC. VAT)* Upward trend in ARPMM from: £17.50 £0.05 • Pricing (including joining fee) £17.00 £0.21 remaining firm with investment in data and analytics enabling us to optimise yield at a local market £16.50 £0.91 level; £17.19 • Take-up o
Slide 8: Cost Saving Initiatives and Govt Support Help to Mitigate Loss in Revenue
COST SAVING INITIATIVES AND GOVT SUPPORT HELP TO MITIGATE LOSS IN REVENUE GROUP ADJUSTED EBITDA LESS NORMALISED RENT 2020 VS 2019 YOY cost increases: • 1st full year of new PT model Government support: • Maturation of 2019 sites • Rates relief £9.6m • Covid-secure measures • Furlough support £6.1m •
Slide 9: Capex Scaled Back in H2 Due to Uncertainty Over Future Lockdowns
CAPEX SCALED BACK IN H2 DUE TO UNCERTAINTY OVER FUTURE LOCKDOWNS SUMMARY • £29.2m of cash Capex in year (vs £41.2m in 2019) － H1: £21.0m primarily on projects committed pre COVID － H2: £8.2m on strategic investments in Tech, rebuild of 2 easyGym sites plus essential maintenance EXPANSIONARY • 8 new
Slide 10: Net Debt Maintained with Equity Placing and Tight Cash Management
FY19 NET DEBT MAINTAINED WITH EQUITY PLACING AND TIGHT CASH MANAGEMENT CASH FLOW & NEW DEBT £m NON-PROPERTY NET DEBT £47.3M (Dec 2019: £47.4m) 1) Group Operating Cash Flow Conversion is calculated as Group Operating Cash Flow as a percentage of Group Adjusted EBITDA 9
Slide 11: Update & Outlook
UPDATE & OUTLOOK • 547,000 members at the end of Feb 21 MEMBERSHIP RETENTION DURING CLOSURE PERIODS • Stronger member retention in this lockdown Lockdown 3 Lockdown 2 vs previous lockdowns (see chart) Lockdown 1 • Disciplined cost management during closure resulting in c.£5m per month cash burn – In
Slide 12: Strategic and Operational Review
STRATEGIC AND OPERATIONAL REVIEW
Slide 13: Action Taken to Reduce Membership Loss in Closure Periods
ACTION TAKEN TO REDUCE MEMBERSHIP LOSS IN CLOSURE PERIODS • Membership subscriptions frozen JOINERS AND LEAVERS IN 2020 immediately after lockdown Sites opened up to and including 2018 Lockdown 1 Lockdown 2 Joiners Leavers announcements • In a normal year for mature sites, levels of cancellations an
Slide 14: People First Approach Will Help Fuel Our Recovery
PEOPLE FIRST APPROACH WILL HELP FUEL OUR RECOVERY JAMIE CAN YOU ADD GOLD INVESTORS IN PEOPLE ICON • Launched People First Campaign during lockdown – Introduced communication & engagement platform – Employee Forum created for colleagues to share feedback – Expanded our e-learning platform – Trained 3
Slide 15: Growth Drivers for Health & Fitness Reinforced by Covid
GROWTH DRIVERS FOR HEALTH & FITNESS REINFORCED BY COVID COVID HAS HIGHLIGHTED THE GYM MEMBERS KEEN TO RETURN BUT IMPORTANCE OF A HEALTHY LIFESTYLE NOT ALL WILL DO SO IMMEDIATELY • Government initiative to reduce obesity will • Members expected to re-join gyms as increase focus on fitness confidence
Slide 16: Strong Market Position
STRONG MARKET POSITION TWO LARGEST OPERATORS CONTINUE TO GROW WE REMAIN COMPETITIVE IN EACH LOCAL WITH REST OF THE LOW COST MARKET STAGNANT MARKET NUMBER OF LOW COST GYMS (DEC 2020)1,2 AVERAGE HEADLINE RATE PER MONTH (NO CONTRACT) DECEMBER 20204,5 Dec-19 Dec-20 Xercise4less 14.99 The Gym 18.81 JD gy
Slide 17: Favourable Property Market Supports High Quality Growth
FAVOURABLE PROPERTY MARKET SUPPORTS HIGH QUALITY GROWTH The crisis in retail, leisure and hospitality is impacting the commercial property market. Expect this to be a significant benefit: RENT LEVELS ON NEW SITES • Improved rents on sites that were in negotiation pre-COVID • Favourable rents on new
Slide 18: Will Use Scale Advantages to Take Advantage of Market Demand
WILL USE SCALE ADVANTAGES TO TAKE ADVANTAGE OF MARKET DEMAND • Value proposition attractive to members in TECHNOLOGY & DATA DEVELOPMENTS economic downturn • New website planned to improve web – Lowest price high quality offer in the market merchandising, product upsell, conversion – “No contract” of
Slide 19: The Gym: Sustainability in Our DNA
THE GYM: SUSTAINABILITY IN OUR DNA SUSTAINABILITY HAS BEEN AT THE HEART OF OUR BUSINESS SINCE OPENING OUR FIRST GYM IN HOUNSLOW IN 2008; IT’S IN OUR CORE PURPOSE AND IN OUR DNA 100% of energy purchased Affordable gyms accessible from renewable energy to 49% of the UK population Opened first low Indu
Slide 20: Sustainability Progress in 2020
SUSTAINABILITY PROGRESS IN 2020 OUR 4 FOCUS AREAS ARE ALIGNED WITH THE UN SUSTAINABLE DEVELOPMENT GOALS GOOD HEALTH GOOD JOBS, QUALITY DIVERSITY AND EQUAL RESPONSIBILITY TO AND WELLBEING EDUCATION & LIFELONG OPPORTUNITY THE ENVIRONMENT LEARNING Commissioned 4Global to ‘People First’ campaign Publish
Slide 21: £1.8bn Social Value Since 2016
£1.8BN SOCIAL VALUE SINCE 2016 £m’s SOCIAL VALUE GENERATED BY GYM GROUP 600 • Social Value Calculator developed by 500 4Global in partnership with Sheffield 400 Hallam University and used by Sport 300 England and Government to determine 200 the social value of regular exercise on 100 communities thr
Slide 22: Investment Case Stronger Post Covid
INVESTMENT CASE STRONGER POST COVID 1. GROWING 2. HIGH QUALITY 3. COMPELLING 4. INNOVATION IN 5. SUSTAINABILITY AT 6. ATTRACTIVE MARKET GYM ESTATE MEMBER TECHNOLOGY & THE CORE OF OUR FINANCIAL MODEL OPPORTUNITY PROPOSITION MARKETING BUSINESS Investment Low cost segment Disciplined site Attractive lo
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Slide 24: KPIs Update
23 KPIS UPDATE 19-20 % £'m 2016 2017 2018 2019 2020 change Financial Data Revenue 73.5 91.4 123.9 153.1 80.5 (47%) Group Adjusted EBITDA 25.4 30.6 39.1 48.5 (10.2) (121%) Group Adjusted EBITDA before POC 26.7 32.2 40.7 49.7 (9.9) (120%) Group Operating Cash Flow 24.9 24.7 34.0 39.2 16.3 (58%) Group
Slide 25: Financial Model: Mature Sites (2019 Pre Covid)
FINANCIAL MODEL: MATURE SITES (2019 PRE COVID) MATURITY: MEMBERS MATURITY: SITE EBITDA¹ MATURE SITE ECONOMICS² Average Mature Average estate £m 2018 2019 Gym Site Members (#) LTM EBITDA 0.5 Revenue £0.97 £1.00 £ Millions 6,000 Gross Profit 99% 99% 0.4 5,000 Fixed Property costs ³ 27% 26% 4,000 0.3 O
Slide 26: Significant Opportunity for Growth
SIGNIFICANT OPPORTUNITY FOR GROWTH • Growth potential in standard PwC Analysis (Jan-19) catchments across the UK driven Total market Existing low Additional by a broadening of locations in opportunity cost gyms potential which low costs gyms have proven (1) (As at Jan-19) gyms (1) (Dec 2020) to oper
Slide 27: UK Market in Long-Term Growth
UK MARKET IN LONG-TERM GROWTH % OF UK POPULATION THAT ARE MEMBERS • Memberships of health 18 16 OF A HEALTH & FITNESS CLUB 15.6 and fitness clubs were in 14 structural growth for many 11.9 years up until 2019 12 10.5 10 • During the Global % 7.3 8 Financial Crisis growth 6 4.6 5.1 rates flattened bu
Slide 28: Social Value Through Physical Activity
SOCIAL VALUE THROUGH PHYSICAL ACTIVITY EXTENSIVE RESEARCH BY LEADING ACADEMIC INSTITUTIONS HAS DEMONSTRATED THE LINK BETWEEN PHYSICAL EXERCISE AND • Reduction in risk of developing non-communicable diseases • Subjective Wellbeing • Educational Attainment • Reduction in crime BUILDING ON THIS RESEARC
Slide 29: The Social Value Calculator Model
THE SOCIAL VALUE CALCULATOR MODEL • The key outputs of the model are a projection of the total social value into VOLUME OF PARTICIPANTS, FREQUENCY these 4 core categories OF ACTIVITY, DEMOGRAPHICS AND SOCIOECONOMIC PROFILE • A person has to use the gym at least 4 times per month to contribute to the
Slide 30: Property
PROPERTY MAP OF ALL 183 LOCATIONS ROLLING AVERAGE SQUARE FOOTAGE1 20,000 19,000 LOCATIONS 18,000 Inside M25 61 17,000 Outside M25 - South East 29 16,000 Outside M25 - Other 93 15,000 Total 183 14,000 13,000 12,000 11,000 10,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Includes Lifestyl
Slide 31: The Gym Group Team
THE GYM GROUP TEAM RICHARD DARWIN MARK GEORGE ANN-MARIE MURPHY Chief Executive Officer Chief Financial Officer Chief People Officer • CEO September 2018 (CFO since May 2015) • CFO since October 2018 • Joined The Gym Group in May 2018 • Formerly CFO of Essenden plc (now Ten • Previously Deputy CFO of
Slide 32: Our PLC Board Directors
OUR PLC BOARD DIRECTORS* PENNY HUGHES JOHN TREHARNE EMMA WOODS PAUL GILBERT Independent Non-Executive Founder Director Non-Executive Director Senior Independent Non- Chairwoman Executive Director • John founded The Gym in 2007 • Currently CEO at Wagamama • Previously President of Coca- and retired a