REG - Gym Group PLC (The) - The Gym Group PLC 2024 Full Year Results
12/03/2025 07:00
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RNS Number : 2656A Gym Group PLC (The) 12 March 2025
12 March 2025
The Gym Group plc
('The Gym Group', 'the Group' or 'the Company')
2024 Full Year Results
Next Chapter growth plan delivering; momentum building
Leading low cost gym operator, The Gym Group, announces its full year results
for the year ended 31 December 2024.
Key financial metrics 1
Year ended 31 December 2024 Year ended 31 December 2023 Movement
Revenue (£m) 226.3 204.0 +11%
Group Adjusted EBITDA (£m) 87.3 75.5 +16%
Group Adjusted EBITDA Less Normalised Rent (£m) 47.7 38.5 +24%
Adjusted Profit/(loss) before tax (£m) 3.6 (5.5) +£9.1m
Statutory Profit/(loss) before tax (£m) 2.5 (8.3) +£10.8m
Statutory Profit/(loss) after tax (£m) 4.4 (8.4) +£12.8m
Adjusted Diluted Earnings/(loss) per share (p) 2.9 (3.4) +6.3p
Statutory Diluted Earnings/(loss) per share (p) 2.4 (4.7) +7.1p
Free cash flow (£m) 37.5 27.0 +39%
Non-Property Net Debt (£m) (as at year end) (61.3) (66.4) Down by 8%
Financial highlights(1)
• Strong revenue growth for the year, up 11%, with average members up 4% and
average revenue per member per month ('ARPMM') up 7%; like-for-like 2 revenue
grew 7%
• 24% increase in Group Adjusted EBITDA Less Normalised Rent at £47.7m (2023:
£38.5m), driven by revenue growth and strong operational leverage
• Return on Invested Capital ('ROIC') of mature gym sites of 25% (2023: 21%),
delivering medium term guidance early; ROIC increases to 27% after excluding
13 workforce-dependent 3 gyms
• Free cash flow generated in the year increased to £37.5m (2023: £27.0m)
funding 12 new sites, enhancements to existing sites and continued technology
and data investment
• Non-Property Net Debt reduced by £5.1m to £61.3m (Dec 2023: £66.4m),
resulting in reduced Adjusted Leverage of 1.3x; new £90m three-year combined
bank facility signed in June 2024
Business and operational highlights
• Next Chapter growth plan driving up returns on mature gym estate, through
higher yield, more cost-effective promotion, better targeted customer
acquisition and early progress on retention
• High levels of member engagement and satisfaction sustained, with 93% of
members rating The Gym Group 4 or 5 out of 5 for overall satisfaction (57%
5/5); proportion of members visiting 4+ times a month increased by 120bps
• 12 new sites opened in 2024, at top end of guidance. Our focused approach to
openings has resulted in all new sites performing ahead of historical maturity
curves
• Continued investment in member proposition with capital spend in over 100
sites and significant enhancements in 15; HYROX training sessions rolled out
to 120 gyms to become the UK's largest HYROX training club
• Employee engagement score improved to 9 out of 10, with a 92% completion rate;
now rank in the top 5% 4 of consumer services businesses for overall
engagement
Current trading and outlook
• Trading momentum remained strong in our peak recruitment months of January and
February; revenue after two months has grown by 8% year on year, reflecting a
4% increase in average members and 4% growth in yield. Like-for-like revenue
up 3%
• Plan to open 14-16 new sites in 2025, in line with our plan to open c.50 sites
over three years funded from free cash flow; leverage expected to remain below
1.5x
• Group Adjusted EBITDA Less Normalised Rent for FY25 now expected to be at the
top end of the recently revised analyst forecast range of £49.0m-£50.8m 5 ,
driving further improvement in mature site ROIC
Will Orr, CEO of The Gym Group, commented:
"This strong set of results reflects good progress against the strategic
objectives set out in our Next Chapter growth plan. We have seen excellent
momentum to date with increased membership, revenue and profit; and our
market-leading proposition is more resonant than ever, in a sector that is
growing. We will continue to execute on initiatives started in FY24 alongside
new initiatives in place for FY25, underpinned by our investment in technology
and data to drive future growth.
As a result, we believe there is still more benefit to come from the Next
Chapter growth plan, giving us the confidence to increase guidance again to
the top end of the recently revised analyst forecast range for FY25. We also
remain on track to deliver our target of opening c.50 new high quality gyms
over three years, funded from free cash flow."
A live audio webcast of the analyst presentation will be available at 9:00
a.m. today via the following link:
https://storm-virtual-uk.zoom.us/webinar/register/WN_USzSnU5bSyC7WdKB-P1gTA
(https://storm-virtual-uk.zoom.us/webinar/register/WN_USzSnU5bSyC7WdKB-P1gTA)
. Webinar ID: 850 0442 4647
A copy of the presentation and recording of the webcast will be published on
the Company's website.
For further information, please contact:
The Gym Group via Instinctif Partners
Will Orr, CEO
Luke Tait, CFO
Katharine Wynne, Investor Relations
Instinctif Partners (Financial PR) +44 (0)20 7457 2020
Justine Warren
Tim Pearson
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.
Notes for editors
The Gym Group was a pioneer of the low cost gym model with gyms offering 24/7
opening and flexible, no contract membership. As at 31 December 2024, we
operate 245 high quality sites across the UK with 891,000 members nationwide.
Our gyms have over 65 million visits per annum and score highly on member
satisfaction. The Gym Group is the UK's first carbon neutral chain of gyms.
Sites opened in 2024 are: Orpington, London Euston Road, Manchester Oxford
Road, Welwyn Garden City, London Plaistow, Dudley, London East Ham, London
Bromley by Bow, Surbiton, Gillingham, London Shepherds Bush and London
Elephant and Castle.
LEI Number: 213800VCU9TBANZIN455
CEO Review
The Gym Group has a winning 'high value, low cost' proposition and operates in
the fastest growing part of a growing market for health, fitness and gyms.
With a clear plan and a strong team in place, I'm more confident than ever
about our prospects for sustained growth.
We have had a year of good progress as we began to execute our Next Chapter
growth plan outlined at our preliminary results presentation a year ago. The
first year of the plan has resulted in strong growth in revenues and EBITDA,
translating into increased free cash flow which we are continuing to reinvest
to generate further growth.
Next Chapter recap
Our Next Chapter growth plan is focused on delivering sustained growth from
free cash flow in the highly resilient and growing health and fitness market,
within which the 'high value, low cost' gym sector is showing particularly
strong growth.
This growth plan aims firstly to 'Strengthen the core' of our existing
business, increasing returns from the existing estate. 'Strengthen the core'
includes pricing and revenue management, cost-effective member acquisition,
and improving member retention.
The second part of the plan is to 'Accelerate rollout of quality sites'. Here
we set ourselves a target of opening around 50 high quality, high returning
sites over three years, funded from free cash flow.
Successful execution of these two priorities is our current focus because we
see strong potential in both. That said, we will periodically assess further
options to 'Broaden our growth' over the longer term.
A winning proposition
Underpinning our growth is our focused, scalable proposition which continues
to deliver for our members. As at the end of February 2025, we have 951,000
members, up 7% since last year end. Visits continued to grow in 2024 and the
proportion of members visiting 4+ times per month has increased by 120bps.
This remains a key target as more members visiting more frequently improves
retention, revenue growth and the Social Value 6 we create. In 2024, we
created £962m of Social Value, up from £890m in 2023.
We invested £12.2m in our mature gyms in 2024, upgrading facilities and
equipment in over 100 sites with more comprehensive enhancement projects in 15
of them. We have also rolled out the popular HYROX training sessions to more
locations, and they are now available in 120 of our gyms.
Customer satisfaction metrics show continuing strength, with 93% of our
members rating The Gym Group 4 or 5 out of 5 for overall satisfaction (57%
5/5). According to Google reviews, we have a significantly higher percentage
of 4/5 and 5/5 satisfaction scores compared with our closest high value, low
cost competitors.
We were also proud to be named as one of the Best Places to Work in the UK in
2024's Sunday Times survey, while our employee engagement score in the latest
survey (carried out in Q4 of 2024) increased to 9/10 (8.5/10 in FY23). Our
highly engaged and high performing teams are critical to our winning
proposition, delivering a positive member experience, driving frequency of
visits and supporting our growth plan.
Strengthen the core
As the key measure of success for the 'Strengthen the core' programme, we set
a target to achieve an average ROIC on our mature sites of 25% over the medium
term, compared with the starting point of 21% in FY23. Thanks to the rigour of
our approach and the efforts of our teams, we have delivered a ROIC of 25% in
the first year (27% after excluding 13 workforce-dependent gyms 7 ), with
active pricing and revenue management delivering a strong improvement in
like-for-like revenue and resulting in excellent growth in site EBITDA.
Progress under the various elements of this programme is outlined below.
Yield improvement from reducing the gap with competitors
We have targeted reducing the pricing gap with our key 'high value, low cost'
competitors and have made good progress in 2024. Our average headline price
for a Standard membership in December 2024 was £24.53, up 6%, or £1.37, year
on year. Like-for-like revenue growth of 7% reflects a combination of higher
headline rates for new members, re-pricing of the existing member base, and
more cost-effective promotional activity. This approach to yield improvement,
as with all areas of the Next Chapter growth plan, is based on expert analysis
of comprehensive data sets and rigorous A/B testing.
We have achieved this increase in yield without seeing an increase in the rate
of member churn and, as a result, our like-for-like membership has been
maintained. Our strategy has been to optimise the pricing opportunity, whilst
using our data management tools to minimise volume attrition. The introduction
of off-peak pricing has supported this approach. Off-peak provides members
with a third, particularly affordable membership option, which strengthens our
marketing proposition and provides a 'safety net' to retain existing members
who otherwise might have left. We have further refined off-peak pricing at
site level to minimise cannibalisation and drive incremental volume.
As at 31 December 2024, Off-peak accounted for 10.5% of our member base, in
line with our expectations. The appeal of our Ultimate membership remained
strong, and this accounted for 29.6% of our member base at the same point in
time (31.3% at 30 June 2024 and 31.7% at 31 December 2023).
Using data and technology to support customer acquisition and retention
When it comes to acquiring new members, we have been very focused on ensuring
our marketing spend delivers a strong return on investment. To that end, we
have increased A/B testing to improve messaging, media deployment and web
conversion. With investment in AdTech allowing us to tailor advertising to
relevant geography and demographics, we have delivered a 10.5% reduction in
the cost per acquisition as well as improvements in web conversion rates in
2024.
As we said in our March 2024 strategy presentation, increasing member
retention and tenure has significant potential revenue upside. The highest
rate of churn is in the first 45 days of membership, before a habit has
formed. Therefore, a core part of our retention plan is 'early life'
engagement with members. By utilising behavioural science in our email
engagement with new members; upgrading our highly rated and well used app; and
improving in-gym interaction with new members, we have seen an improvement in
the average tenure of our membership base in 2024.
In 2025, we will commence a programme of investment in our major technology
and data platforms. This is focused on introducing a new set
of market-leading business and member capabilities, accelerating the pace of
innovation and creating a step change in operational performance, scalability
and efficiency when it comes to delivering tech-enabled strategic initiatives.
We will be implementing new member management and payment systems, with the
implementation being staged over the next two years to minimise any risks as
we make this transition. We expect these developments to accelerate the
already strong progress we are seeing from the Next Chapter growth plan.
Accelerating rollout of quality sites
Our Next Chapter growth plan targets an accelerating rollout of high quality
sites, delivering 30% ROIC and funded from free cash flow.
We opened 12 new gyms in 2024, at the top end of our guidance of 10-12
openings, eight of which opened in the second half. These locations all met
the criteria of high population density, good visibility and convenient
transport links - all being in Greater London or other 'Urban Residential'
locations. We have also refined our approach to launching our new gyms,
resulting in a more rapid ramping up of member volumes. Enhanced tailoring of
marketing and gym product to local markets has resulted in all new sites
performing ahead of historical maturity curves.
In addition, applying the 'Strengthen the core' approach across our estate has
ensured that sites opened in 2022 and 2023 are also on track to deliver our
30% ROIC target. As well as supporting revenue in the mature estate, we
continue to drive cost efficiency projects, enhancing new site returns as well
as improving the performance of mature sites. These include refining the
operating model, optimising energy usage and innovating in-build cost
management.
There is a strong site pipeline building - helped by our appointment of
leading property agents, Savills - that is expected to deliver 14-16 new gyms
in 2025, in line with our three year target of c.50 gyms, delivering an
average ROIC of 30%. We remain committed to our ROIC target, which will
continue to take precedence over delivering a specific number of site openings
in any given year.
As we continue to evolve our proposition in 2025, as well as delivering
enhanced value through the upgrading of equipment and provision of additional
products, we are also starting some work to refresh the look and feel of our
gyms, within our existing capital expenditure budgets. This aims to give them
a more contemporary and dynamic feel, increasing customer appeal.
Next Chapter summary
We have a clear Next Chapter growth plan which is showing encouraging early
results. It has enabled us to deliver our mid term returns target for the
mature estate in the first year of the plan, and to open new sites that are
performing ahead of our expectations.
We will continue to harness data and A/B testing to increase yields, while
aiming to maintain like-for-like membership volume through effective
marketing. This, alongside strong cost management, is expected to support
like-for-like revenue growth ahead of inflation and further improvements to
mature site ROIC. With our retention programme gathering momentum, and a major
data study we commissioned identifying clear member headroom in clusters of
our existing sites, we have further initiatives to come on like-for-like
growth.
This strengthening of returns in our core estate will, as outlined, in turn
underpin our organically funded rollout of quality new sites, taking full
advantage of the significant white space opportunity for low cost gyms in the
UK.
Management appointments
We welcomed two new arrivals to our Executive Committee in 2024. Tina Koehler
joined us as Chief Commercial Officer in September 2024. Tina brings extensive
commercial and marketing experience from previous roles at Deliveroo, Procter
& Gamble, Amazon and Audi. Hamish Latchem joined us in December 2024 as
Chief Property Officer, having previously been National Store Development
Director at Aldi UK. Hamish took over the role from David Melhuish, who after
a decade at The Gym Group in senior roles, retired at the end of the financial
year, with our thanks and best wishes.
Summary and Outlook
The Gym Group has a winning high value, low cost proposition that is well
placed to thrive in the growing health and fitness market. Through our clear
Next Chapter growth plan, we have identified multiple opportunities to drive
like-for-like revenue growth. With significant white space opportunity
suggesting a decade of rollout potential, we are accelerating our self-funded
rollout of c.50 sites over three years that are expected to deliver an average
30% ROIC.
We are building momentum, having achieved a 24% increase in Group Adjusted
EBITDA Less Normalised Rent in FY24 and delivered our target of 25% ROIC in
mature sites early. Trading has remained strong through our key member
recruitment period and our resilient business model is well insulated from
wider market cost pressures. As a result, we now expect that FY25 Group
Adjusted EBITDA Less Normalised Rent will be at the top end of the recently
revised analyst forecast range of £49.0m-£50.8m 8 , driving further progress
in mature site ROIC in FY25 and confidence in a return to 30% in the longer
term. Further details on the FY25 financial guidance can be found in the
Financial Review on page 12.
Finally, I would like to thank our committed, expert people. We have a
fantastic team who have worked hard to deliver a strong 2024, and a good start
to 2025.
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 adopted a
three-column format for 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 are not considered to be incurred in the normal course of
business. They are classified as non-underlying items on the face of the Group
income statement within their relevant category. Further information about
what has been included in non-underlying items can be found in Note 5 to the
Consolidated Financial Information.
Summary financial information 9
Year ended 31 December 2024 Year ended 31 December 2023 Movement
Total number of gyms at year end 245 233 +5%
Total number of members at year end ('000) 891 850 +5%
Revenue (£m) 226.3 204.0 +11%
Group Adjusted EBITDA (£m) 87.3 75.5 +16%
Group Adjusted EBITDA Less Normalised Rent (£m) 47.7 38.5 +24%
Adjusted Profit/(loss) before tax (£m) 3.6 (5.5) +£9.1m
Statutory Profit/(loss) before tax (£m) 2.5 (8.3) +£10.8m
Statutory Profit/(loss) after tax (£m) 4.4 (8.4) +£12.8m
Net cash inflow from operating activities (£m) 95.1 79.5 +20%
Free cash flow (£m) 37.5 27.0 +39%
Non-Property Net Debt (£m) (as at year end) (61.3) (66.4) Down by 8%
Adjusted Leverage 1.3 1.7 Down by 0.4x
Return on Invested Capital ('ROIC') on mature sites 25% 21% +4 ppts
Results for the year
Year ended 31 December 2024 Year ended 31 December 2023
Underlying result Non-underlying items Total Underlying result Non-underlying items Total
£m £m £m £m £m £m
Revenue 226.3 - 226.3 204.0 - 204.0
Cost of sales (2.9) - (2.9) (2.8) - (2.8)
Gross profit 223.4 - 223.4 201.2 - 201.2
Other income 0.1 - 0.1 0.3 - 0.3
Operating expenses (before depreciation, amortisation and impairment) (139.6) (0.4) (140.0) (128.4) (1.5) (129.9)
Depreciation, amortisation and impairment (60.1) (0.5) (60.6) (57.5) (0.8) (58.3)
Operating profit 23.8 (0.9) 22.9 15.6 (2.3) 13.3
Finance costs (20.7) (0.2) (20.9) (21.4) (0.5) (21.9)
Finance income 0.5 - 0.5 0.3 - 0.3
Profit/(loss) before tax 3.6 (1.1) 2.5 (5.5) (2.8) (8.3)
Tax credit/(charge) 1.8 0.1 1.9 (0.6) 0.5 (0.1)
Profit/(loss) for the year attributable to shareholders 5.4 (1.0) 4.4 (6.1) (2.3) (8.4)
Earnings/(loss) per share (p)
Basic 3.0 2.5 (3.4) (4.7)
Diluted 2.9 2.4 (3.4) (4.7)
Revenue
Trading in 2024 was strong despite the ongoing cost-of-living pressures on
consumers, demonstrating the continued resilience of the low cost gym model
and the early success of the Next Chapter growth plan. Revenue increased by
11% to £226.3m (2023: £204.0m), reflecting 4% higher average membership
numbers throughout the year and a 7% increase in yield.
The average membership number in the year was 906,000 compared with 872,000 in
the prior year; and we closed the year with 891,000 members which was up 5% on
31 December 2023.
The average headline price of a Standard membership increased to £24.53 in
December 2024 compared with £23.16 in December 2023, largely as a result of
higher joining fees and price increases for new members. During the year, we
also did some selective repricing of the base membership. As a result, Average
Revenue Per Member Per Month ('ARPMM') in 2024 was up 7% to £20.81 compared
with £19.50 in 2023. The proportion of members taking our premium membership
was 29.6% in December 2024 compared with 31.7% in December 2023.
Like-for-like revenue (based on all sites open as at 31 December 2021)
increased by 7% year on year.
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 broadly in line with the prior year at £2.9m (2023: £2.8m).
Underlying operating expenses (before depreciation, amortisation and
impairment)
Underlying operating expenses (before depreciation, amortisation and
impairment) are made up as follows:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Site costs before Normalised Rent 109.7 105.0
Site Normalised Rent 39.2 36.6
Site costs including Normalised Rent 148.9 141.6
Central Support Office costs 26.5 21.0
Central Support Office Normalised Rent 0.4 0.4
Central Support Office costs including Normalised Rent 26.9 21.4
Share based payments 3.4 2.4
179.2 165.4
Less: Normalised Rent (39.6) (37.0)
Underlying operating expenses (before depreciation, amortisation and 139.6 128.4
impairment)
Site costs including Normalised Rent
In 2024, site costs including Normalised Rent increased by 5% to £148.9m
(2023: £141.6m).
The fixed costs associated with running the sites (predominantly building
rates and service charges) decreased by £0.2m year on year as one-off
benefits and refunds from historic rates challenges more than offset the
effect of the increased estate size and the full year impact of inflationary
increases in building rates costs (three year assessment period starting April
2023).
Controllable site costs increased by £4.9m as the impact of inflationary pay
increases (on both staff costs and cleaning), and increased marketing spend to
drive volume, were partially offset by the normalisation of utilities prices.
Other increases in controllable costs predominantly reflect the larger estate
size and continued technology investment.
Site Normalised Rent, which is defined as the contractual rent payable,
recognised in the monthly period to which it relates, increased by £2.6m in
the year, again reflecting the larger estate size.
Central Support Office costs including Normalised Rent
Central Support Office costs excluding Normalised Rent increased in the year
by £5.5m to £26.5m (2023: £21.0m), reflecting an increase in headcount to
deliver the Next Chapter growth plan, pay inflation and increased variable pay
accruals as a result of the strong trading performance. Central Normalised
Rent remained flat at £0.4m.
Share based payments
The charge for share based payments (including related employer's national
insurance) in the year amounted to £3.4m (2023: £2.4m), reflecting the
stronger trading performance and share price growth. In January 2024, the
Group established an Employee Benefit Trust ('EBT') to purchase shares in
order to minimise dilution associated with the share based payments. During
the year, 2,834,928 shares were purchased at a cost of £3.5m.
Underlying depreciation and amortisation
Underlying depreciation and amortisation charges in the year amounted to
£60.1m (2023: £57.5m), made up of £24.6m (2023: £24.0m) on property, plant
and equipment, £29.4m (2023: £28.0m) on right-of-use assets, and £6.1m
(2023: £5.5m) on intangible assets. The increases year on year reflect the
larger estate and the continued investment in technology.
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 Operating profit/(loss) as follows:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Operating profit 22.9 13.3
Non-underlying operating items (see below) 0.9 2.3
Share based payments 3.4 2.4
Underlying depreciation and amortisation 60.1 57.5
Group Adjusted EBITDA 87.3 75.5
Normalised Rent 10 (39.6) (37.0)
Group Adjusted EBITDA Less Normalised Rent 47.7 38.5
Group Adjusted EBITDA Less Normalised Rent was 24% ahead of the prior year at
£47.7m (2023: £38.5m), as the strong trading and increased revenue was
complemented by tight control of operating costs. This in turn drove a four
percentage point increase in the Return on Invested Capital ('ROIC') of mature
sites, increasing from 21% in FY23 to 25% in FY24 (27% after excluding 13
workforce-dependent gyms 11 ).
Underlying finance costs
Underlying finance costs decreased in the year by £0.7m to £20.7m (2023:
£21.4m). The finance costs associated with our bank borrowings (comprising
interest payable and fee amortisation less capitalised interest) decreased by
£0.7m to £5.2m (2023: £5.9m), reflecting the lower average net debt
throughout the year. The weighted average interest rate applicable to the
Group's bank borrowings during 2024 was 8.2% (2023: 8.2%).
The implied interest relating to the lease liabilities was £15.5m (2023:
£15.5m) as the impact of additional property leases due to the increased
estate was offset by a reduction in non-property leases.
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 31 December 2024 Year ended 31 December 2023
£m £m
Affecting operating expenses (before depreciation, amortisation and
impairment)
Costs of major strategic projects and investments 0.2 0.9
Restructuring and reorganisation costs (including site closures) 0.2 0.6
0.4 1.5
Affecting depreciation, amortisation and impairment
Impairment of property, plant and equipment, right-of-use assets and 0.4 0.6
intangible assets
Amortisation of business combination intangible assets 0.1 0.2
0.5 0.8
Affecting finance costs
Refinancing costs and remeasurement of borrowings 0.2 0.5
0.2 0.5
Total all non-underlying items before tax 1.1 2.8
Tax on non-underlying items (0.1) (0.5)
Total non-underlying charge in income statement 1.0 2.3
Non-underlying items affecting operating expenses (before depreciation,
amortisation and impairment) reduced in the year to £0.4m (2023: £1.5m) and
relate to costs incurred in the year on strategic technology projects, as well
as a provision for the closure costs of one gym in 2025.
Non-underlying costs affecting depreciation, amortisation and impairment in
the year amounted to £0.5m (2023: £0.8m), of which £0.4m (2023: £0.6m)
relate to the impairment of one site (2023: two sites). The remaining £0.1m
(2023: £0.2m) of non-underlying costs affecting depreciation, amortisation
and impairment relates to 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 £0.2m (2023: £0.5m)
and relate to advisory and legal costs incurred in agreeing the Group's new
banking facilities in June 2024.
Taxation
The tax credit for the year was £1.9m (2023: charge of £0.1m) and results
from the recognition of additional deferred tax assets.
The net deferred tax asset recognised at 31 December 2024 was £18.2m (31
December 2023: £16.3m). Deferred tax assets are recognised in respect of
those tax losses and other temporary differences only to the extent it is
considered probable that the assets will be recoverable. This involves an
assessment of when those assets are likely to be recovered, and a judgement as
to whether or not there will be sufficient taxable profits available to offset
the assets.
A deferred tax asset of £12.1m (2023: £11.1m) has been recognised in respect
of trading losses. The trading losses were incurred as a result of the
Covid-19 pandemic and the subsequent cost-of-living crisis, together with the
introduction in March 2021 of the temporary enhanced capital allowances regime
(the 'super-deduction tax break').
Losses for which no deferred tax asset has been recognised amount to £16.1m
(2023: £23.0m), resulting in an unrecognised deferred tax asset of £4.0m
(2023: £5.8m) 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 profit before tax
was £2.5m (2023: loss of £8.3m) and the statutory profit after tax was
£4.4m (2023: loss of £8.4m).
Adjusted profit/(loss) before tax is calculated by taking the statutory
profit/(loss) before tax and adding back the non-underlying items. Adjusted
profit before tax in 2024 was £3.6m (2023: loss of £5.5m). Adjusted profit
after tax was £5.4m (2023: loss of £6.1m).
The basic and diluted earnings per share was 2.5p and 2.4p respectively (2023:
basic and diluted loss per share of 4.7p), and the adjusted basic and diluted
earnings per share was 3.0p and 2.9p respectively (2023: adjusted basic and
diluted loss per share of 3.4p).
Dividend
We are a growth company, in a growth market, with a clear capital allocation
policy. Whilst dividends and other returns of capital to shareholders will be
considered by the Directors in the future, we are not proposing a dividend for
the current year as we continue to see significant opportunities, with
attractive returns, to invest our free cash flow in growing the business.
Cash flow
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Group Adjusted EBITDA Less Normalised Rent 47.7 38.5
Movement in working capital 8.7 5.0
Maintenance and enhancement capital expenditure (12.2) (10.3)
Free cash flow before non-underlying items, interest and tax 44.2 33.2
Non-underlying items (0.9) (1.0)
Net interest paid (5.8) (5.2)
Taxation - -
Free cash flow 12 37.5 27.0
Expansionary capital expenditure (27.8) (16.4)
Refinancing fees (0.8) (1.0)
Purchase of own shares by EBT (3.5) -
Net cost of share schemes settlement (0.3) -
Cash flow before movement in debt 5.1 9.6
Net decrease in non-property lease indebtedness (5.6) (2.5)
Net drawdown/(repayment) of borrowings 2.0 (11.0)
Net cash flow 1.5 (3.9)
Free cash flow generated in the year was £37.5m (2023: £27.0m). The increase
year on year is largely due to the strong trading performance and higher
working capital inflows, driven partly by short term timing differences on
payments and receipts. Maintenance and enhancement capital expenditure
increased in the year by £1.9m to £12.2m, reflecting the larger estate as
well as expenditure on kit enhancements and refurbishments in a number of
gyms.
Expansionary capital expenditure in the year amounted to £27.8m (2023:
£16.4m) and relates to the fit-out of the 12 new gyms we opened as well as
continued investment in technology and data.
As noted earlier, in January 2024, the Group established an Employee Benefit
Trust ('EBT') to purchase shares in order to minimise dilution associated with
the share based payments. During the year, the EBT purchased 2,834,928 shares
at a cost of £3.5m.
Balance sheet and net debt
At 31 December 2024 At 31 December 2023
£m £m
Non-current assets 573.1 558.5
Current assets 12.5 13.0
Current liabilities (77.6) (72.3)
Net current liabilities (65.1) (59.3)
Non-current liabilities (376.4) (371.2)
Net assets 131.6 128.0
Net debt (61.3) (66.4)
At 31 December 2024, non-current assets increased by £14.6m as a result of
software and property, plant and equipment additions and an increase in the
carrying value of deferred tax assets.
Net current liabilities at 31 December 2024 increased by £5.8m, reflecting
higher trade and other payables.
Non-current liabilities increased by £5.2m, as the recognition of lease
liabilities in relation to new sites more than offset payments made in
relation to existing leases.
As at 31 December 2024, the Group had Non-Property Net Debt of £61.3m (31
December 2023: £66.4m) comprising drawn facilities of £61.0m and
non-property leases of £3.3m, less cash of £3.0m. The Directors believe that
this measure of net debt best reflects the financial health of the business.
In addition, it is a key constituent of the Adjusted Leverage covenant
included in the Group's banking agreement. At 31 December 2024, Adjusted
Leverage was 1.3 times (December 2023: 1.7 times), significantly below the
banking covenant threshold of 3.0 times; and Fixed Charge Cover was 1.9 times
(December 2023: 1.7 times).
New banking facilities agreement
In June 2024, the Group entered into a new facilities agreement with the same
banking syndicate, which came into effect on 1 July 2024. Under the new
agreement, the Group has in place a combined £90m facility, consisting of
£45m of Term Loan and £45m of RCF. The new facility is due to mature in June
2027 but includes two one-year extension options.
Funds borrowed under the new facility agreement bear interest at a minimum
annual rate of 2.75% (was 2.85%) above the Sterling Overnight Index Average
('SONIA'); and undrawn funds under the RCF bear interest at a minimum annual
rate of 1.1% (was 1.14%).
The new facilities agreement continues to be subject to quarterly financial
covenant tests on Adjusted Leverage and Fixed Charge Cover (both terms defined
on page 13). Adjusted Leverage must not exceed 3.0 times and the Fixed Charge
Cover must be greater than 1.5 times.
Terms permit the distribution of surplus cash flow to shareholders in line
with our capital allocation policy, which prioritises organic growth.
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 2026. 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 mitigating actions
that can be deployed in the event of reasonable downside scenarios. Further
detail is provided in Note 2 to the Consolidated financial information.
Current trading and outlook
Trading in the first two months of the new financial year shows continued
positive momentum. Revenue after two months has grown by 8% year on year,
reflecting a 4% increase in average members and 4% yield growth. Like-for-like
revenue for the two months was up 3%, driven largely by price increases
implemented at the start of 2025. Membership at the end of February 2025 was
951,000, up 7% versus the end of 2024.
We expect like-for-like revenue in 2025 to increase by c.3% overall.
Like-for-like cost growth is expected to be c.2%, as higher employee costs
(from a combination of higher national insurance contributions and National
Living Wage) are partially offset by utility rate reductions and cost
optimisation initiatives. As a result, we now expect that FY25 Group Adjusted
EBITDA Less Normalised Rent will be at the top end of the recently revised
analyst forecast range of £49.0m-£50.8m 13 .
We also expect to incur c.£3m of non-underlying costs in 2025 in relation to
the investment in the Group's member management and payments systems.
We plan to open 14-16 sites in 2025, with all new sites continuing to be
financed from free cash flow. As a result, Adjusted Leverage is expected to
remain below 1.5 times.
Definition of non-statutory measures
• Group Adjusted EBITDA - operating profit before depreciation, amortisation,
share based payments and non-underlying items.
• Normalised Rent - the contractual rent payable, recognised in the monthly
period to which it relates.
• Group Adjusted EBITDA Less Normalised Rent - Group Adjusted EBITDA after
deducting Normalised Rent. A reconciliation of Operating profit/(loss) to
Group Adjusted EBITDA Less Normalised Rent is included below the Consolidated
statement of comprehensive income in the Consolidated financial information
section.
• Adjusted Profit/Loss before tax - profit/loss before tax before non-underlying
items.
• Adjusted Earnings - profit/loss for the year before non-underlying items and
the related tax.
• Basic Adjusted EPS - Adjusted Earnings divided by the basic weighted average
number of shares.
• Free cash flow - Group Adjusted EBITDA Less Normalised Rent and movement in
working capital, less maintenance and enhancement capital expenditure, cash
non-underlying items, bank and non-property lease interest and tax. A
reconciliation of Net cash inflow from operating activities to Free cash flow
is included in Note 12 to the Consolidated financial information.
• Non-Property Net Debt - bank and non-property lease debt less cash and cash
equivalents. See Note 10 to the Consolidated financial information for the
breakdown.
• Mature gym site EBITDA Less Normalised Rent - Group Adjusted EBITDA Less
Normalised Rent contributed by the mature sites. Mature sites are defined as
those sites that have been open for 24 months or more at the period end and
exclude acquisition sites.
• Return on Invested Capital ('ROIC') of mature gym sites - Mature gym site
EBITDA Less Normalised Rent divided by total capital initially invested in the
mature sites (after capital contributions and rent free amounts).
• Maintenance and enhancement 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 from landlords.
• Adjusted Leverage - Non-Property Net Debt divided by Group Adjusted EBITDA
Less Normalised Rent.
• Fixed Charge Cover - Group Adjusted EBITDA divided by Finance costs (excluding
interest costs on property leases) less Finance income plus Normalised Rent.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Year ended 31 December 2024 Year ended 31 December 2023
Underlying Non-underlying (Note 5) Total Underlying Non-underlying (Note 5) Total
Note £m £m £m £m £m £m
Revenue 4 226.3 - 226.3 204.0 - 204.0
Cost of sales (2.9) - (2.9) (2.8) - (2.8)
Gross profit 223.4 - 223.4 201.2 - 201.2
Other income 0.1 - 0.1 0.3 - 0.3
Operating expenses (before depreciation, amortisation and impairment) (139.6) (0.4) (140.0) (128.4) (1.5) (129.9)
Depreciation, amortisation and impairment (60.1) (0.5) (60.6) (57.5) (0.8) (58.3)
Operating profit 23.8 (0.9) 22.9 15.6 (2.3) 13.3
Finance costs (20.7) (0.2) (20.9) (21.4) (0.5) (21.9)
Finance income 0.5 - 0.5 0.3 - 0.3
Profit/(loss) before tax 3.6 (1.1) 2.5 (5.5) (2.8) (8.3)
Tax charge)/(credit) 6 1.8 0.1 1.9 (0.6) 0.5 (0.1)
Profit/(loss) for the year attributable to equity shareholders 5.4 (1.0) 4.4 (6.1) (2.3) (8.4)
Other comprehensive income for the year - - - - - -
Total comprehensive income/(expense) attributable to equity shareholders 5.4 (1.0) 4.4 (6.1) (2.3) (8.4)
Earnings/(loss) per share (p) 7
Basic 3.0 2.5 (3.4) (4.7)
Diluted 2.9 2.4 (3.4) (4.7)
Reconciliation of Operating profit to Group Adjusted EBITDA Less Normalised
Rent(1)
Year ended Year ended
31 December 2024 31 December 2023
Note £m £m
Operating profit 22.9 13.3
Add back: Non-underlying operating items 5 0.9 2.3
Share based payments (included in Operating expenses) 14 3.4 2.4
Underlying depreciation and amortisation 8, 9 60.1 57.5
Group Adjusted EBITDA 87.3 75.5
Less: Normalised Rent(2) (39.6) (37.0)
Group Adjusted EBITDA Less Normalised Rent(1) 47.7 38.5
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 payable, recognised in
the monthly period to which it relates.
Consolidated Statement of Financial Position
As at 31 December 2024
31 December 2024 31 December 2023
Note £m £m
Non-current assets
Intangible assets 92.2 91.4
Property, plant and equipment 8 181.2 171.7
Right-of-use assets 9 280.5 278.1
Investments in financial assets 1.0 1.0
Deferred tax assets 6 18.2 16.3
Total non-current assets 573.1 558.5
Current assets
Inventories 0.7 0.7
Trade and other receivables 8.8 10.8
Cash and cash equivalents 3.0 1.5
Total current assets 12.5 13.0
Total assets 585.6 571.5
Current liabilities
Trade and other payables 49.5 43.6
Lease liabilities 9 27.6 28.6
Provisions 0.5 0.1
Total current liabilities 77.6 72.3
Non-current liabilities
Borrowings 10 61.3 58.9
Lease liabilities 9 312.9 310.6
Provisions 2.2 1.7
Total non-current liabilities 376.4 371.2
Total liabilities 454.0 443.5
Net assets 131.6 128.0
Capital and reserves
Own shares held 0.1 0.1
Share premium 189.9 189.8
Own shares reserve - EBT (3.0) -
Merger reserve 39.9 39.9
Retained deficit (95.3) (101.8)
Total equity shareholders' funds 131.6 128.0
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Own shares held Share premium Own shares reserve - EBT Merger reserve Retained deficit Total
Note £m £m £m £m £m £m
At 1 January 2023 0.1 189.8 - 39.9 (95.8) 134.0
Loss for the year - - - - (8.4) (8.4)
Other comprehensive income for the year - - - - - -
Loss for the year and total comprehensive expense - - - - (8.4) (8.4)
Share based payments 14 - - - - 2.4 2.4
At 31 December 2023 0.1 189.8 - 39.9 (101.8) 128.0
Profit for the year - - - - 4.4 4.4
Other comprehensive income for the year - - - - - -
Profit for the year and total comprehensive income - - - - 4.4 4.4
Share based payments 14 - - - - 2.9 2.9
Issue of Ordinary share capital - 0.1 - - - 0.1
Purchase of own shares by EBT - - (3.5) - - (3.5)
Exercise of share options - - 0.5 - (0.8) (0.3)
At 31 December 2024 0.1 189.9 (3.0) 39.9 (95.3) 131.6
Consolidated Cash Flow Statement
For the year ended 31 December 2024
Year ended 31 December 2024 Year ended 31 December 2023
Note £m £m
Cash flows from operating activities
Profit/(loss) before tax 2.5 (8.3)
Adjustments for:
Finance costs 20.9 21.9
Finance income (0.5) (0.3)
Non-underlying operating items 0.9 2.3
Underlying depreciation of property, plant and equipment 8 24.6 24.0
Underlying depreciation of right-of-use assets 9 29.4 28.0
Underlying amortisation of intangible assets 6.1 5.5
Share based payments and associated NICs 14 3.4 2.4
Decrease in inventories - 0.2
Decrease/(increase) in trade and other receivables 2.3 (2.2)
Increase in trade and other payables 6.1 7.6
Increase/(decrease) in provisions 0.3 (0.6)
Cash generated from operations 96.0 80.5
Tax paid/received - -
Net cash inflow from operating activities before non-underlying items 96.0 80.5
Non-underlying items (0.9) (1.0)
Net cash inflow from operating activities 12 95.1 79.5
Cash flows from investing activities
Purchase of property, plant and equipment (33.0) (19.2)
Purchase of intangible assets (7.0) (4.5)
Bank interest received 0.5 0.3
Net cash outflow used in investing activities (39.5) (23.4)
Cash flows from financing activities
Repayment of lease liability principal (30.2) (28.0)
Lease interest paid (15.5) (15.5)
Bank interest paid (5.8) (4.5)
Payment of financing fees (0.8) (1.0)
Drawdown of bank loans 5.0 2.0
Repayment of bank loans (3.0) (13.0)
Purchase of own shares by EBT 14 (3.5) -
Settlement of share based payments through EBT 14 (0.4) -
Proceeds from issue of ordinary shares 0.1 -
Net cash outflow from financing activities (54.1) (60.0)
Net increase/(decrease) in cash and cash equivalents 1.5 (3.9)
Cash and cash equivalents at the start of the year 1.5 5.4
Cash and cash equivalents at the end of the year 3.0 1.5
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 in this report does not constitute statutory
accounts for the years ended 31 December 2024 or 2023 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 2024 and 2023 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 2023 have
been filed with the Registrar of Companies, and those for 2024 will be
delivered in due course subject to their approval by the Company's
shareholders at the Company's Annual General Meeting on 8 May 2025.
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 2023. The functional currency of each entity in
the Group is pound sterling. The consolidated financial statements are
presented in pound 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 period.
Going concern
In assessing the going concern position of the Group for the year ended 31
December 2024, the Directors have considered the following:
· the Group's trading performance in 2024 and throughout the traditional January
and February 2025 peak period;
· future expected trading performance to 30 June 2026 (the going concern
period), including membership levels and behaviours in light of the
continued difficult macroeconomic environment; and
· the Group's financing arrangements and relationship with its lenders and
shareholders.
Trading in 2024 was strong, with membership at the end of December 2024
reaching 891,000, an increase of 5% from the end of December 2023. Average
revenue per member per month ('ARPMM') for the year was £20.81, up 7% from
£19.50 in the prior year. Ultimate, the premium price product, ended the
year at 29.6% of total membership compared with 31.7% in December 2023. As
a result, revenue increased by 11% to £226.3m (2023: £204.0m), and Group
Adjusted EBITDA Less Normalised Rent at £47.7m was 24% better than
in 2023.
The Group also reported strong cash generation in the year, with free cash
flow of £37.5m (see Note 12 to the Consolidated financial information for a
reconciliation to Net cash inflow from operating activities) being generated
and used to fund 12 new site openings and a number of major refurbishments
and enhancements, as well as significant investment in technology.
On 28 June 2024, the Group agreed a new facilities agreement with its existing
banking syndicate, which came into effect on 1 July 2024. Under the new
agreement, the Group has in place a combined £90m facility, consisting of
£45m of Term Loan and £45m of RCF. The new facility is due to mature in June
2027. Drawings under the facilities continue to be subject to quarterly
financial covenant tests on Adjusted Leverage (Non-property Net Debt divided
by Group Adjusted EBITDA Less Normalised Rent must not exceed 3.0 times) and
Fixed Charge Cover (Adjusted EBITDAR to Net Finance Charges plus Normalised
Rent must be greater than 1.5 times).
As at 31 December 2024, the Group had Non-Property Net Debt (including
non-property leases) of £61.3m, consisting of £61.0m drawn debt under the
RCF, £3.3m of non-property leases and £3.0m of cash. The Directors believe
that this measure of net debt best reflects the financial health of the
business. In addition, it is a key constituent of the Adjusted Leverage
covenant included in the Group's banking agreement as noted above. Headroom
under the bank facilities at 31 December 2024 (drawn debt less cash) was
£32.0m. Adjusted Leverage was 1.3 times and Fixed Charge Cover was 1.9 times.
Following the January and February 2025 peak trading period, closing
membership at 28 February 2025 was 951,000, an increase of 7% on the
position at 31 December 2024, demonstrating that the low cost gym
model remains resilient and spend on gym membership continues to be
prioritised.
Despite the continued strong trading performance, the Directors have continued
to take a cautious approach to planning. The base case forecast for the period
to 30 June 2026 anticipates some growth in yields across the whole
estate as a result of pricing optimisation actions identified as part of
the Next Chapter growth plan. Modest increases in membership levels
are driven largely by the sites opened in 2023 and 2024, and not by growth in
the mature estate.
In addition, the Directors have continued to take a measured approach to new
site openings throughout the plan period, with all new sites assumed to be
self-financed. Under this scenario, the financial covenants are passed with
headroom, and the Group can operate comfortably within its financing
facilities.
The Directors have also considered a severe downside scenario in which
membership numbers in the mature estate decline by approximately 4%. Yields
continue to grow, but at a much more modest rate than in the base case. In
this scenario, the number of new site openings is reduced to conserve cash,
expenditure on maintenance and marketing is reduced slightly, and
discretionary performance-related bonuses and share based payment funding are
removed. Under this scenario, the 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
technology capital expenditure; further reducing controllable
operating costs and marketing expenditure; and pausing the new site opening
programme in order to preserve cash. In this scenario, the closing
membership would need to decline by 23% from April 2025 before the Fixed
Charge Cover covenant would be breached in June 2026. The Group would,
however, continue to operate within its current level of debt capacity and
the Adjusted Leverage ratio would not be breached.
In the event of a reverse stress test scenario, the Directors would introduce
additional measures to mitigate the impact on the Group's covenants and
liquidity, including: (i) even greater reductions in controllable operating
costs, marketing and capital expenditure; (ii) discussions with lenders to
secure a covenant waiver; and (iii) deferral of, or reductions in,
rent payments to landlords. 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 2026. 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 2024.
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 members 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 31 December 2024 Year ended 31 December 2023
£m £m
Major products/service lines
Membership income 214.9 193.1
Rental income from personal trainers 8.2 7.7
Ancillary income 3.2 3.2
226.3 204.0
Timing of revenue recognition
Products transferred at a point in time 3.7 3.5
Products and services transferred over time 222.6 200.5
226.3 204.0
Contract liabilities at 31 December 2024 amounted to £15.8m (2023: £14.4m).
Contract liabilities relate to membership fees received at the start of a
contract, where the Group has the obligation to provide a gym membership over
a period of time and are included within trade and other payables. The
contract liability balance increases as the Group's membership numbers
increase. The Group does not receive any consideration greater than 12 months
in advance from members. Hence the total contract liability as at 31 December
2023 of £14.4m has been recognised as revenue during the year ended 31
December 2024.
5. Non-underlying items
Year ended Year ended
31 December 31 December 2023
2024
£m £m
Affecting operating expenses (before depreciation, amortisation and
impairment)
Costs of major strategic projects and investments 0.2 0.9
Restructuring and reorganisation costs (including site closures) 0.2 0.6
Total affecting operating expenses (before depreciation, amortisation and 0.4 1.5
impairment)
Affecting depreciation, amortisation and impairment
Impairment of property, plant and equipment, right-of-use assets and 0.4 0.6
intangible assets
Amortisation of business combination intangible assets 0.1 0.2
Total affecting depreciation, amortisation and impairment 0.5 0.8
Total affecting operating expenses 0.9 2.3
Affecting finance costs
Refinancing costs and remeasurement of borrowings 0.2 0.5
Total affecting finance costs 0.2 0.5
Total all non-underlying items before tax 1.1 2.8
Tax on non-underlying items (0.1) (0.5)
Total non-underlying charge in income statement 1.0 2.3
Non-underlying items affecting operating expenses (before depreciation,
amortisation and impairment) of £0.4m (2023: £1.5m) relate to costs incurred
in the year on strategic technology projects, as well as a provision for the
closure costs of one gym in 2025.
Non-underlying costs affecting depreciation, amortisation and impairment in
the year amounted to £0.5m (2023: £0.8m), of which £0.4m (2023: £0.6m)
relate to the impairment of one site (2023: two sites). The remaining £0.1m
(2023: £0.2m) of non-underlying costs affecting depreciation, amortisation
and impairment relates to 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 £0.2m (2023: £0.5m)
and relate to advisory and legal costs incurred in agreeing the Group's new
banking facilities in June 2024. Further information about the Group's bank
facilities can be found in Note 10.
Tax on non-underlying items represents the tax charge or credit arising on the
Group's non-underlying items calculated at the current tax rate.
Reconciliation of non-underlying operating items to cash flow
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Non-underlying items affecting operating expenses 0.9 2.3
Less: Non-underlying items affecting depreciation, amortisation and impairment (0.5) (0.8)
Add: opening accruals 0.5 -
Less: closing accruals - (0.5)
Cash outflow from non-underlying operating items 0.9 1.0
6. Taxation
The tax credit/(charge) in the consolidated statement of comprehensive income
is broken down as follows:
Year ended 31 December 2024 Year ended 31 December 2023
£m £m
Current income tax
Current tax on profits for the year - (0.1)
Adjustments in respect of prior years - -
Total current income tax - (0.1)
Deferred tax
Origination and reversal of temporary differences 1.9 -
Total deferred tax 1.9 -
Tax credit/(charge) 1.9 (0.1)
Deferred tax assets are recognised in respect of those tax losses and other
temporary differences only to the extent it is considered probable that the
assets will be recoverable. This involves an assessment of when those assets
are likely to be recovered, and a judgement as to whether or not there will
be sufficient taxable profits available to offset the assets.
In assessing the probability of recovery, the Directors have reviewed the
Group's three year plan that underpinned the going concern and viability
assessment, and the goodwill and property, plant and equipment impairment
testing. The plan was then extended to include a fourth year, as the Directors
believe that four years is an appropriate timeframe over which to forecast
recoverability of the DTAs, given the return to profitability of the Group in
2024, the strong trading performance to date in 2025, and the prediction of
taxable profits in 2025 and beyond. However, the cash flows, particularly in
the outer years, were then risk-adjusted to reflect the uncertainty inherent
to the future.
The Directors believe this risk-adjusted plan provides convincing evidence to
recognise deferred tax assets of £18.2m (2023: £16.3m) in the Group's
balance sheet at 31 December 2024, which is forecast to be recovered within
four years.
A deferred tax asset of £12.1m (2023: £11.1m) has been recognised in respect
of trading losses. The trading losses were incurred as a result of the
Covid-19 pandemic and the subsequent cost-of-living crisis, together with the
introduction in March 2021 of the temporary enhanced capital allowances regime
('the super-deduction tax break'). Losses for which no deferred tax asset has
been recognised amount to £16.1m (2023: £23.0m), resulting in an
unrecognised deferred tax asset of £4.0m (2023: £5.8m) using a 25% tax rate.
There is no time limit for utilising trade losses in the UK.
A deferred tax asset of £3.1m (2023: £2.1m) has arisen on accelerated
capital allowances, whereby the tax written-down value is higher than the net
book value. No deferred tax asset has arisen on intangible assets (2023:
liability of £0.3m). Other deferred tax assets of £3.0m (2023: £3.4m)
includes timing differences on the accounting for the various share schemes.
The deferred tax assets and liabilities have been measured using the rates
expected to apply in the reporting periods when the timing differences
reverse.
There are no material uncertain tax provisions at 31 December 2024 (2023:
nil). However, judgement has necessarily been applied in estimating the impact
and timing of utilisation of capital allowances and tax losses which could
give rise to prior period adjustments in future years.
7. Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the profit/(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 earnings/(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 2024,
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.
Year ended 31 December 2024 Year ended 31 December 2023
Profit/(loss) (£m)
Profit/(loss) for the year attributable to equity shareholders 4.4 (8.4)
Adjustment for non-underlying items 1.0 2.3
Adjusted profit/(loss) for the year attributable to equity shareholders 5.4 (6.1)
Weighted average number of ordinary shares for basic earnings/(loss) per share 177,153,298 178,512,563
Effect of dilution from share options 7,503,376 -
Weighted average number of ordinary shares adjusted for the effect of dilution 184,656,674 178,512,563
Earnings/(loss) per share (p)
Basic earnings/(loss) per share 2.5 (4.7)
Diluted earnings/(loss) per share 2.4 (4.7)
Adjusted basic earnings/(loss) per share 3.0 (3.4)
Adjusted diluted earnings/(loss) per share 2.9 (3.4)
The weighted average number of ordinary shares excludes the shares that are
held by the EBT (see Note 14) as these are classified as Own shares reserve -
EBT.
In the prior year, 7,164,017 share awards were excluded from the diluted
weighted average number of ordinary shares calculation because their effect
would be anti-dilutive.
8. Property, plant and equipment
Assets under construction Leasehold improvements Fixtures, fittings and equipment Gym and other equipment Computer equipment Total
£m £m £m £m £m £m
Cost
At 1 January 2023 2.3 240.8 11.6 90.0 5.6 350.3
Additions 1.4 8.9 0.3 4.2 0.7 15.5
Disposals (0.3) - - - - (0.3)
Transfers (1.6) 1.5 - 0.1 - -
At 31 December 2023 1.8 251.2 11.9 94.3 6.3 365.5
Additions 0.9 23.4 0.3 9.0 1.5 35.1
Disposals (0.2) (1.8) (0.1) (11.7) - (13.8)
Transfers (1.6) 0.7 - 0.6 - (0.3)
At 31 December 2024 0.9 273.5 12.1 92.2 7.8 386.5
Accumulated depreciation
At 1 January 2023 - (95.2) (9.6) (60.5) (4.0) (169.3)
Charge for the year - (15.8) (0.5) (6.9) (0.8) (24.0)
Impairment - (0.4) - (0.1) - (0.5)
At 31 December 2023 - (111.4) (10.1) (67.5) (4.8) (193.8)
Charge for the year - (16.5) (0.4) (6.7) (1.0) (24.6)
Disposals - 1.6 0.1 11.7 - 13.4
Transfers - - - 0.1 - 0.1
Impairment - (0.4) - - - (0.4)
At 31 December 2024 - (126.7) (10.4) (62.4) (5.8) (205.3)
Net book value
At 31 December 2023 1.8 139.8 1.8 26.8 1.5 171.7
At 31 December 2024 0.9 146.8 1.7 29.8 2.0 181.2
Included within additions for the year is £0.4m of capitalised interest
(2023: £0.1m) and £5.5m of accrued capital expenditure (2023: £4.2m).
The Group had £5.9m of commitments that were contracted but not provided as
at 31 December 2024 relating to contracts for the fit-out of new gyms where
works have not yet commenced (2023: £3.6m).
9. 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 leases Non-property leases Total
£m £m £m
Cost
At 1 January 2023 420.5 15.3 435.8
Additions 13.8 3.0 16.8
At 31 December 2023 434.3 18.3 452.6
Additions 32.0 0.2 32.2
Disposals (2.5) (0.1) (2.6)
At 31 December 2024 463.8 18.4 482.2
Accumulated depreciation
At 1 January 2023 (144.6) (1.8) (146.4)
Charge for the year (25.7) (2.3) (28.0)
Impairment (0.1) - (0.1)
At 31 December 2023 (170.4) (4.1) (174.5)
Charge for the year (27.0) (2.4) (29.4)
Disposals 2.3 - 2.3
Transfers - (0.1) (0.1)
At 31 December 2024 (195.1) (6.6) (201.7)
Net book value
At 31 December 2023 263.9 14.2 278.1
At 31 December 2024 268.7 11.8 280.5
The split of lease liabilities between current and non-current is as follows:
31 December 2024 31 December 2023
£m £m
Current 27.6 28.6
Non-current 312.9 310.6
Total Lease liabilities 340.5 339.2
10. Borrowings and Non-Property Net Debt
The carrying value of the Group's bank borrowings at 31 December 2024 was
£61.3m (2023: £58.9m).
In the first half of the year, the Group had in place a combined £80m
Revolving Credit Facility ('RCF') (2023: £80m) which was syndicated to a
three-lender panel of NatWest, HSBC and Barclays. The facility was due to
mature in October 2025 and funds borrowed under the facility agreement bore
interest at a minimum annual rate of 2.85% (2023: 2.85%) above the Sterling
Overnight Index Average ('SONIA').
On 28 June 2024, the Group agreed a new facilities agreement with the same
banking syndicate which came into effect on 1 July 2024. Under the new
agreement, the Group has in place a combined £90m facility, consisting of
£45m of Term Loan and £45m of RCF. The new facility is due to mature in June
2027.
Funds borrowed under the new facilities agreement bear interest at a minimum
annual rate of 2.75% above the Sterling Overnight Index Average ('SONIA'); and
undrawn funds under the RCF bear interest at a minimum annual rate of 1.1%.
The new facilities agreement continues to be subject to quarterly financial
covenant tests on Adjusted Leverage and Fixed Charge Cover (both terms defined
on page 13). Adjusted Leverage must not exceed 3.0 times and the Fixed Charge
Cover must be greater than 1.5 times.
The average interest rate paid in the year on drawn funds was 8.2% (2023:
8.2%).
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 (other than as a
result of changes in floating interest rates), the borrowings are remeasured
using the original effective interest rate. Any remeasurement of borrowings is
treated as non-underlying and excluded from Adjusted earnings.
At 31 December 2024, the Group had drawn down £61.0m under the facilities
(2023: £59.0m), leaving £29.0m (2023: £21.0m) undrawn and available. The
£61.0m is repayable in October 2027. Adjusted Leverage was 1.3 times (2023:
1.7 times) and Fixed Charge Cover was 1.9 times (2023: 1.7 times).
Non-Property Net Debt at the year end was made up as follows:
31 December 2024 31 December 2023
£m £m
Bank borrowings 61.0 59.0
Non-property leases (Note 11) 3.3 8.9
Less: Cash and cash equivalents (3.0) (1.5)
Non-Property Net Debt 61.3 66.4
11. Financial liabilities
The table below sets out the changes in liabilities arising from financing
activities.
Borrowings Non-property lease liabilities Property lease liabilities Total lease liabilities
£m £m £m £m
At 1 January 2023 70.0 11.4 339.0 350.4
Repayments of interest and principal (17.5) (6.5) (37.0) (43.5)
Interest expense 5.7 1.0 14.5 15.5
Drawdowns 2.0 - - -
New leases and modifications - 3.0 13.8 16.8
Other (1.3) - - -
At 31 December 2023 58.9 8.9 330.3 339.2
Repayments of interest and principal (8.8) (6.1) (39.6) (45.7)
Interest expense 5.4 0.5 15.0 15.5
Drawdowns 5.0 - - -
New leases and modifications - - 31.5 31.5
Other 0.8 - - -
At 31 December 2024 61.3 3.3 337.2 340.5
Included in 'Other' is the effect of changes to amortised cost on borrowings
using the effective interest rate method and accrued interest.
12. Net cash inflow from operating activities
The Directors believe that Free cash flow is the measure that best reflects
the amount of cash available to the Group for investing in new sites and
technology, and for enhancing existing sites. As such, Free cash flow is
included within the Key performance indicators section of the Annual Report
and Accounts 2023 and referenced in both the Financial Review and Going
concern note. A reconciliation of Net cash inflow from operating activities to
Free cash flow is included below.
Reconciliation of Net cash inflow from operating activities to Free cash flow
31 December 2024 31 December 2023
£m £m
Net cash inflow from operating activities 95.1 79.5
Less: Property lease payments made (Note 11) (39.6) (37.0)
Less: Maintenance capital expenditure (including funded by lease) (12.2) (10.3)
Less: Bank and non-property lease interest paid (6.3) (5.5)
Add: Bank interest received 0.5 0.3
Free cash flow 37.5 27.0
13. Issued capital
The total number of shares in issue as at 31 December 2024 was 179,287,837
(2023: 178,700,366).
14. Share based payments and Employee Benefit Trust
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 4,841,361 (2023: 5,177,710) shares were granted
under the PSP, the RSP, the SIP and the SAYE. The PSP and RSP awards vest over
three years and are subject to continued employment. The PSP options are also
subject to achievement of certain performance targets. A total of 1,782,726
RSP options and 2,804,981 PSP options were issued.
For the year ended 31 December 2024, the Group recognised a total charge of
£3.4m (2023: £2.4m) in respect of the Group's share based payment
arrangements and related employer's national insurance.
In January 2024, the Group established an Employee Benefit Trust ('EBT') to
purchase shares in order to minimise dilution associated with the share based
payments. During the year ended 31 December 2024, the EBT purchased 2,834,928
shares at a cost of £3.5m. As at 31 December 2024, the EBT held 2,479,863
shares at a value of £3.0m. The shares held in the EBT at 31 December 2024
have been classified as Own shares held - EBT in the Consolidated Statement of
Financial Position.
During the year, the Group made income tax payments on behalf of employees of
£0.4m (2023: £nil) in the form of cash as part of a net settlement process
on share based payments. The settlement in cash reduced the future funding
requirement to the EBT and has accordingly been classified as a financing
activity in the consolidated cash flow statement.
1 For a summary of KPI definitions used in this report see the 'Definition
of non-statutory measures' section.
2 Like-for-like revenue vs 2023 includes all sites open as at 31 December
2021.
3 Sites with a workforce index of more than 120 (workforce population /
residential adult population *100), without car parking or a significant
student population.
4 Based on companies included in the Peakon benchmark. Peakon is software
developed by Workday that is designed to gather, analyse, and improve
employee sentiment.
5 Current Company-compiled analyst forecast range.
6 The Social Value Model created by Sheffield Hallam University focuses on
member participation and the health benefits of regular exercise. It
calculates the financial value resulting from reduced GP visits, enhanced life
satisfaction, personal development and the growth of social and community
connections.
7 Sites with a workforce index of more than 120 (workforce population /
residential adult population *100), without car parking or a significant
student population.
8 Current Company-compiled analyst forecast range.
9 Non-statutory measures are defined in the 'Definition of non-statutory
measures' section.
10 Normalised Rent is the contractual rent payable, recognised in the
monthly period to which it relates.
11 Sites with a workforce index of more than 120 (workforce population /
residential adult population *100), without car parking or a significant
student population.
12 A reconciliation of Net cash inflow from operating activities to Free
cash flow has been included in Note 12 to the Consolidated financial
information.
13 Current Company-compiled analyst forecast range.
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