TIDMGYM
RNS Number : 4674K
Gym Group PLC (The)
02 September 2021
The Gym Group plc
('The Gym Group', 'the Group' or 'the Company')
2021 Interim Results
Strong recovery since re-opening and opportunities for
accelerated growth
The Gym Group, the nationwide operator of 190 low cost, high
quality, 24/7 no contract gyms, announces its interim results for
the six-month period ended 30 June 2021.
The results reflect both the significant disruption caused by
the pandemic and the start of our recovery out of Covid. During
this period, gyms were required by the UK Government to close for
more than 50% of the trading days. However, with gyms re-opening in
April and all remaining Covid restrictions being lifted in July in
England, we have seen strong demand for our gym memberships and now
look forward to a period of sustained recovery and accelerated
growth.
Financial Highlights
Six months ended 30 June 2020
Six months ended 30 June 2021 Restated* Movement
Revenue (GBPm) 29.3 37.3 (21.4)%
Group Adjusted EBITDA (GBPm) 6.7 5.1 31.4%
Group Adjusted EBITDA less Normalised
Rent (GBPm) (8.1) (8.2) 1.2%
Adjusted Earnings (GBPm) (20.9) (22.1) 5.4%
Basic Adjusted Loss per Share (p) (12.6) (14.9) 15.4%
Statutory Earnings (GBPm) (21.8) (24.0) 9.2%
Basic Statutory Loss per share (p) (13.1) (16.1) 18.6%
As at As at
30 June 31 December 2020
2021 Movement
-------------------------------------- ------------------------------ ------------------------------ ---------
Non-Property Net Debt (GBPm)** 30.1 47.3 36.4%
--------------------------------------- ------------------------------ ------------------------------ ---------
* Refer to note 4 of the Condensed Consolidated Financial
Information for details of the restatement of Finance costs.
** Non-Property Net Debt as at 30 June 2021 is stated after
adjusting for the GBP30.3m proceeds of the equity raise on 2 July
2021.
For a summary of KPI definitions used in the table see the
"Definitions of Non-GAAP measures" section .
Operational and Financial Update for H1 2021
-- Strong recovery in membership numbers following re-opening,
with total members at 30 June 2021 of 730,000, up from 547,000
at the end of February 2021
-- Average headline price of a standard DO IT membership increased
to GBP19.11 in June 2021 (vs GBP18.81 in December 2020 and
GBP18.55 in June 2020)
-- LIVE IT penetration at 30 June 2021 was 24.7% of total members,
up from 22.5% at 31 December 2020
-- Number of trading days lost in H1 2021 was similar to H1
2020, however a lower membership base in H1 2021 (due to
extended closure periods during 2020 and 2021) resulted
in a 21.4% reduction in revenue vs H1 2020
-- Strong cost control and Government support during closures,
together with strong recovery on re-opening, limited Group
Adjusted EBITDA less Normalised Rent loss to GBP8.1m, in
line with H1 2020
-- EBITDA and cash flow positive in the months when gyms were
fully open (May and June)
Current Trading Update and Outlook
-- Equity placing completed 2 July 2021 providing GBP30.3m
(net) of financing for accelerated rollout programme
-- In addition to four sites opened in H1, we plan to open
40 new sites in the 18 months to December 2022, of which
three have opened so far in July and August
-- Total membership at 31 August 2021 was 721,000, a small
decline from 30 June 2021 in line with expectations
-- Gym visits remain strong at 1.4 visits per member per week
since re-opening
-- Non-Property Net Debt (including finance leases) at 31 August
2021 was GBP28.3m with headroom of GBP73.3m against GBP100m
RCF
Richard Darwin, CEO of The Gym Group, commented:
"Since the re-opening of gyms in April, The Gym Group has
performed strongly with excellent member feedback, a higher rate of
visits per member and a rapid recovery in overall membership
levels. We have identified some exciting growth opportunities to
expand our estate further and raised additional funds from
shareholders to capitalise upon them. With restrictions now lifted,
we are planning to open 40 new sites by the end of 2022, of which
three have opened so far in July and August, as we continue to make
fitness accessible for all and deliver further social value to
communities around the country. We look forward to the second half
of the year and beyond with confidence."
A live audio webcast of the analyst presentation will be
available at 08.30am today via the following link:
https://webcasting.brrmedia.co.uk/broadcast/611531bec97de6636c2d90db
For further information, please contact:
The Gym Group via Tulchan
Richard Darwin, CEO
Mark George, CFO
Numis
Luke Bordewich
George Price 0207 260 1366
Peel Hunt
Dan Webster
George Sellar 0207 418 8900
Tulchan
James Macey-White
Elizabeth Snow 0207 353 4200
Forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature, such
statements involve risk and uncertainty since they relate to future
events and circumstances. Actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by law or by the Listing Rules of the UK Listing
Authority, the Company undertakes no obligation to publicly revise
any forward-looking statements in this announcement following any
change in its expectations or to reflect subsequent events or
circumstances following the date of this announcement.
Chief Executive's Review
During the first half of 2021, The Gym Group took the decisive
steps needed to ensure that the business is well-placed to prosper
in the post-Covid environment. Our fundamental belief is that the
growing demand for health and fitness over the last decade will
continue and accelerate over the coming years, in part due to the
health shock that the nation has experienced. The Gym Group is
well-positioned to take advantage of this demand with our high
quality, affordable product, a well-invested estate and the
financing capacity to accelerate our gym rollout programme.
Rebuilding membership levels after re-opening
Our initial focus following the re-opening of gyms after the
third lockdown in April 2021 was to recover our membership base. At
the end of June 2021, we had 730,000 members, up one third from the
Covid low of 547,000 at the end of February 2021. Part of this
rebound was due to our effective marketing campaign which saw the
deployment of our traditional January and February programme in
April and May, using a mix of TV, social media, radio and digital
performance channels. As a result of the successful campaign, we
saw a higher than normal proportion of ex-members re-joining -
despite this over 50% of new joiners remain new to our gyms. The
return to the gym has also been helped by the UK Government's
vaccination programme that has reduced overall risks from
Covid.
We believe that having experienced this initial strong rebound
in membership, we will see further recovery in member numbers
during the coming months. The small number of sites that are
showing lower levels of growth are those that are largely dependent
on office workers, and the recovery in those sites will depend on
the speed of the return to the office. We expect growth in
membership in September and October as students return to
universities. The next peak in membership will be in January and
February 2022 and our business is already planning ahead for a
strong campaign to maximise this seasonal demand.
Supporting our colleagues and members
The tremendous work of our teams across the business, both in
the sites and centrally has been fundamental to the re-opening. We
continued to support our Fitness Trainers ("FTs") who work for us
for 12 hours a week by offering a discounted rent on the
self-employed part of their business for three months after
re-opening whilst they re-established their own businesses. I am
pleased that the FTs have responded by showing strong loyalty to
our business resulting in low vacancy rates similar to levels
achieved pre-Covid. I am also delighted with the take-up of our
Government-supported Kickstart programme with 250 applications
approved for the scheme and 17 having already graduated and taken
up positions in our business.
The restrictions around our business were removed in England
from 19 July and in Wales and Scotland from 7 and 9 August
respectively; this is a welcome development as we seek to normalise
our operations, bring more of our equipment back into use and offer
a fuller class timetable with more capacity to our members.
However, there are some elements that we have introduced in the
past year that are additions to our offer which we plan to retain.
These include the increased sanitation and cleaning, QR codes for
contactless entry and a busyness tracker in the app. A number of
our gym colleagues have also been trained on the impact of Long
Covid so that they can help members to exercise more effectively.
Overall, our member feedback since re-opening has been strong with
satisfaction levels six percentage points higher than pre-Covid,
demonstrating confidence in the Covid-secure procedures we have put
in place as well as our overall product offer.
Commitment to investment and innovation
The effective use of technology is an important part of our
business and even during periods of Covid closure, we have
continued to invest in our infrastructure and team whilst
instigating a number of new initiatives to improve our proposition.
Only low cost operators with scale have the resources to be able to
invest in these areas and I believe that at The Gym Group we have
built real capability and competitive advantage. Improvements in
online functionality and user experience, along with a more
resilient web platform, were key to the delivery of record-breaking
member acquisition in April and May after the re-opening. We have
also improved the member experience with a refreshed app, and the
functions introduced during Covid - contactless entry and busyness
tracker - continue to be popular. In data and analytics, our
increased capability has enabled new work on price optimisation,
elasticity of demand and churn prediction, and is increasing our
use of data to make informed decisions on finding sites.
During the pandemic, we introduced Fiit, the at-home digital
class offering, which is now available for our members to sign up
for in the join journey on the website. Trials of the class
offering, including digital content from Fiit, are underway in
three gyms including our recently refurbished site in Oxford
Street.
Our Commercial teams also launched a strong re-opening campaign
and upweighted our presence across a number of social and digital
channels. Performance marketing has been a big area of focus with
the appointment of a new agency to improve levels of expertise.
These are all important capabilities for a business that is part
multi-site leisure business and part e-commerce business. We are
continuing to invest in expanding the size of our teams across
Commercial and Marketing, Technology, Data and Operations, in order
to deliver further improvements in our key trading metrics.
Financial impact of Covid
The prolonged period of lockdown had another significant impact
on our financial performance (as in 2020). The Government support
provided through furlough, local grants, and business rates relief
has proven to be helpful support to mitigate the effect of three
and a half months of closure in this half year period. The closure
period meant we froze member payments, effectively reducing revenue
to zero. Overall, we have had to accommodate approximately nine
months of closure across 2020 and 2021.
Our revenue for the half year was GBP29.3m down 21.4% (H1 2020:
GBP37.3m) as a result of the lower membership in H1 2021; and Group
Adjusted EBITDA less Normalised Rent was a loss of GBP8.1m (H1
2020: loss of GBP8.2m). Statutory earnings were a loss of GBP21.8m
(H1 2020: loss of GBP24.0m) and Non-Property Net Debt at the period
end was GBP30.1m after adjusting for the equity placing proceeds
(31 December 2020: GBP47.3m). Deferred rents and VAT payments
outstanding at 30 June 2021 amounted to GBP5.5m and GBP1.7m
respectively.
Significant opportunity for growth
Our view is that the long-term growth of health and fitness in
the UK during the last decade will continue post-Covid and that the
low cost gym market has the potential to approximately double in
size over the coming years from its current size of 749 sites. The
pandemic has accelerated the strategic opportunity for our business
in two ways: (1) The impact of the crisis on the competitive
landscape; and (2) The availability of high quality sites to
accelerate our rollout. Part of our strong start has been as a
result of dislocation of members from other operators that have not
re-opened. Around 20% of Local Authority-owned facilities have
remained closed and mid-market and premium operators continue to be
squeezed. Our business, with its strong balance sheet, scale, and
quality locations, is set to be able take advantage of this altered
competitive environment.
As part of our actions to speed up the rollout, we have
increased the size of our Property Acquisition team to ensure we
can take advantage of new site opportunities across the whole
country as they arise. The current property market is the most
favourable we have seen in the 12 years that this business has been
in existence. As a result of a large number of retailers focusing
on their online operations and other retailers going through CVAs,
we are being offered high quality sites, particularly on retail
parks, at commercial rents that work well within our business
model. Landlords want to work with The Gym Group and, as a result,
we have built a pipeline of around 80 potential sites with 15
currently exchanged, of which we are onsite at seven. All potential
sites continue to be evaluated against the Group's 30%+ ROIC
threshold.
Seven new sites have opened so far in 2021, of which four were
opened in the first half and three were opened in July and August.
All are performing strongly, reinforcing our confidence in the
opportunity to accelerate our rollout. New gyms have been opened in
Chichester, York, Cambridge, Leeds, Oxford, Perth and Sydenham in
London. A number of these locations have been targets for a number
of years.
We are targeting 40 new openings in the 18 months to December
2022 (including the three that we opened in July and August), made
up of standard sized gyms of 10,000-20,000 sq. ft, as well as a
small number of small box gyms of 7,000-9,000 sq. ft. Having a full
range of appropriate formats means we can penetrate smaller
catchment areas as well as the larger catchments where our growth
to date has been concentrated.
To be able to take advantage of the accelerated rollout
opportunity fully we also needed funding. I am delighted that our
shareholders supported us in the equity placing in July 2021, where
we raised GBP30.3m net proceeds, and that our lending syndicate
provided additional flexibility. This equity financing, combined
with our available debt facilities and cash generation, means we
are now well-placed to be able to accommodate this acceleration,
whilst retaining relatively low levels of leverage. Our teams have
moved quickly since the fundraise with a number of new sites under
construction. Overall, our balance sheet is stronger than all
others within the current UK Health and Fitness market and we
believe that our strength of covenant further reinforces our
ability to accelerate our site expansion by proving us to be an
attractive partner for landlords.
Sustainability
During 2021, we have made great strides in communicating and
reporting externally what has always been at the core of our
business - a commitment to growing and operating in a sustainable
way and ensuring that fitness becomes accessible to a much broader
audience. In February, we published the social value generated by
our gyms over the past 5-year period which amounted to GBP1.8bn;
the first private leisure business in the UK to do so. We also
reported at the year end against Global Reporting Initiative
standards (Core Option) for the first time. We continue to work to
the UN sustainability goals across the four key areas we have
identified: (1) Good health and promoting wellbeing; (2) Good jobs,
quality education and lifelong learning; (3) Diversity and equal
opportunity; and (4) Responsibility to the environment.
A comprehensive materiality assessment with all our stakeholder
groups is currently being conducted and we will use this input to
expand and, where required, adjust our focus. We have also measured
our carbon footprint which will enable us to set reduction targets
in due course; and we will be publishing our first 'Task Force on
Climate-Related Financial Disclosures' report alongside our Annual
Report and CDP* disclosure next year. But above all, we are aware
that our greatest contribution is to encourage a diverse set of
members to work out in our gyms with greater frequency (in sites
that are designed to minimise our impact on the environment), and
we continue to focus on that aim.
* Note: CDP is a not-for-profit charity that runs the global
disclosure system for investors, companies, cities, states and
regions to manage their environmental impacts.
Looking forward
The growth in our membership since 12 April has been strong, but
we believe there is more to come. The past 18 months has been a
time of great change in our business - our team and our members
have embraced that change. Now our focus as a business is on taking
advantage of the opportunity that has been presented to us to
accelerate our rollout and speed up our growth, as well as
continuing to recover our membership base. At the end of August,
our membership was in line with our expectations at 721,000,
reflecting the more normal seasonal summer patterns. However, on
the back of the normal seasonal peaks, we do expect further growth
across the September and October period boosted by the number of
new openings that we have planned.
The funds raised through the successful equity placing and
additional flexibility provided by our lending syndicate, together
with our continued investment in technology, infrastructure and
people, ensure we are well-placed to focus on executing our
exciting rollout programme. The Gym Group is a leading player in an
important and growing sector, and I am convinced by the compelling
opportunity we have to expand our offer of affordable fitness to
more people over the coming months and years.
Richard Darwin
Chief Executive Officer
2 September 2021
Financial Review
Summary
Trading in the six months to 30 June 2021 has again been
challenging for The Gym Group as a result of the Covid-19 pandemic,
with Government-enforced gym closures in the first three and a half
months resulting in the loss of over 50% of trading days. Whilst
this has had an inevitable detrimental impact on our financial
performance, we have navigated the challenges well and taken a
number of actions to mitigate the impact of the lost revenue,
including reducing costs and capital expenditure to conserve cash.
In addition, we continued to receive UK Government support in the
form of business rates relief, furlough payments and Local
Authority grants.
Gyms re-opened in England on 12 April, followed by gyms in
Scotland on 26 April and in Wales on 3 May. Since re-opening,
trading has been ahead of our expectations, reflecting strong
membership recovery and an increased average number of visits per
member. We opened four new gyms in the first half of the year,
taking our total estate to 187 gyms. All four gyms are performing
well.
This financial review uses a combination of statutory and
non-statutory measures to summarise performance in the period. The
definitions of the non-statutory Key Performance Indicators can be
found in the "Definitions of non-GAAP measures" section.
Six months ended 30 June 2020
Six months ended 30 June 2021 Restated*
------------------------------------------------- ------------------------------ ------------------------------
Total number of gyms at period end 187 179
Total number of members at end of period ('000) 730 698
Revenue (GBPm) 29.3 37.3
Group Adjusted EBITDA (GBPm) 6.7 5.1
Group Adjusted EBITDA less Normalised Rent (GBPm) (8.1) (8.2)
Adjusted Loss before Tax (GBPm) (27.4) (26.3)
Adjusted Earnings (GBPm) (20.9) (22.1)
Statutory Loss before Tax (GBPm) (28.5) (28.6)
Statutory Earnings (GBPm) (21.8) (24.0)
Group Operating Cash Flow (GBPm) (3.4) (4.0)
Free Cash Flow (GBPm) (4.3) (5.0)
-------------------------------------------------- ------------------------------ ------------------------------
* Refer to note 4 of the Condensed Consolidated Financial
Information for details of the restatement of Finance costs.
Result for the period
Six months
Six months ended 30
ended 30 June 2020
June 2021 Restated*
GBPm GBPm
-------------------------------------------------- ----------- -----------
Revenue 29.3 37.3
Cost of sales (0.5) (0.8)
--------------------------------------------------- ----------- -----------
Gross profit 28.8 36.5
Other income 6.5 -
Administration expenses excluding exceptional
items (54.6) (55.0)
Exceptional administration items (0.1) (0.4)
--------------------------------------------------- ----------- -----------
Operating loss (19.4) (18.9)
Finance costs (9.1) (9.7)
Loss before tax (28.5) (28.6)
Tax credit 6.7 4.6
--------------------------------------------------- ----------- -----------
Loss for the period attributable to shareholders (21.8) (24.0)
Loss before tax (28.5) (28.6)
Amortisation of non-IT intangible assets - 0.3
Exceptional administration expenses 0.1 0.4
Remeasurement of borrowings 1.0 1.6
--------------------------------------------------- ----------- -----------
Adjusted loss before tax (27.4) (26.3)
Tax credit 6.7 4.6
Tax effect of above items (0.2) (0.4)
--------------------------------------------------- ----------- -----------
Adjusted earnings (20.9) (22.1)
--------------------------------------------------- ----------- -----------
* Refer to note 4 of the Condensed Consolidated Financial
Information for details of the restatement of Finance costs.
Revenue
Revenue in the period decreased by 21.4% to GBP29.3m (H1 2020:
GBP37.3m), reflecting the extended lockdown in early 2021 which
meant that gyms were only open for two full months of the period.
In the periods of Government-enforced closure, we earned close to
zero revenue as we again 'froze' members' accounts so they did not
pay their subscription while gyms were closed. Ancillary income
(e.g. vending) and rental income from our Fitness Trainers were
also lost during these closure periods.
Whilst the number of trading days was broadly similar year on
year, membership numbers and revenue in the first half of 2021 were
substantially lower than in the first half of 2020 due to the
extended periods of closure during 2020 and early 2021. From a peak
in February 2020 of 891,000, membership decreased to 547,000 by the
end of February 2021. When gyms re-opened in April 2021, we saw
stronger demand than expected, with member numbers increasing to
730,000 by the end of June 2021. The freeze-free option was removed
on re-opening which meant that revenue also recovered strongly from
the re-opening date.
Since re-opening, we have been able to maintain a good yield per
member. The average headline price of a standard DO IT membership
increased to GBP19.11 in June 2021 (vs GBP18.81 in December 2020
and GBP18.55 in June 2020) and the proportion of members taking our
premium LIVE IT membership increased to 24.7% in June 2021 (vs
22.5% in December 2020 and 20.7% in June 2020).
Other income
Other income in the period amounted to GBP6.5m (H1 2020: GBPnil)
and reflects income received under the various Covid-related
Government grant schemes. A further GBP0.6m was received in July
2021 and will be included in the results for the second half of the
financial year.
Administration expenses excluding exceptional items
Administration expenses excluding exceptional items are made up
as follows:
Six months Six months
ended 30 ended 30
June 2021 June 2020
GBPm GBPm
----------------------------------------------- ----------- -----------
Site costs before Normalised Rent 21.5 24.7
Add: Normalised Rent 14.8 13.3
------------------------------------------------ ----------- -----------
Site costs including Normalised Rent 36.3 38.0
Central support office costs 7.1 6.7
Depreciation & amortisation 24.4 24.6
Long-term employee incentive costs/(credit) 1.6 (1.0)
Less: Normalised Rent (14.8) (13.3)
------------------------------------------------ ----------- -----------
Administration expenses excluding exceptional
items 54.6 55.0
------------------------------------------------ ----------- -----------
Site costs including Normalised Rent
Site costs including Normalised Rent decreased to GBP36.3m (H1
2020: GBP38.0m) as management continued to control operating costs;
take advantage of Government support in the form of the Coronavirus
Job Retention Scheme ('CJRS') and business rates relief; and
negotiate Covid-related rent concessions with landlords.
Across our gyms and central support, we furloughed approximately
95% of our staff during closure periods. The total support claimed
from the CJRS in the six months to 30 June 2021 was GBP3.4m (H1
2020: GBP4.3m) and has been netted off against staff costs within
Administration expenses in the Group's income statement. When gyms
re-opened, staff costs returned to more normal levels as furlough
support ended.
Cleaning and maintenance costs also increased in the run-up to
and following re-opening as we worked to ensure a safe and
welcoming gym environment for both members and staff. This has been
reflected in a significant increase in membership satisfaction
scores compared to pre-Covid levels.
Business rates relief amounted to GBP6.8m in the six months
ended 30 June 2021 (H1 2020: GBP3.3m), with a further GBP2m
expected in the second half of the year. In addition to significant
rent deferrals, we also agreed a further GBP1.1m of rent
concessions in the period (H1 2020: GBP0.4m) which have been
included as a credit within Administration expenses and a reduction
in the lease liability, in line with the IASB practical expedient
for Covid-19-Related Rent Concessions in relation to IFRS 16
Leases.
Normalised Rent costs, which are defined as the contractual
rents that would have been paid in normal circumstances without any
agreed deferments, recognised in the monthly period to which they
relate, amounted to GBP14.8m in the period (H1 2020: GBP13.3m). The
increase year on year reflects the growing gym portfolio.
Central support office costs
Central support office costs increased slightly in the six
months to 30 June 2021 to GBP7.1m (H1 2020: GBP6.7m) as we
continued our investment in people and technology to ensure we
emerged strongly from the pandemic.
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 the statutory
operating loss as follows:
Six months Six months
ended 30 ended 30
June 2021 June 2020
GBPm GBPm
------------------------------------------- ----------- -----------
Operating loss (19.4) (18.9)
Add back: Depreciation of property, plant
and equipment 11.4 12.1
Add back: Depreciation of right-of-use
assets 11.2 10.8
Add back: Amortisation of intangible
assets 1.8 1.7
Add back: Exceptional items 0.1 0.4
Add back: Long-term employee incentive
costs/(credit) 1.6 (1.0)
Less: Normalised Rent (14.8) (13.3)
-------------------------------------------- ----------- -----------
Group Adjusted EBITDA less Normalised
Rent (8.1) (8.2)
-------------------------------------------- ----------- -----------
Group Adjusted EBITDA less Normalised Rent was a loss of GBP8.1m
in the period (H1 2020: loss of GBP8.2m) and reflects the
significant reduction in revenue, partially offset by the various
cost saving measures and Government support described above.
Long-term employee incentive costs
During the period, the Group granted further shares under the
Performance Share Plan ('PSP'), the Share Incentive Plan ('SIP')
and the Restricted Stock Option Plan to certain members of senior
management. The awards vest in three years provided continuous
employment during this period and, in the case of the PSP, certain
performance conditions are met relating to total shareholder
returns.
The Group continues to operate a matching shares scheme under
the SIP, where for every share purchased by an employee the Group
will award one matching share, up to a maximum value. The shares
vest after three years subject to continuous employment.
The Group recognised a charge of GBP1.6m in the period (H1 2020:
credit of GBP1.0m) in relation to the share-based payment
arrangements. The prior year credit reflected an adjustment to
reverse certain historical charges following an assessment that
financial targets in relation to the 2018 and 2019 schemes would
not be met.
Finance costs
Finance costs in the period amounted to GBP9.1m (H1 2020
restated: GBP9.7m). The implied interest relating to the lease
liability under IFRS 16 was GBP6.6m (H1 2020: GBP6.8m). Finance
costs associated with our bank borrowing facilities were GBP2.5m
(H1 2020 restated: GBP2.9m) comprising interest costs and fee
amortisation of GBP1.5m (H1 2020: GBP1.3m), and a charge in
relation to the remeasurement of the amortised cost of our
borrowings of GBP1.0m (H1 2020 restated: GBP1.6m).
Taxation
The tax credit in the period was GBP6.7m (H1 2020 restated:
credit of GBP4.6m), representing an effective tax rate ('ETR') on
statutory profit before tax of 23.5% (H1 2020 restated: 16.1%). The
increase in ETR is largely due to the impact of the change in UK
corporation tax from 19% to 25% on the Group's deferred tax assets,
following substantive enactment of the Finance Act 2021, and
changes in assumptions relating to the Group's performance share
plans.
The effective tax rate on adjusted loss before tax is 23.7% (H1
2020: 16.0%).
Earnings
As a result of the factors discussed above, the statutory loss
before tax for the period was GBP28.5m (H1 2020 restated: loss of
GBP28.6m) and the loss after tax for the period was GBP21.8m (H1
2020 restated: loss of GBP24.0m).
Adjusted loss before tax is calculated by taking the statutory
loss before tax and adding back the amortisation associated with
non-IT related intangibles, any exceptional items and the gain or
loss on re-measurement of borrowings. Adjusted loss before tax in
the period was GBP27.4m (H1 2020: loss of GBP26.3m).
The basic loss per share was 13.1p (H1 2020 restated: loss of
16.1p), and the basic adjusted loss per share was 12.6p (H1 2020:
loss of 14.9p).
Dividend
As set out in the Group's Annual Report and Accounts 2020, i t
is a condition of the GBP30m New Bank Facility that the Company
shall not declare or pay a dividend. Although this facility
currently remains undrawn, the Directors would like to continue to
have access to it as necessary and as a result the Directors are
not proposing an interim dividend for 2021.
Cash flow
Our focus during the extended lockdown period was to manage
cash, ensuring we exited lockdown with a good level of liquidity,
ready to grow the business and take advantage of the opportunities
in the property market. During a period of lockdown, the typical
net cash outflow for the Group was c. GBP5m per month. In open
months, the Group is typically cashflow positive before
expansionary capital expenditure.
Six months Six months
ended 30 ended 30
June 2021 June 2020
GBPm GBPm
-------------------------------------------- ----------- -----------
Group Adjusted EBITDA less Normalised
Rent* (8.1) (8.2)
Rent working capital 1.2 10.0
Movement in other working capital 4.8 (0.2)
Maintenance capital expenditure cash
flow (1.3) (5.6)
--------------------------------------------- ----------- -----------
Group operating cash flow (3.4) (4.0)
Exceptional items - (0.4)
Bank interest paid (0.9) (0.6)
Free cash flow (4.3) (5.0)
Expansionary capital expenditure funded
by leases (1.5) -
Expansionary capital expenditure funded
by other sources (7.2) (15.4)
Refinancing fees - (0.3)
Capex lease repayment (0.1) -
Net proceeds from issue of ordinary shares - 39.9
Other financial assets purchased - (1.0)
Movement in Non-Property Net Debt before
finance leases (13.1) 18.2
Net movement in Non-Property leases 1.4 -
Net drawdown/(repayment) of borrowings 14.0 (14.0)
Net cash flow 2.3 4.2
--------------------------------------------- ----------- -----------
* A reconciliation of operating profit to Group Adjusted EBITDA
less Normalised Rent can be found below the Condensed Consolidated
Statement of Comprehensive Income.
The Group operating cash outflow in the six months ended 30 June
2021 was GBP3.4m (H1 2020: outflow of GBP4.0m), largely reflecting
the Group's losses at the EBITDA level as a result of the extended
closure period. This was partly offset by inflows on rent working
capital and other working capital of GBP1.2m and GBP4.8m
respectively, as we agreed further deferrals with landlords and
returned to more normal creditor levels following the re-opening of
gyms in April.
As at 30 June 2021, GBP5.5m of rent deferrals remained
outstanding. In addition, for a number of sites, we were able to
establish deals with landlords to extend the leases or take out a
lease break in exchange for rent-free periods; the cash flow
benefit of these rent-free periods in the first half of 2021 was
GBP0.8m.
Fixed asset additions in respect of maintenance capital
expenditure were relatively low in the period at GBP1.5m (H1 2020:
GBP4.1m) as we focused only on repairs required for health and
safety reasons to conserve cash where possible. Adjusting for the
movement in capex creditors, the cash flow from maintenance capex
was GBP1.3m (H1 2020: GBP5.6m).
Fixed asset additions in respect of expansionary capital
expenditure in the period were GBP7.3m (H1 2020: GBP13.3m) and
relate to the Group's investment in the fit-out of new and acquired
gyms and technology projects . It is stated net of contributions
towards landlord building costs. During the period, we opened four
new sites and started work on a number of sites to be opened later
in the year, spending a total of GBP5.6m. We also continued to
invest in technology throughout the period. Adjusting for the
movement in capex creditors, the cash flow from expansionary capex
was GBP8.7m (H1 2020: GBP15.4m) including GBP1.5m funded by
leases.
Following the introduction of Government relief measures on VAT,
we deferred a GBP1.9m VAT payment relating to Q1 2020 that was due
to be paid in March 2020. This deferred VAT is now being paid
equally over an eight-month period, with the first instalment being
made in June 2021, leaving GBP1.7m of deferred VAT outstanding at
the end of the period.
Balance sheet
As at
As at As at 31 December
30 June 2021 30 June 2020* 2020
GBPm GBPm GBPm
------------------------- -------------- --------------- -------------
Non-current assets 527.9 511.0 521.9
Current assets 11.0 12.1 10.5
Current liabilities (51.3) (53.8) (43.0)
Non-current liabilities (353.4) (304.1) (335.0)
------------------------- -------------- --------------- -------------
Net assets 134.2 165.2 154.4
------------------------- -------------- --------------- -------------
* Refer to note 4 of the Condensed Consolidated Financial
Information for details of the restatement of Finance costs.
Non-current assets increased in the six months to 30 June 2021
by GBP6.0m to GBP527.9m largely as a result of an increase in the
deferred tax asset, reflecting the increased losses in the period
and the impact of the change in UK corporation tax from 19% to 25%,
following substantive enactment of the Finance Act 2021.
Current assets increased in the period by GBP0.5m as a reduction
in the receivables balance was more than offset by an increase in
cash balances.
Current liabilities increased by GBP8.3m and reflects higher
trade payables following the full site re-opening and additional
lease liabilities.
Non-current liabilities largely comprise the long-term element
of the Group's lease liabilities and drawn bank debt. The increase
of GBP18.4m in the period reflects the drawdown of the RCF and the
inception of new leases.
At 30 June 2021, the Group had Non-Property Net Debt of GBP60.4m
(30 June 2020: GBP29.2m; 31 December 2020: GBP47.3m), comprising
drawn facilities of GBP65.0m and finance leases of GBP1.4m, less
cash of GBP6.0m. Deferred rent and VAT at the balance sheet date
amounted to GBP5.5m and GBP1.7m respectively. During the period,
the Group agreed with its lenders a waiver for both the March and
June 2021 covenants as a result of the extended lockdown
period.
Going concern
The Board has reviewed the financial forecasts and sensitivities
of the Group and has a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
period to 31 December 2022. As a result, the Directors continue to
adopt the going concern basis in preparing these condensed
consolidated financial statements and have concluded that there is
no material uncertainty. In making this assessment, consideration
has been given to the current and future expected trading
performance; the Group's current and forecast liquidity position;
the Covid-19 situation and success of the UK vaccination programme;
the support received to date from our lenders and shareholders; and
the mitigating actions that can be deployed in the event of
reasonable downside scenarios. Further detail is provided in Note 2
of the Condensed Consolidated Financial Information.
Update and outlook
On 2 July 2021, we raised a further GBP30.3m of equity (net of
fees) from our shareholders and agreed a relaxation of the capital
expenditure and finance lease restrictions in our banking
facilities, reducing Non-Property Net Debt to GBP30.1m and
providing the liquidity necessary to fund our accelerated rollout
programme.
In addition to the four sites opened in the first half of the
year, we are targeting a further 40 new openings in the 18 months
to December 2022 . We have opened three new gyms in July and August
and have exchanged on a further 15, of which we are currently
onsite at seven. All potential sites continue to be evaluated
against the Group's 30%+ ROIC threshold.
The summer months are historically quieter times for gyms.
Membership at 31 August 2021 was 721,000 which is slightly below
the level at the end of June but in line with our expectations. We
anticipate increases in membership levels in September and October
as students return to universities and further growth in the
January and February 2022 peak trading period.
The increased liquidity, together with the further easing of
lockdown restrictions throughout England, Scotland and Wales and
the investments we have made in technology, people and marketing,
mean that we are well-placed to enter a period of rapid and
sustained growth.
Principal Risks and Uncertainties
A summary of the principal risks and uncertainties that the
Group faces is set out below. Further detail about each of the
risks can be found on pages 48 to 50 of the Annual Report and
Accounts 2020, published on 18 March 2021.
-- Business interruption, including the impact of Covid-19
-- Operational gearing
-- Member experience
-- Economic conditions
-- Competition
-- Staff retention
-- Information technology dependency
-- Organic rollout
-- Data protection
-- Regulatory
The Directors have reviewed the principal risks and
uncertainties and believe they remain valid at the date of this
report.
The Directors believe that the impact of Covid-19 on the Group's
principal risks has reduced significantly since year end as a
result of the successful vaccine rollout programme, but it has not
gone away completely. The risks of business interruption,
operational gearing and economic conditions are believed to be much
wider than just the risk of pandemics and, as such, continue to be
principal risks to the Group's ability to trade successfully.
The risk of organic rollout also remains valid but has shifted
somewhat from a risk of site scarcity towards one of execution risk
as we accelerate the rollout programme to take advantage of market
conditions.
Mark George
Chief Financial Officer
2 September 2021
Responsibility statement
The Directors of the Company are listed on pages 56-57 of the
Annual Report and Accounts 2020.
The Directors confirm that, to the best of their knowledge:
-- the Interim Financial Statements have been prepared in accordance
with IAS 34 Interim Financial Reporting;
-- the Interim Management Report includes a fair review of
the information required by DTR 4.2.7R (indication of important
events during the first six months and description of principal
risks and uncertainties for the remaining six months of
the year); and
-- the Interim Management Report includes a fair review of
the information required by DTR 4.2.8R (disclosure of relates
parties' transactions and changes therein).
On behalf of the Board
Mark George
Chief Financial Officer
2 September 2021
Key Performance Indicators
Definitions of non-GAAP measures
- Group Adjusted EBITDA - is operating profit before depreciation,
amortisation, long-term employee incentive costs and exceptional
items.
- Normalised Rent - is the contractual rent that would have
been paid in normal circumstances without any agreed deferments,
recognised in the monthly period to which it relates.
- Adjusted Profit before Tax - is calculated as profit before
tax before non-IT amortisation, exceptional items and remeasurement
of bank borrowings.
- Adjusted Earnings - is calculated as the Group's profit
for the period before non-IT amortisation, exceptional items,
remeasurement of bank borrowings and the related tax effect.
- Basic Adjusted EPS - is calculated as the Group's profit
for the period before non-IT amortisation, exceptional items,
remeasurement of bank borrowings and the related tax effect,
divided by the basic weighted average number of shares.
- Group Operating Cash Flow - is calculated as Group Adjusted
EBITDA less Normalised Rent plus movement in working capital
less maintenance capital expenditure.
- Free Cash Flow - is calculated as Group Operating Cash Flow
less tax, interest and other financing costs and exceptional
items.
- Non-Property Net Debt - is calculated as borrowings less
property leases and cash and cash equivalents.
- Return On Invested Capital - is calculated as Group Adjusted
EBITDA less Normalised Rent of the Group's mature sites,
divided by total capital invested in the sites.
- Maintenance capital expenditure - relates to the replacement
of gym equipment and premises refurbishment.
- Expansionary capital expenditure - relates to the Group's
investment in the fit-out of new gyms and technology projects.
It is stated net of contributions towards landlord building
costs.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2021
Six months Six months
ended 30 ended 30
June 2021 June 2020
Restated*
Unaudited Unaudited
Note GBPm GBPm
----------------------------------------------- ------ ----------- -----------
Revenue 5 29.3 37.3
Cost of sales (0.5) (0.8)
----------------------------------------------- ------ ----------- -----------
Gross profit 28.8 36.5
Other income 6.5 -
Administration expenses (54.7) (55.4)
----------------------------------------------- ------ ----------- -----------
Operating loss (19.4) (18.9)
Finance costs (9.1) (9.7)
----------------------------------------------- ------ ----------- -----------
Loss before tax (28.5) (28.6)
Tax credit 6 6.7 4.6
----------------------------------------------- ------ ----------- -----------
Loss for the period attributable to equity
shareholders (21.8) (24.0)
----------------------------------------------- ------ ----------- -----------
Other comprehensive income for the period
Items that may be reclassified to profit
or loss
Changes in the fair value of derivative
financial instruments - -
Total comprehensive loss attributable
to equity shareholders (21.8) (24.0)
----------------------------------------------- ------ ----------- -----------
Loss per share pence pence
----------------------------------------------- ------ ----------- -----------
Basic and diluted 7 (13.1) (16.1)
Reconciliation of Operating loss to Group Adjusted EBITDA less Normalised
Rent
GBPm GBPm
----------------------------------------------- ------ ----------- -----------
Operating loss (19.4) (18.9)
- Depreciation of property, plant and
equipment 8 11.4 12.1
- Depreciation of right-of-use assets 9 11.2 10.8
- Amortisation of intangible assets 1.8 1.7
* Exceptional items 0.1 0.4
- Long-term employee incentive costs 12 1.6 (1.0)
- Normalised Rent (14.8) (13.3)
----------------------------------------------- ------
Group Adjusted EBITDA less Normalised
Rent (8.1) (8.2)
----------------------------------------------- ------ ----------- -----------
* Refer to note 4 for the details of the restatement of Finance
costs.
Condensed Consolidated Statement of Financial Position
As at 30 June 2021
30 June
30 June 2020 31 December
2021 Restated* 2020
Unaudited Unaudited Audited
Note GBPm GBPm GBPm
---------------------------------------- ----- ---------- ----------- ------------
Non-current assets
---------------------------------------- ----- ---------- ----------- ------------
Property, plant and equipment 8 167.4 179.4 171.3
Right-of-use assets 9 259.0 239.9 255.6
Intangible assets 85.8 86.8 86.4
Trade and other receivables - 0.1 -
Financial assets at fair value through
other comprehensive income 1.0 1.0 1.0
Deferred tax assets 14.7 3.8 7.6
---------------------------------------- ----- ---------- ----------- ------------
Total non-current assets 527.9 511.0 521.9
Current assets
---------------------------------------- ----- ---------- ----------- ------------
Inventories 0.2 0.7 0.3
Trade and other receivables 4.7 4.6 6.3
Income taxes receivable 0.1 - 0.2
Cash and cash equivalents 6.0 6.8 3.7
---------------------------------------- ----- ---------- ----------- ------------
Total current assets 11.0 12.1 10.5
Total assets 538.9 523.1 532.4
---------------------------------------- ----- ---------- ----------- ------------
Current liabilities
---------------------------------------- ----- ---------- ----------- ------------
Trade and other payables 24.3 20.8 18.6
Lease liabilities** 25.8 28.4 21.8
Other financial liabilities 1.2 3.9 2.6
Provisions - 0.6 -
Income taxes payable - 0.1 -
---------------------------------------- ----- ---------- ----------- ------------
Total current liabilities 51.3 53.8 43.0
Non-current liabilities
---------------------------------------- ----- ---------- ----------- ------------
Borrowings 10 64.3 37.5 49.2
Lease liabilities** 287.8 265.2 284.5
Provisions 1.3 1.4 1.2
Deferred tax liabilities - - 0.1
---------------------------------------- ----- ---------- ----------- ------------
Total non-current liabilities 353.4 304.1 335.0
Total liabilities 404.7 357.9 378.0
---------------------------------------- ----- ---------- ----------- ------------
Net assets 134.2 165.2 154.4
---------------------------------------- ----- ---------- ----------- ------------
Capital and reserves
---------------------------------------- ----- ---------- ----------- ------------
Issued capital 11 - - -
Share premium 159.5 159.5 159.5
Hedging reserve (0.1) (0.1) (0.1)
Merger reserve 39.9 39.9 39.9
Retained deficit (65.1) (34.1) (44.9)
---------------------------------------- ----- ---------- ----------- ------------
Total equity shareholders' funds 134.2 165.2 154.4
---------------------------------------- ----- ---------- ----------- ------------
* Refer to note 4 for the details of the restatement of Finance
costs.
** GBP12.1m of lease liabilities have been reclassified from
non-current to current as at 30 June 2020.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2021
Issued Share Hedging Merger Retained
capital premium reserve reserve deficit Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ----- --------- --------- --------- --------- --------- -------
At 1 January 2020 - 159.5 (0.1) - (9.2) 150.2
Loss for the period
and total comprehensive
expense - - - - (24.0) (24.0)
Issue of ordinary
share capital 11 - - - 39.9 - 39.9
Share based payments 12 - - - - (0.6) (0.6)
Deferred tax on
share-based payments - - - - (0.3) (0.3)
-------------------------- ----- --------- --------- --------- --------- --------- -------
At 30 June 2020
(restated*) - 159.5 (0.1) 39.9 (34.1) 165.2
Loss for the period
and total comprehensive
expense - - - - (12.4) (12.4)
Share based payments 12 - - - - 1.4 1.4
Deferred tax on
share-based payments - - - - 0.2 0.2
At 31 December
2020 - 159.5 (0.1) 39.9 (44.9) 154.4
Loss for the period
and total comprehensive
expense - - - - (21.8) (21.8)
Share based payments 12 - - - - 1.2 1.2
Deferred tax on
share-based payments - - - - 0.4 0.4
-------------------------- ----- --------- --------- --------- --------- --------- -------
At 30 June 2021 - 159.5 (0.1) 39.9 (65.1) 134.2
-------------------------- ----- --------- --------- --------- --------- --------- -------
* Refer to note 4 for the details of the restatement of Finance
costs.
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2021
Six months
Six months ended 30
ended 30 June 2020
June 2021 Restated*
Unaudited Unaudited
Note GBPm GBPm
----------------------------------------------------- ----- ----------- -----------
Loss before tax (28.5) (28.6)
Adjustments for:
Net finance costs 9.1 9.7
Exceptional administration items 0.1 0.4
Depreciation and impairment of property,
plant & equipment 8 11.4 12.1
Depreciation and impairment of right-of-use
assets 9 11.2 10.8
Amortisation and impairment of intangible
assets 1.8 1.7
Long-term employee incentive costs 12 1.6 (1.0)
Rent concession (1.1) (0.4)
Loss on disposal of property, plant & equipment 0.1 -
Decrease in trade and other receivables** 1.5 2.9
Increase/(decrease) in trade and other payables*** 4.4 (2.6)
Payment of deferred consideration (1.4) -
----------------------------------------------------- ----- ----------- -----------
Net cash inflow from operating activities
before exceptional items 10.2 5.0
Exceptional items - (0.4)
----------------------------------------------------- ----- ----------- -----------
Net cash inflow from operating activities 10.2 4.6
----------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Payment for financial assets at fair value
through profit and loss - (1.0)
Purchase of property, plant and equipment 8 (7.3) (19.0)
Purchase of intangible assets (1.2) (2.1)
Net cash outflow from investing activities (8.5) (22.1)
----------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Repayment of lease liability principal (5.9) (0.8)
Lease interest paid (6.6) (2.5)
Bank interest paid (0.9) (0.6)
Payment of financing fees - (0.3)
Drawdown of bank loans 19.0 20.0
Repayment of bank loans (5.0) (34.0)
Proceeds of issue of ordinary shares - 41.3
Costs associated with share issue - (1.4)
Net cash inflow from financing activities 0.6 21.7
----------------------------------------------------- ----- ----------- -----------
Net increase in cash and cash equivalents 2.3 4.2
Cash and cash equivalents at start of period 3.7 2.6
----------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at end of period 6.0 6.8
----------------------------------------------------- ----- ----------- -----------
* See note 4 for details of the restatement of Finance
costs.
** The decrease in trade and other receivables on the balance
sheet since 31 December 2020 was GBP1.6m, of which GBP0.1m related
to non-cash items including bank loan arrangement fees
amortisation.
*** The increase in trade and other payables on the balance
sheet since 31 December 2020 was GBP5.7m. The difference between
the GBP5.7m and the GBP4.4m shown above largely relates to the
movement in capital creditors, share option accruals and interest
accruals, all of which are excluded from working capital for cash
flow purposes.
1. General information
The Directors of The Gym Group plc ('the Company') and its
subsidiaries ('the Group') present their interim report and
unaudited condensed consolidated financial statements for the six
months ended 30 June 2021 ("Interim Financial Statements"). The
Group operates 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 Interim Financial Statements were approved by the Board of
Directors on 2 September 2021. They have not been audited or
formally reviewed by the auditors. The financial information shown
for the half year periods ended 30 June 2021 and 30 June 2020 does
not constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. The information shown for
the year ended 31 December 2020 has been extracted from the Group's
Annual Report and Financial Statements for the year ended 31
December 2020 and does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006.
The Interim Financial Statements should be read in conjunction
with the Annual Report and Financial Statements for the year ended
31 December 2020, which were prepared in accordance with European
Union endorsed International Financial Reporting Standards ('IFRS')
and those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The Annual Report and Financial Statements
for 2020 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for 2020 was unqualified and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006, but did include a
reference drawing attention to a material uncertainty related to
going concern arising from the uncertainty of the impact of the
Covid-19 pandemic on the Group's business.
Further copies of the Interim Financial Statements and Annual
Report and Financial Statements may be obtained from the address
above.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority. The Annual
Financial Statements of the Group and Company for the year ended 31
December 2021 will be prepared in accordance with United Kingdom
adopted International Financial Reporting Standards.
The Interim Financial Statements are presented in Pounds
Sterling, rounded to the nearest one million pounds, except where
otherwise indicated; and under the historical cost convention as
modified through the recognition of financial liabilities at fair
value through the profit and loss.
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those applied in
the preparation of the Group's consolidated financial statements
for the year ended 31 December 2020. The Group has not
early-adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
Several amendments apply for the first time in 2021, but do not
have an impact on the Interim Financial Statements of the
Group.
Going concern
In the Group's 2020 Annual Report and Financial Statements, the
Directors concluded that, whilst the Group was a going concern, the
potential impact of Covid-19 and uncertainty over possible
mitigating actions, including covenant waivers or extending the New
Bank Facility, represented a material uncertainty that may cast
significant doubt over the Group's ability to continue as a going
concern.
At the time of signing off on those financial statements in
March 2021, the third Government-enforced lockdown was in place and
there remained significant uncertainty about when it would end and
how quickly membership would recover after gyms re-opened. In
addition, the vaccination programme was in its infancy and the
efficacy of the vaccine was not proven.
Since then, we have seen a lot of positive momentum with gyms
re-opening on 12 April, stronger than expected post re-opening
trading and membership recovery, and the successful vaccine
programme leading to full lockdown easing in July. In addition, we
have successfully raised GBP30.3m from shareholders (net of fees)
to fund our accelerated rollout programme and have agreed a
relaxation of capex and finance lease restrictions with lenders, as
well as covenant waivers for both the March 2021 and June 2021
covenant tests necessitated by the Government-enforced
lockdown.
As a result, the Directors consider that it is appropriate to
prepare the Group's FY21 Interim Financial Statements on the going
concern basis without material uncertainty.
In assessing the going concern position of the Group for the
period ended 30 June 2021, the Directors have considered the
following:
-- the Group's trading performance since the re-opening of
gyms on 12 April 2021;
-- future expected trading performance to 31 December 2022
(the going concern period), including membership levels
and behaviours;
-- the Group's site rollout programme;
-- the latest situation and UK Government guidance with respect
to the Covid-19 pandemic; and
-- the Group's recent GBP30.3m equity placing, the relationship
with the Group's banks and financing arrangements to 31
December 2022.
Since the re-opening of gyms on 12 April 2021, the Group has
seen strong demand in terms of both membership numbers and yield.
Total membership increased from 547,000 at the end of February 2021
to 730,000 at the end of June 2021. We continued to receive the
benefit of business rates relief until the end of August 2021.
During periods when the relief is in place, the Group requires
approximately 540,000 members to break even at the cash flow level;
without the relief, the cash flow break-even point is approximately
610,000 members.
The Group opened four new gyms in the first half of the year and
all are performing well, in line with historical (pre-Covid)
performance for new sites. As set out in the Chief Executive's
Review, the Directors believe that the strong post-lockdown trading
performance, together with the Covid-impacted commercial property
market, provide the Group with a unique opportunity to accelerate
growth and gain market share. The Group is targeting to open 40 new
sites in the 18 months to December 2022, of which three have been
opened in July and August. The rest are expected to be phased
evenly over the period. All sites will be expected to meet the
Group's 30%+ ROIC threshold on maturity.
To facilitate this accelerated growth, on 2 July 2021, the Group
raised additional financing in the form of an equity placing, which
raised net proceeds of GBP30.3m. In addition, the Group agreed
revised terms on its existing GBP100m banking facility from its
lending banks. These amendments provide the Group with greater
flexibility around capital expenditure and finance lease
arrangements.
As at 30 June 2021, the Group had Non-Property Net Debt of
GBP60.4m and GBP41.0m of headroom (calculated off bank debt less
cash) under the GBP100m of borrowing capacity under the Revolving
Credit Facility ("RCF") (reducing to GBP70m in June 2022 and
maturing in October 2023). After adjusting for the equity raise on
2 July 2021, Non-Property Net Debt reduced to GBP30.1m. Rent
deferrals of GBP5.5m and deferred VAT payments of GBP1.7m remained
outstanding at 30 June 2021.
Until June 2022, the RCF is subject to quarterly financial
covenant tests primarily relating to the performance of the Group
against agreed targets for Group Adjusted EBITDA less Normalised
Rent. From June 2022, the covenants revert back to those of the
original GBP70m RCF, with quarterly tests on leverage (net debt :
Group Adjusted EBITDA less Normalised Rent) and fixed charge
cover.
The Group's base case forecast for the period to end December
2022 anticipates continued recovery of membership and robust
yields, together with the successful execution of the accelerated
rollout plan. Under this scenario, all financial covenants are
passed with a significant level of headroom and the Group can
operate comfortably within its financing facilities.
The Directors have considered a downside scenario which
anticipates a much slower recovery in which membership numbers only
return to pre-pandemic levels of c. 5,000 members per mature site
in 2023. Under this scenario, all financial covenants continue to
be passed and the Group continues to operate within its financing
facilities.
The Directors have also considered reverse stress test scenarios
that model the impact of a significantly slower recovery in
membership numbers or significant downturn in trading and a further
Government-enforced lockdown as follows:
Trading scenarios
-- A significant delay to the recovery in membership such that
member numbers decline in Q4 2021 and remain flat in Q1
2022 at c. 690,000 (a period when significant increases
would be expected). Under this scenario, the March 2022
EBITDA covenant would be breached in the absence of mitigating
actions (see below) but the Group would remain within its
liquidity limits;
-- A more prolonged delay to the recovery in which membership
levels decline in Q2 and Q3 2022 to c.600,000 at which point
the Group becomes loss-making at the EBITDA level. Under
this scenario, the Group would breach its GBP70 million
maximum debt facility in September 2022 without further
mitigating actions (see below).
The Directors believe the reverse stress test scenarios above
are implausible given the solid trading post re-opening and the
controllable and other mitigating actions that could be
deployed.
Further Government-enforced lockdown
-- A further Government-enforced lockdown in the next 12 months
during which gyms are required to close for at least one
month. Under this scenario, whilst the Group would remain
within its liquidity limits, the EBITDA covenant would be
breached despite the mitigating actions below.
The Directors believe that the success of the UK's vaccination
programme, the removal of all Covid restrictions in all parts of
the UK and all sectors of the economy and the UK Government's
stance that we must learn to live with the virus and focus on
economic recovery, are all positive indicators that further periods
of enforced closure are unlikely. In addition, the Group has a very
good relationship with its lenders who have been supportive
throughout the pandemic. The lenders understand the Group's
business model, our significant profit and cash generation when
open, and our relatively low gearing. As a result, in the unlikely
event there is another national lockdown that results in a breach
of a quarterly EBITDA covenant, the Directors believe that the
banks would continue to support the Group with covenant flexibility
in the form of waivers or amendments, as they have done on a number
of occasions in the last 18 months during previous lockdown periods
and given the liquidity position of the Group. The Directors
therefore consider that the combination of a lockdown being
unlikely and a subsequent lack of flexibility from banks is such
that, the risk of a lockdown leading to a going concern risk is
remote.
Under all stress test scenarios, the Directors would introduce
additional measures to mitigate the impact on the Group's
liquidity, covenants and cash flow including: (i) further
reductions in operating costs and marketing and capital
expenditure; (ii) a slowdown/pause of the accelerated new site
rollout programme; (iii) additional support from the UK Government
(in the event of a further lockdown); (iv) requesting an extension
of the GBP30m debt facility beyond June 2022 and/or covenant
waivers; (v) seeking continued deferral of, or reductions in, rent
payments to landlords; and (vi) the potential to raise additional
funds from third parties.
Conclusion
The Board has reviewed the financial forecasts and sensitivities
of the Group and has a reasonable expectation that the Group has
adequate resources to continue in operational existence for period
to 31 December 2022. As a result, the Directors continue to adopt
the going concern basis in preparing these condensed 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; the Covid-19
situation and success of the UK vaccination programme; 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
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16
The amendments provide temporary reliefs which address the
financial reporting effects when an interbank offered rate (IBOR)
is replaced with an alternative nearly risk-free interest rate
(RFR).
The amendments include the following practical expedients:
-- Permit contractual changes, or changes to cash flows that
are directly required by the reform, to be treated as changes
to a floating interest rate, equivalent to a movement in
a market rate of interest;
-- Permit changes required by IBOR reform to be made to hedge
designations and hedge documentation without the hedging
relationship being discontinued;
-- Provide temporary relief to entities from having to meet
the separately identifiable requirement when an RFR instrument
is designated as a hedge of a risk component.
These amendments had no impact on the interim condensed
consolidated financial statements of the Group. The Group intends
to use the practical expedients in future periods if they become
applicable.
4. Adjustments to prior year
Remeasurement of borrowings
The Group has borrowings in the form of a revolving credit
facility which should be measured at amortised cost using the
effective interest method. Following the renegotiation of banking
facilities in June 2020, the valuation of the borrowings at
amortised cost was not correctly reflected in the financial
statements at 30 June 2020. Correction of this error results in
finance costs increasing by GBP1.6m and borrowings on the balance
sheet increasing by the same amount. This additional charge in the
first half of 2020 is a timing difference which will unwind to
GBPnil over the life of the loan. The tax effect of the adjustment
is an increase in the tax credit in the income statement of GBP0.3m
and a reduction in the corporation tax payable on the balance
sheet. There is no impact to Adjusted earnings as the remeasurement
of borrowings is excluded from this KPI.
Additionally, GBP0.7m related to the effective interest on the
borrowings has been reclassified from trade and other payables to
borrowings.
Condensed consolidated income statement for the six months ended
30 June 2020 (extract):
As reported Remeasurement of borrowings Restated
GBPm GBPm GBPm
Operating loss (18.9) - (18.9)
Finance costs (8.1) (1.6) (9.7)
--------------------------------------------------------------- ------------ ---------------------------- ---------
Loss before tax (27.0) (1.6) (28.6)
--------------------------------------------------------------- ------------ ---------------------------- ---------
Tax credit 4.3 0.3 4.6
--------------------------------------------------------------- ------------ ---------------------------- ---------
Loss for the period and total comprehensive loss attributable
to equity shareholders (22.7) (1.3) (24.0)
--------------------------------------------------------------- ------------ ---------------------------- ---------
Loss per share pence pence pence
Basic and diluted (15.3) (0.8) (16.1)
--------------------------------------------------------------- ------------ ---------------------------- ---------
Condensed consolidated statement of financial position as at 30
June 2020 (extract):
As reported Remeasurement of borrowings Restated
GBPm GBPm GBPm
------------------------------- ------------ ---------------------------- ---------
Current liabilities
Trade and other payables 21.5 (0.7) 20.8
Income taxes payable 0.4 (0.3) 0.1
Total current liabilities 54.8 (1.0) 53.8
------------------------------- ------------ ---------------------------- ---------
Non-current liabilities
Borrowings 35.2 2.3 37.5
Total non-current liabilities 301.8 2.3 304.1
------------------------------- ------------ ---------------------------- ---------
Total liabilities 356.6 1.3 357.9
------------------------------- ------------ ---------------------------- ---------
Net assets 166.5 (1.3) 165.2
------------------------------- ------------ ---------------------------- ---------
Condensed consolidated cash flow statement for the six months
ended 30 June 2020 (extract):
As reported Remeasurement of borrowings Restated
GBPm GBPm GBPm
Loss before tax (27.0) (1.6) (28.6)
Adjustments for:
Net finance costs 8.1 1.6 9.7
Cash generated from operations 5.0 - 5.0
-------------------------------- ------------ ---------------------------- ---------
5. Revenue
The principal revenue streams are those described in the Annual
Report and Financial Statements 2020, namely membership income,
rental income and other income. The majority of revenue is derived
from contracts with customers.
Disaggregation of revenue
In the following table, revenue is disaggregated by major
products and service lines and timing of revenue recognition. All
revenue arises in the United Kingdom.
Six months Six months
ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBPm GBPm
----------------------------------------- ----------- -----------
Major products/service lines
Membership income 28.6 34.9
Rental income from personal trainers 0.4 1.8
Other income 0.3 0.6
----------------------------------------- ----------- -----------
29.3 37.3
----------------------------------------- ----------- -----------
Timing of revenue recognition
Products transferred at a point in time 0.5 0.6
Products and services transferred over
time 28.8 36.7
----------------------------------------- ----------- -----------
29.3 37.3
----------------------------------------- ----------- -----------
Contract liabilities at 30 June 2021 amounted to GBP7.5m (H1
2020: GBP8.7m).
6. Taxation
The tax credit in the Condensed Consolidated Statement of
Comprehensive Income is broken down as follows:
Six months Six months
ended 30 ended 30
June 2021 June 2020
Restated*
Unaudited Unaudited
GBPm GBPm
------------------------------------------ ----------- -----------
Current income tax
Current tax on profits for the period - -
Adjustments in respect of prior years - -
------------------------------------------ ----------- -----------
Total current income tax - -
Deferred tax
Origination and reversal of temporary
differences 3.9 4.8
Change in tax rates 3.0 (0.1)
Adjustments in respect of prior years (0.2) (0.1)
------------------------------------------ ----------- -----------
Total deferred tax 6.7 4.6
Tax credit in the Consolidated Statement
of Comprehensive Income 6.7 4.6
------------------------------------------ ----------- -----------
* See note 4 for details of the restatement of Finance
costs.
The income tax expense was recognised based on management's best
estimate of the annual income tax rate expected for the full
financial year, applied to the profit before tax for the half year
ended 30 June 2021.
The effective tax rate on Profit Before Tax for the half year
ended 30 June 2021 before discrete items was 17.3% (H1 2020
restated: 16.1%). The impact of the change in UK corporation tax
from 19% to 25% on the Group's deferred tax assets, following
substantive enactment of the Finance Act 2021, and movements in the
company share option scheme attributable to H1 are being treated as
discrete items. Including these items, the effective tax rate on
the statutory loss for the period was 23.5% (H1 2020 restated:
16.1%). Excluding the tax effect of the amortisation of non-IT
intangible assets and exceptional items, the effective tax rate on
Adjusted Profit Before Tax for the half year ended 30 June 2021 was
23.7% (H1 2020: 16.0%).
The net deferred tax asset recognised at 30 June 2021 was
GBP14.7m (31 December 2020: GBP7.6m; 30 June 2020: GBP3.8m). This
comprised deferred tax assets relating to tax losses, provisions,
equity settled share-based incentives and accelerated capital
allowances.
At each of 30 June 2021, 31 December 2020 and 30 June 2020,
there was no unrecognised deferred tax asset relating to
unrecognised tax losses.
7. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average number
of ordinary shares outstanding during the period, excluding
unvested shares held pursuant to The Gym Group plc Share Incentive
Plan, The Gym Group plc Performance Share Plan, The Gym Group plc
Restricted Stock Plan and The Gym Group plc Long Service Award
Plan.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. During the period ended
30 June 2021, the Group had potentially dilutive shares in the form
of share options and unvested shares issued pursuant to The Gym
Group plc Share Incentive Plan, The Gym Group plc Performance Share
Plan, The Gym Group plc Restricted Stock Plan and The Gym Group plc
Long Service Award Plan. As the Group is in a loss-making position,
all potential dilutive share options will not be dilutive.
Six months
Six months ended 30
ended 30 June 2020
June 2021 Restated*
Unaudited Unaudited
Basic weighted average number of shares 165,857,174 148,617,471
Adjustment for share awards - -
------------------------------------------ ------------ ------------
Diluted weighted average number of
shares 165,857,174 148,617,471
------------------------------------------- ------------ ------------
Basic and Diluted loss per share (pence) (13.1) (16.1)
------------------------------------------- ------------ ------------
At 30 June 2021, 6,593,345 share awards (2020: 1,361,025) were
excluded from the diluted weighted average number of ordinary
shares calculation because their effect would be anti-dilutive.
Adjusted loss per share is based on the loss for the period
before exceptional items, amortisation of non-IT intangible assets,
remeasurement of borrowings and their associated tax effect.
Six months Six months
ended 30 ended 30
June 2021 June 2020
Restated*
Unaudited Unaudited
GBPm GBPm
------------------------------------------ ----------- -----------
Loss for the year (21.8) (24.0)
Amortisation of non-IT intangible assets - 0.3
Exceptional administration expenses 0.1 0.4
Remeasurement of RCF 1.0 1.6
Tax effect of above items (0.2) (0.4)
------------------------------------------- ----------- -----------
Adjusted earnings (20.9) (22.1)
------------------------------------------- ----------- -----------
Basic and Diluted adjusted loss per
share (pence) (12.6) (14.9)
------------------------------------------- ----------- -----------
* See note 4 for details of the restatement of Finance
costs.
8. Property, plant and equipment
Assets Leasehold Fixtures Gym & Other Computer
Under Construction Improvements & Fittings Equipment Equipment Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------- -------------------- -------------- ------------ ------------ ----------- --------
Cost
---------------------------------------------------------------------------------------------------------
At 31 December
2020 2.2 191.8 11.3 84.4 3.6 293.3
Additions 3.1 4.0 0.1 0.4 0.3 7.9
Disposal (0.1) (0.1) - (0.1) - (0.3)
Transfer from
Assets Under
Construction (1.4) 1.3 - 0.1 - -
Transfer to
Right-of-use
assets - (0.1) - - - (0.1)
At 30 June
2021 3.8 196.9 11.4 84.8 3.9 300.8
Accumulated depreciation
---------------------------------------------------------------------------------------------------------
At 31 December
2020 - (62.9) (8.0) (48.3) (2.8) (122.0)
Charge - (6.7) (0.5) (3.9) (0.3) (11.4)
Disposals - 0.1 - - - 0.1
Transfer to
Right-of-use
assets - (0.1) - - - (0.1)
---------------- -------------------- -------------- ------------ ------------ ----------- --------
At 30 June
2021 - (69.6) (8.5) (52.2) (3.1) (133.4)
Net book value
---------------------------------------------------------------------------------------------------------
At 31 December
2020 2.2 128.9 3.3 36.1 0.8 171.3
At 30 June
2021 3.8 127.3 2.9 32.6 0.8 167.4
---------------- -------------------- -------------- ------------ ------------ ----------- --------
Included within additions for the period to 30 June 2021 is
GBPnil of capitalised interest (Dec 2020: GBP0.1m), GBP0.3m of
capital contributions from landlords not yet received (Dec 2020:
GBP0.2m), GBP1.0m of accrued capital expenditure for invoices not
received (Dec 2020: GBP0.8m), and GBP0.5m of invoices received but
not paid at 30 June 2021 (Dec 2020: GBP0.1m).
Outstanding capital commitments totalled GBP5.0m (31 December
2020: GBP2.2m).
9. Right-of-Use Assets and Leases
Non-Property
Property Leases Leases Total
GBPm GBPm GBPm
-------------------------- ---------------- ------------- ---------------
Cost
-------------------------- ---------------- ------------- -------------
At 31 December 2020 345.4 - 345.4
Additions 12.9 1.5 14.4
Disposal - - -
Transfer from Leasehold
improvements 0.1 - 0.1
At 30 June 2021 358.4 1.5 359.9
Accumulated depreciation
-------------------------- ---------------- ------------- -------------
At 31 December 2020 (89.8) - (89.8)
Charge (11.2) - (11.2)
Impairment - - -
Disposals - - -
Transfer from Leasehold
improvements 0.1 - 0.1
-------------------------- ---------------- ------------- ---------------
At 30 June 2021 (100.9) - (100.9)
Net book value
-------------------------- ---------------- ------------- -------------
At 31 December 2020 255.6 - 255.6
At 30 June 2021 257.5 1.5 259.0
-------------------------- ---------------- ------------- ---------------
The split of lease liabilities between current and non-current
is as follows:
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------- ---------- ---------- ------------
Current 25.8 28.4 21.8
Non-current 287.8 265.2 284.5
-------------------------- ---------- ---------- ------------
Total Lease liabilities 313.6 293.6 306.3
-------------------------- ---------- ---------- ------------
The maturity analysis of lease liabilities is as follows:
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBPm GBPm GBPm
---------------------------------- ---------- ---------- ------------
Within one year 39.5 40.1 34.6
Greater than one year but less
than two years 33.7 30.2 32.4
Greater than two years but less
than three years 33.7 30.3 32.4
Greater than three years but
less than four years 33.5 30.2 32.7
Greater than four years but less
than five years 33.0 30.3 32.2
Five years or more 227.8 223.2 232.3
401.2 384.3 396.6
Less: unearned interest (87.6) (90.7) (90.3)
----------------------------------- ---------- ---------- ------------
313.6 293.6 306.3
---------------------------------- ---------- ---------- ------------
During the period, the Group entered into a leasing arrangement
with a total available facility of GBP4.0m to finance the fit-out
of new gyms. As at 30 June 2021, the amount outstanding on this
facility was GBP1.4m. The facility was increased to a maximum of
GBP9.5m after the period end.
The Group has benefited from unconditional waivers of lease
payments and additional rent-free benefits on six properties in
exchange for the removal of break clauses without modification to
the original lease contract. The waiver of lease payments of
GBP1.1m (H1 2020: GBPnil) has been included as a credit within
Administration Expenses and a reduction in the lease liability, in
line with the IASB practical expedient for Covid-19-Related Rent
Concessions in relation to IFRS 16 Leases.
10. Borrowings
30 June 30 June 31 December
2021 2020 2020
Restated*
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------ ---------- ----------- ------------
Revolving credit facility 65.0 36.0 51.0
Remeasurement adjustment (0.1) 2.3 (1.2)
------------------------------------- ---------- ----------- ------------
Revolving credit facility carrying
value 64.9 38.3 49.8
Loan arrangement fees (0.6) (0.8) (0.6)
------------------------------------- ---------- ----------- ------------
64.3 37.5 49.2
------------------------------------ ---------- ----------- ------------
* See note 4 for details of the restatement of Finance
costs.
The Group's bank borrowings are secured by way of fixed and
floating charges over the Group's assets.
In October 2019, the Group successfully refinanced its
borrowings, moving from a mix of term loans and Revolving Credit
Facility ('RCF') to a single committed RCF of GBP70m. The facility
is syndicated to a three-lender panel of HSBC, NatWest and Banco de
Sabadell and matures in October 2023.
On 5 June 2020, the Company agreed with its lending banks to
increase its existing GBP70 million RCF with an additional GBP30m
facility for a term of 18 months, which was subsequently extended
on 17 December 2020 to June 2022 (the New Bank Facility). As a
result, the Group has available GBP100m of revolving credit
facility.
The funds borrowed under the New Bank Facility bear interest at
a minimum annual rate of 2.60% (H1 2020: 2.60%) above the
appropriate Sterling LIBOR. The average interest rate paid in the
period on drawn funds under the new facility was 2.64% (H1 2020:
2.48%). Undrawn funds bear interest at a minimum annual rate of
0.910% (H1 2020: 0.910%). At 30 June 2021, the Group had drawn down
GBP65.0m (30 June 2020: GBP36.0m) under the facility.
The Group's borrowings are held at amortised cost using the
effective interest method. Each reporting period, the Group reviews
its cash flow forecasts and if these have changed since the
previous reporting period, the borrowings are remeasured using the
original effective interest rate. Any remeasurement of borrowings
is treated as being non-underlying and is excluded from adjusted
earnings.
The fees incurred in respect of the 2019 facility amounted to
GBP0.9m and are being amortised over the term of the loan using the
effective interest method. The fees incurred in respect of the June
2020 refinancing amounted to GBP0.4m and are being amortised over
the remaining term of the loan on a straight-line basis.
The proportion of the revolving credit facility that was undrawn
and available at 30 June 2021 was GBP35.0m (30 June 2020: GBP64.0m;
31 December 2020: GBP49.0m).
Non-Property Net Debt
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBPm GBPm GBPm
--------------------------------- ---------- ---------- ------------
Borrowings 65.0 36.0 51.0
Less: Cash and cash equivalents (6.0) (6.8) (3.7)
---------------------------------- ---------- ---------- ------------
Non-Property Net Debt excluding
property leases 59.0 29.2 47.3
Non-Property leases (note 9) 1.4 - -
--------------------------------- ---------- ---------- ------------
Non-Property Net Debt 60.4 29.2 47.3
---------------------------------- ---------- ---------- ------------
Covenants
The RCF is subject to financial covenants relating to leverage
and fixed charge cover.
From September 2020 until June 2022 the covenant tests of the
RCF have been replaced in the New Bank Facility by covenant tests
primarily relating to the performance of the Group against agreed
targets for Group Adjusted EBITDA less Normalised Rent. Upon
termination or early cancellation of the New Bank Facility, the
covenants and all other terms of the original RCF will apply until
the maturity of the RCF in October 2023. Waivers were received in
respect of the March 2021 and June 2021 reporting periods due to
the extended lockdown.
11. Issued capital
The total number of shares in issue as at 30 June 2021 is
166,210,022 (31 December 2020: 165,969,665).
12. Long-term employee incentive costs
The Group operates share-based compensation arrangements under
The Gym Group plc Performance Share Plan (PSP) and The Gym Group
plc Share Incentive Plan (SIP). During the period, 982,565 shares
were granted under the PSP and 347,780 under the SIP. These grants
and their vesting criteria are similar in nature to those awarded
during 2020.
For the period ended 30 June 2021, the Group recognised a total
charge of GBP1.6m (H1 2020: credit of GBP1.0) in respect of the
Group's share based long-term incentive plans and related
employer's national insurance.
13. Related party transactions
The Group has identified major shareholders, key management
personnel and family members of the Directors as its related
parties.
Closewall Limited is a company under the control of a family
member of a Director, J Treharne. During the period, Closewall
Limited provided services to the Group to the value of GBP11,000
(H1 2020: GBP607,000). There was no balance outstanding at 30 June
2021 or 30 June 2020.
There were no transactions in the period with key management
personnel or major shareholders.
14. Subsequent events
On 2 July 2021, the Group's balance sheet and liquidity was
further strengthened by an equity placing. The Gym Group plc issued
11,350,000 new ordinary shares and raised gross proceeds of
GBP31.2m. The costs directly related to the transaction amounted to
GBP0.9m. At the same time as the equity placing, certain
restrictions in the Group's banking facilities around capital
expenditure and finance lease debt were relaxed.
Following the share issue, the total number of shares in issue
is 177,560,022. The proceeds of the share issue will be used to
accelerate the Group's site rollout programme, targeting 40 sites
in the next 18 months.
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END
IR EAENFEEAFEAA
(END) Dow Jones Newswires
September 02, 2021 02:00 ET (06:00 GMT)
The Gym (LSE:GYM)
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