TIDMGYM
RNS Number : 4731I
The Gym Group plc
31 August 2016
The Gym Group Plc
('the Company' or 'The Gym')
2016 Interim Results
Continued strong growth in membership numbers and
profitability
The Gym Group Plc, the fast growing, nationwide operator of 80
low cost gyms branded 'The Gym', announces its interim results for
the six month period ended 30 June 2016.
Financial Highlights
-- Revenue of GBP36.1 million, an increase of 25.1% (H1 2015: GBP28.9 million)
-- Group Adjusted EBITDA(1) of GBP11.5 million, an increase of
35.2% (H1 2015: GBP8.5 million)
-- Group Operating Cash Flow(2) of GBP13.5 million, an increase
of 13.6% (H1 2015: GBP11.8 million)
-- Adjusted profit before tax(3) of GBP4.6 million (H1 2015: loss of GBP0.8 million)
-- Adjusted EPS(4) of 2.8 pence (H1 2015: loss of 3.3 pence)
-- Statutory profit before tax of GBP3.4 million (H1 2015: loss of GBP3.3 million)
-- Strong cash generation reduces net debt to GBP2.5 million (December 2015: GBP7.1 million)
-- Maiden interim dividend of 0.25 pence declared
Operational Progress
-- Six new gyms opened in H1 2016 increasing the total estate to 80
-- 19.4% increase in membership numbers versus prior year to 424,000 (H1 2015: 355,000)
-- Maturing sites driving profitability - Site EBITDA up 30.8%
ahead of revenue growth demonstrating the Company's operational
gearing
-- Strong pipeline for H2 2016 and 2017 - expect to meet target of 15-20 new gyms per year
-- Recently exchanged contracts on four sites from another operator
-- 11.2 million visits in the period, up 2.1 million compared to H1 2015
-- Gold Investors in People awarded
John Treharne, CEO of The Gym Group, commented:
"Excellent progress has been achieved so far in 2016 as
demonstrated by the growth in membership. Our rollout is on track
with six sites opened in H1. We remain on target for 15-20 for the
year and have a strong pipeline for 2017. Our existing sites are
performing well which has contributed to the Group's strong growth
in profitability.
We are confident that our low cost, disruptive positioning in
the market place, our well-developed roll out plans and our strong
financial position bode well for further rapid and measured
profitable development and progress, whatever the economic
environment."
An audio webcast of the analyst presentation will be available
from 13:00 today via our website www.tggplc.com
For further information, please contact
The Gym Group via Instinctif Partners
John Treharne, CEO
Richard Darwin, CFO
Numis
Oliver Cardigan
Oliver Hardy
Toby Adcock 020 7260 1000
Instinctif Partners
Matthew Smallwood
Justine Warren 0207 457 2020
(1) Group Adjusted EBITDA is calculated as operating profit
before depreciation, amortisation, long term employee incentive
costs, exceptional items and other income.
(2) Group Operating Cash Flow is calculated as Group Adjusted
EBITDA less working capital less maintenance capital
expenditures.
(3) Adjusted profit before tax is calculated as Group Adjusted
EBITDA less depreciation, net finance costs and long term employee
incentives.
(4) Adjusted EPS is calculated as the Group's profit for the
period before amortisation, exceptional items, other income and the
related tax effect, divided by the basic weighted average number of
shares.
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
Progress in the first half of 2016 has met the Board's
expectations. Revenue of GBP36.1 million increased by 25.1% mainly
as a result of the 22.8% growth of average members in H1 to 420,000
(H1 2015: 342,000). Average revenue per member per month increased
by 1.6% to GBP14.31 (H1 2015: GBP14.08). We now have 80 sites open,
with six openings so far this year and further openings scheduled
for the last four months of the year to meet our 2016 target of
15-20. Our revenue growth is driven by the 2015 and 2016 site
openings together with ongoing maturation of sites opened in 2014.
At June 2016, we had 25 sites that had been open since December
2014, reflecting the relative immaturity and potential of our gym
estate.
The increase in revenues and members is, as anticipated,
translating into growth in profit. Group Adjusted EBITDA grew by
GBP3.0 million to GBP11.5 million, up 35.2% (H1 2015: GBP8.5
million). Site EBITDA(1) increased by 30.8%, ahead of revenue
growth, demonstrating the operational leverage inherent within our
model. Our highly profitable business model aligned with
disciplined site selection is enabling us to generate strong cash
flows which are being invested into new sites. The business is
approaching debt free status at the half year, with just GBP2.5
million of net debt. We have substantial firepower from which to
fund and develop the business, with a total of GBP40.0 million of
available financing facilities.
In light of this strong performance and its confidence in future
cash flows, the Board has declared a maiden interim dividend of
0.25 pence per share.
I set out five key operational initiatives in our last Annual
Report that will drive the future growth of our business. These are
i) to continually improve the performance of our existing sites;
ii) drive efficiencies from our low cost operating model; iii)
continue to enhance the strong customer proposition; iv) rollout
new sites from a strong pipeline; and v) focus on people. At the
half year we are making progress against these priorities:
- Improve performance of existing sites. This involves bringing
the new sites opened in the last two years to maturity and
maintaining the performance and market positioning of the existing
sites. EBITDA per site increased by 2.7% to GBP187,000 (H1 2015:
GBP182,000) as the maturing of recent openings drives up the
overall profitability of the business.
- Efficiencies from low cost operating model. Our operating
discipline is shown in the strong margin performance and tight
control over capital expenditure spent on new sites. Overall Site
EBITDA margin grew to 41.5% (2015: 39.6%). We continue to open
sites at an overall cost of between GBP1.3 million to GBP1.4
million per site, and in some instances where we can take on the
appropriate type of building the cost is being reduced due to cost
re-engineering.
- Strong customer proposition. The Gym originated the low cost
gym concept and we are constantly examining ways to innovate
further. Enhancements are being rolled out to improve classes, free
weights provision and member zones in the gym. We are currently
trialling innovative ways to provide more benefits to our members,
including the creation of an e-shop and affiliate partnerships.
- Rollout new sites delivered from a strong pipeline: We opened
six sites in the first half, of which four are within London. These
are trading encouragingly and in line with our expectations. We
have a strong opening programme for H2 including a number of sites
within the M25 which will extend our presence within Greater
London, including new sites at Sunbury, Lewisham and Dagenham. We
currently expect to meet our target of 15-20 new sites for 2016. As
in previous years, our openings are expected to be weighted towards
Q4. The pipeline in 2017 is also building well and is much more
developed than at the same time last year. As part of our rollout
strategy we have recently exchanged contracts on four sites from
another operator that meet our acquisition criteria and will be
fitted out to our high specifications. The four sites following
assignment of the leases, closure and fit out are likely to open in
Q1 2017. We believe there is a substantial opportunity in the low
cost gym market in which we operate with currently only 450 low
cost Gyms across the UK.
- Focus on people. Considerable progress in the first half has
been made in building the Executive team to support the business in
its rapid growth. I am delighted that Nick Henwood has joined us as
Operations Director having held similar roles at David Lloyd
Leisure, Mothercare and Autoglass. Nick will help to build the
quality of the member proposition. Barney Harrison joins as
Marketing Director from Sky where he had extensive experience in
customer acquisition within their subscription TV business in
Ireland and also at Skybet. I would like to pay tribute to the
enormous contribution to the growth of The Gym Group made by Jim
Graham as COO over the last three years - Jim has decided to return
to the private equity world from which he joined us and we wish him
well. Our investment and commitment to all our people is shown by
the award of the Gold Investors in People and it is key to our
success that we maintain this strong culture and ethos as the
business grows. We were pleased to enable all our employees to
become shareholders in the business through a free shares issue in
April this year.
During the second half of 2016 we will continue to progress,
opening new sites and maturing the gyms that have been opened in
the last two years. If the external environment becomes more
challenging our value proposition will become even more attractive
to consumers - The Gym Group opened its first gym in the wake of
the financial crisis in 2008 and its model is designed to perform
well in all types of economic conditions. I am confident that the
business will continue to execute its strategy and deliver
strongly, disrupting the market in which we operate. After a good
first half we are on track to meet market expectations for profit
for the full year and are confident that we will continue to make
strong progress.
(1) Site EBITDA is calculated as Group Adjusted EBITDA
contributed by the gym portfolio.
John Treharne
Chief Executive Officer
31 August 2016
Financial Review
Six months ended 30 June 2016 Six months ended 30 June 2015 Movement
GBP'000 GBP'000
Revenue 36,079 28,850 25.1%
Group Adjusted EBITDA(1) 11,502 8,507 35.2%
Group Adjusted EBITDA before Pre-Opening
Costs(2) 12,587 9,671 30.2%
Group Operating Cash Flow(3) 13,450 11,839 13.6%
Group Operating Cash Flow Conversion(4) 116.9% 139.2% (16.0)%
Expansionary Capital Expenditure(5) 8,466 12,571 (32.7)%
Net Debt 2,497 55,674 (95.5)%
Total number of gyms 80 63 27.0%
Number of members 424 355 19.4%
Average number of members(6) 420 342 22.8%
Average revenue per member per month
(GBP)(7) 14.31 14.08 1.6%
------------------------------------------- ------------------------------ ------------------------------ ---------
(1) Group Adjusted EBITDA is calculated as operating profit
before depreciation, amortisation, exceptional items, long term
employee incentive costs and other income.
(2) Group Adjusted EBITDA before Pre-Opening Costs is defined as
Group Adjusted EBITDA excluding the costs associated with new site
openings
(3) Group Operating Cash Flow is calculated as Group Adjusted
EBITDA less working capital less maintenance capital
expenditures.
(4) Group Operating Cash Flow Conversion is calculated as Group
Operating Cash Flow as a percentage of Group Adjusted EBITDA.
(5) Expansionary capital expenditure relates to the Group's
investment in the fit-out of new gyms and central IT projects. It
is stated gros
of amounts funded by finance leasing (occurring in the prior
period only) and net of contributions towards landlord building
costs.
(6) Average number of members is calculated as the total number
of members divided by the number of months in the period
(7) Average revenue per member per month is calculated as
revenue divided by the average number of members divided by the
number of months in the period and has been calculated on a
consistent basis for H1 2016 and H1 2015.
Continued focus on the Group's ongoing rollout strategy has
increased the size of the estate to 80 sites, an increase of 17
sites compared to 30 June 2015. Membership numbers increased
significantly to 424,000 compared to 355,000 as at 30 June 2015, an
increase of 19.4%.
Group Adjusted EBITDA increased by 35.2% to GBP11.5 million (H1
2015: GBP8.5 million), with GBP1.1 million of costs incurred in
relation to pre-opening costs during the period (H1 2015: GBP1.2
million).
Revenue
The average number of members for the half year increased by
22.8% to 420,000 (H1 2015: 342,000), driven by the increased size
of the estate. Average revenue per member per month increased from
GBP14.08 to GBP14.31.
As a result, revenue for the half year increased by 25.1% to
GBP36.1 million (H1 2015: GBP28.9 million).
Group Adjusted EBITDA
Group Adjusted EBITDA increased from GBP8.5 million in the six
months ended 30 June 2015 to GBP11.5 million for the six months
ended 30 June 2016. Growth was driven by an increase in the size of
the estate, as well as the average EBITDA per site(7) increasing by
2.7%. On average, each site contributed GBP187,000 to EBITDA,
compared to GBP182,000 in H1 2015.
Group Adjusted EBITDA is adversely affected by pre-opening costs
of GBP1.1 million compared to GBP1.2 million in the first half of
2015. As sites opened during 2014 and 2015 grow to maturity, Group
Adjusted EBITDA before Pre-Opening Costs per site(8) increased from
GBP154,000 in H1 2015 to GBP157,000 in the current period. This
increase, combined with the growth of the overall estate, resulted
in a 30.2% increase in Group Adjusted EBITDA before Pre-Opening
Costs to GBP12.6 million (H1 2015: GBP9.7 million).
(7) Average EBITDA per site is calculated as Site EBITDA divided
by the total number of gyms.
(8) Group Adjusted EBITDA before Pre-Opening Costs per site is
calculated as Group Adjusted EBITDA before Pre-Opening Costs
divided by the total number of gyms.
Result for the period
Six months ended 30 June 2016 Six months ended 30 June 2015
GBP'000 GBP'000
Group Adjusted EBITDA 11,502 8,507
Exceptional items (159) (1,464)
Long term employee incentive costs (471) -
Depreciation (6,079) (4,878)
Amortisation (1,028) (1,069)
Net finance costs (378) (4,416)
Taxation (850) (688)
------------------------------ ------------------------------
Profit / (loss) for the period 2,537 (4,008)
------------------------------ ------------------------------
Significant exceptional costs were incurred in the six months
ended 30 June 2015 in relation to the exploration of strategic
options prior to the Group's IPO in November 2015, and in relation
to the IPO itself. Exceptional costs of GBP0.2 million were
incurred in the six months ended 30 June 2016 in relation to
one-off strategic activities.
During the period the Group implemented the Performance Share
Plan and Share Incentive Plan, which includes the issue of free
shares and a partnership share scheme open to all employees. This
resulted in a charge of GBP0.5 million.
Depreciation charges increased from GBP4.9 million in the prior
period to GBP6.1 million in the six months ended 30 June 2016,
largely as a result of the increased number of sites.
Net finance costs decreased significantly as a result of changes
in the Group's financing structure on IPO.
The Group has incurred an income tax charge for the period of
GBP0.1 million (H1 2015: GBP0.2 million). Taxable profits were
largely offset by the utilisation of taxable losses. A deferred tax
charge of GBP0.7 million (H1 2015: deferred tax credit of GBP0.9
million) has arisen mainly in relation to the same utilisation of
losses.
Earnings
Six months ended 30 June 2016 Six months ended 30 June 2015
GBP'000 GBP'000
Profit / (loss) before tax for the period 3,387 (3,320)
Amortisation of intangible assets 1,028 1,069
Exceptional items 159 1,464
------------------------------ ------------------------------
Adjusted Profit Before Tax 4,574 (787)
Tax charge (850) (688)
Tax effect of adjustment items (167) (201)
------------------------------ ------------------------------
Adjusted Earnings 3,557 (1,676)
------------------------------ ------------------------------
Adjusted Earnings per Share (pence) 2.8 (3.3)
------------------------------------------- ------------------------------ ------------------------------
The tax charge 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 interim
period. On this basis, the Group's tax charge was GBP0.9 million
(H1 2015: GBP0.7 million). The effective tax rate on Adjusted
Profit Before Tax was 22.2%.
Excluding the tax effect of the amortisation of acquired
intangible assets and exceptional items (GBP167,000) and deferred
tax adjustments in respect of prior years (GBP127,000), the
effective tax rate on Adjusted Profit Before Tax for the half year
ended 30 June 2016 was 25.0%.
Adjusted Earnings for the period increased by GBP5.2 million,
from a loss of GBP1.7 million to a profit for the current period of
GBP3.6 million as a result of the factors discussed above.
Adjusted Earnings per Share was a profit of 2.8 pence (H1 2015:
loss of 3.3 pence). The improvement in Adjusted EPS results from
both an increase in Adjusted Earnings and the dilution arising on
the issue of shares on IPO.
Dividends
The Directors have declared an interim maiden dividend of 0.25
pence. The ex-dividend date is 8 September 2016, with a payment
date of 30 September 2016.
Cash Flow and Net Debt
Six months ended 30 June 2016 Six months ended 30 June 2015
GBP'000 GBP'000
Group Adjusted EBITDA 11,502 8,507
Movement in working capital 2,760 4,034
Maintenance capital expenditure (812) (702)
------------------------------ ------------------------------
Group Operating Cash Flow 13,450 11,839
Expansionary capital expenditure (8,466) (12,571)
Exceptional items (129) (1,464)
Finance costs (212) (4,966)
Repayment of debt - (1,936)
Drawdown of loans - 6,463
------------------------------ ------------------------------
Net cash flow 4,643 (2,635)
------------------------------ ------------------------------
The Group has delivered strong cash generation in the six months
ended 30 June 2016, with Group Operating Cash Flow of GBP13.5
million compared to GBP11.8 million in the prior period due to an
increase in Group Adjusted EBITDA resulting from a greater number
of gyms.
Group Operating Cash Flow Conversion improved from 109.4% for
the year ended 31 December 2015 to 116.9% for the current
period.
Expansionary capital expenditure of GBP8.5 million arises as a
result of the fit-out of new gyms.
30 June 2016 30 June 2015
GBP'000 GBP'000
Net debt at 1 January 7,140 49,205
Group operating cash flow (13,450) (11,839)
Expansionary capital expenditure 8,466 12,571
Other non-operating cash flow 341 1,210
Drawdown of loans - 6,463
Repayment of finance leases - (1,936)
------------- -------------
Net debt at 30 June 2,497 55,674
------------- -------------
Strong cash generation during the half year has resulted in a
decrease in net debt to GBP2.5 million. The Group has drawn GBP10.0
million of its five year bullet repayment facility, with GBP25.0
million of the facility undrawn and available to fund new sites,
working capital and capital expenditure. In addition, the Group has
a GBP5.0 million revolving credit facility which was undrawn at 30
June 2016.
Principal Risks and Uncertainties
The principal risks and uncertainties set out in the last annual
report remain valid at the date of this report. In summary, these
include:
-- the competitive position of the Group;
-- the delivery of the organic rollout plan;
-- providing members with a high quality product and service;
-- retention of key staff;
-- dependency on the performance of IT systems;
-- data security and protection;
-- satisfactory delivery from outsourced services providers; and
-- adherence with regulatory requirements.
Management makes critical judgements in applying the Group's
accounting policies in relation to depreciation and amortisation,
goodwill impairment, provisions, income taxes and share based
payments. A more detailed description of these estimations and
uncertainties is included in the 2015 Annual Report, which can be
obtained from the Company's registered office or from
www.tggplc.com.
Going Concern
As stated in note 2 to the Interim Financial Statements, the
Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of at
least 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the Interim
Financial Statements.
Cautionary Statement
This report has been prepared solely to provide additional
information to shareholders to assess the Group's strategies and
the potential for those strategies to succeed. The Interim
Management Report should not be relied on by any other party or for
any other purpose.
In making this report, the Company is not seeking to encourage
any investor to either buy or sell shares in the Company. Any
investor in any doubt about what action to take is recommended to
seek financial advice from an independent financial advisor
authorised by the Financial Services and Markets Act 2000.
Directors' Responsibility Statement
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).
John Treharne Richard Darwin
Chief Executive Officer Chief Financial Officer
31 August 2016 31 August 2016
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2016
Note Six months ended 30 Six months ended 30 Year ended 31 December
June 2016 June 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Revenue 36,079 28,850 59,979
Cost of sales (419) (518) (1,073)
Gross profit 35,660 28,332 58,906
Administration expenses (31,895) (27,236) (62,712)
Other income - - 1,105
Operating profit / (loss) 3,765 1,096 (2,701)
Finance income 13 233 265
Finance costs (391) (4,649) (9,946)
Profit / (loss) before
tax 3,387 (3,320) (12,382)
Tax (charge) / credit 5 (850) (688) 909
Profit / (loss) for the
period attributable to
equity shareholders 2,537 (4,008) (11,473)
------------------------ ------------------------ -------------------------
Other comprehensive - - -
income for the period
Total comprehensive
income / (loss)
attributable to equity
shareholders 2,537 (4,008) (11,473)
------------------------ ------------------------ -------------------------
Earnings per share 4 pence pence pence
Basic 2.0 (8.0) (19.0)
Diluted 2.0 (8.0) (19.0)
Adjusted earnings per
share 4
Basic 2.8 (3.3) (1.8)
Diluted 2.8 (3.3) (1.8)
------------------------ ------------------------ -------------------------
Reconciliation of GBP'000 GBP'000 GBP'000
operating profit to
Group Adjusted EBITDA
Operating profit / (loss) 3,765 1,096 (2,701)
Depreciation of property,
plant and equipment 6 6,079 4,878 10,907
Amortisation of
intangible assets 1,028 1,069 2,308
Exceptional items 3 159 1,464 7,607
Other income - - (1,105)
Long term employee 471 - -
incentive costs
------------------------ ------------------------ -------------------------
Group Adjusted EBITDA 11,502 8,507 17,016
------------------------ ------------------------ -------------------------
Group Adjusted EBITDA is a non-GAAP metric used by management
and is not an IFRS disclosure
Condensed Consolidated Statement of Financial Position
As at 30 June 2016
Note 30 June 2016 30 June 2015 31 December 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 6 88,837 75,975 85,237
Intangible assets 48,344 49,946 49,137
Deferred tax asset 5 - - 177
Total non-current assets 137,181 125,921 134,551
Current assets
Inventories 167 140 122
Trade and other receivables 7,044 5,971 5,654
Cash and cash equivalents 7,503 2,941 2,860
Total current assets 14,714 9,052 8,636
Total assets 151,895 134,973 143,187
------------- ------------- -----------------
Current liabilities
Trade and other payables 30,520 26,780 25,546
Income taxes payable 116 10 -
Borrowings 7 - 4,039 -
Total current liabilities 30,636 30,829 25,546
Non-current liabilities
Borrowings 7 9,072 74,040 8,966
Provisions 230 226 232
Derivative financial instruments - 811 -
Deferred tax liabilities 5 557 1,482 -
------------- ------------- -----------------
Total non-current liabilities 9,859 76,559 9,198
Total liabilities 40,495 107,388 34,744
------------- ------------- -----------------
Net assets 111,400 27,585 108,443
------------- ------------- -----------------
Capital and reserves
Issued capital 10 12 9 12
Own shares held 48 - 48
Capital redemption reserve 4 - 4
Share premium 136,280 48,982 136,280
Retained deficit (24,944) (21,406) (27,901)
------------- ------------- -----------------
Total equity shareholders' funds 111,400 27,585 108,443
------------- ------------- -----------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2016
Issued Capital Own shares held Capital Share Premium Retained Total
redemption deficit
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2015 (audited) 9 - - 48,974 (17,398) 31,585
Loss for the
period and
total
comprehensive
loss - - - - (4,008) (4,008)
Issue of
Ordinary share
capital - - - 8 - 8
At 30 June 2015
(audited) 9 - - 48,982 (21,406) 27,585
Loss for the
period and
total
comprehensive
loss - - - - (7,465) (7,465)
Share based
payment charge - - - - 1,018 1,018
Conversion of
preference
share capital
into Ordinary
share capital 2 - - - - 2
Cancellation of
share capital (4) - 4 - - -
Issue and
repurchase of
share capital - 48 - - (48) -
Costs associated
with the issue
of share
capital - - - (2,620) - (2,620)
Issue of
Ordinary share
capital 5 - - 89,918 - 89,923
At 31 December
2015 (audited) 12 48 4 136,280 (27,901) 108,443
Profit for the
period and
total
comprehensive
income - - - - 2,537 2,537
Share based
payment charge - - - - 420 420
At 30 June 2016
(unaudited) 12 48 4 136,280 (24,944) 111,400
-------------- --------------- -------------- ------------- --------------- -------
Consolidated Cash Flow Statement
For the six months ended 30 June 2016
Note Six months ended 30 June Six months ended 30 June Year ended 31 December
2016 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash generated from
operations 8 14,262 12,541 21,364
Tax paid - - (73)
Interest paid (225) (4,966) (4,124)
------------------------ ------------------------- -------------------------
Net cash flows from
operating activities
before exceptional items
and other income 14,037 7,575 17,167
Other income - - 1,105
Exceptional items (129) (1,464) (7,001)
------------------------ ------------------------- -------------------------
Net cash flow from
operating activities 13,908 6,111 11,271
------------------------ ------------------------- -------------------------
Cash flows from investing
activities
Purchase of property,
plant and equipment (9,113) (11,273) (27,330)
Purchase of intangible
assets (165) (145) (575)
Interest received 13 - 16
------------------------ ------------------------- -------------------------
Net cash flows used in
investing activities (9,265) (11,418) (27,889)
------------------------ ------------------------- -------------------------
Cash flows from financing
activities
Proceeds of issue of
Ordinary shares - 8 89,931
Drawdown of bank loans - 1,000 17,500
Payment of financing fees - - (1,067)
Costs with IPO - - (2,620)
Repayment of bank loans - - (53,902)
Drawdown / (repayment) of
shareholder loans - 3,600 (22,699)
Repayment of finance
leases - (1,936) (13,241)
------------------------ ------------------------- -------------------------
Net cash flows from
financing activities - 2,672 13,902
------------------------ ------------------------- -------------------------
Net increase / (decrease)
in cash and cash
equivalents 4,643 (2,635) (2,716)
Cash and cash equivalents
at start of period 2,860 5,576 5,576
------------------------ ------------------------- -------------------------
Cash and cash equivalents
at end of period 7,503 2,941 2,860
------------------------ ------------------------- -------------------------
Notes to the Interim Financial Statements
1. General information
The Directors of The Gym Group plc (the "Company") present their
interim report and the unaudited condensed consolidated financial
statements for the six months ended 30 June 2016 ('Interim
Financial Statements').
The Company is a public limited company, incorporated and
domiciled in the UK. Its registered address is Woodbridge House,
Woodbridge Meadows, Guildford, Surrey, GU1 1BA.
The Interim Financial Statements were approved by the Board of
Directors on 30 August 2016.
The Interim Financial Statements have not been audited or
formally reviewed by the auditors.
The information shown for the year ended 31 December 2015 does
not constitute statutory accounts within the meaning of section 434
of the Companies Act 2006 and has been extracted from the Group's
Annual Report and Financial Statements for the year ended 31
December 2015.
The Interim Financial Statements should be read in conjunction
with the Annual Report and Financial Statements for the year ended
31 December 2015, 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 2015 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for 2015 was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
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 IAS 34, 'Interim Financial Reporting' as endorsed
by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
The Interim Financial Statements are presented in Pounds
Sterling, rounded to the nearest thousand 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 2015. A number of new European Union
endorsed standards and amendments to existing standards are
effective for periods beginning on or after 1 January 2016.
However, none of these have a material, if any, impact on the
annual or condensed interim consolidated financial statements of
the Group in 2016.
The Group's activities consist solely of the provision of high
quality health and fitness facilities within the United Kingdom. It
is managed as one entity and management have consequently
determined that there is only one operating segment. All revenue
arises in and all non-current assets are located in the United
Kingdom. The Group's operations are not considered to be seasonal
or cyclical in nature.
The Directors have made appropriate enquiries and formed a
judgement at the time of approving the financial statements that
there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For this reason the Directors continue to adopt the going
concern basis in preparing the financial statements.
3. Exceptional items
Six months ended 30 June Six months ended 30 June Year ended 31 December
2016 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Costs in relation to IPO - 727 5,731
Share based payment costs
associated with IPO - - 1,018
Exploration of strategic
options 159 689 809
Costs in relation to
aborted merger with Pure
Gym - 48 49
-------------------------- -------------------------- --------------------------
159 1,464 7,607
-------------------------- -------------------------- --------------------------
Other income received in the year ended 31 December 2015 of
GBP1,105,000 (six months ended 30 June 2016: GBPnil, six months
ended 30 June 2015: GBPnil) relates to a payment received on the
surrender of a lease.
An additional GBP2,620,000 of exceptional costs associated with
the issue of share capital as part of the IPO have been recognised
directly in reserves in the year ended 31 December 2015.
4. Earnings per share
Basic earnings per share is calculated by dividing the profit or
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 Share Incentive
Plan and Performance Share Plan (see note 8).
As the Company issued shares and changed its capital structure
on IPO during November 2015, the number of shares in the prior
periods has been adjusted to match the post restructuring position
such that the figures remain comparable.
Diluted earnings 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
six months ended 30 June 2016 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 and Performance
Share Plan (see note 8).
Six months ended 30 June Six months ended 30 June Year ended 31 December
2016 2015 2015
Unaudited Audited Audited
Basic weighted average
number of shares 128,105,275 50,227,896 60,485,605
Adjustment for share 222,896 - -
awards
-------------------------- -------------------------- --------------------------
Diluted weighted average
number of shares 128,328,171 50,227,896 60,485,605
-------------------------- -------------------------- --------------------------
Basic earnings per share
(p) 2.0 (8.0) (19.0)
Diluted earnings per share
(p) 2.0 (8.0) (19.0)
-------------------------- -------------------------- --------------------------
Adjusted earnings per share is based on profit for the year
before exceptional items, amortisation and their associated tax
effect.
Six months ended 30 June Six months ended 30 June Year ended 31 December
2016 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Profit / (loss) for the
period 2,537 (4,008) (11,473)
Amortisation of intangible
assets 1,028 1,069 2,308
Other income - - (1,105)
Exceptional administration
expenses 159 1,464 7,607
Exceptional finance costs - - 1,623
Tax effect of above items (167) (201) (67)
-------------------------- -------------------------- --------------------------
Adjusted earnings 3,557 (1,676) (1,107)
-------------------------- -------------------------- --------------------------
Basic adjusted earnings per
share (p) 2.8 (3.3) (1.8)
Diluted adjusted earnings
per share (p) 2.8 (3.3) (1.8)
-------------------------- -------------------------- --------------------------
5. Taxation
The major components of taxation are:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Current income tax
Current tax on profits for
the year (116) (236) -
Adjustments in respect of prior
years - - (173)
----------- ----------- -------------
Total current income tax (116) (236) (173)
----------- ----------- -------------
Deferred tax
Origination and reversal of
temporary differences (843) 924 (700)
Change in tax rates (18) - (91)
Adjustments in respect of prior
years 127 - 55
----------- ----------- -------------
Total deferred tax (734) 924 (736)
----------- ----------- -------------
Tax (charge) / credit in the
Income Statement (850) 688 (909)
----------- ----------- -------------
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 2016.
Excluding the tax effect of the amortisation of acquired
intangible assets and exceptional items (GBP167,000) and deferred
tax adjustments in respect of prior years (GBP127,000), the
effective tax rate on Adjusted Profit Before Tax (see note 4) for
the half year ended 30 June 2016 was 25.0%.
The net deferred tax liability recognised at 30 June 2016 was
GBP557,000 (30 June 2015: GBP1,482,000; 31 December 2015:
GBP177,000 deferred tax asset). This comprised deferred tax assets
relating to tax losses and equity settled share-based incentives
totalling GBP176,000 (30 June 2015: GBP632,000; 31 December 2015:
GBP1,006,000) and deferred tax liabilities in relation to
accelerated capital allowances and acquired intangible assets
totalling GBP733,000 (30 June 2015: GBP2,114,000; 31 December 2015:
GBP829,000).
At 30 June 2016 there was a net unrecognised deferred tax asset
of GBPnil (30 June 2015: GBPnil; 31 December 2015: GBPnil) relating
to unrecognised tax losses.
6. Property, plant and equipment
Leasehold Fixtures, Gym and other Computer equipment Total
improvements fittings and equipment
equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2015 56,752 4,033 25,657 533 86,975
Additions 17,364 1,549 9,428 391 28,732
Disposals (89) (13) (298) - (400)
At 31 December 2015 74,027 5,569 34,787 924 115,307
Additions 6,242 505 2,846 135 9,728
Disposals (49) - - - (49)
At 30 June 2016 80,220 6,074 37,633 1,059 124,986
------------------ ----------------- ------------------ ------------------ -------
Accumulated
depreciation
At 1 January 2015 6,606 1,672 10,872 315 19,465
Charge for the year 5,745 656 4,329 177 10,907
Disposals (42) (7) (253) - (302)
At 31 December 2015 12,309 2,321 14,948 492 30,070
Charge for the year 3,065 391 2,506 117 6,079
Disposals - - - - -
At 30 June 2016 15,374 2,712 17,454 609 36,149
------------------ ----------------- ------------------ ------------------ -------
Net book value
At 31 December 2015 61,718 3,248 19,839 432 85,237
At 30 June 2016 64,846 3,362 20,179 450 88,837
------------------ ----------------- ------------------ ------------------ -------
Outstanding capital commitments totalled GBP1,673,000 (30 June
2015: GBP4,917,000; 31 December 2015: GBP2,342,000).
7. Borrowings
30 June 2016 30 June 2015 31 December 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Non-current
Bank facility A 10,000 - 10,000
Former bank facilities - 48,508 -
Finance leases - 6,068 -
Shareholder loans and accrued interest - 21,926 -
Loan arrangement fees (928) (2,462) (1,034)
------------- ------------- -----------------
9,072 74,040 8,966
------------- ------------- -----------------
Current
Finance leases - 4,039 -
------------- ------------- -----------------
The Group's bank borrowings are secured by way of fixed and
floating charges over the Group's assets.
On 12 November 2015 the Group refinanced its former bank
facilities and shareholder loans using the net proceeds of its
IPO.
On 12 November 2015 the Group entered into a new 5 year bullet
repayment facility with HSBC and Barclays. The facility comprises a
GBP10.0 million term loan ('facility A') for the purposes of
refinancing the Group's finance leases, a GBP25.0 million term loan
('facility B') to fund acquisitions and capital expenditure, and a
GBP5.0 million revolving credit facility. Interest is charged at
LIBOR plus a 2.5% margin.
At 30 June 2016, facility A was fully drawn and facility B and
the revolving credit facility were undrawn.
There have been no changes to the valuation techniques used for
financial assets or liabilities held at fair value and no transfers
in the hierarchy of financial assets or liabilities. The carrying
values of all financial assets and liabilities are considered to
represent their fair values.
8. Cash generated from operations
Six months ended 30 June Six months ended 30 June Year ended 31 December
2016 2015 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Operating profit / (loss) 3,765 1,096 (2,701)
Adjustments for:
Other income - - (1,105)
Non-cash long-term 471 - -
employee incentive costs
Exceptional items 159 1,464 7,607
Depreciation of property,
plant and equipment 6,079 4,878 10,907
Amortisation of intangible
assets 1,028 1,069 2,308
Loss on disposal of
property, plant and
equipment 49 19 98
Increase in inventories (45) (66) (47)
Increase in trade and other
receivables (1,389) (1,485) (1,372)
Increase in trade and other
payables 4,145 5,566 5,669
-------------------------- -------------------------- --------------------------
Cash generated from
operations 14,262 12,541 21,364
-------------------------- -------------------------- --------------------------
9. Long term employee incentive costs
The Group operates share based compensation arrangements under
The Gym Group plc Performance Share Plan and The Gym Group plc
Share Incentive Plan. In accordance with IFRS 2 Share Based
Payments, the value of the awards are measured at fair value at the
date of the grant. The fair value is expensed on a straight-line
basis over the vesting period, based on the management's estimate
of the number of shares that will eventually vest.
In the six months ended 30 June 2016, the Group recognised a
total charge of GBP471,000 (six months ended 30 June 2015: GBPnil,
year ended 31 December 2015: GBP1,018,000) in respect of the
Group's share based long term incentive plans and related
employer's national insurance (GBP420,000 and GBP51,000
respectively).
a) Performance Share Plan
During the six months ended 30 June 2016, 528,435 share awards
were granted under the Performance Share Plan ('PSP'). Of these,
134,297 were exercisable at 30 June 2016. The remaining awards will
vest after three years, subject to continued employment and the
achievement of earnings per share and total shareholder return
targets. The fair value of the total shareholder return element of
the award was estimated at the grant date using a Monte Carlo
simulation model, taking into account the terms and conditions upon
which the awards were granted. This model simulates the TSR and
compares it against the group of comparator companies. It takes
into account historic dividends and share price fluctuations to
predict the distribution of relative share price performance.
b) Share Incentive Plan - Free shares
On 26 April 2016, the Company made 79,248 free share awards to
employees of the Group. The awards are subject to continued
employment requirements over a three year period and have no
performance conditions. The shares are held by an employee benefit
trust and are dilutive for the purposes of earnings per share.
c) Share Incentive Plan - Matching shares
During the six months ended 30 June 2016, the Company granted
7,564 matching share awards, whereby for every share purchased by
an employee the Company will award one matching share, up to a
maximum value. The awards are subject to continued employment
requirements over a three year period and have no performance
conditions. The shares are held by an employee benefit trust and
are dilutive for the purposes of earnings per share.
10. Issued capital
During the six months ended 30 June 2016, the Company issued
86,812 Ordinary shares of GBP0.0001 each in relation to free and
matching share awards under The Gym Group Plc Share Incentive Plan.
The shares were then allocated to award holders via an Employee
Benefit Trust, subject to satisfaction of continued employment
conditions, for nil consideration.
11. Related party transactions
Identification of related parties
The Group has related party relationships with major
shareholders, key management personnel and family members of the
Directors.
Phoenix Equity Partners 2010 L.P. and Phoenix Equity Partners
2010 GP L.P. ("the Phoenix Funds"), and Bridges Community
Development Ventures Fund II (which is managed by Bridges Ventures
LLP) are major shareholders in the Company.
Closewall Limited is a company under the control of a family
member of a Director, J Treharne.
C Treharne is a relation of a Director, J Treharne.
Transactions with related parties
The following table provides the total amounts owed to related
parties for the relevant financial period:
Six months ended 30 June Six months ended 30 June Year ended 31 December 2015
2016 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Phoenix Funds - 44,667 -
Bridges Ventures LLP - 22,304 -
Key management - 3,349 -
Closewall Limited 2 9 49
C Treharne - - -
--------------------------- ---------------------------- ----------------------------
The following table provides the total amounts of purchases from
related parties for the relevant financial period:
Six months ended 30 June Six months ended 30 June Year ended 31 December 2015
2016 2015
Unaudited Audited Audited
GBP'000 GBP'000 GBP'000
Phoenix Funds 20 681 -
Bridges Ventures LLP 20 341 -
Key management - - -
Closewall Limited 3,132 3,406 7,627
C Treharne 4 4 8
--------------------------- ---------------------------- ----------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKKDQABKDOFN
(END) Dow Jones Newswires
August 31, 2016 02:00 ET (06:00 GMT)
The Gym (LSE:GYM)
Historical Stock Chart
From Jun 2024 to Jul 2024
The Gym (LSE:GYM)
Historical Stock Chart
From Jul 2023 to Jul 2024
