TIDMGYM
RNS Number : 7793S
Gym Group PLC (The)
18 March 2021
18 March 2021
The Gym Group Plc
(the 'Company')
Annual Report and Accounts 2020
Following the announcement on 18 March 2021 of its full year
results for the year ended 31 December 2020 (RNS: 6896S ), the
Company announces that it has published the 2020 Annual Report and
Accounts ("2020 Annual Report") on the Company's website,
http://www.tggplc.com/.
The 2020 Annual Report has also been submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
For further information, please contact
The Gym Group via Instinctif Partners
Richard Darwin, CEO
Mark George, CFO
Instinctif Partners
Matthew Smallwood
Justine Warren 020 7457 2020
Appendix
The additional information set out below is included in
compliance with Disclosure Guidance and Transparency Rule 6.3.5,
and should be read in conjunction with the 2020 Annual Report as a
whole. The principal risks and uncertainties are set out on pages
46-50 of the 2020 Annual Report and page references below are to
the relevant pages of the 2020 Annual Report. The full and unedited
text relating to these disclosures are set out below:
Principal Risks and Uncertainties
Risk Management
In order to gain an understanding of the risk exposure of the
Group, we review each area of our business annually and use a
methodology that will assist the Group in measuring, evaluating,
documenting and monitoring its risks within all areas of its
operations.
We use our risk management process as described to identify,
monitor, evaluate and escalate risks as they emerge, enabling
management to take appropriate action wherever possible in order to
control them and also enabling the Board to keep risk management
under review.
This is an area that the Board has always taken seriously.
However, it has never been more important than now, as the past
year has shown us through the impact of an uncontrollable event in
COVID-19.
Principal risks
The risk factors addressed below are those which we believe to
be the most material to our business model, which could adversely
affect the operations, revenue, profit, cash flow or assets of the
Group and which may prevent us from achieving the Group's strategic
objectives. Additional risks and uncertainties currently unknown to
us, or which we currently believe are immaterial, may also have an
adverse effect on the Group.
Risks and uncertainties in 2020 relating to COVID-19
The impact of COVID-19 and resulting risks have been a
significant feature of the past 12 months. We are continually
monitoring the impact of the pandemic and our priority is to ensure
the safety of our staff and members. Whilst there are signs of
optimism that we will soon be through the cycle of lockdowns and
that our business may soon be able to return to trade as normal,
there remains uncertainty on the continuing impact of COVID-19 on
the wider environment and the Group's operations.
We are following our robust risk management framework and
ensuring that an active risk assessment and business continuity
plan is in place, overseen by our Health and Safety Manager,
reporting to the Executive Committee. The Group will follow Public
Health England and Health Protection Scotland guidance, and medical
and local authority advice where relevant, to ensure that we
respond to any developments quickly, safely and in the best
interests of our people. In addition, management has taken a number
of actions to increase available liquidity, reduce costs to
mitigate the disruption caused by the outbreak, and it will also
continue to seek to access the various government schemes to
support businesses. As set out on page 51, appropriate financial
modelling has been undertaken to support the assessment of the
business as a going concern with the material uncertainty from
COVID-19 and in support of viability.
The table below sets out the principal risks of the business and
for each risk identifies whether and how COVID-19 has affected that
particular risk.
Responsibility for risk
The relevant roles and responsibilities in monitoring and
operating the system of risk management are illustrated in the
diagram on page 46.
Principal Definition Impact Mitigation
risk
1) Business Whilst this Extended periods -- A detailed exercise
interruption risk is highly of closure is being undertaken to
relevant today would result assess each of the sources
as a result in a loss of of business interruption
of COVID-19, revenue and risk and determine where
this risk is could also appropriate action can
wider than pandemics cause a decrease be taken to mitigate it,
and there could in membership based on whether the cost
be other causes numbers. of the action is proportionate
of significant This is specifically to the risk it is mitigating.
disruption or the case during -- This will be turned
widespread closure the current into a clear action plan
of our estate, COVID-19 pandemic, with agreed owners and
including for with reduced timeframes.
example: member numbers -- In addition, business
(a) Climate and enforced continuity procedures
change resulting temporary gym and risks are monitored
in an increase closures. and refreshed regularly.
in the likelihood Over an extended -- In relation to COVID-19,
and severity period, a loss management has identified
of environmental of revenue and implemented proven
disasters such coupled with measures to preserve cash
as storms or the inability and reduce discretionary
droughts, which of the Group expenditure during a period
could result to remove certain when all of the Group's
in major infrastructure of its cost sites are closed, and
damage and outages base in a closure to be able to reopen quickly
of electricity scenario means to minimise revenue loss.
and water supplies. this could Appropriate financial
(b) Major health lead to a material modelling has been undertaken
scare in relation uncertainty to support the assessment
to gym usage. in the Group's of the business as a going
(c) Failure ability to concern with the material
of a key supplier continue as uncertainty from COVID-19
impacting our a going concern. and in support of viability.
ability to operate -- As part of our response
our gyms. to the TCFD recommendations,
(d) Significant we will review the risks
reputational of future climate change
damage. on our business and identify
adaptation action required.
-------------------------- -------------------------- -------------------------------------
2) Operational High operational A limited number -- Monthly monitoring
Gearing gearing from of corrective and reforecasting of business
the fixed cost options in performance at site level.
base. the cost base -- Active yield management
could be made on a gym-by-gym basis.
to correct -- Regular financial management
any underperformance by the Executive Committee
in membership and Board.
numbers, which -- Option to slow down
could have expansion in order to
an adverse preserve cash.
impact on profitability. -- During COVID-19 lockdowns,
COVID-19 lockdowns operating costs have been
have caused reduced significantly
a significant to minimise the impact
drop in revenue, of lost revenue and we
which has been have taken government
only partially support in the form of
mitigated by business rates relief
cost management and wages support for
measures. furloughed staff. Capex
has also been reduced
significantly to preserve
cash.
-------------------------- -------------------------- -------------------------------------
3) Member Failure to provide Reductions -- Monitor gym utilisation
Experience members with in actual or and member satisfaction
a high quality perceived customer scores.
product and service could -- Enhance monitoring
service would result in a and feedback processes.
damage the Group's decrease in -- Ongoing review of equipment
reputation. membership usage to ensure we meet
numbers and member requirements.
revenue generation. -- Explore further innovations
COVID-19 has to improve the member
had an adverse experience.
impact on this -- Enhanced cleaning protocols
risk. to reduce risk of COVID-19
Whilst member transmission and increase
feedback is member confidence.
at an all-time -- Maintain appropriate
high in response levels of expenditure
to the COVID-secure on repairs and maintenance.
steps implemented -- Significant work completed
in the gyms, on preparing gyms to be
there are significant COVID-secure.
numbers of -- Gym busyness tracker
former members helps nervous members
who continue to visit at quieter times.
to be uncomfortable -- Strong communications
returning to plan in place to communicate
their normal the #safewithus commitment
day-to-day to members and to reinforce
activities key guidelines regarding
- including sanitisation, face coverings
due to COVID-19. and social distancing.
-------------------------- -------------------------- -------------------------------------
4) Economic A prolonged A period of -- We are very well placed
conditions uncertainty disruption to operate successfully
following wider caused by continued in a challenging economic
economic shock national lockdowns environment; we are one
such as the may result of the lowest price gym
impact of COVID-19 in continuing operators in the UK market
could cause challenges with an average monthly
significant for the economy, subscription of GBP18.81
disruption to resulting in which is GBP1-4 per month
business conditions. a loss of membership lower than most competitors
and hence revenue. in the low cost gym sector
Over an extended and significantly lower
period, a loss than rates charged by
of revenue mid-market and premium
coupled with operators. Although some
the inability of our members may choose
of the Group to cancel their subscription
to remove certain due to financial hardship
of its cost we would also expect to
base in a closure benefit from others 'trading
scenario means down' from the mid-market
this could or premium gyms.
lead to a material
uncertainty
in the Group's
ability to
continue as
a going concern.
-------------------------- -------------------------- -------------------------------------
5) Competition The Group may The ability -- Continue to operate
face increased of the Group a low cost operating model
competition to hold or to ensure we can retain
and pressure increase prices price leadership.
from competitor and therefore -- Maintain focus on choosing
pricing decisions. achieve performance the best sites in a geographical
targets could area.
be affected. -- Continue to invest
However, COVID-19 in the member proposition.
has led to
the closure
of competitors
and so at this
stage has reduced
this risk.
-------------------------- -------------------------- -------------------------------------
6) Staff Loss of key A lack of experienced -- The Group uses a variety
retention staff through and motivated of techniques to attract,
retention policy staff will retain and motivate staff
and failure have a detrimental at all levels across the
to manage succession. impact on all business. These techniques
areas of the include:
business, from - competitive remuneration
operations packages;
to central - opportunities to own
functions. shares in the
COVID-19 has Company;
resulted in - opportunities for training
a small reduction and progression;
in staff churn, - short, clear reporting
as the economic lines;
uncertainty - succession planning;
is encouraging and
people to remain - utilising staff engagement
in role. surveys so our staff have
an opportunity to provide
feedback and ideas.
-- In addition, the growth
of central functions and
way we run the business
is reducing dependencies
on key individuals by
spreading knowledge more
widely.
-------------------------- -------------------------- -------------------------------------
7) Information Our ability Disruption -- Our primary data systems
Technology to enrol members, in critical are hosted by fully qualified
Dependency carry out online IT systems organisations in suitable
marketing activity, could have data centres.
process payments a negative -- Our primary IT infrastructure
and control impact on our is fully managed by specialist
gym access is reputation IT companies which provide
dependent on and our ability best-practice architecture
the performance to collect and support.
of our IT systems. revenue. -- All membership and
There is a business information is
slight increase backed up using third
in this risk party locations.
due to COVID-19, -- Robust disaster recovery
as we experience and business continuity
significant plans are in place.
spikes in usage -- Additional capacity
around the has been added to our
point of reopening infrastructure to cope
post-lockdown. with large spikes in usage.
-------------------------- -------------------------- -------------------------------------
8) Organic Site scarcity Delays to our -- Our highly experienced
Rollout may affect the rollout plan property team is focused
delivery of may have an on site selection and
our rollout adverse impact sourcing the best deals
plan. on growth targets to deliver a strong pipeline.
and operational -- Our expansion into
returns. small box gyms increases
However, COVID-19 the range of suitable
has resulted sites.
in increased
availability
of high quality
sites, thereby
resulting in
a reduced risk.
-------------------------- -------------------------- -------------------------------------
9) Data The Group holds Unauthorised -- The Group's networks
Protection business critical access, loss and systems are protected
and confidential or disclosure by firewalls, security
information of this information software and secure passwords.
electronically. may lead to -- All sensitive data
A breach of legal claims, is captured and presented
security or regulatory using SSL encryption.
data protection penalties, Our transactional website
rules is a key disruption is scanned quarterly to
risk. of operations ensure PCI compliance.
and reputational -- Access to central member
damage. We data systems requires
do not consider 2-Factor authentication.
this risk to -- All customer payment
be affected data is stored externally
by COVID-19. on systems that are PCI-DSS
and/ or BACS certified.
-- We have implemented
industry-leading authentication
management software.
-- We are recruiting a
Data Protection Manager
to oversee and optimise
our control environment
in this area.
-------------------------- -------------------------- -------------------------------------
10) Regulatory Failure to adhere Potential reputational -- The Board has oversight
to regulatory damage and of the management of regulatory
requirements penalties. risk and compliance, and
such as the We do not consider delegates specific responsibilities
Listing Rules, this risk to to senior management.
taxation, the be affected -- Expert opinion sought
Data Protection by COVID-19. where relevant.
Act, employment -- Legal advice taken
law, health to ensure systems, processes
and safety requirements, and documentation conform
planning regulations, with the Data Protection
noise abatement Act.
and advertising -- Third party health
and marketing and safety risks assessments
regulations. and audits carried out.
Staff conduct periodic
health and safety assessments.
-- Employment and continuous
training and development
of appropriately qualified
staff.
-------------------------- -------------------------- -------------------------------------
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