In a pre-close trading update low cost, no contract gym operator The Gym Group (GYM) said full year revenue to 31 December 2020 fell 47% to £80 5 million reflecting the 45% of lost trading days due to government restrictions. The shares gained 0.7% to 219.5p.
Under the prior tier one-to-three tier system all the company’s 183 gyms could remain open but the introduction of tier four resulted in 162 gyms closing and from 4 January all remaining gyms were closed after the government’s second national lockdown.
Monthly cash burn before expansionary capital expenditure during the current lockdown will be around £5 million, lower than during the November lockdown as a result of the recently announced Government grant scheme. All the company’s front line staff remain furloughed.
The company’s year-end net debt was £47.3 million, unchanged from a year ago, helped by the £40 million share raise in April.
Gym has ‘significant liquidity’ under its £100 million banking facility, £30 million of which was extended in December to run to June 2022 with the remainder expiring in October 2023.
ROLL OUT CONTINUES
The economic damage caused by the pandemic has created opportunities for Gym to access ‘excellent’ new sites at attractive rents.
For example, chief executive Richard Darwin told Shares the more attractive property landscape has enabled the company to open sites in York and Cambridge, locations it had targeted for years without finding suitable sites and rental terms.
The company said it is building a strong pipeline for 2021 and beyond while the timing of the roll-out will be determined by the reopening date for gyms, whenever that might happen.
Numis commented, ‘we expect steady rebuilding of member numbers and return to site expansion at attractive returns to drive shareholder value.’
The most important thing according to Darwin was to have clarity around a ‘permanent’ opening date rather than the flip-flopping of opening and closing sites. The company ended the period with 578,000 members, down around 27% on the prior year.
The company has appointed ex-footballer Rio Ferdinand and Wais Shaifta as non-executive directors. Ferdinand has worked with the government and other influential thinkers on how to reinvigorate communities in social housing. He is said to be ‘a passionate advocate for fitness and mental health’.
Wais is currently chief executive of Push Doctor, a leading digital healthcare company working in partnership with the HNS.