Low cost, no contract Gym Group (GYM) reported full-year revenues to 31 December 2019 up 24% to £153m and pre-tax profit up 36% to £13.9m. Having fallen 70% over the last month, the shares bounced 5% higher to 86p.

The company said that trading in the first two months of the year trading was in-line with expectations, but in the last two weeks daily gym usage has started to decrease with a higher number of cancellations and members freezing memberships.

All gyms are currently open and the company said it was following advice from Public Health officials. One of the attractions of the company’s offering is that members can stop without any notice, so it should be the first to see any significant change in customer behaviour.

In London there is some discussion that certain parts of the community are not following Government advice on social distancing, which may result in more draconian measures being taken.

Chief executive Richard Darwin is taking a positive stance on the coronavirus pandemic and commented: ‘Our business has a significant reach with over 10 million member visits already this year and our focus is to be in a strong position when we emerge from the Covid-19 disruption to extend access to affordable fitness across the UK.’

STRONG CASH FLOWS

Part of the measures designed to tackle the disruption include slowing down expansion in order to preserve cash and reducing discretionary spending. The intention is to achieve neutral cash flows if revenues drop in the coming weeks.

The company highlighted increasing future cash flows as more of the estate reaches maturity and that 109 of the 175 sites had been open for more than two years, and by the end of this year there will be 155 mature sites.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for a mature site remained stable at £437,000, achieving return on capital of 31%.

Operating cash flow grew 20% to £40.8m in 2019 and free cash flow was up 19% to £33.9m while non-property net debt was £47.4m.

READ MORE ABOUT GYM GROUP HERE

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Issue Date: 19 Mar 2020