Gym Group Plc · LSE:GYM
Gym — The Gym Group — FY2022 Earnings Presentation
38 slides from Gym's earnings presentation, Mar 16, 2023
Slide 1: Full Year Results
Full Year Results 16 March 2023
Slide 2: Forward-looking statement disclaimer
Forward-looking statement disclaimer This presentation and information communicated verbally to you may contain certain projections and other forward looking statements with respect to the financial condition, results of operations, businesses and prospects of The Gym Group ple. These statements are
Slide 3: Introduction
Introduction
Slide 4: Year in review and current year outlook
Year in review Current year outlook Post pandemic recovery - Macroeconomic challenges full year of sales delivering Consumer cost-of-living £38m of EBITDALNR! pressures and high utility 28 new openings — highest cost inflation ever in a single year Revenue increases broadly . offset by cost increase
Slide 5: 2022 Highlights
2022 Highlights 229 Open sites 2021: 202 200 New Fiit classes @ the gym group 14% Membership growth 2022: 821k 2021: 718k 12% Increase to visits per member? Je divided by the averai +4% ARPMM' growth H2 2022: £18.30 H2 2021: £17.60 £3.3m Social value generated per site* 1ge membership inthe period £
Slide 6: Financial update
Financial update
Slide 7: Financial summary
Financial summary Gyms Closing Membership (k) Revenue (£m) 183 . =m 2020 2021 2020 2021 2020 2021 EBITDA LNR (£m)! Free cash flow (£m)! Non-property net debt (£m)! a , (10.2) (16.6) 2020 2021 2022 2020 2021 2022 2020 2021 2022 @ the gum group —weterrocppenatorsetionsornonstowterymeosres Fuleor Resut
Slide 8: Group adj. EBITDA LNR of £38.0m
Group adj. EBITDA LNR of £38.0m £m 2022 2021 2019 Revenue 172.9 106.0 153.1 Cost of sales (2.0) (1.7) (1.4) Gross Profit 170.9 104.3 1517 Site costs (85.0) (60.2) (64.5) Other income 08 73 - Central costs (15.4) (16.0) (12.7) Normalised rent (33.3) (29.7) (25.9) Group Adj. EBITDALNR 38.0 57 485 Marg
Slide 9: ARPMM growth of 4% from price optimisation and higher LIVE IT penetration
ARPMM growth of 4% from price optimisation and higher LIVE IT penetration Average DO IT headline rate (£) LIVE IT penetration (%) ARPMM (£) £22.00 +4% £21.00 225% £20.00 17.60 £19.00 £18.00 £17.00 —2020 2021 2022 2020 2021 H2 2021 H12022 H2 2022 Full | Full year 2022 ARPMM was £17.82 | 2022 ARPMM wa
Slide 10: Membership volume, yield and LFL revenue
O1. 02. 03. Membership volume Yield LFL Revenue
Slide 11: Expansionary and maintenance capex
@ Expansionary Maintenance capex increased to 7% of revenue (2021: 5%) £m New site capex Brand relaunch Tech & data capex Expansionary Capex Additions Proceeds from disposal of equipment Expansionary Capex Creditor movement Expansionary Capex Cash Flow Maintenance Capex Additions Maintenance Capex C
Slide 12: Investment funded by Free Cash Flow and Non-Property Net Debt increase
Investment funded by Free Cash Flow of £16.6m and Non-Property Net Debt increase £m (6.0) Group Adj. Movement in Rent Movement in Other — Maintenance Group Operating Non-Underlying Interest & Tax Free Cash Flow Expansionary Net Consideration Cash flow before EBITDA LNR Working Capital Working Capita
Slide 13: Net debt at 2.0x Adj. EBITDA LNR
Net debt at 2.0x Adj. EBITDA LNR £m 2022 2021 Bank facilities 80.0 100.0 Lease facilities! 15.0 - Total facilities 95.0 100.0 RCF drawn (70.0) (45.0) Cash & cash equivalents 5.4 73 Bank net debt (64.6) (37.7) Finance lease indebtedness (11.5) (6.5) Non-Property Net Debt? (76.1) (44.2) Leverage? 2.0x
Slide 14: Core mature estate ROIC has significantly recovered
The core mature estate ROIC has significantly recovered but has not returned to pre-pandemic levels When excluding gyms which are workforce-dependent, the organic mature estate achieved 22% ROIC The former easyGym and Lifestyle gyms reached 18% ROIC in 2022, due to the premium incurred to acquire th
Slide 15: New sites performing well
New sites performing well Revenue vs mature target by month open 100% 80% Sites opened in 2021 teaching 100% of their 60% mature revenue targets 40% Sites opened in 2022 progressing well 20% 0% 12 3 45 67 8 9 10 11 12 13 14 :*15 16 17 18 19 20 21 ==2021openings =2022 openings @ the gum group — -waen
Slide 16: Continual focus on cost efficiency
Continual focus on cost efficiency Utilities Other cost areas
Slide 17: Current trading and outlook
Current trading and outlook 7) Jan/Feb trading 2023 Full year outlook Investment in capex and * 890,000 members as at Feb + Revenue increase from yield strategic projects self financed 2023, up 8% vs Dec 2022 and new openings now from free cash flow * Revenue year to date up 19% vs expected to broad
Slide 18: Chief Executive Officer
= = = 5 a se) = 5 £5 2 fa Chief Executive Officer
Slide 19: Member satisfaction, social value and engagement
Visits per member up Record OSAT' results, Highest ever social Strong engagement 12% since 2019 with 57% of value, generating and Investors our gym members £756m in 2022 in People Gold giving 5/5 overall (2019: £700m) accreditation satisfaction ratings ...but market recovery has been uneven post Cov
Slide 20: Post Covid-19 routines and cost-of-living impact
Establishment of post Covid-19 routines, digital fitness and continuation of working from home trends Economic impact of cost- of-living crisis Source: Leisure Database Company Report Morch 2022 Mitigated by: 2 Share of UK gym membership 2022! Low cost = Mid-market & Premium m Public Full Year Resul
Slide 21: 2022 Strategic priorities
2022 Strategic priorities Market Optimising yield Developing Rolling out opportunity & & profitability the technology the new brand organic rollout platform G the gym group Full Year Results- 2022
Slide 22: Low cost gym market share and competitors
O1. 02. 03. PureGym JD Gyms/ Xercise4Less énergie Fitness 24/7 Fitness Simply Gym Trugym Others 2019-2022 fo 202 = 1 +27 [et -s | 81 V-14 | 10 10 | 2 l low cost gyms (vs 748 PY) [7 5 5-1 market share? (267% PY) Full Year Results - 2022
Slide 23: Growth in high performing urban residential and Greater London locations
02. 03. 04. Substantial growth in high performing Urban Residential (+29%) and Greater London (+19%) locations City Centre locations have been impacted most by changes to workforce routines (except for student gyms) Town and urban locations enable a range of sizes between 7,000-21,000 sq. ft Focused
Slide 24: Growth delivered across a range of sizes
Growth delivered across a range of sizes Birmingham Selly Oak City Residential Greater London Glenrothes Town Retail park Commuter town centre Opened August 2022 Opened November 2022 Size: 15,145 sq.ft Size: 20,839 sq.ft Retail park Opened August 2022 Size: 9,074 sqft © the gym group FulveorResuts-2
Slide 25: Optimised price
Optimised price Remained lowest cost provider Launched pay up front membership High value option for Ts willing to commit to tenure +2.5ppts Higher LIVE IT penetration + Improved and promoti mechanics Developing 3 Tier architecture Dec 2021 Dec 2022 @ cvs +£4.12 +£2.33 Cece +£4.48 +£2.35 D eS +£4.06
Slide 26: Digital platform overall benefits
u | v Overall Benefits * Improved sales conversion: conversion up 1.0-15% over 4 months + Higher yields: increased yield sophistication + Improved member experience: OSAT and visits per member at all-time high Tech Statistics 75% traffic on mobile 99.99% site reliability in key Jan/Feb period App ra
Slide 27: Brand relaunched successfully in 2022
Brand relaunched successfully in 2022 join the Creating a more memorable ; lowest cost : . . . nationwide Ol. identity to drive marketing 24/7 gym effectiveness Most effective audio visual campaign creative to date with 04 14 percentage points increase in ° correct attribution from 2021 campaign ass
Slide 28: A strong brand will improve search effectiveness
Astrong brand will improve search effectiveness, drive organic traffic, reduce performance media spend and CPAs The impact is measured using 3 key metrics: Feb - Dec 21 Jan - Jul 22 Aug - Dec 22 Jan - Feb 23 Old Brand = New Brand ling score Full Year Results.
Slide 29: Growing sustainably
Growing sustainably CarhonNeutral.com 2022 Highlights Our environment Ist carbon neutral gym chain in the UK Submitted our pathway to net zero to SBTi for validation! Reduced our Scope 1 and 2 emissions by 11% Launched energy saving initiatives Our members + Generated £756m of social value through e
Slide 30: Summary and Q&A
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Slide 31: A year of significant recovery
A year of significant recovery 28 new sites opened Rebrand and tech launched © the gym group Price optimisation continues Yield increases 3 price product architecture Fuller Res 31
Slide 32: Q&A
Slide 33: Business KPIs (5 year)
Business KPIs (5 year) Financial 2022 2021 2020 2019 2018 YoY Revenue 729 106.0 80.5 153.1 123.9 63% Group Adj. EBITDA LNR 38.0 5.7 (10.2) 48.5 39.1 n/a Group Operating Cash Flow 23.1 63 (16.3) 39.2 34.0 n/a Group Operating Cash Flow Conversion 60.8% 110.6% 160.3% 80.8% 86.8% (45%) Expansionary Capi
Slide 34: Definition of non-statutory measures
Definition of non-statutory measures * Group Adjusted EBITDA LNR - operating profit before depreciation, amortisation, share based payments costs, non-underlying items and normalised rent. * Normalised Rent - the contractual rent that would have been paid in normal circumstances without any agreed d
Slide 35: 8k 26K -£10m
6m 6m 8k 26K -£10m
Slide 36: Property
Property Rolling average sq. ft by year 2,000 O Existing gyms HE 2022 acquired sites 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 A. 2022 organic openings @ the gum group rulveorResuts-2022 36
Slide 37: Investment rationale
D Investment rationale O01. Low cost segment leading growth of the UK health and fitness market + increased focus in health & fitness following Covid + strong value proposition means low cost gyms will be in high demand 02. Disciplined site selection assisted by strong covenant for landlord + locati
Slide 38: Thank you
ey Thank you