Gym Group Plc · LSE:GYM
Gym — The Gym Group — H1 2024 Earnings Presentation
39 slides from Gym's earnings presentation, Sep 11, 2024
Slide 1: Half Year Results 2024
Half Year Results 2024 11 September 2024
Slide 2: Presenters
Will Orr Luke Tait Will Orr Will Orr
Slide 3: Will Orr, Chief Executive Officer
Will Orr Chief Executive Officer
Slide 4: Strong first half performance; well set for the full year
Strong first half performance; well set for the full year Membership up 4% to 905k (H1 2023: 867k) Yield up 9% vs H1 2023 Bank debt refinanced £90m combined Term Loan and RCF; improved interest rates 1. Like-for-tke revenue vs 2023 includes all sites open as at 31 December 2021 ©) the gym group Reve
Slide 5: Luke Tait, Chief Financial Officer
Luke Tait Chief Financial Officer
Slide 6: Financial summary
Financial summary ~\ (— >) 1 Group Adjusted EBITDA Less Average Members ARPMM Revenue Normalised Rent! (LNR) 914k £20.44 £112.1m £22.1m 43% +9% +12% +28% +30k vs PY +£1.63 vs PY +£12.3m vs PY +£4.9m vs PY (Jun 2023: 884k) (Jun 2023: £18.81) (Jun 2023: £99.8m) (Jun 2023: £17.2m) JW Ne S ( ; >) ( Stat
Slide 7: Group adj. EBITDA LNR of £22.1m
Group adj. EBITDA LNR! of £22.1m £m H12024 H12023 YoY % £m Revenue 1121 998 12.3 12% Cost of Sales (1.5) (1.4) (0.1) (3%) Gross Profit 110.6 98.4 12.2 12% Site Costs (Excl. Normalised Rent) (56.4) (53.3) (3.1) (6%) Central Costs (Excl. Normalised Rent) (12.5) (10.0) (2.5) (25%) Normalised Rent2 (19.
Slide 8: H1 2024 vs H1 2023
H1 2024 vs H1 2023 Membership volume ARPMM LFL Revenue
Slide 9: ARPMM growth of 9%
ARPMM growth of 9% ARPMM (£) Average Standard headline rate (£) Key Drivers 21.00 £25.00 +9% Headline rate increases 2050 £24.00 a 2000 £23.00 £2200 Existing member repricing 1950 £2100 19.00 7681 £20.00 Joining fee optimisation 1850 £19.00 18.00 £18.00 * ee . Promotion optimisation 1750 £17.00 H1 2
Slide 10: Site costs in line with expectation
Site costs in line with expectation Site costs inflationary pressures... Offset by cost optimisation initiatives... National Living Wage - Impacts staff costs and Staff Costs — National Living Wage increase has been cleaning offset by efficiencies in staffing model Rates — New rating period and Unif
Slide 11: Strong cash flow generation
Strong cash flow generation £m 221 > N18 Group Adj. Movement in Maintenance Free Cash Non-Underlying Interest on Free Cash Flow Expansionary EBT Funding/ Cash Flow Before EBITDA LNR Working Capital Capex Flow Before Costs Bank Debt & Non- Capex Purchase of Movement in Debt Non-Underlying Property Le
Slide 12: Four new sites opened in H1 2024 vs two in H1 2023
Four new sites opened in H1 2024 vs two in H1 2023, on track to open 10-12 this year Continued investment in Tech & Data to deliver the Next Chapter initiatives Maintenance capex 4% of revenue in H1 2024 as we continue to invest in existing sites
Slide 13: Bank facilities and net debt
£m Bank facilities 80.0 Lease facilities aks) Total facilities 915 RCF drawn (56.0) Cash & cash equivalents 74 Bank net debt (48.6) Non-property lease indebtedness (6.0) Non-Property Net Debt! (54.6) Adjusted Leverage! 1.3x Fixed Charge Cover! 1.8x tatut 80.0 12.4 92.4 (59.0) 15 (57.5) (8.9) (66.4)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Slide 16: Current trading and outlook
OD Current trading Outlook Gym rollout on track
Slide 17: Will Orr, Chief Executive Officer
Will Orr Chief Executive Officer
Slide 18: Investment case: sustained growth from free cash flow
Slide 19: Strong market growth and low cost sector gaining share
Strong market growth and low cost sector gaining share £5.9bn 10.7m 28% Market Size Gym Members Low Cost Share (Members) Top 2 operators - The Gym Group & PureGym - DF the GUM group surcereisure08 store ofthe UK Fitness industry Report 2024, TSG onalysis now account for 81% of low cost members Half
Slide 20: A winning proposition
A winning proposition More members visiting 4x per month Higher proportion scoring us 5/5 Leading reviews in low cost sector % Members Visiting 4+ Times per Month, H1 2023 vs H12024 [715 O0rr7 % Member Satisfaction Scoring 5 out of 57, H1 2023 vs H1 2024 *240 bps Distribution of Average Google Revie
Slide 21: A clear plan: The Next Chapter
Aclear plan: The Next Chapter Drive like-for-like revenue and Create funds for future growth generate cash options wn, ae | Accelerate rollout of quality sites Broaden our growth Strengthen the core © the gym group Hf YeorResuts-2024 al
Slide 22: Strengthen the core
Strengthen the core © the gym group + £1 ARPMM = £8.3m revenue per year (adjusted for elasticity) + 1% Membership Volume = £3.3mM revenue per year + 1 week tenure = £5.9m revenue per year Half Year Results-2024 2
Slide 23: Price & Promotions initiatives driving revenue
Price & Promotions initiatives driving revenue Key Wins in H1 24 Continuing to Close the Price Gap Continued closing the gap in headline rates and joining fees to competitors, with profitability boosted by new 3 tier membership Member Repricing Identified profitable new ways to close the price gap o
Slide 24: Promotion days and month 1 discount
Note: • Promotion days = number of days in H1 24 vs H1 23 where we ran a main channel promotion of each type • Month 1 Discount = % discount versus total month 1 headline rate and joining fee at the end of H1-24, based on average site, discount and product mix
Slide 25: Acquisition programme improving marketing returns
Acquisition programme improving marketing returns Key Wins in H1 24 Website Conversion Gains New A/B testing programme yielding steady stream of incremental improvements - 15 tests in H1 Dynamic Creative is Live Recently launched real-time ad-tech creating more relevant ads to viewer location and de
Slide 26: Brand metrics
43% 36% 28% 30% Jan-24 Feb-24 Apr-24 Jun-24 More Likely to Visit Website +11% Offers Great Value For Money +8% More Likely to Join +5%
Slide 27: Member Acquisition
Member Acquisition Improving social media engagement ata locallevel | ““sasewinconsstent messaging delivered locally Social Media is an increasingly important channel We are driving reach and engagement in gym-level ‘local’ social Instagram Local Gym Pages - Key Reach Metrics, 12m to Jun 24 80%+ of
Slide 28: Retention programme gaining momentum
Retention programme gaining momentum Key Wins in H1 24 Early Life CRM We have increased our retention rate in H1 24 vs H1 23 Improved early life retention by 3.3% in trial of applying behavioural science to initial email engagement Average % of Members Retained per Month, H1 23 versus H1 24 App Upgr
Slide 29: The Next Chapter
The Next Chapter Drive like-for-like revenue and generate cash ae | Accelerate rollout of quality sites Broaden our growth Strengthen the core © the gym group af YeorResuts-2024 29
Slide 30: New Site targets by year, 2023 - 2025
New Site targets by year, 2023 - 2025 10-12 18-25 2023 2024 2025 2026
Slide 31: New site openings
Orpington Manchester Oxford Rd Plaistow Greater London Urban Residential Greater London Euston Welwyn Garden City Dudley Greater London Urban Residential Urban Residential 0% Weeks London East Ham – Open 10 Sep
Slide 32: Will Orr, Chief Executive Officer
Will Orr Chief Executive Officer
Slide 33: Strong first half performance; well set for the full year
Strong first half performance; well set for the full year Membership up 4% Revenue up 12% Strong cash generation to 905k (H1 2023: 867k) vs H1 2023 Net debt reduced by £118m Yield up 9% LFL' up 9% since Dec 2023 vs H1 2023 Free Cash Flow of £24.5m, up 73% YoY Bank debt refinanced Accelerating new op
Slide 34: Q&A
Slide 35: Appendix
Slide 36: Appendix - Business KPIs (5 year)
Appendix - Business KPIs (5 year) Financial (£m) H12024 H1 2023 H12022 H12021 H12020 YoY Revenue 12.1 998 84.2 29.3 37.3 12% Group Adj. EBITDA LNR 221 72 17.0 (8.1) (8.2) 28% Free Cash Flow 245 142 69 (4.4) (5.0) 73% Expansionary Capital Expenditure N12 7.6 15.0 87 15.4 47% Non-Property Net Debt (54
Slide 37: Appendix - IFRS16 charges are currently £3m higher than cash rent
Appendix - IFRS16 charges are currently £3m higher than cash rent Depreciation & Interest vs Property Payments IFRS 16 - Annual Charge FY 2023 £m 240/000 220,000 ' Right of use asset depreciation 25.7 | 200,000 i Property lease interest 145 ' 180,000 f Total 40.2 160,000 ' H i 140,000 H i Property l
Slide 38: Definition of non-statutory measures
Definition of non-statutory measures Average Revenue Per Member Per Month (‘ARPMM’) Revenue divided by the average number of members divided by the number of months in the period Group Adjusted EBITDA LNR Operating profit before depreciation, amortisation, share based payments and non-underlying ite
Slide 39: 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