Revenue rises, losses narrow for the Gym Group

The London-listed company said group adjusted EBITDA rose 6% to £75.5m, while adjusted EBITDA less normalised rent reached £38.5m, ahead 1% year-on-year.

Its adjusted loss before tax remained consistent with the prior year at £5.5m, while statutory losses before tax improved by 57% to £8.3m.

Similarly, statutory losses after tax increased 56% to £8.4m, while adjusted basic and diluted losses per share rose by 13% to 3.4p.

Free cash flow surged 62% to £27m, with non-property net debt narrowing by 13% to £66.4m.

On the operational front, the Gym Group saw average members increase by 8%, with average revenue per member per month (ARPMM) rising 9%.

Like-for-like revenue grew 8%, and despite cost inflation, particularly in utilities and staff expenses, EBITDA less normalised rent was slightly ahead of 2022.

The company said its business strategy for the future, dubbed ‘Next Chapter’, aimed for a threefold growth plan focussed on strengthening the core business, accelerating the rollout of quality sites, and broadening growth opportunities by exploring additional revenue streams.

During the year, the company bolstered its leadership team with key appointments, including Will Orr as chief executive officer and Simon Jones as a non-executive director.

Additionally, Alison Sagar was set to join as chief commercial officer in March.

Looking ahead, the Gym Group reported a positive start to trading in 2024, with revenue after two months increasing by 16% year-on-year.

The company said it anticipated a 4% to 5% overall increase in like-for-like revenue for the year.

Plans for 2024 included opening 10 to 12 new sites, with leverage expected to remain within the range of 1.5 to 2.0x.

The ‘Next Chapter’ growth plan aimed to deliver 50 site openings with an average return on invested capital of 30% over three years, funded from free cash flow.

“We have maintained positive momentum in revenue through the second half to deliver results that have offset cost inflation, in line with our guidance,” said chief executive officer Will Orr.

“With a strong start to 2024, and clear signs that demand for health and fitness has never been stronger, these are solid foundations on which to build our ‘Next Chapter’ growth plan.”

Orr said that over the next three years, the firm aimed to strengthen the performance of its core business and accelerate its site rollout.

“There continues to be substantial headroom for low cost gyms in the UK and we are fully focused on our aim of making high value, low cost fitness even more accessible for all.”

At 0913 GMT, Gym Group shares were up 5.47% at 115.6p.

Reporting by Josh White for Sharecast.com.