The Gym Group makes decent first-half gains

The London-listed firm said group adjusted EBITDA reached £17.5m - an increase of 28.0% - with its EBITDA margin in line with expectations at 30.1%, down from 32.0% year-on-year.

Its board said the slight slip in its margin reflected its “immature” estate profile and Lifestyle conversions.

Adjusted profit before tax was 8% higher than the same period a year earlier at £7m.

Statutory profit before tax decreased 14.4% to £5.1m, which was reportedly due to an increase in exceptional costs to £1m from £0.1m, primarily relating to the acquisition of the easyGym chain.

Adjusted earnings per share were 4.2p - an increase of 7.8% over a year ago.

Net debt decreased to £21.6m from £37.5m at the end of December, which was put down to cash of £24m received from equity placing for the easyGym acquisition.

The board declared an interim dividend of 0.35p per share - up 16.7% from the 0.30p paid at the end of the first half of 2017.

On the operational front, six new gyms were opened in the first half, along with the acquisition of 13 easyGym sites on 4 July, bringing the group’s proforma site number to 147.

Proforma members, including easyGym sites, rose to 720,000 from 508,000 in June last year.

The Gym Group said 18 Lifestyle sites had been converted by August, with the majority of the easyGym estate to also be converted by the end of 2018.

Take-up of the pricier ‘LIVE IT’ membership had grown to 55,000, representing 7.6% of proforma members as at 30 June, with average revenue per member per month rising to £14.65 from £14.42 year-on-year.

The board said its ERP system had been successfully launched, and would enable the start of the rollout of its personal trainer model in the fourth quarter.

CEO succession planning was also completed during the period, with Richard Darwin to take over as CEO in September.

John Treharne would remain in the business and on the board as founder-director, with the directors adding that their CFO search was making “good progress”, and an appointment expected by the end of September.

“This has been another excellent period for The Gym Group with the hard work of 2017 beginning to come to fruition,” said CEO John Treharne.

“We now have systems and technology in place to support a business of considerable size and scale with our ERP system safely landed.

“These investments will allow us to start the roll out of the new personal trainer model and further capitalise on ‘LIVE IT’, our premium pricing offer, which is proving popular with our members and experiencing strong levels of take up.”

Trehame said that since the end of the half year, the group had expanded again with the acquisition of 13 easyGyms taking it close to 150 sites.

“In addition, we remain well set to achieve our target range of 15 to 20 organic openings for 2018.

“In my last set of results as CEO, I am confident that the business is in as strong a position as ever to execute its strategy and deliver further accelerated profitable growth,” he added.

“After a strong first half we are on track to meet market expectations for the full year and look forward to further progress in the second half of the year.”