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The Gym Group plc
5th Floor OneCroydon
12-16 Addiscombe Road
Croydon CR0 0XT
www.tggplc.com
www.thegymgroup.com
The Gym Group plc
Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Founded in 2007, The Gym Group
is the original provider of high
quality, low cost gym facilities in
the UK. We offer 24/7, no contract
gym memberships delivering
great value for money for all
our members.
For more information go to | tggplc.com
Overview
2023 highlights
Financial
Revenue
£204.0m
2022: £172.9m
Group Adjusted EBITDA
Less Normalised Rent1
£38.5m
2022: £38.0m
Statutory loss for the year
£8.4m
2022: loss of £19.3m
Non-Property
Net Debt1
£66.4m
2022: £76.0m
1
See page 167 for definition and cross-reference to reconciliation to statutory measure.
Business and operational
Six new sites opened in 2023, enhancements
made in over 100 sites and launch of HYROX fitness
programme collaboration
Successful implementation of three-tier price product
architecture, rolling out Off-peak membership throughout
the entire estate
High levels of member engagement, with 92% of our
members rating The Gym Group 4 or 5 out of 5 for
overall satisfaction
Board strengthened in the year with the appointment of
Will Orr as CEO and Simon Jones as Non-Executive Director
Next Chapter three-fold growth plan for the next stage
of The Gym Group’s development announced
Average membership increase
Investment in
+8%
872,000 (vs 808,000 in 2022)
>100
sites in 2023
Overall member
satisfaction
92%
scoring 4 or 5 out of 5
Social Value2
generated in 2023
£890m
(vs £756m in 2022)
2
See footnote on page 03 for information on
what Social Value is and how it is calculated.
See Progress against 2023 strategy on pages 16 to 21
Contents
Overview
01
02
2023 highlights
Introduction to our business
Strategic report
Market review
06
Chair of the Board’s
08
statement
10 Q&A with the Chief Executive
12 Chief Executive’s review
Progress against
16
2023 strategy
Financial review
22
30 Key performance indicators
(‘KPIs’)
32 Next Chapter growth plan
38 Sustainability report
54
Principal risks and
uncertainties
64 Stakeholder information
Governance
70
80
Introduction from the
Chair of the Board
72 Board of Directors
74
75
Executive Committee
Corporate Governance
report
Report of the Nomination
Committee
Report of the Audit and
Risk Committee
Report of the Sustainability
Committee
Report of the Remuneration
Committee
108 Directors’ report
111
Directors’ responsibility
statement
90
84
92
Financial statements
112
Independent auditor’s
report
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated cash flow
statement
Notes to the consolidated
financial statements
Company statement of
financial position
Company statement of
changes in equity
Notes to the Company
financial statements
122
123
124
125
126
158
159
160
Other information
Five year record
166
Definition of non-statutory
167
measures
Corporate information
168
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The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Overview
Introduction to our business
Our purpose
Breaking down
barriers to fitness
for all
Our business model
The economies of scale in our business model enable us
to offer a great service at a low cost for our members,
whilst also delivering strong financial returns.
Reinvesting
in proposition
and new site
expansion
Improving
returns;
generating
higher free
cash flow
Robust and
growing
market
Data-driven and
tech-enabled
Multiple
growth drivers
Low cost
model taking
share
Winning
proposition
Next Chapter growth plan
Drive like-for-
like revenue and
generate cash
Create funds
for future growth
options
Strengthen
the core
Accelerate
rollout of
quality
sites
Broaden
our
growth
02 |
See the Next Chapter growth plan on pages 32 to 37
What we deliver
Accessible fitness for all
233
high quality gyms affording
access to over 50% of the UK
population
Social Value for
communities1
£3.2bn
created through member
exercise over the last
five years
Sustainable long
term growth
20%
site growth per year for last ten
years with an average
of 20 new sites added per year
Strong return on capital2
19%
delivered in 2023
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Social Value is a measure of the value we are creating through regular exercise in the communities in
which we operate. It is derived using a model created by Sheffield Hallam University and used extensively
by Sport England, local authorities, and the UK Government.
2
Return on invested capital of mature gym sites. See pages 166 and 167 for more information.
See the Sustainability report on
pages 38 to 53
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Our key stakeholders
A successful working relationship with our stakeholders is key to our operating model.
Stakeholders
Why they matter
Shareholders
Our investors provide capital for growth, whilst providing challenge
and feedback on our business model and plans for the future.
Employees
Our employees are the driving force behind our Company purpose
and growth. We are a people-first business and consider our unique
team and culture to be a vital part of our strategy.
Members
Satisfied members are what make our gyms successful, and they
inspire us every day with their achievements. They are the best
indicator that we are delivering on our purpose of breaking down
barriers to fitness for all.
Suppliers &
Partners
Our partnerships with our suppliers ensure we source the best
value goods and services for the benefit of our members and
employees. High standards of ethics and business conduct is
an important part of being a responsible business.
Communities
Being a valuable part of the communities in which we operate is
hugely important to us. Providing safe and affordable facilities to
exercise creates Social Value for the communities around our gyms.
Environment
We are committed to finding new opportunities to improve our
environmental performance, including on our pathway to net zero
carbon emissions. Sustainability has always been at the core of
our business.
Lending banks Our lending banks provide funds for growth and day-to-day
working capital to enable us to operate and grow our business
to its full potential.
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The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Overview
Introduction to our business continued
As at 31 December 2023,
we operated 233 sites in the
UK with 850,000 members.
We are consistently rated
excellent on Trustpilot,
score highly on member
satisfaction and have
over 60 million gym
visits per annum.
Member proposition
Market-
leading
low price
membership
High
quality
gym equipment
and exercise
facilities
Friendly,
helpful staff
and access
to personal
trainers
24/7
access and
unlimited
training
Free
group
exercise
classes
No
contract
Convenient
locations
+50% of UK
population
live within
15 minutes’ drive
of at least one
of our gyms
Flexible
membership
options
Ultimate,
Standard, Off-
peak and Saver
Free Fiit
on-demand
digital fitness
classes for
Ultimate
members
Growing gym network
Number of gyms
233
850,000
£23.16
Number of members
Average headline price
in December 2023 -
Standard membership
We focus on operating high quality,
low cost gyms that have widespread
appeal, breaking down barriers to
fitness for all.
In 2023, we opened six new gyms,
predominantly in urban residential
areas. We also closed two gyms in
Manchester and Leeds.
Existing gyms
2023 openings
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04 |
*
Note: All figures correct as at 31 December 2023.
Average monthly membership relates to Standard rate.
Standard membership is a membership for one specified gym.
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The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Market review
Well placed
in a growing market
The low cost gym segment continues to drive the growth of
the UK health and fitness market. Our position as a leading
operator means we are well placed to take advantage of
the long term structural growth within the sector.
Consumer demand
The macro consumer environment is showing early signs
of improvement, but spending remains suppressed
and there is continued uncertainty about the outlook
for interest rates and employment trends which puts
pressure on consumers to prioritise their spending.
However, engagement in health and fitness is high, with
consumers increasingly recognising the importance
exercise has on both physical and mental health. As a
result, spend on gym membership is no longer considered
to be a discretionary item for many, but value-for-money
is an important factor in deciding how to engage.
In addition, the ongoing growth of social media usage
and development of self-produced video content,
together with the continuing evolution of fashion to look
‘Fit not Thin’ is driving a shift from cardio to strength and
functional fitness.
As a result, demand for gym memberships remains strong,
(as can be seen in the charts opposite) with more people
considering joining a gym and younger generations
(where we perform strongly) particularly highly engaged
(86% of Gen Z exercise or want to, 5% more than
Millennials)¹.
Gym consideration, % UK 16+ population¹
22%
23%
+4 pts
19%
2019
2022
2023
Membership by age 20231
16–24
29%
41%
25–44
24%
31%
29%
45%
75%
90%
Alongside this trend, there is a growing preference for
convenient solutions that are on-demand and readily
available, amplifying the appeal of ‘round the clock’
opening hours and no-contract models.
45–64
10%
15%
65+
4%
6%
As a result, low cost gyms remain strategically
advantaged, particularly in the current environment.
As one of the lowest cost, nationwide, 24/7 gym
operators in the UK with an average standard headline
rate of £23.16 in December 2023, we are well placed not
only to retain the members that have already chosen us
as their preferred health and fitness provider, but also
to attract new members, including those gym-goers who
want to switch from premium and mid-market fitness
clubs in search of better value-for-money.
06 |
Current member
Non-member – Would consider
Non-member – Would not consider
1 Source: Kantar Profiles / Mintel Heath & Fitness Clubs August 2023.
Survey: Base: 2,000 internet users aged 16+, June 2023. Private health and
fitness clubs only.
Industry supply
The health and fitness market in the UK has shown
structural growth for over a decade and continued
to grow in 2023, reaching a market size of £5.4bn
and an estimated 10.3 million gym members. A
significant proportion of that growth has been
driven by low cost gyms, which now account for
15% of the market value (up from 2% in 2012) and
28% of the membership (up from 4% in 2012),
according to data from State of the UK Fitness
Industry Report 2023 published by Leisure DB
(‘LDC’) .
The leisure market has seen significant turbulence
since 2019, with large and long-lasting changes in
consumer behaviour. Within this environment, the
low cost sector has continued to roll out at pace,
and whilst membership levels (per site) on average
remain below 2019 levels, revenue per site has
returned to 2019 levels.
Barriers to organic entry into the low cost market
remain high, with the three largest players having
considerable structural advantage.
In this trading environment, the benefit of
economies of scale, competitive pricing and a
highly cost-efficient operating model, enabled
us to strengthen our position further as a market
leader with six new sites opened in 2023.
Market size
Low cost gaining share,
from 2% in 2012, to
Gym members
Low cost gaining share,
from 4% in 2012, to
15%
in 2023
28%
in 2023
Growth potential
A PwC market study commissioned by The Gym Group
and published in February 2024 assesses the current
total market capacity for low cost gyms to be between
1,350 and 1,600 gyms, suggesting additional growth
potential in the market of 600–850 gyms.
This headroom assessment confirms the continued
expansion of the low cost market potential driven
by a combination of increased consumer demand,
expansion in the wider health and fitness market and
low cost gyms entering smaller catchment areas.
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Total gyms (number)2
7,239
7,063
6,998
553
2019
8%
Covid-19
Low cost
share
Total members (m)2
15m
10m
5m
0m
Low cost
share
10.4
2.5
2019
24%
Market value (£bn)2
Covid-19
649
2022
9%
9.9
2.6
2022
26%
£6bn
£4bn
£2bn
£0bn
Low cost
share
5.1
4.8
0.6
2019
12%
Covid-19
0.7
2022
14%
724
2023
10%
10.3
2.8
2023
28%
5.4
0.8
2023
15%
2 Source: LDC State of the UK Fitness Industry Reports, 2019-23. Adjusted
low cost sector: 2023 numbers as reported by LDC. 2022 removes énergie
Fitness, TruGym, and ActiveFitness. 2019 removes Sports Direct/Everlast,
Fitness4Less, énergie Fitness, TruGym and ActiveFitness. All figures as at
March each year.
Total low cost market potential3
1,350-1,600
1,200-1,400
654
756
900-1,000
301
As at
Feb 15
As at
Jan 19
As at
Jan 24
600-750
159
As at
Jan 13
450-600
600-700
500-750
600-850
At recent rates of site expansion by all low cost gym
operators, the analysis suggests there is scope for 10-
15 years of further growth.
3 Source: PwC market study, February 2024.
Existing gyms
Additional headroom
In summary
Our covenant and reputation, alongside a highly
experienced property acquisition team and sophisticated
location appraisal process, have enabled our successful
growth to date; they remain key to our expansion
programme over the coming years and securing our
share of the potential growth.
In addition, we see additional headroom for membership
and revenue growth in our current sites through
delivering on our strategic priorities under the
Next Chapter growth plan.
See Next Chapter growth plan on pages 32 to 37
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Chair of the Board’s statement
“2023 posed some
macroeconomic
challenges for the UK,
but I am delighted The
Gym Group has been
able to demonstrate
positive momentum
through the year and
now has the leadership
in place to move
forward with a strong
growth plan.”
Strengthening
the team
to deliver progress
“The actions we have taken to strengthen
management, our financial position and the
Group’s customer proposition will enable us
to continue to take advantage of the many
growth opportunities in our market.”
John Treharne | Chair of the Board
Elaine O’Donnell, who joined the Board
in 2022, succeeds Emma as Senior
Independent Director, bringing broad
governance experience to this role.
Simon Jones also joined our Board
in February 2023, and his multi-site
leisure and consumer expertise from
his former role as MD of Premier Inns
and current role as CEO of Away
Resorts is proving invaluable.
Finally, Ann-marie Murphy, formerly
Chief Operating Officer and an
Executive Board Director, stepped
down from the Board and left the
business on 31 January 2024. She
leaves with our good wishes for her
new role at SSP Group plc.
Looking forward
The Board is confident that with
new leadership now in place, and a
strong growth plan to move forward,
The Gym Group is well placed for the
‘Next Chapter’ of its development,
and in a strong position to seize the
opportunity of the significant long
term sector growth ahead.
See Next Chapter growth plan on
pages 32 to 37
John Treharne
Chair of the Board
13 March 2024
Health and wellbeing remains a
consumer priority
We have continued to offer our
members great value for money and
this has enabled us to withstand the
pressures on discretionary spending
from the cost-of-living crisis. UK
consumers continue to value their
health and wellbeing above many
other spending priorities, but their
focus on value has seen the low cost
gym sector continue to take share in
a market that has grown consistently
over the past decade.
Strong growth in revenue offset
cost inflation
We chose to moderate the rate of site
openings last year, after a record rate
of expansion in 2022, but delivered
strong like-for-like progress, driven
by increasing both our members and
yield. This was sufficient to offset a
sharp increase in cost inflation, in
particular related to energy costs,
enabling us to deliver a slight increase
in profitability.
We are continuing to open high
quality sites and, as the PwC report
referenced in the Market review
shows, there remains significant
headroom opportunity for low cost
gyms. Therefore, we’ll be stepping
up the rate of growth again in 2024
and beyond.
See Market review on
pages 6 to 7
Strengthened financial position
Our business generated strong free
cash flow in 2023, leading to a £10m
reduction in our net debt and leverage
falling further towards the lower end
of our guidance range.
This reduction in net debt came
despite us stepping up the rate of
enhancement spend in our existing
gyms, to make sure we are offering
our members the best quality
equipment and group exercise
classes.
Sustainable progress
ESG metrics are discussed as part
of our regular reviews of business
performance so that all areas of the
business are engaged in achieving our
sustainability objectives.
We aim to continue to lead our
sector for sustainability, delivering
on our founding mission to break
down barriers to fitness with a
welcoming, accessible experience.
Fitness facilities have an increasingly
important role to play in the
communities around them.
We are very proud to have grown
Social Value by 18% in 2023, which
reflects the frequency of usage by
our members as well as our expansion.
We have also become the first fitness
operator in the world to have its
science-based net zero targets
validated by the Science Based
Targets initiative (‘SBTi’), a milestone
achievement for the Group.
£890m
of Social Value generated
in 2023
Strengthened Board
and Executive
We began our search for a new
CEO following Richard Darwin’s
announcement that he would step
down in January 2023, and were
delighted to welcome Will Orr to our
Board as CEO on 1 September 2023.
Most recently MD of Times Media Ltd,
Will brings a wealth of experience
in branded consumer businesses, in
particular with subscription-type
models, and with a strong track record
of delivering growth.
Upon Will’s arrival I stepped back
to a non-executive role. We have
also seen some non-executive
departures this year. Both David Kelly
and Emma Woods stepped down
after seven years of service and we
thank them both for their immense
contribution over this period.
08 |
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Q&A with the
Chief Executive
An introduction to our
new CEO, Will Orr
Q&A
“We are a growth
business in a
growing market,
with a proposition
that delivers and
a purpose that
really motivates our
people.”
Will Orr | Chief Executive Officer
10 |
Q
Why did you want to join
The Gym Group?
A
The Gym Group has a strong high
value, low cost proposition that
meets a clear customer need.
This, combined with our business
model and our scale, made me
believe – as I do more than ever
six months in – that we can create
sustained growth. We are a growth
business in a growing market, with
a proposition that delivers and a
purpose (accessible fitness) that
really motivates our people. I could
see that sense of engagement
and energy in our gyms right from
the beginning of the interview
process. In essence, we have
strong foundations and great
upside potential. I believe I have
the right experience to help unlock
that potential.
Q
What skills and experience do you
bring to the role of CEO?
A
I’ve had a 30-year career, working
with branded consumer businesses
– and most of that experience has
been in subscription-type models. I’ve
built a strong track record of growth
by focusing on value drivers: data,
digital marketing, digital product
development, new propositions,
pricing and retention. I’ve also had
good experience in ‘people-intensive’,
operational businesses, where a great
customer experience is delivered by
highly-engaged, expert teams on the
front line.
Q
What were your priorities
when you first joined?
A
The first thing was to really
understand our business, our
people and our stakeholders.
Having done so, I’m more excited
than ever about the opportunity.
The second was trading – it’s
important for The Gym Group to
establish a sustained track record
of doing what we say we’re going
to do, so a key priority for me in the
final quarter of 2023 was to support
the team on trading and delivering
full year results in line with market
expectations.
I also worked with the teams to
develop a strong plan for our key
January recruitment period. Another
priority was to work with the Board
and the team on the strategy for the
‘Next Chapter’ of The Gym Group’s
story, which we have announced
with our results. Finally, I have been
looking to build on the strong
commercial capabilities we have
with the appointment of a new Chief
Commercial Officer, Alison Sagar.
Q
What are the key elements of the
Next Chapter strategy?
A
There are three inter-relating
elements to our strategy. It starts
with ‘Strengthen the core’: working
on measures to continually improve
returns on the mature estate.
This creates cash to fuel our
expansion: ‘Accelerate rollout of
quality sites’. That in turn will deliver
future growth, giving us options to
‘Broaden our growth’ in the longer
term. The focus right now is to
execute relentlessly in the first two
areas, and do some more strategic
work on ‘Broaden our growth’. Some
of the key elements are discussed in
more detail later.
See Next Chapter growth plan on
pages 32 to 37
Q
Does the business have the
capabilities and resources to
deliver the Next Chapter strategy?
A
I have been very impressed with our
people and we’ve worked hard to
make sure everyone is clear on their
role in the growth plan. Our teams
are highly engaged (with a score
of 8.5/10 in our latest employee
engagement survey) and delivering
strong member satisfaction as well
as growing revenue and membership.
To complement our strong
capability, we’re making investments
in areas like technology (including
the recruitment of our experienced
CTO Milan Juza), data, pricing and
digital marketing to further support
growth. In that context, I’m pleased
to note that recently I have hired
a new Chief Commercial Officer,
Alison Sagar. Alison brings a wealth
of experience when it comes to
driving sustainable customer and
revenue growth.
Q
How easy will it be to accelerate
new site openings while meeting the
requirement of 30% ROIC?
A
We have identified the key
characteristics of high-returning
sites, with Greater London and urban
residential locations delivering the
best returns for us. That is where we
are concentrating our site opening
programme for the time being.
We have set our teams the priority of
achieving a Return on Invested Capital
on maturity of at least 30% for all
new site openings, and this will take
precedence over delivering a specific
number of site openings in the year.
That said, our ambition is to open circa
50 sites over the next three years. The
benefit of improving the performance
of the mature estate is that this will
unlock a greater number of future
opportunities.
Q
What is the long term opportunity
in the UK for The Gym Group?
A
Health and fitness is a long term
growth market – it’s more of a priority
than ever for our members and target
customers. We expect the market
will polarise further between the
premium and low cost sectors like
other consumer models have done,
with low cost gyms continuing to take
share. A report published by PwC,
has identified potential for a further
600-850 low cost sites across the UK,
so there is plenty of runway. Our 24/7,
flexible no contract model suits the
needs of today’s consumers and with
Off-peak pricing starting at £13.99
per month, we are more accessible
than ever.
Q
What are your strategic priorities
for 2024?
A
I am committed to building a
sustained track record of doing what
we say we are going to do! But we as a
team are working on progressing our
Next Chapter growth strategy – the
first year of a five year journey. This in
turn will generate the cash to pay for
the acceleration in our growth plans. I
am really excited about the future for
this business.
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Chief Executive’s review
“It’s a pleasure to
provide my first report
to our shareholders. I
joined The Gym Group
at the beginning of
September 2023. One
of my first priorities
was to support the
team with trading in the
final quarter, ensuring
we delivered a strong
performance, building
on the progress that
was delivered in the first
half and carrying that
into 2024.”
Drivinggrowth
“These are strong foundations on
which to build our Next Chapter
growth plan.”
Will Orr | Chief Executive Officer
Providing a great
member experience
Our members are visiting our gyms
more frequently, making more than
60 million visits to our gyms in 2023;
and average visits per member per
month were up 10% year on year. This
means that the average member visited
almost six times per month in 2023.
See Sustainability review on pages
38 to 53
We have sustained our industry-leading
customer satisfaction levels, with
57% of our members rating The Gym
Group 5 out of 5 in overall satisfaction
measures1, and a massive 92% rating us
at least 4 out of 5. Our Trustpilot and
Google ratings also remain strong at
4.4. This is testament to the great work
put in by our gym teams.
Maintaining a winning
proposition that delivers results
As well as great value and convenience,
one of the key factors which our
members rate The Gym Group for is the
quality of our equipment. We have been
investing around 5% of our revenue
annually in repairing, maintaining and
upgrading our gyms. We have done this
within our existing capital discipline,
whilst maintaining the guidelines that
continue to underpin our carbon-
neutral status and commitment to net
zero. This includes reusing, renewing
and recycling of equipment where
possible. In 2023, we refurbished 14
sites that were typically more than
ten years old and made some form
of enhancement investment in over
100 sites, including rolling out new
equipment such as SkiErgs, air bikes
and 50kg dumbbells, to ensure we are
continuing to offer relevant and high
quality equipment.
In addition, in 2023 we launched a
new fitness programme collaboration
offering HYROX training classes,
initially in select London gyms in
March, before expanding regionally in
Manchester, Birmingham and Glasgow.
Friendly, helpful
staff and access
to personal trainers
850,000
members at 31 December 2023
Enhancement investment
in 2023
>100
sites
Positive trading trends
through 2023
The financial outcome for 2023 was
in line with the guidance given earlier
in the year, with revenue growth of
18% offsetting the cost inflation,
especially in utilities prices, that we
experienced. Despite the cost inflation
challenges, we grew EBITDA slightly
compared with the prior year and
reduced our net debt levels by £10m,
whilst expanding the business, which is
encouraging.
We built on the momentum of the
first half of the year, with good
growth in both membership and
yield, supporting like-for-like revenue
growth of 8%. After opening a record
number of gyms in 2022, we took
the proactive decision to moderate
site openings in 2023, to ensure we
could fund them out of free cash flow.
We added a net four gyms to give
a year end total of 233. We closed
the year with 850,000 members, up
4% on 2022, while average members
through the year were 8% ahead of
the prior year.
Continued strength in yield
Average revenue per member per
month (‘ARPMM’) rose 9% in the
year to £19.50 as we continued to
optimise our headline rate and
drive penetration of our premium
subscription product.
We trialled a three-tier pricing model
in 64 sites through the Summer and
early Autumn and rolled this out to all
sites in November 2023. We now offer
an Off-peak product, starting from as
little as £13.99 per month; Standard
membership (replacing ‘DO IT’); and an
Ultimate premium product (replacing
‘LIVE IT’).
This will give us significant future
flexibility in marketing and yield
management, as well as offering an
even more accessible price point, in
line with our aim to lower the barriers to
fitness for everyone. The uptake of our
Ultimate membership has continued
to rise, reaching a penetration rate of
31.7% in December 2023.
See Next Chapter growth plan on
pages 32 to 37
12 |
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1 Overall Satisfaction score surveys undertaken by Service Management Group.
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Chief Executive’s review
continued
We are the only UK nationwide low
cost operator to offer this popular
workout programme, which is free to
our members. From 17 gyms at the
end of 2023, we will extend HYROX to a
total of over 50 sites in 2024.
We have also made good progress
with our proposition for corporate
members, which gives us substantial
additional reach potential. We aim
to work with companies to support
their employee wellbeing strategy,
with bespoke packages, discounts
and wellness activities via employee
benefit platforms. From small
beginnings, corporate memberships
have almost doubled and now
account for more than 2% of our
overall membership.
Data-driven and tech-enabled
The technology investment made
in 2022 has supported an increase
in online member engagement.
Downloads of The Gym Group app
rose 7% in 2023, and usage has
jumped 25%, with an average across
the year of almost 700,000 members
using it, taking penetration levels to
around 80% of our member base.
Again, satisfaction levels are high with
Apple rating the app 4.7 out of 5 and
Android 4.6 out of 5.
We are planning significant additional
enhancements to the app in 2024 in
line with our drive to increase member
retention. We will also step up our use
of advertising technology (‘AdTech’)
and use our growing data analytics
capability to optimise across all
areas of activity, from pricing and
marketing ROI, to site selection
and opening.
See Next Chapter growth plan on
pages 32 to 37
App usage in 2023
+25%
vs 2022
Sustainability
During the year, we continued to
make progress with our sustainability
goals. The SBTi approved the Group’s
near and long term carbon reduction
commitments and we are proud to
be Prime-rated by the Institutional
Shareholder Services Inc. (‘ISS’) for
Corporate Responsibility. We also
delivered £890m of Social Value in
2023, up 18% on 2022, reflecting the
increase in frequency of visits by our
members.
Shaping a great team
Earlier in the year, we welcomed Milan
Juza to the Company and Executive
Committee as our Chief Technology
Officer, bringing significant
technology leadership experience,
most recently at TUI Group where
he was responsible for e-commerce
technology globally. Ruth Jackson
also joined our Executive Committee
in late 2023 as Chief People Officer,
having been promoted from People
and Development Director.
Introducing the ‘Next Chapter’
growth plan
Today we have announced the
framework and strategic priorities
of our ‘Next Chapter’ growth plan for
the next stage of The Gym Group’s
development. The Q&A on pages 10 to
11 explains the rationale and gives an
overview of our plans.
The Next Chapter growth plan aims to
‘Strengthen the core’ of our business
by continuing to increase like-for-
like revenue from our existing sites,
and you can see more detail of our
planned activity in the Next Chapter
growth plan on pages 32 to 37. This will
generate the cash for us to ‘Accelerate
rollout of quality sites’ – doubling to
10-12 openings this year; and in the
longer term to ‘Broaden our growth’ as
we develop our proposition into new
channels, new adjacencies and/or new
markets.
I look forward to reporting on our
progress later in the year, but in the
meantime, we have made a promising
start to 2024, with like-for-like revenue
in the first two months of the year
up 12%.
I’m delighted that Alison Sagar will
join the Company and Executive
Committee in March, in the new role
of Chief Commercial Officer. Alison
brings a wealth of experience as a
commercial and marketing leader,
from roles at British Airways, Booz
Allen, Amex and Paypal, as well
as two digital scale-ups. She has
also consulted extensively in the
leisure sector.
I’d like to thank Ann-marie Murphy
(former Chief Operating Officer)
and Emily Kortlang (former Chief
Marketing Officer), who have left
the Company. They have both left
a legacy of strong operational and
marketing teams respectively.
Finally, I’d like to extend my thanks to
all our colleagues for their fantastic
efforts in 2023 and for making my first
months so stimulating and enjoyable.
We have a really energised and
capable team and I am delighted to
see how the whole Company is getting
behind our growth plan. The early
fruits of all that effort can be seen in
the progress we have made in the key
member recruitment period this year.
Will Orr
Chief Executive Officer
13 March 2024
High quality gym
equipment and
exercise facilities
14 |
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Strategic report
Progress against 2023 strategy
High quality
estate
Compelling member
experience
Innovative technology
and marketing
Unique team
and culture
Highlights in 2023
The Group opened six gyms and closed two, taking the total
in operation at the year end to 233.
There was continued investment in the existing estate, with
14 major gym enhancements completed and over 100 sites
receiving investment in facilities or equipment upgrades.
Highlights in 2023
We grew average members by 8% in 2023, to 872,000,
and closed the year with 850,000 members, up 4% on
the prior year.
We have sustained high satisfaction scores, including our
highest score ever achieved for ‘friendliness of staff’
The footprint and fitout of sites continues to be managed
Penetration of our multi-site Ultimate membership
closely to underpin our carbon-neutral status and pathway
to net zero.
We continued to maintain a strong financial covenant and
good relations with landlords, to secure prime locations.
reached 31.7% in December 2023.
We launched a new fitness programme collaboration by
offering HYROX training classes, the only UK nationwide low
cost operator to offer this popular branded workout.
Highlights in 2023
We averaged 691,000 app users in 2023, with downloads up by
7% and usage increasing by 25% versus 2022.
Our app remains highly rated on both Apple (4.7) and
Android (4.6). This supports visit frequency which helps to
build Social Value.
We successfully trialled three-tier pricing across 64 sites,
introducing a new Off-peak price point across the estate by
November 2023, supported by robust data analysis.
Brand search increased year on year by 38%, showing we
remain highly optimised for search and sales conversion1.
Highlights in 2023
We achieved top quartile levels of employee engagement
measured by our new engagement survey platform, with
90% completion rate.
We remain committed to supporting a diverse and inclusive
team culture and in 2023 launched a Female Health First
programme; were the first in the sector to be accredited
as a Menopause Friendly Employer; and reported a 2.7
percentage point reduction in our 2023 gender pay gap.
In 2023, we enhanced our early careers pathways, creating
more job opportunities for PTs and inspiring careers in
fitness – including through our ‘Accelerate PT’ programme.
We launched further development and engagement
programmes for our teams, including Women in Leadership
and mentoring programmes.
See page 18 for further details
See page 19 for further details
See page 20 for further details
See page 21 for further details
Performance measure
Performance measure
Performance measure
Performance measure
233
Total number of gyms as at 31 December 2023
92%
of members rated us 4 or 5 out of 5 for overall satisfaction
25%
More app users in 2023 vs 2022
8.5/10
Employee engagement survey result
Aligned to Sustainable Development Goals
(‘SDGs’)
Aligned to Sustainable Development Goals
(‘SDGs’)
Aligned to Sustainable Development Goals
(‘SDGs’)
Aligned to Sustainable Development Goals
(‘SDGs’)
See Sustainability report on pages 38 to 53
See Sustainability report on pages 38 to 53
See Sustainability report on pages 38 to 53
See Sustainability report on pages 38 to 53
Underpinned by growing sustainably
This continues to underpin the framework of our strategy. In 2023, we became the world’s first fitness chain to
have our net zero emission reduction targets validated by the SBTi.
The Social Value generated through our operations increased to a total of £890m in 2023 as we continue to
deliver on our mission of breaking down barriers to fitness.
16 |
1
Performance of our brand term ‘The Gym Group’ in Google Trends in 2023 vs 2022.
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Strategic report
Progress against 2023 strategy
continued
High quality
estate
New site openings moderated
in 2023 after a record number
of openings in 2022, with six
new openings in Edinburgh
Corstorphine, Accrington,
Wimbledon, Uxbridge, Stafford,
and Coventry.
>100
sites had some form
of investment in 2023
We invested in our mature estate in 2023, delivering 14
major gym enhancement projects, plus facilities and kit
upgrades across over 100 sites. Through our rigorous
standards and maintenance regimes, we continued to
provide a safe environment, deliver an exceptional member
experience, and ensure our gyms are highly energy
efficient and up-to-date.
We completely refitted Hounslow, the first gym to open
in 2008, which has resulted in a 9 ppts increase in overall
satisfaction (‘OSAT’) score year on year.
Energy reduction
programmes led to
consumption savings of
12.6%
per gym in 2023 versus 2019
We remain committed to energy-efficient design and
to evolving and improving the energy and sustainability
performance in our gyms. We delivered a number of
projects across our energy reduction programme in the
year, including introducing air source heat pump (‘ASHP’),
solar panels and voltage optimisers.
See Sustainability report on pages 38 to 53
Coventry
16,285sq. ft.
Opened November 2023
Compelling
member
experience
In aggregate, there have been more than 60 million visits
to our gyms in 2023. Members have also been making
more frequent use of our gyms, with average visits per
member per month up 10% year on year, which is an
important driver of Social Value.
See Sustainability report on pages 38 to 53
We continued to prioritise the
member experience in 2023,
investing in existing sites and
equipment and launching new
products, which is reflected in our
high member satisfaction scores.
Ultimate membership
31.7%
of total members in
December 2023
Overall satisfaction
92%
of members rated us
4 or 5 out of 5
Our premium Ultimate membership offering multi-site
access and other benefits, reached 31.7% in December
2023. With new Off-peak and Saver memberships, we are
further broadening choice and access to more members.
We continued to prioritise a great member experience
which is reflected in the high OSAT scores, increasing
scores for both ‘Inclusive Atmosphere’ and ‘Friendliness of
Staff’ by 2 ppts each.
Our high quality gym equipment is at the heart of our
value proposition for members, and in 2023 we upgraded
facilities and equipment at over 100 sites, including
introducing SkiErgs and Air Bikes, as well as rolling out 50kg
dumbbells to 88 gyms.
We launched a new fitness programme collaboration
by offering HYROX training classes at no extra cost to
members and we remain the only UK nationwide low cost
operator to offer this popular branded workout. Initially, we
offered this class in select London gyms in March, before
expanding regionally to Manchester, Birmingham and
Glasgow with plans to roll it out further in 2024.
18 |
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Strategic report
Progress against 2023 strategy
continued
Innovative
technology
and marketing
We continued to build on the
brand and technology investments
made in 2022 to drive member
engagement and promote our
high value, low cost proposition.
Most significantly, we trialled and rolled out a new Off-
peak membership product and rebranded our premium
multi-site membership to Ultimate (formerly ‘LIVE IT’), and
Standard (formerly ‘DO IT’), introducing a three-tier price
product architecture – providing even greater choice and
broader accessibility for members.
We applied robust data analysis for the three-tier price
product architecture trial ahead of the full membership
rollout and will continue to monitor pricing on a local
site level.
App usage
+25%
in 2023 vs 2022
App rated
4.7
on Apple
Our updated visual identity and advertising creative meant
we could continue to drive brand distinction, particularly
focusing on the areas local to our gyms where brand
awareness is highest.
We also experienced an increase in online member
engagement with app downloads increasing by 7% in
2023, taking penetration to around 80% of our member
base. With an average of almost 700,000 members using
the app across the year, usage jumped 25%. This further
supports visit frequency which, in turn, helps to build
Social Value. Satisfaction levels are high, with Apple rating
the app 4.7 out of 5 and Android 4.6 out of 5.
Unique team
and culture
We remain focused on our
commitment to providing
development opportunities and
career pathways, supporting
employee wellbeing and nurturing
a friendly and inclusive culture.
The Gym Group employs over 1,800 people across 233
gyms and the Central Support Office, and our friendly,
inclusive, and people-centred culture, continues to be a
key part of our success.
In early 2023, we introduced a more flexible operating
structure in our gyms, which has helped us continue to
attract and retain the best people. Our commitment to
reducing administrative and office based tasks to allow
our front line teams to focus on member engagement, has
ensured we deliver a compelling experience for both our
members and our teams. This is evidenced by our highest
levels of employee engagement and member experience
metrics, all against the backdrop of driving a more cost
effective and lean operating model.
Also in 2023, we launched more early careers, development
and engagement programmes, including our ‘Accelerate
PT’, ‘Women in Leadership’ and mentoring programmes.
We are committed to providing good jobs and lifelong
learning, for which we are proud to hold several Investors
In People awards.
Gender pay gap
2.7ppts
reduction in 2023
Employee
engagement score
8.5
out of 10 in 2023
We scored 8.5 out of 10 in the employee engagement survey,
which puts The Gym Group in the top 25% of engaged
businesses in Peakon’s Consumer Services benchmarking.
Following the success of our participation in the 2022
government Kickstarter scheme, we have continued
to develop our early careers pathway initiatives and
have welcomed 45 trainees through our ‘Accelerate PT’
programme since launching in May.
We are working towards our targets of 50/50 gender
balance by 2030 and 40% female leaders by 2025. As
part of our commitment to gender diversity and business
purpose of breaking down barriers to fitness, we launched
our Female Health First (‘FHF’) programme in partnership
with The Well HQ, providing employees with specialist
knowledge in women’s health and making us the first gym
chain to focus on the differing training and wellbeing
needs of our female members.
See Sustainability report on pages 38 to 53
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Strategic report
Financial review
£13.3m
Operating profit
2022: operating loss of £2.3m
£27.0m
Free cash flow1
2022: £16.7m
£66.4m
Non-Property Net Debt1
2022: £76.0m
1
See page 167 for definition and cross-reference
to reconciliation to statutory measure.
Investing
and strengthening
“Trading in 2023 was robust despite the
ongoing cost-of-living pressures on consumers,
demonstrating the continued resilience of the low
cost gym model.”
Luke Tait | Chief Financial Officer
Presentation of results
This Financial review uses a
combination of statutory and
non-statutory measures to
discuss performance in the year.
The definitions of the non-statutory
key performance indicators can
be found in the ‘Definition of
non-statutory measures’ section
on page 167.
To assist stakeholders in
understanding the financial
performance of the Group, aid
comparability between years and
provide a clearer link between the
Financial review and the Consolidated
financial statements, we have also
adopted a three-column format
for presenting the Group income
statement in which we separately
disclose underlying trading and non-
underlying items.
Non-underlying items are income
or expenses that are material by
their size and/or nature and are
not considered to be incurred in the
normal course of business. They are
classified as non-underlying items
on the face of the Group income
statement within their relevant
category.
Non-underlying items include costs
of major strategic projects and
investments, restructuring and
reorganisation costs (including site
closure costs), impairment of assets,
amortisation and impairment of
business combination intangibles,
remeasurement gains or losses on
borrowings, and refinancing costs.
Further details on non-underlying
items are provided later in this report.
Summary
Total number of gyms at year end
Total number of members at year end ('000)
Revenue (£m)
Group Adjusted EBITDA (£m)
Group Adjusted EBITDA Less Normalised Rent (£m)
Adjusted Loss before tax (£m)
Statutory Loss before tax (£m)
Statutory Loss after tax (£m)
Net cash inflow from operating activities (£m)
Free cash flow (£m)
Non-Property Net Debt (£m) (as at year end)
Year ended
31 December
2023
Year ended
31 December
2022
Movement
233
850
204.0
75.5
38.5
(5.5)
(8.3)
(8.4)
79.5
27.0
(66.4)
229
821
172.9
71.3
38.0
(5.5)
(19.4)
(19.3)
65.4
16.7
(76.0)
+2%
+4%
+18%
+6%
+1%
0%
+57%
+56%
+22%
+62%
+13%
Results for the year
Revenue
Cost of sales
Gross profit
Other income
Operating expenses (before depreciation,
amortisation and impairment)
Depreciation, amortisation and impairment
Operating profit/(loss)
Finance costs
Finance income
Loss before tax
Tax (charge)/credit
Loss for the year attributable to shareholders
Loss per share
Basic and diluted (p)
Year ended 31 December 2023
Year ended 31 December 2022
Underlying
result
£m
Non-
underlying
items
£m
–
–
–
–
(1.5)
(0.8)
(2.3)
(0.5)
–
(2.8)
0.5
(2.3)
204.0
(2.8)
201.2
0.3
(128.4)
(57.5)
15.6
(21.4)
0.3
(5.5)
(0.6)
(6.1)
(3.4)
Underlying
result
£m
Non-
underlying
items
£m
172.9
(2.0)
170.9
0.8
(101.8)
(59.3)
10.6
(16.1)
–
(5.5)
(1.4)
(6.9)
–
–
–
–
(4.4)
(8.5)
(12.9)
(1.0)
–
(13.9)
1.5
(12.4)
Total
£m
204.0
(2.8)
201.2
0.3
(129.9)
(58.3)
13.3
(21.9)
0.3
(8.3)
(0.1)
(8.4)
(4.7)
(3.9)
Total
£m
172.9
(2.0)
170.9
0.8
(106.2)
(67.8)
(2.3)
(17.1)
–
(19.4)
0.1
(19.3)
(10.9)
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Strategic report
Financial review
continued
Revenue
Trading in 2023 was robust despite the ongoing cost-of-living pressures on consumers, demonstrating the continued
resilience of the low cost gym model. Revenue increased by 18% to £204.0m (2022: £172.9m), reflecting 8% higher average
membership numbers throughout the year and a 9% increase in yield.
The average membership number in the year was 872,000 compared with 808,000 in the prior year; we closed the year
with 850,000 members which was up 4% on 31 December 2022.
The average headline price of a Standard membership increased to £23.16 in December 2023 compared with £21.49 in
December 2022, largely as a result of higher joining fees and price increases for new members, as well as some repricing
of the base membership. In addition, the proportion of members taking our premium membership reached 31.7% in
December 2023 compared with 29.6% in December 2022. As a result, Average Revenue Per Member Per Month (‘ARPMM’)
in 2023 was up 9% to £19.50 compared with £17.82 in 2022.
Like-for-like revenue (based on all sites open as at 31 December 2020) increased by 8% year on year.
Cost of sales
Cost of sales, which includes the costs associated with the generation of ancillary income as well as call centre costs
and payment processing costs, were £2.8m (2022: £2.0m) with the increase year on year mirroring the revenue and
membership growth.
Underlying operating expenses (before depreciation, amortisation and impairment)
Underlying operating expenses (before depreciation, amortisation and impairment) are made up as follows:
Site costs before Normalised Rent
Site Normalised Rent
Site costs including Normalised Rent
Central Support Office costs
Central Support Office Normalised Rent
Central Support Office costs including Normalised Rent
Share based payments
Less: Normalised Rent
Underlying operating expenses (before depreciation, amortisation
and impairment)
Site costs including Normalised Rent
In 2023, site costs including Normalised Rent increased by 20% to £141.6m (2022: £117.9m).
105.0
36.6
141.6
21.0
0.4
21.4
2.4
165.4
(37.0)
128.4
85.0
32.9
117.9
15.4
0.4
15.8
1.4
135.1
(33.3)
101.8
The fixed costs associated with running the sites (predominantly building rates and service charges) increased by
£5.9m year on year as a result of the increased estate size, inflationary increases in building rates costs (new three year
assessment period starting April 2023), and the end of the Covid-19 related rates relief which reduced costs in the first
quarter of 2022.
Controllable site costs increased by £14.1m with higher utilities costs accounting for £8.2m of this increase. Staff costs
were also £1.1m higher, reflecting the increased estate size, inflationary pay increases and increased site bonuses. Other
increases in controllable costs predominantly reflect the larger estate size.
Site Normalised Rent, which is defined as the contractual rent payable, recognised in the monthly period to which it
relates, increased by £3.7m in the year, again reflecting the larger estate size.
Central Support Office costs including Normalised Rent
Central Support Office costs in the year increased to £21.4m (2022: £15.8m), reflecting an increase in headcount, pay
inflation and the resumption of bonuses.
Share based payments
Share based payments in the year amounted to £2.4m (2022: £1.4m), reflecting a more regular run rate following a year in
which the charge was lower than expected due to share price volatility and a number of adjustments for leavers.
In January 2024, the Group established an Employee Benefit Trust (‘EBT’). The EBT will be used to purchase shares in order
to minimise dilution associated with the share based payments.
Underlying depreciation and amortisation
Underlying depreciation and amortisation charges in the year amounted to £57.5m (2022: £59.3m). The reduction year on
year reflects a return to more normal levels as the prior year charge included accelerated depreciation and amortisation
on a number of assets that were replaced following the launch of the new consumer website and brand.
Group Adjusted EBITDA Less Normalised Rent
The Group’s key profit metric is Group Adjusted EBITDA Less Normalised Rent as the Directors believe that this measure
best reflects the underlying profitability of the business. Group Adjusted EBITDA Less Normalised Rent is reconciled to
Operating profit/(loss) as follows:
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
Operating profit/(loss)
Non-underlying operating items (see page 26 for further details)
Share based payments
Underlying depreciation and amortisation
Group Adjusted EBITDA
Normalised Rent1
Group Adjusted EBITDA Less Normalised Rent
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
13.3
2.3
2.4
57.5
75.5
(37.0)
38.5
(2.3)
12.9
1.4
59.3
71.3
(33.3)
38.0
1
Normalised Rent is the contractual rent payable, recognised in the monthly period to which it relates. A reconciliation of property lease payments to Normalised
Rent has been included in Note 21 to the Consolidated financial statements.
Group Adjusted EBITDA Less Normalised Rent was slightly ahead of the prior year at £38.5m (2022: £38.0m), as the
increased revenue was offset by increased operating costs.
Underlying finance costs
Underlying finance costs increased in the year by £5.3m to £21.4m (2022: £16.1m). The finance costs associated with our
bank borrowings (comprising interest payable and fee amortisation less capitalised interest) increased by £3.2m to
£6.0m (2022: £2.8m), reflecting the increases in SONIA rates during the year. Funds borrowed under the Revolving Credit
Facility (‘RCF’) bear interest at a minimum rate of 2.85% above SONIA.
The implied interest relating to the lease liabilities was £15.5m (2022: £13.3m) with the increase largely reflecting the
increased estate.
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Strategic report
Financial review
continued
Non-underlying items
Non-underlying items are costs or income which the Directors believe, due to their size or nature, are not the result of
normal operating performance. They are therefore separately disclosed on the face of the income statement to allow a
more comparable view of underlying trading performance.
Affecting operating expenses (before depreciation, amortisation and
impairment)
Costs of major strategic projects and investments
Restructuring and reorganisation costs/(income) (including site closures)
Affecting depreciation, amortisation and impairment
Impairment of property, plant and equipment, right-of-use assets and intangible assets
Amortisation of business combination intangible assets
Affecting finance costs
Remeasurement of borrowings
Refinancing costs
Total all non-underlying items before tax
Tax on non-underlying items
Total non-underlying charge in income statement
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
0.9
0.6
1.5
0.6
0.2
0.8
0.1
0.4
0.5
2.8
(0.5)
2.3
4.6
(0.2)
4.4
8.3
0.2
8.5
0.9
0.1
1.0
13.9
(1.5)
12.4
Non-underlying items affecting operating expenses (before depreciation, amortisation and impairment) amounted to
£1.5m in the year (2022: £4.4m).
The costs of major strategic projects and investments of £0.9m (2022: £4.6m) include the costs incurred in relation to
introducing the three-tier price product architecture, as well as consultancy and other costs incurred in shaping the
Group's strategic plan.
Restructuring and reorganisation costs in the year of £0.6m (2022: credit of £0.2m) include the costs associated with
the change of Group CEO and other Board and Executive Committee changes, as well as restructuring costs incurred in
relation to the Central Support Office.
Non-underlying costs affecting depreciation, amortisation and impairment in the year amounted to £0.8m (2022: £8.5m),
of which £0.6m (2022: £8.3m) relates to the impairment of two sites (2022: 13 sites). The majority of the charge in 2023
relates to one site which was impaired in 2022 but where the value-in-use estimate has fallen, partly driven by an increase
in the discount rate. The remaining £0.2m (2022: £0.2m) of non-underlying costs affecting depreciation, amortisation and
impairment relates to the amortisation of business combination intangibles acquired as part of the Lifestyle, easyGym
and Fitness First acquisitions.
Non-underlying items affecting finance costs amounted to £0.5m (2022: £1.0m), of which £0.4m (2022: £0.1m) relates to
costs incurred in relation to the amendments to the Group’s RCF which were agreed with the banks in September; and
£0.1m (2022: £0.9m) relates to the remeasurement of the RCF following those agreed changes.
Taxation
The tax charge for the year was £0.1m (2022: credit of £0.1m).
The net deferred tax asset recognised at 31 December 2023 was £16.3m (31 December 2022: £16.3m). This comprised
deferred tax assets in respect of tax losses and other temporary differences where the Directors believe it is probable
that these will be recovered within a reasonable period. Short term timing differences are generally recognised ahead of
losses on the basis that they are likely to reverse more quickly.
The trading losses incurred as a result of the Covid-19 pandemic and the subsequent cost-of-living crisis, together with
the introduction in March 2021 of the temporary enhanced capital allowances regime (‘super-deduction tax break’), have
resulted in significant tax losses to carry forward. Losses for which no deferred tax asset is recognised equate to £23.0m,
resulting in an unrecognised deferred tax asset of £5.8m using a 25% tax rate. There is no time limit for utilising trade
losses in the UK.
Earnings
As a result of the factors discussed above, the statutory loss before tax was £8.3m (2022: loss of £19.4m) and the
statutory loss after tax was £8.4m (2022: loss of £19.3m).
Adjusted loss before tax is calculated by taking the statutory loss before tax and adding back the non-underlying items.
Adjusted loss before tax was £5.5m (2022: loss of £5.5m). Adjusted loss after tax was £6.1m (2022: loss of £6.9m).
The basic and diluted loss per share was 4.7p (2022: loss of 10.9p), and the basic and diluted adjusted loss per share was
3.4p (2022: loss of 3.9p).
Dividend
We are a growth company, in a growth market, with a clear capital allocation policy. Whilst dividends and other returns of
capital to shareholders will be considered by the Directors in the future, we are not proposing a dividend for the current
year as we continue to see significant opportunities, with attractive returns, to invest our free cash flow in growing the
business. In addition, there is a remaining condition in the RCF agreement that the Company shall not declare or pay a
dividend if the £10m additional facility is drawn and, although this facility is currently undrawn, the Directors would like to
continue to have access to it as necessary.
Cash flow
Year ended
31 December 2023
£m
Year ended
31 December 2022
£m
Group Adjusted EBITDA Less Normalised Rent
Movement in working capital
Maintenance capital expenditure
Free cash flow before non-underlying items, interest and tax
Non-underlying items
Net interest paid
Taxation
Free cash flow1
Expansionary capital expenditure
Refinancing fees
Proceeds from disposal of equipment
Net consideration paid on acquisition
Net proceeds from issue of Ordinary shares
Cash flow before movement in debt
Net (decrease)/increase in non-property lease indebtedness
Net (repayment)/drawdown of borrowings
Net cash flow
38.5
5.0
(10.3)
33.2
(1.0)
(5.2)
–
27.0
(16.4)
(1.0)
–
–
–
9.6
(2.5)
(11.0)
(3.9)
38.0
(5.2)
(8.8)
24.0
(5.3)
(2.8)
0.8
16.7
(43.0)
(0.7)
0.4
(5.4)
0.1
(31.9)
5.0
25.0
(1.9)
1
A reconciliation of Net cash inflow from operating activities to Free cash flow has been included in Note 24 to the Consolidated financial statements.
26 |
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Strategic report
Financial review
continued
Free cash flow generated in the year was £27.0m (2022: £16.7m). The increase year on year is largely driven by improved
working capital, including an increased uptake of pay-up-front and student products and the normalisation of rent
payments. The prior year working capital outflow included £2.1m in relation to the unwind of deferred rents from 2020
and 2021.
Fixed asset additions in respect of maintenance capital expenditure in the year amounted to £8.7m (2022: £11.9m).
However, the timing of settlement of some maintenance capital creditors brought forward from the prior year has meant
that the cash outflow in respect of maintenance capital expenditure in the year was £10.3m (2022: £8.8m), including £1.5m
funded by leases (2022: nil).
Fixed asset additions in respect of expansionary capital expenditure in the year amounted to £14.2m (2022: £46.5m)
and relate to the fit-out of the six new gyms we opened in the year; refurbishments and enhancements in existing gyms;
and spend on technology projects, including the rollout of the three-tier price product architecture. Adjusting for the
movement in capital creditors, the cash outflow in respect of expansionary capital expenditure was £16.4m (2022:
£43.0m), including £1.5m funded by leases (2022: £8.0m).
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
At 31 December
2023
£m
At 31 December
2022
£m
558.5
13.0
(72.3)
(371.2)
128.0
580.4
15.2
(64.7)
(396.9)
134.0
At 31 December 2023, non-current assets were £21.9m lower than at 31 December 2022, as the lower level of new site
openings meant that depreciation on property, plant and equipment and right-of-use assets more than offset the costs
incurred on new sites and enhancements of existing sites.
Net current liabilities at 31 December 2023 increased by £9.8m, reflecting a lower level of cash holding at year end 2023
and an increase in the proportion of lease liabilities being payable within one year.
Non-current liabilities decreased by £25.7m, as payments made in relation to existing leases more than offset the
recognition of lease liabilities in relation to new sites.
Revolving Credit Facility
In September 2023, the Group agreed with its lenders certain changes to the Group’s RCF. As a result, the Group now has
access to a combined £80m facility which matures in October 2025. The RCF is subject to quarterly financial covenant
tests on Adjusted Leverage (Non-property Net Debt divided by Group Adjusted EBITDA Less Normalised Rent must not
exceed 3.0 times) and Fixed Charge Cover (Adjusted EBITDAR to Net Finance Charges plus Normalised Rent must be
greater than 1.5 times). The previously reported liquidity covenant was removed as part of the revised RCF agreement.
As at 31 December 2023, the Group had Non-Property Net Debt of £66.4m (31 December 2022: £76.0m) comprising
drawn facilities of £59.0m and non-property leases of £8.9m, less cash of £1.5m. The Directors believe that this measure
of net debt best reflects the financial health of the business. In addition, it is a key constituent of the Adjusted Leverage
covenant included in the Group’s banking agreement. At 31 December 2023, Adjusted Leverage was 1.72 times
(2022: 2.0 times), significantly below the banking covenant threshold of 3.0 times; and Fixed Charge Cover was
1.73 times (2022: 1.94 times).
Going concern
The Board has reviewed the financial plan and downside scenarios of the Group and has a reasonable expectation that
the Group has adequate resources to continue in operational existence for the period to 30 June 2025. As a result, the
Directors continue to adopt the going concern basis in preparing the consolidated financial statements. In making this
assessment, consideration has been given to the current and future expected trading performance; the Group’s current
and forecast liquidity position and the support received to date from our lenders and shareholders; and the mitigating
actions that can be deployed in the event of reasonable downside scenarios. Further detail is provided in Note 2 to the
Consolidated financial statements.
Current trading and outlook
Trading in the first two months of the new financial year shows continued positive momentum, in line with Board
expectations. Revenue after two months has grown by 16% year on year, reflecting a 3% increase in average members
and 13% yield growth. Like-for-like revenue for the two months was up 12%, driven largely by price increases implemented
at the start of 2024. Membership at the end of February 2024 was 909,000, up 7% versus the end of 2023.
We expect like-for-like revenue in 2024 to increase by 4-5% overall as the impact of the early price increases normalises
later in the year. Utility rates will moderate slightly in 2024 resulting in like-for-like site cost growth of c.2%. Central
Support Office costs are expected to increase year on year as we invest to deliver the Next Chapter growth plan.
We plan to open 10-12 sites in 2024, with all new sites continuing to be financed from free cash flow. As a result, Adjusted
Leverage is expected to remain within the range of 1.5 to 2.0 times. The Next Chapter growth plan aims to deliver circa 50
site openings with average ROIC of 30% over three years, funded from free cashflow.
Luke Tait
Chief Financial Officer
13 March 2024
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Key performance indicators (‘KPIs’)
We use a number of non-financial and financial
KPIs to measure our performance over time.
We select KPIs that demonstrate the operational and
financial performance underpinning our strategic drivers.
During the year, we have updated our key cash measure to
focus on ‘Free cash flow’ as opposed to ‘Group operating
cash flow’ as the Directors believe that this measure better
reflects the amount of cash available for investing in
new sites and technology and enhancing existing sites.
The ‘Leverage’ KPI was also previously called ‘Non-Property
Net Debt to Group Adjusted EBITDA’.
Non financial
Total number of gyms
+4 sites
2023
2022
2021
2020
2019
Members that visit 4+ times in a month %
+3.6ppts
233
229
202
183
175
2023
2022
2021
2020
2019
32.6
23.9
50.8
47.2
44.0
Definition
Number of gyms open at the end
of the year.
Link to 2023 strategy
High quality estate
2023 performance
Increased by a net four during
2023, as the Group opened six
new sites and closed two city
centre workforce-dependent
sites.
Definition
The percentage of total members
that have visited the gym four or
more times in a month, calculated
as a rolling 12 month average.
2023 performance
Increased again in 2023,
demonstrating that members
continue to get significant value
from their gym membership.
Average Revenue per Member per
Month (‘ARPMM’) £1
+9%
Link to 2023 strategy
Compelling member experience
Sustainability
Research shows that people who
visit the gyms 4+ times per month
are also more likely to continue
their membership and gain
significant health benefits from
it which, in turn, drives increased
Social Value.
2023
2022
2021
2020
2019
19.50
17.82
17.60
17.20
16.02
Employee engagement score %2
10bps
8.5
8.4
7.6
6.4
2023 performance
In 2023, we continued to
make progress with employee
engagement and achieved an
engagement score of 8.5 out of
10, with a 90% survey completion
rate. The score of 8.5 puts us
in the top 25% in Peakon’s
consumer services benchmarking
for overall engagement.
Definition
Revenue divided by the average
number of members divided by
the number of months in the
period.
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Increased by 9.4% in 2023, driven
by an increase in the average
headline price of a Standard
membership of £1.67 and an
increase in the take-up of our
premium product, Ultimate, (from
29.6% of total members in 2022
to 31.7% in 2023).
Total number of members ’000
+4%
2023
2022
2021
2020
2019
850
821
578
718
794
Definition
Total gym memberships
at the end of the year.
Link to 2023 strategy
Compelling member experience
2023 performance
Closed the year with 850,000
members, an increase of 4% on
2022, and reflecting the full year
impact of sites opened in 2022,
as well as the incremental volume
from new sites opened in 2023.
2023
2022
2021
2020
Definition
A measure of how committed
and enthusiastic employees
are about their work and the
organisation.
We use four engagement
categories (Engagement,
Belief, Loyalty, Satisfaction) to
calculate a score on a 0-10 scale,
and all responses are averaged
out to give a score out of 10.
In 2023, we changed the way we
measure employee engagement.
We partnered with Peakon, an
engagement specialist, and
adopted a more accurate and
comprehensive approach using a
0-10 scale rating system, moving
away from a percentage score
(Top Box).
Link to 2023 strategy
Unique team and culture
30 |
Financial
Revenue £m
+18%
2023
2022
2021
2020
2019
106.0
80.5
Definition
Revenue is generated from
membership fees, non-refundable
joining fees, rental income from
personal trainers and other
ancillary services, including the
sale of goods through vending
machines, advertising through
the use of media screens and the
sale of day memberships.
204.0
172.9
153.1
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Increased by 18% in year, with
average members up 8% to
872,000 (2022: 808,000), and
average revenue per member
per month (‘ARPMM’) up 9% to
£19.50 (2022: £17.82). Like-for-like
revenue grew 8% year on year.
Return on Invested Capital (‘ROIC’) %3
-60bps
2023
2022
2021
2020
2019
Definition
Group Adjusted EBITDA Less
Normalised Rent contributed
by mature sites, divided by
total capital initially invested in
the mature sites. Mature sites
are defined as those sites that
have been open for 24 months
or more at the period end and
exclude acquisition sites. See
page 166 for details of number of
mature sites and Group Adjusted
EBITDA Less Normalised Rent
contributed by mature sites.
19
20
18
18
31
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Declined slightly in the year as
utilities and fixed cost increases
more than offset revenue growth
in the mature sites.
Group Adjusted EBITDA Less
Normalised Rent £m
+1%
2023
2022
2021
-10.2
2019
5.7
2020
38.5
38.0
Adjusted Leverage x
0.3x
improved
by
48.5
2020
1.7
2.0
2023
2022
2021
-4.6
2019 1.0
7.7
Definition
Operating profit before
depreciation, amortisation, long
term employee incentive costs
and non-underlying items and
after deducting Normalised Rent.
Normalised Rent is the
contractual rent payable,
recognised in the monthly period
to which it relates.
See page 122 for a reconciliation
to Operating profit.
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Increased by 1% in the year as
the increase in revenue noted
above was largely offset by cost
inflation, particularly in utilities
and staff.
Free cash flow £m
+62%
2021
2023
2022
2.0
-16.6
2019
2020
27.0
16.7
32.3
Definition
Group Adjusted EBITDA Less
Normalised Rent and movement
in working capital, less
maintenance capital expenditure,
cash non-underlying items, bank
and non-property lease interest
and tax.
See Note 24 to the Consolidated
financial statements for a
reconciliation to Net cash inflow
from operating activities.
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Increased by 62% in year,
reflecting an increased uptake
of pay-up-front and student
products and the normalisation
of rent payments.
Definition
Non-Property Net Debt divided
by Group Adjusted EBITDA Less
Normalised Rent.
Non-Property Net Debt is defined
as bank and non-property
lease debt less cash and cash
equivalents and is the leverage
measure used in the Group’s
banking covenants.
See Note 23 to the Consolidated
financial statements for a
breakdown.
Link to 2023 strategy
High quality estate
Compelling member experience
Innovative technology
and marketing
2023 performance
Improved in the year as a result
of higher free cash flow (see
opposite) and fewer new site
openings.
See Financial review on pages 22 to 29
1
2
3
In order to provide better year on year comparability for yield, the figures
presented for 2021 and 2020 have been adjusted to exclude the impact of UK
Government-enforced closure periods as a result of the Covid-19 pandemic.
The 2021 figure is calculated for the period from July 2021 to December 2021
when all gyms were fully open and trading had returned to normal. The 2020
figure is calculated on a site-by-site basis and excludes days when the sites
were required to be closed due to government restrictions.
Due to the change in methodology for calculating the engagement score, a
precise comparison to 2022 and prior cannot be made. These are therefore
included for indicative purposes only.
In order to provide better year on year comparability for ROIC, the figures
presented for 2021 and 2020 have been adjusted to exclude the impact
of UK Government-enforced closure periods as a result of the Covid-19
pandemic. The 2021 figure is calculated for the period from July 2021 to
December 2021 when all gyms were fully open and trading had returned to
normal. The 2020 figure is calculated to exclude those months when sites
were required to be closed due to government restrictions.
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The Gym Group plc | Annual Report and Accounts 2023
Robust and growing market
Low cost gyms have disproportionately grown their
share of the market and of gym members rapidly over
the past decade. The gym market itself has grown by
40%, while the share of low cost gyms has grown at a
compound annual growth rate (‘CAGR’) of 25%, from
2% to 15% of the overall market.
See Market review on pages
6 to 7
Encouragingly, and notwithstanding the pressures of
the cost-of-living crisis, it is clear that gym members
are continuing to prioritise health and fitness spending,
including gym memberships, over other areas of spend,
and there are a number of long-run trends that will
continue to drive growth in our market. These include
a much greater awareness of health, fitness and body
image; increasing demand for convenience and flexibility;
and a polarisation of spend towards luxury and low cost,
squeezing middle market operators.
A winning proposition
The Gym Group’s high quality, low cost and flexible
proposition is well placed to exploit these trends.
Industry analysis (Mintel: Health and Fitness Clubs UK,
2023) shows that since before Covid-19, there has been
a 21% increase in those who are not currently gym
members considering joining a gym – now at 23% of
UK adults (16+). Gym consideration rises to over 40%
when looking at those aged 16-24 specifically, an area
in which we are strongly represented in both our teams
and members.
As our performance in 2023 demonstrates, our
proposition is highly rated by existing members, who are
visiting more frequently and scoring The Gym Group
very highly in satisfaction metrics. When it comes to
the prospect of new members, our analysis shows that
within the catchment of our existing 233 sites, there are a
further circa 5 million people within our target age range,
who are either members of another gym or considering
joining a gym.
No. of 16-24 year olds considering
joining a gym
Potential additional reach in
our target age range is a further
>40%
circa 5m
people within the catchment
of our existing 233 sites
Strategic report
Next Chapter growth plan
How we seize our
market opportunity:
The Next Chapter
Drive like-for-like
revenue and
generate cash
Create funds
for future growth
options
Strengthen
the core
Accelerate
rollout of
quality
sites
Broaden
our
growth
The framework and strategic
priorities of our Next Chapter
growth plan for the next
stage of The Gym Group’s
development are outlined in
this section.
Our investment case is to deliver
sustained growth from
free cash flow and the Next
Chapter growth plan is focused on
how we will deliver this, within the
highly resilient and growing market
that is health and fitness.
32 |
32 |
The framework is to
‘Strengthen the core’ of our
business to increase returns
from the existing estate, funding
‘Accelerate rollout of quality
sites’, in turn creating optionality
to ‘Broaden our growth’ as
we develop our proposition into
new channels, new adjacencies
and/or new markets.
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The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Next Chapter growth plan
continued
34 |
34 |
Strengthen
the core
Under our plan to ‘Strengthen the
core’, we have identified a number
of growth drivers that will deliver
increased returns in our existing
estate and underpin the attractive
returns we continue to drive from
our new sites.
The key initiatives under this plan fall into three
core categories:
Yield and revenue management;
Member acquisition; and
Improving retention.
Each of these categories will contribute to like-for-like
growth in our mature estate and provide an opportunity
to access some of the potential new members we have
identified. They are summarised as follows:
Yield and revenue management
Closing the pricing gap…
Analysis from Simon-Kucher (quantitative pricing experts
used widely in digital subscription businesses) shows that
members of our own and competing low cost gyms ascribe
a higher value to their gym membership than they currently
pay. Although we have increased the average headline
rate of a Standard membership by 8% in December 2023
(vs December 2022), we remain on average around £2 per
month cheaper than our closest competitors (within a one
mile radius). We aim to continue to narrow that gap in 2024,
as well as improving yield by focusing on more profitable
promotions and continuing to improve the penetration of
premium memberships, for example.
…whilst still offering great value
The introduction of three-tier pricing and fixed term Saver
memberships has given us increased flexibility both in
terms of recruitment and promotional activity.
A lower entry-level price point (Off-peak membership
from £13.99 per month) has the potential to attract more
members who would prefer to work out at less busy times,
as well as underpinning the value of the Standard and
Ultimate products. In addition, with the fixed term Saver
product, we can also offer the trade-off of cancellation
flexibility for even better value.
Member acquisition
Maximising returns from member acquisition
The primary choice factor for joining a gym is convenience,
and 80% of our membership base lives within three miles
of their gym. Within the catchment area of our existing
estate, there remains a potential additional circa 5 million
people in our target age range who are not currently a
member of one of our gyms - a substantial untapped
market opportunity.
Given this opportunity, we will geo-target our marketing
activity to focus in the places where our sites are, and
focus messaging on the key drivers of choice – convenient
location, great equipment and affordable price. We will
also have distinct acquisition strategies for our core
product (Standard/Ultimate), Off-peak and students to
maximise incremental volume. We’ll harness advertising
technology and data science to optimise returns on
marketing investment.
Improving retention
Organisational focus on retention
The no contract model remains an important contributory
factor to the attractiveness of our proposition. That
said, there is a significant opportunity to improve
member retention, which will in turn drive both yield and
membership volume.
The highest rate of churn occurs in the first 45 days of a
membership, before a habit has formed. We will therefore
focus on the ‘early life’ of a new member, starting with
the way they are acquired - because certain types of
promotion increase churn, we are reducing the number of
days on promotion and using data analytics to determine
which promotional offers have the best retention rates.
Having acquired through the right promotion, there is then
an organisational focus on helping ‘early life’ members to
build lasting habits, whether that’s via our expert teams in
the gyms or through digital channels like our App. Used by
around 80% of our members and highly rated, we will invest
in the App as a channel for engagement, information,
encouragement and ultimately retention.
Across these and other related
initiatives, we will drive like-for-
like growth through our existing
estate, which will help to improve
returns and generate more cash
to reinvest in expansion.
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m
a
t
i
o
n
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Next Chapter growth plan
continued
Accelerate
rollout of
quality sites
Analysis from PwC shows that the
opportunity in the UK extends to
potential for between 600 and 850
additional sites in the low cost gym
segment alone. At recent rates of
site expansion by all low cost gym
operators, this suggests there is scope
for 10-15 years of further growth.
We have identified the key characteristics of high-returning
sites and it is clear that Greater London and urban
residential locations deliver the best returns for us. This,
therefore, is where we are concentrating our site opening
programme for the time being. Disciplined rollout of high
quality and high-returning sites will deliver attractive
returns and create significant value for shareholders.
Retaining discipline in selecting the right sites – in terms
of location, footprint and local market – is critical to
maintaining the attractive 30% target Return on Invested
Capital (‘ROIC’) that the Group’s new site pipeline delivers.
Our ambition is to open circa 50 new sites over the next
three years, but we have set our teams the priority of
achieving the 30% ROIC target on new sites, and this will
take precedence over delivering a specific number of site
openings in any given year.
See Market review on pages 6 to 7
Broaden
our growth
‘Strengthen the core’ and
‘Accelerate rollout of quality sites’
are where our executional focus
is today.
However, successful execution in these areas will create
further options to ‘Broaden our growth’ for the mid and
long term. We are currently making a strategic assessment
of these options and will return with more details at the
appropriate time. Illustratively, these options may include
further developments to our existing proposition; format
innovation; investigating new channels to market; and
introducing new adjacent revenue streams to complement
our existing business.
The Next Chapter
growth plan aims to
create significant value
over the medium term.
‘Strengthen the core’, underpinned by both membership
and ARPMM increases, will deliver like-for-like revenue
growth which, combined with tight control of central costs,
will drive sustainable profit and cash generation. In turn,
this will fund both the continuing investment of 5-6% of
revenue in maintenance capital expenditure and the
disciplined opening of circa 50 new sites over the medium
term, whilst maintaining our target leverage.
We expect that the combined impact of ‘Strengthen the
core’ and ‘Accelerate rollout of quality sites’ will improve our
ROIC back towards historic levels. This will generate funds
to invest in ‘Broaden our growth’.
The principal risks relating to the Next Chapter growth plan are as follows:
Principal risk
Description and impact
Mitigations and controls
Strategic link
r
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s
1
Operational
gearing
V
3
Trading
environment
V
5
IT
dependency
V
As we look to narrow the pricing gap
with competitors we risk impacting
the volume of members per gym
Regular monitoring of site performance
Active yield and retention management at
site level
Revised price product architecture to offer
Off-peak
Strengthen
the core
Accelerate
rollout of
quality sites
O
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r
i
n
f
o
r
m
a
t
i
o
n
The cost-of-living crisis and/or
geo-political environment may cause
financial hardship for our members
Monitoring of relative price positioning
versus competitors
Introduce measures to reduce operating
costs and discretionary spending
Strengthened financial position with
extension of bank facility and cash
generation
Ability to enrol and support members,
carry out online marketing activity,
process payments and control gym
access
Primary data systems hosted by specialist
providers
Primary IT infrastructure fully managed by
specialist IT companies
Robust disaster recovery and business
continuity plans in place
Strengthen
the core
Accelerate
rollout of
quality sites
Strengthen
the core
Accelerate
rollout of
quality sites
Broaden our
growth
See Principal risks and uncertainties on pages 54 to 63
36 |
36 |
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Strategic report
Sustainability report
H e althy people
Providing everyone
with the opportunity
to start their journey
towards a fitter,
healthier and happier
life is our mission.
Delivering positive health outcomes
is dependent on providing a
healthy environment in which we
all want to live. At The Gym Group,
our comprehensive sustainability
strategy has continued to deliver
in all of these areas, built on the
foundation of our purpose: breaking
down barriers to fitness for all.
Equality, div
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&
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engagement
+10pp
SBTi’s
net zero
targets verified
Social Value
+18%
(vs FY22)
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H
Sustainability
at The Gym Group
Sustainability has become a
defining factor in today’s business
landscape, with increasing demand
from consumers and enhanced
regulatory compliance requirements.
The actions required to meet
these rising expectations produce
multiple benefits, including risk
mitigation, business resilience, market
competitiveness, talent recruitment
and direct cost reduction through
energy efficiency.
We strive to be sustainability leaders
within the health and fitness industry
and demonstrate our value
to building a sustainable economy
by publishing the Social Value
generated by our members.
As members of ukactive and
EuropeActive we engage and
contribute to building a cross-sector
approach on sustainability issues.
David Melhuish | Chief Development
& Sustainability Officer
I S O Q A R .COM
ISO 450 01
REG I S T E R E D
0026
O
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n
Responsibility to
the environment
A highlight of our year has been the
validation of our target for net zero by
the Science Based Targets initiative
(‘SBTi’); we’re proud to be the first gym
business in the world to achieve this
and hope others will quickly follow. We
are committed to reducing our carbon
footprint and have outlined our
ongoing initiatives to enable progress
towards our net zero target within this
Annual Report.
Good health and wellbeing
The safety of our employees
and members is of paramount
importance to us. In 2023, we became
the UK’s first national gym chain
to achieve accreditation to ISO
45001, the international standard
for occupational health and safety
management.
Diversity and equal opportunity
We remain committed to ensuring our
culture and practices are inclusive,
supportive and create the best
environments for people to thrive.
We have continued to deliver
actions to support our gender
parity ambitions and launched
several family-friendly policies to
enhance flexibility and work-life
balance.
2023 performance highlights
Social impact
The increase of Social Value
generated through our operations
to a total of £890m is a reflection of
our ability to make health and fitness
more accessible and engaging for
our members, delivering positive
health outcomes.
In November 2023, we launched
a charity partnership with NHS
Charities Together, to further deliver
on our commitment to supporting
better health outcomes through
fundraising and volunteering for
NHS charities around the UK.
Good jobs and quality education
In October, we transferred to a new
platform to measure employee
engagement, supporting a more
comprehensive approach to
measuring and benchmarking.
We achieved our highest response
rate to date at 90% survey
completion. We were also proud to be
shortlisted for the Investors in People
UK Employer of the Year Award in
recognition for our commitment to
our people and culture.
38 |
38 |
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Sustainability report
continued
Good health
and wellbeing
Our approach
Delivering positive health and wellbeing benefits to our members is at the
heart of our business. The benefits of physical activity include a reduced
risk of noncommunicable disease and improved mental health, sleep,
and cognitive function. In 2020, the World Health Organisation (‘WHO’)
published guidelines on physical activity and sedentary behaviour, which
acknowledge and endorse these and other benefits.
a u s e
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Our social impact
Measuring the social impact we
have on the communities we serve
is central to understanding whether
we are fulfilling our purpose of
breaking down barriers to fitness for
all. Our wide-ranging and growing
network of affordable, high quality
gyms are accessible to over 53% of
the UK population, and our services
contribute to target 3.4 of SDG3 –
Good health and wellbeing: to reduce
premature mortality and promote
mental health and wellbeing.
Since 2019, we have been reporting
on the Social Value our business
generates using an internationally
recognised model created by Sheffield
Hallam University and 4Global,
focused on member participation
and health outcomes of regular
exercise. The model calculates the
monetary value derived from reduced
GP visits, improved mental wellbeing
and individual development, as well as
social and community development
(see tggplc.com Sustainability/
Strategy for more details).
“Through a rigorous
evaluation process, The Gym
Group demonstrated their
unwavering commitment to
health, safety and wellbeing,
ultimately earning the coveted
ISO 45001 certification.
Organisations could benefit
from understanding the
importance of adopting
a Health and Safety
Management System in the
way that The Gym Group
has done.”
Jonathan Yates | Enterprise Account
Manager at Alcumus ISOQAR (external
certification body)
See Progress against 2023
strategy on pages 16 to 21
e r
c
n
a
C o l o n c
Social Value/member £
544
508
478
400
325
2019
2020
2021
2022
2023
We have made great strides this year
towards our goal to create £900m
of Social Value by the end of 2025
and will work towards exceeding
this target. Our 2023 contribution
translates to £544 per member,
therefore creating double the average
membership fee in community
benefits. This is not only driven by
increased membership numbers, but
also by record member engagement,
with 50.8% of our members visiting our
gyms at least four times per month.
In 2023, we successfully certified
our health and safety management
system to the international standard,
ISO 45001, demonstrating our
commitment to ensuring member and
employee safety through continual
evaluation and improvement.
Additionally, we also successfully
certified to Level 3 of the FITcert®
scheme and the new European
standard for fitness centres, EN17229.
The European quality standard sets
out requirements for operators to
optimise health, safety and hygiene
standards. We became the UK’s first
24/7 operator to achieve certification
to this level and are working on
attaining Level 4 (full) certification
in 2024.
These results indicate that our
priorities of ensuring our members
derive value from their memberships
and supporting them on their journey
to a healthy lifestyle are resonating
with our base.
Targets and KPIs
Good health and wellbeing
2023
50.8% of members
(up from
47.2% in
2022)
Pledge
Increasing the percentage
of members visiting our
gyms 4x or more per month
2023
£890m delivered
in 2023
(up from
£756m)
Pledge
Delivering at least £900m
in Social Value by end of 2025
Safety at our gyms
Protecting the health and safety of
our members and employees is a key
priority. We have a mature health
and safety management system
underpinned by digital solutions for
risk management and training, as well
as robust strategic and operational
crisis management plans which
are overseen by our Sustainability
Committee.
We have seen great value from
Wakefield Council, our Primary
Authority partner for health, safety
and environmental matters. This
year, we successfully onboarded East
Sussex Fire and Rescue as our second
Primary Authority partner with a
focus on fire safety and regulation.
Both partnerships will support us in
ensuring that matters are considered
from a regulatory perspective.
Positive impact of
exercise on health
and wellbeing
Interview with Shilpa, member
of The Gym Group Oadby
Why did you join our gym?
In 2022 I had very high blood
pressure, was overweight,
diagnosed with stage 2 diabetes
and had severe back pain. I had
also been diagnosed with MGUS
the previous year, a precursor to
myeloma which required me to
go for quarterly screenings. I was
devastated and felt like I needed to
take back control. The Gym Group
Oadby opened nearby and was
offering everything I was looking for.
What is your experience
at the gym?
The staff are incredibly friendly
and helpful and the members are
from all walks of life so I never felt
out of place. I started working
out with Tom, a Personal Trainer,
and he helped me not only with
a great exercise regime but also
with nutrition advice. Now that I
feel confident in what I am doing,
I continue to exercise regularly
without a PT.
How has exercise impacted
your health?
My blood pressure is normal, I
am now pre-diabetic rather than
diabetic and I have lost a lot of
weight. My back pain is under
control and I no longer need an
operation. Because my health has
improved so much, the quarterly
check-ups for MGUS have now
been moved to annual. It has really
changed my life.
40 |
*
Public Health England Physical Activity: applying all our health, March 2022.
1
Bull F, Al-Ansari SS, Biddle S, et al. World Health Organization 2020 Global Guidelines on physical activity
and sedentary behaviour. BrJ Sports Med. 2020;54(24). doi:10.1136/bjsports-2020-102955.
| 41
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Strategic report
Sustainability report
continued
Good jobs,
high quality
education
and lifelong
learning
“People across the
country are discovering
new careers as personal
trainers, thanks to The
Gym Group’s Accelerate
PT programme backed by
the Department for Work
and Pensions.”
Jo Churchill MP | Minister
for Employment
See Progress against 2023
strategy on pages 16 to 21
Our approach
The Gym Group’s ‘people first’ culture remains essential to our success,
helping us to achieve our strategic priorities. Our commitment to
delivering against our ‘people promise’ ensures that we provide career
adventures, opportunities and a supportive environment.
Sustaining healthy and engaged
teams remains a business priority
for The Gym Group. Throughout
the year, we delivered diverse
development opportunities across
all organisational levels with a focus
on female health, personal growth,
wellbeing and career progression.
Furthermore, we have continued to
evolve our approach to early careers,
supporting equal opportunities and
accessible pathways into a career
in fitness.
Leaders in employee
engagement
Our new employee engagement
survey has provided a deeper level
of insight into how our employees
feel working at The Gym Group. Our
overall engagement score was 8.5
out of 10, putting us in the top 25%
compared to the benchmark data
set of consumer services (hotels,
restaurants and leisure). We also
reported high satisfaction levels, with
an overall diversity and inclusion score
of 8.9 out of 10, measuring 0.5 above
the benchmark for consumer services.
Inclusiveness and sense of belonging
was identified as a strength, with a
score of 9.4 out of 10. Feedback
and insights from the engagement
survey will inform our actions for
2024 and beyond.
Targets and KPIs
2023
38 people
achieved
their Level
3 Personal
Trainer
qualification
Pledge
Supporting 500 people to
gain Level 3 Personal Trainer
qualification between 2023
and 2030
2023
44%
Pledge
Achieve and maintain a
minimum of 60% internal
progression rate by 2025
Accelerate Personal Training
Through the launch of our ‘Accelerate
PT’ framework, we aim to provide
equal opportunities through
supporting people to achieve their
Level 3 Personal Training qualification.
Within the Accelerate PT framework,
we created partnerships with the
Department for Work and Pensions,
The Prince’s Trust and The Shaw
Trust to design a sector-based
work academy programme to
reach the long-term unemployed.
The employability programme
includes work experience, interview
practice, skills-based learning and
the opportunity to enrol onto our
Accelerate PT programme.
Since its launch in May 2023, we have
enrolled 45 trainees, providing them
with a funded Level 3 Diploma in
Personal Training and employment
opportunities within our gyms.
We have made a positive start to
investing in our local communities
and building a pipeline of talent to
support our workforce requirements.
We look forward to rolling out further
cohorts in 2024.
Career progression
To measure the career development
opportunities at The Gym Group,
we aim for 60% of our operational
management team to be working in
roles they have progressed into. We
are pleased to report a 44% internal
progression rate of our current
workforce, including:
47%
of Assistant
General Managers
started as Fitness
Trainers
42%
of Fitness
Managers were
Fitness Trainers
41%
of General Managers
were Assistant General
Managers
Throughout 2023, we delivered
further cohorts of our ‘Emerging
Talent’ management development
programmes, providing Assistant
General Managers and Fitness
Trainers with the skills required to
progress their careers. We continue to
report high employee promotion rates
following programme participation.
66%
promotion rate –
Emerging Talent
management
development
programme
41%
promotion rate –
Emerging Talent
Fitness Trainer
programme
Alongside core programmes, we have
provided upskilling and personal
development sessions. These have
included senior management
development focused on leadership
skills, wellbeing and enhancing
expertise.
Our ‘Impossible is Nothing’ self-
development workshops, ‘Women
in Leadership’ programme and the
continuation of apprenticeship-
development and mentoring
opportunities have broadened the
availability of learning within our
Central Support Office function.
“I joined The Gym Group in 2022
as an Assistant General Manager
and have always enjoyed leading
a team to deliver the best service
possible.
Supporting women in health and
fitness has been a passion of mine,
and the ‘Female Health First’ (‘FHF’)
programme allowed me to gain
new knowledge and practical skills
to support my team, members
and clients.
The course has helped me develop
myself as a manager and as a
Personal Trainer. It has opened
up new opportunities, including
teaching bespoke classes in pelvic
health and female functional
fitness to England Netball at
Loughborough University. I also
collaborate with local health
experts on creating a safe
environment in our gym for women
to thrive, feel seen and be heard.
Open discussions about female
health are now a regular
occurrence in The Gym Group
classes and during my personal
training sessions with clients.
Through the FHF programme, I have
discovered my niche as a trainer
and manager. It has enabled
me to develop new expertise
and will support our female
members’ health.”
Laura Travis
Assistant General Manager
42 |
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The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Sustainability report
continued
Diversity
and equal
opportunity
“Since collaborating in
2019, The Gym Group
have progressed their EDI
strategy and goals, placing
importance on being data-
driven in their approach to
targets and accountability
frameworks for gender and
ethnicity. They remain hugely
active in their commitment
to WiHTL & DiR*.”
Tea Colaianni | Founder/Chair of
WiHtl & DiR
See Progress against 2023
strategy on pages 16 to 21
Our approach
Driving an inclusive and friendly culture that breaks down barriers to
progression remained a fundamental focus of our equality, diversity
and inclusion (‘EDI’) strategy in 2023.
Aligning to our ‘people promise’,
we continue to support our teams,
ensuring equal opportunities to
succeed. To deliver against this, we
prioritised a focus on the following:
Targets and KPIs
2023
( + 0.7 percentage points)
31.4%
improving employee
wellbeing support,
driving an inclusive culture, and
providing equitable development
opportunities.
We have continued to work towards
the EDI targets established through
our sustainability strategy, reporting
quarterly to the Sustainability
Committee. Our Chief Development
and Sustainability Officer remains our
Executive sponsor for the Equality,
Diversity and Inclusion Group, playing
a crucial role in raising the agenda
and enabling positive action on
diversity.
Gender
In 2023, we saw the female
representation among our senior
leaders decrease by 4.2 percentage
points to 30.9%. This was impacted by
female turnover within our leadership
team and a higher percentage of
male hires at this level. We have
reported a small increase in female
representation across our wider
business and, overall, female turnover
reduced by 12 percentage points from
72% in 2022 to 60% in 2023.
Implementation of our ‘Women
in Leadership’ development
programme, along with mentoring
and apprenticeship opportunities,
will support in developing our internal
pipeline of future female leaders.
Pledge
50/50 gender
balance by 2030
2023
(-4.2 percentage points)
30.9%
Pledge
40% female senior
leaders by 2025
2023
12.5%
Pledge
20% leaders of ethnically
diverse origin by 2030
Female health first
To support gender diversity, we
launched our ‘Female Health First’
(‘FHF’) pilot programme in partnership
with The Well HQ, providing employees
with specialist knowledge in women’s
health and focusing on the specific
training and wellbeing needs of our
female members. This eight-week
programme upskilled 51 employees
across 18 of our gyms and our Gym
Support functions on topics such as
menopause, midlife health and pelvic
health, providing Gym Managers and
Trainers with knowledge and practical
skills to support female members’
health and wellbeing.
We have begun implementing female-
specific classes within these gyms,
such as pelvic health workshops and
female functional health classes.
We will continue to roll out further
FHF cohorts in 2024, expanding this
unique offering to 120 employees
across 60 gyms.
Gender pay gap
We are pleased to report a significant
reduction in our mean gender pay
gap as of April 2023 which reduced to
0.6% (a decrease of 2.7 percentage
points from 2022 reporting). Our
median pay gap remains at 0%.
Ethnicity
Whilst our workforce is representative
of the communities we serve, we have
identified a lack of representation
within senior levels of the organisation
– with 12.5% identifying as Black,
Asian, Mixed or Other Ethnic
Background; we have therefore
introduced an ethnic diversity Senior
Leadership Team pledge of 20%
representation by 2030 to drive
greater focus and commitment to
addressing this imbalance.
In support, we launched our reverse
mentoring scheme, pairing eight
culturally diverse mentors with
members of our Senior Leadership
Team to increase diversity of thought
and elevate the experiences of
our diverse talent.
Ethnicity pay gap
Our pay gap reporting is based
on data collected from 98% of our
employees. As of April 2023, our mean
ethnicity pay gap was 22.7%, this is a
7.9 percentage point increase from
2022 reporting. Our median ethnicity
pay gap remains at 0%.
Our full ethnicity and gender pay
gap reports provide further detail
and the actions we are taking
(www.tggplc.com/sustainability).
Employee inclusion
and retention
In May 2023, we concluded our
‘Mental Health Ambassador’ (‘MHA’)
programme which provided refresher
training and upskilling to 22 mental
health champions, expanding MHA
support to all operational regions
and our Gym Support functions.
Additional training was provided to
18 of our Cluster General Managers,
strengthening the mental health
knowledge, skills and support available
within our operational teams.
Aligning employee health and
wellbeing with our gender parity
ambitions, we implemented the
following family-friendly policies,
giving greater opportunities for
flexibility, and work-life balance
through enhanced periods of
leave for:
Fertility treatment
Pregnancy loss
Carers
Neonatal care
In December 2023, we were proud to
be awarded the Menopause Friendly
Employer Accreditation in recognition
of our commitment to driving
menopause awareness and inclusion.
44 |
| 45
* Women in Hospitality, Travel and Leisure & Diversity in Retail.
Strategic reportGovernance reportFinancial statementsOther information The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Strategic report
Sustainability report
continued
Responsibility
to the
environment
“We are the world’s first
fitness operator to have a
net zero emissions target
validated by The Science
Based Targets Initiative
(‘SBTi’) in line with a 1.5°C
trajectory.”
See Progress against 2023
strategy on pages 16 to 21
Our Commitment to net zero
We are committed to reducing our carbon emissions, and we recognise the
importance of the Paris Agreement to limit global warming to 1.5°C. Our
near term and long term targets below demonstrate our commitment to
ambitious short term reductions and steady progress towards net zero.
Targets and KPIs
2023
-3%
Pledge
Scope 1 and 2 emissions
compared to 2019
2023
-12.6%
Pledge
Reduction in energy consumption
per gym from 2019 base year
Near term targets1
Reduce absolute Scope 1 and 2
greenhouse gas (‘GHG’) emissions
by 50% by 2030
Reduce Scope 3 GHG emissions
covering purchased goods and
services, capital goods, fuel
and energy-related activities,
upstream transportation and
distribution, waste generated in
operations, business travel, and
employee commuting by 55% per
gym by 2030
25% of our suppliers by spend,
covering purchased goods and
services and capital goods, will have
science-based targets by 2028.
Long term targets1
Reduce absolute Scope 1 and 2
GHG emissions by 90% by 2045
Reduce Scope 3 GHG emissions
by 97% per gym by 2045
Transition planning
The International Sustainability
Standards Board (‘ISSB’) issued its first
sustainability disclosure standards,
IFRS S1 and S2, in June 2023. By
continuing to report with reference to
the Global Reporting Initiative and in
alignment with the SASB Standards,
we strive to ready our business for the
reporting requirements of the ISSB.
Furthermore, the Transition
Plan Taskforce (‘TPT’) Disclosure
Framework was launched to develop
a gold standard for best practice
climate transition plans, building on
IFRS S2 requirements. Our reporting
aligns with the TPT Framework’s three
principles: Ambition, Action and
Accountability.
We are committed to achieving our near term target
of a 50% reduction in Scope 1 and 2 emissions by
and decarbonising these emissions by
2030
2035
GHG emissions across the value chain by
2045
We have committed to achieve net zero
46 |
1 Base year 2019.
Ambition
Our science-based commitment
to a net zero pathway aligned with
a 1.5°C trajectory demonstrates
our ambition to decarbonise. We
have outlined our climate-related
risks and opportunities within our
TCFD schedule.
Alongside our net zero target and
carbon neutrality status, we have four
carbon reduction commitments:
Suppliers
Engage with our key suppliers
to set their own emission
reduction targets, aligned with
climate science, by the end of
2028
Members
Develop a member
engagement plan by the end
of 2025 to drive our net zero
ambition forward
Renewable energy
Increase and maintain our
annual sourcing of renewable
electricity to 100% by the
end of 2025
Abatement
Develop our plan to remove
and store carbon from the
atmosphere. This will offset
the impact of our unabated
emissions; the maximum 10%
of our carbon footprint, which
will remain once we have
achieved
our 2045 target
Action
To support our transition to a net zero
aligned economy, we are continuing
to invest in decarbonising our
operations. Our annual budgeting
process includes allocation for
sustainability initiatives within our
maintenance capital expenditures,
forming part of our climate-related
transition plan.
This includes funding for both carbon
and water-related initiatives, some of
which are detailed below.
By closely monitoring climate change’s
evolving effects, we aim to maintain
this resilience in the years to come.
Development of a high efficiency
air source heat pump (‘ASHP’)
solution for use in all new sites and
to replace failed gas-fired boilers;
39 of our gyms now operate with
an ASHP, while 78% of the estate
operates with gas-fired hot water.
We have two sites operating
photovoltaic (‘PV’) solar panels
as we continue developing
our on-site power generation
strategy. PV solar enables up to
30% of the required power to be
generated on-site.
Procurement of 100% renewable
energy across our gyms at all sites
where we control the purchase
of energy.
Voltage optimisation was
installed in 10 gyms in 2023 and, on
average, delivered an 8% reduction
in gym electricity consumption;
we will continue the rollout in 2024
through an investment of over £1m.
We are rolling out a system to
automatically capture and
report gym water consumption
with a central reporting system,
identifying any excessive
consumption to prompt
rapid action.
We recognise that our climate action
must create deep emission reductions
in the coming years, and we will
continue to innovate and invest
across our operations. With 67% of our
emissions associated with our Scope
3 activities, engaging our extended
value chain will be a significant step
as we continue along our net zero
pathway.
To this end, all new supply agreements
will include contractual requirements
for environmental performance.
In addition to the actions we take to
decarbonise, our business model also
includes natural climate resilience; we
lease, rather than own the buildings we
operate, limiting our liability in the case
of climate-related physical impacts
and providing enhanced flexibility to
move locations as needed.
Accountability
Our sustainability strategy captures
material ESG performance data,
including energy consumption, GHG
emissions, and waste production. We
calculate our Scope 1, 2 and 3 GHG
emissions following the Greenhouse
Gas Protocol Corporate Accounting
and Reporting Standard. We will further
develop our suite of climate-related
metrics to include cross-industry
metrics that inform our understanding
of our climate impact and exposure to
climate-related risks and opportunities.
Our plans for 2024 include the
development of a detailed transition
plan to provide an outline of the
actions, timeframes, and potential
costs required to achieve our net zero
targets. We are also further evaluating
the adaptation costs necessary to
enhance our overall resilience to the
physical impacts of climate change.
As we continue our transition to net
zero, we have chosen to offset our
Scope 1, 2, and operational Scope
3 emissions to achieve carbon-
neutral certification for our business
through Climate Impact Partners.
Putting a price on carbon helps to
incentivise emissions reductions
across our business operations and
investment decisions while, in the
meantime, contributing to credible
emission reduction projects that
are independently validated to
recognised global carbon standards.
We will, however, prioritise direct
carbon abatement over purchasing
carbon credits.
Carbon neutral since
2021
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Sustainability report
continued
2023 carbon emissions
Our Scope 1 direct emissions for
2023 are 1,884 tCO2e, associated with
natural gas combustion and estimated
refrigerant leakage. This represents a
consumption decrease of 8.4% from
2019, primarily as a result of our efforts
to reduce gas consumption across
our estate.
Scope 2 indirect emissions for this
year are 8,701 tCO2e, resulting from
the consumption of 41,154,605 kWh of
electricity and 995,005 kWh of direct
heat, purchased and consumed in
day-to-day business operations. This
represents a decrease of 1.1% from 2019.
Whilst our energy consumption per gym
decreased by 12.6% vs 2019, an increase
in the number of gyms in our estate and
higher UK grid carbon conversion factors
contributed to a smaller decrease in
carbon emissions.
Our operations have intensity metrics
of 138 tCO2e per gym and 519 tCO2e per
million visits for this reporting year. This
represents a reduction in operational
carbon intensity of 33% and 34%,
respectively, from our base year.
Our Scope 2 emissions have been
calculated utilising location-based
emission factors, as published by the
Department for Business, Energy and
Industrial Strategy.
Due to the renewable electricity
procurement contract in place since
2019, our Scope 2 emissions calculated
using market-based emissions would
equal 1,305 tCO2e.
The significant reduction in our Scope
3 emissions is largely due to a reduced
number of new site openings in 2023
resulting in a 55% reduction in CO2
emissions from capital goods.
100%
renewable energy for all
sites where we control the
purchase of energy
Emissions year ended 31 December 2023
Total emissions (tCO2e)
Direct emissions from operation (Scope 1)
Purchased electricity and heat (Scope 2)
Indirect emissions in value chain (Scope 3)
Total emissions (tCO2e)
% Change from base year Scope 1 and 2
% Change from base year Scope 1, 2 and 3
Intensity metric (tCO2e per gym)
% Change from base year
Intensity metric (tCO2e per million member visit)
% Change from base year
Total consumption (kWh)
Scope 1 (Gas)
Scope 2 (Electricity)
Scope 2 (Heat)
Total (kWh)
Total emissions (tCO2e)
50,000
2019
2,157
8,797
25,660
36,614
206
785
2022
2,138
7,633
36,837
46,608
-11%
27%
203
-1.5%
871
11%
2023
1,884
8,701
21,657
32,242
-3%
-12%
138
-33%
519
-34%
2019
2022
2023
11,071,196
10,960,970
10,137,976
34,409,373
39,435,614
41,154,605
10,907
38,880
995,005
45,491,476
50,435,464
52,287,586
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2019
2022
2023
Scope 3 emissions
Scope 3 Category
Emissions (tCO2e)
Capital goods
Business travel
Employee commuting
and homeworking
2019
2022
2023
to base
Contr.
17,544
21,856
7,948
-55% 36.7%
272
205
224
-18%
1.0%
402
385
423
5%
2%
Fuel and energy related
2,343
3,031
3,140
34% 14.5%
Purchased goods and services
4,488
11,064
9,501
112% 43.9%
Upstream transport
375
80
184
-51% 0.9%
Water and Waste
Total
236
25,660
216
36,837
237
21,657
0%
-16%
1.1%
We improved our landfill diversion
from 95% in 2022 to 97% in 2023 and
achieved 100% landfill diversion from
September to December 2023.
100%
landfill diversion
from September
to December 2023
2019
750
4.3
90%
2022
1,066
6
95%
2023
816
4.4
97%
Waste management
In 2023, we generated 816 tonnes of
general and mixed recycling waste.
This is a decrease of 23% despite the
growth of our estate. This result was
mainly achieved by a reduction of
blue-roll waste. The average weight
per gym has dropped to 4.4 tonnes
per gym, a reduction of 27% but
just short of our 4.3 tonnes per
gym target.
Landfill diversion
Total weight (in tonnes)
Average tonnes/gym
Diverted from landfill
Water management
We recognise that water stress is
expected to increase in the coming
years, and we acknowledge our role
in minimising consumption through
our operations. As we do not operate
any pools, saunas, steam rooms, or
similar wet facilities, toilet and wash
facilities are The Gym Group’s primary
source of water use.
We completed the replacement of
legacy shower heads with low-volume
units during 2023, potentially saving
over half a million litres of water a
week. We will continue to explore
water reduction measures across
our operations.
48 |
Direct emissions from operations (Scope 1)
Purchased electricity and heat (Scope 2)
Indirect emissions in value chain (Scope 3)
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Our progress on TCFD
The Task Force on Climate-related Financial
Disclosures (‘TCFD’) recommendations support
the identification and assessment of our
climate-related risks and opportunities; these
inform how we respond to the physical risks
of climate change and the transition risks
associated with the UK progressing to a low
carbon economy.
This is our third report in line with
the recommendations of the TCFD,
and includes disclosures across
the four areas of governance,
strategy, risk management, and
metrics and targets.. We assess
that we are fully compliant with the
Listing Rules (Disclosure of Climate-
Related Financial Information)
(No 2) Instrument 2021. The 2023
TCFD analysis further determines
that while climate-related risks
and opportunities do not currently
impact the financial performance or
position of the business, they have the
potential to do so in the coming years.
We acknowledge the iterative nature
of the TCFD, and we will continue to
refine our approach as we develop our
understanding of the climate-related
financial risks and opportunities to
our business.
Governance
Our Sustainability Committee (‘the
Committee’) is one of four Board
Committees delegated to manage
associated responsibilities. The
Sustainability Working Group,
informed by the ESG workstream,
works closely with the Committee
to provide oversight at senior
management level, ensuring the
comprehensive governance of the
business and successful execution
of our strategy.
Management of climate-related risks
and opportunities is included in the
mandate of the ESG workstream.
Our Chief Development and
Sustainability Officer, David Melhuish,
continues to lead the management
and oversight of The Gym Group’s
sustainability strategy and is
responsible for monitoring and
overseeing our climate-related
progress. Our Business Development
and Sustainability Director supports
the integration of sustainability
across the business, overseeing the
development of The Gym Group’s
net zero targets as well as engaging
leaders from across the business to
provide insight on the climate-related
risks and opportunities in different
areas, such as finance, procurement
and facility management. Further
details relating to climate and
sustainability governance are found in
the Sustainability Committee Report
on pages 90 to 91.
Strategy
We undertook climate scenario
analysis, examining climate and
weather projections, socioeconomic
trends and operating environment
predictions to understand how
The Gym Group’s operations may
be affected due to the impacts of
climate change and the transition to a
lower carbon economy. This included
consideration of existing and future
potential regulations and what risks
they may pose to The Gym Group.
The analysis enabled us to assess
the resilience of our strategy to
climate change.
This year, we enhanced our approach
to climate scenario analysis in
line with best-practice physical
climate projections from the
Intergovernmental Panel on Climate
Change (‘IPCC’). We also analysed
three new transition scenarios from
the International Energy Agency
(‘IEA’). The selected scenarios present
a sharp contrast between potential
futures, which allows us to plan for a
range of possible climate impacts.
We assessed climate impacts
over three time horizons: short
term (present to 2039 with a 2030
milestone), medium term (2040
to 2059 with a 2050 milestone)
and long term (2060 to 2079 with
a 2070 milestone). Our near term
emissions reduction target and the
current business strategy align with
our short term milestone, while the
UK Government’s net zero target
date aligns with our medium term
milestone. Considering that climate-
related impacts often occur across
longer time horizons (IPCC projections
go up to 2100), the long term
milestone considers potential impact
materialisation as varying scenarios
increasingly diverge from one another.
The scenario analysis assessed
potential impacts for all our
operations across the UK. Predictions
regarding which regions are most
at risk were documented where
applicable, informed by the physical
climate projections.
The Met Office’s UK Climate
Projections 2018 (UKCP18) Report
and IPCC’s Sixth Assessment Report
(AR6) (IPCC, 2023) were used as
the basis for the physical scenario
analysis. AR6 introduces enhanced
climate scenarios called Shared
Socioeconomic Pathways (‘SSPs’).
Compared to the previously used
Representative Concentration
Pathways (‘RCPs’), SSPs look at
climate change projections alongside
socioeconomic circumstances to
better evaluate climate impacts
and adaptation measures.
50 |
Risks were evaluated in line with
The Gym Group’s corporate risk
methodology. Our TCFD register
assesses both the impact and
likelihood of each climate-related risk,
with an outline of current and future
control measures. The risk scores were
then calculated by multiplying impact,
likelihood and control environment
ratings together, each scored from 1
to 3. The risk management process is
defined in more detail in the ‘Principal
Risks and Uncertainties’ section of the
Strategic Report.
Financial impacts were then
evaluated. For our first year of
financial impact reporting, the
evaluation focused on key qualitative
information rather than quantified
financial impacts. The potential
impacts to financial position (assets,
liabilities, capital and financing)
and performance (revenue and
expenditures) were described for
each risk and opportunity. Relative
financial impact was evaluated
to help determine which risks and
opportunities are the most material to
the organisation. This will enable us to
focus our management and reporting
of financial impacts on those risks
and opportunities with the highest
potential for financial materialisation.
Findings from the consolidated TCFD
risks and opportunities register have
been communicated to the Audit
and Risk Committee and the Board.
Our Finance Director is responsible
for reviewing our Company-wide
risk register and assigns ownership
of risks and opportunities to the
relevant senior managers. This
assessment takes place twice per
year, with the support of the Executive
Committee, to ensure that actual and
potential climate-related impacts are
controlled, mitigated or transferred
as appropriate and integrated into
business decision-making.
The three physical climate scenarios chosen are outlined below.
SSP1-2.6
A low greenhouse gas (‘GHG’) emissions scenario where
emissions decline to net zero around 2070.
Warming: 1.3°C–2.4°C by 2100.
SSP2-4.5
An intermediate GHG emissions scenario where emissions
remain around current levels until 2050.
Warming: 2.1°C–3.5°C by 2100.
SSP5-8.5
A very high GHG emissions scenario where emissions roughly
double from current levels by 2050.
Warming: 3.3°C–5.7°C by 2100.
Three new transition scenarios from the IEA’s World Energy Outlook report (2022)
provided the basis for transition scenario analysis and are outlined below.
Net zero emissions
by 2050 Scenario
(‘NZE’)
A scenario that maps out a way to achieve a
1.5°C stabilisation in the rise in global average
temperatures, alongside universal access to
modern energy by 2030.
Announced pledges
scenario (‘APS’)
A scenario that assumes that all aspirational targets
announced by governments are met on time and in
full, including net zero and energy access goals.
Stated policies
scenario (‘STEPS’)
A pragmatic exploratory scenario showing the
trajectory implied by today’s policy settings.
The most significant risks and
opportunities are summarised on
pages 52 to 53. Through our scenario
analysis, SSP5-8.5 is recognised as
the scenario in which the identified
physical risks are the most significant
for The Gym Group. By contrast, the
identified transition risks and climate
opportunities are most significant
under the NZE scenario.
Risk management
The information identified through
the scenario analysis was used to
update our climate-related risks
and opportunities register. Two
collaborative workshops were
subsequently held, during which the
potential business and financial
impacts of the risks and opportunities
were evaluated.
The workshops were attended by
senior leaders and key stakeholders
from across the business who
provided insights and supported
the assessment of our risks and
opportunities. The collective insight
provided by this group meant that
potential climate-related risks and
opportunities could be assessed
effectively across the areas they were
projected to impact.
The output of these workshops
included the identification of
control measures already in place
as well as areas where further work
is needed to better understand
risk exposures. Potential business
impacts associated with each risk and
opportunity were reviewed to support
the evaluation of the risks.
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Our progress on TCFD
continued
Climate-related risks and opportunities
Risk
Potential financial
impact
Control measures
Emissions
scenario
Materialisation
Physical climate-related risks:
Flooding:
Increased frequency and
intensity of extreme rainfall
may lead to increased river
and surface water flood events.
Surface water flooding is
predicted to pose the highest risk
in the urban areas where
The Gym Group operates.
Flooding may also occur due
to increased sea levels, putting
gyms in some coastal regions
at risk of flooding. Sea level rise
is most likely to impact gyms in
South East England.
Revenue:
Decreased revenue
due to business
disruption and/or
closure of premises.
Expenditures:
Increased insurance
costs; increased costs
for flood mitigation
updates.
Assets and liabilities:
Decreased asset
value or write-offs
due to water damage.
We lease our premises,
providing flexibility to
exit leases in flood-prone
areas.
Our corporate insurance
includes flood coverage, and
flood risk mapping is assessed
at policy renewal. It is standard
due diligence practice to
determine any potential
physical risks, including flood
risks, during the acquisition
of new sites.
Our nationwide network allows
members to use alternative
locations should their primary
gym be closed.
Low
emissions
(SSP1-2.6)
Medium
emissions
(SSP2-4.5)
High
emissions
(SSP5-8.5)
Short term
(2023-2040)
Short term
(2023-2040)
Short term
(2023-2040)
Prolonged water stress:
Changing precipitation patterns
may lead to prolonged drought
conditions in summer months.
This could lead to potential water
restrictions impacting The Gym
Group’s ability to provide shower
facilities to customers.
Revenue:
Decreased revenues
due to water
restrictions impacting
demand.
Expenditures:
Increased water costs.
Remote water monitoring
has been introduced at
selected sites, and this may be
expanded in the future.
High
emissions
(SSP5-8.5)
Short term
(2023-2040)
Our approach to water
management and current
initiatives are detailed on
page 49.
High temperatures:
Sustained increase in median
temperature, leading to
increased cooling requirements
at gyms and offices and a
potential decline in appetite
for fitness.
This risk is most likely to impact
gyms in South East England.
Expenditures:
Increased costs
associated with the
installation and/
or additional repair
of air conditioning/
cooling mechanisms.
Assets and liabilities:
Reduced lifetime
of air conditioning
equipment.
Our ‘20 is Plenty’ model ensures
gyms are operating at no lower
than 20°C.
High
emissions
(SSP5-8.5)
Medium term
(2040-2059)
Building insulation minimises
the cooling demand. The Gym
Group is working to attain
a minimum EPC rating of ‘C’
across all gyms by 2025.
52 |
Risk
Potential financial
impact
Control measures
Emissions
scenario
Materialisation
Transition climate-related risks:
Supply chain costs:
Increased supply chain cost of
raw materials for constructing
and refurbishing gyms.
Expenditures:
Increased costs due
to changing input
prices and output
requirements.
The control measures for this
risk are outlined in our Principal
risks and uncertainties section
– Risk 8: Reliance on key
suppliers – on page 59.
Net zero
emissions
(‘NZE’)
Low
emissions
(APS)
Short term
(2023-2040)
Short term
(2023-2040)
Opportunity
Potential financial
impact
Control measures
Emissions
scenario
Materialisation
Climate-related opportunities:
Onsite energy generation:
Implementing on-site energy
generation (e.g., solar panels)
at gyms may reduce grid
dependency and lower exposure
to fluctuating fossil fuel prices.
Expenditures:
Reduced operating
costs (e.g., through
efficiency gains and
cost reductions).
Onsite energy generation
has the potential to enhance
energy efficiency and lower
operating costs. Our approach
to onsite energy generation
and current initiatives are
detailed on pages 46 to 47.
Indoor exercise demand:
Increased demand for indoor
exercise in climate-controlled
gyms may occur during extreme
heat events (chronic and acute).
Outdoor workouts may become
less viable due to storms, heat
waves, hotter summers, and
wetter winters. Thus, there is an
opportunity to attract more
customers who previously
exercised outdoors.
Revenue:
Increased
revenue from gym
memberships.
Capital and
financing:
Increased investment
from shareholders
and higher share
price.
NZE
Low
emissions
(SSP1-2.6)
Medium
emissions
(SSP2-4.5)
Short term
(2023-2040)
Short term
(2023-2040)
Short term
(2023-2040)
High
emissions
(SSP5-8.5)
Medium term
(2040-2059)
Metrics and targets
Metrics and targets play a significant
role in climate-related risk and
opportunity management, with
linkages to governance, strategy and
risk management. They enable the
Board and senior management to
make informed, data-driven decisions
and communicate to stakeholders
how we track and manage climate
performance. Metrics and targets
also measure and describe the
impact of climate-related risks
and opportunities on strategy and
financial planning, helping to enhance
the resilience of the business against
different scenarios.
Lastly, they help with the
measurement of risk exposure as
part of the business’s broader risk
management processes.
Through our sustainability
strategy, we capture material ESG
performance data that informs our
understanding of transition risk
exposure and enables us to track
the effectiveness of the climate-
related initiatives detailed within the
‘Strategy’ section above.
We have established climate-related
targets, headlined by our commitment
to achieving net zero emissions by
2045, which has been validated by
the SBTi. Further details about our
climate-related metrics and targets
are outlined on pages 46 to 47. In
2024 and subsequent years, we will
further develop our suite of climate-
related metrics to include additional
cross-industry metrics that inform our
understanding of our climate-related
risks and opportunities.
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Principal risks and uncertainties
Managing
our risk
Our risk management
framework is designed
to effectively identify,
assess and mitigate
risks whilst enabling
us to deliver the
Group’s strategic and
operational objectives.
Approach to risk management
The Board and senior management
take very seriously their responsibility
for operating a robust risk
management and internal controls
process, and for reviewing their
effectiveness at least annually.
The Board has overall responsibility
for ensuring there is an effective risk
management process in place which is
designed to identify the principal risks
that the business faces and to provide
reasonable assurance that they are
fully understood and managed. The
Audit and Risk Committee provides
oversight and challenge on the
effectiveness of risk management
and mitigating controls.
Risk appetite
The UK Corporate Governance Code
requires companies to determine their
risk appetite. This is an expression
of the amount and types of risk that
the Group is willing to take in order to
achieve its strategic and operational
objectives. A risk that can seriously
affect the performance, prospects
or reputation of a company is
deemed to be a principal risk. The
Group’s risk management process
aims to strike a balance between
identifying, monitoring and mitigating
risks whilst maximising potential
opportunities and returns to ensure
we deliver against our strategy.
Our commitment to delivering a
compelling member experience and
operational excellence will not be
delivered at the expense of price
competitiveness. We are willing to
accept the risk of partnering with
third parties to deliver our core
business activities. However, contracts
and relationships with critical
suppliers must be well monitored,
value-for-money and regularly
reviewed. In addition, third parties
must comply with appropriate
regulatory and ethical standards.
We seek to provide a great place
to work, and balance costs and
risks to ensure our colleagues are
engaged and have the capability
to deliver our strategy. We have
no tolerance for harm (physical or
mental) to individuals and actively
promote diversity and inclusion. We
also have no appetite for the loss
of, or otherwise unauthorised or
accidental disclosure of, member or
other sensitive data and no appetite
to knowingly breach the spirit or
letter of the laws that apply to us.
In areas of uncertainty, we will have
a robust justification and clear
rationale for the choices we make.
Where possible, high priority projects
must be delivered on time, to budget,
to expected quality and in a way
that safeguards the wellbeing of our
colleagues working on the project.
However, cost overruns and delays will
sometimes be tolerated to achieve the
desired outcome.
Risk management process
The Group’s risk management process
is designed to measure, evaluate,
document and monitor risks within all
areas of the business.
Each area of the business maintains
a functional risk register in which
functional leads identify and
document the risks that their business
area faces. Areas covered include:
People; Operations; Marketing;
Property Acquisition; Property
Maintenance and Facilities; Finance;
Technology; Data; and Sustainability.
A review of the functional risk
registers is performed twice yearly
by the Executive Committee. In
addition, the Executive Committee
also considers and identifies strategic
risks at least annually – i.e. those risks
that they believe would have the most
significant impact on the Group’s
ability to achieve its strategic goals.
The output of the above reviews is
discussed with the Audit and Risk
Committee (on behalf of the Board).
The Group’s principal risk register is
made up of those strategic risks (top
down) and functional risks (bottom
up) that are believed would have the
greatest impact on our operations.
Each risk is evaluated against three
criteria with equal weighting to arrive
at an overall score:
Likelihood – the likelihood of
occurrence.
Financial impact – the financial
implications.
Control environment – the
strength of controls mitigating
the risk.
In assessing the risks, consideration is
given to ‘what can go wrong’, i.e. what
could result in the risk being realised.
For each risk identified, current and
future mitigations are developed
and documented.
54 |
Key roles and responsibilities
The roles and responsibilities for designing, monitoring and operating the system of risk management are set out below.
Functions
and employees
First line
of defence
Manage day-to-day risk in
their own areas guided by
Group policies, procedures
and control frameworks.
Identify and report on
functional risks to the
Executive Committee and
ensure mitigations are in
place.
Deliver the actions
associated with managing
risk.
Executive Committee
Board
Audit and Risk
Committee
Second line
of defence
Third line
of defence
Promotes and supports
the embedding of risk
management throughout
the business.
Ensures there is active
management of identified
and emerging risks.
Formally reviews the
functional risk registers
at least twice yearly and
the strategic risks at least
annually.
Reports to the Audit
and Risk Committee
on the internal control
environment and principal
and emerging risks
identified.
Has overall responsibility
for strategy, governance,
performance, internal
control and risk
management.
Sets the tone and
culture for managing
risk and embedding
risk management
controls, providing
strategic direction on
the appropriate balance
between risk and reward.
Ensures the most
significant risks facing
the Group are properly
managed.
Evaluates the risk
implications of planned
investments.
Monitors and reviews the
overall effectiveness of
the Group’s system of
internal control and risk
management.
Makes recommendations
to the Board for
improvements or
developments.
Defines and reviews the
Group’s risk appetite.
Monitors compliance with
internal control systems
and oversees the external
audit.
Principal risks
Through its 2023 reviews, the Board
and Executive Committee have
identified eight principal risks which
are set out on the following pages.
These are the risks which we believe to
be the most material to our business
model, which could adversely affect
the operations, revenue, profit, cash
flow or assets of the Group, and which
may prevent us from achieving our
strategic objectives. Additional risks
and uncertainties currently unknown
to us, or which we currently believe are
immaterial, may also have an adverse
effect on the Group.
For each of the principal risks, we
have included a link to the Group’s
strategic priorities, movement in risk
trend compared to the prior year
and examples of relevant controls or
mitigations that have been developed.
Those principal risks which have been
included in the assessment of the
Group’s long term viability have also
been highlighted.
Risk heat map (before mitigations)
h
g
H
i
y
t
i
l
i
b
a
b
o
r
P
i
m
u
d
e
M
w
o
L
6
3
2
4
5
8
1
7
Low
Key
1 Operational gearing
2 Member experience
3 Trading environment
4 Our people
Medium
Impact
High
5 IT dependency
6 Cyber and data security
7 Reputation, brand and trust
8 Relationships with key suppliers
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Principal risks and uncertainties
continued
Key
Risk movement in 2023:
Risk increase
No change
Risk decrease
Included in Viability assessment, see page 63
Principal risk
Description and impact
Mitigations and controls
Strategic link
Principal risk
Description and impact
Mitigations and controls
Strategic link
Strengthen
the core
Accelerate
rollout of
quality sites
Strengthen
the core
Accelerate
rollout of
quality sites
1
Operational
gearing
V
The high operational gearing of the
business, as a result of the largely
fixed cost base, limits the number of
corrective actions that could be made
to mitigate any under-performance
in membership numbers, which could
adversely impact profitability.
In addition, the current macroeconomic
and geopolitical environment has led
to significant increases in utilities costs
and wage inflation.
An increase in the frequency of extreme
weather events, leading to flooding and
extreme heat events could also impact
on our operations with damage to gyms
and equipment and potential increased
costs for repair or replacement.
The Group may be unable to attract
sufficient members and/or increase
prices to sufficiently cover the cost
increases, leading to reduced margins.
Regular monitoring and reforecasting of
business performance at site level
Active yield and retention management on a
gym-by-gym basis
Revised price product architecture rolled out
estate-wide in 2023, including Off-peak and
Saver membership options
Ongoing financial management by the
Executive Committee and the Board and
continuous review of the low cost operating
model
Measures identified to reduce operating
costs, preserve cash and reduce
discretionary spend where necessary
Option to slow down new site openings to
preserve cash
Energy-efficient investment into our sites
Energy costs for FY24 fully hedged
Insurance policies in place to mitigate any
costs or business interruption from extreme
weather events
2
Member
experience
Failure to provide members with a
high quality product and service due
to internal or external factors could
result in a loss of membership and
reputational damage.
A decrease in membership numbers, as
a result of a fall in actual or perceived
customer service or confidence,
would adversely impact revenue and
profitability.
V
Tracking of gym utilisation, cleanliness
and member satisfaction scores through
enhanced monitoring and feedback
processes
Ongoing review of equipment usage and
appropriate investment in repairs and
maintenance to ensure we meet member
requirements
Significant investment programme to
enhance gym equipment and kit mix and
refurbish older sites
Gym staffing model allows control over
staffing deployment to ensure peak periods
are adequately covered
Fitness product innovation to enhance the
member experience e.g. introduction of
HYROX and small group training classes
Strong member communication plan in place
Crisis and incident management plans
developed
3
Trading
environment
V
The UK continues to experience a
cost-of-living crisis and there is
significant economic and geopolitical
uncertainty. We need to respond
appropriately to external market
conditions while maintaining focus on
delivering on our strategic objectives.
Members may choose to cancel their
membership due to financial hardship.
Existing competitors may make
decisions around capital deployment,
location and/or pricing which could
impact the ability of the Group to
achieve membership and EBITDA
targets.
New competitors could enter the fitness
market offering an alternative to the low
cost gym model e.g. digital fitness out-
of-home offerings and/or aggregators.
This could lead to sub-optimal
membership levels, an increase in the
number of under-performing sites and
substantially lower revenue/profitability.
This risk is believed to be trending
upwards as a result of increased
competition and the ongoing cost-of-
living pressures for our members.
4
Our people
The success of the business is
dependent on talent attraction,
development and retention, as well as
culture and wellbeing.
V
A lack of experienced and motivated
staff could have a detrimental impact
in all areas of the business, from
Operations to Gym Support.
Increased demand and competition
for staff could impact on our ability
to support the gyms, deliver a good
member experience and execute on our
strategy. Stretched resources could see
staff distracted from performing their
core roles or failing to deliver on key
projects.
Lack of adequate succession planning
and dependency on a small number
of key staff could also result in loss of
knowledge and weakening of supplier
relationships, which in turn could impact
operational performance.
Well placed to operate successfully in a
challenging economic environment as we are
one of the lowest price gym operators in the
UK market with prices that are significantly
lower than those charged by mid-market and
premium operators
Strengthen
the core
Accelerate
rollout of
quality sites
Revised price product architecture rolled out
estate-wide in 2023, including Off-peak and
Saver membership options
Highly experienced management team
in place
Fitness product innovation to ensure we
continue to meet the evolving needs of
members and prospective members e.g.
introduction of HYROX and small group
training classes
Ongoing partnership with Fiit and
enhancements to the app to develop the
digital fitness offering
Active yield and retention management
Rigorous site selection process
Current bank facility agreement in place
until October 2025, and strong underlying
operating cash generation before investment
in growth
Use a variety of tools to attract, retain and
motivate staff at all levels of the business,
including:
– Competitive remuneration and
benefits packages
– Opportunity to own shares in the Company
– Opportunities for training and progression
– Short, clear reporting lines
– Succession planning
– Launch of a new engagement survey
platform in 2023, improving data analysis
and insights and providing staff with the
opportunity to provide feedback and ideas
– Engagement surveys carried out every
six months
– e-learning platform, internal communication
and recognition platform, CORE
Wellbeing programmes, Employee Diversity
and Inclusion Group and
other employee forums
Employee assistance programme providing
24/7 telephone counselling service
Extensive work on gym staff recruitment,
including trialling new gym operating models
Growth of Gym Support and cross-training to
reduce dependencies on key individuals
Strengthen
the core
Accelerate
rollout of
quality sites
Broaden our
growth
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Principal risks and uncertainties
continued
Key
Risk movement in 2023:
Risk increase
No change
Risk decrease
Included in Viability assessment, see page 63
Principal risk
Description and impact
Mitigations and controls
Strategic link
Principal risk
Description and impact
Mitigations and controls
Strategic link
5
IT
dependency
Our ability to enrol and support
members, carry out online marketing
activity, process payments and
control gym access and other services
is dependent on the performance of
our IT systems.
By increasing the level of sophistication
and breadth of our products and
developing new innovations, we create
more opportunities for growth in the
longer term. However, this also means
that we have to manage and deal
with greater technology and process
complexity and increasing platform
load.
Disruption to our critical IT systems
could adversely impact member
experience and/or our ability to collect
revenue and grow the business.
This risk is believed to be trending
upwards as we seek to implement more
complexity and change in an ageing
system in the pursuit of our strategic
goals and improved member offering.
The Group holds business critical
and confidential information
electronically. A breach of security
or data protection controls due
to unauthorised access, loss or
disclosure of this information could
lead to legal claims, regulatory
penalties, disruption of operations
and/or reputational damage.
The level of overall cyber risk remains
high due to the current geopolitical
instability and an increased number
of threat actors and attack vectors
(including AI); and over time, we believe
our increased brand recognition will
increase our vulnerability to such
attacks.
Data protection legislation brings
potentially wide-reaching effects and
consequences for all businesses, with
penalties for breaches attracting fines
of up to 4% of annual turnover, or £17.5m
– whichever is the higher.
6
Cyber
and data
security
Primary data systems hosted by specialist
hosting providers in suitable data centres
Strengthen
the core
Accelerate
rollout of
quality sites
Broaden our
growth
Primary IT infrastructure fully managed by
specialist IT companies which provide best-
practice architecture and support
All membership and business information
backed up regularly using third-party
locations
Robust disaster recovery and business
continuity plans in place
Additional capacity added to our
infrastructure to cope with large spikes
in usage and regular programme of load
testing on critical member-facing platforms
Increasing and upskilling the internal
technology team
7
Reputation,
brand and
trust
Strengthen
the core
8
Reliance
on key
suppliers
Networks and systems protected by
firewalls, industry-leading authentication
management and security software and
strong passwords
All sensitive data is captured and presented
using SSL encryption and access restricted
by role
Two-factor authentication enabled on most
critical systems
PCI Level 2 compliance achieved
All customer payment data is stored
externally on systems that are PCI-DSS and/
or BACS certified
Ongoing programme of security review and
upgrades for key platforms
Continuous assessment of new and
innovative products for security
Mandatory cyber security and data
protection training for all employees
Data Protection Manager in place to
oversee and optimise our control
environment in this area
Senior leadership briefs the Board on
information security matters at least
annually when the CTO presents the Group’s
IT strategy
Cyber security insurance in place
Strengthen
the core
Accelerate
rollout of
quality sites
Broaden our
growth
Strengthen
the core
Accelerate
rollout of
quality sites
Group policies and procedures set out the
expectations and behaviours that enable all
colleagues to make the right decisions and
communicate appropriately
Communication and engagement
programmes in place to listen to our
members and stakeholders to help ensure we
reflect their needs in our plans, which include
health, community, climate and sustainability
initiatives
Promotion of our values and high standards
of doing business should ensure we become a
trusted brand which boosts our reputation
Clear, documented procedures in place for
managing health and safety incidents; staff
regularly trained to ensure all incidents are
effectively managed
Robust business response plan in place to
deal with brand and reputational issues,
including the retention of a specialist PR
agency and media training for key executives
Central control of social media posts
The Gym Group maintains good relationships
with its key suppliers and seeks to treat all
suppliers ethically and professionally
Solid procurement process in place to assess
the quality of suppliers
Business continuity plans for critical
suppliers are in place and reviewed regularly
Stronger supplier assessments added as
part of PCI Level 2
Key supplier contracts updated and renewed
in 2023 with additional data protection and
other provisions included
Our main gym equipment supplier has a
number of manufacturing facilities around
the world to ensure supply should geopolitical
tensions threaten production and availability
of kit
The Gym Group brand is built on trust,
inclusion and strong sustainability
credentials. The relaunch of the brand
in FY22 and its growth and promotion
in FY23 brings increased media
coverage of The Gym Group as brand
recognition increases.
A health and safety or other serious
incident in any of our gyms could result
in reputational damage, particularly
if misinformation is spread on social
media.
There is also a risk that an inappropriate
social media post by a member of staff
is interpreted as the view of The Gym
Group, which could have a wide-reaching
impact on our brand and reputation,
leading to loss of membership. This
increases as the estate and workforce
grows and brand recognition increases.
Where possible, we employ a policy of
using multiple suppliers to minimise
business interruption should one
supplier fail. However, standardising
equipment, materials and processes
across our estate, allows us to benefit
from economies of scale, reducing
initial site fit-out costs and ongoing
maintenance and other controllable
costs. At the same time, we provide
consistency of member experience.
As a result, we have key supplier
dependencies in areas such as
equipment provision, gym access and
payment processing.
With the continuing macroeconomic
challenges in the UK economy and the
wider geopolitical conflicts, there is an
increased risk of critical supplier failure
caused by financial exposure and/or
cyber attacks.
In addition, as our business grows, there
is a risk that key suppliers’ processes
and procedures do not keep pace with
our requirements.
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Principal risks and uncertainties
continued
Changes in principal
risks in 2023
In the 2022 Annual Report and
Accounts, ‘Significant business
interruption’ and ‘Structural change in
the industry’ were included as Group
principal risks.
‘Significant business interruption’
has been removed from the Group
Principal risks in 2023 as the Board
believes that the factors that were
described in this risk in 2022 have
either reduced in threat level or are
adequately captured in the other
principal risks. For example, failure of a
key supplier is captured in the ‘Reliance
on key suppliers’ and ‘IT dependency’
risks, and climate change has been
captured in the emerging risks section
below. It was also felt that whilst the
risk of a Covid-19 resurgence has not
completely disappeared, the threat of
a total lockdown of all sites during the
Group’s planning horizon felt less likely.
‘Structural change in the industry’
has been removed from the Group
Principal risks as the Board believes
that hybrid working patterns post-
Covid-19 have now stabilised and,
whilst consumers may have changed
their patterns and routines in terms
of fitness, demand for low cost gyms
remains as strong as ever and the
Group’s strategy and business model
have been adapted to operate in
this new environment. The threat of
competition from new entrants into
the fitness market has been captured
in the ‘Trading environment’ risk.
‘Reliance on key suppliers’ has been
renamed from ‘Relationships with key
suppliers’ to focus more on the threat
posed by relying on a small number
of key suppliers for critical parts of
the business.
Emerging risks
In addition to the principal risks
set out on the previous pages, the
Executive Committee and Board also
consider emerging risks as part of
their reviews. These are risks that,
whilst not currently believed to be
principal risks to the Group, are
clearly important to us and could have
a significant impact on the ability
of the business to fulfil its strategic
objectives in the future.
Climate change
Climate change continues to be
included in our emerging risks register.
Extreme weather events are
increasing in frequency in the UK, and
flooding and extreme heat events
could impact on our operations,
leading to damage to gyms and
equipment (resulting in increased
costs for repair or replacement) and
poor customer experience. However,
the geographic distribution of our
gyms means that, over the time
horizon covered by our strategic
planning and Group principal risks
assessment (three years), these are
expected to impact only a small
number of sites and do not threaten
closure of a substantial part of the
estate for a prolonged period of
time. In addition, insurance policies
are in place to mitigate any costs
or business interruption, although it
is acknowledged that such policies
will become more expensive and
less available over the longer term.
Therefore, the Board has concluded
that climate change is not a principal
risk, but it can and does impact other
principal risks such as ‘Operational
gearing’ and ‘Member experience’.
Our TCFD report on pages 50 to 53
contains a comprehensive discussion
about the climate-related physical
and transition risks that the Group
faces and the measures we are taking
to address these risks both now and in
the future. The report includes a range
of scenarios and mitigating actions.
Artificial intelligence (‘AI’)
The Board has added Artificial
intelligence (‘AI’) to its emerging risks
register for 2023. We are currently
evaluating how the business could
benefit from the use of AI as well
as what risk AI could potentially
pose in relation to possible data
and/or system breaches or loss
of competitive advantage should
existing or new competitors use AI to
innovate or reduce operating costs.
Going concern
In assessing the going concern
position of the Group for the
year ended 31 December 2023,
the Directors have considered
the following:
the Group’s trading performance
in FY23 and throughout the
traditional January and February
2024 peak period;
future expected trading
performance to June 2025 (the
going concern period), including
membership levels and behaviours
in light of the continued difficult
macroeconomic environment; and
the Group’s financing
arrangements and relationship
with its lenders and shareholders.
2023 was a year of solid membership
and revenue growth for The Gym
Group, with membership at the end
of December 2023 reaching 850,000,
an increase of 4% from the end of
December 2022. Average revenue per
member per month (‘ARPMM’) for the
year was £19.50, up 9% from £17.82 in
the prior year. Ultimate, the premium
price product, ended the year at 31.7%
of total membership compared with
29.6% in December 2022.
As a result, revenue for the year at
£204.0m was 18% up on the prior
year. Group Adjusted EBITDA Less
Normalised Rent at £38.5m was £0.5m
better than in 2022, as the growth in
revenue was largely offset by cost
inflation, particularly in utilities and
staff costs.
The Group also reported strong cash
generation in the year, with free cash
flow of £27.0m (see Note 24 to the
Consolidated financial statements
for a reconciliation to Net cash inflow
from operating activities) being
generated and used to fund six new
site openings and a number of major
refurbishments, as well as significant
investment in technology.
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Principal risks and uncertainties
continued
In September 2023, the Group agreed
with its lenders certain changes to
the Group’s Revolving Credit Facility
(‘RCF’). As a result, the Group now has
access to a combined £80m facility
which matures in October 2025. The
Group also currently has access to
£12.4m of finance lease facilities (£15m
permitted under the RCF).
The RCF is subject to quarterly
financial covenant tests on Adjusted
Leverage (Non-property Net Debt
divided by Group Adjusted EBITDA
Less Normalised Rent must not
exceed 3.0 times) and Fixed Charge
Cover (Adjusted EBITDAR to Net
Finance Charges plus Normalised
Rent must be greater than 1.5 times).
The previously reported liquidity
covenant was removed as part of the
revised RCF agreement.
As at 31 December 2023, the Group
had Non-Property Net Debt (including
non-property leases) of £66.4m,
consisting of £59.0m drawn debt
under the RCF, £8.9m of non-property
leases and £1.5m of cash. Headroom
under the RCF (drawn debt less cash)
was £22.5m. Adjusted Leverage was
1.72 times and Fixed Charge Cover
was 1.73 times.
Whilst the going concern assessment
covers the period to the end of June
2025, the Directors have considered
the fact that the Group’s RCF facility
is currently expected to expire in
October 2025 and concluded that,
based on regular discussions with
participating banks and financial
advisors, there is a realistic prospect
that this will be extended or
refinanced before that time.
Following the January and February
2024 peak trading period, closing
membership at 29 February 2024
was 909,000 members, an increase
of 7% on the position at 31 December
2023, demonstrating that consumers
consider gym memberships to be
a high priority purchase, despite
the ongoing difficult economic
environment; and that the low cost
gym model remains resilient.
Despite the above, the Directors
have continued to take a cautious
approach to planning. The base case
forecast for the period to 30 June
2025 anticipates continued growth
in yields across the whole estate
as a result of pricing optimisation
actions that have already been taken
and the impact of the new three-tier
price product architecture rolled
out in FY23. Modest increases in
membership levels are driven largely
by the sites opened in 2022 and
2023, and not by growth in the
mature estate.
In addition, the Directors have
continued to take a measured
approach to new site openings
throughout the plan period, with
all new sites assumed to be self-
financed. Under this scenario, the
financial covenants are passed with
headroom and the Group can operate
comfortably within its financing
facilities.
The Directors have also considered
a severe downside scenario in which
membership numbers in the mature
estate decline by approximately 5%
during 2024 and 3% thereafter. Yields
continue to increase as a result of
pricing optimisation actions already
taken, but they do so at a lower level
than under the base case. In addition,
the number of new site openings
is reduced to conserve cash and
discretionary performance-related
bonuses are removed.
Under this scenario, the financial
covenants continue to be passed and
the Group continues to operate within
its financing facilities.
The Directors have also considered
a reverse stress test scenario to
ascertain the extent of the downturn
in trading that would be required
to breach the Group’s banking
covenants or liquidity requirements.
Mitigating actions assumed in this
scenario include moving to a minimum
level of maintenance and technology
capital expenditure; reducing
controllable operating costs and
marketing expenditure; and pausing
the new site opening programme in
order to preserve cash.
In this scenario, the closing
membership would need to decline by
16% from February 2024 before the
Fixed Charge Cover covenant would
be breached in June 2025. The Group
would, however, continue to operate
within its current level of debt
capacity and the Adjusted Leverage
ratio would not be breached.
In the event of a reverse stress
test scenario, the Directors would
introduce additional measures to
mitigate the impact on the Group’s
covenants and liquidity, including:
(i) further reductions in controllable
operating costs, marketing and
capital expenditure; (ii) discussions
with lenders to secure a covenant
waiver; (iii) deferral of, or reductions
in, rent payments to landlords. The
Directors consider the reverse stress
test scenario to be highly unlikely.
Conclusion
The Board has reviewed the financial
plan and downside scenarios of
the Group and has a reasonable
expectation that the Group has
adequate resources to continue
in operational existence for the
period to 30 June 2025. As a result,
the Directors continue to adopt the
going concern basis in preparing the
consolidated financial statements.
In making this assessment,
consideration has been given to the
current and future expected trading
performance; the Group’s current
and forecast liquidity position and
the support received to date from
our lenders and shareholders; and
the mitigating actions that can be
deployed in the event of reasonable
downside scenarios.
Viability
As stated in the going concern
assessment, the Directors have a
reasonable expectation that the
Group has adequate resources to
continue in operational existence for
the period to 30 June 2025. However,
in accordance with provision 31
of the UK Corporate Governance
Code 2018, the Directors have also
assessed the longer term viability
of the Group, taking into account
the Group’s current position and the
potential impact of the principal and
emerging risks documented earlier in
this report (including climate change
risk) that would threaten its business
model, future performance, solvency
or liquidity.
The Directors have determined that
the three year period to 31 December
2026 is an appropriate period
over which to assess the Group’s
viability as:
the Directors review a three year
financial plan with management
each year as part of an annual
strategy review and the viability
analysis is based primarily on this
plan; and
the period is sufficient to reflect
the maturation of new sites
opened in 2022 and 2023.
Whilst the viability review has
considered all the principal risks
identified by the Group, the Directors
have concluded that the risks that
would most materially threaten
the Group’s growth drivers, future
performance, solvency or liquidity
were operational gearing, member
experience, the trading environment,
our people, IT dependency and
reliance on key suppliers.
Severe but plausible downside
scenarios based on these risks were
therefore created against which
liquidity and debt covenant headroom
analysis was performed. The Directors
considered the fact that the Group’s
RCF facility of £80m is currently
expected to expire in October 2025
and concluded that, based on regular
discussions with participating banks
and financial advisors, there is a
realistic prospect that this will be
extended to cover the whole of the
viability assessment period.
The downside scenarios included
modelling a severe but plausible
decline in membership numbers
compared with the base case plan
and a significant increase in costs
over and above that included in
the base case plan. The Directors
have also considered a reverse
stress test scenario to ascertain
the extent of the downturn in
trading that would be required
to breach the Group’s banking
covenants or liquidity requirements.
In the downside scenarios, the number
of new site openings is reduced and
discretionary performance-related
bonuses are removed to ensure that
all financial covenants continue to be
passed and the Group continues to
operate within its financing facilities.
In the reverse stress test scenario,
additional mitigating actions
assumed include moving to a minimum
level of maintenance and technology
capital expenditure; reducing
controllable operating costs and
marketing expenditure; and pausing
the new site opening programme in
order to preserve cash.
Having completed the above
assessment, the Directors have
concluded that the Group remains
viable.
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Stakeholder information
Non-
financial and
sustainability
information
The table opposite sets out where stakeholders can find
information in our Strategic report that relates to non-
financial matters detailed under section 414CB of the
Companies Act 2006.
64 |
Reporting requirement
Where to find further information
Pages
Summary of relevant policies if applicable
Environmental
matters
Sustainability report
38-53
Our environmental strategy is set out on
page 50.
TCFD disclosures
Sustainability report
50-53
Our updated disclosures with regard to
TCFD can be found on pages 50 to 53.
Employees
Sustainability report
Chief Executive’s review
Principal risks and uncertainties –
Our people
38-53
12-15
54-63
The Group has relevant training for all
employees which is served via a training
portal. Our employee-related policies
and procedures which include our privacy
notice, family-friendly and inclusivity
policies and all work-related policies, are
available to employees on the intranet.
Human rights
Sustainability report
38-53
Modern slavery statement
Social matters
Sustainability report
38-53
It is prohibited for any employee or person
working on our behalf to offer, give, request
or accept any bribe. The Group has an
Anti-Bribery and Anti-Corruption policy
which sets out the relevant procedures. A
copy can be found on our website at www.
tggplc.com.
The Company also has a Whistleblowing
policy.
Our approach to diversity, equal
opportunities and promoting wellbeing are
set out on pages 40 to 45.
Our Diversity and Inclusion manifesto can
be found on our website at www.tggplc.com.
Business model
Business model
2
An explanation of the Group’s business
model can be found on page 02.
Principal risks
Principal risks and uncertainties
54-63
The Board has a process for considering
the principal risks as set out on pages 54
to 55.
Non-financial KPIs
Key performance indicators (‘KPIs’)
30-31
The Board approves relevant KPIs for use as
set out in the Strategic report on page 30.
Relationships with
suppliers, members
and others
Stakeholder information
64-69
The Group has a number of policies and
procedures underpinning its commitment
to high standards of business conduct,
which are available to all employees on the
intranet.
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Stakeholder information continued
Engaging
with our stakeholders
Section 172 (‘s172’) of the Companies Act 2006 imposes on
company directors a duty to act in the interests of a broad
range of stakeholders including shareholders, employees,
suppliers and local communities. A statement in respect
of compliance with s172 is on page 110.
Who they are and
why they matter
How we engaged
during 2023
Outcomes of that
engagement
How the Board considers the
interests of our stakeholders
Shareholders
Our investors provide
capital for growth,
whilst providing
challenge and
feedback on our
business model and
plans for the future.
Regular calls and meetings with
our current and prospective
shareholders.
Dialogue with shareholder groups.
Presentations given to
shareholders upon the release of
annual or interim results.
Site visits with current and
prospective shareholders, as well
as for broker education.
Feedback from our joint brokers
following investor engagement
and reports from brokers on
market trends.
Reporting to the Board as a whole
on investor matters.
Preparation of investor materials
for results announcements.
The Board did not recommend
any dividends in respect of
the financial year 2022 and
does not recommend any
in respect of financial
year 2023.
The Board is kept informed
of all responses received
as part of shareholder
consultations by
management and the brokers.
See 2023
dividend on page 27
The Board welcomes
questions from our
shareholders at our Annual
General Meeting (‘AGM’). The
arrangements for our 2024
AGM will be confirmed in the
2024 Notice of Meeting. In
addition, John Treharne, the
Chair of the Board, is also
available to shareholders.
The Board has committed
to ongoing improvements in
sustainability reporting.
See Sustainability
report on pages 38
to 53 and our website
at www.tggplc.com.
The Chair of the Board
held a number of one-on-
one shareholder meetings
to discuss queries on
governance and strategic
matters. This type of
engagement helps our
investors and shareholders
to be better informed about
our business.
Shareholders were also
keen to understand our
remuneration decisions. The
Board and Remuneration
Committee Chair continued to
consult with shareholders, to
understand their views on key
decisions, and we will continue
this dialogue in future years.
See Report of
the Remuneration
Committee on
pages 92 to 107
Who they are and
why they matter
How we engaged
during 2023
Outcomes of that
engagement
How the Board considers the
interests of our stakeholders
Employees
Our employees define
our culture and values.
Fostering an engaged
workforce is central to
our strategy, enabling
us to deliver the
exceptional service
that keeps us at the
forefront of our sector.
Our friendly, inclusive
and people-centred
culture continues
be a key part of
our success.
Investment in a new employee
engagement survey platform has
enabled us to gain greater levels of
insight and feedback on employee
experiences working at The Gym
Group. We launched our first survey
in October 2023.
Our Accelerate PT programme in
partnership with the Department
of Work and Pensions and the
Prince’s Trust enables us to provide
the opportunity for people out
of work to qualify for a Level 3 PT
qualification and apply for a role in
our gyms.
Our Emerging Talent Programme
gives Assistant General Managers
and Fitness Trainers the necessary
competencies to progress within
operational management roles.
Members
Being a high quality
gym operator, we
are the lowest cost
24/7 nationwide
gym operator in the
market. We continue
to work on eliminating
gym intimidation and
providing comfortable,
safe and accessible
facilities, delivering
on our purpose
of breaking down
barriers to fitness
for all.
A key part of our strategy and
business model is to ensure we
achieve high levels of member
satisfaction in our gyms. As such,
we measure this through overall
satisfaction (‘OSAT’) scores, but
also recognise the importance
of additional channels such as
Google reviews. Through OSAT
scoring, we are able to identify
member sentiment with regard to a
range of factors including classes,
condition of gym equipment,
friendliness of staff and overall
atmosphere.
The Board has met regularly
to consider, oversee and
review progress on people-
related actions.
The engagement survey
results are shared with the
Board on a regular basis.
All Directors visit several of
our sites each year to support
our teams and to listen and
understand the needs of team
in the gyms.
In November 2023, we held
our annual conference for
all gym support and gym
managers, enabling leaders to
share information about the
Company’s future plans and
engage with, energise and
recognise our teams.
We regularly review our
member satisfaction scores
at Board meetings.
Directors use member
feedback to identify ways in
which our member experience
can be improved or enhanced.
The Board has overseen
the roll out of a three-tier
price product architecture,
receiving reports on progress
in addition to all other
key initiatives.
Our ‘people first’ approach
contributed to our high
engagement scores. We saw
a 90% response rate and a
high employee engagement
score that placed us in the
top 25% of consumer services
benchmarking. Engagement
feedback is utilised to
implement improvement
action plans.
Accelerate PT outcomes 2023:
since launching in May 2023,
we have enrolled 45 trainees,
38 have completed their
Level 3 Personal Trainer
qualification and 39% have
converted to Fitness Trainer
roles in our gyms.
We have continued to see
great success with our
Emerging Talent programmes,
with a 66% promotion rate
within the Emerging Talent
management development
programme and a 41%
promotion rate within the
Fitness Trainer Emerging
Talent programme.
We constantly monitor
market trends and member
demand; the launch of our
three-tier pricing structure,
in addition to our flexible gym
format and design, ensures
we provide facilities closely
matched to member usage
patterns, demographics
and demands. In addition,
we continuously innovate
our fitness product and are
the only UK nationwide low
cost provider to offer HYROX
training classes included
with membership.
At the end of 2023 we
expanded our fitness product
offering with the introduction
of small group training,
enhancing the support and
resources our members can
access to achieve their goals.
In addition, the launch of a
three-tier pricing structure
enabled us to further broaden
access to gyms and meet
consumer demand.
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Stakeholder information continued
Who they are and
why they matter
How we engaged
during 2023
Outcomes of that
engagement
How the Board considers the
interests of our stakeholders
Who they are and
why they matter
How we engaged
during 2023
Outcomes of that
engagement
How the Board considers the
interests of our stakeholders
We maintained helpful and
positive relationships with
our suppliers.
The Board is committed to
high standards of ethical
business conduct.
We maintain our properties to
a high standard, maintaining
good relationships with
property management
companies and behaving as
responsible tenants.
We have set out further
information on the outcomes
of engagement throughout
the report:
See Good Health and
Wellbeing section on
pages 40 to 41
In addition, during the period,
there were 13 interactions
with regulators from local
authorities and fire and
rescue services, all of
which were concluded as
satisfactory with no further
action required.
The policies and procedures
relevant to business conduct
are available to all employees.
Executive Directors, on behalf
of the Board, have worked
with key suppliers to develop
plans in accordance with
business needs.
The Board takes a zero-
tolerance approach to bribery
and corruption. It also reviews
the Group’s Modern Slavery
Act Statement annually.
The Board recognises the
importance of contributing
to wider society and considers
it a vital part of achieving
our purpose.
The Board considers the long
term impact of its operations
as part of its sustainability
strategy and has set up a
Sustainability Committee that
meets at least three times
per year and reports directly
to the Board.
The Board considers diversity
to be a focus for succession
planning.
See the Board’s position
on diversity on page 82
Suppliers
Our partnerships
with our suppliers
ensure we source the
best value goods and
services for the benefit
of our members.
High standards of
ethics and business
conduct is an
important part of
being a responsible
member of the
communities in which
we operate.
We publish our Payment Practices
Report twice a year and this is
available to download from the
government website.
We published a Procurement
Governance Policy in 2023
outlining the key requirements
and guidelines for procurement
activities in the business.
In addition, we published a Code
of Conduct on our website in 2023
which underpins our commitment
to responsible procurement
practices and the expectations we
have on the suppliers we work with.
Communities
Being a valuable part
of the communities in
which we operate is
hugely important to
us. Providing safe and
affordable facilities
is the foundation of
fulfilling our purpose.
Members exercising
in our gyms creates
Social Value for the
communities in which
we operate.
Our low price model makes fitness
more affordable and accessible
and enables a larger proportion of
the UK population to benefit from
exercise. We have partnered with
NHS Charities Together to raise
funds for NHS charities around the
UK. Our employees have two paid
volunteer days per year which we
encourage them to use either with
local NHS charities or to support
other community-based projects.
We have worked closely with local
authorities to ensure our gyms
are safe places for communities
to visit, partnering with two
primary authorities for health,
safety and environmental matters
and fire safety. We continue to
work towards a workforce that
is reflective of the communities
in which we operate and focus
in particular on our leadership,
where currently 11% are from BAME
communities, with a target to
increase this to 20% by 2030. We
also have a near term target to
increase the percentage of female
leaders in our business to 40%
by 2025.
Environment
The quality of our
environment is central
to society’s health and
wellbeing. Protecting
the environment and
minimising climate
change is a collective
responsibility and we
recognise that we
have to play our part
in achieving this.
Our SBTi targets have been
validated and we are working
towards decarbonising our Scope
1 and 2 emissions by 2035 and
achieving net zero by 2045. We
have set out our environmental
strategy, activities and initiatives.
See Sustainability
report on pages 38 to 53
During the year, we reviewed the
risks and opportunities relating to
climate change and expanded on
our 2022 TCFD report.
See TCFD report on
pages 50 to 53
Our Board and Executive
Committee remain fully
committed to identifying and
addressing the immediate
and longer term climate-
related impacts on our
business. Our Board has
overall accountability for
managing the business risks
and opportunities posed by
climate change.
The Sustainability Committee
meets at least three times per
year and reports directly to
the Board.
Responsibility for monitoring
and overseeing the
Group’s climate-related
progress is delegated to
the Chief Development and
Sustainability Officer.
We are proud to be the first
gym chain in the world with a
validated SBTi target. As part
of our net zero commitment to
SBTi we have also committed
to:
reducing Scope 3 GHG
emissions covering
purchased goods and
services, capital goods,
fuel and energy-related
activities, upstream
transportation and
distribution, waste
generated in operations,
business travel, and
employee commuting by
55% per gym by 2030 (from
the 2019 base year); and
ensuring that 25% of
our suppliers by spend,
covering purchased goods
and services and capital
goods, will have science-
based targets by 2028.
Lending banks
Our lending banks
provide funds for
growth and day-to-
day working capital to
enable us to operate
and grow our business
to its full potential.
During the year, we provided
regular updates on the Group’s
financial performance, including
performance against agreed
debt covenants.
Management met with the lending
banks to discuss the Group’s
current trading performance and
the three year plan, with a view
to agreeing an extension to the
Revolving Credit Facility (‘RCF’) and
other changes.
In September 2023, the
Group agreed with its
lenders certain changes to
the Group’s RCF, including a
one-year extension of the
facility to October 2025, the
replacement of Sabadell with
Barclays in the syndicate,
and various amendments
to the covenants, including
the removal of the liquidity
covenant.
See Financial review
on pages 22 to 29
Management held regular
meetings/calls with lending
banks during the year to
enable them to be updated
on the progress and
performance of the business.
Representatives from the
lending banks are invited to
our half year and full year
results presentations.
In financial plans discussed
by the Board, analysis is
presented on how these plans
would impact debt covenants
in order to ensure that the
interests of the lending banks
are protected.
The Board’s annual going
concern and viability
assessment is performed with
specific reference to the level
of borrowings required under
different scenarios and the
impact of such scenarios on
debt covenants.
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Introduction from the Chair of the Board
“As Chair of the Board, it is my role to
ensure that we have the right balance
of skills, experience, knowledge and
perspectives around the table to
ensure robust debate, constructive
challenge and positive engagement
on strategy.”
John Treharne | Chair of the Board
70 |
Dear Shareholder
I am pleased to introduce the 2023
Governance report on behalf of
the Board. The Governance report
forms part of the Directors’ report.
Purpose and culture
The Gym Group’s purpose is to break
down barriers to fitness for all, and the
Board fully supports and promotes
this by conducting its business
according to our core values: taking
the first step, realness, friendliness and
challenging your limits. In addition,
we strive to consider the interests
of our stakeholders when making
decisions. In a transitional year that
involved management and strategic
change, the Board and management
have worked to ensure that the Group
remains focused on its strengths and
protects its people and stakeholders.
The Board’s activities during 2023 are
described on page 78.
Board composition
Whilst 2023 has been a year of
transition with significant Board
and management change, as Chair
of the Board, it is my role to ensure
that we have the right balance of
skills, experience, knowledge and
perspectives around the table to
ensure robust debate, constructive
challenge and positive engagement
on strategy. It is also important that all
Board members receive a full, formal
and tailored induction and receive the
information and access to resources
they need to carry out their duties
and responsibilities. During 2023, our
new Board members completed, or
are in the process of completing, their
inductions, details of which are in the
Report of the Nomination Committee
on pages 80 to 83.
In September 2023, following a
thorough recruitment process, we
welcomed Will Orr to the Board as
our new Chief Executive Officer. In
addition, in February 2023, we also
welcomed Simon Jones to the Board
as a Non-Executive Director (‘NED’)
and member of our four Committees.
As announced in January 2023,
Richard Darwin stepped down from
the Board in March 2023, David Kelly
stepped down from the Board in May
2023 and Emma Woods stepped down
in December 2023. Post year-end,
Ann-marie Murphy stood down and
left the business in January 2024.
Further information on the activities
of the Nomination Committee can be
found on pages 80 to 83.
Independence
and responsibilities
The independence status of the
Directors is set out on page 78. To
preserve Board balance, all of our
Non-Executive Directors have the
same responsibilities, which are further
explained in this report on pages 76
to 77, and include engaging in Board
discussions, making sufficient time
available to carry out their roles
and responsibilities and acting in
accordance with their duties.
Shareholder engagement
With 2023 being a year of transition
and significant change, I spent time
with shareholders on several occasions,
to understand their views on strategy,
Board composition and remuneration.
Further details of our shareholder
engagement activities can be found in
our s.172 statement on pages 66 to 69.
Talent, diversity and succession
In 2023, we have increased our
focus on succession and talent
management for the Board and
Executive Committee and throughout
the business by focusing on
conducting robust talent sessions
looking at performance, critical
talent, development and succession
planning. This is reviewed by the
Nomination Committee and by
the Board as a whole and any
necessary actions are then put in
progress. These talent sessions also
allow a focus on the progress made
with regard to our diversity targets.
Progress has been made in 2023 on
filling key senior management roles
and in ensuring we have the best
possible talent and resource within
the business.
Sustainability
We continue to improve and enhance
our sustainability reporting, as is set
out in the Sustainability report on
pages 38 to 53. Our Sustainability
Committee supports and promotes our
sustainability strategy, ensuring that
sustainability matters are supported
by robust governance streams and the
Board considers sustainability matters
as central to its discussions and
considerations. In 2023, we continued
to make further progress on measuring
the Social Value generated by our
members exercising in our gyms.
AGM
Our AGM is planned for 9 May 2024,
and I look forward to meeting
shareholders there.
John Treharne
Chair of the Board
13 March 2024
UK Corporate Governance Code compliance statement
The UK Corporate Governance
Code 2018 (the ‘Code’) is the key
governance measure to which we
referred to during the financial year
up to 31 December 2023. The Code
can be found at www.frc.org.uk.
We always intend to comply with
the prevailing principles of good
governance and the code of
best practice honestly, simply,
transparently, and with clarity and
integrity.
Provision 5
The Board recognises that, following
the departure of Rio Ferdinand
in August 2022, it did not have a
designated Non-Executive Director,
a formal workforce advisory panel
or a Director appointed from the
workforce in 2023. The Board felt
that, with 2023 being a transitional
year with regard to inducting a new
CEO and CFO, and with significant
management and strategic change,
the Chief People Officer (‘CPO’)
would be the individual most suited
to engaging with the workforce.
During 2023, the CPO regularly
reported to the Board on key
areas of activity which included: (a)
gender diversity; (b) Group culture;
(c) talent strategy; and (d) people
priorities. The Board considers
that this method of reporting was
appropriate and effective as the
CPO was well connected to the wider
business by virtue of her additional
role, being that of Chief Operating
Officer. In February 2024, the
Nomination Committee reviewed the
arrangements for engaging with the
workforce given that the CPO left
the Company in January 2024 and
agreed that John Treharne would
act as the designated Non-Executive
Director for workforce engagement
matters supported by Simon Jones.
The Committee felt that John, as
the founder of the business, would
be best placed to take on this
role supported by Simon who has
extensive experience in people
engagement matters.
Provision 9
John Treharne, Executive Chair of
the Board from January 2023 to
September 2023, was not considered
independent on appointment as Chair
in July 2022 as he was the founder
of The Gym Group and formerly held
the positions of CEO until September
2018 and Founder Director until July
2022. Prior to the appointment of
Will Orr as CEO in September 2023,
the Board believed that it was in the
best interests of the Group for John
to hold the role of Executive Chair for
a limited period of time to support
the transition to a new CEO. The
Board believed that this exceptional
arrangement was appropriate, as
John’s unrivalled knowledge of The
Gym Group and Board tenure offered
stability and consistency for the
Board and support for the Executive
Directors during a period of significant
change – no risks associated with
non-compliance with the Code were
identified as the appointment was
short term in nature. In September
2023, with the appointment of Will Orr
as CEO, John stood down from the
position of Executive Chair.
2023 Governance report
Our governance reporting follows
the order set out in the Code:
Division of responsibilities
More information can be
found on page 76.
Audit, risk and internal control
More information can be
found on pages 84 to 89.
Compliance with the Code
Board leadership and
Company purpose
More information can be
found on page 75.
Composition, succession
and evaluation
More information can be
found on pages 80 to 83.
Remuneration
More information can be
found on pages 92 to 107.
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Governance report
Board of Directors
John Treharne
Chair of the Board
Will Orr
Chief Executive Officer
Luke Tait
Chief Financial Officer
Elaine O’Donnell
Senior Independent Director
Wais Shaifta
Non-Executive Director
Richard Stables
Non-Executive Director
Simon Jones
Non-Executive Director
Committees
Committees
Committees
Committees
Committees
Committees
Committees
Career
John founded The Gym Group
in 2007 and has over 30 years’
experience in the health and
fitness industry.
John launched Dragons Health
Club plc in 1991, before its
flotation on AIM in 1997 and
sale to Crown Sports plc in
2000.
John was appointed Chair of
the Board and the Nomination
Committee in July 2022, and
took on the role of Executive
Chair in January 2023, with
a focus on supporting the
transition to a new CEO. John
stood down as Executive Chair
in September 2023 when Will
Orr joined the Board as CEO.
Board skills and experience
John’s wealth of operational
and leadership experience
and knowledge of industry
trends offers the Board
valuable context to develop
its strategy and inform its
decisions. As founder of
The Gym Group, John has
an unmatched network of
industry connections and
corporate knowledge used to
support the business and the
Board’s evolution, and as Chair,
John provides stability and
continuity in leadership.
Other appointments
ukactive
Board member
EuropeActive
Board member
Career
Will joined The Gym Group
as Chief Executive Officer
(‘CEO’) in September 2023.
Will was formerly MD of Times
Media Limited, publisher of
the Times and Sunday Times,
and previously held Managing
Director roles for RAC and
British Gas (Centrica Plc). Will
is a Fellow of the Marketing
Society and has an MBA from
London University.
Career
Luke is the Group’s Chief
Financial Officer (‘CFO’)
and joined The Gym Group
in October 2022. Luke was
formerly Group CFO of
Nando’s Group Holdings
Limited, the global restaurant
business, which he joined in
2017. Prior to this, he held
various finance roles at SSP
plc, including CFO of the UK
and US businesses and Group
Corporate Finance Director,
finishing his time as Group
Financial Controller. Luke is
a chartered management
accountant.
Career
Elaine is a highly experienced
financial professional and is
Senior Independent Director
and Chair of the Audit and Risk
Committee. She is also Chair of
the Audit Committee of On the
Beach Group plc, and Chair of
the Audit and Risk Committee
and Non-Executive Director of
SThree plc. She was formerly
Chair of Games Workshop
plc until 31 December 2022,
having served in various roles
on that Board since 2013.
Elaine was previously a Partner
at Ernst & Young and is a
chartered accountant.
Board skills and experience
Will brings significant
experience developing
and delivering sustainable
customer growth strategies
(including pricing, proposition,
digital marketing, and
retention strategies) as well
as operational expertise in
businesses where customer
experience is critical.
Board skills and experience
Luke brings a broad experience
to the Board from global
leisure businesses to lead the
finance function. In his first full
year as CFO in 2023, Luke has
worked with the leadership
and stakeholders across the
business to ensure the Group
is well placed to capitalise
on the significant market
opportunities ahead.
Board skills and experience
Elaine brings to the Board
extensive experience as a
Non-Executive Director and
plc Chair, and Committee
member of a diverse range of
businesses. Elaine’s financial
knowledge and expertise, in
addition to her online retail
industry experience, supports
the Board in its oversight of the
Group’s financial reporting and
related controls.
Other appointments
None
Other appointments
None
Other appointments
On the Beach plc
Senior Independent
Director and Chair of
the Audit Committee
SThree plc
Chair of the Audit
& Risk Committee
Career
Richard is an experienced
corporate financier, having
spent 32 years at Lazard.
Currently, Richard is a Partner
at Fulcrum Advisory Partners
LLP, an independent advisory
firm, a Senior Advisor to
Blantyre Capital and a Non-
Executive Director of Archer
Ltd. Richard is a chartered
accountant.
Career
Wais is currently CEO of
PrivateDoc and has substantial
e-commerce expertise from
a number of leading online
businesses. Prior to his
current role, Wais was CEO
at Push Doctor, one of the
leading digital healthcare
companies in Europe, working
in partnership with the NHS to
connect thousands of patients
a week with clinicians. Before
joining Push Doctor, Wais was
Director of Global Operations
at Treatwell, and prior to that
was International Operations
Director at Just Eat.
Board skills and experience
Wais’ background in leading
technology businesses gives
him a strong understanding of
the vital role technology plays
in our drive to be ever more
relevant to members. Wais’s
experience of healthcare
businesses means he is well
aligned with our purpose to
provide access to affordable
fitness for all.
Board skills and experience
Richard brings his strong
experience of corporate
finance and understanding
of the UK financial markets
to support the Board in
its strategic direction and
decision-making, deepening
the Board’s skillset for the
future.
Career
Simon is CEO of Away Resorts
and, prior to this role, was
Managing Director for Premier
Inn and Restaurants, UK and
Global Commercial Director
at Whitbread, leading the
UK business for Premier Inn
and Whitbread’s portfolio of
restaurant brands since 2016.
Simon was also Marketing
and Strategy Director at
Premier Inn and, before joining
Whitbread in 2012, had over 15
years’ experience as a strategy
consultant, working with a
variety of clients across the
retail and hospitality space,
latterly as a partner at OC&C
Strategy Consultants.
Board skills and experience
Simon has extensive
commercial and operational
experience in building UK-wide
businesses whose customer
proposition is based on value
and quality, which supports the
Board’s discussions and future
growth plans.
Other appointments
PrivateDoc
CEO
Reach plc
Non-Executive Director
Samaipata
Operating Partner
Snappy Group
Non-Executive Director
Other appointments
Fulcrum Advisory Partners LLP
Partner
Other appointments
Away Resorts
CEO
Blantyre Capital
Senior Advisor
Archer Ltd
Non-Executive Director
During the year, David Kelly
and Emma Woods stood
down as Non-Executive
Directors. Richard Darwin,
formerly CEO, stood down
on 24 March 2023 and on
31 January 2024, Ann-marie
Murphy, formerly COO, also
stood down from the Board.
Simon Jones was appointed
a Non-Executive Director
on 6 February 2023 and
Will Orr was appointed CEO
and joined the Board on
1 September 2023.
Committees
Nomination Committee
Audit and Risk Committee
Remuneration Committee
Sustainability Committee
72 |
Chair
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Governance report
Corporate Governance report
Board leadership
and business purpose
Governance
Role of the Board
The Board is the principal decision-
making body in the Group. It
is collectively responsible for
promoting the long-term success
of the business for the benefit of its
members, achieving this through the
creation and delivery of sustainable
shareholder value.
The Board also carefully considers
its wider stakeholders, including
colleagues, customers and suppliers,
when making decisions. Further
information can be found in our s.172
statement on pages 66 to 69.
The Board is also responsible for
ensuring that effective internal
control and risk management systems
are in place. The matters reserved
for the Board can be found on
our website.
Board Committees
The Board has formally delegated
certain governance responsibilities to
its Board Committees to assist with
fulfilling its responsibilities, as outlined
in the table below.
In addition to setting the strategy
of the business and overseeing its
implementation by management,
the Board provides leadership to the
business on purpose, culture, values
and ethics, sustainability, monitoring
overall financial performance
of the business, and ensuring
effective corporate governance,
succession planning and stakeholder
engagement.
Governance structures as at 31 December 2023
The Board
The schedule of matters reserved for the Board includes the consideration and approval of:
the Group’s strategic aims,
objectives and commercial
strategy;
review of performance relative
to the Group’s business plans
and budgets;
major changes to the Group’s
corporate structure, including
acquisitions and disposals;
material capital expenditure;
the financial statements, Group
dividend policy and interim
results;
major changes to the capital
structure, including tax and
treasury management;
major changes to accounting
policies or practices;
the system of internal control
and risk management policy;
the Group’s overall risk appetite;
and
the Group’s corporate
governance and compliance
arrangements.
Board Committees
The Board formally delegates certain matters to one of the Committees set out below.
Nomination
Committee
See report
Pages 80 to 83
Audit and Risk
Committee
See report
Pages 84 to 89
Sustainability
Committee
See report
Pages 90 to 91
Remuneration
Committee
See report
Pages 92 to 107
David Melhuish
Chief Development and
Sustainability Officer
Committees
Career
David joined The Gym Group
in April 2013 and has been
critical to the rapid growth
of the estate and ongoing
strategic expansion. In
2021, David was promoted
to Chief Development and
Sustainability Officer and
is responsible for delivery
and support of The Gym
Group’s high quality gym
estate, as well as developing,
implementing, and leading
our sustainability strategy.
David acts as an ambassador
for all sustainability-related
matters at The Gym Group,
both internally and externally.
He ensures the business is
well positioned to meet its
designated sustainability
reporting and disclosure
obligations, as well as wider
corporate targets.
David was previously the Head
of Development at Central
England Co-operative.
Milan Juza
Chief Technology Officer
Nick Shelmerdine
Director of Strategy and
Corporate Development
Ruth Jackson
Chief People Officer
Career
Milan joined The Gym Group
in March 2023 to lead the
Technology and Product
function. Prior to joining the
Group, Milan led a global
e-commerce technology
team at TUI Group and also
brings a wealth of technology
leadership and digital product
delivery experience from
several industries including
telecoms, media, and
financial services.
During his career, Milan
led and successfully
delivered several large-scale
technology and business
transformation initiatives
as well as numerous market-
leading innovations and
services. Milan is passionate
about building and growing
high-performing teams
and organisations, creating
real business advantage
through technology, and
helping organisations to grow
business agility.
Career
Nick is The Gym Group’s
Director of Strategy and
Corporate Development.
Nick joined The Gym Group
in November 2021 and was
formerly Associate Partner at
OC&C Strategy Consultants
and MD of Delivery at The
Restaurant Group plc,
focused on building a food
delivery business and major
transformation projects. Nick
brings his expertise in growth
strategy, M&A, business
development and change in the
consumer and leisure space to
the Executive Committee.
During his time at The
Gym Group, Nick has been
crucial in the development
of the strategic direction of
the business. Nick delivers
a more forward-looking
approach to decision-making
to evaluate and seize new
growth opportunities.
Career
Ruth joined The Gym Group
as People and Development
Director in October 2022 and
was promoted to Chief People
Officer in December 2023. Ruth
has held a number of senior
HR positions in leading leisure
and hospitality businesses,
including People Director for
Zizzi Restaurants (Azzurri
Group), People Director at
Cote Brasserie and spent over
11 years at Whitbread in a
variety of HR roles.
Ruth brings wide HR and
operational experience to drive
employee engagement and
foster a positive team culture
to support business growth.
During her time at The Gym
Group, Ruth has realigned the
People team to deliver high
value support to all areas
of the business, focusing on
creating high performing
teams through talent
performance, development
and retention.
During the year, Jasper McIntosh and Emily Kortlang both stood down and Ruth Jackson
was appointed as Chief People Officer in December 2023.
How the Board and Executive Committee work together
The Board and Executive Committee work closely together to ensure the robust governance of the
business and successful execution of our strategy. Over the year, the Board and Executive Committee
worked closely on delivering transformational change projects in strategy and the consumer
proposition with a focus on ensuring that the Group is well resourced, motivated and driven by our
purpose to break down barriers to fitness for all.
Will Orr, CEO and Luke Tait, CFO, are also members of our Executive Committee, and their
biographies are on page 72. Ann-marie Murphy was part of the Executive Committee during 2023
until she left the Company in January 2024.
Committees
Nomination Committee
Audit and Risk Committee
Remuneration Committee
Sustainability Committee
Chair
74 |
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continued
Division of Board
responsibilities
The Board and its Committees have
a scheduled forward programme of
meetings, aligned to the updated
strategy, to ensure that sufficient
time is allocated to each key area and
the Board’s time is used effectively.
As at 31 December 2023, our Board
comprised four Independent Non-
Executive Directors, of which one
acts as Senior Independent Director,
one non-independent Non-Executive
Director, three Executive Directors and
the Chair. Each of their responsibilities
is listed on pages 76 to 77 and
more information on their specific
contributions to the business can be
found in their biographies on pages
72 to 73.
The Chair of the Board and the
Non-Executive Directors also met
without the Executive Directors being
present, and the Senior Independent
Director held discussions with the
Non-Executive Directors without the
Executive Directors or the Chair of the
Board being present.
Directors were made aware of the key
discussions and decisions made at
each of the four principal Committees.
The Chair of each Committee also
provided a detailed summary of
the key matters discussed at each of
their respective Committee meetings
at the Board meeting following the
relevant Committee meeting.
On the occasion that a Director
is unavoidably unable to attend a
scheduled meeting, they receive a
briefing from the Chair of the Board
before the meeting, so that their
comments and input can be taken
into account at the relevant meeting,
and the Chair provides an update to
them after the meeting.
There is sufficient flexibility for items
to be added to the agenda, which
enables the Board to focus on key
matters relating to the business at
the right time.
Roles and key responsibilities
Chair of the Board
John Treharne was
appointed Chair of the
Board in July 2022, and
Executive Chair in January
2023, for a limited period
to support the transition
to a new CEO. John stood
down as Executive Chair
in September 2023. John’s
responsibilities include:
The leadership, effectiveness and governance of the Board.
Setting the agenda, style and tone of Board discussions with a particular
focus on strategic matters.
Ensuring each Non-Executive Director makes an effective contribution to the Board.
Ensuring that the Directors receive accurate, timely and clear information.
Chairing the Nomination Committee.
Promoting a culture of openness and debate.
Facilitating constructive Board relations.
Chief Executive Officer (‘CEO’)
Will Orr’s responsibilities
as Chief Executive Officer
include:
Proposing the strategic objectives of the Group for approval by the Board and
delivering the strategic and financial objectives in line with the agreed purpose
and strategy.
Leading the Executive Committee and senior management in managing the
operational requirements of the business.
Providing clear and visible leadership of our shared values.
Responsible for the effective and ongoing communication with colleagues and
shareholders.
Chief Financial Officer (‘CFO’)
Luke Tait’s responsibilities
as Chief Financial Officer
include:
Working with the Executive Directors and Executive Committee to develop
and implement the Group’s purpose and strategic objectives.
Monitoring and reporting on the financial performance of the Group.
Ensuring that the Group remains appropriately funded to pursue the
strategic objectives.
Investor relations activities and communications with shareholders.
Financial reporting including the preparation of the Annual Report and Accounts.
76 |
Roles and key responsibilities continued
Senior Independent Director (‘SID’)
Elaine O’Donnell became
the SID in January 2024
when Emma Woods stood
down in December 2023.
Elaine’s responsibilities
include:
Acting as a sounding board for the Chair of the Board and serving as an
intermediary for the other Directors as necessary.
Acting as lead independent Non-Executive Director.
Leading the Non-Executive Directors in the performance evaluation of the
Chair of the Board, with input from the Executive Directors.
Being available to meet with shareholders in the event that the Chair of
the Board or the Executive Directors are unavailable.
Non-Executive Directors
Responsibilities of the
Non-Executive Directors
include:
Company Secretary
The Company Secretariat
function carries out the
following responsibilities:
Constructively challenging management proposals and providing advice
in line with their respective skills and experience.
Helping develop proposals on strategy.
Having a prime role in appointing and, where necessary, removing Executive Directors.
Having an integral role in succession planning.
Supporting the Chair of the Board and the Non-Executive Directors with
their responsibilities.
Advising on regulatory, compliance and corporate governance matters.
Facilitating individual induction programmes for Directors and assisting
with their development as required.
Communications with shareholders and organisation of the AGM.
Facilitating training for Board members.
Board meetings
The Board’s programme of meetings allows key areas of focus to be established and reviewed on a regular basis.
Scheduled Board meetings are predominantly held in person, with additional virtual and hybrid meetings facilitated
where required. Management teams and colleagues attend to support the Board’s assessment of performance, discuss
progress and agree key priorities.
When unable to attend a meeting, a Director receives papers and has the opportunity to feed back comments in advance
to John Treharne, the Chair of the Board, or the respective Committee Chair. The below table shows the attendance of
Directors at scheduled Board meetings in 2023.
John Treharne
Will Orr1
Luke Tait
Wais Shaifta
Emma Woods2
Ann-marie Murphy3
Elaine O’Donnell4
Richard Stables
Simon Jones5
Richard Darwin6
David Kelly7
Board
9/9
3/9
9/9
9/9
8/9
9/9
9/9
9/9
8/9
2/9
2/9
Nomination
Committee
Audit and Risk
Committee
Remuneration
Committee
Sustainability
Committee
2/2
2/2
2/2
2/2
2/2
1/2
1/2
1/2
3/4
4/4
4/4
3/4
2/4
5/6
6/6
4/6
3/6
4/4
2/4
4/4
3/4
3/4
1/4
1/4
1 Will Orr joined the Board on 1 September 2023.
2 Emma Woods stood down from the Board at the close of business on 31 December 2023.
3 Ann-marie Murphy stood down from the Board on 31 January 2024.
4 Elaine O’Donnell joined the Sustainability Committee on 3 April 2023.
5 Simon Jones joined the Board on 6 February 2023.
6 Richard Darwin stood down from the Board on 24 March 2023.
7 David Kelly stood down from the Board on 11 May 2023.
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continued
Director independence
In line with the Code, John Treharne,
Chair of the Board, was not deemed
independent on appointment
having previously been an Executive
Director of the Company. Non-
Executive Directors Wais Shaifta,
Emma Woods, Elaine O’Donnell,
David Kelly and Simon Jones all of
whom served during the year, were
determined to be independent on
and during their appointments.
As a result of his connections
with one of the Company’s major
shareholders, Richard Stables was
not considered independent on
appointment to the Board.
The independence of the Non-
Executive Directors is closely
monitored by the Board on an
ongoing basis and the Corporate
Governance Code statement which
includes information on the Board’s
decisions on independence is set out
on page 71.
Cross directorships
Elaine O’Donnell and David Kelly, who
stood down from the Board in May
2023, both serve as Non-Executive
Directors on the board of On The
Beach plc.
How the Board spent its time
The Board measures the time spent on
strategy, governance and operational
performance at each meeting. The
biggest part of the Board’s time
was spent on strategy, followed
by governance and operational
performance, which the Board
considers to be appropriate. Minutes
of all Board and Committee meetings
are taken by the Company Secretary
and circulated for comments and
approval. Any unresolved concerns
raised by a Director are recorded in
the minutes.
The following sets out the key areas of focus for the Board during the year:
Strategy
Strategy refresh and approval
Site approvals and pipeline reviews
Consideration of sustainability matters
Performance management and talent review of executive management
Functional reports including People and Operations
Trading environment reviews and consideration of market conditions
Stakeholder engagement including updates on feedback received from investors
Pricing and member plan review
Financial
Business performance, including trading updates and the market’s response to announcements
Preparation of the Annual Report and Accounts, full and half year announcements
Engagement with the Group’s banks
Updates on capital markets activities
Budget and financial planning
Technology
Improved app and mobile web experience
Technology investment and improvements
Governance
Approval of the Annual Report and Accounts
Annual AGM plans
Succession planning and Board composition, independence
and roles and responsibilities
Diversity and inclusion matters
Onboarding and development of new Directors
Board training and development
Remuneration policy considerations
Board skills and composition
Information and support
An agenda and accompanying pack
of detailed papers are circulated to
the Board prior to the meeting, usually
a week in advance, via a secure digital
app. Given the fast-paced nature
of the business, certain relevant
information, such as latest trading
data up to the prior day, is shared
with Directors at Board meetings.
These include reports from
Executive Directors on their areas
of responsibility and additional
reports from other members of senior
management and external advisers.
Members of senior management
are often invited to present relevant
matters to the Board. All Directors
have direct access to senior
management should they require
additional information on any of
the items to be discussed, and the
Company Secretary, should they wish
to discuss governance, procedural or
administrative matters. The Board and
the Audit and Risk Committee also
receive regular and specific reports to
allow the monitoring of the adequacy
of the Group’s system of internal
controls.
The information supplied to the Board
and its Committees is kept under
review and is formally assessed on
an annual basis as part of the Board
evaluation exercise to ensure it is fit
and proper for purpose and that it
enables sound decision-making.
Training and development
The Group has developed an
induction programme to provide new
Directors with a formal and tailored
induction that includes visiting several
operational locations. The Board and
Committees’ standing agenda items
include the briefing of Directors on
a wide range of topics, which include
corporate governance, legal and
regulatory requirements. Additionally,
Directors have access to the advice
and services of the Company
Secretary and independent and
professional advice at the Group’s
expense should they determine
that this is necessary to discharge
their duties.
Re-election of Directors
The Board considers all Directors to
be effective, committed to their roles
and to have sufficient time to perform
their duties. In accordance with the
Articles of Association, all Directors
will offer themselves for election or
re-election at the Company’s AGM in
May 2024.
All of the Directors have service
agreements or letters of appointment
in place and the details of their
terms are set out in the Report of
the Remuneration Committee. The
service agreements and letters
of appointment are available
for inspection at the Company’s
registered office during normal
business hours.
Directors’ conflicts of interest
No Directors took on additional
significant commitments during the
year which impacted on their ability to
carry out their duties. All Directors act
in line with the Group’s Conflicts Policy.
No contract with the Company or
any subsidiary undertaking of the
Company in which any Director was
materially interested existed at the
end of the financial year.
Relationship with shareholders
Ensuring a satisfactory dialogue with
shareholders and receiving reports
on the views of shareholders is a key
matter reserved for the Board.
The Board is committed to maintaining
good communications with existing
and potential shareholders based
on the mutual understanding of
objectives. During the year, the Group
had regular dialogue with institutional
shareholders in order to develop
an understanding of their views
which was communicated back to,
and discussed with, the Board.
These discussions were primarily led
by the Chair in the early part of the
year with the Chief Financial Officer
also taking part where necessary and,
once Will Orr joined the Company in
September 2023, he also met with
several shareholders as part of his
induction programme.
These discussions covered strategy,
governance matters, business
performance, results (at the year-end
and half year) and remuneration.
Through these meetings, the views
of shareholders are brought to the
attention of the Board and are
discussed at Board meetings when
deemed appropriate. Management
also conducts meetings with
institutions that focus on private
clients, as a way of extending the
Company’s shareholder base.
The Chair, CEO and CFO spoke with
shareholders during the year on a
number of matters which included
executive remuneration and further
details of this engagement is set out
in the Report of the Remuneration
Committee on pages 92 to 107.
The Board receives regular investor
feedback through our joint brokers,
Deutsche Numis Limited and Peel
Hunt LLP, both at Board meetings
and through written updates, as well
as via our remuneration consultants,
who provide updates to the Board on
institutional shareholder views.
Presentations were given to analysts
and investors as part of the annual
and interim results roadshows. Further
information for investors is included
in the investors’ section of the Group’s
website at www.tggplc.com. The CEO
and CFO hold presentations at the
half year and full year results, with
such presentations being made
available as audio recordings on the
investor website. Other members
of management such as the COO
attended where appropriate.
The Group also maintains a holistic
timetable of press engagement
on commercial and corporate
matters, which is managed through
Instinctif Partners.
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Report of the Nomination Committee
Dear Shareholder
I am pleased to present the Report
of the Nomination Committee (the
‘Committee’), and to report on
developments since last year.
The Committee has a key role in
ensuring that the Board and the
broader business has the right
people with the skills and experience
needed so that the business is set up
for success.
Whilst 2023 has been a positive year,
it was also a transitional year which
saw significant management change.
To that end, I am delighted that the
Company welcomed Will Orr as our
new CEO in September 2023. Will’s
appointment has been a crucial step
in our strategic journey and he has
made significant impact in the short
time that he has been with us. Page 81
sets out further details on the process
by which Will was identified and
appointed.
Roles and responsibilities
The role of the Committee is to
develop and maintain a formal,
rigorous and transparent procedure
for making recommendations on
appointments and reappointments to
the Board. In addition, it is responsible
for reviewing the succession plans for
Executive Directors and Non-Executive
Directors. This involves:
Keeping under review the
leadership needs of the Group,
both Executive and Non-Executive,
with a view to ensuring the
continued ability of the Group
to compete effectively in the
marketplace;
Regularly reviewing the structure,
size and composition of the Board
to ensure it has an appropriate
balance of skills, diversity,
experience, knowledge and
independence, and reporting
and making recommendations
to the Board with regard to any
changes; and
Regularly assessing the
knowledge, skills and experience
of individual Board members
and reporting those results to
the Board.
Objectives
To ensure the Board has an
appropriate balance of skills,
diversity, experience, knowledge
and independence.
To ensure that the most suitable
candidates for Executive and Non-
Executive positions are identified
and nominated to fill vacancies as
and when they arise.
To ensure that appropriate
succession plans are in place for
Directors and senior executives of
the Group.
To undertake a Board evaluation
process to identify developmental
needs that can enhance
Board practices and Director
performance.
Committee areas
of focus in 2023
Oversaw the search for and
appointment of a new CEO, Will
Orr, and oversaw his full, formal
and tailored induction programme
(see below for further details).
Oversaw the search for and
appointment of a Non-Executive
Director in 2023 resulting in the
appointment of Simon Jones.
Reviewed the composition of
the Board and its Committees
and continued with the ongoing
review process of Board rotation
and succession which included
the Executive Committee and the
senior management team.
Oversaw progress on diversity and
inclusion initiatives which included
a target of having 20% of senior
managers from Black, Asian and
minority ethnic backgrounds.
Reviewed the strategies in place
to develop talent, in particular, a
newly created reverse mentoring
and coaching programme.
Reviewed the appropriateness of
the alternative arrangements in
place as regards Provision 5 of the
Code (workforce engagement).
Considered relevant corporate
governance matters relating to
composition of the Board on an
ongoing basis.
Recommending to the Board the
appointment of Elaine O’Donnell
as Senior Independent Director
following the resignation of Emma
Woods in December 2023 after
seven years.
Recommending to the Board the
appointment of Wais Shaifta
as Remuneration Committee
Chair with effect from 1 January
2024 following the resignation of
Emma Woods.
Succession planning at
Board level
The Committee has put in place
an orderly succession plan for
both Executive and Non-Executive
Directors, taking into account
governance requirements and the
balance of skills and experience
required on the Board. The Committee
will keep this process under
regular review.
In February 2023, Simon Jones joined
the Board as a Non-Executive Director.
Simon brings extensive commercial,
operational and strategic experience,
broadening and deepening the
Board’s overall skillset.
David Kelly and Emma Woods both
stood down in 2023 as part of
effective succession planning and the
rotation of Directors on the Board.
Search for a new CEO
In early 2023, we conducted an
extensive market search for a
new CEO. A sub-Committee of the
Board comprising me; our Senior
Independent Director at the time,
Emma Woods; and Richard Stables
had discussions with various
executive search agencies and the
sub-Committee agreed that Odgers
Berndtson (‘Odgers’) be appointed
to lead the search for a new CEO.
The sub-Committee felt that Odgers,
having already worked with the
Company on Non-Executive Director
recruitment previously, had a good
understanding of the business and a
strong pipeline to draw from.
Odgers led a thorough process based
on the requirements set by the
Committee, which was overseen by
Emma Woods and a Board-approved
sub-Committee, which reviewed
the shortlist and conducted initial
interviews.
Once the first round of interviews
was complete, the sub-Committee
proposed various candidates for the
rest of the Board to meet. Ultimately,
the process continued until we had
reached a position where there were
two strong candidates for the final
stage where both candidates were
invited to provide a presentation
to the Board before a final decision
was made. All Board members were
engaged in the process and all of
them met the two final candidates,
some on several occasions. Overall it
was felt that Will Orr would be the best
fit for the Company for its next stage
of growth.
Once Will was appointed, a tailored
induction plan was created, which
included a 100 day plan, and Will
was able to dedicate time, ahead of
joining, to meet the team which was
an ideal opportunity for him to start
to build relationships and understand
the culture of the business before
commencing. Will formally joined the
Company on 1 September 2023.
Succession planning
beyond the Board
The Committee regularly reviews the
composition and succession plans in
place for members of the Executive
Committee and their direct reports.
The Committee received a report
on the future model, capability and
succession planning for key roles
within the wider business, focusing
on the Executive Committee and
the senior management team with
ongoing resource requirements
in mind.
In addition, the CEO regularly briefs
the Board about the performance
of individual Executive Committee
members and any changes that he
proposes to make to this team.
| 81
“We have seen significant changes this
year but believe we are building a strong
Board that is well placed to continue
growth, focus on our unique capabilities
and strengthen us for the future.”
John Treharne | Chair of the Nomination Committee
Committee members
Chair of the Committee
Committee
members
Number of meetings held in 2023
John Treharne
Wais Shaifta
Elaine O’Donnell
Richard Stables
Simon Jones*
2
* Simon Jones joined the Committee in February 2023. Emma Woods stood down
in December 2023.
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Nomination Committee
continued
David Kelly and Emma Woods both
stood down in 2023 as part of
effective succession planning and the
rotation of Directors on the Board.
Whilst this activity does not take
place formally within the meetings of
the Nominations Committee, it does
form part of its work in overseeing
Executive Committee development,
the overall succession process and
the pipeline of talent available for
succession to the Board. Board
members have regular contact with
members of the Executive Committee
and the wider senior management
team, through formal Board
presentations, attendance at annual
strategy days, and regular visits to
the head office and other Group sites,
when Non-Executive Directors meet
members of the Executive Committee
and senior management team on
a less formal basis. Non-Executive
Directors also mentor and provide
guidance to Executive Committee
members as well as members of the
senior management team, subject
to the specific requirements of
the mentee.
During the year, Jasper McIntosh and
Emily Kortlang left the business and in
January 2024 Ann-marie Murphy also
left the business. Ruth Jackson was
appointed as Chief People Officer in
December 2023.
Workforce representation
As regards Provision 5 of the Code,
the Committee recognises that
the Company did not comply with
this provision in 2023. However,
during the year, Ann-marie Murphy
as COO ensured that the views of
the wider workforce were regularly
represented by reporting on People
and Operations which is a standing
agenda item at each Board meeting
– these views are fed into the Board’s
decision-making process. In addition,
the Sustainability Committee
receives reports and information
on workforce matters including
equality, diversity and inclusion and
team development initiatives.
The Committee reviewed the
effectiveness of this alternative
arrangement in 2023, and concluded
that, as Ann-marie Murphy left the
Group in January 2024, John Treharne
would act as the designated Non-
Executive Director for workforce
engagement matters supported by
Simon Jones.
The Committee felt that John, as the
founder of the business, would be best
placed to take on this role supported
by Simon who has extensive
experience in people engagement
matters.
Diversity and inclusion
Our Diversity and Inclusion policy
states that no individual should be
discriminated against on the grounds
of age, disability, gender reassignment,
marriage and civil partnership,
pregnancy and maternity, race
(which includes colour, nationality and
ethnic or national origins), religion or
belief, sex or sexual orientation. Our
policy is reflected in our approach
to recruitment at all levels, including
Board level, and is stated in our
employee handbook which forms part
of our employees’ service contracts.
We will be publishing our annual
Gender Pay Gap report on our
website in March 2024. Our mean
gender pay gap to is 0.6% (versus
3.3% in 2022). Our median pay
gap remains consistent with 2022
reporting as most of our employees
undertake the same role and are
therefore on the same pay-rate,
regardless of whether they are male
or female. Our full published gender
pay gap report, together with our
ethnicity pay gap report, will provide
further details on our figures and
the actions we are taking to address
these gaps.
As at 31 December 2023, the
percentage of women on the
Board was 33% and the Committee
recognises that we did not meet the
recommendations in Listing Rule 9.8.6
(9) (a) (i) – the requirement to have
at least 40% of Board appointments
held by a woman.
However, as 2023 has been a
transitional year with significant
management and strategic change,
the Committee felt that it was right
to prioritise the recruitment and
on-boarding of a new CEO which
would set the strategic direction of
the Company.
Since the year-end, the percentage
of women on the Board has reduced
to 14% as Emma Woods stood down
in December 2023 and Ann-marie
Murphy left the business in
January 2024.
The Committee feels that, after
a period of significant change at
Board level, a period of continuity
and stability is appropriate whilst
the new CEO becomes embedded in
the business. Having said that, the
Committee acknowledges that the
composition of the Board is a matter
that needs to be kept under constant
review, especially in light of the
diversity element, and will continue
to evaluate the size and balance on
the Board throughout 2024. We are
pleased to confirm that we have met
the recommendations in Listing Rules
9.8.6 (a) (ii) and (iii) in that the Senior
Independent Director role was held
by a woman throughout 2023, firstly
by Emma Woods and, following her
resignation in December 2023, Elaine
O’ Donnell, and that the Company
has a Board member appointed
from a minority ethnic background in
Wais Shaifta.
The Executive Committee’s direct
reports, comprising our senior
management team and certain
heads of departments, have 44%
(eight) female and 56% (ten) male
members. We believe we are making
progress towards a more diverse
leadership in all areas, including
gender and cultural diversity,
and are working towards a more
representative, diverse Board to
reflect our workforce. We continue our
commitment to diversity and inclusion
through reviewing progress against
our equality, diversity and inclusion
pledges and projects focused on our
purpose of breaking down barriers.
Details of relevant initiatives can be
found on pages 44 to 45.
The Group has collected the following data on the composition of the Board and Executive management relating to
gender identity, sex of the individuals and the ethnic background as at 31 December 2023, as set out in the following
tables:
Gender identity or sex of Board and Executive Committee members
Men
Women
Number of Board
members
Percentage
of the Board
6
3
67%
33%
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
3
1
Number in
Executive
Management
Percentage
of Executive
Management
5
2
71%
29%
Ethnic background of Board and Executive Committee members
Number of Board
members
Percentage
of the
Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number
in Executive
Management
Percentage
of Executive
Management
White British or other White
(including minority-white
groups)
Asian/Asian British
Governance processes
The Committee meets at least twice
a year and at such other times as
the Chair of the Committee or any
member of the Committee may
request. In 2023, the Committee met
twice and attendance at the meetings
is shown in the table on page 77.
The Committee has formal terms of
reference which can be viewed on the
Group’s website www.tggplc.com.
In 2023, both Will Orr and Simon Jones
worked through their full, formal and
tailored induction programmes, which
included site visits and gym tours,
in-person and virtual Board meetings,
a Board off-site meeting, and
meetings with senior management
and Group advisers. In their first
year as Directors, all of our new
colleagues have demonstrated great
commitment to both learning and
sharing the benefit of their extensive
experience.
8
1
89%
11%
4
–
7
–
100%
–
Board effectiveness review
We held an internal Board
effectiveness review in November
2023, where a number of actions were
identified, reported and discussed
at the Board’s meeting in February
2024. The review process comprised
the completion of an anonymous
questionnaire covering the various
aspects of the activities of the Board
and its Committees. Board members
valued the feedback of their peers
and the Board has drawn up a plan
to implement appropriate changes
based on the recommendations of
the report.
In addition, the Non-Executive
Directors led by the Senior
Independent Director, completed
an evaluation of my performance
as Chair in December 2023 and
concluded that I was effective
as Chair.
I look forward to meeting shareholders
at the AGM on 9 May 2024.
John Treharne
Chair of the Nomination Committee
13 March 2024
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Audit and Risk Committee
Dear Shareholder
I am pleased to present the
Audit and Risk Committee (the
‘Committee’) report for the year
ended 31 December 2023. This
report is intended to provide
shareholders with an insight in to
how key topics were considered
during the year, the activities of the
Committee and how the Committee
discharged its responsibilities
in 2023.
The Committee fulfils a vital role in
the Group’s governance framework,
providing valuable independent
challenge and oversight across
the Group’s financial reporting,
risk management and internal
control procedures.
Whilst the business performed well
during the period, 2023 saw ongoing
disruption from economic and
geopolitical instability. As with many
UK consumer businesses, the Group
continued to face an increased
cost base from utilities, the supply
chain and our workforce at a time
when our customers faced financial
hardship due to the continued
cost-of-living crisis. Despite this
challenging economic backdrop,
the Group has shown good financial
performance and has continued to
make improvements to its internal
controls throughout the year. I am also
pleased to report that the full year
audit process has been conducted
according to plan and on time, and
I would like to thank the Finance
team and Ernst & Young LLP (‘EY’) for
the planning and commitment that
contributed to this.
Composition and Governance of the Committee
The Committee currently comprises three independent Non-Executive Directors
(listed below with their appointment dates) who bring a wide range of financial
and commercial expertise relevant to our market. Summary biographies of each
Committee member are included on pages 72 to 73.
Committee Member
Appointment to the Committee
Elaine O’Donnell (Chair)
Wais Shaifta
Simon Jones
30 August 2022
11 May 2021
6 February 2023
Both David Kelly and Emma Woods were members of the Committee until they stood down in 2023.
The Board is satisfied that as Chair,
I have extensive, recent and relevant
financial experience and that the
Committee as a whole has a wide
range of experience and competence
relevant to the sector in which the
Group operates through current and
previous roles.
Whilst the management team and
Chair of the Board are not members
of the Committee, a positive
working relationship is critical to
the Committee’s proper function.
Only members of the Committee are
entitled to attend meetings, however
standing invitations are extended
to the Chief Financial Officer, Chief
Executive Officer, Chair of the Board,
the external auditors and other Non-
Executive Directors. In addition, the
Committee also invites other senior
finance and business managers to
attend certain meetings where it is
deemed appropriate.
Luke Tait, as Chief Financial Officer,
has responsibility for all aspects of
financial reporting, internal control
and risk management. At the request
of the Committee, Luke has attended
all Committee meetings and updated
the Committee on key matters.
The Company Secretary is Secretary
to the Committee.
In 2023, the Committee met four
times. Attendance at the meetings
is shown in the table on page 77. In
March 2023 and 2024, the Committee
held a private session with the
external auditor without members of
management being present.
The Committee has formal terms
of reference which can be viewed
on the Company’s website: www.
tggplc.com. During the year, the
Committee reviewed these terms of
reference and made updates in line
with best practice recommendations
from the Corporate Governance
Institute (‘CGI’).
Role and responsibilities
of the Committee
The Committee’s role is to assist
the Board with the discharge of
its responsibilities in relation to
financial reporting, risk management
and internal control.
This includes:
Reviewing the Group’s annual and
half year financial statements and
accounting policies.
Monitoring the integrity of the
Group’s financial statements and
related announcements, including
reviewing and challenging any
significant financial reporting
judgements contained therein.
As requested by the Board,
assessing whether the Annual
Report and Accounts, taken as
a whole, is fair, balanced and
understandable and provides
the information necessary for
shareholders to assess the Group’s
position and performance,
business model and strategy.
Reviewing the Group’s risk
management framework, including
principles, policies, methodologies,
systems, processes, procedures
and people; and advising on the
Group’s risk appetite.
Monitoring compliance with
internal control systems; reviewing
the overall effectiveness of the
Group’s system of internal control
and risk management and making
recommendations to the Board for
improvements or developments.
Regularly reviewing the need for
an internal audit function to help
in evaluating the robustness of
current internal control systems.
Agreeing the external auditor’s
engagement terms, scope and
fees; monitoring and reviewing the
effectiveness and independence
of the external auditors; and
ensuring appropriate policies are
in place to protect independence.
Advising on the appointment
of the external auditor and the
extent and fees for any non-audit
services provided.
Reviewing the effectiveness
of the Group’s whistleblowing,
anti-bribery and fraud
prevention processes.
“I am pleased to continue the Committee’s
work to ensure the effectiveness of the
Group’s systems and controls, supporting
the Company in its next phase of
strategic ambition and growth.”
Elaine O’Donnell | Chair of the Audit and Risk Committee
Committee members
Chair of the Committee
Committee
members
Number of meetings held in 2023
Elaine O’Donnell
Wais Shaifta
Simon Jones*
4
* Simon Jones joined the Committee in February 2023. Emma Woods stood down from the
Committee when she left on 31 December 2023.
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Audit and Risk Committee
continued
Summary of principal activities
and focus in 2023
The principal activities since the
last report were as follows:
Verification of the independence
of the external auditor and
approving the scope of the
audit plan and the audit fees.
Review and recommendation for
approval by the Board, the 2023
half year results including the
investor presentation.
Review and recommendation for
approval by the Board, the 2023
full year results including the
investor presentation.
Consideration of significant
accounting matters and
judgements in relation to the
financial statements. This included
consideration of management’s
approach and the related
comments of the external auditor.
Consideration and
recommendation of the
Group’s going concern and
viability statements.
Evaluation of the reporting
requirements of the TCFD
framework and agreeing
the scope and review of the
reporting for climate-related
financial disclosures.
Consideration of the Code
requirements concerning
fair, balanced and
understandable reporting.
Consideration of the Group’s risk
management review, including
assessment of the principal risks
and risk appetite statement, and
approval of the principal risks and
uncertainties report.
Assessment of the effectiveness
of risk management and internal
control systems.
Review of compliance with, and
continuing suitability of, the
Committee’s terms of reference,
approving minor updates.
Oversight of the operation of the
Group’s Whistleblowing and Anti-
Bribery policies, including training
for all staff.
Discussions with the
external auditors without
management present.
Engagement with the Financial
Reporting Council (‘FRC’) in
relation to their review of the
Company’s Annual Report
and Accounts for the year
ended 31 December 2022, in
accordance with Part 2 of the
FRC Corporate Reporting Review
Operating Procedures.
Significant issues and
judgements relating to the
financial statements
The Committee has the responsibility
to monitor the integrity of the Annual
Report and Accounts and the Interim
Results, including a review of the
significant financial reporting matters
and judgements contained in them.
At its meeting in September
2023, the Committee reviewed a
comprehensive paper prepared by
the Finance Director, which analysed
the Group’s results for the half year
and highlighted any significant
issues and judgements arising in the
preparation of the Group’s half year
financial statements. In early 2024,
an updated paper was prepared
and reviewed, which supported the
preparation of the Group’s Annual
Report and Accounts 2023. It also
provided information to support the
Directors’ viability and going concern
statements. The Committee also
considered a paper prepared by the
external auditor, which included their
findings in respect of the audit of the
full year financial statements and
significant reporting and accounting
matters therein.
The most significant issues and
judgements considered by the
Committee were as follows:
Annual impairment testing
Consistent with prior years, as
part of the year end procedures,
management has tested goodwill
for impairment. In addition, it has
assessed whether there are any
indicators of impairment in relation
to tangible assets, right-of-use assets
and intangible assets, and where such
indicators are present, tested those
assets for impairment. The cash flow
forecasts used in the assessment
were based on the Group’s three-year
financial plan, together with assumed
growth rates thereafter. A number
of significant judgements have been
made by management in relation
to the impairment review process,
the most judgemental of which are
considered to be the determination
of cash generating units (‘CGUs’) and
the determination of the discount
rates to apply to the future cash flows
generated by each CGU.
The CGUs identified by management
for both goodwill and other asset
impairment testing in 2023 are
consistent with those identified in
the prior year and discussed in detail
in the Committee report that was
included in the 2022 Annual Report
and Accounts. Nothing has come to
light in the year, or fundamentally
changed in the way the business
operates, to suggest this would no
longer be appropriate.
The discount rate applied to the
CGU cash flows was calculated by
management using internal and
external data points and assumptions.
As a result of changes in the external
rates of interest, the pre-tax discount
rate applied increased to 10.4%
(2022: 8.5%).
As part of their audit procedures,
EY reperformed management’s
impairment modelling, including
the key assumptions and inputs,
and concurred with management’s
assessment.
As well as the key judgements noted
above, the Committee also reviewed
and considered other accounting
matters including the presentation of
the non-underlying items identified by
management and the capitalisation
of staff costs. In both instances, EY
and Committee were satisfied that
they are appropriately classified and
disclosed in the financial statements.
Please refer to Note 9 to the
consolidated financial statements
for further information on
non-underlying items.
There were no material matters
requiring the Committee to make
amendments to the consolidated
financial statements.
Fair, balanced and
understandable
The Board recognises its duty to
ensure that the Annual Report and
Accounts 2023, taken as a whole, is
fair, balanced and understandable
and provides the information
necessary for shareholders to assess
the performance, strategy and
business model of the Group.
The Board has placed reliance on the
following to form this opinion:
The process by which the
Annual Report and Accounts
2023 was prepared, including
detailed project planning and a
comprehensive review process.
The review of the Annual Report
and Accounts 2023 by the
Committee, placing reliance
on the experience of the
Committee members.
Reports prepared by senior
management regarding critical
accounting judgements and
significant accounting policies.
Discussions with, and reports
prepared by, the external auditor.
Regular financial information
received throughout the year,
including monthly KPIs.
As detailed in the Directors’
responsibility statement on page
111, each of the Directors has
confirmed that, to the best of each
person’s knowledge and belief, the
Annual Report and Accounts 2023,
taken as a whole, is fair, balanced
and understandable and provides
the information necessary for
shareholders to assess the Group’s
position, performance, business
model and strategy.
External auditor effectiveness
The appointment of EY in 2015
was made having considered their
capabilities and experience. As part
of the annual reporting process, the
Committee reviewed the effectiveness
of the auditor through:
Reviewing the 2023 audit plan.
Discussing the results of the audit,
including their views on material
accounting issues and key
judgements and estimates.
Meeting the auditor without
management present
and understanding the
extent to which the auditor
challenged management.
Considering the robustness of the
audit process.
Meeting without the auditor
present to consider their
performance.
Confirming the independence
and objectivity of the auditor
through a review of formal reports
presented to the Committee and
considering whether any other
conflicts of interest exist which
might impact independence.
Confirming that no non-audit work
was undertaken.
The Committee is satisfied with the
performance and independence of
EY and therefore recommends their
reappointment at the May 2024 AGM.
The impairment testing methodology
and key assumptions, including CGU
determination and discount rates,
were reviewed and considered by
the Committee and the Committee is
satisfied that the impairment loss of
£0.6m that has been recognised in the
Group’s financial statements for 2023
is appropriate. Please refer to Notes
14 and 15 to the financial statements
for further information.
Going concern and viability
The Committee reviewed and
considered the paper prepared by
management to support the going
concern assumption and longer term
viability statement in the financial
statements. Consideration was given
to the assumptions made in both the
base case and severe, but reasonable
downside case, as well as additional
risk-based scenarios and reverse
stress tests. The assessment included
a review of the principal risks facing
the Group, their financial impact and
how they are managed, as well as the
adequacy and timing of renewal of
the Group’s bank facilities. Following
a detailed review and discussion, the
Committee concluded that the Group
has adequate resources to continue
in operational existence for the period
to 30 June 2025 (the going concern
assessment period) and that the
Group remains viable.
Bank refinancing
In September 2023, the Group
agreed with its lenders certain
changes to the Group’s Revolving
Credit Facility (‘RCF’), including a
one year extension of the facility to
October 2025 and the replacement
of Sabadell with Barclays in the
syndicate. As a result of the changes,
the refinancing was assessed by
management to determine whether
the modification in the year should
result in an extinguishment of the
old loan and recognition of a new
one based on IFRS 9 requirements.
The outcome from that assessment
was that the changes constituted a
modification of the existing loan and
the financial statements for 2023
reflect that outcome. EY reperformed
management’s calculations and
concurred with the treatment
adopted.
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Audit and Risk Committee
continued
External auditor fees
During 2023, management agreed
an increase in the audit fees for the
Group and subsidiary Companies
to £350,000 for the year ended 31
December 2023 (2022: £300,000).
The increase reflected additional
regulatory demands and a marginal
increase due to inflation.
Non-audit services
In 2023, EY did not provide any non-
audit services to the Company or its
subsidiaries.
In line with UK Independence Rules,
the Committee is responsible for
approving all non-audit services
provided by the auditor. The
Committee has a formal policy on the
supply of non-audit services by the
Company’s auditor, which is aligned
with the requirements of the UK
Financial Reporting Council’s Ethical
Standards (2016 and 2019). This policy
is available on the Group’s website. All
non-audit services carried out by the
Company’s auditor are pre-approved
by the Committee.
External auditor rotation
EY was appointed as auditor on
28 July 2015. It is expected that the
external audit be put to tender at
least every ten years. As a result,
the Company expects to conduct a
tender process in 2025.
I can confirm that the Company has
complied with ‘The Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of
Competitive Tender Processes and
Audit Committee Responsibilities)
Order 2014’ during the financial year.
Engagement with regulators
In October 2023, the Chair of the
Board received a letter from the
FRC’s Supervision Committee which
has delegated responsibility to
keep under review periodic reports
produced by issuers of listed
securities.
In its letter, the Supervision Committee
informed us that they had carried
out a review of the Company’s
Annual Report and Accounts for
2022 in accordance with Part 2 of
the FRC Corporate Reporting Review
Operating Procedures. The letter
explained that the review was based
solely on our Annual Report and
Accounts and did not benefit from
detailed knowledge of our business,
or an understanding of the underlying
transactions entered into. It also
explained that it does not provide any
assurance that our Annual Report and
Accounts are correct in all material
respects, as the FRC’s role is not to
verify the information provided, but to
consider compliance with reporting
requirements. As a result, the FRC
accepts no liability for reliance on
them by the Company or any third
party, including but not limited to
investors and shareholders.
In its letter, the Supervision Committee
raised a question to help them to
understand how the Board had
satisfied the relevant reporting
requirements in relation to the
recoverability of investments in
subsidiaries and amounts owed by
Group undertakings. It also set out,
in an appendix to the letter, further
observations on certain disclosures
in the financial statements which
we were encouraged to take into
account when considering whether
any improvements could be made to
our future reporting. The Company
responded to the FRC’s question in
November 2023 and the FRC was
satisfied with the Company’s response
and concluded that the matter
was closed. Additional disclosures
in relation to the recoverability of
investments in subsidiaries and
amounts owed by Group undertakings
have been included in the Company
financial statements for the year
ended 31 December 2023.
In addition, the further observations
made by the Supervision Committee
have been considered and, where
relevant, addressed through
enhanced disclosures in the
consolidated financial statements.
Risk management
Our risk management process and
the risks which are considered to be
the principal risks of the Group, are
detailed in the Principal risks and
uncertainties section on pages
54 to 63.
During the year, the Committee
reviewed the Group’s risk
management process and
methodology and considered the
principal and emerging risks identified
by management, together with the
adequacy of any mitigating actions
put in place to reduce each risk. In
addition, the Committee reviewed and
approved the risk appetite statement
included in the Annual Report and
Accounts 2023, which is linked to our
corporate purpose and strategic
ambitions and embedded into the
Group’s risk management process.
The Committee discussed the
reduction in the number of principal
risks from ten to eight as proposed by
management and agreed on balance
with the removal of ‘Significant
business interruption’ and ‘Structural
change in the industry’ from the
Group’s principal risks in light of the
current external environment and
changes to the Group’s strategy
and business model to allow it to
operate successfully following the
normalisation of hybrid working
patterns and fitness preferences.
The Committee also discussed
the continued high likelihood for
cyber attacks in light of ongoing
geopolitical events and the
heightened risk in relation to our
people given the ongoing cost-of-
living pressures. The Committee was
satisfied with the mitigations in place
to manage cyber risk, which include:
the Chief Technology Officer (‘CTO’)
briefing the Board on information
security matters at least annually;
all employees being required to
complete online training courses
for data protection and cyber
security at least once a year; and an
ongoing programme of assessments
and accreditations testing the
information security environment.
There have been no material
information security breaches in
the last four years. The Committee
was also satisfied that the Group
continues to have in place a variety of
tools to attract, retain, motivate and
support its employees.
Internal control
The Group’s system of internal control
is underpinned by the following:
A robust system of financial
controls, including appropriate
segregation of duties within the
Finance team, clear delegation
of authority rules, an established
balance sheet reconciliations and
review process, and a detailed
monthly meeting with the Finance
Director and CFO to review the
monthly management accounts.
Regular review meetings of
various groups, including business
functions, senior management,
sub-committees and the Board to
discuss key issues.
A thorough budget and three year
planning process with outputs
reviewed by the Board.
Circulation of monthly reports
to the Board containing detailed
information regarding financial
performance, rolling forecasts,
actual and forecast covenant
compliance, and financial and
non-financial KPIs.
During the year, the Committee
also discussed developments in the
Group’s internal control environment
with management and the auditors.
Internal audit
The Committee reviewed the
requirement for an internal audit
function during the year, as it does
annually, and has concluded that,
given the relatively straightforward
nature of the Group’s operations
and the low levels of portable assets
such as cash in hand and inventory,
an internal audit function is not
necessary at this time. This will be kept
under review as the Group continues
to grow.
Whistleblowing
The Group encourages staff to
report any concerns which they
believe need to be brought to
management’s attention concerning
any financial or other impropriety.
All employees receive a copy of the
employee handbook, which includes
whistleblowing arrangements and
sets out the procedures to follow
should a member of staff wish to raise
concerns in confidence in respect of
suspicions of wrongdoing or unethical
conduct, including anonymously
if preferred. The policy confirms
that bullying, harassment or other
detrimental treatment afforded
to a colleague who has made a
qualifying disclosure is unacceptable.
The Committee approved an updated
policy in November 2021, pursuant to
which a new whistleblowing reporting
function, accessible to all staff, was
launched in 2022 to supplement the
whistleblowing notification email
address which is available on the
corporate website. The Committee
receives regular reports relating to
any whistleblowing-related matters
raised under the relevant channels
and can consider responses where
appropriate. No instances of
whistleblowing were reported in 2023.
Elaine O’Donnell
Chair of the Audit
and Risk Committee
13 March 2024
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Sustainability Committee
“The Committee is delighted that the
Group is the world’s first health and fitness
business to have its net zero targets
validated by SBTi.””
Wais Shaifta | Chair of the Sustainability Committee
Committee members
Chair of the Committee
Committee
members
Wais Shaifta
John Treharne
Will Orr*
Elaine O’Donnell*
David Melhuish
Simon Jones*
Cornelia Woschek*
Number of meetings held in 2023
4
90 |
*
Simon Jones joined the Committee in February 2023, Will Orr joined the Committee
in September 2023 and Elaine O’Donnell and Conelia Woschek joined the Committee in
April 2023.
Dear Shareholder
I am pleased to present the Report
of the Sustainability Committee
(the ‘Committee’) and to highlight
some of the developments since
last year.
Environmental, Social and Governance
(‘ESG’) matters are crucial to our
ability to deliver on our purpose of
breaking down barriers to fitness
for all. Our sustainability strategy
has been developed to advance our
purpose and build a resilient business
environment.
The worldwide challenge of climate
change has local implications for
our business. By understanding the
risks and opportunities that may
arise due to the physical impacts of
climate change and the transition
to a low carbon economy, we can
remain proactive in our approach
and continue building a sustainable
business model. Building on our
2022 Taskforce on Climate-related
Financial Disclosures (‘TCFD’) report,
we have advanced the integration
of climate change management
across the business and have further
developed our disclosures in line
with the TCFD’s recommendations.
As demonstrated within our TCFD
disclosures on pages 50 to 53, we
believe that our current business
strategy is resilient to climate change.
We acknowledge that reducing
our own carbon footprint is a
critical part of The Gym Group’s
role in transitioning to a lower
carbon economy and are pleased
to confirm that we have had our
net zero targets validated by the
Science-Based Targets initiative
(‘SBTi’). This validation is another
stamp of approval on our journey
to reducing our carbon footprint
and demonstrates the significant
journey that the Group has been on as
regards our commitment to building a
sustainable business.
Governance
Our Sustainability Committee
supports the Group in continually
improving its sustainability
performance and reporting. ESG-
related matters are regularly
discussed and reviewed by the
Board and its Committees, with the
Group always striving to exceed the
expectations of our stakeholders.
The Committee holds dedicated
meetings at least three times a year,
escalating relevant matters to the
Board directly after each of these
meetings. In between Committee
meetings, the Board receives reports
on key ESG-related matters directly.
During the year, we welcomed Simon
Jones, Will Orr and Cornelia Woschek
to the Committee and all have made
impactful contributions.
Climate-related risks and
opportunities are a standing agenda
item for the Committee, which
provides Board-level governance of
climate-related issues. As outlined
within the Committee’s terms of
reference, this includes (but is not
limited to) reviewing progress against
our goals and targets to achieve our
science-based net zero emissions
target and managing physical and
transition risks through our identified
control measures. The Board also
has final sign-off on annual budget
allocations and strategic aims,
including the planned expenditures
for carbon-related initiatives. Whilst
we have developed ESG remuneration
for executives, the integration of
climate-related performance into
remuneration policies remains work
in progress.
The Executive Committee and
sustainability working group work
closely with the Committee and Board
to provide oversight at the senior
management level, ensuring the
comprehensive governance of the
business and successful execution
of our strategy. The sustainability
working group is informed by the ESG
workstream, the equality, diversity and
inclusion workstream, and the health,
safety, and wellbeing workstream.
Management of climate-related risks
and opportunities is included in the
mandate of the ESG workstream. The
sustainability working group and its
associated workstreams convene at
lease four times per year, providing
input to the Sustainability Committee
at each meeting.
Key responsibilities
Assisting the Board in its oversight
of corporate responsibility,
climate, sustainability and
reputational matters considering
the Group’s purpose, strategy
and culture.
Developing, upholding and
promoting the Group’s
sustainability strategy including
evaluating materiality and
reviewing sustainability targets.
Monitoring sustainability KPIs to
measure delivery against the
Group’s strategy and targets
relating to carbon emissions and
the Group’s environmental impact.
Advising on the management of
the sustainability and climate-
related risks and opportunities for
the Group.
Reviewing and recommending for
approval the external statements
and disclosures made by the
Group concerning sustainability
and ESG matters.
Strategy
Sustainability, including the
management of climate-related
issues, is fully integrated into our
business strategy. The environment is
recognised as a critical stakeholder
to be considered when reviewing
and guiding strategy, major plans
of action, risk management policies
and annual budgets. One of the
Committee’s responsibilities is to
assist the Board in articulating and
developing The Group’s sustainability
strategy.
For more information on our strategy,
please visit our website tggplc/
sustainability. In our Sustainability
report on pages 38 to 53, we explain
our progress and performance
against our sustainability strategy in
the areas identified in our materiality
assessment.
Risks and opportunities
Our Board, has overall accountability
for managing the business risks
and opportunities including those
presented by climate change.
Alongside the Executive Committee,
the Board remains fully committed
to managing risks and opportunities
that have the potential to influence
the business.
The Committee supports the Board
in developing its understanding of
climate and sustainability-related
risks and opportunities for the Group.
Upon evaluation of the significance
threshold for escalating climate
risks and opportunities, we have
upgraded climate change to an
emerging risk for the business. This
reflects our understanding that
managing climate-related risks and
opportunities will have an increasingly
important influence on our financial
position and performance in the
years to come. We outline our full
process for the assessment of risks in
the Principal risks and uncertainties
section on pages 54 to 63.
Activities in the year
Supporting the Company’s SBTi
application and TCFD review.
Monitoring gender and cultural
diversity across the Group at
different levels of the workforce,
understanding how reflective these
populations are of our member
population.
Considering reports from the
sustainability workstreams:
health and safety, governance,
equality, diversity and inclusion,
environment and climate action
and social impact.
Approving new sustainability
targets relating to good jobs and
lifelong learning; and equality,
diversity and inclusion.
Focus in 2024
The Committee will continue to
support the sustainability governance
streams to uphold the Group’s
sustainability strategy matters and
keep its objectives at the heart of
the Board’s agenda. We will continue
to develop our understanding of the
impact of climate change on our
business, managing its risks and
opportunities proactively.
Further information relating to our
sustainability governance framework
and other matters, can be found on
the Company’s website at https://www.
tggplc.com/sustainability/strategy.
Wais Shaifta
Chair of the Sustainability Committee
13 March 2024
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Governance report
Report of the Remuneration Committee
Dear Shareholder
I am pleased to introduce my
first Report of the Remuneration
Committee (the ‘Report’ and
the ‘Committee’) as Chair of the
Committee for the financial year to
31 December 2023.
On behalf of the Committee and
the Board, I would like to thank the
previous Chair, Emma Woods, for her
stewardship of the Committee over
the last few years and as well as her
thorough handover.
Board changes
As outlined in last year’s report,
Richard Darwin stepped down as
CEO on 24 March 2023 and remained
available to support the Company
until his employment ended on 12 July
2023. We were delighted to secure a
high calibre new CEO in Will Orr, and
welcomed him to the Board with effect
from 1 September 2023.
As announced on 7 November 2023,
Ann-marie Murphy stepped down
from the Board and left the business
on 31 January 2024 to take up the
role of Chief People Officer at SSP
Group plc. Both David Kelly and Emma
Woods also stood down from the
Board in 2023.
Further details of the approach
to Will, Richard and Ann-marie’s
remuneration is set out on page 102.
Performance and remuneration
in 2023
The Group continued its positive
momentum in 2023 and, whilst
there was some restraint in new site
openings, there was strong like-for-
like progress driven by increasing
both membership and yield.
2023 annual bonus outcome
The FY23 annual bonus for Executive
Directors was based on EBITDA (60%
weighting), transitional leadership
(15% weighting), percentage of
members visiting four times per
month (10% weighting) and personal
objectives (15% weighting). Based on
performance against these metrics,
the 2023 bonus outcome was 82-84%
of maximum - in accordance with
the Remuneration Policy, the value of
the bonus in excess of 75% of salary
(applied pro-rata for Will Orr and
Richard Darwin) will be deferred into
shares for two years. Further details
are set out on pages 97 - 98.
2021 PSP outcome
Former Executive Directors Richard
Darwin and Mark George were granted
awards under the Performance Share
Plan (‘PSP’) on 25 March 2021 which were
subject to relative Total Shareholder
Return (‘TSR’) (67% weighting) and
absolute TSR (33% weighting) targets.
Performance against each of these
elements will be assessed after the
performance period ends in March 2024.
However, based on performance up to
31 December 2023, our current estimate
is that the award will lapse in full. Further
details are set out on page 99.
Grant of 2023 PSP awards
PSP awards were granted to Luke Tait
and Ann-marie Murphy on 29 March
2023 and, following his appointment to
the Board, to Will Orr on 13 September
2023. Performance will be measured
against relative TSR (40% weighting),
absolute TSR (40% weighting) and
Social Value (20% weighting). Further
details are set out on pages 99 - 100.
Application of discretion for 2023
The Committee carefully considered
the performance outcomes under
variable pay schemes for 2023. The
Committee strongly believes that the
bonus outcome appropriately reflects
the strong performance delivered
during 2023 whilst the expected 2021
LTIP outcome reflects share price
performance over a three year period
and the shareholder experience.
Overall, the Committee concluded
that the outcomes were appropriate
and did not apply discretion (positive
or negative) during 2023.
Implementation of our
Remuneration Policy in 2024
The Committee has determined
that a higher weighting on financial
measures will apply for the 2024
annual bonus (80%). The personal
objectives element will be removed and
the remainder (20%) will be based on
strategic measures. Further details on
the expected implementation of the
current policy for 2024 is set out on
pages 94 to 95.
As highlighted in Emma’s statement
last year, the level of leadership
change over the last 12-18 months as
well as feedback from shareholders
2023 means that it was appropriate
for the Committee to consider whether
our current Directors’ Remuneration
Policy remains the most appropriate
approach for the Company. As such,
we have been undertaking a review of
the Policy and are currently engaging
with major shareholders to determine
whether to bring forward a new policy
in 2024, which would be a year ahead
of the normal three year renewal
period.
Closing remarks
Should you have any queries or
comments on this report, or more
generally in relation to remuneration,
then please do not hesitate to contact
me via the Company Secretary.
I hope that you find the information
in this report helpful and informative,
and I look forward to your continued
support at the Company’s 2024 Annual
General Meeting.
Wais Shaifta
Chair of the Remuneration Committee
13 March 2024
“In 2023, the Committee agreed the
remuneration package for our new CEO
and continued to give thought to our
remuneration policies and metrics, and
their appropriateness for the Company.”
Wais Shaifta | Chair of the Remuneration Committee
Committee members
Chair of the Committee
Committee members
Number of meetings held in 2023
Wais Shaifta
Elaine O’Donnell
Simon Jones*
5
*
Simon Jones joined the Committee February 2023. Emma Woods stood down from the
Committee when she left on 31 December 2023.
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Governance report
Report of the Remuneration Committee
continued
At a glance: Remuneration policy and implementation
Overview of current policy
Remuneration in 2023
Base salary Reviewed annually.
Will Orr: £425,000 (from 1 September 2023)
Consideration given to performance
of the Group and the individual,
responsibilities or scope of the role,
as well as pay practices in relevant
comparator companies.
Luke Tait: £300,000
Ann-marie Murphy: £231,000
Note: As outlined in last year’s report, Ann-
marie was paid a responsibility allowance of
£5,000 per month for the period from Richard
Darwin leaving the business until Will Orr
joined the Board.
Implementation for 2024
In line with the wider
workforce, Luke Tait will
receive a 5% salary increase.
Will Orr and Ann-marie
Murphy will not receive a 2024
salary increase.
Effective from 1 January 2024,
the resulting salaries will be:
Will Orr: £425,000
Luke Tait: £315,000
Ann-marie Murphy: £231,000
Effective from 1 January 2023, Executive
Director pension levels were aligned to the
majority of the workforce (4%).
No change.
Pension
and benefits
Pension – maximum contribution of
10% of salary but aligned with the
majority of the workforce from the
start of 2023.
Benefits consist of car allowance,
life insurance, private medical cover,
a car parking space and additional
mobile telephone contracts (in the
case of the Founder Director).
For 2024, the Committee has
determined that a higher
weighting will be placed
on financial metrics. The
personal objectives element
has been removed.
Weightings for 2024:
Financial measures (80%)
Strategic measures (20%)
Award levels consistent with
2023.
Performance measures and
targets to be disclosed in due
course.
Annual
bonus
Maximum of 100% of salary.
In 2023, metrics included:
Paid in cash up to 75% of base
salary and outcomes above this level
deferred into shares for two years.
Subject to achievement of relevant
performance conditions.
Subject to malus and
clawback provisions.
Long term
incentives
Performance share award, subject
to service and performance over
a three year period, as well as two
year post vesting holding period.
Maximum award of 200% of
salary (300% in exceptional
circumstances).
Subject to malus and
clawback provisions.
Adjusted EBITDA (60%)
Transitional Leadership (15%)
Percentage of members visiting four times
per month (10%)
Personal Objectives (15%)
Outcome was 83-84% of maximum, with the
value of any bonus in excess of 75% of salary
(applied pro-rata for Will Orr and Richard
Darwin) deferred in shares for two years.
2021 PSP awards:
The PSP awards granted in March 2021 are
due to vest in March 2024 based on relative
TSR (67% weighting) and absolute TSR (33%
weighting) performance up to this date. Based
on performance up to 31 December 2023, our
current estimate is that this award will lapse
in full.
2023 PSP awards:
Quantum: Awards of 175% of salary
were granted to Will Orr, Luke Tait and
Ann-marie Murphy.
Performance conditions: Absolute TSR (40%);
Relative TSR (40%); Social Value (20%). Relative
TSR is measured against constituents of the
FTSE SmallCap (excluding IT and REITs).
Note: Will Orr also received a buy-out
award in respect of awards from a previous
employer that were forfeited on his joining
the Group.
Further details are set out on pages 99 to 100.
Overview of current Policy
Remuneration in 2023
Implementation for 2024
Share
ownership
guidelines
300% for salary for Executive
Directors at Admission (Richard
Darwin and John Treharne).
As at the date he stepped down from the
Board, Richard Darwin had not met his
shareholding requirement.
No change.
200% of salary for Executive Directors
appointed after Admission (Will Orr,
Luke Tait and Ann-marie Murphy).
As at 31 December 2023, the other Executive
Directors were working towards meeting their
shareholding requirement, noting that:
A two year post employment
shareholding guideline of 200% of
salary (or actual shareholding at
leaving, if lower) applies from leaving.
Will Orr joined the Board on
1 September 2023
Luke Tait joined the Board on
17 October 2022
Ann-marie Murphy joined the Board on
11 April 2022
Non-
Executive
Director
fees
The fees for the Non-Executive
Directors may include a basic fee
and additional fees for further
responsibilities (for example,
when chairing Board Committees
or holding the office of Senior
Independent Director).
No benefits are envisaged for
the Chair of the Board and
Non-Executive Directors but the
Company reserves the right to
provide benefits including travel
and office support.
John Treharne (Founder Non-Executive
Director): £138,000
No change.
Base Non-Executive Director fee: £55,000
Additional fee for:
Senior Independent Director: £5,000
Chair of the Audit & Risk Committee: £8,000
Chair of the Remuneration Committee:
£8,000
As disclosed in the Group’s announcement made on 30 August 2022, Richard Stables is currently a Partner at Fulcrum
Advisory Partners LLP (‘Fulcrum Partners’), an independent advisory firm, and a Senior Advisor to Blantyre Capital
(‘Blantyre’), a c. 11.8% shareholder in the Company as at 31 December 2023. While Richard has not been appointed as a
representative of Blantyre or any other shareholder and Fulcrum Partners has ceased to provide advisory services to
Blantyre in relation to the Company, Fulcrum Partners is party to an incentive arrangement with Blantyre pursuant to
which Fulcrum Partners is entitled to certain cash payments contingent on the share price of the Company achieving
various price levels up to 600p per share, with a maximum cash value at those price levels equivalent to 305,641 shares
in the Company. For the avoidance of doubt, no payments under this incentive have been made up to the date of this
report and the cost of any such payments are met in full by Blantyre i.e. there is no cost to the Company.
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Governance report
Report of the Remuneration Committee
continued
Introduction
This report contains the material
required to be set out as the Directors’
Remuneration Report in accordance
with The Large and Medium-sized
Companies and Groups (Accounts
and Reports) Regulations 2008 (‘the
DRR Regulations’), as amended in 2013,
2018 and 2019.
Directors’ Remuneration Policy
The current Directors’ Remuneration
Policy was approved by shareholders
at the 2022 AGM (the ‘Directors’
Remuneration Policy’) and can
be found within our 2021 Annual
Report and Accounts which are
available on our website at:
www.tggplc.com/investors.
As noted in the Chair’s statement,
we are in the process of reviewing
the Directors’ Remuneration Policy
and expect to present a revised
policy to shareholders for approval in
due course.
Single total figure table (audited)
The remuneration for Directors of the Company who performed qualifying services during 2023 is detailed below, with
prior year information provided for comparison purposes.
Salary/fees
Taxable
benefits1
Pension
Total fixed
remuneration
Bonus
Long term
incentives2
Other3
Total variable
remuneration
Total
remuneration
(£’000s)
2022
2023 2022
2023 2022
2023 2022
2023 2022
2023 2022
2023 2022
2023 2022
2023 2022
2023
Executive Directors
Richard
Darwin4
Will Orr4
Luke Tait
Ann-marie
Murphy5
337
–
62
78
142
300
159
262
14
–
2
9
4
7
10
13
Chair and Founder Director
John
Treharne
116
138
10
12
Non-Executive Directors
David
Kelly4
Emma
Woods4
Wais
Shaifta
Elaine
O’Donnell
Richard
Stables
Simon
Jones4
55
20
62
68
55
55
21
19
63
55
–
50
–
–
–
–
–
–
–
–
–
–
–
–
31
–
2
6
–
–
–
–
–
–
–
3
6
12
382
–
66
85
155
322
–
–
65
118
19
249
8
173
283
48
–
126
150
–
–
–
–
–
–
55
20
62
68
55
55
21
19
63
55
–
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 340
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
126
150
–
–
–
–
–
–
55
20
62
68
55
55
21
19
63
55
–
50
1
2
3
4
5
Taxable benefits comprise car allowance (£1,849 for Richard Darwin, £2,667 for Will Orr and £8,000 for Luke Tait and Ann-marie Murphy), private medical cover,
a car parking space and additional mobile telephone contracts (in the case of John Treharne). Will Orr’s benefits include £3,500 for legal advice associated with
his appointment.
The performance period for the 2021 PSP awards does not end until March 2024. However, based on performance up to 31 December 2023, our current estimate
is that this award will lapse in full. Further details are set out on page 99.
Will Orr was granted a buy-out award in respect of awards from a previous employer that were forfeited on his joining the Group. Further details are set out on
page 102.
Richard Darwin and David Kelly stepped down from the Board on 24 March 2023 and 11 May 2023 respectively. Will Orr and Simon Jones joined the Board on
September 2023 and 6 February 2023 respectively. Emma Woods stepped down from the Board on 31 December 2023.
As outlined in last year’s report, Ann-marie was paid a responsibility allowance of £5,000 per month for the period from Richard Darwin leaving the business
until Will Orr joined the Board.
–
–
–
–
–
300
–
–
65
382
418
–
359
249
425
150
573
571
Personal objectives
15%
See below
Will Orr: 93%
Luke Tait: 93%
Richard Darwin:
100%
48
–
221
283
Overall
100%
2023 annual bonus (audited)
For 2023, the overall bonus plan maximum for the Executive Directors was 100% of salary. Performance was based on four
metrics: 60% based on financial targets (Group Adjusted EBITDA Less Normalised Rent), and the remaining 40% based on
personal objectives, number of member visits per month, and transitional leadership.
As outlined in last year’s report, Richard Darwin was eligible for a pro-rata annual bonus for 2023 up to the date he
stepped down from the Board on 24 March 2023. Ann-marie Murphy was not eligible for a 2023 bonus following the
announcement in November 2023 that she would be stepping down from the Board in 2024.
Weighting
Threshold
(0%)
Target
(60%)
Maximum
(100%)
Actual
Outcome
(% of maximum)
Weighted Outcome
(% of maximum)
Measure
EBITDA
60% £33.6m £37.3m £41.0m £38.5m
Payment under non-financial measures is subject to achieving threshold EBITDA (£33.6m):
Transitional leadership
15%
See below
Percentage of members
visiting 4 times
per month
10%
n/a
47.5%
50%
50.8%
73%
100%
100%
44%
15%
10%
Will Orr: 14%
Luke Tait: 14%
Richard Darwin:
15%
Will Orr: 83%
Luke Tait: 83%
Richard Darwin:
84%
Executive
Element
Performance targets and assessment
Will Orr
Transitional
leadership
For Will Orr, the transitional leadership element of the bonus was based on an
assessment of the delivery of a ‘100 day plan’ after joining the Board. In considering
the performance under this element, the Committee noted that Will had:
Engaged effectively and visibly with the Company since joining.
Delivered 2023 performance ahead of guidance and drove preparation for peak season.
Developed and agreed a refreshed strategy to the Board and rolled this out to the
business with clarity of accountability and a new ‘value stream’ delivery approach.
Made a positive impact with shareholders.
Established strong working practices and relationships with the Executive Committee.
Outcome: 15% out of 15%
Personal
objectives
Achieve revenue budget for FY 2023
Driven performance across the trade team and ensured effective commercial decisions
were taken
Revenue outcome of £204.0m exceeded 2023 target
Integration
Exceptional integration into the business and culture
2023 employee engagement score exceeded target
Develop shareholder relationships
Actively engaged with shareholders following appointment
Achieved positive feedback via broker and analyst reports, although no significant
recovery in share price.
Outcome: 14% out of 15%
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Remuneration Committee
continued
Executive
Element
Performance targets and assessment
Luke Tait
Transitional
leadership
In considering the performance under this element, the Committee noted that Luke
had:
Worked diligently with the outgoing CEO to ensure a smooth handover and transition,
recognising the uncertainty of timing for a new CEO joining the business.
Took on additional responsibilities over the spring/summer 2023 prior to the appointment
of the new CEO, working closely with the Chair to lead, manage and deliver investor
roadshow presentations and the HY23 results.
Supported the new CEO immediately from appointment, working collaboratively to
prepare for the FY23 results.
Outcome: 15% out of 15%
Personal
objectives
Achieve revenue budget for FY 2023
Driven performance across the trade team and ensured effective commercial decisions
were taken.
Revenue outcome of £204.0m exceeded 2023 target.
Successful refinancing
Successfully amended and extended the RCF.
Strengthened syndicate support.
Delivered reduction in financing restrictions.
Increased shareholder engagement
Engaged with shareholders to improve sentiment.
Achieved positive feedback via broker and analyst reports, although no significant
recovery in share price.
Outcome: 14% out of 15%
Richard
Darwin
Transitional
leadership
and
personal
objectives
The Committee assessed Richard’s performance across both elements, noting
that he:
Managed and led the delivery of the FY22 results.
Completed a comprehensive handover to the senior management team.
Remained actively available to the management team during the remainder of his notice
period for consultation.
Transitional leadership outcome: 15% out of 15%
Personal objectives outcome: 15% out of 15%
In accordance with the Directors’ Remuneration Policy, the Directors’ bonus is paid in cash as soon as practicable
following the completion of the audit, up to 75% of salary. Any element of annual bonus awarded to the Directors’ above
75% of salary will be awarded in shares and deferred for two years, subject to continued employment. The Committee
applied the deferral approach on a pro-rata basis for Will Orr and Richard Darwin.
The table below sets out the 2023 bonus awards for the Executive Directors:
Executive
Will Orr
Luke Tait
Base salary
2023 bonus
opportunity
2023 bonus
outcome
2023 bonus
Cash
Shares
Total
£425,000 33.3% of salary*
83% of max
£106,250
£11,333
£117,583
£300,000
100% of salary
83% of max
£225,000
£24,000
£249,000
Richard Darwin
£337,000 23.2% of salary*
84% of max
£58,431
£7,012
£65,443
* Pro-rata for time on the Board.
Vesting outcome of 2020 and 2021 PSP awards
Final vesting outcome for 2020 PSP awards
Richard Darwin and Mark George were granted LTIP awards on 9 September 2020 based on relative TSR and absolute
TSR targets assessed over a three year period from this date. The performance period was not complete at the time of
preparation of the 2022 Annual Report and Accounts. The final outcome was subsequently confirmed as resulting in nil
vesting, as outlined in the table below.
Performance measure
Relative TSR vs FTSE Small Cap
(excluding Investment Trusts)
Absolute TSR (share price
adjusted for dividends)
Total
Weighting
Threshold
(20% vests)
Maximum
(100% vests)
Performance
achieved
Outcome
(% of
maximum)
Outcome
(% of award vesting)
67% Median
Upper quintile
Below median
33%
100%
210p
300p
103.1p
0%
0%
0%
0%
0%
Estimated vesting outcomes for 2021 PSP awards
Richard Darwin and Mark George were granted LTIP awards on 25 March 2021 based on relative TSR and absolute TSR
targets assessed over a three year period from this date. Although the performance period is not yet complete, based
on performance up to 31 December 2023, our current estimate is that this award will lapse in full. Further details are set
out below.
Performance measure
Relative TSR vs FTSE Small Cap
(excluding Investment Trusts)
Absolute TSR (share price
adjusted for dividends)
Total
Weighting
Threshold
(20% vests)
Maximum (100%
vests)
Estimated
performance1
Outcome
(% of
maximum)
Outcome (% of
award vesting)
67% Median
Upper quintile
Below median
33%
100%
285p
335p
106.2p
0%
0%
0%
0%
0%
1 Based on performance up to 31 December 2023. The final outcome will be disclosed in next year’s report.
Grant of 2023 PSP awards
PSP awards were granted to Luke Tait and Ann-marie Murphy on 29 March 2023 and, following his appointment to the
Board, to Will Orr on 13 September 2023. Awards were granted in the form of nominal value (0.01p) options.
98 |
Ann-marie Murphy
29 March 2023
175% of salary
£404,248
1 Based on the three month average share price up to the day prior to the grant date.
Executive
Will Orr
Luke Tait
13 September 2023
175% of salary
29 March 2023
175% of salary
£743,749
£525,248
Date of grant
Award level
Face value
of award
Share price used
for grant1
Number of
shares awarded
£1.0363
£1.2388
£1.2388
717,697
423,797
326,323
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Remuneration Committee
continued
Awards are subject to the performance conditions and targets set out below. Relative TSR and absolute TSR are
measured over the three year period from the grant date. The Social Value measure is based on the Social Value
generated in FY2025.
Statement of Directors’ shareholding and share interests (audited)
The table below details, for each Director who served during the year, the total number of Directors’ interests in shares at
31 December 2023 or the date the departing Director left the Board:
Performance measure
Relative TSR (vs FTSE Small Cap (excluding ITs and REITs)
Absolute TSR
Social Value generated during FY2025
Weighting
40%
40%
20%
Threshold
(20% vests)
Maximum
(100% vests)
Median
Upper quintile
7.5% pa
£700m
15.0% pa
£900m
Grant of 2022 Deferred Bonus Share Plan (‘DBSP’) awards
As outlined in last year’s report, the 2022 annual bonus awards were delivered fully in shares. On this basis, DBSP awards
were granted to Luke Tait and Ann-marie Murphy 29 March 2023. Awards were granted in the form of nominal value
(0.01p) options.
Executive
Luke Tait
Ann-marie Murphy
Date of grant
29 March 2023
29 March 2023
Face value
of award
£18,629
£65,2432
Share price
used for grant1
Number of
shares awarded
£1.2388
£1.2388
15,037
52,666
1 Based on the three month average share price up to the day prior to the grant date.
2
This reflects the full year 2022 annual bonus for Ann-marie Murphy (of which £47,737 relates to her services as an Executive Director during 2022, as disclosed in
last year’s report).
Participation in the Share Incentive Plan (‘SIP’)
The Executive Directors are eligible to participate in the SIP on the same terms as all other employees. Details of the
Executive Directors’ participation in the SIP are as follows:
Executive
Total SIP
shares at
1 Jan 2023
Partnership
shares purchased
in 2023
Matching
shares awarded
in 20231
Free shares
awarded
in 2023
Shares forfeited
or withdrawn
in 2023
Total SIP
shares at
31 Dec 2023
Ann-marie Murphy
2,466
569
569
–
3,462
142
1
Matching shares are awarded on a monthly basis associated with the purchase of partnership shares on a 1:1 basis. The partnership shares were purchased at
share prices from £0.85 to £1.35 during 2023, and the total face value matching shares awarded was £600.09.
Participation in the Sharesave Plan
The Executive Directors participate in the Sharesave Plan on the same terms as all other employees. Details of the
Executive Directors’ participation in the Sharesave Plan are as follows:
Executive Director
Richard Darwin
Ann-marie Murphy
Luke Tait
Total
Sharesave
awards at
1 Jan 2023
16,666
1,000
Awards
granted
(number)
Exercise price
of awards
granted
(pence)
Awards
vested
(number)
Awards
exercised
(number)
Awards
lapsed
(number)
–
–
108.0
108.0
95.0
–
–
–
–
–
–
16,666
1,000
Nil
19,526
Total
Sharesave
awards at
31 Dec 2023
–
–
Earliest
exercise
date
N/A
N/A
–
19,526 18/10/2026
Awards subject to
continued employment
Awards
subject to
performance
conditions
Matching
shares
awarded
under SIP
(shares)
Sharesave
awards
(options)
PSP/DSBP
awards
(nominal
cost
options)
Ordinary
shares1
PSP awards
(nominal
cost
options)
Vested but
unexercised
options
Total
shareholding
and share
interests
Shareholding
requirement
met?
Director
Executive Directors
–
–
–
288,722
246,067
717,697
19,526
243,087
775,933
98,168
540,936
–
–
–
–
1,020,884
963,764
1,102,756
639,246
No2
No2
No2
No2
Richard Darwin
727,990
4,172
Will Orr2
Luke Tait
Ann-marie Murphy
Chair and Founder Director
–
64,210
71
–
–
71
John Treharne
1,629,053
1,764
Non-Executive Directors
David Kelly
Emma Woods2
Wais Shaifta
Elaine O’Donnell
Richard Stables
Simon Jones
10,000
28,930
–
20,000
200,000
–
–
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
170,553
1,801,370
–
–
–
–
–
–
10,000
28,930
–
20,000
200,000
–
1
2
Includes shares held by connected persons.
Executive Directors that joined the Board following the IPO are required to build up a shareholding of at least 200% of salary (300% for Richard Darwin).
Shareholding includes all beneficial shareholdings, vested but unexercised options (on a net of tax basis) and unvested shares subject to continued employment
only (on a net of tax basis). As at 31 December 2023, Will Orr, Luke Tait and Ann-marie Murphy were still working towards this requirement (having joined the
Board in the last two years). As at 24 March 2023, Richard Darwin had not met his shareholding requirement.
Between 31 December 2023 and the date of this report, there were no changes in the Directors’ shareholdings and share
interests remained unchanged.
The table below sets out the details of the share options exercised by Executive Directors during the year:
Director
Awards exercised
during the year
Date of exercise
Exercise
price
Share price on
date of exercise
Ann-marie Murphy
21,512
22 September 2023
£0.0001
£1.198
Gain on
exercise
£25,769
100 |
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Remuneration Committee
continued
Departure of Richard Darwin
(CEO)
Following mutual agreement with the
Board, Richard Darwin stepped down
from the Board and as CEO on 24
March 2023 and remained employed
until 12 July 2023 (the end of his six
month notice period).
Payments up to 24 March 2023 are
disclosed in the single figure table of
remuneration on page 96. Richard
continued to receive his salary,
pension and benefits between 24
March 2023 and 12 July 2023, in line
with his contractual entitlements,
as follows:
Base salary: £101,462
Pension: £4,059
Benefits: £5,084
Payment in respect of holiday accrued
but not taken: £21,975
He also received a contribution of
£6,500 plus VAT towards legal fees
and £3,000 plus VAT towards the cost
of public relations advice incurred
in connection with his departure.
On stepping down from the Board,
Richard also received a ten year gym
membership with The Gym Group
in recognition of his long term on
the Board, in line with the standard
approach for retiring long serving
Directors from the Board. This is not
considered a taxable benefit and
therefore there is no associated
taxable benefit value.
Richard was entitled to participate in
the 2023 bonus scheme on a pro-rata
basis for the period worked to reflect
his role in leading and setting up the
business for the change of CEO. As set
out on page 99, he received a bonus of
£65,443 (equivalent to 84% of the pro-
rated maximum opportunity).
Richard is permitted to retain his
unvested PSP awards - the awards
will continue to be subject to the
performance conditions and will
be pro-rated by reference to the
proportion of the vesting period for
which Richard was employed. Awards
will vest on the original timescales and
will remain subject to the post vesting
holding period.
Richard was not eligible to be granted
a 2023 PSP award and he has no
unvested Deferred Share Bonus Plan.
Richard’s awards under the SIP and
SAYE schemes will be treated in
accordance with the relevant plan
rules and HMRC legislation.
Departures of David Kelly and
Emma Woods
On stepping down from the Board,
both David Kelly and Emma Woods
received a ten year gym membership
with The Gym Group in recognition of
their long term service on the Board,
in line with the standard approach for
retiring long serving Directors from
the Board. This is not considered a
taxable benefit and therefore there is
no associated taxable benefit value.
David and Emma received no other
payments in connection with their
departures from the Company.
Departure of Anne-marie
Murphy (COO)
As was announced on 7 November
2023, Anne-marie Murphy stepped
down from the Board to take up
the role of Chief People Officer at
SSP Group plc. She is contractually
entitled to a six month notice period.
However the Committee agreed
that she would step down from the
Board and cease employment with
the Company on 31 January 2024,
receiving a further two months’ pay in
lieu of notice (‘PILON’).
In line with her contractual
entitlement, Ann-marie continued
to receive her base salary (£231,000
per annum), pension (4% of salary)
and benefits until she stepped down
from the Board on 31 January 2024.
She received two months’ PILON in
respect of her fixed pay, and payment
in respect of accrued but untaken
annual leave.
Ann-marie will not be eligible for
a 2023 annual bonus. All unvested
PSP will lapse on cessation of her
employment with the Company. She
will not be eligible for any variable
remuneration in respect of 2024.
Ann-marie’s awards under the SIP
and SAYE schemes will be treated in
accordance with the relevant plan
rules and HMRC legislation.
Full details of the final amounts paid
to Ann-marie will be set out in next
year’s report, in accordance with the
requirements of the DRR regulations.
Appointment of Will Orr
(new CEO)
On 1 September 2023, Will Orr
joined the Board as an Executive
Director and CEO. The Committee
carefully considered the appropriate
remuneration package for the
role, taking into account Will’s
remuneration package at his previous
employer, his experience, market
practice and relativity to the other
Executive Directors. The Committee
considered benchmarking data for
companies of similar size to The
Gym Group plc operating in similar
sectors (broadly the ‘Consumer
Discretion’ sector).
Will’s base salary was set at £425,000
(between the lower quartile and
median of the market benchmarking).
His pension is in line with the
wider workforce and his variable
remuneration opportunities are
in line with the current Directors’
Remuneration Policy.
Will also received a contribution to
his legal fees of £3,500 plus VAT
associated with his appointment.
Grant of buy-out award
To compensate Will for awards
forfeited on departure from his
previous employer, in particular cash
bonus and unvested share awards, the
Committee agreed to grant a buy-out
totalling £300,000 in accordance with
the Directors’ Remuneration Policy.
The Committee resolved to deliver
a higher proportion of the award in
shares compared to the forfeited
awards. In particular, the Committee
determined that £45,000 of the buy-
out award would be delivered in cash
and the remaining £255,000 would
be delivered in shares subject to an
extended vesting period to provide
further alignment with shareholders –
50% of the shares will vest on the first-
year anniversary of the date of grant
and the remaining 50% will vest on the
second-year anniversary of the date
of grant, subject to the rules of the PSP.
There is no post vesting holding period
applicable to the buy-out award.
102 |
Executive
Will Orr
Date of grant
Face value
of award
Share price used
for grant1
Number of
shares awarded
13 September 2023
£255,000
£1.0363
246,067
1 Based on the three month average share price up to the day prior to the grant date.
Payments to past Directors
No payments to past Directors were made, other than those set out above in respect of Richard Darwin’s exit from
the Company.
Performance graph and CEO remuneration table
The graph below shows the total shareholder return (‘TSR’) performance of an investment of £100 in The Gym Group plc’s
shares from its listing in November 2015 to the end of the period, compared with a £100 investment in the FTSE SmallCap
Index over the same period. The FTSE SmallCap Index was chosen as a comparator because it represents a broad equity
market index of which the Company is a constituent. The TSR was calculated in accordance with the DRR Regulations.
Total Shareholder Return (TSR)
200
175
150
125
100
75
50
25
0
06 Nov
2015
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
31 Dec
2023
The Gym Group plc
FTSE Small Cap Index
The table below details certain elements of the CEO’s remuneration over the same period as presented in the TSR graph:
2015
2016
2017
20181
20181
2019
2020
2021
2022
20231
20231
CEO
John Treharne
John Treharne
John Treharne
John Treharne
Richard Darwin
Richard Darwin
Richard Darwin
Richard Darwin
Richard Darwin
Richard Darwin
Will Orr
Single figure of
total remuneration
(£’000)
288
314
431
273
97
537
336
484
382
150
573
Annual
bonus outcome
(% of maximum)
£60,0002
27.2%
74.3%
16.0%
16.0%
35.1%
0%
44.7%
0%
84%
83%
Long term
incentive outcome
(% of maximum)
n/a
n/a
n/a
41.7%
41.7%
72.5%
0%
0%
0%
0%
n/a
1
2
The 2018 figures represent the single figure of total remuneration for John Treharne for the period to 17 September 2018, and for Richard Darwin from that date.
The 2023 figures represent the single figure of total remuneration for Richard Darwin for the period to 24 March 2023, and for Will Orr from that date.
The actual bonus paid has been inserted for 2015 as this related to the year of Admission when an uncapped discretionary bonus plan was in operation. No long
term incentive awards vested in 2015, 2016 or 2017.
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Remuneration Committee
continued
Annual percentage change in remuneration of Directors and employees
During 2020 and 2021, there was significant volatility in remuneration at The Gym Group, as a result of the impact of
Covid-19 and the actions taken by the Board to ensure that executive remuneration aligned with the broader experience
of our stakeholders. During 2022, the business started to return to a more stable position, albeit subject to significant
inflationary pressures as a result of the Ukraine war and resulting energy crisis. Those inflationary pressures are reflected
in the increases in general employee remuneration, resulting in material increases in salaries, benefits and bonuses. The
percentage movements between 2021 and 2022, shown in the table below, therefore reflect the impact of these pressures
on remuneration of employees and, to a lesser extent, the Directors.
The percentage change in remuneration of the Directors and employees of the business between the 2019, 2020, 2021,
2022 and 2023 financial years were as follows:
% change from 2019 to 2020
% change from 2020 to 2021
% change from 2021 to 2022 % change from 2022 to 2023
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
Salary/
fees
Benefits
Bonus
fees Benefits
Bonus
Salary/
CEO to employee pay ratio
The table below shows how the CEO’s single figure remuneration (as taken from the single figure remuneration table on
page 96) compares to equivalent single figure remuneration for full-time equivalent UK employees, ranked at the 25th,
50th and 75th percentile.
Year
2018
2019
2020
2021
2022
2023
Method
Option C
Option C
Option C
Option C
Option C
Option C
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
19:1
30:1
19:1
26:1
20:1
34:1
13:1
27:1
19:1
25:1
19:1
33:1
10:1
14:1
13:1
24:1
16:1
27:1
Employees1,2
5%
(11)% (100)%
6%
29%
100%
11%
4%
720%
9%
19% (29)%3
Notes to the CEO to employee pay ratio:
Executive Directors:
Richard Darwin4
Will Orr4
Luke Tait4
Ann-marie Murphy4
(6)%
N/A
N/A
N/A
3% (100)%
N/A
N/A
N/A
N/A
N/A
N/A
8%
N/A
N/A
N/A
8%
N/A
N/A
N/A
100%
N/A
N/A
N/A
10%
N/A
N/A
N/A
7% (100)%
N/A
N/A
N/A
N/A
N/A
N/A
0%
N/A
0%
5%
10% 100%
N/A
25%
N/A
171%
9% (100)%
Chair and Founder Director:
1
As the hourly rates for gender pay gap purposes for significant numbers of employees are the same, it is not possible to identify appropriate representative
quartile employees from this data alone. Instead, the lower quartile, median and upper quartile employees were initially identified using the approximate full-
time equivalent total actual pay of all employees for the financial year (based on employees of the Group as at 31 December 2023). A full-time equivalent total
pay and benefits figure for the 2023 financial year was then calculated for each of those employees. This was also sense checked against a sample of employees
with full-time equivalent total actual pay either side of the identified individuals to ensure that the appropriate representative employee is selected. A review of
the methodology used identified that this was more consistent with Option C and has been relabelled accordingly.
2
The pay ratios outlined above were then calculated as the ratio of the CEO’s single figure to the total pay and benefits of each of these employees. As required
by the regulations, the CEO single figure used to determine the 2023 pay ratios is based on the sum of the total single figures of remuneration for Richard Darwin
and Will Orr. This gives a total of £723,000 (which includes Will Orr’s buyout award).
John Treharne
(27)%
(48)%
N/A
36%
42%
N/A
(40)%
23%
N/A
19%
20%
N/A
3 Each employee’s pay and benefits were calculated using each element of employee remuneration on a full-time basis, consistent with the CEO.
Non-Executive Directors:
David Kelly5
Emma Woods
Wais Shaifta5
Elaine O’Donnell5
Richard Stables5
Simon Jones5
(27)%
(27)%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
36%
36%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0%
24%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0%
0%
0%
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1
2
3
4
5
The strict legal requirement is to only provide details of employees of The Gym Group plc. As the listed entity has very few employees, we have decided to
voluntarily disclose in respect of all The Gym Group employees.
The average percentage change in employee remuneration was calculated using the movement in mean values (in respect of each element of remuneration)
between the relevant years. The relevant mean values were calculated by dividing the aggregate total of each element of remuneration for all Group employees
during the year (calculated on an FTE basis) by the total number of Group employees.
This represents a reduction in bonuses paid in 2023 (in respect of 2022) compared to those paid in 2022 (in respect of 2021).
Richard Darwin stepped down from the Board from 24 March 2023. Ann-marie Murphy and Luke Tait joined the Board on 11 April 2022 and 17 October 2022
respectively and Will Orr joined the Board on 1 September 2023.
Wais Shaifta joined the Board on 1 February 2021, Elaine O’Donnell and Richard Stables joined the Board on 30 August 2022 and Simon Jones joined the Board on
6 February 2023. David Kelly stepped down from the Board on 11 May 2023.
4
Where required, remuneration was approximately adjusted to be full-time and full-year equivalent based on the employee’s average full-time equivalent hours
for the year and the proportion of the year they were employed. No other adjustments were made.
The total pay and benefits and the salary component of total pay and benefits for the 2023 pay and benefits of the
employees at the 25th percentile, median, and 75th percentile are shown below:
Salary
Total pay and benefits
25th percentile
Median
75th percentile
£21,275
£21,275
£21,850
£21,850
£23,683
£27,282
Base salaries of all employees, including our Executive Directors, are set with reference to a range of factors including
market practice, experience, and performance in role. The Committee also notes that the CEO’s remuneration package is
weighted more heavily towards variable pay (including the annual bonus and LTIP) than those of the wider workforce due
to the nature of the role, and this means the ratio is likely to fluctuate depending on the performance of the business and
associated outcomes of incentive plans in each year.
The 2023 ratios are higher than the prior year. This is primarily attributable to the combined CEO’s single figure of
remuneration being higher for 2023, primarily due to the buyout award for Will Orr. For reference, the 2023 median pay
ratio is 19:1 excluding the buyout award for Will Orr (i.e. in line with the 2022 median ratio). Over the longer term, the CEO
pay ratios have moved broadly in line with the CEO’s single figure of remuneration.
The Committee notes that the pay ratios for 2023 reflect the nature of the CEO’s package being more heavily weighted
towards variable pay compared to more junior colleagues, consistent with our reward policies. Furthermore, the
Committee is satisfied that our pay and broader people policies drive the right behaviours and reinforce the Group’s
values which in turn drive our culture. For these reasons, the Committee believes that the ratios are consistent with
these policies.
104 |
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Report of the Remuneration Committee
continued
Relative importance of spend on pay
The table below details the change in total staff pay between 2022 and 2023 compared with distributions to shareholders
by way of dividend, share buy backs or any other significant distributions or payments:
Total gross staff pay
Dividends/share buy back(s)
2023
(£’000)
35,348
–
2022
(£’000)
35,403
–
%
change
0%
0%
Summary of shareholder voting
The following table shows the results of the advisory vote on the 2022 Directors’ Remuneration Report (at the 2023 AGM)
and the binding vote on the Directors’ Remuneration Policy at the 2022 AGM:
For (including discretionary)
Against
Votes withheld
Approval of the 2022 Directors’
Remuneration Report (2023 AGM)
Approval of the Directors’ Remuneration
Policy (2022 AGM)
Total number
of votes
105,047,207
12,936,030
200
% of
votes cast
89.0%
11.0%
–
Total number
of votes
137,871,527
4,841,266
1,287,713
% of
votes cast
96.6%
3.4%
–
Remuneration Committee in 2023
The Committee’s principal responsibilities are to recommend the Group’s policy on executive remuneration, determine the
levels of remuneration for Executive Directors and the Chair of the Board and prepare an annual remuneration report for
approval by the shareholders at the AGM.
The Chief Executive Officer and other Executive Directors as necessary are invited to attend meetings of the Committee,
except when their own remuneration is being directly discussed. Our Chair, John Treharne, takes no part in any
discussions relating to his own remuneration. The Committee met five times during the year and the table below details
attendance of members at these meetings.
Director
Emma Woods (Chair to 31 December 2023)
Elaine O’Donnell
Simon Jones1
David Kelly2
1 Simon Jones was appointed to the Board on 6 February 2023.
2 David Kelly stepped down from the Board on 11 May 2023.
Member since Meetings attended
November 2016
August 2022
February 2023
July 2016
5 / 5
5 / 5
4 / 4
3 / 3
Following Emma’s departure from the Board, the Remuneration Committee members are Wais Shaifta (Chair),
Elaine O’Donnell and Simon Jones.
The Committee has formal terms of reference which can be viewed on the Group’s website.
The Committee does not currently consult with employees specifically on the effectiveness and appropriateness of the
Executive Remuneration Policy and framework. However, the Group seeks to promote and maintain good relationships
with employees as part of its employee engagement strategy. The whole Board, especially the Chair of the Board and the
Chair of the Remuneration Committee, regularly visit our gyms, which facilitates engagement and keeps the Board up to
date with gym operations. It is our intention to continue this dialogue in 2024 and to explain to the wider workforce how
the pay of Executive Directors and employees is aligned.
During the year, the Committee’s key
activities included:
Determining the remuneration
package for Will Orr as our new CEO;
Determining the leaving arrangements
for Richard Darwin;
Assessing the final vesting outcome
under the 2020 performance share
plan awards;
Assessing the out-turn of the 2022
annual bonus;
Setting the performance measures,
weightings and targets for the 2023
annual bonus and 2023 PSP awards;
Commencing a review of the Directors’
Remuneration Policy;
Appointing a new remuneration
advisor, PricewaterhouseCoopers LLP;
Approving a grant of options under the
Save As You Earn scheme;
Reviewing and approving a Company-
wide pay review for 2024; and
Receiving updates on shareholder
views on remuneration.
In addition, the Committee has
ensured that the Directors’
Remuneration Policy and practices
are consistent with the six factors set
out in Provision 40 of the Corporate
Governance Code:
Clarity – Our Directors’ Remuneration
Policy is well understood by our senior
Executive team and has been clearly
articulated to our shareholders
and representative bodies (both
on an ongoing basis and during
consultation when changes are
being made).
Simplicity – The Committee is mindful
of the need to avoid overly complex
remuneration structures which can be
misunderstood and deliver unintended
outcomes. Therefore, a key objective
of the Committee is to ensure that
our Directors’ Remuneration Policy
and practices are straightforward to
communicate and operate.
Risk – Our Directors’ Remuneration
Policy has been designed to ensure
that inappropriate risk-taking is
discouraged and will not be rewarded
via (i) the balanced use of annual
incentives and long term incentives
which employ a blend of financial,
non-financial and shareholder return
targets, (ii) the significant role played
by shares in our incentive plans
(together with bonus deferral and in
employment shareholding guidelines),
and (iii) malus/clawback provisions
within all our incentive plans.
Predictability – Our incentive plans
are subject to individual caps, with our
share plans also subject to market
standard dilution limits. At the time of
approving the Policy full information
on the potential values of the annual
bonus and PSP awards are provided,
with strict maximum opportunities
and minimum, target and maximum
performance scenarios. An indication
of the potential impact of a 50%
share price appreciation on the value
of LTIP awards is also included.
Proportionality – There is a clear
link between individual awards,
delivery of strategy and our long
term performance. In addition,
the significant role played by
incentive/‘at-risk’ pay, together
with the structure of the Executive
Directors’ service contracts,
ensures that poor performance
is not rewarded.
Alignment to culture – Our Executive
pay policies are fully aligned to The
Gym Group’s culture through the
use of metrics in both the annual
bonus and PSP that measure how
we perform against key aspects of
our strategy, which has the objective
of delivering sustainable growth.
The Committee oversees consistent
workforce reward principles and is
satisfied that these policies drive
the right behaviours and reinforce
the Group’s values, which in turn
promote an appropriate culture.
The use of annual bonus deferral, LTIP
holding periods and our shareholding
requirements strengthen the focus
on our strategic aims and ensure
alignment with the interests and
experiences of shareholders, both
during and after employment.
Advisers to the Remuneration
Committee
The Committee appointed
PricewaterhouseCoopers LLP
(‘PwC’) as external independent
remuneration advisers to the
Committee following a competitive
tender process in early 2023. PwC
advised the Company on all aspects
of the remuneration for Executive
Directors and the senior management
team. PwC received fees of £65,000
plus VAT for their advice during the
year to 31 December 2023, partly on
a fixed fee and partly on a time and
materials basis.
Prior to the appointment of PwC, FIT
Remuneration Consultants LLP (‘FIT’)
served as independent remuneration
advisers having been appointed by
the Committee prior to IPO. FIT’s fees
in respect of 2023 were £25,000 plus
VAT, charged on a fixed fee basis.
Both PwC and FIT are members of
the Remuneration Consultants Group
and the voluntary code of conduct
of that body is designed to ensure
objective and independent advice is
given to remuneration committees.
The Committee is therefore of the
view that both PwC and FIT provided
independent remuneration advice
to the Committee and do not have
any connections with the Group or
any Director that may impair their
independence.
On behalf of the Board
Wais Shaifta
Chair of the Remuneration Committee
13 March 2024
106 |
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The Gym Group plc | Annual Report and Accounts 2023
Governance report
Directors’ report
The Directors present their report
together with the audited financial
statements for the period ended
31 December 2023.
Where reference is made to other
sections of the Annual Report and
Accounts 2023, these sections
are incorporated into this report
by reference.
A summary statement of non-financial
information and where this can be
found in the report is on page 65.
Corporate structure
The Gym Group plc is a public
company limited by shares,
incorporated in England and Wales,
and its shares are traded on the Main
Market of the London Stock Exchange.
The Company number is 08528493.
The Board
The Directors who served
during the year were:
John Treharne
Will Orr (appointed with effect
from 1 September 2023)
Luke Tait
Elaine O’Donnell
Wais Shaifta
Richard Stables
Simon Jones (appointed with
effect from 6 February 2023)
Richard Darwin (resigned with
effect from 24 March 2023)
Emma Woods (resigned with
effect from 31 December 2023)
David Kelly (resigned with
effect from 11 May 2023)
Ann-marie Murphy (resigned with
effect from 31 January 2024)
The roles and biographies of the
Directors as at the date of this report
are on pages 72 to 73. The general
powers of the Directors are set out
in Articles 64 to 68 of the Company’s
Articles of Association (‘the Articles’).
These provide that the Board may
exercise all the powers of the Company,
subject to applicable legislation, the
Articles and any special resolution of
the Company, applicable on the date
that any power is exercised.
Appointment and replacement
of Directors
The appointment and replacement
of Directors is governed by the
Company’s Articles. These state that
the number of Directors shall not be
less than two nor exceed 12 and that:
The shareholders may, by ordinary
resolution, elect any person willing
to act as a Director.
The Board may, by ordinary
resolution, elect any person willing
to be a Director.
Every Director shall retire at
each AGM and be eligible for
re-election.
The Company may, by special
resolution, or ordinary resolution
of which special notice has been
given according to applicable
legislation, remove any Director
before the expiration of his or her
period of office.
There are a number of other
grounds on which a Director’s office
may cease, namely: voluntary
resignation, if they are absent
without special leave of absence for
a period of more than six months,
they are physically or mentally
incapable of acting as a Director,
they become bankrupt or prohibited
by law from being a Director.
Directors’ indemnity insurance
The Company has granted an
indemnity by way of deed poll to
its Directors against any liability
which attaches to them in defending
proceedings brought against them,
to the extent permitted by English law.
In addition, Directors and Officers of
the Company and its subsidiaries are
covered by Directors’ and Officers’
liability insurance.
Compensation for loss of office
The Company does not have
arrangements with any Director which
would provide compensation for loss
of office or employment resulting from
a takeover, except that provisions of
the Company’s share plans may cause
options and awards granted under
such plans to vest on a takeover.
Dividend
As noted on page 27, the Directors
are not proposing a final dividend for
the year 2023. It is a condition of the
Company’s bank facilities that the
Company shall not declare or pay a
dividend while the £10m additional
RCF Facility is in place.
Going concern
As noted on pages 61 to 63, the
Directors have a reasonable
expectation that the Group has
adequate resources to continue in
operational existence for the period
to 30 June 2025. As a result, they
continue to adopt the going concern
basis in preparing these consolidated
financial statements.
Future developments in
the business
The likely future developments in
respect of the business can be found
in the Strategic report on pages 6
to 69 and forms part of this report
by reference.
Corporate governance
A report on corporate governance
and compliance with the Code is set
out on pages 70 to 79, and forms part
of this report by reference.
Health and safety
An overview of health and safety is
provided in the Sustainability report
on page 41 and forms part of this
report by reference.
Greenhouse gas emissions
Information on the Group’s
greenhouse gas emissions is set out in
the Sustainability report on pages 46
to 49 and forms part of this report
by reference.
ensure they are properly trained
to perform their role safely and
effectively and to provide career
opportunities which allow them to fulfil
their potential. Where an employee
becomes disabled in the course of
their employment, the Group will
actively seek to retain them wherever
possible by making adjustments to
their work content and environment
or by retraining them to undertake
new roles.
Directors’ interests
The beneficial interests of the
Directors of the Company at
31 December 2023, and their
connected persons, in the issued
Ordinary shares are provided on
page 101 within the Report of the
Remuneration Committee.
Major interests in shares
As at 31 December 2023, the Company
was aware of the following interests
representing 3% or more of the issued
share capital of the Company (see
table below). It should be noted that
these holdings may have changed
since notified to the Company;
however, notification of any change is
not required until the next applicable
threshold is crossed.
Share capital
As at 31 December 2023, the
Company’s issued share capital
comprised 178,700,366 Ordinary
shares with a nominal value of £0.01
each with one vote per share.
Ordinary shares
The Ordinary shares rank pari passu
in all respects with the other Ordinary
shares in issue, including for voting
purposes, and will rank in full for all
dividends and other distributions
thereafter declared, made or paid
on the Ordinary share capital of the
Company. Each Ordinary share ranks
equally in the right to receive a relative
proportion of shares in case of a
capitalisation of reserves.
Except in relation to dividends which
have been declared and rights on
a liquidation of the Company, the
shareholders have no rights to share
in the profits of the Company.
The Ordinary shares are not
redeemable. However, the Company
may purchase or contract to
purchase any of the Ordinary
shares on or off market, subject to
the Companies Act 2006 and the
requirements of the Listing Rules.
Human rights, anti-bribery
and anti-corruption
We conduct our business honestly
and ethically wherever we operate.
Our Human Rights Policy Statement
and Anti-Bribery and Corruption
Policy Statement can be found on
our website. We also have a detailed
AntiBribery and Corruption policy,
which is available to all employees via
our intranet along with training.
We comply with the Modern Slavery
Act and our statement, including
further information on our activity
to mitigate risks related to modern
slavery, can be found on our website:
www.tggplc.com/modern-slavery.
Political donations
The Company made no political
donations in 2023 (2022: £nil).
Employee involvement and
policy regarding disabled
persons
The Group operates an equal
opportunities policy which aims to
treat individuals fairly and not to
discriminate on the basis of sex, race,
ethnic origin, disability or on any
other basis. The Group’s policy and
procedures are designed to provide
for full and fair consideration and
selection of disabled applicants, to
Institution
Blantyre Capital
Liontrust Sustainable Investments
Goldman Sachs Collateral Account
Fidelity International
Invesco
Number of shares
Percentage
21,059,643
18,717,293
13,406,119
13,039,450
9,387,741
7,088,847
7,040,146
6,922,809
6,046,201
5,961,727
5,360,000
5,352,855
11.78%
10.47%
7.50%
7.30%
5.25%
3.97%
3.94%
3.87%
3.38%
3.34%
3.00%
3.00%
Royal Bank of Canada (previously BlueBay Asset Management)
Farringdon Capital Management
Gresham House Asset Management
Columbia Threadneedle Investments
Credit Agricole, Luxembourg (PB)
Blackmoor Investment Partners
GVQ Investment Management
Since 31 December 2023 until 13 March 2024, the Company has been notified of the following interests representing over
3% of the issued share capital:
Institution
Invesco
Royal Bank of Canada
FORUM European Smallcaps GmbH
Number of shares
Percentage
Date of transaction
8,797,380
9,463,934
6,617,840
4.92%
8 January 2024
5.30% 9 February 2024
3.70%
1 March 2024
108 |
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Financial statementsOther informationStrategic reportGovernance report The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Governance report
Directors’ report
continued
There are no restrictions on transfers
of Ordinary shares other than:
certain restrictions which may
from time to time be imposed by
laws or regulations such as those
relating to insider dealing;
some of the Company’s employee
share plans include restrictions on
transfer of shares while the shares
are held within the plan;
pursuant to the Group’s Share
Dealing Code whereby the
Directors and designated
employees require approval to
deal in the Company’s shares; and
where a person with an interest in
the Company’s shares has been
served with a disclosure notice and
has failed to provide the Company
with information concerning
interests in those shares.
The Company is not aware of any
arrangements between shareholders
which may result in restrictions on the
transfer of securities or voting rights.
Amendment to the Company’s
Articles of Association
The Company may alter its Articles
of Association by special resolution
passed at a general meeting of
shareholders.
Authority for the Company to
purchase its own shares
At the 2023 AGM, shareholders
approved an authority for the
Company to make market purchases
of its own shares up to a maximum
of 17,836,845 shares (being
approximately 10% of the issued
share capital at that time) at prices
not less than the nominal value of
each share (being £0.01 each). No use
was made of this authority during
the period. The Company intends to
renew this authority at its 2024 AGM.
Authority to allot shares
At the 2023 AGM, authority was given
to the Directors to allot new Ordinary
shares up to a nominal value of
£5,945.61, equivalent to 33.33% of the
issued share capital of the Company.
In addition, authority was given to the
Directors to allot further new Ordinary
shares up to a nominal value of
£11,891.23, equivalent to 66.67% of the
authorised share capital of the Group.
The Company intends to renew this
authority at its 2024 AGM.
Significant agreements
The Company is not a party to any
significant agreements which would
take effect, alter or terminate upon a
change of control of the Company.
Financial risk management
The Group’s financial risk
management objectives and
policies, including its use of financial
instruments, are set out in Note 23 to
the consolidated financial statements.
Information presented in
other sections
Certain information is required to
be included in the Annual Financial
Report by Listing Rule 9.8.4. The
following table (see below) provides
references to where this information
can be found in this Annual Report
and Accounts 2023. If a requirement is
not shown, it is not applicable to
the Company.
Section 172 and engagement
with suppliers, customers
and others
In its decision-making, the Board
has regard to each Director’s duty
to promote the success of the
Company on behalf of the Company’s
stakeholders, to foster the Company’s
relationships with employees,
suppliers, members, and others, and
considers the effect of the principal
decisions taken by the Company
during the financial year on the
Company’s stakeholders. This is set
out in our s.172 statement on pages
66 to 69.
Auditor
Each of the persons who is a
Director at the date of approval of
the Annual Report and Accounts
2023 confirms that: a) so far as the
Director is aware, there is no relevant
audit information of which the
Group’s auditor is unaware; and b)
the Director has taken all the steps
which he/she ought to have taken as
a Director in order to make himself/
herself aware of any relevant audit
information and to establish that
the Group’s auditor is aware of that
information. Ernst & Young LLP has
expressed its willingness to continue
in office as auditor and a resolution
to reappoint them will be proposed at
the forthcoming AGM.
AGM
The Notice convening the 2024 AGM
will be circulated to shareholders
separately with details of the meeting.
We will ensure that shareholders are
kept informed using the Notice of
Meeting, our website, and relevant
regulatory announcements in
due course.
On behalf of the Board
Krishan Pandit
Company Secretary
13 March 2024
Section
Listing Rule requirement
Location
1
4
10
110 |
A statement of the amount of interest capitalised by the
Group during the period under review with an indication of the
amount and treatment of any related tax relief
Details of long term incentive schemes
Details of contracts of significance
Note 10 Finance costs (page 141)
Report of the Remuneration Committee
(pages 92 to 107)
Corporate Governance report (page 79
Directors’ conflicts of interest)
Responsibility statement
The Directors confirm, to the best of
their knowledge:
That the consolidated financial
statements, prepared in
accordance with UK-adopted
IFRSs, give a true and fair view
of the assets, liabilities, financial
position and results of the
Parent Company and subsidiary
undertakings included in the
consolidation taken as a whole;
That the Annual Report and
Accounts 2023, including the
Strategic report, includes a fair
review of the development and
performance of the business and
the position of the Company and
subsidiary undertakings included
in the consolidation taken as a
whole, together with a description
of the principal risks and
uncertainties that they face; and
That they consider the Annual
Report and Accounts 2023, taken
as a whole, is fair, balanced and
understandable and provides
the information necessary
for shareholders to assess
the position, performance,
business model and strategy of
the Company and subsidiary
undertakings included in the
consolidation taken as a whole.
On behalf of the Board
Will Orr
Chief Executive Officer
13 March 2024
Governance report
Directors’ responsibility statement
The Directors are responsible for
preparing the Annual Report and
Accounts 2023 in accordance with
applicable United Kingdom law
and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law,
the Directors have elected to prepare
the Group financial statements
in accordance with UK-adopted
international accounting standards
(‘IFRS’), and the Parent Company
financial statements in accordance
with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards and
applicable law), including Financial
Reporting Standard 101 Reduced
Disclosure Framework (‘FRS 101’).
Under company law, the Directors
must not approve the Group and
Company financial statements unless
they are satisfied that they give a true
and fair view of the state of affairs of
the Group and the Company and of
the profit or loss of the Group and the
Company for that period.
In preparing the financial statements,
the Directors are required to:
select suitable accounting policies
and then apply them consistently;
make judgements and estimates
that are reasonable and prudent;
present information, including
accounting policies, in a manner
that provides relevant, reliable,
comparable and understandable
information;
provide additional disclosures
when compliance with the
specific requirements in IFRSs
(or in respect of the Parent
Company financial statements,
FRS 101) is insufficient to enable
users to understand the impact
of particular transactions,
other events and conditions on
the Group’s financial position
and performance;
in respect of the Group financial
statements, state whether
applicable UK-adopted IFRSs
have been followed, subject
to any material departures
disclosed and explained in the
financial statements;
in respect of the Parent Company
financial statements, state
whether applicable UK accounting
standards including FRS 101 have
been followed, subject to any
material departures disclosed
and explained in the financial
statements; and
prepare the financial statements
on a going concern basis, unless it
is appropriate to presume that the
Company and/or Group will not
continue in business.
The Directors confirm that the
financial statements comply with the
above requirements.
The Directors are responsible for
keeping adequate accounting
records that are sufficient to show
and explain the Company’s and
Group’s transactions and disclose
with reasonable accuracy at any
time the financial position of the
Company and the Group and enable
them to ensure that the Company and
Group financial statements comply
with the relevant financial reporting
framework. They are also responsible
for safeguarding the assets of
the Group and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
Under applicable law and regulations,
the Directors are also responsible
for preparing a Strategic report,
Directors’ report, Directors’
remuneration report and Corporate
Governance statement that comply
with that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Group’s website.
Legislation in the UK governing the
preparation and dissemination of
accounts may differ from legislation
in other jurisdictions.
| 111
Financial statementsOther informationStrategic reportGovernance report
The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Independent auditor’s report
to the members of The Gym Group plc
Opinion
In our opinion:
The Gym Group plc’s Group financial statements and Parent Company financial statements (the ‘financial
statements’) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 December 2023 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of The Gym Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2023 which comprise:
Group
Parent Company
Consolidated statement of financial position as at
31 December 2023
Company statement of financial position as at
31 December 2023
Consolidated statement of comprehensive income
for the year then ended
Company statement of changes in equity for the year
then ended
Consolidated statement of changes in equity for the year
then ended
Related notes 1 to 8 to the financial statements including
material accounting policy information
Consolidated cash flow statement for the year then ended
Related notes 1 to 28 to the financial statements, including
material accounting policy information
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and UK adopted international accounting standards. The financial reporting framework that has
been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company
and we remain independent of the Group and the Parent Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group
and Parent Company’s ability to continue to adopt the going concern basis of accounting included :
We obtained management’s forecast cash flows and covenant calculations covering the period from the date of
signing to 30 June 2025 and we agreed these to the Group’s three year financial plan;
We challenged the appropriateness of the going concern assessment period, taking into consideration events after
the going concern period which may have an impact;
We tested the mathematical accuracy of the cash flows, as well as the calculation of the forecast covenants;
We assessed, against historic and current membership levels and independent sector forecasts, the plausibility of the
reduction in membership numbers that would lead to a covenant breach under the reverse stress test scenario, and
the impact this would have on liquidity;
We corroborated lease costs to agreements; rate forecasts to published rate increases; and benchmarked costs
against external industry forecasts;
We further corroborated the membership impact of the timing / number of new gym openings with management’s
expansion plans;
We understood and challenged the Board’s controllable mitigation plans, including reduced gym openings, lower
marketing spend, deferral of projects and the forecast impact on the ability of the business to operate within its
financial covenants. We obtained supporting documentation to evaluate the plausibility of management’s mitigation
plans considering actions delivered to date;
We compared forecast future cashflows to historical data, ensuring variations are in line with our expectations and
understanding of the business to consider the reliability of past forecasts;
We considered the results of other audit procedures and other knowledge obtained in the audit and whether it was
consistent with or contradicted management’s assumptions;
We performed our own sensitivity analysis on management’s forecast cashflows;
We included management’s reverse stress tested model in the work above;
We obtained evidence of the banks’ agreement to the extension of the Group’s Revolving Credit Facility to
October 2025;
We agreed available facilities to underlying agreements and the extent of drawings thereunder to external
confirmations at 31 December 2023;
We enquired with management in respect of events beyond the going concern period taking into consideration the
planned refinancing in October 2025, made enquiries of our Debt Advisory team and considered the Company’s
positive experience of support to date from their banks.
We assessed the adequacy of disclosures within the Annual Report and Accounts.
Going concern has not been determined to be a key audit matter. We observed that membership rose 4% to 850,000
in the year. Under the reverse stress test, it requires a reduction in members of 16% from February 2024 to create a
breach of the Fixed Charge Cover covenant in June 2025 (after applying available controllable mitigations) with no
liquidity issues.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a
going concern for a period of 15 months from when the financial statements are authorised for issue.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements
about whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group’s ability to continue as a going concern.
112 |
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Independent auditor’s report continued
to the members of The Gym Group plc
Overview of our audit approach
Audit scope
We performed an audit of the complete financial information of two components and
Key audit matters
audit procedures on specific balances for a further one component.
The components where we performed full or specific audit procedures accounted for
100% of Loss before tax, 100%% of Revenue and 100% of Total assets.
Deferral of membership income.
Property, plant and equipment and Right-of-use assets impairment testing including
cash flow and discount rate assumptions.
Materiality
Overall Group materiality of £1,480,000 which represents 2% of Group EBITDA.
An overview of the scope of the Parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our
audit scope for each Company within the Group. Taken together, this enables us to form an opinion on the Consolidated
financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of Group-
wide controls, changes in the business environment, the potential impact of climate change and other factors when
assessing the level of work to be performed at each Company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial statements, of the five reporting components of the Group,
we selected three components covering entities, which represent the principal business units within the Group.
Of the three components selected, we performed an audit of the complete financial information of two components
(‘full scope components’) which were selected based on their size or risk characteristics. For the remaining component
(‘specific scope components’), we performed audit procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant accounts in the financial statements either
because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 100% (2022: 100%) of the Group’s Loss
before tax, Group’s Revenue and Group’s total assets:
Number of components
Revenue
Loss before tax
Total assets
Full
scope
2
100%
97.8%
99.98%
2023
Specific
scope
Remaining
components
1
0%
2.2%
0.02%
2
–
–
–
Full
scope
2
100%
99.95%
99.98%
2022
Specific
scope
Remaining
components
1
0%
0.05%
0.02%
2
–
–
–
Changes from the prior year
There are no changes in the scoping from prior year.
Involvement with component teams
All audit work performed for the purposes of the audit was undertaken by the Group audit team.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group. The Group has determined that the
most significant future impacts from climate change on their operations will be from the reputational risk of not meeting
net zero targets and physical risks regarding heatwaves and temperature increases. These are explained on pages 50
to 53 in the required Task Force for Climate-related Financial Disclosures and on pages 54 to 63 in the Principal risks and
uncertainties. They have also explained their climate commitments on pages 46 to 49. All of these disclosures form part
of the ‘Other information’, rather than the audited financial statements. Our procedures on these unaudited disclosures
therefore consisted solely of considering whether they are materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our
responsibilities on ‘Other information’.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and
any consequential material impact on its financial statements.
The Group has explained in its Sustainability report how climate change has been reflected in the financial statements,
under summary of significant accounting policies how they have reflected the impact of climate change in their financial
statements, including how this aligns with their commitment to the aspirations of the Paris Agreement to achieve net zero
emissions by 2050 for Scope 1 and 2 emissions and 2045 for Scope 3 emissions. There are no significant judgements and
estimates relating to climate change impacting the financial statements.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating
management’s assessment of the impact of climate risk, physical and transition, their climate commitments, and the
effects of material climate risks disclosed on pages 52 and 53. As part of this evaluation, we performed our own risk
assessment, supported by our climate change internal specialists, to determine the risks of material misstatement in the
financial statements from climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern to 30 June
2025 and viability of the Group over the next three years and associated disclosures. Where considerations of climate
change were relevant to our assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit
matter or to impact a key audit matter.
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Independent auditor’s report continued
to the members of The Gym Group plc
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
Key observations communicated
to the Audit and Risk Committee
Based on our procedures,
deferral of membership
income in the year
ended 31 December
2023 is appropriately
recognised and
presented as contract
liabilities as at that date.
Risk
Our response to the risk
Deferral of membership income – total
revenue for the year ended 31 December
2023: £204.0m (31 December 2022:
£172.9m), of which £14.4m was deferred
at 31 December 2022 (31 December
2020: £11.0m) and presented in the
Consolidated statement of financial
position as contract liabilities.
Refer to the Report of the Audit and Risk
Committee (pages 84 to 89); Accounting
policies (page 129); and Note 5 of the
Consolidated financial statements (page 138)
In preparing the consolidated financial
statements, management need to calculate
the amount of joining and subscription
payments collected, which relate to
membership after the year end date and
for which the related revenue should be
deferred and presented as a contract
liability under IFRS 15 ‘Revenue from
Contracts with Customers’ (‘IFRS 15’).
Although the calculation of deferred
membership fees does not involve significant
judgement or estimation, there are a
number of inputs including large numbers
of members, varying subscription rates
and the reliance on outsourced processes
which could be open to manipulation. The
deferred revenue calculation is automated,
driven by manually input reports. There
is an increased risk of material error and
management override in the inputs to
this calculation. Further, consistent with
Auditing Standards, the recognition of
revenue is assessed as a material fraud
risk on every audit engagement with only
rare exceptions.
We reconfirmed our understanding of the
Group’s revenue recognition and deferred
membership fee income calculation processes
and related controls and performed
walkthrough procedures. In addition to making
enquiries of management, we also made
enquiries of the outsourced membership
management service provider (Clubware) to
obtain an understanding of the outsourced
elements of the membership income process,
including the deferred membership fee income
calculation;
We tested the completeness of the members
included in the deferred membership fee
income calculation;
We agreed a sample of the data used in
management’s deferred revenue calculation
(for example the membership ID, joining /
direct debit date and subscription rate) to
the members database and the December
2023 membership income reports used to
post revenue to test the accuracy of the data.
This included sample testing by reference
to membership data held by the Group and
membership data provided directly to us by the
outsourced membership management service
provider.
We also tested completeness and accuracy
of the membership data held by the Group
and used to recognise revenue, by comparing
the monthly/ weekly income files provided to
us from management to the monthly income
files provided directly from the outsourced
membership management service provider.
We tested the appropriateness of manual
journal entries recorded in the general ledger
in relation to revenue, and in particular those
related to deferred income;
We re-performed management’s deferred
membership fee calculation for a sample
of members.
We considered the risk of management
override in the revenue process including the
deferred membership income calculation and
challenged management on methods and
inputs used to calculate deferred revenue.
116 |
Key observations communicated
to the Audit and Risk Committee
Based on our
procedures, we
consider management’s
assessment and the
impairment charges
which have been
recorded in the current
year are reasonable.
The financial statements
disclosures, particularly
those in Notes 14 and
15 to the Consolidated
financial statements,
materially comply
with the applicable
requirements of IAS 36
and IAS1.
Risk
Our response to the risk
Property, plant and equipment (‘PPE’)
impairment testing - 31 December 2023:
£171.6m (31 December 2022: £181.0m);
Right-of-use (‘ROU’) assets 31 December
2023: £278.2 (31 December 2022: £289.4m)
Refer to the Report of the Audit and Risk
Committee (pages 84 to 89); Accounting
policies (page 133); and Notes 14 and 15 of the
Consolidated financial statements (pages
144 to 147).
As disclosed in Notes 14 and 15 to the
Consolidated financial statements, PPE
including ROU of £449.8m is recognised.
Management has undertaken an annual
impairment review in respect of PPE
and ROU assets and has recognised an
impairment of £0.6m in the current year.
We focused on this area due to both the
significance of the carrying value PPE and
ROU assets; and the inherent uncertainty
involved in an impairment review, which
requires management to make significant
judgements and estimations as to future
outcomes and assumptions of cash flows
(for example customer acquisition and
retention, changes in subscription rates,
operating costs, etc), along with the
discount rate to be applied to those cash
flows and the determination of CGUs. In
addition, such judgements and estimates
could be influenced by management bias.
The significant assumptions are disclosed in
Note 14 for PPE and Note 15 for ROU assets.
We performed a walkthrough of the process
and controls to gain an understanding of the
Group’s impairment process.
We considered the appropriateness of the
determination of cash generating units,
challenging management on this allocation
and obtaining supporting evidence.
We obtained management’s three year plan for
2024 to 2026 and assessed assumptions within
this. We also assessed the historical accuracy of
management’s forecasting by comparing actual
financial performance for the year ended 31
December 2023 to management’s previous budget.
We challenged the reasonableness of these
assumptions by reference to historical
data, external benchmarks and the risk of
management bias.
We sought contradictory evidence through
other areas of our audit, internal and external
information on industry and other macro-
economic factors and challenged management
on the appropriateness of significant
assumptions and cost mitigations used in the
impairment calculation.
For the impairment test, we assessed whether
the assumptions disclosed in Notes 14 and 15
to the Consolidated financial statements were
the appropriate key assumptions to be used in
the impairment model, being the discount rate,
revenue growth and cost inflation, taking into
consideration the cost-of-living crisis over the
next three years and the long term growth from
2025 onwards.
We considered management’s sensitivity
analysis showing the impact of a reasonably
possible change in key impairment assumptions
to determine whether an impairment charge
would be required. This consideration included
performing our own sensitivity analysis by
reference to the results of our assessment of
assumptions referred to above.
As part of our work, we utilised EY valuations
specialists to assist in assessing the
appropriateness of the methodology applied
in management’s impairments models and to
assist in our assessment of the discount rate
and long term growth rate assumptions used in
the impairment models.
We assessed the financial statements
disclosures, particularly those in Note 14
for PPE and Note 15 for ROU Assets to the
Consolidated financial statements, against the
requirements of IAS 36 and IAS1 ‘Presentation
of financial statements’ (‘IAS 1’), particularly
those related to judgements, estimation
uncertainty and sensitivities.
The Group audit team performed the full scope
audit procedures on the impairment models
prepared for The Gym Group plc which covered
100% of the risk amount.
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Independent auditor’s report continued
to the members of The Gym Group plc
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining
the nature and extent of our audit procedures.
We determined materiality for the Group to be £1,480,000 (2022: £1,400,000), which is 2% (2022: 2%) of Group EBITDA.
We believe that Group EBITDA would be the most appropriate basis given the focus on Group EBITDA as the Group’s
results continue to normalise.
We determined materiality for the Parent Company to be £3,022,000 (2022: £3,148,000), which is 1% (2022: 1%) of assets.
Being a holding entity, and non-trading, an earning or activity based basis for planning materiality is not applicable,
therefore we have applied a capital-based approach and have selected assets.
During the course of our audit, we reassessed initial materiality and there was no change in our final materiality from
our original assessment at planning.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to
an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 75% (2022: 75%) of our planning materiality, namely £1,111,500 (2022:
£1,050,000). We have set performance materiality at this percentage due to experience with the Group demonstrating an
effective control environment and low incidence of misstatements.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement
accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for
each component is based on the relative scale and risk of the component to the Group as a whole and our assessment
of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to
components was £222,300 to £1,111,500 (2022: £315,000 to £1,050,000).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of
£74,100 (2022: £70,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and
in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report and Accounts 2023 set out on pages 01
to 107, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other
information contained within the Annual Report and Accounts 2023.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the Annual Report and Accounts or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of the other information, we
are required to report that fact.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements and those reports have been prepared in
accordance with applicable legal requirements;
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency
Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements; and
information about the Company’s corporate governance statement and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in
the course of the audit, we have not identified material misstatements in:
the Strategic Report or the Directors’ Report; or
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion, certain disclosures of Directors’ remuneration specified by law are not made; or
adequate accounting records have not been kept by the Parent Company; or
the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a Corporate Governance Statement has not been prepared by the Company.
Corporate Governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group and Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit:
Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on pages 61 to 63;
Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why
the period is appropriate set out on pages 61 to 63;
Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation
and meets its liabilities set out on pages 61 to 63;
Directors’ statement on fair, balanced and understandable set out on page 111;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages
54 to 63;
The section of the Annual Report and Accounts that describes the review of effectiveness of risk management and
internal control systems set out on pages 54 to 61; and
The section describing the work of the Audit and Risk Committee set out on pages 84 to 89.
We have nothing to report in this regard.
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The Gym Group plc | Annual Report and Accounts 2023
Other matters we are required to address
Following the recommendation from the Audit and Risk Committee we were appointed by the Company on 29 July 2015 to
audit the financial statements for the year ending 31 December 2015 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is nine years, covering
the years ending 31 December 2015 to 31 December 2023.
The audit opinion is consistent with the additional report to the Audit and Risk Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Ian Venner (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Belfast
13 March 2024
Financial statements
Independent auditor’s report continued
to the members of The Gym Group plc
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 111, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the Company and management.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and
determined that the most significant are Companies Act 2006; UK Listing Rules; UK Listing Authority – Disclosure
and Transparency Rules; The Companies (Miscellaneous Reporting Regulation) 2018; The Large and Medium-sized
Companies and Groups (Accounts and Reports (Amendment)) Regulations 2013 in particular in respect of the Report
of the Remuneration Committee; UK Tax Legislation; and UK Corporate Governance Code 2018.
We understood how The Gym Group plc is complying with those frameworks by making enquiries of senior
management and those charged with governance; attendance at Audit and Risk Committee meetings; obtaining
an understanding of entity-level controls and considering the influence of the control environment; obtaining an
understanding of policies and procedures in place regarding compliance with laws and regulations, including how
compliance with such policies is monitored and enforced; obtaining an understanding of management’s process for
identifying and responding to fraud risks, including programmes and controls established to address risks identified,
or otherwise prevent, deter and detect fraud, as well as reviewing the risk register and how senior management
monitors those programmes and controls; and reviewing correspondence with relevant regulatory authorities.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud
might occur by discussing within the audit team; performing client continuance procedures; reviewing interim
financial information; identifying related parties; and considering the nature of the account and our assessment of
inherent risk for relevant assertions of significant accounts.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures involved testing of journal entries, with focus on manual journals, large or unusual
transactions, or journals meeting our defined risk criteria based on our understanding of the business; enquiring
of members of senior management and those charged with governance regarding their knowledge of any non-
compliance or potential non-compliance with laws and regulations that could affect the financial statements;
inspecting Board meeting minutes in the period and up to date of signing; enquiring about the policies that have
been established to prevent non-compliance with laws and regulations by officers and employees, and whether such
policies are formalized in a code of conduct, conflict-of-interests statement or similar standard; enquiring about the
entity’s methods of enforcing and monitoring compliance with such policies, if any; and inspecting correspondence, if
any, with regulatory authorities.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
120 |
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Financial statements
Consolidated statement of financial position
as at 31 December 2023
31 December 2023
£m
31 December 2022
£m
Note
Underlying
Non-
underlying
(Note 9)
Total
Underlying
Non-
underlying
(Note 9)
Revenue
Cost of sales
Gross profit
Other income
Operating expenses (before depreciation,
amortisation and impairment)
5
6
7
204.0
(2.8)
201.2
0.3
–
–
–
–
204.0
(2.8)
201.2
0.3
(128.4)
(1.5)
(129.9)
Depreciation, amortisation and impairment
13, 14, 15
(57.5)
15.6
(21.4)
0.3
(5.5)
(0.6)
(0.8)
(2.3)
(0.5)
–
(2.8)
0.5
(58.3)
13.3
(21.9)
0.3
(8.3)
(0.1)
10
11
172.9
(2.0)
170.9
0.8
(101.8)
(59.3)
10.6
(16.1)
–
(5.5)
(1.4)
Total
172.9
(2.0)
170.9
0.8
(106.2)
(67.8)
(2.3)
(17.1)
–
–
–
–
–
(4.4)
(8.5)
(12.9)
(1.0)
–
(13.9)
(19.4)
1.5
0.1
Operating profit/(loss)
Finance costs
Finance income
Loss before tax
Tax (charge)/credit
Loss for the year attributable
to equity shareholders
Other comprehensive income for the year
Items that may be reclassified to profit or loss
Changes in the fair value of derivative
financial instruments
Total comprehensive expense attributable
to equity shareholders
Loss per share (p)
Basic and diluted
(6.1)
(2.3)
(8.4)
(6.9)
(12.4)
(19.3)
–
–
–
(0.1)
–
(0.1)
(6.1)
(2.3)
(8.4)
(7.0)
(12.4)
(19.4)
12
(3.4)
(4.7)
(3.9)
(10.9)
Reconciliation of Operating profit/(loss) to Group Adjusted EBITDA Less Normalised Rent1
Operating profit/(loss)
Add back:
Non-underlying operating items
Share based payments
(included in Operating expenses)
Note
9
8, 26
Underlying depreciation and amortisation 13, 14, 15
Group Adjusted EBITDA
Less:
Normalised Rent2
Group Adjusted EBITDA Less Normalised Rent1
31 December 2023
£m
31 December 2022
£m
13.3
2.3
2.4
57.5
75.5
(37.0)
38.5
(2.3)
12.9
1.4
59.3
71.3
(33.3)
38.0
1
Group Adjusted EBITDA Less Normalised Rent is a non-statutory metric used internally by management and externally by investors. It is calculated as operating
profit before depreciation, amortisation, share based payments and non-underlying items, and after deducting Normalised Rent. Refer to the KPIs on pages 30
to 31 for further information.
2
Normalised Rent is the contractual rent payable, recognised in the monthly period to which it relates. A reconciliation of property lease payments to Normalised
Rent has been included in Note 21.
The Notes on pages 126 to 157 form an integral part of the financial statements.
Note
31 December 2023
£m
31 December 2022
£m
91.4
171.7
278.1
1.0
16.3
558.5
0.7
10.8
1.5
13.0
571.5
43.6
28.6
0.1
72.3
58.9
310.6
1.7
371.2
443.5
128.0
0.1
189.8
39.9
(101.8)
128.0
92.7
181.0
289.4
1.0
16.3
580.4
0.9
8.9
5.4
15.2
595.6
38.8
25.3
0.6
64.7
70.0
325.1
1.8
396.9
461.6
134.0
0.1
189.8
39.9
(95.8)
134.0
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in financial assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Capital and reserves
Own shares held
Share premium
Merger reserve
Retained deficit
13
14
15
16
11
17
18
19
15
22
20
15
22
25
25
25
25
Total equity shareholders’ funds
The Notes on pages 126 to 157 form an integral part of the financial statements.
These financial statements were approved by the Board of Directors on 13 March 2024.
Signed on behalf of the Board of Directors
Will Orr
Chief Executive Officer
Luke Tait
Chief Financial Officer
Company Registration Number 08528493
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2023
Financial statements
Consolidated cash flow statement
for the year ended 31 December 2023
Own
shares held
£m
Share
premium
£m
Hedging
reserve
£m
Note
0.1
189.7
(0.1)
Merger
reserve
£m
39.9
At 1 January 2022
Loss for the year
Other comprehensive income for the year
Income/(loss) for the year and total
comprehensive expense
Issue of Ordinary share capital
Share based payments
Deferred tax on share based payments
At 31 December 2022
Loss for the year
Other comprehensive income for the year
Loss for the year and total
comprehensive expense
Share based payments
At 31 December 2023
–
–
–
–
–
–
–
–
–
0.1
–
–
0.1
189.8
–
–
–
–
–
–
–
–
0.1
189.8
–
0.1
0.1
–
–
–
–
–
–
–
-
–
25
26
11
26
The Notes on pages 126 to 157 form an integral part of the financial statements.
Retained
deficit
£m
(77.5)
(19.4)
–
Total
£m
152.1
(19.4)
0.1
(19.4)
(19.3)
–
1.7
(0.6)
(95.8)
(8.4)
–
(8.4)
2.4
0.1
1.7
(0.6)
134.0
(8.4)
–
(8.4)
2.4
–
–
–
–
–
–
39.9
–
–
–
–
39.9
(101.8)
128.0
Note
31 December 2023
£m
31 December 2022
£m
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance costs
Finance income
Non-underlying operating items
Underlying depreciation of property, plant and equipment
Underlying depreciation of right-of-use assets
Underlying amortisation of intangible assets
Share based payments
Rent concessions
Profit on disposal of property, plant and equipment
Decrease in inventories
Increase in trade and other receivables
Increase in trade and other payables
Decrease in provisions
Cash generated from operations
Tax received
Net cash inflow from operating activities before non-underlying items
Non-underlying items
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Bank interest received
Proceeds from disposal of property, plant and equipment
Business combinations
Net cash outflow used in investing activities
Cash flows from financing activities
Repayment of lease liability principal
Lease interest paid
Bank interest paid
Payment of financing fees
Drawdown of bank loans
Repayments of bank loans
Proceeds of issue of Ordinary shares
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
10
9
14
15
13
26
7
9
24
21
21
21
21
21
18
The notes on pages 126 to 157 form an integral part of the financial statements.
(8.3)
21.9
(0.3)
2.3
24.0
28.0
5.5
2.4
–
–
0.2
(2.2)
7.6
(0.6)
80.5
–
80.5
(1.0)
79.5
(19.2)
(4.5)
0.3
–
–
(23.4)
(28.0)
(15.5)
(4.5)
(1.0)
2.0
(13.0)
–
(60.0)
(3.9)
5.4
1.5
(19.4)
17.1
–
12.9
26.4
28.1
4.8
1.4
(0.5)
(0.4)
(0.6)
(3.1)
3.2
–
69.9
0.8
70.7
(5.3)
65.4
(36.5)
(7.2)
–
0.4
(5.4)
(48.7)
(27.4)
(13.3)
(2.3)
(0.7)
30.5
(5.5)
0.1
(18.6)
(1.9)
7.3
5.4
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Financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2023
1. General information
The Gym Group plc (‘the Company’) and its subsidiaries (‘the Group’) operate low cost, high quality, 24/7, no contract gyms.
The Company is a public limited company whose shares are publicly traded on the London Stock Exchange and is
incorporated and domiciled in the United Kingdom.
The registered address of the Company is 5th Floor, OneCroydon, 12-16 Addiscombe Road, Croydon, CR0 0XT, United
Kingdom.
2. Summary of material accounting policies
A summary of the material accounting policies is set out below. These have been applied consistently in the financial
statements.
Statement of compliance
The financial statements have been prepared in accordance with the Listing Rules and the Disclosure Guidance and
Transparency Rules of the United Kingdom Financial Conduct Authority (where applicable) and United Kingdom adopted
international accounting standards. The accounting policies applied are consistent with those described in the Annual
Report and Accounts of the Group for the year ended 31 December 2022. The functional currency of each entity in the
Group is pound sterling. The consolidated financial statements are presented in pound sterling and all values are rounded
to the nearest one hundred thousand pounds, except where otherwise indicated.
Basis of preparation
The consolidated financial statements have been prepared on a going concern basis under the historical cost convention
as modified by the recognition of derivative financial instruments, financial assets and other financial liabilities at fair
value through the profit and loss and the recognition of financial assets at fair value through other comprehensive income.
The consolidated financial statements provide comparative information in respect of the previous period.
Going concern
In assessing the going concern position of the Group for the year ended 31 December 2023, the Directors have
considered the following:
the Group’s trading performance in 2023 and throughout the traditional January and February 2024 peak period;
future expected trading performance to June 2025 (the going concern period), including membership levels and
behaviours in light of the continued difficult macroeconomic environment; and
the Group’s financing arrangements and relationship with its lenders and shareholders.
2023 was a year of solid membership and revenue growth for The Gym Group, with membership at the end of December
2023 reaching 850,000, an increase of 4% from the end of December 2022. Average revenue per member per month
(‘ARPMM’) for the year was £19.50, up 9% from £17.82 in the prior year. Ultimate, the premium price product, ended the
year at 31.7% of total membership compared with 29.6% in December 2022.
As a result, revenue for the year at £204.0m was 18% up on the prior year. Group Adjusted EBITDA Less Normalised Rent
at £38.5m was £0.5m better than in 2022, as the growth in revenue was largely offset by cost inflation, particularly in
utilities and staff costs.
The Group also reported strong cash generation in the year, with free cash flow of £27.0m (see Note 24 to the
Consolidated financial statements for a reconciliation to Net cash inflow from operating activities) being generated and
used to fund six new site openings and a number of major refurbishments, as well as significant investment in technology.
In September 2023, the Group agreed with its lenders certain changes to the Group’s Revolving Credit Facility (‘RCF’). As
a result, the Group now has access to a combined £80m facility which matures in October 2025. The Group also currently
has access to £12.4m of finance lease facilities (£15m permitted under the RCF).
The RCF is subject to quarterly financial covenant tests on Adjusted Leverage (Non-Property Net Debt divided by Group
Adjusted EBITDA Less Normalised Rent must not exceed 3.0 times) and Fixed Charge Cover (Adjusted EBITDAR to Net
Finance Charges plus Normalised Rent must be greater than 1.5 times). The previously reported liquidity covenant was
removed as part of the revised RCF agreement.
2. Summary of material accounting policies continued
Going concern continued
Whilst the going concern assessment covers the period to the end of June 2025, the Directors have considered the
fact that the Group’s RCF facility is currently expected to expire in October 2025 and concluded that, based on regular
discussions with participating banks and financial advisors, there is a realistic prospect that this will be extended or
refinanced before that time.
Following the January and February 2024 peak trading period, closing membership at 29 February 2024 was 909,000
members, an increase of 7% on the position at 31 December 2023, demonstrating that consumers consider gym
memberships to be a high priority purchase, despite the ongoing difficult economic environment; and that the low cost
gym model remains resilient.
Despite the above, the Directors have continued to take a cautious approach to planning. The base case forecast for the
period to 30 June 2025 anticipates continued growth in yields across the whole estate as a result of pricing optimisation
actions that have already been taken and the impact of the new three-tier price product architecture rolled out in FY23.
Modest increases in membership levels are driven largely by the sites opened in 2022 and 2023, and not by growth in the
mature estate.
In addition, the Directors have continued to take a measured approach to new site openings throughout the plan period,
with all new sites assumed to be self-financed. Under this scenario, the financial covenants are passed with headroom
and the Group can operate comfortably within its financing facilities.
The Directors have also considered a severe downside scenario in which membership numbers in the mature estate
decline by approximately 5% during 2024 and 3% thereafter. Yields continue to increase as a result of pricing
optimisation actions already taken, but they do so at a lower level than under the base case. In addition, the number of
new site openings is reduced to conserve cash and discretionary performance-related bonuses are removed. Under this
scenario, the financial covenants continue to be passed and the Group continues to operate within its financing facilities.
The Directors have also considered a reverse stress test scenario to ascertain the extent of the downturn in trading that
would be required to breach the Group’s banking covenants or liquidity requirements. Mitigating actions assumed in this
scenario include moving to a minimum level of maintenance and technology capital expenditure; reducing controllable
operating costs and marketing expenditure; and pausing the new site opening programme in order to preserve cash.
In this scenario, the closing membership would need to decline by 16% from February 2024 before the Fixed Charge Cover
covenant would be breached in June 2025. The Group would, however, continue to operate within its current level of debt
capacity and the Adjusted Leverage ratio would not be breached.
In the event of a reverse stress test scenario, the Directors would introduce additional measures to mitigate the impact
on the Group’s covenants and liquidity, including: (i) further reductions in controllable operating costs, marketing and
capital expenditure; (ii) discussions with lenders to secure a covenant waiver; and (iii) deferral of, or reductions in, rent
payments to landlords. The Directors consider the reverse stress test scenario to be highly unlikely.
Conclusion
The Board has reviewed the financial plan and downside scenarios of the Group and has a reasonable expectation that
the Group has adequate resources to continue in operational existence for the period to 30 June 2025. As a result, the
Directors continue to adopt the going concern basis in preparing the consolidated financial statements.
In making this assessment, consideration has been given to the current and future expected trading performance; the
Group’s current and forecast liquidity position and the support received to date from our lenders and shareholders; and
the mitigating actions that can be deployed in the event of reasonable downside scenarios.
As at 31 December 2023, the Group had Non-Property Net Debt (including non-property leases) of £66.4m, consisting
of £59.0m drawn debt under the RCF, £8.9m of non-property leases and £1.5m of cash. Headroom under the RCF (drawn
debt less cash) was £22.5m. Adjusted Leverage was 1.72 times and Fixed Charge Cover was 1.73 times.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
2. Summary of material accounting policies continued
Climate change
In preparing the consolidated financial statements, management has considered the impact of climate change,
particularly in the context of the disclosures included in the Strategic Report and the stated net zero targets. These
considerations did not have a material impact on the financial reporting judgements and estimates, consistent with the
assessment that climate change is not expected to have a significant impact on the Group’s going concern assessment
to 30 June 2025 nor the viability of the Group over the next three years.
The following specific points were considered:
we procure 100% renewable energy for all of our sites where we directly control the purchase of energy.
the Group continues to reduce its carbon emissions and environmental impact by investing in the energy-efficient
design of our new sites, as well as in our existing estate.
our carbon emissions through electrical power consumption will reduce with the decarbonisation of the National
Grid and natural gas will eventually become our principal source of direct carbon emission. We now have 51 sites
operating successfully without gas for water heating and are continuing to roll out electric heat pumps to obviate
the requirement for gas.
in all cases, the expected costs and investment required during the Group’s strategic planning horizon have been
considered within the future cash flows included within the Group’s three year plan which forms the basis of our going
concern and viability assessment, the goodwill and site impairment testing, and the assessment of the recoverability
of deferred tax assets.
Consolidation
Subsidiaries
A subsidiary is an entity controlled, either directly or indirectly, by the Company. Control is achieved when the Group
is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and
the ability to use its power over the investee to affect its returns.
All subsidiaries are wholly owned.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the income statement from the date the Group gains
control and until the date the Group ceases to control the subsidiary.
All subsidiaries apply consistent accounting policies and all intra-Group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
The acquisition method of accounting is used to account for the acquisition of subsidiaries or business combinations
where trade and assets are acquired by the Group. The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over
the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition
is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income
statement. Subsequent changes to the fair value during the measurement period are treated as fair value adjustments
against the acquired net assets.
2. Summary of material accounting policies continued
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segment, has been identified as the Board of Directors. The Group’s activities consist solely
of the provision of low cost, high quality, 24/7, no contract gyms within the United Kingdom, traded through 233 sites at
31 December 2023. It is managed as one entity and management has consequently determined that there is only one
operating segment.
Segment results are measured using earnings before interest, tax, depreciation, amortisation, share based payments
costs and non-underlying items. Segment assets are measured at cost less any recognised impairment. All revenue
arises in and all non-current assets are located in the United Kingdom. The accounting policies used for segmental
reporting reflect those used for the Group.
Revenue
Revenue, which is stated excluding value added tax and other sales-related taxes, is measured at the fair value of the
consideration receivable for goods and services supplied.
Revenue from memberships comprises monthly membership fees, non-refundable joining fees and longer term
membership fees. Longer term membership fees comprise student memberships which typically cover a nine month
period, pay-up-front memberships which typically cover a six or nine month period and corporate annual membership.
All membership income (being the membership fee and the joining fee) is recognised straight-line over the period
that the membership relates to, with any subscriptions in advance of the period in which the service is provided being
recorded as a contract liability in the statement of financial position.
Rental income from personal trainers, which represents amounts paid by standalone personal trainers to operate their
business from our gyms, is recognised on a straight-line basis over the term of the rental agreement.
Other income, which includes the sale of goods through vending machines, is recognised at the point in time when control
of the goods transfers to the customer.
Contracts with customers are non-complex and do not require any significant accounting judgements or estimates.
Cost of sales and gross profit
Cost of sales comprises costs arising in connection with the generation of ancillary revenue as well as call centre costs
and payment processing costs. Therefore gross profit is stated before costs associated with operating the gyms.
Non-underlying items
Non-underlying items are income or expenses that are material by their size and/or nature and are not considered to
arise in the normal course of business. The Directors consider that these items should be disclosed separately on the
face of the income statement (but within their relevant category) to allow a more comparable view of underlying trading
performance.
Non-underlying items include restructuring and reorganisation costs (including site closure costs), costs of major
strategic projects and investments, impairment of assets, amortisation and impairment of business combination
intangibles, profit/loss on disposal of businesses, remeasurement gains or losses on borrowings, and refinancing costs.
Profit before non-underlying items is used to calculate adjusted earnings per share and is reconciled to profit before
taxation on the face of the income statement. Non-underlying items are disclosed in Note 9.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
2. Summary of material accounting policies continued
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary or the Group’s share of trade and assets acquired in a business combination at the
date of acquisition. Goodwill on acquisitions is included in intangible assets. Goodwill is tested annually for impairment
and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Further information
in relation to impairment testing is provided in the ‘Impairment of non-financial assets’ section of this Note.
Computer software and licenses
Acquired computer software and licences are capitalised on the basis of the costs incurred to acquire and bring into
use the specific software. Certain costs incurred in connection with the development of software to be used internally,
or for providing services to customers, are capitalised once a project has progressed beyond a conceptual, preliminary
stage to that of application development. Development costs that are directly attributable to the design and testing of
identifiable and unique software products controlled by the Group are recognised as intangible assets when the following
criteria are met:
it is technically feasible to complete the software product so that it will be available for use;
management intends to complete the software product and use or sell it;
adequate technical, financial and other resources to complete the development and to use or sell the software
it can be demonstrated that the software product will generate probable future economic benefits;
there is an ability to use or sell the software product;
product are available; and
2. Summary of material accounting policies continued
Leases and Right-of-use assets
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-
of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee.
Lease liabilities
Lease liabilities are presented as a separate line in the Consolidated Statement of Financial Position.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, which is
generally the case for leases in the Group, the Group’s incremental borrowing rate is used, being the rate that the Group
would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
Lease payments included in the measurement of the lease liability comprise:
fixed lease payments (including in-substance fixed payments) less any lease incentives receivable;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate
the lease.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability. There are no variable lease payments nor residual value guarantees.
the expenditure attributable to the software product during its development can be reliably measured.
To determine the incremental borrowing rate, the Group:
Costs that qualify for capitalisation include both internal and external costs but are limited to those that are directly
related to the specific project. Computer software costs are included at capitalised cost less accumulated amortisation
and any recognised impairment loss.
Amortisation is calculated to write down the cost of the assets on a straight-line basis over their estimated useful lives,
over three to five years. Useful lives are reviewed at the end of each reporting period and adjusted as appropriate.
The carrying value of computer software is reviewed for impairment if events or changes in circumstances indicate the
carrying value may not be recoverable.
Property, plant and equipment
Property, plant and equipment are included in the financial statements at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is calculated to write down the cost of the assets on a straight-line basis over the estimated useful lives
as follows:
leasehold improvements over the shorter of the useful life and the term of the lease;
fixtures, fittings and equipment between three and ten years;
gym and other equipment between five and ten years; and
computer equipment three years.
The estimated useful lives are reviewed at the end of each reporting period and adjusted if appropriate. The carrying
values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate
the carrying value may not be recoverable.
Assets under construction represents the costs incurred in the construction of gyms and are included in Property,
plant and equipment. No depreciation is provided on assets under construction until the asset is available for use.
where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third-party financing was received;
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by The Gym
Group, which does not have recent third-party financing; and
makes adjustments specific to the lease, e.g. term and security.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability whenever:
there is a change in the Group’s assessment of whether it is reasonably certain to exercise a purchase, extension or
termination option, in which case the lease liability is remeasured by discounting the minimum lease payments using
a revised discount rate at the effective date of the change in assessment;
the lease payments change due to changes in an index or rate, in which cases the lease liability is remeasured by
discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due
to a change in a floating interest rate, in which case a revised discount rate is used);
the lease payments change due to a rent review, in which case the lease liability is remeasured by discounting the
revised lease payments using the original discount rate at the effective date of the change in rent;
the lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the effective
date of the modification.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
2. Summary of material accounting policies continued
Leases and Right-of-use assets continued
When the lease liability is remeasured, an equivalent adjustment is made to the right-of-use asset, except in the case
of modifications resulting in a reduction in the scope of the lease, or in instances where doing so would reduce the
carrying amount of the right-of-use asset below zero. For a modification that fully or partially decreases the scope of
the lease, the carrying amount of the right-of-use asset is reduced to reflect partial or full termination of the lease and
any difference between that adjustment and the amount of the remeasurement of the lease liability is recognised in
profit or loss at the effective date of the modification. In other cases, if the right-of-use asset is reduced to zero by a
remeasurement, any remaining amount of the remeasurement is recognised in profit or loss.
Although the Group enjoys security of tenure as tenant in respect of certain of its lease arrangements, there are
conditions associated with these rights such that no unconditional right to extend the lease term exists.
Extension and termination options are included in a number of property leases across the Group. These are used to
maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension
and termination options held are exercisable only by the Group and not by the respective lessor. When it is reasonably
certain that the Group will not exercise a termination option or will exercise an extension option, this assumption is
included within the calculation of the lease liability.
Incremental borrowing rate
The calculation of lease liabilities requires the Group to determine an incremental borrowing rate (‘IBR’) to discount
future minimum lease payments. Judgement has been applied to those leases entered into prior to November 2015 when
the Group listed on the London Stock Exchange and entered into a Revolving Credit Facility (‘RCF’), and which remain
on the 31 December 2023 balance sheet as right-of-use assets and lease liabilities. Prior to this the Group was under
private equity ownership, with its financing reflecting such ownership (including loan notes). As a consequence, there
was less observable data on which to assess the IBR of the Group during this time, hence there was an increased level of
judgement in assessing an appropriate IBR for use in applying IFRS to pre-2015 leases. Post-listing and refinancing of
the Group’s bank facilities in October 2019, there was an increased level of observable data, including a market-based
margin, to indicate the credit spread on which the Group could borrow. This margin was then added to observable Bank
of England base or risk-free rates, such that the level of judgement on post-2015 leases, and in particular post-2019
leases, is considered to be low.
Right-of-use assets
Right-of-use assets predominantly relate to property leases and are depreciated on a straight-line basis over the
shorter of the asset’s useful life and the lease term. Right-of-use assets for non-property leases mainly relate to gym
equipment purchased on hire purchase contracts and are depreciated over the asset’s useful life.
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses
and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes:
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
The carrying values of right-of-use assets are reviewed for impairment if events or changes in circumstances indicate
the carrying value may not be recoverable.
2. Summary of material accounting policies continued
Impairment of non-financial assets
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Under IAS 36, goodwill is allocated to cash generating units (‘CGUs’) or groups of CGUs on the basis of which CGU or
group of CGUs is expected to benefit from the business combination in which the goodwill arose. As management has
determined that the Group’s goodwill cannot be allocated to CGUs on a non-arbitrary basis and that the Group has just
one operating segment and goodwill is not monitored at any lower level, then consistent with the requirements of IAS 36,
testing for goodwill impairment is performed at the operating segment level, being the entire business.
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value-in-use.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the CGU to which the asset belongs. CGUs are identified based on the lowest level aggregation
of asset from which largely independent cash inflows are generated. This can be a single gym or, in a number of instances,
a group of gyms which are geographically closely located where the cash inflows from each individual gym are not
generated largely independent of other gym sites within the surrounding geographical area. Any impairment charge is
recognised in non-underlying items in the income statement in the period in which it occurs.
Impairment losses relating to goodwill cannot be reversed in future periods. At each reporting date, an assessment is
made as to whether there is any indication that a previously recognised impairment loss for assets other than goodwill
no longer exists or has decreased. If there is any such indication, the recoverable amount of the asset is recalculated
and the impairment loss reversed. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such reversal is recognised in non-underlying items in the
income statement unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation
increase and recognised as a separate reserve within equity.
Further information on impairment testing is provided in Notes 3, 13, 14 and 15.
Financial instruments
Fair value hierarchy
IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of
the inputs used in the value measurements:
Level 1: quoted prices in active markets for identical assets or liabilities
Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable market data)
There were no transfers between levels throughout the periods under review.
Financial assets
The Group’s financial assets comprise trade and other receivables, cash and cash equivalents, and investments. The
Group classifies its financial assets as those to be measured at amortised cost, those recognised at fair value through
profit and loss and those recognised at fair value through other comprehensive income.
The Group measures its trade and other receivables and cash and cash equivalents at amortised cost. Subsequent to
initial recognition, these assets are carried at amortised cost using the effective interest method. Income from these
financial assets is calculated on an effective yield basis and is recognised in finance income in the income statement. Due
to the Group’s upfront payment model, it has limited exposure to credit losses.
Investments in unquoted equity securities are designated as fair value through other comprehensive income if they are
held as long term strategic investments that are not expected to be sold in the short to medium term. Any changes in fair
value of those assets are recognised in other comprehensive income and are not recycled to profit or loss.
Financial assets are generally presented as current assets. Financial assets are classified as non-current if maturity is
greater than 12 months after the reporting date, and settlement is not expected within this time frame.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
2. Summary of material accounting policies continued
Financial liabilities
The Group’s financial liabilities comprise trade and other payables, other financial liabilities (including contingent
consideration) and borrowings.
The Group initially recognises its financial liabilities at fair value net of transaction costs where applicable and, other
than derivatives and contingent consideration, they are subsequently measured at amortised cost using the effective
interest method. Transaction costs are amortised using the effective interest method over the maturity of the loan.
Contingent consideration is subsequently measured at its fair value, which is reassessed at each reporting period, and
any fair value movement is recognised in non-underlying items in the income statement.
Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on temporary investments of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in finance costs in the income statement in the period in which they are incurred.
Hedging activities
The Group enters into structured wholesale energy market contracts for the procurement of electricity and natural gas.
It does this by buying energy directly from the wholesale market to cover operational energy requirements. All contracts
are entered into and continue to be held to receive or deliver the energy in accordance with the Group’s expected usage
requirements and all contracted quantities are actually physically supplied with no financial settlement prior to, or
at, maturity. As such, the Group applies the own use exemption in IFRS 9 with regards energy market contracts and
recognises the contracted cost of energy in the consolidated income statement when the energy is consumed.
Pensions
The Group operates defined contribution pension schemes and pays contributions to publicly or privately administered
pension plans. The Group has no further payment obligations once the contributions have been paid. The contributions
are recognised as an employee benefit expense when they are due.
Share based payments
The Group operates a number of share based arrangements for employees. Equity-settled share based payments are
measured at the fair value of the equity instruments at the grant date, which excludes the effect of non-market based
vesting conditions. The fair value at the grant date is recognised as an expense on a straight-line basis over the vesting
period, based on the Group’s estimate of the number of equity instruments that will eventually vest. The estimate of the
number of awards likely to vest is reviewed at each balance sheet date up to the vesting date, at which point the estimate
is adjusted to reflect the actual outcome of awards which have vested. No adjustment is made to the fair value after the
vesting date even if the awards are forfeited or not exercised.
Inventories
Inventories are carried at the lower of cost and net realisable value.
Trade and other receivables
Trade and other receivables comprise rental income due from personal trainers, room rental income, advertising income
and amounts due from landlords in respect of contributions towards building work. They are initially measured at
transaction price. Subsequently, trade and other receivables are measured at amortised cost. The loss allowance for
trade receivables and accrued income is measured using the simplified approach (lifetime expected credit losses).
2. Summary of material accounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, short term deposits held on call with banks and other short term,
highly liquid investments with original maturities of three months or less.
Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year.
If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method.
Taxation
Current taxation
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the balance sheet date. Income tax relating to items recognised in comprehensive
income or directly in equity, is recognised in comprehensive income or equity and not in the income statement.
Deferred taxation
Deferred income tax is provided using the liability method on all temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the balance sheet date, with the
following exceptions:
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss;
in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future; and
deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available
against which deductible temporary differences, carried forward tax credits or tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities. Deferred income tax assets and liabilities are measured at the tax rates that are
expected to apply in the period when the asset is realised or the liability is settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the balance sheet date.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event; it is
probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the
amount of the obligation. Provisions are measured at the present value of the expenditure expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and risks
specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.
A dilapidations provision is recognised when there is a present obligation relating to the maintenance of leasehold
properties. The provision is based on management’s best estimate of the cost of meeting this obligation.
Dividends
Dividends payable by the Company are recognised on declaration.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in accordance with IFRS requires estimates and assumptions to be made that
affect the value at which certain assets and liabilities are held at the balance sheet date and also the amounts of revenue
and expenditure recorded in the period. The Directors believe the accounting policies chosen are appropriate to the
circumstances and that the estimates, judgements and assumptions involved in its financial reporting are reasonable.
Accounting estimates made by the Group’s management are based on information available to management at the time
each estimate is made. Accordingly, actual outcomes may differ materially from current expectations under different
assumptions and conditions. The significant judgements that management has made in applying its accounting
policies and the estimates and assumptions for which there is a significant risk of a material adjustment to the financial
statements within the next financial year are set out below.
Critical judgements
Determination of CGUs for goodwill impairment testing
The Group’s activities consist solely of the provision of low cost, high quality, 24/7, no contract gyms within the United
Kingdom, traded through 233 sites as at 31 December 2023. All gyms operate under ‘The Gym Group’ brand including
gyms acquired through business combinations. Under IAS 36, goodwill is allocated to the cash generating units (‘CGUs’)
on the basis of which CGU or group of CGUs is expected to benefit from the business combination in which the goodwill
arose. However, management has determined that the Group’s goodwill cannot be allocated to CGUs on a non-arbitrary
basis. Further, the Group has determined that it has a single operating segment and goodwill is not monitored at any
lower level. Therefore, consistent with the requirements of IAS 36, testing for goodwill impairment is performed at the
operating segment level, being the entire business.
Determination of CGUs for property, plant and equipment and right-of-use assets impairment testing
Annually, management consider indicators of impairment to determine if an impairment assessment is required
for property, plant and equipment, right-of-use assets and intangible assets other than goodwill. Where indicated,
management identifies the CGU into which an asset belongs. Individual assets generally do not generate independent
cash inflows, and therefore they must be tested at the level of the CGU. In many cases, individual gyms are considered
to generate largely independent cash flows and therefore are considered to be a single CGU for impairment purposes.
However, there are some instances where a number of sites may be interdependent in generating cash flows. This is the
case where some gyms in a geographic location have a higher proportion of Ultimate members who frequently visit other
gyms in the same geographic location. In these instances, there is significant trading interdependency and the cash
inflows from each individual gym are not generated largely independent of each other. In these instances, these gyms
are grouped together and considered to be one CGU for impairment assessment purposes. There is judgement required
to determine which sites are largely independent and which gyms are interdependent on each other. If no grouping of
sites was assumed, the additional impairment recognised in the financial year ended 31 December 2023 would have been
£4.0m in relation to five sites.
Further information on the impairment testing undertaken in the year is included in Note 14.
Sources of estimation uncertainty
Impairment testing
The recoverable amount of the Group’s CGUs is based on value-in-use calculations. This method requires the estimation
of future cash flows and the determination of a pre-tax discount rate in order to calculate the present value of the cash
flows. Discount rates reflect the estimated return on capital employed required by an investor. This is also the benchmark
used by management to assess operating performance and to evaluate future capital investment proposals. The pre-tax
discount rate is derived from the Group’s post-tax weighted average cost of capital. Changes in the discount rate are
calculated with reference to latest market assumptions for the risk-free rate, equity market risk premium and the cost of
debt.
Where an impairment loss is identified, it is allocated to the assets of the CGU on a pro-rata basis to their carrying
amount, subject to the limitation that the carrying amount of an asset cannot be reduced below the highest of fair value
less costs of disposal, value-in-use or zero. Due to the ability to sublease the right-of-use assets, these have a measurable
fair value less costs of disposal and, as a result, this restriction results in the right-of-use asset being written down only
to its recoverable amount based on fair value less costs of disposal. Any remaining amount of the impairment loss that
would otherwise have been allocated to the right-of-use asset is allocated instead pro-rata to the other assets of the
unit. More information, including key assumptions and carrying values, is included in Notes 13, 14 and 15.
3. Significant accounting judgements, estimates and assumptions continued
Sources of estimation uncertainty continued
Whilst the Directors have currently assessed that reasonably possible changes in key assumptions are unlikely to cause an
impairment in the carrying value of goodwill, estimates of future cash flows and the determination of discount rates applied
to those cash flows could change in the longer term such that an impairment arises. Further, the Directors have currently
assessed that the carrying value of property, plant and equipment is sensitive to reasonably possible changes in key
assumptions – see Note 14 for further details. In addition, estimates of future cash flows and the determination of discount
rates applied to those cash flows could change in the longer term such that an impairment arises in relation to other CGUs.
4. New and amended IFRS standards
New and amended IFRS standards that are effective for the current year
The Group applied for the first-time certain standards and amendments, which are effective for annual periods
beginning on or after 1 January 2023 (unless otherwise stated). The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
IFRS 17 Insurance Contracts – This amendment has no impact on the Group.
Definition of Accounting Estimates – Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting
policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop
accounting estimates. The amendments had no impact on the Group’s consolidated financial statements.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples
to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities
provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their
‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance
on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
These amendments have resulted in some changes to the Group’s disclosures of accounting policies, but not on the
measurement, recognition or presentation of any items in the Group’s financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer
applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities. The amendments had no impact on the Group’s consolidated financial statements.
International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12 – This amendment has no impact on the
Group.
There were no other standards and amendments that became effective in the period, that apply to the consolidated
financial statements of the Group.
New and revised IFRS standards that are in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS
standards that have been issued but are effective for reporting periods beginning on or after 1 January 2024:
Amendments to IAS 1
Amendments to IFRS 16
Amendments to IAS 7 and IFRS 7
Amendments to IAS 21
Classification of Liabilities as Current or Non-current
Liabilities with Covenants
Lease Liability in a Sale and Leaseback
Disclosures: Supplier Finance
Lack of Exchangeability
The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial
statements of the Group in future periods.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
5. Revenue
The principal revenue streams for the Group are membership income, rental income from personal trainers and
ancillary income.
Membership income comprises monthly membership fees, non-refundable joining fees and longer term membership
fees in relation to student, pay-up-front and corporate memberships. Rental income from personal trainers represents
amounts paid by standalone personal trainers to operate their business from our gyms. Ancillary income includes income
from the sale of goods through vending machine, advertising income through the use of media screens and the sale of
day memberships.
The majority of revenue is derived from contracts with members and all revenue arises in the United Kingdom.
Disaggregation of revenue
In the following table, revenue is disaggregated by major products and service lines and timing of revenue recognition.
Major products/service lines
Membership income
Rental income from personal trainers
Ancillary income
Timing of revenue recognition
Products transferred at a point in time
Products and services transferred over time
Liabilities relating to contracts with customers
Contract liabilities (Note 19)
Revenue recognised that was included in contract liabilities in the prior year
Membership income
31 December 2023
£m
31 December 2022
£m
193.1
7.7
3.2
204.0
3.5
200.5
204.0
(14.4)
11.0
162.5
7.8
2.6
172.9
3.1
169.8
172.9
(11.0)
8.4
Contract liabilities relate to membership fees received at the start of a contract, where the Group has the obligation
to provide a gym membership over a period of time and are included within trade and other payables (see Note 19).
The contract liability balance increases as the Group’s membership numbers increase. The Group does not receive any
consideration greater than 12 months in advance from members. Hence the total contract liability as at 31 December
2022 of £11.0m has been recognised as revenue during the year ended 31 December 2023.
6. Other income
Research and development tax credits
Government grants receivable towards work placements
Other
31 December 2023
£m
31 December 2022
£m
0.3
–
–
0.3
0.4
0.1
0.3
0.8
Other income comprises government grants receivable, research and development tax credits and other non-
membership-related income.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions
attaching to them and that the grants will be received. Where the income relates to a distinct identifiable expense, the
income is offset against the relevant expense. Where an expense is not distinctly identifiable, or the income relates to
multiple expenses, the income is recognised within Other income.
138 |
7. Operating expenses
Operating expenses comprise the following:
Underlying employee costs (Note 8)
Site costs (excluding employee costs)1
Central support office costs (excluding employee costs)2
Profit on disposal of property plant and equipment
Auditor’s remuneration costs:
Fees payable for the audit of the Group’s annual accounts
Audit of the Group’s subsidiaries pursuant to legislation
Underlying operating expenses before depreciation, amortisation
and impairment
Non-underlying operating expenses before depreciation, amortisation
and impairment (Note 9)
Operating expenses before depreciation, amortisation and impairment
31 December 2023
£m
31 December 2022
£m
43.7
78.1
6.2
–
0.3
0.1
128.4
1.5
129.9
37.6
59.3
5.0
(0.4)
0.2
0.1
101.8
4.4
106.2
1
Site costs include the fixed and variable costs of running the Group’s gyms and include rates and services charges, cleaning costs, utilities, repairs and
maintenance, site technology costs, marketing costs and insurance.
2 Central support office costs largely comprise central technology costs and professional fees.
In the prior year, the Group received government assistance in the form of a 66% discount on business rates (subject to a
maximum of £2.0m per business) for businesses in the retail, hospitality and leisure sectors in England for the period 1 June
2021 to 31 March 2022. The value of business rates saved during the year ended 31 December 2023 was £0.1m (2022: £1.1m).
8. Employee information
Wages and salaries
Social security costs
Employers’ pension costs
Share based payments (note 25)
Government grants
Underlying employee costs
Non-underlying employee costs
Employee costs
31 December 2023
£m
31 December 2022
£m
37.9
3.1
0.7
2.4
–
44.1
0.5
44.6
33.4
2.9
0.7
1.4
(0.5)
37.9
0.3
38.2
Included within employee costs in 2023 is £0.4m (2022: £0.3m) which has been included within cost of sales in the
consolidated income statement.
In 2023, no government grant income was received as a contribution towards salary costs (2022: £0.5m). In 2022, the
Group participated in the Kickstart scheme offered by the government to combat youth unemployment. Under this
scheme, the Group received financial support in order to offer six-month work placements for young people aged 16-24
who were claiming Universal Credit in the form of a one-off grant per person employed to cover setup costs. This income
was recognised evenly over each six-month placement term. The Kickstart scheme ended at the end of 2022.
The average number of employees, including Directors, during the year was:
Operational
Administrative
31 December 2023
Number
31 December 2022
Number
1,644
193
1,837
1,848
187
2,035
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
9. Non-underlying items
10. Finance costs
31 December 2023
£m
31 December 2022
£m
Bank loans and overdraft interest including amortisation of financing fees
Affecting operating expenses (before depreciation,
amortisation and impairment)
Costs of major strategic projects and investments
Restructuring and reorganisation costs/(income) (including site closures)
Total affecting operating expenses (before depreciation,
amortisation and impairment)
Affecting depreciation, amortisation and impairment
Impairment of property, plant and equipment, right-of-use assets
and intangible assets
Amortisation of business combination intangible assets
Total affecting depreciation, amortisation and impairment
Total affecting operating expenses1
Affecting finance costs
Remeasurement of borrowings
Refinancing costs
Total affecting finance costs
Total all non-underlying items before tax
Tax on non-underlying items
Total non-underlying charge in income statement
0.9
0.6
1.5
0.6
0.2
0.8
2.3
0.1
0.4
0.5
2.8
(0.5)
2.3
4.6
(0.2)
4.4
8.3
0.2
8.5
12.9
0.9
0.1
1.0
13.9
(1.5)
12.4
1
At 31 December 2023, there were £0.5m of accruals on the Group balance sheet relating to non-underlying items affecting operating expenses (before
depreciation, amortisation and impairment). As a result, the cash outflow in the year was £1.0m. In the prior year, in addition to the £4.4m of non-underlying
items affecting operating expenses (before depreciation, amortisation and impairment), there was £0.9m of cash outflow in relation to prior year creditors,
bringing the total amount of cash flow on non-underlying operating items to £5.3m. Depreciation, amortisation and impairment and remeasurement of
borrowings are non-cash items.
The costs of major strategic projects and investments of £0.9m (2022: £4.6m) include the costs incurred in relation to
introducing the three-tier price product architecture, as well as consultancy and other costs incurred in shaping the
Group’s strategic plan.
Restructuring and reorganisation costs in the year of £0.6m (2022: credit of £0.2m) include the costs associated with
the change of Group CEO and other Board and Executive Committee changes, as well as restructuring costs incurred in
relation to the Central Support Office.
Non-underlying costs affecting depreciation, amortisation and impairment in the year amounted to £0.8m (2022: £8.5m),
of which £0.6m (2022: £8.3m) relates to the impairment of two sites (2022: 13 sites). The majority of the charge in 2023
relates to one site which was impaired in 2022 but where the value-in-use estimate has fallen, partly driven by an increase
in the discount rate. The remaining £0.2m (2022: £0.2m) of non-underlying costs affecting depreciation, amortisation and
impairment relates to the amortisation of business combination intangibles acquired as part of the Lifestyle, easyGym
and Fitness First acquisitions.
Non-underlying items affecting finance costs amounted to £0.5m (2022: £1.0m), of which £0.4m (2022: £0.1m) relates to
costs incurred in relation to the amendments to the Group’s Revolving Credit Facility (‘RCF’) which were agreed with the
banks in September; and £0.1m (2022: £0.9m) relates to the remeasurement of the RCF following those agreed changes.
Tax on non-underlying items represents the tax charge or credit arising on the Group’s non-underlying items calculated
at the current tax rate.
Lease interest
Movement in fair value of derivatives
Capitalised interest
Underlying finance costs
Non-underlying finance costs
Finance costs
31 December 2023
£m
31 December 2022
£m
6.0
15.5
–
21.5
(0.1)
21.4
0.5
21.9
2.8
13.3
0.2
16.3
(0.2)
16.1
1.0
17.1
Capitalised interest is recognised within leasehold improvements. The capitalisation rate used to determine the amount
of borrowing costs to be capitalised is the weighted average interest rate applicable to the Group’s general borrowings
during 2023 of 8.2% (2022: 4.5%). The increase in the weighted average interest rate from 2022 to 2023 has been
primarily due to the increase in the SONIA rate over the same period.
11. Taxation
Tax on loss
Current income tax
Current tax on losses in the year
Adjustments in respect of prior years
Total current income tax
Deferred tax
Origination and reversal of temporary differences
Change in tax rates
Total deferred tax
Tax (charge)/credit
The standard rate of corporation tax applied to reported losses is 23.5% (2022: 19%).
Reconciliation of tax credit
Loss before tax
Tax calculation at standard rate of corporation tax of 23.5% (2022: 19.0%)
Expenses not deductible for tax purposes
Change in tax rates
Unrecognised tax losses
Tax (charge)/credit
31 December 2023
£m
31 December 2022
£m
(0.1)
–
(0.1)
–
–
–
(0.1)
(0.1)
–
(0.1)
(0.3)
0.5
0.2
0.1
31 December 2023
£m
31 December 2022
£m
(8.3)
2.0
(0.7)
–
(1.4)
(0.1)
(19.4)
3.7
0.7
(0.4)
(3.9)
0.1
140 |
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
11. Taxation continued
Deferred tax
At 1 January 2022
Adjustments in respect of prior years
Recognised in income statement
Business combinations
(Charge)/credit to income statement
due to changes in tax rates
Recognised in equity
At 31 December 2022
Adjustments in respect of prior years
Recognised in income statement
At 31 December 2023
Accelerated
capital
allowances
£m
Losses
£m
Intangible
assets
£m
Share
schemes
£m
(0.2)
1.9
(0.5)
0.6
–
–
1.8
(1.5)
1.8
2.1
11.3
(1.8)
1.1
–
0.5
–
11.1
2.4
(2.4)
11.1
–
(0.1)
(0.3)
–
–
–
(0.4)
(0.2)
0.3
(0.3)
1.4
–
(0.1)
–
–
(0.6)
0.7
–
0.2
0.9
Other
£m
3.6
–
(0.5)
–
–
–
3.1
(0.2)
(0.4)
2.5
Total
£m
16.1
–
(0.3)
0.6
0.5
(0.6)
16.3
0.5
(0.5)
16.3
Deferred tax assets have been recognised in respect of tax losses and other temporary differences where the Directors
believe it is probable that these will be recovered within a reasonable period. Short term timing differences are generally
recognised ahead of losses on the basis that they are likely to reverse more quickly.
In assessing the probability of recovery, the Directors have reviewed the Group’s three year plan that underpins the going
concern and viability assessment, and the goodwill and property, plant and equipment impairment testing. The Directors
believe this detailed plan, supplemented with conservative projections for the years immediately following, provides
convincing evidence to recognise the amount of deferred tax assets shown above which are forecast to be recovered
within four years. As disclosed in more detail in respect of going concern in Note 2 and impairment in Notes 13 and 14, the
Group’s three year plan anticipates continued growth in yields across the whole estate and additional members from new
site openings. The Directors have also considered the impact of climate-related risks set out in the Sustainability report
on pages 50 to 53.
The trading losses incurred as a result of the Covid-19 pandemic and the subsequent cost-of-living crisis, together with
the introduction in March 2021 of the temporary enhanced capital allowances regime (‘the super-deduction tax break’),
have resulted in significant tax losses to carry forward. Losses for which no deferred tax asset is recognised equate to
£23.0m (2022: £20.2m), resulting in an unrecognised deferred tax asset of £5.8m (2022: £5.1m) using a 25% tax rate. There
is no time limit for utilising trade losses in the UK.
A deferred tax asset has arisen on accelerated capital allowances, whereby the tax written-down value is higher than the
net book value. A deferred tax liability has arisen on intangible assets of £0.3m (2022: £0.4m). Other deferred tax assets
include timing differences on the accounting for the various share schemes.
The Finance Act 2022 increased the corporation tax rate from 19% to 25% with effect from 1 April 2023. The deferred tax
assets and liabilities have been measured using the rates expected to apply in the reporting periods when the timing
differences reverse.
There are no material uncertain tax provisions at 31 December 2023 (2022: nil). However, judgement has necessarily been
applied in estimating the impact and timing of utilisation of capital allowances and tax losses which could give rise to
prior period adjustments in future years.
12. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average
number of Ordinary shares outstanding during the year, excluding unvested shares held pursuant to The Gym Group plc’s
share based long term incentive schemes (see Note 26).
Diluted loss per share is calculated by adjusting the weighted average number of Ordinary shares outstanding to assume
conversion of all dilutive potential Ordinary shares. During the year ended 31 December 2023, the Group had potentially
dilutive shares in the form of share options and unvested shares issued pursuant to The Gym Group plc’s share based
long term incentive schemes (see Note 26).
Loss (£m)
Loss for the year attributable to equity shareholders
Adjustment for non-underlying items
Adjusted loss for the year attributable to equity shareholders
Weighted average number of shares
31 December 2023
31 December 2022
(8.4)
2.3
(6.1)
(19.3)
12.4
(6.9)
Basic and diluted weighted average number of shares
178,512,563
177,251,348
Loss per share (p)
Basic and diluted loss per share
Adjusted basic and diluted loss per share
(4.7)
(3.4)
(10.9)
(3.9)
At 31 December 2023, 7,164,017 share awards (2022: 6,804,605) were excluded from the diluted weighted average number
of Ordinary shares calculation because their effect would be anti-dilutive.
13. Intangible assets
Cost
At 1 January 2022
Additions
Business combinations
Disposals
At 31 December 2022
Additions
Disposals
At 31 December 2023
Accumulated amortisation
At 1 January 2022
Charge for the year
Impairment
Disposals
Transfer to right-of-use assets
At 31 December 2022
Charge for the year
Disposals
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Goodwill
£m
Customer list
£m
Contract
£m
Computer
software and
licences
£m
77.7
–
4.1
–
81.8
–
–
81.8
–
–
–
–
–
–
–
–
–
81.8
81.8
2.7
–
0.3
–
3.0
–
–
3.0
(2.6)
(0.1)
–
–
–
(2.7)
(0.1)
–
(2.8)
0.3
0.2
1.2
–
–
(0.1)
1.1
–
(0.2)
0.9
(0.5)
(0.1)
(0.1)
–
0.2
(0.5)
(0.1)
0.2
(0.4)
0.6
0.5
20.3
7.3
–
(7.3)
20.3
4.4
–
24.7
(12.8)
(4.8)
–
7.3
–
(10.3)
(5.5)
–
(15.8)
10.0
8.9
Total
£m
101.9
7.3
4.4
(7.4)
106.2
4.4
(0.2)
110.4
(15.9)
(5.0)
(0.1)
7.3
0.2
(13.5)
(5.7)
0.2
(19.0)
92.7
91.4
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
13. Intangible assets continued
Included within additions to computer software and licenses in 2023 is £2.4m of investment in relation to the technology
enhancements required to implement the three-tier price product architecture (see the Chief Executive’s review on pages
12 to 15 for further details). The additions in 2022 included £4.7m in relation to the investment made into the Group’s new
digital platform.
Impairment test for goodwill
Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstance indicate
that the carrying value may be impaired.
The recoverable amount of goodwill has been determined based on a value-in-use calculation using cash flow projections
based on the Group’s three year plan. Cash flows beyond this period are extrapolated using an estimated growth rate
of 3.0% (2022: 3.0%). All cash flows are discounted using a pre-tax discount rate of 10.4% (2022: 8.5%). The increase in the
discount rate reflects the increase in SONIA and the risk free rate.
Membership growth, growth rates in subscription prices and increases applied to costs are the key assumptions
included within the Group’ s three year plan. These have been modelled based upon a mixture of historical experience
and expected future performance. The impact of any future openings has not been included in the assessment as they
do not form part of the existing assets. The performance of any gyms expected to close have been included within the
calculation up to the point of closure. In the years under review, management’s value-in-use calculations have indicated
no requirement to impair and no reasonably possible change in key assumptions gives rise to an impairment. Further
information on impairment is provided in Note 3.
14. Property, plant and equipment
Assets under
construction
£m
Leasehold
improvements
£m
Fixtures,
fittings and
equipment
£m
Gym and
other
equipment
£m
Computer
equipment
£m
Cost
At 1 January 2022
Additions
Business combinations
Disposals
Transfers
At 31 December 2022
Additions
Disposals
Transfers
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Charge for the year
Impairment
Disposals
At 31 December 2022
Charge for the year
Impairment
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
2.1
2.0
–
–
(1.8)
2.3
1.4
(0.3)
(1.6)
1.8
–
–
–
–
–
–
–
–
208.7
31.9
1.1
(2.6)
1.7
240.8
8.9
–
1.5
251.2
(79.2)
(16.4)
(2.2)
2.6
(95.2)
(15.8)
(0.4)
(111.4)
2.3
1.8
145.6
139.8
11.5
0.5
–
(0.4)
–
11.6
0.3
–
–
11.9
(9.1)
(0.9)
–
0.4
(9.6)
(0.5)
–
(10.1)
2.0
1.8
86.6
7.4
0.1
(4.2)
0.1
90.0
4.2
–
0.1
94.3
(55.9)
(8.5)
(0.3)
4.2
(60.5)
(6.9)
(0.1)
(67.5)
29.5
26.8
Total
£m
313.2
43.1
1.2
(7.2)
–
350.3
15.5
(0.3)
–
365.5
(147.6)
(26.4)
(2.5)
7.2
(169.3)
(24.0)
(0.5)
4.3
1.3
–
–
–
5.6
0.7
–
–
6.3
(3.4)
(0.6)
–
–
(4.0)
(0.8)
–
(4.8)
(193.8)
1.6
1.5
181.0
171.7
14. Property, plant and equipment continued
Impairment test for property, plant and equipment, right-of-use assets and other intangible assets
The Group reviews the carrying value of property, plant and equipment, right-of-use assets and intangible assets
(excluding goodwill) for indicators of impairment annually, or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
The recoverable amount of the Group’s CGUs is typically based on value-in-use calculations. The value-in-use at
31 December 2023 was calculated using the discounted present value of each CGU’s expected future cash flows using the
Group’s three year plan as the basis. Membership growth, growth rates in subscription prices and increases applied to
costs are the key assumptions included when determining the expected future cash flows of each CGU. These have been
modelled based upon a mixture of historical experience and expected future performance. A pre-tax discount rate of
10.4% (2022: 8.5%) was used to calculate the present value.
During the year a total impairment loss of £0.6m (2022: £8.2m) was recognised relating to two (2022: 13) sites. Of the total
impairment charge recognised in the year of £0.6m (2022: £8.2m), £0.5m (2022: £2.5m) was allocated against property,
plant and equipment and £0.1m (2022: £5.7m) was allocated against right-of-use assets. The total recoverable amount of
the affected CGUs was £1.3m (2022: £7.7m).
The impairment loss was allocated to the assets of the CGU on a pro-rata basis to their carrying amount, subject
to the limitation that the carrying amount of an asset cannot be reduced below the highest of fair value less costs
of disposal, value-in-use or zero. Due to the ability to sublease the right-of-use assets, these have a measurable fair
value less costs of disposal and, as a result, this restriction results in the right-of-use asset being written down only to
its recoverable amount based on fair value less costs of disposal. The remaining amount of the impairment loss that
would otherwise have been allocated to the right-of-use asset was allocated pro-rata to the other assets of the unit.
In restricting the impairment charge recognised in respect of the right-of-use assets, their fair value less costs of
disposal was calculated on the basis of the cash flows that could be realised by the Group through the sublet of the site,
discounted using a pre-tax discount rate of 10.4% (2022: 8.5%). The increase in the discount rate reflect the increase in
the SONIA and the risk free rate.
Under the downside scenario prepared for the going concern assessment, at the sites impaired during the year, no
further impairment (2022: £1.1m) would arise in relation to property, plant and equipment, and no further impairment
(2022: £0.4m) would arise in relation to right-of-use assets.
Under the downside scenario, a further impairment charge of £0.6m (2022: £0.1m) in relation to property, plant and
equipment at a further two sites would be recognised. No additional impairment (2022: £0.6m) would be recognised in
relation to right-of-use assets.
Further information on impairment is provided in Note 3.
Included within additions for the year is £0.1m of capitalised interest (2022: £0.2m), and £4.2m of accrued capital
expenditure (2022: £6.2m).
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
15. Right-of-use assets and leases
The Group leases gym sites and its head office (‘Property leases’) and also enters into hire purchase and lease
agreements for gym equipment (‘Non-property leases’). Property leases are typically made for fixed periods of 10 to 20
years but may have extension options as well. Non-property leases are typically made for fixed periods of three years.
Both property and non-property leases are recognised as a right-of-use asset with a corresponding liability at the date
at which the leased asset is available for use by the Group.
(i) Amounts recognised in the consolidated statement of financial position
Property leases
£m
Non-property leases
£m
Cost
At 1 January 2022
Additions
Business combinations
Disposals
At 31 December 2022
Additions
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Charge for the year
Impairment
Disposals
Transfer from intangible assets
At 31 December 2022
Charge for the year
Impairment
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
388.2
33.5
3.3
(4.5)
420.5
13.8
434.3
(114.0)
(26.5)
(5.7)
1.8
(0.2)
(144.6)
(25.7)
(0.1)
(170.4)
275.9
263.9
7.2
8.1
–
–
15.3
3.0
18.3
(0.2)
(1.6)
–
–
–
(1.8)
(2.3)
–
(4.1)
13.5
14.2
Total
£m
395.4
41.6
3.3
(4.5)
435.8
16.8
452.6
(114.2)
(28.1)
(5.7)
1.8
(0.2)
(146.4)
(28.0)
(0.1)
(174.5)
289.4
278.1
During the year a total impairment loss of £0.6m (2022: £8.2m) was recognised relating to two (2022: 13) sites. Of the total
impairment charge recognised in the year of £0.6m (2022: £8.2m), £0.5m (2022: £2.5m) was allocated against property,
plant and equipment and £0.1m (2022: £5.7m) was allocated against right-of-use assets. The total recoverable amount of
the affected CGUs was £1.3m (2022: £7.7m). See Note 14 for further disclosure.
The split of lease liabilities between current and non-current is as follows:
Current
Non-current
Total Lease liabilities
31 December 2023
£m
31 December 2022
£m
28.6
310.6
339.2
25.3
325.1
350.4
The total cash outflow for leases in the year was £43.5m (2022: £40.7m). The maturity analysis of lease liabilities is
disclosed in Note 23.
15. Right-of-use assets and leases continued
(ii) Amounts recognised in the consolidated income statement
The statement of profit or loss shows the following amounts relating to leases:
Lease liability derecognised under Covid-19 Rent Concession
Depreciation charge of right-of-use assets
Impairment of right-of-use assets
Interest expense (included in finance cost)
31 December 2023
£m
31 December 2022
£m
–
28.0
0.1
15.5
(0.5)
28.1
5.7
13.3
There are no variable lease payments and no sublease income recognised in the consolidated income statement.
(iii) Extension and termination options
The Group has recognised lease extension options contained within the lease in the calculation of right-of-use assets
and lease liabilities at inception of the lease if management is reasonably certain to exercise the option to extend
the lease beyond its contractual term. In all other cases, a lease extension is only recognised when a lease is extended
beyond the original contractual term.
During the year, the Group has renegotiated two leases (2022: four) which resulted in additional lease liabilities of £1.8m
being recognised (2022: £3.5m), with a corresponding increase included within additions to the right-of-use assets in
the table in Note 15 (i). The Group also terminated one lease (2022: two) in the year with no gain or loss recognised on
termination as the right-of-use asset was fully impaired in the previous year.
(iv) Non-property lease facilities
At 31 December 2023, the Group had in place total facilities of £12.4m in respect of non-property lease arrangements
(2022: £12.5m) which it utilises to finance the fit-out of new gyms. As at 31 December 2023, the amount outstanding on
these facilities was £8.9m (2022: £11.4m).
16. Investments in financial assets
On 3 February 2020, the Group purchased convertible loan notes in Fiit Limited for cash consideration of £1.0m.
Conversion was originally expected to take place within two years of issue giving the Group a small non-controlling stake
at a maximum valuation of £1.25m. During 2022, a number of changes to the terms of the convertible loan notes were
agreed, including the extension of the date of conversion to 15 July 2023 and changes to the circumstances in which the
loan notes may be redeemed or converted. In July 2023, the date of conversion was further extended to 15 July 2025.
These notes are measured at fair value through profit or loss and the carrying value at the end of the year was £1.0m
(2022: £1.0m).
This is a Level 3 valuation under the fair value hierarchy and was determined based on the performance of the
business post-acquisition against the business plan produced at the time of the investment. The business continues to
build strategic partnerships with a number of parties and is expected to continue to have adequate funding in place.
As such, the carrying amount is believed to appropriately reflect the fair value. The range of sensitivity in the valuation
at 31 December 2023 to reasonably possible changes in the assumptions used is not considered to be material.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
17. Trade and other receivables (due in less than one year)
Trade receivables
Loss allowance
Other receivables
Prepayments and accrued income
18. Cash and cash equivalents
Cash at bank
Short term deposits
Cash and cash equivalents
31 December 2023
£m
31 December 2022
£m
1.7
–
1.7
0.2
8.9
10.8
0.6
–
0.6
0.7
7.6
8.9
31 December 2023
£m
31 December 2022
£m
1.5
–
1.5
0.5
4.9
5.4
Cash and cash equivalents earn interest at floating rates based on daily bank deposit rates. Short term deposits are
made for periods of one day and earn interest at the respective short term deposit rates.
19. Trade and other payables (due in less than one year)
Trade payables
Social security and other taxes
Accruals
Other payables
Contract liabilities (note 5)
31 December 2023
£m
31 December 2022
£m
6.7
4.3
18.0
0.2
14.4
43.6
8.0
2.0
17.6
0.2
11.0
38.8
20. Borrowings
The carrying value of the Group’s bank borrowings at 31 December 2023 was £58.9m (2022: £70.0m).
The Group has in place a combined £80m Revolving Credit Facility (‘RCF’) (2022: £80m) which is syndicated to a three-
lender panel of NatWest, HSBC and Barclays. Until September 2023, the syndicate included Banco de Sabadell, which was
then replaced by Barclays. The facility was due to mature in October 2024, but as part of the changes agreed with the
banks in September 2023, the facility was extended to October 2025.
The funds borrowed under the RCF bear interest at a minimum annual rate of 2.85% (2022: 2.85%) above the Sterling
Overnight Index Average (‘SONIA’). The average interest rate paid in the year on drawn funds was 8.2% (2022: 4.46%).
Undrawn funds bear interest at a minimum annual rate of 1.14% (2022: 1.14%).
The Group’s borrowings are held at amortised cost using the effective interest method. Each reporting period, the
Group reviews its cash flow forecasts and if these have changed since the previous reporting period (other than as a
result of changes in floating interest rates), the borrowings are remeasured using the original effective interest rate. Any
remeasurement of borrowings is treated as non-underlying and excluded from Adjusted earnings.
The RCF is subject to quarterly financial covenant tests on Adjusted Leverage and Fixed Charge Cover (both terms defined
on page 126). Adjusted Leverage must not exceed 3.0 times and the Fixed Charge Cover must be greater than 1.5 times.
At 31 December 2023, the Group had drawn down £59.0m under the RCF (2022: £70.0m), leaving £21.0m (2022: £10.0m)
undrawn and available. The £59.0m is repayable in October 2025. Adjusted Leverage was 1.72 times (2022: 2.0 times) and
Fixed Charge Cover was 1.73 times (2022: 1.94 times).
21. Financing liabilities
Changes in liabilities arising from financing activities
Borrowings
£m
Non-property
lease liabilities
£m
Property lease
liabilities
£m
At 1 January 2022
Repayments of interest and principal
Interest expense
Drawdowns
Business combinations
New leases and modifications
Lease disposals
Other
At 31 December 2022
Repayments of interest and principal
Interest expense
Drawdowns
New leases and modifications
Other
At 31 December 2023
44.3
(7.8)
2.3
30.5
–
–
–
0.7
70.0
(17.5)
5.7
2.0
–
(1.3)
58.9
6.4
(3.6)
0.5
–
–
8.1
–
–
11.4
(6.5)
1.0
–
3.0
–
8.9
329.9
(37.1)
12.8
–
3.3
33.5
(4.5)
1.1
339.0
(37.0)
14.5
–
13.8
–
330.3
Total lease
liabilities
£m
336.3
(40.7)
13.3
–
3.3
41.6
(4.5)
1.1
350.4
(43.5)
15.5
–
16.8
–
339.2
Included in ‘Other’ is the effect of changes to amortised cost on borrowings using the effective interest rate method,
accrued but unpaid interest, and rent concessions in 2022.
Reconciliation of property lease payments to Normalised Rent
Property lease payments
Lease payments made in advance
Leases terminated
Accrued rent not yet paid
Unwind of deferred rent
Normalised Rent
31 December 2023
£m
31 December 2022
£m
37.0
(0.2)
–
0.3
(0.1)
37.0
37.1
(0.7)
(1.0)
–
(2.1)
33.3
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
22. Provisions
At 1 January 2023
New provisions
Utilisation of provisions
Release of provisions
At 31 December 2023
Due in less than one year
Due in more than one year
At 31 December 2023
Dilapidations
£m
1.8
–
–
(0.1)
1.7
–
1.7
1.7
Other
£m
0.6
0.1
(0.3)
(0.3)
0.1
0.1
–
0.1
Total
£m
2.4
0.1
(0.3)
(0.4)
1.8
0.1
1.7
1.8
A dilapidations provision is recognised when there is a present obligation relating to the maintenance of leasehold
properties. The provision is based on management’s best estimate of meeting this obligation, but the amount and timing
of this are uncertain. Any difference between expectations and the actual future liability will be accounted for in the
period when such determination is made. Management has determined that the likelihood of a liability arising is not
probable in relation to 200 of the Group’s 233 gym sites as at 31 December 2023 (2022: 196 of 229) as the Group enjoys
security of tenure as tenant and therefore is unlikely to give up a site where it is trading profitably. If circumstances
indicate otherwise the Group will recognise an appropriate provision.
Subject to a new lease not being negotiated to extend the current lease term, dilapidations would become payable
between 2025 and 2040 (2022: 2025 and 2040) with £0.2m (2022: £0.1m) expected to crystalise in the next five years,
£0.9m (2022: £0.8m) crystallising in between five and ten years and the remainder crystallising in more than ten years.
23. Financial instruments
Fair values
With the exception of the Group’s borrowings, the carrying value of financial assets and liabilities equal their fair value.
The carrying value of borrowings of £58.9m (2022: £70.0m) have a fair value of £59.0m (2022: £70.0m). After initial
recognition, borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are
recognised in profit and loss when the liabilities are derecognised.
The fair value of borrowings have been calculated by discounting the future cash flows at prevailing market interest rates.
The fair value of borrowings is categorised as Level 2, and all other financial assets at fair value through profit and loss
are categorised as Level 3.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to
provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure and
cost of capital. In order to maintain or adjust capital, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as bank borrowings and non-property leases less cash and
cash equivalents. The Directors believe that this measure of net debt best reflects the financial health of the business.
In addition, it is a key constituent of the Adjusted Leverage covenant included in the Group’s banking agreement.
Total capital is calculated as equity (excluding own shares held and retained earnings) as shown in the Consolidated
Statement of Financial Position plus net debt.
23. Financial instruments continued
The gearing ratios for the periods under review are as follows:
Bank borrowings
Non-property leases
Less: Cash and cash equivalents
Non-Property Net Debt
Total equity
Total capital
Gearing ratio
31 December 2023
£m
31 December 2022
£m
59.0
8.9
(1.5)
66.4
229.7
296.1
22%
70.0
11.4
(5.4)
76.0
229.7
305.7
25%
Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
Market risk
Credit risk
Liquidity risk
This note presents information about the Group’s exposure to each of the above risks, and the Group’s objectives, policies
and procedures for measuring and managing risk. The Board of Directors has overall responsibility for the establishment
and oversight of the Group’s risk management framework.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. The principal market risk affecting the Group is interest rate risk. Financial instruments affected by
market risk include borrowings, deposits and derivative financial instruments.
The sensitivity analysis in the following sections relates to the position as at 31 December 2023 and 2022. The analysis
has been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt
and derivatives are all constant.
Interest rate risk
The Group is exposed to interest rate risk because the Group’s long term debt obligations are at floating interest rates
based on GBP SONIA. The risk is sometimes managed by the Group through interest rate swap contracts and hedging
activities are evaluated regularly to align with interest rate views and defined risk appetite to ensure the most cost-
effective hedging strategies are applied.
The Group is not expecting any reduction in interest rates over the next 12 months.
The increase in the loss before tax of a reasonably possible increase in interest rates is as follows:
Change in interest rates of 0.5% (2022: 0.5%)
31 December 2023
£m
31 December 2022
£m
0.3
0.4
150 |
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
23. Financial instruments continued
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Ultimate responsibility
for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by continuously monitoring
forecast and actual cash flows; matching the maturity profiles of financial assets and operational liabilities where possible
and maintaining adequate cash reserves.
The table below summarises the maturity profile of the Group’s financial liabilities:
25. Issued share capital and reserves
Allotted, called up and fully paid
Ordinary shares of £0.0001 each
Own shares held
Deferred Ordinary shares of £1 each
31 December 2023
The number of Ordinary shares in issue is as follows:
Trade and other payables
Borrowings
Lease liabilities
Trade and other payables
Borrowings
Lease liabilities
Within 1 year
£m
1 to 2 years
£m
2 to 5 years
£m
More than 5 years
£m
24.9
6.2
43.4
74.5
–
64.7
43.6
108.3
–
–
125.9
125.9
–
–
218.0
218.0
31 December 2022
Within 1 year
£m
1 to 2 years
£m
2 to 5 years
£m
More than 5 years
£m
25.8
5.6
40.4
71.8
–
74.1
43.4
117.5
–
–
117.8
117.8
–
–
246.0
246.0
Total
£m
24.9
70.9
430.9
526.7
Total
£m
25.8
79.7
447.6
553.1
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with banks and financial institutions, and other financial instruments.
31 December 2023
£m
31 December 2022
£m
–
0.1
–
0.1
31 December 2023
31 December 2022
178,135,710
178,039,002
48,050
48,050
Ordinary shares of £0.0001 each
Deferred Ordinary shares of £1 each
In addition, 564,676 Ordinary shares of £0.0001 each are held by an employee benefit trust (2022: 312,480). This employee
benefit trust is linked to the share incentive plan.
During the year, 348,884 Ordinary shares were issued, of which 252,176 were issued to the employee benefit trust.
The following describes the nature and purpose of each reserve in equity:
Own shares held and capital redemption reserve
These reserves represent 48,050 Deferred Ordinary shares of £1 each repurchased by the Company on 12 November 2015
and Ordinary shares held in an employee benefit trust. The Deferred Ordinary shares constitute a separate, non-voting
class of shares which is held in treasury and not admitted to trading. The rights attached to the Deferred Shares are set
out in the Company’s Articles.
Share premium
The amount subscribed for share capital in excess of nominal value.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
Hedging reserve
The fair value movements on the effective portion of hedging instruments.
Due to the nature of the business requiring customers to pay in advance, there is little concentration of risk in trade
receivables due to the limited value of trade receivables due from large number of customers which are spread across
wide geographical areas. Trade receivable balances are written off when the balance is known not to be recoverable.
and expected credit losses are immaterial.
24. Net cash inflow from operating activities
The Directors believe that Free cash flow is the measure that best reflects the amount of cash available to the Group for
investing in new sites and technology, and for enhancing existing sites. As such, Free cash flow is included within the Key
performance indicators section of the Annual Report and Accounts 2023 and referenced in both the Financial review and
Going concern note. A reconciliation of Net cash inflow from operating activities to Free cash flow is included below.
Reconciliation of Net cash inflow from operating activities to Free cash flow
Net cash inflow from operating activities
Less: Property lease payments made (Note 21)
Less: Maintenance capital expenditure (including funded by lease)
Less: Bank and non-property lease interest paid
Add: Bank interest received
Free cash flow
31 December 2023
£m
31 December 2022
£m
79.5
(37.0)
(10.3)
(5.5)
0.3
27.0
65.4
(37.1)
(8.8)
(2.8)
–
16.7
Merger reserve
The amount subscribed for share capital in excess of nominal value attracting merger relief under the Companies
Act 2006.
Retained earnings/deficit
The accumulated net gains and losses of the Group since inception.
Issued Share Capital and Capital Redemption Reserve are not included in the Consolidated Statement of Changes
in Equity because the balances in these reserves are less than £0.1m.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
26. Share based payments
The Group had the following equity-settled share based payment arrangements in operation during the year:
a) The Gym Group plc Performance Share Plan (‘PSP’)
b) The Gym Group plc Share Incentive Plan – Free shares (‘SIP – Free Shares’)
c) The Gym Group plc Share Incentive Plan – Matching shares (‘SIP’)
d) The Gym Group plc Restricted Stock Plan (‘RSA’)
e) The Gym Group plc Long Service Award Plan (‘LSA’)
f) The Gym Group plc Savings Related Share Option Scheme (‘SAYE’)
In accordance with IFRS 2 Share Based Payment, the value of the awards is measured at fair value at the date of the
grant. The fair value is expensed on a straight-line basis over the vesting period, based on management’s estimate of the
number of shares that will eventually vest. The Group recognised a total charge of £2.4m (2022: £1.7m) in respect of the
Group’s share based payment arrangements. There was no net charge or credit related to employer’s national insurance
(2022: credit of £0.3m).
A summary of the movements in each scheme is outlined below:
Scheme name
31 December 2023
Outstanding
at 1 January
2023
Granted
during the
year
Lapsed/
cancelled
during the
year
Exercised
during the
year
Outstanding at
31 December
2023
Exercisable at
31 December
2023
Performance Share Plan
3,337,237
2,778,282 (2,062,556)
–
4,052,963
375,300
Share Incentive Plan – Free shares
16,383
–
–
(2,016)1
14,367
Share Incentive Plan – Matching shares
216,704
100,645
(21,659)
(21,156)2
274,534
14,367
87,808
Restricted stock
Long Service Awards
Save as You Earn
2,178,032
1,770,627
(298,496)
(261,919)3
3,388,244
405,377
2,750
1,500
–
(2,750)4
1,500
–
1,312,444
526,656
(410,851)
(3,888)5
1,424,361
255,979
7,063,550
5,177,710 (2,793,562)
(291,729)
9,155,969
1,138,831
1 The weighted average share price at the date of exercise of these options was £1.09.
2 The weighted average share price at the date of exercise of these options was £1.04.
3 The weighted average share price at the date of exercise of these options was £1.13.
4 The weighted average share price at the date of exercise of these options was £1.00.
5 The weighted average share price at the date of exercise of these options was £1.40.
Scheme name
31 December 2022
Outstanding
at 1 January
2022
Granted
during the
year
Lapsed/
cancelled
during the
year
Exercised
during the year
Outstanding at
31 December
2022
Exercisable at
31 December
2022
Performance Share Plan
3,613,320
1,244,092
(1,520,175)
–
3,337,237
378,888
Share Incentive Plan – Free shares
19,431
–
–
Share Incentive Plan – Matching shares
158,896
77,085
(11,548)
(3,048)1
(7,729)2
16,383
216,704
16,383
47,139
Restricted stock
Long Service Awards
Save as You Earn
1,604,628
1,272,508
(202,357)
(496,747)3
2,178,032
316,047
4,358
2,750
–
(4,358)4
2,750
882,569
857,360
(408,736)
(18,749)5
1,312,444
6,283,002
3,453,795
(2,142,816)
(530,631)
7,063,550
–
52,386
810,843
1 The weighted average share price at the date of exercise of these options was £1.36.
2 The weighted average share price at the date of exercise of these options was £1.61.
3 The weighted average share price at the date of exercise of these options was £1.53.
4 The weighted average share price at the date of exercise of these options was £1.31.
5 The weighted average share price at the date of exercise of these options was £1.55.
154 |
26. Share based payments continued
The exercise price of all options under the schemes held during the year is £0.01 (2022: £0.01), with the exception of the
SAYE scheme where the exercise price ranges between £0.93 and £2.36 (2022: £0.93 and £2.36). 882,852 options were
exercisable under the PSP, RSA and SIP schemes as at 31 December 2023 (2022: 758,457) and 255,979 options were
exercisable under the SAYE scheme (2022: 52,386). No other options were exercisable as at 31 December 2023 (2022: none).
In January 2024, the Group established an Employee Benefit Trust (‘EBT’). The EBT will be used to purchase shares in order
to minimise dilution associated with the share based payments.
(a) Performance Share Plan
The outstanding awards under the PSP as at 31 December 2023 will all vest within three years, subject to continued
employment and the achievement of certain performance targets.
For awards made in 2023, the targets are based on TSR and Social Value performance measures, with the TSR target
contributing 80% of the vesting conditions, and the Social Value contributing 20%. The TSR performance measures are
relative TSR and absolute TSR, with awards being split equally between these two measures.
For awards made in 2022 and prior to 2020, the targets are based on TSR and financial performance measures with each
target contributing to 50% of the vesting conditions. For awards made in 2022, the financial performance measures are
Return on Invested Capital (‘ROIC’) and Cumulative Adjusted Group Operating Cash Flow, with the awards being split
equally between these two measures. Prior to the 2019 awards all of the financial performance measures were based on
adjusted EPS targets, with the 2019 awards split equally between EPS and ROIC.
For awards made in 2021 and 2020, the performance targets are solely based on TSR, with 33.3% based on absolute
shareholder return and 66.7% based on relative TSR.
The vesting conditions of the Performance Share Plan awards are set out on pages 99 to 100. The maximum term of these
awards is three years and settlement is in the form of shares.
The fair value of the ROIC, Cumulative Adjusted Operating Cash Flow and EPS elements was determined using the share
price at the date of grant.
The fair value of the TSR element of the award was estimated at the grant date using a Monte Carlo simulation model,
taking into account the terms and conditions upon which the awards were granted. This model simulates the TSR and
compares it against the group of comparator companies. It takes into account historic dividends and share price
fluctuations to predict the distribution of relative share price performance.
The shares are potentially dilutive for the purposes of calculating diluted earnings per share.
The following assumptions were used for options granted during the year:
Weighted average share price at date of grant
Exercise price
Expected volatility
Expected term until exercised
Expected dividend yield
Risk-free interest rate
Without holding period
With holding period
2023
£0.97
£0.0001
51.2%
3 years
–
3.83%
2022
£2.22
£0.0001
61.75%
3 years
–
1.57%
2023
£0.97
£0.0001
42.3%
5 years
–
3.66%
2022
£2.22
£0.0001
54.25%
5 years
–
1.56%
The weighted average fair value of each award issued under this scheme during the year was £0.46 (2022: £1.21).
The weighted average remaining contractual life was 7.8 years at 31 December 2023 (2022: 8.0 years).
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2023
26. Share based payments continued
(b) Share Incentive Plan – Free shares
The awards made under the SIP – Free Shares occurred when the Group floated on the London Stock Exchange and were
subject to continued employment requirements over a three-year period and had no performance conditions. Therefore,
the options vested in full at the end of the three-year period. No further awards have been issued. The shares are held by
an employee benefit trust and are dilutive for the purposes of earnings per share.
The weighted average remaining contractual life was 2.3 years at 31 December 2023 (2022: 3.3 years).
(c) Share Incentive Plan – Matching shares
Under the matching shares award, for every share purchased by an employee the Company will award one matching
share, up to a maximum value. Therefore, the options vest in full at the end of the three year period. The awards are
subject to continued employment requirements over a three year period and have no performance conditions.
The shares are held by an employee benefit trust and are dilutive for the purposes of earnings per share.
The weighted average fair value of each award issued under this scheme during the year was £1.06 (2022: £1.60) and was
determined using the share price at the date of grant. The weighted average remaining contractual life was 1.3 years at
31 December 2023 (2022: 1.2 years).
(d) Restricted stock
The outstanding awards under the RSA are subject to continued employment requirements, which range from a one-year
to a three-year period and have no performance conditions. Therefore, the options vest in full at the end of the period.
The shares are potentially dilutive for the purposes of calculating diluted earnings per share.
The weighted average fair value of each award issued under this scheme during the year was £1.22 (2022: £1.53) and was
determined using the share price at the date of grant. The weighted average remaining contractual life was 8.3 years at
31 December 2023 (2022: 8.7 years).
(e) Long Service Awards
The outstanding awards under the LSA are subject to continued employment requirements over a one year period and
have no performance conditions. Therefore, the options vest in full at the end of the period. The shares are potentially
dilutive for the purposes of calculating diluted earnings per share.
The weighted average fair value of each award issued under this scheme during the year was £1.14 (2022: £1.05) and was
determined using the share price at the date of grant. The weighted average remaining contractual life was 0.2 years
(2022: 0.9 years) at 31 December 2023.
(f) Save as You Earn (‘SAYE’) Scheme
Under the SAYE scheme, employees are allowed to acquire options over the Company’s shares at a discount of up to 20%
of their market value at the date of grant. The awards are subject to continued employment requirements over a three-
year period and have no performance conditions. Therefore, the options vest in full at the end of the period. The shares
are dilutive for the purposes of earnings per share.
The weighted average fair value of each award issued under this scheme during the year was £0.95 (2022: £0.56) and was
determined using the share price at the date of grant. The weighted average remaining contractual life was 2.4 years
(2022: 2.7 years) at 31 December 2023.
27. Commitments and contingencies
The Group had £3.6m of commitments that were contracted but not provided as at 31 December 2023 relating to
contracts for the fit-out of new gyms where works have not yet commenced (2022: £0.8m).
28. Related party transactions
Identification of related parties
The ultimate holding company of the Group is The Gym Group plc, a company incorporated in The United Kingdom.
The subsidiaries of the Group are as follows:
Company
Principal activity
Country of incorporation
The Gym Group Midco1 Limited
The Gym Group Midco2 Limited
Holding company
Holding company
The Gym Group Operations Limited
Holding company
The Gym Limited
Fitness operator
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Holding
100%
100%
100%
100%
The registered office of the subsidiaries is 5th Floor, OneCroydon, 12–16 Addiscombe Road, Croydon, CR0 0XT.
In March 2023, two dormant entities, Derwent Fitness NW Limited and Derwent Fitness GS Limited, were struck off.
There have been no other significant changes to the nature of the Group’s related parties during the year.
Terms and conditions of transactions with related parties
The purchases from related parties are made at normal market prices. Outstanding balances at the year end are
unsecured, interest free and settlement occurs in cash. There have been no guarantees provided for any related party
payables. There were no transactions with related parties during 2023 (2022: nil), other than key management personnel
as disclosed below.
Compensation of key management personnel
Key management includes the Directors as identified in the Directors’ Report and members of the Group’s Executive
Committee. The compensation paid or payable to key management for employment services is shown below:
Remuneration
Company contributions to defined contribution pension scheme
Share based payment charge
31 December 2023
£m
31 December 2022
£m
2.4
0.1
0.6
3.1
1.6
0.1
0.8
2.5
At the current and prior year end, there were no outstanding loan balances owed by key management personnel.
At the year end, no balance (2022: nil) was owed to key management personnel in respect of year-end bonuses.
Information regarding the highest paid Director is shown in the Report of the Remuneration Committee.
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Financial statements
Company statement of financial position
as at 31 December 2023
Financial statements
Company statement of changes in equity
for the year ended 31 December 2023
At 1 January 2022
Profit for the year
Other comprehensive income
Total comprehensive loss for the year
Capital contributions to subsidiaries
Issue of Ordinary share capital
At 31 December 2022
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Capital contributions to subsidiaries
Own
shares held
£m
0.1
–
–
–
–
–
0.1
–
–
–
–
Share
premium
£m
189.7
–
–
–
–
0.1
189.8
–
–
–
–
At 31 December 2023
0.1
189.8
Hedging
reserve
£m
(0.1)
–
0.1
0.1
–
–
–
–
–
–
–
–
Merger
reserve
£m
39.9
–
–
–
–
–
39.9
–
–
–
–
39.9
Retained
earnings
£m
10.5
0.3
–
0.3
1.7
–
12.5
(0.2)
–
(0.2)
2.4
14.7
Total
£m
240.1
0.3
0.1
0.4
1.7
0.1
242.3
(0.2)
–
(0.2)
2.4
244.5
The capital contributions to subsidiaries relate to share based payments made by subsidiaries of the Company.
The Notes on pages 160 to 165 form an integral part of the financial statements.
Retained earnings include distributable reserves of £9.4m (2022: £9.6m).
Non-current assets
Investments in subsidiaries
Trade and other receivables
Deferred tax asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Non-current liabilities
Borrowings
Total liabilities
Net assets
Capital and reserves
Own shares held
Share premium
Hedging reserve
Merger reserve
Retained earnings
Total equity shareholders’ funds
Note
31 December 2023
£m
31 December 2022
£m
4
5
5
6
7
8
8
8
8
8
229.9
75.3
0.5
305.7
3.0
–
3.0
308.7
5.3
58.9
64.2
244.5
0.1
189.8
–
39.9
14.7
244.5
227.6
85.4
0.5
313.5
3.0
0.1
3.1
316.6
4.3
70.0
74.3
242.3
0.1
189.8
–
39.9
12.5
242.3
The Notes on pages 160 to 165 form an integral part of the financial statements.
As permitted by s.408 of the Companies Act 2006, the Company’s profit and loss account is not presented as part
of these accounts. The Company’s loss for the year amounted to £0.2m (2022: profit of £0.3m).
These financial statements were approved by the Board of Directors on 13 March 2024.
Signed on behalf of the Board of Directors
Will Orr
Chief Executive Officer
Luke Tait
Chief Financial Officer
Company Registration Number 08528493
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Financial statements
Notes to the Company financial statements
for the year ended 31 December 2023
1. General information
The Gym Group plc (‘the Company’) is incorporated and domiciled in the United Kingdom with Company number
08528493. The registered address of the Company is 5th Floor, OneCroydon, 12-16 Addiscombe Road, Croydon, CR0 0XT,
United Kingdom.
2. Summary of significant accounting policies
A summary of the significant accounting policies is set out below. These have been applied consistently in the
Financial Statements.
Statement of compliance and basis of preparation
The Financial Statements of the Company have been prepared in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework (‘FRS 101’) and with those parts of the Companies Act 2006 applicable to companies
reporting under FRS 101. The Financial Statements of the Company are included in the Group’s consolidated financial
statements which can be obtained from the Company’s registered office.
The Company meets the definition of a qualifying entity under FRS 101 and has therefore taken advantage of the
following disclosure exemptions available to it under FRS 101:
(a) the requirements of IFRS 7 Financial Instruments;
(b) the requirements of paragraph 97 of IFRS 13 Fair Value Measurement;
(c) the requirements of IAS 7 Statement of Cash Flows;
(d) the requirements of paragraphs 10(d), 111 and 134 to 136 of IAS 1 Presentation of Financial Statements;
(e) the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
(f) the requirements of paragraph 17 of IAS 24 Related Party Disclosures; and
(g) the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such
a member.
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are
significant to the Financial Statements are disclosed in Note 3.
Going concern
In assessing the going concern position of the Company for the year ended 31 December 2023, the Directors have
considered the following:
the Group’s trading performance in 2023 and throughout the traditional January and February 2024 peak period,
in particular in respect of its trading subsidiary The Gym Limited (‘TGL’) on which the Company is interdependent;
future expected trading performance of the Company and TGL to June 2025 (the going concern period), including
membership levels and behaviours in light of the current difficult macroeconomic environment; and
the Company and Group’s financing arrangements and relationship with its lenders and shareholders.
2023 was a year of solid membership and revenue growth for The Gym Group, with membership at the end of December
2023 reaching 850,000, an increase of 4% from the end of December 2022. Average revenue per member per month
(‘ARPMM’) for the year was £19.50, up 9% from £17.82 in the prior year. Ultimate, the premium price product, ended the
year at 31.7% of total membership compared with 29.6% in December 2022.
As a result, revenue for the year at £204.0m was 18% up on the prior year. Group Adjusted EBITDA Less Normalised Rent
at £38.5m was £0.5m better than in 2022, as the growth in revenue was largely offset by cost inflation, particularly in
utilities and staff costs.
The Group also reported strong cash generation in the year, with free cash flow of £27.0m (see Note 24 to the
Consolidated financial statements for a reconciliation to Net cash inflow from operating activities) being generated and
used to fund six new site openings and a number of major refurbishments, as well as significant investment in technology.
2. Summary of significant accounting policies continued
Going concern continued
In September 2023, the Company agreed with its lenders certain changes to the Company’s Revolving Credit Facility
(‘RCF’). As a result, the Company now has access to a combined £80m facility which matures in October 2025.
The Company also currently has access to £12.4m of finance lease facilities (£15m permitted under the RCF).
The RCF is subject to quarterly financial covenant tests on Adjusted Leverage (Non-Property Net Debt divided by Group
Adjusted EBITDA Less Normalised Rent must not exceed 3.0 times) and Fixed Charge Cover (Adjusted EBITDAR to Net
Finance Charges plus Normalised Rent must be greater than 1.5 times). The previously reported liquidity covenant was
removed as part of the revised RCF agreement.
As at 31 December 2023, the Group had Non-Property Net Debt (including non-property leases) of £66.4m, consisting
of £59.0m drawn debt under the RCF, £8.9m of non-property leases and £1.5m of cash. Headroom under the RCF (drawn
debt less cash) was £22.5m. Adjusted Leverage was 1.72 times and Fixed Charge Cover was 1.73 times.
Whilst the going concern assessment covers the period to the end of June 2025, the Directors have considered the fact
that the Company’s RCF facility is currently expected to expire in October 2025 and concluded that, based on regular
discussions with participating banks and financial advisors, there is a realistic prospect that this will be extended
or refinanced before that time.
Following the January and February 2024 peak trading period, closing membership at 29 February 2024 was 909,000
members, an increase of 7% on the position at 31 December 2023, demonstrating that consumers consider gym
memberships to be a high priority purchase, despite the ongoing difficult economic environment; and that the low cost
gym model remains resilient.
Despite the above, the Directors have continued to take a cautious approach to planning. The base case forecast for the
period to 30 June 2025 anticipates continued growth in yields across the whole estate as a result of pricing optimisation
actions that have already been taken and the impact of the new three-tier price product architecture rolled out in FY23.
Modest increases in membership levels are driven largely by the sites opened in 2022 and 2023, and not by growth in the
mature estate.
In addition, the Directors have continued to take a measured approach to new site openings throughout the plan period,
with all new sites assumed to be self-financed. Under this scenario, the financial covenants are passed with headroom
and the Group can operate comfortably within its financing facilities.
The Directors have also considered a severe downside scenario which membership numbers in the mature estate decline
by approximately 5% during 2024 and 3% thereafter. Yields continue to increase as a result of pricing optimisation
actions already taken, but they do so at a lower level than under the base case. In addition, the number of new site
openings is reduced to conserve cash and discretionary performance-related bonuses are removed. Under this scenario,
the financial covenants continue to be passed and the Group continues to operate within its financing facilities.
The Directors have also considered a reverse stress test scenario to ascertain the extent of the downturn in trading
that would be required to breach the Company and Group’s banking covenants or liquidity requirements. Mitigating
actions assumed in this scenario include moving to a minimum level of maintenance and technology capital expenditure;
reducing controllable operating costs and marketing expenditure; and pausing the new site opening programme in order
to preserve cash.
In this scenario, the closing membership would need to decline by 16% from February 2024 before the Fixed Charge Cover
covenant would be breached in June 2025. The Group would, however, continue to operate within its current level of debt
capacity and the Adjusted Leverage ratio would not be breached.
In the event of a reverse stress test scenario, the Directors would introduce additional measures to mitigate the impact
on the Company and Group’s covenants and liquidity, including: (i) further reductions in controllable operating costs,
marketing and capital expenditure; (ii) discussions with lenders to secure a covenant waiver; and (iii) deferral of, or
reductions in, rent payments to landlords. The Directors consider the reverse stress test scenario to be highly unlikely.
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The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Notes to the Company financial statements continued
for the year ended 31 December 2023
2. Summary of significant accounting policies continued
Conclusion
The Board has reviewed the financial plan and downside scenarios of the Group and has a reasonable expectation that
the Company and the Group has adequate resources to continue in operational existence for the period to 30 June 2025.
As a result, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.
In making this assessment, consideration has been given to the current and future expected trading performance; the
Company and Group’s current and forecast liquidity position and the support received to date from our lenders and
shareholders; and the mitigating actions that can be deployed in the event of reasonable downside scenarios.
Investments
On initial recognition, investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid.
Where consideration is paid by way of shares, the excess of fair value of the shares over nominal value of those shares
is recorded in share premium. Investments in subsidiaries are reviewed for impairment at each balance sheet date with
any impairment charged to the income statement. Refer to Note 4 for further details of impairment testing.
Financial instruments
Fair value hierarchy
IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of
the inputs used in the value measurements:
Level 1: quoted prices in active markets for identical assets or liabilities
Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
3. Significant accounting judgements, estimates and assumptions
The preparation of the Financial Statements in accordance with FRS 101 requires estimates and assumptions to be
made that affect the value at which certain assets and liabilities are held at the balance sheet date and also the
amounts of revenue and expenditure recorded in the period. The Directors believe the accounting policies chosen are
appropriate to the circumstances and that the estimates, judgements and assumptions involved in its financial reporting
are reasonable.
There are no critical accounting judgements or estimates within these Financial Statements.
4. Investments in subsidiaries
At 1 January 2022
Additions
At 31 December 2022
Additions
At 31 December 2023
£m
225.9
1.7
227.6
2.3
229.9
During the current and prior year, share options in the Company’s shares were granted to employees of The Gym Group
Operations Limited and The Gym Limited. A corresponding capital contribution of £2.3m has been recognised within
investments in subsidiaries (2022: £1.7m). Details of the Company’s share based payment arrangements are shown in
Note 26 to the consolidated financial statements.
Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable market data)
The Company’s subsidiary undertakings are shown in Note 28 to the consolidated financial statements.
There were no transfers between levels throughout the periods under review.
Financial assets
The Company measures its trade and other receivables and cash and cash equivalents at amortised cost. Subsequent
to initial recognition these assets are carried at amortised cost using the effective interest method. Income from these
financial assets is calculated on an effective yield basis and is recognised in the income statement.
The Company recognises an allowance for expected credit losses (‘ECL’) for all debt instruments held at amortised
cost. The ECLs are based on the difference between the contractual cash flows due, and the cash flows expected to be
received.
For trade receivables, the Company does not track changes in credit risk, but instead recognises a loss allowance based
on lifetime ECLs at each reporting date.
For receivables other than trade receivables, the Company recognises ECLs in two stages. For credit exposures for which
there has not been a significant increase in credit risk since initial recognition, a loss allowance is recognised based on
12-month ECLs. For credit exposures for which there has been a significant increase in credit risk since initial recognition,
a loss allowance is required for lifetime ECLs.
Financial liabilities
The Company initially recognises its financial liabilities at fair value and subsequently they are measured at amortised
cost using the effective interest method.
Current taxation
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the balance sheet date.
Income tax relating to items recognised in comprehensive income or directly in equity, is recognised in comprehensive
income or equity and not in the income statement.
The Company assesses at each reporting date, whether there are any indications of impairment of investments. If
at a reporting date any indication is present, an impairment test is performed. The impairment test assesses the
investments in subsidiaries for impairment by comparing the recoverable amount (being the higher of the fair value less
costs of disposal and value-in-use) to the carrying amount. If the carrying amount exceeds the recoverable amount, the
investment is considered impaired and written down to its recoverable amount.
The Company determines the recoverable amount of its investments by determining the present value of the estimated
future cash flows expected to be generated by the investees. This is performed using cash flow projections based on the
Board-approved three year plan. Cash flows beyond this period are extrapolated using an estimated growth rate of 3.0%
(2022: 3.0%). All cash flows are discounted using a pre-tax discount rate of 10.4% (2022: 8.5%). The increase in the discount
rate reflects the increase in SONIA and the risk-free rate.
In the years under review, management’s value-in-use calculations have indicated no requirement to impair and no
reasonably possible change in key assumptions gives rise to an impairment.
5. Trade and other receivables
Amounts owed by Group undertakings
Due in less than one year
Due in more than one year
31 December 2023
£m
31 December 2022
£m
78.3
78.3
3.0
75.3
78.3
88.4
88.4
3.0
85.4
88.4
The Company provides a guarantee over certain non-property lease contracts of its trading subsidiary, The Gym
Limited. As a result, at 31 December 2023, the Company was exposed to £8.9m (2022: £11.4m) should The Gym Limited,
default on its obligations under those leases. No expected credit loss in respect of this has been recognised at the
balance sheet date.
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The Gym Group plc | Annual Report and Accounts 2023
The Gym Group plc | Annual Report and Accounts 2023
Financial statements
Notes to the Company financial statements continued
for the year ended 31 December 2023
5. Trade and other receivables continued
No expected credit loss in respect of the intercompany receivables has been recognised at the balance sheet date
(2022: nil) as these have been assessed as immaterial. In making this assessment, consideration has been given to a
probability-weighted estimate of credit losses over the expected life of the intercompany debt.
Qualitative factors, including a review of the cash flow projections of the main trading entity (The Gym Limited), have
then been considered to ascertain whether there has been a significant increase in the credit risk during the year.
Based on this assessment, there has been no significant increase in credit risk and the entity is expected to generate
sufficient cash to repay its intercompany balances and/or dividends to other entities within the Group to allow them to
repay their intercompany balances.
6. Trade and other payables (due in less than one year)
Trade payables
Amounts owed to Group undertakings
Accruals
31 December 2023
£m
31 December 2022
£m
–
3.8
1.5
5.3
0.1
3.8
0.4
4.3
7. Borrowings
The carrying value of the Company’s borrowings at 31 December 2023 was £58.9m (2022: 70.0m).
8. Issued capital and reserves
Allotted, called up and fully paid
Ordinary shares of £0.0001 each
Own shares held
Deferred Ordinary shares of £1 each
The number of Ordinary shares in issue is as follows:
Ordinary shares of £0.0001 each
Deferred Ordinary shares of £1 each
31 December 2023
£m
31 December 2022
£m
–
0.1
–
0.1
31 December 2023
31 December 2022
178,135,710
178,039,002
48,050
48,050
Refer to Note 25 of the consolidated financial statements for details of movements in share capital.
8. Issued capital and reserves continued
The following describes the nature and purpose of each reserve in equity:
Own shares held and capital redemption reserve
These reserves represent 48,050 Deferred Ordinary shares of £1 each repurchased by the Company on 12 November 2015
and Ordinary shares held in an employee benefit trust. The Deferred Ordinary shares constitute a separate, non-voting
class of shares which is held in treasury and not admitted to trading. The rights attached to the Deferred Shares are set
out in the Company’s Articles.
Share premium
The amount subscribed for share capital in excess of nominal value.
Hedging reserve
The fair value movements on the effective portion of hedging instruments.
Merger reserve
The amount subscribed for share capital in excess of nominal value attracting merger relief under the Companies
Act 2006.
Retained earnings
The accumulated net gains and losses of the Company since inception.
Issued Share Capital and Capital Redemption Reserve are not included in the Consolidated Statement of Changes
in Equity because the balances in these reserves are less than £0.1m.
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The Gym Group plc | Annual Report and Accounts 2023
Other information
Five year record
Other information
Definition of non-statutory measures
The following table sets out a summary of selected key financial information and Key Performance Indicators for the
business.
Group Adjusted EBITDA – operating profit before depreciation, amortisation, share based payments and
non-underlying items.
Revenue
Group Adjusted EBITDA Less Normalised Rent1
Free cash flow2
Non-Property Net Debt3
Adjusted Leverage (x)
Total number of gyms (number)
Total number of members (‘000)
Average revenue per member per month (£)4
Members that visit 4+ times in a month5
Number of mature gyms in operation (number)
Mature gym site EBITDA Less Normalised Rent6
Return on Invested Capital of mature gym sites7
Employee engagement score8
2023
£m
204.0
38.5
27.0
66.4
1.72
233
850
19.50
50.8%
199
53.6
19%
8.5
2022
£m
172.9
38.0
16.7
76.0
2.00
229
821
17.82
47.2%
182
50.9
20%
8.4
2021
£m
106.0
5.7
2.0
44.1
7.74
202
718
17.60
32.6%
175
22.5
18%
7.6
2020
£m
80.5
(10.2)
(16.6)
47.3
(4.64)
183
578
17.20
23.9%
155
3.9
18%
6.4
2019
£m
153.1
48.5
32.3
47.4
0.98
175
794
16.02
44.0%
109
48.1
31%
n/a
1
A reconciliation of Operating profit/(loss) to Group Adjusted EBITDA Less Normalised Rent has been included underneath the Consolidated statement of
comprehensive income on page 122.
2 A reconciliation of Net cash inflow from operating activities to Free cash flow has been provided in Note 24 to the consolidated financial statements.
3
4
Information on the make-up of Non-Property Net Debt is included under Capital risk management in Note 23 to the consolidated financial statements.
In order to provide better year on year comparability for yield, the figures presented for 2021 and 2020 have been adjusted to exclude the impact of UK
Government-enforced closure periods as a result of the Covid-19 pandemic. The 2021 figure is calculated for the period from July 2021 to December 2021 when
all gyms were fully open and trading had returned to normal. The 2020 figure is calculated on a site-by-site basis and excluded days where the sites were
required to be closed due to government restrictions.
5 The 2021 and 2020 figures are impacted by closure days.
6
7
8
Group Adjusted EBITDA Less Normalised Rent contributed by mature sites (£53.6m in 2023; £50.9m in 2022) plus Group Adjusted EBITDA Less Normalised Rent
contributed by non-mature and acquisition sites (£6.3m in 2023; £2.9m in 2022) less Central Support Office costs (£21.4m in 2023; £15.8m in 2022) equals Group
Adjusted EBITDA Less Normalised Rent (£38.5m in 2023; £38.0m in 2022).
In order to provide better year on year comparability for ROIC, the figures presented for 2021 and 2020 have been adjusted to exclude the impact of UK
Government-enforced closure periods as a result of the Covid-19 pandemic. The 2021 figure is calculated for the period from July 2021 to December 2021 when
all gyms were fully open and trading had returned to normal. The 2020 figure is calculated to exclude those months when sites were required to be closed due
to government restrictions.
In 2023, we changed the way we measure employee engagement. We partnered with Peakon, an engagement specialist, and adopted a more accurate and
comprehensive approach using a 0-10 scale rating system, moving away from a percentage score (Top Box). Due to the change in methodology for calculating
the engagement score, a precise comparison to 2022 and prior cannot be made. These are therefore included for indicative purposes only.
Normalised Rent – the contractual rent payable, recognised in the monthly period to which it relates. A reconciliation of
property lease payments to Normalised Rent is included in Note 21 to the Consolidated financial statements.
Group Adjusted EBITDA Less Normalised Rent – Group Adjusted EBITDA after deducting Normalised Rent. A
reconciliation of Operating profit/(loss) to Group Adjusted EBITDA Less Normalised Rent is included below the
Consolidated statement of comprehensive income on page 122.
Adjusted Profit/Loss before tax – profit/loss before tax before non-underlying items.
Adjusted Earnings – loss/profit for the year before non-underlying items and the related tax.
Basic Adjusted EPS – Adjusted Earnings divided by the basic weighted average number of shares.
Free cash flow – Group Adjusted EBITDA Less Normalised Rent and movement in working capital, less maintenance
capital expenditure, cash non-underlying items, bank and non-property lease interest and tax. A reconciliation of Net
cash inflow from operating activities to Free cash flow is included in Note 24 to the Consolidated financial statements.
Non-Property Net Debt – bank and non-property lease debt less cash and cash equivalents. See Note 23 to the
Consolidated financial statements for the breakdown.
Mature gym site EBITDA Less Normalised Rent – Group Adjusted EBITDA Less Normalised Rent contributed by
mature sites (open 24 months or more at the period end).
Return On Invested Capital of mature gym sites – Mature gym site EBITDA Less Normalised Rent divided by total
capital initially invested in the mature sites excluding acquisition sites.
Maintenance capital expenditure – costs of replacement gym equipment and premises refurbishment.
Expansionary capital expenditure – costs of fit-out of new gyms (both organic and acquired), technology projects
and other strategic projects. It is stated net of contributions from landlords.
Adjusted Leverage – Non-property Net Debt divided by Group Adjusted EBITDA Less Normalised Rent.
Fixed Charge Cover – Group Adjusted EBITDA divided by Finance costs (excluding interest costs on property leases)
less Finance income plus Normalised Rent.
166 |
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The Gym Group plc | Annual Report and Accounts 2023
Other information
Corporate information
Company Secretary
Krishan Pandit
Company number
08528493
Registered office
5th Floor
OneCroydon
12–16 Addiscombe Road
Croydon
CR0 0XT
Website
www.tggplc.com
Corporate Advisers
Bankers
HSBC Bank plc
Solicitors
Allen & Overy LLP
Auditor
Ernst & Young LLP
Joint Brokers
Deutsche Numis
Peel Hunt LLP
Registrar
Link Group
168 |
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The Gym Group plc
5th Floor OneCroydon
12-16 Addiscombe Road
Croydon CR0 0XT
www.tggplc.com
www.thegymgroup.com