The Gym Share Discussion Threads

[robizm] 23/3/2020 11:05

Something tells me you have never been to a gym. Trust me plenty cannot wait to get back

[onjohn] 20/3/2020 22:48

lots of empty gyms, people cancelling and many wont come back

borderline bust

[quepassa] 20/3/2020 22:00

528 and 551 refer.

Good Luck ALL


It is informative to examine yesterday's full figures and ACCOUNTS. In particular, Gym's outgoings/amounts due such as Admin Expenses and Bank Interest, Trade and Other Payables etc etc.

Of course, in normal times, these would just be part of normal cash-flow.

All leisure sector businesses have generally been closed down by HMG for a protracted period. No-one can guess for how long.

It is nonetheless by no means clear to me that the very substantial and welcome government support measures so far announced would however cover the majority business liabilities for every business.

Some long-standing businesses may have accumulated more fat to help them weather lean times. Other businesses which may still be in the growth phase may have fewer reserves to fall back upon.

The government has additionally announced helpful, if not vital, business loan facilities being made available at attractive rates, although such loans would need to be repaid and will impact gearing and gearing ratios.

In the case of The Gym Group, one notes that the recent figures to 31/12/19 released yesterday reveal Current Assets of some £12m against Current Liabilities approaching £50m. It is interesting in this regard perhaps to consider the Quick Ratio or "Acid Test".

It is not clear to me what insurance Gym Group has, if any, to cover Business Disruption of this nature for an extended period.

The final two paragraphs on Page 20 of yesterday's Accounts under the rubric of "2. Basis of preparation" make for informative reading and offers perhaps both some encouragement and some doubt in equal measure.

It is also interesting to consider the next paragraph in this same section on page 21 which contains the following words which must be carefully read in their full and proper context:


"The Directors have concluded that the potential impact of the Covid-19 pandemic described above and uncertainty over possible mitigating actions represents a material uncertainty that may cast significant doubt on the Group and Company’s
ability to continue as a going concern. Nevertheless, having assessed the combination of these various options and the impact of a potential liquidity shortfall in the event of a longer period of impact from the Covid-19 pandemic the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months".


Of course yesterday, when this was released, gyms were still open for business. Today gyms have been closed.


Whilst one can but wildly guess, it would seem not unlikely that when life eventually normalises, that many smaller/mid-size leisure sector businesses may or may not require recapitalisation by way of issuing new equity whether in the form of (rescue) rights issues or issuing new equity to third parties. Both of which would lead to inevitable shareholder dilution.

Good Luck to Gym Group and to shareholders.

ALL IMO. DYOR.
QP

[squitter] 20/3/2020 19:22

Eeep. And there I was, congratulating myself on my timing, at picking up some shares at the bottom of the dip today.

[ronwilkes123] 20/3/2020 19:07

Subscriptions frozen I've had an email

[pugugly] 20/3/2020 18:11

Now formally shut down for an indefinate period but massive Gov supportg to subsidise staff wages and rates - so far as newsflow goes at the moment NO RELIEF against lease charges - Investors I suggest need an announcement from the company of an estimated cost per ongoing month during shutdown - Subscriptions of course will need to be extended foc for the period of the shutdown.

Could it be that those buying today will have caught the proverbial falling knife or will they be like the wise virgins and filled their lamp with vast quantites of pent up consumer demand that will light up their lives when (and that IS A BIG WHEN) life gets back to the old normal.

[pugugly] 19/3/2020 11:12

FT Today - US Gym companies under severe stress - Short term bounce failed - As UK moves into total lockdown cannot see much short term hope here - Announcement - So far as I can see - does not cover worst case scenario. (OK have to do more detailed inspection of sacred entrails) but as a very viable fitness model should be able to source a fresh capital infusion but at what dilution.

[thomshrike] 19/3/2020 10:27

2 comments from me:
- I expected a share price bounce, but probably some people are still expecting "peak negative news" which will be if and when their gyms are finally shut down.
- a fellow investor asked the company what is the take-up rate of the fee freeze option. Apparently it is currently 2% of the members, which - good news - is much lower than what I would have anticipated at this point.

[sphere25] 19/3/2020 09:10

Suffice to say there's enough buying interest to have taken a long trade. Broken 85 and testing a key level at 90p now.

Could be a vicious bounce on its way. Oversold to the nth degree!

Still, be careful out there folks. US still hasn't formed a bottoming pattern, but there are an absolute barrage of stocks due strong oversold bear rallies.

[sphere25] 19/3/2020 08:31

Could the market bounce on this statement. I'm watching for a potential bounce. The likes of CINE and BOWL bounced at the times of their closures. Have to wait and see. Clearly anything goes in this market. Which way are the algos programmed to go today I wonder!


"In making this assessment the Directors have made a current consideration of the potential impact of the Covid-19 pandemic on the cashflows and liquidity of the Group over the next 12 month period. This assessment has taken in to account the current measures being put in place by the Group to preserve cash and reduce discretionary expenditure during a period when the Group may need to temporarily close some or all of its sites as a result of enforcement action by the UK Government, and potential reductions in revenues resulting from changes in the behaviours of members. The Group's financial modelling assumes reduced membership and revenue as a result of Covid-19 impacting members behaviours and associated actions by the UK government, than it would have otherwise expected during the next 12 months both during the period of any closure and thereafter. The Company has considered the impact of additional downside scenarios with a greater length of closure and a more severe impact on the Group's cashflows and liquidity as a result of additional loss of membership and revenue. These downside scenarios assume that Group Adjusted EBITDA in 2020 reduces by approximately 65% compared to the Board's expectations prior to development of the Covid-19 pandemic. At these levels of Group Adjusted EBITDA reductions, when combined with the mitigating actions that are within the Group's control including reductions in capital and other expenditure, the Directors currently believe the Group can maintain sufficient liquidity within its GBP70m debt financing facilities (reflecting the GBP20m drawdown in March 2020 of the remaining facility) and satisfy its bank covenant levels over the next 12 months.

The Directors have also assessed the impact of an even more severe effect on the Group were there to be an even longer period of enforced closure and greater reductions in revenues resulting from changes in members' behaviours. Under certain of these scenarios the Group could breach its bank covenants or have insufficient liquidity within the next 12 months. In considering the impact on the Group's going concern position the Directors have carried out a preliminary assessment of the additional options that may be available to the Group to mitigate the impact on its cashflows and liquidity. In particular Directors have considered (i) additional reductions in expenditure at certain times to improve liquidity; (ii) the announcement by the Chancellor of the Exchequer on 17th March 2020 of measures to assist companies with the impact of the Covid-19 pandemic including a rates holiday for retail, leisure and hospitality and, more specifically, guaranteed loans for lending of over GBP300bn to enable companies to help meet their fixed cost obligations including rent, rates and staff costs during the period of the pandemic; (iii) the potential of the Group to access additional debt where the Directors note that the Group's existing GBP70m revolving credit facility includes a further GBP30m accordion which requires consent of the banks; (iv) the potential for the Group to agree with its landlords deferrals in the timing of rental payments ; or (v) the potential to raise additional funds from third parties."

[masurenguy] 19/3/2020 07:37

Full Year Results for the year ended 31 December 2019.

-- Adjusted profit before tax of £14.0m, up 36.0% (2018: £10.3m)
-- Statutory profit before tax decreased by 10.6% to £6.2m (2018: £7.0m)
-- Basic Adjusted Earnings per Share (EPS) of 7.7p, an increase of 32.8% (2018: 5.8)
-- Return on invested capital on mature estate above 30% target at 31% (2018: 30%)
-- Non-Property Net Debt at £47.4m (2018: £46.0m, H1 2019: £47.2m)
NB: This demonstrated that we funded our expansion through operating cash flows

-- Trading in the first two months of the year was in line with the Board's expectations with 891,000 members at the end of February

-- The emerging outbreak of Covid-19 has in the last two weeks begun to have an impact on the business: daily gym usage has started to decrease, new joiner numbers are marginally lower than expected, cancellations are higher and the number of members freezing their membership has increased

-- As of 18 March we have 870,000 members; all gyms remain open currently

-- Operationally, we are monitoring the outbreak carefully and being guided by advice from Public Health England with the health and safety of our members and staff our first priority

-- Financially, we have taken a number of actions to reduce cash outgoings, including pausing our pipeline rollout, as we operate through what we anticipate to be a period of significant disruption.

Richard Darwin, CEO of The Gym Group, commented:"Whilst 2019 was another successful year in which The Gym Group delivered substantial growth in members, revenue and profits, we are now focused on planning for the potential impact on our business of Covid-19. To date, we have seen a small impact on trading and all 179 of our gyms remain open. We go into a period of anticipated disruption with an established membership base, a cash generative business model and a strong balance sheet. As the scale of the outbreak escalates we have contingency plans in place. Our business has a significant reach with over 10 million member visits already this year and our focus is to be in a strong position when we emerge from the Covid-19 disruption to extend access to affordable fitness across the UK"

[ronwilkes123] 18/3/2020 15:34

We wanted to provide an update to our members on the coronavirus situation.

We know that exercise plays a significant part in the lives of our members so our gyms remain open as usual, so that you can continue to train if you want to.

We’ve already made some changes to our cleaning schedules to ensure your workout session is as safe as possible. And we’re providing extra cleaning equipment on gym floors for members to use.

And from today we’re introducing further changes so that you can maintain the minimum 2 metre social distancing that the government has advised:
All classes have been cancelled until further notice
Some of our equipment will be taken out of use, temporarily. We’ll be putting signs on the pieces that are out of use
Group inductions and free PT taster sessions have also been cancelled
We’re also planning to provide our members with some exercise content that they can use outside of the gym or at home. We’ll be sending more information on this soon.

We continue to monitor the coronavirus situation closely and will update you via email in the coming days.

For the latest information and links to websites that can provide advice on coronavirus please visit www.thegymgroup.com/coronavirus-information.

Updated members email sent in last few mins

[dtaliadoros] 18/3/2020 15:02

I will drive past mine later and report back

[ronwilkes123] 18/3/2020 14:57

Been in a gym group gym this morning and yesterday - i can tell you numbers are down compared to when i normally go. I saw no cleaning equipment for the machines and the toilets were just as bad as they ever were.

Why they have decided to stay open is beyond me

[dtaliadoros] 17/3/2020 10:24

Any eyeball numbers from the ground? I've not been able to pass my local gym today. Keen to know what others sort of numbers people are seeing in their local gyms.

[quepassa] 17/3/2020 08:46

Reviewing the situation regularly:-

hXXps://www.thegymgroup.com/coronavirus-information/



ALL IMO. DYOR.
QP

[dtaliadoros] 16/3/2020 13:41

Flippin eck….was fulling expecting a fall today....but not by this amount.

[dtaliadoros] 16/3/2020 08:21

What's the eyeball research looking like for this.i Went and had a look at my local gym and I would say it was about a third as busy as usual.

[quepassa] 16/3/2020 08:18

A great fan of GYM but this share has a lot , lot further to fall methinks .


Good Luck All but wear a hardhat and carry a shamrock.

ALL IMO. DYOR.
QP

[rp] 13/3/2020 14:04

Can we dare to hope that when the coronavirus drama subsides people might be more encouraged to get fitter.

[dtaliadoros] 13/3/2020 00:13

I do like this stock, having been invested in the past, but not currently.

The trouble with this stock, and indeed all stocks in the service sector is that is it news driven. Given the cheap membership prices I don't expect many to cancel their memberships, but probably enough to see a decent enough dent in the their new sign up rates. Drop in numbers will be a significant enough new even for a company that up until now has been roaring ahead, and that I feel will be enough to see this stock drop further. I think it will be inevitable that expansion plans going forward may have to be scaled back.