INTERIM RESULTS August 2016 Forward-looking statement disclaimer - PowerPoint PPT Presentation

The Gym Group plc INTERIM RESULTS August 2016

Forward-looking statement disclaimer This presentation and information communicated verbally to you may contain certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of The Gym Group Plc. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this presentation or communicated verbally should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. The Gym Group Plc undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances. Neither this presentation nor any verbal communication shall constitute an invitation or inducement to any person to subscribe for or otherwise acquire securities in The Gym Group Plc. 1

Summary performance Group Adjusted Estate Revenue EBITDA  80  £36.1m Av. member growth of  £11.5m + 25.1% vs PY sites + 22.8% Av. revenue (H1 2015: 63 sites) per member + £3.0m (35.2%) growth vs PY + 1.6% (H1 2015 : £8.5m) Strong cash Maiden interim Adjusted PBT Adjusted EPS generation dividend £4.6m 2.8p 0.25p Net Debt (H1 2015: Adjusted per share £2.5m loss £0.8m) as at June 2016 2

Strategic and Financial Operational Outlook Update Update 3

A disruptive concept and compelling proposition Significant market opportunity Market leader Low-cost, technology-led Compelling consumer proposition disruptive business model Experienced management team led by High quality and well invested gym estate Founder / CEO Attractive financial model Value proposition that can prosper in a challenging economic environment 4

Keys to success in low cost gym market Key success factors for The Gym Group • 8 years refinement of the model: Know how & – Large format, high utilisation gyms expertise  – Efficiently marketing a low-cost proposition online – Integration of multiple components of technology • Dedicated acquisitions team: well networked with landlords and agents Ability to  • Historic data about what works (and what doesn’t) source sites • Strong covenant and brand, impacted positively by IPO Scale •  Increasing returns to scale for large operators advantages • Reducing marginal costs to operate and fit out Access to  • High quality, durable gym fit-out with significant upfront capex capital • Bank debt is difficult to secure until operators have reached a position of scale • Technology Technology key to a successful low-cost product offering  • Underpins low staff costs: facilitates online model, 24/7 (1) access and generates valuable data 1. All gyms open 24/7 excluding 3 gyms due to licensing restrictions 5

Market opportunity Significant The model is A large, fragmented Low cost gyms are opportunity for the fastest growing growing the market health & fitness further growth in low sub-segment market in the UK cost space • UK market >30% underpenetrated vs. international precedent ~55% (2) £4.4bn (1) of joiners new to • Low-cost successful Market gym membership (3) UK gym in a number of other CAGR market value UK sectors 6,435 Aldi / Lidl, Travelodge / gyms (1) Premier Inn, easyJet / In the UK Ryanair 1. Leisure Database Company (LDC) Report: Data as at 31 March 2016. Total annual membership revenue of all health and fitness clubs in the UK (private and public). 2. Market growth as at 31 March 2016. Source: LDC Report. Figures based on March of 2012-2016. 3. % of joiners new to gyms as disclosed by completed annual surveys up to December 2015. Minimum response rate of ~30%. 6

Market opportunity A fragmented market… …with low -cost driving market growth 2012-16 CAGR Total UK health and fitness market (£bn) (2) 4.4 4.3 UK health and fitness market by +3.5% 3.9 4.1 3.9 0.4 0.3 0.2 4 0.1 0.1 number of private and public clubs (1) +54.6% 3 4.0 4.0 3.9 3.8 3.8 2 +1.5% 450 Low cost 1 2012 2013 2014 2015 2016 Traditional private and public Low Cost Total 1,378 Traditional private Low-cost driving increase in members Number of multi-club 6.5 UK gyms 5.9 Number of UK private gym members (m) (3) 5.4 5.6% 5.5 5.0 4.5 4.8 6,435 4.6 1.9 1.3 56.9% 0.2 4.5 0.9 0.7 0.4 1,872 Traditional private 3.5 independent 2.5 4.3 4.2 4.1 4.1 4.1 4.0 (1.4%) 1.5 2,735 Public 0.5 2011 2012 2013 2014 2015 2016 Traditional Low Cost Large (£4.4bn) UK gym market with a growing low-cost segment (2) 1. Source: LDC Report. Number of clubs as at 31 March 2016. 2. Source: LDC Report. Private and public clubs. Private market value of £3.09bn and public market value of £1.34bn. Figures based on March of each year (private and public). 3. Source: LDC Report. Figures based on March of each year. 7

Operational KPIs Revenue £m Strong performance of existing Gyms (#) 74 80 60.0 gyms 6 • Revenue £36.1m +25.1% 45.5 55 sites 35.7 36.1 (H1 2015: £28.9m) 40 open in 28.9 32 22.3 • Average members 420,000 H1 2016 10 16 +22.8% (H1 2015: 342,000) 5 1 • Average revenue per member £14.31, +1.6% (H1 2015: 2008 2009 2010 2011 2012 2013 2014 2015 H1 2012 2013 2014 2015 H1 H1 2016 2015 2016 £14.08) • EBITDA per site increased by Group Adjusted EBITDA £m Members (k) 2.7% to £187,000 (H1 2015: 376 424 £182,000) 17.0 293 14.7 Further efficiencies from low 225 11.8 11.5 cost operating model 166 8.5 • Group EBITDA margin up 2.4% 6.0 96 26 58 to 31.9% (H1 2015: 29.5%) 7 • Average site operating costs 2008 2009 2010 2011 2012 2013 2014 2015 H1 down 3.4% vs H1 2015 2012 2013 2014 2015 H1 H1 2016 2015 2016 • Average site capital cost maintained at £1.35m 8

Further operational progress Focus on team and people Strengthen the customer proposition • Awarded Gold Investors in • Net Promoter Score of 62.0% People in May 2016 up 1.8% compared to year • All Staff Share Scheme, each end employee granted £1,000 free • Feefo score of 93.5% for 6 shares and the ability to invest in additional shares month period • Nick Henwood joins as • Improved classes; 15 gyms Operations Director, following with investment in free similar roles at David Lloyd weights areas and functional Leisure, Mothercare and zones in H1 Autoglass • Barney Harrison joins as Marketing Director, with extensive experience gained at Sky 9

Property rollout Target of 2016 Progress 15-20 • 6 gyms opened in H1 2016 new sites p.a. • Openings weighted towards over medium Q4 2016 term Glasgow Bothwell Street 24/03/16 • Strong line up of London 20,200 sq. ft. Converted retail property centric openings for 2016 (e.g. Lewisham, Sunbury, Norwich Hall Road Dagenham) 23/05/16 10,400 sq. ft. New build • Well-developed pipeline for 2017 including contracts Tooting exchanged on 4 sites from 29/06/16 16,300 sq. ft. Harrow on the Hill another operator in August New build mixed use 24/06/16 development 2016 14,200 sq. ft. Southall Southfields New build mixed use 24/05/16 11/04/16 development 17,300 sq. ft. 13,200 sq. ft. Rolling average sq ft 19,500 Converted New build mixed use -4.0% office building development 19,000 18,500 Rolling Mature at New at average sq ft 18,000 Rolling 2015 2015 mature site 17,500 average CAGR to 17,000 members per 2015 (1) 16,500 sq ft for mature sites 2015: 16,000 0.35 15,500 15,000 CAGR to 2015: 2010 2011 2012 2013 2014 2015 -0.8% 10 1. Sites open at December 2013. Rolling average sq ft CAGR of sites open at December 2015 is -2.8%.

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