The Gym Group Reports Strong 2025 Interim Results with 8% Revenue Growth

The bank group extended and upsized facilities to £102 million, now maturing in June 2028. The average interest rate on drawn funds eased to 7.4% (H1 24: 8.5%). There was £52.3 million of headroom at period end. In short, plenty of flexibility to push on with self-funded expansion.

Rollout and refurbishments: 14-16 openings in 2025, with Gen Z in focus

Five new sites have opened year to date (three in H1), with eight more under construction. The full-year target of 14-16 new gyms is reiterated, all funded from free cash flow. The pipeline for 2026 is “well supplied”, with 18-22 openings planned. The estate stood at 247 gyms at period end and 249 by 10 September 2025.

New sites feature an evolved, more contemporary design that’s landing well, particularly with Gen Z – a cohort that values health spend and drives frequency. Refits are bringing those design elements into the existing estate within the usual maintenance budget. Property maintenance capex is expected to remain at 5-6% of revenue.

Technology upgrade: building capacity for new member features

The two-year programme to replace legacy member management and payments systems is underway. It is already a line item in non-underlying costs (£1.0 million so far in H1, with c.£3 million expected for 2025). The prize is faster innovation – think member-get-member, new payment options, and richer data to keep pushing yield and retention.

Outlook: guidance at the top end and like-for-like still growing

Trading momentum continued through July and August. The company now expects to deliver c.3% like-for-like revenue growth for the full year, with like-for-like cost growth of c.2%. Group Adjusted EBITDA less Normalised Rent is guided to the top end of the analysts’ range of £50.6 million-£52.8 million. There’s no interim dividend, with cash prioritised for high-return growth.

My take for investors: the good, the watch-outs, and why it matters

• Operationally better: A 24% jump in EBITDA after rent shows the model’s operating leverage when pricing and membership both tick up.
• Self-funded expansion: Free cash flow of £25.1 million is paying for new gyms and tech. That de-risks the rollout compared with equity-funded growth.
• Balance sheet comfort: Leverage at 1.0x with extended facilities to 2028 gives room to manoeuvre if the macro turns.
• Clear pricing headroom: Management’s analysis suggests mid-market gyms now price at a 57% premium to The Gym Group’s average, leaving scope to keep nudging yield without losing competitiveness.

What to keep an eye on

• Modest LFL growth: Like-for-like revenue is +3% – solid, but not spectacular. The heavy lifting still relies on rollout and yield management.
• Non-underlying spend: The systems upgrade is the right call, but it is a drag in 2025 (c.£3 million). Execution risk is being managed via a phased rollout.
• No dividend (yet): Sensible given the returns on new sites, but income investors will need to wait.
• Lease-heavy model: As ever with gyms, lease liabilities are significant, so maintaining high utilisation and retention remains vital.

Overall, this is an encouraging half year. The model is doing what a high-value, low-cost operator should do: grow members, lift yield, keep costs in check and compound cash. With guidance now at the top end and new sites outperforming early, the Next Chapter plan looks on track.

Useful definitions (quick refresher)

• ARPMM: Average revenue per member per month – here up 4% to £21.16.
• Like-for-like (LFL): Compares performance of sites open by 31 December 2022; revenue grew 3%.
• Group Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation, excluding one-off items.
• Normalised Rent: Contractual rent recognised in the month to which it relates.
• Group Adjusted EBITDA less Normalised Rent: Management’s key profit metric after deducting rent – a proxy for cash generation at site level.
• Adjusted Leverage: Non-Property Net Debt divided by last-12-month Group Adjusted EBITDA less Normalised Rent – now 1.0x.