Gym Grp Regulatory News (GYM)

17th November 2017

The Gym Group Plc

("The Company" or "The Gym")

Potential changes to member service proposition

Since the Company opened its first site in Hounslow in 2008, the Gym Group has grown rapidly. During this time the Company has used an operating model that enables it to partner with wholly self-employed personal trainers. Whilst member satisfaction remains high, with Net Promoter Score of 63.2% at the half year, increasingly the Company believes that its operating model does not deliver the consistency of service we believe our members expect.

As a result of its rapid growth, The Gym Group has been evaluating over recent months, the benefit of potentially offering part-time employment to some of its self-employed personal trainers. The rationale for this potential change to our operating model is to deliver an even more compelling offer to members ensuring we can deliver consistently high standards of service in all our gym locations.

Offering part-time employment to some of its personal trainers, whilst enabling them to continue to operate their personal training businesses on a self-employed basis, would deliver a more effective arrangement for members, General Managers, personal trainers and the Company. As part-time employees, personal trainers would be remunerated for their time (12 hours a week) working on behalf of The Gym on various operational tasks. As self-employed personal trainers, these same individuals would pay a rent to The Gym to operate their personal training businesses outside their contracted hours. It is proposed that self-employed trainers, who choose not to accept part-time employment would have no tasks to perform on behalf of The Gym and would be charged a market rent to practice in the gyms.

This new approach should benefit those personal trainers who choose to be employed part-time, by offering them an element of fixed remuneration together with all the rights and responsibilities that come with employment. Additionally, there may be potential career opportunities within the Company for those that want to apply. The benefit for The Gym will be the ability to manage its Gym operations more effectively.

We are planning on trialling the new operating system in a small number of gyms in early 2018 and, if successful, we anticipate that the new arrangement will be rolled out across the Company over the next six to nine months.

It is anticipated that the overall financial impact would be neutral.

John Treharne, CEO, said:

"We constantly review our business to determine the best way of operating The Gym as it continues to grow. We are evaluating the benefits of having some of the personal trainers employed on a part time basis, reporting directly to the in-house team to deliver a consistent offer and the highest levels of service for our members. (They will remain self-employed when delivering personal training services to their clients). We plan to pilot the new model before potentially rolling it out more widely across the Company's portfolio. "

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