Virgin Active suspends pay increases and bonuses due to impact of COVID-19

Investment company, Ethos Capital, has provided an update on the financial standing and operations of Virgin Active, which falls under its umbrella company, amidst the coronavirus (COVID-19) outbreak.

In a statement on Tuesday, 31 March 2020, Ethos Capital stated that each of its portfolio companies have been differently affected by the COVID-19 pandemic, with the 21-day South African lockdown proving to be an additional hurdle. The statement read, in part, “Ethos has been engaging with all the portfolio company management teams to develop a COVID-19 plan and process and a financial plan, and furthermore, assisted them to establish task teams and business continuity planning measures.”

In particular, Virgin Active has closed down all of its gyms throughout the country, as it was deemed a high-risk place for the transmission of COVID-19. According to the statement, the franchise was able to achieve good trading performance during February 2020, which was strongly driven by an increase in South African business. This allowed the company to have a good financial standing until the virus become more evident.

Several measures were immediately put in place to mitigate possible financial loss in the coming months. The gym franchise suspended pay increases and bonus payments, and further ceased all but essential capital expenditure and removal of all planned investments. Moreover, operating cost cash outflows for Virgin Active are expected to decrease by two thirds while clubs are closed.

See the full statement here.

Sayushka Naidoo
[email protected]