The Gym Group plc (GYM) Earnings Call Transcript & Summary

Thank you for joining the call this morning. We'll do a short summary of the trading statement released this morning and then open the line up for questions. Let me welcome Luke Tait to his first trading update. We're obviously very pleased that Luke has joined the business. And I know that he's looking forward to meeting you individually in the coming weeks. I'll cover off the key headlines in the statement then hand it to Luke, who will cover some of the financial elements and what they mean for our performance. Overall, though, I would summarize this performance as being resilient with continued membership and yield growth. And we've continued to make good progress against our long-term strategy. So on the operational update. First, our membership has grown by 16.7% year-to-date from 718,000 to 838,000 at the end of October 2022. This is on the back of growth, both from the existing estate and also from the new sites that we've opened. So that's 21 new sites we've opened in the year-to-date with further 5 new openings to come and 2 more Fitness First conversions. In the statement, we referenced that we've segmented the estate into 3 parts: Firstly, the sites opened up to the end of 2018. These are sites that were, for the most part, matured just before COVID. Secondly, those sites opened in the years 2019, '20 and '21. We call these the growth cohorts because they include a mix of openings covering both the pre- and post-COVID period. But they lost a lot of their members during COVID and effectively had to restart their maturation. And then thirdly, the sites we've opened this year, that's 2022. So let me deal with each of those in turn. On the pre-COVID mature estate, this is where we've been giving a like-for-like against the equivalent month in 2019. So you can see how we've been recovering. And for all 154 sites, this is 90% at October 2022. However, delving deeper into performance there, we see that the 16 sites that they are the most workforce dependent are only at 67%. Excluding these means the like-for-like gets to 93% for the other 138 sites. And this is obviously a good proportion of recovery albeit would ideally have liked it to have been a touch quicker. Just to be clear, we're not talking about all city center sites in our portfolio with these 16. Some city centers are strong student sites. And these 16 are the ones that rely most on the workforce population for their membership. Now of course, we know that people are returning to the offices. But in this hybrid world of 2 to 3 days per week in the office, we're seeing very slow return to gym membership in these types of site. The shift in working patterns has been well publicized and we've responded to that in recent years by focusing our openings in residential areas. Since 2019, none of our openings had the characteristics of the 16 workforce gyms. And that means our growth plans are very much on track and we are opening sites in the right places. Coming on to the second segment then, these growth cohorts, the sites opened in the years 2019 to '21. These are growing at the levels we would expect, around 85% of their revenue appraisal. And we expect that through 2023, they will continue to mature and grow. And finally, regarding the third and final segment, the sites opened in 2022. These are building membership exactly as we would expect. So for instance, sites opened in the first half of this year are already at around 85% of their expected membership volumes. So what all this means is that our product proposition and business model continues to be very relevant. We're seeing this across our estate with usage up around 12% versus pre-COVID levels and higher member satisfaction scores than ever. And our growth, as I said, is concentrated in the right locations. On the rollout, we're now committed to 28 site openings this year and plan to keep within the range of 25 to 30 set out in Capital Markets Day for next year. We're seeing a good flow of sites and encouraged by what we've got coming in the London residential pipeline, where as we've always said, it's generally harder to find sites. On pricing, we're pleased by how our price increases have landed. Overall, we've increased headline price to GBP 21.30, up from GBP 19.27 at December 2021 and as a result, implementing the first part of our revised pricing strategy in closing GBP 2 of the GBP 4 gap versus our immediate competitors. We spoke about that at the Capital Markets Day. This has increased average revenue per member per month in the first 4 months of the second half of the year up to GBP 18.49, up 5.5% compared to the same period in 2021. And this shows how the price increases have been absorbed and how we've still been able to drive good levels of acquisition volumes. LIVE IT has also contributed to the yield benefit, up to 29.8% from 28.7% at the half year. More evidence that scale really does help to drive yield. Inevitably in the cost of living crisis, the market has become a bit more promotional. We've built this into our average revenue per member per month expectations going forward. And then finally, just a word on the market. I think we can expect to see quite a lot of disruption in all parts of the health and fitness market as a result of the macro environment and the energy shop. The Gym Group is well positioned due to the strength of our business model and we expect to take market share as we continue our ambitious rollout program. By our estimates, the low-cost gym market is now 764 sites in the U.K. and our market share by number of sites is 29.3%. And this has continued to increase early in the year when it was 27.5%. So let me hand over to Luke now, who will cover some of the financial aspects.

Thanks, Richard. I'm very pleased to be with you for my first trading update. Starting with reported revenue of GBP 143.2 million for 10 months of 2022. This arises as a result of 2 factors: the average revenue per member per month year-to-date of GBP 17.80 and an average membership number of 805,000. What we've actually seen on memberships overall this year is a seasonal pattern more in line with a typical pre-COVID year, i.e., strong growth in Q1 and a drift bandwidth thereafter for the second spike upwards in September and October. There's typically a small seasonal decline through the year-end. So we'd anticipate a similar average membership number for the full year. However, you can see from the average revenue per member per month in the second half that Richard spoke about at GBP 18.49, we have been able to take some yield improvements this year from the pricing initiatives. And we would expect average revenue per member per month to continue to improve to year-end. As we noted in the statement, we've continued to see good levels of margin and cash flow since we last reported. And this is shown in the nonproperty net debt number of GBP 68.5 million, giving GBP 24 million liquidity against total facilities of GBP 92.5 million. These facilities are made up of GBP 80 million of bank facilities and GBP 12.5 million of finance lease capacity. We constantly review our facilities to make sure they're rightsized with the flexibility to meet our growth aspirations. On costs, we've seen very strong cost control that has contributed to our margin performance. And this has helped to reduce the impact of slightly slower-than-expected membership recovery in the current year. Overall, our model is able to cope well with inflation. Having no cost of sales and the labor-light PT model gives us a natural advantage. Clearly, the biggest inflationary impact is from utilities. And as we said in the statement, we've taken a middle ground on hedging for next year with all our fixed charge effectively hedged and 63% of volumes hedged. Given the uncertainty, we think that this at this stage is the right hedging approach. Although as we get closer to 2023, we may look to increase that percentage. As we're coming off a favorable hedge last month, the expectation in 2023 is a doubling of cost, incremental by around GBP 8 million to GBP 10 million year-on-year. Overall, the 3 elements worth calling out as they impact on our expectations going forward: Firstly, the pre-COVID mature estate has recovered well particularly in the 138 residential student sites. But overall, this has been slightly slower than we expected. Given the macro environment, we are cautious about speed of recovery for the mature sites, although we do expect to continue to grow membership in this part of the estate particularly if we have an uninterrupted January, February trading period in 2023. Secondly, the impact of the 16 highly workforce-dependent sites that Richard spoke about means we have a small section of our estate that has been a drag on performance in the year although they do still contribute to the excess of our LIVE IT product. And to be clear, these sites were not strong contributors in 2019 but post-COVID, they suffered the most. And thirdly, the energy cost increases which have a full year impact of around GBP 8 million to GBP 10 million next year, where we are partially hedged. The root causes of all of these 3 elements are macro-related factors. And the encouraging sign for me as someone new to the business is that we have a strong profitable business with relatively low levels of leverage and an expectation that we'll continue to grow profitably as we go into 2023. Furthermore, the fact that the newer sites are growing as anticipated is very encouraging and shows how well positioned our business is to continue to grow. I think that puts us in a strong position relative to our competitors and should enable us to continue to take market share. Now let's open up the line for questions.

[Operator Instructions] The first question comes from the line of Owen Shirley from Berenberg.

I had 3, please. The first was just on would you ordinarily expect revenue per site to improve between June and October? Obviously, you sort of said it was 90% of all gyms like-for-like in June. And now we're 90% of mature gyms in October. So yes, just if you could help us kind of bridge that please? And then the second question was net debt is obviously sort of perhaps up a bit. I know Q4 is usually the biggest period for new openings. Would CapEx align to that? And I suppose in a roundabout way, what I'm marketing really is should we expect net debt to go up or down by the year-end? And then finally, obviously, revenue, the momentum seems to have slowed down a bit in the recovery. You've got costs going up. Net debt is quite high. Perhaps you could just touch on why you're not considering any sort of pause for breath on the rollout.

Okay. Let me deal with the first one in terms of our expectations. I think as Luke said, what we would normally expect particularly in the mature estate is that we would get strong Q1, there would be some drift downwards and then we will get a bit of a spike in September and October. And that spike in particular would be in the strong student site because obviously, you get people coming back to university. I think if you look at our like-for-like numbers, they have -- on that mature estate, they have kind of marginally crept up in the comparison against June 2022. So obviously, at October 2022, we said we were 90%. If you kind of exclude the 4 city center sites that we excluded when we reported at the half year, that would be 91% and that was a comparison against 90% that we had in June 2022. I think what we've seen over this autumn period was actually a slow start to September and then some strong growth in October. And ideally, I think we would have seen slightly stronger growth in both months, September and October. But as I said, we come off a pretty strong October overall. Do you want to cover the net debt question, Luke?

Yes. So I think you're absolutely right. Q4 will have a higher level of CapEx than the previous quarters. And therefore, you should expect net debt to be higher at year-end.

And then I think, Owen, on your final question about should we be pausing for breath in terms of the rollout. Look, we've said that we've got a range of 25 to 30. And I think we've also said that we're conscious of the macro environment and we'll constantly keep that under review. At this point in terms of the visibility that we've got, I think we stay in that range of 25 to 30. But obviously, in an environment that's changing quickly, we would constantly keep that under review. That's kind of the sensible thing to do.

Just maybe a quick follow-up on that last point. How -- what's the minimum number of sites you could currently do next year, i.e., have you already sort of signed on for 10 or -- how does that work?

I mean I think we're at a typical sort of level of exchanges probably on that sort of order at this point. So -- but again, we've got sites at different stages in their development. So we'd have some -- as we always have some where we've exchanged somewhere, they're getting close to exchange somewhere. We're kind of in the initial stage of legals, some heads of terms. So it kind of varies as you can imagine.

The next question comes from the line of Tim Barrett from Numis.

I had 2 questions, please. Just in terms of the regional performance. I wondered if you could cut the data that way. When you presented interims, the north was 99%, I think. I just wondered whether that continued to improve, go through 100% and what the residual has done. And then lastly -- secondly, on the 16 underperformers. It sounds like you're being prudent and not encouraging us to factor in any recovery next year. That feels like a worst case. What do you think the prospects are of those sites getting slightly better as office footfall comes back?

I think the sort of trends on the regional performance that we've seen are pretty similar to what we've spoken about earlier, still disproportionately in the north versus the south in London. However, I think what has been encouraging is that we've seen stronger recovery actually particularly in the London residential most recently. And so that's a good trend, I think. And we've got obviously a very strong market position in London residential, both sites with parking and without parking. And so I think we continue to see good levels of profitability coming from our London estate overall. I think on the 16 underperformers, I think what we're saying is that there is a lack of visibility. Clearly, we will be doing things ourselves to help drive performance, particularly make it more attractive in this hybrid world. So one of the things, for instance, that we've recently done is that we've added Fit and the Fit app into our LIVE IT product. And that's part of the kind of the ongoing partnership that we've got with Fit. And we think that strengthens the proposition overall particularly for LIVE IT but also kind of helps people but maybe have a more hybrid style of working. I think the other thing that we'll be kind of pushing and looking to do is do a bit more corporate as well than perhaps we've done historically. And I think, again, that plays to those types of sites. So clearly, what we're saying is lack of visibility on those 16 but we're not sitting on our hands. We'll be actively kind of seeking to improve their overall performance.

Without necessarily closing any or doing anything that drastic?

No. I think we may see the odd one where we exit if it's coming towards the end of the lease or that we've got a break. I mean the thing about these sites is typically, these are the ones that we had opened in the very early days of the business, so 2008. Predominantly kind of started in the city centers and then from there, kind of spread into the more residential areas, some of the smaller towns and cities. And that's just a trend that we've accelerated. But because of that, because typically, we were taking 15-year leases, it means that there will be some that are coming towards the end of their lease. And then what we will judge is how much do we think it's important that we have a presence in a city center and such that it adds to the overall LIVE IT proposition because I think it's really important to stress whilst they're at 67%, they still contribute in that respect because it may be that somebody has a membership or their home membership in one of the residential sites and then comes in and uses it occasionally. So for instance, in some of our city center sites, we may see kind of 30% of the usage is coming from members that have got a membership elsewhere. And so in that respect, they're contributing to the benefit of LIVE IT. But clearly, we'll look at it on a site-by-site basis in terms of determining is it worthwhile extending a lease or should we actually exit when it comes to an end.

[Operator Instructions] The next question comes from the line of Selvan Masil from Westray.

I just wondered if you could give us a bit more color on the pricing environment. I mean obviously, on the negative, we know about weaker, struggling consumer; on the positive, the closures. Obviously, you're suffering from high utility costs but one assumes your peers are as well. How has sort of your view of pricing, both currently and as you look into next year change in the last few months since your Capital Markets Day?

I think overall, as I said in my script, we have closed some of the gaps that we had to our nearest competitors. And that was kind of roughly a GBP 4 gap in the locations in which we compete. And we -- that was very much kind of back -- on the back of some of the research that we've done kind of about a year ago that we felt we could close that gap. I think it's very important we say this in the statement that we retain that natural price advantage, not just against other low-cost competitors but also against the mid-market and the premium sector because we would expect to see some trading down in this environment as well as us taking share. And so therefore, I think we've made that initial kind of close of the gap. I think we would kind of seek to retain that price advantage of kind of roughly about GBP 2 that we've got against our other lower-cost competitors to make sure that we are really competitive. And that -- but actually, we can use that in some of our marketing messaging as well because I think in this environment, what we expect is that they will be -- value will be very important, I think, for members, both on an ongoing basis but also in terms of getting that initial acquisition.

And that price increase, I mean obviously, the math would say it covers comfortably the utility cost increase. But I assume when you start -- when you first started putting those price increases through, you weren't expecting such utility cost increase. Is that fair?

Yes. I think it's fair to say that when we were doing the work, we were hoping that we could get the yield increase. And it wasn't having to kind of cover some of these kind of cost increases overall. But I mean Luke, do you want to talk a little bit more about the 5% average revenue per member per month? I mean I think that's an encouraging kind of number that we've seen in terms of our increase in yield.

Yes. I think that it's growing well and it takes a while to come through. So I think we will continue to see that yield improve in the coming months. And so I think it's a reasonably positive trend.

The next question comes from the line of Anna Barnfather from Liberum.

I just wanted to ask about sort of marketing and promotions in light of the slightly slower recovery that you expected ahead of the sort of January to March big sign-up period. Has your thinking changed in terms of marketing budgets or style of promotions versus historic levels?

I don't think it's necessarily changed, Anna. I think as I said again in my opening remarks that in this sort of market, then obviously kind of typically the market will become a little bit more promotional. Now what does that actually mean? It means that typically, there would be a first month offer that we would need to make to actually get people to join. Now of course, the thing is that actually, we're not looking for them to join just for a month. We're looking for them to join at least 9 to 10 months. So that's kind of the typical lifetime value of people joining us. And so therefore, it's well worth it in our view. And we've done a number of these, obviously, through 2022 to be able to give a strong offer to members to be able to kind of join for that first month with the hope that they will then continue to have quite a long period of membership. And we haven't really -- we've seen that sort of tenure begin to normalize. When we first reopened post COVID, actually, we were seeing sort of a slightly shorter tenure simply because we were kind of putting so many new members into the base. I think over time, we're now 18 months since we reopened, we're seeing that kind of normalization of tenure. And that's in line with our expectations overall. But I think there's an element by which there will be a promotional element to the market. And I think the other thing is that, and you'll have seen this in September and October, we've begun to do a little bit more brand marketing than we have done previously. It was -- there was very little point of doing too much brand marketing when we had this very generic brand. Now obviously going to The Gym Group means that actually, we've got a unique brand name. We've got a recognizable visual identity. And so therefore, it's worthwhile doing a bit more brand marketing. So we constantly are looking at that mix between performance marketing and brand marketing to make sure that we've got that at the right sort of level.

So in terms of the pricing, the aim is to hold headline prices, grow headline prices but to give first month and no joining fees as you sort of push in January, February.

I mean that's what we've done previously, Anna. So not just this year 2022 but even if you go back to the last period, which would have been Jan, Feb 2020 prior to COVID. Those are the sort of offers that we would have driven in Jan, Feb. So I don't see a great deal of difference in terms of what we'll be offering this Jan, Feb compared to what we've done historically.

And then sort of last sort of related question. On the 16 underperforming or sort of lagging sites, has there been a price reset there as part of this rejuvenation plan?

So what we have done is treat them a little bit more like new sites. So what that means is that for those 16 sites, you'll be able to get a 3-month kicker. So we'll effectively reduce the price for a 3-month period. And then you would kick up to the more normal price. And that's something that is a tactic that we've deployed very successfully on new sites. It's one of the ways that we grow the volume quite rapidly. And so we've been trialing that. It hasn't been in for that long, probably about 3 or 4 weeks overall. But we'll continue with that probably through to the end of the year.

Sorry, apologies. I did have one other question just in terms of the market supply. Have you seen -- I mean there's a lot of press about local authorities and even traditional gyms sort of struggling with the cost base. Have you actually seen tangible closures near your sites? Or is that something that you expect to see in the next 6 months?

Yes, I think so. I mean we saw obviously kind of post COVID or post the reopening, there were some local authorities that never reopened. I think there's been a lot of press about the fact that over this winter, the leisure centers will struggle to pay some of their energy bills and so therefore will have to close. And of course, then the interesting question is do they close the entirety of the leisure center. Or do they actually kind of keep the gym element open? I think that's kind of a question for them. I think more generally, what we've seen is some closure of independents. We've also seen -- you remember on the market, there is a group of chains that were never really expanded, kind of typically 8 to 10 sites overall. And we've seen some of those begin to close sites or kind of shed sites overall. And the other thing that we've -- we said this at the half year is some of the low-cost gym sector actually put their price up so much that they were no longer defined as low cost by LDC. And so I think all that together is one of the reasons why we're growing market share. And we're obviously kind of expanding our network and growing our number of sites. But we're just under 30% or 29.3% overall by market share against the overall number of low-cost gyms, which is 764. And that's an environment really where there's only 2 players that are expanding. So I think -- one of the questions we had at Capital Markets Day was are we being too conservative on our market share assumptions. Actually already, we've seen our market share increase just from a more normalized kind of level of rollout. And that's partly because of the impact overall on the low-cost gym market.

The next question comes from the line of Sahill Shan from Singer Capital.

A few questions from me. Can we just probably talk a bit more around what your experience has been with students given they make a fairly significant proportion of your membership base? And just a bit more color around the sites that are exposed to the student population. The second question is around the energy point, which I mean seems like sort of slightly new news in terms of the new guidance you have given. What's fundamentally changed since what you said back at the interim stage in July vis-à-vis energy and cost guidance going forward? And the final question is given you're effectively almost 11 months into the year, can you give us some kind of guidance as to what kind of ballpark net debt figure we should be expecting for the current year?

Okay. Let me take the first one and then perhaps Luke, you can do the energy and the net debt one? I think what we've said previously is that probably about 25% of our estate has a strong student component. That's not always universities. Sometimes it can be colleges as well that are located very close to one of our sites. And what our experience was and this goes to kind of the overall membership trend was that September was a little bit of a slow start. But then we saw strong volume pickup in October. And obviously, that was on the back of effectively the students returning and taking up our membership. So I think overall, we're pleased with the level of student take-up. I think we would have liked September as a whole to have been a bit stronger than what we saw overall. What I say about student is what I say about the market as a whole, which is unsurprisingly, students look for value. Just as we think kind of other people seeking out a gym membership look for value, which is why it's important about our price point and also kind of go to some of the things I was saying about our promotional strategy. And so therefore, we've sought to make sure that we can give as much value to the students, whether it be them buying a fixed term product upfront for 9 months or buying our kind of normal price with some sort of discount. It depends where they have purchased it. And so overall, we've seen a strong level of uptake from students this year.

On the second question around the energy levels costs going into next year and our guidance versus year-on-year movement of GBP 8 million to GBP 10 million, I mean a couple of things to say. Firstly, obviously, there's a lot of uncertainty around that price. I think prices are slowly declining at the moment but very, very difficult to call that. Secondly, I don't think the GBP 8 million to GBP 10 million should be new news. I think probably about 1/3 of that is probably sort of an adjustment to our guidance. And then on your second question on net debt, as I mentioned earlier, Q4, it is a high CapEx quarter. And so I think you should expect sort of net debt certainly to be sort of above 70 but maybe somewhere between 70 and 75.

Great. If it's okay, can I just have 1 quick follow-up, if that's okay, Richard? And it's related to the 2018 cohort prior to that. Given you're at 90% at the moment or there or thereabouts, can you give us any confidence that, that particular cohort on that membership level is generating the kind of return that you'd actually targeted?

Well, I think I'll refer to what we said in the statement, which is that our mature state is strongly profitable. Clearly, what we've called out is the fact that 138 of them are at 93% of where they were in October 2019. And as we said in our opening remarks, we would have liked that to have been a bit stronger but it's on that trajectory to get to 100%. I think what a lot of these sites need is uninterrupted January, February. So even if you go back to January, February of this year, the first 2 or 3 weeks, which are important weeks for acquisition were impacted by Omicron. So as we come into 2023, even though we've got these macro headwinds that are kind of everyone knows about to have an uninterrupted kind of period of acquisition in January, February, I think, will be important in terms of kind of continue to show that trajectory of recovery and to continue with that recovery. But overall, if you think about our estate, clearly, the mature estate, that kind of pre-2018 is strongly profitable. Is it back at the sort of level of return that we were pre-COVID? No, because obviously that's reflected in that like-for-like number but we think we're on a kind of trajectory of recovery.

The next question comes from the line of Chandni Patel from Barclays.

Putting together what you've sort of discussed so far on the city center sites being slower to recover and the cost headwinds as well, can you comment on your outlook for consensus EBITDA for both 2022 and 2023, please?

Well, I think what we've said overall is that our recovery expectation is a little bit slower than we would have hoped for through September and October. Now obviously, clearly, that will be reflected in the full year forecast for 2022. And then because we start with like kind of lower membership number and obviously then -- we -- all the analysts will update to the energy as well going into 2023, we'd expect that to be reflected into 2023. Now clearly, we don't tend to do a direct forecast of what we expect the number to be for either 2023 and -- 2022 and 2023. That is what's forecast by the analysts. But we would expect some revisions to forecast on the back of what we put out this morning. I think we've given a 10 months year-to-date sales number. I think we have some momentum month-on-month in sales growth. But it should be a pretty helpful guide to where the full year sales number will come in this year.

[Operator Instructions] Our next question comes from the line of Selvan Masil from Westray.

Sorry, just a follow-up question to net debt. Just looking back at your Capital Markets presentation, I mean you've given us some helpful guidance obviously as to where this year will end up. Do you still hope for sort of net debt to stop ever so slightly trending downwards as we look over 2023? I'm just looking at that chart that you put in, in the capital markets that showed it just coming down -- starting to come down next year.

I mean I think what I'd say on net debt overall is that what we're seeking to do as a business is get back to the position that we were in, in 2019, where we were effectively self-financing and financing our growth and the cash flows that we've generated. And that still absolutely is our aspiration to get there as quickly as possible. And we are hopeful that if we're not -- even if we're not completely there, that we're pretty close to that in 2023.

And I think that...

Just to be clear -- sorry. Carry on, Luke.

I was going to say that, that will also depend on where we fall within the 25 to 30 range. At the 25 end, I think that's right at the top end. I don't think that will come down much in '23.

The next question comes from the line of James Michael Thorne from Columbia Threadneedle.

Just one for me. I just wanted to ask about the value proposition and just if you can share with us anything about usage and the churn at sort of the lower usage rates and whether you're concerned about churn increasing as we go into 2023 or continued pressure on the consumer?

So the answer to that is what we've said previously, which was that post our reopening in April '21, we've generally seen higher levels of churn. And the reason for that is that our whole estate was effectively acting a bit like a new site. And typically, in a new site, we see high levels of churn compared to the mature estate overall. And the reason for that is simply that we're putting a lot of new members into the site. Some of them stick and like the experience and stay with us for quite a long period of time. Others may kind of churn out relatively quickly. And so effectively, what happened was the entirety of the estate acted a bit like a new site. Now we've seen that moderate a bit. But offsetting that, I think, is the fact that obviously, the kind of the general macro environment plus an element by which we bring people in on promotion would be kind of things that go the other way against that. So we're not seeing anything on churn that concerns us at the moment as a result of the macro environment overall. But clearly, it's something that we will monitor very carefully. And I think it goes to this point about why it's so important that we have this very strong value message and very strong value proposition because that price point of GBP 21.30 is still around GBP 2 lower than competitors in the locations in which we compete. And so therefore, we think that, that insulates us to a certain extent. And when you break it down based on visits of just over 5 member visits per month, then effectively, you can see it's just over GBP 4 per visit, which we think is exceptional value. And I think particularly as people prioritize their kind of mental and physical well-being, then it kind of puts us in good shape as we go through the next few months. And clearly, we expect the next few months to be difficult from a macro environment. I think the other thing I'd just say is what's interesting is one of the things I called out, which is overall, our usage is up around 12% from 2019 for the members that we've got. And the reason that's encouraging is that we know that members that actually use our gyms tend to stay a bit longer. We're actually pretty good at predicting churn. And one of the early indicators that somebody may kind of churn is if the pattern of usage changes over time. And so actually, the fact that we're seeing that high usage, I think, is pretty encouraging in terms of what we can expect for churn going forward.

We have reached the end of the Q&A section of the call. Richard Darwin will now close the call.

So thank you for joining the call this morning. 2022 to date has been a year of recovery from COVID for this business, one in which the mature estates begin to deliver good levels of profitability once more. And at the same time, we've implemented the biggest organic program of expansion in our history along with the launch of the new tech infrastructure early in the year and the brand transformation more recently. We've got a strong executive team strengthened with the addition of Luke, many of them presented at the Capital Markets Day. And we are seeing some structural change around hybrid working impact a small proportion of our sites, the 16 that we've spoken about. And of course, the macro environment does impact the speed of recovery and obviously the cost base with the energy shock. However, overall, we continue to think that we are very well positioned to take market share over the coming months and to generate strong levels of profit and cash flow. So thank you for listening.