The Gym Group plc ($GYM)

Good morning, and welcome to the 2025 Full Year Results presentation for the Gym Group. Thank you for making the time to join us in the room and on the dial-in. After the presentation, we'll take your questions in the room first and then from the webcast. Our CFO, Luke Tait and I will be doing the presenting today. And here's what we plan to cover. I'll start with an overview before handing to Luke to share our 2025 full year financial results. I'll then provide a progress report on our next chapter growth plan and summarize before taking your questions. So starting with the overview. And I'm pleased to report strong progress for the full year 2025. Closing membership was up 4%, with revenue for the period up 8%, 3% on a like-for-like basis. With this performance and strong management of costs, EBITDA less normalized rent was up 19% at GBP 56.7 million. The market we operate in grew again in 2025. U.K. penetration is up to a new high, around 17%, and we expect this growth to continue. In line with our next chapter growth plan, we've continued to strengthen the core of the business with mature site ROIC up a further 2 percentage points to 27%. We also accelerated our site rollout, opening 16 new sites in 2025 at the top end of guidance. We expect to open at least 20 in 2026, again, all funded from free cash flow. And finally, I'm pleased to report a strong start to 2026 with 9% revenue growth for the January, February peak trading period. So the momentum continues, giving us confidence as we look ahead. I'll now hand over to Luke for the financial update.

Thank you, Will. Good morning. So starting with a summary of our financial KPIs. The key revenue KPIs, which we announced in January, have both shown good growth year-on-year. We had average members of 945,000 during the year, up 4% versus last year, and average revenue per member per month was GBP 21.60, also up 4% on prior year. As a result, revenue for the year was GBP 244.9 million, up 8% on prior year. The revenue growth has dropped through well to profit with EBITDA less normalized rent of GBP 56.7 million, up 19% or GBP 9 million year-on-year and GBP 1.2 million ahead of consensus. Statutory profit before tax was GBP 7.4 million, up GBP 4.9 million or nearly 200% year-on-year. Free cash flow of GBP 38.3 million was up 10% versus prior year, enabled the -- and enabled the opening of 16 new sites and a net debt reduction of GBP 2 million to GBP 59.3 million, reducing the net debt-to-EBITDA leverage ratio to 1x, down by 0.3x versus December 2024. We'll now look at each of these key financial metrics in more detail on the following slides. Starting with the income statement. EBITDA grew strongly in the year, up 19% versus last year. Revenue was GBP 244.9 million, up by GBP 18.6 million year-on-year. The acceleration of new openings has resulted in over 70% of the revenue growth coming from the new openings. Overall, costs came in slightly better than expectations. Cost of sales were in line with prior year at GBP 2.9 million. Site costs were well controlled with the GBP 5.8 million increase, reflecting the new openings and a 1% increase in like-for-like site costs. We'll expand on the key drivers shortly, but we benefited from lower electricity rates in 2025, which offset increases such as the Living Wage and NI. The central cost increase year-on-year slowed further in the second half as guided, with full year cost as a percentage of revenue dropping by 0.4% to 11.3%. The 5% increase year-on-year relates principally to the annual inflationary salary increase and a number of investments in delivering the next chapter growth plan. In 2026, we expect to see further operating leverage and central gross margin to drop below 11%. Normalized rent increased by GBP 2.6 million, reflecting new site growth with an underlying increase of 4%. As a result, EBITDA was GBP 56.7 million, up GBP 9 million year-on-year with a strong drop-through of incremental revenue to profit. EBITDA margin was 23%, up 2 percentage points on prior year. Moving on down the P&L. EBITDA growth converted well to PBT and EPS growth. The noncash charge for share-based payments increased to GBP 5.5 million predominantly reflecting the delay in granting awards in 2024 and the recent strong financial performance. Depreciation and amortization of GBP 62.4 million grew by GBP 2.3 million due to the estate growth and investment in technology. Net financing costs of GBP 20.4 million remain essentially in line with prior year due to a reduction in bank and finance lease interest, offsetting an increase in property lease interest. The decrease year-on-year in bank and finance lease interest was driven by lower average net debt during the year and lower interest rates. It's worth noting that the IFRS 16 property lease charges are GBP 2.9 million higher than the cash rent costs. They are expected to align in around 2029. Adjusted profit before tax was GBP 10.6 million, up GBP 7 million or nearly 200% year-on-year and nonunderlying items of GBP 3.2 million was GBP 2.1 million higher than prior year. This is due to the non-CapEx costs relating to the implementation of the new member management and payment systems due to go live this summer. There was no P&L or cash tax in 2025. The deferred tax asset will start to unwind in 2026, but no cash tax is expected until 2029. Finally, profit after tax for the year was GBP 7.4 million, GBP 3 million higher than prior year. Revenue grew by 8% in the year. Average revenue per member per month grew by 4%. This was principally down to a combination of yield increases in the like-for-like estate and the optimization of yield in the new site openings, including coming off introductory headline rate discounts. The average headline rate of a standard membership was GBP 25.64, up by GBP 1.11 year-on-year. Like-for-like revenue was up 3%, in line with guidance, with the average membership remaining at 100% year-on-year and the average yield increasing by 3%. Looking at site costs in more detail. We've been able to control site costs well despite the ongoing inflationary environment. In the first half, like-for-like site costs were actually down by 1%. As mentioned earlier, this was principally driven by a further reduction in electricity commodity prices and our energy optimization program. For example, we now have installed 210 voltage optimization units across the estate. In the second half, site cost inflation was 3%, bringing the full year increase to 1%, which was slightly lower than guidance of 2%. The increase was driven by a 44% increase in the noncommodity element of the electricity cost in Q4 as well as 3 quarters of NI and UBR increases. These cost increases will annualize during 2026. And therefore, we expect the cost inflation in the first half to be higher than in the second half. Our cost optimization program will continue to offset increases elsewhere. For example, we see potential for significant energy optimization through air handling unit sensors as well as the last phase of the [ VO ] rollout. We recently launched an academy with a specialist training company to help staff our gyms more efficiently. And we also successfully appealed 116 of the 2023 ratings list valuations last year. However, as we guided in September, we do expect site cost inflation to be higher in 2026 until the noncommodity electricity rate in particular annualizes in Q4 this year. This will then remain unchanged until October '27. Commodity rates have also been fixed until October 2027. Turning now to cash flow. Strong cash flow generation in the year enabled us to self-fund our expansionary CapEx, buy shares to the EBT and pay down debt. The working capital inflow of GBP 5.3 million reflects the cash-generative nature of our business model, careful cash management and a higher proportion of pay upfront memberships. After deducting the cash spend on maintenance CapEx of GBP 17.3 million, Operating cash flow was GBP 44.7 million. The cash element of nonunderlying items was GBP 1.8 million, bank and lease interest was GBP 4.6 million. As mentioned earlier, due to losses incurred during COVID and accelerated capital allowances, we do not expect to pay any cash tax until 2029. Free cash flow was GBP 38.3 million, up 10% year-on-year, giving a free cash flow yield based on recent share price of around 12%. Expansionary CapEx was GBP 33.9 million, and after refinancing and EBT share purchase costs, net debt reduced by GBP 2 million year-on-year. We continue to invest to grow the business and ensure a well-maintained estate. Total cash CapEx in the year was GBP 51.2 million, up from GBP 40 million in the prior year. Maintenance CapEx across both property and tech was GBP 17.3 million in the year. Property maintenance of GBP 14.7 million was 6% of revenue. Tech and data maintenance CapEx of GBP 2.6 million was spent on hardware, including CCTV upgrades and on our data infrastructure. Expansionary CapEx was GBP 33.9 million with the main spend being on new sites as well as we opened 16 new sites last year, in line with the top end of our guidance. Tech and data expansionary spend relates principally to investments in our digital assets to enable next chapter growth initiatives such as product add-ons and our conversion optimization program. Spend on upgrading our member management and payment systems was GBP 4.2 million, and will unlock functionality around member referrals, reductions in payment failure rates and new retention strategies. The project is expected to complete in 2026. Turning now to net debt. Non-property net debt was GBP 59.3 million at year-end, down GBP 2 million from December 2024. The net debt consisted of GBP 62 million of bank debt and GBP 0.3 million of finance lease debt and GBP 3 million of cash. As a result of the reduction in net debt, the leverage ratio reduced to 1x, down from 1.3x at year-end 2024 and 1.7x at the end of 2023. Given the further acceleration in new openings planned in 2026 funded from free cash flow, we do not expect any further reduction in net debt at this year-end. Moving on to ROIC. ROIC for the mature estate increased by 2 percentage points to 27% last year, benefiting from the strong EBITDA growth in the year. This 2 percentage point increase was on the back of a 4 percentage points increase the year before. If the 13 workforce dependent sites are excluded, the mature site ROIC increases to 30%. We expect further progress this year on mature site ROIC and as a result, have continued confidence in returning to 30% ROIC over the medium term. The new sites are performing well, with the sites opened in 2022, delivering an average ROIC of 30% last year. The small 2023 cohort is on track to deliver an average ROIC of 25% with 1 site having been impacted by an unusual level of competitors' openings. The 2024 cohort of 12 gyms is trading well and on track to deliver ROIC of 30%. And although early in their tenure, the 16 2025 sites are progressing well with strong initial membership volume. Overall, our confidence remains high on returning 30% on new openings. We set out our planned capital allocation policy with our results in 2023, and we've delivered against it. Our first priority is to maintain the existing estate, and we guided to maintenance CapEx spend of circa 6% of revenue. Our second priority was to keep net debt-to-EBITDA leverage below 2x. And as at December 2025, it was 1x. Thirdly, we've prioritize organic new site openings. And in January, we increased our rollout plan to circa 75 sites over the next 3 years from free cash flow. And finally, we would return any excess capital to shareholders. In January, we commenced a GBP 10 million share buyback and to date, we purchased and canceled 1.1 million shares. We'll continue to operate to this capital allocation policy going forward. Finally, turning to current trading and outlook. Revenue year-to-date at the end of February was up 9% versus prior year with average members up 4% and average revenue per member per month, up 5%. Like-for-like was 3%. The run rate EBITDA when adjusting for gyms open at the end of last year, but not yet mature, a circa GBP 65 million. We're planning to open 20 to 22 new gyms this year, which in line with previous years will be second half weighted. We expect to spend between GBP 60 million and GBP 65 million on CapEx funded from free cash flow. Looking ahead, for the full year, we expect like-for-like sales growth of circa 3% and like-for-like site cost inflation of 3% to 4% with the first half weighting. Our electricity rates are fixed until October 2027. Central costs are expected to drop below 11% of revenue this year. And as a result, we now expect 2026 EBITDA less normalized rent to be at the top end of analyst forecast range. And now I'll hand over to Will for the strategy update.

Thank you, Luke. In March 2024, I set out our next chapter growth plan, and I wanted to give you another progress report. Firstly, a reminder of the investment case, sustained growth from free cash flow and why we think it's so compelling. Starting at 12:00 on the circle, health and fitness is a large market that's benefiting from continued structural growth. And in gyms, the high-value, low-cost sector is growing fast. As with other categories, we're benefiting from consumers' appetite for no-frills, great value propositions and from new, more committed generations of gym goers. This winning proposition has high levels of customer satisfaction and is delivered by an advantaged labor-light business model. We also have multiple drivers of growth listed on the right-hand side of the slide with detailed plans on each of them. Strong execution on those growth drivers is increasing returns in our existing estate, in turn, funding the organic rollout of quality new sites. This virtuous circle of sustained growth is being powered by data and technology, 2 areas we continue to invest in as the foundation for any successful digital subscription business. U.K. consumers now spend GBP 6.5 billion on gym memberships with 11.3 million of us being members. That penetration continues to grow with another strong increase in 2025 to 16.6%. And as you can see from the green bars, low-cost gym growth is strong. With a proposition that's high quality and affordable, we're introducing new generations of gym goers to something they really value and benefiting from continuing trade down from the mid-market. And in this growing market segment, we're 1 of 2 brands that account for around 80% of member share. And there are several consumer trends that support our continued growth. Consumers fitness IQ is increasing all the time, meaning the use of a gym is ever more rounded and more engaged. They tell us they want to prioritize mental health and see gyms as an obvious way to do that. They want to feel and look strong, increasing the need for equipment you'll only find in a good gym and amplified by the rise of social media, consumers are increasingly seeing the gym as part of their identity, lifestyle and social life. All this is creating increased demand for gyms and our advantaged model best meets that need affordably and conveniently. We're also seeing the rise of GLP-1s, which we see as a positive trend for 2 reasons. Firstly, because GLP-1s are giving more people the confidence to come to the gym. And secondly, because of growing awareness that strength training protects muscle mass during the treatment period. This ever-growing engagement in fitness and gyms is particularly strong among Gen Z consumers, because they're so engaged, they're prioritizing fitness over anything else when it comes to discretionary spend, and they now make up 44% of our membership base. This generation of consumers is 1 of the many reasons I'm optimistic for the Gym Group's future, and we'll keep working hard to meet their needs going forward. Our simple scalable proposition based on value, convenience and results is highly rated by our members, and the progress here continues. For any subscription business, usage is important, and we continue to see an uptick in visits per member. The proportion of members visiting us 4 times a month grew again in 2025 to 54.6%, while the proportion of members rating us 5 out of 5 in satisfaction surveys has risen year-on-year to a remarkable 62%. So we're growing in a growing part of the growing market, and we have a fundamentally strong proposition. We also have a clear growth plan that everyone in our company is focused on and I wanted to give you a further progress report on that plan. As a reminder, there are 3 elements to the plan. Strength in the core is about increasing returns from our existing sites and members, driving growth in like-for-like revenue and free cash flow. It's the pillar of the plan that's helped us to deliver a 6 percentage point improvement in the mature site ROIC over the last 2 years to 27% and will underpin further growth in that measure. Strengthening the core has also supported growth in free cash flow, and that, in turn, allows us to accelerate our organically funded rollout of quality sites in the U.K. These first 2 COGS where our executional focus is for the time being because we see so much headroom here. We do, however, continue to assess opportunities to broaden our growth over the longer term, and I'll return to that later in the presentation. So turning to the first part of the plan. We continue to strengthen the core of the business in 2025 across revenue management, acquisition and retention. On revenue management, we continue to increase prices in a measured data-driven way. We also supported yield by adding new guest pass and multisite add-ons to our standard product and further optimized off-peak pricing, unlocking incremental revenue in target sites. On acquisition, we made significant further progress on brand memorability, social media reach and web conversion. And on retention, we saw average member tenure increase again in 2025, supported by several initiatives. Progress here included 16% growth in members taking a long-term product, for example, 9 or 12 months, a 39% increase in early life kickstart inductions and strong engagement with our market-leading app. I'll briefly expand on a few of these areas, starting with pricing. The data on this slide and the next clearly shows the ongoing pricing opportunity we benefit from. Our members pay around GBP 25 a month for a large, well-equipped gym that's run by a friendly expert team and open 24/7. It's not surprising member score us so highly on value for money. And while we're similarly priced to our key high-value, low-cost competitors, the mid-market is 60% higher. Our market segment has a clear advantage on value, supporting pricing headroom and ongoing trade down from the mid-market. And this ongoing pricing opportunity is also clear in our consumer data. The graph on the left-hand side of the slide is output from a large quantitative study we refresh annually with pricing experts SK&P. It plots perceived value on the y-axis against perceived price on the x-axis, and shows that we, along with other high-value low-cost players remain underpriced with the opportunity to sit nearer or in the blue corridor shown on the chart. And the table on the right-hand side is also reassuring. It shows that while we increased prices in 2025, so did our competitors, meaning the headroom, we can exploit in competing locations actually grew. One of the ways we can add perceived value supporting our pricing strategy is to further strengthen and modernize our brand. After research with our core Gen Z audience. We've evolved our visual identity and tone of voice, rolling out the new approach gradually and cost effectively across web, app, marketing campaigns and, of course, our gyms. Increasing brand awareness also brings new prospects into our e-commerce journey, and we've seen another set of encouraging improvements unprompted awareness. And with that growing brand awareness, we're increasing the number of people coming into our web buying journey. And with over 10 million non-member traffic starting that buying journey in 2025, small improvements to conversion rate make a big difference. I've talked about our web conversion program before with our e-commerce team running multiple A/B tests at any given time to increase conversion. And as you can see, we saw some good results from this in 2025 with more to come this year. We also have a team who worked tirelessly to improve our already sector-leading app. The app supports our retention program, engaging existing members. 2025 enhancements included more personalized onboarding for new members, more digital workouts and better dashboards to track your progress. And the app isn't just a retention tool. It's proving to be a sales tool as well. 93% of the new add-on sales we had last year were via the app. It's also growing as a convenient channel for past members to rejoin us. So that's a few examples of the many ways we're strengthening the core of the business, supporting like-for-like revenue, mature site returns and free cash flow. And in line with our strategy and capital allocation policy, we're currently deploying that free cash flow to accelerate the rollout of quality sites in the U.K. And in 2024, PwC estimated 10 years plus of U.K. white space for low-cost gyms. So the opportunity here is compelling. We opened 16 new sites in 2025 at the top end of our guidance. We've continued to be rigorous in identifying the characteristics of our best-performing sites, some of which are set out on the left-hand side of the slide. We then applied that formula in a disciplined way to the 16 sites we chose to open. We're taking a measured returns-focused approach to rollout. And what about the gyms themselves? Across the estate, we have great gyms with strong customer ratings and improving returns, but we identified headroom to elevate the gym experience further, driving those high value perceptions and supporting sustained revenue growth. The evolved approach is being applied to all new sites and as I'll cover in a moment, also being rolled out into our mature estate. The work to do this, which included input from a world-leading retail design agency was based on 5 key principles set out on the slide. Here's a short video showcasing the new approach. [Presentation]

We've had fantastic feedback from members on the new design template, and we're very encouraged by the performance of the 2025 sites so far. Where we've been open long enough to get a read, these sites are building membership 22% faster than our 2022,'23 cohort and getting even higher customer ratings. And after just 3 months, these sites are already at 92% of the member volume needed to deliver a 30% ROIC. So we're seeing accelerating performance in new sites as well as growing returns in the mature state. And that performance has supported our decision to accelerate further our cash funded rollout. We opened 28 sites in the last 2 years with maturation of those sites, generating a run rate EBITDA less normalized rent of GBP 65 million. And looking ahead, as we said in our January trading statement, we're targeting 75 new sites over the next 3 years and will open no less than 20 this year. We have strong visibility of the 2026 pipeline that we do expect openings to be H2 weighted again this year. And as per our capital allocation policy, we'll continue to invest in our mature estate to keep it as well maintained and as competitive as possible. And we're working hard to maximize the return on this capital. Firstly, by prioritizing mature site investment in a data-driven way. We've developed a detailed prioritization matrix, which now includes a statistical model estimating likely member headroom at site level. And once the site is prioritized, we refurbish it in the new design template and support it with local relaunch marketing. I'm excited by the results we've seen to date with this approach with strong member feedback, growth in volume and increasing prices. And as a result, these refurbs are on track to deliver a 30% return on the capital, we're investing in them. So that's a progress report on the first 2 elements of the plan in 2025, and I'm looking forward to making further progress in these areas in 2026. Turning to the third COG of the plan. We continue to look at ways to broaden our growth. We're investigating new channels, new products and new markets. And we're looking for returns that align with core competencies are highly incremental and have strong returns. Given the quality of the returns in the core business, the bar for anything additional is extremely high. So far, we've looked in detail at a few opportunities, but have been disciplined about saying no, if our criteria aren't fully met. We have, however, launched a new channel in partnership with Wellhub, a fitness and wellness platform accessing over 400 employees in the U.K. We piloted this channel, testing it for high levels of incrementality and have now rolled it out nationally. Performance continues to track ahead of business case. So that's the progress report on our next chapter growth plan, and I'll now summarize. The next chapter growth plan has created strong momentum. We've consistently grown revenue, margin and EBITDA less normalized rent. And we've also been able to accelerate site openings while reducing our leverage ratio. And I'm pleased to say our teams are doing all this in a sustainable way, creating social value, engaged employees and new jobs while also reducing our energy consumption per gym. As I said at the beginning, I'm confident that we'll continue to deliver on our investment case of sustained growth free cash flow. Firstly, we have an advantaged business model that delivers exceptional value for money in a market with structural growth. And we're attracting a new generation of gym goers for whom fitness in the gym is increasingly nondiscretionary. Secondly, we have multiple like-for-like growth opportunities in the existing estate and strong white space to roll out new sites. Against that backdrop, in 2025, we delivered 19% growth in EBITDA less normalized rent and another strong step forward on mature site ROIC to 27%. We're accelerating our self-funded rollout to 75 sites over the next 3 years and in line with our capital allocation policy, have commenced a GBP 10 million share buyback. Looking to 2026, we expect EBITDA less normalized rent to be at the top end of analyst forecast range, and I'm pleased to report a strong start to the year with 9% year-on-year revenue growth for the Jan-Feb peak trading period. Finally, I'd like to thank our committed expert people for delivering these strong results. The Gym Group benefits from a fantastic team, and it's a real pleasure to be a part of that team. Thank you, and we will now take your questions.[Operator Instructions] I am now handing back to Will Orr for questions in the room.

Go ahead.

Ross Broadfoot from RBC. 3, please. Let's go 1 at a time, so I've got them written on different pages. The proportion of members scoring you 5 out of 5 at 62% is clearly a very good score. Could you give any insight into what makes people score you less than 5 out of 5 as number 1?

Yes. I mean 92% score us 4 out of 5, or 5 out of 5. And the metrics that are important around that choice would be principally friendly expert people, really good equipment, clean, safe, those sorts of things, those sort of drivers of satisfaction.

And could you just remind me where we're up to in terms of refurbing the mature sites to the new style? And if you can tell us anything about any changes to volumes you've seen at those sites?

Yes. So as I was saying, the refurb sites that we've done already are performing well. We've seen some improvement in volume. We've been able to put some pricing through and we're seeing better satisfaction. So they're tracking nicely towards the 30% return on the incremental capital that we've put in. And then in terms of the estate as a whole across new and refurbed, we've now got I think, 37 sites in the new format, and we'll expect to double that this year as we roll it out.

Fine. And then number 3, you talked about 2025 new sites, 92% of volumes required to deliver the 30% ROIC. What is required from price, obviously, because you've just given sort of a higher volume percentage there?

Yes. So we have introductory offers and the volume growth is faster than it ever has been. And then we -- customers step on to full price. So that's essentially the model. But with that pace of volume to that 92%, I think you'd have pretty good confidence as customers step up to the full price, you get to the 30% and beyond on that cohort.

Yes, Douglas Jack at Peel Hunt. Just on the expansion. Has there been any sort of change looking into 2026 in terms of the size of openings and the weighting you're having towards London because, obviously, London has been doing very well in the last year or 2?

Yes. So in terms of size, it was -- I think it will sort of net or sort of at similar level to previous years. I think we sort of talked about sort of 14,000, 15,000 square feet being the average. But there's -- there will again be a variation around that. We'll open sites up to sort of best part of 20,000 square feet down to just below 10. And then London weighting will be a bit lower, I think, this year than it has been in the last 2, but not hugely.

And last question for me. In terms of the advertising campaign you had, do you get any measurement coming out of that in terms of the success it has been? And what's your plan for that going forward?

Yes. So we ran that for the sort of January, February peak. So that's sort of the first time we've run it, and we'll have a sort of PCA on it in the next post campaign analysis on it in the next couple of weeks. But we've seen some efficiency on CPA. So I think that would be encouraging about its sort of cut through and performance. And I think we plan to continue with that theme of for every group, there's a Gym Group.

Jack Cummings at Berenberg. My first question is just on the openings. I think you said circa 20 in January, and you said at least 20, and I think the presentation said 20 to 22. So kind of what's giving you confidence in that number? And can you maybe share any details in terms of how many you are on site at the moment. [ Should I do 1 by 1 ]?

Yes. So on that one, we've opened one. We're on site a further 3 and exchanged on a further 8. So we've got 12 secured. I think in terms of confidence, I think we've got good visibility of a sort of good pipeline for 2026. We sort of already, I think, know what those sites are going to be. It's just, in some cases, securing them. So yes, I think we've got reasonable levels of confidence around that.

Perfect. And second question, I think in the release and you put it in the presentation as well, you said about continuing to assess opportunities for the new adjacencies, the partnership. Could you maybe just flesh that out a little bit? Would anything be outside of the core low-cost gym or is this just partnerships with other kind of like workplaces, et cetera?

Yes. So I mean, we see lots of opportunities. As we said, the sort of hurdle rate on them is extremely high given the sort of current deployment of capital. And 1 or 2 things we've looked at them in some detail. I think the Wellhub thing is quite illustrative of the sort of approach as in it's a channel that's genuinely incremental. It's low distraction for us. The economics on the members that we get through that channel are good and it's obviously pretty close to the core of what we do. So I think that's illustrative of the approach, and we'll just keep assessing opportunities against that kind of high hurdle rate.

Perfect. And my final question is just on returns. You're obviously seeing really improving returns over the past couple of years. And I think in the slide, it was the 30% excluding the workforce dependent ones. And Is 30% a ceiling? Or given the growth that you're seeing at the moment, could we actually start to move into the low 30s percentage on return on invested capital?

Good question, Jack. I think we still see pretty sustained opportunity on pricing, pricing headroom, value for money and the increasingly sort of committed spend towards health and illness as in Gen Z and seeing gyms as nondiscretionary. So I think whilst all those are aligned in the same way. I think we can continue to drive the gyms forwards.

Anna Barnfather from Panmure Liberum. Sort of a much higher level question, if I could. You mentioned the Pricewaterhouse 10-year runway for new gyms. I just wondered what that would imply for penetration rates in terms of population? And if you talk about demographic differences with younger people, what that means for penetration amongst that cohort. And then I've got a follow-up on that if you have views?

I mean as you see from the chart, what we've seen is somewhere between a sort of 0.5%, around, I think, sort of long-term average about 0.5% extra penetration a year. We actually saw a bit more last year, but I think that's probably the sort of run rate you'd see as you progress through those 10 years. And I think from a sort of demographic point of view, I think when you open in the white space, probably the demographic mix is similar. So [indiscernible] good sort of strong view of the way on how that demographic mix might shift as that white space evolves.

And just to follow up on GLP-1s, there's a lot of studies that it's older women predominantly who are taking it. Are you seeing any hard data on more older women coming in to lift weights?

I think that's right. I think the sort of our understanding of it is that there is a skew in that direction. I mean it's a bit hard to measure because not everybody will sort of disclose, but we did. We do a -- 1 of the best ways to try and understand what's going on as we did -- we're surveying our fitness trainers and in January, 39% of our fitness trainer said they were training at least 1 person doing GLP treatment. And last June, that was 24%. So it's stepping up well within our membership base, which is obviously broad because we've got nearly 1 million members. So I would say it's growing in terms of our membership and we see that as positive for the reasons that we talked about in the presentation. And if we put together really sort of responsible experts provision of advice and training, I think we can appeal right across the sort of age spectrum when it comes to that.

And related to that, the question Jack asked about sort of ancillary revenues. Are there other things you're looking at that would go alongside that in terms of guidance counseling on nutrition and partnering with people who are prescribing?

Yes. Yes, that's the sort of thing. That's an area that we're exploring for sure, yes, yes.

Tim Barrett from Deutsche Numis. A question on yield, please. The gap with peers, low-cost peers isn't, really isn't closing. Would your view be that it doesn't need to, if there's a kind of a rising tide in the high-value, low-cost segment? And then second question, possibly for Luke, on the CapEx split. It sounds like you're funding after the upgrades out of maintenance capital sort of still getting a 30% return on it, which is really interesting. Is there -- is that true? And is there kind of an argument for going faster on those?

Good questions, Tim. So on yield. I think that we will do -- we A/B test everything we do. And so we will follow our own strategy to maximize revenue. But I think it is very helpful that the other main names in the sector are also moving forward quite positively in the yield terms. So it always -- it's just providing us more and more headroom. I think we always said we thought that, that would happen, the headroom would open up as time went on and it does -- it's continuing to do that. In fact, you saw in the data that Will presented there, actually headroom got a little bit more last year. So I think it's really helpful that that's happening, but I think we are also sort of using our own strategy, if you [ see what I mean ]. And then on the refurb CapEx, it's still quite early days, but we're seeing a nice sort of incremental membership movement on that refurb. And as we said, to this point, we've done all that refurb within the sort of refurb spend that we were planning anyway. I think the second part, which we're still learning is what does it sort of give us permission to do in terms of price. And I think if we can come -- combine that sort of volume uptick and a price uptick then I think it would really increase our confidence levels in getting an equivalent return on that investment as we get on new sites. And then I think there is, as you say, an opportunity potentially to go a bit faster.

Good. Any more? Is that -- that's -- we're done, got all the questions? Yes. Okay. Good. Well, thank you very much for coming. And as I say, we're very, very pleased with the results and the momentum and the start to 2026. So thank you.