Gym Group (LSE:GYM) — Full Year Results

0:00 Good afternoon and welcome to the GYM GROUP PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted anytime by the Q and A tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received from the meeting itself. However, company can review all the questions submitted today and publish responses when it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you to CEO, Will O. Good afternoon to you, sir.

0:31 Hi there, everyone, and thanks for taking the time to to join us. My name is Will All. I'm chief executive of THE GYM GROUP, and I'm joined by Luke Tate, our CFO. And we each have thirty years plus experience in businesses, including subscription type business models like this one and multi site retail like this one. So so, hopefully, some good experience to be to be running business. The GYM GROUP was founded in 2007. Today, we have 245 gyms. We have around 900,000 members, and we're the only UK listed gym business. Like Premier Inn and Hotels, for example, we are a high value, low cost proposition.

1:20 So that's really from from foundation being about focusing on the things that really matter when it comes to a gym. So in particular, twenty four seven access, great equipment, big, clean, safe, well equipped gyms with friendly expert people in them, and then engineering out some of the more peripheral items in order to present a fantastic gym at a really affordable price. So that's essentially what we what we are. What we'll do is present for fifteen minutes or so and then take your questions, and we'll be presenting from the annual report and annual results deck that we recently shared with the market.

2:12 We're not gonna present and talk to every slide and every detail, but you'll find the, you know, the full materials on our investor relations website if you want to look in more detail. We'll cover the latest results, a snapshot of where we are today, and then just pick out a few aspects of the market, the proposition, and the investment case as we see it. So we'll go first to just the headlines of what we shared last week in our annual results presentation. And we're very pleased to to say that we had a a very strong 2024. We grew our membership by 5% to 891,000 members at the end of December. We grew revenue by 11%, and we grew profit EBITDA less normalized rent by 24%.

3:03 We're also very pleased to see a four percentage point improvement in the returns on our mature estate, and that's an absolutely critical metric for us. It's important to understand that as a team, we are absolutely as focused on the returns we get from from our current sites as we are about opening new ones. And I think that's one of the things that will make this growth story very sustainable.

3:31 Strong cash generation is a very important part of our proposition. We generated £37,500,000 of free cash flow last year, up 39% year on year, and reduced net debt by 5,000,000 in the same period. That free cash flow is funding our, organic or our or our organically funded rollout of new sites. We opened 12, in 2024, which is the top end of our guidance, and we're on track to open circa 50 new sites over the next three years, as I say, all funded from free cash flow. And finally, we reported really good progress on our next chapter growth plan, and it's that growth plan which is driving fantastic improvements we're seeing in returns from the existing estate and also the very strong performance of our newest gyms.

4:22 So that's the overview, and then Luke's just going to cover the headlines from the financial results. Good afternoon. So starting with the key revenue KPIs, which are the first two on this page, both have shown good growth year on year. We had average members of 906,000 during the year, which was up 4% versus last year. And average revenue per member month was £20.81 up 7% on prior year.

4:54 As a result, revenue for the year was £226,300,000 up 11% on prior year. The strong revenue growth has dropped through well to profit with EBITDA less normalized rent of 47,700,000, up 24% or 9,200,000 year on year. Profit before tax was GBP 2,500,000, and it was up GBP 10,800,000 year on year. As we mentioned, free cash flow of GBP 37,500,000 was up GBP 10,000,000 versus prior year, enabled us to open 12 new gyms and also pay down debt by 5,000,000 to 61,300,000, reducing the net debt to EBITDA leverage ratio to 1.3 times in the year, down by 0.4 times versus last year, December 2023.

5:49 Okay. So so that gives you a snapshot of where we are right now today and the strong growth that we're seeing. And and next, we're just going to give you some headlines from our strategy and the progress that we're making in terms of the way that we intend to grow the company sustainably. Sustainably. And I'm just gonna start with the investment case as as we see it and why we think it's so compelling. So starting at 12:00 on the circle, health and fitness a very large market with structural growth tailwinds. And in gyms, it's the it's the low cost part of the market that is growing fastest. As with other categories, I think, you know, we really we really benefit from that kind of appetite for no frills, great value for money proposition. So we are in the fastest growing part of a fast growing market, and we see real structural tailwinds when it comes to fitness fitness in in The UK as we'll as we'll go on to show.

7:00 That low cost model, which is based on an advantaged business model in terms of the way that we operate our sites, means that we can deliver high value at a low cost, which is a winning proposition for customers, and our proposition gets extremely high ratings for value for money and customer satisfaction. Moving around the circle, this is not a complicated business. There are multiple drivers of growth, and and we we have have detailed plans on each of those drivers across pricing, the way we acquire new members, the way we retain them, and also the way we pick new pick and build new sites. With the progress of that against those multiple growth drivers and the sort of detailed data driven plans we have in those areas, we are able to generate more cash flow, which we're doing.

7:49 And as we said, that enables us to reinvest in in opening opening more sites around The UK. And, yeah, PLC did a independent report about a year ago suggesting that there's there's ten years or more of white for UK low cost gyms to roll out into. So we think the the the opportunity is is sustained. And at the center of all that, we're very, very data and tech driven so that, you know, particularly using data to derisk any decision making, give us high certainty when it comes to our growth plan. So just turning to a couple of the of the elements from that wheel, if if we if we just talk briefly to the market, we are the the the market continues to grow. 10,700,000 of us are members of of gyms in The UK, and you can see that growth continues.

8:44 Penetration of The UK population in gyms continues to rise, and it is the high value, low cost part of the market that is growing fastest. You can see that in the green part of those bars on the right hand side. And then within that high value, low cost part of the market, our sales and PureGym account for over 80% of the members. So we have a very strong competitive position in the market. And why why is the market growing so relentlessly? We, We, unsurprisingly, do a lot of surveys, focus groups. We observe behavior in our gyms, and we see a number of sort of macro consumer trends, which I think are all enormously helpful to our to our business. So I'll go through them quickly. The first we call Fitness IQ, which is to say that UK gym goers are more and more informed about the benefits of physical and also more sophisticated in the way that they work out. They use a range of equipment from cardio to weights, which means they get great value from the gym. And and and and also they have to just have a high understanding of to how get those benefits.

9:55 When it comes to so that's physical health. There's also mental health, which now our members in surveys will say that the mental health benefit for them is as big a motivator as the physical health benefit. So that's a big that's that's a a big big change versus, say, a few years ago. And then I think there's some more kind of cultural aspects whereby for sort of, you know, know, new newer generations of gym goers, the gym is really part of their identity. It's a it's part of how they they want to look, how they wanna feel, how they want to socialize, how they want to project in social media. And so the net of all that is we see our customers and our average average customer is about 30. They go to the gym because they want to, not because they feel they should.

10:39 And, again, I think that's that's a very helpful tailwind for this for this business. And then, of course, as we've said before, people like the no frills proposition because it's great value for money. And they also our our model is no contract. So really overcoming one of the things that people historically didn't didn't like when it came to gyms. So we we're doing it. We're we're meeting a need in a very affordable way and also in a very flexible way. So all those trends really help us. And and I think in particular, Gen Z, which represents around 40% of our base, I think that that group really particularly embodies the sorts of trends that we are talking about. And I think that generation is giving us a generational opportunity to introduce people to something that they really value, something that they really want to do, and then to help them build habits that last a lifetime. So the the sort of consumer tailwinds and the market tailwinds and the value proposition, I think, all give us great confidence in the investment case. And then just, I think, one more sort of data point on on in this area is this is a survey. It wasn't looking just at gen Gen Z. It looked at the population as a whole. But this is a recently refreshed annual survey which asks consumers which areas they would consider cutting back on if they needed to.

12:05 And as as you you can can see see on on the the chart, after our children and our pets, the thing that we're least willing to cut back on is fitness

12:13 and well-being. So we think this is a very, very resilient picture when it comes to demand. So, yeah, as I say, that's some of what what we what we think makes the the the the market very attractive. And then just briefly in terms of our strategy, just a high level summary of our strategy to sort of maximize that that that opportunity. We set out our next chapter strategy around a year ago as a as a business. We've working on it. We've been executing against it for for longer than that, so sort of eighteen months. But it's in three simple parts. The first, we call strengthen the core, and this is about increasing returns in our mature estate.

12:58 And that's that's this program is what's driven that 4% percentage point improvement in our mature site returns, and we think there's more to come there towards as we go towards 30%. And then within strengthening the call, there's strategies around pricing, around digital marketing, around retaining customers for longer. We think there's a huge amount more to come from that from that program. The initiatives in it are kind of multiyear and all gathering pace. What Strengthen the Core then does is it generates more like for like revenue, more cash flow into the second cog of our strategy, which is to accelerate the rollout of quality sites in The UK. And as I said before, we are expecting to open around 50 new sites over the next three years from free cash flow.

13:45 And then finally, broaden our growth. We're extremely

13:48 focused on The UK at the moment and those first two cogs. But periodically, we will look at what opportunities there might be to broaden our to broaden our growth, whether that's in new territories internationally new adjacent revenue areas. But, essentially, that's the plan, and we will be sticking very consistently to it for some time to come. I'm gonna do one last chart, and then I'm gonna take your take your questions. So it's it's really a summary. And as I say, there's a lot of detail in the pack about that next chapter growth strategy and how we're how we're progressing with it. But just to summarize, this is a really large so so fitness in The UK is a really large market with structural growth tailwinds as we've described.

14:38 Second point is we have an advantaged business model. We have a, you know, we have a a p an employee light business model which enables us to deliver high value at low cost and also insulates us significantly against changes in national insurance and living wage. And I think among leisure stocks, we're almost in a universe of one when it comes to that protection that we have.

15:03 Thirdly, there's multiple like for like growth opportunities, and we are unlocking those, and we'll continue to do so. And there is ten years plus of white space to low cost gyms in The UK. And we are making really good progress that we hope to see continue. We grew profit by 24%. As I said, we improved our mature site returns by four percentage points, and we'll expect further progress on that in 2025, all of which is accelerating a self funded rollout of quality sites.

15:33 As a result of all that, we took the opportunity when we presented last week to, again, revise our analyst forecast range up to the numbers that you can see there on the screen. So we we think this is a sustainable sort sort of, of, you you know, know, cash and returns driven investment case. And, you know, we're we're we're confident about it as we look to the future. So I'll pause there and see what questions we have. Perfect. Thank you very much for presentation. Ladies and gentlemen, please do continue to submit questions, and you can do so just by using the Q and A tab, which is situated on the top right hand corner of your screen. We have received an number of questions, so I want to start the Q and A session. The first one here will treat as follows.

16:20 How have you been impacted by the last five changes to National Living Wage and National Insurance? Yeah. So it's a good it's a it's a good question. So taking National Living Wage first, we I think the changes there were well trailed, and so we had we had budgeted more or less exactly for what for what came to pass in the budget. So that's that piece. And then the the second piece is around National Insurance, which was more of a surprise. The impact to us in 2025 of that the addition to a cost basis

16:58 is about £1,300,000. For for many multisite leisure businesses. The impact is, as you probably know, tens of millions. It didn't change so that number, it didn't change our forecast. It didn't change the fact that we've again updated the guidance. And just to very briefly explain the kind of core operating model is is it among our fitness trainers is a is a combination a a a contract with a small number of hours to maintain our gym support members. And on a on a separate contract, those guys then pay rent and build their own personal training book. So it that that operating model is sort of net cost neutral and also means that we're not exposed to to to National Insurance in in anything like the same way as many others.

17:58 Perfect. Thank you very much. Turning to the next question. Do you think you can carry on raising prices? In the the short answer is yes, and and we might just dip into a a slide which I think is critical to understand sort of, you know, I think understand the the investment case. So slide slide 26 in our in our pack. What this shows is it's a it's a sort of big quantitative dataset that we refresh year with a with a external company called Simon Kucher Partners. And what it does is a number of big quantitative

18:36 methods to plot perceived value against perceived price. And see is that low cost gym market, so us and our two key competitors, are all underpriced, essentially. So consumers perceive more value than they pay. If you if you do go to one of our gyms, you'll see a big, well equipped, clean, safe gym with with some, you know, friendly expert people in it for, let's say, £25 a month, and it's just it's just demonstrably good value. And you see that in that data. And then on the right hand side of the slide, you can see that we have sort of eight out of 10 value for money scores. And those value for money scores have been consistent despite some upper pricing over the last couple of years. And it's also worth saying the percentages of price increase are material when it's applied across the business of our size. But in absolute terms, they are quite small amounts of money. And then finally, our proposition is less than half the price of the mid market and mid market operators. So for for many many reasons, I think we have a very favorable sort of landscape when it's come comes to pricing. That's why we're guiding that we will price ahead of inflation, ahead of our own cost inflation for, yeah, for the foreseeable.

19:55 And it might be worth just mentioning at that point that we are anticipating reasonably low cost inflation again this year. So last year, it was a 2.4. So we have a number of cost lines,

20:07 which are actually reducing to offset the minimum wage increase. And we expect in '25 to be in the same sort of place. We're expecting site cost inflation to be around 2%. And therefore, we are expecting price inflation to outstrip cost inflation quite significantly. Perfect. Thank you very much. Turning to another question. With plans to open 16 new sites in 2025, what criteria are you used to select locations? And how does this align with long term expansion goals?

20:43 Yeah. Sure. Again, we're just sort of putting up putting up a slide that hopefully helps illustrate. So we so we have 245 sites. So we have a big sort of dataset to analyze in terms of the ingredients of the sites that have the best returns. And so so we looked at that, and then we try and really sort of distill the formula for what for what works. And, essentially, that is finding areas of, unsurprisingly, of dense population. So in in in Greater London and other urban residential areas. And then it's about site specific things like, you know, convenient access and good visibility for for the for the gym as well. And then you sort of see that reflected in the 12 sites that we opened in 2024.

21:37 So if I take the likes of Alpington, Serbenton, Plastow, Shepherd's Bush, they're in sort of significant greater London in or out of sort of suburban areas, and then they're equivalent in in in places like Manchester, Gillingham, and so on. And then if you go forward one more slide, it's sort of fine looking slide, but this shows the the growth in membership from day one of each of those 12 sites. And you can see that each one of those is performing ahead of our historical average when it comes to membership numbers. So we will continue to open

22:17 gyms like that. We'll open around 16 in in 2025 and around 20 odd in 2026. So it's sort of measured speed of expansion, but it'll be those kind of dense dense population, good sized sites, and we won't deviate too much from that formula. And as I say, we'll do it all from free cash flow as well. The next question here, how has recent trading been, and are you seeing any slowdown in demand from consumers? So we we actually included in our in our results announcement in our r and s that we had traded. So January and February is clearly a a key time of year for us, and we were pleased to be able to say that we traded well through say, '23, four results, but then we could also update to say that 2025, January and February, have traded well and that we're not seeing seeing any slowdown.

23:21 And I'll turn, Luke, if you want to. Sure. No problem. So we as usual with our full year results, we give trading for the first couple of months of the year because they're our key acquisition period. Revenue for the first two months of the year was up 8%. That That was was driven driven half by increase in average members and half by an increase in average revenue per member per month. We are also guiding to like for like revenue continue to grow nicely for the year at 3%, as we mentioned earlier.

23:49 In the middle block there, from the point of rollout, Will just mentioned our plans for 14 to 16 sites. And we now have three sites which are currently under construction, and we have further five where we have legal commitments. And then on the right hand side, as I mentioned earlier, we're also guiding to like for like site cost growth of 2%. And so when you combine that with a 3% like for like revenue growth, it gave us the confidence to up our guidance profit guidance range to the to the city to the top end of the analyst range, I. E, around 51,000,000. Thanks very much, Luke. The next question we have here is really around competition, I guess. You mentioned that THE GYM GROUP and PURE GYM have 81% of low cost members.

24:41 What is the split of the 81%? And how do you differentiate yourselves to PURE GYM? Yeah. I mean, I think the third I think the first thing to say in terms of that sort of differentiation point is, yeah, I think from a from a sort of consumer's point of view, if you visited five PureGyms and five gym groups in a in in in work out in them, something that I have done, you I think your overall impression would be of relative similarity and truth. They are

25:09 they they're both $24.07. They're both affordable. Affordable. They both have similar sort of equipment laid out similar similar way. So, you know, honestly, there's probably more differences in so more similarity than difference, but both deliver extremely well versus a growing need. So so in a sense that that's okay. And then we seek to differentiate in various ways. But, I mean, in particular, it is it's it tends to be about the local trade area and therefore where we do compete on sites that are more close together, it's really about each individual site and making sure it's it's got the right, you know, local management in place that it's clean, clean, it's well presented, the kit's well maintained, the class timetable's good, the personal training's good. So, actually, it kind of comes down to

26:02 just making sure the the offering is as well presented and executed as possible at a local at a local level. And then over time, we also sort of obviously try and build our build out our brand to be distinctive. And then in terms of the sort of split, they they have around 400 gyms, and we have around 250 gyms. And then in terms of the sector, there's a sort of another 100 or so low cost gyms in the sector. JD JD Jims is the other sort of significant player. And, yeah, as I say, you know, PLC's view is that the The UK has the potential to have another 750 plus low cost gyms. So the sort of and and penetration is growing. So there's a sort of significant opportunity for for us and PureGym.

26:57 And I think compared to many other sectors, say retail, the competitive intensity is actually relatively low.

27:04 Thanks very much, Will. We've got another question here. How are you navigating the broader macroeconomic environment, including potential cost consumer spending slowdowns or inflationary pressures? Yeah. I mean, it touches on some the things that we talked about. On the inflationary side, we we we we are, as I said, quite well advantaged in terms of our business model. So and, yeah, energy energy increases abated some time ago post Ukraine. So so we are guiding that that our own cost inflation would be around 2%, and we will be pricing ahead of that at around 3% for this year.

27:54 So and I think that's on on the sort of supply side. We have that very advantaged business model and on the demand side because essentially, because the because going to the gym is becoming less and less discretionary and because we are a low cost player, I think we're pretty resilient on the supply side as well. And as we said, didn't see haven't seen any consumer slowdown in terms of demand for our proposition. Yeah. Probably worth just putting it in context. If you use our gym once a week, it's not costing you much more per visit than a cappuccino from Starbucks. That's That's great. Just turning to the next question. When do you think you'll reach saturation in The UK market?

28:43 Yeah. I think that that that as I as I mentioned before, I think it's it's it's sort of, you know, ten ten years plus for You know, we we we are I think, yeah, we're doing our 50 over three years, and then I think we expect that to become a kind of rolling 50 for some for some time. There's a lot of white space in The UK. There are there's a continual flow of new people coming into the market because, again, because of the price point and because of the younger demographic that we tend to attract and and and penetration overall of gyms in The UK is growing. So I think we are, yeah, frankly, many years from saturation. That's great. Is there any opportunity to further monetize the existing member base through premium services or potentially digital offerings?

29:36 Yeah. I mean, we so we we have a we have a sort of range of of products. We have off peak. We have standard. We have ultimate. So we do we do sort of somewhat premiumize within our product range. And we also have one or add ons like sports water add on and so on. But but, yes, I think over time, there will be and is opportunity to add new value added services. But I think we will seek to to stay stay firmly in the, say, kind of high value, low cost part of the market. Actually, the mid market, which is a bit more premium, is is having it, you know, has a much more difficult time. So I think back to that sort of premier in analogy, we'll find we'll find new opportunities to, you know, sell benefits to customers, but we wanna keep it simple, and we wanna keep it affordable.

30:29 Thank you. Just switching gears slightly. How do you plan to retain the return on invested capital targets, especially as new sites are rolled out? Sure. So I will put up a slide that was again in our in our results deck. So in 2023, we reported a return on invested capital of 21%. And then last year, driven predominantly by that very strong profit growth that we saw, Return on invested capital was 25%. So we moved it forwards by 4%, which meant we hit our midterm target early. We have about 13 gyms that were quite impacted by change in working patterns post COVID. And if we exclude those, the underlying return on invested capital is actually 27%.

31:23 So getting very close to our target for new sites, and and and we look at the sort of performance by by annual cohort. And the gyms that we opened in 2021, which we now have, you know, proper trading history on, I have actually already achieved that 30% ROIC target. And then over the page, we just show the revenue evolution of the following cohorts. And the 22 cohorts are very close now to their target mature revenue. And therefore, we have high confidence that they will deliver the 30% ROIC. And you can see that actually the 23 sites are performing slightly ahead of the 22 sites. So again, I think we'll we'll end up with with 30% ROIC. And then finally, the sites we opened last year, which is still very early in their sort of maturation, as Will said as Will took you through earlier, shown very strong initial volume.

32:22 So so I think that we are pretty confident that with this with the the sort of gently accelerating rollout framework that we will be able to deliver 30% return on invested capital on that on the new openings. And at the same time, given the the very strong the very strong forward momentum we had last year and we anticipate further momentum this year, year, it gives us good confidence we'll get back to 30% in the mature state in due course. Thank you very much, Luke. Another question we have here. I noticed you use EBITDA as a metric. How does that convert to cash? So, again, we'll we will pull from one of the slides in the in the results deck. Let me just pull it up. So this chart shows the waterfall of EBITDA, and and we we use EBITDA less normalized rent. What we mean by that is EBITDA, including the actual rent charge, the cash rent that that we we paid to the landlords in that time frame rather than being confused by the latest change in accounting, which replaces rent with a depreciation and finance charge, which frankly does make it a little bit more difficult to see what's going on in cash.

33:51 And this slide attempts to reconcile genuinely the sort of cash the cash generation of the business. So the cash profit on the left hand side was 47,700,000. We then had cash inflows from working capital of of nearly 9,000,000. We have a model that that means that as we grow, we do actually generate working capital. So our members pay us at the beginning beginning of their time period, and our suppliers pay pay us or we pay the suppliers thirty days or forty five days later depending on our agreed terms. So as we grow, we actually generate working capital. We then spent 12,000,000 on maintaining our our existing sites, and and we we take take the the maintenance of the existing sites very seriously. It's important to maintain a top quality portfolio.

34:40 So once those two are taken off the cash profit, you can see the operating cash flow is about GBP 44,000,000. So still, the majority of the cash profit is intact. We then spent last year about GBP 6,000,000 on interest. This year, it will be a bit lower. But after we deduct interest, free cash flow was 37,500,000. It's also just worth saying at this stage that we had some significant tax losses during COVID, so we don't anticipate paying any cash tax until at least 2027. So you can see that the cash profit of 47,700,000 translated to free cash flow of $7,037,500,000. And that's that is the the the the the cash generation that we then can choose to deploy as appropriate between rolling out new sites or paying down debt or potentially making returns to shareholders.

35:40 Thank you very much. The next question, can you explain your debt profile? When is it due to rollover and any likely refinancing rates? Sure. So again, I will flick to a slide from the pack. So last June, we renegotiated a new banking package with our syndicate. We have three banks in our syndicate, so HSBC, Barclays and NatWest, so obviously very strong strong banks in The UK market. And we moved from a rolling one year RCF to a three year split term loan and RCF, and it also comes with two one year one year options to extend. When we renegotiate when we renegotiated last year, we also reduced the the interest rate over Sonya from 2.85% to 2.75%, and we also removed any restrictions on returns to shareholders.

36:45 Perfect. That's great. And we have one final question. Do you expect to generate cash beyond the spend on your opening program? And if so, will you pay down debt, look to diversify or give it back to shareholders? So this time last year, we set out a capital allocation policy that that started with ensuring a sort of minimum debt coverage was in place, but we're well below that now. So so we don't feel like we we need to pay debt down any further than where it is. Our second priority was organic organic growth and new sites as long as we felt we had high confidence of achieving 30% ROIC. As I think we've shown you on those earlier charts that we believe we are doing so. So we will continue to prioritize new new new sites in the short term.

37:36 But if we do have excess free cash flow or if we see significant change in the share price, and we believe we can match the returns that we're getting on those new site openings for buying back and canceling of shares, for example, then we're we're very open to do it. That's great. Well, Luke, thank you very much for answering those questions from investors. You've been very generous of your time. Of course, the company can review the questions submitted today, we will publish out the responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which is important to you both, Will, could I just ask you for a few closing comments? Yeah. Well, I've I've put this summary and outlook slide up there on the screen again.

38:23 I I won't I won't sort seek to repeat every point in there. I think the things that I I don't to think about are essentially the size of this sort of consumer trend around health and fitness and the this quite unusual business model that enables us to deliver that demand in in a a way way that's great, great value for money. And I think those two things should make it a very a very resilient growth path. And then we're about we're about execution, consistency, cash generation, and organic and then organically funded rollouts with, you know, you know, ten years plus of of white space. And as Luke says, we will also be disciplined and deploy our cash in the way that is best for our for our share shareholders, whether that's the organic rollout or at some point, for example, buybacks. So, yeah, I've I've been in the job for a bit less than two years, and I certainly feel greater confidence than ever that this is a fantastic business and a fantastic investment proposition as well.

39:38 Will, Luke, thank you once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected provide your feedback in order the management team can better understand your views and expectations? This will only take a few moments to complete, which I'm sure will be greatly valued by the company. On behalf of the management team of THE GYM GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you very much. Thank you.