Good morning, and welcome to the 2024 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 will take your questions in the room first and then from the webcast. Our CFO, Luke Tait, and I will be doing the presenting today. Here is what we plan to cover. I will start with an overview before handing over to Luke to share our 2024 full-year financial results. I will then provide a progress report on our Next Chapter growth plan. i will then summarize before taking your questions. Starting with the overview, I am very pleased to report strong performance for full-year 2024. Closing membership was up 5% and yield 7%, with revenue for the period up 11%, 7% on a like-for-like basis.
With this performance and strong management of costs, EBITDA less normalised rent was up 24% at GBP 47.7 million. In turn, mature site ROIC rose to 25%. This is a 4 percentage point increase on prior year, and it means we've hit our midterm target for this measure in a timeframe that's exceeded our own expectations. Strong cash generation is an important part of our investment case, and we've made good progress here as well. Free cash flow was up 39% on prior year at GBP 37.5 million, and net debt reduced by GBP 5.1 million in the same period. When it comes to new sites, we opened 12 in 2024, and as we'll come on to describe, their performance to date has been very strong.
Twelve sites was the top end of our guidance for 2024, and we're on track with our plan to open circa 50 new sites over three years, all funded from free cash flow. Finally, we're making strong progress on our Next Chapter growth plan, driving those mature site returns and new site outperformance. I'll provide a progress update on that shortly. In the meantime, I'll hand over to Luke for the financial results.
Good morning. 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 906,000 during the year, up 4% versus last year. Average revenue per member per month was GBP 20.81, up 7% on prior year. As a result, revenue for the year was GBP 226.3 million, up 11% on prior year. The strong revenue growth has dropped through well to profit, with EBITDA less normalised rent of GBP 47.7 million, up 24% or GBP 9.2 million year-on-year, and GBP 2 million ahead of consensus. The profit before tax of GBP 2.5 million was up GBP 10.8 million year-on-year.
Free cash flow of GBP 37.5 million was up over GBP 10 million versus prior year, and enabled the opening of 12 new sites and a net debt reduction of over GBP 5 million to GBP 61.3 million, reducing the net debt to EBITDA leverage ratio to 1.3 times, down by 0.4 times versus December 2023. We will look at each of these key financial metrics in more detail in the following slides. Firstly, looking at the income statement, EBITDA less normalised rent for the year was GBP 47.7 million, up GBP 9.2 million on prior year. Revenue was GBP 226.3 million, up by GBP 22.3 million year-on-year. The incremental revenue was driven 70% by the like-for-like estate and 30% by the new openings, reflecting the smaller number of new openings in 2023. We expect like-for-like and new sites to contribute more evenly in the current year.
Site costs and cost of sales were well controlled in the year, with the GBP 5 million increase reflecting the new openings as well as the impact of inflation. We will expand on the key drivers shortly, but we benefited from lower electricity rates in 2024, with a further drop expected in the current year. Central costs increase year-on-year relates principally to a 5% inflationary salary increase and a higher element of variable pay. There were also investments in delivering the Next Chapter growth plan. In 2025, the inflationary increase will be lower, and there will not be significant incremental investments required, and therefore we would expect to see the central cost margin return to circa 11%. Normalized rent increased by GBP 2.6 million, reflecting new site growth, with an underlying inflationary increase of 2.2 %.
Moving on down the P&L, the non-cash charge for share-based payments increased to GBP 3.4 million due to the stronger trading performance and increase in the share price. Net financing costs of GBP 20.2 million consist of GBP 15.5 million relating to property and finance lease interest, and GBP 4.7 million relating to our borrowing facilities. The decrease year-on-year was driven by lower bank interest costs due to lower average net debt during the year. It's worth noting that the IFRS 16 property lease charges are GBP 2.4 million higher than the cash rent costs. This is expected to reverse in the next couple of years as the average age of our lease grows. A reconciliation is included in the appendix. Non-underlying items of GBP 1.1 million was lower than prior year, and a full breakdown is included in today's announcement.
Finally, profit before tax for the year was GBP 2.5 million, GBP 10.8 million higher than prior year. Turning now to like-for-like revenue, like-for-like revenue for the year was 107%. As we progressed through the year, the trading environment remained stable, and like-for-like remained stronger than expected. The yield increase of 7% was delivered whilst maintaining like-for-like membership numbers. The increase in average revenue per member per month was 7%, was driven by a combination of price increases and reduced promotional discounts, and covers a full year of Off-Peak membership dilution. Our average Standard headline rate increased to GBP 24.53, an average increase of just GBP 1.37 versus December last year. When we move headline rates, we continue to reprice existing members as long as our internal tests to ensure minimal incremental churn are met, and all increases are A/B tested to ensure that we understand the elasticity of the increase.
Site costs for the year came in in line with expectations. There were very different trends by cost line. There was inflationary pressure in wage cost from National Living Wage increase. However, our low staffing model is a competitive advantage against the mid-market gym operators and results in a far smaller impact than on multi-site leisure in general. There was also pressure from rates with a new rating period and an increase in the Uniform Business Rate. These were significantly offset by cost optimization initiatives. In our staffing model, we've made changes both at the management and fitness trainer level. We're tailoring our management structures using a range of roles which enable us to align the management structure to the complexity and scale of the operations in each area.
Optimizing the number of trainers to the gym level demand ensures satisfaction for members, sufficient opportunities for the trainers, and maximum rents for the business. On rates, we have managed to reduce the impact of the increases by challenging rateable values wherever possible. In utilities, we have seen the higher electricity prices start to work their way out of the business in 2024, with a GBP 2 million rate reduction. We are expecting a similar saving in 2025. We also have a number of energy efficiency programs ongoing. We have now installed voltage optimization units in 105 gyms, which are giving an average ROIC of 39%, and we have plans for a further 85%. Early trials of automated lighting circuits are promising, giving a ROIC of nearly 50%. Initial analysis has identified 50 sites, and we plan to carry out the first phase rollout this year.
A softening insurance market has also provided savings. In total, like-for-like site costs increased by 2.4% for the full year. Turning now to cash flow, strong cash flow generation in the year enabled us to self-finance our investments, buy shares for the EBT, and pay down debt. The working capital inflow of GBP 8.7 million reflects careful cash management and a higher proportion of pay-upfront memberships. After deducting the cash spend on maintenance CapEx of GBP 12.2 million, operating cash flow was GBP 44.2 million, up GBP 11 million or a third on prior year. The cash element of non-underlying costs was GBP 0.9 million. Bank and lease interest was GBP 5.8 million, leaving free cash flow of GBP 37.5 million, up 39% year-on-year, giving a free cash flow yield based on recent share price of over 13%.
It's worth noting that due to losses during COVID, we do not expect any cash tax until 2027. Expansionary CapEx was GBP 27.8 million, and after refinancing and EBT share purchase costs, net debt reduced by GBP 5.1 million year-on-year. We continue to invest to drive the business forwards. Total cash CapEx in the year was GBP 40 million, up on GBP 26.7 million last year. The main increase was in new site spend at GBP 19.6 million, with double the number of new openings in 2024 versus prior year. There was a high proportion of Greater London new sites than normal at eight out of 12. Tech and data spend was GBP 8.2 million in 2024, as we continue to invest in Next Chapter growth initiatives, including on the e-commerce journey and the app.
We have a number of major tech projects over the next couple of years, and therefore expect spend on tech to continue at at least this level. Total maintenance CapEx of GBP 12.2 million remained pretty consistent as a percentage of sales year-on-year, averaging around GBP 50,000 per gym. Turning now to net debt, non-property net debt was GBP 61.3 million at year-end, down GBP 5.1 million from December 2023. The net debt consisted of GBP 61 million of bank net debt and GBP 3.3 million of finance lease debt and GBP 3 million of cash. As a result of the reduction in net debt, the total net debt to EBITDA multiple reduced to 1.3 times, down from 1.7 times at year-end 2023 and two times at the end of 2022. Given the further acceleration in new openings planned in 2025, we do not expect any further reduction in net debt at this year-end.
In June last year, we agreed a three-year, GBP 90 million combined term loan and RCF agreement with our banking syndicate. The agreement included two one-year extension options, the first of which we intend to request this year. The facility agreement permits distributions to shareholders, but in line with our capital allocation policy set out last year, our priority remains organic new site growth when we have high levels of confidence in achieving a ROIC of 30%. Moving on to ROIC, ROIC for the mature estate was 25% last year, benefiting from the strong EBITDA growth in the year. The four percentage points increase year-on-year delivered our midterm target early. If the 13 workforce -dependent sites are excluded, the ROIC increases to 27%.
The gyms opened in 2021 are now delivering ahead of the 30% ROIC target for new openings, and we expect further progress this year on mature site ROIC and, as a result, have increased confidence in returning to 30% ROIC in the longer term. The new sites are performing well, with the sites opened in 2022 on track to deliver an average ROIC of 30%. Although earlier in their tenure, the 2023 sites are on a similar trajectory to the 2022 sites. The 2024 sites are progressing well with strong initial volumes. Finally, turning to current trading and outlook, revenue year to date at the end of February is up 8% versus prior year, with average members up 4% and average revenue per member per month up 4%. Like-for-like was 3%, with like-for-like average members flat year-on-year.
The gym rollout is on track with a guidance of 14-16 new openings this year, with three gyms currently on site and we've exchanged on a further three sites. The openings will be second half weighted. Looking ahead for the full year, we expect like-for-like sales of circa 3% and like-for-like site cost inflation of circa 2%. As a result, now expect 2025 EBITDA less normalised rent to be at the top end of analysts' forecast range. Now I'll hand over to Will for the strategy update.
Good. Right. Thank you, Luke. Last March, I set out our Next Chapter growth plan, and as I did last September, I wanted to give you a 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 o'clock on the circle, health and fitness is a very large market with structural growth tailwinds. In gyms, it's the low-cost sector that's growing fastest. As with other categories, we're benefiting from consumers' growing appetite for no-frills, great value propositions, and from new, more committed generations of gym goers. Our advantaged business model delivers high value at low cost, a winning proposition with high levels of customer satisfaction. We also have multiple drivers of growth listed on the right-hand side of the slide, and we have detailed plans for each of them. Strong execution on these growth drivers is increasing returns in our existing estate, in turn funding the organic rollout of quality new sites. All of this is being powered by data and technology, two areas we continue to invest in as the foundation for any successful digital subscription business.
The U.K. gym market is benefiting from sustained structural growth. U.K. consumers spend GBP 5.9 billion on gym memberships, with 10.7 million of us being members. That penetration continues to grow, with a significant increase in 2024 from 15.9% versus 15.1% a year ago. As you can see in the green part of the bar chart, that growth is being driven by low-cost gyms. With a proposition that's high quality and affordable, we're introducing new generations of gym goers to something they really value, as well as benefiting from continued trade down from the mid-market. In this growing market segment, we're one of two brands with over 80% member share. Looking at consumer trends in surveys, focus groups, or observing behavior in our gyms, it's not surprising to see that penetration growth led by high-value, low-cost gyms.
I talked to these trends a year ago, and each of them continues to accelerate. Consumers' fitness IQ is growing, meaning their use of the gym is more rounded and more engaged. They tell us they want to prioritize mental health and see gyms as the most obvious way to do that. They want to look fit and shaped, increasing the need for equipment you'll only find in a good gym. Amplified by the rise of social media, consumers are increasingly seeing the gym as part of their identity and their desired lifestyle. All this is creating increased demand for gyms, and our advantaged business model best meets that need affordably and conveniently. The growing impact of Gen Z only strengthens these tailwinds. They accounted for 42% of our average members in 2024 and embody the trends laid out on the previous chart and again here.
Gen Z are giving us a generational opportunity to attract new members and help them build habits that last a lifetime. Gen Z do not see going to the gym as a chore, but as part of their identity, part of the way they want to live and to socialize. To personalize it, when I was 19, I occasionally went to the gym because I thought I ought to. My 19-year-old son goes every day because he wants to. In short, there is a new generation of gym goers who love our gyms and will help to fuel our sustained growth. It is not just Gen Z. In the broader population, health and fitness is increasingly high priority when it comes to spend. For a growing number of us, health and fitness is not discretionary; it is essential.
The 2025 RSM survey of U.K. consumers looks at where we're looking to cut back on spend, and only spend on our children and our pets is less discretionary than fitness and well-being. Against that backdrop, our proposition resonates more than ever. For any subscription business, usage is a good health indicator, and the proportion of members visiting us four times or more a month increased again in 2024 by 120 basis points to 53.5%, while the proportion of members rating us five out of five in satisfaction surveys has risen year-on-year to a remarkable 57%. The Gym Group is growing in a growing part of a growing market. We benefit from structural tailwinds, an advantaged business model, and a winning proposition. We also have a clear growth plan, and I wanted to give you that progress report.
As a reminder, there are three elements to the Next Chapter. Strengthen the Core is focused on increasing returns from our existing sites by growing like-for-like revenue. It is the program that has helped us deliver our 25% midterm target for mature site ROIC early, and it is generating the cash to accelerate our organically funded rollout of quality sites in the U.K. As we said in September, those first two cogs are very much where our executional focus is for the time being because we see so much opportunity here. We are continuing to assess opportunities to broaden our growth over the longer term. Turning in more detail to strengthen the core, we delivered multiple wins in 2024 across three areas of focus covering different aspects of revenue growth.
On pricing and revenue management, we see a sustained upside opportunity based on our strong value for money credentials, and I'm confident we have the data and capability to continue growing yield. When it comes to acquiring new members, we're using data, ad technology, local targeting, and e-commerce skills to create a highly efficient acquisition engine. Thirdly, on member retention, we're seeing improving results by taking a systematic and data-driven approach. On the next few slides, I'll give you some examples of the progress we're making in these areas. We continue to see clear and sustained headroom when it comes to pricing. The key reason for this is shown on the left-hand side of the slide. The graph is output from a large quantitative study we refresh annually with Simon-Kucher & Partners.
It plots perceived value on the X-axis against perceived price on the Y-axis and shows that the high-value, low-cost gym sector is underpriced. When you consider The Gym Group value proposition, that's not surprising. You get a well-equipped, well-maintained gym staffed with friendly expert people for about GBP 25 a month. It's a phenomenal piece of value engineering, and you can see on the right-hand side of the chart that that has led to strong value for money perceptions, which are stable despite increasing prices in 2024. We've talked previously about our relative pricing versus other high-value, low-cost competition, and I'll come to that in a second. It's also important to point out in the box bottom right that the mid-market proposition is over twice the price of ours.
Again, it's no surprise that we have highly resilient value perceptions and also that we benefit from trading down from the mid-market. With this pricing and yield opportunity in mind, we've delivered a number of wins in 2024. All these have been underpinned by analytics and A/B testing, de-risking our decision-making as we execute the plan. Firstly, we have increased our headline rates for new members while remaining cheaper than the competition in competing sites. Secondly, with those value perceptions, the higher headline rates and our three-tier product architecture in place, we repriced 540,000 members in 2024 without significant churn. Turning to Off-Peak, having rolled it out nationally in 2023, we continue to fine-tune its deployment, including optimizing its pricing at site level. In sites where this optimization has happened, we see a 3% improvement in revenue and will continue this work.
Finally, through data testing and a wider set of promotions, in 2024, we were able to discount less generously off-headline rate. Turning to new member acquisition, we're building an efficient acquisition engine. The dynamic ad tech solution I talked to in September continues to yield results, enabling small adjustments to copy that deliver significant results across hundreds of ads. We also have a web team running multiple tests to improve sale conversion. We're using data analytics to improve the ROI on our marketing investments, for example, so that we can upweight spend around our sites with the higher returns. As I've described before, we also continue to focus our marketing investment spend close to our sites to minimize any wastage and to win locally across 245 gyms. I'm pleased to say that it's working.
Over the last 18 months, we've seen consistent gains in the key metrics that support growth, including likelihood to visit our website, likelihood to join, and intention to visit more often. Retaining more members is another clear growth lever. 2024 was the first year of a sustained program on retention, and I'm very encouraged by the early results that we've seen. Our highest churn rates are in the first 45 days of a member's tenure, so last year we developed an early life plan. This included a new CRM program that delivered a 3.3% increase in day 45 retention rates. We also launched a range of new app features, helping members to get even more value from their subscription. For example, after improving it, we saw 159,000 more members use our member workout area in H2 2024 versus the same period in 2023.
Our acquire-to-retain program delivered a new stepped promotional mechanic that delivers higher retention by reducing bill shock post-introductory offer. We also initiated a plan to grow our base of Saver members who sign up for six, nine, or twelve months. We more than doubled that base in 2024 with more enhancements to the product landing this year. Finally, we improved the experience for new members with increased staffing at new member peaks and better availability and quality of inductions. New members who get a warm welcome and have an induction stay longer. That is a few examples of the many ways we are strengthening the core of the business, increasing like-for-like revenue, mature site returns, and free cash flow.
In line with our strategy and the capital allocation policy set out in March, we're currently deploying that free cash flow to accelerate the rollout of quality sites in the U.K. As you'll recall, PwC recently estimated 10 years plus of U.K. white space for low-cost gyms. The opportunity for sustained new site rollout is clear, and we'll take a disciplined returns-focused approach to unlocking it. We opened 12 sites in 2024 at the top end of our guidance. As we explained a year ago, we've been rigorous in identifying the characteristics of our best-performing sites as set out on the left-hand side of the slide. We then applied that formula in a disciplined way to the 12 new sites that we chose to open. Every gym on this page is delivering a winning proposition in a high population density location.
With ample space, 24/7 access, great equipment, friendly staff, and an affordable price, each gym has the proven ingredients to deliver 30% ROIC. I am pleased to see the performance to date of our newest openings. The graph on the left-hand side shows the growth in members from launch date with all 12 sites ahead of our historical average. The key drivers of that outperformance are set out on the right-hand side, and our teams have done a great job. Against each of these drivers, we have clear plans for further gains, and what we are seeing gives me real confidence we can open new 30% returning sites sustainably. Looking ahead, we are on track with our guided aim to open circa 50 high-quality new gyms over the next three years, funded from free cash flow.
Our guided range for this year is 14-16 new sites, and we're making good progress with our 2025 pipeline and indeed with our 2026 pipeline. With this year's cohort getting out of the blocks fast, I'm excited that we still have lots of areas to build on for further acceleration. Firstly, we can apply the best of our strength in the core program as we mature the new sites, whether that's data-driven pricing, marketing, gym product innovation, or site cost management. Secondly, we can further innovate on site build costs, a real focus for 2025. Thirdly, we're upgrading the design of our sites. We see headroom to make them look and feel more modern, cooler, for want of a better word, and we've retained a world-class design and build company to support on all sites moving forward.
We will also test former innovations to take full advantage of available U.K. white space. Finally, we're adding new data sets to our site appraisal model. Our growth plan has momentum with more to come. As you'll see on the left-hand side, this year will continue many of the 2024 focus areas because they will deliver benefit over multiple years. We also have exciting new initiatives in 2025. The list on the right is not exhaustive, but to give you two examples. In Q4 last year, we commissioned a major piece of data analysis to identify whether there is membership headroom in our existing estate. In other words, sites where the statistical model says we should have more members. That gives us a data-driven list of sites that we can go after to increase their membership.
This might mean refreshing a particular site's equipment, design, and/or giving it a new marketing push. Either way, it will enable a focused approach to site-level membership growth. To give you one other example, in H1, we'll deliver a slicker rejoin process. Given our flexible no-contract proposition, we want to make it as easy as possible for lapsed members to return to us. In short, I expect 2025 to be another year of progress in multiple areas, delivering further growth in mature site ROIC and strong performance on new gyms. That is the progress report on our Next Chapter growth plan. i would like to take the opportunity to thank our committed expert people across our 245 gyms and our support center for delivering the progress that you can see. We will shortly take your questions, but before that, I am going to briefly summarize today's presentation.
The Gym Group operates in a large market with structural growth at tailwinds. We have an advantage business model that delivers high value at low cost and limits exposure on National Living Wage and National Insurance. With multiple ways to grow, we increased profit by 24% last year and delivered our midterm returns target on mature sites early. We expect further progress on this metric in 2025. Profit growth is converting into strong cash flow, and that is allowing us to accelerate our organically funded expansion. As a result of this strong progress and our current trading performance, we are updating our guidance once again and look to 2025 with real confidence. Thank you. We will now take your questions. I think you are going to hear a voice that is going to instruct you on what is going to happen.
Thank you.
Yes, if you have a question and you're in the room, please raise your hand and wait for a microphone to be brought to you. If you're on Zoom, then please use the Q&A box on your screen and type your question. Thank you.
Okay. Douglas Jack, Peel Hunt. I've got a couple of questions. The first one is, can you talk about the trajectory to 30% return on invested capital on the new sites and any read-through you have to the existing estates in terms of best practice there? In terms of the 2025 expansion, obviously last year you were largely in London. Were you looking to be expanding in 2025? Are you looking at bigger sites on average compared to the existing estate?
Take the second one. Maybe to take the second question first.
Yeah, I think, as you say, 2024, our site locations were weighted towards Greater London. This year, we'd expect that to be more sort of 50-50 across the sort of 14-16 sites. Greater London is a really strong performing area for us, but so is other sort of major urban conurbations. In terms of size, yeah, we'll continue to open on average sort of 14,000-15,000 sq ft, but we'll go up to 20,000 sq ft. In terms of returns, we look for gyms where the top line can be really strong, and that often is bigger sites. That's where we'd expect the balance to be.
Doug, I think in terms of the sort of aspiration to return to 30%, we've obviously made significant progress in the current year going from 21%- 25%.
We are obviously guiding to further growth, EBITDA growth this year, and that's the key driver of mature site ROIC. I don't think we've set out a specific time frame, but in the longer term, I think it does give us confidence we can keep moving that forwards.
Morning, Tim Barrett from Deutsche Numis. Can I just first ask about the rollout a bit more? There's a step up implied in 2026, as you've talked about. Keen to understand the kind of rent deals and landlord contributions, that kind of thing, just in terms of what's happening on underlying market conditions. Secondly, on repricing, I think you said 540,000 members repriced. What's the approach to the other 400,000? Is it continuous, or do you sort of look at it quarterly, periodically, that sort of thing? Thank you.
Yeah, okay.
On rollouts, I think it's true to say that landlords like gyms because they can see it's a growing market in mixed-use developments and so on. It drives footfall and likewise on the high street. I think there's really strong availability for us. In terms of our 2026 pipelines, Luke said, we're building three. We've exchanged on another three. I think we've got a good line of sight to the 14-16 for 2025. As Luke said, it'll be H2 weighted. I think, yeah, good availability and good progress on that pipeline. As I say, I think people welcome gyms into high streets and retail parks and so on.
Tim, on repricing, we have quite a sort of scientific approach to the way we reprice.
We look at a bunch of different characteristics, so sort of membership, tenure, usage of the gym, whether or not they're on student products, etc., etc., to decide how and when we reprice. As a result, you'll never reprice the entire sort of estate at one time. It is very granular. It is literally down to quite small cohorts of membership types.
Hi, Jack Cummings at Berenberg. Just wanted to first ask, you mentioned on the site-level member headroom that you're looking in 2025, should we expect there to be volume growth year-on-year in like-for-like terms in 2025? Just secondly, on capital allocation, leverage has come down significantly over the past two years and is expected to remain in pretty healthy levels. What goes into the decision-making process when you're thinking about dividends and buybacks and how that's balanced against your growth opportunities? Thanks.
I think on the first one, I think we guided last year and will continue this year that we're seeking to optimize for revenue. The way that we're doing that for the time being is to sort of take the yield opportunity that we can see and we think will sustain for some time to come. We would expect our like-for-like revenue growth to be weighted towards yield. That said, we do not want to decrease our like-for-like membership. As last year, we will be trying to at least keep that 100% like-for-like, but sort of yield-weighted. That said, we have a number of programs that look at volume. That site-level headroom, I think, is a kind of a new piece of analysis that should help us with that.
Jack, on capital allocation.
This time last year, we set out a sort of capital allocation policy that prioritized organic growth as long as we felt really good certainty on delivering that 30% ROIC. I mean, I think we remain sort of open-minded. I mean, essentially, we'll follow the returns for shareholders. There is a place when the share price gets to a point where we think the returns can be as strong as the returns on organic growth and essentially with no execution risk. We'll remain open-minded to whether or not we need to reorder.
Anna Barnfather from Panmure Liberum. Just on the build costs, you mentioned you're going bigger, but you're also looking at how to optimize and innovate on those designs. Can you expand a little bit more on average build costs and where you think there's some design savings on there?
Then second question on IT development and spend. Obviously, some is capitalized, some is expensed. What is the total amount spent in 2024, and where will that increase to in 2025 and beyond, please?
Yeah, I think on build costs, I think in absolute terms, we are, as we were sort of talking about a moment ago, sort of looking to build relatively large sites. Sometimes that is more like the 1.5-1.6 type level. We are good with that because some of those bigger sites are returning very good, returning very well, and have a very strong top line. There is something about the absolute number and just the sort of size of the gyms that we are building. On site cost innovation, it is really a new program for 2025.
We've hired Hamish Latchem here, who's in the room here, who has just joined us from Aldi, where he was National Store Development Director. I think he will bring a lot to that agenda. We've got a kind of whole list of items that we're working through. Perhaps when we do this in September, we'll try and give you a bit more granular detail. I think important when you look at the absolute number to recognize that we open quite large gyms.
On the tech CapEx, or sorry, tech spend altogether, we haven't given sort of line item detail on cost lines for the P&L, but I would say that the CapEx is higher than the OpEx. I think the sort of key change, really, that we've seen lately is that change in accounting policy where you can't capitalize SaaS implementations.
That's why I think it's appropriate to report the projects we're just sort of commencing now as non-underlying because they're so lumpy in nature that I think it just distorts the underlying picture of trading.
Morning. Sahil Shan from Singer Capital Markets. Three questions, please. Firstly, in terms of the commentary on current trading this morning, it's clearly positive. Just wanted to understand a bit more relative to where you were this time last year. What's been the key learnings, key insights? What have you done differently this year around to sort of give you a lot more confidence around that trading over January and February? Secondly, the slide on retention, if I remember correctly, the focus was on the members who joined in the first 45 days or so. The question is, how much scope is there more to improve retention in that area?
But more importantly, anything you can share about the rest of the membership cohort, how retention has fared over the last 12 months vis-à-vis that cohort? Final question, just anything that's worth sharing in terms of what you're seeing vis-à-vis the competitive landscape at the moment? Thank you.
Shall I make a start? I'll go on current trading and retention and maybe to competitive landscape. Sorry, say that again. Maybe to your third one. Yeah. I think on current trading, we're pleased with how trading went through the January-February peak. Indeed, we're quite pleased how it went last year as well. I would say in terms of new learnings, I think the first thing to say is that this year, it was kind of a build on last year. We sort of try and take the best elements forward.
We're not sort of trying to reinvent the wheel each time, which would be sort of a higher risk thing to do. I think a strong, clear marketing campaign targeted around our existing sites. We did do a bit more what we call sort of priming the pump. We did quite a lot of media activity between Christmas and New Year to just get awareness levels up once the peak trading started in earnest. That was an evolution. In many ways, it was essentially the same campaign based around sort of key benefits and a media buy that's very digital and very focused on the existing sites. I think we're seeing a consumer who has disposable income and will spend it on things that they really value. Gyms, fortunately for us, are one of the things that they are really valuing.
I think that's on trading. I think on retention, yeah, we've had a particular focus on that early life cohort, but the retention program goes right across the base. We have seen some improvements this year. The average tenure of our membership grew year-on-year towards sort of 18 months. Yeah, we saw improvements right across the piece on retention, though the program is year one of a multi-year program on retention.
On competition, I mean, I think probably the best way of describing it is I think we've got pretty good and capable competitors, but everyone's taking economically rational decisions at the moment, both in terms of headline rates and how they're sort of moving them and sort of flexing to inflation. Also, I think in terms of sort of site selection.
Good morning, Caroline Gulliver from Equity Development.
I just wanted a little bit more color around your staffing model, if possible. You talked about making efficiencies. I just wondered if you could give us some more color on the learnings that you're taking into your new sites when you're looking at how to staff new sites. Secondly, you also mentioned that wage inflation was coming down from last year, but just wondered if you could quantify what you expected for wage inflation for this year.
Yeah, I mean, I think on staffing model, if you go to one of our gyms, what you'll see is a large, clean, safe space with a lot of great equipment in it and some friendly people. What you won't see is a receptionist, somebody sort of collecting towels, somebody cleaning a swimming pool because we don't have swimming pools. In other words, it's a no-frills proposition.
Therefore, we're able to staff in a very cost-effective way. I think that's essentially how we approach the model.
That's always been the case, though. What have you changed differently? You mentioned you've made more efficiencies this year in staffing. Yeah.
For example, we've changed some of the management structures. If we've had two or three small gyms, smaller membership gyms in an area, we might look at a cluster manager. We might look at your site manager. We might look at fitness instructors rather than assistant general managers. We've sort of broadened the range of roles that we have so that we can tailor those roles to the complexity of the local sort of operational picture. On your second question about wage inflation, that was specifically a comment about central costs.
Unfortunately, we don't get to set most of the wage inflation in site-level costs, but we were expecting central cost wage inflation at about 3%.
Thank you. Jane Henderson, Ocean Wall. Turning to your ROIC at mature sites, can we assume that the graph or the numbers that you're giving us is comparable to the 159 sites that you put in the presentation last year? Secondly, can we push back a little bit more on the lease environment? Because retailers are all talking about shortening leases, and the whole concept of upward-only rent reviews seems a thing of the past. A bit more color on that would be helpful. Thirdly, because your marketing team seems to be well embedded and firing on all cylinders now, will we see anything a little bit different, like a bit more corporate membership activity or corporate deals or something of that nature? Thank you.
I'll try one or three. I think on leases, I don't think we're seeing anything hugely different. Our leases will tend to be 15 years with a break at 10 years. I think that side of things is relatively stable. On your third question, yes, we've got a great marketing team. To the question of corporate, yeah, I think there's opportunity there. I mean, we do have corporate members. We have grown that base, but it is a relatively small part of the mix. Actually, we've got some quite sort of significant experiments planned in that area, if I could put it that way. Again, that's something we could probably come back and update on perhaps in September. For sure, corporates, as I'm sure you know, want to offer their people fitness and well-being because, again, they know that it's high priority.
Yes, I think there's more to come in that area.
On your question about, Jane, on the ROIC of a mature site perimeter, it was the same perimeter, but plus one new cohort that falls in as mature sites. Every year, we add essentially one more cohort in.
We have a question from online, which is from Patricia López from 2Playbook. She says, "Are you looking to grow in other markets outside of the U.K.?"
Yeah, as I said in the presentation, we are currently focused on the U.K. because we see further headroom to grow the returns on our existing estate as we've talked to in that sort of journey to 30% and the progress that we've made there. We see 10 years plus of white space to roll out into in the U.K. That's absolutely our focus.
Then periodically, we sort of have a look at other possibilities to, in quotes, broaden our growth. We sort of have a strategic look at that each year. For the time being, we are very consciously focusing on the U.K.
We have another question online from James Gilbert. He says, "Congratulations on great results. Please, can you talk about how you see the tech and data spend? You have it as exponentially. How do you see ROIC given the large amounts involved?" Thank you.
Sorry, I am not quite sure I understood the second half of that.
How do you see the ROIC given the large amounts involved?
Yes, yes. Obviously, every major tech investment we make, we assess the returns that we expect to get from it.
We treat it very much like a normal capital item, albeit sometimes the business case is a little bit more difficult to discern, particularly when you're in areas around sort of revenue optimization. Essentially, we do look for ROIC increase on that CapEx spend as well.
There are no further questions from online. Thank you.
Thank you. Okay. Thank you for coming. I think that's that. Yeah, thank you.