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Hello and welcome to BasicVid's 2024 full-year results conference call and webcast. Please note that today's conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now turn the call over to your host for today's conference, Richard Picker, Head of Investor Relations. Sir, you may begin.

Thank you, Laura, and good afternoon and welcome to our course call during which we will discuss our results over the full year 2024. With me today are CEO René Moos, who you all know well, and our new CFO Maurice de Kler, who will present the results of BasicFit for the first time. Some of you have had the opportunity to meet Maurice already in the past months, and those of you who did not will get the opportunity in the coming period. This call is being broadcast live on our website, and a recording of the call will be available shortly afterwards. As usual, I would like to point out that safe harbor applies. We will start with Rene, who will discuss the highlights and the operational developments, followed by a more detailed look at the financial results from Maurice. After these prepared remarks, we will open the call for questions. And the call will finish no later than 3 o'clock. And with that, I hand it over to you. Thank you, Richard.

And welcome, everyone, for joining today's call. We had a very strong 2024, recording significant increases in all key metrics. Clubs, membership, revenue, and underlying EBITDA less rent all increased with double-digit percentages. In 2024, we expanded our club network to 1,575 clubs and our membership base to 4,250,000. The revenue and underlying EBITDA, less rent, came in with the guidance ranges. Compared to a year ago, our revenue increased by 16% to 1,250,000,000 euros. We increased underlying EBITDA, less rent, even faster by 20% to €313 million. Let's go to the next slide on club openings. Let's take a look at our latest club expansion figures. At the end of 2024, we operated 1,575 clubs, up from 1,402 at the end of 2023, a 12% increase. Today, we operate 1,611 clubs after opening 36 clubs year to date. In France, we have further strengthened our market leadership with a net club growth of 77, representing a 10% increase. We have been shifting our focus more towards Spain, which has been a major growth driver. We achieved a net club growth of 70, marking a 50% increase. driven in part by the acquisition of RSG Spain. We surpassed the 200 club mark in Spain, providing us with the scale to launch national marketing campaigns and make clear steps in increasing our brand recognition and building our brand. As a result, we are seeing a positive membership development, something I will share more about later in the presentation. In Germany, we expanded our presence with 60 new club openings, our total to 28 clubs. After an initial phase of more scattered openings to test the market, we are now strategically focusing on four key urban regions. By building club clusters in these areas, we aim to establish ourselves as the logical fitness choice for local communities. With the growth we have achieved across our markets, we continue to fulfill our mission by making fitness accessible to even more people across Europe. Let's go to the membership development slide. We have seen strong momentum in our membership growth. We reached 4,250,000 memberships at the end of 2024, reflecting a 12% year-on-year increase. Growth has been across all countries, with France and Spain delivering the strongest performances. We have been seeing solid ingrowth in newly opened clubs, supported in part by successful founding member campaigns. These campaigns have proven to be an effective driver of early stage membership growth, giving new clubs a strong head start. Market conditions in France improved somewhat during the course of the year. In 2024, we also implemented a new management structure in France. We separated the responsibilities for club expansion and club operation and divided the country into separate regions. Each region is now being overseen by its own dedicated business manager. This contributed to improved operations and journey numbers per club. The start of 2025 overall was very solid. with membership increasing by over 200,000 in the first two months. This is clearly an improvement compared to the first quarter of 2024. In this quarter, we increased the membership base by 250,000, which is including the quite well over 100,000 members of the RSG Spain acquisition. The improving membership trends are also visible when looking at different cohorts of clubs. As we analyze our club performance, it is important to differentiate between the cohorts and how they are developing over time. On this slide, we show a graph with two lines with the ramp up of the average revenue per club of two different cohorts in the first three years after opening. The gray line represents the cohort of clubs that we opened before 2020. We filtered the COVID-19 years out of the data to show a more representative picture of the development of revenue ingrowth. The purple line represents the cohort of clubs that we opened during the COVID-19 affected years 2020, 21, and 2022. The purple line is fairly straight, indicating that the COVID-19 affected clubs missed out on the accelerated ingrowth that typically in the first two years after opening. Something that you do see in the gray line of the pre-COVID clubs. The COVID affected clubs continue to grow, however, at a slow pace. I see a lot of positive developments on this slide with both cohorts continuing to increase revenue per club. On the next slide, we provide more details on the development of the post-COVID cohort. On this slide, you see two lines representing the average revenue in growth per club in the cohorts of COVID affected clubs and the cohort of clubs that we opened post-COVID in 2023 and 2024. The blue line represents the post-COVID clubs in growth, taking into account the fact that 90 of the open clubs were regional clubs and we acquired 42 clubs in Spain. We can still see that we are able to reach the cash flow break-even level at 1,500 membership after six months, while the COVID affected clubs on average were only just over 1,000 membership after six months. Noteworthy also is that the cumulative average revenue of the 2023 and 2024 clubs over the first six months is similar to those of 2018 and 19. Then going to the next slide. As we have demonstrated in prior capital market days, we have invested heavily in our smart camera system, which has enabled us to increase the service to our members without increasing staff costs. It has also been instrumental to our 24-7 model, which further enhances accessibility and convenience for our members. In Benelux, we have successfully implemented 24-7 unstaffed clubs, with more than 75% of our location now operating under this model. This has been a key driver behind the increased service to our members in the Benelux countries. However, in France, regulations do not yet allow unstaffed clubs. To see if we could offer French members the same level of accessibility and convenience, we launched a pilot program in the second half of 2024 to test 24-7 staffed clubs in France. The result of the 70 pilot clubs were encouraging. In addition, as in the Benelux, French consumers highly value the accessibility and convenience that a club which is open 24-7 offers. We therefore decided the number of clubs operating 24-7 with staff to 333 in France in January 2025. Beyond France, we are also expanding opening hours in Spain and Germany, further enhancing accessibility for our members in these markets. While this transition comes with an additional annual cost of 35 million, we expect this to be mitigated by higher membership numbers as of 2026. The next slide, strategy update. Today, we announce our more capital efficient strategy, which paves the way for sustainable growth, increased shareholder value, and an even stronger market position in the fitness industry. We are pleased to announce that in 2025, we will initiate a 40 million share repair program enabled by the positive cash flow post-expansion that we expect to generate this year. This move reflects our commitment to enhancing shareholder value while maintaining financial discipline. By 2026, we aim to achieve a below two times adjusted EBITDA leverage target. This milestone will ensure we maintain a strong and flexible financial position, allowing us to continue investing in future growth. Growth is in our DNA. so we will continue to open many clubs in our current countries the coming years. With approximately 100 new clubs openings planned for both 2025 and 2026, we are further strengthening our European leadership in the industry. Longer term, we continue to see the development for more than 3,000 owned clubs across our current markets. On top of this, we are actively prepared for the launch of our franchise platform. More details we expect to share with you in the second half of 2025, when we can announce concrete steps. In summary, BasicFit's capital efficient strategy positions us for continued growth, financial strength, and leadership in the European fitness market. We remain committed to delivering value to our members, investors, and all stakeholders. Now let's go to the next slide and see what our strategy execution has resulted in over the past year. Since our IPO, we have consistently delivered strong growth across all key performance indicators, achieving double-digit compound annual growth rates. Since our IPO in 2016, we have expanded our club network by an average of 80% a year. while underlying EBITDA less rent has grown even faster at 19% a year on average. Looking ahead, our updated strategy is designed to reinforce these growth trends, enhance the quality of our results, and ensure a more sustainable long-term outlook, allowing us to continue building on our success. I now hand it over to Maurice for the financial reviews.

Yes, thank you, Renee. In the next two slides, I will quickly walk you through the main elements of our income statement and the underlying performance. Total revenue increased by 16% to 1.2 billion euros thanks to the expansion of our club network, an increase in memberships, and an increase in the average monthly yield to 24 euros and 24 cents from 23 euros and 53 euro cents a year ago. Underlying club EBDA less rent, which is club EBDA adjusted for exceptional items and minus the invoiced rent costs to the open clubs, increased by 16% to €462 million. The underlying club EBDA less rent margin was stable at 38.3%. Total club operating costs related to rents, personnel and other club costs increased to €750 million. mainly due to our growing club network and cost inflation partly mitigated by decreasing energy prices. Bad debt write-offs remain broadly stable as percentage of revenue. Marketing costs, 61 million euros as a percentage of revenue. They came in at 5%, which is lower than the 5.4% of revenue we spent in 2023. Underlying EBITDA-less rent increased by 20% to €313 million compared with €261 million last year. The increase was supported by continued operating leverage as our attention to operational efficiencies at the head office are paying off. The underlying EBITDA-less rent is adjusted for exceptional items that came in at €12.3 million compared to €6.9 million in 2023. In addition to various relatively small amounts, exceptional items in 24 mainly related to one-off costs for the integration and re-organization of the RSG Spain acquisition, club closure costs, disputed claims and the rent costs of clubs that were not yet open. At our Capital Market Day November 23, we communicated our aim to reduce overhead costs excluding marketing to between 6% and 7% of revenue in the medium term. In 24, we made good progress towards achieving this goal by reducing overhead costs excluding marketing by 60 basis points to 7.2% of our revenue. Including marketing costs, overhead as a percentage of revenue decreased to 12.2% from 13.2% in 2023. For 2025, we expect overhead, including marketing, to come down to between 11.5% and 12%. In January 2024, Basic Fit launched Smart Refurbishment. Instead of fully replacing fitness equipment at the end of its useful life, Our fitness partner pays regular visits to the clubs after year six to replace parts, refurbish, and maintain the fitness equipment for a fixed yearly fee. Smart refurbishing extends the useful life of our fitness equipment from six and eight years to 12 years. This change had a positive impact on the depreciation of fitness equipment in 2024 for an amount of approximately 11 million euros. Our cash finance costs amounted to 46 million euros compared with 35 million euros in 2013. The year-on-year increase reflects higher average level of bank debt than in the previous years. The higher average level of bank debt results from a strong organic club growth and, of course, the acquisition of RSG Spain. This year, we expect a different picture, of course, with the moderation of the pace of club openings. The net result for the full year 24 was a profit of 8 million euros compared to a loss of 2.7 million euros in the previous year. On an underlying basis, we report a year-on-year increase in profits of 59% to 44 million from 27 million. You can find all the adjustments in the table. Let's go to the next slide on mature club developments. Our 990 clubs ended the full year with an average of 3,139 memberships. This is below the average of 3,283 we reported over the full year of 2023. In 2024 the 2021 club cohort was added in the mature club base. These clubs were impacted during their important in-growth periods by COVID-19 closures and restrictions and have an average membership count below the average of the group. The high uptake of the premium membership, although supportive to our average yield per member, has been having a negative effect on the average membership per club. In the medium term, we continue to expect the average club to have 3,250 memberships, as communicated at our Capital Markets Day in November 2023. Our mature clubs generated underlying EBITDA-less rent of €395 million. On an average club basis, this resulted in an underlying EBITDA of €399,000 compared with €390,000 in 2023. Like last year, mature club profitability improved in the second half of the year as a result of the further gradual increase of the average yield per member and growth in memberships. The average underlying club ABDA represents a return on invested capital of 34%, meeting our target of a ROIC of at least 30% at our mature clubs. Let's go to the next slide on Capex. Expansion Capex, including acquisitions and expansion of existing clubs, was €224 million compared to €289 million in 2023. The decrease is the result of the lower club's number of club openings, 181 in 2024 compared to 213 in 2023. The average capex per newly built club was 1.3 million euros in 2024 compared to 1.2 million euros in 2023. The increase compared to the prior year is due to modest cost inflation and fewer regional club openings in France than in 2023. As a reminder, regardless of the initial capex for a club, we only sign a lease contract for a new club when we expect to achieve a ROIC of at least 30% when a club becomes mature. Maintenance capex was €58,000 per club, an increase from €55,000 per club in the prior year. The increase reflects targeted investments in France to enhance club quality and meet evolving member needs. We expect similar average maintenance costs per club in 2025. Other CAPEX amounted to 19.3 million euros, an increase from 12.8 million euros in the prior year. Other CAPEX consists of investments in innovations and software development and also in sustainability-related investments. The increase in 2024 was mainly driven by sustainability-related investments, including installing solar panels at head offices and clubs, and replacing gas-driven systems for hot water and heating with fully electrical systems. Let's go to the next slide on financing. Net debts excluding lease liabilities was €938 million at year-end 2024 compared with €804 million at year-end 2023. The year-on-year increase was partially due to the continued strong club growth, which could not yet be financed from cash flow from operating activities, and partially due to the financing of the acquisition of ISG Spain. Including committed but undrawn facilities, we have available liquidity of 120 million euros at the end of 2024. In May 2024, we extended our existing term and revolving facilities agreement by one year to June, 2028. We have a remaining option, which allows in 2025 to extend these facilities by another year to June, 2029. In 2024, we repaid 80 million euros of the German Schulzein loan, bringing it to zero. The net debt to adjusted EBDA ratio was 2.6 times at year end 2024. unchanged from the previous year. As René already mentioned, our new strategy update will allow us to reach a leverage target of below two times by 2026. We have €304 million in senior unsecured comfortable bonds maturing in June 2028, with a put option for the bondholders in June 2026. We have been looking at several suitable refinancing options in case bondholders will exercise the good option. We are confident in the breadth of options available to us that will meet redemption requests while maintaining comfortable liquidity. Let's go to the final slide of our presentation, the outlook for 2025. I will conclude the presentation with our outlook for 2025. We expect further growth of our club network, memberships, revenue, and underlying EBDA, supported by positive membership growth trends, albeit that we are living in uncertain geopolitical times, making things more difficult to predict. What we do know is that we plan to open around 100 clubs this year, and also in 2026. The positive free cash flow after club expansion that we expect to generate We expect our leverage ratio to degrees to blow two times in 2026. And additionally, we will initiate a share by way of progress this year. With the new club openings plans, the percentage of our mature clubs in the total will increase from around 75% at the start of 2025 to close to 90% at the start of 2027. With fewer starting losses, and the maturation of our club network, this will have a positive impact on our profit margins. We do not give guidance on yields and memberships, but we do expect the average revenue per member to increase again this year on the back of the new membership structure. This will help increase revenue for 2025 to between 1,375,000,000 and 1,425,000,000 euros. René discussed this earlier. We have increased the number of 24-7 staff clubs in France this year to 333. And in addition, we are extending the opening hours in Spain and Germany. These actions will bring additional costs of 35 million euros a year. We expect memberships at the involved clubs to increase and mitigate these additional costs by 2026. For 2025 we expect underlying EBDA less rent to come in at between 330 million and 370 million euros. The past two years we have been reducing the overhead costs including marketing as a percentage of revenue and expect it to decrease further in 2025 to between 11.5% and 12%. All in all, I believe that we have presented a strong set of results and positive guidance today. And with these positive notes, I end my presentation. Operator, please open your questions.

Thank you, sir. If you would like to ask a question at this time, please press the star key followed by the digit 1 on your telephone keypad. Please ensure that the mute function on your telephone key is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question.

We will pause for just a moment to allow everyone to ask a question.

We will now take our first question from Chan Nate Hirani of Barclays. Your line is open. Please go ahead.

Hi there. Thanks for taking my questions. I've got a few, if I may. The first is, do you still expect EBITDA Permature Club to get back to that 460k mark? This step kind of seemed a bit light at 399k that you reported today, and that compares to 390k last year. So I think last year you had said you expected it to come back within two to three years. Do you still feel that way? The second question is, the club openings that you've reduced, Is that in any particular region that it's coming from? Is it mainly Germany or is it France? Any color in that would be helpful. And then the third is, can we expect more share buybacks announced this year and going forward in general? Is that kind of what the company is moving towards? You know, the 40 million announced today was obviously a step, but it was 3% of your current market cap and kind of well below what was suggested in the recent activist letter. So just wondering whether this is going to be your primary focus from now on, given you want to generate better free cash flow quicker.

Thank you.

Okay, let's start with the first question. So yes, we increased the mature clubs to 399. We do expect to reach the €460,000 EBITDA per club. It is not that we expect it for this year, but in the near term, we expect that to grow to the 460. In 2025, we will add the last COVID cohort with it. So for sure, we will not reach it this year, but we do expect in 26 or latest 27 to be able to reach the 460,000 per club. So that is the first question. Then the second question is the growth in which country. I think it will be a bit similar to what we saw in 2024, just on a lower number. So the growth countries are clearly France, Spain, and Germany, and that will also continue for this year and also next year. Then the last one, the share buyback. Yeah, we, of course, listen to all stakeholders. And then we as a company make a decision how we use our capital allocation, where we spend our money. I think we will not disclose already if we will do additional buybacks. We are a growth company, so we will want to continue growing. But we thought in this current situation, with everything that's happening in the world, interest rates and so on, that it was the right choice to slow down in club openings. And in that combination, we were able to also do this first buyback. So the answer is yes and no. It's not saying the first and only time, but it's also not our focus. Our focus will be as a company to grow, but we will use the... the slowdown in the next two years of two times 100 clubs. First of all, start the franchise, and second of all, the things that we have just mentioned.

Brilliant. That's clear. Thank you.

Thank you. We'll now take our next question from Robert Bors of ABNM. Ro, your line is open. Please go ahead.

Yes. Hi. Good afternoon, all. I have a few questions as well. First, I would like to come back to the share buyback. According to your long-term outlook for clubs, there's still plenty of growth to be captured. I can also imagine that there is a certain advantage of moving quickly in order to discourage new entrants. So my question is, can you explain why you have opted for, in itself, a modest share buyback program in combination with a severe cut in the new club openings instead of maybe scenario with a more modest cut in club openings, but without share buybacks. To me, you are now clearly signaling that you're stepping on the brakes in order to be able to do a share buyback program. So that's my first question. The second one, you spent last year 1.3 million on average for newly built clubs that were opened. Should we assume a similar amount for 2025 and possibly beyond? And then my last question, is it possible to elaborate a bit more on how you expect to meet a potential early redemption request for the convertible bonds, potentially, as you said, as for June next year? Those were my questions. Thank you.

To start with the share buyback, The severe cut in club openings was a decision we made without considering doing or not doing share buyback. So it was for us the right decision to actually improve the balance sheet and lower the debt but also have more time to focus on our franchise adventures. So that was the combination. And, of course, listening to all stakeholders. We got more and more discussions about buying back shares. So looking at the balance sheet and looking at the plans and the cash flow that we expect for the next two years, it was also a logical step to do... to buy back the first 40 million euros. So the combination was actually not buying back shares and lower growth. The combination was focusing on our franchise and stepping back on less club openings and improving the balance sheet a bit. The last questions. was the convertible bonds in the initial CAPEX. Oh, yeah, the initial CAPEX. So the initial CAPEX last year was 1.2 million. I think we stated in the press release or in this presentation that for this year we expect it to be 1.3 million. Why is it higher? So we are putting now, first of all, the index. So construction index was fairly high. but also we're adding more plate-loaded equipment, massage chairs, so we're actually optimizing the look and feel of the club a bit. So for that we are growing to the 1.3 million on average for a new club this year.

Yeah, and in addition to that, as to your last question relating to the convertible bond, Of course, there's a chance, certainly based on the current share value, that the bondholders will use their put option at the mid of 2026. And currently, we are in good dialogue with our banks, and we're feeling comfortable that we have several options in refinancing the convert. But it is on the agenda in the next few months.

And of course, with the less club openings, we can do one-third or 50% of the convertible. If they come, we can do it with the cash flow that we are making in 2025 and 2026. So it's not that we have to refinance the full 300. We can do one-third or 50% of our own cash flow that is extra available because of slowing down the club openings.

All right. Thank you. That's clear.

Thank you. We'll now move on to our next question from Lynn Hortikiti of KBC Securities. Please go ahead.

Yes. Good afternoon, everyone. I also have two questions. First of all, on the franchise model, I think it's delayed again. It's pushed more towards the end of 2025, and I was wondering if there was a specific reason for that.

Yes, well, the specific reason is it is a lot of work, and it takes more time than we expected. But we'd rather start with a good partner and the right contract in the right area than starting six months earlier. It's something we will do in the coming 10, 20 years. So starting off with the right partner in the right contract is for us crucially important, more important than starting six months or 12 months earlier.

Okay, that's clear. And then secondly is also on the convertible and on the share buyback. I can imagine that you want to do a share buyback to keep certain shareholders happy, but in conversations with your banks, do you get a lot of pushback doing the share buyback, given the leverage and the refining of the bond that is coming up?

No, we're not getting any pushback. I think the 2.6 times EBITDA that is going down next year to do below 2 is actually a number that not only we but also our banks are comfortable with.

Okay, clear. And maybe as a follow-up, do you have any guidance on the interest costs in 2025 and 2026?

Well, you're actually working for a bank, so maybe you can advise us. No, but I think we have no guidance on that.

No, but of course, we have now a coupon of 1.5%, so that might change if we refinance the conference.

But again, we will do it a combination of owned cash and bank loan.

Okay, thanks, Stu.

Thank you.

We'll now take our next question from Mark Zwartzenberg of ING. Your line is open.

Please go ahead. First question is on the 35 million investment in the 24-7 gyms. So now also Germany and Spain are included. Can you give a bit more detail? Are you going to have 24-7 in all clubs in Germany and Spain? And are these

and staffed or are they also staffed how would that work yeah so uh so over 35 million more than 90 percent of the cost will go to france because there is not allowed to go uh staffless in spain and germany it is the cost is limited because we just need spanish and german speaking people in the security room. And if we do 10 clubs or 300 clubs, it's similar cost. So that is a one-off. And if we keep adding clubs in Spain and Germany, there's no extra additional cost. The real cost is France with more than 90% of the 35 million to this 24-7. We have been looking at all of Spain because we want to have all members in Spain being able to work out at three in the morning, as an example. So we have looked at clubs that function in a cluster. So, yeah, I'm talking about France now. No, no, France. So more than 90%, sorry. So Spain and Germany is with the cameras. France is with people. So because of that, 90%, more than 90% of the 35 million will be invested in France because we need to have staff at night. And we have been looking at the different clusters So we do not have to do all clubs 24-7. So it's a cluster of, let's say, three. And then one of the three clubs is 24-7. And the other two clubs that are close by can use that club if they want to work out in the middle of the night. So for that, with the 333 clubs, we cover most of France. Maybe if we add another 100, 200 clubs in the near future, we'll add a few more. But I think with this, we are fine. We can have everybody who really wants to work out at night work out at night. And I think this will help us in the future, not this year. So the cost is first, but we think in time we will be able to add more members on those 24-7 clubs. So it's a long-term investment. Another thing, Mark, is... We're not sure if it will help the length of stay, but we think the combination of the servers to be able to work 24-7 in a cluster is crucially important.

Yeah, it's more a bit maybe the cost number to it. If you've defined by the 333 clubs, it comes... 100,000 club. 100,000 club. So, yeah, 100,000 club, that is a lot. So how can you explain that? Because how many more members do you need? I can make a calculation, but I think it's more than 15 to 20 per month.

Correct, correct. So that's why we lose money on it. So this year we will for sure lose money on it, and maybe the beginning of next year also. But we think in time we will... improve the member base with it. But yeah, it's the 100,000 euros. So that means you need around 350 extra members. So it will take some time to reach that. And you cannot really pinpoint it saying, okay, because of that, we have more members now. But we do know that our customers in the Benelux really appreciate it. So for us, this is a positive effect. And if you compare our length of stay, so when we IPO'd, it was 16 months. It's now over 23 months length of stay. If you compare that to other companies, that is a high number. And we think it's a combination of all the things that we're doing. So, yeah, we think in time it is the right investment. It's the right investment now, and we think in time we will make the return.

Yeah, well, you need to make the 30% ROKI also, so you need 30% more than the 350, so you're basically talking about 500 more members per gym. That's quite a lot to have some people in the night working out, because you need to make a return on it. Yeah, that's true.

Again, we do not expect to make any return this year, and also probably not beginning of next year, but in time we do expect that. Okay.

Then maybe on the membership in growth. So if you look to Q4, I see January, February looks good. But if you look to Q4, it's half of what it was the year before. I know there were more promotions in 2023. But I also recall the Q3 call that just said October is even ahead of the trend that we saw last year. So apparently November, December must have been pretty ugly. Is that the correct read across from Q4? What I've seen, and from what you said, that there was maybe high churn. Is there something that went wrong in November, December to explain the Q4 number?

Yeah, no, I think I'm sure you can remember that in 2023, we had extra marketing investment in Q4. So if you compare them with Q4 2024, it is lower because we did not do the investment. which you can also see in the percentage of marketing that we spent, so that is lower. And we did spend that money in the first quarter this year, and you do see that that helps and makes a difference. We increased in the first two months of this year, we increased the net growth huge. So, yes, it is... For us, really, it doesn't matter if somebody is joining in the end of December or beginning of December or first of January. So overall, there's no, for us, not a big difference. So we did it in 23, November, December. Big marketing push and a great sales month. And for this year, for 24, we did not. And we spent that money in January, February. And we saw a big increase in members in January, February.

And that may be on the net debt position. Basically, it remained flat at the end of the first half. But you would expect a bit of positive cash inflow in the second half. What explains that the cash flow is making that kind of seasonal pattern in the second half of this year?

Well, the biggest point is the working capital. I think by far the biggest point is working capital. So we opened most of the clubs, not in December, what we did the year before, And then you can pay it in January. We opened most of the clubs September, October, so we all had to pay those clubs in 2024. While the year before, so it's working capital. Of course, we also have some higher maintenance. We also have some higher maintenance costs at 3,000 a club. And we have some higher expansion, especially the reorganization of RG Group. So it's a combination of a lot of things. But the biggest part is working capital. So clubs that we paid at the end of the year because they were opened in, say, September or October, while in other years they were opened in, let's say, December.

Then on the franchise model, you didn't mention anything in the press release, I think. Is there a reason not to mention it? About what? The franchise models. Is it still expected that we get an update somewhere in the second half after the summer, all that? Or has anything changed in the plans?

Yes, definitely. So as we communicate, we want to be able to really announce not only which continent and which... But we also want to open a club. So we are working hard currently on... or finalizing things, then it also takes time to find the clubs and to build the clubs. And once we are ready to open clubs, that is the moment that we will communicate where and when we will be opening. So we do have really big plans about a franchise, and we are really enthusiastic about rolling it out big.

May I ask Christian a final one, maybe from Maurice? Maybe one. You mentioned that you want to pay one-third of the 300 million, let's say 100 million in cash for the convertible next year. But you do a share buyback of 40 million this year. You have a little bit of free cash flow. But next year, you probably will open the clubs at the beginning of the year. So the first half normally is not a cash flow half. So how would you then all of a sudden make 100 million of free cash flow in the first half of next year?

Yeah. Very good question, Mark. Of course, we calculated that with the increase, first of all, the effect of our new membership mix, which gives us a positive effect on our yield, the growth that we expect in new memberships, would give us enough free cash flow to do both. So both deleverage and also, albeit limited, a 40 million share buyback program.

If you look at it, Mark, I think what is important is that in 2026, you will have only like 10, 11% of your clubs being immature. So that will be a really big change in cash flow. So for that, the way we calculate it, we can do one-third or 50% of the convertible by the cash flow that is available. Okay. All right. Thanks very much. Thank you.

Thank you. We'll now move on to our next question from Chris Kepes of DeGroote Speed. Your line is open. Please go ahead.

Yes. Good afternoon. Can you hear me? Yes. Okay, perfect. Two questions still from my side. First one, coming back to the French market with indeed the bulk of the 35 million additional costs linked to the opening. To what extent is there any possibility that you could, let's say, lobby for a change in the law because the flexibility in France, of course, is not comparable to, let's say, the Benelux, for example. But is there any hope on that side? And then second question, looking at the openings in 2024, Spain was already close to the French number of openings. Could you share with us how the situation in France is actually going right now? And would there be an optionality that the Spanish market would grow faster number of openings in France in this year? Thank you.

Yeah, I think... With the frame clubs unstaffed, yeah, there's always hope. And we are already for years lobbying. So it's not that we are not trying that. But it clearly takes time. I think eventually one day it would be very logical to see more and more things staffless from supermarkets to a lot of things are staffless with cameras. So we have built a system. We invest, yeah. a lot of money to make that super safe. So once the French government is ready for that, and I'm sure in time it will, then we're also ready for it. But I don't see it happen in the near future, to be honest. But, yeah, hope is always there. Then if you look at the French clubs, we have, I would say, end of the year, we will pass the 900 clubs in France, top of my head. So meaning the biggest growth is out of France. So yes, in time, and maybe not this, and for sure not this year, and maybe also not next year. But the years after, I would say that the Spanish opening will be higher than the French opening is.

Correct. Okay, very clear. Thank you.

Thank you. Once again, as a reminder, please press star one to ask a question. Thank you. We will now move on to our next question from Natasha Brilliant of UBS. Your line is open, please go ahead.

Thank you very much for taking my questions. My first one is around the target of 100 clubs opening this year and next year. Should we assume that is just organic or is M&A still an option for some of those clubs? The second question is on the buyback. Can you confirm when you will start that? You've said 2025, but should we assume that that starts pretty soon? And then my last question is just coming back on the convertible bond and potential refinancing. Are you just considering the debt market at the moment, or could you consider equity markets as well? Thank you.

Yes, so the 100 clubs is without M&A. So the 100 clubs is new openings. The buyback is something we will start fairly soon, but we will take a maximum of 12 months. But we will not wait till the end of the year, so we will start pretty soon on that. And for the convertible, are you considering all options?

Okay, and just one follow-up also on the franchise model. Could we see any monetization of that in 2025? Or is the message this is more of a 2026 story now?

I would say that 2025 is definitely reachable, yes. Okay, thank you. What do you mean monetizing? Oh, health of labor. Oh, no, I would say that will be in 2026 or 2027 even. Okay.

Okay, so assume no revenues from the franchise model until 2026 or even 2027.

Yeah, you will see revenue, but no results. Okay, thank you. So maybe negative results, limited, but... Okay.

Thank you. We'll now take a follow-up question from Mark Zuttenberg of ING. Please go ahead.

Mark, do you mind to check on your mute button, please?

We can't hear you, Mark. Yeah, there I am, my mic switched off. Yeah, sorry, one quick follow-up. Now that we closed 2024, can you share with us the return on invested capitals on the Roki for a mature French club, just to get a feel for where we are and what we can expect going forward in the mix?

Well, I don't know, top of my head, so Richard will come back on you what that is. All right. All good. Thanks.

Thank you. We have reached the end of today's conference call. I would like to hand over to Richard Picker for any closing remarks. Please go ahead, sir.

Yes, thank you. And thank you, everyone, for dialing in today. And if there's any follow-up questions, you know where to find us. I'm happy to continue the conversation. And with this, I would like to close the call. Thank you all.

Thank you this concludes today's call. Thank you for your participation. You may now disconnect.