Slide 1: Q4 2019 Interim Report October-December 2019
Q4 2019 INTERIM REPORT OCTOBER - DECEMBER 2019 13 FEBRUARY 2020
Slide 2: Market positions and clubs across the Nordics
#1 position1 with 103 clubs and 299 000 members (+5%2) #1 position1 with 79 clubs and 230 000 members (+3%2) 2 #1 position1 with 28 clubs and 62 000 members (+2%2) #2 position1 with 38 clubs and 97 000 members 4 1 3 1 4 10 20 58 Greater Oslo 10 3 Greater Helsinki 5 62 6 4 Greater Stockholm 10 1 1 1
Slide 3: Club openings, divestments and relocations
• • • With its 770 sqm the smallest club in the Norwegian portfolio so far • Divestment of club without cluster connection • Testing the concept of smaller clubs without GX room, using our • Sold to Fitness1 clusters to offer a complementary range of clubs • • • Closed and merged with ELIXIA Itis, 5
Slide 4: Deep dive into the main revenue streams
DEEP DIVE INTO THE MAIN REVENUE STREAMS VOLUME DRIVEN BY MEMBER @ acrwanion : = SATSGROUP
Slide 5: 21% member growth in 2019
21% MEMBER GROWTH IN 2019 OUTGOING MEMBER BASE (000) be 3 1 h 590 _ | s » _— —1 Q42018 NORWAY SWEDEN FINLAND @42019 DENMARK 42019 EXCL. DK
Slide 6: Inactivity is the main driver of member churn
INACTIVITY IS THE MAIN DRIVER OF MEMBER CHURN \ emer REGULARLY EXERCISE REGULARLY /) [_} LOSEREGULARITY LEAVE |) STOP TRAINING SATS
Slide 7: +7% from 2018 +12% from 2018 +12% from 2018
+7% from 2018 +12% from 2018 +12% from 2018 7 (1) Excl. Denmark
Slide 8: Flexible pricing model and yield initiatives
• Flexible “pay for what you need” pricing model introduced in January 2017 • Several yield initiatives implemented throughout 2019 • Now on a positive yield development which we expect to continue 8
Slide 9: Other revenue development
• Positive development in other revenue in 2019 driven by retail and personal training • Growth in Q4 slowing down for our personal training business • Several actions to increase number of SATS PTs as the slowdown is driven by supply 9 (1) Calculated as other revenue in the period, divided by the a
Slide 10: Retail and product offerings
Basic training clothes range, with Comprehensive sports nutrition Launched the “Sats shop” partner Fresh food successfully good quality at an affordable price range incl. sports drinks, protein site in January, as a first step implemented at 15+ clubs in point shakes, bars, protein powders and towar
Slide 11: Treatment rooms in clubs
• Treatment rooms integrated in clubs • 1-2 therapists per treatment room when fully up and running • Full time employee model with salary more or less purely variable based on hours delivered (similar to PT model) – highly attractive model for therapists • Long-term experience in Sweden with 17 clu
Slide 12: Group training product implementation
• Made the first steps towards implementing SATS’ product offering and operating model • Educated ~250 group training instructors during 2019, representing approximately one third of the instructor pool • Introduced SATS’ products, including group training classes 12
Slide 13: Club upgrades in Copenhagen
• Significant club upgrades completed during 2019, with main focus on clubs in the Copenhagen cluster 20 • The club portfolio in Copenhagen brought up to the same level as the Oslo clubs and Stockholm clusters • Upgrades consist of size adjustments, change of gym layouts, introduction of SATS concep
Slide 14: Denmark turnaround
Implementing SATS operational routines and best practices in clubs and overhead functions Focus on making the organization more sales and result oriented Training program for club staff initiated in Q4 2019, with particular focus on sales The turnaround takes time, even more than expected, guiding t
Slide 15: Financial review
FINANCIAL REVIEW SATSGROUP
Slide 16: Revenue development
• Solid revenue improvement compared to last year driven by both member growth and improved ARPM • The underlying growth in other revenue in 2019 is strong, but slightly weaker in Q4 due to challenges recruiting enough qualified personal trainers • Strong development in retail revenue 16
Slide 17: EBITDA development
• Norway, Sweden and Finland show continued strong margin improvements as a result of operating leverage and the previously communicated reduction in marketing spend in the second half of the year • Reduced negative contribution from Denmark compared to Q3 • Due to different periodization of operati
Slide 18: Capital expenditures
• Maintenance capex1 229 MNOK (5.7% of revenues), mainly driven by club upgrades in Denmark and increased IT investments • Expansion capex of 96 MNOK for the full year, reflecting recent acquisitions and greenfields • Significant proportion of maintenance CAPEX in Q4 2019 IT related, including app d
Slide 19: Refinancing and leverage
• Refinanced all outstanding bank borrowings under a new revolving credit agreement in Q4 2019 • Maximum principal amount of 2 500 MNOK, of which 1 300 MNOK was drawn by end-Q4 • Creating financial flexibility 19 (1) Net debt divided by last twelve months adjusted EBITDA before impact of IFRS 16
Slide 20: Cash flow and cash conversion
• Cash conversion at 60%, slightly down from 65% in 2018 • Higher maintenance CAPEX in 2019 related to major upgrades in Denmark and increased IT investments is driving the operating cash flow temporarily down 20
Slide 21: Outlook and priorities for 2020
Keep strengthening cluster position through new club openings and M&A Continued volume growth, yield expansion and growth in other revenues • Revenue development as expected in the start of the year • Aim to intensify marketing in 2020, with the same frontloading as in 2019 Increased focus on digita
Slide 22: Q&A
dNOAISLVS Q&A
Slide 23: additional meaningful financial information that should be considered when assessing the Group’s ongoing performance.
This report includes forward-looking statements which are based on our current expectations and projections about future events. Statements herein, other than statements of historical facts, regarding future events or prospects, are forward-looking statements. All such statements are subject to inhe
Slide 24: Appendix
dNOAISLVS APPENDIX
Slide 25: Group revenues
GROUP REVENUES HISTORICALLY HIGH ARPM IN 2019 ARPM AND YIELD (NOK/MONTH) MM vietD MM OTHER YIELD Q4 2018 Q42019 2018 2019 ARPM AND YIELD EXCL. DENMARK (NOK/MONTH) MM veto Ml OTHER YIELD 503 Q4 2018 Q42019
Slide 26: Norway: members and ARPM
NORWAY MEMBERS AND ARPM OUTGOING MEMBER BASE (000) 5%) 04 2018 12019 22019 3 2019 04 2019 ARPM AND YIELD (NOK/MONTH) MM veto Ml OTHER YIELD $22 Q4 2018 Q42019
Slide 27: Norway: revenues and EBITDA
NORWAY REVENUES AND EBITDA TOTAL REVENUES (MNOK) ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 Hl MEMBERSHIP REVENUES 7%) Wl ox I OTHER REVENUES test — MARGIN 1340 445 473 106 90 “ : 24 2018 24 2019 2018 2019 24 2018 24 2019 2018 2019 27 SATSGROUP
Slide 28: Sweden: members and ARPM
MEMBERS AND ARPM OUTGOING MEMBER BASE (000) 43%, > 223 228 227 228 230 04 2018 12019 22019 3 2019 042019 ARPM AND YIELD (NOK/MONTH) MM veto OTHER YIELD f ' 493 504 466 482 . : : 593 566 Q4 2018 Q42019 2018 2019
Slide 29: Sweden: revenues and EBITDA
SWEDEN REVENUES AND EBITDA TOTAL REVENUES (MNOK) I MEMBERSHIP REVENUES C7 I OTHER REVENUES 1308 1225 282 264 p32 om 1026 328 346 76 270 Q4 2018 Q42019 2018 2019 ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 Wl ox — MARGIN Gad 6: > a | 7 28% 27% 76 363 8 94 Q4 2018 Q4 2019 2018 2019 Ps 3 SATSGROUP
Slide 30: Finland: members and ARPM
FINLAND MEMBERS AND ARPM qQratts \ See Q4 2018 Q12019 Q22019 Q3 2019 Q4 2019 ARPM AND YIELD (NOK/MONTH) MM veto Ml OTHER YIELD Q4 2018 Q42019
Slide 31: Finland: revenues and EBITDA
FINLAND REVENUES AND EBITDA TOTAL REVENUES (MNOK) ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 Hl MEMBERSHIP REVENUES G9) Wl ox Ill OTHER REVENUES a3 ~ MARGIN Le 315 7 12% ng a 34 [—G—, 268 82 n 9 EE a: mn | Q4 2018 Q42019 2018 2019 Q4 2018 Q4 2019 2018 2019 a SATSGROUP
Slide 32: Denmark: members and ARPM
MEMBERS AND ARPM *] OUTGOING MEMBER BASE (000) a.) 106 100 99 97 eee 0 04 2018 12019 22019 3 2019 042019 ARPM AND YIELD (NOK/MONTH) LT) f OTHER YIELD 433 423 Q4 2018 Q4 2019 2018 2019
Slide 33: Denmark: revenues and EBITDA
DENMARK REVENUES AND EBITDA TOTAL REVENUES (MNOK) ADJUSTED COUNTRY EBITDA BEFORE IMPACT OF IFRS 16 Hl MEMBERSHIP REVENUES Wl ox I OTHER REVENUES 504 Q4 2018 Q42019 2018 2019 Q4 2018 Q4 2019 2018 2019 SATSGROUP
Slide 34: Alternative performance measure definitions
Adjusted country EBITDA before Adjusted EBITDA before impact of IFRS 16 less allocation of Group Profit/(loss) before net financial items, income tax expense, EBITDA impact of IFRS 16 overhead and cost allocations depreciation and amortization Adjusted country EBITDA before Adjusted country EBITDA b
Slide 35: Key figures
Q4 2019 Q4 2018 2019 2018 Number of clubs, EOP 248 203 248 203 Outgoing member base ('000s) 687 569 687 569 Members per club 2 772 2 801 2 772 2 801 ARPM (NOK) 502 503 490 481 Yield (NOK) 394 386 390 379 Reported EBITDA (MNOK) 180 157 717 645 Adjusted EBITDA before impact of IFRS 16 (MNOK) 155 130 5
Slide 36: IFRS 16 impact on balance sheet and P&L
Reported Change Excl. IFRS 16 Reported Change Excl. IFRS 16 Amounts in NOK million FY 2019 IFRS 16 FY 2019 Q4 2019 IFRS 16 Q4 2019 Balance sheet items - IFRS 16 Property, plant and equipment 739 -5 744 739 -5 744 Right-of use asset 3 912 3 912 0 3 912 3 912 0 Deferred tax assets 192 82 110 192 82 11
Slide 37: SATSGROUP
SATSGROUP