Slide 1: Q1 2022 Interim Report January-March 2022
QI 2022 INTERIM REPORT JANUARY-MARCH 2022 CEO SONDRE GRAVIR CFO CECILIE ELDE
Slide 2: Closing the pandemic chapter
CLOSING THE PANDEMIC CHAPTER: INCURRED SIGNIFICANT FINANCIAL LOSSES RECOVERED MEMBER BASE AND IMPROVED MEMBER SATISFACTION OPERATIONAL LEARNINGS AND IMPROVEMENTS A DIGITAL LEAP, SUPPORTING AND SUPPLEMENTING THE PHYSICAL CLUB EXPERIENCE 35 NEW CLUBS IN THE NETWORK LOOKING AHEAD, WITH AMBITIOUS PLANS
Slide 3: Club and member footprint across the Nordics
115 clubs and 310 000 members (16%2) 90 clubs and 231 000 members (12%2) 2 32 clubs and 64 000 members (9%2) 30 clubs and 80 000 members (22%2) 4 3 1 5 10 24 67 Greater Oslo 11 Greater Helsinki 5 72 11 4 Greater Stockholm 11 2 1 4 30 Greater Copenhagen 1) Measured by 2021 revenues based on figures f
Slide 4: Covid restrictions status by country
• Currently all of the 115 clubs are open and operating • Currently all of the 30 clubs are open and operating without restrictions without restrictions • Group training was closed until mid-January, but • Corona pass requirement was removed in early opened with maximum 20 participants until early F
Slide 5: Member base development in the quarter
• Restrictions and closed clubs in the beginning of the quarter resulted in significantly lower January sales than normal • Net growth in Q1 2022 mostly delivered in February and March, with higher sales than comparable months in 2019 1) Excl. 9 DK clubs sold in Q2 2020 2) Excl. acquisitions 5
Slide 6: Visit level impacted by covid restrictions
• The visit level in January was negatively impacted by covid restrictions, including imposed club closures in Finland • When restrictions were removed in February and society opened up, visits per paying member grew significantly • Somewhat lower than normal visits to group training classes, but th
Slide 7: Strong position coming out of covid in a growing market
• Strong position coming out of covid in a growing market Acceleration of • Member growth to be Membership yield growth club roll out accelerated through: through increased pricing • Digital tools improving capacity Existing clubs: in existing clubs with high Continued member base Personal training
Slide 8: Maturing and growing market for digital training
• Maturing and growing market for digital training, accelerated by covid-19 • Successful and inspiring track record from international players within digital home training • Potential to target people less likely to become SATS members, e.g.: those saying they don’t have time to workout or people th
Slide 9: Accelerated registration of new Mentra users
• Accelerated registration of new users as all SATS members recently have received 3-month free access to Mentra by SATS in a limited offer 1) Not equal to paying members. Registered Mentra by SATS users are not included in SATS member base 9
Slide 10: Mentra by SATS replaces SATS Online Training
• Replacing SATS Online Training product with Mentra by SATS and significantly improving the user experience • From April, Mentra by SATS is available in all four Nordic markets, with the entire digital offering • Rflex will also soon be available for purchase in Finland and Denmark 10
Slide 11: Equity raise and fragmented Nordic market
• Completed an equity raise in February 2022, establishing a financial platform that enables us to execute on opportunities in an interesting and fragmented market when they arise • The net proceeds will predominately be used to ensure sufficient strategic flexibility for the company to act on poten
Slide 12: New clubs, acquisitions and relocations in 2021-2022
Greenfields: Acquisitions: • HiYoga Aker Brygge • Fresh Fitness Ås • Fresh Fitness Lindeberg • Fresh Fitness Kalbakken • SATS Slemmestad • Fresh Fitness Sinsen • SATS Hinna • Fresh Fitness Romsås • SATS Ursvik Entré • Fresh Fitness Haugerud • SATS Häggvik • Fresh Fitness Lier • SATS Arninge • SATS I
Slide 13: Signed new clubs and acquisitions
Greenfields: Acquisitions: • SATS Kolbotn Torg • Fresh Fitness Rona1 • SATS Oasen • Fresh Fitness Vågsbygd Lumber1 • SATS Triaden • Fresh Fitness Vågsbygd Kjos1 • SATS Limhamn • Fresh Fitness Søgne1 • SATS Lidingö Centrum • Fresh Fitness Lyngdal1 • SATS Nacka Forum • Fresh Fitness Grimstad1 • SATS K
Slide 14: Benefits of acquiring established clubs
• Established member base enables quicker ramp-up to profitability • No capacity added to the market • No uncertainty related to lead-times and pricing of equipment and building materials • Clubs built based on SATS manual resulting in high standard, optimized product delivery and efficiency • No ri
Slide 15: Acquisitions of Gym Gruppen and Bare Trening Sør
• Through the acquisition of Gym Gruppen, SATS has filled key white spots Ila and Manglerud, as well as strengthened capacity in high-growth area Bekkestua • The acquisition closed on February 2022 • Fresh Fitness AS has acquired Bare Trening Sør AS, a chain of seven fitness clubs in southern Norway
Slide 16: Historical acquisitions at 4-6x EBITDA
Post-acquisition integration usually drives short Historical acquisitions completed at 4-6x EBITDA1, with term member churn. However, on average, net multiple reflecting the attractiveness of the acquisition target based on several criteria, such as: growth in member base of 8% after 12 months • Str
Slide 17: Financial Review
FINANCIAL REVIEW
Slide 18: Pre-pandemic development of the company
• Closing the pandemic chapter, it is valuable to remind about the pre- pandemic development of the company • Historically, the club growth has been moderate, and the member growth has primarily been driven by the existing club portfolio • Will continue to work on optimizing current clubs and increa
Slide 19: Club and member growth
• Accelerated club roll out during the pandemic, expanding the club network by • A total member base of 686 000 at the end of the quarter, flat down from Q1 29 new clubs, both through greenfields and acquisitions 2019, after having taking a hit during the pandemic • Five new clubs in the first quart
Slide 20: Membership price development
• Solid development in contractual membership price past three years driven by • The annual price adjustment, carried out with effect as of January 2022, lifted pricing strategy: membership prices in the base with 2.3% • Annual inflation adjustment for existing members • Expect to see a pick-up in p
Slide 21: PT, retail and treatments revenue growth
• PT growth through strong focus on getting new members to try PT (“PT Start”) and stimulating usage frequency through trigger-based communication to members Retail growth through improved assortment including launch of SATS Clothing and SATS Nutrition, and more targeted campaigns and communication
Slide 22: Revenue on par with 2019 and Q4 2021
• Revenue on par with comparable quarter in 2019, as well as Q4 2021 • Member base recovered compared to 2019 • Freeze level almost back to normal by levels the end of the quarter, following a • Continued positive yield development further improved by recent price temporary rise in December to Febru
Slide 23: Revenue by country
• Norway and Sweden with revenues above 2019 level • Finland affected by club closures in January, but is approaching 2019 level towards the end of the quarter • Danish market overall progressing slower than the other Nordic countries 23
Slide 24: Operating expenses development
Total operating expenses incl. Like-for-like club operating COGS and overhead expenses • +22 clubs compared to 2019 and • Increase in operating expenses ramp-up of Mentra by SATS main driven by lease cost, electricity prices drivers for increase in operating and extra marketing and campaign expenses
Slide 25: Adjusted EBITDA in the quarter
• Adj. EBITDA at NOK 30 million in the quarter on the back of: • Member base recovered compared to 2019, but temporary elevated freeze levels • Yield improvements over time through various initiatives • Successful cost initiatives over the past few year, keeping cost increases at a minimum • Increas
Slide 26: Looking ahead, profitability will improve
• Mature clubs have capacity to continue to grow beyond 2019-level in terms of average members per club • Yield expansion will continue to contribute to Looking ahead, profitability will improved profitability going forward improve by: • High demand for personal training and retail, with strong marg
Slide 27: Capex development and priorities
• Maintenance capex lower than normal during pandemic due to focus on cash preservation and less wear & tear on equipment • Will return to historical levels of maintenance capex in 2022 at around 5% of revenue • Upgrading 28 of our clubs in Stockholm, completing the major Nordic club portfolio reviv
Slide 28: Liquidity position
• Satisfactory liquidity with cash balance of NOK 403 million and undrawn RCF amount of NOK 613 million • Equity issue of 600m ensures sufficient strategic flexibility to be able to act on organic and in-organic growth opportunities in the short and medium term, and to ensure a more robust liquidity
Slide 29: Net debt development
• Net debt decrease in Q1 2022 largely due to proceeds from the equity raise • Historically shown deleveraging capability on back of EBITDA growth and high cash conversion • Increased short term flexibility with the addendum to the revolving credit facility agreement 29
Slide 30: Summary
SUMMARY
Slide 31: Summary and outlook
Long term member volume is expected to increase, driven by continued strong demand across the Nordics • Accelerating club growth in a market with great consolidation potential • Focusing on improving the utilization of existing clubs • Q2 seasonally weak, in line with pre-pandemic historic developme
Slide 32: Disclaimer
• 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 in
Slide 33: Appendix
APPENDIX
Slide 34: Norway
NORWAY OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES CED 482 169 Q12021 Q2 2021 Q3 2021 Q4 2021 QI 2022 12021 Q12022 12021 Q12022 OUNTRY EBITDA BEFORE IMPACT OF IFRS 16 (MNOK) 82 92 12021 @12022 34
Slide 35: Sweden
SWEDEN " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 0 zee al 483 503 347 206 207 506 w 78 15% me 269 51 : oo f& Q12021 @22021 Q32021 Q42021 QI
Slide 36: Finland
FINLAND " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) I MEMBERSHIP YIELD Hi MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES ,-@7 as 431 70 Q12021 Q22021 Q3 2021 Q4 2021 Q12022 12021 Q12022 Q12021 Q12022 12021 Q120
Slide 37: Denmark
DENMARK " ADJ. COUNTRY EBITDA BEFORE OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) IMPACT OF IFRS 16 (MNOK) I MEMBERSHIP YIELD I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES $50%) 80 429 99 n 73 78 = - 66 285 59 BD “13% 554 82 284 5 “12 -20 1 0; a Q12021 @22021 Q3
Slide 38: 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, depreciation EBITDA impact of IFRS 16 overhead and cost allocations and amortization Adjusted country EBITDA before Adjusted country EBITDA b
Slide 39: Key figures and APM reconciliation
Amounts in NOK million Q 1 2022 Q 1 2021 Number of clubs, EOP 267 254 Outgoing member base ('000s) 686 599 Average number of members per club 2 571 2 358 ARPM (NOK) 498 329 Yield (NOK) 381 194 Reported EBITDA (MNOK) 287 80 Adjusted EBITDA before impact of IFRS 16 (MNOK) 30 -165 Adjusted EBITDA befor
Slide 40: Reported vs excluding IFRS 16 impact
Re por te d C ha nge Exc l. I FRS 16 Amounts in NOK million Q 1 2022 I FRS 16 Q 1 2022 Ba la nc e she e t ite ms - I FRS 16 Property, plant and equipment 660 0 660 Right-of use assets 4 198 4 198 0 Deferred tax assets 210 73 137 Prepaid expenses and accrued income 239 -72 311 Tota l a sse ts 8 548 4
Slide 41: SATS
SATS