Slide 1: Comeback – Q3 2020 Interim Report
COMEBACK Q3 2020 INTERIM REPORT SONDRE GRAVIR CECILIE ELDE IR: STINE.KLUND@SATS.NO MOBILE: +47 98 69 9259
Slide 2: Rapid comeback of members and visits
• We have seen a rapid comeback of members and visits after opening our clubs • We have proven that it is safe to work out at SATS, with no confirmed infection cases among members tracked back to our clubs • We have strong operational routines and tight cost control, resulting in a significant impro
Slide 3: Market positions in Oslo, Stockholm, Helsinki, Copenhagen
#1 position1 with 103 clubs and 292 000 members (-2%2) #1 position1 with 82 clubs and 226 000 members (-1%2) 2 #1 position1 with 30 clubs and 63 000 members (+1%2) #2 position1 with 30 clubs and 82 000 members (-17%2) 4 1 3 1 4 10 22 58 Greater Oslo 10 3 Greater Helsinki 5 65 6 4 Greater Stockholm 1
Slide 4: Visits are back to strong levels
— VISITS THIS YEAR, INDEXED OUR MEMBERS ARE GETTING HEALTHIER AND HAPPIER — —~xsusr VISITS ARE BACK TO STRONG LEVELS NORWAY SWEDEN 140 160 130 120 110 100 90 80 70 60 Pa 140 120 100 80 60 w2e 40 W26 W28 W30 W32 W34 W36 W38 W40 Ww42 waa FINLAND DENMARK (EXCL. NINE SOLD CLUBS) 160 140 120 140 rie ee W
Slide 5: Workouts per member and club visits
# of workouts / member, Share of active members in member base Gender distribution, Average age, club visits club visits at clubs and online 5
Slide 6: Member base, revenues and costs recovering
After adjusting for the sale of nine clubs Revenues climbing back towards last The new normal entails certain additional in Denmark, the member base is only 1% year, driven by yield initiatives cost-driving measures, but this is behind Q3 2019 and has grown with compensated for through other cost 26
Slide 7: How did we get there?
HOW DID WE GET THERE? SATS
Slide 8: Dual focus during the lock-down
Temporarily closed all clubs Dual focus during the lock-down: Reopened all clubs in Sweden. Limited measures from the government created a situation differing from the other Nordic countries Short term crisis Long term planning for Reopened all clubs in Finland, after the restrictions in the main He
Slide 9: Key adjustments
Key adjustments: • Improved hygiene protocols, adapted to the infection control rules • Increased staffing to handle distance between members • Members guided in a friendly manner • Reduced capacity per GX class, compensated by increased number of classes 9
Slide 10: Country restrictions related to fitness clubs
• No specific national restrictions related to • No specific restrictions related to fitness clubs fitness clubs, but face masks are mandatory in • Local recommendations in certain areas to public spaces in general when it is not possible avoid fitness clubs, swimming pools, libraries to keep 1 mete
Slide 11: Operational routines and staffing for clubs
• Role descriptions for Club • Overview of tasks executed in • Principles for staffing • Way of working with tasks and manager and Assistant club clubs hours for operations • Model for allocating hours to manager roles • Operative tasks clubs • Planning • Cleaning and maintenance • Backbone schedule
Slide 12: Studies show low COVID-19 risk in fitness clubs
Study by Clinical Effectiveness Research team at the University of Oslo, in collaboration with People who went to a gym were not more likely to get Oslo University Hospital, Virke Trening, SATS, infected, or sick, than people who didn’t EVO and STOLT Preliminary data reveals extremely low levels of
Slide 13: Infection tracking in Norway
• Access control secures complete overview of visits at any time 4.2 million visits in Norway since reopening • Deviation reporting of: • Infection cases 145 visits from transmitted members • Employees in quarantine • Access restrictions at clubs • Always send SMS to members who have visited a SATS
Slide 14: Successful marketing campaign and member activation
SUCCESSFUL MARKETING CAMPAIGN AND MEMBER ACTIVATION ACTIVITIES Q3 CAMPAIGN PRODUCT ENGAGEMENT OMEGACKTILBUD & J WANTED! Ke & MORE FACES OF SATS * INSPIRATOR ROLE MODEL
Slide 15: Successfully launched in August
SUCCESSFULLY LAUNCHED IN AUGUST
Slide 16: Affordable recycled clothing collection
• Affordable clothes (lower price points than branded suppliers) with good quality and commercial design • The majority of the clothes are made of 100% recycled materials • To be launched in November in Sweden, Norway and Denmark • Own SATS models will front the collection and be visualized on all t
Slide 17: New app features and usage
• New club overview showing clubs nearby, current capacity and opening hours App usage, 30 days rolling • New discover screen with news, suggested classes and important information Spike driven by communication about app relaunch • New push message services reminding members to clean and be responsi
Slide 18: Online training sessions per week
‘000 of sessions started per week Average: +85% 18
Slide 19: All workouts on all platforms
• All workouts are available on all SATS platforms • A 360 degree product, so each member chose where and when to do the workout • Members will know what to train before entering the GX room, reducing the barrier to attend 19
Slide 20: Visits more evenly distributed
• Visits more evenly distributed throughout the day, easing the pressure in peak hours • Visits to some extent distributed from the busiest city clubs to more suburban clubs • “Infection control guard” limits the number of members at each club and in each zone • Introduced access restriction by the
Slide 21: What will the future bring?
WHAT WILL THE FUTURE BRING? SATS
Slide 22: Digital fitness landscape growing rapidly
• The digital fitness landscape is growing rapidly, and new players have entered the industry, both globally and locally • The growth of digital fitness is fueled by several underlying drivers: • Fit-tech devices becoming widely adopted • Growth of at-home workouts, boosted by COVID-19 • New players
Slide 23: SATS digital offering
• Library of +120 on- SATS online Training demand classes and training programs • We are continuing our shift in strategy started in 2019 from external consultants to internal developers Webinars and • Providing expert advice audios on selected topics Online PT, physio • Bringing our 1:1 • Per 1 Sep
Slide 24: Leading platform for digital training in the Nordics
• Our digital traffic is increasing rapidly, driven by increases in web and especially app usage • Online Training usage has stabilized at a higher level compared to pre- COVID-19 (+85% higher on average than Q3 2019) Our ambition: The leading platform for digital • This digital activity amongst our
Slide 25: COVID-19 further reduced population activity
As if that were not enough, the COVID-19 pandemic came and further reduced the activity level in the population: Share of population spending > 2.5 hours on health enhancing activity per week Rapid decrease in step counts worldwide, with some regions dropping nearly 50%2 In Norway, one out of five r
Slide 26: Benefits of physical activity
• Physical activity improves both stress management, learning, memory, creativity, concentration and intelligence1 • Regular physical activity leads to a better quality of life due to increased mental well-being and better general physical health2 • A physically active 30-year old can get five years
Slide 27: SATS works to reduce physical inactivity
SATS WORKS EVERY DAY TO REDUCE PHYSICAL INACTIVITY AND IMPROVE PUBLIC HEALTH - MAKING PEOPLE HEALTHIER AND HAPPIER BOTH THROUGH THE PRODUCT; THE COMPREHENSIVE PHYSICAL CLUB EXPERIENCE, COMPLIMENTED BY THE DIGITAL UNIVERSE... VISION: WE MAKE PEOPLE HEALTHIER AND HAPPIER GOOD HEALTH AND WELL-BEING SAT
Slide 28: 30 days activation of inactive members
30 days activation: Member Day 14 Day 15 No No No No workout Day 19 workout Day 23 workout Day 27 workout Day 32 Pushing inactive members has not Pack your See you at been to Motivational Where are What is your Don’t let the extensively through email / the gym in gym bag for the gym talk you? goal?
Slide 29: Societal value estimated by Oslo Economics
~ ~ .(1) Estimated by Oslo Economics. Please see appendix for methodology. 29
Slide 30: Financial review
FINANCIAL REVIEW SATS
Slide 31: Member base development
• After adjusting for the club closure and sale of nine clubs in Denmark, the member base grew with 4% in Q3, versus a flat development in Q3 2019 • Successful campaign in August and September resulted in record high Q3 sales, proving out ability to recover • The record high net growth in member bas
Slide 32: ARPM and yield
• Flat currency adjusted yield y/y as previous yield initiatives are compensating • Underlying price increasing, driven by price adjustments during the past year for short term effect of Q3 campaigns • Tactical sales campaigns from June to September will affect reported ARPM the next year, as the tw
Slide 33: Personal training and retail revenue
• Revenue from personal training back to pre-COVID-19 levels, with a slight decline in number of PTs more than compensated by increased activity per PT • PT and retail margins of 35-40%, in line with pre-COVID-19 levels 33
Slide 34: Revenue by country
• Revenue increase in Q3 driven by weakening of NOK relative to SEK, DKK and EUR • Revenue decrease in Denmark mainly due to divestment of nine clubs in Jylland and Fyn in the quarter 34
Slide 35: Adjusted EBITDA
• Adj. EBITDA recovering after the lock-down, but is lower than in Q3 2019 as: • Marketing costs increased as a part of the strategic decision to win back the lost sales from the closure period • Temporarily increased frozen share of members 35
Slide 36: Campaigns affect reported ARPM short term
Campaigns will affect reported ARPM in the short term, but contractual membership price is increasing Once the member base is back to pre- COVID-19 levels, we expect to return to Member base climbing back towards pre-COVID-19 levels the healthy financials proven prior to the pandemic The new normal
Slide 37: Capital expenditures
• Full year expectations for maintenance capex remains in line with our previous communication of keeping a stable level at around 5% of revenues (1) Maintenance capex consists of IT capex and club portfolio capex 37
Slide 38: Club openings, closures and divestments
• • • Tapiola (Q1) • The nine clubs Nyborgvej, Vogterhus, Svendborg, Broen, • Ursvik Entré (Q1) Strandbytov, Bispensgade, Frisko, Risskov and Viby divested to • Iso Omena (Q3) Fitness 1, enabling SATS to continue focusing on the Greater • Lyngby – Kanalvej (Q3) Copenhagen area • Transaction closed o
Slide 39: Acquisition of Fresh Fitness clubs
• Well run clubs, fitting into Fresh Fitness’ club portfolio and filling out our Greater Oslo cluster with: • Romsås • Kalbakken • Haugerud • Sinsen • Ås • Lier • Transaction closed on 2 November • Key figures: • 2019 revenues ~ NOK 30 million • 2019 EBITDA: ~ NOK 11 million • Members: ~ 9 000 SATS
Slide 40: Growth through acquisitions and greenfields
• Average EV/EBITDA multiple for the past fill-in acquisitions in Oslo and Stockholm: • Will continue to grow through a combination of acquisitions and greenfields • Aiming to fill out the existing clusters • Assessing potential new clusters in smaller cities in the Nordics 40
Slide 41: Cash flow and cash conversion
• Frontloading of maintenance capex in 2020 leads to a step-up in cash conversion in Q3 2020 • Structural negative working capital in Q3 outweighed by reduction in payroll taxes and duties in Norway, as well as distributed compensation for fixed costs during the closure period in Q1 and Q2 • Suffici
Slide 42: Leverage and credit facility
• Leverage ratio temporarily elevated due to effects of lock-down on LTM adj. EBITDA • Amendment to the revolving credit facility in place, waiving the original financial covenants of <4.25x adj. LTM EBITDA until September 2021 and <4.00x thereafter (1) Net debt divided by last twelve months adjuste
Slide 43: Outlook and summary
• The record high net growth in member base in Q3 is not expected to continue in Q4 given the COVID-19 development and uncertainty around potential new governmental restrictions – but we have proven that we are able to quickly recover even after a long club closure • Our number one priority is to en
Slide 44: 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 45: Appendix
APPENDIX SATS
Slide 46: Health gains from physical activity methodology
Health gains from physical activity come both in the form of Key assumptions: increased health-related quality of life, increased life expectancy and • A proportion of SATS’ new members change their lifestyle due to reduced absence from work. The basis is the research showing that SATS and go from b
Slide 47: Norway
NORWAY " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MINOK) Wl veto I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 430 436 23% ——$—__2% 100 91 Q5 2019 Q4 2019 Q1 2020 Q2 2020 @3 2020 @3 2019 Q3 2020 @3 2019 Q3 20
Slide 48: Sweden
SWEDEN " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MINOK) WM vietD Tl MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 52% a, “0% 492 330 5% 506 25% CURR. ADJ.) 97 81 Q5 2019 Q4 2019 Q1 2020 Q2 2020 @3 2020 @3 2019
Slide 49: Finland
FINLAND " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MINOK) Wl veto I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES I GOVERNMENTAL SUPPORTING PACKAGE 63 62. 62 60 od. ay 478 438 12% 18% (+1% CURR. ADJ.) 88 % a a
Slide 50: Denmark
DENMARK " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MINOK) Wl veto I MEMBERSHIP REVENUES [OTHER YIELD Il OTHER REVENUES 99 SB 426 97 9 407 82 21 1o1 2 100 88 Q5 2019 Q4 2019 QI 2020 @2 2020 @3 2020 @3 2019 Q3 2020 @3
Slide 51: Alternative performance measures 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 52: Key figures
Amounts in NOK million Q 3 2020 Q 3 2019 Number of clubs, EOP 245 248 Outgoing member base ('000s) 662 687 Average number of members per club 2 703 2 772 ARPM (NOK) 490 455 Yield (NOK) 397 377 Reported EBITDA (MNOK) 344 348 Adjusted EBITDA before impact of IFRS 16 (MNOK) 99 129 Adjusted EBITDA befor
Slide 53: IFRS 16 impact on Q3 2020
Reported Change Excl. I FRS 16 Amounts in NOK million Q 3 2020 I FRS 16 Q 3 2020 Balance sheet items - I FRS 16 Property, plant and equipment 772 0 772 Right-of use assets 4 195 4 195 0 Deferred tax assets 150 85 65 Prepaid expenses and accrued income 313 -70 383 Total assets 8 900 4 210 4 690 Equit
Slide 54: SATS
SATS