Sats Asa · OSL:SATS
Sats Asa — Q1 2020 Earnings Presentation
44 slides from Sats Asa's earnings presentation, May 2020
Slide 1: Q1 2020 Interim Report January-March 2020
Q1 2020 INTERIM REPORT JANUARY —- MARCH 2020
Slide 2: Healthier and happier
HEALTHIER AN
Slide 3: Market positions in Oslo, Helsinki, Stockholm and Copenhagen
#1 position1 with 103 clubs and 301 000 members (-1%2) #1 position1 with 82 clubs and 232 000 members (+0%2) 2 #1 position1 with 29 clubs and 63 000 members (+1%2) #2 position1 with 38 clubs and 99 000 members (-6%2) 4 1 3 1 4 10 21 58 Greater Oslo 10 3 Greater Helsinki 5 65 6 4 Greater Stockholm 10
Slide 4: Update on COVID-19 and the closure of clubs
UPDATE ON COVID-19 AND THE CLOSURE OF CLUBS SATSGROUP
Slide 5: Timeline of the COVID-19 closure of clubs
• SATS decided on March 12 to temporarily close down all clubs in the Nordics to contribute to limit the contagion of COVID-19, governmental shutdown of the industry followed later in Norway and Denmark • Close dialogue with the authorities in the wake of the closure, following their advices on how
Slide 6: Actions taken during the closure
• Continuously update financial forecasts • Develop scenarios for reopening • Close dialogue with financial institutions • Work with government support packages • Negotiate with suppliers and lessors • Optimize capex plan in light of new situation • Re-evaluate CAPEX plan • Keep employees informed a
Slide 7: Expected reopening after ~3 months
Expected reopening after • Preparing for reopening on 15 June ~3 months • Reopened after initial 14 day period Clubs reopened • Limited measures from government after 14 days has created a situation that differs from other Nordic countries • No reopening date declared, but Indications of August indi
Slide 8: Close dialogue with members during closure
• Get access to the full SATS digital universe Kept a close dialogue with members during the closure and pay only for this access until we reopen period Aiming to provide members with a choice of how to be compensated while keeping as many members as • Continue paying the regular membership fee, pos
Slide 9: One home training universe
• Includes daily recommended online training One «home training» universe classes and training programs • ~10 classes per day, avg. of Live streaming of GX classes ~1 100 unique viewers per class Online PT, physio and • Bringing our 1:1 services to a digital nutrition advice platform Online training
Slide 10: Moved 1:1 services online
MOVED 1:1 SERVICES ONLINE TO CONTINUE OFFERING PERSONAL GUIDANCE MEMBERS CAN CHOOSE BETWEEN GETTING A TRAINING PLAN, A CONSULTATION OR A BUNDLE DIGITAL CONSULTATIONS WITH PHYSIO THERAPISTS THROUGH THE CONFRERE VIDEO SYSTEM PT ONLINE ONLINE PHYSIOTHERAPY ONLINE NUTRITIONIST - Ls a’. ie promine ONLINE
Slide 11: Expanded partnerships in the SATS shop
EXPANDED PARTNERSHIPS IN THE SATS SHOP Lifekeys Online psykolog * KRY @ Hejdoktor.dk PARTNERING UP WITH RUNNING OFFERS AND CAMPAIGNS SESconS USING EQUIFRENT FGom PSYCHOLOGISTS AND DOCTOR IN THE SHOP THE SHOP SERVICES TO COMPLEMENT MENTAL HEALTH FOCUS SATSGROUP
Slide 12: Launched webinars with experts
LAUNCHED WEBINARS WHERE EXPERTS PROVIDE THEIR ADVICE ON NUTRITION, PREHAB AND TRAINING TREN HJEMME MED ONLINE TRAINING SATS
Slide 13: 10 steps to better mental health
• “10 steps to better mental health during difficult times” with 10 steps to better psychologist Carina Carl mental health during difficult times • 10 episodes available at our webpage (e.g. learn to control your stress, connection and loneliness, the joy of movement) • “How to train your Brain in c
Slide 14: Access to online training classes
• Access to 120 online training classes • Up to 10 live workouts per day • 16 audio workouts ranging from running to meditation • 2-7 minute office workouts • 12 steps to better mental health • More than 100 training plans 14
Slide 15: Almost 350 000 participants in live classes
‘000 of sessions started 1. Tabata Core #7 2. 20 Minute HIIT #1 3. Crosstraining #6 4. Tabata Core #6 5. ABSolution #1 6. Strong & Flexible #1 7. Bootylicious #1 8. Zumba: Rush • Over 320 sessions 9. FLX #1 • Almost 350 000 participants 10. Mini-band Strength #1 • Average participants per session of
Slide 16: Operations aligned with government recommendations
We are working continuously to make This means that we have adapted many aspects of our operations to a new reality to sure that our operations are in line allow our members to feel safe while exercising with government recommendations • Extra cleaning in clubs (tasks and frequency) • Limiting numbe
Slide 17: Adapting operations to reduce infection risk
Adapting the operations in order to reduce risk of infection 1. Estimating how many members are in the club and guiding members to less crowded clubs nearby 2. Enforcing distance rules among members in the club 3. Cardio equipment has been moved further apart or partially put out of use to ensure a
Slide 18: Making it easier to find clubs with available capacity
MAKING IT EASIER TO FIND CLUBS WITH AVAILABLE CAPACITY ONLINE APP SATSGROUP
Slide 19: Moved core products outdoors
Moved some of the core products outdoors to reduce risk of infection: • Outdoor GX ~ • • Outdoor Bootcamps Outdoor PT ~ ~ 19
Slide 20: Share of SATS clubs by size
Share of SATS clubs by size < > 20
Slide 21: Share of clubs by estimated visits redirected
Share of clubs by share of estimated visits needed to be redirected Estimate based on 2m radius per member (~14 sqm) and gym floor visits in May 2020 Estimated visits Estimated capacity > Typically these clubs exceed capacity during peak hours while they have spare capacity at other times 06:00:00 1
Slide 22: Safe reopening proven in Sweden and Finland
Percent of visits comparable week LY by weeks since reopening Sweden Finland 76% 77% 76% 73% • Ability to reopen in a safe and responsible way proven in Sweden and Finland 53% • Visits in Sweden have gradually increased back to 51% 51% a level of 75-80% compared to the same period 43% last year – wi
Slide 23: Financial review
FINANCIAL REVIEW SATSGROUP
Slide 24: Member base of 676 000 as per 30 April
• Member base of 676 000 as per 30 April • The typical seasonal pattern shows a net reduction in April, but this year the decline was stronger due to lower sales, which is expected to continue the coming months • Experienced a period of increased churn after reopening in Sweden and Finland • Churn w
Slide 25: Revenue and COVID-19 impact
• Revenue decline of 2% corresponds to an increase of 9% adjusted for the estimated COVID-19 impact on revenues of NOK 110 million • ~70% of the estimated COVID-19 revenue loss was related to members on freeze and ~30% to lost retail sales and personal training sessions • Average contractual members
Slide 26: Cost measures and government support
Closed all clubs Started dialogues with landlords, cleaning providers, music suppliers etc. Sent notice of temporary lay-offs to the majority of the employees in Norway Danish government announced supporting package for fixed costs Sent home the majority of the employees in Denmark, only a few days
Slide 27: EBITDA decline and COVID-19 effect
• EBITDA decline of 67% corresponds to a 4% increase adjusted for the estimated COVID-19 effect of NOK 85 million • Supporting package from the Norwegian government for March, estimated to NOK 15 million, not booked before Q2 2020 27
Slide 28: Capex frontloading and plans
• Frontloading of maintenance capex1, due to investments in new commercial platform and several major upgrades prior to COVID-19 outbreak • Going forward, both expansion and maintenance capex partly put on hold until the situation has stabilized, but: • Still consider it wise to keep the majority of
Slide 29: Operating cash flow and working capital
• Positive deferral effects on working capital increases operating cashflow • Prepaid membership fees due to delay in member compensations temporary lifts working capital – effect will revert the quarter clubs reopen • Increase in trade payables after renegotiating payment terms during the closed pe
Slide 30: Liquidity and cash measures
~ ~ • Precautionary draw-down on RCF of NOK • Danish governmental support for non- • Temporary lay-offs of majority of employees 575 million to secure available liquidity, working employees (~75% of salaries within in Norway, with full financial impact in April increasing cash to NOK 775 million cer
Slide 31: Precautionary draw-down of credit facility
• Precautionary draw-down of NOK 575 million of the credit facility in Q1 to ensure liquidity during the COVID-19 crisis • RCF leverage covenant of 4.25x • Maximum principal amount of 2 500 MNOK, of which 1 944 MNOK was drawn by end-Q1 • Weekly cash burn and working capital deferrals will increase t
Slide 32: Financial targets withdrawn; outlook
• Withdrawing the previously communicated financial targets due to the extraordinary uncertainty • Will revert to the market with updated targets when the situation has stabilized • Industry wide setback caused by the COVID-19 outbreak • Expect the negative effects to prevail some time after reopeni
Slide 33: Q&A
dNOAISLVS Q&A
Slide 34: Forward-looking statements
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 35: Appendix
dNOAISLVS APPENDIX
Slide 36: New club openings and acquisitions
• • White spot in the Greater Helsinki area, west of city centre • The 2 000 sqm club is located at highly visited AINOA Shopping centre with good public transport connections • • White spot in the Greater Stockholm area, north of city centre • 2 000 sqm club, including a sports hall, with good park
Slide 37: Norway
NORWAY " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MNOK) Wi veto I MEMBERSHIP REVENUES OTHER YIELD I OTHER REVENUES —_@——- —@— @ 301 op 463 @ 506 298 «298 299 21% Ne 96 69 Q12019 Q22019 Q3 2019 Q4 2019 Q12020 Q12019
Slide 38: Sweden
SWEDEN " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MNOK) WM veto Hl MEMBERSHIP REVENUES Ml OTHER YIELD Il OTHER REVENUES 25% —@)— 12% 488 487 2% CURR ADJ) 15 102 331 557 18% 78 71 28% (29% CURR. ADJ) 584 83 373 aS 26
Slide 39: Finland
FINLAND " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MNOK) Wl vieto I MEMBERSHIP REVENUES Ml OTHER YIELD Il OTHER REVENUES 466 454 9% 86 85 7% CURR. ADL) 86 85 16 16 13; (126% CURR. ADJ.) 380 369 a7 69 Q12019 Q2 2019
Slide 40: Denmark
DENMARK " ADJUSTED COUNTRY EBITDA OUTGOING MEMBER BASE (000) ARPM AND YIELD (NOK/MONTH) TOTAL REVENUES (MNOK) BEFORE IMPACT OF IFRS 16 (MNOK) Wl vieto Hl MEMBERSHIP REVENUES Ml OTHER YIELD Il OTHER REVENUES 456 391% 43% (349% CURR. ADJ.) (-4% CURR. ADJ.) 130 134 18 28 2 106 Q12019 Q2 2019 Q3 2019 Q4
Slide 41: 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 42: Key figures
Q1 2019 Q1 2018 2019 2018 Number of clubs, EOP 252 245 248 203 Outgoing member base ('000s) 695 703 687 569 Members per club 2 757 2 868 2 772 2 801 ARPM (NOK) 477 491 490 481 Yield (NOK) 379 387 390 379 Reported EBITDA (MNOK) 286 354 717 645 Adjusted EBITDA before impact of IFRS 16 (MNOK) 40 120 57
Slide 43: IFRS 16 balance sheet and P&L impact
Reported Change Excl. IFRS 16 Amounts in NOK million Q1 2020 IFRS 16 Q1 2020 Balance sheet items - IFRS 16 Property, plant and equipment 824 0 824 Right-of use asset 4 174 4 174 0 Deferred tax assets 151 82 69 Prepaid expenses and accrued income 214 -72 286 Total assets 9 059 4 184 4 875 Equity 1 15
Slide 44: SATSGROUP
SATSGROUP