Basic Fit : Full Year 2016 Results

BASIC-FIT REPORTS FULL YEAR 2016 RESULTS

Strong growth of results and acceleration of club rollout strategy

FINANCIAL HIGHLIGHTS

Revenue increased by 28% year-on-year to €259 million Adjusted EBITDA grew by 34% year-on-year to €80 million

Revenue of mature clubs (like-for-like) increased by 5% year-on-year Mature club EBITDA margin increased by 134 bps year-on-year to 49.6%

Adjusted net earnings increased by 61% year-on-year to €14 million (2015: €8.7 million)

OPERATIONAL HIGHLIGHTS

Number of clubs grew to 419; increase of 81 clubs of which 48 in France Total memberships grew to 1.21 million; increase of 27% year-on-year Like-for-like memberships grew by 1.3% year-on-year

Sports water made available in all Basic-Fit clubs Strong demand for personal trainers and day passes

MEDIUM-TERM OUTLOOK

Rollout strategy accelerated; pipeline well filled

Network is expected to grow by around 100 clubs in 2017 and onwards

Unchanged target of return on invested capital on mature clubs of at least 30%

René Moos, CEO Basic-Fit:

2016 was the most successful year in the history of Basic-Fit. We grew by a record number of 81 clubs, achieved strong growth of results and had a successful listing on Euronext Amsterdam. And these are just a few of the highlights to underscore what an important year it was for Basic-Fit.

We will increase our investments in innovation in order to further reduce the cost of operations, increase revenue by offering enhanced and new services, and further improve the fitness experience.

In France, Basic-Fit has become the leading non-franchise fitness chain with more than 70 clubs. In the coming years, we will continue to focus on our growth in France to achieve a similar sustainable leading market position as we currently have in the Benelux.

Supported by the strong club openings pipeline, we will accelerate the execution of the club rollout strategy and expect to open around 100 clubs in 2017 and onwards.

FINANCIAL AND BUSINESS REVIEW

Key figures In € millions	2016	2015	change
Total revenue	258.6	202.2	28%
Fitness revenue	253.1	197.5	28%
Other revenue	5.5	4.7	16%
Operating expenses	(145.7)	(118.2)	23%
Adjusted club EBITDA	112.9	84.0	34%
Total overhead expenses	(32.5)	(23.9)	36%
Adjusted EBITDA	80.4	60.1	34%
Exceptional items	(11.0)	(4.4)
EBITDA	69.4	55.7	25%
Depreciation & Amortisation	(65.4)	(48.0)	36%
Operating profit	4.0	7.7	-48%
Net result	(32.4)	(23.0)
Adjusted net earnings*	14.1	8.7	61%
Adjusted EPS*	0.32	0.29	11%
* Before amortisation, interest on shareholder loans, exceptional items and one-offs and the related tax effects Totals and change percentages are based on non-rounded figures

REVENUE

Revenue increased by 28% to €259 million compared to €202 million in 2015. This growth is mainly the result of higher fitness revenue. The continued expansion of the number of clubs in our network and the addition of new members in our existing clubs continued to be the main drivers of the increase in fitness revenue. Other revenue also contributed to total revenue growth, mainly as a result of higher rent income from personal trainers and higher sales of day passes.

On a like-for-like basis, mature1 club revenue increased by 5% to €136 million. This increase was mainly the result of higher revenue per member but also due to further membership growth (1.3%).

The average revenue per member per month increased by 3% to €19.46 compared to €18.84 in 2015. This was mainly the result of the positive effects of the add-ons like our sports water subscription which is now available in all our clubs, and the harmonisation of our membership offering, which resulted in price increases, particularly in the Netherlands. This increase was reduced to some extent by promotional activities for both new club openings as well as existing clubs.

All countries showed strong revenue growth compared to 2015. France achieved revenue growth of 173%, which is mainly explained by our expansion strategy which has a strong focus on France.

1 A club is deemed mature if at the start of the year it has been open for 24 months or more

In France, we increased the number of clubs by 48. In the Netherlands we added 8 clubs to the network, in Belgium 20 and in Spain 5. In total, Basic-Fit increased its network by 81 clubs. The total number of memberships at the end of the year was 1.21 million, which is an

increase of 27% compared to 2015, which is the largest growth of all major European fitness chains2.

Geographic revenue split In € millions	2016	2015	change
Netherlands	100.1	83.0	21%
Belgium	106.2	90.5	17%
Luxembourg	8.2	7.3	12%
France	25.0	9.2	173%
Spain	19.0	12.3	55%
Total revenue	258.6	202.2	28%
Totals and change percentages are based on non-rounded figures

ADJUSTED EBITDA

On a club level, total operating expenses increased to €146 million from €118 million in 2015, which is mainly the result of the growth in the number of clubs. The growth of revenue outpaced the growth of operating expenses and as a result we saw the adjusted club EBITDA margin improve by 213 bps to 43.7%. The mature club EBITDA margin increased by 134 bps to 49.6%.

Overhead expenses increased to €33 million from €24 million. This can mainly be explained by the increase in international overhead costs due to the further professionalisation of the organisation in preparation for the listing and to facilitate continued future growth, including the expansion of our customer support department.

In 2016, adjusted EBITDA increased by 34% to €80 million, from €60 million in 2015. The adjusted EBITDA margin increased by 138 bps to 31.1%.

EXCEPTIONAL ITEMS

Exceptional items in the year totalled €11 million compared to €4.4 million in 2015. This increase was mainly the result of IPO-related costs (€4.9 million IPO-related transaction costs and €3.9 million other exceptional costs).

DEPRECIATION AND AMORTISATION

Depreciation and amortisation increased to €65 million compared to €48 million in 2015. The increase was the result of higher depreciation, due to the large number of clubs that we have added to our network.

During the year, we assessed the useful lives of fitness equipment in line with the accounting

2 Basic-Fit had the strongest organic membership growth of the top 10 European fitness club operators according to the EuropeActive/Deloitte European Health & Fitness Market Report 2017

policy and IAS 16. This review has resulted in longer estimated useful lives, which we have implemented as of 1 October 2016: 8 years for strength fitness equipment and 6 years for cardio and other fitness equipment (previously: 5-6 years for all fitness equipment). As a result of the change in policy the depreciation of fitness equipment was €1.8 million less than if we had followed the previous policy for the full year.

OPERATING RESULT

The operating result was €4.0 million compared to €7.7 million in 2015. This decrease was the result of the significant exceptional costs as a result of the IPO, as well as the increase in depreciation, which increased faster than revenue, as over the last two years we have been opening many new clubs that have yet to mature.

INTEREST AND NET DEBT

The proceeds of the new bank loan and the primary offering of the IPO were used to deleverage and improve our capital structure. At the end of the year the net debt was €206 million, compared to €255 million (excluding €201 million shareholder loan) at the end of

2015, representing a leverage ratio3 of 2.6. At the end of 2016, we had €44 million in undrawn

credit facilities, compared to €18 million at the end of 2015.

The finance expenses were €36 million compared to €37 million in 2015. This stable development was the result of costs (€12 million) relating to the early repayment of prior loans and lease commitments being more than offset by a combination of lower debt and improved facility terms after June 2016. The finance expenses include the interest costs on shareholder loans, which we will no longer incur under the current capital structure.

As a result of both the reduced debt and interest rates, we expect the weighted average interest rate to be between 2.5% and 3.0% going forward.

TAX

The corporate income tax expense for the year was €0.7 million, compared to a €6.3 million benefit in 2015. In 2016 Basic-Fit reached an agreement with the Dutch and Belgian tax authorities. As described in the IPO prospectus, Basic-Fit was in discussions with the Dutch tax authorities about several tax matters, the main one being the tax deductibility of the interest on shareholder loans. As a result of the agreement, the recognised deferred tax assets were reduced by €9.2 million, resulting in a non-cash tax charge of the same amount.

ADJUSTED NET EARNINGS

The net result in the year was minus €32 million, compared to minus €23 million in 2015. To provide more insight in the underlying profitability of the company we report an adjusted net earnings measure. Adjusted for amortisation, interest on shareholder loans, exceptional items and one-offs and the related tax effects, earnings were €14 million, compared to €8.7 million

3 Net debt/LTM adjusted EBITDA