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
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 revenu growth of 173%, which is mainly explained by our expansion strategy which has a strong focus on France.
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.

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

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

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 revenu 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 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 taks authorities. As described in the IPO prospectus, Basic-Fit was in discussions with the Dutch taks 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 in 2015. The transaction costs, representing the main item in exceptional items, were related
to the IPO. The pre-opening costs in exceptional items include non-cash lease costs incurred ahead of opening a club. The one-off costs are linked to the refinancing and early repayment of our financial leases and the one-off non-cash tax charge.


3 Net debt/LTM adjusted EBITDA


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

Reconciliation net result to adjusted net earnings
In € millions 2016 2015
Net result (32.4) (23.0)
Amortisation 16.7 14.9
Exceptional items 11.0 4.4
Pre-opening costs 2.2 1.6
Transaction costs 4.9 -
Other exceptional costs 3.9 2.8
Interest on shareholder loans 10.9 21.2
One-off costs 21.6 -
Breakage cost related to early repayment 7.8 -
Amortisation of capitalized finance cost 4.6 -
Non-cash tax charge 9.2 -
Tax effects (27% / 22%) (13.7) (8.8)
Adjusted net earnings 14.1 8.7
Totals are based on non-rounded figures

EQUITY
Total equity at the end of 2016 was €305 million, compared to minus €24 million at the end of 2015. This improvement was the result of the use of proceeds from the IPO.

WORKING CAPITAL
Working capital was €82 million negative compared to €88 million negative at the end of 2015. As a percentage of revenue, working capital was minus 32%, compared to minus 43% in 2015.

CASH FLOW & CAPITAL EXPENDITURE
The cash flow pre-expansion capex, defined as adjusted EBITDA minus maintenance capex, was €66 million, an increase of 31% compared to €50 million in 2015.
Maintenance capex in 2016 was €14 million compared to €9.8 million in the same period last year. On a per-club basis for the full year, maintenance capex was €38 thousand.
Expansion capex was €105 million, compared to €94 million in 2015. The increase is mainly explained by the larger number of clubs opened in 2016. This figure also includes expenses for the expansion of existing clubs and small acquisitions in 2016 (€15 million) and 2015 (€23 million). We will continue to expand successful existing clubs in 2017 when possible, as this is a cost-effective alternative for building a new club near a successful existing one.

The initial capex per newly-built club was on average €1.1 million.
During the year we finalised the planned refurbishment programme. The related one-off capex was €11 million, compared to €33 million in 2015.
Other capex amounted to €3.5 million and consisted primarily of relocation costs for our international headquarters and our headquarters in Belgium and France, and software development costs.

OUTLOOK
Club openings pipeline (# clubs)
* Contracts signed includes sites for which we are awaiting permit approval
The pipeline of new clubs is very well filled. At the end of 2016, 29 clubs were under construction and contracts were signed for 69 clubs. These include clubs for which we are awaiting permit approval. In addition, we have a pipeline of 140 clubs for which we are in
advanced discussions with the property owners or which are in the research phase. This enables us to accelerate the execution of our club rollout strategy in the medium-term. We now expect our network to grow by around 100 clubs in 2017 and onwards.
The vast majority of club openings will be in France where we have the opportunity to secure a sustainable leading position. We will be opening clubs in clusters in more cities and regions across the country, in line with our strategy. We will increase our marketing spend to support
the rollout of new clubs with local advertising in the various regions.
In the medium-term, we expect revenue to grow on average by at least 20% a year, with significant operating leverage. The annual like-for-like revenue growth is expected to be modest.
We will continue to rigidly follow our well defined expansion process in order to maintain the high quality of our network and achieve the targeted return on invested capital4 on mature 4 Mature adjusted club EBITDA divided by the initial capital expenditure incurred in opening a new club
We will increase the level of investment 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. This in return will also help to increase the length of stay.
We have secured funding for the accelerated growth plan by increasing the revolving credit facility by €75 million. Given the ample covenant headroom other amendments to the agreement were not required. As a result of the accelerated growth plan and subsequent
higher investments, we will not deleverage this year, and expect net debt to be between 2.5 and 3.0 times adjusted EBITDA at the end of 2017.

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