Basic Fit : reports half-year 2017 results

H1 FINANCIAL HIGHLIGHTS

Revenue increased by 26% to €156 million (H1 2016: €124 million)

Other revenue increased by 34% to €3.3 million (H1 2016: €2.5 million) Club EBITDA margin remains strong at 43.3% (H1 2016: 43.3%)

Adjusted EBITDA increased by 23% to €45.5 million (H1 2016: €37.2 million) Adjusted net earnings1 were €10.3 million (H1 2016: €2.7 million)

H1 OPERATIONAL HIGHLIGHTS

47 net club openings year to date, growing network to 466 clubs (up 11% in H1 2017 and 27% year on year)

Total number of memberships increased to 1.36 million (up 13% in H1 2017 and 22% year on year)

Sports water subscriptions doubled to 18% of membership base (H1 2016: 9%)

MEDIUM-TERM OUTLOOK

The club openings pipeline for the remainder of 2017 and 2018 is well filled

We remain confident to grow our network by around 100 clubs in 2017 and onwards Unchanged target of return on invested capital on mature clubs of at least 30%

Basic-Fit had a strong first half of the year in which we delivered on the accelerated growth plans and maintained our high margins. The club EBITDA margin remained strong at 43.3% despite the large number of new club openings.

The development of add-on revenue was encouraging. Our members appreciate the additional options that we offer to optimise their fitness experience. More members now add a sports water or PRO APP subscription to their memberships which contributed to a higher average yield per member.

The club openings pipeline remains strong with most clubs planned to be opened in France. With 47 net club openings, we are on track to open around 100 clubs this year. In 2016 and the first half of this year club openings were back-end loaded. Because of this and the many new clubs that are now ramping up memberships, we expect to benefit from operating leverage and adjusted EBITDA growth to accelerate in the second half of 2017.

Note: Adjusted (club) EBITDA, adjusted net earnings and leverage ratio are non-GAAP measures (see page 7)

1 Net earnings adjusted for amortisation, interest on shareholder loans, exceptional items and one-offs and the related tax effects (25%)

FINANCIAL AND BUSINESS REVIEW

* Before amortisation, interest on shareholder loans, exceptional items and one-offs and the related tax effects Totals are based on non-rounded figures

CLUB AND MEMBERSHIP DEVELOPMENT

In the first half of the year we opened 51 clubs and closed 4 clubs resulting in 47 net additions to our network. Of the four clubs that we closed, three were part of prior larger acquisitions and planned to close upon expiration of the lease contracts. One club has been temporarily closed whilst the landlord is doing necessary construction work on the property.

At the end of the period we operated 466 clubs compared to 368 clubs a year ago; an increase of 98 clubs. In France, we increased the number of clubs by 70 compared to a year ago. In Belgium, the Netherlands and Spain we added 15, 9 and 4 clubs respectively to our network.

The total number of memberships in the first half of the year increased to 1.36 million compared to 1.21 million at the end of 2016 and 1.12 million a year ago. Our 249 mature clubs2 showed a robust membership development with 3,307 members on average per club.

1. At the start of the year we had 252 clubs in our network which were 24 months or older. During the first half year, we closed 3 mature clubs as planned which resulted in the current 249 mature clubs

   REVENUE

   In the first half of 2017, revenue increased by 26% to €156 million compared to €124 million in the same period last year. Both fitness revenue and other revenue contributed to this growth by 26% and 34% respectively. The ramp up of memberships at our existing clubs and the new club openings were the main drivers for the increase of fitness revenue. The increase of other revenue was mainly the result of personal trainers being made available in more clubs and higher sales of day passes.

   Geographic revenue split

   Totals are based on non-rounded figures

   All countries showed strong revenue growth compared to H1 2016. In France, we delivered revenue growth of 181% due to the large number of club openings and the memberships ramp- up at immature clubs.

   The average yield per member per month increased to €19.76 compared to €19.51 in the first half of 2016. The take-up of add-on subscriptions and the increased maturity of our membership base more than compensated for the high VAT rate in France.

   CLUB EBITDA AND ADJUSTED EBITDA

   On a club level, EBITDA increased by 26% to €67.5 million, representing a club EBITDA margin of 43.3% (H1 2016: 43.3%). The stable margin was the result of the increased yield per member and the larger number of mature clubs in the mix which compensated for the large number of club openings in the period.

   Total operating expenses on a club level increased to €88.5 million from €70.1 million in H1 2016, which is mainly the result of the growth in the number of clubs. The increase in club operating costs in France, mainly due to local taxes, were offset by higher membership levels.

   Adjusted EBITDA increased by 23% to €45.5 million compared to €37.2 million in H1 2016. The adjusted EBITDA margin decreased to 29.2% compared to 30.0% in the same period last year, as a result of higher overhead costs. Total overhead expenses increased to €21.9 million compared to €16.5 million in H1 2016, due to the further professionalisation of the organisation to facilitate further growth. The international build-out of overhead occurred throughout 2016, with the full impact in costs in 2017. In addition, higher marketing spend relating to the new club openings in France in the period accounted for €1.2 million of the increase.

   EBITDA AND EXCEPTIONAL ITEMS

   Total EBITDA of the group increased by 43% to €43.3 million compared to €30.2 million in H1 2016.

   Exceptional items totalled €2.2 million compared to €6.9 million in H1 2016 and mainly comprised of non-cash pre-opening costs and costs related to the retention share plan awarded to key people after the IPO. In H1 2016 the exceptional items also included the IPO and refinancing costs.

   INTEREST AND NET DEBT

   The finance expenses in the first half of the year decreased to €3.6 million compared to €32.5 million in the same period in 2016, as a result of the new facilities agreement we entered into at the time of the IPO, with significantly improved terms. In addition, the finance expenses in H1 2016 included costs (€12 million) related to the early repayment of prior loans and lease commitments.

   At the end of the period our net debt was €248 million compared to €206 million at the end of 2016. The increase is the result of the large number of club openings in line with the announced accelerated execution of our growth strategy. The leverage ratio3 at the end of the period was 2.8, within the bandwidth of 2.5 to 3.0 times adjusted EBITDA as communicated in March. Our financial position provides the flexibility to continue to execute our growth strategy at the current high pace.

   CORPORATE TAX

   In the first half of the year, the corporate tax expenses amounted to €2.0 million (H1 2016: tax income of €7.7 million) representing an effective tax rate of 47% compared to 23% in H1 2016. The increase in the effective tax rate is mainly explained by the reassessment of deferred tax assets and liabilities after a tax rate reduction in France (16% points impact) and some non tax deductible expenses (7% points impact). We expect to start paying cash taxes from 2018 onwards.

   ADJUSTED NET EARNINGS

   The net profit in the first half of the year was €2.2 million compared to a net loss of €26.1 million in H1 2016.

   Adjusted net earnings4 increased to €10.3 million compared to €2.7 million in H1 2016.

   The one-off costs which we incurred in H1 2016 were related to the IPO and the refinancing and early repayment of our financial leases.

2. Net debt/LTM adjusted EBITDA

3. Net earnings adjusted for amortisation, interest on shareholder loans, exceptional items and one-offs and the related tax effects (25%)