7/25/2023

speaker
Caroline
Conference Operator

Hello and welcome to BasicFix 2023 Half-Year Results Conference Call and Webcast. Please note that today's conference is being recorded and for the duration of the call, your lunch will be on listen only. However, you'll have the opportunity to ask questions at the end of the call. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now turn the call over to your host for today's conference, Mr. Richard Becker, Head of Investor Relations. Sir, you may begin now. Thank you.

speaker
Richard Becker
Head of Investor Relations

Thank you, Caroline, and good afternoon and welcome to our conference call during which we will discuss our results over the first half of 2023. With me today are René Moos, our CEO, and Hans van der Eyre, our CFO. This call is being broadcast live on our website and a recording of the call will be available shortly afterwards. As usual, I would like to point out that safe harbor applies. We will start with René, who will discuss the highlights and the operational developments, followed by a more detailed look at the financial results from Hans. After these prepared remarks, we will open the call for questions. The call will finish no later than 3 o'clock. And with that, René, I would like to hand over to you.

speaker
René Moos
CEO

Thank you, Richard. Welcome, everyone, and thank you for joining today's call. I'm pleased that we achieved a strong set of first half-year results in a challenging global microeconomic and geopolitical environment. During the first six months of this year, we continued our accelerated club opening program with a net addition of 103 clubs. We also witnessed further strong membership growth and our enlarged group of 888 mature clubs. is now at the targeted level of 3,300 membership on average per club. The combination of the strong membership growth that we achieved over the past 12 months and the benefits from the membership structure changes and pricing initiatives during the same period led to a record of 41% higher first half-year revenue of €500 million, with an 83% higher underlying EBITDA of €110 million. All in all, a good set of results. Let's go to the next slide on club openings. In the first half year, we grew our club network by 103 clubs to a total of 1,303. This means that we further extended our market leadership in Europe as a whole and in the five countries where we already had the leading position. In total, we opened 108 clubs and we closed five clubs. Most club openings were in France, where we now operate well over 700 clubs. If you look at it on a 12-month basis, we added 110 clubs to our network in France, a growth of 18%. After becoming market leader in Spain in 2022, we continued our accelerating club rollout with the addition of 22 clubs to reach 112 clubs by the end of the first half year. Compared to a year ago, we grew our network in Spain by 45 clubs, which is an increase of 67%. We continue to open clubs in new cities like Cordoba and Granada, create new clusters like in Balbao and Malaga with four clubs each, and strengthen existing clusters like in Valencia region, where we now operate 10 clubs. In the Netherlands and Belgium, we grew our network by four and three clubs respectively in the first half of the year. In our new market, Germany, we opened three clubs in the first half year to reach six clubs. In July, we opened another two more, lifting the total in Germany to eight clubs. We continue to see huge growth potential in Germany and currently have a pipeline with signed contracts of 65 clubs that we plan to open in the next 18 months. Let's move on to the next slide on membership growth. Our membership base grew by 8% or more than 250,000 members in the first six months of 2023. Compared to a year ago, we grew our member base by almost 700,000 or 23%. At the end of June, we had more than 3.6 million memberships. The seasonal pattern of membership development returned to normal after two years of COVID-19 and a recovery year. As usual, we had a strong first quarter as a result of the good intentions and a slower second quarter. The membership development in France was, however, somewhat impacted by a long period with protests, strikes, and civil unrest. As expected, we saw churn rates normalizing the past quarters to pre-COVID level of around 4% per month for the low rate after the lifting of COVID measures in 2022. We expected the churn rate to stay around 4% per month going forward. As we told you before, during 2022, we intensified our efforts to promote our premium membership. Ongoing efforts this first half year have more recently led to a further increase in the take-up rate of premium membership to more than 55%. By the end of the first half year, our 888 mature clubs had an average of 3,301 memberships. Together with a further gradual increase in the average revenue per member per month, this looks promising for our group profitability in the second half of the year. In a few minutes, Hans will give some further details on Mature Club's performance. Let's go to the next slide on our premium membership growth. Last year, we told you that we were intensifying our efforts to increase the higher-priced premium membership uptake, as we believe it is an effective tool to help increase the average revenue per membership per month. This, of course, to help mitigate rising club operating costs due to inflation and high energy costs in 2023. From last year's second quarter onwards, we have intensified our efforts to promote our premium membership, and since the second half of 2022, this has resulted in an uninterrupted premium membership uptake of over 50%. In the first half of 2023, we reintroduced the Comfort Membership at the price of €24.99 per four weeks in all countries except for Spain, and stopped offering the lower price Basic Membership. The new Comfort Membership gives access to all clubs in a country, while the Basic Membership gave only single club access. After the reintroduction of the Comfort membership, we witnessed a further increase in the premium uptake rate to more than 55%. If the trend continues, I believe that by year end, we will have a premium penetration rate of more than 45%. More premium memberships and our new pricing structure are expected to result in an average revenue per member per month of at least $23.50 for the full year. This compares to 2013 realized in the first six months of the year. That brings me to my last slide about our club rollout plans. This slide should look to you familiar. As you can see, we continue to have a full club opening pipeline. Year to date, we have already added a net of 107 clubs to our network. The next period with a large number of openings is in the second half of August and the beginning of September, when we expect that we will open around 70 clubs. For the full year, we will grow our network by at least 200 clubs compared to 2022. I'm excited about Germany, where we are now at eight clubs, but where we have a pipeline of 65 clubs that we plan to open in the next 18 months. This concludes my part of the presentation. I now hand it over to Hans for the financial review.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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