Reference is made to the stock exchange announcements “SATS has decided to
temporarily close all clubs” on 12 March 2020 and “SATS ASA – Notice of
Extraordinary General Meeting – New Investment Programme” on 25 February 2020
from SATS ASA (“the Company”).
This statement includes estimates which are based on current expectations and
projections about future events. All such estimates are subject to a high degree
of uncertainty and risk.
SATS decided on the morning of March 12 to temporarily close down all clubs in
the Nordics to take social responsibility and contribute to limit the contagion
of COVID-19. The Norwegian government imposed a lock-down of all gyms later the
same day. SATS calls for clear guidelines from the authorities in the other
Nordic countries, in particular in Sweden and Finland where most competitors
still are open.
With the assumption of a 14-days closure in all the Nordic countries, the
Company estimates the negative effect on Adjusted EBITDA before impact of IFRS
16 to be approximately NOK 150 million in March. The revenue effect is estimated
to approximately NOK 190 million, mainly due to existing memberships being on
hold during the closure, but partly also explained by an estimated negative
effect from reduced membership sales and drop-off. The effect on operating
costs, including cost of goods sold, is estimated to approximately NOK 40
million, representing approximately 20% of the operational costs in the period.
The cost reduction is limited in the short term, due to binding contracts. The
Company is working on temporary lay-offs in Norway, but the total salary effect
is limited both in the short and medium term due to the country labour
regulations in Sweden, Finland and Denmark. The estimates take into account the
supporting initiatives related to the COVID-19 from the Norwegian government,
and the Company expects action from the remaining Nordic governments to remedy
the negative financial effects of this challenging situation. The Company is
continuously working to find ways to reduce costs during the closure. In a
scenario where the closure is extended beyond 14 days, the Company expects to be
able to reduce a larger proportion of the operating costs, including easing from
SATS is working on a range of measures to allow our members to get back to work
out in our clubs in a proper and safe manner as quickly as possible, especially
in Sweden, Finland and Denmark where the closure is voluntary and not imposed by
the authorities. Until the clubs can reopen, the Company will share the Online
Training product with both members and non-members, offering daily training
programs and 80+ classes for everyone. SATS will also arrange daily live classes
via the Online Training platform during this extraordinary period.
SATS' Board of Directors has, in consultation with the Company's nomination
committee, today resolved to cancel the extraordinary general meeting scheduled
to be held on 18 March 2020 due to the coronavirus COVID-19 pandemic. The SATS’
board of directors will consider to reintroduce the investment program at a
later stage when the market conditions have stabilized.
The Company has financial flexibility through a revolving credit facility with a
maximum principal amount of NOK 2 500 million, of which NOK 1 300 million was
drawn by end-Q4 2019. The draw-down might be increased going forward. This is,
in combination with a negative EBITDA effect, expected to result in a temporary
significant deviation from the leverage target of 2.0x Adjusted EBITDA. Due to
the extraordinary situation, the Board of Directors will not propose to
distribute the guided dividend of NOK 250 million to the shareholders in 2020.
The Board will reassess the capacity for a dividend once the situation has
Cecilie Elde, Chief Financial Officer, phone: +47 924 14 195
Stine Klund, Finance and Investor Relations Manager, phone: +47 986 99 259
Malin Selander, Head of Communication & PR, phone: +46 70 426 40 06