Update #2 on the temporary closure of clubs
Reference is made to the stock exchange announcements “SATS has decided to temporarily close all clubs” on 12 March 2020 and “SATS ASA – Update on the temporary closure of clubs” on 13 March 2020 from SATS ASA (“the Company”).
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. On March 13, the Company updated the market on the status and the financial effects. During the past week, the situation has developed differently in the four Nordic countries, and the governmental decisions and actions have also been different. The Company is in close dialogue with the health authorities and will follow their advice on how to act after these two weeks of closure.
The Company has continued working on finding ways to reduce costs and minimize the revenue loss during the closure period. A significant effort is also put into keeping the members active and introducing SATS to non-members through the Online Training offering. We have made digital training programs, 100+ pre-recorded classes and many live classes every day available for the Nordic population to continue to fulfil our vision of making people healthy and happy even though our clubs are closed. The response has been overwhelming, with 50-60 000 users daily.
Since the update on 13 March, the governments in the Nordic countries have announced various financial packages to support both companies and employees, expanding SATS’ flexibility when it comes to scaling down costs:
The Danish government has announced a supporting initiative to cover parts of the fixed costs for companies with an income loss of above 40%, which SATS might be eligible to, dependent on the final revenue loss. SATS calls for the other Nordic governments to consider similar supporting initiatives. Further on, the Danish government has announced a package where companies who choose to send employees home temporarily during the next three months will be refunded 75% of the wage cost, which SATS has decided to take part in.
The Swedish government has announced a relief in the regulation of temporary layoffs, which the company intend to take part of, but the Company awaits clarity into the relevant terms and conditions. The company will decide on further steps to reduce labor cost in Sweden.
The Finnish government has proposed several supporting packages, which are not yet approved, with most important for SATS is a reduction in the notice period for temporary layoffs. An invitation letter was sent to Finnish employees on 18 March and temporary layoffs can with the new package, if necessary, come into force from 6 April.
The Norwegian government has announced several supporting packages. The most important for SATS is the relief in the regulation of temporary layoffs, reducing the layoff notice period from 15 to two days. In Norway, the majority (more than 4000) of the employees, both in the operation and at the headquarter, are temporarily laid off, which was also reflected in the estimate provided to the market on 13 March.
The Company has also had positive dialogues with landlords to find constructive solutions for lease payments during this extraordinary situation.
SATS has taken several measures on the member revenue side, reducing the expected revenue loss to be around NOK 140 million, instead of the previously estimated NOK 190 million. Actual effects on the profit and loss statement in Q1 is awaiting clarification regarding accounting principles.
The Company has a revolving credit facility with Swedbank with a leverage covenant of 4.25x Adjusted EBITDA. The Company has a close dialogue with the bank and expects flexibility should the temporary closure persist.
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