Earnings Call: Q4 2020

Mar 9, 2021

Good day, ladies and gentlemen. Welcome to Basic Fit's 2020 Year Results Conference Call and Webcast. At this time, all participants are in a listen only mode. We will be facilitating a question and answer session after today's prepared remarks. Please note that this conference is being recorded. I will now turn the call over to your host for today's conference, Richard Peekar, Head of Investor Relations. Sir, you may begin. Thank you, Kevin, and good afternoon, and welcome to everyone on our conference call in which we will discuss our results over 2020. With me today are, as usual, CEO, Rene Mos and CFO, Hans Van der Ayn. This call is being broadcast live on our website, and a recording of As usual, I would like to point out that Safe Harbor applies. Now we will start with Rene, who will discuss the highlights and the operational developments, followed by a more detailed look at the financial results from Hans. After the prepared remarks, we will open the call for questions. This call will finish no later than 3 And with that, Rene, I would like to hand over to you. Thank you, Richard. Welcome, ladies and gentlemen, and thank you for joining today's call. 2020 was the toughest year in the Basic Fit history. We started the year strongly with a record number of club openings and a record number of joiners. This lasted until mid March when we were confronted with the COVID-nineteen pandemic. As a result of government measures In all our countries, we were forced to temporarily close all our clubs. In the summer, after we had reopened our clubs, our members found their way back to our clubs. However, as of the end of September, we were forced again to gradually close our clubs in France, Belgium, Luxembourg and the Netherlands. Only in Spain, our clubs could remain open. In spite of a very tough year, we were able to grow our club network by 121 clubs to 9 105 Clubs. Of these 905 Clubs, 851 were closed at the end of the year. We ended the year with 2,000,000 members and a lower revenue of $377,000,000 with the underlying EBITDA of 94,000,000 All these KPIs are disappointing in the light of the ambitious start of the year and are all explained by the COVID-nineteen related government measures, Something that you will hear more often in this presentation. Let's go to slide 3. Because of the government measures, our costs were closed for an average of 41% of the time in 2020. When we could reopen after the first COVID wave, we had to respect a number of different restrictions in all countries. In France, The country in which we were forced to keep our clubs closed the longest. The clubs were closed for 46% of the time. In the Netherlands, the story is very different. It was the last of our countries to reopen after the first wave. But during the 2nd wave, it was the last one of our largest countries to close. We were able with the branch organization Show the Dutch government that the fitness industry is able to offer a safe fitness environment to members and employees By applying strict hygiene protocols and ensure social distancing by managing traffic to the club with a reservation system and a triage at the gate. Our geographical spread did not help to preserve cash During the 1st wave, as we had to close all our clubs all at once in March. But during a large part of the second wave, we had no or limited cash burn at the clubs in 1 or 2 of the larger countries remained open. We believe that With the wavering support of the government measures, the progress made with the vaccination programs and the seasonal flu season coming to an end, That we will be able to gradually open our clubs in the different countries the coming couple of days, weeks or months. Let's go to the next slide. I think it is good to briefly discuss what we did to keep the company in the best shape possible and to position ourselves optimally for the growth opportunities that lie ahead of us. We focused on keeping our members and employees engaged. Our members received regular updates about their clubs, We're able to use the Basic Fit app to support at home and the memberships were put on freeze. For periods, members had paid, But when clubs were closed, we provided compensation. We believe our generous gesture to our members resulted Relatively limited cancellation and that it will pay off once we can reopen our clubs. We also kept our employees up to date of the situation and organized virtual events to maintain the family spirit of the organization. But regardless of the events, I work with a wonderful team of motivated managers who have been working very hard And we have been very flexible the past year to cope with this COVID-nineteen crisis. As we all of a sudden were confronted With the decrease in revenue, we had to act swiftly by focusing on cash flow and liquidity. During both COVID-nineteen waves, We halted the construction and opening of new clubs and minimized maintenance activities, like replacement of equipment or refurbishments, To bring the capital expenses to a minimum, in addition, we lowered the club operating cost and the operating cost. We received support from governments who provided compensation for staff costs and we made use of the possibility to postpone tax payments. We also received strong support of our long term business partners, including landlords, contractors and suppliers, which helped us to limit our monthly cash outflow during the months of closures. During the year, we obtained additional bank facilities of $100,000,000 and raised $133,000,000 to an accelerated book build offering of new shares. At the end of the year, we obtained Bank covenant waivers. Last month, we received $150,000,000 bridge financing, which provides us With the additional financial flexibility, which we believe is sufficient to weather the continuing impact of the COVID 19 related government measures and to restart our growth strategy once the government measures have been lifted. During the year, we used the time while our clubs were closed to optimize our product offering and HQ organizational structure, And we optimized our digital product offering. Let's go to the next slide. We achieved a number A record number of openings in January February 2020 and during the summer period after the first wave, It makes me proud that we grew our number of clubs by 121 to 905. This means that we are by far Europe's largest Fitness Group in terms of clubs. Of the 121 club openings, our growth market France accounted for 90 new clubs. We now have 4 47 clubs in France and that means that France now accounts for close to 50% of our clubs. We had planned to open many more clubs in the Q4 of 2020 if government had not interfered. At the end of the year, we had 45 new clubs They were nearly finished and which we now expect to open in the next couple of weeks or months, when government will lift restrictions. We continue to have a well filled new club opening pipeline, which we are eager to start building as soon as possible. Let's move to the next slide about the members. As I mentioned earlier, we had a very strong start of the year. The line chart shows our strong journey growth also compared to 2019 during January February. The COVID-nineteen pandemic has increased attention for fitness and the desire to lead a more active and healthy lifestyle. We saw the results of this once we were able to reopen our clubs in June July, when the number of joiners was much higher than in the same period in 2019. We offered our members a safe place to exercise and work on their fitness by applying Since the reopening of our clubs in June, we had more than 33,000,000 visits to our clubs 2020 without a single club having to close because of COVID outbreak. In our Q3 3, trading update. We reported that our member count had recovered to 2,250,000 by the end of September, which was a 6% Year on year increase. However, due to an increasing number of new temporary club closures starting in France in September And later followed by Belgium in October, Luxembourg in November and Netherlands in December, we ended the year with 2,000,000 members, 10% less than in the previous year. The decline is entirely due to temporary club closures. When clubs Are closed. We continue to have members leaving, but no people joining. We do expect that After reopening, we will see a catch up in demand, like after the first wave and recovery of the membership base. The next slide. During 2020, we have seen many publications, which concluded fitness clubs are a safe place to work out. Basic Fit has large clubs, which are equipped with top quality air refreshing systems and with all the necessary hygiene protocols in place. In other words, we are ready to offer all those millions of Europeans who have been sitting down in their house, in front of their laptops the last months, and we could welcome them in our fitness environment. We see, however, that many fitness clubs in the industry are struggling, especially fitness chains who do not have access to the capital markets are being pushed to the brink of bankruptcy. The fact that they are hit hardest is a result of the unbalanced government support programs, which are kept at low amounts. This means that an entrepreneur with 1 or 2 clubs receive as much support as a large chain with tens of clubs. It is therefore good to see that the French government is considering increasing the maximum support for corporates. In spite of the COVID-nineteen pandemic, the lockdowns and prolonged club closures, we remain confident about the growth opportunity for Basic Fit. Because of COVID-nineteen, more people are paying attention to their health and fitness And many will join a fitness club. When COVID-nineteen restrictions are lifted, we will restart our expansion plans. This will be done in a post COVID-nineteen context with increased availability of good sites and improved terms. Organic growth will remain our preferred way of growth. However, considering the acquisition opportunities that we expect To cross our path post COVID-nineteen, we do not rule out acquisitions in the coming year. We continue to be ambitious with our Growth plans, when we have reopened our clubs and have more visibility on the development of COVID-nineteen and the memberships, We will update the market on our expectations regarding club openings for 2021 and 2022. Our long term potential of 2,000 clubs remains unchallenged and could even increase post COVID. What also remains unchanged is our ROIC target of 30% for mature clubs. We are planning to update the market in more details on our strategy and targets during our Investor Day, which we plan to organize on November 4. This concludes my part of the presentation, and I would like to hand over to Hans for the financial review. Thank you, Rene. I would like to start with a slide on our revenue development in 2020. We reported a 27% decline in revenue to 3.70 $7,000,000 As Rene already mentioned, we were forced to close our clubs for 41% of the time, which resulted in a loss of revenue well over €200,000,000 When clubs were closed, we put members on freeze. When members had already paid before being put on freeze, we offer them compensation. Depending on the kind of membership, Members could choose between such options as a free upgrade from comfort to premium membership, a goodie bag, free sports water or compensation in the form of a discount on a number of monthly payments after clubs reopen. If members have prepaid their annual membership, their contracts were extended by the length of the close period. Of the members that indicated their preferred way of compensation with us, the vast majority chose for the compensation in the form of a discount. Our revenue was also impacted by the fact that the temporary club closures meant that our membership base stood under pressure As we had regular leaders, but no joiners. If we look at our two segments, then we see a revenue decrease 23% for France and Spain and a 29% decrease for the Benelux countries. The somewhat lower decrease for France and Spain Reflects our higher club opening program in these regions. Let's go to the slide of the income statement. This slide and the next slide shows the main elements of our income statement and our underlying club EBITDA and net result performance. Club operating costs rose 3% compared to last year as a result of a 28% decrease in personnel costs and a 24% increase in other club costs. The decrease in personnel costs is the result of the various government schemes Compensating part of the employee costs during periods of club closures. The increase in other club costs It's the result of our strong club network growth with an increase in the average number of clubs of 20%. To add to this, we opened a record number of clubs in January February of 2020 and the rest after the 1st wave compared to a more even spread during 2019. Other club costs include utility and service charges, Recurring maintenance and cleaning costs, small repair costs, insurance and local taxes, some of which Continue also while clubs are closed. Club EBITDA was 187,000,000 And I will give you some more color on the underlying performance in a minute. We reduced our overhead costs by 14%, which is a combination of both lower international and country overhead costs. We succeeded Lower marketing costs also added to this cost reduction. Higher depreciation and amortization charges reflect our growing club network, which I mentioned a minute ago. Bottom line, we ended the year with €125,000,000 loss. On the next slide, we have summarized our underlying performance. We have presented our results in a similar way as we did at the time of our first half year results. With the rent postponement And to provide a clear view on the underlying performance in the relevant period, we report on basis of invoice trends When we adjust for IFRS 16 and rent payments for the full year rather than on cash rents. The delayed rent payments at the year end of 2020 amounted to approximately €13,000,000 compared to €2,000,000 at the end of 2019. Underlying club EBITDA decreased 31 percent to $154,000,000 after adding back exceptional items of 91,000,000 These exceptional items are almost entirely COVID-nineteen related and consist for circa 50% of rent related charges. By applying the same methodology, we arrived at an underlying EBITDA of 94,000,000 Our underlying net result amounts to a loss of $33,000,000 You can find all the elements in the table. To help you with your modeling, we expect a $7,000,000 lower amount of TPA related amortization in 2021 compared to 2020. We also expect to record more COVID-nineteen rent credit, although we cannot guide you on amount at this point in time. That brings me to the next slide on the mature club development. This slide is about clubs that were at least 24 months old at the start of the year. Because of the COVID-nineteen situation, Our mature club results are also severely impacted. We ended the year with 510 mature clubs, which is an increase of 105 clubs Compared to 2019, the majority of our new mature clubs are located in France and Spain. The average number of members per mature club decreased to 2,695. The decrease is entirely due to the COVID-nineteen related club closures. The larger decrease than the average for the group It's because at mature clubs, relatively more members are out of their year contract. Now we go to the next slide on capital expenditure. The total CapEx in the year was 212,000,000 Roughly €70,000,000 lower compared to 2019. The decrease is result of the lower expansion CapEx Because of the more limited club growth compared to 2019 and because we spent less on maintenance CapEx. Initial CapEx by newly built club was an average of €1,200,000 compared to €1,190,000 in 20 19. On average, we spent 42,000 per club on maintenance, well below the 55,000 We spent in 2019. And yes, again, the lower average maintenance CapEx per club is also the result COVID-nineteen related temporary club closures and the decision to halt maintenance during the COVID-nineteen waves. Other CapEx was $13,000,000 comparable to 2019 and includes the acquisition Of the full IP rights of our membership administration software, the setup of a logistic hub in the Netherlands and a global HR system, Next to the usual investments in IT and Technology. Then to the next slide, our balance sheet. After the 1st lockdown period, we issued 5,300,000 new shares in June to improve our financial flexibility and reignite our growth strategy. The share issue gave us gross proceeds of 133,000,000 However, due to a second period with temporary club closures during the second half of twenty twenty and the impact this had on our results, We ended the year with a higher net debt of €539,000,000 compared to €451,000,000 at the end of 2019. The longer than expected second lockdown period resulted in a higher level of net debt in combination with a lower underlying EBITDA and impacted our leverage ratio. To this end, we successfully negotiated a waiver on our loan covenants. Our financing partners fully understand that these are exceptional times and that our short term performance is largely beyond our control Due to government measures and at the longer term, we have a great business model and great strategy. Our liquidity position at year end amounted to $19,000,000 consisting of $70,000,000 cash at hand and $20,000,000 of undrawn facilities. Although we see light at the end of the tunnel of this pandemic with people being vaccinated in all our countries, We deemed it prudent to improve our financial flexibility by means of a bridge facility we negotiated with the banks in February. And now back to Renee for the final slide. Thank you, Hans. I would like to conclude with the outlook for 2021. As I mentioned earlier, we continue to be ambitious with our growth plans, but we need to have more clarity on the timing of reopening of our clubs and the developments of COVID-nineteen and the membership before we can update the market on our expectations regarding club openings for 2021 2022. Soon after we are allowed to reopen our clubs, we intend to open 45 clubs that were already under construction at the time of the second COVID-nineteen wave. We expect to benefit from increased focus on health and well-being after COVID-nineteen, which should lead to a further increase of the fitness penetration levels in all countries. With our well positioned product offering, we are ready to seize the opportunity that will come our way. We intend to provide the market an update on Trends after reopening in our strategy at our Investor Day on November 4. This concludes the presentation. Operator, please open the lines for questions. Thank you, Our first question today comes from James Roland Clarke of Barclays. Hi, good afternoon everyone. I've got a few questions please. My first is just on the balance sheet. When you organized the bridging facility about a month ago, You commented that you would refinance that with debt to equity or equity linked instruments or a combination. Have you got a preferred method in mind? And what sort of target level of leverage would you be trying to Would you be looking to achieve or stay below? And also, could you just remind us what the covenants have been relaxed to at December June next year? I've got a second sort of area questioning, which is just on the competitive backdrop. Could you just provide some color about what's happening To your peers in France, Holland and Belgium, who's struggling and in what areas of the market that is? And then finally, On memberships, you had €2,000,000 at the end of last year. Could you just enlighten us as to where you stand Today, are we right thinking that the 3% to 4% churn is the right number per month for the last 2 months? And When clubs reopen at this current membership level, can you breakeven on a cash basis at a group level? Thank you. Well, those are a lot of questions. Maybe it's better to keep that to 1 or 2 questions for the next because now we have a big list. And I think I forgot the first one already, but I think I know the first question was a question about the €150,000,000 bridge, James, about What I preferred, we have to pay that back in after 1 year. So the bridge facility is for the end of February next year. And we are looking at several ways to get the new financing in. So we said when we did the press release about €150,000,000 bridge that we would look at Equity linked or other debts to refinance this, and we're still looking at all kinds of ways to repay that back. So we haven't decided yet. And if you're looking at our peers who are struggling, I think everybody who's in this business is struggling if you have to close down for 20%, 30% or 40% of the time. We don't have really names or labels that we would like to share with you on this. But it is clear that there are definitely problems in this industry. The good thing for us was of course that we were listed and we were able to refinance. And it's clear if you look at the U. S. For instance, that you saw a few of the bigger change go bankrupt. Not sure if that will also happen in Europe because most of the countries gave good support On salary costs for instance, but it's clear that pretty much every fitness company in That had closed down for such a long period is struggling. The member amount is something we do not want to share in the middle The quarter is something we will communicate in April 22, what the member number is. And what was the last question? I still have to have answer, James, on the covenant that we have, the relaxation of the government. So that's So we managed to get a relaxation on the government to 4.5 times adjusted EBITDA. We're looking at because if you look at that covenant at the end of the year because it's very important when our clubs will be opened, What we will do with that covenant? It's clear that if clubs are closed for a very long time that we have an issue there, Which we are very sure that we can do. We can again talk with our banks and our financing partners to get another relaxation on that Or have an equity or an equity linked instrument to make sure that our debt is lower. So it depends on it's Too early to tell now. It depends on when our clubs will be opened and what the results will be of new members coming in after the We're open to which country will be first to reopen our clubs. We're constantly very scrutinously monitoring our debt Our cash position on liquidity, but on the not known factor, unknown factors, again, when can we reopen our clubs? That's great. Thank you. Sorry for my long questions. No problem. No problem, James. The next question today comes from Robert Voss of ABN AMRO. Yes. Hi, good afternoon. I have a few questions as well. First one on the liquidity. Taking into consideration the $150,000,000 refinancing, but also 2 months of, let's say, cash burn, Can you share what your liquidity position was roughly at the end of February? And related to this, I read in the press release that you confirmed That you have a $15,000,000 to $20,000,000 monthly cash burn in the month that nearly all your clubs in all your countries were closed. If I do the calculations with your net debt position at half year of 3.99 and At full year of $539,000,000 then the increase is $140,000,000 So that suggests a cash burn that is higher than that. So what am I missing there? And The last question is, what you said on the memberships in the mature clubs, it came down from What is your view on the pace of ramp up to pre COVID-nineteen levels after clubs Are allowed to reopen again. So how quickly you think these memberships will return to pre COVID levels of more than 3,000? Thank you. Well, to start with the liquidity, I will answer that question and when I will come back to the memberships. Yes, we had a €150,000,000 bridge loan, which has to be paid back at the end of January last next year, not February, January. Our cash burn, operational cash burn is around €20,000,000 a month. Of course, Next to that, we still have some not a lot, but still CapEx to handle. So we were building a few clubs and had to pay still for a few clubs in January. So that It was added to that amount. But if you I won't get into details about giving liquidity every month because we can do that every month then. We'll report that again when we do the trading update. But you can make your own calculations. We started with €90,000,000 available cash. We had €150,000,000 bridge and we have a cash burn off operational cash burn off around €20,000,000 a month With some addition of some CapEx that had to be paid. So you can make your own calculation. About the membership, I think as long as we are close, we will slowly drop in Number of members, what we saw the last time when we reopened after the first lockdown, We had really a lot higher sales. I think it all depends in which month we can open. If it's going to be what we are talking what we are hearing at least for the Netherlands that could be end of March or 1st week of For April, that is at least what they are telling us at this moment. But if that is the case, then I think we will To grow memberships quickly, that is a good period to open. If we can open, let's say, in June, of course, it's Midsummer, it could be difficult. I think to be back on our feet with the 3,300 members on a mature club, That will take until Q1 next year, we expect. All right. Thank you. The next question comes from Jamie Rollo of Morgan Stanley. Yes, thanks. The first question is, could you help us understand how to think about the average revenue per member, the impact this year of the 6 months discount that you gave last year? And also would you expect to be more promotions than usual Once you're allowed to reopen, so maybe we should be factoring in a bigger hit this year than we saw last year on that. Secondly, could you talk a bit about your view on any changing habits on outdoor exercise or technology, home exercise? Clearly, you reopened very quickly last time, but maybe a year or maybe habits are starting to change and your view on that sort of digital competition. And then finally, you helpfully talked about the Netherlands maybe reopening later this month or 1st week in April. Could you just give your view On the other markets you operate in, please? Thank you. A lot of questions again. Hans, do you remember the first one? Yes. The first one is about what the impact will be of the compensation schemes that we had on the average revenue per member for 2021, well, that's a very difficult calculation. Again, it depends again on when the clubs will be open And what people will choose because yes, compensation is, as I said, some choose for the Most of our members were put on freeze in the 2nd lockdown, so they didn't pay anything. So then we'll restart their contract at moment that we opened, so there was no compensation. But of course, a lot of people already paid their membership, and they will get compensated in due course With a discount on the memberships in 2021. But again, what the impact will be on The average revenue per member for 2021 depends on when the clubs will be opened and how members will react after we open. We have a lot of new members in with new contracts, then the average revenue will definitely be higher. If we get less members in and we'll have to get All the old members will stay in, then the average revenue will be lower. So it's difficult to tell now. We'll get back to that later when we have more information when Clubs will be open. More promotions, no. We will do more or less the same promotions as What we have been doing the last few years about the habits that are changing after year, well, we have, of course, other continents where After COVID, they are open already for a few months. We are in close contact with our colleagues in Asia and U. S. And what you see is that, yes, People are really social human beings. They like to be around people with people, especially after such a long lockdown. So the club industry Has been doing it has been very successful after reopening. So we think it will be, Of course, the digital fitness world or exercising at home in any way or form It's already there for a very long time for many, many years. It has definitely Become more professional and more different ways of exercising, so that has become better. But what I said, it is clear that people are like to work out in an environment where there's also Other people instead of in your own living room with your cat or dog or case crying. So it is I think it will Eventually be a combination. People will be working out outside. People will be working out inside, but also in the clubs. And your what do you think about the opening in other countries? So we know now that the Netherlands would it's Still unclear, of course. Netherlands, we think, as you listened to the last press conference of our Prime Minister that In the end of March and the beginning of April, there will be some new measures, Possibly reopening of our clubs because we are ahead on the front line of the so called root card. I don't know if it's proper English, but the Dutch Speaking people understand what I mean. In Belgium, we now announced that we will the date that I mentioned is 1st May, where the are possible to be reopened again. And I think what we have I've seen or heard in France is that they are open for testing with mouth caps. So we're not sure when we can start testing that. So that's quite unclear what will happen in France. That could be on short term where we can use with the mouth caps Or it could be maybe when there's some delivery problems or other things could take a bit longer. But we are very optimistic that in the coming weeks, We will be opening clubs again. Okay. Thanks. Good luck, guys. Thank you. Our next question comes from Alan Vandenberger of KBC Securities. Yes, good afternoon. Thanks for having my question. I will limit myself to 2. The first one is regarding something that you said earlier in the present You seem to imply that other less professional or smaller players seems to be struggling. I was wondering if that could also have An impact on your geographic expansion strategy. So if opportunities would arise in countries where you are not present, If that's an opportunity you would be willing to take. And then my second question is a rather detailed question, but If I remember correctly, at the end of the first half, you had 5 13 mature clubs and at year end, you only have 510. I was wondering where the difference came from. Thank you. We did close 5 clubs This year, so that is part of that number. We come back to the exact Maybe it was those 3. Yes, it was those 3. There was a temporary closing in France due to some accident that happened there. And we closed the club in moved 1 club from Delft to another location. So that new location is a new club, The other club was in the Mature Club, so we closed 3 Mature Clubs in the last month. I think your question is about if we go to if there was an opportunity that we would maybe go to country number 6, That is not in our plan for 2021. Of course, in the future, we can always look at that. But I think for this year, We will be focusing on our own on our current 5 countries. And so no, for this year, no country number 6. Okay. Thank you. Our next question comes from Mark Zwartsenburg of ING. Yes, good afternoon. A couple of questions from my side, but not 10 or don't be afraid. To start with the Here we go. To start to come back on the potential opening in France, Belgium and Netherlands in the next months, Would you expect once they open that after now with the UK Mutation also out there that they will probably impose more restrictive Yes, conditions when your clubs are open because in the I think after lockdown 1, around after the summer, I think you had 30 people Being able to go into a gym, would you expect that to be limited more to 10 or 20 people and then indeed with mouth masks and maybe more time between time slots or Anything like that? Is that something you expect? Well, it is hard to say really because every country we are European Union, Not on this way of looking against the COVID crisis. So every country is completely different. If you look at you talked about the U. K. Type. If you look at U. K. Fitness clubs, they are there Open on April 12, so on a more or less normal way, we are not sure. So per country it will be different. So some countries will say that at least that was in the first and second lockdown 1.5 or 2 meter distance between machines. Other countries said Only 30 people in at the same time. We had another country that said 15 square meters per person that is in. So yes, it's going all over the place. And maybe in the last few months that we were closed, they have again talked to other people and have new ideas. So we That is also not necessary. With the 30 people that are coming in at the same time, we are because our club openings is almost More and more clubs 20 fourseven. We can have a lot of people in even though it's only 30 at the same time. So For a beginning in this summer period will not be a problem. Hopefully, somewhere in August, September when our Big seasons is restarting again. Then everybody had their vaccination and life will be more normal, but we have to see. So it's not clear. So it's not that you have any indication, indeed, from the Dutch government that they say, well, we're almost there, but it will be a bit more restrictive, etcetera. There's no Indication yet that, that will happen? No. Okay. Clear. Then on the My second question on the club openings, Rene, I think you mentioned the target for 2022 has not changed at the 12.50 And perhaps we will update you later on with even an higher target. I assume that you're talking then with a higher target about the period beyond 22 or would it also be possible that you seize an opportunity and that you say, okay, we're going to raise the bar even further? I'm just thinking a bit now how fast can you roll out in the second half of next year post COVID, so to speak? Yes. Well, I didn't mention the number 1250 and it's also not in our press release. It is I mentioned the number 2,000 in the long term. We do not want to commit to any number until we know when we can open our clubs. So it is not set in stone the $12.50 for next year. It could be less. It could be a lot less. It could be more. It depends when we can open and how the market is reacting and how our membership base is going. So we are not focusing on a number right now. We're just focusing on good openings, see how it's going. And then we will Connect with our investor base on November 4. Then we have been open for many months and then we can explain what the plan is As of that moment. Okay. Sorry, my mistake was then the $12,000,000 I thought it was still in place. That's why I was referring to that one. No, but that's still okay, okay, okay. But if possible, you would be able to open after the summer, You could open to 80 clubs in the second half like you've done before, I assume. And then going into next year, you could go back to the old 150 pace for Correct. We can go back to that, but of course, liquidity is also an issue. So we have to look at also the financing strategy, how we're going to finance, that's also We also look at that. Yes. So as said, we will on November 4, we will update Our investor base with the plans that we have for the coming years. But I assume if you fix it earlier with the D linked instrument or whatever instrument you want to use, then I assume we get an update a bit before that. That's generally Yes, absolutely. All right. All right. Thank you very much guys. Thank you, Mark. And the next question comes from Hans Plueger of Kepler Cheuvreux. Yes, good afternoon gentlemen. Yes, I guess from my side, first of all, a follow-up on the bridge facility and your cash position. Do you have, let's say, any target for your cash position you want to have as a minimum cash at hand what I'm talking about? And then especially also with respect to the bridge financing, because if you look currently at your outflow, the principal would be still have some cash and you You still have not to use the bridge financing. You could fully repay maybe from cash at moment in time or do you see that differently? So do you have any, let's say, minimum cash position you want To preserve, secondly, on the membership trends during closure, I should I understand what you're saying with respect to that before the closure, there was some acceleration of outflow. But let's say through the time of the closures, did you see any change In trends through the months, is there an acceleration or was that say the outflow each month relatively stable? And also of course looking into 1st month of this year. So how long will it take? Is there any difference in development there? And my last question is a very detailed question on the what kind of Value for the after Q, let's take into consideration in your revenues in when during closure. Let's start with the last one because I can remember that one. What value the app is 0 because it is Included in the membership, so No. We to the value people don't have to pay It's not part of the memberships. People don't pay separately for the app. But in our revenue recognition, we work with the amount of 2 The PEM member for the revenue for the app. So we didn't book any revenue, only the revenue for the app. I didn't pay separately, that's what Renee means, but it's in the revenue recognition because they could use the app and work out with the app. We in administrative, we work with a 2.50 per member per month For the app usage. And to come back to your minimum liquidity, we don't have a fixed amount of minimum We want to be flexible in what we want to do, so we want to be able to be flexible in that. To give you some guidance, part of the covenant waiver that we received at the end of the year, we have To have a minimum of €55,000,000 liquidity. Okay. And then the membership trends through, let's say, due and closure, especially on the outflow turnover? Well, as we said in the press release, Hans, what you see is that we didn't have any joiners and we had levers. People were, of course, a bit afraid what to do. We're taking the precautions. But you look at the mature clubs, You saw that people in the Mature Clubs are regularly more out of contract. So we're more able to leave anytime they want to because we know our system. We have signed a year contract and after 12 months it's cancelable per month. And of course in the mature clubs we have more members who can cancel every month because they're out of contract. And a lot of those not a lot, but a normal amount of people chose to leave the club and make use of that possibility to enter contract. But we're pretty sure that especially those people who then see that the clubs are opened again and they work can work out in a safe environment, We'll come back again to work out. So we had the normal levers despite the fact that they were on a freeze, Let's say the 3%, 3.5% per month in churn, but we expect that those people We're a member. We'll come back to the mature clubs. That's also the reason why the mature clubs had a higher decrease than the average decrease in members. And that's 3.5% to 3.5% was stable, let's say, when the lockdown period was longer? Yes, it was stable. It was stable. Yes. You even went down a bit in the last months because of, yes, people We're frozen. They didn't have to pay, so they didn't have reason to leave. But still people have been out of the contract. They cancel the contract and Come back when the clubs will be open again. Thanks. The next question comes from Chris Kippers of Degroof Petercam. Yes, good afternoon. Thank you for still taking my question. One remaining, just To be clear on the opening remarks of Rene, on the M and A side, it does seem that you are now looking at opportunities, of course, we understand in your existing countries. Is this a temporal thing in view of COVID? Or could this also be a strategic one whereby M and A is again on the agenda? Was it just to shift gear rapidly indeed with the opportunities and the sector suffering? Thank you. Yes. I think our main focus will be opening of new clubs. So we are not focusing on M and A. But if there is an opportunity in the country where we are and We think that could be the case. We will look at it seriously, but it's not a shift of thinking. We still prefer to open our own clubs, Especially now that we see that the rent is going towards a lower number. So buying existing clubs with old rent contract is not always a good way to go. So but we do look at it and we think there could be opportunities. Okay. Thank you. The next question comes from Charles Mortimer of Citibank. Very good. Good afternoon, everyone. Thanks for taking questions. So just a couple of very quick ones, the clarification really. The 45 clubs that you're aiming to open this year, what's the associated CapEx in 2021 for those Well, the club cost will be around 1,200,000 Times 45. I'm not sure which part has been paid or not paid or invoiced. So that is Those invoices will be in 2021 Maus, because we agreed with all the supplies in the building companies that we can pay them later after We are rebuilding those clubs and after the reopening. So the most of those costs will be paid in 2021, any invoice. Okay. That was quite clear. And then just on the just a Further clarification, Ben, on the inorganic. You say that the opportunities could come to you. Is that to say that over the last 12 months, not that many opportunities within Europe have been around and you're expecting them to come upon reopening? Well, we have been there has been talks, but nothing that was Great. Now for us, it's also more important to wait what will happen with all the reopening before we go ahead with Decisions like that. So it's not wise to do things like that now. So we but also The change that we look at or we talk with also wait till the clubs will be opened and then we can make a decision. We know that things are happening in the sector. As Rene said, our main target is to open new clubs ourselves. But if opportunities arise, then we'll definitely look at it. But at this moment, last 12 We had other things on our mind and it wasn't there. It wasn't the right time to do things like that. Okay, great. That's very clear. Thanks for answering the questions and yes, Thank you very much. The next question comes from Christine Zhou of RBC. Hi, yes, good afternoon. Thank you. And a couple of questions, please. Firstly, on Luxembourg, I just wondered if you've seen any notable trends since reopening there. I do appreciate it's a tiny sample size, but So I've just wondered if there'd been any meaningful takeaway from the last few weeks that could give an indication of how other geographies could behave post reopening? And just secondly on Spain, COVID clearly disrupted your sort of trial period there. And understand the last few months Anything but normal, but is there anything you've observed in particular given how the clubs have largely been open for the last couple of months? Is there anything you've observed that's feeding into how you're thinking about that market going forward? Thank you. Well, Luxembourg recently reopened. We have, I think, 11 clubs open there. There's a huge limitation. There's only 10 people allowed to go into the club. So it's not really something we can learn from. So It is a small amount of clubs and it is really limited number of people are allowed. So we also don't do any marketing because Yes, 10 people in at the same time is just too low also for the existing member base. Spain is definitely a country that Has been struggling of course for a while. We are membership based. It is not a lot better than what is happening in the other countries. Even though it was opened In the last few weeks, we had this snow problem. We have not had a really stable period of normal Doing normal marketing and having a normal period in Spain. So it is not worse Than the other countries, but it's also not a lot better. To add to that, Spain is also is of course, the clubs are open in Spain. And in some regions, we had to close the clubs and reopen them again. Within the we are, of course, focused on the Madrid area and the clubs were open. But the Life in Spain is very hard now with all the with the COVID. It's not our clubs are open, but a lot of the traffic between The areas is forbidden. You have to stay in your own area. You can't just walk around and you have to work out with the mouth cap. So it's not Very inviting for new members to join a fitness club in Spain. So we're doing okay. We have the normal joiners, A bit less than normal. And we have the normal leases, also a bit less than normal, but it's not like Spain is completely normal. So it's Hard to say what will happen in Spain can be an example of what will happen in other countries. It's the clubs are open, but there's still a lot of limitations, restrictions for people going there to the club or moving around. So it's also COVID In fact, any impacted. Yes, understood. Thank you. Thanks. Okay. Thank you. And the final question today comes from Christophe Begin of Kempen and Co. Yes. Two questions from my side. Can you remind us please what percentages of the members that are still Tuck, let's say, within their 1st year contract? And the second question is, do you have a preferred country where you would execute on M and A, like for instance, where you could maybe make a big jump in market share by doing some strategic acquisition? If I can answer the first question, around less than 50% of our members are in is still in contract. So the remaining bit difficult now to say because everybody is frozen and the contract period is, of course, lengthened by the closure period. But Roughly around 50% of our members are still in contract, meaning 50% are out of contract. Okay. And the preferred country for M and A, we would look at any country. So we don't have a preferred country to look at M and A. We have reached the end of today's conference call. I would like to hand over to Richard Peekar for any closing remarks. Please go ahead, sir. Thank you everyone for dialing in and joining in our conference call today. If there are any remaining question or any follow ups, Please give John David or me a call, and we're happy to continue the discussion. We look forward to talking. Have a nice day. Bye bye. Thank you very much. Bye bye. Thank you.