To the Actic Group Q4 interim report. My name is Anders Carlbark, and I'm the CEO for Actic. With me today, I also have our CFO, Stephan Ebberyd. We will take you through a quick look at the overall market situation. We'll take you through some bullets around our result, and we'll also look forward in terms of how we address the future. Then we'll end up with a Q&A at the end. First of all, the market situation in quarter four, divided by the different segments. First of all, Sweden have reduced visits to gyms. There's a requirement of allowing each visiting member 10 sq m, which then have set a max capacity on total visitors per gym.
That has obviously influenced the possibility to offer training to our members, and also an overall recommendation not to visit gyms had a negative effect on the visit. We do have a couple of sites in Sweden closed. These are small sites operated by the municipalities, and it's seven sites in total. There is also, in Sweden, 40 baths closed, and these are not baths operated by ourselves, but in connection to our gyms, where the gym membership offers access to the bath, which also has a negative impact on the possibility to sell memberships and traffic in total. But in these 40 baths, the gyms are open. If we look at Norway, it's been lockdowns on a regional aspect. If we look at the end of the year, we had seven sites closed.
As of today, it's four clubs, Actic clubs in Norway closed. This varies a little bit week on week, depending on the spread of COVID-19. If we look at Germany has been closed, all gyms since second of November. There's been communication now that at the earliest mid-March, we will see openings of the German fitness industry. We estimate that this will be slightly longer, but this is the latest communication from the German government. The actions that we have taken in order to mitigate the effect has been many, and we have had safety as a first priority and then cost control as well. We have put full efforts into making sure that we have a safe environment for our members and staff at the gyms.
We have been tested in Sweden for this, how we follow the max capacity and the other regulations or recommendations from the Swedish government. We have had tests in approximately half of our clubs, which has been 100% approved. We believe that we have done a good job in following this and that we are continuing to be able to offer a safe environment for our members to train at the Actic sites. We have closed sites, and this is not due to the pandemic, but rather due to low profit and our outlook on the possibility to drive profit. We have 5 clubs closed, which means that in the end of this period, we have 173 sites.
We have also had to take in a lot of tough decisions when it comes to employees. We have decreased our employees to 635 from 809 at the same period last year. We have done a lot of optimization of our scheduling and our contract structure to make sure that we still staff our gyms when the members are visiting. This has been very important to us that we do not take away time from when we have peaks in visitor numbers. We believe that with an optimization we have managed to do this in a good way. Obviously, the decision to decrease staff has been tough, but sadly necessary. We've also implemented efficiency programs.
We have automatic entrances where we are able to open earlier and close later, but still not drive staff costs connected to this. We've also added centralized support and digital solutions to be able to use our hours still at the gyms in a better way and still have the connection with the members. We've also developed and grown our digital training offer and our outdoor training offer to build a strong overall omni-offer to our members. These, both of these has been very popular during the pandemic. Both of them, we believe, is not only actions connected to the pandemic, but also big and important growth drivers ahead.
If we look at the impact of our member base, obviously, the full year with the two waves we have had of the pandemic has not been good for our member base. We have had slight increases in churn, but the main challenge has been that we have not sold as many memberships as we do on a normal case year. This is really the main driver of our membership base, as you can see in the graph to the right, dropping from 220 to 186. Part of this is also closed sites, but the majority has really come from the possibility to sell memberships. The net effect is plus 12,000 members less than.
Financial impact, if we look at the revenue from quarter to quarter, it's around SEK 30 million. We've been able to keep our margins on a high level because of the measures we have taken connected to staffing and other cost controls. We believe that an optimization has allowed us, even though a big drop in turnover, to keep margins at a healthy level for the group. Here is another view where we see the EBITDA then. We see the net sales, and we see the margin over the years instead of the quarters. If we look at
If we look at quarter four, we dropped net sales close to SEK 70 million down to SEK 166 million. For the year, we dropped SEK 204 million in turnover to SEK 748 million. This is then the effect of the membership base and the impact we have had of COVID-19. We have not got any state subsidies in our net sales, so we have not booked any of the state subsidies in the net sales component. If we look at the EBITDA, we managed to keep an EBITDA somewhat in line with last year, same quarter. If we look at the fiscal year, it's slightly improved versus last year.
I think this is then, again, the productivity and efficiency improvements that we have made, dropping SEK 200 million in turnover, but still be able to keep somewhat, or even improve the EBITDA. We believe this is something that shows the strength of what has been taken, the actions that we've taken. Look at the EBIT. EBIT is also then 16.6 million in the quarter and for the year, 58.3. The margin also you can see below there. Net result, SEK 7 million compared to -14 last year in the quarter and 8.3 over the year with -304.5 last year.
We also wanted to note that the board of directors proposes that no dividend is paid out for 2020. We move forward. If we look at the year, the headline is strong cash flow and lower net debt. Our cash flow improved SEK 101 million in the fiscal year compared to last year. And here we do have state subsidies that's still not included in the cash flow that we're awaiting payment for. Worth noticing. The cash flow in the quarter is minus SEK 6.2 million, and if we look at the year, it's SEK 59 million versus negative SEK 45 million last year. We also, as you might know already following us, but the model of the prepaid members, it boosts cash flow.
As soon as we're up and running again selling memberships, we get this stable revenue base to continue to build on. Our net debt is lower at the end of the period and compared to last year, SEK 345 million versus SEK 425 million. Cash available for us is SEK 144 million and not used credits as well. We have a net debt that is SEK 70 million better than Q4 2019. If we look at the leverage of the net debt in adjusted EBITDA, we had 3.2x, whereas last year we had 3.9x, excluding the effects from IFRS 16.
Even though we have had a year of a pandemic dropping SEK 200 million in revenue, we have been able to maintain profits and also improve our situation when it comes to the net debt and cash position. If we look at the development per segment, first of all, Nordics, we see a drop in turnover as we do on the total group. We see an EBITDA that is slightly lower than last year, and here we have governmental support. This is related to Norway of NOK 3 million. We have an EBIT of close to NOK 19 million versus last year's NOK 13 million. The member base developed negatively. Again, Norway has been closed site by site, region by region, and we have had then the recommendations to Sweden not to visit the gym.
We have had an environment where it's been really tough to sell memberships, and that's the impact we have had on our member base. We've also closed a couple of clubs here, as you can see, which also has, of course, had a negative impact on the membership base. In Germany, we had a large part of the quarter closed. We have net sales of EUR 8.6 million. Last year, we had EUR 24 million. The EBITDA is then EUR 8.8 million. Here it's EUR 10 million of governmental support included in this EBITDA worth noticing. The supports in Germany for quarter four has been good, which means that we can maintain an EBITDA on a good level.
The membership base in Germany has dropped, not as much, but still, of course, with the same reason, a total lockdown does not help us build the membership back. We have the same number of clubs in Germany as we did the same period last year. If we look ahead then with these results, we have done a lot of work in terms of, optimizing our operations, really reviewing and working with the cost side to make sure that we work smart, to learn from the large number of sites we have and using best practice and implementing that on a total group level.
This means that we see that we will continue even after the pandemic to work with a much lower staff cost and higher efficiency than we did entering this year. We expect the staff cost and efficiency to maintain after the pandemic as well. With the growth of members, that adds a healthy revenue to the total, and we believe that it will not drive additional staff costs. Why do we believe this? We wanted to highlight this a little bit. Well, the streamlined site operations is one, the optimization of each schedule, the work that we have done in every site of Actic.
We have implemented automatic entrances and continues to do so, which means we can increase opening hours without increasing staffing costs, so we can offer the members a better training experience, without driving additional cost. We have centralized marketing supports, to be able to work much more efficient than before. This was an initiative out at our sites, which took some time for the staff out in our sites. We did not see really the big effect of this. We see a bigger effect of those hours being spent taking care of the members. We have centralized facility management, and we have increased the digital aspect of operating our sites, and we continue to do so.
We believe this is not where we are completely done, but again, we see more improvement, and that's why we can feel certain that staffing costs continues to be on a lower level than what you have seen before, even after the pandemic. If we look a little bit longer ahead then, well, what trends do we see to leverage on in terms of the industry that we operate in? Well, first of all, the new working habits, we believe a continued work from home will be present after the pandemic, compared to before. This changes the traffic flows a little bit to which sites that are more visited than others. This also opens up for home training in a completely different way than before.
That's the digital development. We see that the maturity to work with inspiration structure of training has, I think, increased heavily and that this is something that is definitely part of how we build a strong training offer going forward. You can train at home, you can get access to personal training, you can have programs and also advice. We believe a lot in being present with the members when they train in the gyms, outdoor, but also at home. Customer preferences have changed. We believe social interaction and outdoor training close to home will be more important than before. We believe that the training together aspect will continue to be an important part of the training routine for most people.
We do not believe that at-home training will completely replace the overall aspect. We believe that at-home training adds a healthy piece of the puzzle to making sure that you stay active enough to live a healthy life. I think this is also a big part of the Actic DNA that is training for health and not muscles. This is also, of course, the larger health trend that we will see here now after the pandemic. How can we live a life where we take care of ourselves and we prepare ourselves as much as we can for the challenges to come? Training for health has always been and will be DNA in how we view our part of the market, the health and fitness market.
What we believe strongly in is that we operate with an omni-channel model. We have, and this is where we see that we put the member in the center, and we offer them training on their terms, much more than what has been before, where the gym's location and opening hours has been the central part of the availability of training. We launched Actic Anywhere, which is our digital platform, for training. This was launched in quarter four in all markets. This is just the start. We believe strongly that this will be an important core offer of being a member at Actic, and it will be continuously developed to meet our members' demands. You can get personal training here.
We will have PT Online, training programs and advice and inspiration, wherever you are. I think that this is really key for us as an operator to be helping our members with their training also outside the gyms. We're also really happy with our outdoor boxes. We've had tests during this year, and we've had a success in both of these boxes. It's been really positively received from all member types. The possibility to train outside with weights has really been in demand.
We have moved to launch 22 new outdoor boxes in late quarter one, early quarter two, depending on the city, and we will use these boxes to strengthen the total offer in the cities where we operate along with the Actic Anywhere application. We believe this is what creates the omni-channel of Actic, the gyms, the outdoor boxes, and then the digital solution connecting it all together. We also will continue with this. This has been really positive and we have announced 22 boxes. We look into possibilities to launch more of these boxes to strengthen our total offer and integrate it with the gyms. That's it. Taking you through the market situation quarter four.
We've been through our results and we've also shared with you how we view the maybe short-term, but also the mid-long term in how we as an operator in training and health and our role and what that will be in the future. With that said, we open for questions. If there are no questions, obviously me and Stephan will also be away.
Hello?
Hello?
Yes. Hi. Sorry. This is Barbara Smit from Fitness News Europe. Yes, I did have a question about Actic Anywhere. Can you tell us, you know, in what way you're monetizing this? Well, first of all, how it was developed, with whom? Secondly, how you intend to somehow monetize this and what your expectations are in terms of the uptake from members?
Absolutely. Thank you. Hello, Barbara, and thank you for the question. If we start with one part of your question: how was this developed? We've done this with a partner, but it's all the total interfaces from us, all the inspiration, all the movies, everything, all the programs, it will be Actic, but the infrastructure of the app is done with a partner. We believe we want to have the connection with the customer with our content and the Actic content, so I think that's important. Monetizing this, we see that this is an integral part of the offer that we have, that this is really to drive our overall memberships. We want to offer our members the ability to train anywhere. The main part is to offer an Actic member Actic Anywhere.
Itself, it will not drive the access to Anywhere. It will not drive a main new revenue stream. We will offer it to non-Actic members, but to a low cost. The main audience for this is the Actic members. Within the app, we see great possibilities to add segments which we can monetize, premium programs, boot camps. We also see PT Online being a product in high demand and with an exciting future ahead. That's how we will monetize it, not through the access to inspiration and structured training, but rather the aspect of premium programs, boot camps, and PT Online.
One question from Nicklas Fhärm as well. Do you know how we can unmute him?
Barbara, was that an answer to your question?
Although I have a couple of follow-ups. Who is the partner with whom you developed it?
We have worked with a company here in Sweden that's called Twiik.
Okay. Any member can download this service, this app? How many have done that so far?
Well, we have not communicated the figures of this yet, but all members can download it at the moment. It's been. We think of it as a broad offering. We also believe it has definite potential to continue to develop going forward. We have at the moment two apps. We have one app where you do your Group X bookings and more functional aspects to the training, and then we have this as a structured inspired training. The ambition is to build them together over time. For us, the speed to market was an important factor in now offering digital structured training.
Okay.
That's why we have them.
At the end of the day, what do you then expect? I mean, when you want to have build them together, which, you know, I suppose will really drive adherence to that, you know, what percentage of members would you expect to actually use that? Also what percentage would you expect to use one of the premium services?
Our vision for this is that it's an integral part of the offer. If you're an Actic member, you will have your membership within that app, so that all members will have it as a core foundation and hub to their training. That's how we will build it. For us, it's all members, not now, but the goal is that this is the hub for the Actic membership, really. The other aspects of premium training, we're still discovering stuff to speculate how big it will be.
We have a huge belief in the PT Online product. As part of helping our members to get the training as part of their life, ever-changing life, and that the PT Online is a really strong product, that where we can offer a coach to all members. We have not set any targets for this as well as we're just getting started. I believe that the digital products will be a significant part of our growth ahead. We have not communicated any goals around this.
Mm-hmm. Okay, thank you.
Thank you, Barbara. Do we have any more questions?
Yeah. We have one question from Nicklas Fhärm. We need to unmute.
We have some questions from Nicklas Fhärm. We'll take them as soon as we can get sound on. Are there any other questions meanwhile?
Well, Anders, while you're waiting. Can you hear me?
Sure. I hear you, Barbara.
Yes. While you're waiting, can you tell us how things have progressed with the shortage of personal trainers?
I think the situation has been really challenging for the trainers. It's we have seen a drop, as you can see in the revenue of trainers, which means that their possibilities to
To operate is tough at the moment. It's not changed. I think we'll need to see the recovery of memberships and visits to our gyms before we can see the recovery of personal training. I think that the shift that we're doing to PT Online opens up for a lot of possibilities to trainers to reach outside of the gyms where we have lower amount of visits. This is something that as soon as the pandemic is over, we'll start to recover. At the moment, the demand is lower, so it's also tougher for the trainers.
Exactly. Thank you.
Hi, this is Nicklas Fhärm. Can you hear me now?
We hear you now, Nicklas. Hey.
Oh, wonderful. Wonderful. Hey, good morning, everybody. I had some difficulties with the call in, so I joined the Teams meeting instead. It seems to be working much better. My first question is actually gonna be on the cash flow in the quarter. I was just wondering if you could explain a bit how there's quite a big change in debtors in the working capital in Q4 this year compared to Q4 last year. I would be very interested to understand the basis of that change. Also, I was meant to ask you how much is the cash flow effect that you're kind of still missing in terms of payments relating to government subsidies that eventually will be paid out, please?
I'll let Stephan answer those questions, Nicklas.
Yep.
Yeah.
Thank you, Nicklas. As you can see, you have a quite big difference mainly in the liabilities side, and it's mainly I think we have had some backlog last year in the payments and also this year. Of course, we have some less prepayments due to the decreased member base. A part of that is we have at December 31 it is booked as liability, and this liability is lower. That's why you have the decrease in that one. It's actually lower member payments due to lower member base.
Mm-hmm.
On the second question, it's EUR 13 million that we are waiting for mainly in Germany in governmental support.
Excellent. Thank you. My second question relates to the costs. I have to say, I think it's an impressive job done on the cost side now for not only the quarter but you know, along last year as a whole. I meant to ask you sort of, are there any impacts in operating costs in sort of Q4 that are sort of very specific reductions due to the current situation that you know, quite immediately will reverse when hopefully soon you know, the world normalize? Could you walk us through a little bit in more detail the cost bridge or the cost development with some key items in Q4, please?
Just to understand how you managed to reach those cost levels, please?
Yeah. We have one big impact. That's the government support of EUR 13 million in total in the quarter. This, you asked if this is recurring. The governmental support package in Germany will not be as generous as it has been in Q4. It will be during Q1 a little bit more like it is in Norway that you have a percentage of the fixed costs. The November and December package that the German government came with was very generous.
If you look on the other cost side, of course, it meant as Anders mentioned, it's the employee cost that we have decreased a lot, and we have the work that the company started in 2019 and have continued during the COVID situation. I mean, it's SEK 25 million that have decreased in personnel expenses.
Mm.
We also have, of course, the rent situation. A part of our rents are variable. When the net sales come down, the rents also come down in part. Also it's a lot of cost savings, of course. When we have gone into this situation, of course, we have focused on cash and saving costs.
All right. Can I also just ask you to give us an update on the ongoing SEK 8 million annual savings program from the redundancy program? More specifically, how you expect that to sort of impact operating earnings on a more, say, quarterly basis throughout 2021, please.
Absolutely, Nicklas. Thank you for the question. What we have done is that we have since we started this work already in 2019, but it's really to go through and optimize the scheduling and then the contract structure to match up and place staffing hours at our gyms where the members are. This program is the result of that where we move from the short-term permit and rather adjusting to the new schedules. We will be able to operate at the levels that you have seen throughout the year without the governmental support on short-term permit.
I think it's our way to really adjust to the scheduling that we want without the short-term permit.
Yeah.
You should expect that staffing costs will continue on an efficient level as you have seen them throughout the year, even though there's been a pandemic.
Excellent. Thanks. Thank you for clearing that out. Now can I also let me see now. Of course. Yeah. Sorry. I also wanted to ask you know, once the world normalize somehow and, you know, your facilities are open at, you know, full capacity, at that point, can you tell us a little bit more on sort of your strategy to recover membership base, vis-à-vis sort of pre-term levels, et cetera? How do you. For example, would you consider discounting membership offers, et cetera, et cetera, to sort of get back to where you need to be in terms of capacity? Or what is your strategy when things look more normal?
I mean, it's a good question, Nicklas. What we have done now is what I mentioned is we seek to work on our geographical strategies to strengthen the clusters where we operate in. What we have done now is we have moved with outdoor boxes to strategic locations within these clusters, and that adds and opens up the outdoor training. That strengthens the customer offer, clearly. We'll continue to that along with continuing to work with our roadmap on expansion, then looking at new sites in order to strengthen our presence.
Combined with that, continue to develop the digital product so that when the world recovers, we are ready to receive members with a strong customer offer, a stronger customer offer than we had before. I think that's the main aspect. We also worked with lifting our gyms, so improving the offer out at the existing gyms. We have done a couple of them already. We will continue with that when we have better visibility ahead. Meaning lift the indoor gym experience as well. That it's not super advanced, but it's paint, it's equipment, it's other aspect that we can see clearly that in demand from the members. I think those are the two.
To your question, whether we are open to discounting, we have done that as a part of our commercial year in a normal year. We will also work with campaigns, and we will open up for different type of offers to attract new members. We think it's necessary to recover the membership base as quick as possible. We saw that we were able to do late August, September and large part of October worked really well for us. It was we had great sales when it was a more normalized situation. We also expect that the same program strengthened with outdoor training, digital product and campaigns will give us the possibility to recover fast. That's the priority.
As soon as the market is open, we'll put that as the highest priority.
Thank you, Anders. A final question, I think, for now, if I may. Could you just give me an update on sort of your market and your market situation with regards to, you know, presumably smaller competitors, maybe even going out of business, et cetera? Have you experienced any change in the marketplace that you think is worth mentioning that could, you know, eventually benefit you?
Well, what we can see is that there will be a lot of possibilities to great locations. For our offer, there will be a good market to find new sites and new locations for where we want it to be. We think that that absolutely can be an upside going forward. I think it's been tough for the whole industry. I mean, this when you have this type of revenue streams through the membership base, to have these two waves of pandemic, it's been tough for us, but it's also been tough for everyone else in the industry. I believe more or less you will suffer from this. Could it open up possibilities for us? I think so.
We have navigated this well. Yeah.
Yeah.
I'm not sure if that's an answer to your question, Nicklas, but that's how we see it.
Yeah. No, that's perfect. Thank you so much for taking all of these questions, and maybe I'll come back into the call later.
Thank you, Nicklas.
Are there any other questions from anyone else?
Could I have one more question, Anders? It's Nicklas again.
Of course, Nicklas. I was waiting for that for sure.
If anything, I just want to ask you. I mean, again, you're missing some cash payments, but obviously net debt to trailing EBITDA is now down towards 3.2-ish levels, which I think is a bit of a positive surprise, to be honest. My question is really if you could give us an update on how your discussions with your banks are going at this point, really.
Thank you, Nicklas. As you mentioned, we have lowered the net debt ratio and we have the total EBITDA ex IFRS is on the same level as last year, so it's mainly because of the decreased net debt. It's almost in line with our financial goals. Of course, if you look on the next year, we know that we started last year very well. Q1 was quite strong, January and February, and then we had a tough November with COVID. We will lose some EBITDA during Q1 because we meet two strong months.
As mentioned, we have a lower member base to start from. Of course, the leverage situation maybe will be a little bit tough to maintain. Regarding the discussion with the bank, of course, we have a good relation with them and a discussion with them regarding our financials, of course. Yep. Yep.
All right. Thank you again so much.
Thank you, Nicklas. Are there any last questions? All right. Thank you so much for listening in, from me and Stephan. We wish you a continued great day, and bye-bye.