Good morning, everyone. It's time, 10:00 A.M., and a warm welcome to this presentation of Actic's Q1 report. Before we start this presentation, I would like to ask you to put your phone and/or computer on mute during the presentation. This presentation will be held by me, Anna Eskhult. I'm the CFO and acting CIO of Actic Group, and together with me I have Olav Thorstad, Chairman of the board of Actic Group, who will be available in the Q&A session that will follow this presentation. We will start with a brief overview of the first quarter. We can see a positive trend in the quarter, but of course the comparison of numbers is impacted by the severe COVID situation that we had first quarter last year.
Still, compared to last year, we have a positive net sales development with 34%, a growth in member base of 12%, and we also have a positive EBITDA development of 21%. We also see an increase in number of average employees with 9%, but we do have a negative development in number of clubs with 3%, with six fewer clubs, compared to Q1 last year. If we continue with the operational update. As we already have communicated, during the quarter, there are a lot of initiatives that has been implemented or are currently ongoing that we strongly believe will give Actic the possibility and opportunity to grow the business and increase profitability, moving forward.
First, we have revised our strategy with a clearer operational focus and investments in existing clubs and clusters based on the needs of each market. After a phase of strong focus on development in digital services, we will, with the revised strategy, shift to full focus on service delivery, meaning reviewing our product offer, daily routines, customer communications, et cetera, together with investments through upgrades in our clubs and key clusters in terms of refurbishments and equipment. To free up capital, we have during the quarter carried through our reorganization and cost overview program with a goal of a saving of SEK 30 million on a yearly basis. The reorganization process is aligned with our revised strategy with market adaptations. We move from a traditional group structure to a country-based structure that we believe will support a strategic operational focus and increase efficiency.
The change has affected the group and support functions in Sweden but also in Norway. The new organization came into force the 1st of April. In the new country-based structure with the new country managers, we have new country managers in both Sweden and Norway that has been appointed, and we are glad to welcome Leif Nilsen in the role as country manager in Norway and Jens Danerhall in the role as country manager in Sweden. In Germany, Martin Arent is appointed as country manager since December last year. We also announced in February that a fully guaranteed rights issue will be carried out that will bring in approximately SEK 50 million to the company. The subscription period is currently ongoing, and the issue is planned to be completed in end of May.
Finally, we have signed a new long-term financing agreement with our bank, DNB, that will enter into force when the share issue is finalized. All these initiatives together bring Actic into a position with great opportunities to develop the business and build for the future, to be able to welcome our members to an inspiring and competitive training arena. Let's continue with more operational key events in the first quarter. Hopefully, the critical part of the pandemic now is over, and from mid of April, we can operate without restrictions in all our markets, Sweden, Norway, and Germany. The quarter started with high infection rates, and the normal high season in January were affected by the Omicron variant of COVID-19. From mid of February, we could operate without restrictions in the Nordics.
In Germany, restrictions remained throughout the quarter but are now finally removed. Our member base continued to grow, and we increased our member base with approximately 7,000 members in the quarter, and outgoing member base by end of March was 191,000 members, an increase of 4% from December 2021. As I mentioned previously, we announced a new group management team in the quarter, consisting of country managers from each market, working Chairman Olav Thorstad, and myself. According to the revised strategy, we are preparing and planning for the upcoming upgrades and investments in key clusters. During the quarter, we have started with two upgrades in Norway at our clubs in Moss and Liertoppen with a great response from our members. Still, we have a way to go until we have recovered our member base.
The focus is, of course, to continue to work with ongoing initiatives so we can rebuild our member base back to the levels we had pre the COVID pandemic. Compared to the first quarter last year, we can of course see a positive trend since first quarter last year were heavily impacted by closed clubs in both Norway and Germany. This slide summarizes the positive trend in both sales and member-based development. As you can see, and as I also said before, we have a way to go to come back to the sales levels before the pandemic. Still, it's positive to see that we have increased our member base with 20,000 members corresponding to 12% since Q1 last year.
The number of clubs amounts to 166 by the end of the quarter compared to 172 clubs last year. During the first quarter, one club in Växjö has been closed. The result in the first quarter has been affected by one-off costs in relation to the reorganization process that amounts to SEK 13 million. The EBITDA level has increased compared to the same quarter last year, and excluding the one-off cost, the EBITDA level is SEK 47 million. The overhead cost will decrease as a result of the reorganization and will have a positive EBITDA impact going forward. Adjusted EBITDA excluding IFRS 16 lease effects, the EBITDA amounts to SEK 5 million excluding the one-off cost. Continuous cost control is very important going forward, and we are monitoring the cost development closely.
Now we continue with the more detailed financial update for the first quarter. Net sales amounted to SEK 188 million compared to SEK 140.2 million first quarter 2021. Even though we have had an impact of COVID during the quarter, with high infection ratio in the Nordics in the beginning of the year and the remaining restrictions in Germany throughout the quarter, open clubs in all countries have of course had a positive effect on net sales both in the Nordics and in Germany. Increased member base and less freeze memberships also contributes to the positive development. The EBITDA for the quarter amounted to SEK 34.3 million, corresponding to a margin of 18.2%. As I mentioned earlier, one-off cost regarding the organization process affects the EBITDA negatively with SEK 13 million.
Compared to last year, we can see an increase in operating expenses that is an effect from less received COVID support packages, where we in Q1 last year received SEK 7 million, but this quarter, we didn't receive any support packages. We can also see an increase in cost related to open clubs in terms of cost for daily operations such as consumables, cleaning and maintenance, and electricity. We can also see an increase in marketing spend and an increase in cost for turnover rent as a result from high sales. EBITDA excluding IFRS 16 amounted to -SEK 7.7 million, corresponding to a margin of -4.1%. Excluding the one-off costs, the EBITDA amounted to SEK 5.3 million with a margin of 2.88%. Oh, cash flow.
Cash flow from operating activities amounted to SEK 60.5 million for the quarter, and cash flow for the quarter amounted to SEK 13.1 million. Cash position by the end of the quarter was SEK 45.5 million. The positive cash flow is mainly connected with the increase in sales during the quarter, but also from positive working capital. For the first quarter since Q3 2020, we can see a positive cash position development. The development per segment. Nordic net sales amounted to SEK 172 million, and EBITDA amounted to SEK 40 million and EBIT -SEK 7 million. By the end of the period, we had 173,000 members in the Nordics. In Germany, net sales amounted to SEK 60 million. EBITDA was SEK 2 million and EBIT -SEK 2 million.
The member base was 18,000 members by end of March. Yes, that was the presentation, and thank you for listening. Now we will open up for question. Please unmute if you would like to ask any questions.
Yes, good morning. This is, Niklas Fhärm with SEB Equities. Can you hear me?
Yes, I can hear you. Good morning, Nicholas.
Good morning. Thanks for a good presentation of the Q1 results and touching on as well on the outlook of course. Apparently, business is normalizing and, you know, your clients are increasingly finding their way back to your gym clubs. My question is more, I mean, it's quite a substantial increase year-over-year in memberships and RPM levels as well for that matter. Where would you put the membership, the actual membership growth in terms of sort of your internal expectations going into this quarter, i.e. Q1? Is this kind of in line what you hoped for? Is this slightly better or slightly worse?
When we went into this quarter, we were in a situation with a continuous effect from the pandemic and with high infection rates. It was difficult to see what the quarter would look like depending on the pandemic, but the outcome is more or less in line with our expectations for the quarter, yes.
Without necessarily putting any specific numbers on this, would you say that this increase or expectation is, you know, it's reasonable to assume in current trading as well? For example, has Q1 started off along the same lines, or has there been any changes because of the recent events, whatever they may be?
No, but now we're following a normal seasonal trend with the lower activities in the Q2 and due to the summer, et cetera. We are currently working hard to recover the member base. With the initiatives that are ongoing, we see positive on the future, but we can't really say anything about the detailed effects that we can see now.
Also quickly, just looking at external cost development in Q1, quite a bit higher than we expected at least. Obviously, you have been investing in trying to get, you know, members back into your business. How should we think about that going forward? Do you expect to have to charge, you know, Q2, Q3, Q4 P&Ls with a substantial increase in marketing, et cetera? Or do you think that the levels you're at right now is sufficient?
I think that the levels that we see now are sufficient, but we also have seen an increase in costs in general in the market, which we can't really do anything about. For example, electricity and such things. I think the cost level is quite stable, and we are also always looking into monitoring the cost levels that we have and to see what we can do to reduce cost of course. We still have a way to go to recover our member base. Spend and marketing will continue, I would say.
What about costs? I mean, are there any sort of year-over-year effects of, you know, last year not having to pay certain costs that will sort of return in this year, in 2022 that we should be aware of any significant proportion and size?
I wouldn't say so, but of course the comparison with the last year will have an effect from less governmental support packages that we reduced our cost base last year. Also it will have an effect with the closed clubs, which resulted in a lower cost of course.
Right
It's nothing major I would say.
Right. All clubs are open now?
Yes. All clubs are open now.
Yes. Excellent. Final question if I may. Sorry for so many questions, but my final question to you today, Anna, is the savings program, the SEK 30 million that you expect to generate in this year, will you essentially allow that to feed through the P&L, or would you have to reinvest some of the gains from the savings program you expect?
No, I think that will be on a yearly basis. We'd start from 2023. I think we could see this effect in the P&L.
Right. Right. Excellent. Thank you so much for taking all these questions.
Thank you. Any other questions?
Hello?
Hello.
Yes. Hello. Can you hear me?
Yes, I can hear you.
Yes. Hi, Anna. This is Barbara Smith from Fitness News Europe. I was wondering what are your thoughts and actions in terms of pricing. It was said a couple of quarters ago that, you know, you were introducing a new pricing model. Just wondering how far down the road you are in implementing that, and also how that might have been adjusted in view of, you know, general inflation. We're seeing very substantial increases in, you know, by some fitness club operators in other European countries. I'm wondering how you're thinking about that.
Yes. We are in the phase of implementing a flexible pricing module in Sweden during the quarter, as we did in Norway in the fourth quarter. That reflects the inflation rate ratio, of course. That's what we're doing and we're planning to do. I don't know, Olav, if you would like to add something into that flexible membership project that we have ongoing.
No, I think that's fine. I think when it comes to pricing, I think we will always look for optimizing pricing, and one thing is the price out in the market, but the net price to the consumer, you know, pricing, we have been doing a lot of campaigning. We don't expect to do that the same way further, with you know, a more normalized market. We of course also look at the price structure within the base and see how we can work with that. I think that can be added to sort of the price point.
Thank you. You know, what is the end result in terms of price? I mean, now that you're implementing in Sweden, it suggests that you're, you know, you've got results or that, you know, it's all done in Norway and that you can see, you know, how this is panning out. What is the average entry price increase in Norway if it's an increase in fact, on a monthly basis?
The flexible membership is you can't really say the average in general, because that's. It's depending on what type of membership that you're buying. Over time, we see that these projects will have an increase and a positive effect on the ARPM and but that will take some time, since we have lots of customers and members on the normal or the regular old memberships as well.
Okay. Well, maybe putting it a little bit differently then. What would be the average price increase to joiners on the back of this new model in Norway?
Yes, as I said, that is depending on the region and the type of membership that you choose. I can't really say that the increase is X or Y percent.
Okay. Thank you.
Yeah.
Just to add a comment there, because it could sound a bit confusing, but the point is that today we sell one price for, you know, irregardless of what you buy. What we do now is we tailor the price to what you want to do. If you want group training, you pay some additional. In terms of price competitiveness, we increase competitiveness significantly versus, you know, competitors with low price studio-only training because we can offer a different price. We also make sure that the ones who actually buy group training pay for it. We don't have to discount to attract people who only want to use studio and then also giving a great discount to the ones who are using the group training who should pay more because it's a better product.
In terms of what we do now is we reduce the discounting part because we don't have to because we are more price competitive with this tailored recipe. What happens is that we get more members because we have a more attractive offering and more relevant offering to a wider group of potential gym members. We also see that without campaigning, we see an increase in average price, but the price point itself doesn't need to increase. When we look at price minus discount, we see an increase in margin in our base.
Okay. Well, that's very helpful. Thank you.
Thank you, Barbara. Any other questions?
It's Niklas Farm again from SEB Equities. Can I have one follow-up question, please?
Yes.
I've been struggling a bit with sort of estimating operating cash flow for the past year, and as you know very well, it's been quite delicate because of the significant shifts and movements. I mean, during the pandemic, quite honestly. In this quarter, you have a significant reduction in debtors, which kind of contributes very nicely to the change in working cap and therefore the operating cash flow. I was just wondering, I think I posed the same question last quarter, but could you give me an idea of why the working cap has developed the way it has in this quarter, and what we should expect for a full year?
If there are any non-recurring reasons for why changes in working cap this year will be different than, say, a more normal year?
I think.
Two questions in one. What happened in the quarter, and what to expect for the full year, please?
No, we have an increase in accounts payable this quarter that is affecting cash flow positively. Long term, I don't think during the full year, I can't really see that the pattern will differs from a normal year.
All right. Very clear. Long question, short answer. Thank you very much.
Thank you.
Cheers. Bye.
Cheers. Any other questions? If that's the case, I would thank you, thank you so much for today and wish you all a great day. Thank you.
Goodbye.
Bye bye.