Basic-Fit N.V. (BFIT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Welcome to Basic-Fit's 2020 Year Results Conference Call and Webcast. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to your host for today's conference, Richard Piekaar, 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 Moos; and CFO, Hans van der Aar. This call is being broadcast live on our website, and a recording of the call will be available shortly afterwards. 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 present -- prepared remarks, we will open the call for questions. This call will finish no later than 3 o'clock. 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 confronted with the COVID-19 pandemic. As a result of government measures in all our countries, we will force 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 905 clubs. Of these 905 clubs, 851 were closed at the end of the year. We ended the year with 2 million members and a lower revenue of EUR 377 million with an underlying EBITDA of EUR 94 million. All these KPIs are disappointing in the light of the ambitious start of the year, and are all explained by the COVID-19 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 clubs 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 second wave, it was the last one of our largest countries to close. We were able, with the branch organization to 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 the reservation system and a triage at the gate. Our geographical spread did not help to preserve cash during the first 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 as the clubs in 1 of the 2 -- 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 receive regular updates about their clubs. We're able to use the Basic-Fit app, the sport 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 in a 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-19 crisis. As we all of a sudden, we're confronted with a decrease in revenue, we had to act swiftly by focusing on cash flow and liquidity. During both COVID-19 waves, we halted the construction and opening of new clubs and minimize 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 million, and raised $133 million 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 million 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 and 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 million. 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 447 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 fourth quarter of 2020 if government had not interfered. At the end of the year, we had 45 new clubs that 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 joiner growth also compared to 2019 due in January and February. The COVID-19 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 and 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 strict hygiene protocols. Since the reopening of our clubs in June, we had more than 33 million visits to our clubs in 2020 without a single club having to close because of a COVID outbreak. In our Q3 trading update, we reported that our member count has recovered to 2.25 million 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, Luxemburg in November and Netherlands in December, we ended the year with 2 million 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 the recovery of the membership base. The next slide. During 2020, we have seen many publications, which conclude that 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 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 the 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-19 pandemic, the lockdowns and prolonged club closures, we remain confident about the growth opportunity for Basic-Fit. Because of COVID-19, more people are paying attention to the health and fitness, and many will join a fitness club. When COVID-19 restrictions are lifted, we will restart our expansion plans. This will be done in a post-COVID-19 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 paths post-COVID-19, 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-19, 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 the 27% decline in revenue to EUR 377 million. 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 EUR 200 million. When clubs were closed, we put members on freeze, where members that already paid before being put on freeze, we offered them compensation. Depending on the kind of membership, members could choose between such options as a free upgrade from Comfort to Premium membership, a goody 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 leavers, but now join us. If we look at our 2 segments that we -- then we see revenue decrease of 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 cost and a 24% increase in other club costs. The decrease in personnel cost is the result of the various government schemes, compensating part of the employee cost during periods of club closures. The increase in other club costs is 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 and February of 2020 and the rest after the first 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 EUR 187 million, and I will give you some more color on the underlying performance in a minute. We reduced our overhead costs by 14%, which is the combination of both lower international and country overhead costs. We succeeded in saving costs by taking a critical view at our operations, while keeping our future growth potential intact. 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 EUR 125 million 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 trends. The delayed rent payments at the year-end of 2020 amounted to approximately EUR 13 million compared to EUR 2 million at the end of 2019. Underlying club EBITDA decreased 31% to EUR 154 million after adding back exceptional items of EUR 91 million. These exceptional items are almost entirely COVID-19 related and consist for circa 50% of rent related charges. By applying the same methodology, we arrive at an underlying EBITDA of EUR 94 million. Our underlying net result amounts to a loss of EUR 33 million. You can find all the elements in the table. To help you with your modeling, we expect a EUR 7 million lower amount of PPA-related amortization in 2021 compared to 2020. We also expect to record more COVID-19 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-19 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-19 related club closures. The larger degrees that the average for the group is because of 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 EUR 212 million, roughly EUR 70 million lower compared to 2019. The decrease is a 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 per newly built club was on average of EUR 1.2 million compared to EUR 1.19 million in 2019. On average, we spent EUR 42,000 per club on maintenance, well below the EUR 55,000 we spent in 2019. And yes, again, the lower average maintenance CapEx per club is also the result of COVID-19 related temporary club closures and the decision to halt maintenance during the COVID-19 waves. Other CapEx was EUR 13 million 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 first lockdown period, we issued 5.3 million new shares in June to improve our financial flexibility and reignite our growth strategy. The share issue gave us gross proceeds of EUR 133 million. However, due to a second period with temporary club closures during the second half of 2022, and impact this had on our results, we ended the year with a higher net debt of EUR 539 million compared to EUR 451 million at the end of 2019. The longer-than-expected second lockdown period resulted in a higher level of net debt in combination with the 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 that the longer term, we have a great business model and great strategy. Our liquidity position at year-end amounted to EUR 90 million, consisting of EUR 70 million cash at hand and EUR 20 million 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 Rene 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-19 and the memberships before we can update the market on our expectations regarding club openings for 2021 and 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-19 wave. We expect to benefit from increased focus on health and well-being after COVID-19, 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 and our strategy at our Investor Day on November 4. This concludes the presentation. Operator, please open the lines for questions.

[Operator Instructions] Our first question today comes from James Rowland Clark of Barclays.

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, 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 -- or 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 and June next year? I've got the second sort of area of 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 million at the end of last year. Could you just enlighten us as to where you stand today? Are we right thinking that 3% to 4% churn is the right number per month for the last 3 months? And when clubs reopen at this current membership level, can you break even on a cash basis at the group level?

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.

I think I know the first question was question about EUR 150 million bridge, James, about what our 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 EUR 150 million bridge that we would look at equity, equity-linked or other debt to refinance this, and we're still looking at all kinds of ways to pay 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, you saw a few of the bigger chains go bankrupt. Not sure if that will also happen in Europe because most of the countries gave good support on salary cost, for instance. But it's clear that pretty much every fitness company in -- that had to close down for such a long period is struggling. The member amount is something we do not want to share in the middle of the quarter. It's something we will communicate in April of '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 -- we managed to get a relaxation on government to 4.5x 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. But 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 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 clubs are opened and which country will be first to reopen our clubs. We're constantly very continuously monitoring our debt and our cash position and liquidity, but on the not known factor -- unknown factors, again, when can we reopen our clubs.

The next question today comes from Robert Faas of ABN AMRO.

I have a few questions as well. First one on the liquidity. Taking into consideration the EUR 150 million refinancing, but also 2 months of, well, 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 EUR 15 million to EUR 20 million 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 EUR 399 million and a full year of EUR 539 million then the increase is EUR 140 million. 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-19 level 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?

Well, to start with the liquidity, I will answer that question and then when I will come back to the memberships. Yes, we had EUR 150 million bridge loan, which is to be paid back the end of January last -- next year, not February, January. Our cash burn, operational cash burn is around EUR 20 million a month because we -- next to that, we have still have some -- not a lot, but still CapEx to handle. So we're building a few clubs and had to pay still for a few clubs in January. So that 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. And we'll report that again when we do the quarter trading update. But if you can make your own calculations. We started with EUR 90 million available cash. We had EUR 150 million bridge, and we have a cash burn of -- operational cash burn of around EUR 20 million a month with some additional CapEx that had to be paid. So you can make your own calculation.

About the membership, I think as long as we are closed, 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 first week of April. That is at least what they are telling us at this moment. If that is the case, then I think we will grow memberships quickly. That is a good period to open. If we can open, let's say, in June, of course, it's mid-summer, 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.

The next question comes from Jamie Rollo of Morgan Stanley.

The first question is, could you help us understand how to think about the average revenue per member due the impact this year of the 6-month discount that you gave last year? And also, would you expect to do 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 on maybe habit is starting to change and your view on that sort of digital competition. And then, finally, you hopefully talked about the Netherlands maybe reopening later this month or first week in April. Could you just give your view on the other market you operate in, please?

Well, a lot of questions again. Hans, do you remember the first one?

Yes. The first one is about what 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 reopen and what the people will choose. Because, yes, compensation is, as I said, some choose for the discount. Most of our members were put on freeze in the second lock down. So they didn't pay anything. So then we'll restart that contract at the moment that we reopen. 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 reopen. When 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 opened.

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, where 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 being stills 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, a digital fitness world or exercising at home in any way or form is 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 kids 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 listen 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 cart. I don't know if that's proper English, but the Dutch speaking people understand what I mean. In Belgium, it now announced that we will the date that I mentioned is the 1st of May, where we are possible to be reopened again.

And I think what we have seen and 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 a 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, months, we will be opening clubs again.

Our next question comes from Alan Vandenberghe of KBC Securities.

I will limit myself to 2. The first one is regarding something that you said earlier in the presentation. You seemed to imply that other less professional or a smaller player 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 513 mature clubs and at year-end, you only have 510 million. I was wondering where the difference came from?

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's a temporary closing in France due to some accident that happened there. And we closed the club in -- moved 1 club from Dallas to another location. So that new location is a new club, but the other club was in the mature club. So we closed 3 mature clubs in the last 10 months.

I think your questions about if we go to -- if there was an opportunity that we maybe go to country #6. That is not our -- 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 #6.

Your next question comes from Marc Zwartsenburg of ING.

Yes. A couple of questions from my side, not 10, don't be afraid. To start with the -- 2 only. Here we go. Just to come back on the potential opening in France, Belgium and Netherlands in the next 10 months, would you expect, once they open, that after now with the U.K. mutation also out there that they will probably impose more restrictive 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, but 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 the U.K. fitness clubs, they are to 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 lockdowns, 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 it's gone 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 just have to wait and see what is coming our direction. But for sure, we do not expect if we can open -- that we can open everything immediately, but 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 24/7, we can have a lot of people in, even though it's only 30 at the same time. So 30, for a beginning in the 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 now that you have any indication needs from the Dutch government that they say, well, we're almost there, but it will be a bit more restrictive, et cetera. There's no indication yet that, that will happen.

No, no.

Okay. Okay. Clear. Then on my second question on the clip openings, René, I think you mentioned the target for 2022 has not changed at the 1,250, and perhaps we will update you later on with even and higher target. I assume that you're talking them with a higher target about the period beyond '22? Or would it also be possible that you cease an opportunity and that you say, "Okay, we're going to raise the bar even further?" I'm just thinking a bit as how much can you roll out in the second half and next year post-COVID, so to speak.

Yes. Well, I didn't mention the number 1,250, and it's also not in our press release. It is -- we -- 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 to 1,250 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're 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 that at 1,250. 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 will be able to open after the summer you could open so 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?

Correct.

I go back to that, but of course, liquidity is also an issue. So we have to look at also the financing strategy. Are we 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 fixed it earlier with the equity-linked instruments or whatever instrument you want to use, and I assume we get an update a bit before that, that's...

Yes. Absolutely.

And the next question comes from Hans Pluijgers of Kepler Cheuvreux.

Yes. A question from my side. First of all, a follow-up on the bridge facility and your cash position. Do you have any target for your cash position you want to have as a minimum cash at hand, what I'm talking about? And then especially with respect to the bridge financing because if you look currently at your outflow, the principal would be still have some cash and you still have not to use the bridge financing. You could fully repay maybe from cash at the moment in time. Or do you see that differently? Do you have any, let's say, minimum cash position you wanted to preserve? Secondly, on the membership trends during closure. As 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 any acceleration? Or was that, say, the outflow each month relatively stable? And also, of course, looking into the first months of this year. So how longer it take? Is there any difference in the development there? And my last question is a very deep question on the -- what kind of value for the app give you, let's say, take into consideration new 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...

Now, we -- to the value -- people don't have to pay for the -- 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 EUR 250 per member for the revenue for app. So we didn't book any revenue only the revenue for the app, didn't pay separately, and that's what René 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 EUR 250 per member per month for the app usage. And to come back to your minimum liquidity, without a fixed amount of minimum liquidity, 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 EUR 55 million liquidity.

Okay. And in the membership trends for, let's say, during enclosure, 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 leavers. People were, of course, a bit afraid what to do with taking the precautions. And if 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 wanted. We know our system. We have a sign 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, but not a lot, but the normal amount of people chose to leave the club and make use of that possibility to enter a contract. But we're pretty sure that, especially those kind of -- those people, will then see that the clubs are open again, and they can work out in the safe environment, will come back again to work out. So we had the normal leavers despite the fact that they were on freeze, let's say, the 3%, 3.5% per month in churn. But we expect that those people were a member will 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 3.5%, 3% was stable, let's say, when the lockdown period was longer. It was through the period.

It was stable. What you even went down a bit in the last months because yes people were frozen, they didn't that pay, so they didn't have a reason to leave. But still people if cancel the contract and come back when the clubs will reopen again.

The next question comes from Kris Kippers of Degroof Petercam.

One remaining, just to be clear on the opening remark of René. On the M&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 strategic one, whereby M&A is again on the agenda? Or is it just to shift gear rapidly indeed with the opportunities and the sector suffering?

Yes. I think our main focus will be opening of new clubs. So we are not focusing on M&A. But if there is an opportunity in the countries 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.

The next question comes from Charles Mortimer of Citibank.

Just a couple of very quick ones. Clarification really. The 45 clubs that you're aiming to open this year. What's the associated CapEx in 2021 for those or remaining CapEx?

Well, the club cost will be around EUR 1.2 million times EUR 45 million. I'm not sure which part has been paid or not paid or invoiced. So that is...

Those imports will be in 2021, because we agreed with all the supplies and the building companies that we can pay them later after rebuilding those clubs and after the reopening. So most of those costs will be paid in 2021 and invoiced.

Okay. That was quite clear. And then just on the -- just a further clarification, 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 of grade.

No. 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 til the clubs will be opened, and then we can make a decision. We know that things are happening in the sector. As René 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 months, we had other things on our mind, and there wasn't the right time to do things like that.

The next question comes from Christine Zhou of RBC.

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. It's a tiny sample size, but sort of 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 after reopening? And just secondly, on Spain, COVID clearly disrupted your sort of trial period there. And I understand the last few months have been 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'd observed that's feeding into how you're thinking about that market going forward?

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 in the number of people who are allowed. So we also don't do any marketing because 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 -- our membership base, 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 the snow problem. This -- 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.

And 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. But in -- we are, of course, focused on the Madrid area when, there, the clubs were open. But the life in Spain is very hard now with all -- with the Co fit. It's not -- our clubs are open, but a lot of the traffic between 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 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 normal join us, a bit less than normal, and we have the normal leavers, 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 -- if Spain can be an example of what will happen in other countries. 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, and impacted.

The final question today comes from Christophe Beghin, Kempen & Co.

Yes. Two questions from my side. Can you remind us, please, what percentages of the members that are still stuck, let's say, within their first year contract? And the second question is, do you have a preferred country where you would execute on M&A, like, for instance, Spain, where you could maybe make a big jump in market share by doing some strategic acquisitions?

If I can answer the first question, around less than 50% of our members are in still in contract. So the remaining, it's a bit difficult now to say because everybody is frozen and the contract period is, of course, lengthened by the closure period. But if you -- roughly around 50% of our members are still in contract, meaning 50% are out of contract.

And the preferred country for M&A, we would look at any country. So we don't have a preferred country to look at M&A.

We have reached the end of today's conference call. I would like to hand over to Richard Piekaar 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 questions 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.