Basic-Fit Key figures

Company profile

		Our identity Basic-Fit is Europe’s largest and fastest-growing fitness chain, with 1,200 clubs and 3.35 million members across six countries. Our values – be, accessible, smart, inclusive, committed – define us and guide us toward our mission to make fitness accessible to all and a habit people love.
		Our approach We are a mission-driven company that offers affordable, high-value fitness solutions to make working out a basic of life everywhere at any given time. We use state-of-the-art technology to constantly update our products and make them scalable, affordable, and personalised. By doing this, we help our members to move toward a fit and happy life.
		Our unique proposition We offer a selection of  memberships that fit personal situations. Our subscriptions give access to our club facilities, as well as all the benefits of the Basic-Fit app. Our self-developed and maintained app offers hundreds of training programmes, podcasts and virtual group lessons. Members can also use the app for nutritional advice, to track their progress or to search for an available personal trainer. The combination of our extensive and fast-growing club network and the Basic-Fit app gives our members the opportunity to exercise close to where they live or work, or in the comfort of their own homes via digital training or with our new smart bike offer.

For Basic-Fit, 2022 was a year of recovery and growth. Following the lifting of the remaining COVID-19-related government restrictions in the first four months of the year, we saw a strong recovery in memberships, as our numbers increased by 51% to 3.35 million memberships. We also added a record 185 clubs to our network to reach 1,200 by year-end. We extended our European market leadership in terms of club locations and are now larger than the next three integrated operators combined. And this is just the beginning, as we envisage operating 3,000 to 3,500 clubs by 2030.

By the end of the year, the mature club profitability was also back at pre-COVID levels. This, in combination with ample available liquidity and sound balance sheet ratios, will enable us to comfortably increase our club network by between 200 and 300 clubs a year in the coming years.

In October, we shared with you the news that the average number of memberships in our 502 mature clubs had recovered to the pre-COVID level of around 3,300 memberships per club. This means that these mature clubs have now fully recovered from a two-year period of temporary closures and other COVID-19-related government measures. This recovery once again confirms the strength of our proven business model, as well as our cluster strategy; since the outbreak of the COVID-19 pandemic, the number of immature clubs increased from close to 400 to nearly 700 clubs, and still our mature clubs grew back to their pre-COVID memberships level.

By expanding our network throughout Europe, we enable more people, including our members and broader communities, to work on their physical and mental health. At the same time, we aim to use our natural resources more consciously, both in our clubs and offices. By reducing our energy consumption and using sustainable energy, we aim to reduce our CO₂ emissions and be carbon neutral by 2030. With this in mind, we have set up an energy saving task force to help identify where we can achieve efficiencies. Our first goal is to reduce the energy consumption per club by an average of 20% in the course of 2023 compared with average energy consumption in 2022. In the long-term, we will replace all natural gas heating systems with more efficient electric systems in those clubs that are not yet natural gas free and we will install solar panels on our headquarters and clubs when possible.

I would like to thank everyone who contributed to our recovery and continued growth in the past year. Thank you to all our employees for your hard work and dedication and to all our stakeholders for their continued support. Thanks to you, we are in a strong starting position for 2023.

As we switched back to a modus of accelerating growth, everyone, from our Supervisory Board and my colleagues in the senior management team, to our people working in our 1,200 clubs and in our local and international head offices, did an outstanding job.

Last but not least, I would like to thank our more than 3.3 million members who chose Basic-Fit as a partner to work on their physical and mental well-being and help us achieve our ambition to make Europe a fitter and healthier place.

CEO and founder
Basic-Fit

Our strategy

We believe that everyone deserves to be fit and feel great. We encourage everyone to improve their fitness level, as it can have a positive impact on almost every aspect of our lives. Our mission is to make fitness accessible to all and get people to love their fitness habits. We aim to remove the barriers that are keeping people from working out, and we are committed to helping people make fitness their Basic.

The United Nations’ Sustainable Development Goals (SDGs) are a roadmap to a more environmentally and socially conscious and responsible world by 2030. Our mission and purpose are particularly closely aligned with five of these SDGs: good health and well-being, quality education, gender equality, decent work and economic growth, and responsible consumption and production.

In 2021, we launched our ‘Go for a fitter world programme’, which articulates our long-term ambitions by 2030. Based on our three main pillars of Healthy People, Healthy Planet and Healthy Communities we built a programme which covers the different areas of attention that drive our strategy. This varies from offering our members and employees a healthy and safe environment to work (out) in to the impact of our business on our planet to the way we give back to our communities. Ultimately our goal is to make our world a fitter place.

Our overarching long-term ambition is linked to our pillar Healthy people which aims to reach 15 million people by 2030 to help them improve their health and well-being. This includes all people that benefit from our products and services across Europe in our clubs and at home. Our ambition for the planet results in our goal to reduce our environmental footprint and be carbon neutral in our clubs and offices by 2030. When it comes to Healthy communities, we aim to invest, next to our contributions in kind, at least €5 million in our communities through impactful partnerships by 2030.

In 2022, the World Health Organization published a report stating that almost 500 million people will develop heart disease, obesity, diabetes or other noncommunicable diseases (NCDs) attributable to physical inactivity, between 2020 and 2030, and highlighted the high related cost of physical inactivity if populations are not encouraged to take up more physical activity. The Health and Fitness industry has an important role to play in these efforts by improving the population’s overall fitness levels.

We at Basic-Fit contribute to this by aiming to have a positive impact on as many people as we can, through our products and services, across Europe. We offer a holistic approach to fitness that includes training options in our club, outside and at home. We build our clubs close to where people live and work, as proximity is a key criteria in their motivation. Time is also an important factor in whether people choose to go to the club; this is why we have increased the number of 24/7 clubs across our network, to make it easier for our members to visit one of our clubs whenever it is most convenient for them. For this reason, we have also launched a new smart bike for home use.

We constantly improve and develop new features in our Basic-Fit app to meet the expectations of sports enthusiasts in the new hybrid era. Our members have access to more than 150 virtual group classes and instruction videos, so they can get the most out of their membership and work on their fitness training anytime and anywhere. In addition to helping our members stay fit, our app delivers nutritional advice and recipes, together with an online coaching service to complement their exercise routine. We have a special focus on getting more members with a Premium membership, as these memberships offer families and friends the opportunity to work out together. This is particularly valuable, because parents who exercise regularly set a good example for young people. If these young people have the opportunity to work out too, as part of a Premium subscription, this increases the likelihood that they will lead an active life later on as adults.

Our priority is to provide both members and employees with a safe, healthy and comfortable environment to work and to work out. Our employees are also a key factor in the success of our members’ fitness journey. At Basic-Fit, we also foster a company culture in which our people can grow and develop and have an impact on a daily basis.

To find out more, please see the Non-financial information section in this annual report.

Healthy planet is linked to our ambition to minimise the negative impact of our activities on our planet and, more specifically, to reduce our carbon emissions.

We are committed to making our operations carbon neutral by 2030 by reducing our CO₂ emissions for scope 1 (direct emissions) and scope 2 (indirect emissions). Basic-Fit's scope 1 emissions come from burning gas for heating, including the showers in our clubs and at our local and corporate headquarters. Scope 2 emissions are linked to the energy that we purchase. These emissions are created when our suppliers generate electricity. We are also taking in to account Scope 3 emissions, which is more complex and not fully within our control, in our long-term approach. This focuses on all other emissions, including those upstream and downstream of an organisation's operations, generated by the activities of suppliers and members. We will conduct an impact assessment and examine all the elements that we can control, such as emissions caused by our business travel and employee commuting, in 2023.

In the short-term, our main focus is on the implementation of energy reduction initiatives, the exploration of new solar panel installation opportunities, working on a gas transformation project and the continued development of our remote facility system. A dedicated internal taskforce has defined and prioritised a full set of initiatives. We are also actively encouraging our employees to join the collective effort.

The aim of our remote facility system is to help us remotely monitor and control the operations of a club, including the use of heating, ventilation and cooling. Our new remote facility solution will enable us to prevent waste by monitoring and controlling the use of these systems centrally. In the coming years, we will be rolling out this remote facility in all our clubs.  In the meantime, we will replace any gas-powered central heating systems with electric boilers. In addition, we will be equipping a growing number of our clubs with heat recovery systems. These systems will render the use of central heating systems unnecessary and reduce energy consumption in the clubs.

Minimising water usage is one area of attention and this will be included in our remote facility system monitoring. In addition to this, we are continuing our efforts to optimise our clubs facilities to help prevent water spillage.

To learn more about this, see the Healthy Planet section in the Non-financial information chapter of this annual report.

Our third pillar, Healthy Communities, is focused on promoting the benefits of sports activities, as well as an inclusive and responsible culture with our stakeholders and the world around us.

We think beyond our members to help the communities in the countries in which we operate to lead a fitter, healthier life and to create a more inclusive culture. This involves improving the health of these communities by helping to increase the levels of exercise in their lives. Our efforts are particularly focused on youngsters and young adults who lack the opportunity to exercise, whatever their background or ability. We believe that fitness has a positive effect on society. Doing sports from an early age encourages young people to develop good habits and to acquire skills that will benefit them socially, professionally and help them work towards a healthier future.

To substantiate this belief, we have supported organisations that share these goals since 2020. We have partnerships with three highly respected organisations that run dedicated programmes to support children and young adults: the Cruyff Foundation based in the Netherlands, Sport dans la Ville in France and Sport2be in Belgium.

We also focus on providing young adults with better opportunities through the job programmes Job dans la ville and Job2Be, run by Sport dans la Ville et Sport2Be respectively. We help them with work placements in our clubs, career advice and workshops to help them get started in the world of fitness. We also support new initiatives that bring together youngsters from both organisations to create more synergies and impact.

In 2022, we also developed specific initiatives in the Netherlands and France to support refugees and help them stay fit and socialise, when they find themselves in a new environment.

In the years through 2030, we aim to increase our contribution, both financial and in kind, and invest a total of €5 million in our communities. We will expand our cooperation with our partners and give more young people a better chance to lead healthy and active lives.

To find out more, please see Healthy Communities in the Non-financial information section of this annual report.

Stakeholder value creation

Basic-Fit's value creation model provides insight into the resources we use to achieve our strategic objectives and the impact that we ultimately have on the world around us. It aligns our material aspects and sustainability targets with our mission and strategy.

Our business model is based on our mission to make fitness accessible to all and to get people to love their fitness routine. We aim to achieve this by using technology and innovations to provide the best affordable, high-value fitness solution that is easy to use for everyone. This way, we help our members to pursue a fit and happy life.

Key elements of our business model are a winning customer proposition and brand, scalability in existing and new regions, significant cost benefits in building and running clubs, and clear potential for continued growth.

The output of our value creation model is aligned with our strategic and financial goals: affordable, innovative and high-quality fitness that is available to everyone, anytime, anywhere, and which is resulting in cycles of strong returns and sustainable growth.

The model below reflects our integrated thinking at Basic-Fit. The impact we have through our value creation model is aligned with our strategic and sustainability goals. We strive to have a positive impact on the health of people, our planet and the communities in which we operate. You will find more details on the impact that Basic-Fit has on the world in the Non-financial information section of this annual report.

Value creation Model

Modern day fitness clubs originated in the United States and the first chains came to Europe in the 1980s. Since that time, we have seen steady growth in the number of clubs and fitness has become one of the most popular sporting activities across Europe. At the same time, the percentage of people who are members of a fitness club, also known as the penetration rate, is still relatively low in most European countries. This is also the case in all the markets Basic-Fit operates in except for the Netherlands, which is clearly ahead of the long term-trend with a denser club network. But in the Netherlands, too, there is room for further fitness penetration growth, towards the more than 20% fitness penetration rate in the USA.

There are several factors that determine penetration rates across Europe. One of the most important factors is the availability of value-for-money fitness clubs where people live or work. The majority of the countries where Basic-Fit operates are still characterised by large mid-market and premium fitness segments that cater predominantly to consumers who live or work nearby and who can afford relatively high membership fees. In these markets, the value-for-money segment accounts for a modest, albeit fast-growing, piece of the pie in terms of the number of clubs and total memberships. This is why we believe there is enormous potential for value-for-money fitness in our current markets, but also in new European markets. Our model has proven that a greater supply of value-for-money fitness clubs in geographies where there is no or limited availability generates more demand.

Based on proprietary analysis that we regularly conduct, we believe there is an opportunity to expand our network to 2,650-3,200 clubs in our current six geographies. Our updated 2021 market analysis suggests there is potential to expand our network to 300-350 clubs in the Netherlands, to 300 clubs in Belgium and Luxembourg combined, to 1,000-1,300 clubs in France and to 450-650 clubs in Spain. In Germany, where we opened our first clubs in the fourth quarter of 2022, we see room to expand to 600 clubs. The untapped potential in all our markets remains enormous thanks to low fitness penetration rates and limited competition from large chains in the fast-growing, value-for-money fitness segment.

When it comes to identifying and assessing new sites and developing new clubs, we have strict site selection and club development procedures. These all help to make sure we meet our financial criteria. Management will only approve a new rental contract if a new site analysis points to a minimum return on invested capital¹¹ (ROIC) at maturity of at least 30%. The average building costs of a new club and average rental costs can differ between city centre clubs and more rural locations. Most other operating costs are similar for all the clubs in a country. In this respect, building costs and annual rental costs largely determine the minimum required number of memberships a new club should reach at maturity to generate a minimum ROIC of 30%. This means that a city centre club typically requires more memberships than a club in a more rural location.

We combine a centralised and a decentralised site selection and development approach that uses local and regional real estate agents and an increasing number of dedicated contractors. This means we can open a lot of clubs quickly and in the right locations. In 2022, we also used this approach to open our first clubs in our sixth country, Germany.

After we open a new club, it takes an average of 24 months to reach maturity²². In this period, the club ramps up its membership numbers to an average of 3,300. Subsequently, membership growth levels out as the margin between members joining and members leaving the same club diminishes. In the first 24 months of a new club, the number of leavers is well below average rates for the Group, as in that period a relatively large number of members are still under contract. In its first year of maturity, a club is expected to reach the required minimum 30% ROIC threshold.

In our internal and external reporting since our initial public offering in 2016, we have been defining a club as mature if it is at least 24 months old at the start of the calendar year. Because of the pandemic, we decided to temporarily adjust the definition of a mature club in 2022, as new mature clubs were often closed or confronted with government restrictions during their important initial growth stage. In 2022, we reported on the performance of the 502 clubs that were mature before the first lockdowns occurred in 2020. In October 2022, the average number of memberships at the 502 mature clubs had fully recovered to the pre-pandemic level of around 3,300. We expect that the enlarged total of 767 mature clubs, which include the next two cohorts of clubs opened in 2018 and 2019, will reach the same 3,300 average level of memberships in the first quarter of 2023. With the strong post-pandemic recovery having materialised, we will again use the original definition in the mature club reporting. This means that we will report on 891 mature clubs in our half year 2023 results.

We want to point out the embedded underlying club EBITDA potential of our network. Even if we do not open a single new club, our underlying club EBITDA, based on 1,200 clubs, could potentially increase to €518 million, based on the average mature club’s underlying EBITDA in 2022³.

In 2022, we introduced a new membership structure. In addition to increasing the average yield per member, the aim is also to make the membership structure more future proof, as it will add flexibility to our go-to-market strategy. With the introduction of the new membership structure, we also made the use of the QR code on mobile phones the standard. This means that new members will no longer automatically receive a membership card. Additional benefits for us are a reduction in the use of plastic and higher usage of and engagement with the Basic-Fit app.

In all countries, we offer a limited number of membership types consisting of an entry price membership called Basic at €19.99 per four weeks or Comfort at €24.99 per four weeks, plus a Premium membership for €29.99 per four weeks. We adjusted the benefits of the different membership types in 2022. With regard to club access, Basic members have access to only one club whilst Comfort members have access to all clubs in a country. Our Premium membership allows members to visit all of our clubs in all of our countries. The Premium membership also has an important extra feature, as it allows members to always bring a friend. Thanks to changes made in the memberships structure in 2022, we were able to increase the percentage of Premium memberships within the total memberships base to 34% at year-end compared with 23% at the start of 2022. This increase, which we expect to continue into 2023, has a gradual positive effect on the yield or average monthly spend per membership.

In the second half of 2022, after some initial pilots, we launched the Basic-Fit branded home bike in the Benelux and France. Tests conducted showed that our target group prefers a rental model rather to buying the bike in one go. As a result, we introduced a new third-tier membership under the All-In name. This new membership differs between the Benelux countries and France in terms of the length of the contract. The common denominator, however, is that the memberships can be split into a Premium membership plus a bike rental contract.

In addition to membership fees and joining fees, a club also generates revenue from a limited number of membership add-ons and other revenue streams. The membership add-ons are additional fee-based services that can be added to a membership and thus lead to an overall higher yield per member. Add-ons include a sports water subscription, a discounted personal trainer introduction session, a 12-week online certified personal coach subscription, or a flex option that gives members a greater number of options to cancel a membership within the first contract year. The add-on income stream is part of our fitness revenue.

Our clubs also generate other club revenue. This revenue stream includes fees received from self-employed personal trainers and physiotherapists who offer their services in our clubs, as well as from nutritional food and beverage vending machines, and from the sale of day passes in our clubs. A club also generates revenue through digital out-of-home advertising. Third parties, usually large well-known international consumer brands, can advertise their products and services to our relatively young member base via the TV panels in our clubs. This service caters to a growing need among advertisers, as these target groups are difficult to reach via traditional media channels such as live TV and printed media.

The company also generates non-club revenue, which is mainly derived from the online sale of home tools and other fitness-related products and our in-house NXT Level nutrition brand via online and other distribution channels, including wholesale outlets, supermarkets and drug stores. In 2022, we launched our new Basic-Fit webshop, which we built in-house. Thanks to its integration with the SalesForce commerce cloud platform, the new webshop will allow us to integrate these products and services in the customer journeys of our members and increase our conversion rates.

With a record net growth of 185 clubs, which took our network to 1,200 clubs, and with more than 3.3 million members at year-end, Basic-Fit is the largest and fastest-growing value-for-money fitness chain in Europe measured by the number of clubs and members.

Our strong growth profile, combined with our fitness equipment replacement cycle, also makes us by far the largest buyer of new fitness equipment in Europe. This position helps us to negotiate favourable terms with our equipment suppliers. We believe we get the best deals in terms of pricing, but also in terms of service agreements, such as extended warranties and short repair or replacement windows for damaged or out-of-order fitness equipment. Our scale also gives us bargaining power in terms of building, furniture and other club-related initial investment and refurbishment costs. As a result, we believe we can build a club of similar size for less than any of our competitors.

Our ongoing investments in operational effeciencies should also help us to achieve significant energy consumption savings. In the coming years, we will continue to install remote operating tools in all our existing and newly built clubs, which will enable us to monitor and reduce the use of energy. Thanks to the automation of our administrative processes, we can operate a club at a relatively low cost with approximately three full-time equivalents (FTEs). Our remote camera system also allows us to operate more than 300 clubs in the Benelux 24/7. During the off-peak night hours, these clubs are run with no staff. But the non-24/7 Benelux clubs also benefit from our remote camera and other systems and can be run without staff during certain off-peak hours.

Our scale and operational efficiencies put us in a positive cash flow (underlying club EBITDA) position at club level once we reach an average of 1,600 to 1,700 memberships. It also results in a payback period for the initial investment in a club of between three and four years.⁴ To capture the full potential of a local market, we have adopted a cluster strategy, which aims to open clubs in a region or country following a predetermined order and pace. Instead of opening one club in the centre of a city, we aim to open multiple clubs in a city in a relatively short time frame.

This helps us to reach the estimated full potential for value-for-money fitness in a market as quickly as possible, while also ensuring that the clusters of clubs deliver on the minimum ROIC threshold of 30% at maturity. We accept that occasionally, for strategic reasons, we may only reach this threshold at a later stage, for example if we feel this is necessary to achieve a strong and sustainable position in a geographical area in the long term.

While cluster clubs do compete with each other in terms of memberships, the impact is modest and included in our pre-opening assessments. On the other hand, cluster clubs benefit from local scale efficiencies, such as personnel planning, management affairs, marketing and other operating expenses. Having multiple locations also makes us the preferred brand to join, as we are likely to have a club near where people live, work or where their friends work out.

While many of our competitors have gone through difficult times over the past three years due firstly to the pandemic and later a surge in energy costs and wage and rent inflation, we have been reserved in terms of the acquisition of fitness chains. Although many medium to larger size chains were for sale, we will only consider a deal if the price is right, i.e. if we can realise a minimum 30% ROIC over our initial investment plus refurbishment and other related costs. Additional elements that play a role are also the terms of the existing rental contracts and the number of locations that have to be closed over time. Although our last noteworthy deal - the Fitland acquisition - took place in 2019, we continue to be on the lookout for possible acquisitions of fitness club locations and chains. However, we regularly reach asset deals involving a single or several club locations. These are a way of obtaining good locations without having to go through a potentially lengthy permit process.

Any acquisitions that we do make will be opportunistic, with a view to generating clear revenue and cost synergies, while requiring a minimum ROIC of 30% at maturity. At the same time, we believe we can achieve our ambition of expanding to 2,650 to 3,200 clubs in our existing six markets by building our own clubs, as there are ample opportunities.

We finance our growth by reinvesting the cash flows we generate and by drawing on our available facilities. In addition, we have the option to increase our (bank) debt or issue shares and bonds to raise capital. We continuously monitor our short-term and long-term liquidity needs to ensure we have ample available liquidity at all times. At the end of 2022, our available liquidity amounted to €142 million.

Our proprietary research indicates that there are several new geographical markets in Europe where we could establish a long-term presence. Specifically, we are looking to take advantage of opportunities in sizeable markets with relatively low levels of fitness penetration or an underdeveloped value-for-money fitness segment. We are also looking at markets where there is a significant gap between prevailing health and fitness club prices and our price levels. To safeguard our ambitious growth rate target for new clubs beyond 2025, we entered Germany in 2022. We established a local head office in Dusseldorf and recruited local staff. At the end of the year, we operated our first three clubs and this number should grow substantially in 2023 and beyond. After France and increasingly Spain, Germany should become our third main growth driver towards our target of operating between3,000 and 3,500 clubs by 2030.

Several global trends continue to support the ongoing growth of the fitness industry in which we operate: 1) people are getting older; 2) an increasing number of people are suffering from lifestyle diseases such as obesity and diabetes; 3) people are moving to cities; 4) people are increasingly looking for flexibility and instant gratification; 5) people are less active as a result of digitalisation and the increased use of smartphones; and 6) more and more people have a sedentary lifestyle. These trends support the growing demand for fitness in a number of ways. Global life expectancy has been increasing, and this trend is expected to continue in the coming decades. At the same time, the perception of old age and how older people live their lives has also been changing. An increasing number of people are remaining active and mobile at an older age. A fitness workout is an ideal solution for people who want to stay in control and get fit at their own pace.

Increasing prosperity in Europe has brought with it higher incidences of lifestyle diseases over the past decades. Globally, a higher calorie intake of often unhealthy food is contributing to a surge in the number of people suffering from lifestyle diseases such as obesity and diabetes. More people are moving to cities, where the options for outdoor sports are more limited. Combined with the steady growth of the global population, this means there will be less space available for outdoor activities. All these trends are linked to increased inactivity, particularly among younger generations, and this trend is being exacerbated by the rapid pace of digitalisation and the increased use of smartphones.

We are very pleased that the topic of unhealthy and inactive lifestyles is receiving ever more attention in government and NGO policies. The fact that more resources are being used to inform the public about the need to adjust their lifestyles should lead them to adopt healthier habits, including regular exercise and a responsible diet. The fitness sector in general, and Basic-Fit in particular, offer a highly effective, flexible and personalised way for people to remain active and stay fit. Basic-Fit caters to people who lead busy lives and are used to services that meet their needs, whenever and wherever they want. We offer all of this at a very affordable price, maximising the potential number of Basic-Fit subscribers.

1. Calculated by dividing the underlying club EBITDA at maturity by the initial capital expenditure incurred to open that club.
2. Clubs that had not been in operation for 24 months before the start of the pandemic in March 2020, or clubs that were opened during the pandemic may require more than 24 months to mature.
3. This calculation, based on the 502 mature clubs that we reported on in 2022, should not be considered as guidance for underlying club EBITDA for mature clubs in 2023 or beyond.
4. Based on pre-pandemic performances. The payback period of clubs that were operational for less than three to four years at the start of the pandemic depends on the impact of local lockdowns and restrictions.

Business and financial review

1. Adjusted for IFRS 16, PPA related amortisation, IRS valuation differences, exceptional items, one-offs and the related tax effects.
   Totals are based on non-rounded figures

In 2022, we expanded our network by 185 clubs – 191 openings and six closures – to 1,200 clubs. This is a year-on-year increase of 18%. Our growth markets France (119 clubs; +23% year-on-year) and Spain (34 clubs; +61% year-on-year) accounted for over 80% of the growth in our network. In the Netherlands, the number of clubs went up by 15 to 231 clubs. In Belgium, we expanded our network by 14 clubs to 219. In October and November, we opened our first three clubs in our new country Germany.

In 2022, we increased our membership base by more than 1.1 million to 3.35 million (+51% year-on-year). This growth was broad-based, with all countries showing strong performances in both mature and immature clubs.

Following the end of the lockdown in the Netherlands on 15 January 2022, and the lifting of the health pass and other remaining COVID-19 restrictions in all our markets in the first months of the year, we achieved a record membership growth. This higher joiner and membership growth trend compared to years before the pandemic lasted until September, after which growth trends returned to a more long-term trend.

A club is considered mature when it is at least 24 months old at the start of the calendar year. Because of the impact of the pandemic on our performance in 2020 and 2021, we report mature club performance over the year 2022 based on the 502 clubs that were mature before the start of the pandemic in 2020. Our 502 mature clubs ended the year with an average of 3,326 memberships, compared with 2,646 memberships at the start of the year. This means that our mature clubs have now fully recovered from the impact of the pandemic.

1. Totals are based on non-rounded figures

In 2022, group revenue more than doubled to €795 million (2021: €341 million). Fitness revenue includes income from our different memberships, as well as from add-ons like sportswater and personal online coach. The increase in fitness revenue to €764 million (2021: €331 million) was the result of all our clubs being open for the entire period (except for the first two weeks in January for our Dutch clubs), in combination with strong membership growth and the strong growth of our club network. In 2021, our clubs were closed, on average, for 36% of the time, which resulted in a considerable loss of revenue.

Within our membership base, we aim to increase the percentage of higher-priced Premium memberships (€29.99/4 weeks) as this has a positive impact on our average revenue per membership per month. As of the second quarter of 2022, we intensified our efforts to promote our Premium membership and increased the (perceived) value gap between the Basic membership and Premium membership. These changes drove the uptake of the Premium membership to over 50%. At the end of 2022, Premium memberships accounted for 34% of our total memberships, compared with 23% at the start of the year. At the end of December 2022, we changed the membership structure in France and did the same in the Benelux countries in February 2023. In the new structure, the Basic membership has been replaced by the Comfort membership (€24.99/4 weeks). The Comfort membership provides members with access to all clubs in a country while the Basic membership offers access to a single club. The new membership structure is available for new members only. We continue to see an uptake of over 50% for the Premium membership, which, if this continues, should result in a further increase to between 40% and 45% by year-end 2023. Supported by the gradual increase of the Premium membership penetration rate, the average revenue per member per month increased to €22.86 in 2022, compared with €13.05 in 2021 and €20.56 before the start of the pandemic (2019).

Other club revenue increased to €24.3 million (2021: €7.6 million) and includes income from our personal trainer concepts, physiotherapists, day passes, vending and advertising revenue via the screens in our clubs. The increase is mainly the result of clubs being closed for 36% of the time in 2021.

Non-club revenue, which includes sales from our webshop and NXT Level nutritional products to retailers, more than doubled to €5.9 million (2021: €2.5 million).

1. Totals are based on non-rounded figures

All our geographic segments, the Benelux and France, Spain and Germany, recorded strong revenue growth compared with 2021, thanks to clubs being open for the entire period (except for the first two weeks of January 2022 for our Dutch clubs) and the strong recovery of memberships at mature clubs and strong ingrowth of memberships at new and immature clubs.

Underlying Club EBITDA, which is club EBITDA adjusted for exceptional items and minus invoiced rent costs of opened clubs, came in at €316 million in 2022 (2021: €94 million). The year-on-year increase was driven by a strong recovery in memberships at our mature and immature clubs, coupled with a higher average revenue per member per month.

Club operating costs (rent opened clubs, personnel and other) amounted to €480 million (2021: €302 million). The increase in club operating costs is largely the result of our growing club network and the absence of discounts on rents from our landlords and government support for wages and fixed costs that we received as compensation of the impact of COVID-19-related government measures in 2021. The impact of the general inflationary environment was limited on a full year basis, although costs did creep up towards the latter part of the year, mainly as a result of rent and wage indexation.

The underlying club EBITDA has been adjusted for exceptional items that amounted to €7.5 million (2021: 57.8 million), with €6.0 million (2021: €56.4 million) of this related to COVID-19.

Underlying EBITDA, which is EBITDA adjusted for exceptional items and minus invoiced rent costs, showed a strong recovery to €204 million, compared with €31.6 million in 2021. Profitability was weighted towards the second half of 2022, thanks to a strong recovery in memberships in our mature and immature clubs in the first half of the year, which resulted in a more profitable starting point from July 2022 onwards.

Total overhead expenses increased to €112 million (2021: €61 million), due to an increase in international overhead to €43.3 million (2021: €29.9 million) and an increase in country overhead to €68.8 million (2021: €30.7 million).

International overhead expenses increased on the back of our growing club network and organisation, including the setup of a new head office in Germany, new initiatives and higher wage costs due to inflation. We invested in our IT capabilities, insourced our member administration and Basic-Fit member app. In addition, we increased our investments in our competencies in legal, marketing and sustainability. In the second half of the year, we launched our new self-developed webshop and corporate website and we set-up an energy savings taskforce.

The main driver for the increase in country overhead costs were higher marketing expenses, which increased by approximately €30 million compared with 2021. In the first half of the year, we decided to increase our marketing spend as a percentage of revenue to approximately 6%, as we saw the opportunity to benefit from our strength in our local markets to quickly recover memberships lost during 2020 and 2021 and to gain further market share. We also targeted to end 2022 with as many memberships as possible to give us a strong starting point in 2023. In terms of membership acquisition costs, the amount spent per joiner was similar to 2019, the last year before the pandemic. For 2023, we expect to spend a similar percentage of revenue (approx. 6%) on marketing.

The underlying EBITDA has been adjusted for exceptional items that amounted to €10.5 million (2021: 59.7 million), with €6.0 million (2021: €56.4 million) of this related to COVID-19. Non-COVID-related exceptional items include start-up costs for our new German operation.

Depreciation and impairment of tangibles amounted to €151 million, compared with €125 million in 2021. Depreciation of right-of-use assets increased to €172 million from €148 million in 2021. The increase of both line items was driven by the strong growth of our club network in 2021 and 2022. Amortisation costs amounted to €8.7 million, compared with €10.8 million in 2021.

COVID-19 rent credits in the period amounted to €2.4 million (2021: €23.1 million) and relate to property rent discounts received from our landlords that did not result in the amendment of lease contracts. In the event of lease contract amendments, we remeasured right-of-use assets and lease liabilities on our balance sheet. The reported €2.4 million in the period reflects the finalisation of rent negotiations for a number of clubs that were temporarily closed in 2021.

Operating profit came in at €55.5 million, compared with a loss of €145 million in 2021, when clubs were closed for 36% of the time. The recovery was primarily driven by a strong recovery of memberships in our entire club network in combination with tight cost controls.

Finance costs on borrowings amounted to €26.1 million in 2022, compared with €23.8 million in 2021. The year-on-year increase reflects a higher average level of bank and convertible bond debt than in the previous year. Finance costs related to bank borrowings in 2022 were slightly lower than in 2021. The charge related to the €304-million, 1.5%-coupon 2028 convertible bond loan (issue date: June 2021) amounted to €13.2 million (2021: €6.9 million). Interest rate swap charges and valuation differences resulted in a €3.7 million benefit (2021: €1.8 million benefit).

The interest on lease liabilities was €32.6 million, compared with €32.9 million in 2021. The small decline, in spite of a growing club network, was the result of the ageing of our existing club network in combination with rent contract remeasurements that led to the use of lower interest rates than those used at the time we adopted IFRS 16.

Corporate income tax expense for the year was €0.5 million (2021: €51.3 million income), representing an effective tax rate of minus 17.4% (2021: 25.5%). The main element (€1.7 million) of the charge in 2022 was the French CVAE tax (‘Cotisation sur la Valeur Ajoutée des Entreprises’). CVAE is a corporate value-added contribution that meets the definition of an income tax as established under IAS 12.

For the full year 2022, net income amounted to a €3.7 million loss, compared with a loss of €150 million in 2021. The underlying net profit, which is the reported net income adjusted for IFRS 16, PPA-related amortisation, interest rate swaps valuation differences, exceptional items, COVID-19-related exceptional costs, COVID-19 rent credits and the related tax effects, was €11.3 million (2021: €95.2 million loss).

1. Totals are based on non-rounded figures.
2. 25.0% tax effect used for 2021

Net debt (excluding lease liabilities) stood at €694 million at year-end 2022, compared with €548 million at year-end 2021. The year-on-year increase reflects our accelerated club openings programme.

Net debt including lease liabilities stood at €2,175 million, compared with €1,853 million at the year-end 2021.

The net debt/adjusted EBITDA¹ leverage ratio stood at 2.9 at year-end 2022 (year-end 2021: 2.1), which is well below the 3.5 covenant threshold agreed with our lenders.

Including undrawn facilities, the company had access to cash and cash equivalents of €143 million at year-end 2022. Cash and cash equivalents on balance sheet stood at €44 million at year-end 2022.

The initial average capex for the newly built clubs that we opened in 2022 was €1.17 million per club (2021: €1.15 million). Regardless of the initial capex for a club, we continue to only sign a lease contract for a new club if we expect to achieve a return on invested capital (ROIC) of at least 30% at maturity.

Maintenance capex amounted to €61.2 million in 2022 (2021: €47.7 million). The average maintenance cost per club was €55 thousand, compared with €50 thousand in 2021. We continuously invest in our clubs to make sure they always look fresh and welcoming. The average spent per club in 2022 was in line with our multi-year planning. The lower amount in the previous year was the result of clubs being closed for 36% of the time and our decision to use the period that clubs were temporarily closed to roll out the installation of our smart camera system in more clubs and to further optimise the club layout. In the medium term, we still expect an average spend of around €55 thousand per club per year.

Other capex amounted to €11.2 million (2021: €7.5 million). Other capex consists of investments in innovations and software development. In 2022, we made additional improvements to the mobile phone app we developed in-house. The embedded QR code in the app has become the standard tool for joiners to enter our clubs.

On the back of the positive membership development year to date, we remain optimistic on the outlook for 2023 and will continue to execute our accelerated club opening plans. We opened 64 clubs in the first ten weeks of the year and are on track to open at least 200 clubs. This is in line with our longer-term target to open between 200 and 300 clubs a year. We will continue to monitor macro-economic and membership developments, so we can adjust the pace of club openings when necessary. We plan to open most clubs in France and Spain in 2023, whilst we continue to build momentum in Germany with already contracts signed for 65 new clubs.

We achieved a strong growth of memberships and a full recovery of the membership count at the 502 mature clubs to pre-COVID-19 levels last year. We also saw a strong membership development at the clubs we opened in 2018, 2019 and 2020. We decided to return to the original mature club definition and as of H1 2023 will report on the 891 clubs that were at least 24 months old at the start of 2023.

The continuous and gradual increase in average revenue per member, as a result of the adjusted membership structure and high uptake of the Premium membership, will help, together with the energy savings initiatives, to compensate for the impact of cost inflation.

1. Adjusted EBITDA under the bank covenants is defined as the underlying EBITDA adjusted for permitted pro forma adjustments, which are capped at 15% of the total adjusted EBITDA.

Non-financial information

In this section, we provide an overview of how Basic-Fit deals with impacts, risks, and opportunities related to environmental, social and governance matters. We approach this in line with our sustainability strategy, based on three pillars: Healthy People, Healthy Planet and Healthy Communities.

Basic-Fit periodically updates its prioritisation of sustainability topics through materiality assessments or reviews. We determine material topics in conjunction with our stakeholders and these represent the issues that are most relevant for both our stakeholders and Basic-Fit. This year 2022 materiality review highlighted the following topics: focus on health and well-being, access to fitness for more people, member experience, safe and healthy facilities, environmental management, responsible business conduct, and employee recruitment, retention and engagement. Information regarding how Basic-Fit manages these topics is presented in this section. You will find more details of our materiality process in the About this report section of this annual report.

Healthy people

The main thought behind this pillar is to make fitness available to as many people as possible. This means providing a safe environment to work out and promoting healthy behaviours. Our employees are vital to achieve this goal, so we also focus on ensuring their safety and giving them opportunity to grow and be motivated.

Our people are our best ambassadors towards our members. At year-end 2022, we employed 7,564 people. Our employees are a true representation of our members: multiple nationalities and diverse backgrounds, brought together by the love of fitness. We offer our people a safe place to work in, where they can be themselves, have a positive impact on our members and seize opportunities to develop and grow. We are proud of our values (be, accessible, smart, inclusive, committed), which we regularly communicate internally in various ways, such as onboarding for new employees or via our intranet platform. An internal survey performed in 2022 showed that the majority of our people is familiar with our values.

By year-end 2022, the number of Basic-Fit employees increased to 7,564 from 6,964 the previous year. The increase, in absolute terms, was largely driven by the growth in the number of clubs. In 2022 we also welcomed our first new German employees. Our people includes 3,777 men, 3,782 women, and 5 employees who identified as gender-neutral. The majority (around 72%) of our employees work part-time, especially in our clubs. Club employees represent more than 90% of our people. Our employees in France, Spain and Belgium are covered by collective bargaining agreements (standard sector agreement).

We value the experience our employees accumulate during their journey at Basic-Fit. We review our employee lifecycle annually with a focus on launching group-wide HR processes within our operating system. We also collect data at various touch points in their journey and use this information to improve their employment within the Basic-Fit cycle.

The development of our people is one of our focus points. Our international training and development team worked throughout 2022 to offer training on our new services and products to all our employees in their local language. Following the launch of our new Learning Management System (LMS) module, we will be able to offer a wider variety of digital training, as well as a renewed onboarding programme for our new hires. We give a lot of attention to learning and development programmes for employees in strategic positions and plan to add LinkedIn learning in the near future. We will also continue our partnership with local trainers for our club managers. We aim to give our employees the opportunity to grow within the company. More than 15% of this year’s new positions were recruited internally (see 'internal promotions' in table below). The newly promoted employees benefit from trainings and other professional development initiatives.

1. Full-timers only. Data for 2021 is based on Q4 only due to launch of new HR system then.

We aim to facilitate access to fitness by making our clubs easy to reach, which is why we open clubs close to where people live or work. At the end of 2022, Basic-Fit operated 1,200 clubs in six countries with a membership base of 3.35 million. This represents an increase of 51% in our membership base compared with 2021.

Our members are at the centre of everything we do. We are always on the look-out for ways to ensure our products and services are affordable, innovative, high-quality and available to everyone. Our attractive prices allow more and more people to start working out. The new All-In subscription, which includes a smart bike, enables everyone to work out at home as well as in the club. We continuously optimise the club workout environment in line with the needs of our members. Our Basic-Fit app makes fitness available 24/7 and assists our members in the club, at home or outdoors, plus it delivers personalised fitness content, nutrition advice and a wide range of workouts, from meditation to cardio training. In 2022, we introduced the QR code functionality to facilitate access to the clubs through the Basic-Fit app. With our holistic approach, we want to help our members stay fit mentally and physically and make fitness a basic part of their daily routine.

We keep working to improve the Basic-Fit app functionalities. Our app is in the top 10 fitness apps in our markets. The latest version has a rating of 4.4 in the iOS AppStore and 3.4 in Play Store for Android, and we aim to reach higher ratings. Our goal is to help our members carry out transactions in a faster, easier and more flexible way.

With the aim of helping more and more people improve their health and well-being, we give our premium members the opportunity to bring a friend. This means that more people, beyond our members, can benefit from fitness in our clubs. The ability to bring a friend also helps our members feel more motivated when working out. In 2022, more than 1,400,000 people visited our clubs by invitation from our Premium members.

Ensuring a safe and healthy environment for our members and our employees is, of course, a top priority.

Health and safety is managed locally in each country we operate in. Local managers supervise how clubs operate, have an overview of hazards and risks, and ensure that employees receive continuous safety training, including ergonomics, first-aid and fire prevention. They also coordinate with local authorities to ensure cooperation and compliance with regulations. They meet at periodic health and safety coordination sessions, where they share experiences and plan future actions, such as testing ergonomic tools to minimise the physical load of employees.

In addition to our employees in the club, we continue to connect our clubs using state-of-the-art remote surveillance systems to ensure safety, These systems include smart camera networks (25 cameras per club on average), intercoms and panic buttons, which help us to identify risks or detect incidents and respond quickly. These systems are now a standard feature in newly built clubs. A dedicated remote surveillance department operates these systems. At the end of 2022, 71% of our club network was equipped with remote surveillance.

Healthy planet

We recognise our activities can affect the environment and want to manage our footprint, starting by minimising any negative impacts. With this in mind, we constantly monitor our operational processes and explore ways to make them more sustainable, including efforts to reduce our energy consumption, use of water and waste generation.

We aim to become carbon neutral by 2030 and reducing our energy consumption is key to achieving this objective. With this in mind, we are currently testing different pilot initiatives aiming to lower the use of energy in our clubs by 20% in 2023 compared to 2022.

In 2021, we developed a remote facility management system, which enables us to generate a comfortable club environment with minimal energy consumption and efficient maintenance. This includes monitoring and controlling a wide range of operations in a club, such as heating, cooling, humidity, CO₂ levels, ventilation and water temperature in showers, and identifying malfunctions. We have started installing this system in our clubs and will continue in 2023.

We have also been exploring other ways to make our operations generate less CO₂ emissions. We are working towards stopping the use of natural gas in all clubs where it is technically possible by the end of 2024, including investments in the replacement  of gas-powered systems with electric systems. We have also started preparations for the installation of solar panels on our headquarters and we will assess feasibility for this in clubs as well. Finally, we are initiating a project to measure our scope 3 emissions and refine our measurement methodology for scope 1 and scope 2 emissions. Understanding this will help us identify key risks and opportunities and strengthen our decision-making processes, ensuring we move steadily towards our objective of becoming carbon neutral by 2030.

We do not consider ourselves to be a major water user, as the use of water in our clubs is limited. We do not operate swimming pools, saunas or other services that use major quantities of water or require storing water in our installations. We only discharge wastewater after use (mainly showers, toilets and cleaning).

At the same time, we still want to make our water consumption as responsible as possible. To achieve this we have been implementing initiatives such as using water-saving showerheads and activation buttons, which ensure water flow stops once a member has finished. We will continue to look for ways to further reduce our water use.

In addition to reducing our energy and water consumption, over the past few years we have developed several other initiatives to promote sustainable alternatives at our clubs, headquarters and at our partners.

We are exploring ways to reduce our impact in terms of waste generation. For instance, we are working with our suppliers to reduce the amount of packaging used for the materials we purchase. Moreover, we have started contracting responsible waste management companies, which sort collected waste and recover materials for recycling and reuse.

We also keep evaluating our logistics and site construction processes to improve the way we work with our suppliers. Our aim is to encourage our building and equipment partners to reduce the environmental impact of their operations and of their respective supply chains.

1. The most recent dataset for these indicators is 2021 (2022 not available at time of publication). Based on the clubs with our own connection. Calculation of scope 2 emissions was performed using the GHG emission intensity of electricity generation in each of the countries in which we operate.
2. Data for 2020 is restated due to an error in calculation using KwH instead of m³ as measurement unit for gas use. Data reported in previous annual report: 8,337 tCO₂e scope 1 emissions; and 11,899 tCO₂e total scope 1 and 2 emissions. This means that as a result, scope 1 emissions were 29% lower and the total scope 1 and 2 emissions were 20% lower.
3. Note that the number of clubs increased by more than 10% in 2021. With regards to scope 2 emissions, note also that electricity in Belgium in 2021 did not come from certified renewable energy sources, which was the case in 2020.

Healthy Communities

This pillar focuses on our impact on the communities in which we operate. This includes promoting fitness and healthy behaviours, but also helping people feel welcomed in our clubs, by promoting a diverse and inclusive environment. Acting responsibly in our communities also involves doing business with integrity and transparency, and respecting the human rights of all our stakeholders.

Be, Accessible and Inclusive are three of our brand’s core values that drive us at Basic-Fit. At Basic-Fit, you can be yourself. We are proud to welcome everyone, from our boardroom to our clubs, regardless of their fitness level, ethnicity, gender, or beliefs. We offer different memberships, as well as the option of training in both our mixed or ladies clubs. In 2022, we launched our first Pride Campaign in our countries, to celebrate everyone. We aim to maintain, to the extent that we can, a diverse and balanced membership base in terms of gender and age. One of our attention points is that we want to remain attractive for the 50+ age group, which has not yet fully returned in the post-COVID-19 period.

We want to ensure that our goal to make fitness accessible to everyone is also reflected in our workforce.

Equality and diversity are the main pillars of our HR strategy. Basic-Fit aims to create equal opportunities for all employees, regardless of personal background, race, gender, age, religion, sexual orientation or any other personal characteristic. We treat all individuals equally at every stage of the employee cycle, and we do not accept any form of harassment of our employees or members. We launched an internal survey in 2022 focused on diversity and inclusion (D&I). No less than 90% of the respondents stated that Basic-Fit offers an inclusive workplace, 91% believe that we treat everyone fairly regardless of gender, age, ethnicity, background or sexual orientation and 93% felt they could be themselves at work. We have started a D&I sounding board at HQ level and aim to fine tune our approach in the coming year.

Our staff is balanced in terms of both gender and age representation. At the end of 2022, half of our workforce were women and half were men. Our vision is to have a workforce that largely reflects the diversity of the membership of our clubs, and who can understand everyone’s needs and demands. In the last quarter of 2022, 47% of our employees in management positions are female. At the end of this year, the middle management consisted of 34% women. You will find more information on our diversity policy in the Corporate Governance section.

We expect all suppliers to adhere to local laws and regulations. Basic-Fit has required its suppliers to adhere to Basic-Fit’s supplier code of conduct. The code covers human rights standards, including ensuring that our suppliers provide fair labour conditions in compliance with all applicable local and national laws and regulations. We include this code in the processes related to contracting new suppliers or contract renewals with existing suppliers.

Basic-Fit promotes education, equality and diversity, in line with SDGs 4 and 5. Our ambition is to actively support our communities to help them lead fitter, healthier lives and create a more inclusive environment. We understand the importance of building healthy habits that will keep people healthy, both physically and mentally. This is why, since 2020, we have been partnering with organisations in the countries we operate in, to help young people who lack the opportunity to exercise, stay fit and enjoy the social benefits of doing sports, regardless of background or ability. Our main partners are in the Netherlands The Johan Cruyff Foundation, which focuses on getting people fitter, in Belgium Sport2be and in France Sport dans la Ville, which develop sports and job programmes to support youngsters in their learning process through sports, and help young adults acquire professional skills. Studies have shown that sports play a key role in education from an early age, and our goal is to accompany youngsters and young adults on their journey to a bright and healthy future.

We support our partners both financially and through donations in kind. At an operational level, we activate young people by hosting weekly fitness training sessions in a number of regions, facilitating a partner’s event in our club facilities, giving professional advice or facilitating career opportunities. In 2022, our fitness instructors gave 120 fitness sessions for the girls from Sport2be, creating strong relationships with the youngsters on a weekly basis. We aim to involve our employees in building our corporate values and engaging with our communities.

In the course of last year, Basic-Fit also supported  several organisations to help refugees gain access to fitness facilities and equipment. In the Netherlands, we provided the municipality of Vlaardingen, and the VluchtelingenWerk and Klabu refugee organisations with around 500 memberships to give refugees the opportunity to stay fit. On World Refugee Day (20 June 2022), Basic-Fit facilitated the organisation of Klabu’s fundraising event, Riders for Refugees, that brought together around 300 people cycling on Basic-Fit All-In bikes on Dam square in Amsterdam. In France, we supported Play International and, more specifically, their training programmes and sporting activities for young people in six refugee camps across the country.

We have developed a number of other initiatives to promote sports while giving back to communities at country level. Basic-Fit was one of the main sponsors the Amsterdam City Swim in 2022 to raise funds for the ALS organisation.

Sustainability governance

Basic-Fit is an international company and deals with diverse business cultures and practices in the countries in which it operates. We recognise our responsibility to take care of the environment and our people, promote and protect human rights and integrity, and avoid corruption and bribery.

Critical concerns concerning human rights, anti-bribery, tax reporting and ESG reporting are escalated through various channels in the organisation to Management Board or second line of defence roles. When they are noted by people in second line of defence roles in reviews, they  are subsequently escalated to the Management Board. The Supervisory Board receives regular updates on these topics. In the event of highly material incidents, the matter and any mitigation will be discussed in the Management Board and/or in the Supervisory Board.

Sustainability and ESG is part of our DNA and have been integrated in our strategy and business processes. Together with our international and local teams, we ensure that our ESG priorities are concrete and manageable. The Leadership team takes overall responsibility for Basic-Fit’s sustainability strategy, approves targets and monitors performance.

The Director Treasury, Investor Relations and Sustainability is responsible for the development and execution of the strategy. The Director is supported by a dedicated team, who ensure the rollout of plans and liaise internally with key stakeholders. This team includes the Sustainability Reporting Manager, the Communications & CSR Lead and a number of business analysts. In 2022, we also created a sustainability committee. This committee brings together internal ambassadors from various departments and operating countries, to support the integration of sustainability within the company, collect feedback and convey messages across the company.

The CEO’s remuneration targets include an ESG performance-related objective.

We recognise that doing business responsibly requires being transparent towards our stakeholders. In addition to reporting how we manage the different impacts of our operations on people and environment, in this section we explain how we ensure sustainability remains at the core of our corporate governance and business strategy, including the fact that all our operations are performed with integrity and in compliance with applicable laws and regulations.

One of our focus points is to increase awareness of our commitment towards a more sustainable future and encourage our stakeholders to join us on this journey. Basic-Fit commissioned a communications and media analytics partner to set up and conduct a survey on sustainability in France and the Netherlands, to enable us to  gain essential knowledge and fine tune our communication strategy.

We have also initiated various initiatives to make our sustainability approach and reporting more accessible and transparent. A key initiative was the addition of a sustainability section to our new corporate website launched in November 2022. We also engaged more closely with ESG rating agencies and evaluators, with the aim of providing a clearer view of our sustainability approach.

Basic-Fit is committed to avoiding any non-compliance with laws and regulations of the countries in which we operate, which include health and safety regulations, competition and antitrust laws, insider trading regulations and anti-corruption laws. Basic-Fit has a Code of Conduct, which reflects the company’s values and principles and ethical business practices in a wide range of areas, such as good business practice, integrity in dealing with third parties and financial reporting, health and safety, conflicts of interest and handling confidential information. Everyone working for Basic-Fit is required to diligently follow the principles as set out in the Code of Conduct when dealing with any business on behalf of Basic-Fit.

The compliance officer monitors compliance with the Code of Conduct. The elements and values reflected in the Code of Conduct are assessed in a yearly integrity, fraud and corruption risk assessment. The compliance officer, together with other stakeholders/departments such as Human Resources (HR), are responsible for the continuous promotion of best practices from the Code of Conduct and for raising awareness of the elements of the Code of Conduct within Basic-Fit (in clubs, as well as offices in all countries).

The principles and rules for ethical conduct, anti-corruption and anti-bribery are laid down in Basic-Fit’s Code of Conduct, the supplier code of conduct, the employee handbook, our insider trading policy, our policy on bilateral contracts, our whistle-blower policy, our internal data security policy and our integrity policy. The whistle-blower policy not only applies to employees but to all people who provide labour or services to Basic-Fit. This ensures that anyone affected has the ability to report issues that are not in line with Basic-Fit’s principles and values.

The company’s corporate governance framework and its Code of Conduct include safeguards and controls by the Supervisory Board to avoid conflicts of interest. We work with suppliers at every level and via all the departments in the organisation. As Basic-Fit operates solely in developed EU countries, most suppliers are local partners working under the same EU regulatory framework.

For the supply of the fitness equipment and materials used in the clubs, such as towels, bottles, bags and clothes, we may work with non-EU suppliers. The risks of corruption and bribery may be less controlled in these countries, with different regulatory regimes, and we have less control due to the physical distance. Any case of corruption or bribery could lead to considerable financial and reputational damage. However, we believe that based on the policies and procedures we have implemented, combined with the background of most suppliers with whom Basic-Fit has been working for years, as well as the spread of suppliers, we have adequate control of this risk. We will continue to develop our supply chain policies with a focus on sustainability-related risks.

In line with the company's growth, we continue to enhance our procurement framework to closely monitor the procurement process and to engage and partner with carefully selected suppliers. When entering into any engagement with suppliers, Basic-Fit always tries to apply its own contract documentation, including the principles and values related to sustainability, human rights, anti-corruption and anti-bribery. Depending on the standards used, the supplier, and the relationship between Basic-Fit and the supplier, this could also be one of the supplier’s conditions. Basic-Fit strives for a situation in which the majority of all principal suppliers comply with the company’s supplier code of conduct. If the suppliers' conditions are applied, Basic-Fit pays extra attention to the suppliers' code of conduct to make sure their principles are in line with those of Basic-Fit.

Basic-Fit performs due diligence investigations on potential new suppliers before the start of any cooperation. Currently, the managers responsible for procurement control these processes, which is assessed by the compliance officer.

We keep a close eye on regulations related to ESG performance and reporting that may be applicable to Basic-Fit. We not only aim for compliance but also to learn from all frameworks, platforms, networks and others in the sustainability landscape on our journey towards becoming a more sustainable organisation.

Basic-Fit is subject to the Corporate Sustainability Reporting Directive (CSRD), adopted at the end of 2022 by the European Parliament, as the evolution from the Non-Financial Reporting Directive. The CSRD will require companies to report disclosures detailed in the upcoming European Sustainability Reporting Standards (ESRS). In the case of Basic-Fit, these requirements will need to be fulfilled from 2024 onwards.

We have started preparations to apply the CSRD and report in line with the ESRS. In the last quarter of 2022, we performed a gap analysis to identify both those requirements we can already fulfil and those for which we need to implement organisational improvements to ensure compliance in the future. In addition, we commissioned an internal audit also focused on assessing our sustainability readiness. Building on these findings, we have set up a series of workshops to continue to integrate sustainability in the organisation, which took place early 2023 with the support of an external partner. This included a workshop with the leadership team to ensure understanding of the implications of CSRD and define focus points. We also organised workshops with internal topic owners to define a roadmap with action plans to close gaps regarding policies, processes and data requirements.

Basic-Fit is also subject to the EU Taxonomy Regulation, based on Article 8 of the regulation. The EU Taxonomy establishes a EU-wide classification framework with the aim to provide businesses and investors with a common language to identify and report to which extend economic activities can be considered environmentally sustainable through the creation of activity-specific sustainability criteria. Companies currently in scope of Directive 2014/95/EU on the disclosure of non-financial information, which has been implemented into Dutch law through the Decree disclosure on non- financial information (‘Besluit bekendmaking niet-financiële informatie’), are required to disclose the percentage of Taxonomy-aligned and non-Taxonomy aligned economic activities in their total turnover, Capital Expenditures (capex) and Operating Expenses (opex) including certain qualitative information.

Basic-Fit's main activity is to operate fitness clubs in six countries in Europe and offer fitness facilities to its members. This activity does not fall under one of the activities covered by the EU Taxonomy and its selection of NACE macro sectors (that is, sectors coded in the Statistical Classification of Economic Activities in the European Community), as defined in its technical report. Consequently, the main source of revenue, the opex required to operate the clubs and the capex invested to build and maintain the clubs are non-eligible under the EU Taxonomy. Basic-Fit does not own real estate and outsources the fitout and maintenance of its clubs to external partners. In turn, these partners must establish whether the EU Taxonomy Regulation applies to their activities.

The list of activities under this Delegated Act currently applies to specific sectors with high CO₂ emissions. Our revenue generating activities currently do not fall under any of the activities described in those Annexes.

The applied denominator for EU taxonomy turnover is defined as revenue as disclosed in note 3.2 to the consolidated financial statements. Further disclosures as well as the applied accounting policy can be found in the same note.

The denominator for the capex KPI includes additions in intangible assets, property, plant & equipment and lease assets, including reassessment. Notes 4.3 and 4.4 of the financial statements provide more information on the additions to the above-mentioned assets as well as the related accounting policies. The denominator for the opex KPI covers direct non-capitalized costs that relate to research and development, building renovation measures, short-term leases, maintenance and repair and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the enterprise or third parties that are necessary to ensure the continued and effective functioning of such assets.

The conclusion of our assessment is that 0% of the turnover, opex and capex is considered to be Taxonomy-eligible. Our assessment is based on our interpretations on how the regulation applies to our business activities and the impact thereof on eligibility and alignment. We will continue to assess our eligibility and the extent of EU Taxonomy alignment in 2023.

In addition to the above, we keep a close watch on applicable regulations regarding ESG performance and reporting that may be relevant for Basic-Fit in the future.

We pursue a transparent and responsible tax strategy in all our operating countries. Our tax strategy is in alignment with the long-term interests of all stakeholders, including shareholders, governments and communities. Our Audit & Risk Committee reviews our tax strategy on an annual basis. Given the potential financial, regulatory and reputational risks involved, Basic-Fit’s risk appetite on tax is prudent. Our business operations are leading, we declare profits and pay taxes where the economic activity occurs, and we do not use tax havens for tax avoidance. We have a transfer pricing policy and transfer pricing documentation in place, and we have a good relationship with the tax authorities in all the jurisdictions in which we operate, with whom we discuss the various tax positions on a regular basis. Tax is part of our overall internal control framework. We seek the advice of external tax experts and always take into account the independence of our internal and external auditors.

Risk management and control systems

Achieving our long-term strategic objectives inherently involves taking risks. This makes risk management an essential element of Basic-Fit’s culture, corporate governance, strategy, and operational and financial management. Basic-Fit carefully considers the type of risk we take and our risk appetite in achieving our objectives. Basic-Fit’s risk management approach plays an important role in achieving our strong international growth ambitions and creating long-term value.

We aim to make continuous improvements: we have a risk strategy, corporate governance procedures, a risk management policy and an internal control framework that recognise the entrepreneurship that is embedded in our culture, but also ensure compliance with laws and regulations. These continue to contribute to the identification and adequate management of strategic, operational, financial, legal and compliance risks. Basic-Fit’s risk management strategy is designed to provide reasonable assurance that objectives are met by integrating management control in daily operations.

The Management Board, under the supervision of the Supervisory Board, is responsible for identifying and managing the risks associated with the company’s strategy and activities. The Management Board, therefore, bears ultimate responsibility for designing and establishing Basic-Fit’s risk management and internal control framework, and for creating and promoting the right business culture and values. To ensure compliance with all applicable internal and external standards, the Management Board frequently discusses the strategic objectives, risk appetite, risk management and internal control systems. All our staff are responsible for the day-to-day execution of effective controls.

The company has a centralised, structured and well-embedded legal department, with professionals who are able to ensure compliance with laws and regulations, in alignment with the strategy, in all Basic-Fit jurisdictions. Furthermore, the risk and compliance function monitors the corporate governance framework and compliance with laws and regulations and company policies, in line with the company’s risk and compliance charter.

The risk, compliance, privacy and IT security positions represent the second line and jointly protect and monitor Basic-Fit’s risk strategy, risk culture and integrity. The second line works closely with the internal auditor, who acts as the third line, to align working methods and the approach to risk management and makes sure that the internal audit findings are monitored and followed by the day-to-day operations, who together with the staff functions represent the first line.

As defined in the internal audit charter, the internal auditor develops and implements an annual internal audit plan, applying an appropriate risk-based methodology, including risk or control concerns identified by the Management Board or the Audit & Risk Committee, and addresses compliance with policies, procedures, laws and regulations. This internal audit plan is submitted to the Management Board and Audit & Risk Committee for review, after which it is presented to the Supervisory Board for approval.

Senior management and all employees help the Management Board to carry out these tasks on a daily basis. They are encouraged to work in an entrepreneurial manner and to take risks, provided they are equipped to manage these risks and operate within the boundaries set by senior management in the risk management framework. Senior management is responsible for effective internal controls and the risk management for the activities under their responsibility. Furthermore, the Management Board is advised by the staff departments, such as Finance, HR, Marketing, Customer Care, IT, Legal, Risk & compliance, who monitor risk management within their respective functions. Finally, the independent internal audit function plays an assurance role within the company’s risk management strategy. The internal auditor reports to the Management Board and the Audit & Risk Committee on the functioning of the internal control systems.

The Audit & Risk Committee supervises the effectiveness of the internal control systems, while the Supervisory Board approves the overall strategic objectives and validates the associated risk appetite. Country management and the centralised support departments are responsible for implementing the strategy, achieving results, identifying underlying opportunities and risks, and ensuring effective controls. They are also responsible for preparing and implementing risk mitigation in their fields of responsibility.

In 2022, Basic-Fit was able to add 185 clubs to its network. Basic-Fit continued to fill the pipeline of new clubs and prepared for the rollout of new clubs in line with our strategy. This despite and while recovering from the COVID-19 pandemic, the war in Ukraine, burgeoning inflation and the energy crisis, that had a considerable financial, commercial and operational impact in 2022. This affected both consumer behaviour and Basic-Fit operations and results. To manage this, the company devoted additional focus and attention to our membership structure and member communications. Furthermore, we set up an energy task force to reduce energy consumption. And we continued to focus on cost controls. We also further professionalised our property and expansion teams to manage costs, to maintain quality and stable capex levels. Together with the liquidity injections made in 2020 and 2021, which strengthened Basic-Fit’s financial position further, this enabled the company to deal with the challenges faced in 2022, while continuing its development and growth. The leadership team and senior management analysed the possible implications for the company’s daily operations, as well as the possible economic impact, and reported its findings to the Supervisory Board on a recurring basis. Basic-Fit believes it has shown that it has the ability to respond to adversity in a pragmatic way, still managing to open 185 clubs in 2022 and increasing membership to 3.35 million members.

We have made the first steps into a new country with a well-developed strategy and step-by-step plan. We have strengthened our sustainability strategy and are preparing for ESG reporting requirements, further strengthening our position on this topic. We have implemented a club facility management tool to start controlling our facilities digitally and remotely, which will help to control club operating costs and club climates efficiently.

We improved our club expansion process even further, to control costs and timing through efficient project management. We have automated this process to make our control and monitoring of this process even more effective.

We work continuously on embedding our vision and our value drivers in the company’s culture and entrepreneurial activity as we grow on every front. The company’s culture provides room for its employees to grow and develop and to be healthy.

As we continue on our growth path, we need to keep reviewing and developing our risk management process and internal controls. We continue to redefine and optimise these based on the constant development and growth of the organisation.

The general counsel is responsible for the company’s corporate governance, the day-to-day legal issues related to the development of the company, and compliance with and monitoring of laws and regulations and the associated risks. In pursuing these goals, the general counsel strengthened the legal department and acted as the day-to-day legal advisor in all the company’s jurisdictions, all with a strong business orientation.

The Legal department proactively assures compliance with the company’s corporate governance rules and laws and regulations, and plays a clear role in protecting the company’s assets, integrity and reputation. We constantly work on building awareness of legal developments, laws, regulations, integrity and risks within the company through training and communication. Basic-Fit has a data protection officer (the privacy officer), who is responsible for executing and monitoring the privacy policy and the day-to-day privacy recommendations related to running the business and new projects.

Together, the risk, compliance, privacy and (IT) security functions are responsible for reviewing and monitoring the risk strategy, with a focus on fields and areas in which the company is developing strongly. They do this from a broad perspective, taking the risk assessment and risk table in this section as a starting point. The risk management officer focused on overall risk assessments and the continued enhancement of the internal control framework in close cooperation with the internal auditor.

In addition to this, Basic-Fit devotes continuous attention to embedding and maintaining awareness of the Business Continuity Plan, with the aim of securing the functioning and continuity of the business in the event of severe internal or external incidents.

Internal auditing is outsourced to an independent international audit firm. During the yearly review of the internal control framework, the firm identified opportunities for control and process improvements. The review and its recommendations have been taken into account and have been implemented in the processes. The outcome of the reviews, including the detailed management actions that were agreed upon, was discussed in the Audit & Risk Committee in the presence of the internal auditor function. The internal auditors use a risk-based internal audit plan that enables them to provide the Management Board with the necessary assurance on how Basic-Fit manages key risks, including the effectiveness of the controls and other responses to such risks. The internal audit plan for 2023 has been reviewed by the Audit & Risk Committee and approved by the Supervisory Board. Basic-Fit will continue to increase compliance and risk awareness in the company and will focus on increasing efficiency, knowledge sharing, and the monitoring of risks and control in a constantly growing and developing organisation through increased use of smart technology and automation.

In general, Basic-Fit takes an entrepreneurial but prudent approach to risk taking. The risk boundaries are defined by the company’s culture and our corporate governance, defined in Basic-Fit’s strategy, values, code of conduct, policies and procedures. We identify, assess and manage the risk management approach to risk for each risk category and topic.

Sensitivity Analysis

1. Net debt excluding lease liabilities

Risk	Risk description	General risk trend	Trend in risk		Risk appetite
1 Customer behaviour	Attracting and retaining members is one of the core focus points of Basic-Fit’s strategy. Being less attractive to our existing and new members, due to our offering, communication, marketing, competition, harm to our reputation, pricing and membership structure or changes in consumer preferences and behaviour could impact future growth and profitability.		For strategic risks, acceptable risk levels vary depending on the subject at hand. Basic-Fit is generally prepared to take above-average to high risks, being calculated and carefully weighted, in pursuing its ambitions.
2 Unpredictable markets impacting expansion	Basic-Fit wants to be accessible for everybody, everywhere at any time. The main way it achieves this is by being present with clubs and increasing the coverage of our network. The expansion potential of its portfolio in existing and new markets are a key pillar of Basic-Fit’s strategy. This expansion potential could be influenced by different or changing market conditions, laws and regulations, pandemics, consumer preferences and discretionary consumer spending habits in our growth markets or potential new markets. This could impact future growth and profitability.
3 Competition	The health and fitness industry is highly competitive and localised and competitors could succeed in attracting our existing and new members, which could impact future growth and profitability.
4 Macro-economic and (geo)political risks	The risk that market developments, such as (macro-) economic and (geo)political developments, war and unrest, inflation, natural disasters or pandemics could have a possible adverse effect on our growth and profitability.
5 Reputation	The risk of negative publicity, ineffective marketing campaigns or incidents occurring, which will have an adverse affect on the Basic-Fit brand.

Risk	Risk description	General risk trend	Trend in risk		Risk appetite
6 Digital transformation	Our business model is technology and data-driven. If we cannot keep up with technological changes or if we cannot adopt new systems (in a timely manner), it may affect future growth and profitability. To support digitalisation, Basic-Fit is shifting more and more digital services to the cloud and if we do not manage the shift in responsibilities associated with this sufficiently, this might impact the control of the service delivery chain, potentially resulting in service discontinuity.	Basic-Fit weighs operational risks in relation to the implementation of its strategy and the impact of its execution and generally has a moderate risk appetite on this front. However, topics related to quality, security and integrity are subject to a low risk appetite.
7 Suitable sites	The identification and securing of suitable sites are crucial for the realisation of our growth ambitions. It is necessary to obtain the required permits and agree on acceptable lease terms. Delays in regulatory procedures or construction activities could impact our club opening process and objectives for the year.
8 Workforce and talent	Any failure to recruit, train, motivate and retain service-minded staff in our clubs and customer care centre, or suitably qualified management, could impact future growth and profitability.
9 Suppliers	The limited number of suppliers for various aspects of our business makes us vulnerable to interruptions to our existing and new operations and could impact future growth and profitability.
10 Health & Safety	Health & safety procedures and strategy are important to the company. Any failure to respect external laws and regulations related to health and safety or to follow our own procedures and policies could impact the reputation of the company and its long-term growth and profitability.
11 Managing growth	Our extensive and ambitious long-term growth plan has an impact on the organisation. The rapid and continuous growth can put constraints on the efficiency and availability of the centralised support organisation and requires continuous adaptation, balancing and flexibility of the strategy in line with each new phase of Basic-Fit. If Basic-Fit is unable to adapt and adjust its support operation in time, this could impact the company’s profitability. Identifying and securing suitable sites is crucial for the realisation of our growth ambitions.

Risk	Risk description	General risk trend	Trend in risk		Risk appetite
12 Business model disruptions	In addition to the operational revenue from members, the company’s wish to offer a holistic fitness offering requires a disruptive business model and the revenue from the other operational activities and products, such as NXT level, vending machines and training activities are becoming increasingly important. So, any setback in those activities will have an impact on growth and profitability.
13 IT security	The resilience of the Basic-Fit organisation in the face of cyber threats is constantly under pressure. Attacks, threats and intrusion attempts are becoming increasingly sophisticated and are focusing more and more on users. The combination of this with potential reduced awareness can result in attackers trying to gain access to our crown jewels via e.g. ransomware. Not having the right procedures and controls in place could impact our business operation, reputation and brand.
14 Club Maintenance	With the growth of the club portfolio, the importance of solid club maintenance processes and systems is increasingly relevant to the management and monitoring of the quality and service levels in the clubs and safe and healthy environments for our customers and workforce. Not keeping up with this could impact profitability.

Risk	Risk description	General risk trend	Trend in risk		Risk appetite
15 Financial risk and inflation	In line with our growth strategy, we manage a large number of capital-intensive projects to expand our club base. Overspending or price increases due to developments in the markets or inflation could impact our cash flows. Lack of cash generation impacts the company’s capital expenditure capability.	Basic-Fit has adopted a prudent financial risk strategy, with the intent to limit financial risks and maintain long-term solvency and to stay within bank covenants.
16 Liquidity risk	Basic-Fit requires access to capital to fund its growth ambitions.
17 Credit risk	The payment behaviour of our existing and future members could change, which would have an impact on our profitability and cash flows.
18 Currency and interest	Significant changes in financial markets could impact our financial condition or performance.
19 Tax and accounting	Changing tax and accounting regimes could impact our financial performance or tax treatment programming.

Risk	Risk description	General risk trend	Trend in risk		Risk appetite
20 Regulatory	Failure to comply with legislation, internal and external policies, rules and regulations could have a negative impact on our reputation and future growth and profitability. Furthermore the regulatory framework is becoming increasingly complex with many developments and reporting requirements in the current year and years to come.	Basic-Fit strives for the highest level of compliance with legal and regulatory requirements (including financial reporting), so we have a low risk appetite for these risks. We have a low to medium risk appetite for any risks that could have a negative impact on Basic-Fit’s reputation, or the implementation and monitoring of its corporate values and its Code of Conduct.
21 Sustainability and ESG	The failure to adhere to generally accepted ESG norms and the Basic-Fit sustainability strategy as reflected in Basic-Fit’s values and Code of Conduct could have an adverse effect on the profitability and reputation of the Basic-Fit brand. Furthermore, the regulatory framework and societal impact of ESG regulations are becoming increasingly relevant.
22 Data security	It is of the utmost importance that our general data and other privacy-sensitive data is secure and processed responsibly. Failure to follow the right procedures and respect rules and regulations could impact our image and brand, which could have a financial impact and have an adverse effect on the company’s profitability and reputation.
23 Diversity & Inclusion	The failure to apply and adhere to a solid Diversity & Inclusion strategy, as reflected in Basic-Fit's DNA, values and policies on D&I, could have an adverse effect in the profitability and reputation of the Basic-Fit brand for both consumers and our workforce. This could have an adverse effect on the willingness of people to work at Basic-Fit, to achieve strong results driven by diverse perspectives and the company's profitability and reputation.

The risks that potentially have the greatest adverse effect on the achievement of Basic-Fit’s objectives are described below. The year 2022 turned out to be a year with many challenges in the risk field due to the uncertainty and impact around the development of COVID-19, the war in the Ukraine and the resulting unrest in the financial and geopolitical field, the inflation and increasing costs of supplies. The risk categories described are similar to the risks identified for the previous year but the risktrend increased for several risks. Although the risk trend has increased for several risks, company has proven to be able to mitigate the increased risk and limit the impact of the increase in risk. Some risk descriptions have been updated to give them a more outside-in perspective and bring them into line with the developments in the company. Furthermore, we have added two risks. Given the increasing volume in clubs that have to be operated and maintained, the relevance of club maintenance and how effectively we manage this to mitigate risks is becoming increasingly important. Furthermore, Diversity and Inclusion is a relevant societal topic that requires dedicated attention and involves increasing risk if not mitigated effectively. We have therefore added these risks. This is not an exhaustive list. There may be risks or risk categories that are currently identified as not having a significant impact on the business but that could develop into key risks. The objective of Basic-Fit’s risk management systems is to identify changes in risk profiles and any risk-related incidents in a timely manner, so that appropriate and timely measures can be taken.

Corporate governance

Basic-Fit recognises the importance of good governance, and its vital role in ensuring integrity and maintaining open and transparent communications with stakeholders and other parties interested in the company. Basic-Fit’s corporate governance structure, its supervision, and how it is reported are all in line with the Dutch Corporate Governance Code 2016 (‘the Code’). The Code contains principles and best practice provisions that regulate relations between the Management Board, the Supervisory Board and the General Meeting, with a focus on ensuring the continuity and growth of Basic-Fit while the company endeavours to create long-term shareholder value. In this report, the Code will be taken into account, however, company already took initiatives to adapt policies towards alignment with the renewed Corporate Governance Code 2022. Some references to these anticipated adaptations will be made throughout this chapter.

Basic-Fit fully endorses the core principles of the Code and is committed to following the Code’s best practices to the greatest extent possible. However, in consideration of our own interests and the interests of our stakeholders, we deviate from a limited number of best practice provisions, which we specify and explain in the Corporate Governance declaration in this board report.

Basic-Fit N.V. is a public limited liability company incorporated under Dutch law on 12 May 2016. On 10 June 2016, part of the share capital of Basic-Fit was offered to the public in an Initial Public Offering as a result of which 54,666,667 shares were listed on Euronext Amsterdam. On 9 June 2020, Basic-Fit issued 5,333,333 new shares as a result of which 60,000,000 shares were listed. After that, on 23 April 2021 Basic-Fit issued 6,000,000 new shares as a result of which 66,000,000 shares are now listed on Euronext Amsterdam. Basic-Fit has a two-tier board structure, consisting of a Management Board and a Supervisory Board. The Management Board currently consists of two members, while the Supervisory Board has five members. The provisions of the Dutch Civil Code related to the large company regime ('structuurregime') do not apply to Basic-Fit.

The Management Board is collectively responsible for the day-to-day management of Basic-Fit. Its tasks include the overall management, performance and general affairs of Basic-Fit, as well as the formulation and implementation of its strategy, policies and objectives, as well as the company’s results. The Management Board provides the Supervisory Board with information in a transparent way. The key items of information are the annual and long-term budgets, monthly management reports, quarterly reports and the board report, information on significant investments and expansion strategies, risk management and control reports, including risk, compliance and internal audit updates, together with major HR and IT issues. Over the past year, the Management Board devoted specific and close attention to the approach and execution of Basic-Fit's strategy in light of the recovery from the COVID-19 pandemic, while dealing with the geopolitical and economic developments that the world faced in 2022, as a result of among other things the war in Ukraine. Despite this, the company has been able to open 185 clubs and had increased its member numbers to 3.35 million by the end of the year.

The Management Board is supervised by the Supervisory Board and has adopted rules (Management Board Rules) describing its duties, responsibilities, composition, decision-making and procedures. The Management Board Rules are in line with the new Code and are available on the Basic-Fit corporate website.

Certain resolutions of the Management Board are subject to prior approval by the Supervisory Board. These resolutions are also outlined in the above-mentioned Management Board Rules and in Basic-Fit's articles of association, which you will find on the Basic-Fit corporate website.

In addition to the Management Board, a Leadership team assists with the definition of the strategy and the day to day execution of this strategy. The Leadership team is composed of the members of the Management Board being the CEO and CFO, and the COO and CCO. In the paragragh Composition more information can be found.
At 8 February 2023, the Supervisory Board and Management Board adopted new Leadership team rules, which will be published on the Basic-Fit corporate website.

The General Meeting appoints the members of the Management Board (i) pursuant to and in accordance with a proposal of the Supervisory Board, or (ii) pursuant to a binding nomination to be drawn up by the Supervisory Board. A resolution of the General Meeting to appoint a member of the Management Board pursuant to and in accordance with a proposal of the Supervisory Board can be adopted by an absolute majority of the votes cast, irrespective of the capital present or represented at the meeting.

The General Meeting may only overrule the binding nature of a nomination by the Supervisory Board by resolution of the General Meeting adopted by an absolute majority of the votes cast, provided said majority represents at least one-third of the company’s issued share capital. If the General Meeting votes in favour of overruling the binding nature of the nomination by an absolute majority of the votes cast, but this majority does not represent at least one-third of the company’s issued share capital, then a new meeting may be convened at which the resolution can be passed by an absolute majority of the votes cast, irrespective of the capital present or represented at the meeting. In the notice convening the new meeting, it must be stated, giving the reason therefor, that a resolution may be passed by an absolute majority of the votes cast, irrespective of the part of the capital represented at said meeting.

If the binding nature of the nomination is overruled, the Supervisory Board shall draw up a new binding nomination to be voted upon at the next meeting. If the Supervisory Board has not drawn up a proposal or binding nomination, the General Meeting is free to appoint a member of the Management Board, provided that the appointment is subject to and in accordance with the requirements under applicable law, and further provided that said resolution of the General Meeting is adopted by an absolute majority of the votes cast, representing at least one-third of the company’s issued share capital.

The Articles of Association give the General Meeting the authority to suspend or dismiss a member of the Management Board. Such a resolution of the General Meeting requires an absolute majority of the votes cast, and this majority must represent at least one-third of the issued share capital. If the General Meeting votes in favour of the suspension or dismissal by an absolute majority of the votes cast, but this majority does not represent at least one-third of the issued share capital, a new meeting may be convened at which the resolution may be passed by an absolute majority of the votes cast, irrespective of the capital present or represented at said meeting.

The Supervisory Board may also suspend a member of the Management Board at any time. The General Meeting may at any time discontinue a suspension by the Supervisory Board. Said suspension shall lapse automatically if the General Meeting does not resolve to dismiss said member of the Management Board within three months from the date of said suspension.

The Management Board of Basic-Fit consists of two or more members, and shall in any event include a CEO, who will act as chairman.

On 31 December 2022, the composition of the Management Board was:

• René Moos (1963, Dutch) is Chief Executive Officer (CEO) and chairman of the Management Board.

• Hans van der Aar (1958, Dutch) is Chief Financial Officer (CFO).

The section on the Basic-Fit Management Board contains more information on their profile.

Both statutory members of the Management Board have entered into service agreements with Basic-Fit and have been appointed for an indefinite period. As long as René Moos is a member of the Management Board of Basic-Fit, he will (i) be chairman of the Management Board and have the title of CEO; and (ii) have the power to represent Basic-Fit individually. This is in accordance with the Relationship Agreement (further referred to as the ‘Relationship Agreement’), entered into between Basic-Fit and its main shareholders, 3i Group plc and funds managed by 3i's aggregate shareholding, previously named Mito Holdings S.a.r.l (further 3i Group), and AM Holding BV (referred to hereafter as ‘AM Holding’) on 27 May 2016. If the Management Board consists of two members and the CEO has been suspended, the Management Board can only adopt valid resolutions to the extent required to continue the normal business operations of Basic-Fit, or to the extent required to safeguard the continuity of the business.

The Leadership team, exists in addition to the members of the Management Board, of the COO and CCO. Redouane Zekkri is a key employee and part of Basic-Fit’s leadership team in the role of Chief Operations Officer (COO). As of 1 November 2021, Erica van Vonderen - Hahn is as a key employee and part of Basic-Fit’s leadership team in the role of Chief Commercial Officer (CCO).

Information on the remuneration of the Management Board, Supervisory Board and Basic-Fit’s key employees can be found in the Remuneration Report.

The Supervisory Board is responsible for supervising and advising the Management Board, and for overseeing the general direction of Basic-Fit’s operations and strategy. In the performance of its duties, the Supervisory Board is guided by the interests of Basic-Fit and our affiliated business, taking into consideration the interests of all Basic-Fit stakeholders.

The Supervisory Board is responsible for the quality of its own performance. The Supervisory Board has adopted rules (Supervisory Board Rules) describing its duties, responsibilities, composition, decision-making and procedures. In line with the Code 2022, the Supervisory Board has adjusted the Supervisory Board rules. The Supervisory Board Rules are available on Basic-Fit's corporate website.

The General Meeting appoints the members of the Supervisory Board pursuant to a binding nomination to be drawn up by the Supervisory Board, with due observance of the profile for the size and the composition of the Supervisory Board as adopted by the Supervisory Board from time to time.

The General Meeting may only overrule the binding nature of such nominations by the Supervisory Board by resolution of the General Meeting adopted by an absolute majority of the votes cast, provided such majority represents at least one-third of the issued share capital.

If the General Meeting votes in favour of overruling the binding nature of the nomination by an absolute majority of the votes cast, but this majority does not represent at least one-third of the company’s issued share capital, then a new meeting may be convened at which the resolution may be passed by an absolute majority of the votes cast, irrespective of the capital present or represented at said meeting. In the notice convening the new meeting, it must be stated, giving the reason therefor, that a resolution may be passed by an absolute majority of the votes cast, irrespective of the part of the capital represented at the meeting.

If the binding nature of the nomination is overruled, the Supervisory Board shall draw up a new binding nomination to be voted upon at the next meeting. If the binding nature of a nomination is not overruled and the nomination for a vacancy to be filled consists of one person, the person nominated by the Supervisory Board is considered appointed by the General Meeting. If the Supervisory Board has not drawn up a binding nomination, the General Meeting is free to make such an appointment, provided that the appointment is subject to and in accordance with the requirements under applicable law, and further provided that such resolution of the General Meeting is adopted by an absolute majority of the votes cast, representing at least one-third of the company’s issued capital.

Each member of the Supervisory Board is appointed for a maximum period of four years, with reappointment possibilities in line with BPP 2.2.2 of the Code. A rotation schedule has been put in place to avoid, as far as possible, a situation in which multiple members of the Supervisory Board are due for reappointment in the same year.

The Articles of Association give the General Meeting the authority to suspend or dismiss a member of the Supervisory Board. Under the Articles of Association, a resolution of the General Meeting to suspend or dismiss a member of the Supervisory Board pursuant to and in accordance with a proposal thereto by the Supervisory Board requires an absolute majority of the votes cast. However, such a resolution of the General Meeting other than one pursuant to and in accordance with a proposal thereto by the Supervisory Board requires an absolute majority of the votes cast, which majority must represent at least one-third of the company’s issued share capital.

If the General Meeting votes in favour of the suspension or dismissal by an absolute majority of the votes cast, but this majority does not represent at least one-third of the company’s issued share capital, a new meeting may be convened at which the resolution may be passed by an absolute majority of the votes cast, irrespective of the part of the capital represented at said meeting. In the notice convening the new meeting it must be stated, giving the reason therefor, that a resolution may be passed by an absolute majority of the votes cast, irrespective of the part of the capital represented at the meeting.

The Supervisory Board must consist of a minimum of three members. The number of members is to be determined by the Supervisory Board. The profile of the Supervisory Board is available on Basic-Fit's corporate website . On 31 December 2022, the Supervisory Board consisted of five members. In accordance with the Relationship Agreement, one Supervisory Board member is appointed upon nomination by AM Holding. Hans Willemse has been designated for nomination by AM Holding. As AM Holding holds more than 10% of the shares in Basic-Fit, Hans Willemse is deemed not to be independent within the meaning of best practice provision 2.1.8. vii of the Code. Pieter de Jong stepped down as Supervisory Board member as per the AGM in April 2022.

Herman Rutgers is the Supervisory Board member who serves as an industry expert. Pursuant to the Relationship Agreement, the proposal for appointment by the Supervisory Board of the industry expert requires the consent of the member of the Supervisory Board designated for appointment by AM Holding.

The right of AM Holding to designate one member for nomination and replacement will lapse if AM Holding ceases to own or control, directly or indirectly, at least 12.5% of the outstanding share capital of Basic-Fit.

As of 31 December 2022, the composition of the Supervisory Board was as follows, with Rob van der Heijden taking over the seat of Pieter de Jong as member of the Appointment & Remuneration Committee

The Supervisory Board Profile contains additional information. Information on the remuneration of the members of the Supervisory Board can be found in the Remuneration Report.

The Supervisory Board has established two committees: the Audit & Risk Committee and the Selection, Appointment & Remuneration Committee. The function of these committees is to support the decision-making process of the Supervisory Board. The roles and responsibilities of each committee, as well as its composition and how it performs its duties, are set out in the respective charters of the committees, which have been published on Basic-Fit's corporate website.

The Audit & Risk Committee assists the Supervisory Board in monitoring Basic-Fit’s system of internal controls, the quality and integrity of its financial reporting process, the content of the financial statements and reports, and the assessment and mitigation of Basic-Fit’s business and financial risks. In addition, the Audit & Risk Committee assists the Supervisory Board by advising it on matters such as the company’s policy on tax planning; the financing of the company; the company’s compliance with applicable laws and regulations; the company’s integrity policy; the company’s disclosure of financial information, including the company’s accounting principles; the recommendation for the appointment of the company’s external auditor to the General Meeting,

as well as assessing the independence of the external auditor; compliance with recommendations from the company’s external auditor; plus the review of the internal risk management and control systems, and IT and business continuity safeguards. The Audit & Risk Committee will meet as often as circumstances dictate, but in any event no less than four times a year.

The Selection, Appointment & Remuneration Committee advises the Supervisory Board on the remuneration of individual members of the Management Board; monitors Basic-Fit’s remuneration policy; and reviews and recommends policies relating to the compensation of the members of the Management Board. In addition, the Selection, Appointment & Remuneration Committee monitors the succession plans for the Management Board and the Supervisory Board and advises the Supervisory Board on the selection criteria and appointment procedures for members of the Management Board and the Supervisory Board, as well as on proposals for appointments and reappointments.

Basic-Fit’s Management Board and Supervisory Board rules include provisions on the procedures to be followed in the event of a conflict of interest. Basic-Fit applies a related party policy to set out the internal rules for related party transactions in line with all applicable legislation and the Code.

A member of the Supervisory or Management Board is not deemed to have a conflict of interest solely by reason of their affiliation with a direct or indirect shareholder. Any potential conflict of interest must be reported immediately to the other Supervisory Board members and/or the chairman of the Supervisory Board. Basic-Fit’s CEO, René Moos, is an indirect shareholder in HealthCity Amstelveen in the Netherlands and has an indirect majority interest in fitness club Saints & Stars. The HealthCity Amstelveen club is a fitness club active in the mid-to-premium market segment of the health and fitness market. Saints & Stars is a fitness club active in the premium market segment. These clubs could be perceived as competing with Basic-Fit and, even though they operate in a separate fitness market segment, and could in theory benefit from changes in the health and fitness market harmful to the business of Basic-Fit.

Furthermore, Basic-Fit leases a number of premises for its clubs, as well as its international headquarters, from companies that are directly or indirectly owned by the CEO, René Moos.

All transactions as stipulated above between Basic-Fit and the holders of at least 10% of the shares are listed in note 8.3 Related party transactions to the consolidated financial statements. All these transactions are related to board members and are agreed on terms that are customary in the sector concerned. In entering into these transactions, Basic-Fit complied with the best practice provisions 2.7.3, 2.7.4 and 2.7.5 of the Dutch Corporate Governance Code. There have been no material related party transactions that do not follow normal business dealings or that are not entered into under normal market conditions with related parties as defined in provision 2:167 of the Dutch Civil Code.

The Management Board adopted insider trading regulations at the moment of listing. It is Basic-Fit’s policy that all employees, and anyone else with any other type of relationship of authority with Basic-Fit, will adhere to these regulations, which can be found on Basic-Fit’s corporate website.

Basic-Fit values diversity within the company and believes that diversity, in a broad perspective such as gender, age, nationality, education and otherwise, is essential to the pursuance of its sustainable long-term strategy. In this respect, Basic-Fit aims to have an adequate and balanced composition of all its corporate bodies in line with Dutch legislation and our D&I policy. Diversity and inclusiveness are part of the core values of Basic-Fit, as reflected in our strategy towards members, employees and other stakeholders. You will find more information on Basic-Fit’s core values in the Healthy Communities section of this annual report.

The Diversity Decree (Diversiteitswet’ 35 628) enacted in 2022, aims to balance the ratio of men and women in management and supervisory boards. This law provides for a statutory growth quota for the supervisory boards of NV's listed in the Netherlands and an appropriate and ambitious target, to be set by the company itself, for Management Board and the senior management (to be defined ny company itself) of large NVs and BVs to promote gender diversity. The law replaces the statutory regulation of Section 2:166/267 of the Dutch Civil Code for large NVs and BVs that expired on 1 January 2020. The law applies to Basic-Fit and entered into force on 1 January 2022.

Firstly, the law includes a quota of at least one-third male and one-third female for Supervisory Boards. An appointment that does not make the distribution more balanced in line with this law is void. Exceptions apply to reappointments within eight years from the year of appointment and appointments in the event of exceptional circumstances.

In addition, Basic-Fit should establish an appropriate and ambitious target to promote gender diversity on the Management Board and in categories of employees in management positions to be determined by the company itself. In doing so, Basic-Fit should take into account the size of the board or committee and the existing divisions, plus the target should be aimed at making the existing situation more balanced. For this purpose, Basic-Fit has drawn up a plan with targets and measures to achieve these targets. This plan has been approved by the Management Board and the Supervisory Board.

Basic-Fit will, for the first time and ultimately before the end of October 2023, inform the SER about the plan, the progress, the number of men and women in middle and senior management positions, the plan to achieve the target figure and the extent to which the goals set in the previous financial year have been achieved, and if one or more goals have not been achieved, the reasons why. The information which will be reported to the SER will also be included in he management report. The SER will monitor progress and whether companies are complying with their commitments and make the results public.

The Supervisory Board has formulated a profile defining its size and composition, taking into account the nature of Basic-Fit and its activities. The composition of the Supervisory Board and the combined diverse mix of knowledge, skills, experience and expertise should be such that it fits the profile and the strategy of Basic-Fit.

Basic-Fit has a diversity policy approved by the Supervisory Board to promote diversity within its main corporate bodies, these being the Management Board and the Supervisory Board. The preferred composition of the Supervisory Board and the Management Board shall be such that the combination of experience, expertise, independence and the diversity of its members meets the qualifications as stipulated in the profile and the diversity policy, and enables both the Management Board and the Supervisory Board to carry out their duties and responsibilities in the best possible way. In the event of a new appointment, both bodies will take into account the most relevant profile aspects that should be added for a balanced composition, giving preference to women in the event of equal qualifications, to promote further gender diversity.

In addition to this, the company is working on an extended D&I policy. Diversity and inclusion are deeply rooted in our values and pillars. Our behaviour ensures that we not only continuously promote an inclusive environment, but also leads to a future in which fitness is accessible to all. On the D&I front, we do this by: 1) Empowering everyone to be heard, 2) Removing barriers to entry and 3) Setting clear ambitions and committing to them. Basic-Fit will use 2023 to adapt the current diversity policy, making it an updated and more comprehensive D&I policy that will take into account new legislation. The company will also continuously collect feedback and use it to further strengthen its approach to diversity and inclusion.

At Basic-Fit, we believe that differences make us stronger and better and we stand for equal opportunities for everyone. We strive for an inclusive culture, in which differences are recognised, valued and exploited. This applies to our members, our employees and our partners. It is important that employees are competent, but also that they differ from each other and we create the space for them to express these differences. Different perspectives, backgrounds, knowledge and experiences contribute to the realisation of Basic-Fit’s objectives when they are used in a positive way and used in innovative, sustainable solutions that connect with our customers, who are a reflection of society.

Basic-Fit empowers both male and female talent to develop and grow. For the Basic-Fit employee group as a whole, the gender diversity ratio is currently as follows: at the end of 2022, the entire Basic-Fit workforce consisted of exactly 50% women and 50% men. Of all leadership positions in the organisation at every level combined, 47% of leadership positions were filled by women. This follows a trend that has been established at Basic-Fit for years and to which Basic-Fit attaches great importance. Basic-Fit is keen to maintain this strong balance.

There are currently five Supervisory Board members, four of which are male and one is female. At the AGM of 24 April 2023, the Supervisory Board will ask the AGM to approve the appointment of Joëlle Frijters as the sixth Supervisory Board member. The most important element of her appointment is her valuable and complementary expertise in entrepreneurship, IT and digitalisation. With her appointment, Basic-Fit will meet the gender diversity targets stipulated for the Supervisory Board.

The statutory Management Board consists of two members, René Moos being the CEO and Hans van der Aar being the CFO, both men. There have been no vacancies in the Management Board in recent years. In addition to the two statutory directors, the leadership team also consists of two non-statutory directors, Erica van Vonderen - Hahn, the CCO, and Redouane Zekkri, the COO. Together they represent the daily management of Basic-Fit. The leadership team currently consists of three men and one woman, making the female representation 25%.

For the determination of the middle management level at Basic-Fit, all persons as from scale 18 in the Basic-Fit job classification system, which only includes managerial positions, are taken into account. The middle management consists of 34% women and 66% men.

When considering vacancies, finding a person with the required skills, expertise, experience and independence and all other aspects of diversity, such as gender, age and nationality, will remain an important consideration in the selection process for the (re)appointment of members of the Supervisory Board, Management Board and other senior directors and managers. The size and composition of the Supervisory Board and Management Board, and their combined experience and expertise, should be such that they best fit the profile and strategy of Basic-Fit.

Basic-Fit formulates appropriate and ambitious targets for the m/f ratio in its Leadership team, the Supervisory Board and its middle management level. In the field of diversity, equality and inclusion, Basic-Fit has defined the following objectives:

• Promote diversity in the composition of our workforce through inflow and advancement to make it a representative reflection of society and our membership base.

• For the entire workforce, the percentage of both men and women always remains between 45% and 55%.

• At least one-third of our Supervisory Board, Leadership team and middle management (from level 18) is female and at least one-third male.

• Basic-Fit rewards equally for equal work.

• A working environment that is safe and free from discrimination.

• Fair and equal access to opportunities.

• Leadership with an eye for diversity values.

In order to continue to achieve objectives, we continuously develop our policies and measures, partly on the basis of the feedback from our employees. At the moment, Basic-Fit has been able to achieve many of these objectives. Even so, we will continue to look at how we can do even better. In the coming years, we will devote attention to the further development of (gender) diversity in the leadership team, which does not yet meet these objectives. The leadership team is small. Last year was the first full year in which the leadership team functioned with four rather than three people, which in addition to giving us a more complete leadership team took the step towards a representation of 25% women. We do not foresee a change in this in the short term, but if there is a change in the current composition, or an expansion of the leadership team, then the focus will be on the further promotion of diversity in the team on all fronts, including an increase in female representation.

It is important that the senior management of the organisation feels the necessity and urgency of the diversity policy and propagates it from the top of the organisation. Diversity and inclusion are an integral part of Basic-Fit's vision and mission and the composition of its total workforce reflects Basic-Fit's diverse membership group. Across the entire employee group, there has been a healthy and equal balance between men and women for years. At Basic-Fit, we attach great importance to the development of talent and the preparation for managerial roles from within. We also devote a great deal of attention specifically to the role of women, thanks to which there is already a high representation of women in Basic-Fit’s middle management. The management devotes constant attention to succession in the daily management and finds it extremely important to give space to a diverse composition of people in terms of talent, expertise and background, with equal opportunities for everyone, also taking into account female talent.

The D&I Policy and gender diversity is deeply embedded in the organisation and is propagated by the leadership team in the implementation of strategy and policy. The HR department also plays an active role in ensuring that active D&I policies and measures are embedded and followed up in the organisation at every level of the employee cycle described below. The leadership team is supported by the directors layer, which includes the people responsible for all operational units and all staff departments. In their periodic meetings, these directors are closely involved in the implementation of the D&I policy and bear joint responsibility.

All Basic-Fit managers, including senior and middle management, receive regular training and education in the field of leadership, strategy and values, with the focus on realising all the elements of the Basic-Fit strategy and objectives. Development in the field of inclusive leadership, unconscious biases and objective interviewing will be a regular part of this programme.

• As part of the D&I working group, Basic-Fit has appointed D&I ambassadors in the organisation.

• Basic-Fits conducts an annual employee satisfaction survey among the entire workforce, which also includes the topics of safety, culture, diversity and inclusion. The results are analysed and these also determine any measures to promote diversity.

• Basic-Fit formulates SMART objectives in the field of D&I and more specifically gender diversity;

• D&I is included in the profile for the Supervisory Board and the Management Board, and must be guaranteed in the longlist and shortlist of candidates for appointments.

• Basic-Fit has a mentoring programme for talented employees to stimulate succession and advancement from within. The company also has a specific mentoring programme for female talent.

• All employees can participate in dialogue sessions or workshops on diversity, equality and inclusion in employee resource groups. We take the position that we have never finished learning and continue to innovate. We invite employees to share initiatives with the D&I working group. This can also be done in the Lunch & Learn sessions we organise on a regular basis for employees with Basic-Fit’s middle management and leadership team. This also includes specific attention for D&I and female leadership.

• If necessary and relevant, Basic-Fit invites an external D&I expert to further explore topics, investigate or shape measures.

• Basic-Fit constantly evaluates and monitors inclusive policies for employees and takes into account the findings of the employee resource groups related to the likes of long-term or care leave, parental leave, etc.

Basic-Fit attaches great importance to providing a safe and pleasant working environment. We expect employees to contribute to a working environment without any form of undesirable behaviour, such as sexual harassment, aggression and violence, discrimination, stalking, bullying, abuse of power, insulting and verbal defamation. This means that there is a safe and open culture, where people dare to address each other about any form of undesirable behaviour. This means that all employees know that such behaviour is not accepted and that it is associated with appropriate actions. The Basic-Fit code of conduct is the guideline for our actions and decisions and helps us to do our work well, carefully and with integrity. The code of conduct devotes explicit attention to a safe and pleasant working environment, discrimination and exclusion. In the event of experiences with undesirable behaviour, such as bullying or discrimination, employees can contact a confidential advisor. The function of confidential advisor is fulfilled by various people in the organisation and in HR. In addition, Basic-Fit has a speak-up policy, on the basis of which employees can report any violation of Basic-Fit's integrity policy.

Basic-Fit is developing various initiatives to stimulate and increase dialogue and awareness about diversity and inclusion in the workplace. Inclusive communication is crucial for success. Basic-Fit actively communicates internally and externally about the organisation’s diversity vision and the associated objectives and measures. Basic-Fit also pays attention in word and image to role models within the organisation, for example at Orange Connect or in seminars, to bring Basic-Fit to the attention of potential new colleagues. We also show that we strive to be a diverse organisation in our labour market communication and our social media channels. We have experience stories from colleagues in various labour market positions, different ages, sexual and gender identities, cultural backgrounds, education, job levels and areas of work, so that many different candidates find recognition and connection. Basic-Fit regularly checks this to ensure objectivity. Recruiters are also trained in the writing of inclusive recruitment texts.

Basic-Fit used and adapted Steven AJ Cox's 'Employee Lifecycle' (2019) Diversity and Inclusion framework' to identify D&I goals in the employee lifecycle.

We want to offer everyone equal opportunities to work at Basic-Fit. We do this by:

• Gender-neutral and inclusive language in all our communication. By training our communication and HR teams in Tone of Voice, in line with the Basic-Fit values that are embedded in our D&I policy. This ensures that our language is inclusive and does not exclude anyone.

• The use of inclusive and gender-diverse storytelling on our recruitment channels, such as LinkedIn and Career websites. The goal is to make two of these posts on these channels and on our intranet Orange Connect every quarter, with (gender) diverse profiles that show what it is like to work at Basic-Fit.

• On our corporate website, we communicate about our D&I policy, our objectives and what we achieve in the field of D&I (including gender diversity). These statistics will be developed and available in an up-to-date form through a connection to Power BI. This promotes transparency in the field of (gender) diversity and the objectives of Basic-Fit.

We strive for a process that is free of bias, clearly identifies our interest in diverse candidates, supports applications from diverse candidates, and sets expectations for hiring managers/external recruitment agencies. In order to offer everyone equal opportunities, we work as objectively as possible in our recruitment, selection, internal transfer and promotion processes. For example, we use an assessment that makes selection objective and suitable for a wide variety of candidates. We strive to ensure that no one feels discriminated against and we are guided by relevant and objective criteria in recruitment and selection.

New employees understand our expectations and know what support there is and what opportunities are available, for everyone equally. Everyone feels comfortable being themselves at work. Basic-Fit has a central and inclusive introduction programme that is constantly evolving. This contributes to the smooth introduction of new colleagues within Basic-Fit and a feeling of being welcome.

At Basic-Fit, we offer everyone the space and equal opportunities to develop themselves. Through the training courses we offer and the focus on personal development, we strive to create as many equal opportunities as possible for everyone. In addition, we believe that everyone has talents and our design for talent development takes an inclusive approach. Where necessary, we offer specific learning and development opportunities to specific target groups to promote diversity. As part of Basic-Fit’s Learning Management System (LMS), we are planning to develop a D&I track in 2023. We will also launch LinkedIn Learning in 2023, with a high-quality D&I challenge, to promote knowledge of D&I and gender diversity. Throughout the year, Basic-Fit draws attention to D&I, including gender diversity, in a variety of ways. Basic-Fit makes podcasts with guest speakers on this topic and we host Lunch and Learn meetings on this topic. At least one session per year will be devoted to female leadership. Female executives will share their experience of leadership at Basic-Fit. In the leadership training for middle management, the focus is on the development of all facets of leadership, including (gender) diversity training and awareness. This ensures inclusive leadership and involvement in the implementation of the D&I policy and the role of female managers.

An equal pay policy is important. In 2022, Basic-Fit conducted a benchmark study into the market conformity of the salaries within Basic-Fit and all positions and profiles classified in a job classification system with the corresponding salary scales. This has already largely mapped out deviations between people in similar roles with similar circumstances, and we have now taken measures on this front. We will conduct regular investigations into whether there are differences in pay between men and women in equal roles under the same conditions. This will help us to ensure equal inclusive pay.

Basic-Fit conducts and records performance assessments consistently, inclusively, objectively and transparently, in line with D&I policy. In addition, we are setting up an inclusive talent identification and success planning programme in Workday for the development and advancement of talent, with equal opportunities for all. Managers are trained in honest and objective assessment. We have set up a mentoring programme to promote female leadership, in which managers can seek cooperation with external mentoring programmes, but in which internal female leadership also plays an exemplary role.

Diverse talent must want to stay with the company. We act on feedback and use inclusion programmes in the workplace. We learn from people who leave and investigate whether there is a lack of inclusion. We process the data from the exit interviews and surveys objectively and transparently and reported this in Power BI. We use the input to investigate the policy and, where necessary, to improve it.

Furthermore, you will find additional information on age, gender, nationality and background in the Non-financial information. Basic-Fit is proud that our workforce clearly reflects the diversity of people in our society and our member base.

The Annual General Meeting of Shareholders (hereinafter referred to as the ‘General Meeting’) must be held within six months of the end of each financial year. An Extraordinary General Meeting (EGM) may be convened whenever the Supervisory Board or Management Board deem this to be in the interests of Basic-Fit. Shareholders who, individually or jointly, hold at least 10% of the issued and outstanding share capital may request that a General Meeting be convened. If no General Meeting has been held within eight weeks of the shareholders’ request, the shareholders may, upon request, be authorised by a District Court in summary proceedings to convene a General Meeting.

Notice of a General Meeting must be given 42 days prior to the day of the meeting. The notice must include, among other items: an agenda indicating the place and time of the meeting; the items for discussion and voting; the proceedings for registration, including the registration date; and any proposals for the agenda. Shareholders who, individually or jointly, represent at least 3% of the issued and outstanding share capital may request that an item be added to the agenda. Such requests must be made in writing, have to be either substantiated or include a proposal for a resolution, and must be received by Basic-Fit at least 60 days prior to the day of the General Meeting.

The General Meeting is chaired by the chairman of the Supervisory Board. Members of the Management Board and Supervisory Board may attend the General Meeting and shall have an advisory vote. The chairman of the General Meeting may decide at their discretion to admit other persons to the General Meeting. Each shareholder, as well as other persons with voting or meeting rights, may attend the General Meeting, address the General Meeting and (insofar as they have such a right) exercise voting rights pro rata to their shareholding, either in person or by proxy. Shareholders may exercise these rights if they are the holders of ordinary shares on the registration date (currently the 28th day before the day of the meeting) and if they or their proxy have notified Basic-Fit of their intention to attend the meeting, in writing to the address and by the date specified in the notice of the meeting.

Each shareholder may cast one vote in a General Meeting for each ordinary share held. Pursuant to Dutch law, no votes may be cast at a General Meeting in respect of ordinary shares held by the company. Resolutions are adopted by absolute majority, except where Dutch law or the Articles of Association provide for a qualified majority.

The most important matters requiring the approval of the General Meeting include:

• Adoption of the financial statements

• Resolution on the reservation or distribution of the profits

• Adoption of the remuneration policy for the Management Board and the Supervisory Board

• Appointment of the external auditor

• Authorisation for the Management Board to issue shares, to restrict or exclude the pre-emptive rights of shareholders, and to repurchase shares

• Appointment, suspension or dismissal of members of the Management Board

• Appointment, suspension or dismissal of members of the Supervisory Board

• Amendment of the company’s Articles of Association

Furthermore, the General Meeting is asked to provide the company with an advisory vote on the remuneration report, in line with the requirements in line with SRDII. You will find further details in the Articles of Association, which are published on Basic-Fit's corporate website.

Basic-Fit’s authorised share capital consists of 150,000,000 ordinary shares, each with a nominal value of €0.06. On 31 December 2022, a total of 66,000,000 shares had been issued, following the issuance of 6,000,000 new shares on 23 April 2021, within the boundaries of the powers granted to the company by the General Meeting. The authorised share capital of the company consists solely of ordinary shares. All issued shares are fully paid up and each share confers the right to cast a single vote in the General Meeting. The General Meeting may resolve to issue shares, or grant rights to subscribe for ordinary shares, if this is proposed by the Management Board and the proposal has been approved by the Supervisory Board.

The Articles of Association provide that the General Meeting may designate the Management Board as the competent body authorised to resolve to issue ordinary shares or grant rights to subscribe for ordinary shares.

Pursuant to the Corporate Governance Code 2022 (the Code) and the Articles of Association, the period of such designation may not exceed five years. At the designation, the number of ordinary shares to be issued by the Management Board must be determined. If the Management Board has been designated as the competent body authorised to issue ordinary shares, the resolution to issue ordinary shares is subject to the prior approval of the Supervisory Board.

The General Meeting designated the Management Board for a new period of five years from 21 April 2022 (i.e. until 20 April 2027), subject to the approval of the Supervisory Board, as the competent body to (i) resolve to issue shares, and (ii) grant rights to subscribe for shares, up to a maximum of 1% of the fully diluted outstanding share capital, either at the time of issue or at the time of granting rights to subscribe for shares, and (iii) to exclude or limit pre-emptive rights to subscribe for shares in the event that the issue of granting of rights to subscribe for shares takes place in connection with the Performance Share Plan or any other employee participation plan.

Furthermore, the General Meeting designated the Management Board for a period of 18 months from 21 April 2022 (i.e. until 20 October 2023), subject to the approval of the Supervisory Board, as the competent body to (i) resolve to issue shares, and (ii) grant rights to subscribe for shares up to a maximum of 10% of the issued share capital, at the time of the issue or at the time of granting rights to subscribe for shares; and (iii) to exclude or limit pre-emptive rights thereto.

Each shareholder has a pre-emptive right to subscribe, on a pro-rata basis, to any issuance of new ordinary shares, or, upon the granting of rights, to subscribe for ordinary shares. Pre-emptive rights can be limited or excluded. Exceptions to these pre-emptive rights include the issuance of ordinary shares and the granting of rights to subscribe for ordinary shares (i) to Basic-Fit’s employees, (ii) in return for non-cash consideration or (iii) to persons exercising a previously granted right to subscribe for ordinary shares.

Basic-Fit may repurchase fully paid-up ordinary shares at any time for no consideration ('om niet'); or for consideration, subject to the approval of the General Meeting, certain provisions of Dutch law and the Articles of Association, and the prior approval of the Supervisory Board. Basic-Fit may not cast votes on ordinary shares it holds itself, nor is it entitled to dividends paid on those ordinary shares, nor will such shares be counted for the purpose of calculating a voting quorum. The ordinary shares held by Basic-Fit will not be included in the calculation of the profit distribution. On 21 April 2022, the General Meeting authorised the Management Board to repurchase shares in the share capital of Basic-Fit for a period of 18 months (i.e. until 20 October 2023), up to a maximum of 10% of the issued share capital.

The transfer of ordinary shares in the share capital of Basic-Fit included in the Statutory Giro System must take place in accordance with the provisions of the Dutch Securities Giro Act (‘Wet giraal effectenverkeer’). The Articles of Association do not restrict the transfer of ordinary shares in the capital of Basic-Fit. Basic-Fit is not aware of any agreement pursuant to which the transfer of ordinary shares in the share capital of the company is restricted, other than lock-up arrangements for the Management Board in line with the long-term share incentive plan described in the Remuneration Report.

It is laid down in the Basic-Fit Articles of Association that if profits are made, the Basic-Fit Management Board can define which part of these profits will be reserved. Profits that are not reserved in this context are available to the General Meeting, which can decide to pay out dividends based on a proposal of the Management Board that has been approved by the Supervisory Board.

Basic-Fit has published its dividend policy in the Shareholder Information section of its corporate website. This states that given the strong return profile of new club openings, the primary use of cash for the short to medium term will be for investments in the rollout of new clubs. As a result, Basic-Fit does not anticipate paying out any dividends in the short to medium term. Capital will be invested with strict financial discipline and applying the targeted return thresholds. Basic-Fit expects to introduce dividend payments in the future, although any dividend proposals will be carefully assessed against other uses of cash, including an acceleration of the club rollout, repayment of debt, share buybacks and acquisitions.

The General Meeting appoints the external auditor. For the financial years 2022 and 2023, the General Meeting appointed Ernst & Young Accountants LLP as Basic-Fit’s external auditor. The external auditor may be questioned at the General Meeting regarding its audit opinion on the financial statements. The external auditor is therefore invited to attend, and is entitled to address, the General Meeting.

For more information on Basic-Fit’s risk and control framework, please see the Risk Management chapter.

Change of control arrangements have been included in Basic-Fit’s financing facilities, as well as some of Basic-Fit's lease agreements. These arrangements could result in the termination of these agreements in the event of a change of control.

The Management Board and Supervisory Board, who are jointly responsible for Basic-Fit’s corporate governance structure, recognise the importance of good corporate governance. We fully endorse the core principles of the Code and are committed to adhering to the best practices set out in the Code as much as possible. We believe that we are applying almost all of the principles and best practice provisions of the Code. However, in the interest of Basic-Fit and its stakeholders, Basic-Fit deviates from the following best practice provisions:

‘A management Board member is appointed for a maximum period of four years. A member may be reappointed for a term of not more than four years at a time, which reappointment should be prepared in a timely fashion. The diversity objectives from best practice provision 2.1.5 should be considered in the preparation of the appointment or reappointment.’

This provision provides that a member of the Management Board may be appointed for a maximum period of four years. Both members of the Management Board, René Moos and Hans van der Aar, have been appointed for an indefinite period of time, given their positions as CEO/co-founder and CFO before listing, respectively. The service agreements for the CEO and CFO are for an indefinite period of time, thereby maintaining the same term included in their employment agreements with Basic-Fit before its conversion into a public limited liability company. Currently, there are no women present in the Management Board; however, there is one woman in the extended leadership team. The other principles in the diversity policy are respected and well represented within this Management Board.

‘If the Supervisory Board consists of more than four members, it should appoint from among its members an audit committee, a remuneration committee and a selection & appointment committee.’

The Supervisory Board has combined the functions and responsibilities of the Remuneration Committee and the Selection & Appointment Committee in one committee: the Selection, Appointment & Remuneration Committee.

‘Analyst meetings, analyst presentations, presentations to institutional or other investors and press conferences should be announced in advance on the company's website and by means of press releases. Analysts’ meetings and presentations to investors should not take place shortly before the publication of the regular financial releases. All shareholders should be able to follow these meetings and presentations in real-time, by means of webcasting or telephone or otherwise. After the meetings, the presentations shall be posted on the company’s website.’

This provision provides that all shareholders should be able to follow all Basic-Fit meetings with and presentations to analysts and investors, as well as presentations related to press releases in real time. Basic-Fit does not offer this possibility for all presentations and therefore does not comply with this provision. However, the presentations are made available on Basic-Fit’s website after the meetings.

The Code requires companies to publish a statement regarding their approach to corporate governance and compliance with the Code. This is referred to in Article 2a of the Decree on the contents of the management report (‘Besluit inhoud bestuursverslag’) as last amended in 2022. The information required to be included in this corporate governance statement as described in articles 3, 3a and 3b of the Decree, which are incorporated and repeated here by reference, can be found in the Corporate governance section. Major shareholders are obliged to give notice of interests exceeding certain thresholds to the Dutch Financial Markets Authority (AFM).

1. These are the interests reported to the AFM’s register of substantial interests. These figures do not necessarily reflect the actual shareholding in the company due to the requirements to notify the AFM. In the table, the interest of ‘R.M. Moos’ refers to the direct and indirect interests of AM Holding in the company. The register of Director's interests also shows other direct or indirect shareholdings of R.M. Moos.

Basic-Fit has not issued shares to which special rights of control are attached, and there are no limitations on the voting rights attached to the shares in Basic-Fit.

Management statements

The Management Board manages the company and is responsible for achieving the company’s strategy, objectives, goals and results, and for taking appropriate measures in relation to the design and operation of the risk management and control systems in a manner that is consistent with BasicFit’s business. In 2022, the priority of the Management Board was to recover from the impact of the COVID-19 pandemic, to mitigate the risks of the geopolitical and societal developments due to the war in the Ukraine, the energy crisis and the inflation and its impact on Basic-Fit, and to continue the execution of its growth strategy. While doing this, Basic-Fit relied on, reviewed and continuously enhanced the company’s risk management and control processes with regard to its strategic, operational, legal and compliance, and financial risks (including risks related to financial reporting). Basic-Fit has implemented continuous improvements in the registration, documentation and formalisation of processes and controls in line with the development of the strategy and the growth of the company. The segregation of duties is part of all processes and IT systems have been aligned with the growth level of the company. The risk management and control systems have been designed to: identify opportunities and risks in a timely manner; manage key risks; facilitate the realisation of the company’s strategic, operational and financial objectives, while safeguarding the reliability of the company’s financial reporting; and complying with applicable laws and regulations. The reviews and enhancements, including changes and planned improvements, were discussed with the Audit & Risk Committee and the Supervisory Board.

It should be noted that the above does not imply that these systems and procedures, however well-designed and however much intended to control risks optimally, provide absolute assurance as to the realisation of operational and strategic objectives. Nor that they can prevent all misstatements, inaccuracies, errors, fraud and non-compliance with legislation, rules and regulations. Based on the approach described above, the Management Board believes that, with respect to financial reporting, the internal risk management and control systems performed satisfactorily in the year 2022, and provide reasonable assurance that the financial reporting does not contain any material inaccuracies.

The Management Board confirms that, to the best of its knowledge:

• The financial statements for 2022 give a true and fair view of Basic-Fit’s assets, liabilities, financial position and comprehensive income and those of the companies included in the consolidation taken as a whole.

• The Management Board report provides a true and fair view of Basic-Fit’s position as of 31 December 2022, and of Basic-Fit’s development and performance in 2022 and of its affiliated companies whose information has been included in its financial statements and describes the key risks Basic-Fit faces.

• The Management Board concluded that it is justified that the financial reporting is prepared on a going concern basis.

• The Management Board report discloses all material risks and uncertainties that are relevant regarding the expectations as to the continuity of Basic-Fit for the 12-month period after the date this Management Board report was prepared.

Hoofddorp, 13 March 2023

René Moos, CEO
Hans van der Aar, CFO

Chief Executive Officer and chairman of the Management Board

Year of birth: 1963
Nationality: Dutch
Other positions: None

René has over 30 years of fitness sector experience. In 1984, after ending his professional tennis career, René started to manage and invest in tennis parks, to which he added fitness facilities. He co-founded HealthCity, a mid-to-premium health and fitness club operator, and was appointed CEO in 2004. In 2013, following the demerger of Basic-Fit from HealthCity, René was appointed CEO of Basic-Fit. René studied at the University of Tennessee in Knoxville, Tennessee, USA.

Chief Financial Officer and member of the Management Board

Year of birth: 1958
Nationality: Dutch
Other positions: None

Hans has over 30 years of experience in accounting. He started his career as an auditor in the audit practice of BDO Accountants Advisors, where he was audit partner from 2000 to 2011. From 2004 to 2011, Hans also served as general manager for the BDO office in The Hague. In 2012, Hans was appointed CFO of Basic-Fit. Hans holds a Bachelor's degree in Slavic Languages & Literature from the University of Amsterdam and qualified as a chartered accountant (RA) at the RSM Erasmus University in Rotterdam.

Supervisory Board Report

Chairman of the Supervisory Board

President Europe and member of the Executive Committee at Unilever N.V.
Member of several supervisory boards.

Chairman of the Supervisory Board of GrandVision N.V. (until 15-01-2022)
Member of the Board of Directors of ENPRO Industries, Inc. in the US
Member of the Board of FSHD Unlimited, a biotech start-up working on the development of a therapy for FSHD muscular dystrophy (until 28 December 2022)

Master’s degree in Business Engineering from the University of Twente, the Netherlands

Vice-chairman and Chairman of the Audit & Risk Committee

Senior Executive Vice President Group Compliance, Legal & Security at ABN AMRO
Member of several supervisory boards

Member of the Supervisory Board Coöperatie TVM U.A
Member of the Supervisory Board of TKH Group N.V.
External member of the audit committee of the Dutch Ministry of Justice and Security
Member of the Supervisory Board of DAS Holding N.V.
Member of the Supervisory Board of Nederlandse Transplantatie Stichting
Member of the Supervisory Board of Ebusco Holding N.V. (as per 26 October 2021)

Chartered Accountant.
Master’s degree in Business Economics from the University of Groningen, the Netherlands

Chairman of the Selection, Appointment & Remuneration Committee

Extensive international executive experience (Quaker Oats, AkzoOrganon, Sheaffer Pen, Prince/Benetton Sports Group, Life Fitness and Octane Fitness), with over 25 years in the fitness industry
Supervisory Board member of SATS and Activage in Sweden
Co-Founder and board member EuropeActive in Brussels, Belgium

Ambassador of EuropeActive (European trade association for the health & fitness industry)
International Ambassador for Reed Exhibitions/FIBO in Germany
Advisor Wellness Foundation, Italy Co-author of the European Health & Fitness Market Report; contributor to several books on the fitness sector

Bachelor’s degree in Business Administration from Hogere Textielschool, Enschede, the Netherlands.

Member of the Audit & Risk Committee; member of the Selection, Appointment & Remuneration Committee

Several positions at ABN AMRO, mainly in the financial restructuring and recovery department
Member of the management team and credit committee at Hollandse Bank Unie (a former ABN AMRO subsidiary)

Managing partner at Craic Capital, a corporate finance and investment boutique founded and owned by Hans Willemse in 2008
Supervisory Board member at Mepal BV

Master’s degree in Dutch Civil Law from Leiden University, the Netherlands

Member of the Audit & Risk Committee

Director Corporate Banking and first Vice-President of Commerzbank Nederland N.V.

Managing director of Citadel International B.V.
Managing director of Harvill Group Holding B.V.
Member of the Board of Fused Information Technology B.V.
Chairman of the Supervisory Board of Autobedrijf van den Udenhout B.V.
President of the Board of foundation Hamarpa (MBI Group)

Bachelor’s degree in Business Administration SVM Real Estate Broker

Report of the Supervisory Board and its committees

Following the two intense years of the COVID-19 pandemic, 2022 was another challenging year. In addition to the last COVID-19 measures in the early part of the year, members had to get back to the clubs again, plus Basic-Fit was confronted by a number of geopolitical and economic challenges. Despite all of this, Basic-Fit was able to expand its club count by 185 clubs to 1,200 clubs by the end of the year and add another 1.1 million members (which was 50% of the member count at year-end 2021), increasing the total number to 3.35 million members. In the meantime, the company set up an energy task force to control its energy consumption, maintained a strict approach to cost controls and maintained its focus on innovation, expansion and the continued professionalisation of processes, with a focus on the company’s future long-term growth and development.

This report gives an overview of the approach and activities undertaken by the Supervisory Board in the year under review. In addition to supervising the general course of affairs, a significant part of the Board’s activities in 2022 focused on supervising the approach to increasing costs, the adjustments of the strategy, including a new membership structure, the company’s sustainability strategy and the preparations for ESG reporting. Continuous points of attention were the supervision of the financial situation, the expansion and innovation plans, and continued enhancement of the company’s internal control frameworks, IT security, risk management and compliance. In carrying out its duties, the Supervisory Board is guided by the Dutch Civil Code, the Dutch Corporate Governance Code (the Code), the renewed version of which came into force on 1 January 2023, the company’s Articles of Association, and the overall interests of Basic-Fit, our business and our stakeholders.

The Supervisory Board Profile is aligned with Basic-Fit’s profile and strategy, with a balanced distribution of specific expertise in relation to the business activities, strategy and long-term goals. At the General Meeting held on 21 April 2022, Pieter de Jong stepped down from the Supervisory Board and no new Supervisory Board member was appointed. The Supervisory Board currently consists of five members. The composition and diversity of the Supervisory Board in terms of expertise, knowledge, skills, gender, age and independence remained unchanged. The Supervisory Board adjusted its profile in February 2023 to make it compliant with the renewed Code and the gender diversity legislation applicable to the company. The current composition of the Supervisory Board is as follows: Kees van der Graaf (chairman), Carin Gorter (vice-chair), Hans Willemse, Herman Rutgers and Rob van der Heijden.

In the Supervisory Board meeting of 8 February 2023, the Chairman Kees van der Graaf announced his decision that he will not finish his current term which runs until the anual meeting in 2025. He announced that, now that the company is in steady waters again, it is time to focus on other things and to hand over to another Chairman for the next phase of the development of Basic-Fit. Based on an available list of potential candidates for the role of chairman of the Supervisory Board, Jan van Nieuwenhuizen (m) has been asked to fullfill this role. He will bring valuable knowledge from his experience as international corporate and investment banker with ample boardroom and corporate governance experience at NIBC and Rabobank. Currently, Jan holds non-executive roles as Chairman of the Supervisory Board of ForFarmers (listed on Euronext Amsterdam) and Wealth Management Partners. The company will propose to appoint Jan van Nieuwenhuizen as new chairman of the Supervisory Board at the AGM of 24 April 2023.

Furthermore at the AGM to be held in 2023, the Supervisory Board will ask the AGM to approve the appointment of a new sixth Supervisory Board member, Joëlle Frijters (f). Joëlle is an independent digital thinker with a track record of entrepreneurship, innovation and international expansion who is currently active in a combination of activities including start-up advisory and non-executive roles. Joëlle is Supervisory Boardmember of CM.com (listed on Euronext Amsterdam), TABS (a HAL investment), HighTechXL and LeQuest and Advisory Board member at The Cronos Group. 

These two new Supervisory Board members will complement the existing expertise, experience and diversity of the Supervisory Board in line with the Supervisory Board profile. If the appointment of Joëlle Frijters is accepted at the AGM of 24 April 2023, Basic-Fit will as of that moment meet the gender diversity requirements for the Supervisory Board as defined in the Diversity law. Diversity, including gender, is an important consideration in the selection process for the (re)appointment of members of the Supervisory Board. As explained in the corporate governance section, when considering new vacancies, all elements of the Supervisory Board profile will be looked at to maintain and further stimulate a diverse Supervisory Board with a balanced male-female ratio. More information on the Plan of Approach and targets for gender diversity in the company can be found in the Corporate Governance section of this annual report.

As they do every year, members of the Supervisory Board visited Basic-Fit operational sites to maintain their understanding of the company’s operations, opportunities and challenges, and they were continuously updated on market and industry developments. One of the Supervisoy Board members attended an educational course at IESE business school on best practices for boards. The main learnings and findings were shared with the Management Board and Supervisory Board. Furthermore the Supervisory Board has been briefed extensively about the cyberrisks development by the IT director and IT security officer. The Supervisory Board was also specifcally informed about the ESG developments and how this impacts Basic-Fit as well as on the impact of the new Code.

1. Based on rotation schedule
2. Number of positions are based on article 2:142a of the Dutch Civil Code. All members comply with the relevant regulations.
3. Kees van der Graaf has only one appointment as a chair relevant in this respect as from 15 January 2022. Carin Gorter has five positions in Supervisory Boards, with the 5th added per 26 October 2021.
4. Kees van der Graaf, Rob van der Heijden en Hans Willemse were reappointed in 2021, Carin Gorter was reappointed in 2020, Herman Rutgers was reappointed in 2019, Pieter de Jong was reappointed in 2018 and stepped down in 2022 and Hans Willemse was reappointed in 2017. They are currently in their second or third (Hans Willemse) term. Based on best practice provision 2.2.2, appointment for a third or fourth term can be for a maximum of two years, for which reasons have to be given in the Corporate Governance Statement.

The Supervisory Board believes that the independence requirements referred to in best practice provisions 2.1.7 to 2.1.9 have been fulfilled. However, Supervisory Board member Hans Willemse is considered a non-independent member of the Supervisory Board, as defined in best practice provision 2.1.8. vii of the Code. Hans Willemse was designated for appointment by AM Holding. The Supervisory Board firmly believes that the overriding principle for its composition is that its members make a valuable contribution in terms of experience and knowledge of Basic-Fit’s business. In the opinion of the Supervisory Board, its size and composition meet the specifications laid down in the Supervisory Board profile, notwithstanding the above factors.

The members of the Supervisory Board who hold shares in the company are Kees van der Graaf, who personally held 3,275 shares, Herman Rutgers, who personally held 3,000 shares, and Hans Willemse, who personally held 40,029 shares in Basic-Fit as at 31 December 2022. They own their shares with a longterm perspective. None of the other Supervisory Board members were granted, nor do they possess, any Basic-Fit options or shares.

The Supervisory Board met nine times in regular meetings in 2022. All members of the Management Board were present at all meetings, except for the part of the meeting regarding the self-assessment of the Supervisory Board and the assessment of the Management Board, and the beginning of the meetings, which are held only with Supervisory Board members. Five meetings were combined with the Audit & Risk Committee meeting. All Supervisory Board members were present during all of the meetings.

Furthermore, the members of the Supervisory Board consulted regularly with each other and with the Management Board by telephone and by email. Between meetings, the chairman maintained regular and informal contact with the CEO and CFO. The meetings held in March, April, July and October and November 2022 were attended by the external auditor, as well as the meeting of March 2023, where they presented their audit findings for 2022. The meetings took place digitally or physically at the Basic-Fit head office in Hoofddorp, with one two-day strategy meeting held at an offsite location in June.

All members were able to devote sufficient time, including between meetings, to the affairs of Basic-Fit.

Recurring topics at the Supervisory Board meetings included:

• CEO and CFO updates

• Monthly results

• Market and business updates

• Risk reports

• Impact of economic and geopolitical developments (e.g. Impact war Ukraine, inflation, energy prices)

• Legal updates, including compliance and governance-related matters

• Investor relations activities

Topics that were discussed in more detail during these meetings included:

• Group strategy and long-term value creation

• Expansion strategy

• Quarterly results, H1 2022 results and related reports

• Full-year financial statements and approval of board report

• Press releases for the H1 results and Q1 and Q3 trading updates

• Scenario analyses and budget 2023

• Capital management and financing strategies

• Liquidity position and scenario analyses

• Compliance with debt covenants

• Current and expected profitability and cash flow

• Management performance and succession planning

• Supervisory Board performance and succession planning

• Other positions of Supervisory Board and Management Board members

• Remuneration of the Management Board

• Outlook and strategy 2022 - 2030

• Innovations in fitness and service

• Corporate story, values and culture

• Sustainability strategy and ESG reporting

• D&I Policy

• Governance and compliance model

• Internal audit plan

• Management letter

• Risk and control framework

• Integrity and fraud

• Pricing and membership model

• Club visits

The meetings addressed routine commercial, financial and operational matters, and focused on strategy implementation, the further maturation of the organisational (risk and control) structures required for future growth, and the implementation of the sustainability, corporate and social responsibility framework for the organisation. In 2022, the geopolitical and economic developments, also impacting Basic-Fit, were recurring topics at the meetings. The Management Board informed the Supervisory Board about the potential impact on the operation and results and ways to mitigate potential risks. Furthermore, the meetings devoted ample attention to the financial strategy and liquidity and the rollout of the long-term strategy towards 2030.

The company focused strongly on the development of a corporate strategy that is fit for the long-term future and creates long-term value for all stakeholders, including members, communities, employees, partners and shareholders. Basic-Fit's strategy focuses on promoting our fitness concept as something that is available to all, anytime and anywhere and on helping people make fitness a habit. As described in the CEO message and the Strategy section, the Management Board and the company have been working constantly and with confidence on the rollout of a solid and future-oriented strategy, despite this year's challenges. The Supervisory Board has been closely involved in defining and fine-tuning the strategy.

The expansion and growth strategy remains ambitious but supports the company’s mission to make fitness a habit and available to all. The company adjusted the member structure last year and continued to devote a great deal of time and attention to enhancing its strategy and fundamental processes to make it future proof. The continued automation and streamlining of processes is high on the Management Board’s agenda.

Given the cluster strategy, the potential to increase fitness penetration, a wellthought-out marketing approach, processes and systems to support operational excellence, and the assurance that each club will deliver a minimum return on invested capital (ROIC) threshold of 30% at maturity, the Supervisory Board feels comfortable with the company's long-term growth trajectory.

The Management Board made sure the Supervisory Board was closely involved in its approach to defining the company’s overall strategy and, more specifically, with respect to the following topics throughout the year:

• The impact of the external developments and factors potentially influencing the company’s operations and results, such as the war in Ukraine, inflation and the increase in energy prices, and the company’s measures to mitigate this impact.

• The Supervisory Board reviewed all new innovations and ideas and these were backed by pilots, extensive research and solid business cases. The company implemented a new membership structure, an energy taskforce to limit and control energy consumption, a new corporate website, further enhancement of the webshop and website, a new remote facility management tool and took the first steps in the German expansion. The innovation strategy is crucial to the company’s future growth and profitability and always supports the strategy to operate the clubs effectively and efficiently with a limited number of employees and with a strong focus on quality, service and retention.

• The financial resources needed to support the strategy and to keep the company financially healthy for the long term. The company reinvests the cash we generate, and we have a solid credit facility to support our budget and strategy.

• The company continued to enhance its sustainability strategy, which can further strengthen and support Basic-Fit’s long-term strategy and mission. Every decision the company makes focuses on getting as many people as possible to exercise and work on their health. A critical analysis showed that how the company works, builds and operates continues to raise environmental awareness and limit environmental impact. The company contributes to society by helping people to improve their health and fitness, by reducing our environmental impact and by promoting strong and cohesive communities. The company also started solid preparations for the upcoming ESG requirements. This was discussed extensively with the Supervisory Board.

• The Supervisory Board closely monitors and follows the company’s growth strategy in the various countries, which is tailored to the characteristics and demographics of each country.

• The Supervisory Board also focused on ensuring that the remuneration policy and the targets set for short-term and long-term bonus schemes reflect the company’s sustainable long-term strategy. The targets focus on the growth strategy, the development of clubs and members, sustainability and the implementation of innovation projects in the field of HR, IT and operational excellence. The successful implementation of these innovations contributes directly to the recruitment of new members and members staying longer, and supports the company’s long-term vision, which is why they are part of the target setting in the bonus and performance share plans of the Management Board and senior management.

• In the year under review, the company continued to develop its employee profiles and job classification system and structure. Furthermore, the company devoted a great deal of attention to succession planning right across the organisation, as well as the training, development, motivation and engagement of staff. The company also intensified its focus on Diversity and Inclusion with the implementation of a D&I working group, which is working on an updated D&I policy.

• The Supervisory Board also monitors sound succession planning and management structure within Basic-Fit.

The Supervisory Board was also involved in the discussion of how to implement targets and goals, objectives and values in the Basic-Fit culture and the company’s code of conduct. The organisational structure, management structure and culture of the company have to support the strategy, and the company adjusted these where necessary to make them more efficient. The company conducted a new employee satisfaction survey among Basic-Fit employees. Despite the challenges, the connection with employees and the Basic-Fit culture grew stronger and the team and culture display high levels of motivation and a strong urge to get things done, and to be open and transparent. The company’s values are broadly supported and are evident in how people act at every level of the company. The valuation of employees returned to the level seen before COVID-19 hit. The Basic-Fit values are Be (who you want to be), Accessible (affordable price, wherever, whenever you want), Smart (innovative, new, focused), Inclusive (for everyone) and Committed (customer-focused and engaged). These values are communicated and embedded in the recruitment and onboarding processes and in the overall internal and external communications, as well as in the cooperation with colleagues, partners, members and everyone related to Basic-Fit.

The Supervisory Board received training on its governance responsibilities, compliance, fitness industry developments, customer and employee motivation, sustainability, ESG and the EU Taxonomy and cybersecurity. This training was given by industry experts, the CFO, auditor, external counsels and the general counsel.

One of the meetings of the Supervisory Board was dedicated to assessing its own functioning and the functioning of the Management Board, and was held in the absence of the Management Board. The Supervisory Board reviewed both strengths and opportunities for improvement. The 'Functioning of the Management and Supervisory Board' section in this Supervisory Board Report describes this assessment in more detail.

The Supervisory Board has two committees: the Audit & Risk Committee and the Selection, Appointment & Remuneration Committee. The committees prepare the relevant items ahead of Supervisory Board meetings and the chairman of the committee reports to the Supervisory Board on the discussions of the committee and its main recommendations.

The Audit & Risk Committee consists of three members: Carin Gorter (chair), Hans Willemse and Rob van der Heijden. Collectively, the Audit & Risk Committee has the appropriate level of knowledge and experience in terms of financial accounting for listed companies. The committee’s main role is to assist the Supervisory Board in monitoring the internal control systems, the quality and integrity of the financial reporting process, and the content of the financial statements and reports; and in assessing and mitigating the business and financial risks. The charter of the Audit & Risk Committee is available on BasicFit's corporate website.

In the year under review, the Audit & Risk Committee met ten times, including five meetings in March, April, July, October and November that were combined with the Supervisory Board meetings, two additional meetings with the auditor and one dedicated IT strategy, SAP and ESG reporting meeting in November. All meetings were attended by all members of the Committee and all members of the Management Board, except for the self-assessment preparation and one meeting with the external auditor that was held in the absence of the Management Board. All meetings, except for one in February, were attended in full or in part by the external auditor and the internal auditor. Furthermore, there was a meeting in March 2023, at which the external auditor presented its audit findings. All members were present at all meetings, resulting in full attendance.

The chairman of the Audit & Risk Committee was in regular contact with the CFO, mainly to prepare the Audit & Risk Committee meetings.

The items and topics on the agenda of the Audit & Risk Committee included:

• Monthly reports

• H1 2022 results and Q1 and Q3 trading updates

• Press releases

• Accounting policies

• The external auditor’s 2022 audit plan, including engagement conditions and audit policy for non-audit services and auditor independence

• Cash and treasury management

• IT strategy, risk and (data) governance

• Capital management and financing strategies

• Liquidity position and scenario analyses

• Compliance with debt convenants

• Current and expected profitability and cashflows

• ESG reporting

• Integrity, fraud and risk assessments

• Pensions

• Tax-related topics

• Scenario analysis and 2022 Budget

• Risk and control framework

• Compliance framework and compliance plan

• IFRS 16

• Internal audit plan and internal audit reports

• All communications with the external auditor (e.g. Auditor’s report/ Management letter)

The Management Board and the Audit & Risk Committee consult the external auditor before the publication of press releases containing financial information.

The Audit & Risk committee also discussed the key audit matters .The Audit & Risk committee established that the external auditor is independent. The committee evaluated the functioning of the external auditor in terms of quality, content and adequacy of the audit, and the additional work of the auditor. The committee discussed the audit findings with the external auditor, the Supervisory Board and the Management Board. The Audit & Risk Committee also advises the Supervisory Board regarding the reappointment of the external auditor. The committee had a meeting with the auditor in the absence of the Management Board in line with the Code.

The Supervisory Board oversees the management’s monitoring of compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in terms of risks faced by the company.

In 2022, Basic-Fit continued to apply and adapt its internal control framework to the development and growth of the company. Internal Audit presented the internal audit plan, which was assessed by the Audit & Risk Committee and approved by the Supervisory Board.

The Selection, Appointment & Remuneration Committee consists of three members: Herman Rutgers (chairman), Hans Willemse and Rob van der Heijden, who replaced Pieter de Jong following the AGM in 2022. The Committee’s main responsibilities are to assist the Supervisory Board in supervising the Management Board with respect to the determination of the remuneration policy, compensation programmes and compensation for Basic-Fit’s managers and executive officers; to make proposals for the remuneration of the individual members of the Management Board and Supervisory Board; and to assist in the selection and appointment procedures for members of the Management Board. The chairman of the Selection, Appointment & Remuneration Committee has regular update meetings with the HR Director.

In the year under review, the Selection, Appointment & Remuneration Committee met four times. All members were present at all meetings, resulting in full attendance.

The main topics of discussion were:

• Performance and individual remuneration of the members of the Management Board

• Sustainable long-term incentive target setting for the members of the Management Board and key managers

• Target setting for the 2023 incentive plan

• Performance of the Management Board, key senior management and succession planning for the Management Board and senior management

• Succession planning

• Organisational structure and development

• HR strategy

• Development employee profile and culture

• D&I policy

• Plan of approach and targets to stimulate further genderdiversity

The Supervisory Board assesses its own functioning, and that of its committees, on an annual basis. In addition, the Supervisory Board assessed the functioning of the Management Board and discussed this with the members of the Management Board.

The Supervisory Board evaluated the performance of the Management Board and its individual members. Following this, the chairman od the Supervisory Board and the chairman of the Selection, Appointment & Remuneration Committee together held meetings with each member of the Management Board and gave feedback on their respective performances. The Supervisory Board also evaluated the functioning of the Management Board as a team. The conclusions were discussed in a closed meeting of the Supervisory Board. Overall, the Supervisory Board praises the flexibility, strength and perseverance of the Management Board for its continuous guidance of the company through challenging times, strengthening the position of the company, and its focus on the expansion and long-term strategy of the company. During this period, with many challenging decisions to make, the exchange of information and cooperation between the Management Board and the Supervisory Board was frequent and effective.

In early 2023, the Supervisory Board also reviewed its composition and its own performance and that of its two committees. The internal self-assessment was based on a questionnaire, which was completed by each Supervisory Board member and discussed in a closed plenary meeting. The Supervisory Board concluded that the relationship with the Management Board continues to foster open and in-depth discussions, which is very valuable. The timely and sufficient distribution of information is always an important consideration.

Basic-Fit’s remuneration policy aims to attract, retain and reward highlyqualified executives with the required background, skills and experience. It is transparent and aligned with the medium and long-term interests of Basic-Fit, our shareholders and other stakeholders, with the aim of delivering a strong and sustainable performance in line with Basic-Fit’s strategy. Additional details can be found in the remuneration policy on Basic-Fit’s corporate website and in the remuneration report section of this report. In accordance with the Selection, Appointment & Remuneration charter, the Supervisory Board determined the individual remuneration of Management Board members, as well as the performance conditions and metrics for the short and long-term incentive plans for 2022.

Information on the costs of the actual remuneration of the Management Board and Supervisory Board can be found in the Remuneration report and in notes 8.1 Remunerations of key management personnel and 8.2 Remunerations of members of the Supervisory Board of the consolidated financial statements.

The Audit & Risk Committee reviewed and discussed the Management Board report and financial statements for the 2022 financial year.

The financial statements for 2022 have been audited and provided with an unqualified independent auditors report by Ernst & Young Accountants LLP (see the independent auditor’s report in the 'Other information' section of this board report), and were discussed extensively by the Audit & Risk Committee in the presence of the Management Board in March 2023.

Following this discussion, the full Supervisory Board discussed the financial statements with the Management Board in the presence of the auditors. The Supervisory Board believes that the 2022 financial statements meet all the requirements for correctness and transparency. The 2022 financial statements are endorsed by all members of the Management Board and Supervisory Board, and are included in this board report.

The Supervisory Board recommends that the General Meeting, to be held on 24 April 2023, adopts the 2022 financial statements. In addition, it recommends that the meeting discharge the members of the Management Board and Supervisory Board from liability for their respective management and supervisory activities performed in 2022.

Last year was again an extraordinarily challenging year. It required the company to constantly adapt to changes and uncertain circumstances, always striving for the best solution for all the stakeholders of Basic-Fit involved. Although the circumstances were difficult, the Management Board, with the help of many dedicated employees and partners, managed to guide the company through this period. With great resilience and strength, management protected and secured the company's long-term strategy and managed to add 185 clubs to its portfolio. This resulted in 1,200 clubs at year-end and 3.35 million members. All in all, this resulted in a promising and ambitious outlook for the strategy in the period to 2030. Basic-Fit is continuously consolidating its leading position throughout Europe in the value-for-money segment of the fitness market. Moreover, we are maturing our corporate values and integrating them in a dynamic, flexible and entrepreneurial culture with talented, engaged and highly motivated people, making fitness accessible to everyone. The Supervisory Board wishes to thank the members of Leadership team for their continuous efforts to build on a strong and solid company with an impressive perspective for the long term. Finally, the Supervisory Board would like to thank all Basic-Fit employees, under the strong leadership of the Management Board, for their enormous commitment and dedication to making Basic-Fit the success that it is.

Hoofddorp, 13 March 2023

Kees van der Graaf
on behalf of the Supervisory Board

Remuneration report

This report was prepared by the Management Board and the Selection, Appointment & Remuneration Committee of the Supervisory Board. The Selection, Appointment & Remuneration Committee makes recommendations to the Supervisory Board regarding the remuneration policy, as adopted by the General Meeting, for the Management Board and how to apply the remuneration policy to the remuneration of the individual Management Board members.

This remuneration report combines both the requirements for the Selection, Appointment & Remuneration Committee to prepare a remuneration report in line with the Code, as well as the requirements for the Management Board to prepare a remuneration report in line with Book 2 of the Dutch Civil Code.

This remuneration report is published on the Basic-Fit corporate website as part of the board report.

The remuneration report will be submitted to the General Meeting of 24 April 2023 for an advisory vote.

The Remuneration policy in place was approved by the General Meeting on 22 April 2020, and became effective on the same date. Any subsequent amendments are subject to the approval of the General Meeting.

At the General Meeting of 21 April 2022, the shareholders were asked to give an advisory vote on the remuneration report over the year 2021. From the represented share capital, 73.23% voted in favour of the remuneration report. The size of the vote gave sufficient comfort that the proposed remuneration package for 2022 for the Management Board and the Supervisory Board and the approach towards the handling of the various PSP programs affected by COVID-19, are in line with the remuneration policy in light of the COVID-19 pandemic, and enjoyed the consent and support of the General Meeting. Therefore, the advice was taken into account and the remuneration package for 2022 was implemented as proposed.

The Management Board and Supervisory Board believe that the decision to grant the 2021-2023 PSP (pro rata 2/3 for the years 2022 and 2023 alone), the approval of the vesting of the pro rata part of the 2018 - 2020 PSP shares (being 2/3 of the grant, at target, and excluding any grant for 2020) and the decision that the PSP plans 2019-2021 and 2020-2022 will not vest for the Management Board since two out of three years are affected by COVID-19 limitations, reflects the spirit of the remuneration policy, sensible and responsible business behaviour, and addresses the interests of the shareholders. Also, the decision not to increase the CEO’s salary in 2022 and only apply a limited increase of 7% in the CFO’s base salary, given the fact that Management Board’s first priority is the recovery of the company, follows this line of thinking.

Ahead of the General Meeting, there has been extensive communication with stakeholders on the remuneration report and the chosen approach.

The remuneration policy aims to attract, retain and reward highly-qualified executives with the required background, skills and experience needed for a company the size and complexity of Basic-Fit. The policy is transparent and aligns the interests of the company, shareholders and other stakeholders. Variable compensation is an important part of the total package. The policy focuses on the medium and long term and aims to deliver long-term value creation and sustainable performance in line with Basic-Fit's strategy.

The service agreements with the members of the Management Board contain provisions relating to severance arrangements and claw-back provisions.

Consistent with the best practice principles of the Code, the first part of this remuneration report describes the remuneration policy for the members of the Management Board, while the second part sets out how the remuneration policy was implemented in 2022. The report concludes with the details of the remuneration policy of the Supervisory Board and how this remuneration policy was implemented in 2022.

The level of remuneration of the members of the Management Board is determined on the basis of a range of factors, including a periodic benchmark assessment performed every three years to assess the market comparability of the remuneration package. At the end of 2022, an independent audit firm performed a new benchmark assessment, which affected the decision on the remuneration of the Management Board for 2023 onwards. This new benchmark assessment on the remuneration of the Management Board and Supervisory Board was performed within the framework of the remuneration policy. The total package of remuneration components, including the 2022 conditions for remuneration, was taken into account and benchmarked against a selected peer group.

The benchmark peer group was updated, as a number of parties were no longer comparable, either because they had delisted or because they no longer met the comparability thresholds. The comparability guidance remained unchanged, taking into account industry, geography, ownership structure and size parameters. To capture the various market dynamics and competitive perspectives, both international sector-specific companies and Dutch general market companies were included in the remuneration peer group, based on comparability to Basic-Fit. To determine the peer group, the audit firm advising Basic-Fit applied a range of size parameters, from 2.5 times smaller to 2.5 times larger than Basic-Fit in terms of employees, net revenue and total assets. For market capitalisation, they applied a range of between 0.25 and 4.0 times Basic-Fit’s market capitalisation.

At the time the remuneration policy was adopted, this led to the peer group of 18 peer companies active in recreational services, semiconductors, food products and specialised customer services shown below.

1. Reference group as per moment of benchmark assessment in 2019

For clarity sake and for information solely, as from the year 2023, the new and updated peer group will be as follows:

The new peer group no longer includes Accell and Fitbit due to their delisting. Furthermore, Amsterdam Commodities, Beter Bed, Brunel, Ordina and Medifast have been replaced with others parties, because those companies did not meet the threshold of at least three of the four parameters employees, market cap, net revenues and total assets. The replacement companies that do meet these parameters and are either Dutch listed or sector specific are Aalberts N.V., Compagnie des Alpes SA, Fugro N.V., Inpost SA, Societé des Bains de Mer, Warehouses de Pauw N.V. and Peleton Interactive Inc.

In 2019 when the benchmark assessment was performed and the current peer group was set, the average positioning of Basic-Fit within the remuneration peer group was in the 50th percentile of the total peer group and in the 54th percentile of the Dutch peer group, based on the size parameters market capitalisation, net revenues, total assets and number of employees.

Taking into account the regular compensation for the Management Board at the start of the year 2019, the Total Direct Compensation (TDC) level for the CEO of Basic-Fit would at the time have been between the 25th percentile and the median level of the remuneration peer group. This means that in 2019, the remuneration elements, amount and balance between the elements were in line with the remuneration policy and were considered to be acceptable in light of the position and growth of the company. For the CFO, the TDC was at the median level of the remuneration peer group. The TDC for 2020 that was budgeted and implemented in the comparability study matched the position applied at the time within the remuneration peer group in the current remuneration policy and included a limited increase in base salary for the Management Board of 2.5%. In 2021, the Management Board and Supervisory Board did not increase salaries and instead kept them at the same level. In 2022, the Supervisory Board compensation remained unchanged, while the CEO’s salary was not raised and the CFO’s base salary was increased by 7%.

In the remuneration policy, the Supervisory Board took into account possible outcomes of the variable remuneration elements and how they may affect the remuneration of the members of the Management Board. In addition to this, the development of the share price is taken into account in the structure of the policy and the annual assessment of the application of the policy to the Remuneration of the Management Board. These scenario analyses and share price developments were taken into account when defining the structure of the policy. Each year, the Remuneration Committee discusses whether the remuneration policy is still suitable for the level and size of the company. For the years 2021, 2022 and again for 2023, taking into account the uncertain situation, the focus on recovery and the share price development that reflected this uncertainty, the CEO waived all increases of salary. The CFO also waived an increase in 2021, but in 2022 it was decided to increase the CFO’s base salary by 7% and to increase the CFO’s base salary in 2023 by 8.3%. The reason behind this is that the Management Board responsibilities in the current combination of CEO and CFO are shared equally, which led to the decision to bring the base salary of the CFO more in line with market practice and closer to the CEO’s salary, although still within the guidance of the remuneration policy. The new benchmark assessment 2022 allows an increase in the base salary for the CEO, a moderate increase in base salary for the CFO and a considerable increase in variable compensation for both Management Board members, to bring them in line with the peer group and the guiding principles defined in the remuneration policy of around the median of the peer group. The adjustment of the principles of the variable compensation would lead to a change in the remuneration policy.

The overall remuneration is below the median of the new benchmark assessment and still falls within the boundaries of the current policy, because there were no or limited increases in base salary in recent years. Compared with the remuneration of the peer group, Basic-Fit focused more - at the time of the benchmark assessment - on fixed income compared with variable income for both the CEO and CFO. Given the fact that the Management Board members waived this potential increase of variable compensation for the year 2023, this adjustment of the remuneration policy will not be added to the agenda of the AGM in 2023, but is expected to be added for the 2024 AGM.

Furthermore, the Supervisory Board took note of the views of the Management Board on their own remuneration. The request of the Management Board to waive an increase of variable remuneration in 2023 and the limited increase in the base salary of the CFO alone, was leading  in this decision. At this moment in time, the Management Board deemed this well within the boundaries of the remuneration policy that they deemed suitable for their position, reflecting the growth and development of the company and the accompanying responsibilities. The Committee subjected these arguments to a serious examination and adopted the proposal and arguments when approving the remuneration package for 2023. Pursuant to the remuneration policy, the remuneration packages of the members of the Management Board consist of fixed and variable components. The variable remuneration is linked to predetermined, assessable and influenceable targets, which are predominantly of a long-term nature. The remuneration policy is currently a bit low as shown by the 2022 benchmark assessment. The Supervisory Board and Management Board want to bring that back in line with the entrepreneurial culture of Basic-Fit, with a good balance between fixed and variable income, with more emphasis on the variable part of the remuneration in a new remuneration policy for 2024. It should be taken into account that the CEO has a considerable stake in the company, which strengthens the vision of a long-term value creation strategy for the company and which is also reflected in the short-term and long-term performance targets for the Management Board.

In determining the remuneration of the Management Board, the Supervisory Board also considers the impact of the overall remuneration of the Management Board on the pay differential within Basic-Fit. In line with the Code, Basic-Fit takes into account the internal pay ratios within the organisation when formulating the remuneration policy and determining the remuneration of individual members of the Management Board. The fact that the CEO has received no remuneration increase for 2023 and the CFO received a limited increase of 8.3%, plus the limited potential for pro rata vesting of LTIP vesting in the past and coming years when 2020 en 2021 are included in the performance period, will help to balance the pay ratio further. With a view to transparency and clarity, Basic-Fit has calculated the internal pay ratios based on the notes to the consolidated financial statements.

Basic-Fit’s internal pay ratio is calculated as the total CEO remuneration divided by the employee average remuneration. For the purposes of this calculation:

• Total CEO remuneration consists of the following components for the fullyear 2022: base salary €729,063 (2021: €729,063) + short-term incentives of €182,266 (2021: €0) + long-term incentives (PSP) at fair value at grant of €437,438 (2021: €291,619 ) + pension allowance of €109,359 (2021: €109,359 ) + Social security costs of €16,342 (added for the first time this year but for sake of comparison in 2021: €14,452) + other personnel costs (company car) of €31,815 (added for the first time this year but for sake of comparison in 2021: €35,912). All figures are full-year, based on the information provided in note 8.1 Remunerations of key management personnel.

• Employee average remuneration based on total employee benefit expenses as disclosed in note 3.4 Employee benefits expense, and total average number of employees in FTEs as disclosed in the same note.

Consequently, Basic-Fit’s calculated pay ratio in 2022 is 40 (2021: 34 and 2019 Pre COVID: 40.2), implying that CEO remuneration is 40,05 (2021: 34 / 2019: 40.2) times the average pay of an employee. If the pay ratio is calculated between CEO and CFO, this leads to a pay ratio of 1,2 (compared to 1.3 in 2021). The pay ratio of the CEO compared with the next senior management level was 5 in 2022 (compared to 5 in 2021).

These internal pay ratios were taken into account in the compensation discussions within the company. In 2022, the average increase of salaries for Basic-Fit was around 8,3%, due to the fact that in the past year almost none or very low increases were given and the inflation was high in the past year. In the determination of the remuneration of senior management and the definition and implementation of the new salary structure for the HQ and clubs, the focus was on bringing salaries in line with each other and with the market. Basic-Fit revisited this process in 2022, also taking into account the increasing pressure on the labour market and the higher salaries that come with that, in order to retain employees and talent. All these elements have been taking into account in the decision on the salary increase for Basic-Fit’s overall employee base in all countries.

In addition to the internal pay ratios, the company takes the development of its performance into account in the development of the remuneration of the members of the Management Board. The years 2020 and 2021 were impacted by COVID-19 and therefore difficult to compare in terms of remuneration development. In the years 2019, 2020, 2021, deviating standards for the remuneration package were applied, since discounts on salaries were applied and short-term and long-term variable remuneration was cancelled, limited or postponed. It is therefore difficult to compare year on year. Although the remuneration in 2022 seems to show an upward trend, this is actually a more normalised remuneration, with the impact of a challenging year and limitations in the PSP grant and vesting due to COVID-19 still having a downward impact.

In the formulation of the remuneration policy, the company took into account previous comments and suggestions from shareholders. In previous General Meetings, no comments were made regarding the remuneration policy or the remuneration report.

We have taken into account comments and suggestions from investors, external audit firms and investor consultancy institutions. This was mainly related to comments on the peer group, the division of variable and fixed remuneration, and the type of targets that would best suit a company such as Basic-Fit and its shareholders’ interests.

The Supervisory Board has the authority to make discretionary adjustments to the outcome of variable remuneration if the outcome is deemed to be unfair. In that case, the Supervisory Board can deviate from the policies outlined above, when the members of the Supervisory Board consider this necessary or desirable in specific individual cases.

The remuneration of the Management Board consists of five elements:

• Fixed compensation - annual base salary

• Short-term incentive - annual cash bonus plan (STI)

• Long-term incentive - annual performance share plan (PSP)

• Pension allowance and other benefits

• Severance payments

The annual base salary of the members of the Management Board is a fixed compensation and is set by the Supervisory Board, taking into account a variety of factors, such as the level compared to other Dutch and international listed companies, also taking into account the size and complexity of those companies and the broadness of the responsibility of the Management Board members. Although there would has been room for an increase based on this 2022 benchmark due diligence exercise, the fixed compensation for the CEO was not adjusted as per 1 January 2022 due to the continuing unrest and the year of recovery ahead. For the CFO an increase of 7% was applied. As a result, as of 1 January 2022, the annual base salary for René Moos (CEO) remained €729,063, while the annual base salary for Hans van der Aar (CFO) was €601,209, which is considered to be in line with the remuneration policy.

The STI is an annual cash bonus. The objective is to incentivise strong financial and personal performances, in line with Basic-Fit’s strategy and annually defined targets. The bonus for both members of the Management Board may vary from 0% to 60% of the annual fixed base salary, with 40% being applicable when both financial and non-financial personal targets are achieved. The pay-out at threshold level will be 20%, at target 40% and in the event of outperformance 60%, to be determined for each separate target.

The Supervisory Board sets targets annually based on the budget, taking into account the strategic ambitions. Financial targets such as total revenue and EBITDA determine 70% of the bonus, while non-financial or personal targets determine the remaining 30%. These personal targets are related to the definition and implementation of new strategic projects or products in the company, with a focus on achieving the company’s goals of sustainable long-term business, strengthening the company’s presence in its markets and making fitness accessible for everyone, within existing and new target groups, with existing and new products.

A performance zone is set for each of the financial targets, with no bonus below the threshold level and the maximum bonus when the performance exceeds the upper end of the performance zone. The Supervisory Board may change the exact percentages and targets from time to time.

For 2022, the defined targets and achieved results are as set within this table:

As part of the remuneration policy, Basic-Fit has introduced a performance share plan (PSP). The purpose of the PSP is to align the interests of the company, shareholders and Management Board over the long term; to foster and reward sustainable performances; and to retain and incentivise members of the Management Board to make long-term commitments. A PSP award is a long-term incentive and consists of an annual grant of conditional performance shares. Vesting is subject to continued employment and performance testing after three years.

The number of conditionally granted shares is set for a period of three years. Shares under this plan were granted for the first time in 2017 and each subsequent year.

Any award of performance shares will in principle vest at the end of a three-year performance period, subject to (i) the achievement of two predetermined group financial targets that appropriately reflect Basic-Fit’s long-term strategy, these being average revenue growth and net debt / EBITDA ratio, both reflecting 50% of the total target, (ii) continued service as a member of the Management Board, and (iii) no legislation or guidelines in grants are applicable that prevent (part of the) grant from vesting, for example as a result of the use of NOW 2.0 regulations during the COVID-19 pandemic.

When considered appropriate, the Selection, Appointment & Remuneration Committee may apply at its discretion a performance incentive zone of between 0% and 150%. When such a zone is applied, the Supervisory Board may reduce or increase the target and threshold percentages to ensure awards are an appropriate reflection of performance. Shares acquired at the end of the performance period by members of the Management Board must be held for an additional period of two years, in accordance with best practice provision 3.1.2 of the Code, with the exception of a sale of said shares to cover the tax obligations of the members of the Management Board related to the awarded shares.

The PSP was disrupted as a result of the NOW 2 and NOW 3 regulations that contain conditions for the use and pay-out of remuneration, limiting the company's ability to grant bonuses in any form or shares in the company for the years 2020 (NOW2 and NOW3) and 2021 (NOW3).

The years 2020 and 2021 are included in multiple year PSP plans. These plans also include financial years in which the Management Board delivered extraordinary results (i.e. for the 2018 and 2019 financial years), and furthermore they will contain future financial years in which the Management Board will have to perform strongly to recover from the impact of COVID-19 (i.e. 2022 and 2023).

As announced in the previous 2021 remuneration report and also discussed and approved at the AGM in 2022, the approach of certain PSP subject to the impact of a maximum of one COVID-19 year out of three has changed, in the sense that those plans will be assessed pro rata for the years not affected by COVID-19.

In line with clause 2:135a paragraphs 4 and 5 of the Dutch Civil Code and the Basic-Fit remuneration policy, the Supervisory Board requested approval of the General Meeting in 2021 to temporarily deviate from the remuneration policy due to exceptional circumstances as follows:

• For all currently outstanding and future PSP awards containing the performance years 2020 and/or 2021 (being the 2018 - 2020, 2019 - 2021, 2020 - 2022 and 2021 – 2023 plans), neither of these years will be considered and will be excluded from the determination of whether or not the PSP performance targets have been achieved, and any vesting for the remaining performance years will be determined and assessed on a pro rata basis for such remaining years only.

• For the 2018-2020 PSP, which would vest in 2021 in accordance with the remuneration policy, the vesting would be deferred until 2022, and any vesting linked to the performance years 2018 and 2019 will be subject to an additional review and test of reasonableness by the Remuneration Committee, in order to assess whether or not the vesting of this award will be effectuated on a pro -rata basis for the years 2018 and 2019 only. For the years 2018 and 2019, the predetermined performance targets were achieved in both years that would normally result in a pro rata vesting of 83.3% of the granted shares. Upon the recommendation of the Remuneration Committee, the Supervisory Board will, given this deviation from the remuneration policy, decide whether or not any vesting will take place in 2022, and if so, whether or not it is appropriate that a maximum of 83.3% of the shares subject to this PSP award will vest.

• Any vesting can only take place at the moment the NOW regulations allow the company to do so.

The temporary deviation from the remuneration policy as described above, including an additional review and test of reasonableness when deferring the vesting of the outstanding PSP awards, was approved by the AGM in April 2021.

Based on the deviation from the remuneration policy as approved in April 2021, the following decisions were made in 2022:

• For the grant made in June 2018 for the performance period 2018-2020, it was decided after the AGM in May 2022, that based on the results, it was still reasonable and fair to allow the vesting of the pro rata amount of granted shares, although taking into account a maximum vesting at target level for the years 2018 and 2019, although targets were outperformed. This led to a vesting of two-thirds of the granted shares, this being 9,367 shares for the CEO being and 7,219 shares for the CFO, on the vesting date 15 June 2022, four years after the grant rather than three years, at a share price of EUR 36,24.

1. Linear vesting applies between threshold, target and maximum levels

• In May 2022, the Supervisory Board, together with the Management Board, decided that the vesting of the shares under the 2019-2021 PSP, with scheduled vesting in 2022, will be permanently cancelled. Since two out of three years are affected and have to excluded from the assessment, the one remaining year is deemed to be too limited to come to a reasonable conclusion that pro rata vesting for one year would be fair.

• This same approach also applies to the grant under the PSP for 2020 for the period 2020-2022, as two years of this performance period were also affected. This means that the vesting of this grant will also be permanently cancelled for 2023.

• In 2022, a new grant was awarded under the PSP, this being the first grant expected to once more fall under the normal regime of the PSP, with a planned vesting in 2025.

• In line with earlier decisions, the next vesting will take place in 2024 for the PSP granted pro rata for the performance period 2021 - 2023 (excluding a grant for 2021, so the actual performance period is considered to be 2022 and 2023).

1. Other remuneration refers to the company car contribution.
2. In 2018, René Moos and Hans van der Aar were granted 14,050 and 10,828 shares respectively under the Long-term Incentive Plan (PSP), covering the years 2018, 2019 and 2020. The Management Board and Supervisory Board have exercised their discretionary competence and have decided, in line with the restrictions provided by NOW-regulations and support measures during the Covid-19 period, that for this PSP the year 2020 will not count towards determining whether the bonus targets have been met. As a result, the shares can only vest on a pro rata basis (66.7%). As a result of the same restrictions, no vesting of the PSP 2018-2020 took place in 2021. After approval of the annual report 2021, the discretionary decision was made that these would vest on a pro rata basis in June 2022. The amounts in the table are based on the share price on the grant date (€27.00) of 66.7% of the granted shares (9,367 and 7,219 shares respectively). The share price on the date of vesting in 2022 was €36.24.
3. In May 2022, René Moos and Hans van der Aar were granted 11,634 and 7,995 shares respectively under the long-term incentive plan (PSP), with a share price on the grant date of €37.60. These numbers can increase to 14,543 and 9,994 respectively in the event of outperformance. Under this plan, the aforementioned number of shares will vest in 2025, fully conditional on them still being employed at Basic-Fit and the achievement of targets. For the P&L impact of these plans, we refer you to section 8.1 Remunerations of key management personnel.
4. Variable remuneration 2022 calculated based on PSP 2022 award.

The members of the Management Board do not participate in Basic-Fit’s collective pension scheme and instead receive a comparable payment of a pension allowance of 15% of their base salary. They are entitled to customary fringe benefits, such as a company car and other benefits.

The service agreements with the Management Board include a severance payment in the event of involuntary termination of six months fixed salary and a notice period of six months. No severance payment will be made in the event of serious imputable or negligent behaviour. This is compliant with the best practice provision of the Code on severance payments.

Variable remuneration may be adjusted or recovered from a member of the Management Board, in accordance with the relevant provisions in the Dutch Civil Code, as amended from time to time.

The Supervisory Board remuneration is based on the remuneration policy for the Supervisory Board as approved by the General Meeting in 2020. The remuneration of the members of the Supervisory Board consists of fixed annual fees for their role as Supervisory Board members and was adjusted as per the 2020 General Meeting according to the overview provided in this section.

In addition, the chairman and members of both the Audit & Risk Committee and the Selection, Appointment & Remuneration Committee receive a fixed annual fee for these roles.

Basic-Fit does not grant variable remuneration, shares or options to members of the Supervisory Board. As of 31 December 2022, the members of the Supervisory Board had no loans outstanding with Basic-Fit, and no guarantees or advance payments had been granted to members of the Supervisory Board. Basic-Fit pays company-related travel and accommodation expenses related to meetings.

Financial statements

Consolidated financial statements

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

1. Note 6.1 Equity
2. Note 3.5 Share-based payments

1. Note 6.1 Equity
2. Note 3.5 Share-based payments

Consolidated statement of cash flows

1. Excluding changes as a result of acquisition of business combinations
2. Excluding changes as a result of acquisition of business combinations and netting payables and receivables
3. Excluding changes as a result of acquisition of business combinations, netting payables and receivables and changes in payables related to investing activities