The analysis below should be read along with the consolidated and ruled statements of Grupo Sports World, S.A.B. de C.V. and Subsidiaries, as well as the notes that come with them.

The financial statements were prepared according to the International Financial Reporting Standards (IFRS). The numbers in this analysis, as well as the financial statements and notes are expressed in Mexican pesos.

STATEMENT OF PROFIT OR LOSS

TOTAL REVENUE

EIn 2016, the Total Revenue was $1.36 billion pesos with a 14.5% rise over 2015. This result reflects:

1. A 14.0% growth in Income from Memberships and Monthly Dues, which amounted to $1.17 billion pesos due to the rise in number of Active Clients and clubs in operation.
2. A 37.6% rise in Sports Revenue and Other Core Revenue, which were mainly boosted by a larger participation in personalized classes, sports programs, vacation workshops for children and reactivation of memberships, reaching $112.7 million pesos.
3. A fall of 2.6% in Other Non-Core Revenue, which registered $83.7 million pesos. This number includes income by sponsorships, exchanges, commercial alliances and space rental.

The Total Revenue from Same Clubs, those with over 12 months of operation, grew 8.8% compared to 2015, mainly due to a higher occupation in these clubs and an increase in sales of sports programs and personalized classes.

ADMINISTRATIVE COST

In 2016, the Administrative Cost reached $86.4 million pesos and represented 6.3% of the Total Revenue, a decrease of 0.5% compared to the previous year. This result reflects the efficiency generation in the administrative management.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)

This year's EBITDA reached $228.2 million pesos, an increase of 11.6% compared to 2015. The EBITDA margin decreased 0.5 percentage points, as a percentage of the Total Revenue, to reach 16.7% in 2016, compared to 17.2% in 2015.

OPERATING PROFIT

The Operating Profit for 2016 raised 27.6%, reaching $69.6 million pesos, compared to $54.5 million pesos in 2015. The operating margin increased 0.5 percentage points, as a percentage of the Total Revenue, to reach 5.1% during 2016, compared to 4.6% in 2015, due to a 15% increase in the Operating Expenses, excluding Depreciation and Amortization, compared to the previous year, which was partially offset by a smaller increase in Depreciation and Amortization.

COMPREHESIVE FINANCING RESULT

The Comprehensive Financing Result amounted to $30.3 million pesos, a decrease of 5.9% compared to the $31.9 million pesos registered in 2015. This decrease is a result of the positive effect of the valuation of derivative financial instruments, which were hired with the goal of creating a financial coverage due to the risk associated to floating interest rates of long-term bank debt.

NET INCOME

The Net Income had an increase of 83.0% to $29.7 million pesos, representing a 2.2% margin over Total Income, compared to $16.2 million pesos in 2015, which represented a 1.4% margin.

BALANCE SHEET

CASH AND EQUIVALENTS

The Cash and Equivalents section, by year end, registered $134.3 million pesos, a decrease of $23.9 million pesos or 15.1% compared to last year, mainly due to payments to suppliers related to the construction of new clubs, as well as interest payments and capital amortization of existing credits.

LEASEHOLD IMPROVEMENTS

This concept registered $1.21 billion pesos, an increase of $41.8 million pesos or 3.6% compared to the previous year, mainly as a result of the investments carried out in order to adapt and equip the new clubs as well as to remodel operating clubs in order to offer top notch facilities to our clients.

SUPPLIERS, CREDITORS AND OTHERS

The Company registered a balance of $120.1 million pesos in this account, a decrease of $26.8 millions or 18.2% compared to the previous year. This balance is formed by outstanding amounts to be paid to suppliers, including those in charge of the construction and equipment of the new clubs.

FINANCIAL DEBT

By year-end 2016, the Net Financial Debt amounted to $306.4 million pesos, a 3.1% increase that comes mainly from the hiring of long-term credits. These resources have been used mainly for the adaptation and equipment of new clubs, as well as the remodeling of existing units. In 2016, we hired additional credit lines that amounted to a total of $120 million pesos, to finance the construction of new clubs. The Net Debt / EBITDA ratio by year-end 2016 was 1.34x compared to 1.45x at year-end 2015.

STOCK PERFORMANCE

The Sports World stock price closed at 16.57 pesos on December 31, 2016, a decrease of 14.2% compared to year-end 2015. The average daily operated volume of SPORT during 2016 was of 48,690 shares, in 2015 there was an average operated volume of 292,106 shares a day.