A MESSAGE
FOR OUR SHAREHOLDERS

DEAR SHAREHOLDERS:

DURING THE YEAR 2016, BASED ON THE PROPOSED STRATEGY, WE TOOK IMPORTANT STRIDES THAT LED US TO SIGNIFICANT PROGRESS IN OUR MOST RELEVANT METRICS AND THAT WILL BE THE KEY TO KEEP ON BUILDING A STORY OF SUCCESS.

BY YEAR-END WE REACHED A HISTORIC HIGH OF 72,987 CLIENTS, WITH A TOTAL REVENUE GROWTH OF 14.5% AND AN EBITDA GROWTH OF 11.6%, COMPARED TO THE PREVIOUS YEAR.

We worked to improve the service and hospitality in all of our clubs through a comprehensive focus on cleanliness, maintenance, training and certification of our collaborators and in the unification of our customer service processes. All of this with the objective of fostering a hospitality and experience generation culture above expectations across the company, which was reflected in the decrease in the indicators of churn rate.

At Grupo Sports World we keep growing on strong foundations.

Through the launch of different sports programs, we reinforced our commitment to renovate and complement our sports offer in a continuous way, consistent with the new international trends, through an inclusive and differentiated service proposal.

Among our most important launches this year, we can mention IndBike, a unique spinning concept with dynamic and challenging training routines, coupled with visual content on screens and a setting with illumination and sound congruent with the routine executed. Another important launch was Physical Move, designed specifically to correct movement and posture aspects and reconnect muscle chains.

Additional to these launches and as part of our interest to encourage a healthy and familiar environment and to increase our youngest clients' base, we signed an agreement with SafeSplash Swim School, the leading swim school franchise in the US. The SafeSplash program employs a premium swimming teaching method, focused on bringing a unique and professional experience through the creation of an atmosphere of trust. This program takes into account the personality, skill level and maturity of children and young people, enhancing the results, besides delivering periodic reports of the participating children in the program to parents. Programs like this have allowed us to strengthen our presence in the family segment, which, as of year-end 2016, represented 26% of our clients.

As part of our social work, we made an alliance with Save the Children in order to implement a program that seeks to offer nutrition education, encourage the increase of physical activities as part of an active lifestyle among school age boys and girls and prevent childhood obesity and physical inactivity through workshops and playful activities. Also, in accordance with our wellness approach, we have incorporate ourselves as active members of the Consejo para la Prevención y Atención Integral de la Obesidad y los Trastornos de la Conducta Alimentaria de la Ciudad de México (Prevention and Integral Attention for Obesity and Eating Habit Disorders Council of Mexico City), which takes part in the initiatives implemented with the public sector in order to face the conditions caused by physical inactivity.

For the fifth year in a row, we earned the ESR (Socially Responsible Company) distinctive and we were recognized by the survey Great Place To Work as one of the best places to work in Mexico, being the only ones in our sector with this recognition.

In order to focus our efforts in the clubs that show better response to our commercial strategy, during the year we transferred the operation of the clubs SW Luna Parc, SW Coacoalco and SW Arboledas to a third party that will operate them under a different brand. The Company keeps a percentage of the utilities generated and clients with All Clubs maintenance have access to them, which allows us to maintain our presence in the areas where these clubs operate. Also, during the month of July, the club SW Paseo Interlomas ceased operations due to an expansion and remodeling process in the mall. The plan is to reopen this club during the first part of 2018, taking part of the important expansion and openings plan we will have in the next years.

We continue to develop our strategy focused on offering unique experiences that generate wellbeing, with the objective of turning wellness into a lifestyle for our clients.

In 2016 we opened four clubs, one in Merida and three in Guadalajara, two cities with great potential. We are proud to mention we are the sports club company with the highest rate of growth in the segment we are focused on, in Mexico, placing ourselves as the biggest chain, with 49 clubs in operation as of year-end 2016. These openings will help us generate economies of scale and, therefore, improve our margins and generation of cash as we reach the maximum capacity of clients in each club in operation. As of year-end 2016, the family clubs were, on average, at 75% of their capacity, compared to 69% in 2015. On the other hand, our individual clubs went from 63% in 2015 to 68% in 2016. We are still working day by day on strategies to continue the increase of this indicator.

Finally, towards the end of 2016 and beginning of the present year, we carried out an important change to the brand identity, aiming with this to complement the differentiation we are developing with our presence on a national level and the focus on service experience and wellness.

We look at 2017 with optimism, knowing it will bring important challenges; however, I renew my commitment and the commitment of all of our collaborators to stay on the path of growth that has distinguished us and to continue strengthening our strategy with the goal of improving results and profitability for our shareholders.

Finally, I want to take this opportunity to thank our collaborators because their commitment and dedication have been key elements for the growth of Sports World, our clients who distinguish us with their preference and our shareholders for the trust they have placed in our Company.

Kind regards,

Fabián Bifaretti
Chief Executive Officer
Mexico City, April 2017