360º
Wellness
Annual
Report
2017
wellness
360º
Wellness
We are Wellness
WE ARE PART OF A TRANSFORMATION PROCESS.
WE PROMOTE A HEALTHY AND ACTIVE LIFESTYLE SO THAT OUR CUSTOMERS CAN BE THE BEST VERSION OF THEMSELVES.
Clients
84,823
cac: 13.3%
MORE THAN A LIFESTYLE
WE STRIVE TO TURN WELLNESS INTO A LIFESTYLE. WE WANT OUR CLIENTS TO ACHIEVE A BETTER VERSION OF THEMSELVES THROUGH OUR PROGRAMS AND SERVICES.
Incomes
1,665,842
cac: 16.9%
Figures in thousands of MXN
EXPANSION PLAN
WITH THE OPENING OF EIGHT NEW CLUBS DURING 2017, IN LINE WITH OUR EXPANSION PLAN, SPORTS WORLD HOLDS ITS POSITION AS THE LEADER IN THE PREMIUM SEGMENT.
Ebitda
292,757
cac: 14.1%
Figures in thousands of MXN
SW STRENGTHENED ITS WELLNESS STRATEGY IN 2017, BROADENING ITS SUPPLY AND BRINGING TO ITS CLIENTS THOSE ACTIVITIES AND SERVICES NEEDED TO HAVE A HEALTHY AND BALANCED LIFESTYLE.
Excellent service
that shows results...
UNDER OUR FOUR SERVICE PILLARS SCHEME, WE OFFER OUR CLIENTS A QUALITY EXPERIENCE.
Clubs
57
cac: 13.0%
* Considering clubs in shared operation.
Always on the lead
EVERY DAY THERE ARE MORE COMMUNITIES FORMED WITHIN SPORTS WORLD. THIS CREATES A SENSE OF BELONGING THAT HELPS US RETAIN MORE CLIENTS.
Sustainability
model
WE WORK TO INTEGRATE OUR PHILOSOPHY OF SUSTAINABILITY IN EACH STEP THAT WE GIVE, MAKING EACH ASPECT AN IMPORTANT PART OF THE SUSTAINABILITY MODEL.
AS A WELLNES COMPANY, WE CONSIDER OURSELVES RESPONSIBLE FOR THE PROMOTION OF ACTIVE AND HEALTHY LIFESTYLES WITHIN OUR COMMUNITY AND, PARTICULARLY, AMONGST THE NEW GENERATIONS.
A MESSAGE
FOR OUR SHAREHOLDERS
WE ARE VERY PLEASED WITH THE RESULTS OF 2017. THANKS TO OUR STRATEGIES AND INITIATIVES FOCUSED ON SERVICE AND HOSPITALITY, AS WELL AS OUR CONSTANT INNOVATION, WE CONTINUE TO STRENGTHEN SPORTS WORLD'S LEADERSHIP IN THE MEXICAN MARKET AND WE CONTINUE TO IMPROVE OUR OCCUPANCY AND CHURN RATES.
Más que un estilo de vida
Somos la empresa operadora de clubes deportivos familiares líder en México y la única compañía en la industria del wellness en latinoamérica. Ofrecemos una amplia gama de programas deportivos enfocados en las necesidades y demandas específicas de nuestros clientes.
Corporate
profile
WE ARE THE LEADING FAMILY SPORTS CLUB OPERATING COMPANY IN MEXICO AND THE ONLY PUBLIC COMPANY IN THE WELLNESS INDUSTRY IN LATIN AMERICA. WE OFFER A WIDE RANGE OF SPORTS PROGRAMS FOCUSED ON THE SPECIFIC DEMANDS AND NEEDS OF OUR CLIENTS, AS WELL AS TRAINING, HEALTH AND NUTRITION SERVICES FOLLOWING THE LATEST INTERNATIONAL TRENDS IN THE INDUSTRY, TO ENSURE THAT OUR CLIENTS MAINTAIN A WELLNESS LIFESTYLE.
MISSION
To make our customers feel special in a fun, dynamic and hospitable environment, activating and transforming their lives.
VISION
To be the leading Wellness organization, distinguished for creating experiences that allow us to exceed our clients' expectations through quality in service and innovation, ensuring the growth of our collaborators, our profitability and the Company's sustainability.
VALUES
VALUE
PROPOSAL
CUSTOMERS
Join them in the achievement of their goals, in a comfortable environment, guaranteeing the optimal operation of our facilities.
PEOPLE
Find the balance between the Company's growth and the people's development, transforming ourselves into an example that inspires wellbeing.
SUSTAINABILITY
Promote active and healthy lifestyles, managing the efficient use of our natural resources and operating in an ethical and transparent manner.
MORE THAN
A LIFESTYLE
WE STRIVE TO TURN WELLNESS INTO A LIFESTYLE.
WE WANT OUR CLIENTS TO ACHIEVE A BETTER VERSION OF THEMSELVES THROUGH OUR PROGRAMS AND SERVICES.
2017 was a key year to strengthen our wellness focused strategy. With it, we seek to offer our clients all the services that will lead them to a healthy lifestyle.
Besides the wide and innovative sports offer, we have nutrition services; programs focused on improving health issues such as “Feel Healthy” (focused on improving diabetes, hypertension and overweight); special activities for children (tae kwon do, early stimulation, ballet, sports climbing, special swim program “SafeSplash”, hip hop, yoga, and others, as well as special seasonal events: “Summer Camp”, “Spring Camp” and “Winter Camp”); recovery programs; special yoga events and other programs included in our sports offer, such as “Grit Games”; SPA service and, finally, coffee shops that seek to improve their products every day in order to have a healthy and rich offering that goes along with the lifestyle we encourage.
Nutrition
services
Activities
for Children
Recovery
programs
Spa
service
Coffee shops
service
EXPANSION
PLAN
WITH THE OPENING OF EIGHT NEW CLUBS DURING 2017, IN LINE WITH OUR EXPANSION PLAN, SPORTS WORLD HOLDS ITS POSITION AS THE LEADER IN THE PREMIUM SEGMENT.
As part of our expansion plan, in 2017 we added eight new family format clubs, strengthening our presence in Mexico City with five of them, in Queretaro with two and in Merida with one. Locations are determined based on a growth and economic development analysis by state, as well as a sensitivity analysis carried out by the management team and expansion area experts.
We are proud of the strong welcome we have received in openings outside of Mexico City and its metropolitan area, which is shown our results, demonstrating a 16.2% increase in active clients in comparison to 2016. Thanks to this positive response, we are confident of the success we will continue to have in the expansion towards other states of the country with high potential.
At the end of 2017, we had 53 clubs in operation and four operating under another brand in a shared operation agreement, in line with our growth plan and medium term goals.
8
New
Clubs '17
5
CDMX
2
Queretaro
1
Merida
53
Clubs in
Operation '17
+4
Clubs under scheme
operation agreement
EXCELLENT
SERVICE THAT SHOWS
RESULTS
UNDER OUR FOUR SERVICE PILLARS SCHEME, WE OFFER OUR CLIENTS A QUALITY EXPERIENCE.
We started 2017 with the launch of a new campaign focused on enriching our client service, with which we implemented a new “four service pillars” scheme:
01
Equipment maintenance:
a 72 hrs. commitment to deal with any breakdowns
03
Coaches:
always available
02
Cleanliness:
impeccable facilities at all times
04
Client service:
less than 24 hrs. response to comments
The result of this campaign's implementation was an increase in clients' satisfaction:
80.3%
at the end of 2016
88.1%
at the end of 2017
Through this, we have achieved an increase of 2.5 percentage points in the occupancy rate of clubs with more than twelve months in operation and a 6.4% increase in the monthly average attendance in comparison to the previous year.
On the other hand, we maintained a healthy churn rate of 3.6% by the end of 2017, a level that was kept below the one of the industry and similar to the one we held in 2016, despite the additional increase in prices carried out mid-year and the unfortunate happenings of the September earthquake.
Always
on the lead
EVERY DAY THERE ARE MORE COMMUNITIES FORMED WITHIN SPORTS WORLD. THIS CREATES A SENSE OF BELONGING THAT HELPS US RETAIN MORE CLIENTS.
At the beginning of the year, we launched our new image along with an aggressive marketing campaign. They were both remarkably successful and have been an important factor in strengthening the brand positioning in the premium segment, as well as to reach all generations.
This brand positioning improvement, along with the strengthening of our wellness strategy, have brought an increasing interest from other companies to have presence in our clubs, which has led to an increase in sponsorships and commercial exchange income. We believe these partnerships are important to continue growing the wellness market in the country.
On the other hand, as we have been doing for the past few years, we carried on with our constant innovation, with the goal of always leading with the latest global trends in the fitness and wellness market. In 2017, for example, we implemented IndBike in 18 more clubs, reaching a total of 21 clubs that offer this highly accepted and demanded activity. Another program that has proven to be very successful is GRIT®, in which we have had over 1,000 attendees in three generations and one GRIT® CAMP.
21
CLUBS WITH
ACTIVITY INDBIKE
1,000
ATTENDEES
GRIT® CAMP
Sustainability
Job
Performance
IN 2017 WE TOOK AN IMPORTANT STEP TOWARDS A NEW PERSONNEL MANAGEMENT FOCUS, DEVELOPING OUR HUMAN RESOURCES PROGRAM INTO TALENT & CULTURE. PROMOTING A WELLNESS LIFESTYLE IN OUR COLLABORATORS, WITH THE OBJECTIVE OF INCENTIVATE AN INDIVIDUAL AN PROFESSIONAL BALANCE.
Our Team
1,120
Women (45%)
1,396
Men (55%)
2,516
Total
22%
Professional growth vs previous year
ALMOST 500 PEOPLE JOINED OUR TEAM IN DIFFERENT STATES OF THE COUNTRY.
Training and Assessment
Training is essential for collaborators to have the knowledge that helps them develop necessary skills to improve their job performance.
During 2017 we continued our training programs “Espíritu SW”, “Star Trainer” and “El Impacto de tu Excelencia”, focused on strengthening our hospitality culture. Furthermore, we moved to a new stage in leader training by starting our Management School, in search for skills and competences development in our internal talent to face present and future growth.
56
OF OUR COLLABORATORS WERE
CHOSEN TO BE A PART OF THE
MANAGEMENT SCHOOL
41hrs.
of training per collaborator
(+2hrs vs 2016)
Wellbeing, health and safety
We are natural promoters of wellbeing and, beyond our clients, we also want our collaborators to lead active and healthy lives, in line with our philosophy.
In this year, we continued with the implementation of actions that form our internal “Wellness” health program, such as:
Alignment and Balance Months
To promote a prevention and self-care health culture, implementing days when we offer free medical services such as glucose, BMI and blood pressure measurement, and sight exams among others, getting 71% of collaborators to participate.
21-day Challenge
An initiative that promotes physical activation amongst corporate collaborators, encouraging the use of stairs to head into our facilities.
Family Day
Amongst the initiatives of our internal health program, “Wellness”, we have the Family Day, which allows direct family members of our collaborators to use our facilities on weekends. During 2017, 45 of our collaborators took advantage of this benefit.
Our wellness culture has been recognized by the Wellness Council Mexico, who awarded us for the third year in a row, the distinctive of a Responsibly Healthy Organization (Distintivo Organización Saludablemente Reponsable).
103
Accidents
Total 2017
2
Administrative
101
Operational
Protection of Human
Rights, Diversity and Equity
We join the Global Deal to reject forced labor, child exploitation and discrimination in any form in the totality of our value chain. To ensure the fulfillment of this commitment, we support it internally with our:
AT SPORTS WORLD WE INVEST IN THE WELLBEING AND DEVELOPMENT OF OUR COLLABORATORS AND, AS PART OF THIS EFFORT, WE OFFER BENEFITS THAT SURPASS WHAT THE LAW REQUIRES.
Compensation and Benefits
30-day
Year-end Bonus
10% in Food
Coupons
10% Attendance
Bonus
10% Bonus for
Arriving on Time
5% Savings
Fund
Use of facilities for
employees and some family members
Life insurance
Major Medical Expense insurance
Maternity and Paternity
Because we know that life-work balance is important, all our staff has the right to a paternity or maternity leave. This year, the number of collaborators that took advantage of this right grew a little over 100%; besides, the percentage of people who came back to their jobs after their time off grew by 9%.
36
Went on maternity LEAVE
31
RETURNED TO THEIR ACTIVITIES AFTER THEIR MATERNITY LEAVE
31
KEPT THEIR JOB 12 MONTHS AFTER REJOINING
71
Went on paternity LEAVE
71
RETURNED TO THEIR ACTIVITIES AFTER THEIR PATERNITY LEAVE
69
KEPT THEIR JOB 12 MONTHS AFTER REJOINING
Recognition
During 2017 we set as an objective to join all our internal recognition practices in one single model, which we called DA+ and one which strives to recognize the work, performance, extraordinary effort and contributions from Sports World's collaborators, fostering a superior performance and better results for the Company.
Time
Recognize and celebrate the permanence of our people in the organization.
Achievement
Recognize outstanding collaborators for actions that positively impact the organization.
Life
Celebrate special life moments of each collaborator.
Team
Recognize the work, results and integration as a team.
Development
Recognize those collaborators who strive to improve and develop themselves and make a difference within the Company.
Social
Recognize the participation of collaborators in activities that generate a positive impact in our community.
Sustainability
Environmental
Performance
Securing the sustainability of the Company and protecting the environment is our priority. Year after year, we work on improving our measurement systems, which allow us to know the impact of our day-to-day operations and to establish reduction environmental goals.
Energy
The natural gas and LP gas consumption for water heating make up the main energy source of our operation, followed by electrical consumption in our facilities.
Just like last year, solar energy supplied, energetically, some of our clubs, allowing us to heat water through this means and to turn our energy matrix greener for the future, reducing our dependence on fossil fuels.
80%
REDUCTION NATURAL
GAS CONSUMPTION
-31%
gigajoules
in operation
Electrical Energy
As part of our commitment to the environment, we strive to regulate our electrical energy consumption in each business unit through strategies that allow for its efficient use and the optimization in the use of this resource.
The electrical installation of new clubs has been planned strategically, based on these principles, because they work with compact fluorescence and special LEDs applications, reducing considerably the energy consumption, in comparison with a traditional lamp.
5%
Increase in CONSUMPTION
ANNUAL VS '16
Thermal Energy
Thermal energy is another essential resource for our operation, which is why each club has boiler rooms for water heating, most of which run on LP Gas.
For the most recent openings, we promoted the use of ceramic core boilers with high efficiency, aside from the incorporation of new technology that makes thermal energy use more efficient.
15
OF OUR CLUBS USE
NATURAL GAS
-4%
USE OF
GAS LP
-54%
combustion
emissions
Carbon Footprint
Nowadays, the measurement of the carbon footprint is important not just for the protection of the environment, but also as an indicator of use intensity of resources, financial efficiency of our organization and the analysis of risk associated to climate change.
Due to our growth with the opening of eight new clubs, we are aware of our growing impact on the atmosphere, which is why we are committed to the creation of a mitigation plan, foreseeing the additional pollution we might generate in the future.
-2,964
Tons of co2e
Waste Management
This year, as part of a new initiative, we considered it of importance to reduce the water bottle consumption in corporate offices, carried out through the acquisition of dispensers which resulted in the reduction of 2,600 500ml water bottles consumed in 2017.
We achieved savings of 43.9% in fuel, reducing the related greenhouse gas emissions by almost half.
2,600
water bottles (500 ml)
not consumed
405,487
Recycled bottles
4,320
LITERS OF GASOLINE
BY FLEET OF VEHICLES
$101,599
equivalent in mxn
Actions in Support of the Planet
As part of our strategy to compensate for the carbon footprint generated by our operation, in 2010 we created the program “A Todo Pulmón”. For the seventh year in a row, we summoned our collaborators to join us for a reforestation day that, aside from creating a nice work environment, benefits our planet and community.
We reforest the Cumbres de Ajusco National Park:
100
collaborators
and family
67%
Greater assistance
17' vs 16'
Since the beginning of the program:
6,600
Total of trees
planted
1,500
planted
pine trees
Sustainability
Our Interest Groups
and our ethical behavior
AS A WELLNES COMPANY, WE CONSIDER OURSELVES RESPONSIBLE FOR THE PROMOTION OF ACTIVE AND HEALTHY LIFESTYLES WITHIN OUR COMMUNITY AND, PARTICULARLY, AMONGST THE NEW GENERATIONS.
We strive to keep a mutual trust and open dialog relationship with our interest groups, to continually improve their satisfaction and our operation. The communication channels we use allow us to generate permanent communication, to listen to their interests, opinions and expectations.
During the year, we managed a new proximity to our interest groups, to update our materiality research to continue the improvement process in our reporting forms. Up next, we show the material subjects we had:
Ethical Behaviour
Client’s
Health and Safety
Wellness, health
and job safety
Water consumption
for operation
Ethics and
business behavior codes
Transparency
Environmentally friendly
cleaning materials
Talent attraction
and retention
Human capital
development
Work practices and
Human Rights’ protection
Risks and
crisis management
Information safety
and governance
Operations’
energy consumption
Diversity and inclusion
Client
relationship management
Waste management
To guarantee the sustainability of our business, we must maintain lasting relationships with our interest groups. We consider that we will achieve this by reaching ethical standards and by being transparent with them.
Our Code also sets the path to follow in case we identify non-compliance, which is reported through our reporting channel “Denuncia SW”:
97
Complaints
3
in process
62
Solved
32
Not proceed
CONTACT INFORMATION
CORPORATE OFFICES
Vasco de Quiroga 3880
Nivel 2, Santa Fe Cuajimalpa
Cuajimalpa de Morelos, 05348
Ciudad de México
+52 (55) 5481 7777
The 2017 annual reports might include statements about results expectations about the future performance of Grupo Sports World y Subsidiarias. Such projections, dependent on the management’s consideration, are based on available information. However, the expectations could vary due to facts, circumstances and events outside of Grupo Sports World y Subsidiarias’ control.
WE ARE VERY PLEASED WITH THE RESULTS OF 2017. THANKS TO OUR STRATEGIES AND INITIATIVES FOCUSED ON SERVICE AND HOSPITALITY, AS WELL AS OUR CONSTANT INNOVATION, WE CONTINUE TO STRENGTHEN SPORTS WORLD'S LEADERSHIP IN THE MEXICAN MARKET AND WE CONTINUE TO IMPROVE OUR OCCUPANCY AND CHURN RATES.
A MESSAGE
FOR OUR SHAREHOLDERS
This, along with the successful implementation of our growth plan during the year, helped us surpass our results guidance, reaching a Total Income growth of 22.1% and an EBITDA margin of 17.6%.
The improvement in our profitability is a result of the greater maturity of our clubs with more than twelve months in operation, and of how they continued to increase their occupancy rate, going from 77.7% at the end of 2016 to 80.2% at the end of 2017, a result of the client retention and service focused strategies, as well as of the successful presale process and following evolution of the clubs opened during the year. We will stay focused on increasing the occupancy levels in our clubs to continue to improve the Company's profitability.
On the other hand, despite the unfortunate events that happened in September and the extraordinary increase in prices carried out mid-year to counteract the effect of the cost increase of our main services, we managed to keep our churn rate at 3.6%, a level close to the one shown in 2016, and lower than that of the industry at a global level, reflecting our responsibility to offer a unique experience and quality service.
In line with our expansion plan, during 2017 we carried out the opening of eight new clubs, strengthening our presence in Mexico City and its metropolitan area and expanding our footprint to other states of the country with high development potential. With these openings, we end the year with 53 clubs in operation and four operated under a different brand, under a shared operation agreement, strengthening our position as the biggest family club chain in Mexico.
One of the achievements in 2017 was the success of our new image, launched at the beginning of the year along with a strong marketing campaign, that has propelled our positioning as the leading chain in the market we are focused on.
In 2017 we kept our commitment to contribute to our environment's improvement: for the sixth year in a row, we received the Socially Responsible Company (Empresa Socialmente Responsable) distinction; we carried out our annual reforestation project along with Pronatura México, planting a total of 1,500 trees with the help of approximately 100 volunteers that joined the program; and we carried out the “Smiles Mailbox (Buzón de las Sonrisas)” initiative along with the TUK foundation, which consisted in sponsoring 50 children in vulnerable situations, giving them toys and clothes during the holidays.
To finalize, I want to thank our clients for their preference and for allowing Sports World to be a part of their lives, and to our shareholders for the trust they have placed in us; furthermore, I want to recognize the effort of our collaborators to continue to offer an excellent service.
Fabián Bifaretti
CEO
RELEVANT FINANCIAL INFORMATION 2017
FINANCIAL STATEMENT
2017
2016
Var. $
Var. %
Net Revenues
1,665,842
1,363,874
301,968
22.1%
Clubs' Operating Expense
1,277,616
1,049,277
228,339
21.8%
Gross Contribution
388,226
314,597
73,629
23.4%
Depreciation and Amortization
180,996
158,665
22,331
14.1%
Administrative Cost
95,469
86,371
9,098
10.5%
Administrative Cost/Net Revenue
5.7%
6.3%
-0.6 p.p.
Operating Income
111,758
69,561
42,197
60.7%
Operating Margin
6.7%
5.1%
1.6 p.p.
EBITDA1
292,757
228,226
64,530
28.3%
EBITDA Margin
17.6%
16.7%
0.9 p.p.
Net Financing Expense
(50,196)
(30,033)
(20,163)
67.1%
Income Tax
8,818
9,806
(988)
(10.1%)
Net Profit (loss)
52,747
29,721
23,026
77.5%
Net Profit Margin
3.2%
2.2%
1.0 p.p.
BALANCE SHEET
2017
2016
Var. $
Var. %
Cash and Equivalents
68,792
134,269
(65,477)
(48.8%)
Current Assets
187,945
191,531
(3,586)
(1.9%)
Improvements to leased properties,
construction in progress,
furnishings and equipment
1,394,054
1,206,292
187,762
15.6%
Non-current assets
1,698,009
1,450,291
247,718
17.1%
Total Assets
1,885,954
1,641,822
244,132
14.9%
Circulating portion of long-term debt
104,246
231,568
(127,322)
(55.0%)
Current Liabilities
490,700
534,249
(43,549)
(8.2%)
Long Term Debt
428,542
182,787
245,755
134.4.%
Non-current liabilities
462,918
217,909
245,009
112.4%
Total Liabilities
953,618
752,158
201,460
26.8%
Stockholders' equity
932,336
889,664
42,672
4.8%
Number of Employees
2,516
2,063
446
21.6%
*EBITDA is calculated by adding to the Profit (loss) before Taxes, The Net Financing Expense and Depreciation and Amortization.
Sustainability
Social
Performance
WE WORK TO INTEGRATE OUR PHILOSOPHY OF SUSTAINABILITY IN EACH STEP THAT WE GIVE, MAKING EACH ASPECT AN IMPORTANT PART OF THE SUSTAINABILITY MODEL.
Social programs
Together for a Healthy Childhood: An Active Childhood
This year, our “Together for a Healthy Childhood: An Active Childhood” program, operated in partnership with “Save The Children Mexico”, has paid off, adding one more school to such an important initiative, which seeks to improve nutrition and physical activity among school-aged children.
During 2017 we achieved:
655
Boys and Girls
Benefited
+15%
plain water
consumption
91
nutrition
workshops
+4.5%
INCREASED THEIR FRUITS AND
VEGETABLES CONSUMPTION
105
physical
activation workshops
+20%
PROGRAM
EXERCISED
The results of other programs in which we actively participate are the following:
Game Change
We participated in the 2017 “Copa Valores” by the Asociación Cambio de Juego A.C.
From Oblivion to Relief
We offer a new life to forgotten clothing that is not claimed back by our clients.
For a Healthy Mexico
We continue to strengthen our alliance with Mexico City’s Health Ministry in order to address the health issues in our country.
Smiles Mailbox
The volunteers from our corporate team sponsored 50 children in vulnerable situations to give them a toy they wanted during December, creating, with this, a harmonic space while delivering the gift personally to each child.
We worked with
400 providers in 2017
Value chain
During 2017 we decided to take another step in our involvement with our value chain, focusing our efforts on the creation of a trust relationship and the development of our main providers, many of which are micro, small and medium Mexican companies.
We designed an evaluation process to help them improve, an effort we consider to be beneficial both for them and ourselves. Beyond the quality of their service, we want our value chain to be involved with our Social Responsibility topics, in line with our philosophy and joining the sustainable development effort. Because of this, we offered an awareness workshop to 40 of our most important providers, showing them out sustainable strategy, main actions taken through time and inviting them, with our help, to join the process to get the Socially Responsible Company distinctive, joining the select group of companies that have it.
We will keep this quality relationship in the future, with more workshops to lead them towards Social Responsibility and to guide them in their effort. We will also seek to include more providers in this process. We know that this is the only way in which we will become a truly sustainable company.