Benefit Systems announced its current report on expected results for 2019, indicating the possibility of a decrease in EBIT and pre-tax profit compared to 2018. With a further increase in the sales of sports cards, the company's profits will be burdened with lower revenues in the area of fitness than expected, mainly related to the sale of subscriptions. In addition, the change is also affected by using the IFRS 16 standard for the first time.
Published forecasts for a decline in EBIT and pre-tax profit by 5%-10% and 30%-40% respectively, compared to 2018, refer to reported results, i.e. PLN 153.6 million EBIT and PLN 157.4 million pre-tax profit. In this context, the Management Board indicates that the 2018 results included one-off events that had a positive impact on EBIT in the amount of PLN 21.6 million and an additional positive impact on the pre-tax result by PLN 10.6 million (described in details in the Report on the Management Board activities for 2018, p. 20).
The application of IFRS 16 standard for the first time in 2019 will have a positive impact on the operating result of approx. PLN 23 million and EBITDA of approx. 152 million, as well as a negative impact on the pre-tax result of approx. 27 PLN million The negative impact on the pre-tax result is related to the large number of leasing contracts in the early phase of their duration, which is associated with a different presentation of the same costs over time, and thus the burden on the gross result in 2019. During the lease term, the impact of the standard will be neutral. At the same time, the Management Board indicates that the above estimate is based on already concluded contracts and on planned club openings in 2019. This estimate may change.
The strategy of investing in fitness clubs is justified from the point of view of developing sports card business and building a competitive advantage in this area. This is confirmed by the results reported by Benefit Systems. At the end of the first quarter of this year over 1,032,000 people in Poland and over 265,000 abroad used the MultiSport programme. In total, it is 20% more than last year. Only in the first quarter of 2019, the company gained 103,000 new card users.
The Management Board of Benefit Systems continues to analyse the causes of downward trends in the fitness area and points out that it will take numerous actions to improve the results. The planned activities will be long-term.
Information on the revenue forecast in the area of fitness presented to the market was obtained during the verification of the implementation of the budget of the Benefit Systems Capital Group in 2019 and was provided by the company immediately after obtaining the results, in accordance with applicable MAR regulations.
The company will publish its financial report for the first quarter on the 16th of May this year. Information on the financial results for 2018 is available at benefitsystems.pl/for-investor.