OnMarket Bidding Closed Viva Leisure Ltd ASX: VVA

OnMarket | Viva Leisure Ltd IPO | ASX: VVA

Fixed Priced IPOType of Offer
13 May 19Offer Open
24 May 19Pay By
$1.00Price
A$20 millionSize of Offer
$2,000 Minimum Investment
Ord MinnettLead Manager

Offer closed early via OnMarket.  Investors will be notified of their allocations on Monday 27th May, with the expected ASX listing of 7th June 2019. 

OnMarket has a limited firm allocation, and the offer may close early and the 'Pay By' dates may change. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

The Viva Leisure Ltd IPO is fully underwritten by the Lead Manager, Ord Minnett.

Introduction

Viva Leisure Ltd (ASX: VVA) operates health clubs (gymnasiums) within the Australian health and leisure industry. Viva Leisure’s mission is to connect health and fitness to as many people as possible and aims to provide its members with affordable, accessible and awesome facilities.

At the end of March 2019, Viva Leisure operated 29 clubs located within the Australian Capital Territory and New South Wales, with the majority operating under the Club Lime brand. The Company’s has also entered into leases or agreements to lease a further 16 locations, plus an additional three facilities to be acquired shortly after listing. With over of 47,500 individual members they experienced growth at an average net rate of 709 members per month (excluding acquisitions) for the period April 2018 to March 2019.

Viva Leisure's Brands

Viva Leisure operates on what it calls a ‘hub and spoke’ model with larger (big box) health clubs being supported by smaller (standard, express and boutique) health clubs strives to provide offerings and options to suit individual members’ preferences. The Company believes this approach is unique in the marketplace as health club owners traditionally concentrate on one segment (i.e. big box, standard, express or boutique health clubs).

For the 12 months ending 30 June 2018, Viva Leisure generated revenue of $24.1 million and a statutory EBITDA of $5.2 million. Revenues and EBITDA are forecast to grow to $46.8 million and $11.4 million respectively by FY2020.

Investment Highlights

  • Significant growth opportunity – Fragmented $2.3bn Australian fitness industry targeting organic growth and opportunistic acquisitions
  • Scalable and bespoke business model with strong branding – ‘hub and spoke’ model provides for multiple offerings to suit member preferences supported by a strong and well-respected brand
  • Technology focused development provides a competitive advantage by operating a fully automated front-end and back-end system which pushes out relevant information, removing the need for users to retrieve the information
  • Strong cash flows from membership based revenue model – supported by strong track record of growth across all key metrics, including membership, retention, revenues are forecast to increase from $24.1 million in FY2018 to $46.8 million in FY2020.
  • Experienced management team and industry Board with significant operational and governance experience.

Offer overview

Viva Leisure Limited is seeking to raise $20 million via its IPO and will have a market capitalisation of approximately $52.6 million and an enterprise value to pro forma FY2019 forecast EBITDA of 5.6x. 

The Offer is fully underwritten by the Lead Manager, Ord Minnett.

The Company aims to provide a combination of capital and income returns to shareholders and has established a dividend policy targeting distribution to shareholders, subject to the operating needs of the Company, of between 40% and 60% of NPAT with dividends expected to commence in FY2021.

The purpose of the Offer is:

  • fund execution of Viva Leisure’s business model and expansion opportunities;
  • to pay for costs and expenses associated with the Offer; and
  • to provide working capital.

Industry Overview

The Australian health and fitness industry is made up of health clubs, fitness centres and gymnasiums which are designed to provide a range of fitness and exercise services. With fitness becoming an integral part of the lifestyle for many in the community, and with increased awareness in health and fitness the industry has experienced significant growth over the past decade. It was expected that the aggregate industry revenue in Australia would reach approximately $2.2 billion in FY2018 and continue to grow at an annualised rate of 2.3% over the next five financial years to reach approximately $2.5 billion in FY2023.

The Australian fitness market remains largely fragmented with major players in the market being Fitness and Lyfestyle Group (27.5%) and Anytime Fitness (14.9%). The remainder of the market (57.6%) made up of smaller franchise operators, single club owners multi-club owners/operators and council owned facilities. 

Business overview

Commencing operations in 2004 with one facility, Viva Leisure now operates 29 different facilities in the ACT and NSW, with a further three facilities to be acquired shortly after listing, and 16 new greenfield facilities in different stages of opening.

The majority of the health clubs are operating under the Club Lime brand through which Viva Leisure has become recognised in its market as a brand that stands for value, quality and a club or community atmosphere.

Viva Leisure’s ultimate vision is to be the number one health, fitness and aquatic operator in the market. To achieve its mission and realise its vision, Viva Leisure’s future strategy is focused on:

  • expanding its geographic reach in a determined, but controlled, approach, both organically and via acquisitions;
  • continuing investment in its differentiated model, membership retention, customer experience teams, cutting edge technology systems and facilities strive to make the Viva Leisure experience as seamless and important to its members as possible (e.g. healthy body, better life); and
  • increasing the range of products and services delivered to the Viva Leisure membership base to increase the benefits received by members.

Customer Base

Viva Leisure has demonstrated that its attractive membership proposition together with its high quality facilities and technology-led business model work successfully in a variety of locations across both regional and metropolitan areas. The Company’s membership base exceeds 47,500 and has been achieved through a strong value proposition based on:

  • striving to provide members with an affordable membership pricing structure;
  • access to health clubs 24 hours a day, seven days a week, and
  • providing “no contract” membership offers.

Viva Leisure’s proprietary member management system provides demographic and usage information on its membership base. The table below details customer base details as at March 2019.

Viva Leisure’s Customer base

Growth Strategy

Viva Leisure aims to provide its members with affordable, accessible and awesome facilities with its key strategies being to:

  • expand its geographical reach in a determined but controlled approach through establishing new greenfield locations and acquiring established businesses;
  • harnessing technology driven efficiencies to:
    • minimise administrative costs and overheads; and
    • enable Viva Leisure to continue to collect, analyse and monitor valuable real time data relating to its membership base and health clubs;
  • continue to develop its ‘hub and spoke’ strategy where big box health clubs are supported by smaller standard, express and boutique health clubs; and
  • growing its membership base at its existing health clubs by strengthening brand awareness and continuing to invest in improving members’ experience and its product and service offerings.

Revenue Model

Viva Leisure derives its revenue primarily from membership income. Membership income comprises fortnightly direct debit membership fees, joining fees, access pass fees, and other fees that may be applicable to the membership (i.e. suspension fees). As at April 2019, Viva Leisure’s direct debit income per fortnight exceeded $1.2 million which ensures a regular, consistent cash flow stream for the management of the business.

For the 12 months ending 30 June 2018, Viva Leisure generated revenue of $24.1 million and a statutory EBITDA of $5.2 million. Revenues and EBITDA are forecast to grow to $46.8 million and $11.4 million respectively by FY2020.

Financial Summary

Board and Management

Viva Leisure’s Board and Management bring significant operational and governance experience in the growth, aggregation and consolidation fields, including:

  • Harry Konstantinou (CEO and Managing Director) as a co-founder, he has been driving the business since it commenced and has substantial experience in the health and leisure industry and has overseen various acquisitions.
  • Bruce Glanville (Chair) has over 40 years’ of professional experience having held a variety of roles and serving in a wide range of commercial appointments as Director, including on listed companies and business ventures in both the public and private sectors.
  • Mark McConnell (Non-Executive Director) has over 20 years’ experience in a range of executive roles and has experience in business strategy, investor relations, capital raisings and innovations. Mark is a Director of several private companies and several ASX-listed entities.
  • Susan Forrester AM (Non-Executive Director) has over 25 years’ experience as a commercial lawyer, executive manager and company Director, with expertise in growth strategies and aggregations in a variety of industries. Susan is currently the chair of one ASX entity and a Director of several ASX‑listed entities.
  • Kym Gallagher (CFO) has over 20 years’ experience as a financial controller and CFO. Kym has been CFO of several companies during their IPO process and is a chartered accountant.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. Viva Leisure Ltd is subject to a range of risks, including reliance on membership, changes to regulatory framework, increased competition, technology issues and further acquisitions and integration risks.  

 

Section 734(6) disclosure: The issuer of the securities is Viva Leisure Limited ACN  607 079 792. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).​

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

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Viva Leisure Ltd ASX: VVA

Viva Leisure Ltd
Profitable and growing health club operator in the fragmented $2.3bn fitness industry

 

Offer closed early via OnMarket. Allocations to be made Monday 27th May

 

Viva Leisure Ltd (ASX: VVA) operates 29 health clubs with over 47,500 members within the ACT and NSW. With a further 16 locations under development, the clubs largely operate under the Club Lime brand, offering different membership options and a range of facility types, from big box to boutique fitness facilities.  Revenues of $24.1 million for FY2018, are forecast to increase to $46.8 million by FY2020.

 

$1.00Price
A$20 millionSize of Offer
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24 May 19Pay By