A Look At Only ASX-Listed Gym Operator, Viva Leisure Limited

Viva Leisure Limited (ASX: VVA) operates in the health and leisure industry, focusing on bridging the gap between fitness and people. Established in 2004 and headquartered in Mitchell, Australian Capital Territory (ACT), the company aims to provide access to affordable and accessible facilities to its members. It operates thirty-six health clubs across Victoria, New South Wales and ACT.

In addition to gymnasiums, the company operates varied types of facilities, including big box fitness facilities and boutique fitness facilities. Moreover, it attracts its customers by offering several different membership options. The company generates its revenues through personal training license and services fees, merchandise sales and casual entry fees.

Its portfolio of brands includes mixed gender health club, Club Lime, Club Lime Ladies Only, Club Lime Aquatics, Club Lime Swim School, personal training division Gymmy PT, Psycle Life, Hiit Republic and day spa facilities division Club MMM. Most of the company’s health clubs operate under the Club Lime brand, owing to which the company has become a well-known name in the market for its value, quality and a club or community atmosphere. VVA owns, controls as well as manages all of its locations under the company banner.

Why Viva Leisure’s Member Base Is Growing?

Viva Leisure was the first operator of health clubs to offer its members access to boutique clubs, ‘big box’ clubs, regular sized clubs and 24/7 ‘express’ sized clubs in the Australian health and fitness industry. These four segments of the market make the company well positioned to cater to a diverse group of people, as well as provide access to the best possible format in the health and fitness industry.

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The company believes in offering a supportive and non-intimidating environment to its members, whether first time users of health clubs or causal fitness members, by helping them achieve their goals towards personal fitness.

VVA facilities offer:

  • Motivating and non-intimidating environment,
  • Clean clubs with working equipment,
  • Access to industry professionals,
  • Group exercise classes,
  • Value for money,
  • Attractive packages, discounts and other offers.

IPO Listing on 7 June 2019

Viva Leisure recently debuted on ASX, thereby becoming the first dedicated listed health club operator. The IPO listing, completed on 7 June 2019, was a major milestone for the company as well as for the health and leisure industry, enabling it to introduce the health industry as a lucrative opportunity for investors. Moreover, through the IPO, the company intended to obtain access to capital markets and develop a liquid market for its shares.

The company raised $ 20 million in the IPO, with the issue of 20,000,000 shares at an issue price of $ 1 each share. The capital raised was intended to be directed towards funding expansion opportunities for the company, as well as aiding its business model and making payments towards the offer costs. Moreover, the company aimed at directing the proceeds towards other working capital purposes.

Viva Leisure intends to be at the top position in the health and fitness as well as aquatic facility market in the country. For its vision of becoming the number one, the gym operator plans to focus on organic growth as well as acquisitions, as it would help it in boosting its geographical reach. Moreover, the company intends to take care of its members by offering access to improved products and services.

Acquisition of Fitness 24/7 Business

The company, in an ASX announcement on 17 June 2019, updated the market regrading the completion of acquisition of the Fitness 24/7, which is a regional business operating three health clubs in Australia. The deal is in line with the company’s strategy of boosting its operations with new acquisitions. As part of the deal worth $ 3.75 million, Viva Leisure acquired the three Fitness 24/7 clubs in Albury, New South Wales and Wodonga, Victoria.

The acquisition deal not only establishes the company’s first location in Victoria, but also boosts its geographical reach into regional Australia. With the addition of these three clubs, the total member base of Viva Leisure increased by around 3,500 members. Moreover, the deal is likely to make contributions towards the company’s revenues and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) in FY2020, adding $ 3.0 million and $ 1.4 million, respectively.

The company expects to register $ 46.8 million in revenue during the financial year 2020, while its EBITDA is estimated to reach $ 11.4 million during the reported period.

For the six months ended 31 December 2018, the company generated $15.1 million revenue and $3.1 million EBITDA.

As per the market update, the company immediately started the conversion of the clubs including the deployment of its bespoke member management systems, in addition to online joining portal, self-service member portal, staff member management portal, and fully automated front-end and back-end systems.

The Fitness 24/7 clubs will be rebranded to Club Lime, in line with the company’s previous acquisitions.

Commenting on the acquisition completion, Viva Leisure CEO and Managing Director Harry Konstantinou, expressed his excitement towards the new additions. Harry Konstantinou stated that the previous owner of the Fitness 24/7 business developed a successful chain of clubs in the region and established a great team. Moreover, all the key staff members at the three clubs have accepted positions to transfer to Viva Leisure.

Plans for Upcoming Months:

With a current member base of more than 47,500 people, the company serves as the leading technology based disruptive health club business in the country. As the fastest growing health club owner in Australia, Viva Leisure Limited is continuing with its plans for rapid expansion in the future.

Viva Leisure is set to open new greenfield locations under various phases and anticipates its operational location portfolio to reach approximately 50 within a time period of the next 12-15 months.

The Australian fitness industry has seen sustained growth over last half a decade; expected to grow to a revenue level of $2.5 billion by 2023. VVA aims to continue to capitalise on the growth opportunity.

VVA last traded at A$0.900 as on 16 July 2019 with a market cap of $ 48.39 million and 52.6 million shares outstanding.


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