Resilience is paramount in the face of a global pandemic, as Canberra-based Viva Leisure knows only too well.
Despite COVID-19’s impact on the competitive health club space, the listed pacesetter has delivered a solid result for the 2020 financial year, thanks in part to cutting-edge technology and multiple acquisitions that have created a foundation for further international expansion.
The main driver of performance is membership revenue which was severely impacted with the mandatory closure of all facilities on 23 March 2020 for more than 10 weeks. This resulted in revenue falling short from previous guidance by about $18 million. That guidance was withdrawn shortly after clubs were shut down due to the unprecedented pandemic.
For the eight-month period before COVID-19, net income was tracking at 73.1 per cent above the previous corresponding period. This only included 15 days of FitnFast ownership, an acquisition of 13 health clubs in Sydney, Wollongong, Melbourne and Belconnen in the ACT, announced in December 2019.
The number of operating locations increased from 40 to 79 during the 2020 financial year. During this time, Viva completed and fully-integrated four acquisitions, with a total of 26 new locations.
Also during the financial year, Viva Leisure agreed to terms for the acquisition of Australian Fitness Management, the master franchisor of Plus Fitness. The agreement is significant in the company’s story of growth, as it marked its developing beyond Australia, to New Zealand for three locations, and another four in India (This transaction settled on 21 August 2020).
Monthly member visits peaked at 450,000 visits in February (excluding FitnFast) and had recovered to 500,000, (including FitnFast) in July 2020.
Another show of confidence was demonstrated with two equity capital raising episodes worth $20 million and $25 million respectively.
Viva Leisure’s chief executive officer Harry Konstantinou says COVID-19 has affected the health club industry significantly after mandatory shutdown of facilities in March 2020, effectively reducing income to zero.
“Since then, my team and I have worked diligently to return the business to pre-COVID levels,” Mr Konstantinou says.
“The FY2020 full-year result is outstanding during an unprecedented period. The business is in an excellent position to continue developing from here.”
Viva Leisure has seen strong recovery and performance from all business brands in the first two months of the new financial year. Monthly recurring revenue is tracking towards $5 million for August 2020, even though Victorian locations are closed and NSW clubs are still operating with restrictions.
Membership now exceeds 95,700 and continues to grow.
Viva Leisure maintains its entrepreneurial drive to ensure that it can respond to market conditions quickly, provide the best quality service and facilities possible to members and lead in its chosen markets.
The new financial year will see Viva Leisure continue to expand in a controlled manner to achieve its strategic objectives. The Australian Fitness Management (Plus Fitness) acquisition will provide additional opportunities to grow the business into new markets. Viva Leisure’s strong balance sheet and return to positive cash flow will allow the company to take advantage of future opportunities.
Original Article published by John Thistleton on The RiotACT.