ANN UAL
REPOR T
2019
YEAR END ED
30 JUNE 2019
Viva Leisure’s mission
is to connect as
many people as
possible to a healthy
lifestyle, delivering
to its members an
uncompromising
fitness experience via
accessible, affordable
and quality facilities
and services.
About this Report
This 2019 Annual Report for Viva Leisure Limited (ACN 607 079 792) has been prepared as at 23 September 2019. Please note
that terms such as Viva Leisure, VVA and Viva Leisure Limited have the same meaning unless the context requires otherwise.
Viva Leisure is committed to reducing the environmental footprint associated with the production of this annual report and
printed copies are only posted to shareholders who have elected to receive a printed copy. Shareholders can request a printed
copy of the Annual Report free of charge by emailing investor.relations@vivaleisure.com.au or by writing to the Company
Secretary, PO Box 1, Mitchell ACT 2911.
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CO NTE NTS
OUR LOCAT IONS AND BR ANDS
2019 HIGHLIGHTS
LETTER FROM THE CHAIR
CEO’S REPORT
DIRECTORS REPORT
REMUNERATI ON R EPORT
CORPORATE GOV ERNANC E STATE ME NT
AUDITORS INDEPENDENCE DE C LAR AT IO N
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
SIGNED REPORTS
Directors Declaration
Independent Auditor’s Report
SHAREHOLDER AND ASX INF O RM AT IO N
Shareholder Information
Information in Relation to Certain Property Leases
Corporate Directory
1
3
5
7
9
18
26
27
29
3 1
33
35
37
78
79
86
9 1
93
O U R L O C A T I O N S A N D B R A N D S
1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NSW
10
VI C
1
ACT
29
2
2 0 1 9 H I G H L I G H T S
RE VEN UE - UP 37.1%
$33.1m
M EM BE RS H IP S - U P 51 .7%
54,039
LO C AT IO NS - U P 90.4%
40
EB IT DA* - U P 57.7%
$8.2m
EB IT DA M ARGI N* - UP 14.8%
24.8%
3
*E xcludes one-of f pu blic l isting costs of $ 9 14 k
2019 HIGHLIGHTS V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
REVENUE
($m )
%
R 1 6 . 4
G
A
C
20.7m
18.0m
18.4m
33.1m
1%
7.
3
24.1m
EB IT DA
($m )
8.2m
%
R 6 8.0
G
A
C
%
7.7
5
5.2m
3.3m
1.8m
1.0m
FY2015 FY2016 FY2017 FY2018 FY2019
FY2015 FY2016 FY2017 FY2018 FY2019
MEMBERS
54,039
%
R 2 1. 0
G
A
C
%
51.7
35,631
25,218
26,754
29,124
E BITDA
M ARG IN
(%)
10.0%
5.7%
24.8%
21.6%
15.8%
FY2015 FY2016 FY2017 FY2018 FY2019
FY2015 FY2016 FY2017 FY2018 FY2019
new
locations
one every
2.7 weeks.
$183
13.6%
$161
EB IT DA
p e r m e m b e r
($ p. a.)
FY16-FY19 C A G R 37.2%
$118
$71
FY2015 FY2016 FY2017 FY2018 FY2019
EBITDA per member based on average
member number for the year
4
19 V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
LE T TER FROM
T H E C HAIR
Dear Shareholder
O U R FIR ST YE AR AS
A LISTE D CO MPANY
On behalf of the Board, I am pleased to
present the Viva Leisure Limited 2019
Annual Report.
During 2019, our first year as a listed company,
Viva Leisure continued the strong financial
performance of previous years, demonstrated
by outperforming our prospectus on all key
metrics. In particular:
• Statutory total revenues from continuing
operations were $33.1 million compared
to $24.1 million in the financial year ended
30 June 2018. Prospectus forecast total
revenues were $32.9 million;
• Trading Earnings before Interest, Tax,
Depreciation and Amortisation (EBITDA)
increased to $8.2 million from $5.2 million
when excluding the one-off costs ($914k)
of the listing;
• Profit before income tax from operations
has increased to $5.0 million compared
with $3.7 million in the financial year
ended 30 June 2018;
• Net Profit After Tax (NPAT) from
continuing operations was $3.2 million
compared with $2.9 million in the
financial year ended 30 June 2018;
• Cash and cash equivalent reserves remain
strong at $14.4 million, up from $1.1 million
as at 30 June 2019, predominantly due
to the capital raised during our listing in
June 2019;
• There was an increase in net assets to
$25.8 million compared to -$0.1 million
as at 30 June 2018.
5
L E T T E R F R O M T H E C H A I R
DIVIDENDS
B OARD AND MAN AG E ME NT
As highlighted in the Prospectus and reflecting
Viva Leisure’s growth profile and continuing
investment opportunities, the Directors confirm
that no dividend will be paid in respect of the
FY19 performance.
OPERATING HIGHLIGHTS FOR TH E YE A R
Highlights for the year were:
• An increase in operating locations/clubs
from 21 to 40;
• A strong pipeline of new locations secured
setting up FY20 to be another significant
year of growth;
• The launch of the first hiit republic
boutique studio;
• Membership increasing to over 50,000
for the first time;
• Strengthening our presence in regional NSW,
and entering the regional Victorian market;
• Acquisitions completed of xceler8 Fitness
(Wagga Wagga, NSW), Elite Physique
(Canberra), Absolute Fitness (Goulburn, NSW)
and Fitness 24 Seven (Albury (NSW)) and
Wodonga (Victoria)).
SOCIAL AND COMMUNIT Y COM IT MEN T
Viva Leisure has continued during the year its
commitment to ongoing support of appropriate
community needs. The Board and Management
team are justifiably proud of the impact that is
made in the community by taking a role as a
responsible corporate citizen. Likewise, we are
proud of the opportunities offered for employment
of some staff who may have special circumstances.
It has been a pleasure working with the Viva
Leisure Management team and Directors during
this very busy and exciting year for the Company.
I appreciate the significant contribution and
achievements Harry Konstantinou, his executive
team and of the entire Viva Leisure team, now
comprising over 600 strong.
O U TLO O K
Our mission statement epitomises the objective
of providing the opportunity for an affordable
healthy lifestyle for members. Our respectful view
is that this is a worthy objective and will continue
to provide sustainability to the business of Viva
Leisure. We aim to be anticipatory to potential
changes in the nature and manner of delivery of all
aspects of fitness and health.
The Board and Management team are alert to the
opportunities for Viva Leisure to continue expansion
of the business by way of new greenfield locations
and acquisitions, and in some respects, this is only
the beginning. The Board and I are confident
that, in setting the business plans in a dynamic
business environment for the Company, we are
well placed to execute on those plans in favour
of our shareholders.
In closing, I extend the gratitude of the Board to
our shareholders, employees and members for their
continued support throughout the year and for our
first few months as a listed entity.
Yours sincerely
Mr Bruce Glanville
C H A I R
6
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
C E O’ S REPORT
I am so very proud to present Viva Leisure’s
first annual report as a listed company.
Viva Leisure, an “overnight success” has
actually taken 15 years of “overnights” (and
hard work) to achieve. We have quietly, but
fiercely, grown year on year and achieved
some significant milestones in an extremely
competitive and fast-paced industry.
I could not be more thrilled to have both
taken part in, and shared with many, Viva
Leisure’s first XV.
During financial year 30 June 2019 Viva
Leisure recorded more than 2.9 million
visits to our facilities; our membership
increased to 54,039, representing a five-
year CAGR of 21.0%, and a 51.7% increase
from the previous year. Even more
impressive than our five-year membership
CAGR is our EBITDA CAGR which grew at
68.0% for the five years to 30 June 2019,
and an impressive 57.7% over the previous
corresponding periods.
Notwithstanding these significant
achievements, to quote Jeff Bezos, the
Founder and CEO of Amazon.com Inc
“.. this is but Day 1”.
Today, the health and fitness market in
Australia services approximately 15% of
the population, and Viva is committed
to using our world class facilities to
reach more.
We want to continue to help our members
to become fitter, healthier, stronger and feel
better about life and living. Our mission
is to enhance life’s experience for all our
members and to integrate seamlessly
with their lifestyles as they grow to both
appreciate, and covet, that health is the
real wealth in life.
7
C E O ’ S R E P O R T
OVERVIEW
T HE FU TU R E
Viva Leisure now own and operate 40 locations.
Just shy of 50% of these, a total of 19 locations,
were either opened or acquired in the previous
12 month period. To put this into perspective, on
average we opened or integrated a new location
every 2.7 weeks of the year.
Together with new club openings, we also ensured
our like-for-like locations continued to increase
and grow, with 90.4% of our existing sites having
membership growth from the period 1 July 2018 to
30 June 2019. This highlights that our growth is not
only coming from new locations being opened.
From the previous corresponding year, our
revenue increased by 37.1% to $33.1 million.
Our trading EBITDA margin (excluding one-off
public listing costs of $914k) increased to 24.8%,
up from 21.6% and 15.8% in the two previous
corresponding periods.
Our growth continued to extend outside of the
Australian Capital Territory (ACT). At year end, New
South Wales comprised 21% and Victoria 2% of our
total membership base. The reliance on being just
an ACT-based company to produce our profits and
growth decreased from over 90% in 2018 to 77% in
2019, and this will continue to decrease in the short
term as we apply our growth strategy to broader
geographic regions.
TALENT
To support our ambitious future growth, and as
we have done in the past, our executive team is
focused on attracting the best possible talent, as
well as retaining, fostering and offering growth
opportunities to our already bright shining stars.
Our business is all about experiences, and these
can only be offered sincerely when we have the
very best working in harmony. Our team is highly
motivated, excited, and constantly educating and
adapting to remain at the forefront.
Viva Leisure is excited and committed to continue
our current growth trajectory in all key market
segments which we operate. Our hiit republic
brand has already achieved significant recognition
both in the realised markets and in those where
we are yet to open. We have accelerated the hiit
republic brand rollout and will continue to provide
an unmatched value proposition when partnered
with a Club Lime health club membership.
Our unique FaaS (Fitness as a Service) model is
disrupting the traditional health and fitness market
with our accessible, affordable, no contract, no
joining fee, boutique and health club combination
membership. Our sophisticated data-driven
decision-making process will continue to have
a competitive advantage in site identification,
member analysis, churn and retention.
We will continue to strongly build on our
significant loyal membership base to provide new
revenue streams and digital options, again looking
to disrupt existing experiences being offered and
improving them.
I look forward to leading the team into our first full
year as a listed company, extending our services
out to many more members, increasing the
opportunities for our team and growing the value
of the company for our shareholders.
Harry Konstantinou
F O U N D E R , M A N A G I N G D I R E C T O R
A N D C H I E F E X E C U T I V E O F F I C E R
8
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
D IREC TORS’
REP OR T
9
D I R E C T O R S ’ R E P O R T
The Directors of Viva Leisure Limited present their report together with the financial statements of the
consolidated entity, being Viva Leisure Limited and its controlled entities (the Group) for the financial year
ended 30 June 2019.
DIRECTORS
The following persons were Directors of Viva Leisure Limited during the financial year:
HA R RY KONSTANTI NOU
Managing Director and Chief Executive Officer
Appointed 15 July 2015
Member of the People and Culture Committee
Appointed 12 October 2018
Qualifications
BA, (University of Canberra)
Other Current Directorships
None
Experience
Company co-founder and Director since 2004.
Harry has over 25 years of experience
developing, managing and selling technology
services business.
Directorships held in other listed entities
during the three years prior to the current year
None
Interest in Shares and Options
23,230,502 ordinary shares and options to
acquire a further 2,170,000 ordinary shares
B R UCE GL AN VI LLE
Independent Non-Executive Director
Independent Chair
Member of the Audit and Risk Committee and Chair of
the People and Culture Committee
Appointed 12 October 2018
Qualifications
Fellow of Chartered Accountants ANZ,
Member of Australian Institute of
Company Directors
Experience
Appointed Board and Committee member
and Chair on 12 October 2018.
Bruce is a Chartered Accountant and was
formerly a partner at Duesburys, Rolins
and Deloitte. He has extensive experience
providing board leadership and governance
in addition to driving growth strategies to the
businesses he has led.
Other Current Directorships
None
Directorships held in other listed entities
during the three years prior to the current year
None
Interest in Shares and Options
300,000 ordinary shares and options to acquire
a further 200,000 ordinary shares
1 0
D I R E C T O R S ’ R E P O R T
MA R K MCCONNELL
Non-Executive Director
Member of the People and Culture Committee
Appointed 12 October 2018
Qualifications
Bachelor of Science,
Graduate Diploma of Employment Relations,
Graduate Diploma of Logistics Management,
Master of Business Administration,
Fellow of Australian Institute of
Company Directors
Experience
Appointed Board and Committee
member on 12 October 2018.
Mark has over 20 years of management,
executive and non-executive experience
in a range of industries, including aviation,
technology and investment finance.
Mark’s experience and skills include business
strategy, investor relations, capital raisings
and innovation.
Other Current Directorships
Citadel Group Limited (ASX:CGL)
Adveritas Limited (ASX:AV1)
Directorships held in other listed entities
during the three years prior to the current year
None
Interest in Shares and Options
4,543,296 ordinary shares
SUSAN FORRESTER A M
Independent Non-Executive Director
Audit and Risk Committee Chair
Appointed 12 October 2018
Qualifications
Bachelor of Arts, Bachelor of Law (Hons),
Master of Business Administration,
Fellow of the Institute of Company Directors
Other Current Directorships
National Veterinary Care Ltd (ASX:NVL)
G8 Education Limited (ASX:GEM)
Experience
Appointed Board and Committee member on
12 October 2018.
Susan is a highly respected and accomplished
professional company Director with a powerful
blend of management, board and consulting
experience across ASX-listed, public and
private companies. She draws on 25 years of
executive management expertise covering law,
finance, HR, business and governance, to bring
a practical and pragmatic approach to her
board contributions.
Over the Wire Holdings Limited (ASX:OTW)
Directorships held in other listed entities
during the three years prior to the current year
Xenith IP Group Limited (ASX:XIP) between 2015
and
August 2019
Interest in Shares and Options
24,593 ordinary shares and options to acquire
100,000 ordinary shares
1 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
KYM GALLAGHER
Company Secretary and Chief Financial Officer
Appointed 12 October 2018
Qualifications
Bachelor of Economics,
Member of Chartered Accountants ANZ
Other Current Directorships
None
Experience
Appointed Company Secretary on
12 October 2018.
Kym has considerable experience as the
CFO and other senior management roles of
numerous ASX listed companies, commencing
with RG Capital Radio (ASX:REG) in 2000,
followed by Macquarie Media Group
(ASX:MMG) in 2005 and Southern Cross
Media (ASX:SXL) in 2010
Directorships held in other listed entities
during the three years prior to the current year
None
Interest in Shares and Options
100,000 ordinary shares and options to acquire
a further 175,000 ordinary shares
M OR G AN BRYANT
Company Secretary and Group General Counsel
Appointed 19 March 2019
Qualifications
Bachelor of Arts (International Studies),
Bachelor of Laws, Graduate Diploma of Legal
Practice, admitted Barrister and Solicitor of
the High Court of Australia
Experience
Appointed Company Secretary on
19 March 2019.
Prior to joining Viva, Morgan spent the first
6-years of his career working privately in
various legal and marketing roles, including
with a large multi-national privately-held
company, before spending a further 7-years
in various executive roles within Government.
Morgan is an experienced lawyer with a
broad practice.
Other Current Directorships
None
Directorships held in other listed entities
during the three years prior to the current year
None
Interest in Shares and Options
5,000 ordinary shares
1 2
D I R E C T O R S ’ R E P O R T
PRINCIPAL ACTIVITIES
The principal activities of the consolidated group
during the financial year were health club operation.
No significant change in the nature of these
activities occurred during the year.
R EVIEW OF OPERATIONS AND
F INANCIAL RESULTS
Financial highlights for the year:
• Statutory total revenues from continuing
operations were $31.2 million compared with $7.6
million in the financial year ended 30 June 2018;
• Profit before income tax from continuing
operations has increased to $4.0 million,
compared with $1.6 million in the financial year
ended 30 June 2018;
• Net Profit After Tax (NPAT) from continuing
operations and attributable to members was
$2.9 million compared with a financial year
ended 30 June 2018 result of $1.3 million;
• Cash and cash equivalent reserves available for
deployment on acquisitions is strong at $14.4
million, up from $0.5 million in the financial year
ended 30 June 2018; and,
• There was an increase in net assets of $25.2
million to $25.8 million compared to $0.6 million
at the financial year ended 30 June 2018.
• Ignoring the impacts of the restructure as
described below and in Note 4, and assuming
that there was a consistent group structure
across the two financial periods:
• Statutory total revenues from continuing
operations were $33.1 million compared with
$24.1 million in the financial year ended 30 June
2018, an increase of 37.1%;
• Profit before income tax from continuing
operations has increased to $4.3 million,
compared with $3.1 million in the financial year
ended 30 June 2018, an increase of 36.1%;
• Net Profit After Tax (NPAT) from continuing
operations and attributable to members was
$3.2 million compared with a financial year
ended 30 June 2018 result of $2.9 million, an
increase of 8.2%;
• These results are consistent with the financial
information presented in the Company’s
prospectus dated 14 May 2019. A summary
comparison of the results between 2019, 2018
and the prospectus forecast appears below:
Key Information
2019
2018
Increase /
(Decrease)
%
Prospectus
Increase /
(Decrease)
%
Total revenue and other income
33,081,934
24,127,453
37.1
32,910,000
EBITDA
7,285,461
5,207,727
39.9
6,812,000
Depreciation and amortisation
(2,327,020)
(1,536,556)
51.4 (2,399,000)
EBIT
Finance costs
NPBT
Tax expense
NPAT
4,958,441
3,671,171
35.1
4,413,000
(682,983)
(530,597)
28.7
(713,000)
4,275,458
3,140,574
36.1
3,700,000
(1,120,842)
(223,905)
400.6
(1,017,000)
3,154,616
2,916,669
8.2
2,683,000
0.5
7.0
(3.0)
12.4
(4.2)
15.6
10.2
17.6
Note: these are 12-month year on year results. Refer to note 4 (b) for further information.
1 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
Operational highlights for the financial year:
• An increase in operating locations/clubs
from 21 to 40;
• Member numbers increasing from 35,600 at
June 2018 to 54,000 at 30 June 2019;
• Strengthening our presence in regional NSW,
and entering the regional Victorian market;
• The launch of the first hiit republic
boutique studio;
• Acquisitions completed of xceler8 Fitness
(Wagga Wagga, NSW), Elite Physique
(Canberra), Absolute Fitness (Goulburn, NSW)
and Fitness 24 Seven (Albury (NSW) and
Wodonga (Victoria))
SIGNIFICANT CHANGES I N T HE
STATE OF AFFAIRS
During the year, the following significant changes
occurred within the Group:
1. Group Restructure:
Subsequent to the financial year ended 30 June
2018, a group restructure occurred whereby the
following transactions took place:
a. On 31st July 2018 the Company reorganised
its share capital by executing a share split of
37,500 ordinary class shares for every one
share issued, to increase issued capital to
4,500,000 ordinary shares;
b. On 31st July 2018 the Company acquired
the businesses of the Club Group Trust
for consideration of 11,850,000 shares in
the Company;
c. On 1st August 2018 the Company acquired
the share capital of The Club Group Pty
Limited and its subsidiary Club MMM! Pty
Limited for consideration of 4,650,000
shares in the Company.
As the restructure was determined to occur under
the control of the same shareholders, a common
control reserve was created in the equity section
of the balance sheet. A business combination
involving entities or businesses under common
control is a business combination in which all of
the combining entities or businesses are ultimately
controlled by the same party or parties both before
and after the business combination, and that the
control is not transitory.
Where an entity within the group acquires an entity
under common control, the acquirer consolidates
the carrying values of the acquired entity’s
assets and liabilities from the date of acquisition.
The consolidated financial statements of the
group include the acquired entity’s income and
expenses from the date of acquisition onwards.
Any difference between the fair value of the
consideration paid/transferred by the acquirer and
the net assets/ (liabilities) of the acquired entity are
taken to the common control reserve.
2. Pre-IPO Investment:
On the 1st August 2018 the Company issued
3,425,000 shares (which were converted to
4,543,296 under the share reconstruction that
occurred prior to the IPO. See Note 21.) for a
consideration of $3.5 million. The investment
was undertaken by a controlled entity of Mark
McConnell, a Director of Viva Leisure. The terms
of the investment were agreed during the financial
year ended 30 June 2018, but was contingent upon
a corporate restructure taking place, which did
not occur until early in the financial year ended 30
June 2019. The investment was settled immediately
after the restructure occurred. The funds from
the investment were used to fund the acquisitions
described in point 3 below.
3. Acquisition of Xceler8:
In September 2018, the Company acquired the
business of Xceler8 in Wagga Wagga, New South
Wales for cash consideration of approximately $3.2
million in aggregate (see note 28). The acquisition
was under a business sale arrangement.
As part of the acquisition of Xceler8, Viva Leisure
also assumed $380,000 in lease finance liabilities of
which $184,000 were paid out at completion.
Intangibles resulting from these Acquisitions
totalled approximately $2.9 million, comprising
member contracts at $720,000 with the balance
being goodwill.
4. Acquisition Elite Physique:
In September 2018, the Company acquired the
business of Elite Physique in the Australian Capital
Territory for $575,570. The acquisition was under a
business sale arrangement.
Intangibles resulting from these Acquisitions
totalled $450,000, comprising member contracts at
$250k with the balance being goodwill
1 4
D I R E C T O R S ’ R E P O R T
5. Initial Public Offering:
8. Repayment of related party debt
The Company undertook an initial public offering
of 20 million shares at an issue price of $1.00 to
raise $20 million (less costs of the offer).
Following Completion of the IPO, the Company
repaid $3.36 million in related party debt on 11
June 2019.
The offer was completed on 30 May 2019 with the
issue of shares occurring on the 31st May 2019 and
commencement of trading on the ASX on 7th
June 2019.
6. Acquisition of Absolute Fitness
In April 2019, the company acquired the business
of Absolute Fitness in Goulburn, NSW for cash
consideration of approximately $127,000. The
acquisition was under a business sale arrangement.
7. Acquisition of Fitness 24/7
In June 2019, the Company acquired the businesses
of Fitness 24/7 in the Albury, New South Wales
and Wodonga, Victoria for cash consideration of
approximately $3.44 million in aggregate (see
note 28). The acquisitions were under business
sale arrangements.
E VE NTS SU B SE Q UE NT TO TH E E ND O F TH E
RE P OR TIN G PE RI OD
No matters or circumstances have arisen since the
end of the financial year which significantly affected
or may significantly affect the operations of the
consolidated group, the results of those operations,
or the state of affairs of the consolidated group in
future financial years.
LIK E LY DE VE LO PME NTS AN D E XP E CT ED
RE S U LTS OF O PE RAT IO NS
Likely developments in the operations of the
consolidated group and the expected results of
those operations in future financial years have not
been included in this report as the inclusion of
such information is likely to result in unreasonable
prejudice to the consolidated group.
D IRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of Committees of Directors) held during the year
from the date of appointment on 12th October 2018 and the number of meetings attended by each Director
is as follows:
Director’s name
Board Meetings
Audit and Risk
Committee
People and Culture
Committee
Harry Konstantinou
Bruce Glanville
Mark McConnell
Susan Forrester
Where:
A
13
13
13
13
B
13
13
13
13
A
-
-
-
-
B
-
-
-
-
A
-
-
-
-
B
-
-
-
-
• column A: is the number of meetings the Director was entitled to attend
• column B: is the number of meetings the Director attended
1 5
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
UNISSUED SHAR ES UNDER OP TI ON
Unissued ordinary shares of the Company under option at the date of this report are:
Date options granted
Expiry date
Exercise price of
shares ($)
Number under
option
2 May 2019
2 May 2019
7 June 2019
2 May 2023
2 May 2023
7 June 2024
1.34
1.43
0.00
1,500,000
1,000,000
295,000
2,795,000
These options were issued under either the LTI, Tranche 1 or Tranche 2 Plans (described in Note 20.2 to the
financial statements) and have been allotted to individuals on conditions as follows:
• LTI Plan Options: The vesting of those options and will be subject to the satisfaction of appropriate
service-based conditions and/or performance hurdles determined by the Board. Options issued under
the LTI program expire on the earlier of their expiry date or termination of the employee’s employment;
• Tranche 1 and Tranche 2 Plan Options: The options are currently vested. Options issued under Tranche 1
and Tranche 2 program expire four years from the date of grant of the options.
S HARES ISSUED DURING O R S INCE
THE END OF THE YEAR AS A RES ULT
OF EXERCISE
There have been no issued ordinary shares as a
result of the exercise of options during or since the
end of the financial year.
ENVIRONMENTAL LEGISLAT ION
The consolidated group’s operations are not subject
to any particular or significant environmental
regulation under a law of the Commonwealth or of
a State or Territory in Australia.
D IVIDENDS
There were no dividends paid or declared since the
start of the financial year (2018: nil).
INDEMNITIES GIVEN TO, AND
INSURANCE P REMIUMS PAID FOR,
AUDITOR’S AND OFFIC ERS
Insurance of Officers
During the year, Viva Leisure paid a premium to
insure officers of the Group. The officers of the
Group covered by the insurance policy include
all Directors. The liabilities insured are legal costs
that may be incurred in defending civil or criminal
proceedings that may be brought against the
officers in their capacity as officers of the Group,
and any other payments arising from liabilities
incurred by the officers in connection with such
proceedings, other than where such liabilities arise
out of conduct involving a wilful breach of duty by
the officers or the improper use by the officers of
their position or of information to gain advantage
for themselves or someone else to cause detriment
to the Group.
Details of the amount of the premium paid in
respect of insurance policies are not disclosed as
such disclosure is prohibited under the terms of
the contract.
The Group has not otherwise, during or since the
end of the financial year, except to the extent
permitted by law, indemnified or agreed to
indemnify any current or former officer of the
Group against a liability incurred as such by an
officer. No indemnities have been given or insurance
premiums paid, during or since the end of the
financial year, for any person who is or has been an
officer or auditor of the consolidated group.
Indemnity of officers
The Company has entered into deeds of access,
indemnity and insurance with each Director
(Director’s Protection Deed) which confirm and
extend the Director’s statutory and general law
rights of access to Board papers and the books
1 6
D I R E C T O R S ’ R E P O R T
and records of the Company and its Subsidiaries.
The Director’s Protection Deeds provide that the
Director be allowed access to and a copy of records
in certain circumstances.
• All non-audit services have been reviewed by
the audit committee to ensure they do not
impact the impartiality and objectivity of the
auditor; and
• None of the services undermine the general
principles relating to auditor independence
as set out in APES 110 Code of Ethics for
Professional Accountants.
Details of the amounts paid to the auditors of the
Company, Hall Chadwick, and its related practices
for audit and non-audit services provided during
the year are set out in Note 25 to the financial
statements. The total paid for non-audit services
was $174,907.
Director
______________________________
Harry Konstantinou
Dated this
28 day of August 2019.
In accordance with the Constitution, the Company
must indemnify any current and former Directors
and officers of the Company and its Subsidiaries
against any liability incurred by that person in
that capacity, including legal costs. The Director’s
Protection Deed also requires the Company to
indemnify the Director for liability incurred as
an officer of the Company and its Subsidiaries,
including reasonably incurred legal costs, to the
maximum extent permitted by law.
The Constitution also allows the Company to
enter into and pay premiums on contracts insuring
any liability incurred by any current and former
Directors and officers of the Company and its
Subsidiaries, which is incurred by them in that
capacity, including legal costs.
Accordingly, the Director’s Protection Deed requires
the Company to maintain, to the extent permitted
by law, an insurance policy which insures Directors
and officers against liability as a Director or officer
of the Company and its Subsidiaries.
Indemnity of auditors
The Group has agreed to indemnify its auditors, Hall
Chadwick, to the extent permitted by law, against
any claim by a third party arising from the Group’s
breach of its agreement. The indemnity requires the
Group to meet the full amount of any such liabilities
including a reasonable amount of legal costs.
Non-audit services
During the year, Hall Chadwick, the Company’s
auditors, performed certain other services in
addition to their statutory audit duties.
The board of directors has considered the position
and, in accordance with the advice received from
the audit committee, is satisfied that the provision
of the non-audit services is compatible with the
general standard if independence for auditors
imposed by the Corporations Act 2001. The
directors are satisfied that the provision of non-
audit services by the auditor, as set out below,
did not compromise the auditor independence
requirements of the Corporations Act 2001 for the
following reasons:
1 7
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
REM UN ERATION
REP OR T (AUDITED)
1 8
R E M U N E R A T I O N R E P O R T ( A U D I T E D )
The Directors of Viva Leisure Ltd (Viva Leisure, the
Group, or the Company) present the Remuneration
Report for Non-Executive Directors, Executive
Directors and other Key Management Personnel,
prepared in accordance with the Corporations Act
2001 and the Corporations Regulations 2001.
The Remuneration Report is set out under the
following main headings:
a. Principles used to determine the nature and
amount of remuneration;
b. Details of remuneration;
c. Service agreements;
d. Share-based remuneration; and
• long term incentives (LTIs), being participation
in the form of options. The People and Culture
Committee assess the appropriateness of
the nature and amount of remuneration
on a periodic basis by reference to recent
employment market conditions with the overall
objective of ensuring maximum stakeholder
benefit from the retention of a high quality
Board and Executive Team.
The payment of bonuses, share options and other
incentive payments are reviewed by the People and
Culture Committee annually as part of the review of
executive remuneration and a recommendation is
put to the Board for approval. All bonuses, options
and incentives must be linked to pre-determined
performance criteria.
A . PRINCIPLES USED TO DE TE RMI NE T H E
N ATURE AND AMOUNT OF R EMU NER AT IO N
Short Term Incentives (STIs)
The principles of the Group’s executive strategy and
supporting incentive programs and frameworks are:
• to align rewards to business outcomes that
deliver value to shareholders;
• to drive a high performance culture by setting
challenging objectives and rewarding high
performing individuals; and
• to ensure remuneration is competitive in the
relevant employment market place to support
the attraction, motivation and retention of
executive talent
Viva Leisure has structured a remuneration
framework that is market competitive and
complementary to the reward strategy of
the Group.
The Board has established a People and Culture
Committee which operates in accordance with
its charter as approved by the Board and is
responsible for determining and reviewing
compensation arrangements for the Directors
and the Executive Team.
The Committee has engaged independent
remuneration consultants to provide any necessary
information to assist in the discharge of its
responsibilities (refer to the disclosures below).
The remuneration structure that has been adopted
by the Group consists of the following components:
• fixed remuneration being annual salary;
• short term incentives (STIs), being cash
based payments;
Performance measures involve the use of annual
performance objectives, metrics, performance
appraisals and continuing emphasis on living the
Company values.
The performance measures are set annually after
consultation with the Directors and executives and
are specifically tailored to the areas where each
executive has a level of control. The measures target
areas the Board believes hold the greatest potential
for expansion and profit and cover financial and
non-financial measures.
Entitlement to an annual STI payment for the
Executive Team is subject to the following:
• the achievement of targets as against key
performance indicators (KPIs) and the budget
adopted by the Board for the financial year
ending 30 June of each year;
• a clear audit report for that financial year;
• the People and Culture Committee will assess
whether those KPIs have been achieved or
otherwise and provide a recommendation to
the Board;
• where the KPIs are only partially achieved,
the Board will, wholly at its sole discretion,
determine the basis upon which any
STI payment will be calculated in those
circumstances; and
• any STI amount is only payable upon finalisation
of the financial accounts by the Company.
1 9
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
Long Term Incentives (LTIs)
Use of Remuneration Consultants
Viva Leisure Limited’s Board engaged the services
of Crichton + Associates to review and to provide
recommendations in respect of the amount and
elements of executive remuneration, including
short-term and long-term incentives. Gadens were
engaged to design the long-term incentives plan
and associated documentation.
Under the terms of the engagement, Crichton +
Associates and Gadens provided remuneration
recommendations as defined in section 9B of the
Corporations Act 2001 and were paid $8,225 and
$25,000 respectively for these services.
Each of Crichton + Associates and Gadens have
confirmed that the above recommendations have
been made free from undue influence by members
of the Group’s key management personnel.
Crichton + Associates and Gadens were engaged
by, and reported directly to, the Board of Directors.
The agreement for the provision of remuneration
consulting services of each consultant was executed
by the Chair of the Board of Directors on behalf of
the Board.
The reports containing the remuneration
recommendations was provided by Crichton +
Associates and the documentation related to
the long-term incentives plan and associated
documentation by Gadens were provided directly to
the Chair of the Board of Directors.
The Board is satisfied that the recommendations
were made free from undue influence from any
members of the key management personnel.
The table below describes the performance hurdles
EPS CAGR over the three
Financial Years Ending 30
June 2021
Percentage of
Options that
Vest
Less than 15%
(minimum Target)
15% to 20%
(within target range)
0%
50% - 100% (on a
straight-line basis)
Greater than 20% (above
maximum target)
100%
and vesting conditions that apply as at the date
of the Prospectus and in relation to the 295,000
options granted to senior executives:
Earnings per Share (EPS) Cumulative Compound
Annual Growth Rate (CAGR)
The percentage of options that vest for each % EPS
CAGR is illustrated in the following table:
• For the purposes of the above performance
hurdles, Earnings per Share means the Basic
EPS recorded in the Company’s audited financial
statements.
• The Basic EPS may be adjusted for items which
the Board, in its discretion, considers should be
excluded from the EPS result (such as items of a
one-off and non-recurring nature).
• The Company’s Basic EPS for FY2019 will be
calculated following the IPO and confirmation
of the number of Shares on issue as at the date
of listing.
• The Performance Hurdle will be tested only
once the Vesting Condition has been met by
the grantee senior executive and following the
Company’s audited accounts being finalised
for FY2021.
2 0
R E M U N E R A T I O N R E P O R T ( A U D I T E D )
B .DETAILS OF REMUNERAT ION
Details of the nature and amount of each element of the remuneration of each Key Management Personnel
(KMP) of Viva Leisure are shown in the table below.:
Directors and
other Key
Management
Personnel
Short-term
Employee Benefits
Post-
employment
Benefits
Long-term Benefits
Share-based
Payments
Performance
based on % of
Remuneration
Employee
Year
Cash
salary
and fees
Cash
bonus
Super-
annuation
Long
service
leave
Termination
benefits
Options
Total
Executive Directors
Harry Konstantinou
2019
2 7 3 , 1 1 1
84,375
22,840
107,885
(Managing Director)
2018
230,000
-
2 0,139
Non-executive Directors
Bruce Glanville*
2019
73,194
200,000*
(Independent)
2018
66,833
Mark McConnell
2019
60,000
(Non-Independent)
2018
41,666
Susan Forrester
2019
68,750
(Independent)
2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
127,552
615,763
34.42%
-
250,139
11,064
284,258
-
-
-
66,833
60,000
41,666
5,532
74,282
-
-
Nil
Nil
Nil
Nil
Nil
Nil
Nil
*Rollins Consulting, an associated entity of Mr Bruce Glanville was paid a $200,000 incentive fee for a
successful initial public offering.
Note: Directors were paid as Advisory Board members until their appointment on 12th October, 2018.
Directors and
other Key
Management
Personnel
Short-term
Employee Benefits
Post-
employment
Benefits
Long-term Benefits
Share-
based
Payments
Performance
based on % of
Remuneration
Employee
Year
Cash
salary
and fees
Cash
bonus
Super-
annuation
Long
service
leave
Termination
benefits
Options
Total
Other Key Management Personnel
Kym Gallagher
(Chief Financial
Officer)
Angelo Konstantinou
(Chief Technology
Officer)
Sean Hodges
(Chief Operating
Officer)
2019
231,718
56,250
23,945
8,055
2018
172,869
25,000
16,583
236
2019
176,029
42,063
15,356
50,769
2018
145,000
-
13,775
-
2019
164,267
25,000
14,564
9,459
2018
148,205
6,000
14,080
7,533
2019 Total
2019
1,047,069
407,688
76,705
176,168
2018 Total
2018
804,573
31,000
64,577
7,769
-
-
-
-
-
-
-
-
5,532
325,500
-
214,688
5,532
289,749
-
-
-
158,775
213,290
175,818
155,212
1,862,842
-
907,919
19.0%
11.6%
16.4%
Nil
11.7%
3.4%
30.2%
3.4%
2 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
The relative proportions of remuneration that are linked to performance and those that are
fixed are as follows:
Fixed
remuneration
At Risk Short-Term
Incentives (STI)
At risk options
Executive Directors
Harry Konstantinou
Other Key Management Personnel
Kym Gallagher
Angelo Konstantinou
Sean Hodges
450,000
112,500
127,552
300,000
219,000
169,725
75,000
54,750
25,000
5,532
5,532
-
Since the long-term incentives are provided exclusively by way of options, the percentages disclosed
also reflect the value of remuneration consisting of options, based on the value of options expensed
during the year.
C . SERVICE AGREEMENTS
Remuneration and other terms of employment for the Executive Directors and other Key Management
Personnel are formalised in a Service Agreement. The major provisions of the agreements relating to
remuneration are set out below:
Employee
Base Salary
Harry Konstantinou
Kym Gallagher
Angelo Konstantinou
Sean Hodges
425,000
275,000
200,000
155,000
Term of
Agreement
Notice Period
Three years
Six months
Three years
Three months
Three years
Three months
Three years
Three months
2 2
R E M U N E R A T I O N R E P O R T ( A U D I T E D )
D. SHARE-BASED REMUNERATION
All options refer to options over ordinary shares of the Company, which are exercisable on a one-for- one
basis under the terms of the agreements.
Options granted to the Executive Team are under the LTI Plan and under Tranche 1 and Tranche 2 Plans:
• LTI Plan Options: The vesting of those options and will be subject to the satisfaction of appropriate
service-based conditions and/or performance hurdles determined by the Board;
• Tranche 1 and Tranche 2 Plan Options: These options are currently vested.
Options granted under the LTI, Tranche 1 and Tranche 2 Plans carry no dividends or voting rights.
Details of options over ordinary shares in the Company that were granted as remuneration to each
key management personnel are set out in the table below. Non-Executive Directors are not entitled to
participate in the LTI Plan. There were no options granted at the beginning of the year.
No options under the LTI Plan have been exercised or forfeited during the year.
Employee
Number
granted
Grant date
Value per
Option at
Grant Date
Value of
Options at
Grant Date
Number
Vested
Exercise
Proceeds
($)
Vesting
and First
Exercise
Date
Last
Exercise
Date
Directors and other Key Management Personnel
Executive Directors
Tranche 1
1,000,000
2 May 2019
$0.055
$55,320
Harry
Konstantinou
Tranche 2
1,000,000
2 May 2019
$0.072
$77,232
LTI
170,000
7 June 2019
-
-
Non-Executive Directors
Bruce Glanville
Tranche 1
200,000
2 May 2019
$0.055
$11,064
Susan Forrester
Tranche 1
100,000
2 May 2019
$0.055
$5,532
Other Key Management Personnel
Kym Gallagher
Angelo
Konstantinou
Tranche 1
100,000
2 May 2019
$0.055
$5,532
LTI
75,000
7 June 2019
-
-
Tranche 1
100,000
2 May 2019
$0.055
$5,532
LTI
50,000
7 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 June 2019
2 May 2023
7 June 2019
2 May 2023
7 June 2022
7 June 2024
7 June 2019
2 May 2023
7 June 2019
2 May 2023
7 June 2019
2 May 2023
7 June 2022
7 June 2024
7 June 2019
2 May 2023
7 June 2022
7 June 2024
2 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
S HARES HELD BY DIRECTORS AND K E Y MANAG E ME NT PE RS O N NE L
The number of ordinary shares in the Company during the 2019 reporting period held by each of the
Group’s key management personnel, including their related parties, is set out below:
Directors and other
Key Management
Personnel
Balance
at Start of
Year
Granted as
Remuneration
Received on
Exercised
Options
Shares
Purchased
Executive Directors
Harry Konstantinou
23,230,502
Non-Executive Directors
Bruce Glanville
Mark McConnell
Susan Forrester
Other Key Management Personnel
Kym Gallagher
-
-
-
-
Angelo Konstantinou
23,230,502
Sean Hodges
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at the
End of the
Reporting
Period
-
23,230,502
300,000
300,000
4,543,296
4,543,296
24,593
24,593
100,000
100,000
-
23,230,502
40,000
40,000
At 30 June 2019 there were no loans outstanding to Directors or Key Management Personnel.
2 4
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CO R PORATE
G OVER NANCE
STAT EMENT
2 5
R E M U N E R A T I O N R E P O R T ( A U D I T E D )
The Board is committed to achieving and
demonstrating the highest standards of corporate
governance. As such, Viva Leisure Ltd and its
Controlled Entities (the Group) have adopted the third
edition of the Corporate Governance Principles and
Recommendations.
The Group’s Corporate Governance Statement for
the financial year ended 30 June 2019 is dated as at
30 June 2019 and was approved by the Board on 23
September 2019. The Corporate Governance Statement
is available on Viva Leisure’s Investor Relations website
at https://investors.vivaleisure.com.au.
2 6
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
AUDITOR’S
I N DE PENDENCE
DEC LA RATION
2 72 72 7
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
2 82 8
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CO NSOLIDATED STATEMENT OF PROFIT O R
LOSS AND OT HER COMPRE HE NSIVE INCOME
FOR THE Y EA R EN DED 3 0 J UNE 2 019
2 9
2 9
C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E
Sales revenue
Other income
Rental expense
Employee benefits expense
Bank Charges
Advertising and marketing costs
Utilities and cleaning
Licences and subscriptions
Insurances
Repairs and maintenance
Professional fees
Depreciation and amortisation expense
Finance costs
Costs of initial public offering
Other expenses
Profit before income tax
Tax expense
Profit for the year
Total other comprehensive income for the year
Note
2019
$
5
5
6
31,069,941
90,279
(6,742,218)
2018
$
2,768,323
4,839,175
(700,167)
20
(9,664,619)
(2,906,387)
(425,835)
(1,007,700)
(2,383,840)
(479,020)
(180,255)
(625,137)
(148,450)
(2,201,812)
(631,570)
(913,619)
(1,780,200)
3,975,945
7
9
(1,120,842)
2,855,103
-
(200,283)
(550,273)
(187,819)
(96,996)
(141,970)
(59,670)
(247,651)
(165,797)
(84,395)
-
(639,153)
1,626,937
(281,914)
1,345,023
-
Total comprehensive income for the year
2,855,103
1,345,023
This statement should be read in conjunction with the notes to the financial statements.
Earnings per share
23
Cents
Cents
Basic earnings per share:
Earnings from continuing operations
Diluted earnings per share:
Earnings from continuing operations
5.4
5.2
N/A
N/A
3 0
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CO NSOLIDATED STATEMENT OF FINANC IA L
POSIT ION AS AT 30 JUNE 2019
3 1
3 1
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Contract liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Contract Liabilities
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Note
2019
$
2018
$
10
11
12
11
15
16
17
18
14
19
17
20
14
19
20
17
21
22
14,385,895
218,443
365,306
535,530
719,641
139,359
14,969,644
1,394,530
114,230
19,196,838
6,564,081
3,460,781
29,335,930
44,305,574
2,542,778
2,274,815
1,299,678
1,495,149
1,176,473
8,788,893
5,668,840
1,294,002
115,937
2,675,844
9,754,623
18,543,516
25,762,058
43,715,691
(21,430,110)
3,476,477
25,762,058
1,644,043
943,455
38,121
223,695
2,849,314
4,243,844
954,417
168,727
89,312
386,615
29,490
1,628,561
1,844,364
18,344
-
131,081
1,993,789
3,622,350
621,494
120
-
621,374
621,494
This statement should be read in conjunction with the notes to the financial statements.
3 2
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CONSOLIDATE D STATEMEN T O F
CHANGES IN EQUITY FO R TH E Y E AR
ENDED 30 JUN E 201 9
3 3
3 3
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y F O R T H E Y E A R
Share
Capital
$
Reserves
$
Retained
Earnings
(Accumulated
a)
$
Total
Equity
$
Balance at 30 June 2017
Comprehensive income
Profit for the year
Total comprehensive profit for the year
attributable to members of the entity
Total transactions with owners
and other transfers
Balance at 30 June 2018
Balance at 1 July 2018
Transactions with owners
120
-
-
-
120
120
Issue of shares, net of transaction
costs and tax
22 ,7 1 5, 57 1
Issue of shares under group restructure
21,000,000
-
-
-
-
-
-
-
-
-
Common control reserve arising
from group restructure
Share option premium reserve
-
-
(21,585,321)
155,211
Total transactions with owners
43,715,571
(21,430,110)
(723,649)
(723,529)
1,345,023
1,345,023
1,345,023
1,345,023
1,345,023
1,345,023
621,374
621,494
621,374
621,494
-
-
-
-
-
22 ,7 1 5,57 1
21,000,000
(21,585,321)
155,211
22,285,461
Profit for the period
Total comprehensive profit for the year
attributable to members of the entity
-
-
-
-
2,855,103
2,855,103
2,855,103
2,855,103
Balance at 30 June 2019
43,715,691
(21,430,110)
3,476,477
25,762,058
This statement should be read in conjunction with the notes to the financial statements.
3 4
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CONSOLIDATE D STATEMEN T O F
CASH FLOWS FOR THE YEA R
ENDED 30 JUN E 201 9
3 5
3 5
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S F O R T H E Y E A R
CASH FLOWS FROM OPERATING ACTIVITIES
Note
Receipts from customers
Payments to suppliers and employees
Interest received
Payments of tax
Net cash provided by / (used in) operating activities
24
CASH FLOWS FROM INVESTING ACTIVITIES
2019
$
2018
$
35,881,038
4,358,637
(27,470,717)
(4,503,243)
35,699
(469,785)
7,976,235
85
-
(144,521)
Purchase of property, plant and equipment
(3,928,258)
(262,858)
Proceeds from sale of property, plant and equipment
Purchase of intangibles
Payments for business combinations, net of cash acquired
168,882
(335,431)
(7,121,033)
-
-
-
Net cash (used in) investing activities
(11,215,840)
(262,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Direct costs of issue of shares
Lease payments
Proceeds from borrowings
Repayment of borrowings
Interest paid
Net cash provided by financing activities
Net increase in cash held
Cash at beginning of financial year
Cash acquired under Group restructure
23,500,000
(951,652)
(1,986,449)
-
(3,480,228)
(631,570)
16,450,101
13,210,496
535,530
639,869
-
-
(150,633)
671,272
-
(84,395)
436,244
28,865
506,665
-
Cash at end of financial year
10
14,385,895
535,530
This statement should be read in conjunction with the notes to the financial statements.
3 6
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOT ES TO THE CON SO LIDATE D
FINANCI AL STATEMENTS F O R
THE YEAR EN DED 3 0 J UNE 2 01 9
3 7
3 7
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 1 - NATURE OF OPERATIONS
AASB 9 Financial Instruments
The principal activities of the consolidated
group during the financial year were health club
operations. No significant change in the nature of
these activities occurred during the year.
NOTE 2 - GENERAL INFORMAT IO N AND
STATEMENT OF COMPLIANC E
The consolidated general purpose financial
statements of the Group have been prepared
in accordance with the requirements of the
Corporations Act 2001, Australian Accounting
Standards and other authoritative pronouncements
of the Australian Accounting Standards Board
(AASB). Compliance with Australian Accounting
Standards results in full compliance with the
International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards
Board (IASB). Viva Leisure Limited is a for-profit
entity and statements are prepared on accruals
basis under the historical cost convention.
Viva Leisure Limited is the Group’s Ultimate
Parent Company. Viva Leisure Limited is a Public
Company incorporated and domiciled in Australia.
The address of its registered office and its principal
place of business is Unit 7, 141 Flemington Road,
Mitchell, ACT, Australia.
The consolidated financial statements for the
year ended 30 June 2019 were approved and
authorised for issue by the Board of Directors
on 27 August 2019.
N OT E 3 - CHANGES IN SIGNIFICANT
ACCOUNTING POLICIES
The same accounting policies and methods of
computation have been followed in this financial
report as were applied in the most recent annual
financial statements, taking into account the
previous year’s financial statements were prepared
on an aggregated basis.
Amended Standards Adopted by the Group which
do not have a Material Impact
Group has considered the implications of following
new or amended Accounting Standards below.
AASB 9 Financial Instruments replaces AASB
139 Financial Instruments: Recognition and
Measurement. It makes major changes to the
previous guidance on the classification and
measurement of financial assets and introduces an
‘expected credit loss’ model for impairment
of financial assets.
When adopting AASB 9, the Group has opted not
to restate prior periods. Differences arising from
the adoption of AASB 9 in relation to classification,
measurement, and impairment are recognised in
opening retained earnings as at 1 July 2018.
There was no impact from the adoption of
this standard.
AASB 15 Revenue from contracts with customers
AASB 15 replaces AASB 118 Revenue, AASB 111
Construction Contracts and several revenue-related
Interpretations. Except for a limited number of
exceptions, including leases, the new revenue model
in AASB 15 applies to all contracts with customers
as well as non-monetary exchanges between
entities in the same line of business to facilitate
sales to customers and potential customers.
The core principle of the Standard is that an
entity recognises revenue to depict the transfer
of promised goods or services to customers in an
amount that reflects the consideration to which the
entity expects to be entitled in exchange for the
goods or services.
The Directors determined that the application of
this standard does not impact the way the Group
has historically recognised its revenue.
NOTE 4 - S U MMARY O F
ACCO UN TIN G PO LI CIE S
a. Overall Considerations
The consolidated financial statements have been
prepared using the significant accounting policies
and measurement bases summarised below.
3 8
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
b. Basis of Consolidation
The Group financial statements consolidate those of
the Parent Company and all of its subsidiaries as of
30 June 2019. The parent controls a subsidiary if it
is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability
to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of
30 June. Refer to Note 29 for the list of subsidiaries.
All transactions and balances between Group
companies are eliminated on consolidation,
including unrealised gains and losses on
transactions between Group companies. Where
unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying
asset is also tested for impairment from a group
perspective. Amounts reported in the financial
statements of subsidiaries have been adjusted
where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the
year are recognised from the effective date of
acquisition, or up to the effective date of disposal,
as applicable.
Subsequent to the FY2018 year end, a group
restructure occurred whereby the following
transactions took place:
a. On 31st July 2018 the Company reorganised its
share capital by executing a share split of 37,500
ordinary class shares for every one share issued,
to increase issued capital to 4,500,000 ordinary
shares;
b. On 31st July 2018 the Company acquired
the businesses of the Club Group Trust
for consideration of 11,850,000 shares in
the Company;
c. On 1st August 2018 the Company acquired
the share capital of The Club Group Pty
Limited and its subsidiary Club MMM! Pty
Limited for consideration of 4,650,000
shares in the Company.
As the restructure was determined to occur under
the control of the same shareholders, a common
control reserve was created in the equity section
of the balance sheet. A business combination
involving entities or businesses under common
control is a business combination in which all of
the combining entities or businesses are ultimately
controlled by the same party or parties both before
and after the business combination, and that the
control is not transitory.
Where an entity within the group acquires an entity
under common control, the acquirer consolidates
the carrying values of the acquired entity’s
assets and liabilities from the date of acquisition.
The consolidated financial statements of the
group include the acquired entity’s income and
expenses from the date of acquisition onwards.
Any difference between the fair value of the
consideration paid/transferred by the acquirer and
the net assets/ (liabilities) of the acquired entity are
taken to the common control reserve.
The impact of these transactions is that prior to the
restructure certain entities and businesses under
common control were not consolidated for financial
reporting purposes for the comparative period
to 30 June 2018, and not restated in the numbers
presented in this report.
The table below at b. (i) provide details of
the Statement of Profit or Loss and Other
Comprehensive Income if those entities and
businesses were included for the comparative
period to 30 June 2018.
In addition, the consolidated group as presented
in this report contains approximately 11 months of
results post restructure. The table below at b. (ii)
provide details of the Statement of Profit or Loss
and Other Comprehensive Income if those entities
and businesses were included for the 12 months.
3 93 9
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
b. (i) Comparative Period - Statement of Profit or Loss and Other Comprehensive Income for the
Year Ended 30 June 2018
Sales revenue
Other income
Rental expense
Employee benefits expense
Bank Charges
Advertising and marketing costs
Utilities and cleaning
Licences and subscriptions
Insurances
Repairs and maintenance
Professional fees
Depreciation and amortisation expense
Finance costs
Costs of initial public offering
Other expenses
Profit before income tax
Tax expense
Profit for the year
Total other comprehensive income for the year
Year Ended 30 June 2018
Aggregated
$
As Presented
$
24,101,642
25,811
(4,907,908)
2,768,323
4,839,175
(700,167)
(8,337,129)
(2,906,387)
(247,571)
(619,199)
(2,029,513)
(322,247)
(160,465)
(467,099)
(254,854)
(1,536,556)
(530,597)
-
(200,283)
(550,273)
(187,819)
(96,996)
(141,970)
(59,670)
(247,651)
(165,797)
(84,395)
-
(1,573,741)
(639,153)
3,140,574
1,626,937
(223,905)
(281,914)
2,916,669
1,345,023
-
-
Total comprehensive income for the year
2,916,669
1,345,023
The accompanying notes form part of these financial statements.
4 0
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
b. (ii) 12 Month’s Results - Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2019
Sales revenue
Other income
Rental expense
Employee benefits expense
Bank Charges
Advertising and marketing costs
Utilities and cleaning
Licences and subscriptions
Insurances
Repairs and maintenance
Professional fees
12 Months
$
As
Presented
$
32,991,655
31,069,941
90,279
90,279
(7,123,775)
(6,742,218)
(10,186,787)
(9,664,619)
(425,835)
(425,835)
(1,009,800)
(1,007,700)
(2,539,302)
(2,383,840)
(496,736)
(180,255)
(658,880)
-
(479,020)
(180,255)
(625,137)
(148,450)
Depreciation and amortisation expense
(2,327,020)
(2,201,813)
Finance costs
Costs of initial public offering
Other expenses
Profit before income tax
Tax expense
Profit for the year
Total other comprehensive income for the year
(682,983)
(913,619)
(2,261,484)
4,275,458
(1,120,842)
3,154,616
-
(631,570)
(913,619)
(1,780,199)
3,975,945
(1,120,842)
2,855,103
-
Total comprehensive income for the year
3,154,616
2,855,103
The accompanying notes form part of these financial statements.
Earnings per share
Cents
Cents
Basic earnings per share:
Earnings from continuing operations
Diluted earnings per share:
Earnings from continuing operations
6.0
5.7
5.4
5.2
4 14 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
c. Business Combinations
The Group applies the acquisition method in
accounting for business combinations. The
consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of
the acquisition-date fair values of assets transferred,
liabilities incurred and the equity interests issued
by the Group, which includes the fair value of
any asset or liability arising from a contingent
consideration arrangement.
Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired
and liabilities assumed in a business combination
regardless of whether they have been previously
recognised in the acquiree’s financial statements
prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition- date fair values.
Goodwill is stated after separate recognition of
identifiable intangible assets. It is calculated as the
excess of the sum of: (a) fair value of consideration
transferred, (b) the recognised amount of any
non- controlling interest in the acquiree, and (c)
acquisition-date fair value of any existing equity
interest in the acquiree, over the acquisition-date
fair values of identifiable net assets. If the fair
values of identifiable net assets exceed the sum
calculated above, the excess amount (i.e. gain on
a bargain purchase) is recognised in profit or loss
immediately. See note 16.
d. Fair Value of Assets and Liabilities
Where applicable, the Group measures some
of its assets and liabilities at fair value on either
a recurring or non-recurring basis, depending
on the requirements of the applicable
Accounting Standard.
Fair value is the price the Group would receive
to sell an asset or would have to pay to transfer
a liability in an orderly (ie unforced) transaction
between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information
is used to determine fair value. Adjustments to
market values may be made having regard to the
characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not
traded in an active market are determined using
one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use
of observable market data.
To the extent possible, market information is
extracted from either the principal market for the
asset or liability (ie the market with the greatest
volume and level of activity for the asset or liability)
or, in the absence of such a market, the most
advantageous market available to the entity at the
end of the reporting period (ie the market that
maximises the receipts from the sale of the asset
or minimises the payments made to transfer the
liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement
also takes into account a market participant’s ability
to use the asset in its highest and best use or to sell
it to another market participant that would use the
asset in its highest and best use.
The fair value of liabilities and the entity’s own
equity instruments (excluding those related to
share-based payment arrangements) may be
valued, where there is no observable market price
in relation to the transfer of such financial
instruments, by reference to observable market
information where such instruments are held as
assets. Where this information is not available,
other valuation techniques are adopted and, where
significant, are detailed in the respective note to
the financial statements.
e. Revenue
Revenue is derived mainly from the sale of health
club membership services to its customers.
To determine whether to recognise revenue, the
Group follows a 5-step process:
i. Identifying the contract with a customer;
ii. Identifying the performance obligations
iii. Determining the transaction price
iv. Allocating the transaction price to the
performance obligations
v. Recognising revenue when/as performance
obligation(s) are satisfied
The health club membership services revenue
stream focuses on providing customers with access
to the groups’ gym facilities. Revenue is recognised
as the customers are provided access to the gym.
Under AASB 15: Revenue from Contracts with
Customers, this happens over time as customers
pay in advance of receipt of this service. The
consideration received in advance of providing
these services is recognized as a contract liability.
Therefore, revenue is recognised over time as the
customer consumes these services. The transaction
4 2
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
price is determined with reference to the contract
price as stated in the customers contract.
Interest revenue is recognised using the effective
interest method, which for floating rate financial
assets is the rate inherent in the instrument.
All revenue is stated net of the amount of goods
and services tax.
f. Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of a
qualifying asset are capitalised during the period of
time that is necessary to complete and prepare the
asset for its intended use or sale. Other borrowing
costs are expensed in the period in which they are
incurred and reported in finance costs.
h. Other Intangible Assets
Intangible assets acquired as part of a business
combination, other than goodwill, are initially
measured at their fair value at the date of
acquisition. Intangible assets acquired separately
are initially recognised at cost. Intangible assets are
subsequently measured at cost less amortisation
and any impairment. The gains or losses recognised
in the profit or loss arising from derecognition of
an intangible asset is measured as the difference
between net disposal proceeds and the carrying
amount of the intangible asset. The method
and useful lives of finite life intangibles are
reviewed annually. Changes in expected pattern
of consumption or useful life are accounted for
prospectively by changing the amortisation method
or period.
g. Goodwill
i. Plant and Equipment
Goodwill represents the future economic benefits
arising from a business combination that are not
individually identified and separately recognised.
Each class of plant and equipment is carried at cost
or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Goodwill is carried at cost less any accumulated
impairment losses. Goodwill is calculated as the
excess of the sum of:
i. the consideration transferred at fair value;
ii. any non-controlling interest (determined under
either the fair value or proportionate interest
method); and
iii. the acquisition date fair value of any previously
held equity interest;
over the acquisition date fair value of any
identifiable assets acquired and liabilities assumed.
The acquisition date fair value of the consideration
transferred for a business combination plus the
acquisition date fair value of any previously held
equity interest shall form the cost of the investment
in the separate financial statements.
Goodwill on acquisition of subsidiaries is included in
intangible assets.
Goodwill is tested for impairment annually and is
allocated to the Group’s cash-generating units or
groups of cash-generating units, representing the
lowest level at which goodwill is monitored and
not larger than an operating segment. Gains and
losses on the disposal of an entity include the
carrying amount of goodwill related to the entity
disposed of.
Plant and equipment are measured on the cost
basis and are therefore carried at cost less
accumulated depreciation and any accumulated
impairment losses. In the event the carrying
amount of plant and equipment is greater than the
estimated recoverable amount, the carrying amount
is written down immediately to the estimated
recoverable amount and impairment losses
are recognised either in profit or loss. A formal
assessment of recoverable amount is made when
impairment indicators are present (refer to Note 4 k.
for details of impairment).
The cost of fixed assets constructed within the
consolidated group includes the cost of materials,
direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow
to the consolidated group and the
cost of the item can be measured reliably. All
other repairs and maintenance are recognised as
expenses in profit or loss in the financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed assets
including buildings and capitalised lease assets,
but excluding freehold land, is depreciated on a
straight-line basis over the asset’s useful life to
4 34 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
the consolidated group commencing from the
time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter
of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Asset
Depreciation
Rate
Plant and equipment
Furniture and fittings
Motor Vehicles
Leased plant and equipment
Leasehold improvements
10-40%
10-20%
15-25%
5-20%
5-20%
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by
comparing proceeds with the carrying amount.
These gains or losses are recognised in profit or
loss when the item is derecognised.
j. Leases
Leases of fixed assets, where substantially all the
risks and benefits incidental to the ownership of
the asset – but not the legal ownership – are
transferred to the consolidated group, are classified
as finance leases.
Finance leases are capitalised by recognising an
asset and a liability at the lower of the amounts
equal to the fair value of the leased property or
the present value of the minimum lease payments,
including any guaranteed residual values. Lease
payments are allocated between the reduction of
the lease liability and the lease interest expense for
the period.
Leased assets are depreciated on a straight-line
basis over the shorter of their estimated useful lives
or the lease term.
Lease payments for operating leases, where
substantially all the risks and benefits remain with
the lessor, are recognised as expenses on a straight-
line basis over the lease term.
Lease incentives under operating leases are
recognised as a liability and amortised on a
straight-line basis over the life of the lease term.
k. Impairment Testing of Goodwill,
Other Intangible Assets and Property,
Plant and Equipment
For impairment assessment purposes, assets are
grouped at the lowest levels for which there are
largely independent cash inflows (cash-generating
units). As a result, some assets are tested
individually for impairment and some are tested
at cash-generating unit level. Goodwill is allocated
to those cash-generating units that are expected
to benefit from synergies of the related business
combination and represent the lowest level within
the Group at which management monitors goodwill.
Cash-generating units to which goodwill has been
allocated (determined by the Group’s management
as equivalent to its operating segments) are
tested for impairment at least annually. All other
individual assets or cash-generating units are tested
for impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised for the amount
by which the asset’s or cash-generating unit’s
carrying amount exceeds its recoverable amount,
which is the higher of fair value less costs to sell
and value-in- use. To determine the value-in-use,
management estimates expected future cash flows
from each cash- generating unit and determines
a suitable interest rate in order to calculate the
present value of those cash flows. The data used for
impairment testing
procedures are directly linked to the Group’s latest
approved budget, adjusted as necessary to exclude
the effects of future reorganisations and asset
enhancements. Discount factors are determined
individually for each cash-generating unit and
reflect management’s assessment of respective
risk profiles, such as market and asset-specific
risks factors.
Impairment losses for cash-generating units reduce
first the carrying amount of any goodwill allocated
to that cash-generating unit. Any remaining
impairment loss is charged pro rata to the other
assets in the cash-generating unit. With the
exception of goodwill, all assets are subsequently
reassessed for indications that an impairment
loss previously recognised may no longer exist.
An impairment charge is reversed if the cash-
generating unit’s recoverable amount exceeds its
carrying amount.
4 4
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
l. Financial Instruments
Subsequent measurement financial assets
Recognition, initial measurement
and derecognition
Financial assets and financial liabilities are
recognised when the Group becomes a party to
the contractual provisions of the financial
instrument, and are measured initially at fair
value adjusted by transactions costs, except
for those carried at fair value through profit or
loss, which are measured initially at fair value.
Subsequent measurement of financial assets and
financial liabilities are described below.
Financial assets are derecognised when the
contractual rights to the cash flows from the
financial asset expire, or when the financial
asset and all substantial risks and rewards are
transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled
or expires.
Classification and subsequent measurement
Except for those trade receivables that do
not contain a significant financing component
and are measured at the transaction price in
accordance with AASB 15, all financial assets
are initially measured at fair value adjusted for
transaction costs (where applicable)
For the purpose of subsequent measurement,
financial assets other than those designated
and effective as hedging instruments are
classified into the following categories upon
initial recognition:
•
•
•
•
amortised cost
fair value through profit or loss (FVPL)
equity instruments at fair value through
other comprehensive income (FVOCI)
debt instruments at fair value through other
comprehensive income (FVOCI)
Classifications are determined by both:
•
•
The entities business model for managing
the financial asset
The contractual cash flow characteristics of
the financial assets
All income and expenses relating to financial
assets that are recognised in profit or loss are
presented within finance costs, finance income
or other financial items, except for impairment
of trade receivables, which is presented within
other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost
if the assets meet the following conditions (and
are not designated as FVPL):
•
•
they are held within a business model
whose objective is to hold the financial
assets and collect its contractual
cash flows
the contractual terms of the financial
assets give rise to cash flows that are
solely payments of principal and interest
on the principal amount outstanding
After initial recognition, these are measured
at amortised cost using the effective interest
method. Discounting is omitted where the
effect of discounting is immaterial. The Group’s
cash and cash equivalents, trade and most
other receivables fall into this category of
financial instruments.
Impairment of Financial assets
AASB 9’s impairment requirements use more
forward looking information to recognize
expected credit losses – the ‘expected credit
losses (ECL) model’. Instruments within the
scope of the new requirements include loans
and other debt-type financial assets measured
at amortised cost and FVOCI, trade receivables,
contract assets recognised and measured under
AASB 15 and loan commitments and some
financial guarantee contracts (for the issuer)
that are not measured at fair value through
profit or loss.
The Group considers a broader range of
information when assessing credit risk and
measuring expected credit losses, including
past events, current conditions, reasonable
and supportable forecasts that affect the
expected collectability of the future cash flows
of the instrument.
In applying this forward-looking approach, a
distinction is made between:
•
•
financial instruments that have not
deteriorated significantly in credit quality
since initial recognition or that have low
credit risk (‘Stage 1’) and
financial instruments that have deteriorated
significantly in credit quality since initial
recognition and whose credit risk is not
low (‘Stage 2’).
4 54 5
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
‘Stage 3’ would cover financial assets that
have objective evidence of impairment at the
reporting date.
The carrying amount of financial assets
measured at amortised cost includes the loss
allowance relating to that asset.
‘12-month expected credit losses’ are
recognised for the first category while
‘lifetime expected credit losses’ are
recognised for the second category.
Measurement of the expected credit losses is
determined by a probability-weighted estimate
of credit losses over the expected life of the
financial instrument.
Low credit risk operational
simplification approach
If a financial asset is determined to have low
credit risk at the initial reporting date, the Group
assumes that the credit risk has not increased
significantly since initial recognition.
In order to make such a determination that the
financial asset has low credit risk, the Group
applies its internal credit risk ratings or other
methodologies using a globally comparable
definition of low credit risk.
A financial asset is considered to have low credit
risk if:
•
•
•
there is a low risk of default by the
borrower;
the borrower has strong capacity to meet
its contractual cash flow obligations in the
near term;
adverse changes in economic and business
conditions in the longer term may, but not
necessarily will, reduce the ability of the
borrower to fulfil its contractual cash flow
obligations.
A financial asset is not considered to carry low
credit risk merely due to existence of collateral,
or because a borrower has a risk of default lower
than the risk inherent in the financial assets, or
lower than the credit risk of the jurisdiction in
which it operates.
Recognition of expected credit losses in
financial statements
At each reporting date, the Group assesses
the credit risk and recognises a loss allowance
if appropriate. Any movement in the loss
allowance from prior year is treated as an
impairment gain or loss in the statement of
profit or loss and other comprehensive income.
Classification and measurement of
financial liabilities
As the accounting for financial liabilities remains
largely unchanged from AASB 139, the Group’s
financial liabilities were not impacted by the
adoption of AASB 9. However, for completeness,
the accounting policy is disclosed below.
The Group’s financial liabilities include
borrowings, trade and other payables.
Financial liabilities are initially measured at
fair value, and, where applicable, adjusted for
transaction costs unless the Group designated
a financial liability at fair value through profit
or loss.
Subsequently, financial liabilities are measured
at amortised cost using the effective interest
method.
All interest-related charges and, if applicable,
changes in an instrument’s fair value that are
reported in profit or loss are included within
finance costs or finance income.
Trade and other payables
Trade and other payables represent the
liabilities for goods and services received by
the consolidated group that remain unpaid at
the end of the reporting period. The balance
is recognised as a current liability with the
amounts normally paid within 30 days of
recognition of the liability.
m. Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost includes all expenses directly
attributable to the manufacturing process as well as
suitable portions of related production overheads,
based on normal operating capacity. Costs of
ordinarily interchangeable items are assigned using
the first in, first out cost formula. Net realisable
value is the estimated selling price in the ordinary
course of business less any applicable selling
expenses.
n. Income taxes
Tax expense recognised in profit or loss comprises
the sum of deferred tax and current tax not
recognised in other comprehensive income or
directly in equity.
4 6
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
Current income tax assets and / or liabilities
comprise those obligations to, or claims from, the
Australian Taxation Office (ATO) and other fiscal
authorities relating to the current or prior reporting
periods that are unpaid at the reporting date.
Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and
tax laws that have been enacted or substantively
enacted by the end of the reporting period.
Deferred income taxes are calculated using the
liability method on temporary differences between
the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill or on
the initial recognition of an asset or liability unless
the related transaction is a business combination
or affects tax or accounting profit. Deferred tax on
temporary differences associated with investments
in subsidiaries and joint ventures is not provided
if reversal of these temporary differences can be
controlled by the Group and it is probable that
reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated,
without discounting, at tax rates that are expected
to apply to their respective period of realisation,
provided they are enacted or substantively enacted
by the end of the reporting period.
Deferred tax assets are recognised to the extent
that it is probable that they will be able to be
utilised against future taxable income, based on
the Group’s forecast of future operating results
which is adjusted for significant non-taxable income
and expenses and specific limits to the use of any
unused tax loss or credit. Deferred tax liabilities are
always provided for in full.
Deferred tax assets and liabilities are offset only
when the Group has a right and intention to set
off current tax assets and liabilities from the same
taxation authority.
Changes in deferred tax assets or liabilities are
recognised as a component of tax income or
expense in profit or loss, except where they relate
to items that are recognised in other comprehensive
income (such as the revaluation of land) or directly
in equity, in which case the related deferred tax is
also recognised in other comprehensive income or
equity, respectively.
Viva Leisure Limited and its wholly-owned
Australian controlled entities have implemented
the tax consolidation legislation. As a consequence,
these entities are taxed as a single entity and the
deferred tax assets and liabilities of these entities
are set off in the consolidated financial statements.
o. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand,
deposits held at call with banks, other short-term
highly liquid investments with original maturities
of three months or less, and bank overdrafts. Bank
overdrafts are shown within borrowings in current
liabilities on the statement of financial position.
p. Employee Benefits
Short-term employee benefits
Provision is made for the consolidated group’s
obligation for short-term employee benefits.
Short-term employee benefits are benefits
(other than termination benefits) that are
expected to be settled wholly before 12 months
after the end of the annual reporting period in
which the employees render the related service,
including wages, salaries and sick leave. Short-
term employee benefits are measured at the
(undiscounted) amounts expected to be paid
when the obligation is settled.
The consolidated group’s obligations for short-
term employee benefits such as wages, salaries
and sick leave are recognised as part of current
trade and other payables in the statement of
financial position.
Other long-term employee benefits
Provision is made for employees’ long service
leave and annual leave entitlements not expected
to be settled wholly within 12 months after the
end of the annual reporting period in which the
employees render the related service. Other
long-term employee benefits are measured
at the present value of the expected future
payments to be made to employees. Expected
future payments incorporate anticipated future
wage and salary levels, durations of service
and employee departures and are discounted
at rates determined by reference to market
yields at the end of the reporting period on
government bonds that have maturity dates that
approximate the terms of the obligations. Upon
the remeasurement of obligations for other long-
term employee benefits, the net change in the
obligation is recognised in profit or loss as part
of employee benefits expense.
The consolidated group’s obligations for long-
term employee benefits are presented as non-
current provisions in its statement of financial
position, except where the consolidated group
does not have an unconditional right to defer
settlement for at least 12 months after the
4 74 7
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
end of the reporting period, in which case the
obligations are presented as current provisions.
All employees of the consolidated group
receive defined contribution superannuation
entitlements, for which the consolidated group
pays the fixed superannuation guarantee
contribution (currently 9.5% of the employee’s
average ordinary salary) to the employee’s
superannuation fund of choice. All contributions
in respect of employees’ defined contribution
entitlements are recognised as an expense
when they become payable. The consolidated
group’s obligation with respect to employees’
defined contribution entitlements is limited to
its obligation for any unpaid superannuation
guarantee contributions at the end of the
reporting period. All obligations for unpaid
superannuation guarantee contributions are
measured at the (undiscounted) amounts
expected to be paid when the obligation is
settled and are presented as current liabilities
in the consolidated group’s statement of
financial position.
q. Share-based Employee Remuneration
The Group operates equity-settled share-based
remuneration plans for its employees (see note 20).
None of the Group’s plans feature any options for a
cash settlement.
All goods and services received in exchange for the
grant of any share-based payment are measured
at their fair values. Where employees are rewarded
using share-based payments, the fair values of
employees’ services are determined indirectly by
reference to the fair value of the equity instruments
granted. This fair value is appraised at the grant
date and excludes the impact of non-market vesting
conditions (for example profitability and sales
growth targets and performance conditions).
All share-based remuneration is ultimately
recognised as an expense in profit or loss with a
corresponding credit to share option reserve. If
vesting periods or other vesting conditions apply,
the expense is allocated over the vesting period,
based on the best available estimate of the number
of share options expected to vest.
Non-market vesting conditions are included in
assumptions about the number of options that
are expected to become exercisable. Estimates
are subsequently revised if there is any indication
that the number of share options expected to vest
differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the
current period. No adjustment is made to any
expense recognised in prior periods if share options
ultimately exercised are different to that estimated
on vesting.
Upon exercise of share options, the proceeds
received net of any directly attributable transaction
costs are allocated to share capital up to the
nominal (or par) value of the shares issued with any
excess being recorded as share premium.
r. Provisions
Provisions are recognised when the consolidated
group has a legal or constructive obligation, as a
result of past events, for which it is probable that
an outflow of economic benefits will result, and that
outflow can be reliably
measured. Provisions are measured using the best
estimate of the amounts required to settle the
obligation at the end of the reporting period.
s. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net
of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian
Taxation Office (ATO). In these circumstances the
GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense.
Receivables and payables are stated inclusive of
the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the
ATO is included with other receivables or payables
in the statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing
or financing activities, which are recoverable from
or payable to the ATO, are presented as operating
cash flows included in receipts from customers or
payments to suppliers.
t. Comparative Figures
When required by Accounting Standards,
comparative figures have been adjusted to conform
to changes in presentation for the current financial
year. The comparatives reflect the consolidated
group. Refer to Note 4(d) for the aggregated year
on year results.
Where the consolidated group retrospectively
applies an accounting policy, makes a retrospective
restatement of items in the financial statements or
reclassifies items in its financial statements, a third
statement of financial position as at the beginning
4 8
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
of the preceding period in addition to the minimum
comparative financial statements is presented.
v. New Accounting Standards for Application
in Future Periods
u. Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements
incorporated into the financial statements based
on historical knowledge and best available current
information. Estimates assume a reasonable
expectation of future events and are based on
current trends and economic data, obtained both
externally and within the consolidated group.
Key estimates and uncertainty
Information about estimates and
assumptions that have the most significant
effect on recognition and measurement
of assets, liabilities, income and expenses
is provided below. Actual results may be
substantially different.
Impairment
In assessing impairment, management estimates
the recoverable amount of each asset or cash-
generating unit based on expected future cash
flows and uses an interest rate to discount them.
Estimation uncertainty relates to assumptions
about future operating results and the
determination of a suitable discount rate.
Useful lives of depreciable assets
Management reviews its estimate of the useful
lives of depreciable assets at each reporting
date, based on the expected utility of the assets.
Inventories
Management estimates the net realisable values
of inventories, taking into account the most
reliable evidence available at each reporting
date. The future realisation of these inventories
may be affected by future technology or other
market-driven changes that may reduce future
selling prices.
Business combinations
Management uses valuation techniques in
determining the fair values of the various
elements of a business combination. Particularly,
the fair value of contingent consideration is
dependent on the outcome of many variables
that affect future profitability.
AASB 16: Leases (applicable to annual reporting
periods beginning on or after 1 January 2019).
When effective, this Standard will replace the
current accounting requirements applicable to
leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single
lessee accounting model that eliminates the
requirement for leases to be classified as
operating or finance leases.
The main changes introduced by the new
Standard include:
• recognition of a right-to-use asset and liability
for all leases (excluding short-term leases with
less than 12 months of tenure and leases relating
to low-value assets);
• depreciation of right-to-use assets in line with
AASB 116: Property, Plant and Equipment in
profit or loss and unwinding of the liability in
principal and interest components;
• variable lease payments that depend on an
index or a rate are included in the initial
measurement of the lease liability using the
index or rate at the commencement date;
• by applying a practical expedient, a lessee
is permitted to elect not to separate non-
lease components and instead account for all
components as a lease; and
• additional disclosure requirements
The transitional provisions of AASB 16 allow a
lessee to either retrospectively apply the Standard
to comparatives in line with AASB 108 or recognise
the cumulative effect of retrospective application
as an adjustment to opening equity on the date of
initial application.
At inception of a contract, the group assess
whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contracts
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control the use of an identified
asset, the group assesses whether:
• The contract involves the use of an
identified asset – this may be explicitly or
implicitly and should be physically distinct
or represent substantially all of the capacity
of a physically distinct asset. If the supplier
has a substantive substitution right, then the
asset is not identified;
4 94 9
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
• The Group has the right to obtain substantially
all of the economic benefits from use of the
asset throughout the period of use; and
• The Group has the right to direct the use of the
asset. The Group has this right when it has the
decision-making rights that are most relevant to
changing how and for what purpose the asset
is used. In rare cases where the decision about
how and for what purpose the asset is used is
predetermined, the Group has the right to direct
the use of the asset if either:
• The Group has the right to operate the asset; or
• The Group has designed the asset in a way that
predetermines how and for what purpose it will
be used.
At inception or on reassessment of a contract that
contains a lease component, the Group allocates
the consideration in the contract to each lease
component on the basis of their relative stand-alone
prices. However, for the leases of land and buildings
in which it is a lessee, the Group has elected not to
separate non-lease components and account for
the lease and non-lease components as a single
lease component.
The group recognises a right-of-use asset and a
lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the earlier of the end of
the useful life of the right-of-use asset or at the
end of the lease term. The estimated useful lives of
right-of-use asset are determined on the same basis
as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot
be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discounted rate.
Lease payments included in the measurement of
the lease liability comprise the following:
• fixed payments, including in-substance
fixed payments;
• variable lease payments that depend on an index
or a rate, initially measured using the index or
rate as at the commencement date;
• amounts expected to be payable under a
residual value guarantee; and
• the exercise price under a purchase option that
the Group is reasonably certain to exercise, lease
payments in an optional renewal
• period if the Group is reasonably certain to
exercise an extension option, and penalties for
early termination of a lease unless the
• Group is reasonably certain not to
terminate early.
The lease liability is measured at amortised cost
using the effective interest method. It is remeasured
when there is a change in future lease payments
arising from a change in an index or rate, if there
is a change in the Group’s estimate of the amount
expected to be payable under a residual value
guarantee, or if the Group changes its assessment
of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way,
a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-
of-use asset has been reduced to zero. The Group
presents the right-of-use assets that do not meet
the definition of investment property in ‘property,
plant and equipment’ and lease liabilities in
‘loans and borrowings’ in the statement of
financial position.
Short-term leases
The Group has elected not to recognise lease
liabilities for short-term leases that have a lease
term of 12 months or less. The Group recognises
the lease payments associated with these leases
as an expense on a straight-line basis over the
lease term.
AASB 16 impacts
AASB 16 applies to financial years commencing on
or after 1 January 2019. While not early adopting
AASB 16, Viva Leisure has estimated the impact of
the application of this accounting standard
to include:
5 0
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
• the take up of the initial Lease Liability of
• the removal of deferred rental and deferred
approximately $77 million and Right of Use
Asset of approximately $78 million and related
deferred tax;
fitout incentive liabilities of approximately $1.5m
million currently shown in the historical balance
sheet and related deferred tax; and
• the take up of a provision for make good of
approximately $2.1 million and related
deferred tax;
• the net balance of the above transactions will
be taken to opening retained earnings and is
approximately $0.4 million.
NOT E 5 - REVENUE AND OTH ER INCO ME
Revenue from contracts with customers
Other sources of income
Other income
Total revenue and other income
2019
$
31,069,941
35,699
31,105,640
54,580
2018
$
2,768,323
4,839,175
7,607,498
-
31,160,220
7,607,498
5a
5b
5c
The group operates in one segment, health club services.
a. Revenue from contracts with customers:
31,069,941
2,768,323
Timing of revenue recognition
Over time
Total revenue from contracts with customers
b. Other revenue:
Interest received
Trust distribution received
Shared services income
Total other revenue
c. Other income:
Gain on disposal of property, plant and equipment
Total other income
NOTE 6 - PROFIT FOR THE Y E AR
Profit before income tax from continuing operations includes the
following specific expenses:
Rental expense on operating leases
• Minimum lease payments
5 15 1
31,069,941
31,069,941
2,768,323
2,768,323
35,699
-
-
35,699
54,580
54,580
85
1,027,175
3,811,915
4,839,175
-
-
2019
$
2018
$
6,742,218
700,167
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOTE 7 - FIN ANCE COSTS AND FINANC E I NCO M E
Interest expense from borrowings at amortised cost:
External entities
Interest expenses for finance lease arrangements
Total interest expense
2019
$
2018
$
209,127
422,443
631,570
-
84,395
84,395
NOTE 8 - SEGMENT REPORTING
Management have determined that the Group operates in one business segment – health club operation;
and one geographic segment.
NOTE 9 - INCOME TAX EXPE NS E
The major components of tax expense and the reconciliation of expected tax expense based on the
effective tax rate of Viva Leisure Limited at 27.5% (2018: 27.5%) and the reported tax expense in profit or
loss are as follows:
Profit before tax
Domestic tax rate
Expected tax expense
Adjustment for non-deductible expenses:
Non-deductible expenses
Prior year’s over provision of tax
Actual tax expense / (income)
Tax expense comprises
Current tax expense
Deferred tax expense
2019
$
2018
$
3,927,857
1,626,937
27.5%
1,080,161
52,022
(11,341)
1,120,842
1,465,952
(345,110)
1,120,842
30.0%
488,081
7,327
(213,494)
281,914
367,751
(85,837)
281,914
5 2
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 10 - CASH AND CASH E Q UIVALE NTS
Cash at bank and on hand
Short-term bank deposits
Cash backed bank guarantees
2019
$
2018
$
3,392,562
384,280
10,000,000
993,333
14,385,895
-
151,250
535,530
The effective interest rate on short-term bank deposits was 2.49% (2018: 0.5%); these deposits have an
average maturity of 90 days.
NOTE 10 - CASH AND CASH E Q UIVALE NTS
Current
Trade receivables
Other receivables
Non-current
Bonds held
Loans to other related parties
Total trade and other receivables
2019
$
2018
$
202,184
16,260
218,444
114,230
-
114,230
332,674
716,765
2,876
719,641
-
1,644,043
1,644,043
2,363,683
The net carrying of trade receivables is considered a reasonable approximation of fair value.
All of the Group’s trade and other receivables are within current terms and therefore at 30 June 2019 there
is no expected losses recognised.
NOTE 12 - OTHER CURRENT ASS E TS
Current
Stock on hand
Prepayments
5 35 3
2019
$
2018
$
167,989
197,317
365,306
24,405
114,954
139,359
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOTE 13 - FINANCIAL ASS ETS A ND LI AB ILI TI E S
13.1 Categories of financial assets and liabilities
Note 4 l. provides a description of each category of financial assets and financial liabilities and the related
accounting policies. The carrying amounts of financial assets and financial liabilities in each category are
as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Current borrowings
Trade and other payables
Non-current borrowings
Notes
Amortised
Cost
2019
$
Total
20
20119
$
10
11
14
18
14
14,385,895
14,385,895
332,674
332,673
14,718,569
14,718,568
2,274,815
2,542,778
2,274,815
2,542,778
5,668,840
5,668,840
10,486,433
10,486,433
The financial instrument classifications in the prior period are in accordance with AASB 139 as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Current borrowings
Trade and other payables
Non-current borrowings
Notes
Amortised
Cost
2018
$
Total
2018
$
10
11
14
18
14
535,530
2,363,684
2,899,213
535,530
2,363,683
2,899,213
168,727
954,417
168,727
954,417
1,844,364
1,844,364
2,967,508
2,967,508
A description of the Group’s financial instrument risks, including risk management objectives and policies is
given in Note 31. Financial assets and financial liabilities measured at fair value in the statement of financial
position are measured at amortised cost.
5 4
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 14 - BORROWINGS
2019
$
2018
$
2019
$
2018
$
At amortised cost:
Finance lease liabilities
2,274,815
168,727
5,668,840
Loans from other related parties
-
-
-
210,786
1,633,578
2,274,815
168,727
5,668,840
1,844,364
There are several asset specific security interests
registered on the PPS Register against each of
the following members of the Group:
Finance lease liabilities are secured against the
underlying leased equipment and are at an average
interest rate of 6.2%.
• Viva Leisure Operations Pty Ltd;
• The Club Group (Greenway) Pty Limited;
• The Club Group Pty Ltd; and
• Psycle Life Pty Ltd.
These security interests generally relate to
equipment finance leases for the provision of
gymnasium equipment, office equipment and
motor vehicles for the purposes of the ordinary
trading of the Group.
The related party loan was unsecured, and
the interest rate payable was nil. This amount
was offset as an elimination under the
Group’s restructure.
The carrying amount of the finance lease liabilities
is considered to be a reasonable approximation of
the fair value.
5 55 5
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
N OTE 15 - PROPERTY, PLANT AND EQ U IPM E NT
Details of the Group’s property, plant and equipment and their carrying amounts are as follows:
Plant and
Equipment
Furniture
and
Fittings
Motor
Vehicles
Leasehold
Improvements
Leased
Plant and
Equipment
Total
$
$
$
$
$
$
Gross carrying amount
Balance at 1 July 2018
Additions
110,360
833,852
4,880
55,428
Acquisitions through Group
1,192,901
258,833
restructure
73,421
99,990
53,925
327,854
426,940
943,455
3,539,046
5,505,706
10,034,022
2,630,936
4,503,478
8,640,073
Acquisitions through business
1,119,508
101,844
-
228,975
167,806
1,618,133
combination
Disposals
(41,592)
-
(26,069)
-
(46,639)
(114,300)
Depreciation expense
(360,146)
(50,686)
(33,187)
(350,880)
(1,129,646)
(1,924,545)
Carrying amount at 30 June 2019
2,854,883
370,299
168,080
6,375,931
9,427,645
19,196,838
Plant and
Equipment
Furniture
and
Fittings
Motor
Vehicles
Leasehold
Improvements
Leased
Plant and
Equipment
Total
$
$
$
$
$
$
Gross carrying amount
Balance at 1 July 2017
Additions
Depreciation expense
Carrying amount at 30 June 2018
85,735
43,125
(18,500)
110,360
5,482
-
43,147
42,478
(602)
(12,204)
324,369
22,301
(18,816)
356,537
148,960
815,270
256,864
(78,557)
(128,679)
4,880
73,421
327,854
426,940
943,455
All depreciation and impairment charges are included within depreciation, amortisation and impairment of
non-financial assets.
5 6
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 16 - INTANGIBLES
Details of the Group’s intangibles and their carrying amounts are as follows:
Goodwill
Customer
Contracts
Trademarks
Capitalised
Software
Digital
Assets
$
$
$
$
$
Total
$
-
-
-
-
-
-
1,432
36,689
-
38,121
4,582
317,800
13,050
335,432
37,926
76,515
-
114,441
4,773,354 1,570,000
10,000
-
- 6,353,354
Gross carrying amount
Balance at 1 July 2018
Additions
Acquisitions through Group
restructure
Acquisitions through business
combination
Amortisation expense
-
(180,327)
(3,470)
(93,309)
(161)
(277,267)
Carrying amount at 30 June 2019 4,773,354 1,389,673
50,470
337,695
12,889
6,564,081
Goodwill
Customer
Contracts
Trademarks
Capitalised
Software
Digital
Assets
$
$
$
$
$
Total
$
Gross carrying amount
Balance at 1 July 2017
Additions
Amortisation expense
Carrying amount at 30 June 2018
-
-
-
-
-
-
-
-
1,606
67,392
6,244
(174)
(36,947)
1,432
36,689
-
-
-
-
68,998
6,244
(37,121)
38,121
All amortisation is included in within depreciation and amortisation expense.
16.1 Impairment Testing
For the purpose of annual impairment testing, the Group has one cash-generating unit which is expected to
benefit from the synergies of the business combinations in which the goodwill arises.
The following key assumptions were used in the value-in-use calculations:
Growth Rate
Discount Rate
Health Clubs
3%
8%
The recoverable amount above is determined based on value-in-use calculations. Value-in-use is calculated
based on the present value of cash flow projections over a five-year period plus a terminal value calculated
using a terminal growth rate of 3% less selling costs as determined by management. The present value of
the expected cash flows is determined by applying an estimated weighted average cost of capital (WACC)
of 8.0%.
5 75 7
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
16.2 Growth Rates
The growth rates reflect the estimated long-term average growth rates for mature health clubs.
16.3 Discount Rates
The discount rates reflect appropriate adjustments relating to market risk and any specific risk factors.
16.4 Cash Flow Assumptions
Management’s key assumptions include stable profit margins, based on past experience in this market. The
Group’s management believes that this is the best available input for forecasting this mature market. Cash
flow projections reflect stable profit margins achieved immediately before the budget period. No expected
efficiency improvements have been taken into account and prices and wages reflect publicly available
forecasts of inflation for the industry.
Apart from the considerations described in determining the value-in-use of the cash-generating units
described above, management is not currently aware of any other probable changes that would necessitate
changes in its key estimates.
5 8
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 17 - TAX
1 July
2018
Acquired
Businesses
under Group
Reconstruction
Recognised
in Equity
Recognised
in Profit and
Loss
30 June
2019
$
$
$
$
$
Non-Current Assets
Property, plant and equipment
5,768
(1,308,053)
Leased assets
Other intangible assets
Non-Current Liabilities
Provisions
Lease liabilities
Deferred legal costs
Current Liabilities
Provisions
Accruals
Lease liabilities
Contract liabilities
Equity
Costs of IPO put direct to equity
(117,408)
16,361
-
57,966
6,001
8,110
61,494
46,400
7,922
-
92,614
Non-Current Assets
Property, plant and equipment
Leased assets
Other intangible assets
Non-Current Liabilities
Lease liabilities
Deferred legal costs
Current Liabilities
Provisions
Accruals
Lease liabilities
Contract liabilities
-
(5,274)
-
541,952
77,414
180,339
-
405,375
88,077
-
-
-
-
-
-
-
-
-
-
1,224,800
(77,485)
(2,475,194)
(2,592,602)
(16,843)
(5,757)
171,408
959,013
100,091
171,408
1,558,931
183,507
(4,444)
(36,744)
173,799
322,701
184,005
24,750
625,574
418,700
-
(20,170)
367,383
367,383
(73,477)
293,906
345,110
784,937
1 July 2017
Recognised
in Profit and
Loss
30 June
2018
$
$
$
-
-
-
-
-
-
-
-
-
5,768
5,768
(117,408)
(117,408)
16,361
16,361
57,966
6,001
57,966
6,001
8,110
61,494
46,400
7,922
92,614
8,110
61,494
46,400
7,922
92,614
All deferred tax assets have been recognised in the statement of financial position.
Tax Payable
CURRENT
Income tax payable
5 95 9
2019
$
2018
$
1,495,149
386,615
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
N OT E 18 - TRADE AND OTHE R PAYAB L ES
CURRENT
Trade payables
Sundry payables and accrued expenses
2019
$
2018
$
1,533,550
1,009,228
2,542,778
307,163
647,253
954,416
All amounts are short-term. The carrying values of trade and other payables are considered to be the
fair value.
NOT E 19 - CONTRAC T LIABILITIE S
CURRENT
Amounts received in advance for sale of gym memberships
Operating lease fitout incentives received
Operating lease rent incentives received
NON-CURRENT
Operating lease fitout incentives received
Operating lease rent incentives received
Total contract liabilities
Refer to note 4 e. for the revenue recognition policy.
2019
$
2018
$
1,071,135
174,121
54,422
1,299,678
1,006,400
287,602
1,294,002
2,593,680
78,849
-
10,463
89,312
-
18,344
18,344
107,656
6 0
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 20 - EMPLOYEE REMUNERATIO N
20.1 Employee benefits - expense
Expenses recognised for employee benefits are analysed below:
Wages and salaries
Employee leave entitlements
Share based payments
Superannuation
Employee Benefits Expense
2019
$
2018
$
8,289,001
2,540,256
537,523
155,211
682,884
140,732
-
225,399
9,664,619
2,906,387
20.2 Share-Based Employee Remuneration
As at 30 June 2019, the Company maintained a Long-Term Incentive (LTI) share-based payment scheme for
employee remuneration, which will be settled in equity. In addition, the Company has issued Tranche 1 and
Tranche 2 options.
Options granted to the Executive Team are under the LTI Plan and under Tranche 1 and Tranche 2 Plans:
• LTI Plan Options: The vesting of those options and will be subject to the satisfaction of appropriate
service-based conditions and/or performance hurdles determined by the Board;
• Tranche 1 and Tranche 2 Plan Options: These options are currently vested.
Options granted under the LTI, Tranche 1 and Tranche 2 Plans carry no dividends or voting rights.
Long Term Incentives (LTIs)
The table below describes the performance hurdles and vesting condition that apply as at the date of
the Prospectus and in relation to the 295,000 options granted to senior executives:
Earnings per Share (EPS) Cumulative Compound Annual Growth Rate (CAGR)
The percentage of options that vest for each % EPS CAGR is illustrated in the following table:
EPS CAGR over the three Financial Years Ending 30 June 2021
Percentage of Options that Vest
Less than 15% (minimum Target)
15% to 20% (within target range)
Greater than 20% (above maximum target)
0%
50% - 100%
(on a straight-line basis)
100%
• For the purposes of the above performance
hurdles, Earnings per Share means the Basic
EPS recorded in the Company’s audited
financial statements.
• The Company’s Basic EPS for FY2019 will be
calculated following the IPO and confirmation
of the number of Shares on issue as at the date
of listing.
• The Basic EPS may be adjusted for items
• The Performance Hurdle will be tested only
which the Board, in its discretion, considers
should be excluded from the EPS result (such
as items of a one-off and
non-recurring nature).
once the Vesting Condition has been met by
the grantee senior executive and following the
Company’s audited accounts being finalised
for FY2021.
All options refer to options over ordinary shares of the Company, which are exercisable on a one-for- one
basis under the terms of the agreements.
There were no share options exercised during the reporting period.
6 16 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
LTI
Tranche 1
Tranche 2
No of Options No of Options No of Options
295,000
1,500,000
1,000,000
-
-
-
295,000
1,500,000
1,000,000
-
1,500,000
1,000,000
Outstanding at 1 July 2018
Granted
Exercised
Outstanding at 30 June 2019
Exercisable at 30 June 2019
The fair values of options granted were determined using the Black Scholes option pricing model.
The following principal assumptions were used in the valuation:
Grant date
Vesting period ends
Share price at grant date
Volatility
Option Life
Dividend yield
Risk free investment rate
Fair value at grant date
Exercise price at date of grant
Exercisable from
LTI
Tranche 1
Tranche 2
No of Options No of Options No of Options
7 June 2019
7 June 2019
7 June 2019
Release
of FY2021
results
1.00
25%
7 June 2019
7 June 2019
1.00
25%
1.00
25%
5 years
4 years
4 years
0%
2%
82,979
1.34
0%
2%
72,232
1.43
7 June 2019
7 June 2019
0%
2%
Nil
Nil
Release
of FY2021
Results
Exercisable to
7 June 2024
2 May 2023
2 May 2023
Weighted average remaining contractual life
4.95 Years
3.94 Years
3.94 Years
The underlying expected volatility was determined by reference to historical data of comparable listed
entities over a period of time. No special features inherent to the options granted were incorporated into
measurement of fair value.
In total, $155,211 (2018: $nil) of employee remuneration expense (all of which related to equity-based
payment transactions) has been included in profit or loss and credited to share option reserve.
20.3 Employee benefits - liabilities
Current:
Employee leave entitlements
Non-Current:
Employee leave entitlements
Total employee obligations
2019
2018
1,176,473
29,490
115,937
-
1,292,410
29,490
6 2
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 21 - EQUITY
21.1 Share Capital
The share capital of Viva Leisure consists only of fully paid ordinary shares. All shares are equally eligible
to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting
of Viva Leisure.
Shares issued and fully paid:
Beginning of the year
Shares issued
Group restructure
Share reconstruction
Initial Public Offer (less costs of offer)
Total contributed equity at 30 June
Capital Management
2019
Shares
2018
Shares
2019
$
2018
$
120
120
120
120
3,425,000
21,000,000
7,974,880
20,200,000
52,600,000
-
-
-
-
3,500,000
21,000,000
-
19,215,571
-
-
-
120
43,715,691
120
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio,
generate long-term shareholder value and ensure that the Group can fund its operations and continue
as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by
financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These responses
include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year. This strategy is to ensure that the Group’s gearing ratio remains below 70%.
The gearing ratios for the years ended 30 June 2019 and 30 June 2018 are as follows:
2019
$
7,943,655
14,385,895
(6,442,240)
25,762,058
2018
$
2,013,091
535,530
1,477,561
621,494
19,319,818
2,099,055
N/A
70.4%
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
6 36 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOTE 22 - RESERVES
a. Common Control Reserve
A common control reserve was created when the Group restructure took place as it was determined to
occur under the control of the same shareholders. A business combination involving entities or businesses
under common control is a business combination in which all of the combining entities or businesses are
ultimately controlled by the same party or parties both before and after the business combination, and that
the control is not transitory.
Where an entity within the group acquires an entity under common control, the acquirer consolidates the
carrying values of the acquired entity’s assets and liabilities from the date of acquisition. The consolidated
financial statements of the group include the acquired entity’s income and expenses from the date of
acquisition onwards. Any difference between the fair value of the consideration paid/transferred by the
acquirer and the net assets/ (liabilities) of the acquired entity are taken to the common control reserve.
Common Control Reserve
Measurement under Group restructure
Movement in common control reserve
b. Share Options Reserve
2019
$
2018
$
(21,585,321)
(21,585,321)
The share option reserve records items recognised as expenses on valuation of employee share options.
Share Options Reserve
Issue of options to key management personnel
Movement in share options reserve
2019
$
2018
$
155,211
155,211
-
-
-
-
6 4
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 23 - EARNINGS PER S HARE AND D IV IDE NDS
23.1 Earnings per Share
Both the basic and diluted earnings per share have been calculated using the profit attributable to
shareholders of the Parent Company as the numerator (i.e. no adjustments to profit were necessary
in 2019 or 2018).
The reconciliation of the weighted average number of shares for the purposes of diluted earnings per
share to the weighted average number of ordinary shares used in the calculation of basic earnings per
share is as follows:
Weighted average number of shares used in basic earnings per share*
52,600,000
Shares deemed to be issued for no consideration in respect of options granted
2,795,000
Weighted average number of shares used in diluted earnings per share
55,395,000
N/A
N/A
N/A
2019
2018
$
$
*The weighted average shares are calculated from the date of listing on 7th June 2019.
23.2 Dividends
There were no dividends declared or paid during the year (2018: nil)
23.3 Franking Credits
The amount of franking credits available for subsequent reporting periods are:
Balance at the end of the reporting period
Franking credits that will arise from payment of the amount of provision for
income tax
Total franking credits
2019
2018
$
$
485,676
12,087
1,495,149
-
1,980,825
12,087
6 56 5
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOTE 24 - RECONCILIATION OF CAS H F LOWS
Cash flows from operating activities
Profit after income tax
Non-cash flows in profit
— depreciation and amortisation
— net (gain)/loss on disposal of property, plant and equipment
— interest expenses included in financing activities
— tax effect of expenses taken to equity
— charges to common control reserve
— charges to share options reserve
— (increase)/decrease in trade and term debtors
— (increase)/decrease in other assets
— (increase)/decrease in deferred tax
— increase/(decrease) in payables
— increase/(decrease) in current tax
— increase/(decrease) in other liabilities
— increase/(decrease) in provisions
Net cash from operating activities
Non-cash Financing and Investing Activities
Share issue:
2019
$
2018
$
2,855,103
1,345,023
2,201,813
(54,580)
631,570
167,383
(194,349)
155,211
322,987
(57,825)
(526,293)
165,797
-
84,395
-
-
-
176,456
41,955
(85,837)
(840,004)
(1,600,305)
1,000,513
1,707,563
607,143
367,751
(655,978)
16,222
7,976,235
(144,521)
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
200,000 shares were granted to Bruce Glanville as consideration for services performed during
the group’s listing on the ASX. These have been reflected as a cost of capital in the statement of
financial position.
Finance Lease Additions:
During the year the group had additions to property, plant and equipment via way of finance
lease of $6,146,560.
6 6
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 25 - AUDITOR REMUNE RAT IO N
Remuneration of the auditor for:
Audit and review of financial statements
Financial year ended 30 June 2019
Financial year ended 30 June 2018
Total audit services
Other non-audit services
Financial year ended 30 June 2016*
Half year ended 31 December 2018*
Taxation and business services
Investigating Accountant services for the initial public offering
Total non-audit services
Total auditor remuneration
*These relate to work performed as part of the Group’s listing on the ASX.
2019
$
2018
$
43,500
-
43,500
26,500
18,148
40,050
90,209
174,907
218,407
-
35,000
35,000
-
-
-
-
-
35,000
NOTE 26 - RELATED PARTY T RANSACT IO NS
The Group’s related parties include key management of the Group which are considered to be any
person(s) having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
Related parties continue to own several properties which are leased by the Group as described below. The
Board considers that each of these arrangements are on arm’s length terms, commercial terms and are
subject to the usual risks associated with other leases entered by the Company. The Board has obtained
independent valuation advice to confirm that the arrangements are arm’s length.
A related party, KGFUND Pty Ltd and The Club Group Pty Ltd (a Subsidiary of the Company) were parties
to a loan agreement under which KGFUND Pty Ltd has advanced a loan to The Club Group Pty Ltd in the
amount of $3.4 million (KGFUND Loan). The KGFUND Loan was repaid by the Company on behalf of the
Club Group Pty Ltd on 14th June 2019. On the repayment of the KGFUND Loan, the loan agreement was
terminated and the Group has no outstanding liabilities owing to KGFUND Pty Ltd.
26.1 Transactions with Key Management Personnel
Short-term Employee Benefits:
Wages and salaries (including bonuses and Annual Leave
entitlements)
Superannuation
Total short-term employee benefits
Long service leave
Total other long-term benefits
Share-based payments
Total remuneration
6 76 7
2019
$
2018
$
1,454,757
835,573
76,705
64,577
176,168
7,769
155,212
-
1,862,842
907,919
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors
as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors
and other KMP.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year, long-term disability
benefits and deferred bonus payments.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the options granted on grant date (see Note 20.2).
Further information in relation to KMP remuneration can be found in the directors’ report and at Note 20.
2019
$
2018
$
26.2 Related Party Properties
Total related party property transactions
2,537,853
-
NOT E 27
CONTINGENT LIAB ILIT IE S
The company has no contingent assets or liabilities.
6 8
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 28 - BUSINESS COMB INATIONS
a. Elite Physique – Phillip, ACT
On 10 September 2018, the Group acquired the health club business Elite Physique (Elite) from Changing
Shapes Pty Limited for a purchase consideration of $575,570. The acquisition is part of the Group’s overall
strategy to expand into existing territories where it sees demand for its services.
The purchase was satisfied by the payment of $575,570.
Fair value of consideration transferred
Amount settled in cash
Recognised amounts of identifiable net assets acquired
Plant and equipment
Intangible assets
Total non-current assets
Trade and other receivables
Total current assets
Trade and other payables
Other liabilities
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
Acquisition costs charged to the profit and loss
Net cash paid relating to the acquisition
$
575,570
200,000
250,000
450,000
859
859
(1,297)
(73,992)
(75,289)
375,570
200,000
575,570
4,250
579,820
i.
ii.
Consideration transferred
Acquisition-related costs amounting to $4,250 are not included as part of consideration
transferred and have been recognised as an expense in the consolidated statement of profit or loss
and other comprehensive income, as part of other expenses.
Identifiable net assets
The fair value of the trade and other receivables acquired as part of the business combination
amounted to $859. The Directors believe the receivables are fully recoverable and no provision for
impairment is required.
The fair value of identifiable intangible assets has been determined taking into consideration
forecast sales derived from the existing member base adjusted for estimated churn rates.
iii. Goodwill
The goodwill that arose on the combination can be attributed to the synergies expected to be
derived from the combination and the strong geographic positioning in relation to other Group
health clubs which cannot be recognised as an intangible asset.
The goodwill that arose from this business combination is not expected to be deductible for
income tax purposes.
iv.
Contribution to the Group’s results
Elite contributed $626,975 and $149,892 to the Group’s revenues and profits from the date of the
acquisition to 30 June 2019.
6 96 9
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
b. Xceler8 – Wagga Wagga, NSW
On 28 September 2018, the Group acquired the health club business, Xceler8 from Xceler8 Fitness Centre
Pty Limited for a purchase consideration of $3,229,984. The acquisition is part of the Group’s overall
strategy to expand into other territories.
The purchase was satisfied by the payment of $2,850,141 plus the payout of certain finance lease liabilities
at completion of $183,404 plus the assumption of other finance lease liabilities of $196,439.
Fair value of consideration transferred
Amount settled in cash
Finance lease liabilities paid out
Finance lease liabilities assumed
Recognised amounts of identifiable net assets acquired
Plant and equipment
Intangible assets
Total non-current assets
Trade and other receivables
Total current assets
Borrowings
Total non-current liabilities
Provisions
Other liabilities
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
Acquisition costs charged to the profit and loss
Net cash paid relating to the acquisition
$
2,850,141
183,404
196,439
3,229,984
616,766
720,000
1,336,766
6,831
6,831
(196,432)
(196,432)
(134,281)
(112,692)
(246,973)
900,192
2,133,353
3,033,545
4,250
3,037,795
i.
ii.
Consideration transferred
Acquisition-related costs amounting to $4,250 are not included as part of consideration
transferred and have been recognised as an expense in the consolidated statement of profit or
loss and other comprehensive income, as part of other expenses.
Identifiable net assets
The fair value of the trade and other receivables acquired as part of the business combination
amounted to $6,831. The Directors believe the receivables are fully recoverable and no provision
for impairment is required.
The fair value of identifiable intangible assets has been determined taking into consideration
forecast sales derived from the existing member base adjusted for estimated churn rates.
iii.
Goodwill
The goodwill that arose on the combination can be attributed to the synergies expected to be
derived from the combination and the strong geographic positioning in relation to other Group
health clubs which cannot be recognised as an intangible asset.
The goodwill that arose from this business combination is not expected to be deductible for
income tax purposes.
7 0
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
iv.
Contribution to the Group’s results
Xceler8 contributed $2,179,879 and $586,154 to the Group’s revenues and profits
respectively from the date of the acquisition to 30 June 2019.
c. Fitness 24/7 Albury, NSW and Wodonga, Victoria
On 14 June 2019, the Group acquired the health club businesses Fitness 24/7 from Changing Shapes
Pty Limited for a purchase consideration of $3,439,887. The acquisition is part of the Group’s overall
strategy to expand into other territories.
The purchase was satisfied by the payment of $3,439,887.
Fair value of consideration transferred
Amount settled in cash
Recognised amounts of identifiable net assets acquired
Plant and equipment
Intangible assets
Total non-current assets
Prepayments
Total current assets
Provisions
Other liabilities
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Net cash outflow on acquisition
Net cash paid relating to the acquisition
$
3,439,887
780,000
610,000
1,390,000
17,180
17,180
(50,074)
(277,219)
(327,293)
1,079,887
2,360,000
3,439,887
3,439,887
i.
ii.
Identifiable net assets
The fair value of identifiable intangible assets has been determined taking into
consideration forecast sales derived from the existing member base adjusted for estimated
churn rates.
Goodwill
The goodwill that arose on the combination can be attributed to the synergies expected to
be derived from the combination and the strong geographic positioning in relation to other
Group health clubs which cannot be recognised as an intangible asset.
The goodwill that arose from this business combination is not expected to be deductible
for income tax purposes.
iii. Contribution to the Group’s results
Fitness 24/7 contributed $104,907 and $39,613 to the Group’s revenues and profits from
the date of acquisition to 30 June 2019.
d. Absolute Fitness, Goulburn NSW
In April 2019, the company also acquired the business of Absolute Fitness in Goulburn, NSW for cash
consideration of approximately $127,000, after liabilities of approximately $4,500 were assumed.
7 17 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
Proportion of Ownership
Interests held by the Group
30 June
2019
30 June
2018
N OT E 29 - INTERESTS IN S UB S IDIARIE S
Name of Subsidiary
Principal Activity
Viva Leisure Limited
Parent
Viva Leisure Operations Pty Limited
Health club operation
Viva Leisure People Pty Limited
Health club operation
Viva Leisure Property Pty Limited
Health club operation
Viva Leisure Memberships Pty Limited
Health club operation
Psycle Life Pty Limited
The Club Group Pty Limited
Health club operation
Health club operation
The Club Group (Greenway) Pty Limited
Health club operation
Club MMM! Pty Limited
Health club operation
HIIT Republic Australia Pty Limited
Health club operation
Club Lime Pty Limited
Club Pink Pty Limited
Club Blue Pty Limited
Club Swim Pty Limited
Club Team Pty Limited
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
As part of the Group restructure that occurred during the year the following companies under common
control were acquired (refer Note 4(b)):
Name of Subsidiary
Principal Activity
The Club Group Pty Limited
Club MMM! Pty Limited
Health club operation
Health club operation
Club Lime Pty Limited
Club Pink Pty Limited
Club Blue Pty Limited
Club Swim Pty Limited
Club Team Pty Limited
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 2
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
NOTE 30 - LEASES
30.1 Finance Leases (as lessee)
The majority of the Group’s health club equipment is held under finance lease arrangements. As of 30 June
2019, the net carrying amount of the equipment is $9,427,644 (2018: $426,940)
The Group’s finance lease liabilities, which are secured by the related assets held under finance leases, are
classified as follows:
Current
Finance lease liabilities
Non-Current
Finance lease liabilities
2019
$
2018
$
2,274,815
168,727
5,668,840
210,786
Future minimum finance lease payments at the end of each reporting period under review were as follows:
30 June 2019
Lease payments
Finance charges
Net present values
30 June 2018-
Lease payments
Finance charges
Net present values
Minimum Lease Payments Due
Within 1
Year
$
1 to 5
Years
$
After 5 Years
Total
$
$
2,726,832
6,249,321
(452,017)
(580,481)
2,274,815
5,668,840
194,374
(25,647)
168,727
232,659
(21,873)
210,786
-
-
-
-
-
-
8,976,153
(1,032,498)
7,943,655
427,034
(47,520)
379,514
30.2 Operating Leases (as lessee)
The Group leases health club and office space under operating leases. The future minimum lease payments
are as follows:
Minimum Lease Payments Due
Within 1
Year
$
1 to 5
Years
$
After 5 Years
Total
$
$
30 June 2019
30 June 2018
8,807,608
36,944,474
31,410,576
77,162,658
723,364
2,814,433
2,173,576
5,711,373
7 37 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
N OT E 31 - FINANCIAL INSTRUMENT R IS K
The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and
liabilities by category are summarised in Note 13.1. The main types of risks are market risk, credit risk and
liquidity risk.
The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of
Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimising the
exposure to financial markets.
The Group does not actively engage in the trading of financial assets for speculative purposes nor does it
write options. The most significant financial risks to which the Group is exposed are described below.
31.1 Market Risk Analysis
The Group is exposed to market risk through its use of financial instruments and specifically to interest rate
risk, which result from its operating and investing activities.
Short term exposure
Long term exposure
$
$
30 June 2019
Financial assets
Financial liabilities
Total exposure
30 June 2018
Financial assets
Financial liabilities
Total exposure
14,718,569
(4,817,593)
9,900,976
1,255,171
(1,123,144)
132,027
-
(5,668,840)
(5,668,840)
1,644,043
(1,844,364)
(200,321)
Interest rate sensitivity
The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-
term borrowings are therefore usually at fixed rates. At 30 June 2019, the Group is not exposed to
changes in market interest rates as its borrowings are at fixed interest rates. The Group’s investments in
term deposits all pay fixed interest rates.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in
interest rates of +/- 1% (2018: +/- 1%). These changes are considered to be reasonably possible based on
observation of current market conditions. The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held at each reporting date that are sensitive
to changes in interest rates. All other variables are held constant.
30 June 2019
30 June 2018
Profit for the Year
Equity
$
+1%
67,749
1,560
$
-1%
(67,749)
(1,560)
$
+1%
67,749
1,560
$
-1%
(67,749)
(1,560)
7 4
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
31.2 Credit Risk Analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed
to this risk for various financial instruments, for example receivables to customers, placing deposits,
investment in term deposits, etc.
Credit risk management
The credit risk is managed on a group basis based on the Group’s credit risk management policies
and procedures.
The credit risk in respect of cash balances held with banks and deposits with banks are managed via
diversification of bank deposits, and are only with major reputable financial institutions.
The majority of the Group’s customer pay on an upfront basis by way of direct debit and as such, the
Group does not provide for bad debts as revenue is not recorded until received.
31.3 Liquidity Risk Analysis
Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its
liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as
forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows
is consistent with that used in the contractual maturity analysis below.
See Note 14 for details of borrowings during the financial periods under review. At 30 June 2019, the Group
had no debt facilities in place, apart from finance lease liabilities as described in Note 30.
31.4 Financial Risk Management
Within 1 Year
1 to 5 Years
Over 5 Years
Total
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
Consolidated Group
Financial liabilities due for payment
Trade and other
2,542,778
954,417
-
-
-
payables
Contract liabilities
1,299,678
89,312
261,870
18,344
1,032,132
Finance lease
2,274,815
168,727
5,668,840
210,786
liabilities
Amounts payable
to related parties
Total expected
outflows
-
1,633,578
-
-
-
6,117,271
2,846,034
5,930,710
229,130
1,032,132
Financial assets – cash flows realisable
Cash and cash
14,385,895
535,530
equivalents
Trade receivables
218,443
719,641
114,230
Total anticipated
14,604,338
1,255,171
114,230
-
-
-
-
-
inflows
Net (outflow)/
inflow on financial
8,487,067
(1,590,864)
(5,816,480)
(229,130)
(1,032,132)
instruments
-
-
-
-
-
-
-
-
-
2,542,778
954,417
2,593,680
107,656
7,943,655
379,514
-
1,633,578
13,080,113
3,075,165
14,385,895
535,530
332,673
719,641
14,718,568
1,255,171
1,638,455
(1,819,994)
7 57 5
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
NOTE 32 - FAIR VALUE MEAS URE ME NT
Financial assets and financial liabilities measured at fair value in the statement of financial position are
measured at amortised cost.
NOTE 33 - PARENT ENTITY INFO RMATIO N
Statement of Financial Position
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Non-Current Liabilities
Total Liabilities
Net Assets
Issued Capital
Reserves
Retained Earnings
Total Equity
Statement of Profit and Loss and Other Comprehensive Income
Profit for the year
Other comprehensive income
Total Comprehensive Income
Guarantees and Security Interests
2019
$
2018
$
22,584,246
11,838
22,596,084
12,087
-
12,087
22,583,997
43,715,691
(21,430,110)
298,416
22,583,997
298,665
-
298,665
120
28,494
28,614
28,743
-
28,743
(129)
120
-
(249)
(129)
(249)
-
(249)
There are several asset specific security interests registered on the PPS Register against each of the
following members of the Group:
• Viva Leisure Operations Pty Ltd;
• The Club Group (Greenway) Pty Limited;
• The Club Group Pty Ltd; and
• Psycle Life Pty Ltd.
These security interests generally relate to equipment finance leases for the provision of gymnasium
equipment, office equipment and motor vehicles for the purposes of the ordinary trading of the Group.
In addition to the asset specific security interests described above, there are also security interests
registered on the PPS Register over all of the present and after acquired property of:
• Viva Leisure Operations Pty Ltd; and
• Viva Leisure Property Pty Ltd,
each in favour of the National Australia Bank Limited (NAB).
7 6
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 9
The security interest registered against Viva Leisure Operations Pty Ltd by NAB relates to a general security
deed granted by Viva Leisure Operations Pty Ltd to NAB in connection with a corporate cards facility and a
bank guarantee facility.
The security interest registered against Viva Leisure Property Pty Ltd by NAB relates to a general security
deed granted by Viva Leisure Property Pty Ltd to NAB in connection with a bank guarantee facility.
Contractual commitments
At 30 June 2019, Viva Leisure Limited has the following contractual commitments. The Company had
entered into binding agreements to lease certain rental properties, but the lease terms had not commenced
as at the reporting date:
Contractual Commitments
Within 1
Year
$
1 to 5
Years
$
After 5 Years
Total
$
$
30 June 2019
30 June 2018
1,785,046
11,504,094
18,618,400
31,907,541
-
-
-
-
N OT E 34 - EVENTS AFTER TH E RE POR TI NG PE RI O D
The following events occurred after the reporting period:
• The acquisition of Project Fitness Group was completed on 24 July 2019
• The acquisition of Fitness 24 Seven Wodonga occurred on the 13 August 2019
N OTE 35 - COMPANY INF ORMATI ON
Viva Leisure Limited is the Group’s Ultimate Parent Company. Viva Leisure Limited is a Public Company
incorporated and domiciled in Australia. The address of its registered office and its principal place of
business is Unit 7, 141 Flemington Road, Mitchell, ACT, Australia.
7 77 7
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
VIVA LEISURE G RO U P
DIREC TORS’ DE CLAR AT I ON
1) In the opinion of the Directors of Viva Leisure Ltd:
a) The consolidated financial statements and notes of Viva Leisure Ltd are in accordance with the
Corporations Act 2001, including:
i) Giving a true and fair view of its financial position as at 30 June 2019 and of its performance for
the financial year ended on that date; and
ii) Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b) There are reasonable grounds to believe that Viva Leisure Ltd will be able to pay its debts as and
when they become due and payable.;
2) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001
from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019.
3) Note 2 confirms that the consolidated financial statements also comply with International Financial
Reporting Standards.
Signed in accordance with a resolution of the Directors.
Director
______________________________________________
Harry Konstantinou
Dated this
28 day of August 2019.
7 8
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
I ND EP ENDENT
AUDITOR’S REPORT
7 9
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
8 0
A Member of PrimeGlobal An Association of Independent Accounting Firms SYDNEY · PENRITH · MELBOURNE · ADELAIDE · PERTH · DARWIN · BRISBANE Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au VIVA LEISURE LIMITED ABN 76 607 079 792 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VIVA LEISURE LIMITED Opinion We have audited the financial report of Viva Leisure Limited (the Company and its and controlled entities “the Group”), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, and the consolidated statement of cash flows for the year then ended, notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion the accompanying financial report of Viva Leisure Limited and controlled entities is in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year ended; and b. complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis of Opinion We conducted our audit in accordance with Australian Auditing Standards. Those Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the year ended 30 June 2019. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. I N D E P E N D E N T A U D I T O R ’ S R E P O R T
VIVA LEISURE LIMITED
ABN 76 607 079 792
AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF VIVA LEISURE LIMITED
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Our procedures included, amongst others:
• Held discussions with management to understand the nature
of the transactions
• Obtained and assessed managements calculation of the
restructure and support for the transaction values used in
finalising the accounting entries
• Assessed the appropriateness of the disclosures in the
financial statements in relation to the group restructure.
Our procedures included, amongst others, the following:
• We obtained an understanding of the key controls in the
revenue recognition cycle.
• Sample tested revenue transactions throughout the year
to ensure that revenue was recognised in accordance with
AASB 15: Revenue from Contracts with Customers.
• We ensured the carrying value of the contract liabilities
were accurate and complete.
Accounting for Group Restructure
Refer to Note 4(b) ‘Basis of
consolidation’
During the year ended 30 June 2019 the
group underwent a group restructure
whereby the company acquired the
business of Club Group Trust, The Club
Group Pty Limited and its subsidiary Club
MMM! Pty Limited. This resulted in a
common control reserve of $21,585,321.
This was considered a key audit matter as
there is significant judgement in
determining the transaction values and the
accounting complexities of a common
control transaction.
Revenue Recognition and Contract
Liabilities
Refer to Note 4(e) ‘Revenue and
Other Income’ and Note 19 ‘Contract
Liabilities’
Refer to Note 4(e) for the group’s revenue
recognition policy. The group recognises
revenue from health club membership
services and is recognised as the
customer consumes these services.
Customers pay in advance for these
services and this consideration is recorded
as contract liability. The revenue
recognised for the year ended 30 June
2019 was $31,069,941.
At 30 June 2019 the group recognised
$1,071,135 in contract liabilities for
consideration received in advance for
health club membership services.
We focused on this area as a key audit
matter given the significance of the
balance and that there is a risk that
revenue may not be recognised in
accordance with the revenue recognition
principles as set out in AASB 15: Revenue
from Contracts with Customers.
8 18 1
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
VIVA LEISURE LIMITED
ABN 76 607 079 792
AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF VIVA LEISURE LIMITED
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Accounting for Business Combinations
Refer to Note 28 ‘Business Combinations’
During the financial year ended 30 June
2019 the group made a number of
acquisitions as disclosed in Note 28.
Accounting for acquisitions is complex and
involves a number of significant
judgements.
We focused on this area as a key audit
matter due to amounts involved being
material and the judgements involved in
determining the fair value of the assets
acquired and liabilities assumed.
Carrying value of goodwill
Refer to Note 16 ‘Intangible Assets’
The Group has recognised goodwill of
$4,773,354 at 30 June 2019 resulting from
business combinations.
The assessment of impairment of the
group’s goodwill balances incorporated
significant judgement in respect of factors
such as forecasted revenue, costs,
discount rates and terminal growth rates.
We have focused on this area as a key
audit matter due to amounts involved
being material and the inherent
subjectivity associated with critical
judgements being made in relation to
forecasted revenue, costs, discount rates
and terminal growth rates.
Our procedures included, amongst others, the following:
• Reviewing the purchase agreements to understand the
terms and conditions of the acquisitions and evaluating
management’s assessments under AASB3 Business
combinations
• Assessing the fair value of the assets acquired and the
liabilities assumed
• Assessing the adequacy of the Group’s disclosures in the
financial statements
Our procedures included, amongst others, the following:
• Evaluated management’s impairment assessment of
goodwill.
• Reviewed key inputs in the value-in-use model such as
forecasted revenue, costs, discount rates and terminal
growth rates.
•
Involved our valuation specialists to recalculate
management’s discount rates based on external data
where available. The valuation specialist was also
involved in assessing the value-in use model used for
valuation methodology including treatment of terminal
value calculations and the net present value calculations.
• Performed sensitivity analysis on the assumptions used
such as terminal growth; and discount rate.
• Assessed the Group’s disclosures of the quantitative and
qualitative considerations in relation to the valuation of
goodwill and other intangible assets, by comparing these
disclosures to our understanding of the matter.
8 2
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
VIVA LEISURE LIMITED
ABN 76 607 079 792
AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF VIVA LEISURE LIMITED
Information Other than the Financial Report and Auditor’s Report thereon
The directors are responsible for the other information. The other information comprises the information
in the Group’s annual report for the year ended 30 June 2019 but does not include the financial report
and the auditor’s report thereon. Our opinion on the financial report does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of the other information, we
are required to report that fact. We have nothing to report in this regard.
Director’s Responsibilities of the Director for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australia Accounting Standards and the Corporations Act 2001 and for
such internal control as directors determine is necessary to enable the preparation of the financial report
that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
8 38 3
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
VIVA LEISURE LIMITED
ABN 76 607 079 792
AND ITS CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF VIVA LEISURE LIMITED
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control
–
–
–
–
–
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
8 4
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
8 58 5
VIVA LEISURE LIMITED ABN 76 607 079 792 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VIVA LEISURE LIMITED We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the remuneration report included as part of the directors’ report for the year ended 30 June 2019. In our opinion, the remuneration report of Viva Leisure Limited for the year ended 30 June 2019 complies with s 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. HALL CHADWICK Level 40, 2 Park Street Sydney NSW 2000 Sandeep Kumar Partner Dated: 20 August 2019 V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
AD DITIONAL I N FO R MATION
FOR L ISTED CO MPANIES
8 6
A D D I T I O N A L I N F O R M A T I O N F O R L I S T E D C O M P A N I E S
The following information is current as at 30th August 2019
1. DISTRIBUTION OF SHAREH OLDE RS
The Distribution of issued capital is as follows:
Holding
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1,000
2. DISTRIBUTION OF OPTIONS
Holding
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1,000
Total No. of
Shares Held
No. of
Shareholders
48,620,298
3,121,570
460,643
377,057
20,432
52,600,000
20
78
59
138
33
328
Total No. of
Options Held
No. of
Shareholders
2,695,000
100,000
-
-
-
2,795,000
4
1
-
-
-
5
8 7
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
3 . 20 LARGEST S HAREHOLD ER S
Shareholder
SHJA MANAGEMENT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERA VALE NO 1 PTY LTD
NATIONAL NOMINEES LIMITED
DOMA EQUITIES PTY LTD
CITICORP NOMINEES PTY LIMITED
ANGELO KONSTANTINOU
HARRY KONSTANTINOU
SPIROS KONSTANTINOU
JOHN KONSTANTINOU
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
TRENWITH NOMINEES PTY LIMITED
MRS LEORA SHAMGAR
ROBERT MCCLURE SUPER FUND PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
MRS KRISTIN JANE ARTHUR
MR DEREK HILL & MRS JOANNA HILL
BOND STREET CUSTODIANS LIMITED
Number
Held
% of Issued
Shares
21,688,434
5,280,708
4,543,296
3,559,816
3,000,000
1,552,321
1,542,068
1,542,068
1,542,067
1,542,067
693,527
600,000
300,000
260,000
250,000
250,000
232,926
128,000
109,000
104,000
41.2%
10.0%
8.6%
6.8%
5.7%
3.0%
2.9%
2.9%
2.9%
2.9%
1.3%
1.1%
0.6%
0.5%
0.5%
0.5%
0.4%
0.2%
0.2%
0.2%
8 8
A D D I T I O N A L I N F O R M A T I O N F O R L I S T E D C O M P A N I E S
4. SUBSTANTIAL S HAREHOLDE RS
The names of the substantial shareholders listed in the holding company’s register as at 30 August 2019 are:
Shareholder
VIVA LEISURE LIMITED*
SHJA MANAGEMENT PTY LTD*
ANGELO KONSTANTINOU*
HARRY KONSTANTINOU*
JOHN KONSTANTINOU*
SPIROS KONSTANTINOU*
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERA VALE NO 1 PTY LTD
NATIONAL NOMINEES LIMITED
DOMA EQUITIES PTY LTD
* Nature of relevant interest for Viva Leisure Limited
Number of
Shares
% of Issued
Shares
29,515,866
29,515,866
29,515,866
29,515,866
31,057,933
31,057,933
5,280,708
4,543,296
3,559,816
3,000,000
56.1%
56.1%
56.1%
56.1%
59.0%
59.0%
10.0%
8.6%
6.8%
5.7%
Viva Leisure Limited has entered into voluntary escrow deeds with respect to fully paid ordinary shares
held by:
• SHJA Management Pty Ltd;
• Harry Konstantinou;
• Angelo Konstantinou;
• Trenwith Nominees Pty Ltd; and
• Mera Vale No.1 Pty Ltd,
which restrict disposal of shares as disclosed in the prospectus lodged by Viva Leisure Limited on 14
May 2019 and which gives Viva Leisure Limited a technical relevant interest under s608(1)(c) of the
Corporations Act 2001 (Cth) (Act). However the escrow deeds do not restrict the exercise of voting
rights attaching to the escrowed securities.
By virtue of section 608(3)(a) of the Act (and independent of any shares they individually hold in the
Viva Leisure Limited) each of Angelo, Harry, John and Spiros Konstantinou is deemed to have a relevant
interest in all shares in which SHJA Management Pty Ltd has a relevant interest. Further, by virtue of
section 608(3)(b) of the Act, SHJA Management Pty Ltd is deemed to have a relevant interest in all
shares in which Viva Leisure Limited has a relevant interest.
ASIC has granted relief modifying section 609 of the Act by removing the relevant interest created
under the escrow deeds from the operation of Chapter 6 of the Act. However, under the customary
ASIC relief, securities subject to escrow arrangements are included for substantial holding disclosure
purposes.
8 9
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
5. LESS THAN MARKETABLE PARCE L O F O RD INARY SH AR E S
There is one shareholder with an unmarketable parcel totalling 1 share.
6 . UNQUOTED EQUIT Y S EC URIT IE S
The company had the following unquoted securities on issue as at 30 August 2019
Security
Unquoted Options
No. of Securities
2,795,000
7. RESTRICTED SECURITIES
The company had the following restricted securities on issue as at 30 August 2019:
Class
Fully paid ordinary shares - voluntary escrow
Restricted until the earlier of lodgement of the company's financial
reports for the year ended 30 June 2020 and 24 months
Restricted until the earlier of lodgement of the company's financial
reports for the year ended 30 June 2020 and 24 months
Restricted until the earlier of lodgement of the company's financial
reports for the year ended 30 June 2020 and 24 months
Restricted until the earlier of lodgement of the company's financial
reports for the year ended 30 June 2020 and 24 months
Restricted until the earlier of lodgement of the company's financial
reports for the year ended 30 June 2020 and 24 months
Number of
Shares
% of Issued
Shares
21,688,434
41.2%
4,543,296
1,542,068
1,542,068
8.6%
2.9%
2.9%
200,000
0.4%
7. VOT ING RIGHTS
In accordance with the Constitution each member present at a meeting whether in person, or by proxy, or
by power of attorney, or in a duly authorised representative in the case of a corporate member, shall have
one vote on a show of hands, and one vote for each fully paid ordinary share, on a poll. Performance rights
and Options have no voting rights.
8. ON-MARKET BUY BACKS
There is no current on-market buy-back in relation to the Company’s securities
9 0
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
INFORM ATION IN RELATION TO
CERTAIN P ROPER TY LEAS ES
9 1
I N F O R M A T I O N I N R E L A T I O N T O C E R T A I N P R O P E R T Y L E A S E S
R ELATED PARTY LEASE AGRE E ME NTS
The Company received a waiver from Listing 10.1 at time of listing to the extent necessary to permit the
Company not to seek shareholder approval in relation to rental payments made during the remaining initial
terms of certain lease agreements as set out in the following table. A condition of the ASX waiver is for
inclusion of a summary of the material terms of these lease agreements in each annual report of the Company
during the terms of the leases. The table below sets out the material terms of these lease agreements.
Location
Lessor
Mitchell
Office space
Dimensional
Developments
Australia Pty Ltd
Club Lime
Mitchell
Dimensional
Developments
Australia Pty Ltd
Mitchell
Expanded
office space
Dimensional
Developments
Australia Pty Ltd
Term and options
to renew
5 years commencing on 1
August 2018.
3 further options to renew
for 5 years each.
5 years commencing on 1
August 2018.
3 further options to renew
for 5 years each.
4 years commencing on 1
July 2019.
3 further options to renew
for 5 years each.
Club Lime
and Ladies
Only Gym
and Pool
CISAC
Sports Centres
Australia Pty Ltd
10 years commencing 1
August 2018.
2 further options to renew
for 10 years each.
ClubMMM
at CISAC
Sports Centres
Australia Pty Ltd
5 years commencing 1
August 2018.
2 further options to renew
for 5 years each.
Speedo shop
at CISAC
Sports Centres
Australia Pty Ltd
5 years commencing 1
August 2018.
2 further options to renew
for 5 years each.
Club Lime
Curtin
Akon Holdings Pty
Ltd
5 years commencing 1
July 2018
2 further options to renew
for 5 years each.
Club Lime
Kambah
Jenke Investments
Pty Ltd
5 years commencing 1
August 2018.
2 further options to renew
for 5 years each.
Current annual rent (plus GST) and future increases
$96,000
Rent increases by 3% per annum in the initial term, after which
the base rent is set by market review on each exercise of the
options with further fixed annual increases of 3% per annum.
$154,500
Rent increases by 3% per annum in the initial term, after which
the base rent is set by market review on each exercise of the
options with further fixed annual increases of 3% per annum.
$98,880
Rent is fixed yearly (increasing incrementally year on year by
3%) for the initial term of the lease, after which the base rent
is set by market review on each exercise of the options with
further fixed annual increases of 3% per annum.
$1,664,000
Rent is fixed yearly (increasing incrementally year on year by
4%) for the initial term of the lease, after which the base rent
is set by market review on each exercise of the options with
further fixed annual increases of 4% per annum.
$190,736
Rent is fixed yearly (increasing incrementally year on year by
4%) for the initial term of the lease, after which the base rent
is set by market review on each exercise of the options with
further fixed annual increases of 4% per annum.
$36,400
Rent is fixed yearly (increasing incrementally year on year by
4%) for the initial term of the lease, after which the base rent
is set by market review on each exercise of the options with
further fixed annual increases of 4% per annum.
$130,000
Rent is fixed yearly (increasing incrementally year on year by
$10,000) for the initial term of the lease, after which the base
rent is set by market review on each exercise of the options with
further fixed annual increases of 3.5% per annum.
$226,500
Rent is fixed yearly (increasing incrementally year on year by
3%) for the initial term of the lease, after which the base rent
is set by market review on each exercise of the options with
further fixed annual increases of 3% per annum.
Club Lime
Conder
Konstantinou
Consultants Pty
Ltd as trustee
for Ramesses
Discretionary Trust
10 years commencing 1
April 2019
2 further options to renew
for 10 years each.
$320,000
Rent increases by 4% per annum in the initial term, after which
the base rent is set by market review on each exercise of the
options with further fixed annual increases of 4% per annum.
OTHER KEY TERMS
The Board considers that the leases are on arms’ length terms which reflect customary provisions
commonly found in commercial leases of a similar nature. Set out below are some key terms of these
leases (other than those set out in the other columns of this table). Rent is payable in advance by monthly
instalments and the lessor may charge daily interest on any late payment at 2% above the rate that
would be charged by the lessor’s bank for unsecured overdrafts. On termination of the lease, the lessee is
responsible for make good of the premises. The lessee is responsible for maintaining insurance to cover
standard risks applicable to a lessee in the health club industry, public liability and for the plate glass on the
premises. The lessee releases the lessor from, and indemnifies the lessor against, claims for damages, loss,
injury or death.
9 2
V I V A L E I S U R E A N N U A L R E P O R T 2 0 1 9
CO R PORATE
D IREC TORY
9 3
C O R P O R A T E D I R E C T O R Y
CEO:
Harry Konstantinou
COMPANY SECRETARIES:
Kym Gallagher
Morgan Bryant
R EGISTERED OFFICE AND PRINCIPAL P LAC E O F B U S IN E SS :
Unit 7, 141 Flemington Road, Mitchell ACT 2911
02 6163 8011
investor.relations@vivaleisure.com.au
www.vivaleisure.com.au
R EGISTERS OF SECURITIES ARE HE LD AT TH E F O LLOW ING A D D RE SS :
Link Market Services
Level 12, 680 George Street, Sydney NSW 2000
1300 554 474
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
STOCK EXCHANGE LISTING
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the
Australian Securities Exchange Limited under the code “VVA”.
AUDITORS
Hall Chadwick
Level 40, 2 Park St, Sydney NSW 2000
9 4