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YEAR ENDED 30 JUNE 2020
CONTENT
O UR LO CATI O NS AND B RANDS
2020 HI GHLI GHTS
LE TT ER FR OM T HE C HAIR
CE O ’S RE PO R T
D IR ECTO RS R EPO RT
RE MU NER ATI O N R EPO RT
CO RPO R ATE GOVE RNANCE STAT E M ENT
AU DI TOR S IND EPEND ENCE D E CL ARAT I O N
FINANC IAL STATEM ENTS
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
SI GNED R EPO RTS
Directors Declaration
Independent Auditor’s Report
AD DI TI O NAL INFO RM AT IO N FO R LI ST E D COM PANIE S
Shareholder Information
Corporate Directory
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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 2020 Annual Report for Viva Leisure Limited (ACN 607 079 792) has been prepared as at 2 October 2020. 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.
our
brands
and
locations
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QLD
10
NSW
23
VIC
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ACT
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LOCATIONS - UP 97.5%
$40.9m
MEMBERSHIPS - UP 74.3%
94,196
I
S REVENUE - UP 23.6%
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14.8%
79
EBITDA MARGIN*
- DOWN FROM 24.8%
*E xcludi ng im pacts of AASB 16 .
EBITDA* - DOWN 16.7%
$6.07m
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REVENUE
($m)
R 2 2.1 %
G
A
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24.1m
20.7m
18.4m
40.9m
33.1m
EBITDA
($m)
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%
5 . 7
R 3
8.2m
6.1m
5.2m
3.3m
1.8m
FY2016 FY2017 FY2018 FY2019 FY2020
FY2016 FY2017 FY2018 FY2019 FY2020
MEMBERS
94,196
AGR 37.0%
C
54,039
EBITDA
MARGIN
(%)
35,631
29,124
26,754
24.8%
21.6%
15.8%
14.8%
10.0%
FY2016 FY2017 FY2018 FY2019 FY2020
FY2016 FY2017 FY2018 FY2019 FY2020
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A L E T T E R F R O M
THE CHAIR
Dear Fellow Shareholders
• Cash and cash equivalents reserves remain
OU R FIRST FULL YEAR AS A LISTED
CO MPANY
On behalf of the Board, I am pleased to present the
Viva Leisure Limited 2020 Annual Report.
During 2020, our first full year as a listed company,
Viva Leisure has faced the headwinds of COVID-19
and the consequential severe impacts to our
stakeholders and the business. Our strong and
controlled expansion to the business saw trading
above forecast until the COVID-19 pandemic
required all health clubs to close with 24-hours’
notice by government pronouncement. The required
stand-down of staff at that time was one of the
toughest decisions that the Board and Management
had to make.
Notwithstanding the unexpected closure of all
locations we were grateful for the support of
members and the high level of understanding
by our team. The staff, very capably led by
our management team, provided a platform of
rationalisation to costs and the business structure
to see through the close-down period. As soon
as the business was permitted to re-open across
the States and Territories in which we operate, our
loyal membership base and proven business model
recovered quickly.
Of particular importance to highlight in the
COVID-19 affected results were:
• Total revenues were $40.9 million compared with
$31.2 million in the financial year ended 30 June
2019, an increase of 31.1%;
• Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA) decreased to $6.07
million from $8.2 million in the previous year
excluding the impacts of AASB16;
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strong at $30.1 million, up from $14.4 million
in the previous year, predominantly due to the
capital raised just before the end of the
financial year;
• An increase in net assets to $63.3 million
compared to $25.7 million in the financial year
ended 30 June 2019.
• The Company successfully sought additional
capital on 2 occasions from shareholders
during the year. Each capital raising was heavily
supported, reflecting a positive understanding of
investors to the business opportunities pursued
by the Company.
As foreshadowed in the 2019 Prospectus, reflecting
Viva Leisure’s growth profile and continuing
investment opportunities, the Directors confirm
that no dividend will be paid in respect of the 2020
Financial Year.
OPERATING HIGHLIGHTS FOR TH E YEAR
Highlights for the year were:
• An increase in operating locations/clubs from 40
to 79;
• A strong pipeline of new locations secured,
consistent with the strategic vision of growth;
• The hiit republic boutique concept went from
strength to strength and will continue to be
rolled out as part of Viva Leisure’s unique hub
and spoke model;
• Despite the impact of COVID-19, membership
increased by over 40,000;
• Acquisitions of Healthworks (10 locations in
Queensland), FitnFast (13 locations in New South
Wales, Victoria and the ACT), and Re-Creation
Malvern (Victoria) were each completed.
SO C IAL AND CO M M UNIT Y CO M MI TM E NT
Viva Leisure has again continued its commitment
to ongoing support of the local communities in
which we operate. That contribution has been
necessarily moderated in 2020 by the impact of
the pandemic. The Board and Management are
justifiably proud of the impact that it has made in
the community as a responsible corporate citizen.
Likewise, we are proud of the opportunities offered
for employment of some team members who have
special circumstances.
O UT LOO K
Subject to the vagaries of the pandemic, we expect
the upcoming year to be another dynamic and
successful year, with several exciting opportunities
from which Viva Leisure will benefit, including
capitalising on our recent acquisition of the
Plus Fitness master franchisor, and our potential
expansion into other geographies.
In closing, I extend the gratitude of the Board to
our shareholders, our team, and our members
for their continued support throughout this most
challenging year.
Yours sincerely,
B R U C E G L A N V I L L E
Chair
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The Viva Leisure Board and Management team
have joined regularly during the year as the
challenges have been met and overcome. The spirit
of contribution and effort has been unrelenting
and reflects positively on the whole team. I am
personally grateful for the valuable contribution
of each of the Board and management team. In
particular, I appreciate the significant contribution
and achievements of Harry Konstantinou, his
executive team, and the entire Viva Leisure team
which nearly doubled during the year and now
comprises over 1,100 amazing team members.
I also take the opportunity to recognise the valued
contribution of Mark McConnell who retires at the
Annual Meeting and does not seek re-election. Mark
has been a director since before the Initial Public
Offering and has provided valued counsel over the
early years of Viva Leisure as a public company.
the
chair
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DIVIDENDS
B OARD AND M ANAGE ME NT
A R E P O R T F R O M
THE CEO
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Dear Fellow Shareholders
There is no doubt that 2020 has been a year like no
other. The financial year started with Viva Leisure
coming out of the blocks very quickly and exceeding
our expectations on performance, and then the
COVID-19 pandemic hit. Our clubs and facilities
were all mandated to close with 24-hours’ notice on
the 23 March 2020, and we did not start re-opening
facilities until 31 May 2020.
I am pleased to report that our loyal and committed
membership base returned to near pre-COVID levels
by the end of June 2020 which is testament to our
product and the importance of health and wellbeing
to our members.
The importance of a healthy lifestyle has never been
more important than through this experience, and I
truly believe that this now resonates with more and
more members of our community. I further believe
this will help to drive health club membership and
participation to new levels over the next few years.
Whilst we did not quite achieve 100,000 members
for the year as originally forecast due to the impact
of COVID-19, we expect to achieve that milestone
in the next few months. Membership however
has increased at a compound annual growth rate
(CAGR) of 37.0% since FY2016, an outstanding
achievement.
Other key milestones include:
• Revenue increased to $40.9 million, which
represents a CAGR of 22.1% from FY2016
to FY2020;
• EBITDA decreased to $6.1 million, however, still
maintained an impressive CAGR of 35.7% over
the period FY2016 to FY2020;
It is even more important in the middle of a
pandemic that the community be permitted to
use the facilities of health clubs and maintain and
improve their fitness levels. The feedback that
we have received from members during the
mandatory closure of health clubs was primarily
around how lockdown introduces unhealthy habits
into our lifestyles.
OVERVIEW
Viva Leisure owned and operated 79 locations as
at 30 June 2020. As of 30 September 2020, this
had already increased to 85 locations, which is over
100% increase from the 40 locations we owned and
operated at the end of the financial year 2019.
Together with new club openings and acquisitions
during the year, our existing like-for-like locations
continued to grow members which is the key metric
that we constantly monitor.
Our hiit republic brand has gone from strength to
strength and as of 30 September 2020 we have 15
locations opened across the ACT and NSW. I expect
this to grow to approximately 25 locations at the
end of this financial year. This is an outstanding
achievement considering the first hiit republic only
opened in March 2019.
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.
Viva Leisure offers a unique career path for anyone
who wishes to work in the fitness industry and
nearly all of our senior management have come
through the ranks and worked their way up. 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.
pivot, adapt and grow in my opinion faster and more
controlled than any other player in the market.
I expect in the coming twelve months our level of
innovation will surprise not only our members but
also our competitors.
I look forward to leading the team into the next
period of growth, continuing to extend our services
into more markets, increasing the opportunities for
our team and growing the value of the company for
our shareholders. It is encouraging to see so many
of our members as shareholders of the business.
H A R R Y K O N S T A N T I N O U
Founder, Managing Director and
Chief Executive Officer
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During the year, our team grew from 600 strong to
over 1,100, and each of them plays a very important
part of the experience which we offer our members.
ACQ UI SI TI O NS
During the financial year, we negotiated, settled
and more importantly integrated various
acquisitions. These included 10 locations as part of
the Healthworks acquisition (Queensland) in two
separate acquisitions, 13 locations as part of the
FitnFast acquisition (NSW, Victoria and the ACT),
and the Re-Creation Malvern location in Victoria.
At the end of the financial year, we were also deep in
due-diligence for the acquisition of the Plus Fitness
master franchisor, which was settled in August 2020.
The acquisition has introduced nearly 200 locations
to the Viva Leisure network, a new market segment
we can now target, and an existing network in
both New Zealand and India we can expand on.
I am very excited about what the introduction
of our technology can do to the existing Plus
Fitness network to help our franchisees grow their
businesses which will, in turn, grow our business.
T HE FUT URE
The future, whilst extremely exciting, will continue
our ‘more of the same’ model. A model which
we have proven over the past 16 years since we
opened our first location. Viva Leisure is committed
to continue and even accelerate our strategic,
controlled and well-planned growth trajectory in all
key market segments in which we operate. With
the acquisition of the Plus Fitness master franchisor
(in August 2020), Viva Leisure has added another
option to select from in entering new markets.
We now have brands available to us which are
suitable in all markets and all price-points, which is
something our competitors simply do not offer. We
are a dynamic, three-dimensional business that can
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BR UCE GLANV ILLE
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 Chartered Accountants Australia
and New Zealand
Experience
Appointed Board, 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
HARRY KONSTANTINOU
MARK MCCONNELL
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)
Experience
Company co-founder and Director since 2004.
Harry has over 25 years of experience
developing, managing and selling technology
services business.
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
23,290,066 ordinary shares and options to
acquire a further 2,340,000 ordinary shares.
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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
Executive Director of Citadel Group Limited
(ASX:CGL)
Non-executive Director of 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
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SUSAN FOR R E STER A M
KYM GALLAGHER
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
Experience
Appointed Board and Committee member
on 12 October 2018.
Susan has 25 years executive management
experience and 10 years listed Board
experience across law, finance, business,
HR and governance.
Other Current Directorships
Non-Executive Director of G8 Education Limited
(ASX:GEM)
Non-Executive Director of Over the Wire
Holdings Limited (ASX:OTW)
Non-Executive Chair of Jumbo Interactive
Limited (ASX:JIN)
Directorships held in other listed entities
during the three years prior to the current year
Non-Executive Director of Xenith IP Group
Limited (ASX:XIP) between 2015 and August
2018
Chair and Non-Executive Director of National
Veterinary Care Ltd (ASX:NVL). Resigned 7th
April 2020 following completion of a Scheme of
Arrangement
Interest in Shares and Options
326,668 ordinary shares and options to acquire
100,000 ordinary shares.
Company Secretary and Chief Financial Officer
Appointed 12 October 2018
Qualifications
Bachelor of Economics,
Member of Chartered Accountants ANZ
Experience
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
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
140,000 ordinary shares and options to acquire
a further 250,000 ordinary shares
MO RGAN B RYAN T
Company Secretary and
Group General Counsel
Appointed Company Secretary
on 12 October 2018.
Resigned 16 March 2020.
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PRI NCI PAL AC TI VI TI ES
The principal activities of the consolidated group
during the financial year were the operation of
health clubs. No significant change in the nature
of these activities occurred during the year.
RE VI EW O F O PERATI ONS A ND
FI NANC IAL R ESU LTS
Financial highlights for the year:
• Total revenues were $40.9 million compared
with $31.2 million in the financial year ended
30 June 2019;
• Loss before income tax was ($9.3 million),
compared to a profit of $4.0 million in the
financial year ended 30 June 2019;
• Net Profit / (loss) After Tax (NPAT) from
continuing operations and attributable to
members was ($6.2 million) compared with
a financial year ended 30 June 2019 result of
$2.9 million;
• Cash and cash equivalent reserves available
for deployment on acquisitions is strong at
$30.1 million, up from $14.4 million in the
financial year ended 30 June 2019; and
• There was an increase in net assets from
$25.8 million to $63.3 million
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Impact of AASB16
The statutory financial results have been significantly impacted by the introduction of AASB16. Below is a reconciliation
of the underlying statutory results to the pre-AASB16 results.
Profit and Loss ($m)
FY20
Statutory
AASB16
Impact
FY20
(pre AASB16)
Revenues and profits were significantly impacted during
the closure period and where appropriate this has been
addressed in the specific notes, estimates and judgements
in the Financial Statements. The Group has all Victorian
locations currently closed due mandatory shutdowns
imposed by the Victorian State Government and there
remains uncertainty with respect to future events or
circumstances which may continue to impact the financial
results of the consolidated entity.
The table below shows the management results for
the period to February 2020 (pre COVID-19 impacts)
and compared to the full 12 months results. This
demonstrates the impact on the financial results due
to the mandatory closures.
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Revenue
EBITDA
Depreciation and Amortisation
EBIT
Finance Costs
Profit / (loss) Before Tax
Income Tax Expense
Net Profit After Tax
Earnings per share (basic - cents)
40.89
15.73
17.01
(1.28)
8.06
(9.34)
(3.10)
(6.24)
(10.89)
0.00
(9.66)
(12.94)
3.28
(7.30)
10.58
2.91
7.67
13.39
40.89
6.07
4.07
2.00
0.76
1.24
(0.19)
1.43
2.50
Operational highlights for the financial year:
Other key events during shutdown:
• An increase in operating locations/clubs from 40 to 79;
• Fast tracking of back office synergies from the
• Member numbers increasing from 54,039 at June 2019
to 94,196 at 30 June 2020;
• Now operating 13 hiit republic boutique studios;
• Expanded presence into NSW and Victoria with the
completion of the FitnFast acquisition
• Entered the Queensland market with the completion of
the Healthworks acquisitions
COVID-19 Impacts
All of Viva Leisure Limited’s clubs were closed at Midday
23rd March 2020 in accordance with the Commonwealth
Government directive.
The Company took immediate steps to mitigate exposure
to ongoing costs, seek alternative revenue opportunities
and to preserve cash:
• Wage costs reduced significantly by the stand down
of significant numbers of staff during this period of
closure, supported by the JobKeeper incentive
• Removed significant controllable costs from
the business
• Senior CBA loan facility and existing finance lease
payment obligations were deferred for six months
• Rent negotiations commenced using the Mandatory
Code of Conduct as a backdrop
• Delayed all un-committed capital works on rollouts
• Activated ‘at home’ work-out and work-in options via
apps for members at a reduced rate to provide some
certainty of service, income for the business and retain
contact with members
FitnFast acquisition
• Development of a National Operations Centre (“NOC”)
to allow for ‘staff-less’ gym environments in the future
As the closedown period ended, the Company
recommenced its capital works programs and completed
the following:
• Rebranded all of the Healthworks sites to Club
Lime, and refurbished 5 of the 10 sites including full
equipment upgrades
• Completed the fitouts of the second site in Gungahlin
ACT as well as hiit republic site in Wagga Wagga NSW
The Company also fully prepared a comprehensive
re-opening plan including:
• Ensuring all government and industry guidelines are
adhered to
•
•
•
Implementation of booking system during the phase
two re-opening to manage headcount limits
Installation of people counters during the phase two
re-opening to manage headcount limits
Instituting appropriate broad social distancing and
cleaning protocols
• Re-engaging stood down staff to ensure staffing was
available to meet capacity
Judgement has been exercised in considering the impacts
that the Coronavirus (COVID-19) pandemic has had, or
may have, on the group based on known information. This
consideration extends to the nature of the products and
services offered, customers, supply chain, staffing and
geographic regions in which the group operates.
8 MONTHS JULY - FEBRUARY
12 MONTHS JULY - JUNE
$m (8 months and
12 months)
FY2020
Underlying
FY2019
Underlying
Variance
FY2020
Underlying
FY2019
Underlying
Variance
Revenue
Operating Costs
EBITDA
EBITDA Margin
33.16
(25.39)
7.78
23.4%
20.48
(15.99)
4.49
21.9%
61.9%
58.8%
73.1%
40.89
33.08
(34.82)
(25.80)
23.6%
35.0%
6.07
14.8%
7.29
(16.7%)
22.0%
SI GNIFI CANT C HANGES IN T HE
STATE O F AFFAIR S
EV ENTS SUB S EQ UENT TO T HE E ND OF T HE
RE PO RT ING PERI OD
During the year, the following significant changes occurred
within the Group:
•
•
In December 2019, completed a fully underwritten
$20m equity raising by way of an institutional
placement of approximately 7.5m ordinary shares
at $2.65
In June 2020, completed a fully underwritten $25m
equity raising by way of institutional placement and
rights entitlement offer of approximately 11.36m
ordinary shares at $2.20
• Credit terms were agreed with the Commonwealth
Bank of Australia in relation to a $17.45m five-year
senior secured facility, comprising a $10m Market
Rate Loan facility (currently drawn to $8.0m) to assist
in financing future acquisitions, an equipment finance
facility, bank guarantee facility and a direct
debit facility
• Completed two separate acquisitions comprising 10
Healthworks Health Clubs located in Queensland
• Completed the acquisition of 13 FitnFast Health Clubs
located in the Australian Capital Territory, New South
Wales and Victoria
On 21st August 2020 the Company completed the
acquisition of Australian Fitness Management Pty
Limited, the Master Franchisor for the Plus Fitness
group comprising approximately 200 clubs located in
Australian Capital Territory, New South Wales, Victoria,
South Australia, Western Australia, New Zealand and
India. AFM was acquired for an initial payment of $18m,
with a $2m deferred payment which is subject to
performance hurdles.
No other 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,
other than the impacts of COVID-19 mentioned above.
LI KELY DE VELO PM ENTS A ND E XPE CTE D
RE SU LTS O F OPE 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.
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DIRECTORS’ MEETINGS
D IV ID ENDS
Indemnity of auditors
The number of meetings of the Board (including meetings of Committees of Directors) held during the year and the
number of meetings attended by each Director is as follow:
There were no dividends paid or declared since the start
of the financial year (2019: nil).
Director’s name
Board Meetings
Audit and Risk Committee
People and Culture
Committee
INDEMNITIES GIVEN TO, AND INSURANCE
PREMIUMS PAID FOR AUDITORS AND OFFICERS
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.
A
21
21
21
21
B
21
20
20
21
A
-
3
-
3
B
3
3
3
3
A
1
2
2
2
B
1
2
2
2
Harry Konstantinou
Bruce Glanville
Mark McConnell
Susan Forrester
Where:
• column A: is the number of meetings the Director was entitled to attend
• column B: is the number of meetings the Director attended
During the year, there were 8 scheduled Board Meetings. The additional meetings held and attended by Directors were
for special matters, such as for acquisitions, capital raises and COVID-19 matters.
UNISSUED SHARES UNDER OPTION
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
30 October 2019
Total
2 May 2023
2 May 2023
31 August 2023
31 August 2024
1.34
1.43
0.00
0.00
1,500,000
1,000,000
295,000
295,000
3,090,000
These options were issued under either the LTI, Tranche 1 or Tranche 2 Plans (described in Note 21.2 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 the Tranche 1 and
Tranche 2 program expire four years from the date of grant of the options.
S HA RE S ISSU ED DURING OR SINCE THE END
OF TH E YEA R AS A RESULT OF EXERCISE
OF O PTION S
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 LEGI SLATION
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.
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Insurance of Officers
Non-audit services
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 and Secretaries.
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 of insurance.
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 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.
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.
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 of
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:
• 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, for audit and non-audit
services provided during the year are set out in Note 28
to the financial statements. The total paid for non-audit
services was $53,000. This comprised tax and other
business services.
PRO C EED INGS O N BEH AL F O F TH E
CO NSO LI DATE D GRO UP
No person has applied for leave of Court to bring
proceedings on behalf of the consolidated group or
intervene in any proceedings to which the consolidated
group is a party for the purpose of taking responsibility
on behalf of the consolidated group for all or any part of
those proceedings.
The consolidated group was not a party to any such
proceedings during the year.
AU DI TOR ’S I ND EPEND ENCE DE CL ARAT ION
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act 2001
is set out on page 19.
This directors’ report including the Remuneration Report
on pages 12 to 18 is signed in accordance with a resolution
of the Board of Directors:
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Director
H A R R Y K O N S T A N T I N O U
Dated this
25th day of August 2020.
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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
A. PRINCIPLES USED TO DETERMINE TH E
NATURE AND AMOUNT OF REMUNE RATI O N
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.
Short Term Incentives (STIs)
Performance measures involve the use of annual
performance objectives, metrics, performance
appraisals and continuing emphasis on living the
Company values.
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 including
directly related statutory obligations;
• short term incentives (STIs), being cash
based payments;
•
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 incentive salaries, 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 incentive salaries,
options and incentives are linked to pre-determined
performance criteria, and subject to the usual
discretion of the Board.
The performance measures are set annually after
consultation with the Board 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;
• an unqualified 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.
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Long Term Incentives (LTIs)
B . D ETAIL S OF RE MU NERATI O N
The table below describes the performance hurdles and vesting conditions that apply as at the date of this report and in
relation to the 590,000 options granted to senior executives:
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.:
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:
Directors and
other Key
Management
Personnel
Short-term
Employee Benefits
Post-
employment
Benefits
Long-term Benefits
Share-
based
Payments
Performance
based on % of
Remuneration
LTIs (Tranche 1)
LTIs (Tranche 2)
Employee
Year
Cash
salary
and fees
Cash
incentive
Super-
annuation
Long
service
leave
Termination
benefits
Options
Total
EPS CAGR over the two Financial
Years Ending 30 June 2021
EPS CAGR over the three Financial
Years Ending 30 June 2022
Percentage of Options that Vest
Executive Directors
Less than 15% (minimum Target)
Less than 15% (minimum Target)
0%
15% to 20% (within target range)
15% to 20% (within target range)
50% - 100% (on a straight-line
basis)
Greater than 20%
(above maximum target)
Greater than 20%
(above maximum target)
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 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 was 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.
USE O F REMUNERATION CONSULTANTS
Viva Leisure Limited’s Board engaged the services
of BDO Reward Pty Ltd to review and to provide
recommendations in respect of the amount and
elements of executive remuneration, including
short-term and long-term incentives. Minter Ellison
were engaged to review the long-term incentives plan
rules and associated documentation.
Under the terms of the engagement, BDO Reward
Pty Ltd and Minter Ellison provided remuneration
recommendations as defined in section 9B of the
Corporations Act 2001 for fees of $14,750 and $7,000
respectively for these services.
Each of BDO Reward Pty Ltd and Minter Ellison have
confirmed that any recommendations have been made
free from undue influence by members of the Group’s key
management personnel.
BDO Reward Pty Ltd and Minter Ellison 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 BDO Reward Pty Ltd
and the documentation related to the long-term incentives
plan rules and associated documentation by Minter
Ellison 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.
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Harry Konstantinou
2020
425,000
90,000
25,000
7,125
(Managing Director)
2019
273,1 1 1
84,375
22,840
107,885
Non-executive Directors
Bruce Glanville*
2020
89,124
-
20,620
(Independent)
2019
73,194
200,000*
Mark McConnell
2020
53,076
(Non-Independent)
2019
60,000
Susan Forrester
2020
65,625
(Independent)
2019
68,750
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-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,689
558,814
127,552
615,763
18.2%
34.9%
-
109,744
11,064
284,258
-
-
-
53,076
60,000
65,625
5,532
74,282
Nil
Nil
Nil
Nil
Nil
Nil
Directors voluntarily reduced Directors fees by 50% during the period 27 March 2020 to 14 June 2020.
*2019: Rolins 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
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Employee
Year
Cash
salary
and fees
Cash
incentive
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)
2020
275,000
60,000
25,000
4,799
2019
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56,250
23,945
8,055
2020
200,000
44,119
20,597
3,353
2019
176,029
42,063
15,356
50,769
2020
175,000
20,000
18,678
13,281
2019
164,267
25,000
14,564
9,459
2019 Total
2020
1,282,825
214,119
109,895
28,558
2018 Total
2019
1,047,069
407,688
76,705
176,168
-
-
-
-
-
-
-
-
5,157
369,956
5,532
325,500
3,438
271,507
5,532
289,749
226,959
-
213,290
20,284
1,655,682
155,212
1,862,842
17.6%
19.0%
17.5%
16.4%
8.8%
11.7%
14.2%
30.2%
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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
Up to 50% of fixed
remuneration
Up to 100% of fixed
remuneration
340,000
240,000
230,000
Up to 25% of fixed
remuneration
Up to 40% of fixed
remuneration
Up to 25% of fixed
remuneration
Up to 40% of fixed
remuneration
Up to 15% of fixed
remuneration
Up to 20% of fixed
remuneration
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 ($)
Term of Agreement
Notice Period
Harry Konstantinou
Kym Gallagher
Angelo Konstantinou
Sean Hodges
425,000
315,000
2 1 9 ,1 7 8
210,045
Three years
Six months
Three years
Three months
Three years
Three months
Three years
Three months
D. SHARE- BASED REM UNERAT ION
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.
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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.
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
Harry
Konstantinou
Tranche 1
1,000,000
2 May 2019
$0.055
$55,320
Tranche 2
1,000,000
2 May 2019
$0.072
$77,232
LTI
LTI
170,000
7 Jun 2019
-
-
170,000
30 Oct 2019
$0.069
$11,689
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
Tranche 1
100,000
2 May 2019
$0.055
$5,532
Kym Gallagher
LTI
LTI
75,000
7 Jun 2019
-
-
75,000
30 Oct 2019
$0.069
$5,157
Tranche 1
100,000
2 May 2019
$0.055
$5,532
Angelo
Konstantinou
LTI
LTI
50,000
7 Jun 2019
-
-
50,000
30 Oct 2019
$0.069
$3,438
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7 Jun 2019
2 May 2023
7 Jun 2019
2 May 2023
31 Aug 2021
31 Aug 2023
31 Aug 2022
31 Aug 2024
7 Jun 2019
2 May 2023
7 Jun 2019
2 May 2023
7 Jun 2019
2 May 2023
7 Jun 2022
7 Jun 2024
31 Aug 2022
31 Aug 2024
7 Jun 2019
2 May 2023
7 Jun 2022
7 Jun 2024
31 Aug 2022
31 Aug 2024
E. SHAR ES HEL D BY D I REC TOR S AND KE Y M ANAGEM E NT PE RSO NN EL
The number of ordinary shares in the Company during the 2020 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
Held at the
End of the
Reporting
Period
Executive Directors
Harry Konstantinou
23,230,502
Non-Executive Directors
Bruce Glanville
Mark McConnell
Susan Forrester
300,000
4,543,296
24,593
Other Key Management Personnel
Kym Gallagher
100,000
Angelo Konstantinou
23,230,502
Sean Hodges
40,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,564
23,290,066
-
-
300,000
4,543,296
302,075
326,668
40,000
140,000
-
23,230,502
6,667
46,667
At 30 June 2020 there were no loans outstanding to Directors or Key Management Personnel.
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corporate
governance
statement
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 2020 is available
on the investor relations website at
https://investors.vivaleisure.com.au.
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A
A
N
N
C
C
E
E
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
n
e
p
e
d
n
e
c
n
e
d
i
r
a
l
c
e
d
N
O
I
T
A
R
E
L
C
E
D
S
E
C
N
E
D
N
n
E
P
E
i
D
N
o
i
t
a
I
R
O
T
I
D
U
A
’
A
A
U
U
D
D
I
I
T
T
O
O
R
R
’
’
S
S
I
I
N
N
D
D
E
E
P
P
E
E
N
N
D
D
E
E
N
N
C
C
E
E
D
D
E
E
C
C
L
L
A
A
R
R
A
A
T
T
I
I
O
O
N
N
2 5
2 6
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
consolidated
statement
PROFI T O R LOSS
AND OT HER
COMPREHENSI VE
INCOME for the Ye ar
End ed 30 Ju ne 2020
Earnings per share
24
Cents
Cents
Basic earnings per share:
Earnings from continuing operations
Diluted earnings per share:
Earnings from continuing operations
(10.9)
(10.4)
5.4
5.2
The weighted average shares for the financial year ended 30 June 2019 are calculated from the date of
listing on 7th June 2019 to 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
Depreciation and amortisation expense
Finance costs
Costs of capital raisings and acquisitions
Other expenses
Profit / (loss) before income tax
Income tax benefit / (expense)
Profit / (loss) for the year
Total other comprehensive income for the year
Note
2020
$
2019
$
5
5
6
40,367,123
31,069,941
518,574
(135,325)
90,279
(6,742,218)
20
(13,551,344)
(9,664,619)
(657,908)
(1,322,313)
(425,835)
(1,007,700)
(3,507,656)
(2,383,840)
(826,882)
(236,809)
(817,151)
(255,002)
(479,020)
(180,255)
(625,137)
(148,450)
(17,006,278)
(2,201,812)
(8,063,229)
(1,051,385)
(631,570)
(913,619)
(2,798,033)
(1,780,200)
(9,343,618)
3,097,273
(6,246,345)
-
3,975,945
(1,120,842)
2,855,103
-
7
6
9
Total comprehensive income / (loss) for the year
(6,246,345)
2,855,103
This statement should be read in conjunction with the notes to the financial statements.
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
O
F
P
P
R
R
O
O
F
F
I
I
T
T
O
O
R
R
L
L
O
O
S
S
S
S
A
A
N
N
D
D
O
O
T
T
H
H
E
E
R
R
C
C
O
O
M
M
P
P
R
R
E
E
H
H
E
E
N
N
S
S
I
I
V
V
E
E
I
I
N
N
C
C
O
O
M
M
E
E
2 7
2 8
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C
n
o
i
t
i
s
o
p
l
a
i
c
n
a
n
i
f
N
O
T
I
I
S
O
P
I
L
A
C
N
A
N
I
F
0
2
0
2
E
N
U
J
0
3
T
A
S
A
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
Right of use assets
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Lease liabilities
Contract liabilities
Current tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Contract Liabilities
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Note
2020
$
2019
$
10
11
12
14
19
15
16
17
13
19
18
16
21
13
19
18
21
16
30,103,095
14,385,895
2,652,313
2,972,356
218,443
365,306
35,727,764
14,969,644
-
28,646,732
176,881,777
20,529,715
57,726,670
114,231
9,769,193
9,427,644
6,564,081
3,460,781
283,784,894
29,335,930
319,512,658
44,305,574
5,096,543
1,272,500
14,829,663
863,350
704,386
1,655,033
24,421,475
6,716,000
167,797,430
-
4,476,841
52,784,151
231,774,422
256,195,897
63,316,761
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
22
23
87,375,694
(21,725,385)
(2,333,548)
63,316,761
25,762,058
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
F
F
I
I
N
N
A
A
N
N
C
C
I
I
A
A
L
L
P
P
O
O
S
S
I
I
T
T
I
I
O
O
N
N
This statement should be read in conjunction with the notes to the financial statements.
2 9
3 0
s
e
g
n
a
h
c
y
t
i
u
q
e
n
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
I
S
E
G
N
A
H
C
Y
T
U
Q
E
N
I
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C
0
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
Share
Capital
$
Reserves
$
Retained
Earnings
(Accumulated
a)
$
Total
Equity
$
Balance at 30 June 2018
Transactions with owners
Issue of shares, net of transaction
costs and tax
120
22,715,571
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)
621,374
621,494
-
-
-
-
-
22,715,571
21,000,000
(21,585,321)
155,211
22,285,461
Profit for the year
Total comprehensive profit for the year
attributable to members of the entity
Total transactions with owners
and other transfers
-
-
-
-
2,855,103
2,855,103
2,855,103
2,855,103
43,715,571
(21,430,110)
2,855,103
25,140,564
Balance at 30 June 2019
43,715,691
(21,430,110)
3,476,477
25,762,058
Balance at 1 July 2019
43,715,691
(21,430,110)
3,476,477
25,762,058
Impact of initial recognition of AASB16,
net of tax
-
-
436,320
436,320
Balance at 1 July restated
43 ,7 15 ,69 1
(21,430,110)
3,912,797
26,19 8, 37 7
Issue of shares, net of transaction
costs and tax
Common control reserve arising
from group restructure in prior year
Share option premium reserve
43,660,003
-
.
-
(315,559)
20,284
Total transactions with owners
43,660,003
(295,275)
-
-
-
-
43,660,003
(315,559)
20,284
43,364,728
Loss for the year
Total comprehensive loss for the year
attributable to members of the entity
Total transactions with owners
and other transfers
-
-
-
-
(6,246,345)
(6,246,345)
(6,246,345)
(6,246,345)
43,660,003
(295,275)
(6,246,345)
37,118,383
Balance at 30 June 2020
87,375,694
(21,725,385)
(2,333,548)
63,316,760
This statement should be read in conjunction with the notes to the financial statements.
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
C
C
H
H
A
A
N
N
G
G
E
E
S
S
I
I
N
N
E
E
Q
Q
U
U
I
I
T
T
Y
Y
i
3 1
3 2
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C
S
W
O
L
F
H
S
A
C
0
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
h
s
a
c
s
w
o
l
f
CASH FLOWS FROM OPERATING ACTIVITIES
Note
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Payments of income tax
2020
$
2019
$
45,894,517
35,881,038
(32,816,827)
(27,470,717)
199,463
35,699
(8,063,229)
(1,575,870)
(631,570)
(469,785)
Net cash provided by operating activities
25
3,638,054
7,344,665
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(17,314,639)
(3,928,258)
Proceeds from sale of property, plant and equipment
Purchase of intangibles
583,015
(601,652)
Payments for business combinations, net of cash acquired
29
(17,729,613)
168,882
(335,431)
(7,121,033)
Net cash (used in) investing activities
(35,062,889)
(11,215,840)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Direct costs of issue of shares
Proceeds from borrowings
Reduction in equipment leases principal
Reduction in property leases principal
Repayment of borrowings
Net cash provided by financing activities
Net increase in cash held
Cash at beginning of financial year
Cash acquired under Group restructure
45,000,000
23,500,000
(1,848,761)
7,988,500
(951,652)
-
(1,759,274)
(1,986,449)
(2,238,429)
-
-
(3,480,228)
47,142,036
17,081,671
15,717,201
13,210,496
14,385,895
-
535,530
639,869
Cash at end of financial year
10
30,103,095
14,385,895
This statement should be read in conjunction with the notes to the financial statements.
C
O
N
S
O
L
I
D
A
T
E
D
S
T
A
T
E
M
E
N
T
C
C
A
A
S
S
H
H
F
F
L
L
O
O
W
W
S
S
3 3
3 4
s
e
t
o
n
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
S
E
T
O
N
D
E
T
A
D
I
L
O
S
N
O
C
E
H
T
O
T
R
O
F
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
0
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
› NOTE 1 – NATUR E OF OPERATIONS
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 INFORMATION AND
STATEMENT OF COMPLIANCE
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 2020 were approved and authorised for
issue by the Board of Directors on 25 August 2020.
› NOTE 3 – CHANGES IN SIGNIFICANT
ACCOUNTING POLICIES
Initial Application of AASB 16: Leases
The Group has recognised a lease liability and right-
of-use asset for all leases recognised as operating
leases under AASB 117: Leases where the Group
is the lessee.
Lease liabilities are shown at the
present value of the remaining
lease payments. The Group’s
incremental borrowing rate as
at 1 July 2019 has been used to
discount the lease payments.
The right-of-use assets which the
Group entered into as a lessee have
been measured and recognised in
the statement of financial position
as at 30 June 2020 by taking into
consideration the lease liability
and the prepaid and accrued lease payments (that are
related to the lease).
The following practical expedients have been used by
the Group in applying AASB 16 for the first time:
• For a portfolio of leases that have reasonably
similar characteristics, a single discount rate has
been applied.
• Leases that have remaining lease term of less than
12 months as at 1 July 2019 have been accounted
for in the same way as short-term leases.
• The use of hindsight to determine lease terms on
contracts that have options to extend or terminate.
• Applying AASB 16 to leases previously identified as
leases under AASB 117: Leases and Interpretation
4: Determining whether an arrangement contains
a lease without reassessing whether they are, or
contain, a lease at the date of initial application.
• Not applying AASB 16 to leases previously not
identified as containing a lease under AASB 117 and
Interpretation 4.
The difference between the undiscounted amount of
operating lease commitments at 30 June 2019 and the
impact of applying AASB16 as at 1 July 2019 is due to
discounting the operating lease commitments at the
Group’s incremental borrowing rate; the inclusion of
option periods and any lease incentives (note 20.).
Prior year financial statements have not been restated
to reflect the changes in the Group’s accounting
policies.
› NOT E 4 – S UM M ARY OF
ACCO UNT ING POL IC IES
a. Overall Considerations
The consolidated financial statements have been
prepared using the significant accounting policies and
measurement bases summarised below.
b. COVID-19
Judgement has been exercised in considering the
impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the group based on known
information. This consideration extends to the nature
of the products and services offered, customers,
supply chain, staffing and geographic regions in
which the group operates. The Group has all Victorian
locations currently closed due mandatory shutdowns
imposed by the Victorian State Government and there
remains uncertainty with respect to future events
or circumstances which may continue to impact the
financial results of the consolidated entity. In addition,
NSW has not returned to 24 hour operation.
c. Basis of Consolidation
The Group financial statements consolidate those of
the Parent Company and all of its subsidiaries as at
30 June 2020. 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 30 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.
b. 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
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
3 5
3 6
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
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.
c. 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 (i.e. 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
(i.e. 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 (i.e. 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.
d. 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, or otherwise,
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, which is generally two weeks in advance, is
recognised as a contract liability.
Therefore, revenue is recognised over time as the
customer consumes these services. The transaction 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.
e. 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.
f. Goodwill
Goodwill represents the future economic benefits arising
from a business combination that are not individually
identified and separately recognised.
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.
g. Other Intangible Assets
Depreciation
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.
Amortisation
The amortisable amount of all intangibles is amortised
on a straight-line basis over the asset’s useful life to the
consolidated group commencing from the time the asset
is held ready for use.
The amortisation rates used for each class of amortisable
assets are:
h. Plant and Equipment
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 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 value and useful lives are reviewed,
and adjusted if appropriate, at the end of each reporting
period.
Each class of plant and equipment is carried at cost or fair
value less, where applicable, any accumulated depreciation
and impairment losses.
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.
Class of Intangible
Trademarks
Capitalised Software
Digital Assets
Amortisation
Rate
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.
5-10%
33%
10%
i. Leases
The Group as a lessee
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.
At inception of a contract, the Group assesses if the
contract contains or is a lease. If there is a lease present,
a right-of-use asset and a corresponding lease liability
are recognised by the Group where the Group is a lessee.
However, all contracts that are classified as short-term
leases (ie leases with a remaining term of 12 months or
less) and leases of low value assets are recognised as
operating expenses on a straight-line basis over the term
of the lease.
Initially the lease liability is measured at the present
value of the lease payments still to be paid at the
commencement date. The lease payments are discounted
at the interest rate implicit in the lease. If this rate cannot
be readily determined, the Group uses the incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability are as follows:
• fixed lease payments less any lease incentives;
• variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
• the amount expected to be payable by the lessee
under residual value guarantees;
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• the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
• payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
The right-of-use assets comprise the initial measurement
of the corresponding lease liability, any lease payments
made at or before the commencement day and any initial
direct costs. The subsequent measurement of the right-
of-use assets is at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the lease
term or useful life of the underlying asset, whichever
is the shortest.
Where a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that
the Group anticipates to exercise a purchase option, the
specific asset is depreciated over the useful life of the
underlying asset.
Short-term leases
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.
j. 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.
k. Financial Instruments
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.
Subsequent measurement financial assets
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):
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
• they are held within a business model whose
contractual cash flow obligations in the near term;
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 recognise 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.
• 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.
The carrying amount of financial assets measured at
amortised cost includes the loss allowance relating to
that asset.
Classification and measurement of financial liabilities
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.
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.
In applying this forward-looking approach, a distinction is
made between:
The Group’s financial liabilities include borrowings, trade
and other payables.
• 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
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.
significantly in credit quality since initial recognition
and whose credit risk is not low (‘Stage 2’).
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method.
‘Stage 3’ would cover financial assets that have objective
evidence of impairment at the reporting date.
‘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
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.
l. 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,
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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.
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 the
expected rates 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 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 applicable
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.
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 of the preceding period in
addition to the minimum comparative financial statements
is presented.
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
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
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
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
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
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consideration is dependent on the outcome of many
variables that affect future profitability.
option to terminate the lease if the lessee is reasonably
certain not to exercise that option.
› NOT E 7 – FINANC E COSTS AND FINANC E IN CO ME
Lease term and option to extend under AASB16
Lease term and option to extend under AASB16
The lease term is defined as the non-cancellable period of
a lease together with both periods covered by an option
to extend the lease if the lessee is reasonably certain
to exercise that option; and also periods covered by an
The decision on whether or not the options to extend are
reasonably going to be exercised is a key management
judgement that the entity will make. The Group determines
the likeliness to exercise on a lease-by-lease basis looking
at various factors such as which assets are strategic and
which are key to future strategy of the entity.
Interest expense from borrowings at amortised cost:
External entities
Interest expenses for finance lease arrangements*
Total interest expense
2020
$
2019
$
758,649
7,304,580
8,063,229
209,127
422,443
631,570
› N OTE 5 –REVENUE AND OTHER INCOME
*For the financial year ended 30 June 2020 this is recorded separately in Note19: Leases
Revenue from contracts with customers
Other sources of income
Other income
Total revenue and other income
2020
$
2019
$
40,367,123
31,069,941
446,958
35,699
40,814,081
31,105,640
71,616
54,580
40,885,697
31,160,220
5a
5b
5c
› NOT E 8 – SE GM ENT RE PO R T ING
Management have determined that the Group operates in one business segment – health club operation; and one
geographic segment.
› NOT E 9 – I NCO M E TAX EXPE NSE
The group operates in one segment, health club services.
a. Revenue from contracts with customers:
40,367,123
31,069,941
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% (2019: 27.5%) and the reported tax expense in profit or loss are as follows:
Timing of revenue recognition
Over time
Total revenue from contracts with customers
b. Other revenue:
Interest received
Management fees received
Total other revenue
c. Other income:
Gain on disposal of property, plant and equipment
Total other income
› N OTE 6 – PROFIT FOR THE Y E A R
Profit before income tax from continuing operations includes the following
specific expenses:
Rental expense on operating leases
• Minimum lease payments
• Amounts expensed as part of business combinations
• Short term lease payments
• Amounts expensed as part of capital raises
40,367,123
40,367,123
31,069,941
31,069,941
199,463
247,495
446,958
71,616
71,616
35,699
-
35,699
54,580
54,580
2019
$
2018
$
-
733,789
135,325
317,596
6,742,218
71,309
-
913,619
*For the financial year ended 30 June 2020 this is recorded separately in Note 19: Leases
Profit / (loss) before tax
Domestic tax rate
Prima facie tax expense
Adjustment for non-deductible expenses:
Non-deductible expenses
Tax effect of change in tax rate on DTA/DTL
Prior year’s over provision of tax
Income tax (benefit)/expense
Tax expense comprises
Current tax expense
Deferred tax expense
2020
$
2019
$
(9,343,618)
3,975,945
27.5%
(2,569,495)
27.5%
1,093,385
14,819
(411,877)
(115,315)
(3,097,273)
717,046
(3,814,318)
(3,097,273)
52,022
-
(11,341)
1,120,842
1,465,952
(345,110)
1,120,842
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
4 3
4 4
› N OTE 10 – CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Cash backed bank guarantees
2020
$
2019
$
3,870,360
3,392,562
23,203,643
10,000,000
3,029,092
993,333
30,103,095
14,385,895
The effective interest rate on short-term bank deposits was 0.65% (2019: 2.49%); these deposits are held at call.
› N OTE 11 – TRADE AND OTHER RECEIVA BLE S
Current
Trade receivables
Other receivables
Total trade and other receivables
2020
$
2019
$
143,380
2,508,933
2,652,313
202,184
16,260
218,444
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 2020 there is no
expected losses recognised.
› N OTE 12 – OTHER CURRENT ASSETS
Current
Stock on hand
Prepayments
Bonds and other deposits
2020
$
2019
$
158,200
286,260
2,527,896
167,989
197,317
-
2,972,356
365,306
Bonds relate to amounts set aside against rental obligations to landlords where the Company is a lessee.
› N OTE 13 - BORROWINGS
At amortised cost:
Bank loans
Current
Non-current
2020
$
2018
$
2019
$
2018
$
1,272,500
1,272,500
-
-
6,716,000
6,716,000
-
-
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
In addition, the bank loans mature on 28 May 2025 and the facility agreement specifies the following security interests:
1.
First ranking General Security Interest from each Obligor comprising first ranking charge over all present and after
acquired property.
2. First ranking charge over any assets financed under the Equipment Finance Facility.
3. Account Set offs from Viva Leisure Property Pty Ltd over Deposits totalling $3,400,000 (relating to security for all
cash covered bank guarantees issued in the name of Viva Leisure Property Pty Ltd.
4. The interest rate payable on the market rate loan is BBSY plus 4.0%, at 30 June this amounted to 4.25%
Finance lease liabilities are secured against the underlying leased equipment and are at an average interest rate of 5.8%
› NOT E 1 4 - PR OPE RT Y, PLANT AND E Q UI PME NT
Details of the Group’s property, plant and equipment and their carrying amounts are as follows:
Gross carrying amount
Balance at 1 July 2019
Additions
Plant and
Equipment
Furniture
and
Fittings
Motor
Vehicles
Leasehold
Improvements
$
$
$
$
Total
$
2,854,883
370,299
168,080
6,375,931
9,769,193
3,122,699
232,725
212,187
13,747,029
17,314,640
Acquisitions through business combinations
1,434,429
533,630
(670,698)
(4,931)
-
-
2,328,680
4,296,739
(4,251)
(679,880)
(847,244)
(114,833)
(61,070)
(1,030,813)
(2,053,960)
Disposals
Depreciation expense
Carrying amount at 30 June 2020
5,894,069
1,016,890
319,197
21,416,576
28,646,732
At cost
Accumulated depreciation
Written down value
9,460,802
1,972,439
520,679
23,789,646
35,743,567
(3,566,733)
(955,549)
(201,482)
(2,373,070)
(7,096,834)
5,894,069
1,016,890
319,197
21,416,576
28,646,732
Plant and
Equipment
Furniture
and
Fittings
Motor
Vehicles
Leasehold
Improvements
Total
$
$
$
$
$
Gross carrying amount
Balance at 1 July 2018
Additions
110,360
833,852
4,880
55,428
Acquisitions through Group restructure
1,192,901
258,833
73,421
99,990
53,925
327,854
516,515
3,539,046
4,528,316
2,630,936
4,136,595
Acquisitions through business combinations
Disposals
Depreciation expense
Carrying amount at 30 June 2019
At cost
Accumulated depreciation
Written down value
1,119,508
(41,592)
(360,146)
2,854,883
5,690,892
(2,836,009)
2,854,883
101,844
-
228,975
1,450,327
-
(26,069)
-
(67,661)
(50,686)
(33,187)
(350,880)
(794,899)
370,299
168,080
6,375,931
9,769,193
1,217,623
308,492
7,724,651
14,941,658
(847,324)
(140,412)
(1,348,720)
(5,172,465)
370,299
168,080
6,375,931
9,769,193
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
There are several asset specific security interests registered on the PPS Register against each of the members of the Group
listed at Note 30.
All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial
assets..
4 5
4 6
› N OTE 15 – IN TANGIBLES
Details of the Group’s intangibles and their carrying amounts are as follows:
Gross carrying amount
Balance at 1 July 2019
Additions
Goodwill
Trademarks
Capitalised
Software
Digital
Assets
$
$
$
$
Total
$
6,163,027
50,470
337,695
12,889
6,564,081
-
84,429
472,170
45,052
601,651
Acquisitions through business combination
13,581,598
Disposals
Amortisation expense
-
-
-
(1,927)
-
-
-
-
13,581,598
(1,927)
(6,387)
(205,832)
(3,469)
(215,688)
15.1 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%
7.01%
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 7.01%.
Carrying amount at 30 June 2020
19,744,625
126,585
604,033
54,472
20,529,715
15.2 Growth Rates
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
At cost
19,744,625
144,734
972,311
58,102
20,919,773
Accumulated depreciation
Written down value
-
(18,149)
(368,278)
(3,630)
(390,058)
19,744,625
126,585
604,033
54,472
20,529,715
Goodwill
Trademarks
Capitalised
Software
Digital
Assets
$
$
$
$
Total
$
Gross carrying amount
Balance at 1 July 2018
Additions
Acquisitions through Group restructure
-
-
-
Acquisitions through business combination
6,163,027
1,432
4,582
37,926
10,000
36,689
-
38,121
317,800
13,050
335,432
76,515
-
-
-
114,441
6,173,027
Amortisation expense
-
(3,470)
(93,309)
(161)
(96,940)
Carrying amount at 30 June 2019
6,163,027
50,470
337,695
12,889
6,564,081
At cost
Accumulated depreciation
Written down value
6,163,027
64,405
500,141
13,050
6,740,623
-
(13,935)
(162,446)
(161)
(176,542)
6,163,027
50,470
337,695
12,889
6,564,081
All amortisation is included in within depreciation and amortisation expense. Customer contracts are typically short term,
with low barriers to cancellation and as such, no value has been recognised during the year. Prior year balances have
been adjusted to goodwill.
The growth rates reflect the estimated long-term average growth rates for mature health clubs.
15.3 Discount Rates
The discount rates reflect appropriate adjustments relating to market risk and any specific risk factors.
15.4 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.
› NOT E 1 6 – TAX
1 July
2019
Recognised in
Equity
Recognised
in Profit and
Loss
30 June
2020
$
$
$
$
Non-Current Assets
Property, plant and equipment
Leased assets
Other intangible assets
Non-Current Liabilities
Provisions
Lease liabilities
Deferred legal costs
Current Liabilities
Provisions
Accruals
Lease liabilities
Contract liabilities
Equity
(77,485)
(2,592,602)
(5,757)
171,408
1,558,931
183,507
184,005
24,750
625,574
418,700
-
-
-
-
-
-
-
-
-
367,095
289,610
(50,471,931)
(53,064,533)
(3,471)
(9,228)
1,171,644
1,343,052
48,780,298
50,339,229
441,461
624,968
312,505
5,250
496,510
30,000
3,823,325
4,448,899
(418,700)
-
Costs of IPO allocated direct to equity
293,906
784,937
343,264
343,264
(193,157)
444,012
3,814,319
4,942,519
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
4 7
4 8
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
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 allocated direct to equity
5,768
(117,408)
16,361
-
57,966
6,001
8,110
61,494
46,400
7,922
-
92,614
(1,308,053)
-
(5,274)
-
541,952
77,414
180,339
-
405,375
88,077
-
(20,170)
-
-
-
-
-
-
-
-
-
-
1,224,800
(77,485)
(2,475,194)
(2,592,602)
(16,843)
(5,757)
171,408
171,408
959,013
1,558,931
100,091
183,507
(4,444)
184,005
(36,744)
24,750
173,799
322,701
625,574
418,700
367,383
367,383
(73,477)
293,906
345,110
784,937
All deferred tax assets have been recognised in the statement of financial position.
Tax Payable
CURRENT
Income tax payable
› NOTE 17 – T RADE AND OTHER PAYABLES
CURRENT
Trade payables
Sundry payables and accrued expenses
2020
$
2019
$
704,386
1,495,149
2020
$
2019
$
4,452,036
644,507
5,096,543
1,533,550
1,009,228
2,542,778
All amounts are short-term. The carrying values of trade and other payables are considered to be the
fair value.
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
› NOT E 1 8 – CO NTR ACT L IAB I LI TI ES
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 d. for the revenue recognition policy.
2020
$
2019
$
863,350
-
-
1,071,135
174,121
54,422
863,350
1,299,678
-
-
-
863,350
1,006,400
287,602
1,294,002
2,593,680
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
4 9
5 0
› N OTE 19 – L EASES
(i) AASB 16 related amounts recognised in the balance sheet
RIGHT OF USE ASSETS
Leased buildings:
Opening balance
Additions to right-of-use assets
Depreciation expense
Net carrying amount
Leased equipment: *
Opening balance
Additions to right-of-use assets
Disposals of right-of-use assets
Depreciation expense
Net carrying amount
2020
$
2019
$
-
173,822,889
(12,985,993)
160,836,896
9,427,644
8,452,127
(7,011)
(1,827,879)
16,044,881
-
-
-
-
426,939
10,176,990
(46,639)
(1,129,646)
9,427,644
Total right-of-use assets
176,881,777
9,427,644
*FY2019 leased equipment included in Property, plant and equipment
LEASE LIABILITIES
Leased buildings:
Opening balance
Additions to lease liabilities
Principal repayments
Net carrying amount
Leased equipment:
Opening balance
Additions to lease liabilities
Principal repayments
Net carrying amount
Total lease liabilities
Current liabilities
Non-current liabilities
-
170,390,976
(2,284,894)
168,106,082
-
-
-
-
7,943,655
8,332,235
379,512
9,652,559
(1,754,879)
(2,088,415)
14,521,011
7,943,655
182,627,093
7,943,655
14,829,663
167,797,430
182,627,093
2,274,815
5,668,840
7,943,655
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
2020
$
2019
$
Net carrying amount
(ii) AASB 16 related amounts recognised in the statement of profit or loss
Depreciation charge related to right-of-use assets (included in total
depreciation and amortisation expense)
14,941,974
1,129,646
Interest expense on lease liabilities (included in total finance costs)
7,911,181
378,507
(iii) Cash outflows relating to leases / rental payments
Property lease payments*
Equipment lease payments
Total cash outflows for leases / rental payments
*property lease payments for the year ended 30 June 2019
refer to rental payments
a. Options to Extend or Terminate
9,658,521
2,292,434
11,950,955
6,742,218
2,466,922
9,209,140
The options to extend or terminate are contained in several of the property leases of the Group. There were no
extension options for equipment leases. These clauses provide the Group opportunity to manage leases in order to
align with its strategies. All of the extension or termination options are only exercisable by the Group. The extension
options or termination options which management were reasonably certain to be exercised have been included in the
calculation of the lease liability.
b. Reconciliation from Operating Lease Commitments to lease liabilities
Operating lease commitments as at 30 June 2019
Add/Less: Other Adjustments
Initial Lease liability recognised
Other adjustments include:
- discounting the existing lease commitment at the incremental borrowing rate
- inclusion of option periods in the lease liability calculation
- adjusting for lease incentives
› NOT E 20 – NOTE 20 EM PLOY EE RE MU NERATI O 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
The Company received JobKeeper payments of $2.835m. These
payments have been offset against wages and salaries for the year
77,162,659
972,405
78,135,064
2020
$
2019
$
11,739,107
703,702
20,284
1,088,251
8,289,001
537,523
155,211
682,884
13,551,344
9,664,619
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
5 1
5 2
20.2 Share-Based Employee Remuneration
As at 30 June 2020, 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 in accordance with the Long Term
Incentive Plan in relation to the 590,000 options granted to senior executives:
Earnings per Share (EPS) Compound Annual Growth Rate (CAGR)
The percentage of options that vest for each % EPS CAGR is illustrated in the following table:
LTIs (Tranche 1)
LTIs (Tranche 2)
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 (Tranche1)
LTI (Tranche1)
Tranche 1
Tranche 2
Options
Options
Options
Options
7 Jun 2019
30 Oct 2019
7 June 2019
7 June 2019
Release of
FY2021 results
Release of
FY2022 results
Vested
Vested
1.00
25%
1.00
25%
1.00
25%
1.00
25%
5 years
5 years
4 years
4 years
0%
2%
Nil
Nil
0%
2%
Nil
Nil
0%
2%
82,979
1.34
0%
2%
72,232
1.43
Release of
FY2021 Results
Release of
FY2022 Results
7 June 2020
7 June 2020
EPS CAGR over the two Financial
Years Ending 30 June 2021
EPS CAGR over the three Financial
Years Ending 30 June 2022
Percentage of Options that Vest
Exercisable to
31 August 2023 31 August 2024
2 May 2023
2 May 2023
Weighted average remaining contractual life
3.25 Years
4.25 Years
2.94 Years
2.94 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, $20,284 (2019: $155,211) 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.
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
Less than 15% (minimum Target)
Less than 15% (minimum Target)
0%
15% to 20% (within target range)
15% to 20% (within target range)
50% - 100%
(on a straight-line basis)
Greater than 20%
(above maximum target)
Greater than 20%
(above maximum target)
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 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).
20.3 Employee benefits - liabilities
• 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 .
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.
LTI (Tranche 1)
LTI (Tranche 2)
Tranche 1
Tranche 2
No of Options
No of Options
No of Options
No of Options
Outstanding at 1 July 2019
Granted
Exercised
295,000
295,000
1,500,000
1,000,000
-
-
-
-
Outstanding at 30 June 2020
295,000
295,000
1,500,000
1,000,000
Exercisable at 30 June 2020
-
-
1,500,000
1,000,000
Current:
Employee leave entitlements
Non-Current:
Employee leave entitlements
Total employee obligations
› NOT E 21 – PROV IS IO NS
Consolidated Group
Opening balance at 1 July 2019
Additional provisions
Amounts used
Balance at 30 June 2020
2020
$
2019
$
1,655,033
1,176,473
153,046
115,937
1,808,079
1,292,410
Employee
Benefits
Property Make
Good
$
$
Total
$
1,292,410
1,219,371
(703,702)
1,808,079
-
4,323,795
-
4,323,795
1,292,410
5,543,166
(703,702)
6,131,874
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
5 3
5 4
Provision for Employee Benefits
Provision for employee benefits represents amounts accrued for annual leave and long service leave. The current portion
for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long
service leave entitlements that have vested due to employees having completed the required period of service. Based on
past experience, the Group does not expect the full amount of annual leave or long service leave balances classified as
current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities
since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees
wish to use their leave entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet
vested in relation to those employees who have not yet completed the required period of service.
In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave
being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have
been discussed in Note 4 (o).
Provision for Property Make Good
A provision has been recognised for the costs to be incurred for the restoration of property leases for which the Group
is a lessee and where the obligation to make good is included as a condition of the lease. The provision is based on the
present value of estimated costs to restore the property at the end of each property lease term.
› N OTE 2 2 – EQUITY
22.1 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.
2020
Shares
2019
Shares
2020
$
2019
$
Shares issued and fully paid:
Beginning of the year
52,600,000
120
43,715,691
120
Shares issued (less costs of offer)
18,911,393
3,425,000
43,660,003
3,500,000
Group restructure
Share reconstruction
Initial Public Offer (less costs of offer)
-
-
-
21,000,000
7,974,880
20,200,000
-
-
-
21,000,000
-
19,215,571
Total contributed equity at 30 June
71,511,393
52,600,000
87,375,694
43,715,691
Capital Management
Capital Management
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.
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
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 2020 and 30 June 2019 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
› NOT E 23 – R ESERVES
a. Common Control Reserve
2020
$
2019
$
22,509,511
30,103,095
7,943,655
14,385,895
(7,593,584)
(6,442,240)
63,316,762
25,762,058
55,723,178
19,319,818
N/A
N/A
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
2020
$
2019
$
(21,900,880)
(315,559)
(21,585,321)
(21,585,321)
b. Share Options Reserve
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
2020
$
2019
$
175,495
20,284
155,211
155,211
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
5 5
5 6
› N OTE 24 – EARNINGS PER SHARE AND D IVIDE NDS
24.1 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 2020 or 2019).
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*
57,335,790
52,600,000
Shares deemed to be issued for no consideration in respect of options granted
3,090,000
2,795,000
Weighted average number of shares used in diluted earnings per share
60,425,790
55,395,000
*The weighted average shares for the financial year ended 30 June 2019 are calculated
from the date of listing on 7th June 2019.
2020
$
2019
$
24.2 Dividends
There were no dividends declared or paid during the year (2019: nil)
24.3 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
2020
$
2019
$
2,045,656
485,676
704,386
1,495,149
2,750,042
1,980,825
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries
› NOT E 25 – R ECO NCIL IATI O N OF C ASH FLOWS
Cash flows from operating activities
Profit / (loss) after income tax
Non-cash flows in profit / (loss)
— 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
— tax effect of initial adoption of AASB 16 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
› NOT E 26 - AU DI TO R R EM UNE RAT I O N
Remuneration of the auditor for:
Audit and review of financial statements
Financial year ended 30 June 2020
Half year ended 31 December 2019
Financial year ended 30 June 2019
Total audit services
Other non-audit services
Financial year ended 30 June 2019*
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.
2020
$
2019
$
(6,246,344)
2,855,103
-
17,211,622
71,616
-
508,764
(165,500)
(315,559)
20,284
(4,847,535)
(79,155)
(4,157,583)
2,980,097
(790,763)
(1,067,559)
515,668
2,201,813
(54,580)
631,570
167,383
-
(194,349)
155,211
322,987
(57,825)
(526,293)
(840,004)
1,000,513
1,707,563
607,143
3,638,054
7,976,235
2020
$
2019
$
50,500
25,500
-
76,000
-
-
53,000
-
53,000
129,000
-
-
43,500
43,500
26,500
18,148
40,050
90,209
174,907
218,407
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
5 7
5 8
› N OTE 27 – RELATED PARTY TRANSACTIONS
› NOT E 29 – B U SI NE SS CO M B I NATI O 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.
27.1 Transactions with Key Management Personnel
Short-term Employee Benefits:
Wages and salaries (including incentives and Annual Leave entitlements)
1,496,944
1,454,757
2020
$
2019
$
Superannuation
Long service leave
Share-based payments
Total remuneration
Short-term employee benefits
109,895
28,558
20,284
76,705
176,168
155,212
1,655,681
1,862,842
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 incentives awarded to 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
incentives payments.
Share-based payments
These amounts represent the expense related to the participation of certain Directors and KMP in equity-settled benefit
schemes as measured by the fair value of the options granted on grant date (see Note 21.2).
Further information in relation to KMP remuneration can be found in the directors’ report and at Note 21.
27.2 Related Party Properties
Total related party property transactions
2,464,167
2,537,853
2020
$
2019
$
› N OTE 2 8 – CONTINGENT LIABILITIES
The company has no contingent assets or liabilities.
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
(a) During the period the Group acquired 12 clubs from various vendors as outlined below:
Number of clubs
State
Purchase consideration
Amount settled in cash
10
QLD
1
ACT
2
VIC
12
Total
$
$
$
$
3,430,855
230,000
635,219
4,296,074
Assets and liabilities acquired at fair value
Property, plant and equipment
Other net identifiable assets /(liabilities) acquired
590,059
(11,990)
31,525
138,000
-
(9,781)
759,584
(21,770)
Goodwill
2,852,786
198,475
507,000
3,558,261
3,430,855
230,000
635,219
4,296,075
Revenue and profit contribution from the date of acquisition until 30 June 2020
Revenue
2,448,737
301,258
112,716
2,862,711
Profit before depreciation, amortisation,
interest and tax
(b) FitnFast NSW, Victoria and ACT
1,383,603
249,830
91,364
1,724,797
On 13 February 2020, the Group acquired the health club businesses FitnFast for a purchase consideration of
$13,433,539. The acquisition is part of the Group’s overall strategy to expand into other territories and included clubs in
NSW (10), Victoria (2), and ACT (1).
The purchase was satisfied by the payment of $13,433,539.
Fair value of consideration transferred
Amount settled in cash
Recognised amounts of identifiable net assets acquired
Property, plant and equipment
Other net identifiable assets /(liabilities) acquired
Goodwill
Revenue and profit contribution from the date of acquisition until 30 June 2020
Revenue
Profit before depreciation, amortisation, interest and tax
$
13,433,539
3,537,155
(126,953)
10,023,337
13,433,539
1,996,492
1,071,593
Acquisition-related costs amounting to $733,789 for all acquisitions have been recognised as an expense in the
consolidated statement of profit or loss and other comprehensive income.
The goodwill arising from these business combinations is not expected to be deductible for tax purposes.
The above contributions to of revenue and profit from the date of acquisition to 30 June 2020 were impacted by the
mandatory shutdowns sue to COVID-19.
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
5 9
6 0
› N OTE 30 – INTERESTS IN SUBSIDIARIES
› NOT E 3 2 – FI NANCI AL I NST R UM ENT RI SK
Name of Subsidiary
Principal Activity
Proportion of Ownership
Interests held by the Group
30 June 2020 30 June 2019
Viva Leisure Limited
Viva Leisure Operations Pty Limited
Viva Leisure People Pty Limited
Viva Leisure Property Pty Limited
Viva Leisure Memberships Pty Limited
Psycle Life Pty Limited
The Club Group Pty Limited
The Club Group (Greenway) Pty Limited
Club MMM! Pty Limited
HIIT Republic Australia Pty Limited
Club Lime Pty Limited
Club Pink Pty Limited
Club Blue Pty Limited
Club Swim Pty Limited
Club Team Pty Limited
Parent
Health club operation
Health club operation
Health club operation
Health club operation
Health club operation
Health club operation
Health club operation
Health club operation
Health club operation
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
› N OTE 31 – C APITAL AND LEASING COMMITMENTS
31.1 Finance Leases (as lessee)
The Group’s finance lease liabilities, which are secured by the related assets held under finance leases, are classified
shown at Note 20.
Future minimum finance lease payments at the end of each reporting period under review were as follows:
Minimum Lease Payments Due
Within 1 Year
$
1 to 5 Years
$
After 5 Years
$
Total
$
30 June 2020*
Lease payments
Finance charges
Net present values
30 June 2019-
Lease payments
Finance charges
Net present values
N/A
N/A
N/A
N/A
N/A
N/A
2,726,832
(452,017)
2,274,815
6,249,321
(580,481)
5,668,840
N/A
N/A
N/A
-
-
-
N/A
N/A
N/A
8,976,153
(1,032,498)
7,943,655
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
The Group is exposed to various risks in relation to financial instruments. 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, and focuses on
actively securing the Group’s short to medium-term cash flows by minimising the exposure to financial markets.
32.2 Credit Risk Analysis
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 as below.
30 June 2020
Financial assets
Financial liabilities
Total exposure
30 June 2019
Financial assets
Financial liabilities
Total exposure
Interest rate sensitivity
Interest rate sensitivity
Short term exposure
$
Long term exposure
$
35,283,303
(9,198,855)
-
(18,407,199)
26,084,448
(18,407,199)
14,718,569
(4,817,593)
9,900,976
-
(5,668,840)
(5,668,840)
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 2020, the Group is exposed to changes in market interest
rates as its Bank Debt is at variable 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% (2019: +/- 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.
Profit for the Year
Equity
$
+1%
$
-1%
$
+1%
$
-1%
30 June 2020
30 June 2019
309,020
67,749
(309,020)
(67,749)
309,020
67,749
(309,020)
(67,749)
32.2 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.
*For the financial year ended 30 June 2020 this is recorded separately in Note 20: Leases
Credit risk management
Credit risk management
31.2 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 2020*
30 June 2019
N/A
N/A
N/A
N/A
8,807,608
36,944,474
31,410,576
77,162,658
*For the financial year ended 30 June 2020 this is recorded separately in Note 20: Leases
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.
32.3 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 13 for details of borrowings during the financial periods under review.
6 1
6 2
N
N
O
O
T
T
E
E
S
S
T
T
O
O
T
T
H
H
E
E
C
C
O
O
N
N
S
S
O
O
L
L
I
I
D
D
A
A
T
T
E
E
D
D
S
S
T
T
A
A
T
T
E
E
M
M
E
E
N
N
T
T
S
S
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
0
J
U
N
E
2
0
2
0
0
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
E
R
U
S
I
E
L
A
V
I
V
32.4 Financial Risk Management
Guarantees and Security Interests
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
payables
5,096,543
2,542,778
Contract liabilities
863,350
1,299,678
-
-
-
261,870
Bank loans
1,272,500
-
6,716,000
-
-
-
-
14,829,663
2,274,815
89,720,302
5,668,840
78,077,128
Finance lease
liabilities
Total expected
outflows
22,062,056
6,117,271
96,436,302
5,930,710
78,077,128
1,032,132
196,575,486
13,080,113
Financial assets – cash flows realisable
Cash and cash
equivalents
30,103,095
14,385,895
Trade receivables
2,652,313
218,443
Total anticipated
inflows
Net (outflow)/
32,755,408
14,604,338
-
-
-
-
114,230
114,230
-
-
-
-
-
-
30,103,095
14,385,895
2,652,313
332,673
32,755,408
14,718,568
1,032,132
863,350
2,593,680
-
-
7,988,500
-
182,627,093
7,943,655
There are several asset specific security interests registered on the PPS Register against each of the members of the
Group listed at Note 31.
In addition, the bank loans mature on 28 May 2025 and the facility agreement specifies the following security interests:
1.
First ranking General Security Interest from each Obligor comprising first ranking charge over all present and after
acquired property.
3. Account Set offs from Viva Leisure Property Pty Ltd over Deposits totalling $3,400,000 (relating to security for
all cash covered bank guarantees issued in the name of Viva Leisure Property Pty Ltd
4. The interest rate payable on the market rate loan is BBSY plus 4.0%
Contractual commitments
At 30 June 2020, 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.
The Company entered into a binding agreement to acquire Australian Fitness Management Pty Limited at 30 June 2020,
which completed on the 21st August 2020.
Contractual Commitments
Within 1 Year
$
1 to 5
Years
$
After 5 Years
Total
$
$
-
5,096,543
2,542,778
2. First ranking charge over any assets financed under the Equipment Finance Facility.
inflow on financial
10,693,352
8,487,067
(96,436,302)
(5,816,480)
(78,077,128)
(1,032,132)
(163,820,078)
1,638,455
instruments
30 June 2020
30 June 2019*
18,000,000
-
-
-
1,785,046
11,504,094
18,618,400
31,907,541
› N OTE 33 – FAIR VALUE MEASUREMENT
Financial assets and financial liabilities measured at fair value in the statement of financial position are measured at
amortised cost.
› N OTE 34 – PARENT ENTITY INFORMATION
Statement of Financial Position
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Issued Capital
Reserves
Retained Earnings
Total Equity
Statement of Profit and Loss and Other Comprehensive Income
Profit / (loss) for the year
Other comprehensive income
Total Comprehensive Income
6 3
2020
$
2019
$
65,735,485
22,584,246
11,838
11,838
65,747,323
22,596,084
12,087
12,087
12,087
12,087
65,735,236
22,583,997
87,375,694
43,715,691
(21,725,385)
(21,430,110)
84,927
298,416
65,735,236
22,583,997
(213,489)
298,665
-
-
(213,489)
298,665
*For the financial year ended 30 June 2020 this is recorded separately in Note 20: Leases
› NOT E 35 – EVENTS AFTE R T HE R EPO R TI NG PER IO D
The following events occurred after the reporting period:
On 21st August 2020 the Company completed the acquisition of Australian Fitness Management Pty Limited (AFM), the
Master Franchisor for the Plus Fitness group comprising approximately 200 clubs located in Australian Capital Territory,
New South Wales, Victoria, South Australia, Western Australia, New Zealand and India. AFM was acquired for an initial
payment of $18m, with a $2m deferred payment which is subject to performance hurdles.
› NOT E 3 6 - CO MPANY I NFO R M AT IO N
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.
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VI VA L EI SUR E GRO UP DI RE CTO RS D EC LARATI O N
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
i) Giving a true and fair view of its financial position as at 30 June 2020 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 2020.
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
H A R R Y K O N S T A N T I N O U
Dated this
25th day of August 2020.
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additional
information
The following information is current as at 17 September 2020
3 . 20 LAR GEST SHARE HOL D ER S
1. DIST RIBUTION OF SHAREHOLDERS
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 . DIST RIBUTION 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
64,367,503
4,269,461
1,310,293
1,276,700
287,436
71,511,393
33
172
179
498
597
1479
Total No. of
Options Held
No. of
Shareholders
2,990,000
100,000
-
-
-
3,090,000
4
1
-
-
-
5
Shareholder
SHJA MANAGEMENT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
MERA VALE NO 1 PTY LTD
CITICORP NOMINEES PTY LIMITED
HARRY KONSTANTINOU
ANGELO KONSTANTINOU
JOHN KONSTANTINOU
SPIROS KONSTANTINOU
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
BNP PARIBAS NOMINEES PTY LTD
CS THIRD NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
EASTY HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
TRENWITH NOMINEES PTY LIMITED
B & S FORRESTER PTY LTD
MR DEREK HILL & MRS JOANNA HILL
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
DR GLENN CARLTON CROFT
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FOR LISTE D
COMPANIES
Number Held
% of Issued
Shares
21,688,434
1 4,8 8 1 ,191
7,144,105
4,543,296
3,729,451
1,542,068
1,542,068
1,542,067
1,442,067
1,213,255
580,412
536,066
466,667
325,000
305,000
300,000
260,000
233,334
219,400
1 6 2 ,0 1 6
30.3%
20.8%
10.0%
6.4%
5.2%
2.2%
2.2%
2.2%
2.0%
1.7%
0.8%
0.7%
0.7%
0.5%
0.4%
0.4%
0.4%
0.3%
0.3%
0.2%
7 5
7 6
4. SU BSTA NTIAL SHAREHOLDERS
RE LAT ED PART Y L EAS E AG REE M ENTS
The names of the substantial shareholders listed in the holding company’s register as at 17 September 2020 are:
Shareholder
SHJA MANAGEMENT PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
MERA VALE NO 1 PTY LTD
CITICORP NOMINEES PTY LIMITED
Number of
Shares
% of Issued
Shares
21,688,434
14, 881,191
7,144,105
4,543,296
3,729,451
30.3%
20.8%
10.0%
6.4%
5.2%
5. LESS THA N MARKETABLE PARCEL OF ORDINARY SHARES
There are 90 shareholders with an unmarketable parcel totalling 12,129 shares
6. UN QUOTED EQUITY SECURITIES
The company had the following unquoted securities on issue as at 17 September 2020
Security
Unquoted Options
No. of Securities
3,090,000
7. RE STRICTED SECURITIES
The company had no restricted securities on issue as at 17 September 2020
8 . 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.
9. ON - MA RKET BUY BACKS
There is no current on-market buy-back in relation to the Company’s securities
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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
$98,880
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.
$1,730,559
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.
$198,365
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.
$37,856
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.
$140,000
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.
$240,294
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.
$332,801
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.
OT HER KEY TE RM S
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.
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7 9
CE O :
Harry Konstantinou
CO M PANY S ECR ETARI ES:
Kym Gallagher
RE GISTE RED O FFI CE AND PR INC IPAL PL ACE O F B US I NE SS:
Unit 7, 141 Flemington Road, Mitchell ACT 2911
02 6163 8011
investor.relations@vivaleisure.com.au
www.vivaleisure.com.au
RE GISTE RS O F S ECU RI TI ES AR E HE LD AT TH E FO LLOW I NG AD D RESS:
Link Market Services
Level 12, 680 George Street, Sydney NSW 2000
1300 554 474
registrars@linkmarketservices.com.au
www.linkmarketservices.com.au
STO CK EXCHANGE LI ST ING
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”.
AU DI TOR S
Hall Chadwick
Level 40, 2 Park St, Sydney NSW 2000
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8 0