ANNUAL REPORT Year ended 30 June 2022 2022 N O I S S I M 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. R U O About this Report This 2022 Annual Report for Viva Leisure Limited (ACN 607 079 792) has been prepared as at 23 September 2022. 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. 2 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 AU DI TOR S IND EPEND ENCE D E CL ARAT I ON RE MU NER ATI O N R EPO RT ( AUD IT E D) CE O ’S RE PO R T O UR PO RT FO LI O 2022 HI GHLI GHTS D IR ECTO RS ’ REPO RT A LET T ER FRO M T HE CHAI R S O UR LO CATI O NS AND B RANDS T N E T N O C Independent Auditor’s Report Directors’ Declaration SI GNED R EPO RTS Notes to the Financial Statements AD DI TI O NAL INFO RM AT IO N FO R LI ST ED CO M PANI ES CO RPO R ATE GOVE RNANCE STAT E M ENT CO NSO LI DATE D FINANC IAL STAT EM E NTS Consolidated Statement of Profit or Loss Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Shareholder Information Corporate Directory 1 3 5 7 9 13 23 3 1 34 35 37 39 4 1 43 77 79 87 92 C O N T E N T S S D N A R B R U O S N O I T A C O L + 334 LOCATIONS 0WNED + FRANCHISED NEW ZEALAND 2 INDIA 5 A W 34 7 S A 5 Viva owned corporate locations, includes 17 corporate owned Plus Fitness locations. Plus Fitness Franchise locations Q L D 29 11 NS W 44 V I C 24 8 134 AC T 50 1 O U R B R A N D S + L O C A T I O N S 2 2 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 1 1 O I L O F T R O P 2 2 0 2 e n u J 0 3 t a . s t n e m g e s i t e g r a T l l a g n s A . R U O 2 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 3 3 Segment Health Clubs Boutique Health Clubs Boutique Boutique Boutique Aquatics High quality facilities, mid market price point High quality facilities, mid market price point Low cost, low service market High quality facilities, high market price point Cycling Niche Market Medium quality facilities, mid market price point Aquatics $12-$25pw $39-$45pw $13-$16pw $45-$75pw $20-$25pw $39-$45pw Casual Entry Target Market Target Price Point Opened or Aquired Opened Corporate Locations 94 Franchised Locations Additional Locations Secured 8 Opened Acquired Opened Opened Acquired Opened 25 To be franchised late CY2022 17 182 2 2 9 2 To be franchised late CY2022 2 1 Corporate 20 Franchisee 1 O U R B R A N D S P O R T F O L I O 4 2 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 NETWORK MEMBERSHIPS 33.8% 320,161 OWNED LOCATIONS 31.3% $90.8M SREVENUE 8.5% T H G I L H G I H 334 151 $5.5M EBITDA* 53.8% ALL LOCATIONS 8.1% 2 2 0 2 *Excludes the impacts of AASB-16. 5 REVENUE ($m) Full Year H1 H2 90.8m 83.7m 56.8m 47.8m 33.1m 40.9m 17.9m 24.1m 20.7m 18.4m 35.9m 34.0m 23.0m EBITDA ($m) Full Year H1 H2 3.3m 1.8m 7.3m 6.1m 5.2m 11.9m 6.3m 5.6m 5.5m 9.3m -3.8m FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 +7% 320,161 298,376 NETWORK MEMBERS EBITDA MARGIN (%) 22.0% 21.6% 94,196 15.8% 54,039 10.0% 14.8% 14.3% 6.0% 26,754 29,124 35,631 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 2 0 2 2 H I G H L I G H T S 6 E H T M O R F R E T T E L A R I A H C 2 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 7 Dear Fellow Shareholders • Viva Leisure corporate owned club membership increased by over 33,500 members; M EET I NG T HE CHALL ENGES • The corporatisation of 12 additional Plus Fitness On behalf of the Board, I am pleased to present the Viva Leisure Limited 2022 Annual Report. Like many businesses VIVA’s operations were again severely impacted by the effects of COVID-19, and the pandemic has now impacted the last three financial years. Despite this, the Company rebounded quickly in the second half to not only recover the pre-COVID membership and revenue metrics, but to exceed them, reflecting the loyalty of our membership base and their desire of the to re-establish fit and healthy lifestyles. Our recent Bi-Monthly presentation announcements demonstrate the recovery and improvement of the business on all key metrics and sets a good platform for the year ahead. During the first half of 2022 our staff have endured the difficulties related to further Government mandated closedowns, re-openings, and further closedowns. We do not underestimate the personal toll on our staff, all of whom have shown resilience and understanding during this period. For that we say thank-you. The continued support of our shareholders is best illustrated by the success of our capital raise early in FY2022 during a period of intermittent club closures and uncertainty. This support is appreciated and is an endorsement of the Company’s longer term objectives of growth and growing shareholder return. Important highlights in the COVID-19 affected results were: • Total revenues were $90.8 million compared with $83.7 million in the financial year ended 30 June 2020, an increase of 8.5%; franchised clubs demonstrating the opportunity for the Company to take advantage of the acquisition pipeline. SO C IAL AND COM M UNI TY COM MITM EN T Viva Leisure has again continued its commitment to ongoing support of the local communities in which we operate. That contribution has continued to be necessarily moderated in 2022 by the impact of the pandemic. The Company continues to strive to be a responsible corporate citizen. B OARD AND M ANAGE ME NT I am delighted that Louise Bolger joined the Board in July 2021 and Andrew Burns in April 2022. Both Louise and Andrew have deep corporate and commercial experience and have made a valued contribution since their appointments. The Board and I appreciate the manner in which our CEO Harry Konstantinou and the executive team have navigated through the difficulties posed by the continual disruption of the COVID-19 pandemic. The continued positivity and sustained determination to continue to strive for the strategic corporate vision, despite these roadblocks, is a testament to Harry, the executive team, and the entire Viva Leisure team of over 1,600 employees. This was encapsulated in a significant result in the second half, not only exceeding the pre-COVID key metrics but also setting a robust platform for future financial years. • Earnings before Interest, Tax, Depreciation and B RU CE GLANVI LL E Amortisation (EBITDA) improved from a loss in the first half of ($3.8 million) to a gain of $9.3 million in the second half (full year of $5.5 million) compared with $12.0 million in the previous year, excluding the impacts of AASB16; D IV ID ENDS As set out in the report to shareholders last year and, 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 2022 Financial Year. O PER AT ING H IGHLI GHTS FOR TH E Y EA R Highlights for the year were: • An increase in corporate owned operating locations/ clubs from 115 to 151, comprising 12 new Greenfield locations, and 25 new clubs acquired from 16 separate acquisitions; • The opening of two Groundup locations, establishing a new concept which represents first class Yoga, Pilates and Barre formats; It was with great sadness that our fellow Board member and Chair, Mr Bruce Glanville passed away unexpectedly in April 2022. Bruce was the founding Chair of the Company in addition to being a trusted advisor to the business for many years prior to listing. He will be remembered as a dedicated stalwart of the Company, who’s drive, dedication, commitment and leadership permitted the Company to expand in a controlled and appropriate manner to where it is today. On behalf of the Board and the Company we acknowledge Bruce for his incredible work and dedication to Viva Leisure during such important formative years. 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, R H Y S H O L L E R A N Chair A L E T T E R F R O M T H E C H A I R 8 T R O P E R A E H T M O R F O E C 2 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 9 Dear Fellow Shareholders, As I write this in September 2022, my fourth report as CEO, it is encouraging to not be in lockdown due to COVID-19 as was the case with the previous two financial years. Whilst COVID-19 also affected the first half of the 2022 Financial Year, the second half was our best half year of trading, and the start of the 2023 Financial Year has been even more encouraging. Since listing in June 2019, the business has not had the opportunity to operate a full 12 months without interruptions, however we have used the period to further improve business structures and synergies which has made us stronger for the future. Viva has achieved some significant milestones during the year, and with the feeling from consumers to live a healthier lifestyle due to the pandemic over the past two and a half years we expect to see the growth in memberships and daily visits by members continue to increase as it has every month since re-opening. As I mentioned in my CEO letter last year, the importance of a healthy lifestyle has never been more important than living through a pandemic, and I truly believe that this now resonates with more and more members of our community. Key highlights for the year included: • Direct membership increased 26.6% to 159,546 members, and total membership across all locations increased to 320,161; • Locations increased 31.3% to 151, adding a further 36 locations during the year, essentially one new location joined the Viva Leisure network every 1.4 weeks of the year; • Revenue increased to $90.8 million, an increase of 8.5%; Revenue for H2-FY2022 was $56.8 million (62.5% of the annualised revenue due to the lockdowns in H1-FY2022); • EBITDA was $5.5 million (excluding the impacts of AASB-16) for the full year, however, again was supported by a strong H2-FY2022 which recorded $9.3 million in EBITDA; and • June 2022 annualised revenue run rate at $124.5 million. OVE RVI EW The year was definitely a story of two halves. The first half of the Financial Year was affected by significant lockdowns which had a direct effect on revenue and thus profitability. However, the second half provided a clear run, and with the direct debit nature of our business quickly recovered revenue and thus profitability with an outstanding result. Viva Leisure owned and operated 151 locations as of 30 June 2022 (FY21: 115). As of the date of this report, this has increased to 153 locations. This represents an increase of 124 locations in 40 months since our IPO in June 2019. To put this into perspective, this equates to a new location opening or acquired every nine-and-a-half days since we listed. Together with new club openings and acquisitions during the year, our existing like-for-like locations continued to grow membership and visitations which are two key metrics that we constantly monitor. At 30 June 2022, our like-for-like locations which were open in February 2020 (pre COVID-19 pandemic) had 100% fully recovered and were 3% up in membership, and 8% up in revenue when compared to pre COVID-19 numbers. The second GroundUp boutique Pilates, Yoga and Barre studio during the year with further locations currently being planned. The GroundUp concept builds on our unique hub and spoke approach to fitness where one size, service and product does not fulfil all members needs and requirements. The average revenue per member per week for a GroundUp membership is approximately $50, and with over 900 members in our two operating studios provides an excellent return on investment. Our Plus Fitness brand continues to improve with Systemwide sales now in excess of $95.5 million, which highlights the strength of the franchise network. Whilst franchise locations has been steady at approximately 200 locations, the management team at Plus Fitness has worked hard to improve the profitability of each franchisee which again helps to strengthen the network and will start to pay dividends as they reinvest into their locations with an improved member experience and look and feel of the clubs. During the year our new Plus Fitness branding was also launched. AVER AGE REV ENUE PER M EM BER PE R WE E K AND U TI LI SAT IO N My team and I have paid special attention over the past year to growing the Average Revenue Per Member (ARPM) per week which now sits at $14.59 (June 2022), up from $13.79 (June 2021). The ARPM is expected to exceed $15.00 from the end of Q1-FY2023. Together with increasing ARPM, Utilisation, which is a measure of capacity within our individual facilities has continued to increase from a low of under 60% during COVID, to now average over 69.3% (June 2022) across the portfolio. August 2022 saw this increase to over 70.2%. Improving utilisation rates across the portfolio drives increased margin due to limited additional costs to add new members to an already operating location. These two metrics will continue to be a focus for our team in FY2023 as we target a long term utilisation average of between 75-80% across the entire portfolio of mature locations (ie: older than 12 months). M EM B ERS HIP Network Membership (Corporate and Franchisee locations) increased 7.3% during the year to 320,161 members (FY21: 298,376). Direct Membership at corporate owned locations increased 26.6% to 159,546 (FY21: 126,006). Direct corporate members provide greater revenue and profitability over franchised members and with the membership as of 30 June 2022 now split evenly between franchisee members (50%) and direct corporate owned A R E P O R T F R O M T H E C E O 1 0 Viva Labs builds software & hardware to help our members build better bodies and lifestyles. The Viva Labs team is the technology division of Viva Leisure responsible for ensuring Viva operates at the forefront of fitness and technology. The team is responsible for our websites (both front and back of house), membership systems, the Viva Pay direct debit processing system, designing and building hardware and software to support the business as well as smart phone applications. With a member visiting one of our facilities every 1.3 seconds of the day (August 2022), technology is an important aspect of our business to ensure a smooth member experience. We are more than just a fitness business. members (50%) this will start to provide additional benefits in FY2023. This increase in direct corporate owned members is up from 42% in the previous year. Membership visits for June 2022 were 1.7 million, or put simply, a member visited either a corporate owned location or franchised location every 1.5 seconds of the day. TALEN T 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. ACQUISITIONS During the financial year, we negotiated, settled and more importantly, integrated various acquisitions. In total we acquired 25 new locations, plus the master franchisor of the Rebalance Pilates and Yoga group. We now own 17 corporate Plus Fitness locations in line with our strategy of corporatizing appropriate locations within the Plus Fitness network, which was one of the key drivers in acquiring the master franchisor rights in 2020. VIVA LAB S A ND TECHNOLOGY We have continued to invest in our technology. Our Viva Labs team which builds our software, hardware and smart phone applications all in-house has continued to expand as we look to continue leading the fitness market in creating frictionless joining, membership management, portfolio/brand access and access control experiences unmatched by any other fitness provider in the world. Over the next financial year, we will undertake our largest investment in technology upgrades since the business was launched some 18 years ago. We are in the final stages of deploying our door access technology into our Plus Fitness network which will provide our franchisees with more revenue opportunities and save on costs at the same time. THE FUTURE The future, while extremely exciting, will continue our ‘more of the same’ model. A model which we have proven over the past 18 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 and potentially some new markets we are currently exploring. We continue to be the only provider with a combination of brands available to us which are suitable in all markets and all price-points, which is something our competitors simply do not offer nor can easily replicate. We are a dynamic business that can pivot, adapt and grow in my opinion faster than any other player in the market, both in Australia and internationally. I expect in the coming twelve months we will capitalise on our ability to effectively scale nationally without impacting our margins due to the foundations we have established over the past few years. 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. BRUCE GLANVILLE In April 2022, our founding Chair Mr Bruce Glanville passed away unexpectedly. Bruce was a trusted advisor and mentor to me personally and the rest of the executive management team. I had worked with Bruce on and off for over 20 years in multiple business ventures. Without Bruce’s persistence, experience, contacts and guidance the business would not be where it is today. He believe as much as I did on the path of listing the business on the ASX, and on the goal of becoming not only the largest but the most profitable health club operator in all the markets in which we serviced. He will be deeply missed as both a personal friend and mentor, and as the Chair of Viva Leisure. Bruce, thank you for everything, and rest in peace that your legacy and the foundations you established will live on. H A R R Y K O N S T A N T I N O U Founder, Managing Director and Chief Executive Officer 2 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 1 1 ’ S R O T C E R I D i e L m L d e t i e r u s i : r a e y l a i c n a n T R O P E R a v i V f o s r o t c e r i D e r e w s n o s r e p g n w o f o d n e r o g n i r u d e h T e c n e h t e h t o f i s i f l l i 2 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 Directors of Viva Leisure Limited present their report together with the financial statements of the consolidated entity, being Viva Leisure Limited and its controlled entities (the Group) for the financial year ended 30 June 2022. 1 3 RH YS HOL LER AN Independent Chair Appointed 20 April 2022 Independent Non-Executive Director Member of the Audit and Risk Committee Member of the People and Culture Committee Appointed 30 September 2020 Qualifications Bachelor of Economics and Member of Certified Practising Accountants Australia Experience Appointed Board and Committee member on 30 September 2020. Rhys has 30 years of executive management expertise ranging from micro-cap to ASX 200 companies in the media sector including as Chief Executive of two public listed companies - RG Capital Radio Limited (ASX:REG) and Macquarie Media Group (ASX:MMG, now ASX:SXL) 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 30,000 ordinary shares. HARRY KONSTANTINOU LOUISE BOLGER Managing Director and Chief Executive Officer Appointed 15 July 2015 Independent Non-Executive Director Appointed 5 July 2021 Member of the Audit and Risk Committee Member of the People and Culture Committee Appointed 12 October 2018 Qualifications BA, (University of Canberra) Member of Australian Institute of Company Directors Experience Company co-founder and Director since 2004. Harry has over 25 years of experience developing, managing and selling technology services business. Chair of the People and Culture Committee Qualifications Bachelor of Laws (Hons) Bachelor of Arts Bachelor of Education Experience Louise is an experienced telecommunications, media and technology lawyer and company secretary having held Director, General Counsel and Company Secretary roles with various ASX listed companies. Her experience as a non-executive director extends to listed and not-for-profit organisations. Other Current Directorships None Other Current Directorships None Directorships held in other listed entities during the three years prior to the current year None Directorships held in other listed entities during the three years prior to the current year Superloop Limited (ASX: SLC) resigned 23 November 2018 Interest in Shares and Options 23,386,701 ordinary shares and options to acquire a further 3,163,000 ordinary shares. Interest in Shares and Options 14,000 ordinary shares D I R E C T O R S ’ R E P O R T 1 4 ANDREW B UR N S KYM GALLAGHER 2 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 Independent Non-Executive Director Appointed 20 April 2022 Chair of Audit and Risk Committee Member of People and Culture Committee Qualifications Bachelor of Commerce Executive Masters of Business Administration Member of Chartered Accountants ANZ Member of Australian Institute of Company Directors Experience Andrew has over 25 years’ experience in senior leadership roles and has significant ASX experience. He is currently employed as CFO of Racing and Sports Limited (ASX:RTH) and has undertaken CFO roles for Openpay Ltd (ASX:OPY), where he led the finance function through its IPO in 2019 and multiple subsequent capital raises, and The Citadel Group Limited (ASX:CGL), where he undertook the role of CFO for 11 years. Andrew has strong technical competencies in financial management, accounting and process improvement techniques with a focus in B2B technology and businesses. Other Current Directorships None 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 476,667 ordinary shares. Directorships held in other listed entities during the three years prior to the current year None RETIRED DIRECTORS Interest in Shares and Options 67,686 ordinary shares 1 5 BR UCE GLANV ILLE Independent Non-Executive Director Independent Chair Member of the Audit and Risk Committee and People and Culture Committee until retirement Appointed 12 October 2018 and ceased 7 April 2022 PR INC IPA L ACTIVITIES The principal activities of the consolidated group during the financial year were the operation of health club services. No significant change in the nature of these activities occurred during the year. R EVIEW OF OPERATIONS AND FINANCIAL R ESULTS Financial highlights for the year: • Total revenues were $90,831,726 compared with $83,718,105 in the financial year ended 30 June 2021; • Loss before income tax was $17,140,726, compared to a loss of $8,793,735 in the financial year ended 30 June 2021; • Net loss After Tax (NPAT) from continuing operations and attributable to members was $12,141,191 compared with a financial year ended 30 June 2021 loss of $6,384,898; • Cash and cash equivalent reserves is strong at $10,069,569, down from $17,290,971 in the financial year ended 30 June 2021; and • There was a decrease in net assets to $85,809,917 compared to $86,352,203 in the financial year ended 30 June 2021 Operational highlights for the financial year: The onset of the Omicron variant then led to a reluctance of members to attend our facilities, suppressed the rate of new members joining and led to an increase of voluntary suspensions by existing members. Over the period to 30 June, the Viva Group delayed the works on several of its greenfield locations to preserve cash in the uncertain COVID environment, whilst in many cases carrying full rent costs. These delays have deferred club openings into late in the second half of FY2022 and into FY2023. SIGNIFI CANT CHANGES IN THE STATE OF AFFAIRS During the year, the following significant changes occurred within the Group: • Completed 16 separate acquisitions (25 clubs) comprising: • 12 Plus Fitness sites in Manly, Mona Vale, Rydalmere, and St Marys in NSW; Beerwah, Qld; and Alkimos, Baldivis, Dalyellup, Halls Head, Lathlain, Melville and Mt Lawley, WA • The assets of One Health South Morang, Vic and Live Well Gregory Hills, NSW • The Master Franchise of the Rebalance Group and assets of the corporate owned sites comprising eight Yoga/Pilates studios in Qld, NSW and Vic • The assets of My Fitness Clubs in Broadbeach, • An increase in operating locations/clubs from 115 to 151; Noosaville and Sippy Downs, Qld • Corporate member numbers increasing from 126,006 at June 2021 to 159,546 at 30 June 2022; COVID-19 Impacts • Completed a fully underwritten $11.7m equity raising (before transaction costs) by way of an institutional placement of approximately 7.56m ordinary shares at $1.55 Viva Leisure Limited’s clubs were subjected to significant closures during the period of July to October 2021. • Opened 12 new greenfield sites: The Company took immediate steps to mitigate exposure to ongoing costs and to preserve cash: • Wage costs reduced significantly by the stand down of significant numbers of staff during this period of closure, • Rent relief negotiations commenced with landlords for • Six Club Limes in Castle Hill, NSW; Maroochydore and Nundah, QLD; Ballarat, Coburg and Brunswick, Vic • Three Hiit Republics in Redcliffe, QLD; Coburg and Ballarat, Vic • Plus Fitness in Tuggeranong, ACT the period of shutdown • Two GroundUps in Belconnen and Yarralumla ACT • Delayed all un-committed capital works on rollouts • Closed one site in Shellharbour, NSW • Funding received through the NSW JobSaver Grant • New credit terms were agreed with the • Undertook a capital raise to further preserve the cash position During this period, the Group suffered a significant reduction in revenues, which in turn has affected profits for the period. In addition, the Plus Fitness business suffered a reduction in Franchise Fees (clubs closed by reason of government direction) and lower than normal territory rollouts due to uncertainty across the sector. Commonwealth Bank of Australia in relation to a $63.27 million five-year senior secured facility, comprising a $42.17 million Market Rate Loan facility (currently drawn to $20.13 million) to assist in financing future acquisitions, a bank guarantee facility and a direct debit facility 2 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 1 7 EV ENTS SUB S EQ UENT TO TH E END O F TH E RE PO RT ING PE RI O D Since the end of the financial year, the Company has entered into binding agreements or completed the following acquisitions: • Plus Fitness, Hocking, WA Mitigation Strategies • Ensure that the Company is up to date with current regulatory matters and decisions. • Continuous business development and member growth to increase member numbers and utilisation rates. 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 AND E XPE CT ED 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. RISK STATEMENT The Group is committed to the effective management of risk to reduce uncertainty in business outcomes and to protect and enhance shareholder value. There are a number of risks that could have a material financial impact on the Group; these risks and their mitigation strategies are outlined below: Covid-19 The Group has considered 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. During the first half of the financial year, the Group had its clubs closed across all states and the ACT at various times due mandatory shutdowns imposed by the respective State Governments and there remains uncertainty with respect to future events or circumstances which may continue to impact the financial results of the consolidated entity. Mitigation Strategies • Stand down of staff where appropriate • Negotiate rent relief with landlords • Delay of capital works to preserve cash Regulatory risk If there is a change in any applicable industry regulations, franchising laws or temporary changes legislation such as the shutdown requirements employed through Covid-19 pandemic response (see above), the Group may be affected through additional compliance costs or the inability to provide certain services. This could result in the loss of revenue and customers through lower utilisation and site shutdowns, which may adversely affect the Company’s financial position and performance. Protection of intellectual property The Group maintains many intellectual property assets and risks associated with our IP include the risk that employees or other third parties will breach confidentiality agreements, infringe, or misappropriate the Company’s intellectual property or commercially sensitive information. Mitigation Strategies • Ensure that contractual agreements with employees and third parties include appropriate IP protections, including indemnity clauses. • Administration access limited to select employees. Disruption risks Disruption risks for the Group include service outages, inability to handle unanticipated levels of demand during peak times or events, computer viruses, misuse by employees or contractors, or external or malicious interventions, such as hacking. Any disruption or failure of the Groups technology or systems may adversely affect the Company’s operations, achievement of objectives and ultimately, its financial position. Mitigation Strategies • Ensure suppliers providing technology services to the Company are reputable and have robust mitigation strategies to manage any issues effectively. • Continuous monitoring of traffic site, regular server testing and upgrading to handle increasing traffic. • Redundancies and data backup for all key technology systems. • 24-hour technology coverage of the website and technology assets to ensure issues are dealt with promptly. Privacy breaches Cyber-security incidents may compromise, or breach technology and service platforms used by the Company as part of its ongoing business and result in disclosure of personal or confidential information about the Company, its customers, employees or third parties in breach of Privacy Act 1988 (Cth) (Privacy Act) and the Australian Privacy Principles (APPs). This could result in loss of data integrity, reputational damage to the Company, claims from affected parties, loss of customers, increased regulatory scrutiny or regulatory action. Mitigation Strategies • Application of Privacy Principles to the management of personal data. • Appropriate security regarding use of, and access to, personal data in accordance with the Privacy Act. • IT security measures such as firewalls, alerts for unauthorised access and encryption of data when it is being transmitted. D I R E C T O R S ’ R E P O R T 1 8 Domestic and Global Economic Conditions acquisition capability. UNI SSUE D SHAR ES UND ER O PT IO N 2 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 subject to risk related to the volatility of domestic and global economic, political, and social conditions. The uncertainties and recent downturn of the global economy and other macroeconomic factors, including but not limited to the ongoing COVID-19 pandemic, wars, geo-political instability, supply chain interruptions, and inflation could adversely affect our business. Domestic Economic Conditions: Domestic economic conditions including inflation and increases in the cost of living may have an impact on the Group through pressure to increases in wages and reduced members. Global Economic Conditions: Global economic conditions may have an impact on the Group through the sourcing of equipment and consumables in support of the current and future operations. The impact to the group may be through increased prices and disruptions to supply chain. Mitigation Strategies • Increased domestic global costs may be directly passed on to the customer through periodic price increases. • Wage growth is actively managed using appropriate application the Fair Work Act and a proactive talent • Global supply chain risks are mitigated through advanced planning for new and refurbished sites taking in to account the potential for supply chain disruptions. Interest Rate Risk The Group is exposed to interest rate risks as outline in Note 32. The interest rate risk is limited to the outstanding borrowings with variable interest rates. The groups Equipment Lease Liabilities, which account for approximately 49% of the Group’s external debt, have predominantly fixed payments and fixed interest rates so there is no material underlying risk to the financials of the business. Mitigation Strategies • The group continually assess the weighted average cost of debt against the cost of capital to determine the most appropriate use of free cashflow from operation. DIRECTORS’ MEETINGS 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 follows: Director’s name Board Meetings Audit and Risk Committee People and Culture Committee A 16 14 16 16 1 B 16 14 16 16 1 A 4 3 4 0 4 B 4 3 4 3 4 A 5 3 5 5 2 B 4 3 5 5 2 Harry Konstantinou Bruce Glanville* Rhys Holleran Louise Bolger# Andrew Burns^ #Appointed 5 July 2021 *Ceased 7 April 2022 ^Appointed 20 April 2022, Andrew attended 3 of the 4 ARC meetings as the independent chair prior to being appointed as a Director. 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 7 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 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-19 2-May-19 30-Oct-19 12-Nov-20 28-Oct-21 2-May-23 2-May-23 31-Aug-24 16-Oct-25 16-10-24 1.34 1.43 0.00 3.34 0.00 1,400,000 1,000,000 295,000 1,213,334 412,000 4,320,334 These options were issued under either the LTI, Tranche 1 or Tranche 2 Plans (described in Note 20.2 to the financial statements) and have been allotted to individuals on conditions as follows: • LTI Plan Options: The vesting of those options and will be subject to the satisfaction of appropriate service-based conditions and/or performance hurdles determined by the Board. Options issued under the LTI program expire on the earlier of their expiry date or termination of the employee’s employment; • Tranche 1 and Tranche 2 Plan Options: The options are currently vested. Options issued under the Tranche 1 and Tranche 2 program expire four years from the date of grant of the options. D I R E C T O R S ’ R E P O R T SHAR ES ISSU ED D UR ING O R S INC E T HE E ND O F T HE Y EAR AS A RES ULT O F EX ERC IS E O F O PT IO NS 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. There were no issued ordinary shares as a result of the exercise of options during the financial year. ENV IR ONM ENTAL LE GIS LAT I ON The consolidated group’s operations are not subject to any particular or significant environmental regulation under a law of the Commonwealth or of a State or Territory in Australia. D IV ID ENDS There were no dividends paid or declared since the start of the financial year (2021: nil). INDEMNITIES GIVEN TO, AND INSURANCE PREMIUMS PAID FOR AUDITORS AND OFFICERS Insurance of Officers During the year, Viva Leisure paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors 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 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. 1 9 2 0 2 0 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. PROCEEDINGS ON BEHALF OF TH E CONSOLIDATED GR OUP 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. Indemnity of auditors AUD ITOR’S IND EPEND ENCE DE CL ARATI ON 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 copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 32. This directors’ report including the Remuneration Report is signed in accordance with a resolution of the Board of Directors: H A R R Y K O N S T A N T I N O U D i r e c t o r Dated this 17 day of August 2022. Non-audit services During the year, Hall Chadwick, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board of directors has considered the position and, in accordance with the advice received from the audit committee, is satisfied that the provision of the non- audit services is compatible with the general standard 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 26 to the financial statements. The total paid for non-audit services was $40,275. This comprised tax and other business services. 2 1 VIVA LEISURE ANNUAL REPORT 2022 - N U M E R N O I T A R E T R O P E R D E T I D U A 2 2 2 2 0 0 2 2 T T R R O O P P E E R R L L A A U U N N N N A A E E R R U U S S I I E E L L A A V V I I V V a. Principles used to determine the nature and amount of remuneration b. Details of remuneration c. Service agreements d. Shared-based remuneration e. Shares held by directors and key management personnel 24 27 29 29 30 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; and d. Share-based remuneration A. PRI NCI PLES U SED TO DE T ERM I NE T HE NAT UR E AND AMO UNT OF R EM UNE 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. The Committee has engaged independent remuneration consultants as necessary to provide any 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: • 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 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. 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 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 • fixed remuneration being annual salary including • any STI amount is only payable upon finalisation of the directly related statutory obligations; financial accounts by the Company. R E M U N E R A T I O N R E P O R T A U D I T E D 2 3 2 3 2 4 2 4 Long Term Incentives (LTIs) The table below describes the performance hurdles and vesting conditions that apply as at the date of this report and in relation to the 1,920,334 options granted to senior executives: Earnings per Share (EPS) and Total Shareholder Return (TSR) Cumulative Compound Annual Growth Rate (CAGR) • for the options granted on 28 October 2021, TSR means Total Shareholder Return and will be measured using the VVA 15-day Volume Weighted Average Market Price (VWAP) for the fifteen (15) trading days commencing from the announcement of results for the financial year ended 30 June 2021 (TSR measure start date) to the same 15 trading period VWAP post the date of announcement of results for the year ended 30 June 2024 (TSR measure end date); • The Basic EPS may be adjusted for items which the Board, in its discretion, considers should be excluded from the The percentage of options that vest for each EPS and TSR CAGR is illustrated in the following tables: EPS result (such as items of a one-off and non-recurring nature). 2 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 LTIs (Granted 30 October 2019) EPS CAGR over the three Financial Years Ending 30 June 2022 Percentage of Options that Vest Less than 15% (minimum Target) 0% 15% to 20% (within target range) 50% - 100% (on a straight-line basis) Greater than 20% (above maximum target) 100% LTIs (Granted 12 November 2020) Tranche 1 (50% of Options – based on EPS CAGR) Tranche 2 (50% of Options – based on TSR CAGR) CAGR over the three Financial Years Ending 30 June 2023 Percentage of Options that Vest Percentage of Options that Vest Less than 10% (minimum Target) 0% 10% to 15% (within target range) Greater than 15% (above maximum target) 50% - 100% (on a straight-line basis) 100% 0% 0% 100% LTIs (Granted 28 October 2021) Tranche 1 (50% of Options – based on EPS CAGR) Tranche 2 (50% of Options – based on TSR CAGR) CAGR over the three Financial Years Ending 30 June 2024 Percentage of Options that Vest Percentage of Options that Vest Less than 10% (minimum Target) 0% 10% to 15% (within target range) 50% - 100% (on a straight-line basis) Greater than 15% (above maximum target) Greater than 20% 100% - 0% 0% 0% 100% • For the purposes of the above performance hurdles, EPS means the Basic Earnings per Share calculated by reference to the Company’s audited financial statements and excluding the impacts of AASB16. • For the purposes of the above performance hurdles: • for the options granted on 12 November 2020, TSR means Total Shareholder Return and will be measured using the VVA 20-day Volume Weighted Average Market Price (VWAP) for the twenty (20) trading days commencing from the announcement of results for the financial year ended 30 June 2020 (TSR measure start date) to the same 20 trading period VWAP post the date of announcement of results for the year ended 30 June 2023 (TSR measure end date); • The performance hurdles 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 each respective financial year end. US E OF RE MU NERATI ON CO NS ULTANTS Viva Leisure Limited’s Board engaged the services of Crichton & Associates during the financial year ended 30 June 2022 to review and to provide recommendations in respect of the amount and elements of executive remuneration, including short-term and long-term incentives. Under the terms of the engagement, Crichton & Associates provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 for fees of $19,229 for these services for both the FY2021 and FY2022 financial years. Crichton & Associates confirmed that any recommendations have been made free from undue influence by members of the Group’s key management personnel. Crichton & Associates was engaged by, and reported directly to, the Board of Directors. The agreement for the provision of remuneration consulting services was executed by the Chair of the Board of Directors on behalf of the Board. The report containing the remuneration recommendations was provided by Crichton & Associates 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. CO M PANY PE RFO RM ANC E The tables below set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the period from listing to 30 June 2022: R E M U N E R A T I O N R E P O R T A U D I T E D Revenue Net profit before tax Net loss after tax Share price at start of the year Share price at end of the year Interim dividend Final dividend Basic earnings pe share Diluted earnings per share 30 June 2022 30 June 2021 30 June 2020 90,831,726 83,718,105 40,885,697 (17,140,726) (8,793,735) (9,343,618) (12,141,191) (6,384,898) (6,246,345) $1.64 $1.16 nil nil (13.8) (13.1) $2.62 $1.64 nil nil (8.2) (7.9) $0.88 $2.62 nil nil (10.9) (10.4) 2 5 2 6 B. DE TAILS OF REMUNERATION Details of the nature and amount of each element of the remuneration of each Key Management Personnel (KMP) of Viva Leisure are shown in the table below: Directors and other Key Management Personnel Short-term Employee Benefits Post- employment Benefits Long-term Benefits Share- based Payments Performance based on % of Remuneration Employee Year Cash salary and fees ($) Incentives ($) Super- annuation ($) Leave ($) Termination benefits ($) Options ($) Total ($) 2022 Short Term Incentive As previously outlined during the FY2022 period the financial result of the group was significantly impacted by the Covid-19 pandemic and the government imposed shut downs. As a result, the minimum financial threshold for the FY2022 Short Term Incentive was not met. During the imposed shut down period the executive team led the Covid-19 response by driving multiple initiatives to mitigate the impact of the disruption on the business and to preserve cash and reputation. Since the lifting of regulations, the Viva team has met all of the financial guidelines released to the market. Financial Metric Actual Results Guidance June revenue 2H FY22 revenue June Margin Half Margin $10.3m $57.0m 20.5% 16.3% $10m+ $54m - $56m 20%+ 15% - 17% Executive Directors Harry Konstantinou 2022 626,432 130,000 2 3 ,56 8 68,346 (Managing Director) 2021 425,000 Non-executive Directors Bruce Glanville* (Independent) Rhys Holleran# (Independent) Louise Bolger^ (Independent) Andrew Burns~ (Independent) Mark McConnell& 2022 107,826 2021 86,794 2022 79,580 2021 51,962 2022 83,740 2021 - 2022 15,833 2021 2022 - - (Non-Independent) 2021 25,385 Susan Forrester (Independent)@ 2022 - 2021 37,500 Other Key Management Personnel 2 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 - - - - - - - - - - - - - 2 5,0 00 7,109 10,595 25,000 5,035 - - - - - - - - - - - - - - - - - - - - - Kym Gallagher (Chief Financial Officer) Angelo Konstantinou (Chief Technology Officer) Sean Hodges (Chief Operating Officer) Total Total 2022 356,432 47,500 23,568 8,511 2021 315,000 - 25,000 7,009 2022 2 4 0 , 4 3 2 33,000 22,881 10,110 2021 219,178 - 20,822 8,856 2022 240,432 56,118 22,881 7,929 2021 210,045 - 19,954 7,455 2022 1,750,707 266,618 108,528 94,895 2021 1,370,864 - 115,776 30,429 * Ceased 7 April 2022, remuneration shown is until date of cessation # Appointed 30 September 2020 ^ Appointed 5 July 2021 ~ Appointed 20 April 2022 & Resigned 6 November 2020, remuneration shown is until the date of retirement @ Resigned 31 December 2020, remuneration shown is until the date of retirement % Calculated in accordance with AASB 2: Share Based Payments 2 7 - - - - - - - - - - - - - - - - - - - - - - 129,563 977,909 65,870 522,980 26.5% 12.6% In recognition of the initiatives taken during the Covid-19 shut down period and the achievement of the second half guidance targets the board has used its discretion to award the executive team 50% of the available Short Term Incentive. The cash settlement of the award will be paid in September 2022. - - - - - - - - - - - - 118,421 111,794 84,615 51,962 83,740 - 15,833 - - 25,385 - 37,500 Nil Nil Nil Nil Nil - Nil - - Nil - Nil The relative proportions of remuneration that are linked to performance and those that are fixed for the financial year 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 650,000 Up to 40% of fixed remuneration Up to 60% of fixed remuneration 380,000 264,000 264,000 Up to 25% of fixed remuneration Up to 30% of fixed remuneration Up to 25% of fixed remuneration Up to 30% of fixed remuneration Up to 25% of fixed remuneration Up to 30% of fixed remuneration R E M U N E R A T I O N R E P O R T A U D I T E D Since the long-term incentives for the financial year are provided exclusively by way of options, the percentages disclosed also reflect the value of remuneration consisting of options. 38,848 474,859 18.2% The relative proportions of remuneration that are linked to performance and those that are fixed for subsequent financial years are as follows: 19,907 366,916 27,280 333,703 14,052 262,908 16,302 343,662 6,733 244,187 211,994 2,432,742 106,562 1,623,632 5.4% 18.1% 5.3% 21.1% 2.8% 19.7% 6.6% Executive Directors Harry Konstantinou Other Key Management Personnel Kym Gallagher Angelo Konstantinou Sean Hodges FY2022 changes to STIs and LTIs Fixed remuneration ($) At Risk Short-Term Incentives (STI) At Risk Long Term Incentives (LTI) 700,000 Up to 40% of fixed remuneration Up to 60% of fixed remuneration 410,000 285,000 320,000 Up to 25% of fixed remuneration Up to 30% of fixed remuneration Up to 25% of fixed remuneration Up to 30% of fixed remuneration Up to 25% of fixed remuneration Up to 30% of fixed remuneration Based on remuneration structure review conducted by the People and Culture Committee there is no change to the underlying performance metrics for either the FY22 STI or LTI. The performance targets have been adjusted by the Board to reflect the current market conditions and align incentives with shareholder interests. 2 8 2 2 0 2 T R O P E R L A U N N A E R U S I E L A V I V C . SERVIC E AGREEMENTS Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration for the financial year are set out below: Employee Number granted Grant date Value per Option at Grant Date ($) Value of Options at Grant Date ($) Number Forfeited Number Exercised Exercise Proceeds ($) Options held at Balance Date Vesting and First Exercise Date Last Exercise Date Directors and other Key Management Personnel Non-Executive Directors Employee Harry Konstantinou Kym Gallagher Angelo Konstantinou Sean Hodges Base Remuneration ($) Term of Agreement Notice Period Bruce Glanville# Tranche 1 200,000 2-May-19 0.055 11,064 6 5 0 , 0 0 0 3 8 0 , 0 0 0 2 6 4 , 0 0 0 2 6 4 , 0 0 0 Ongoing Ongoing Ongoing Ongoing Six months Three months Three months Three months Other Key Management Personnel Tranche 1 100,000 2-May-19 0.055 5,532 Kym Gallagher LTI LTI 75,000 7-Jun-19 - - 75,000 75,000 30-Oct-19 0.069 5,157 LTI 226,667 12-Nov-20 0.391 88,587 The major provisions of the agreements relating to remuneration for subsequent financial years are set out below: Employee Harry Konstantinou Kym Gallagher Angelo Konstantinou Sean Hodges Base Remuneration ($) Term of Agreement Notice Period 700,000 4 1 0 , 0 0 0 2 8 5 , 0 0 0 3 2 0,0 0 0 Ongoing Ongoing Ongoing Ongoing Six months Three months Three months Three months LTI 71,000 28-Oct-21 Tranche 1 100,000 2-May-19 50,000 7-Jun-19 0.580 0.055 - 41,180 5,532 - 50,000 Angelo Konstantinou LTI LTI Sean Hodges LTI LTI LTI 50,000 30-Oct-19 0.069 3,438 LTI 160,000 12-Nov-20 0.391 62,532 49,000 28-Oct-21 0.580 28,420 76,667 12-Nov-20 0.391 3,438 - - - - - - - - - - - - - - - - - - - - 200,000 7-Jun-19 2-May-23 100,000 7-Jun-19 2-May-23 - 75,000 31-Aug-22 31-Aug-24 226,667 16-Oct-23 16-Oct-25 71,000 16-Oct-24 16-Nov-24 100,000 7-Jun-19 2-May-23 - 50,000 31-Aug-22 31-Aug-24 160,000 16-Oct-23 16-Oct-25 49,000 16-Oct-24 16-Nov-24 76,667 16-Oct-23 16-Oct-25 49,000 28-Oct-21 0.580 28,420 49,000 16-Oct-24 16-Nov-24 D. SHARE- BASED REM UNERAT ION #Ceased 7 April 2022, holding shown are as at the date of cessation Total 4,615,334 295,000 4,320,334 All options refer to options over ordinary shares of the Company, which are exercisable on a one-for- one basis under the terms of the agreements. Options granted to the Executive Team are under the LTI Plan and under Tranche 1 and Tranche 2 Plans: • LTI Plan Options: The vesting of those options and will be subject to the satisfaction of appropriate service-based conditions and/or performance hurdles determined by the Board; • Tranche 1 and Tranche 2 Plan Options: These options are currently vested. Options granted under the LTI, Tranche 1 and Tranche 2 Plans carry no dividends or voting rights. Details of options over ordinary shares in the Company that were granted as remuneration to each key management personnel are set out in the table below. Non-Executive Directors are not entitled to participate in the LTI Plan. Employee Number granted Grant date Value per Option at Grant Date ($) Value of Options at Grant Date ($) Number Forfeited Number Exercised Exercise Proceeds ($) Options held at Balance Date Vesting and First Exercise Date Last Exercise Date Directors and other Key Management Personnel Executive Directors Tranche 1 1,000,000 2-May-19 Tranche 2 1,000,000 2-May-19 Harry Konstantinou LTI LTI 170,000 7-Jun-19 170,000 30-Oct-19 0.069 11,689 LTI 750,000 12-Nov-20 0.391 293,119 0.055 0.072 - 55,320 72,232 - 170,000 1,000,000 7-Jun-19 2-May-23 1,000,000 7-Jun-19 2-May-23 - - - - - - - - - - - E. S HARES HEL D BY D IR EC TOR S AND KE Y M ANAGEM EN T PE RSO NN EL The number of ordinary shares in the Company during the 2022 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 Shares Sold Held at the End of the Reporting Period Executive Directors Harry Konstantinou 23,346,701 Non-Executive Directors Rhys Holleran Louise Bolger# Andrew Burns& 30,000 - 46,876 Other Key Management Personnel Kym Gallagher 140,000 Angelo Konstantinou 22,130,502 Sean Hodges 46,667 - - - - - - - - - - - - - - - - 40,000 - 14,000 20,810 - - - - 23,386,701 30,000 14,000 67,686 10,000 10,000 140,000 - - - - - 22,130,502 46,667 300,000 170,000 31-Aug-22 31-Aug-24 Retired Non-Executive Directors 750,000 16-Oct-23 16-Oct-25 Bruce Glanville* 300,000 LTI 243,000 28-Oct-21 0.580 140,940 243,000 16-Oct-24 16-Nov-24 *Ceased 7 April 2022, holdings shown are as at the date of cessation #Appointed 5 July 2021 &Appointed 20 April 2022 2 9 At 30 June 2022 there were no loans outstanding to Directors or Key Management Personnel (2021: nil). 3 0 E C N E D N E P E D N I N O I T A R A L C E D ’ S R O T I D U A 2 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 U D I T O R S I N D E P E N D A N C E D E C L A R A T I O N 3 1 3 2 E C N A N R E V O G E T A R O P R O C to achieving and have adopted the fourth edition of the Corporate demonstrating the Entities (the Group) highest standards of As such, Viva Leisure Ltd and its Controlled Governance Principles corporate governance. T The Board is committed N E M E T A T S and Recommendations. Governance Statement ended 30 June 2022 is The Group’s Corporate for the financial year relations website at available on the investor https://investors.vivaleisure.com.au C O R P O R A T E G O V E R N A N C E S T A T E M E N T 3 3 3 4 D E T A D I L O S N O C R E H T O D N A S S O L R O T I F O R P E M O C N I E V I S N E H E R P M O C 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F T N E M E T A T S 2 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 Revenue Rental and outgoings 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, acquisitions and contractual matters Other expenses Loss before income tax Income tax benefit Loss for the year Total other comprehensive income for the year Total comprehensive loss for the year 6 5 8 Note 2022 $ 2021 $ 4 90,831,726 83,718,105 (3,055,293) (2,021,447) 20 (30,552,032) (26,384,475) (1,310,207) (2,058,156) (6,749,756) (2,099,596) (754,395) (1,402,195) (859,786) (1,217,433) (2,133,953) (6,618,395) (1,984,615) (473,408) (1,241,134) (261,635) (38,336,988) (30,076,823) (15,221,882) (12,795,671) (507,428) (1,044,935) (5,064,738) (6,257,916) (17,140,726) (8,793,735) 4,999,535 2,408,837 (12,141,191) (6,384,898) - - (12,141,191) (6,384,898) This statement should be read in conjunction with the notes to the financial statements. Earnings per share 24 Basic earnings per share: Earnings from continuing operations Diluted earnings per share: Earnings from continuing operations 2022 Cents (13.8) (13.1) 2021 Cents (8.2) (7.9) C O N S O L L I D A T E D S T A T E M E N T P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E 3 5 3 6 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 F O T N E M E T A T S 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F 2 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 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Tax receivable Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Property, plant, and equipment Right of use assets Intangible assets Deferred tax assets Other 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 Provisions Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY Note 2022 $ 2021 $ 9 10 16 11 12 10 14 19 15 16 12 17 13 19 18 16 21 13 19 21 16 10,069,569 828,624 1,153,991 809,462 1,460,502 14,322,148 17,290,971 2,719,211 - 899,521 991,848 21,901,551 158,001 52,009,555 130,424 51,707,684 224,358,419 204,883,653 66,201,293 77,669,403 1,425,841 47,915,884 69,896,036 1,700,848 421,822,512 376,234,529 436,144,660 398,136,080 7,007,703 4,435,032 29,107,442 2,628,546 - 2,982,583 46,161,306 15,695,868 215,390,301 7,634,055 65,453,213 304,173,437 350,334,743 85,809,917 6,383,048 2,080,500 22,873,600 4,437,889 1,560,361 1,875,182 39,210,580 7,927,000 197,287,676 6,794,176 60,564,445 272,573,297 311,783,877 86,352,203 116,677,780 (21,607,131) (8,718,446) 22 23 128,064,691 (21,395,137) (20,859,637) 85,809,917 86,352,203 C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N 3 7 3 8 This statement should be read in conjunction with the notes to the financial statements. D E T A D I L O S N O C Y T I U Q E N I S E G N A H C F O T N E M E T A T S 2 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F 2 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 Share Capital Reserves Retained Earnings (Accumulated losses) Total Equity $ $ $ $ Balance at 1 July 2020 87,375,694 (21,725,385) (2,333,548) 63,316,761 Issue of shares, net of transaction costs and tax 29,162,554 - Exercise of share options Share option premium reserve 139,532 - Total transactions with owners 29,302,086 (5,532) 123,786 118,254 - - - - 29,162,554 134,000 123,786 29,420,340 Loss for the year Total comprehensive loss for the year attributable to members of the entity Total transactions with owners and other transfers - - (6,384,898) (6,384,898) - (6,384,898) (6,384,898) 29,302,086 118,254 (6,384,898) 23,035,442 Balance at 30 June 2020 116,677,780 (21,607,131) (8,718,446) 86,352,203 Balance at 1 July 2021 116,677,780 (21,607,131) (8,718,446) 86,352,203 Issue of shares, net of transaction costs and tax 11,386,911 - Exercise of share options Share option premium reserve Total transactions with owners Loss for the year Total comprehensive loss for the year attributable to members of the entity Total transactions with owners and other transfers - - - - 11,386,911 - 211,994 11,598,905 (12,141,191) (12,141,191) - 11,386,911 211,994 211,994 - - 11,386,911 211,994 (12,141,191) (542,286) - (12,141,191) (12,141,191) Balance at 30 June 2022 128,064,691 (21,395,137) (20,859,637) 85,809,917 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y 3 9 4 0 D E T A D I L O S N O C T N E M E T A T S 2 2 0 2 W O L F H S A C F O e n u J 0 3 d e d n e r a e y e h t r o F 2 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 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Payments of income tax Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangibles Payments for business combinations, net of cash acquired Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Direct costs of issue of shares Proceeds from borrowings Repayment of borrowings Reduction in equipment leases principal Reduction in property leases principal Net cash provided by financing activities Net decrease in cash held Cash at beginning of financial year Note 2022 $ 2021 $ 6 25 14 15 29 22 22 19 19 100,204,471 95,961,521 (56,649,881) (57,098,045) 8,747 72,568 (15,221,882) (12,795,671) (395,582) (779,854) 27,945,873 25,360,519 (11,434,976) (27,105,482) 82,196 (988,679) 598,208 (755,869) (19,502,493) (27,540,181) (31,843,952) (54,803,324) 11,714,929 30,139,532 (468,597) (1,200,000) 12,912,000 3,112,500 (2,788,600) (1,093,500) (5,127,796) (3,299,792) (19,565,258) (11,028,056) (3,323,322) 16,630,684 (7,221,401) (12,812,121) 17,290,971 30,103,095 C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S Cash at end of financial year 9 10,069,570 17,290,974 This statement should be read in conjunction with the notes to the financial statements. 4 1 4 2 2 2 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F D E T A D I L O S N O C E H T O T S T N E M E T A T S L A I C N A N I F ’ S R O T C E R I D T R O P E R 2 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 › 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 2022 were approved and authorised for issue by the Board of Directors on 17 August 2022. › NOTE 3 – SUMMARY OF ACCOUNTI NG POLI CIES 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. During the first half of the financial year, the Group had its clubs closed across all states and the ACT at various times due mandatory shutdowns imposed by the respective State Governments and there remains uncertainty with respect to future events or circumstances which may continue to impact the financial results of the consolidated entity. acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition date fair values. The Directors monitor the Group’s liquidity and believe that the strong balance sheet position, together with the ability to raise funds if required, provide a reasonable expectation that the Group will be able to pay its debts as and when they become due and payable. Accordingly, the Directors believe that the preparation of the financial statements on a going concern basis is still appropriate. c. Basis of Consolidation The Group financial statements consolidate those of the Parent Company and all its subsidiaries as at 30 June 2022. 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. d. 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 Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognised amount of any non- controlling interest in the acquiree, and (c) acquisition date fair value of any existing equity interest in the acquiree, over the acquisition date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. See note 15. e. 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 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 4 3 4 4 2 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 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. f. Revenue Health Club Operations 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 customer’s contract. Franchise Operations Following the acquisition of Australian Fitness Management (Plus Fitness), the following additional revenue recognition policies are now applicable for the group. The group enters into franchise licence agreements, whereby franchisees pay an upfront five year licence fee, and ongoing monthly franchise fees. The licence fee consideration is received in advance of providing the services attaching to the licence, which is generally over a five year period, and is recognised as a contract liability. The monthly franchise fees are recorded as revenue as they are derived. The transaction price is determined with reference to the contract price as stated in the franchise agreement. The group provides equipment to franchisees as part of establishing the licence. The equipment is invoiced in advance of the supply and is recognised as a contract liability until the point in time the franchise commences operation. On commencement of the franchises operation the revenue is recognised. The transaction price is determined by the amount invoiced to the franchise. 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. g. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs. h. 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. i. Other Intangible Assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in the profit or loss arising from derecognition of an intangible asset is measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles are reviewed annually. Changes in expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. 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: Class of Intangible Trademarks Capitalised Software Digital Assets j. Plant and Equipment Amortisation Rate per annum 5-10% 33% 10% Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 4 k. for details of impairment). The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss in the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to 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. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised in profit or loss when the item is derecognised. k. Leases The Group as a lessee 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; • 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. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 4 5 4 5 4 6 4 6 2 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 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 exercising a purchase option, the specific asset is depreciated over the useful life of the underlying asset. Short-term leases exist. An impairment charge is reversed if the cash- generating unit’s recoverable amount exceeds its carrying amount. m. 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. 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. 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. l. Impairment Testing of Goodwill, Other Intangible Assets and Property, Plant and Equipment Classification and subsequent measurement 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. 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: 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 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 • 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): • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Impairment of Financial assets AASB 9’s impairment requirements use more forward looking information to 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. 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 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 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. n. 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. o. Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. contractual cash flow obligations in the near term; p. Income taxes • adverse changes in economic and business conditions in the longer term may, but not necessarily will, reduce 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. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 4 7 4 7 4 8 4 8 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. q. 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. r. 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 and salaries. 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 provisions 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 10.0% 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. 2 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. 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. 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. u. 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. v. 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. t. Provisions w. Changes in Significant Accounting Policies 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 There were no changes in significant accounting policies during the year. x. New and revised Australian Accounting Standards and Interpretations on issue but not yet effective At the date of the financial statements, the Group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective: Standard/amendment Effective for annual reporting periods beginning on or after AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates 1 January 2022 1 January 2022 1 January 2023 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 4 9 4 9 5 0 5 0 y. Critical Accounting Estimates and Judgements Inventories Inventories › NOT E 4 – R EVE NUE AND OT HER INCO M E 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. 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 consideration is dependent on the outcome of many variables that affect future profitability. Revenue from contracts with customers Income from franchise operations Other sources of income Total revenue and other income The group operates in one segment, health club services. a. Revenue from contracts with customers: Lease term and option to extend under AASB16 Lease term and option to extend under AASB16 a. Income from franchise operations: The lease term is defined as the non-cancellable period of a lease together with 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 option to terminate the lease if the lessee is reasonably certain not to exercise that option. 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. Timing of revenue recognition Over time At a point in time Total revenue from contracts with customers b. Other Revenue Interest received Rent received Gain on disposal of property, plant and equipment Total other revenue › NOT E 5 – LOSS FO R T HE Y E AR z. Reclassification of prior year presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reports results of operations. The effect of reclassifications on the financial statement line items for the prior period is as follows: 2 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 Note 2021 $ Increase / (Decrease) 2021 (Restated) $ Loss before income tax from continuing operations includes the following specific expenses: CURRENT ASSETS Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS 12 2,692,697 (1,700,849) 991,848 2,692,697 (1,700,849) 991,848 10 - - 1,700,849 1,700,849 1,700,849 1,700,849 2,692,697 - 2,692,697 • Amounts expensed as part of business combinations and acquisition 505,074 4 5 5 ,1 1 1 opportunities • Short term lease payments • Amounts expensed as part of capital raises and debt restructure • Costs relating to contractual matters with AFM Franchisees 1 2 1 , 1 8 1 125,000 92,746 219,027 206,795 383,029 › NOT E 6 – FI NANCE COSTS AND FI NANCE I NCO ME Interest expense from borrowings at amortised cost: External entities Interest expenses for finance lease arrangements Total interest expense 2022 $ 2021 $ 1,327,436 13,894,446 15,221,882 922,234 11,873,437 12,795,671 5 1 5 1 5 2 5 2 2022 $ 84,132,492 6,630,146 2021 $ 75,135,620 8,460,040 90,762,638 83,595,660 69,088 122,445 90,831,726 83,718,105 4a 4a 4b 84,132,492 6,630,146 75,135,619 8,460,041 90,762,638 83,595,660 87,798,838 2,963,800 78,951,201 4,644,459 90,762,638 83,595,660 8,747 60,341 - 69,088 72,568 39,442 10,435 122,445 2022 $ 2021 $ N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 › N OTE 7 – SEGMENT REPORTING › NOT E 1 0 – T RAD E AND OT HER R E CE IVAB LE S Management have determined that the Group operates in one business segment – health club operations; and one main geographic segment. Refer to Note 4 for the revenue splits between the revenue with contracts from customers and franchise operations. › N OTE 8 – INCOME TAX EXPENSE The major components of tax expense and the reconciliation of expected tax expense based on the effective tax rate of Viva Leisure Limited at 30.0% (2021:30.0%) and the reported tax expense in profit or loss are as follows: Profit / (loss) before tax Domestic tax rate Prima facie tax expense Adjustment for non-deductible expenses: Non-deductible expenses Prior year’s over provision of tax Income tax (benefit) / expense Tax expense comprises Current tax expense Deferred tax expense › N OTE 9 – CASH AND CASH EQUIVALENTS Cash at bank and on hand Short-term bank deposits Cash backed bank guarantees 2 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 2022 $ 2021 $ (17,140,752) (8,793,735) 30.0% 30.0% (5,142,226) (2,638,121) 80,405 62,286 66,313 162,971 (4,999,535) (2,408,837) (2,255,515) 1,573,022 (2,744,020) (3,981,859) (4,999,535) (2,408,837) 2022 $ 4,301,938 1,536,327 4,231,304 2021 $ 3,261,521 9,678,852 4,350,598 10,069,569 17,290,971 The effective interest rate on short-term bank deposits was 1.00% (2021: 0.01%); these deposits are held at call. Current Trade receivables Other receivables Sub leases receivable Total current trade and other receivables Non-current Sub leases receivable Total non-current trade and other receivables 2022 $ 2021 $ 729,346 35,297 63,981 828,624 2,549,312 112,748 57,151 2,719,211 158,001 158,001 130,424 130,424 2022 Plus Fitness - franchise fees and territory openings Trade receivables Other receivables and sub-leases receivable Current >30 days past due >60 days past due >90 days past due Total $ $ $ $ $ 98,415 24,970 6,648 151,111 281,144 182,959 99,278 17,368 - 12 - 247,863 448,202 - 99,278 380,652 42,338 6,660 398,974 828,624 The amount in current receivables for Australian Fitness Management – licence fees relates to franchise sites that are in various stages of development. The fees become payable 14 days prior to the club opening. The net carrying of trade receivables is considered a reasonable approximation of fair value. › NOT E 1 1 – INVE NTO R IES Current At cost or lower of net realisable value Finished goods 2022 $ 2021 $ 809,462 809,462 899,521 899,521 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 5 3 5 4 › N OTE 12 – OTHER ASSETS Current Prepayments Non-Current Cash bonds receivable 2022 $ 2021 $ 1,460,502 1,460,502 991,848 991,848 1,425,841 1,425,841 1,700,848 1,700,848 Bonds relate to amounts set aside against rental obligations to landlords where the Company is a lessee. 2 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 OTE 13 - BORROWINGS At amortised cost: Bank loans Current Non-current 2022 $ 2021 $ 2022 $ 2021 $ 4,435,032 2,080,500 15,695,868 7,927,000 4,435,032 2,080,500 15,695,868 7,927,000 There are several asset specific security interests registered on the PPS Register against members of the Group listed at Note 30. 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 $3,250,000 (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 drawn balance of the market rate loan is BBSY plus 4.30%, at 30 June 2022 this amounted to 6.16%. Finance lease liabilities are secured against the underlying leased equipment and are at an average interest rate of 5.4% › 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 2021 Additions Acquisitions through business combinations Disposals Depreciation expense Plant and Equipment Furniture and Fittings Motor Vehicles Leasehold Improvements $ $ $ $ Total $ 14,931,462 1,052,726 286,074 35,437,422 51,707,684 1,611,739 301,333 50,165 9,471,739 11,434,976 1,699,967 (5,469,696) - - - (21,390) - - 1,699,967 (5,491,086) (2,131,656) (254,048) (83,132) (4,873,150) (7,341,986) Carrying amount at 30 June 2022 10,641,816 1,100,011 231,717 40,036,011 52,009,555 At cost Accumulated depreciation Written down value 17,765,791 2,616,755 616,347 50,368,014 71,366,907 (7,123,974) (1,516,745) (384,630) (10,332,003) (19,357,352) 10,641,817 1,100,010 231,717 40,036,011 52,009,555 Plant and Equipment Furniture and Fittings Motor Vehicles Leasehold Improvements Total $ $ $ $ $ Balance at 1 July 2020 Additions 5,894,068 1,016,891 9,351,082 358,689 Acquisitions through business combinations 1,942,276 - 319,197 146,771 - 21,416,577 28,646,733 17,248,940 27,105,482 - (2,821) 1,942,276 (504,251) Disposals Depreciation expense Carrying amount at 30 June 2021 At cost Accumulated depreciation Written down value (465,901) (15,503) (20,026) (1,790,063) 14,931,462 20,222,349 (5,290,887) 14,931,462 (307,351) (159,868) (3,225,274) (5,482,556) 1,052,726 286,074 35,437,422 51,707,684 2,315,423 630,788 41,035,766 64,204,326 (1,262,697) (344,714) (5,598,344) (12,496,642) 1,052,726 2 8 6 ,074 35,437,422 51,707,684 All depreciation charges are included within depreciation, amortisation and impairment of non-financial assets. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 5 5 5 5 5 6 5 6 › N OTE 15 – INTANGIBLES Details of the Group’s intangibles and their carrying amounts are as follows: Goodwill Trademarks Capitalised Software Digital Assets $ $ $ $ Total $ 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: Revenue Growth Rate Expense Growth Rate Discount Rate Gross carrying amount Balance at 1 July 2021 Additions 46,905,229 127,625 831,748 51,282 47,915,884 Health Clubs 4% 3% 6.25% - 270 960,834 27,575 988,679 Acquisitions through business combination 17,906,507 - - - 17,906,507 Amortisation expense - (13,773) (588,088) (7,916) (609,777) Carrying amount at 30 June 2022 64,811,736 114,122 1,204,494 70,941 66,201,293 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 multiple of 5x for health clubs and 8x for the Plus Fitness franchise business 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 6.25%. 64,811,736 159,326 2,671,920 88,448 67,731,430 15.2 Growth Rates At cost Accumulated depreciation Written down value Gross carrying amount Balance at 1 July 2020 Additions - (45,204) (1,467,426) (17,507) (1,530,137) 64,811,736 114,122 1,204,494 70,941 66,201,293 Goodwill Trademarks Capitalised Software Digital Assets $ $ $ $ Total $ 19,744,625 126,585 604,033 54,472 20,529,715 - 14,323 738,775 2,771 755,869 Acquisitions through business combination 27,160,604 - - - 27,160,604 Amortisation expense - (13,283) (511,060) (5,961) (530,304) Carrying amount at 30 June 2021 46,905,229 127,625 831,748 51,282 47,915,884 At cost Accumulated depreciation Written down value 46,905,229 159,056 1,711,086 60,873 48,836,244 - (31,431) (879,338) (9,591) (920,360) 46,905,229 127,625 831,748 51,282 47,915,884 All amortisation is included in within depreciation and amortisation expense. 2 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 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 above, and in Note 3 b. relating to the COVID-19 lockdowns, management is not currently aware of any other probable changes that would necessitate changes in its key estimates. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 5 7 5 7 5 8 5 8 › NOTE 16 – TAX 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 Equity Costs of IPO allocated direct to equity Represented by: Deferred Tax Assets Deferred Tax Liabilities 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 Represented by: Deferred Tax Assets Deferred Tax Liabilities 2 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 1 July 2021 $ Recognised in Equity Recognised in Profit and Loss 30 June 2022 $ $ $ Tax Payable CURRENT 2022 $ 2021 $ Income tax (receivable)/payable (1,153,991) 1,560,361 › NOT E 1 7 – T RAD E AND OT HER PAYAB LE S Current Trade payables Sundry payables and accrued expenses 2022 $ 2021 $ 5,187,628 1,820,075 5,235,112 1,147,936 7,007,703 6,383,048 All amounts are short-term. The carrying values of trade and other payables are considered to be the fair value. › NOT E 1 8 – CO NTR ACT L IAB IL IT I ES Current Amounts received in advance for sale of gym memberships Amounts received in advance for franchise licence sales Total contract liabilities Refer to note 3 f. for the revenue recognition policy. 2022 $ 2021 $ 1,693,356 935,190 1,442,538 2,995,351 2,628,546 4,437,889 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 921,009 (61,465,096) (69,785) 562,555 59,265,944 985,228 2,038,253 21,000 6,782,439 290,044 9,331,591 - - - - - - - - 1,003,375 1,924,384 (5,842,429) (67,307,525) (287) (70,072) 1,727,662 2,290,217 5,457,450 64,723,394 13,397 998,625 (1,143,478) 3,000 894,775 24,000 1,843,490 8,625,929 140,579 140,579 (318,160) 112,463 2,744,020 12,216,190 69,896,036 140,579 7,632,788 77,669,403 (60,564,445) - (4,888,768) (65,453,213) 9,331,591 140,579 2,744,020 12,216,190 1 July 2020 Recognised in Equity Recognised in Profit and Loss 30 June 2021 $ $ $ $ 289,610 (53,064,533) (9,228) 496,510 50,339,229 624,968 1,343,052 30,000 4,448,899 - 444,012 4,942,519 57,726,670 (52,784,151) - - - - - - - - 631,399 921,009 (8,400,563) (61,465,096) (60,557) (69,785) 66,045 562,555 8,926,715 59,265,944 360,260 985,228 695,201 (9,000) 2,038,253 21,000 2,333,540 6,782,439 362,555 362,555 (516,523) 4,026,517 290,044 9,331,591 362,555 11,806,811 69,896,036 - (7,780,294) (60,564,445) 4,942,519 362,555 4,026,517 9,331,591 All deferred tax assets have been recognised in the statement of financial position. 5 9 5 9 6 0 6 0 › N OTE 19 – L EASES 2022 $ 2021 $ 2022 $ 2021 $ (i) AASB 16 related amounts recognised in the balance sheet Net carrying amount 2 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 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 187,421,480 160,836,896 41,735,313 (27,086,271) 202,070,522 47,699,023 (21,114,439) 187,421,480 17,462,173 8,233,834 114,743 (3,522,853) 22,287,897 16,044,881 4,319,065 (93,956) (2,807,817) 17,462,173 Total right-of-use assets 224,358,419 204,883,653 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 204,620,113 40,467,271 168,106,082 47,579,096 (19,565,258) (11,065,065) 225,522,126 204,620,113 15,541,163 8,562,249 (5,127,796) 18,975,616 14,521,011 4,319,944 (3,299,792) 15,541,163 244,497,743 220,161,276 29,107,442 215,390,301 22,873,600 197,287,676 244,497,743 220,161,276 (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) 30,385,224 24,033,264 Interest expense on lease liabilities (included in total finance costs) 13,894,446 11,873,437 (iii) Cash outflows relating to leases / rental payments Property lease payments Equipment lease payments Total cash outflows for leases / rental payments 32,664,497 6,002,745 38,667,242 22,126,667 4,074,620 26,201,287 a. Options to Extend or Terminate 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. › NOT E 20 – EMPLOY EE RE MU NE RAT IO 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 JobSaver payments of $766,360. These payments have been recorded as other income for the year. 2022 $ 2021 $ 26,501,257 23,092,699 1,351,126 211,994 907,214 106,562 2,487,655 2,278,000 30,552,032 26,384,475 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 6 1 6 26 2 2 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 20.2 Share-Based Employee Remuneration As at 30 June 2022, 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 1,920,334 options granted to senior executives: Earnings per Share (EPS) Compound Annual Growth Rate (CAGR) The percentage of options that vest for each % EPS and %TSR CAGR is illustrated in the following tables: LTIs (Granted 30 October 2019) EPS CAGR over the three Financial Years Ending 30 June 2022 Percentage of Options that Vest Less than 15% (minimum Target) 0% 15% to 20% (within target range) 50% - 100% (on a straight-line basis) Greater than 20% (above maximum target) 100% LTIs (Granted 12 November 2020) Tranche 1 (50% of Options – based on EPS CAGR) Tranche 2 (50% of Options – based on TSR CAGR) CAGR over the three Financial Years Ending 30 June 2023 Percentage of Options that Vest Percentage of Options that Vest Less than 10% (minimum Target) 0% 10% to 15% (within target range) Greater than 15% (above maximum target) 50% - 100% (on a straight-line basis) 100% 0% 0% 100% LTIs (Granted 28 October 2021) Tranche 1 (50% of Options – based on EPS CAGR) Tranche 2 (50% of Options – based on TSR CAGR) CAGR over the three Financial Years Ending 30 June 2024 Percentage of Options that Vest Percentage of Options that Vest Less than 10% (minimum Target) 0% 10% to 15% (within target range) Greater than 15% (above maximum target) Greater than 20% 50% - 100% (on a straight-line basis) 100% - 0% 0% 0% 100% • For the purposes of the above performance hurdles, EPS means the Basic Earnings per Share calculated by reference to the Company’s audited financial statements. • For the purposes of the above performance hurdles: • for the options granted on 12 November 2020, TSR means Total Shareholder Return and will be measured using the VVA 20-day Volume Weighted Average Market Price (VWAP) for the twenty (20) trading days commencing from the announcement of results for the financial year ended 30 June 2020 (TSR measure start date) to the same 20 trading period VWAP post the date of announcement of results for the year ended 30 June 2023 (TSR measure end date); • for the options granted on 28 October 2021, TSR means Total Shareholder Return and will be measured using the VVA 15-day Volume Weighted Average Market Price (VWAP) for the fifteen (15) trading days commencing from the announcement of results for the financial year ended 30 June 2021 (TSR measure start date) to the same 15 trading period VWAP post the date of announcement of results for the year ended 30 June 2024 (TSR measure end date); • 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 performance hurdles 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 each respective financial year end. 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. LTI (Tranche 1) LTI (Tranche 2) LTI (Tranche 3) No of Options No of Options No of Options Tranche 1 No of Options Tranche 2 No of Options Outstanding at 30 June 2021 295,000 1,213,334 - 1,400,000 1,000,000 Granted - - Outstanding at 30 June 2022 295,000 1,213,334 412,000 412,000 - - 1,400,000 1,000,000 Exercisable at 30 June 2022 - - - 1,400,000 1,000,000 The fair values of options granted were determined using the Black Scholes option pricing model. The following principal assumptions were used in the valuation: LTI (Tranche 1) LTI (Tranche 2) LTI (Tranche 3) Tranche 1 Tranche 2 Options Options Options Options Options Grant date 30 October 2019 12 November 2020 28 October 2021 7 June 2019 7 June 2019 Vesting period ends Share price at grant date ($) Volatility Option Life Dividend yield Risk free investment rate Exercisable from Exercisable to Weighted average remaining contractual life Release of FY2022 results Release of FY2023 results Release of FY2024 results Vested Vested 1.00 25% 2.75 25% 2.40 25% 1.00 25% 1.00 25% 5 years 5 years 5 years 4 years 4 years 0% 2% 0% 2% 0% 2% 0% 2% 82,979 1.34 0% 2% 72,232 1.43 7 June 2020 7 June 2020 2 May 2023 2 May 2023 Release of FY2022 Results 31 August 2024 Release of FY2023 Results Release of FY2024 Results 16 October 2025 16 November 2024 2.25 Years 3.30 Years 2.38 Years 0.94 Years 0.94 Years Fair value at grant date 20,284 474,202 238,960 Exercise price at date of grant Nil 3.34 Nil 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, $211,994 (2021: $106,562) 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. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 6 3 6 3 6 4 6 4 20.3 Employee benefits - liabilities Current: Employee leave entitlements Non-Current: Employee leave entitlements 2022 $ 2021 $ 2,982,583 1,875,182 277,809 830,640 Total employee obligations 3,260,392 2,705,822 › N OTE 2 1 – P ROVISIONS Consolidated Group Opening balance at 1 July 2021 Additional provisions Amounts used Balance at 30 June 2022 Current: Employee benefits Total current provisions Non-Current: Employee benefits Property make good Total non-current provisions Total provisions 2 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 Employee Benefits Property Make Good $ $ Total $ 2,705,822 1,905,696 (1,351,126) 3,260,392 5,963,536 1,452,284 (59,574) 7,356,246 8,669,358 3,357,980 (1,410,700) 10,616,638 2022 $ 2021 $ 2,982,583 2,982,583 1,875,182 1,875,182 277,809 7,356,246 7,634,055 830,640 5,963,536 6,794,176 10,616,638 8,669,358 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. › NOT E 22 – EQ UI TY 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. 2022 Shares 2021 Shares 2022 $ 2021 $ Shares issued and fully paid: Beginning of the year 81,956,221 71,511,393 116,677,780 87,375,694 Shares issued (less costs of offer) 7,558,019 10,344,828 11,386,911 29,162,554 Shares issued through exercise of options - 100,000 - 139,532 Total contributed equity at 30 June 89,514,240 81,956,221 128,064,691 116,677,780 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. 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 2022 and 30 June 2021 are as follows: N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 2022 $ 2021 $ 20,130,900 18,974,793 39,105,693 10,069,569 29,036,124 85,809,917 10,007,500 15,541,986 25,549,486 17,290,971 8,258,515 86,352,203 114,846,041 94,610,718 25.28% 8.7% 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 3 (r). Total borrowings - Market Rate loan Total borrowings – equipment finance leases Total borrowings Less cash and cash equivalents Net debt Total equity Total capital Gearing ratio 6 5 6 5 6 6 6 6 › N OTE 2 3 – RESERVES a. Common Control Reserve A common control reserve was created when the Group restructure took place during the financial year ended 30 June 2019 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. 2022 $ 2021 $ › NOT E 24 – E ARNI NGS PE R SH ARE AN D D IV ID E 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 2022 or 2021). 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 88,106,171 77,516,637 Shares deemed to be issued for no consideration in respect of options granted 4,248,731 3,804,466 Weighted average number of shares used in diluted earnings per share 92,354,902 81,321,103 2022 $ 2021 $ Common Control Reserve Beginning of the year (21,900,880) (21,900,880) 24.2 Dividends Net movement in common control reserve - - There were no dividends declared or paid during the year (2021: nil) Total common control reserve at 30 June (21,900,880) (21,900,880) 24.3 Franking Credits b. Share Options Reserve The share option reserve records items recognised as expenses on valuation of employee share options. Share Options Reserve Beginning of the year Exercise of options by key management personnel Expensing of options to key management personnel Payment for options by key management personnel Total share options reserve at 30 June 2022 $ 293,749 - 211,994 - 505,743 2021 $ 175,495 (5,532) 106,562 17,224 293,749 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 (or receivable from) the amount of provision for income tax (income tax receivable) Total franking credits 2022 $ 2021 $ 5,021,279 2,825,510 (2,338,931) 1,560,361 2,682,348 4,385,871 2 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 O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 6 7 6 86 8 › NOTE 25 – RECONCILIATION OF CASH FLOWS › NOT E 27 – REL ATE D PAR T Y T R AN SACT I O NS Cash flows from operating activities Loss after income tax Non-cash flows in loss — depreciation and amortisation — tax effect of expenses taken to equity — share based payments — other non-cash items — (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 › N OTE 2 6 - AUDITOR REMUN ERATION Remuneration of the auditor for: Audit and review of financial statements Financial year ended 30 June Half year ended 31 December Other assurance engagements Total audit services Other non-audit services Taxation and business services Total non-audit services Total auditor remuneration 2 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 2022 $ 2021 $ (12,141,191) (6,384,898) 38,336,988 30,076,823 140,579 211,994 26,942 362,554 118,254 - (413,011) 1,251,544 1,155 ,8 63 (225,786) (2,838,941) (4,389,071) 624,655 (1,606,020) (2,153,757) 557,269 901,634 948,157 6, 506,091 2,239,720 27,945,873 25,360,519 2022 $ 2021 $ 68,000 35,000 9,500 112,500 40,275 40,275 152,775 63,500 31,500 9,500 104,500 26,500 26,500 131,000 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. 27.1 Transactions with Directors and Key Management Personnel Short-term Employee Benefits: Wages and salaries (including bonuses and Annual Leave entitlements) 2,017,325 1,318,903 2022 $ 2021 $ Superannuation Long service leave Share-based payments Total remuneration Short-term employee benefits 108,528 94,895 211,994 115,776 30,429 106,562 2,432,742 1,623,631 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 KMP in equity-settled benefit schemes as measured by the fair value of the options granted on grant date (see Note 20.2). Further information in relation to KMP remuneration can be found in the directors’ report and at Note 20. 27.2 Related Party Properties Total related party property transactions 2,396,913 3,014,870 2022 $ 2021 $ 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. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 6 9 6 9 7 0 7 0 › N OTE 2 8 – CONTINGENT LIABILITIES The company has no contingent assets or liabilities. › NOTE 29 – B USINESS COMBINATIONS During the period the Group acquired 25 clubs from various vendors in addition to Australian Fitness Management Pty Limited, the master franchisor for the Plus Fitness network as outlined below: Number of clubs Acquisition 12 1 1 8 3 PLUS Sites NSW Victoria Rebalance MFC* $ $ $ $ $ 15 Total $ Purchase consideration Amount settled in cash, net of cash acquired Assets and liabilities acquired at fair value 10,180,154 1,413,487 1,203,097 2,876,024 3,829,732 19,502,494 Property, plant and equipment 860,212 142,410 7 3 ,1 8 5 214,000 410,160 1,699,967 Other net identifiable assets / (liabilities) acquired (121,320) (6,513) (96,903) (23,976) 144,732 (103,980) Goodwill 9,441,262 1,277,590 1,226,815 2,686,000 3,274,840 17,906,507 10,180,154 1,413,487 1,203,097 2,876,024 3,829,732 19,502,494 Revenue and profit contribution from the date of acquisition until 30 June 2022 Revenue 2,552,966 656,348 804,013 901,675 1,358,503 6,273,505 Profit before depreciation, amortisation, interest and tax (but including property rental costs) 982,852 219,614 171,551 250,285 377,468 2,001,770 *MFC is the My Fitness Clubs group of clubs located in Qld Acquisition-related costs amounting to $505,074 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. 2 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 7 1 7 1 › NOT E 3 0 – I NTE RESTS I N SU B SID I ARI ES Name of Subsidiary Principal Activity Viva Leisure Operations Pty Limited Health club operation Viva Leisure People Pty Limited Health club operation Viva Leisure Property Pty Limited Health club operation Viva Leisure Memberships Pty Limited Health club operation Viva Pay Pty Limited Direct Debit Service Provider Chain Collective Group Pty Limited Parent company for franchise operations Rebalance Pilates & Yoga Group Pty Limited Health club operation Psycle Life Pty Limited The Club Group Pty Limited Dormant Dormant The Club Group (Greenway) Pty Limited Dormant Club MMM! Pty Limited Dormant HIIT Republic Australia Pty Limited Health club operation Plus Fitness Pty Limited Master franchisor for Plus Fitness (Aust) Viva Leisure (NZ) Limited NZ Parent Viva Leisure Operations (NZ) Limited NZ operations Plus Fitness (NZ) Limited Master franchisor for Plus Fitness (NZ) Plus Fitness International Pty Limited Club Lime Pty Limited Club Pink Pty Limited Club Blue Pty Limited Club Swim Pty Limited Club Team Pty Limited Dormant Dormant Dormant Dormant Dormant Dormant Proportion of Ownership Interests held by the Group 30 June 2022 30 June 2021 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% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% › NOT E 3 1 – CAPI TAL AND LEASI NG CO MM I T ME NTS At 30 June 2022, Viva Leisure Limited has entered into a binding agreement for $0.85 million to purchase the following health club: • Plus Fitness – Hocking, WA The acquisition was completed on 1 August 2022. At 30 June 2021, Viva Leisure Limited entered into binding agreements totalling $2.85 million to purchase the following health clubs: • Plus Fitness - Mona Vale, NSW • Plus Fitness – Beerwah, Qld • One Health and Fitness - South Morang, Vic These were all completed early in the financial year ended 30 June 2022. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 Contractual Commitments Within 1 Year $ 1 to 5 Years $ After 5 Years $ Total $ 30 June 2022 30 June 2021 850,000 2,850,000 - - - - - - 7 2 7 2 › NOTE 32 – FINANCIAL INST RUMENT RISK 32.2 Credit Risk Analysis 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. The Group does not actively engage in the trading of financial assets for speculative purposes, nor does it write options. The most significant financial risks to which the Group is exposed are described below. 32.1 Market Risk Analysis Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example receivables to customers, placing deposits, investment in term deposits, etc. Credit risk management Credit risk management The credit risk is managed on a group basis based on the Group’s credit risk management policies and procedures. The credit risk in respect of cash balances held with banks and deposits with banks are managed via diversification of bank deposits and are only with major reputable financial institutions. The majority of the Group’s customer pay on an upfront basis by way of direct debit and as such, the Group does not provide for bad debts as revenue is not recorded until received. The Group is exposed to market risk through its use of financial instruments and specifically to interest rate risk, which result from its operating and investing activities. 32.3 Liquidity Risk Analysis 2 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 30 June 2022 Financial assets Financial liabilities Total exposure 30 June 2021 Financial assets Financial liabilities Total exposure Interest rate sensitivity Interest rate sensitivity Short term exposure $ Long term exposure $ 1 2 , 5 1 6 , 7 1 0 - (17,089,730) (29,023,746) (4,573,020) (29,023,746) 20,010,182 (12,864,607) - (19,067,929) 7,145,575 (19,067,929) The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer- term borrowings such as equipment lease financed amounts are therefore usually at fixed rates. At 30 June 2022, the Group is exposed to changes in market interest rates as its Bank Debt is at variable interest rates. The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 2% (2021: +/- 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 $ $ $ $ 30 June 2022 30 June 2021 (102,395) 71,456 102, 395 (71,456) (102,395) 71,456 1 0 2 , 3 9 5 (71,456) 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. 32.4 Financial Risk Management Within 1 Year 1 to 5 Years Over 5 Years Total 2022 $ 2021 $ 2022 $ 2021 $ 2022 $ 2021 $ 2022 $ 2021 $ Consolidated Group Financial liabilities due for payment Trade and other payables Contract liabilities 7,007,703 6,383,049 - - 7,007,703 6,383,049 2,628,546 4,437,889 2,628,546 4,437,889 Bank loans 4,435,032 2,080,500 15,695,868 7,927,000 20,130,900 10,007,500 Finance lease liabilities Total expected outflows 29,107,442 22,873,600 94,175,412 95,466,815 121,214,889 101,820,860 244,497,743 220,161,275 43,178,723 35,775,038 109,871,280 103,393,815 121,214,889 101,820,860 274,264,892 240,989,713 Financial assets – cash flows realisable Cash and cash equivalents Trade receivables Total 10,069,569 17,290,971 828,625 2,719,211 anticipated 10,898,194 20,010,182 - - - - - - - - - - 10,069,569 17,290,971 828,625 2,719,211 10,898,194 20,010,182 N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 inflows Net (outflow)/ inflow on financial instruments (32,280,529) (15,764,855) (109,871,280) (103,393,815) (121,214,889) (101,820,860) (263,366,698) (220,979,530) 7 3 7 3 7 4 7 4 › N OTE 33 – FAIR VALUE MEASUREMENT Contractual commitments Financial assets and financial liabilities measured at fair value in the statement of financial position are measured at amortised cost. At 30 June 2022, Viva Leisure Limited has entered into a binding agreement for $0.85 million to purchase the following health club: › 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 Loss for the year Other comprehensive income Total Comprehensive Income Guarantees and Security Interests 2022 $ 2021 $ 105,915,818 94,669,485 11,838 11,838 105,927,656 94,681,323 12,087 12,087 12,087 12,087 105,915,569 94,669,236 128,064,691 116,538,248 (21,395,137) (21,467,599) (753,986) (401,413) 105,915,568 94,669,236 (352,573) (486,340) - - (352,573) (486,340) 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. 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 $3,250,000 (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 4.31% 2 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 • Plus Fitness – Hocking, WA The acquisition was completed on 1 August 2022. At 30 June 2021, Viva Leisure Limited entered into binding agreements totalling $2.85 million to purchase the following health clubs: • Plus Fitness - Mona Vale, NSW • Plus Fitness – Beerwah, Qld • One Health and Fitness - South Morang, Vic These were all completed early in the financial year ended 30 June 2022. 30 June 2022 30 June 2021 Contractual Commitments Within 1 Year 1 to 5 Years After 5 Years Total $ 850,000 2,850,000 $ - - $ - - $ - - › NOT E 35 – EVENTS AFTE R T HE R EPO R TI NG PER IO D The following events occurred after the reporting period: Since the end of the financial year, Viva Leisure Limited has completed the acquisition of Plus Fitness, Hocking, WA for $0.85 million. No other matters or circumstances other than as referred to in this report, 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. › 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. N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 2 2 7 57 5 7 6 N O I T A R A L C E D ’ S R O T C E R I D 2 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 P U O R G E R U S I E L A V V I 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) a) The consolidated financial statements and notes of Viva Leisure Ltd are in accordance with the Corporations Act 2001, including: i) Giving a true and fair view of its financial position as at 30 June 2022 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 2022. 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 17 day of AUGUST 2022. V I V A L E I S U R E G R O U P D I R E C T O R S ’ D E C L A R A T I O N 7 7 7 7 7 8 ’ S R O T I D U A T R O P E R 2 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 D N E P E D N I I N D E P E N D E N T A U D I T O R ’ S R E P O R T 7 97 9 8 0 2 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 N D E P E N D E N T A U D I T O R ’ S R E P O R T 8 1 8 2 2 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 N D E P E N D E N T A U D I T O R ’ S R E P O R T 8 3 8 4 2 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 8 5 2 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 O I T A M R O F N I S E I N A P M O C D E T S I L R O F L A N O I T I D D A The following information is current as at 15th September 2022 1 . DI ST RI B UT IO N OF SHAR EHO L DE R S 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. D ISTR IB UT IO N OF O PTI O NS Holding 100,001 and over 10,001 – 100,000 5,001 – 10,000 1,001 – 5,000 1 – 1,000 3 . 20 LAR GEST SHARE HOL D ER S Shareholder SHJA MANAGEMENT PTY LTD NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CAPITAL PROPERTY CORPORATION PTY LTD HARRY KONSTANTINOU BNP PARIBAS NOMS PTY LTD MR JOHN KONSTANTINOU CAPITAL PROPERTY CORPORATION PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 BROADGATE INVESTMENTS PTY LTD SPIROS KONSTANTINOU PORTMAN TRADING PTY LTD PACIFIC L PTY LTD BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD MR JOHN KONSTANTINOU EASTY HOLDINGS PTY LTD MR ANGELO KONSTANTINOU DIXSON TRUST PTY LIMITED A D D I T I O N A L I N F O R M A T I O N F O R L I S T E D C O M P A N I E S Total No. of Shares Held No. of Shareholders 80,081,857 6,373,351 1,334,351 1,395,264 329,417 89,514,240 35 238 178 565 735 1,751 Total No. of Options Held No. of Shareholders 4,320,334 - - - - 4,320,334 5 - - - - 5 Number Held % of Issued Shares 21,688,434 17,866,744 14,363,580 5,926,236 2,576,796 2,472,706 1,542,068 1,527,015 1,409,903 1,326,433 1,252,155 949,036 942,067 900,000 828,396 780,721 567,836 466,667 442,068 394,327 24.23% 19. 96% 16.05% 6.62% 2.88% 2.76% 1.72% 1.71% 1.58% 1.48% 1.40% 1.06% 1.05% 1.01% 0.93% 0.87% 0.63% 0.52% 0.49% 0.44% 8 7 8 7 8 7 8 8 8 8 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 15 September 2022 are: Shareholder SHJA MANAGEMENT PTY LTD NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED Number of Shares % of Issued Shares 21,688,434 24.23% 17,866,744 14,363,580 5,926,236 19.96% 16.05% 6.62% 5. LESS THA N MARKETABLE PARCEL OF ORDINARY SHARES There are 394 shareholders with unmarketable parcels totalling 94,963 shares. 6. UN QUOTED EQUITY SECURITIES The company had the following unquoted securities on issue as at 15 September 2022: Security Unquoted Options 7. RE STRICTED SECURITIES No. of Securities 4,320,334 The company had the following restricted securities on issue as at 15 September 2022: 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 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 Term and options to renew Current annual rent (plus GST) and future increases 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 Club Lime and Ladies Only Gym and Pool CISAC ClubMMM at CISAC Sports Centres Australia Pty Ltd Sports Centres Australia Pty Ltd Speedo shop at CISAC Sports Centres Australia Pty Ltd Club Lime Curtin Akon Holdings Pty Ltd Club Lime Kambah Jenke Investments Pty Ltd 5 years commencing on 1 August 2018. 3 further options to renew for 5 years each. $115,392 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. 5 years commencing on 1 August 2018. 3 further options to renew for 5 years each. $180,300 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. 4 years commencing on 1 July 2019. 3 further options to renew for 5 years each. $115,392 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. 10 years commencing 1 August 2018. 2 further options to renew for 10 years each. $2,058,951 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. 5 years commencing 1 August 2018. 2 further options to renew for 5 years each. 5 years commencing 1 August 2018. 2 further options to renew for 5 years each. 5 years commencing 1 July 2018. 2 further options to renew for 5 years each. 5 years commencing 1 August 2018. 2 further options to renew for 5 years each. $236,007 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. $45,039 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. $176,000 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. N/A – property was sold on 21 December 2021 A D D I T I O N A L I N F O R M A T I O N F O R L I S T E D C O M P A N I E S 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. 8 9 9 0 VIVA LEISURE ANNUAL REPORT 2022 2 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 E T A R O P R O C Y R O T C E R I D CE O : Harry Konstantinou CO M PANY S ECR ETARY: Kym Gallagher RE GISTE RED O FFI CE AND PRINCIPAL P LACE O F B U SINE 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 TIE S ARE HE LD AT T HE FOL LOWI NG AD DR E SS : 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 C O R P O R A T E D I R E C T O R Y 9 1 9 1 9 1 9 2 9 2 9 2 2 2 0 2
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