Viva Leisure enters Queensland market with acquisition of eight Healthworks Fitness Centres

October 16, 2019

Leading Australian health club owner Viva Leisure Limited has announced that it has today signed a binding sale and purchase agreement for eight Healthworks Fitness Centres in Queensland at a cost of $2.7 million.

The acquisition, just 60 days after Viva Leisure completed its previous acquisition in regional Victoria, sees ACT-based company enter the Queensland market.

The eight centres are located in Aspley, Deagon, Ipswich, Mooloolaba, Newstead Gasworks, Redcliffe, Teneriffe and West End.

The acquisition price represents a headline multiple of 3.25 times 2018/19 financial year (FY19) normalised EBITDA, before synergies. Given the benefit of Viva Leisure’s historical acquisition expertise, management expect to realise all post acquisition synergies and, on this basis, expect the effective purchase price to represent a multiple closer to two times FY19 on a full year run-rate. The acquisition is expected to be immediately EPS accretive.

The acquisition will be fully funded through existing cash reserves.

Completion is expected to occur within the next 30 days and will add approximately 10,000 new members to technology-focused chain's growing portfolio. Back office integration of the acquired clubs is expected to be completed quickly with rebranding of the locations to Club Lime to start immediately upon completion.

Viva Leisure expects to overlay its membership sign up and on-line model to enhance the existing and new member experience at the Healthworks sites.

The company’s data and research indicates that its ‘hub and spoke model’ is conducive for the Queensland market and the sites acquired show attractive propositions based on this research and analysis. Under this model, Viva Leisure expects to open additional locations in Queensland, both under the Club Lime and hiit republic brands, in the short to medium term to compliment the Healthworks Acquisition.

Post completion, Viva Leisure will be operating across all the eastern states of Australia with clubs in Queensland, NSW, Victoria and the Australian Capital Territory. These additional eight locations will mean Viva Leisure has now secured 70 locations with 52 clubs acquired or currently operating, five undergoing fit-out to open shortly, and a further 13 club locations secured and in various stages of pre fit-out commencement. Viva Leisure operated 40 clubs at 30th June 2019, representing a significant achievement and demonstrates the company’s ability to expand and integrate quickly as opportunities arise.

Commenting on the acquisition, Harry Konstantinou, Chief Executive and Managing Director of Viva Leisure, told Australasian Leisure Management “entering the Queensland market for the first time with such a high-quality acquisition of the eight Healthworks clubs is an exciting milestone for the Company.

“The opportunities that it provides to extend our hub and spoke model into these new territories is significant. We expect to be operating over 15 locations in Queensland within the next 12 months.”

Market Announcement
Viva Leisure also provides the following trading update as at 15th October 2019.

Membership
• Total membership (excluding the Healthworks Acquisition) is currently 58,342, an increase of 8% from 30th June 2019;
• The Healthworks Acquisition will add approximately 10,000 new members which represents a 26% increase in overall membership YTD; and
• Net member growth (excluding acquisitions) continues to run at approximately 1,100 members per month.

Locations
• Pipeline and operating locations expanded by 75% to 70 (June 2019: 40);
• 52 operating locations including the eight Healthworks sites, five locations currently under fit-out expected to open shortly; 13 additional locations in different stages of pre fit-out commencement; and
• The pipeline of new sites continues to be strong with a further eight greenfield locations currently under negotiation in Viva Leisure’s new and existing operating locations;

hiit republic
• There are now six hiit republic locations in operation
• All six locations have opened in the previous five months
• Current hiit republic membership exceeds 1,565 members (July 2019: 775);
• Target of nine locations operating by HY20.

Images courtesy of Healthworks.

28th August 2019 - Viva Leisure 2018/19 financial results exceed prospectus forecasts

8th August 2019 - Viva Leisure launches new app to offer keyless entry into clubs

25th July 2019 - Canberra’s Project Fitness Group to transition to HIIT Republic brand as it joins Viva Leisure stable

8th June 2019 - Investors welcome Viva Leisure’s ASX listing

15th May 2019 - Club Lime further expands ACT presence with Conder club opening

10th May 2019 - Viva Leisure lodges prospectus and application for ASX listing

7th May 2019 - Viva Leisure opens three boutique fitness spaces in Tuggeranong precinct

20th March 2019 - Club Lime announces acquisition of Goulburn health club Absolute Fitness

23rd January 2019 - Viva Leisure looks to continue fitness club expansion through 2019

18th October 2018 - Stock market launch for Club Lime owner Viva Leisure reflects positive fitness industry performance

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