News: VVA Viva Leisure Says New $6 Mln Overdraft Facility Now In Place, page-12

ABQLD

There's a couple of things that I think should be considered with respects to your comments:

1. The existence of gyms will continue and as you've rightly pointed out, it will be a difficult time for the industry. As such, due to Viva Leisure's economies of scale benefits compared to small gyms and its greater mobility on a larger scale compared to it's franchised competitors, it will be in a better position to survive and also assume market share once others have retracted or failed. For example, F45 customers shifting to HIIT with almost 1/2 price offerings

2. The way these gyms make money is on a subscription basis. In response to COVID, Viva reduced memberships to a freeze fee of $4 with this being applied as credit to the members accounts. This will reduce the impact it makes on customers bank accounts when memberships are unfrozen and therefore reduce the cancellations once people realise they are being charged again.

Further to point two, people aren't necessarily paying for gym usage, they are paying for the option to use the gym.

3. 57 / 97 facilities are in covid-free/low states or territories (ACT or QLD). They also operate in predominantly rural areas throughout VIC and NSW. With this in mind, the restrictions you are commenting on may not be as dire as you suggest as Australia navigates this road to recovery.

I believe on current metrics, Viva is fair-ish value. However, the competitive advantage in being able to grow when others will be forced to shrink or fail is why I am staying on board.

Too easy.