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Greater access to IPOs through OnMarket BookBuilds

State One has partnered with OnMarket BookBuilds to provide our clients with even more investment opportunities. In addition to the exclusive capital raisings that State One undertakes and offers to our clients, you can now take advantage of offers from OnMarket. Our association with OnMarket will allow you to bid directly on IPOs and have the shares allocated straight to your holdings at State One. Through OnMarket our clients will also be able to access free research, management interviews and get notifications on upcoming IPOs.

OnMarket is Australia’s first online platform that lets all investors buy shares in IPOs free of any fees other than the cost of the shares. Since launching in October 2015 OnMarket has hosted 1 in 3 ASX IPOs, so we are obviously excited to be able to offer our clients access to this cutting-edge platform. For each offer hosted by OnMarket you get easy bidding & payment, free independent research, and a chance to 'meet the management' via exclusive video interviews. Best of all, when you invest in IPOs via OnMarket, any shares you buy can be allocated directly to your State One Stockbroking account so you can manage your portfolio without disruption.

How does it work?

We will display the list of current offers from OnMarket on our website. If you see an offer that you want to invest in then click on the Bid Now button to apply for shares. You will leave State One website and be redirected to our partner's (OnMarket) bidding platform where you will need to sign up with your Holder Identification Number (HIN). If you have already signed up then you will be taken straight to the bidding page for the selected offer.

It is important that you enter your HIN correctly when you set up your login at OnMarket. This will make for a seamless experience if you want your shares to be automatically allocated to your State One account.

Current OnMarket Offers

IPO
Materials
$0.80
Size of Offer A$5m - A$10m
Minimum Bid $2,000.00
Opening Date 13/05/2019
Closing Date 24/05/2019

 

Update:  The Lead Manager has confirmed that the company has reached the $5 million minimum offer size.

Introduction

Renergen Ltd (ASX: RLT) is an emerging producer of helium and liquefied natural gas (LNG), with existing production and sales of compressed natural gas (CNG).  Renergen listed on Johannesburg’s AltX securities exchange in June 2015 as South Africa’s first listed alternative and renewable energy Company with a market capitalisation of approximately $77.7 million.  

The Technical Report prepared by MHA Petroleum Consultants the states that the net present value of the Proved + Probable (2P) Methane and Helium Net gas Reserves at discount rates ranging from 15% to 20% is ZAR9.788B to ZAR6.758B (see table 1, page 4 of the MHA Report in the prospectus).  The exchange rate between ZAR to A$ at 13 May 2019 is approximately 9.9:1.

Renergen’s principal asset is its 90% shareholding in Tetra4 Proprietary Limited, which holds the first and currently only onshore petroleum production right in South Africa, giving it first mover advantage on distribution of domestic natural gas. The production right was issued by the DMR and is valid for a remaining 23 years. Tetra4’s Virginia Gas Project is located in the Free State, approximately 250 km southwest of Johannesburg.  The gas fields are situated in an energy scarce area, with high customer density and limited competition. The natural gas contains one of the richest helium concentrations recorded globally.

Tetra4 will sell its helium product under an offtake agreement with Linde Global Helium, as well as to other participants in the global helium industry. Tetra4 has a fully termed offtake agreement with Linde Global Helium for the Virginia Gas Project’s helium production for up to 24,000 mcf per annum.

Helium, separated from natural gas after extraction from the ground, is a rare, inert gas, which is an irreplaceable element without substitute. The Company’s planned product, liquid helium, is essential for superconducting due to its ultra-low temperature (minus 269°C) and is increasingly viewed as a high-tech element owing to its growing use in electronics manufacturing. As a commodity, helium has experienced strong demand growth and diminishing supply and is now considered to be strategic, given its scarcity. Helium’s lack of substitutes in its main markets of MRIs, high-end science engineering, pressure/purge applications and semiconductors has helped the helium BLM auction prices increase by over 460% since 2007.

The following chart depicts the estimate of global supply and demand for helium:

As the Company is already listed on the AltX Securities Exchange in Johannesburg, the Company is offering CHESS Depositary Interests (CDIs) over ordinary shares. CDIs represent the beneficial interest in the underlying shares in a foreign Company and are traded in a manner similar to shares of Australian companies listed on the ASX.  Each Share will be equivalent to 1 CDI.

Investment Highlights

  • Proven helium reserves make Tetra4 a meaningful player in the global landscape – a high helium concentration in its gas stream, with its most recent well producing 11% helium.
  • First mover advantage - granted the first and only onshore petroleum production right in South Africa and has experience in producing and selling natural gas since May 2016.
  • Stage One expansion is fully funded – due to the ~$11.8 million rights issue in November, and the committed debt funding of US$40 million from OPIC, the United States government development finance institution. The conditions to OPIC’s committed debt funding include execution of formal agreements on or prior to 30 September 2019.
  • Stage Two upside potential – the 11% helium concentration was discovered in a sandstone trap contained within the production right. The Company intends drilling horizontal wells into the sandstone to prove the full extent of the helium contained within the field.
  • Large LNG market in South Africa - Demand for LNG is expected to significantly exceed its production capacity, given that South Africa lacks LNG import infrastructure and has no other access to LNG.
  • Economic stimulator for the region - garnered significant support from local business and communities which is an important underpinning of the social licence to operate and will continue to be a focus during the proposed expansion of the Virginia Gas Project and after helium and LNG production commences.

Offer overview

Renergen Limited is looking to raise A$5 million via it’s IPO with the ability to accept a further A$5 million in oversubscriptions.

The purpose of the Offer is:

  • to fund the drilling of additional production wells in Tetra4’s proven gas reserves, aiming to produce gas to operate the New Plant at maximum capacity;
  • to fund a feasibility study for the commercialisation of the high concentration helium reserves contained in the Virginia Gas Project’s prospective sandstone deposit;
  • to pay for costs and expenses associated with the Offer; and
  • to provide working capital.

Current operations

Tetra4 is currently producing and selling CNG on a small scale from its existing CNG Plant, which can produce up to 200 GJ per day of gas from one well. The CNG Plant includes a compression station, mobile storage units and a dispensing station located at the site of Tetra4’s customer, Megabus, which has been successfully trialling replacement of diesel with Tetra4’s CNG product in its buses since May 2016.

The CNG Plant commenced operation in May 2016 and was operating per design specifications since September 2016. The operation has been successfully supplying dedicated CNG buses in the area and has served its purpose of proving the business case for the substitution of CNG for diesel by local fleet operators. Tetra4 will commence supplying CNG to a filling station in Johannesburg for Anheuser-Busch during H1 CY2019. Once the New Plant is operational, CNG production will cease at the Virginia Gas Project and will be replaced with LNG.

Why is helium important

Helium is a unique industrial gas that exhibits characteristics both of a bulk, commodity gas and of a high-value "specialty" gas. Due to the high cost of extraction, helium use is restricted to relatively few, generally high-technology, applications.

Liquefied helium is distributed in bulk containers each carrying over 25,000 nm3. It is the only industrial gas distributed in such large quantities on a global basis. However, only a handful of sources in the world produce helium.

Helium is a vital and irreplaceable element in many modern industries. Helium is used for space exploration, rocketry, high level science, in the medical industry for MRI machines, fibre optics, electronics, telecommunications, superconductivity, underwater breathing, welding and nuclear power stations and lifting balloons.

Business overview

Renergen is an emerging producer of helium and LNG, with existing production and sales of CNG. Renergen’s natural gas is a renewable resource, since it is produced by living microbial organisms.

The Company’s business focus is on the commercialisation of the Virginia Gas Project which has significant reserve estimates of both helium and natural gas. The gas fields are situated in an energy scarce area, with high customer density and limited competition, and contains one of the richest Helium concentrations recorded globally.

The expansion of the Virginia Gas Project to produce helium and LNG will be undertaken in stages. Stage One involves connecting 12 existing economically viable gas wells to a new gas pipeline and constructing the New Plant, for the production of helium and LNG. The New Plant will have a maximum daily production capacity of 74.6 mcf (or about 350 kg) of liquid helium and 2,700GJ (or about 50 tons) of LNG. The New Plant has been designed to be scalable, to support the anticipated growing demand for helium and LNG.

Tetra4 has obtained all regulatory approvals required for the Stage One expansion including obtaining an Environmental Authorisation. Stage One is fully funded as a result of the Company completing a rights issue in November 2018.  Renergen will commence the Stage One of the expansion regardless of whether the Minimum Subscription is raised.

Table 1: Major Milestones of Renergen and the Virginia Gas Project

Renergen’s strategy is to develop the Virginia Gas Project and begin exploring the Evander Exploration Right and may then seek additional opportunities in the upstream helium and natural gas sector to complement its growth strategy.

If Tetra4 is able to develop the South African LNG market, Renergen will look for opportunities to consolidate similar early stage natural gas fields with the ambition of building a large-scale South African natural gas Company with diversified revenue streams.

Board and Management

Renergen Limited’s board and management bring relevant experience and skills to the Company, including industry and business knowledge, financial management and corporate governance experience, including:

  • Brett Kimber (Chairman) Brett is currently the CEO of Eazi Access Rental Pty Ltd. He stepped down as Managing Director of African Oxygen Limited in January 2015 after a twenty-five-year career in the broader Linde Group across Asia, the US and South Africa.
  • Stefano Marani (MD and CEO) was part of the team which acquired Tetra4 from Molopo Energy Limited in October 2013 and has been involved with the Company in a management role since October 2013.
  • Fulufhedzani (Fulu) Ravele (Executive Director and CFO) has experience in financial accounting, internal and external audit
  • Nick Mitchell (Executive Director and COO) was instrumental in the acquisition of Tetra4 from Molopo Energy Limited in October 2013. He was appointed to the Board of Renergen in November 2015 following the acquisition of Tetra4 by Renergen. Nick is also the current Chairman for the Onshore Petroleum Association of South Africa (ONPASA) which represents the upstream onshore petroleum industry in South Africa
  • David King (Non-Executive Director, elect) professional geoscientist and has over 38 years’ experience in oil and gas and other natural resources industries.
  • Mbali Swana (Non-Executive Director) has significant experience in implementing large scale projects across Africa and is currently developing Prop5’s Africa-wide strategy for the development of infrastructure.
  • Bane Maleke (Non-Executive Director) spent 20 years in senior management at the Development Bank of South Africa and held the position of Regional Executive for the Southern African Development Community and East Africa Regions.
  • Francois Olivier (Non-Executive Director) is a portfolio manager and executive committee member at Mazi Asset Management. He has 19 years of investment research and portfolio management experience, the first seven of which were spent in the USA.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. Renergen Ltd is subject to a range of risks, including but not limited to risks associated with construction and new production facilities, Regulatory risks, investment in emerging markets and exposure to commodity prices. Please refer to Section 7 of the prospectus for further details.  

 

Section 734(6) disclosure: The issuer of the securities is Renergen Limited (Registration number: 2014/195093/06; ABN 93 998 352 675). The securities to be issued are CHESS Depository Receipts (CDIs) over ordinary shares in the capital of Renergen Ltd, to be quoted on ASX. The disclosure document for the offer can be obtained via the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).​

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

 

IPO
Materials
$0.20
Size of Offer A$4.5 million
Minimum Bid $2,000.00
Opening Date 16/05/2019
Closing Date 31/05/2019

Introduction

Trigg Mining Limited (ASX: TMG) is an explorer of the essential potassium fertiliser, sulphate of potash (SOP), which is needed for global food production and human nutrition. Founded on the purpose of building mines communities can be proud of, the company engages in the sustainable extraction and evaporation of hypersaline brines in Western Australia.

Sulphate of potash is a premium potassium fertiliser required for healthy plant growth, plant metabolism, optimisation of crop yields and quality of produce. It is a necessary fertiliser for high value, chloride sensitive crops such as avocados, cocoa, coffee beans, grapes, berries and tree nuts, as well as arid and acidic soils. Potassium is also of vital importance for human health where it is required for normal cell function, maintenance of cardiovascular health and prevention of stroke and coronary heart disease.

Investment Highlights

  • Strong global demand for fertiliser – demand for sulphate of potash fertilisers is strong. The world population continues to expand whilst the area of arable land per capita is falling, placing greater pressure on increasing productivity and crop yields to feed the expanding global population.
  • Opportunity to be Australia’s first domestic supplier – Australian consumption of SOP is currently supplied by imports and Australia has frequent supply constraints from traditional suppliers, resulting in SOP imports coming from secondary producers.
  • Targeting premium markets – primary choice for high-value chloride sensitive crops such as avocados, cashews, almonds, cocoa, berries, stone fruits, citrus, all crops under glass and flowers.
  • Naturally occurring production method – Brine hosted SOP is a naturally occurring primary source of SOP and can potentially be organically certified (essential for organic farming) with other methods of production requiring secondary chemical processing, increasing production costs.
  • Competitive footprint – The Projects cover approximately 2,640 km2 containing more than 400 km2 of playa lakes and 300 km of interpreted palaeochannels.
  • Located close to established infrastructure - The Projects lie near existing transport and energy infrastructure.
  • Established exploration target - Exploration Target of approximately 15% of the total tenure area, based on historical exploration work, shallow pit sampling, geophysical surveys and air core drilling.
  • Share register includes Regal Funds Management – Substantial shareholding by Regal Emerging Comp Fund II.
  • Experienced management team and Board with significant expertise in mineral projects, project development and corporate finance.

Offer Overview

Trigg Mining Limited is seeking to raise A$4.5 million and will have an enterprise value of A$7.1 million at listing. The company is also offering 1 free attaching option on the basis of 1 new option for every 2 shares subscribed.  Each new option will be quoted (ASX: TMGO) and will be exercisable at $0.20 per new option on or before 31 October 2021.

The Company intends to use the funds raised under the Offer as follows:

  • to fund exploration drilling, geophysics and support;
  • to establish bores and pump testing;
  • for laboratory and test work;
  • to pay for the Company’s administration and corporate overheads;
  • for working capital; and

to pay for the costs associated with the Offer.

About SOP

Trigg Mining is engaged in the exploration and evaluation of SOP mineralisation, used predominantly as a mineral SOP fertiliser and is a valuable tool in crop management by positively influencing crop yield and quality. SOP nutrients play an important role in the development of proteins, enzymes and vitamins, as well as improving plant photosynthesis and growth. It improves nutritional value, taste and appearance (size, colour, and scent), fruit’s resistance to deterioration during transport and storage and its suitability for industrial processing. SOP can improve the uptake of phosphorus, iron, and other micronutrients and helps the plant to be more resistant to drought, frost, insects and many diseases. In sandy soils it can also reduce leaching of cations such as calcium and potassium.

The Projects

The Company has built a competitive footprint across two SOP Projects: Laverton Links and Lake Throssell Potash Projects.

  • The Laverton Links Potash Project comprises three prospects (Lake Rason, Lake Hope Campbell and East Laverton) and is the Company’s most advanced Project. The Laverton Links Potash Project consists of eight granted exploration licences covering a total area of approximately 2,315 km2.  The Laverton Links Potash Project is located close to established infrastructure including roads, rail and three airstrips. Two gas pipelines pass through the Project tenements.
  • The Lake Throssell Potash Project comprises one exploration licence covering an area of 322 km2, situated approximately 200 km east of Laverton along the Great Central Road through to Alice Springs and Queensland via the Outback Highway.  This Project lies approximately 60 km northeast of the newly established Gruyere Gold Mine and the terminus of the Yamarna Gas Pipeline

The Projects total 2,640 km2 of granted tenure, containing over 400 km2 of salt lake playa and 300 km of interpreted palaeochannels (ancient underground rivers) – all prospective for brine hosted SOP. Early exploration work has established a JORC Compliant Exploration Target of 2.5–9.0 million tonnes of SOP (at 4.3 – 6.3 kg/m3) for the Lake Rason Prospect, representing approximately 15% of the Company’s total tenure by area.

Access to infrastructure

Both Projects are well endowed in terms of transport and energy infrastructure. Multiple roads and tracks access the Projects and two gas pipelines pass directly through the Laverton Links SOP Project. Nearby airstrips are located at the Tropicana and Gruyere mines, as well as the commercial airport at Laverton. Logistics for access to domestic and international markets is, subject to negotiation of suitable access and infrastructure arrangements, likely to be via 300 km of road to the railhead at Leonora and then onwards via rail or road to domestic markets, or to international markets via the deep-water port of Esperance.

Industry Overview

In 2017, the United Nations estimated the world’s population had reached almost 7.6 billion and would continue to expand at 1.1% per annum to reach 8.6 billion by 2030. In contrast, the world’s arable land has decreased by more than a third in the 40 years to 2015 and fertiliser application rates have increased by approximately 30% in just the last 15 years. More people are going to need more food, and with global arable land decreasing per capita, the need for higher crop yields will become increasingly important for global food security. These higher yields will remove more nutrients from the soils, increasing the need to be replenished with the use of fertilisers.

Natural production

About 35% of the world’s SOP production is produced from natural brines via solar evaporation. It is a relatively low-cost, primary production method.  Natural brines, such as that being explored for by Trigg Mining, are the only source of SOP to be certified as organic. For organic certification, SOP must come from natural sources with little or no processing, such as solar evaporation.

There are two other, non-organic methods for producing SOP, including sulphate salts reaction and the Mannheim Process.

Premium product

Given the inelastic nature of the demand for SOP and its exceptional qualities, produce growers are willing to pay a higher price for SOP and it effectively serves a separate market to muriate of potash (MOP), sustaining a price premium over MOP. Price premiums are further supported by the higher cost of manufacturing SOP in the Mannheim Process. By way of illustration, and noting that historic pricing differentials are not a guarantee of future differentials, on 13 September 2018 the stated landed pricing at the Port of Kwinana was $989/t (for SOP) and $618/t (for MOP).

Business Objectives  

The Company’s main objective is to complete the next exploration and evaluation phase which will involve:

  • carrying out further exploration work to seek to expand the Exploration Target, define a JORC compliant Mineral Resource and determine possible processing flow sheet options for the brine at Laverton Links Potash Project; and
  • conduct a heritage survey and undertake reconnaissance exploration at Lake Throssell Potash Project.

Management and Board

Trigg Mining Limited’s Board has significant expertise in mineral projects, project development and corporate finance:

  • Keren Paterson, CEO and MD - recognised mining industry leader with more than 20 years’ international experience spanning the entire mining value chain.  Prior to founding Trigg Mining, Ms Paterson was the founder and Managing Director of a uranium company that listed on ASX in 2009.  She has also held corporate roles with Fortescue Metals Group, CopperCo, Resource Capital Funds and Mainsheet Capital
  • Michael Ralston, Non-Executive Chairperson - experienced mining executive (previously undertaking roles as chairman, Managing Director and CFO) having worked for four junior ASX-listed resource companies over the last 13 years
  • William Bent, Non-executive Director - has 25 years’ international experience in resources and corporate advisory. He is a Director of Mainsheet Capital and was the Managing Director of Chalice Gold from 2012 to 2014 where he led the acquisition of exploration and development projects for the company
  • Neil Inwood, Technical Manager - over 25 years’ international geology experience in gold, base, and specialty metals. Significant consulting and venture capital experience in the last 15 years. Previously the Managing Director at Berkut Minerals, Executive Geologist with Verona Capital and prior to that, Principal Geologist with the international mining consultancy, Coffey Mining
  • Matthew Wheeler, Consulting Geologist - more than 20 years’ experience in the Australian and international mineral resources sector. Has held exploration, resource evaluation, project development and management roles in a range of commodities including gold, uranium and industrial minerals. Extensive Western Australian experience including exploration and evaluation of surficial and palaeochannel sedimentary hosted mineral systems within the Yilgarn Craton, Officer Basin and Canning Basin.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. As set out in Section 13 of the prospectus, Trigg Mining Limited is subject to a range of risks, including but not limited to the nature of mineral exploration and exploitation, exploration target, the inability to attract brine volume, climate change and commodity price volatility.

 

Section 734(6) disclosure: The issuer of the securities isTrigg Mining Limited ACN 168 269 752. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).​

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

 

 

IPO
Consumer Services
$1.00
Size of Offer A$20 million
Minimum Bid $2,000.00
Opening Date 13/05/2019
Closing Date 23/05/2019

Offer closed early via OnMarket.  All payments for successful applications must be made by 5pm, Thursday 23 May (AEST).

OnMarket has a limited firm allocation, and the offer may close early and the 'Pay By' dates may change. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

The Viva Leisure Ltd IPO is fully underwritten by the Lead Manager, Ord Minnett.

Introduction

Viva Leisure Ltd (ASX: VVA) operates health clubs (gymnasiums) within the Australian health and leisure industry. Viva Leisure’s mission is to connect health and fitness to as many people as possible and aims to provide its members with affordable, accessible and awesome facilities.

At the end of March 2019, Viva Leisure operated 29 clubs located within the Australian Capital Territory and New South Wales, with the majority operating under the Club Lime brand. The Company’s has also entered into leases or agreements to lease a further 16 locations, plus an additional three facilities to be acquired shortly after listing. With over of 47,500 individual members they experienced growth at an average net rate of 709 members per month (excluding acquisitions) for the period April 2018 to March 2019.

Viva Leisure's Brands

Viva Leisure operates on what it calls a ‘hub and spoke’ model with larger (big box) health clubs being supported by smaller (standard, express and boutique) health clubs strives to provide offerings and options to suit individual members’ preferences. The Company believes this approach is unique in the marketplace as health club owners traditionally concentrate on one segment (i.e. big box, standard, express or boutique health clubs).

For the 12 months ending 30 June 2018, Viva Leisure generated revenue of $24.1 million and a statutory EBITDA of $5.2 million. Revenues and EBITDA are forecast to grow to $46.8 million and $11.4 million respectively by FY2020.

Investment Highlights

  • Significant growth opportunity – Fragmented $2.3bn Australian fitness industry targeting organic growth and opportunistic acquisitions
  • Scalable and bespoke business model with strong branding – ‘hub and spoke’ model provides for multiple offerings to suit member preferences supported by a strong and well-respected brand
  • Technology focused development provides a competitive advantage by operating a fully automated front-end and back-end system which pushes out relevant information, removing the need for users to retrieve the information
  • Strong cash flows from membership based revenue model – supported by strong track record of growth across all key metrics, including membership, retention, revenues are forecast to increase from $24.1 million in FY2018 to $46.8 million in FY2020.
  • Experienced management team and industry Board with significant operational and governance experience.

Offer overview

Viva Leisure Limited is seeking to raise $20 million via its IPO and will have a market capitalisation of approximately $52.6 million and an enterprise value to pro forma FY2019 forecast EBITDA of 5.6x. 

The Offer is fully underwritten by the Lead Manager, Ord Minnett.

The Company aims to provide a combination of capital and income returns to shareholders and has established a dividend policy targeting distribution to shareholders, subject to the operating needs of the Company, of between 40% and 60% of NPAT with dividends expected to commence in FY2021.

The purpose of the Offer is:

  • fund execution of Viva Leisure’s business model and expansion opportunities;
  • to pay for costs and expenses associated with the Offer; and
  • to provide working capital.

Industry Overview

The Australian health and fitness industry is made up of health clubs, fitness centres and gymnasiums which are designed to provide a range of fitness and exercise services. With fitness becoming an integral part of the lifestyle for many in the community, and with increased awareness in health and fitness the industry has experienced significant growth over the past decade. It was expected that the aggregate industry revenue in Australia would reach approximately $2.2 billion in FY2018 and continue to grow at an annualised rate of 2.3% over the next five financial years to reach approximately $2.5 billion in FY2023.

The Australian fitness market remains largely fragmented with major players in the market being Fitness and Lyfestyle Group (27.5%) and Anytime Fitness (14.9%). The remainder of the market (57.6%) made up of smaller franchise operators, single club owners multi-club owners/operators and council owned facilities. 

Business overview

Commencing operations in 2004 with one facility, Viva Leisure now operates 29 different facilities in the ACT and NSW, with a further three facilities to be acquired shortly after listing, and 16 new greenfield facilities in different stages of opening.

The majority of the health clubs are operating under the Club Lime brand through which Viva Leisure has become recognised in its market as a brand that stands for value, quality and a club or community atmosphere.

Viva Leisure’s ultimate vision is to be the number one health, fitness and aquatic operator in the market. To achieve its mission and realise its vision, Viva Leisure’s future strategy is focused on:

  • expanding its geographic reach in a determined, but controlled, approach, both organically and via acquisitions;
  • continuing investment in its differentiated model, membership retention, customer experience teams, cutting edge technology systems and facilities strive to make the Viva Leisure experience as seamless and important to its members as possible (e.g. healthy body, better life); and
  • increasing the range of products and services delivered to the Viva Leisure membership base to increase the benefits received by members.

Customer Base

Viva Leisure has demonstrated that its attractive membership proposition together with its high quality facilities and technology-led business model work successfully in a variety of locations across both regional and metropolitan areas. The Company’s membership base exceeds 47,500 and has been achieved through a strong value proposition based on:

  • striving to provide members with an affordable membership pricing structure;
  • access to health clubs 24 hours a day, seven days a week, and
  • providing “no contract” membership offers.

Viva Leisure’s proprietary member management system provides demographic and usage information on its membership base. The table below details customer base details as at March 2019.

Viva Leisure’s Customer base

Growth Strategy

Viva Leisure aims to provide its members with affordable, accessible and awesome facilities with its key strategies being to:

  • expand its geographical reach in a determined but controlled approach through establishing new greenfield locations and acquiring established businesses;
  • harnessing technology driven efficiencies to:
    • minimise administrative costs and overheads; and
    • enable Viva Leisure to continue to collect, analyse and monitor valuable real time data relating to its membership base and health clubs;
  • continue to develop its ‘hub and spoke’ strategy where big box health clubs are supported by smaller standard, express and boutique health clubs; and
  • growing its membership base at its existing health clubs by strengthening brand awareness and continuing to invest in improving members’ experience and its product and service offerings.

Revenue Model

Viva Leisure derives its revenue primarily from membership income. Membership income comprises fortnightly direct debit membership fees, joining fees, access pass fees, and other fees that may be applicable to the membership (i.e. suspension fees). As at April 2019, Viva Leisure’s direct debit income per fortnight exceeded $1.2 million which ensures a regular, consistent cash flow stream for the management of the business.

For the 12 months ending 30 June 2018, Viva Leisure generated revenue of $24.1 million and a statutory EBITDA of $5.2 million. Revenues and EBITDA are forecast to grow to $46.8 million and $11.4 million respectively by FY2020.

Financial Summary

Board and Management

Viva Leisure’s Board and Management bring significant operational and governance experience in the growth, aggregation and consolidation fields, including:

  • Harry Konstantinou (CEO and Managing Director) as a co-founder, he has been driving the business since it commenced and has substantial experience in the health and leisure industry and has overseen various acquisitions.
  • Bruce Glanville (Chair) has over 40 years’ of professional experience having held a variety of roles and serving in a wide range of commercial appointments as Director, including on listed companies and business ventures in both the public and private sectors.
  • Mark McConnell (Non-Executive Director) has over 20 years’ experience in a range of executive roles and has experience in business strategy, investor relations, capital raisings and innovations. Mark is a Director of several private companies and several ASX-listed entities.
  • Susan Forrester AM (Non-Executive Director) has over 25 years’ experience as a commercial lawyer, executive manager and company Director, with expertise in growth strategies and aggregations in a variety of industries. Susan is currently the chair of one ASX entity and a Director of several ASX‑listed entities.
  • Kym Gallagher (CFO) has over 20 years’ experience as a financial controller and CFO. Kym has been CFO of several companies during their IPO process and is a chartered accountant.

Risks

You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. Viva Leisure Ltd is subject to a range of risks, including reliance on membership, changes to regulatory framework, increased competition, technology issues and further acquisitions and integration risks.  

 

Section 734(6) disclosure: The issuer of the securities is Viva Leisure Limited ACN  607 079 792. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).​

OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

IPO
Food & Beverage
$0.20
Size of Offer Up to A$8 million
Minimum Bid $2,000.00
Opening Date 12/03/2019
Closing Date 7/06/2019

Update

Australian Nutrition & Sports Ltd (AN1) has advised that they have lodged a Refresh Supplementary Prospectus with ASIC and intend to lodge a full Replacement Prospectus shortly. The Replacement Prospectus will be provided to investors when available.

The Offer is currently closed for new applications. Existing investors can manage their applications, including canceling, via their OnMarket bid history panel.

Introduction

Australian Nutrition & Sports Ltd (ASX: AN1) is an Australian based company, committed to developing, sourcing and marketing high quality Australian made milk formula and nutrition and wellness products for sale in China, Hong Kong and Australia. In the future they plan to expand into other Asian markets.

Currently focused on infant and adult milk formula products, protein based health and wellness nutritional products, ANS’s business model is to develop and brand its own high-quality products, and then to develop distribution channels for the profitable sale of the products. In doing this ANS currently intends to rely on a capital light business model by outsourcing the production of its products to various export accredited Australian third-party producers.

All of ANS’s nutrition and milk formula products are made in Australia at export quality and with all required export certifications. These certifications include the coveted China Certification and Accreditation Administration (CNCA) for the milk formula products. A number of the protein supplements are also approved by China Inspection and Quarantine (CIQ) for the import and sale of products in China.

The market segments in which ANS participates are both growing markets, with health and wellness being a growing industry, particularly in Asia. With the removal of the one child policy in the PRC, and the growing population and growing affluence of the population in Asia in general, ANS believes that the demand for premium nutrition and milk formula products from Australia will continue to grow.

ANS has successfully commercialised a number of products in the Hong Kong market with distributions agreements in places with leading pharmacy groups including Watsons and Mannings. In FY2018, ANS generated cash sales of $419,260, up 192% from FY2017 sales of $218,033.

 

Investment Highlights

  • Premium quality, health and nutrition products sourced and produced in Australia
  • Two complementary product categories, with a total of 23 nutrition products and 4 milk formula products
  • Targeting growing Chinese and South East Asian markets with increased focus on health and wellbeing
  • Third party agreements with accredited manufacturers that hold required accreditations and licences for import and sale of products into China (CNCA and CIQ approved)
  • Executed Agreements for the distribution of products with Watsons and Mannings, Hong Kong’s two largest chain of chemists
  • Commencing Infant Milk Powder sales into mainland China via domestic Chinese e-commerce channels such as KKSKY (www.kksky.com) and Jing Dong (www.JD.com)
  • Generated cash sales of $419k in FY2018, up 192% of FY2017 sales.
  • Board and management with significant experience in global distribution networks sales and marketing in Asia

    Offer Overview

    Australian Nutrition & Sports Limited is looking to raise up to $8 million via its IPO and will have an indicative market capitalisation of approximately $19.1 million at maximum subscription.  

    The proceeds of the IPO will be used to:

    • increase the sales and marketing budget to expand brand awareness to drive both direct and retail channel sales for ANS’s current commercialised products with a focus on export markets;
    • grow sales and brand presence in Hong Kong by continuing to add new customers to the network with a secondary focus to expand in other Asian markets in which the company already has a presence;
    • rebrand the nutrition and fitness product ranges;
    • invest upstream into IMF and protein manufacturers;
    • continue the commercialisation of the portfolio of product formulations;
    • Provide working capital; and
    • cover costs associated with an ASX-listed company, and other typical administration costs.

    Business Model

    Australian Nutrition & Sports Ltd’s business model is to develop and brand its own high-quality products for the market segments in which it operates, and then to develop distribution channels for the profitable sale of the products. In doing this the company currently intends to rely on a capital light business model by outsourcing the production of its products to various third-party producers.

    All of the company’s nutrition and milk formula products are made in Australia at export quality and with all required export certifications. Outsourcing the production of its products to third parties gives the company the advantage of requiring less capital intensity, and also de-risks the supply of products as it reduces the risk to the company that would be caused by the loss of regulatory accreditation of, or other manufacturing disruption at, a company owned production facility.

    ANS Australia executed a supply agreement with Nature One Dairy in October 2018 for the manufacture and supply of Infant and Adult products. As part of the agreement, NOD agrees to supply IMF and AMF products to ANS Australia from its CNCA approved facility in Melbourne.

    Products

    Australian Nutrition & Sports Ltd has a broad and diverse product range comprising two main product classes, being milk formula and nutrition products:

    Milk Formula

    Australian Nutrition and Sports Ltd offers a range of milk formula products with four commercialised products. Three of the products are developed specifically to address the different stages of infant growth as a nutritional alternative to breast milk for growing infants. All milk formula products meet stringent export regulations and are Australian made in National Association of Testing Authorities (NATA) accredited laboratories.

    Nutrition

    In addition to the extensive milk formula range, the company has a range of Australian-made, export quality nutrition products with all required certifications, including protein powders, protein shakes, protein bars and rapid energy gels.

     

    Business Strategy

    Execution of the brand marketing strategy "The ANSWER".

    The company will focus its initial marketing efforts on promoting its brand and increasing awareness of our existing product range, with a view to increasing sales through existing distributors and retailers, as well as growing its network of distributors and retailers in Australia and abroad.

    Continue China expansion

    The distribution of IMF and AMF products into China is undertaken currently via CBEC (Cross Border e-Commerce) sales channel. This sales channel is large, is expected to continue to grow and is the current primary sales channel that the company will focus on for the sale of its IMF and AMF products into China. The company additionally intends to explore opportunities to sell its AMF products offline through traditional retail channels in China.

    Improve Australian market presence

    The company’s nutrition and protein products are currently sold in Australia in gym and fitness centres with its IMF and AMF products sold in a small number of retail outlets. The company intends to undertake an expansion of its IMF and AMF products into retail stores Australia-wide

    Industry Overview

    In September 2016, the nutrition, health and wellness industry had an estimated global market size of US$570 billion. Key demand factors that have been observed by the company in the market are: population growth; growth in the middle classes (particularly in China); positive social trends regarding health and wellness; and governments willingness to implement initiatives to address public health and ageing populations. The key component of the company’s PBNM products is Australian sourced protein, which is ultimately sourced from cow milk.

    Australia has abundant pasture and other resources for production of dairy based products, making it well positioned to meet China’s growing demand for dairy and nutrition products.

    Management and Board

    Australian Nutrition & Sports Ltd is led by a highly experienced Board with skills in supply chain management, global distribution networks, sales and marketing in Asia.

    • Thomas Lashan - Managing Director and CEO, with more than 20 years experience in the health, wellness and fitness industry in Australia and China. In 2006, he founded the company based on insights gained in his lengthy career as a leading Personal Trainer and Life Coach in Melbourne. Mr Lashan personally led the expansion into Hong Kong and CHina.
    • Peter Reilly - Non-Executive Chairman, with more than 30 years’ experience as a senior executive with public and private companies, including being the managing director of Ausdoc Group Pty Ltd.
    • Alexander Molyneux - Non-Executive Director with more than 10 years’ experience as a financier and company director.  Mr Molyneux is currently Non-Executive Chairman of Argosy Minerals Ltd (ASX:AGY), Chairman of Tempus Resources Ltd (ASX:TMR), and Managing Director of Galena Mining Ltd (ASX:G1A).
    • Simon Fraser - Non-Executive Director, held executive positions with various FMCG organisations over the past 25+ years. This includes Proctor and Gamble where he has held several senior executive positions in Australia and in Asia over a 20-year career.

    Risks

    You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. As set out in Section 4 of the Prospectus, Australian Nutrition & Sports Limited is subject to a range of risks, including but not limited to business strategy and execution risk, limited history in the nutritional health and food products market, dependence on service providers and risks in ability to export food products to Asian markets.

     

    Section 734(6) disclosure: The issuer of the securities is Australian Nutrition & Sports Limited ACN 625 485 912. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. 

    OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

    Disclaimer: All information on this section is of a general nature. Before making any investment decision, please seek the relevant advice.

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