Viva Leisure Limited (VVA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Viva Leisure Limited FY '21 Results Investor Briefing. [Operator Instructions] I would now like to hand the conference over to Harry Konstantinou, CEO and Managing Director. Please go ahead.

Thank you, Zoey. Good morning, ladies and gentlemen, and thank you for joining us on the conference call today for Viva Leisure's financial results for the year ended 30th of June 2021. I'm joined today by our CFO, Mr. Kym Gallagher. Yesterday, after market, various documents, including an investor presentation, were uploaded to the ASX, and we will be referring to these today during our presentation. This is Viva Leisure's third set of full year results since listing on the ASX in June 2019, and what a financial year it was. I hope that everyone is doing well and managing during these continued disruptive times to our lives. The agenda for today's presentation. I will provide a quick rundown on the full year performance highlights. I will then pass on to Kym, who will run through the financial results, after which I'll provide some history on the results and how COVID has affected them, both for FY 2021 and so far for FY 2022. I will then provide a very quick overview and update on our different brands and segments before going into some Q&A. At the back of the investor presentation on Page 34 is a reconciliation of the profit and loss against AASB 16, which I am sure you're all familiar with. We will not be going through this today. However, if you have any questions, please contact us directly or feel free to ask a question at the end of the presentation. I'm on Slide 5. I mentioned this in last year's presentation. However, it's important to mention it again. COVID has again significantly affected the health club industry in FY 2021, as it did in FY '20. It has also impacted the start of FY 2022. Further details on the actual impact will be discussed later in this presentation. Notwithstanding the significant impact for the financial year, Viva has managed to achieve an increase all -- in all key metrics over the previous financial year. The full FY 2021 result is an outstanding result, and I'm proud of our entire team of over 1,600 members for what they have achieved. Notwithstanding the impacted start of FY 2022, I believe the business is in an excellent position to capitalize on the foundations we have established over the past year and to continue to grow from here. Viva Leisure has grown from a simple Canberra-based operation to now be the second-largest health club owner in Australia. Moving to Slide 7 of the presentation. A quick high-level summary of the key metrics, which for the year tell us that membership is up 33.8% over the previous year. Our locations increased 45.5% over the previous year. EBITDA has nearly doubled from the previous year with a 97% increase. And revenue has increased 104.8% over the previous year. Moving to Slide 8, performance highlights. Revenue for FY 2021 was $83.7 million, increasing from $40.9 million in the previous corresponding period. EBITDA was $11.9 million; ex AASB 16, up from $6.07 million in the previous year. This represents a 97% increase from FY 2020. Slide 21 of the presentation, which Kym will go through, has some further details on the impacts of EBITDA post our outlook originally issued on 25th of May 2021. It was great to see EBITDA and revenue essentially doubling from the previous corresponding period. This reaffirms what we already know in that more Australians are realizing that fitness is essential to their physical, mental and emotional well-being. Also on this slide are Viva-owned location statistics and consolidated statistics when taking into account the Plus Fitness franchise network. These stats remain unchanged, and I confirm from those presented in our previously bimonthly update issued last month. Moving to Slide 9, operational achievements. There were 115 Viva Leisure-owned locations at the end of financial year. Today, we have 117 locations. A key metric on this slide is that the ACT now represents approximately 40% of Viva Leisure locations around Australia. Previously, over 70% of the portfolio was based in the ACT. Our 2 key areas of growth focus remain Queensland and Victoria, which for FY 2021 increased locations by 50% and 240%, respectively. Moving to Slide 10, locations. A version of this slide was presented in our recently issued bimonthly update. The addition to this page is the column on the right-hand side, which shows our original budget had forecast 313 locations by the end of FY 2021, and we ended the year with 309 locations, essentially on target, notwithstanding the disruptions experienced during the year. Moving to Slide 11, acquisitions and greenfields. During FY 2021, Viva Leisure opened 36 locations made up of 21 greenfield locations and 15 acquisitions, of which 4 were Plus Fitness franchise acquisitions. It is important to highlight that the investment during the year in plant and equipment, greenfield rollouts and acquisitions totaled just under $55 million, and Kym will provide some more details on that. This is a significant investment. The largest investment for us during the year was the acquisition of Australian Fitness Management, the Plus Fitness master franchisor, in August 2020 for $18 million. This investment is more than Viva Leisure has spent in any prior years and helps to build a strong foundation into FY 2022 notwithstanding the slow start due to the lockdowns. I will now pass on to our CFO, Mr. Kym Gallagher, to present the financial results commencing on Page 13.

Thank you, Harry, and good morning all. I'm on Slide 13. Firstly, the full year results presented throughout this presentation are predominantly based on an AASB 16 basis, which is also consistent with the prior year. Looking at the profit and loss. During the financial year, the imposition of mandated restrictions on our clubs and members has again hampered the group's overall results. The continual intermittent and, at times, unexpected shutdowns had the following impacts on the group: It slowed the average time to profitability of our rollouts considerably as our new member take-up momentum was continually hampered, and this put continued pressure on the margins as well. The uncertainty made it difficult to plan and execute meaningful cost savings, particularly when the short-term snap lockdowns were then extended, often with only a day's notice. We were on track to meet our guidance numbers put out in May until we hit the snap closures of clubs across Queensland, New South Wales and Victoria, which significantly impacted the month of June results. Despite this, we achieved revenue growth of 104.8% over the prior corresponding period. This includes the results of Plus Fitness for the first time and for the bulk of the financial year. The revenue growth, excluding Plus, which contributed around $8.5 million of the $83.7 million total revenue, was 84% for the Viva clubs, which is a great top line result. Operating costs have increased largely due to the impact of 36 additional sites. For example, rent costs alone are up by approximately $12.5 million. The inclusion of the Plus Fitness operations also added nearly $6 million to the cost base for the period of ownership. The impact of all this is a 97% increase on the EBITDA line, which is a fantastic result. Finally, having invested a large capital works program of the rollouts and upgrades, the D&A expense has increased accordingly. In summary though, the good news is during the period [ July 2000 ] to June 2021, total member numbers have grown by approximately 30,000 members. We have opened or acquired 36 clubs, including 2 significant acquisitions, the Plus Fitness master franchise and the Pinnacle group, which performed in line with expectations for the period of ownership on both revenue and EBITDA lines. And during the year, we've rolled out an additional 21 clubs composing 10 health clubs and 11 HIIT Republics. In other words, once we spring from the lockdowns, we have a very robust foundation to build on. We'll discuss this in more detail on the upcoming slides. I'm moving on to Slide 14. On this slide, we can see the revenue journey across FY 2021. In July, we were just coming out of the first significant lockdown period but we still had restrictions in place. There was still some hesitancy of members to return to the gym. This then continued to build into December as member confidence started to return. In the second half, we've faced the constant disruption of closed sites, which made it extremely difficult to gain any momentum. What this shows, however, is that moving forward, we have a very strong base of revenue with which to build. Excluding the June lockdowns across the Eastern states, we were heading for over $9 million in revenue for the month of June, which equates to an annualized $108 million revenue base. Moving on to Slide 15. As you can see, we had strong compound annual growth rates in both revenue and EBITDA across the period 2016 to 2021, being 35% for revenue and 46% for EBITDA, respectively, including significant revenue and EBITDA growth for this financial year. EBITDA margin has been impacted for several reasons, the main being that the average time to profitability of our rollouts was much slower than normal, increasing to more like 3 to 4 months in some instances, rather than 1 to 2 months as normal, as the new member uptake momentum was continually hampered through the periods of lockdowns. What this means is that we're paying full rental and wages from when we open but without the supporting members and, therefore, revenue base. In addition, the uncertainty made it difficult to plan and execute meaningful cost savings to counter this loss of momentum, particularly when short-term snap lockdowns were then extended, often with only a day's notice. Moving on to Slide 16. A quick look at the member growth profile between FY '16 and FY '21 shows that we had compound annual growth rate of 62% across this period. This includes the Plus network of franchise members. Excluding Plus members, the CAGR is 36.3% across the same period for the Viva clubs. What is also interesting on this period, as Harry mentioned before, is a derisking of the Viva-owned locations club and member base from being predominantly ACT-based. Total members in the ACT as a percentage of the group has now reduced to only 42%, down from around 77% when we IPO-ed in 2019. The HIIT Republic network also continues to grow now at 22 sites and with over 5,500 members. Moving on to Slide 17. This chart shows the bridge between the FY '20 member numbers of 94,196 to the final FY '21 member numbers of 126,006 for the Viva clubs and then the addition of the Plus Network acquisition and its growth across the period of ownership to bring the total overall membership base to just over 298,000. What each cohort represents in this chart is clubs that were open during the year and their contribution to growth across the current financial year. The exception to this is the 2019 clubs, which includes all clubs for 2019 and prior years. We then separately show the numbers for members of acquisitions. For perspective and in percentage terms, the 2019 clubs grew at 9.2% and the FY '20 clubs grew at 87.1%. So these are organic growth from rollouts, i.e., they exclude any clubs acquired in those years. In addition, with the mandated club closures in late FY '20, we lost significant momentum in our ramp-up of new members. So it's not surprising to see strong growth during FY '21. Similarly, for our FY '21 clubs, we added 6,700 members from our 21 rolled-out clubs across the year. In addition, the major acquisition of the Pinnacle group, 6 clubs, added approximately 7,500 members during the year. Moving on to Slide 18. Similar to the previous slide, this chart shows the bridge between the FY '20 revenues and the final FY '21 results. Again, for perspective and in percentage terms, the 2019 clubs grew at 23.6%, and the FY '20 clubs grew at 337%. The reason FY 2020 is so high is that many of the clubs were new and were closed for the last 3 months of the FY 2020 financial year. As previously mentioned, the good news is Viva clubs contributed 84% of the total revenue growth out of 105%. Moving on to Slide 19. A strong opening cash balance and a successful $30 million cap raise in December provided us with the opportunity to aggressively pursue rollouts and acquisitions. As you will see on the cash flow slide coming up next, approximately $55 million was deployed largely for that purpose. $27 million was spent on acquisitions, and you can see the increase in the intangibles balance predominantly on the Plus Fitness network for $18 million and the Pinnacle Group for $6.2 million. In addition, plant and equipment assets have increased significantly off the back of acquisitions, rollouts, site upgrades and maintenance CapEx. The total investment in rollouts for the 21 sites during the year is $15 million. Debt has remained under control with a total of $25.5 million in debt, up slightly from June 2021, and it includes $15.5 million in equipment lease finance and $10.1 million in the CBA senior facility. On Slide 20. Similar comments to the balance sheet regarding the deployment of the opening cash balance and the inflows from the capital raise undertaken in December 2020, where we can see the significant outflows for the acquisitions and rollouts. The lease principal reduction line includes the impact of payments of equipment leases and rent payments on our property less any finance charges. Moving on to Slide 21. This slide is a brief summary of the reconciliation of guidance to the final audited results. Viva provided guidance to the market on May 25, which discussed the following ranges: revenue range of $81 million to $83 million; trading EBITDA range of $13 million to $13.5 million, excluding one-off costs; EBITDA margin of 16.5% to 17.5%. The final results showed that we beat revenue guidance despite the unforeseen lockdowns in late May and throughout June. Trading EBITDA finished at $11.95 million but with one-off costs of $1.1 million and the impact of lockdowns in June estimated at $600,000. So this equates to approximately $13.6 million on a trading EBITDA basis. The margin, when excluding the one-off costs and lockdown impacts, is calculated at 16.2%. Thank you. I'll now hand back to Harry.

Moving to Slide 22, outlook. This section of the presentation provides an insight into the COVID-19 interruptions and impacts during FY '21 and FY '22. Moving to Slide 23, COVID-19 interruptions. The key information from this slide is to show that during FY '21, Viva had 2 out of 12 months where all locations were open. During parts of other months of the year, we may have had locations open but with significant restrictions and additional cost implications, such as cleaning and COVID marshals. Interestingly, the 2 months where we were able to trade without restrictions, being December 2020 and April 2021, are the 2 months of the year that have the most public holidays. So they were -- still affected the enrollment momentum. Unfortunately, we still have not had 1 full year of uninterrupted trade since listing on the market. Moving to Slide 24, interruptions by days. What this slide indicates is the percentage of interruptions our facilities have faced since the start of the COVID-19 pandemic. Notwithstanding that this is outside the reported financial year, we thought it was important information to highlight. The way this chart works is that each club is one unit for every day that it was either allowed to open or mandated to close. This takes into account new club openings during the period, for example, if a club opened during the period, noting that we had 36 clubs opened during the financial year. Our main market, the ACT, has suffered 11% of days unable to trade since the 23rd of March 2020 when the mandatory government lockdowns commenced. This is the best result out of all the states and territories. New South Wales has not been permitted to trade for 20% of the period, and Victoria 41%, followed by Queensland at 16%. The start-stop lockdowns caused significant disruption to member enrollment momentum. The good point out of all of this, however, is that when we are permitted to trade and build up momentum, we do see good traction and interest in members getting back into the facilities. What this tells us, as mentioned earlier in the presentation, is that the Australian population considers health clubs as essential to their physical, mental and emotional well-being. This is further confirmed in our previously issued bimonthly report, which shows that 11 out of the 12 FY '21 months had net membership growth, notwithstanding these interruptions that were caused by COVID lockdowns. Moving to Slide 25, COVID impacts for FY '22. Following on from the previous slide, this slide provides some information on the impacts we have faced during the commencement of FY '22. Internally, we are forecasting that the New South Wales lockdowns will continue until November, whereas we are optimistically expecting Queensland, Victoria and the ACT to open for trade from early to mid-September. Obviously, this is a wait-and-see exercise for us. To that end, we have provided a similar chart, as presented on the previous slide, to show the closure by units and days for FY '22 year-to-date. You will note that New South Wales has been closed for 79% of the financial year. Whilst metro New South Wales has been closed for 100% of the time during this financial year, this number reduces to 79% for our locations as regional New South Wales was open for a short period of time. These figures are not very encouraging for the start of the financial year. As at today, we have 99 out of our 117 locations unable to trade due to mandated COVID lockdowns, with only 18 locations able to trade, mostly in Queensland. Further to this, we have attempted to provide some guidance for our investors on the financial impact of these closures during the first 2 months of the financial year. What we are seeing is an EBITDA impact or loss of about $4.2 million for the year -- year-to-date, that is. This is essentially similar to the cash burn during the period with full rentals being paid and very little to no income being received from locked-down locations. Assuming the assumptions on the left-hand side of the slide are correct and with New South Wales continuing in lockdown until November as estimated, that will present us with a further $3.6 million cash burn and EBITDA loss. What we are doing to combat this is extreme but is necessary. We have had to temporarily stand down all staff where possible and appropriate. For example, at locations we simply cannot trade, we simply do not have any work for our team at these locations to perform. Secondly, we have put a freeze on all capital expenditure, including our rollout, until we have some clean air and normality resumes. And thirdly, we have put a freeze on acquisitions that are not already committed. At this stage, we have 4 acquisitions which we will complete over the next 60 days that are committed, agreed and signed off. We have other acquisitions which we simply will need to put on hold for the short term. Preservation of cash is key during this period for various reasons, but most importantly in the event that our forecasted lockdowns are underestimated and extend for a longer period than we are forecasting. Part of the program of preservation of cash is to work with our landlords to defer rental payments where possible. It is not prudent cash management for us to continue paying our rentals for locations where we have not traded for over 2 months. We trust our landlords, who were receptive to assistance during the past 15 months, will again be receptive. I'm happy to respond to any questions in regard to this during the Q&A part of our presentation. I'd now like to give a quick update on our brands and segments. For those investors who follow our bimonthly updates, some of the information won't be new, but there are some interesting takeouts that we thought it was appropriate. Moving to Slide 27, Club Lime health clubs. Our key brand, Club Lime, has continued to grow. We currently have 73 branded Club Lime health clubs in Australia. This makes Club Lime brand the second-largest nonfranchised health club brand in Australia. This is an excellent achievement. In addition to the 73 branded Club Lime health clubs, we have 4 other brands totaling 11 other health clubs that are in the process of rebranding to Club Lime. Six of these clubs are Pinnacle, which we acquired in February this year. Subject to when the lockdowns permit us to continue our rollout and acquisition strategy, we still hope to achieve 100 Club Lime locations during this financial year. To put that into perspective, no other single nonfranchise health club brand has ever achieved 100 clubs in Australia. Fitness First peaked at 96 clubs in 2011 before reducing to its current level of 60 clubs today. Achieving 100 clubs is not simply a race for us. It provides us with better operating synergies and will work to cement our position as one of the most recognized health club brands down the East Coast of Australia, which assists us with marketing and member acquisition. Moving to Slide 28, GroundUp. It was important to bring this slide up early as we see this brand as key to our future growth plans. Our first GroundUp location in Belconnen opened in the first week of July '21. In the first 6 weeks of trade, we have secured over 400 members with an average yield of nearly $50 per week per member. This is over 3x the average revenue per member of our health clubs. What we have also seen is that 60% of the membership base are existing members upgrading their membership to include GroundUp. We consider these members loyal to our brands and concepts. These additional 250 members provide the group with an additional $300,000 of annualized revenue from their upgraded membership but, more importantly, provide these members with a unique membership offering, which is unable to be replicated by any single operator in Australia. We have also seen nearly 170 members joining our first GroundUp location completely new to our brands, and this is also encouraging. The second location of GroundUp has been secured and is currently in planning, and the third location is currently under negotiation. Once this concept is refined in the ACT, we will start to roll it out together with our HIIT Republic locations across the existing Club Lime network around the East Coast of Australia. GroundUp locations can also operate independently and do not require a hub-and-spoke configuration, and this is something that we will continue to test. For reference, these locations cost to build approximately $400,000 in fit-out due to the nature of the fit-out and the yoga and Pilates theme, and a further $200,000 in equipment, mostly Pilates beds. This particular location is currently run-rating at $950,000 of annualized income in just 6 weeks of trade. What is also important to highlight is that this particular initial location utilize existing health club space, which we repurposed in Belconnen, ACT, so no additional rental charges in that regard. The location is completely independent of the health club in terms of entry, design and facilities but shares the same building. We are extremely excited what the GroundUp concept has achieved in such a short period of time, and we look forward to how that can positively affect our average revenue per member and retention as the brand grows and members upgrade to this offering. Moving to Slide 29, HIIT Republic. Our HIIT Republic concept has gone from strength to strength. Over the FY '21 year, we increased locations from 13 to 22, at the same time, increased the average members per club from 270 to 276. To put that into perspective, an additional 6 members per club over 22 clubs provides us with an additional $220,000 of EBITDA as there are no additional costs to support these additional 6 members. As we -- as the portfolio grows and as we continue to increase the average members per club, this will continue to grow. As these clubs are matured, we have also been able to crack the magic 50% 4-wall EBITDA margin, and these clubs are now trading on average at 50.6% EBITDA margin. Moving to Slide 30, FitnFast. This will likely be our last update for FitnFast, as we plan to retire the brand as soon as the last 2 locations are rebranded. To remind investors, we acquired 13 locations in February 2020, just before COVID hit. 11 locations have been rebranded and upgraded as part of their transition to the Club Lime brand. Focusing our attention now on the Pinnacle brand. As mentioned in our previous updates, we have not yet commenced the migration of this brand to the Club Lime brand as we wish to operate with a watch-and-learn approach to understand any benefits from the Pinnacle acquisition we may have been able to duplicate in the existing Club Lime network. In addition, the direct debit facility was contracted and was not able to be migrated as any earlier. This is one of the main synergies available to us. We now expect the direct debit facility to generate savings of over $250,000 per annum for the group once migrated to Viva facilities. This migration is now expected to occur in or before November 21 at the latest, within the contract when the current provider expires. Moving to Slide 31, Plus Fitness. As mentioned in our bimonthly updates, Viva Leisure is now the owner of 4 Plus Fitness locations as at the 30th of June 2021 and 5 locations as at today. We expect to settle on one more location later this month and one the following month. There's been a slight delay -- these have been slightly delayed further due to the New South Wales lockdowns, and there was no real benefit for us to acquire these locations when we simply could not trade. From the Australian Fitness Management perspective, the master franchisor of the Plus Fitness network, we've also implemented some changes. I now introduce you to the Chain Collective Group. The Viva Board took into consideration feedback from franchisees. That feedback centered around the sharing of information between Viva operational staff and Plus Fitness operational staff. To keep both teams separate, we recently introduced a new independent Board to manage the franchising division of Viva, and this is where the Chain Collective Group comes in. Chain Collective is a 100%-owned subsidiary of Viva. It has a majority independent Board, handpicked after an extensive recruitment process. The Board comes with extensive fitness franchising experience with Arthur McColl, an experienced NED and executive who has worked in Europe and Australia in fitness and, in particular, franchising of fitness brands. He's supported by experienced NED, Peter McGregor, and myself as the Viva Leisure representative. Chain Collective Group has a simple mandate, and that is to grow the franchising division of Viva Leisure with the introduction of new concepts, brands and to grow the Plus Fitness network in line with previous expectations. Gordon Martin, who we introduced a few months back, now reports directly into the Chain Collective Group Board. This concludes the presentation part of the investor call. It is important to highlight that notwithstanding all the doom and gloom about COVID and how it has significantly impacted this business, we still managed to double EBITDA from FY '21. We have continued to build a strong base so that when we do get clean air and able to trade in all locations, we know the business will start to exceed even our expectations. What is evident and as highlighted in our presentation is that Australians understand the importance of health and fitness. It simply is not possible to find an individual that does not value their health and fitness or does not want to be healthy. What we are seeing with members quickly returning to our facilities by way of enrollments and visitations is not limited to Viva Leisure in Australia. As can be seen from our listed peers in the United Kingdom and the United States as well as those listed gym groups in Europe, the return to health club membership is peaking and returning at a much faster pace than it did prior to the pandemic, and this is occurring all over the world. I'm confident in our strong product and service offering and believe in our unique position of having first-mover advantage as well as currently being the only consolidator in the highly fragmented health club market. We will continue to capitalize on both these strengths moving forward. We would now like to open up for any questions.

[Operator Instructions] Your first question comes from Nick McGarrigle with Barrenjoey.

Just a question around the current environment, which is challenging with lockdowns. Can you talk about, I guess, the capital position of the business, what kind of commitments that you've got on greenfields and acquisitions that can't be avoided, and how you think about the balance sheet evolving over the next 6 months, which I guess is likely to see these lockdowns continue for at least the next couple of months?

Yes. Thanks, Nick. I'll take the first part of the question, and then Kym can talk about the rest. We have sites committed, as we have previously advised in our bimonthly update. Those sites are in different stages of commitment, i.e., heads of agreement signed, leases signed, development applications in. We're still forecasting to continue to roll out some of these sites, but we are slowing down that rollout between now and Christmas to see how it goes and obviously look at preserving cash, but those that are in -- have commenced fit-out. We're still continuing with those. I think there's 3 or 4 of those that will likely open between now and Christmas, but they've been in different stages of opening and taking into account the cash preservation strategy that we're looking to implement. I'll pass on to Kym for the next part of that question.

Okay. Thanks, Nick, and thanks, Harry. So obviously, we've modeled it, some sensitivities around the ongoing COVID impacts and the results that we are prepared to -- I mean obviously, we've taken as the base case the numbers that we've included on Slide 25 of the presentation, which talks about closures of ACT, Victoria and New South Wales and New South Wales going out to November. So we've modeled some sensitivities around that and probably taken an even more conservative approach, i.e., what happens if ACT shut for another month and New South Wales doesn't open until Christmas. So we prepared obviously a financial forecast and then the cash flows that fall out of the back of that. And we're quite comfortable that even by the end of the financial year, we'll be okay from a cash balance perspective. And these estimates that we've done also include paying full rentals for the year. So in other words, if we managed to discuss with landlords or defer some rental amounts in the next couple of months, that they will be caught up by the end of the financial year. And secondly, it includes continuing to pay the full lease and debt repayment. So we've modeled all of that in. So to further bolster the cash position, we've got some options with our lenders who we anticipate speaking with this week, which include potentially a moratorium on lease payments and debt payments, which would be in the order of probably $0.5 million a month, implementation potentially of an emergency overdraft facility if we needed it, bearing in mind they offered us this in March, April, May and June of 2020 once we hit the first major lockdown COVID period. So there's no reason to expect they will not reoffer it as there's no doubt there's a lot of businesses in the same situation we're in. It's not something, as I said, that we need. But if the bank have it available to us, it's always helpful to know that you have that backstop. And also, we'll look at potentially increasing the level of our borrowings against the acquisitions that we've obviously undertaken. The modeling at the moment assumes that we pay cash, so 100% of the committed acquisitions that we've got in front of us and cash for the rollouts. So in other words, accepting no equipment finance and going into further debt. So we'll obviously discuss that with them. And again, that will improve the cash position. And in addition, as Harry mentioned before, we'd look at talking with our landlords and potentially deferring the rental payments in the locked-down sites. So from that perspective, we can weather the storm with a certain degree of comfort out until the end of the financial year from a cash perspective. And I guess it just depends on the erratic nature of the various State Premiers as to how long we remain in lockdown. I think it's important to note that our last month of the financial year in June, if we hadn't have had the lockdowns, we were heading for $9 million worth of revenue. I mentioned that as part of one of the slides. So if you consider that we were trading around about, at that point, somewhere between a 16% and 18% margin, we're talking coming out of the blocks once all the lockdowns start of hitting about $1.5 million to $1.7 million in EBITDA for the first month of full reopening. And that's just on the basis of the existing sites. In addition to that, the rollout sites that we did across the year, we had 21 of them. Looking at the May results, which was the last kind of 4 months of trade for all of those lockdown sites, we were generating just above breakeven. We're a small profit on a collective basis across all of those greenfield sites. So they are ready right now to start contributing some meaningful revenues and profits from the minute that we open up. So on the basis of, as I said, $9 million was the run rate at June. We've got greenfield sites rolling out, so starting to come into profitability, which will start to increase revenue and, therefore, EBITDA. We've got options to talk to our banks to make sure that they'll look after us. And in addition, we can talk to our landlords. So from both -- I mean the profit perspective, it's, as I said, completely going to be determined by when the State Premiers decide that we can open up. But from a cash flow perspective, we believe that we can weather the storm out for many months to come.

Yes. All right. That seems fair. I mean have you had any initial discussions with landlords about rental abatements? Is that something that you think you can -- is likely -- or not abatements but actually rental discounts in -- commensurate with the reduction in revenue?

Harry, do you want to take that one?

Yes. We haven't started discussions with landlords yet. We just wanted to get this result out. We're up to date with all our rentals. So we don't need any assistance at the moment. But we'll start to talk to them from this week. There's no reason they won't share the pain, as they say, as they've done over the last 15 months and assisted with deferred rentals. So we're confident we can get something out of that.

Cool. And then in terms of, I guess, leverage on the way out of this sort of what's going to be a challenging FY '22, how many -- what's the sort of greenfield and acquisition pipeline look like for FY '22? I guess you'll be trying not to spend more cash than you've already got committed. But -- and there was obviously a target prior to this recent round of lockdowns of sort of 68 clubs a year between the acquisitions and greenfields and buybacks. But do you think that that's maintainable into FY '23? And how many do you think you'll get done in FY '22?

Look, if FY '23 is a clean year where we've got 12 months of trade without lockdowns, we're confident we can reach those numbers. That's the numbers we forecasted previously. FY '22 purely depends on what opens and when it opens. If ACT opens, that returns a large chunk of our monthly revenue, and we trade really, very well. If ACT is delayed, it affects that, being 40% of our locations and 42% of our members. So it just -- this is -- when we started to model it, there's just so many variables that come into play. It's difficult for us to pinpoint a number now and go, oh, we can open 20 locations this year, because we don't know when we can actually start opening properly again due to these restrictions.

Yes. Okay. And in terms of just the progress of GroundUp, what do you think the -- do you think the run rate for that could be similar to a HIIT Republic in terms of where they can sit? Or is it potentially bigger than that given you don't feel like they need to be in between sort of full-service gyms in order to build membership?

You fit more people into a GroundUp studio so you don't need as many of them generally. So I don't think the rollout will be the same. So for example, I think we have 9 or 10 HIIT Republics in Canberra, but we would probably only put 4 GroundUps in Canberra, to put it into perspective, because people will travel for that type of unique experience more than they will the HIIT Republic, which they prefer closer to their -- more convenient access.

Your next question comes from Nick Basile with Petra Capital.

A couple of questions from me. The first one just on the CapEx you invested over the last year across acquisitions and greenfield. There was a bit of a step-up between FY '20 and FY '21 in terms of that. Could you give us a sense of what drove that, particularly on the rollout side? I think it was $17 million to $27 million.

Yes. So the CapEx spend for the year, it was around $27 million, as calculated in the cash flow statement. The rollout portion of that was about $15 million. So when you consider there were 21 sites opened, $15 million seems reasonable based on everything we've always said about the cost of rolling out sites. The difference there is that we didn't take on too much lease finance. We paid a lot of cash for most of the rollout program simply because we had significant amounts of cash on the balance sheet. So on that basis, we took, I guess, a more conservative approach and used the -- rather than having the lazy-balance-sheet approach, we actually paid cash for most of these rollouts. Included out of that $27 million, we obviously had upgrades to the, in particular, the FitnFast locations. And certainly, with every acquisition that we undertake, it -- well, generally, the walk-in, walk-out operations we do tend to spend probably a couple of hundred thousand dollars on each site just refreshing the cardio equipment in particular. So that equated to -- in the order of probably $7 million or $8 million as well. So that gets you to $22 million. And the remainder of that was acquired plant and equipment through the acquisitions. We actually took them on to balance sheet. That gets separated out. So that was a couple of million, and the rest is maintenance CapEx throughout the remainder of our sites. That was kind of what the CapEx profile looked like for the financial year.

Okay. Great. And a follow-up to the question earlier on, I guess, discussion with landlords. Can you give us a sense of what sort of time frames were accepted last, I guess, COVID outbreak in terms of months deferred or anything like that as a bit of a way to frame perhaps the discussions you'd be having next week and beyond?