ARDENT TAKES $95.2 MILLION HIT FROM DREAMWORLD TRAGEDY
Written on the 23 February 2017 by Business News Australia
ARDENT Leisure has taken a $95.2 million write-down on the value of its Dreamworld theme park following the tragedy that left four people dead and closed the park for 45 days from October.
The company (ASX:AAD) has reported a $49.4 million loss for the first half of FY17, compared to a $22.7 million profit in the previous corresponding period.
The loss was largely due to the Dreamworld write-down and the reduced performance of the theme parks division, which also includes White Water World and the SkyPoint Tower, both on the Gold Coast.
Theme parks revenue was down 28 per cent at $41.8 million and EBITDA was down 72.3 per cent at $5.874 million.
"The effects of this tragedy will be felt for some time and there is much healing still to take place. Our priority in reopening the park was to do so in a way that was respectful to the families of the victims," says Ardent group managing director Deborah Thomas says.
The shutdown allowed the company to complete a comprehensive park-wide operations and safety review process.
"From mid-January, we have seen a steady return in visitation with increased attendance driven mainly by the re-opening of the Big Nine Thrill rides," says Thomas.
Dreamworld is expected to recover of the course of time, assisted by new attractions and new branded retail concepts, supported by promotion to domestic and international visitors.
The theme parks are also expected to benefit from increased domestic and international tourism to the Gold Coast for the 2018 Commonwealth Games.
Overall, Ardent's revenue was down 4.7 per cent at $317.2 million, EBITDA was $45.2 million (down 29.15 per cent), while core earnings were down 58 per cent at $12.8 million.
Ardent is trading down 19.21 per cent at $1.745 per share at 1:57 AEDT this afternoon on the ASX, following the company's announcement.
During the period the company sold its marinas businesses for $126 million, an 11 per cent increase on its book value, and it also made a $45 million gain by selling its health clubs business.
The asset sale is to help transition the company to a pure entertainment business anchored by Main Event in the United States.
"These transactions support our group strategy to reposition Ardent Leisure as a pure entertainment company, anchored by a high growth US business. Proceeds from the Health Clubs and Marinas' divestments will be used to pay down debt and significantly strengthen the Group's balance sheet to support our growth strategy," says Thomas.
Main Event Entertainment recorded total revenues of US$102.1 million, an increase of 35.2 per cent from the previous corresponding period, while EBITDA was up 20 per cent at US$18.2 million.
This growth was driven by 11 new centre openings since November 2015. Four new centres were opened during the first half of FY17 and following the opening of a fifth centre in February, Main Event Entertainment is now operating 32 centres across 12 states in the US. Six more centres are scheduled to open in the second half, including entry into two new states - Indiana and Pennsylvania.
In FY18, at least 11 new centres are scheduled to be opened, including the first located inside a shopping mall.
Meanwhile, the five-month closure of Kingpin Crown for refurbishment hurt the earnings of Ardent's bowling division.
The bowling division recorded total revenues of $64.3 million against previous comparative revenue of $67.4 million. EBITDA decreased to $8.4 million from $11 million. This was heavily impacted by the closure of Kingpin Crown in Melbourne for refurbishment from mid-July to early December.
Excluding this closure, constant centre revenue for the half was up 4.1 per cent and the division has now achieved six consecutive quarters of constant centre revenue growth.
"These positive trends are attributable to volume growth with an increased focus on the customer, targeted marketing and ongoing improvement of the entertainment offer. This demonstrates that our strategy of transitioning bowling to multi-attraction entertainment centres, similar to the Main Event Entertainment offering in the US, is sound," she added.
The interim dividend will be 2 cents per share, compared with 7c in the previous corresponding period.
Business News Australia
Author: Business News Australia