Dreamworld still a nightmare for Ardent Leisure
Written on the 22 August 2018 by David Simmons
Dreamworld continues to be the thorn that Ardent Leisure (ASX: AAD) cannot remove.
Despite reporting average results in its Main Event operations, Ardent Leisure's financials were battered by the performance of Dreamworld.
The group's efforts to revitalise the Dreamworld brand, following the tragic deaths of four at the park in 2016, remain a seemingly Sisyphean task for the parent company.
Unfortunately, the aftermath of the tragedy may take a while longer than expected to dissipate.
Ardent Leisure's full year loss worsened by 41.5 per cent to a loss of $90.7 million. Revenue was also down 5.1 per cent to $547.5 million.
The company was hit hard by a $75 million write-down of Dreamworld earlier in the year and it also took a $6.2 million hit from costs associated with the accident in the park.
The group says its results were affected namely by impairments at Dreamworld and SkyPoint, impairment of property, plant and equipment at five US Entertainment Centres, non-recurring restructuring costs as well as the continued challenging post-incident trading conditions for the Theme Parks division.
Ardent's Main Event division has been performing well to compensate for other areas of the business, with the division accounting for 80 per cent of the FY18 pro forma revenue and growing at 20.3 per cent.
Despite the improved pro-forma revenue coming from Main Event, pro-forma earnings for continued businesses declined by $19.8 million.
The group's results were offset slightly by the sale of its bowling and entertainment and marinas division, which the group sold for $24.9 million.
In the theme parks division, which consists of Dreamworld, WhiteWater World and SkyPoint, revenue was down 1.4 per cent to $69.9 million on a pro-forma basis. Earnings have improved in the division, up $7.3 million to $91.1 million, however this is mostly due to the impairment charge on Dreamworld being lower than it was in FY17.
The company has planned to launch new attractions in its theme parks, including a DreamWorks Trolls Village, the soon-to-open iRide, an expansion of WhiteWater World and further investments in guest experience.
Proceeds from the sale of Ardent's Marinas and Bowling & Entertainment businesses will go towards the revitalisation of Dreamworld, according to Ardent's FY18 results release.
"Our Theme Park business requires significant capital to develop new attractions and other infrastructure and safety improvements, not only to support our recovery efforts but also to make progress towards becoming the preeminent Gold Coast entertainment precinct built around Dreamworld," says Ardent.
Shares in Ardent Leisure are up 2.81 per cent to $1.83 per share at 11.08am AEST.
Business News Australia
Author: David Simmons