EVENT reeling from cinema closures with $11.4m loss
31 August 2020, Written by Matt Ogg
With the best box office performance in three years across its Australian and New Zealand cinemas, as well as high occupancy rates in its resorts, EVENT Hospitality and Entertainment (ASX: EVT) was on track for a good result before COVID-19 crept up on the world.
That's even despite closures at its Thredbo Alpine Resort due to bushfires, with the eight months to February representing the second-highest EBITDA for the period in the company's history.
But like so many companies this reporting season, EVENT's results are an ugly before and after juxtaposition of fortunes.
The Sydney-headquartered group has reported its normalised EBITDA fell in half in FY20 to $105 million, while revenue fell 22 per cent to $784 million.
A massive $56.9 million in impairment charges - in addition to almost $13 million in asset write-offs, redundancies and restructuring costs - led to a statutory loss of $11.4 million, compared to an NPAT of $111.9 million in FY19.
"The year was impacted by the most unprecedented external factors experienced in the Group's 110-year history, including bushfires, floods and COVID-19 government-mandated restrictions," says EVENT's CEO Jane Hastings.
"The final four months of the year was defined by the impact of COVID-19 government mandated restrictions which immediately impacted revenue, down $262 million for the four month period.
"We immediately adapted with new operating models by division, reflecting the various government COVID-19 restrictions and plan for potential financial scenarios.2
Hastings says this planning allowed the group to pivot at short-notice and achieve $140 million in cost reduction including government subsidies, excluding the benefit of negotiated rent relief which will be recognised once agreements have been signed.
"We are well prepared and some of the changes are expected to deliver lasting benefits for the future," she says.
"We believe that our businesses will rebound relatively quickly once restrictions are lifted due to pent-up demand and we have already seen green shoots, when this has occurred, across the Group."
Last month the company announced an increase in its debt facilities to $750 million, of which the majority matures in in 2023.
"Our current net debt is approximately $450 million and we have a strong balance sheet, underpinned by a solid property portfolio with a fair value of $2 billion at the most recent valuation dates," she says.
"Successful completion of the refinancing process in July, our strong balance sheet, and the swift response to COVID-19 positions the Group well to navigate through this challenging period and improve earnings as restrictions ease," adds chairman Alan Rydge.
In March EVENT confirmed its German cinema business Cinestar to Vue International Bidco for $305 million had received conditional approval from Germany's competiton regulator, subject to the divestment of six sites of which one was successfully sold in August.
Updated at 4:45pm AEST on 31 August 2020.
Author: Matt Ogg