THEME PARKS, BLOCKBUSTERS BOOST VILLAGE ROADSHOW
Written on the 25 February 2016 by Nick Nichols
VILLAGE Roadshow (ASX:VRL) has slumped to a $3.9 million loss in the first half of FY16, driven by a writedown of its movie production company's value to zero.
However, the Melbourne-based group has reported strong growth in its key theme park and cinema distribution operations with total group revenue surging 11.5 per cent to $523.5 million.
The latest bottom-line result, which compares with a $14.8 million profit a year earlier, has been impacted by a $20 million writedown in the company's half share of Village Roadshow Entertainment.
Village flagged the equity accounting measure last year following a $US325 million refinancing of the film business. It says the value of film titles is not reflected in the writedown.
Despite this setback, Village Roadshow's Gold Coast theme parks hit their stride during the latest half year, driven by growing tourist numbers and favourable weather conditions.
The same couldn't be said for the company's Wet 'n' Wild theme park in Sydney which suffered a widening of its pre-tax loss to $1.7 million from $300,000 a year earlier. EBITDA (earnings before interest, tax, depreciation and amortisation) fell $1 million to $3 million.
Village Roadshow blamed an unseasonably cool spring and heavy rain in the peak holiday period for the result.
However, the Sunshine State lived up to its name with the group's theme park division in Queensland posting a 30 per cent surge in pre-tax profit to $12.1 million, with EBITDA up 9.3 per cent to $38.7 million.
Village Roadshow says Gold Coast theme parks continue to shine in the current half year with a solid performance.
Film production on the Gold Coast also will be boosted by the introduction of one of the world's largest sound stages in March.
Poor weather continues to dog the Sydney market with expectations that the full-year result there will not match last year's figures.
Village Roadshow's cinema exhibition business has been buoyed by major film release during the half year.
These include Star Wars; The Force Awakens which broke a number of box office records.
The cinema division posted EBITDA of $33.2 million, up 38.3 per cent, while net profit before tax surged 60 per cent to $24 million.
Village Roadshow is not expecting the same strength in the second half, given the Star Wars effect, strong titles will help support the cinema business in the six months to June 30.
An interim dividend of 14c has been declared.
Author: Nick Nichols