VILLAGE ROADSHOW LIMITED Village Roadshow Limited Preliminary Final Report - 30 June 2017
24 August 2017
APPENDIX 4E - Preliminary Final ReportIntroduced 1/1/2003. Origin: Appendix 4B
RULE 4.3A
Name of entity |
VILLAGE ROADSHOW LIMITED |
ABN of entity |
43 010 672 054 |
Financial year ended ('reporting period'): | Previous financial year ended ('previous corresponding period') |
30 June 2017 | 30 June 2016 |
Extracts from this report for announcement to the market.
$A'000
Income from continuing operations (item 1.1) | Down | 3.1% | to | 1,039,355 | |
Loss after tax from continuing operations (item 1.7) | Down | N/A | to | (65,622) | |
Profit after tax from discontinued operations (item 1.8) | N/A | to | -- | ||
Net loss attributable to members of Village Roadshow Limited (item Down 1.11) | N/A | to | (66,718) | ||
Dividends (distributions) | Amount per Fra security p nked amount er security | Conduit foreign income per security | |||
Reporting Period:
| -- -- -- -- | -- -- | |||
Previous Corresponding Period:
| 14.0 cents 14.0 cents 14.0 cents 14.0 cents | -- -- | |||
+Record date for determining entitlements to the dividend(see item 15.2) | |||||
Brief explanation of any of the figures reported above: R | |||||
+ See chapter 19 of the ASX Listing Rules for defined terms. Appendix 4E Page 1
VRL OFFSETTING THEME PARKS HEADWINDS THAT COULD NEVER HAVE BEEN CONTEMPLATED
24 August 2017: Village Roadshow Limited (ASX:VRL) today announces its results for the twelve months to 30 June 2017 ("FY17").
KEY FY17 RESULTSAttributable loss after tax $66.7 million (twelve months to 30 June 2016 ("FY16"):
$15.7 million profit) after losses from material items after tax of $ 90.3 million (FY16:
$35.2 million);
Losses from material items after tax of $90.3 million in the current period include impairment and other non-cash adjustments of $72.3 million (refer page 13 for further details in relation to material items);
Attributable profit after tax before material items and discontinued operations ("NPAT") $23.6 million, (FY16: $50.9 million); and
Earnings before interest, tax, depreciation and amortisation, excluding material items and discontinued operations ("EBITDA") $136.3 million (FY16: $168.8 million) (refer Reconciliation of Results on pages 14 and 15.
The overarching impact on FY17's trading was the tragedy that occurred at Dreamworld in October 2016, and was something that management could never have contemplated. Furthermore, the odds of this happening have been estimated as hundreds of millions to one. Although not in a VRL park, the unprecedented publicity resulted in broad based community concerns about safety of rides, dramatically impacting the earnings of VRL's Australian theme parks. Based on overseas experience this is expected to dissipate, and VRL is implementing dynamic initiatives led by recently appointed Theme Parks CEO, Clark Kirby, that will accelerate this correction. These include:
The new DC Rivals HyperCoaster, which is the biggest individual theme park attraction ever constructed on the Gold Coast. It is the longest, highest and fastest rollercoaster in the Southern Hemisphere and will be a 'must experience' for young adults and families alike. This will be launched in a spectacular way in September;
The beautiful new polar bear cub "Mishka" will be on display at Sea World around the end of August;
An interactive Splash Zone at Sea World in October;
A new seal show at Sea World in December; and
An incredible Sea Jellies exhibition (partnered with Griffith University and Surf Lifesaving), which overseas experience indicates will be a 'must see', opening at Sea World in time for the Easter school holidays.
Further exacerbating the disappointing results was soft trading for the Film Distribution division, which is traditionally a hit driven business and titles such as Red Dog: True Blue, Power Rangers, Deepwater Horizon and Patriots Day underperformed.
Appendix 4E Page 2
VILLAGE ROADSHOW LIMITED | ABN 43 010 672 054 | LEVEL 1, 500 CHAPEL STREET, SOUTH YARRA, VIC, AUSTRALIA 3141 | T + 61 3 9281 1000
v i l l a g e r o a d s h o w . c o m . a u
Roadshow is morphing to a new business model which consists of four pillars. Firstly, the division is aligning costs in the core distribution business, with a structured approach to reductions in the cost base delivering recurring savings of approximately $2 million per annum in addition to savings already implemented. Roadshow is expanding its presence in the TV space with Roadshow Rough Diamond and BlinkTV. The first production, a miniseries, Romper Stomper is shooting in Melbourne. In the theatrical sphere, Roadshow is well advanced in putting in place the building blocks for a portfolio of quality Australian product which is planned to be financed by a third party film investment fund. Finally, the division's investment in FilmNation continues to provide positive exposure to an international sales and production company.
In addition, the Film Distribution division's sales have been impacted by piracy, however, new government legislation is in the process of being enabled that will block sites that constitute 95% of the illicit traffic. Concurrent with this action, the industry is launching a powerful national public relations campaign that piracy is illegal and warning people of the real dangers of malware and stolen credit card details that exist in the pirate space. It is expected, based on overseas experience, that these initiatives and others will significantly reduce piracy, which should remove this negative impact on Roadshow's results.
The Cinema Exhibition division has had an excellent year although slightly down on the previous year which was an all-time record due to Star Wars: The Force Awakens. It should be noted that the next Star Wars movie is releasing in December 2017. Within Cinema Exhibition there is a concrete program of growth focussed on the expansion of premium cinema concepts and new entertainment offerings and developments in new population areas that are expected to be very successful.
The Marketing Solutions division has performed well in FY17 and VRL expects this business to continue to grow as a result of expansion into the USA and Asia.
Village Roadshow Entertainment Group has recently had a run of disappointing films including Grimsby, Fist Fight, Collateral Beauty and Passengers. This has ever been the nature of the portfolio business which has always been hit driven. To strengthen the business' future, VREG has joined with Vine Alternative Investments. Following the latest restructuring, VRL has reduced its shareholding to 20% of what will be a stronger entity. The division is on the brink of three very strong projects in Ready Player One, Ocean's Eight and The 15:17 Train to Paris. VRL has never felt more confident about the potential future capital growth in this part of the business.
The essence of VRL is going out. Disruption from the internet challenges large sectors of commerce and in particular areas of retail and media. While people may want savings and the convenience of shopping at home, they will always want to go out for entertainment. VRL's primary businesses are going out experiences whether it be theme pa rks, cinema or the exciting Topgolf concept. Topgolf is under construction on the Gold Coast, opening in mid-2018 and is a true social going out experience. Success of Topgolf USA's 31 locations in America (with a further nine sites under construction) is indicative of the potential in Australia.
Investment in opportunities for future growth combined with the unfor eseen decline in earnings has resulted in Net Debt/EBITDA of 3.87x at 30 June 2017. While VRL remains in compliance with its debt covenants, the Board has been actively working towards reducing gearing significantly. This includes the sale of VRL's 50% stake in the Singapore Cinema Exhibition business, Golden Village. The legal agreement with mm2 Asia Ltd ("mm2") has lapsed, however VRL continues to explore options for the disposal of its stake, including with mm2.
The business is actively pursuing other potential asset sales, including the sale and long- term leaseback of freehold land at the Oxenford, Queensland site. The group will remain focussed on cost control and judicious capex spending, with FY18 capex expected to be largely in line with the prior year excluding the investment in Topgolf.
VRL's Board is committed to shareholder returns, while maintaining the ability to invest in the business. Given the current leverage and substantial growth opportunities available, the Board has not declared a final FY17 dividend. This is a cautious short-term measure under the current conditions and the Directors intend to reinstate the dividend as soon as it is deemed prudent.
Commenting on the result, VRL Co-Executive Chairman and Co-Chief Executive Officer, Mr. Robert Kirby said:
"In a time of unexpected turbulence in the trading of our biggest business we have been concentrating on consolidating costs and reaffirming the strength in VRL's capital structure by way of asset sales and debt reduction. We will emerge out of the setback stronger."
VRL Co-Executive Chairman and Co-Chief Executive Officer, Mr. Graham Burke said:
"Stealing from the words of Queen Elizabeth this truly has been our annus horribilis. The good news however is that it doesn't reflect any underlying issue with our primary business and there is no doubt with the energy and planning in place that we will turn it around."
Village Roadshow Limited published this content on 24 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 24 August 2017 07:42:04 UTC.
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