Village Roadshow Ltd (ASX: VRL) shares are trading lower this morning following the release of the company's half-year results. At the time of writing, shares were trading 3% lower at $3.84 as the entertainment company advised it would not pay an interim dividend.
Village Roadshow's results
VIllage reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $59.1 million, excluding AASB 16 treatment of leases. This was down from $65 million in 1H19, reflecting flat cinema sales and reduced earnings from film distribution. Earnings before interest and tax (EBIT) declined materially to $23.1 million from $30.2 million.
Net profit after tax (NPAT) fell to $6.7 million, excluding AASB 16, or $7.1 million including it, falling from $12.8 million in the prior corresponding period (pcp). No interim dividend was declared.
Theme parks
Theme parks saw an increase in visitors with numbers increasing to 2.89 million from 2.67 million in the prior corresponding half. A strong first half for the segment was driven by growth in attendance, with Gold Coast theme parks recording 12% growth in attendance and a 6% increase in ticket yield. Earnings and profits from theme parks increased marginally, with NPAT of $6.6 million compared to $6.2 million in the pcp.
Cinema
Paid admissions at cinemas were flat at 12.3 million. Cinema earnings fell (excluding AASB 16) with EBITDA of $23.5 million down from $24.9 million in 1H19. This was primarily due to unfavorable film hire rates driven by 1H20 title mix. NPAT, however, rose to $9.4 million from $8.3 million.
Film distribution
The film distribution business delivered EBITDA of $0.4 million, down from $8.2 million in the pcp, with reduced Pay TV revenue due to a delay in the renewal of the Foxtel contract.
A net loss of $2.2 million was recorded, down from a profit of $3.7 million in 1H19. Village recorded a large write-down on its goodwill and film library, with the remaining carrying value of the film library reflecting expected future revenues.
Marketing solutions
Marketing solutions delivered EBITDA of $4.1 million in the first half, a $2.1 million improvement on 1H19. The acquisition of Opia, a sales promotion consultancy business, accounted for ~$2.5 million of EBITDA during the half. NPAT of $1.2 million was reported, up from a net loss of $0.6 million in the pcp.
Outlook
Theme parks have been impacted by flooding with major parks closed for two days and a lack of international tourist visitors due to the coronavirus. These factors are expected to have an adverse impact of ~$3 million on second-half results.
Full year box office is expected to be in line with FY19, while second half earnings in film distribution will be supported by the recent renewal of the Foxtel contract for a 2-year term.
Strong momentum was noted in the Opia business which is expected to continue into the second half with the business well positioned for expansion.
