The Event Hospitality and Entertainment Ltd (ASX: EVT) share price has started the week with a day in the red following the release of its full year results.
The entertainment company's shares ended the day 2.5% lower at $8.13.
How did Event perform in FY 2020?
It was a difficult year for Event due to the significant disruption its businesses faced because the pandemic.
For the 12 months ended 30 June 2002, the company reported a 22.3% decline in revenue to $784 million and a 54.2% drop in normalised earnings before interest, tax, depreciation and amortisation (EBITDA) to $105 million. This includes $34 million in Government subsidies.
Event's revenue and earnings decline was the result of the last four months of the year, following the outbreak of COVID-19 globally and government-imposed restrictions.
Over the final four months of the financial year, the company's revenue was down $262 million on the prior corresponding period. Prior to then, revenue had been up 2.5% year to date.
Things were even worse on the bottom line, with Event reporting a 78.5% decline in normalised profit before interest and tax (EBIT) and a statutory net loss after tax of $11.4 million.
The company's result includes $54 million of individually significant items net of tax, the majority of which were non-cash items.
In light of this profit decline, no final dividend was declared for FY 2020.
"Unprecedented external factors."
The company's CEO, Jane Hastings, commented: "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."
"Despite the impact of bushfires we achieved strong performance prior to the COVID-19 period with revenue up 2.5%, EBITDA up 1.7% and normalised profit up 2.2% in the eight months ended February 2020 on an adjusted basis. This was the second highest EBITDA result for the period from July to February from continuing operations in the Group's history," she added.
Event's result could have been far worse. The chief executive revealed that the company has managed to make significant cost-savings during the pandemic.
Hasting explained: "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."
"This planning has enabled 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," the chief executive added.
Outlook.
Unsurprisingly, no guidance has been provided due to the uncertain environment.
Though, management notes that there is a backlog of strong future films waiting to be released. This is expected to support its Entertainment business once trading conditions return to normal.
The company's Hotel business is not expected to return to pre-COVID-19 levels until international tourism resumes. Until then, occupancy levels of 50% to 60% will be required for its hotels to be profitable.
Finally, thanks to a revision to its operating model, the Thredbo business is expected to be profitable, subject to weather conditions.
