Village Roadshow blames Comm Games and Dreamworld for disappointing results

Village Roadshow blames Comm Games and Dreamworld for disappointing results

The 2016 Dreamworld tragedy has had implications for more than just Ardent Leisure, with Movie World operator Village Roadshow (ASX: VRL) blaming the disaster for its own misfortunes.

The listed entertainment company chalked up its underperforming results in its theme parks division to the reputation Dreamworld has wrought on the Gold Coast theme parks sector, as well as the impact of the Gold Coast 2018 Commonwealth Games.

Village Roadshow points out that in the eight years before the Dreamworld tragedy its theme parks were generating earnings of $86 million per year. By the end of FY18, the parks delivered earnings of just $41 million.

The company behind Movie World, Wet'n'Wild and Sea World (and other parks overseas) also insists that the Commonwealth Games deterred customers from visiting theme parks in the April 2018 school holidays.

However, the company says that things are looking up for theme parks on the Gold Coast.

"There is a strong indication that Gold Coast Theme Parks have returned to a positive trajectory as evidenced by the best month of July on record in terms of ticket sales," says Village Roadshow in its FY18 results statement.

"This trend is expected to continue as new low cost attractions like Sea Jellies, Shaun the Sheep, and the new HyperCoast Walkare introduced."

Overall, the company reported a profit after tax of $0.2 million, up from a $66.7 million loss in FY17, and a loss after tax of $7.3 million, down from a $23.6 million NPAT in FY17.

As for the group's cinema division, Village Roadshow says a lack of quality films showing has deterred people away from their cinemas, with a slight recovery in the fourth quarter not enough to offset the shortfall from the first half.

During FY18 Village Roadshow opened a new location in Plenty Valley, which it hopes to capture the key northern growth corridor of Melbourne.

The company also acknowledges the "inevitable digital universe" that continues to impact the group's DVD market, but has been playing well in this new environment. Village Roadshow cites the critically acclaimed TV series Romper Stomper as a production success, which became one of streaming platform Stan's most successful titles yet.

The group's marketing sales division delivered FY18 earnings of $8.3 million, down from $9.8 million.

Looking to the future, Village Roadshow has high hopes for its US based Topgolf business; a family-oriented and golf-enthusiasts entertainment centre. Topgolf opened on 15 June 2018 in the US and has been performing well on entertainment metrics.

During FY18, the entertainment company made significant steps in reducing its total debt levels. This included selling its stake in Singapore Cinema Exhibition, the sale of its land in Oxenford, and the sale of Wet'n'Wild Sydney.

The board has decided to not declare a dividend for FY18.

Shares are 0.44 per cent down to $2.27 per share at 1.57pm AEST.

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