Theme parks push Village Roadshow into black

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SYDNEY -- A strong result from its theme parks division pushed Australian entertainment giant Village Roadshow Ltd. into the black for the half year ending Dec. 31, as the company posted a net profit of AUS$35.6 million ($27.4 million) Tuesday. The six-month results compared with a AUS$4 million ($3.08 million) loss for the corresponding previous half.

"The current half-year result reflects a very strong trading result at the theme parks which was supported by stability of trading in most of our other divisions," Village group chairman John Kirby said.

During the first half of its fiscal year, Village Roadshow acquired Warner Bros'. interest in their jointly-owned Australian theme parks, which include Warner Bros. Movie World, Sea World and Wet 'n' Wild Water World. That division recorded a pre-tax operating profit of AUS$23.2 million ($17.9 million), compared to a $7.9 million ($6 million) profit when they were 50% owned.

The result was driven by increased attendance at each of the attractions and the successful opening of the Australian Outback Spectacular live show on the Gold Coast.

Results from other divisions of the company were "stable," according to Kirby and follow a major corporate restructuring that began in 2005.

VRL CEO Graham Burke said the restructuring will deliver continued earnings growth going forward.

"Looking ahead, we are confident the benefits of restructuring and the closer focus on our core businesses will flow through to continued earnings growth," Burke said. "In addition to growth in our ongoing businesses, we are currently investigating growth options for our theme park division, Gold Class cinemas in the USA and -- through our film production division -- synergies with music ,which we expect to take the group to a new level."

The group's film production division reported a pre-tax operating loss of AUS$7.7 million ($5.9 million).

The company said the division's profit downturn was due primarily to a six-month interest charge stemming from the restructure completed in October 2005, a hedging loss and lower film exploitation profit being recognized from its first portfolio of films.

While VRL's Oscar-winning co-production "Happy Feet," which has thus far grossed AUS$363 million ($280 million) worldwide, was released in the half, that films' success boosted Village Roadshow results for the next six months, principally in the company's cinema exhibition and distribution divisions, Burke said. In the production division, the success will not be reflected until 2008.

Film production earnings were dragged down by the failure of "Unaccompanied Minors." Expected to perform better in the second half is current release "Music and Lyrics" along with upcoming features "The Reaping," "Ocean's Thirteen" and "Lucky You."

VRL's Australian film distribution division, Roadshow Films, performed in line with the corresponding period, with VRL's share of profit at AUS$10.8 million ($8.3 million) against AUS$11 million ($8.47 million) in the previous period.

Profit at the cinema exhibition division fell to an operating loss of AUS$0.9 million ($0.7 million) recorded against AUS$4.3 million ($3.3 million) profit in the comparable period, largely due to costs associated with upgrades at its Greek cinema circuit.

"The VRL Group continues to maintain strong cash flows and a balance sheet which positions us well to take advantage of expected opportunities to grow our core businesses in the future, and deliver further benefits to shareholders," Kirby said.

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