It’s no wonder Village Roadshow is looking to raise $51 million from shareholders – the company’s losses through impairments ballooned in the year to June, according to a release from the company yesterday.
Village Roadshow said yesterday said it expects to book total full-year impairments of $166 million due to factors including lower earnings at its Gold Coast parks and an accounting hit from the sale and lease bank of land in southeast Queensland.
The company will write down the value of its Gold Coast theme parks by $95 million due to the struggle to attract customers following the fatal accident at rival Ardent Leisure’s Dreamworld in 2016.
The company will also have the $25 million loss on the sale of its Wet’n’Wild Water Park in Western Sydney for $40 million plus a variable compensation that will depend on the park’s revenue performance up to June 30, 2020.
Village said would be treated as a significant item in the 2017-18 financial results to be released in late August.
The operator of Movie World and Seaworld has also tipped $9 million of restructuring costs and expects a full-year loss, excluding significant items, of between $6 million and $10 million. With the impairment and Wet’n’Wild loss, and the red ink from trading, the company could be looking at a statutory loss of $200 million or more.
A loss of this size would three times the net loss of $66.7 million for the year ended June 2017. It earned a profit of $15.7 million in 2015-16.
One off items in 2017-18 have skyrocketed from the after tax figure of $90.3 million in 2017 which included impairment and other non-cash adjustments of $72.3 million.
Village Roadshow said yesterday its top management have agreed to a 25% pay cut as part of $10 million in cost cuts in 2018-19, a significant jump on the $2 million of cuts in 2017-18.
All directors have agreed to a 25% drop in fees from July 1, and the group’s co-chair and chief executive have accepted a 25^ reduction in fixed remuneration.
Co-chief executive and co-chairman Graham Burke said the group is focused on improving the operating performance of its core businesses, cutting costs, limiting capital expenditure and “potentially selling some remaining non-core assets".
"Achievement of this objective would enhance VRL’s financial flexibility to recommence the payment of dividends and execute on strategic initiatives," Mr Burke said in a statement.
Village Roadshow shares have been halted since Monday morning to allow the company to raise $51 million via a share offer at $1.65 a share. That’s a sizeable 19% discount on the last sale of $2.18 last Friday. The share offer and proceeds from the $40 million from the sale of Wet’n’Wild will be used to help pay down Village Roadshow’s $425 million debt.
