Ardent Leisure Group (ASX: AAD) announced that at the Company Scheme Meeting and combined General Meetings held earlier today, Ardent securityholders have approved the proposed corporatization of the company.
As per the statement, Ardent Leisure Group will now no longer be a stapled entity and will be held by a new Australian company, Ardent Leisure Group Limited, which will remain listed on the ASX under the code “ALG”.
Chairman Dr. Gary Weiss stated that the corporatisation of the group would lead to several benefits including greater flexibility to fund investment in growth, reduced head office costs, simplification of the corporate structure and reduced regulatory uncertainties.
The company further provided a trading update and outlook in its presentation of Annual General Meeting 2018.
Trading Update & Outlook:
In the first quarter of Fiscal 2019, constant centre sales in Main Event division has gone up by 1.9% on like-for-like basis, but in October 2018, company’s constant centre sales has declined by 4.7%. The Theme Parks division of the company has witnessed 19% rise in revenue for the first quarter of FY19. However, the division reported FY19 October YTD EBITDA loss of $3.8 million on the back of restructuring and other one-off costs of $1.8 million.
Ardent Leisure Group intends to invest $16 million of development capital at Dreamworld in the first half of FY19. Further, the company anticipates to secure new credit facilities by early Q3 of fiscal year 2019.
Fiscal 2018 Performance:
The group has divested its Marinas business in August 2017 for gross proceeds of $126 million and Bowling & Entertainment business in April 2018 for $160 million in addition to the sale of Health Clubs in October 2016. As a result, consolidated revenue of the leisure group declined by 5.1% to $555.1 million in FY18, compared to financial year 2017.
Driven by several non-cash valuation and impairment charges, earnings before interest and tax (EBIT) of the group has massively fallen by 98.5% to negative $106.8 million in Fiscal 2018. This took net loss after tax to shoot straight up to $88.6 million, compared to FY17’s loss of $62.6 million.
However, the primary division of the company, Main Event, has posted 20.3% growth in revenue to $360.2 million which accounts for over 80% of group’s FY18 revenue. Sales growth of 20.3% reflects approximately seven additional average centre equivalents compared to previous corresponding period. Depreciation and amortization costs increased by 40.5% due to opening of new centre, remodelling of five constant centres, new support centre and related system investments.
Theme Parks division has been impacted by Dreamworld incident that happened in October 2016. Slow recovery ahead of Thunder River Rapids ride tragedy, discounted ticket pricing to push the sales and lack of customer’s traction, altogether, has narrowed down the Ardent’s Theme Parks revenue to $69.9 million in FY18. Further, Theme Parks’ EBITDA margins slipped by 8.5 points mainly due to revaluation decrement of SkyPoint besides other impairment charges.
On the day of its Annual General Meeting, Ardent’s share price slipped by 0.968% to close at $1.535 on 20 November 2018.
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