SkyCity Leisure Reports Half Year Profit
10 February 2004
Media Release – For Immediate Publication
SkyCity Leisure Reports Half Year Profit
SKYCITY Leisure Limited today reported a net surplus of $0.2m for the six months ended 31 December 2003 compared to $1.0m for the corresponding prior period. The result and comparative are impacted by a number of unusual items relating to the discontinued Planet Hollywood operation, a restatement of the prior year Fiji surplus and the timing of cinema fit-out contributions. Adjusting for these items would report a net surplus for the period of $0.7m compared to $0.9m for the corresponding prior period.
Revenue (excluding the discontinued Planet Hollywood operation) increased by 10% to $18.7m, with New Zealand cinema revenues up 14% to $15.3m. Revenue also increased 14% at the company’s Fiji cinemas. SKYCITY Metro revenue was down $0.3m due to some vacancies during the period and the renegotiation of some tenancy rentals.
New Zealand cinema admissions increased by 10.4% to 2.83 million - attributable in part to the opening of the company’s newest multiplex, Village SKYCITY St Lukes, which has performed well since opening in May last year.
Total gross margin at $6.1m, and earnings before interest, taxation, depreciation and amortisation (EBITDA) at $5.4m are both comparable with and close to the amounts for the corresponding prior period. SKYCITY Leisure’s New Zealand cinema gross margin improved 6% to $3.8m, Fiji cinemas improved 18% to $0.4m, but property declined to $1.9m.
Operating cash flows improved, with $3.3m being generated in the six-month period compared to $2.5m for the same period last year.
SKYCITY Leisure Chairman David Gascoigne said “The cinema business, in particular, is developing satisfactorily. Our focus is upon both consolidation and growth in that business. We have continued to work on our current cinemas – especially at SKYCITY Metro – and we are continuing with improvements to that and to other existing facilities. The addition of Village SKYCITY St Lukes and the acquisition of Cinema City 5, Whangarei, demonstrates confidence in our core business operations”.
Rialto Cinemas also performed positively during the half year where strong cinema demand in Dunedin led to the announcement of an additional two-screen development within the Dunedin Rialto complex.
SKYCITY Leisure’s flagship complex in Auckland’s Queen Street, SKYCITY Metro, continues to be a popular entertainment destination in its own right.
“Special back-to-back screenings of the Lord of the Rings trilogy proved extremely popular at SKYCITY Metro. Also, the screening of large sporting events, film premieres and theatre hireage for corporate events have helped showcase SKYCITY Metro as a multi-use entertainment complex”, said Mr Gascoigne.
New food and beverage tenancies are currently under development at SKYCITY Metro in the areas previously occupied by Planet Hollywood and Theatro. Work is also underway to make the entrance to these tenancies more inviting and accessible. Other improvements at SKYCITY Metro have included work to increase the rentable area in the food court. The period also saw a renegotiation of the Borders Books lease ensuring their long-term tenancy.
“We look forward to the impact these new developments and attractions will have on the whole complex. The capital works on the premises highlight the importance for us, as a cinema exhibition company, of reinvesting in our assets to keep the whole entertainment experience fresh and exciting for the public. We need to meet evolving customer expectations and to provide the very best in cinema entertainment,” said Mr Gascoigne.
The second half of the year will see the Cinema City 5 multiplex in Whangarei trading as part of the group and the commencement of construction of a new eight screen multiplex in Tauranga. Following the acquisition of Whangarei the group will have an interest in 89 screens nationwide.
“The Whangarei operation is the first cinema complex wholly owned by SKYCITY Leisure - a new development for us and the new 8-screen cinema being built at Fraser Cove in Tauranga will be the second new multiplex development we’ve undertaken through the newly branded Village SKYCITY joint venture. The developers have advised us that we can expect to open the Tauranga complex toward the middle of 2005,” said Mr Gascoigne.
The directors note that the second half performance in FY03 had the benefit of particularly strong film titles including Lord of the Rings - The Two Towers, Harry Potter and the Chamber of Secrets, Chicago, James Bond in Die Another Day, and Whale Rider. The unusually fine weather during January 2004 has resulted in significantly reduced attendances for the beginning of the second six months trading. This combined with an apparently less attractive product mix than for the same period last year will make it unlikely that a similar result will be achieved to that of the January-June period last year. The directors cannot be more specific, given the difficulty in making reliable predictions about the success that any film or films may achieve once released.