Events Cinema beds down to Bounce Back from horror year
Events Cinema beds down to Bounce Back from horror year
Event Cinema, a giant in the hospitality and entertainment industry, started a $250 million divestment program of non-core property assets to reduce its mountain of debt and navigate its way back to profitability after its businesses took a pounding due to the impacts of the pandemic.
The pandemic has driven Event’s revenue down by $466 million. Globally, the hospitality and entertainment industry, hotels, cinemas and ski resorts, have been impacted by Covid. Only 56% of global cinemas are opened. Global box office was down 73%. International and interstate border closures, fall in occupancy in key hotel markets.
Jane M. Hastings, Event Hospitality & Entertainment Limited – CEO, MD & Director said the pandemic impacted their revenue by circa $800 million, and they have done well to offset those declines. “The net debt has increased by only 10%. Our debt facilities of $750 million, with the majority, around $650 million, maturing in 2023”.
They had around a $20 million per month EBITDA loss in the earlier COVID period, March to June, and have been able to reduce the loss to $5 million per month in the 6 months. The active cost management achieved just over $100 million in cost reduction and $155 million since COVID commenced. “We have a strong balance sheet and are confident to manage through the current pandemic trajectory”.
After their revenue fell by 58 per cent to $294 million over the December half-year and after it swung to a $31 million operating loss from a $144 million profit a year earlier., The 111-year-old company, backed by Financial Review Rich Lister Alan Rydge, revealed the divestment strategy. “A strategic divestment of non-core properties has commenced unlocking value in the group’s property portfolio, with a target to realise proceeds of $250 million before tax within two years,”
The assets were not identified. Event said it was in the process of “preparing several expression of interest campaigns for the sale of certain freehold assets that are non-core to the business operations of the group”.
Event’s balance sheet is boosted with a valuable property portfolio of hotels, commercial buildings and development sites. These were worth about $2 billion pre-COVID, though Event estimates hotel property values may have fallen 10-15 per cent during COVID. On the other side of the ledger, Event’s total debt has grown to $534 million from $493 million pre-COVID-19. Event increased its debt facility by $205 million to $750 million in July last year. This debt facility will, however, declined by $100 million by no later than January next year with the remaining $650 million maturing in July 2023.
Its half-year results show Event’s cinema business, which dates back to 1910, was the hardest hit by lockdowns, social distancing restrictions and a lack of Hollywood blockbuster releases, reporting operating losses of $18.5 million in Australia, $4.7 million in New Zealand and $42 million in Germany, where the contracted sale of its Cinestar business to Vue International has come unstuck. Its hotel division, which includes the QT, Atura and Rydges brands, had a better six months, reporting earnings of $11.3 million compared with a loss of $2.5 million for the COVID-affected period from March to June. The event’s best-performing asset was its Thredbo Alpine resort which delivered operating earnings of $23.8 million whilst operating at 50% capacity and having a not so good ski season.
Under the JobKeeper scheme Event received $41.73 million over the six months covid period. The Event chief executive Jane Hastings said the result was defined by the impact of COVID-19 government-mandated restrictions materially impacting our ability to generate revenue. “In response, within every division, we have transformed every aspect of our business to be able to respond to the pandemic constraints.
“We secured more than our fair share of scarce revenue opportunities whilst transforming and mitigating cash-burn. Swift and active cost management resulted in more than $155 million in savings from March to December 2020, excluding government subsidies, and excluding the benefit of most of the rent relief negotiated with landlords which will be recognised once agreements have been signed.”
References:
– Edited Transcript of EVT.AX earnings conference call or presentation 18-Feb-21 9:00pm GMT
by Reuters
https://www.yahoo.com/lifestyle/edited-transcript-evt-ax-earnings-210000750.html
– Event to sell $250m of non-core assets after revenue plunge
by Larry Schlesinger
-Event to sell $250m of non-core assets after revenue plunge
Financial Review