Village Roadshow looking forward, with pledge of shareholder dividends

Village Roadshow says it intends to continue paying dividends after making its first payout to investors in three years.

Clark Kirby and deputy mayor Donna Gates unveiled the new Sea World whale watch vessel earlier in 2019. Photograph: Jason O'Brien

Village Roadshow intends to continue paying dividends after making its first payout to investors in three years, as the 2020 financial year has started well for its embattled theme parks business and advertising has recovered in its cinema exhibition operations.

Village in August declared a final dividend of 5c a share fully franked, after last paying a dividend to shareholders in October of 2016 and reported a strong lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $124.9m in 2018-19, up from $90.9m in the previous year. Underlying profit improved to $20.6m over the year, from a loss of $7.3million.

At Friday’s annual general meeting of the company in Melbourne, Chairman Robert Kirby, who is stepping down to make way for an independent chairman, lauded departing long-serving chief executive Graham Burke. Mr Burke is making way for Mr Kirby’s son, Clark, to take over in January.

READ MORE: Ardent Leisure, Village Roadshow splash out on theme parks

Ninety-six per cent of investors voted in favour of the remuneration report after Village had been dogged in previous years by issues over excessive executive salaries and corporate governance.

Family feud

During the year, Mr Kirby went to war with his brother John over the strategic direction of the company after the latter linked up with veteran investment banker David Kingston to push for board and management change at the company.

The fight was resolved when Mr Burke agreed to step down as CEO, but he will remain on the board with both the Kirby brothers.

Graham Burke and Robert Kirby. Picture: Geraghty David

Robert Kirby told shareholders in Melbourne on Friday that with debt reduced to a conservative level, the focus of the company remained on “careful capital management, the delivery of outstanding experiences and driving sustainable earnings and free cash flow”.

“Village Roadshow is committed to increasing shareholder value and the board intends to continue paying dividends, subject to performance continuing to meet expectations and available free cash flow,’’ he said.

Village shares have risen from $2.45 at the end of August to be trading above $3.20, but they remain below the 12-month high of $3.86 reached in May.

Mr Kirby said first-quarter admissions in the theme parks business, which were under pressure in the two years following the neighbouring Dreamworld tragedy in 2016, were up on the prior corresponding period.

Chasing opportunities in Asia

Village continues to pursue opportunities for consulting and management operating agreements in Asia for the business.

He said capital expenditure in the cinema exhibition business would increase in 2020 due to the refurbishment of premier cinema sites and the introduction of new food and beverage concepts. “The industry experience is that this capital expenditure will deliver a return and is expected to contribute to earnings in the 2021 financial year and beyond,’’ he told investors.

While screen advertising was lower last year, he said it had now “recovered to previous levels.”

The first quarter of the 2020 financial year was impacted by softness in the cinema release schedule, but October saw the release of box office hits Joker and Hustlers, which Mr Kirby said had outperformed expectations.

The theatrical line-up for the rest of the year includes Birds of Prey, Wonder Woman 1984, Miss Fisher and the Crypt of Tears, and The Gentlemen.