Struggling Village Roadshow to slash executive pay, raise $51m

Listed theme park owner Village Roadshow will slash executive pay as part of a strategy to repair the business.

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Listed theme park owner Village Roadshow will slash executive pay as part of a strategy to repair the business, but there are no plans for generational renewal of the company’s top brass.

The group yesterday launched a $51 million equity raising in a bid to cut debt and outlined a strategy to invest in its movie theatres, sell more amusement park tickets and roll out hi-tech golfing ­attractions.

The plans come as visitors have been hesitant to attend Gold Coast theme parks after a tragic accident on the Thunder River Rapids Ride at Dreamworld — owned by the rival Ardent Leisure — saw four people die in 2016.

Village’s co-executive chairmen and co-chief executives Robert Kirby and Graham Burke will feel the loss-making business’s pain, each taking a 25 per cent pay cut. The pair received remuneration packages of $1.59m and $1.41m, respectively, last year.

The company’s director fees will also be reduced by 25 per cent as of July 1 this year.

Even so, Mr Burke told The Australian he expected to remain in the top job.

“Absolutely. I’m fitter than I’ve ever been and hitting goals and feel very confident,” he said.

The group would be able to “very comfortably” meet its debt repayment obligations, he said, as it had a revolving credit facility limit of $425m and $375m was maturing in December 2019.

Village hoped to cut its leverage to 2.5 times earnings before interest, tax, depreciation and amortisation, which Mr Burke said would be prudent.

“We want to get our balance sheet strong. We want to get our debt leverage under control,” Mr Burke told The Australian.

“We will do what we do well, which is sell tickets and market and promote.”

The group warned it expected a net loss after tax excluding material items of between $6m and $10m for the 2018 financial year, but is tipping an “improved” result in 2018-19. The group reported a $67m loss for 2016-17.

“We’ve had one loss in the company’s 75-year history, both as a private company and a public company,” Mr Burke said.

“It was due to freakish, tragic circumstances and we’re very confident that full-year 2019 is going to be strong.”

He says the group can return to paying dividends in the near term, once it is prudent to do so.

Village said its earnings were still affected by the Dreamworld tragedy, via lower ride attendance.

The group flagged a $95m writedown on the value of its Gold Coast parks but hopes to lift ticket sales revenue after clamping down on discount resellers.

Earlier this month, the company signed a deal to sell its Wet’n’Wild park in western Sydney to Spanish theme park operator Parques Reunidos for at least $40m.

Total impairments for the full year are likely to be about $166m, due to theme park writedowns and a sale and leaseback deal the company signed in December on the land its Warner Bros Movie World and Wet’n’Wild Gold Coast theme parks sit on.

Village expects restructuring costs of about $9m and is targeting annualised cost savings of more than $10m this financial year through removing duplication in the finance IT, marketing, legal, human resources and digital development teams.

Baillieu Holst analyst Nick Caley said a solid recovery looked likely for 2018-19 after much of the bad news in the 2017-18 result had already been disclosed in the April trading update.

“There seems to be a bit more urgency within the group in terms of getting the debt down and reducing costs,” Mr Caley said. “You only have to look at [rival] Ardent’s numbers to know the Queensland theme park story is not that attractive.” The listed entertainment group outlined its strategy of focusing on growth opportunities, ranging from investing in its movie theatres to launching new marketing campaigns for its theme parks.

A new theme park pricing strategy is hoped to lift ticketing revenues, as the group phases out existing discounts, while theme park projects in Asia are in the pipeline.

In the film distribution arm, Village will make fewer purchases of expensive overseas movies and focus on Australian content. Village is also making a bet on its family-friendly Topgolf games, where players hit golf balls into targets and win points for accuracy and distance.

Already 38 sites are open in the US and a course on the Gold Coast opened last month. The company is looking for new locations in Australia but the plan depends on the success of the first local site.

The group will focus on premium movie theatres with high-end dining and is opening new cinemas in areas of strong population growth.

As part of the equity raising, shares are being sold at $1.65 each, which represents a 24.3 per cent discount to the group’s share price close on Friday of $2.18. Village shares last traded at $2.18, before they were placed in a trading halt ahead of yesterday’s market open.