Event Hospitality & Entertainment gets boost from Jobkeeper
Cinema, hotels and resorts company Event Hospitality & Entertainment crashed to a $60.2m loss that was only partly mitigated as it tapped the federal government's JobKeeper scheme for $41.73m.
While the company that owns the country's top cinema circuits and hotel chains, including Rydges and QT Hotels, is relying on JobKeeper, it has extended salary cuts for top executives and directors to the end of June.
The company painted a more optimistic outlook for the year ahead but has been hard hit by the coronavirus pandemic and expects most of its units that have tapped JobKeeper to keep receiving it until the end of March.
Event said its first half year was materially impacted by the virus as it operates in some of the hardest hit industries globally, but its more optimistic outlook saw its shares add 4.27 per cent to close at $10.50.
Overall, the pandemic impact led to a revenue plunge of 58 per cent to $294m, but it kept the earning loss to $31m and even wrung a positive contribution from its hotels, despite government mandated closures and restrictions.
The company said the cash burn in the entertainment division was significantly reduced when compared with the COVID-hit period in the last financial year.
Entertainment was hardest hit due to closures in key global markets including the US and Britain. As cinemas worldwide shuttered, fewer blockbuster films were released as major studios delayed launches.
Event chief executive Jane Hastings said the company's result was defined by the impact of COVID-19 restrictions. But the company also cut more than $155m in costs from March to December, excluding government subsidies, and excluding the benefit of most rent relief deals with landlords.
"We have already seen the pent-up demand for our businesses, which was reflected in the outstanding result in Thredbo despite capacity restrictions of up to 50 per cent," Ms Hastings said.
There was strong leisure demand in hotels and cinemas were earnings positive in January despite the Australian nationwide box office halving. The hotels unit is on track to expand, many cinemas have been overhauled and the company has launched an on-demand cinema business.
Ms Hastings said major developments, including two Sydney projects, were also on track, and it would sell $250m in non-core properties over the next two years.
"We are confident, based on what we know today, that we are in a good position to face the challenges of COVID-19 on our industries," Ms Hastings said, and she is bullish about the company's outlook. "While the pandemic makes it difficult to predict the short term, we are optimistic about recovery in the travel and entertainment sectors as soon as the relevant government's vaccination programs are well progressed."
On the entertainment front the company said the vaccination programs offshore were providing more confidence that markets will re-open in time for the northern hemisphere summer period and studios will then release blockbuster films.
Ms Hastings said the company's hotels were not relying on international borders to re-open and anticipated that throughout this year interstate borders may open and close at short notice until vaccination programs were advanced.
Event will not pay an interim dividend but chairman Alan Rydge said that subject to trading conditions, the company had a desire to resume dividend payments from this financial year.
Originally published as Event bullish as JobKeeper stems bleeding