Macquarie Leisure Delivers Solid Third Quarter Trading Results

Macquarie Leisure Trust Group’s Chairman, Mr Neil Balnaves noted “Macquarie Leisure Trust Group results have again highlighted the benefit of being a leader in the affordable leisure sector, which has proven resilient in the current economic cycle. Pleasingly, Dreamworld and Main Event have experienced an improvement in earnings trends on those reported for the half year to 31 December 2008, while d’Albora, Bowling and Goodlife have maintained strong revenue and earnings growth. On the capital management front over $24 million in AMF freehold sales have been completed or contracted since February at above book value while a further $15 million in sales are currently under negotiation”.
 
Dreamworld improves on half year trends
 
Revenue for the nine month period ended 31 March 2009 totalled $69.97 million representing a 4.7% decline over the prior corresponding period (pcp).  Dreamworld’s attendances fell by 4.7% for the period whilst per capita expenditure remained consistent at $65.69.  Earnings before property costs for the period fell by 4.8% when compared to the pcp against a decline of 5.8% recorded for the half year.
 
Group Chief Executive Officer, Mr Greg Shaw noted that the Dreamworld earnings result demonstrated the success of cost management initiatives, with margins being maintained at 38.5% of revenue against 38.6% achieved in the pcp.  The March 2009 quarter also excludes the Easter trading period which fell during March in 2008.
 
Mr Shaw also advised that the new Alien vs Predator combat laser experience opened on 10 April and has been well received by park patrons.  The new attraction was built at a cost of $2.1m.
 
WhiteWater World continues to provide a solid contribution
 
WhiteWater World achieved total revenues of $13.9 million for the nine months to 31 March 2009 representing a decline of 3.4% on $14.4 million recorded in the nine months to 31 March 2008.
 
Earnings before property costs for the period totalled $6.68 million representing a 6.5% decline on $7.15 million achieved in the pcp.
 
Mr Shaw advised: “The third quarter result has been delivered without the benefit of Easter trading and after significant wet weather in south east Queensland.”
 
d’Albora Marinas earnings up 6% on prior corresponding period
 
d’Albora Marinas recorded total revenues of $17.66 million for the nine months to 31 March 2009 representing a 2.2% increase on the pcp.  Earnings before property costs for the period totalled $9.21 million representing a 6.1% increase over the nine months to 31 March 2008.
 
Bowling division records 22.4% increase in earnings
 
The Bowling division recorded total revenues of $79.23 million for the nine month period representing a 6.1% increase on revenues of $74.65 million in the pcp.  Earnings before property costs from the Bowling division increased 22.4% to $25.27 million against $20.65 million recorded in the pcp.  On a constant centre basis, bowling revenues increased 1.1% on the 9 months to 31 March 2008 whilst earnings before property costs increased by 5.5%.
 
Mr Shaw advised: “The Bowling division has continued to perform well in the current economic climate.  In particular, the performance of new centres at AMF Strathfield, Kingpin Darling Harbour, AMF Villawood and our recently opened AMF Joondalup in Perth have all exceeded expectations.  There has also been a strong improvement in operating margins over the pcp, from 27.7% achieved in the nine months to 31 March 2008 to 31.9% for the nine month period to 31 March 2009.”
 
Mr Shaw also advised, “AMF has recently secured a new flagship bowling site which is expected to open in early 2010.  Agreement has been reached with the Rooty Hill RSL Club, Australia’s largest RSL club with a current membership base of around 50,000, to establish a purpose built, state of the art, AMF bowling and laser tag facility as part of their broader entertainment complex in Sydney’s western suburbs. Following the success of new facilities at AMF Strathfield and AMF Villawood, Rooty Hill is expected to enhance AMF’s position as the dominant player in Australia’s bowling heartland.”
 
After completion of the Group’s first standalone M9 laser tag facility at Strathfield, plans are also advanced to establish a number of new M9 laser tag facilities to complement existing AMF bowling centres.

 
Main Event benefits from an improvement in trading trends
 
Total revenues of US$34.94 million were achieved for the nine month period, representing a 5.6% decrease on the nine months to 31 March 2008, against a 6.4% decrease recorded for the half year to 31 December 2008.  Earnings for the nine month period equated to US$7.58 million representing a 16.5% decline on the nine months to 31 March 2008, against a 23.9% decline recorded in the December half.
 
Mr Shaw said, “Improvements have also been recorded for constant centres where revenues of US$25.79 million for the nine month period represented a decline of 7.6% over the pcp, against a 7.3% decline recorded in the half year to 31 December 2008 while constant centre earnings of US$6.66 million fell by 13.4% on the pcp, against a decline of 15.2% recorded in the December half.”
 
The new Main Event Frisco site opened in north Dallas on 12 February 2009 with trading meeting expectations.
 

Goodlife results reflect portfolio expansion
 
Expansion of the Goodlife portfolio has seen the division deliver significant increases in revenue and earnings over the pcp. 
 
Goodlife recorded total revenues of $51.83 million for the nine month period against $20.88 million recorded in the pcp.  Earnings before property costs equated to $18.91 million against $7.75 million recorded in the pcp.
 

Capital Management
 
Over $24 million in sales completed or contracted since February
 
Since mid-February Macquarie Leisure Trust Group has achieved significant progress in relation to the capital management initiatives outlined at the time of announcing the Group’s half year results announcement.  In particular, AMF sale and leaseback transactions have now been completed for Belconnen and Moonah, generating total proceeds of $6.4 million, in line with book value.  A further $8.95 million of unconditional sale contracts and $9.2 million in conditional sale contracts have been finalised with settlements scheduled progressively from May to August 2009.  Negotiations are also well advanced on the sale of additional properties with a value in excess of $15 million.
 
The Group has also finalised documentation in relation to the extension of $50 million of the $100 million Australian debt facility from September 2009 to September 2010, to take total Australian facilities to $250 million.  Terms have been agreed for a new US$10 million debt facility to support the Main Event business. Documentation on the US facility is expected to be finalised before the end of May 2009.
 
As a result, the Group currently remains on track to reduce Australian debt to below $230 million by September 2009.

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Marc Pallisco

Marc Pallisco

A freelance property writer and analyst, Marc is a co-founder of realestatesource.com.au.

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