Here’s how Event performed during the 2021 financial year.
The post The Event (ASX: EVT) share price is gaining on FY21 earnings appeared first on The Motley Fool Australia. –
Right now, the Event share price is $13.04, 4.49% higher than its previous close.
Event share price jumps despite severe COVID-19 impact
Here’s a snapshot of how the company performed during FY21:
Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $27.2 million – 71% less than FY20
$653 million of revenue excluding government subsidies, down 45.4%
Loss of $63 million before income tax.
In its earnings report, Event said it was hit hard by COVID-19 restrictions over FY21.
Its Australian and New Zealand entertainment segment brought in an EBITDA loss of $6.4 million, while its German entertainment segment saw an EBITDA loss of $33.6 million. The company’s event segments house its cinemas, which spent much of FY21 closed due to pandemic-related lockdowns.
However, the company’s hotels and resorts segment was in the green with EBITDA of $33.4 million. Its Thredbo Alpine Resort also had a positive EBITDA, reaching $29.7 million.
In addition, Event reported its property and investments brought in $16.7 million of EBITDA.
The company’s property portfolio saw a fair value increment of $6.9 million, while rental revenue was down due to COVID-related rent relief.
Since the start of the COVID-19 pandemic in 2020, Event has created $264 million of cost reductions.
Additionally, it accessed government wage subsidy programs including JobKeeper, New Zealand’s Wage Subsidy, and Germany’s Short-Time Pay. Event stated the subsidies provided no net benefit to the company.
Event’s insurance costs increased by 75.9% to $11.2 million during FY21.
As of 30 June 2021, Event had reduced its net debt by 25% to $355.5 million.
What happened in FY21 for Event?
FY21 was a productive year for Event and its share price.
Over the period, the company made progress on 2 major property developments.
The first being a $37 million value add on to 525 George Street in Sydney through a stage 1 development application. The company expects a stage 2 development application to be lodged in FY22 and the sale of 109 apartments to start in 2023/24.
Additionally, the development application for the podium component of the company’s proposed 458-472 George Street development has been approved. The development will see ground-floor retail space on George Street, and the QT Sydney hotel with 72 new hotel rooms, a conference centre and a QT rooftop bar.
CineStar Germany remained closed throughout the second half. It reopened on 1 July 2021. The company advised German government support would help to offset its losses during the closure period from November 2020. So far, Event has applied for €27.5 million ($43.5 million) of support to date.
Event realised $79.6 million of proceeds (before selling costs and tax) from its non-core property divestment strategy. However, $30.3 million of those are yet to settle.
The assets sold were the Forum Building in Brisbane, the Double Bay property, 201-203 Port Hacking Road Miranda, Rydges Plaza Cairns Hotel, Cairns City Cinema, and Mt Maunganui Cinemas.
Event also acquired property, plant, and equipment valued at $30.2 million during FY21.
What did management say?
Commenting on the results, Event CEO Jane Hastings said:
Whilst government mandated temporary lockdowns and restrictions have continued to impact our business, we have seen a strong return to cinemas when we have quality films, and customers are spending more than they were pre-COVID-19… It is clear from the second half results that when government restrictions are lifted, demand returns…
Whilst the Delta variant outbreak and government lockdowns in Australia during June 2021 did not significantly impact the result for the year, it has materially impacted the results for our Australian divisions in July and August 2021. We managed to break even in July.
Hastings said the speed of government vaccine rollout programs in Australia and New Zealand, underpinned by a clear framework for reopening, would determine the timeline for recovery.
Our industries have been amongst the most impacted, with lockdowns reducing revenue by almost 100%… At this time, large businesses, with the most employees, are not eligible for direct government support. This is disappointing as the previous JobKeeper scheme enabled these larger employers to retain jobs and provide security for employees.
What’s next for Event?
Here’s what might dirving the Event share price in FY22:
Event stated it couldn’t provide guidance due to COVID-19. However, it did outline its future plans.
The company plans to bring in more than $150 million from the sale of more non–core properties during FY22. It is also identifying non-core assets to sell in FY23. It hopes to realise $250 million of proceeds from the sale of non-core assets over the next 2 years.
The company plans to strengthen its property portfolio by investing in developing assets that generate reasonable returns, potentially developing some of its Sydney assets, maximising rental income, divesting under-performing assets, and potentially acquiring assets that generate positive earnings.
Its entertainment segment will look to continue the development of its ‘Cinemas of the Future’ strategy, investing in good locations and reviewing underperforming locations, implementing new pricing strategies, developing new food and beverage concepts, and looking to new technology and entertainment concepts to increase efficiency.
Event also has a strategy to maximise earnings from its hotels and resorts segment and its Thredbo Alpine Resort.
Finally, Event will launch its corporate social responsibility strategy during FY22. After releasing its scope 1 and 2 carbon emissions recently, the company will begin to report under the Financial Stability Board’s Task Force on Climate-related Financial Disclosures framework.
Event share price snapshot
The Event share price has gained 35% year to date. It is also 56% higher than it was this time last year.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.