Thank you for standing by, and welcome to the Ardent Leisure Group Half Year Financial Results Conference Call. All participants are in listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to Doctor. Gary Waies, Chairman of Arden.
Please go ahead, sir.
Thank you. Welcome, everybody, to our results call. It is said that a week is a long time in politics. In the case of Ardent Leisure, the past 12 months has seemed an eternity. A year ago, we reported particularly encouraging results.
In relation to Main Event, following the appointment of Chris Morris and his team some 18 months earlier, Main Event was evidencing strong momentum with a return to good like for like sales growth and the resumption of a well defined and executed program for new center rollout. Against that backdrop, we announced our intention to initiate a process to introduce a partner to our U. S. Business to help accelerate growth. In relation to theme parks, following the appointment of John Osborne and his team some 14 months earlier, Dreamworld had experienced its best Christmas New Year trading results since 2016, and there was a program underway to refresh the offering with a pipeline of new rides and attractions and with Sky Point on track to deliver its best ever trading result.
All of this was, of course, upended by the COVID-nineteen pandemic, the greatest global health challenge for over a year over 100 years. Ardent has met the substantial challenges arising from the global pandemic by refining our business models and reshaping our operations, and I do particularly want to call out the impressive leadership of the teams at Main Event and Dreamworld over this period and also significantly strengthening Ardent's financial position through the partnership with Redbird Capital in relation to Main Event announced in June last year and through the financial assistance package negotiated with the Queensland government in relation to our theme park business. The last few months have seen us battle the devastating second wave of the pandemic in the U. S. And border closures in Australia.
Despite these very significant headwinds and challenges, both of our businesses have, in relative terms, performed well in the circumstances. Ardent's businesses have shown considerable resilience in the face of these particularly adverse challenges. And with effective vaccines being rolled out and hopefully the end of the pandemic on the horizon, we believe that our businesses are well placed to resume the growth that was well underway 12 months ago and with it, the restoration of value for Ardent shareholders. I will now pass to Darren Harper to take you through the results.
Thank you, Gary, and good morning, everyone. On Slide 2, let me start by reminding everyone that our statutory results for the first half of the prior fiscal year FY 2020 included one extra operating week due to FY 2020 being a 53 week year. We have presented the prior results on a pro form a basis consistent with our presentation in the prior year and have included a reconciliation to the reported results in the appendix of the presentation. For the balance of this call, when discussing year over year variances, this will be against the prior year pro form a results unless otherwise noted. Furthermore, please note that the lease accounting standard was implemented at the start of the prior year and thus our current and prior year results both reflect the impact of the new standard.
We have continued however to quantify the impact of the lease accounting standard in our specific items and this can be found on Slide 4 of the presentation. Lastly, I will refer you to the appendix of our posted results presentation for a listing of defined terms used during the call. Turning our attention to the key highlights on Slide 2, our results for the first half of FY 'twenty one reflect the significant impact that COVID-nineteen have on the results of both of our businesses. Group revenue was down over $109,000,000 and EBITDA excluding specific items was down $38,800,000 versus the prior year. On a U.
S. Dollar basis, Main Event revenue declined $54,400,000 and EBITDA excluding specific items decreased $27,300,000 Despite the significant headwinds from COVID, we are pleased with the underlying sales results of the Main Event business, which we will discuss in more detail later during the presentation. During the reporting period, we had several of our centers closed for varying lengths of time due to state or local restrictions. But by January 2021 we returned to having 42 of our 44 centers opened. We also opened a new center during the first half of FY twenty twenty one and despite the ongoing impact of the pandemic, our results have been remarkably strong.
We are very pleased with the performance of our last several new center openings demonstrating the effectiveness of our revised real estate approach. With regard to theme parks, revenue was down $23,000,000 with both Dreamworld and Whitewater World being closed until 16 September 2020. Despite the decline in revenue, EBITDA excluding specific items was down less than $1,000,000 year over year. Furthermore, strong annual pass sales from the local drive market, a disciplined approach to capital spending and the JobKeeper wage subsidy boosted cash receipts resulting in trading for the period being cash positive. John will walk through the performance of theme parks in more detail later in the presentation.
Moving to Slide 3, as noted earlier, revenue for the group declined $109,000,000 or 44.3 percent due to the negative impact of COVID-nineteen on both businesses. EBITDA excluding specific items was a loss of $19,800,000 which was down $38,800,000 from the prior corresponding period, reflecting the revenue decline as well as the high operating leverage nature of the Main Event business. Corporate group office costs declined $600,000 versus prior year as a result of prior restructuring decisions and tight management costs. Net borrowing costs increased from $11,000,000 in the first half of twenty twenty to $17,700,000 in the first half of twenty twenty one mainly due to the inclusion of the Redbird paid in kind preferred stock dividend, amortization of capitalized borrowing costs incidental to the Redbird transaction and lastly a change in net debt balances in the current period. Lastly, we had a lower tax benefit in the first half of twenty twenty one due to the current period being impacted by a $19,700,000 tax expense relating to Australian and U.
S. Tax losses and Australian deductible temporary differences not recognized as deferred tax assets during the period. Turning to Slide 4, here we have provided a breakdown of the specific items impacting our results. In addition to the aforementioned impact of the new lease accounting standard, the specific items for the first half of FY 2021 also include an impairment charge of $4,100,000 related to leased right of use assets associated with 1 main event center that was previously impaired. Additionally, we incurred $4,400,000 of restructuring and other non recurring charges in association with the Redbird transaction, write off of dead site costs for main event and a penalty associated with the cyber breach which is expected to be recovered in the second half of FY twenty twenty one via insurance proceeds.
Also important to note is the continued immaterial costs associated with the pre enrolled incident. Now let's turn our attention briefly to the financial performance of Main Event and then I'll hand the call over to Chris Morris. Moving to Slide 6, as previously noted Main Event revenue declined on a U. S. Dollar basis $54,400,000 or 37 point 7%, primarily reflecting a reduction in constant center sales due to the impact of COVID-nineteen, which resulted not only in lower consumer demand, but also in temporary center closures during the period.
Additionally, we had 2 permanent center closures during the second half of FY 2020 and these were partially offset by full period contributions from 2 new centers that opened in FY 2020 and 1 new center that opened in the early FY 2021. Regarding our constant center revenue performance, on a like for like basis for the first half of the year, including both opened and closed centers in the constant center base representing 40 locations, we were down 43% versus the prior corresponding period. For reopened centers, our revenue was down 37.7% versus the prior corresponding period. Chris will discuss our sales trends in more detail in a few moments. Main Event Centers began gradually reopening in May 2020 with 42 of 44 centers reopened by September 2020.
However, during the November December 2020 timeframe, 5 centers were required to be reclosed due to the pandemic. As of the 29 December 2020, 38 out of 44 Main Event Centers were reopened and operational as compared to 43 centers in the prior corresponding period with a further 4 centers reopening in January 2021 resulting in our current status of 42 of 44 centers reopened. Excluding specific items, the EBITDA loss for the first half of FY twenty twenty one was $9,400,000 which is a decrease of $27,300,000 versus the prior period. While decline was driven by reduced revenue associated with COVID-nineteen, it was partially offset by improved cost of sales and labor efficiencies as well as lower other operating and overhead costs resulting in more favorable negative flow through. With that, I'll now turn the call over to Chris Morris.
Okay. Thank you, Darren. Good morning, everyone. The first half of the twenty twenty one year has certainly been challenging. However, I'm proud of how our teams across the country have managed through the numerous challenges associated with COVID-nineteen.
While still facing headwinds, we're pleased with the positive momentum in our business and believe we are well positioned for a strong recovery. Let's go through Slide 78. Constant center revenue performance sequentially improved for the 1st three periods of the first half of the year ending the September quarter with constant center revenue down 14.4% in the month of September. Then as we moved into the December quarter, sales softened as the second surge of COVID-nineteen cases spread across the country and we lapped the highest seasonal period for corporate event sales. As we've discussed previously, corporate event sales were very challenging this year given the pandemic.
Companies were very reluctant to corporate event sales given large public gatherings. However, content center revenue recovered in January regaining the momentum we experienced prior to the 2nd surge of COVID cases. Content center revenue was down 18.8% in January, which is well above 4 well EBITDA breakeven levels. In fact, in the month of January, 37 centers generated positive 4 well EBITDA. Overall, we are pleased with our performance so far this year as our business is recovering at a pace quicker than anticipated.
Additionally, we are very happy with the performance of our new centers even during the pandemic, which we believe validates the revised real estate approach by our current management team. Moving on to Slide 9. Throughout the first half of the year, we have continued to make considerable progress on key strategic initiatives. First, we have continued to ensure a safe environment for our guests and team members as the health and safety of our team members and guests has been and will continue to be our top priority. We're committed to supporting our team that's working so hard to take care of our guests each and every day.
Currently, 42 of our 44 centers are open. Orlando, Florida and Albuquerque, New Mexico are the 2 closed centers and both are expected to be closed through the remainder of this fiscal year. We completed a system wide rollout of new virtual reality traction, Star Wars Dojo and leverage the Star Wars IP to bring excitement and awareness to our business. We've continued to invest in technology as part of our commitment to lead through innovation. We recently rolled out a new e commerce ecosystem including the launch of a new website and mobile app.
Additionally, we implemented a new CRM and email platform enabling better targeting and data capture. These are important milestones for Main Event as we begin to use our size and resources as a competitive advantage in the family entertainment category. We will use this platform to engage with our guests and bring new and interesting solutions tailored for their needs. With the onboarding of our new Chief Operating Officer, we are adjusting and elevating our service model to deliver an even better guest experience. Slide 10.
As a result of the success of our new center openings and our belief in our long term strategies, we are actively rebuilding our new unit pipeline. We remain on track to opening a new unit in Chesterfield, Missouri no later than September 2021 and are projecting a total of 4 new centers to open in fiscal 2022. In addition, we are in active conversations with another 8 to 10 sites for future development. As we look out the remainder of this fiscal year, there remains near term uncertainty regarding the efficacy of the vaccine rollout and overall consumer recovery. With that said, however, we are pleased with the progress of our recovery to date and believe we will continue to see improvement in the second half of fiscal year.
We remain bullish on this category and believe we are well positioned to be the leading growth brand for many years to come. So with that, I'll turn it over to John.
Thank you, Chris, and good morning to everyone listening today. Dreamworld and Whitewater World remained closed until 16th September. This along with ongoing border restrictions and snap lockdowns led to a decline in attendance and revenue compared to the prior period. Despite the challenging environment, the division recorded a modest EBITDA loss excluding specific items of $3,700,000 compared to a loss of $2,900,000 in the prior period. A focus on pricing and product for the local drive market, a reduction in the cost base of approximately $6,000,000 compared to the prior period and the JobKeeper wage subsidy has resulted in trading for the division being cash positive.
Effective implementation of our COVID safe continues to be our highest priority. The incremental increase in expenses associated with the various plan measures is in the order of $750,000 per annum, excluding capital expenditure and other one off costs. We believe that many of these measures will become standard practice. Therefore, much of this incremental cost increase is likely to continue post pandemic. In relation to Dreamworld and White Water World border restrictions and SNAP lockdowns have resulted in all interstate markets being largely unavailable since reopening on the 16th September.
Despite this extreme disruption, attendance to the 26th January was approximately 70% of the prior period. The local drive market focus created sales momentum with past sales and cash receipts between the 12th August 26th January being 92% and 49% better than the prior period respectively. Staging of pop up activations continues to be a successful strategy. Between October January, we staged Happy Halloween, Bluey Live Interactive and the Monster Trucks Spectacular and they all attracted large crowds and repeat visitation from our existing and local pass holders alike sorry, our existing and new pass holders alike. The various initiatives supported by a targeted marketing campaign resulted in the local drive market attendance during September school holidays and the Christmas school holidays to the 8th January being 35% and 11% better than the prior period respectively.
Unfortunately, attendance since the Greater Brisbane lockdown, which occurred between the 8th 11th January has fallen sharply. This lockdown effectively brought a premature end to the Christmas holiday trading season for us and many tourism and leisure businesses in the South in Southeast Queensland. Construction has commenced on Steel Taipan, our new $32,000,000 world class multi launch roller coaster and we are targeting a completion date of quarter 4 calendar year 2021. In relation to the Sky Point Observation Deck and Climb in Surfers Paradise, the restrictions have had a significant impact with attendance between the 10th July 26th January being approximately 27% of the prior period. The lower attendance has to some extent been offset by a high yield per guest resulting from promotions, including consumer buying events and other offers, which target the local drive market.
Historically strong corporate events business has also been significantly impacted. However, an increase in recent inquiries is very encouraging. Prior to the pandemic Skypoint was on a growth trajectory and there's no reason to think that earnings will not return to historical levels in the future. Our immediate focus will continue to be providing a safe environment for our guests and team members, staging activations and experiences that encourage repeat presentation and increased spend by our local pass holders, attracting interstate visitors where border restrictions allow, reducing discretionary costs wherever possible along with the successful delivery of projects such as steel type van. The Australian government's vaccine program leaves us feeling optimistic about the prospect of a strong recovery.
However, we believe that uncertainty is likely to prevail for the next for at least the next 12 months. The work we have done over the last year means we are well positioned to take full advantage of the strong rebound that is expected when the pandemic related restrictions ease and eventually comes to an end. Thank you. And I'll now hand back to Darren.
Thanks, John. Let me just touch on a few points for the next few slides and then we'll open up the line to Q and A. On Slide 19, I'll draw your attention to the net debt for the group of $117,200,000 as of 29 December 2020. This is an increase of 38.8 $1,000,000 from 30 June 2020 and was driven primarily by lease payments, cash flow used in operations and capital spending. Included within these outflows were unfavorable working capital adjustments primarily associated with deferred vendor payments as of 30 June 2020.
They were repaid during the second half of FY twenty twenty one sorry, they were repaid during the first half of FY twenty twenty one totaling over $10,000,000 The group had a cash balance of 105,400,000 dollars as of 29 December 2020, which is comprised of $27,300,000 $78,100,000 cash available to the Australian and U. S. Businesses respectively. Cash in the U. S.
Business largely reflects the investment from Redbird Capital in June 2020. Turning to Slide 20, please note that the debt structure as of 29 December 2020 still primarily consisted of the credit facilities for the U. S. Business of which no additional capacity exists due to the fully drawn term and revolving facilities. Main Event continues to have covenant waivers through to and including the March 2021 quarter from its lenders.
While $5,500,000 was drawn on the Queensland Treasury Corporation loan facility as of 29 December 2020, this amount was fully repaid in January 2021 resulting in no borrowings under the facility currently. Also as a reminder, under the terms of the group's financing facilities, cash and debt held by the Australian and U. S. Businesses are subject to separate ring fencing provisions whereby each business cannot access cash or facilities held by the other. Lastly, in view of the ongoing uncertainty of the current environment and the Board's previously stated intention to continue to invest in Main Event and Theme Parks, the Board has decided not to declare an interim dividend
for the first half of twenty
twenty one. Finally, on Slide 21, note the significant reduction in our corporate costs over the last few years. The group has taken its recurring cost base of over $16,000,000 to our run rate of less than $7,000,000 due to significant efforts to permanently reduce the cost structure given the changes to the business of the past few years. This decrease has been partially offset by higher insurance costs in the current period. This concludes our prepared remarks.
And with that, we'll now open the call to questions.
Thank you. Your first question comes from Sam Tighe from Citi. Please go ahead. Good morning, guys.
There's been a couple of results on today, so sorry if you covered this already in the presentation. But what should we be expecting for the monthly Dreamworld cash burn post the JobKeeper expiry in March?
Yes. Look, I think if you look at what we've actually disclosed today, the benefit that the theme park business got from Job Cheaper was $8,400,000 So that's the net benefit. That's on Slide 12 with a note sort of explaining that. I think that as I said in my remarks, we had a really strong opening between September December with the strong support from the local market. We were trading cash positive for most of those months.
And then since the lockdown of Brisbane in the middle of January, things have been trading has been quite restrained. So in terms of what the actual monthly number would be, I wouldn't like to give any direct guidance on that. But I think you can assume that we're not getting the $8,400,000 that we got in the first half and work from that. But there will be we see that probably taking I think I said at least 12 months, and I don't think I'd be far off with those comments.
All right. And then of the $6,000,000 cost reduction, what do you think is permanent? And what do you think would need to be reinvested in the recovery phase? Yes. So based
on yes, so their operating costs, Sam, they excluded cost of goods sales for obvious reasons, but include the incremental increased costs associated with COVID that I called out in the presentation. None of those operating costs will have to be reinvested based on our current business model. So we think we can operate steel type down in the park as it currently is and we talked at the last presentation 6 months or so ago about reducing the size of the footprint, all of that's been done. So we see those cost savings being embedded. Let's hope that the pent up demand story is 10x better than anybody thinks it's going to be, in which case, obviously, we'd look at ramping up, but that will be commensurate with trade.
But to answer your question, those cost savings are embedded as far as we're concerned don't have to be reinvested in the future unless there's a good business case to add more rides, attractions, whatever, which would result in a profitable outcome anyway.
Got it. And then maybe one for the Main Event team. Can you just talk about the timing for the 4 new centers you're planning for next financial year? And I guess what's giving you the confidence to accelerate the rollout next year?
Hey, Sam, this is Chris.
Hi, Chris. Turning to
the time here. So Chesterfield, as I said in my prepared remarks, will open it's targeted to open in September. It's possible it could open a little bit earlier. The other three centers, most of those will right now we believe the remaining three will be open no later than the end of the Q3 of fiscal 2022. But not prepared to say specifically which quarter or which period.
We believe all 4 will be opened by the end of the Q3. But we're still in the process of locking things down so those dates might move. But we're confident at this point in time all 4 will open in the fiscal 2022 year. In terms of our confidence in rebuilding our pipeline, I think first it starts with our most recent openings. I know that historically this brand has done exceptionally well throughout time, but there have been a couple of missteps on the real estate side of things prior to our management team.
And with our
new management team, we one of our
very first priorities was to team, we one of our very first priorities was to bring a new level of sophistication to real estate site selection. And so, the sites that we've opened under our new management team have all performed well above expectations all the way through even during the pandemic. We opened our most recent opening was in Tampa, which opened in the middle of the pandemic, opened in July and that unit has continued to exceed even our wildest expectations. So we see we have confidence just in the fact of the results that we've been able to deliver with the 3 that we've opened under our team. And in order for us to get rebuild our pipeline in F 2023 and beyond, we need to start actively we need to start having those conversations in place today because the lead time is still long.
And so as we look out, we believe that the consumer is continuing to strengthen. Our businesses, the recovery continues to get better and better. And we think certainly by F 2023 going forward, our business will be back. And so we want to be there and be prepared. But even in the event that there's still a little bit of headwinds based on the results that we've seen out of the 3 new center openings that we've opened, we still feel very confident we'll get great returns.
Thanks, Chris. Sure.
There are no further questions at this time. I will now hand it back to the presenters for closing remarks.
Thank you very much. I want to thank those on the line for their attendance gets the backdrop of seeing the pandemic through rear vision mirrors. But anyway, thank you all for your attendance.