Village downsizing

Exhib sells chains in Germany, France, Switzerland, Hungary

SYDNEY — Village Roadshow Ltd. has flagged its intention to exit Austria and Malaysia as it continues to scale back its spread of international exhibition interests to focus on fewer territories.

The Australian company revealed Thursday its cinema division sustained its first-ever loss in the fiscal year ending June 30, impacted in particular by poor trading in the U.K. and economically-ailing Argentina.

VRL now operates 1,518 screens in 15 territories after selling its circuits in Germany, France, Switzerland and Hungary and an entertainment complex in Athens (where it continues as the cinema operator) in the past 12 months.

The exhib divison incurred an after-tax loss of $A13.5 million ($7 million) on gross B.O. revenue of $441.2 million, compared with a $8 million profit in the prior year.

Deputy chairman Robert Kirby said the company is in advanced negotiations to sell its two multiplexes in Austria (totaling 18 screens) and its 25% stake in 44 screens in Malaysia, while declining to reveal the parties involved.

Kirby hinted Village aims to quit several other markets in line with the target to slim down to “about 10 territories.”

However it plans to open 232 screens at 25 locations in the current fiscal year, expanding chiefly in the U.K., Taiwan, Italy and South Korea.

Managing director Graham Burke said the exhib losses were offset by excellent results from VRL’s other core businesses comprising radio, distribution, theme parks and film production.

Overall, net profit dipped by 27% to $28.6 million after a jump in company tax and the write-down of some cinema assets, the closure of Scape, its Australian Internet co-venture with the Ten Network, and adopting a more conservative accounting policy.

Operating revenues improved by 37% to $550 million.

The production division generated a pre-tax profit of $15 million (a rise of 146%), reflecting an increase in product from the Village Roadshow Pictures-Warner Bros co-venture. Among the VRP-WB titles set for release in the current fiscal year are “Don’t Say a Word,” “The Majestic,” “Zoolander,” “Queen of the Damned,” “Arac Attack,” “Showtime,” “Oceans 11” and “Pluto Nash.”

In the last fiscal year VRL had an IPO for its radio network Austereo, retaining control and a 57.5% stake.

Burke noted VRL has disposed of all non-core activities and said,” “With indications of a turnaround in film product, we expect to have all our core businesses contributing to earnings growth in the (current) year.”

Kirby said B.O. revs at Village’s cinemas worldwide in July-August improved by an average of 18%, and the gains in Australia, the U.K. and Korea were more than 20%.

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