Wet Christmas dampens NZ Experience's result

Friday 24th February 2012

Rainbow’s End theme park operator New Zealand Experience, delivered a disappointing first-half result, reporting tax-paid profit of $740,000 in the six months to Dec. 31 after wet, windy Christmas season weather hit attendance numbers at the Auckland attraction.

The result compares with a $1 million profit a year earlier, with revenues traditionally greatest in the first six months of the financial year, and partly reflects investments the company has made in anticipation of growth.

Visitor numbers were down 8 percent for the half to 154,500, as a result of the poor December trading.

Total revenue for the first six months was up slightly to $5.8 million, with higher sale of goods offsetting a decline in services revenue, while total expenses rose from $4.4 million in the same period a year earlier to $4.8 million. Employee costs, inventories and other expenses contributed to the increase.

The company confirmed earlier guidance suggesting its full-year net profit will be in the range of $1.2 million to $1.4 million, compared with $1.5 million last year. While somewhat weather-dependent, the second half was also likely to see increased revenue from function activity, which suffered in the first half because of competition from the Rugby World Cup.

Earnings per share for the period were 2 cents, compared with 2.73 cents in the prior period.

Chairman Rodney Walshe, who replaced Tony Frankham after the half-year end, said in a statement to the NZX the company’s cost base had increased during the period “as a result of our added offerings in the park and continued inflationary pressures.”

Staff costs had also risen as new full-time employees were added to support expanded facilities, and the advertising and marketing budget had also grown.

Feasibility study costs were also recorded in the period under review, as the company works towards further upgrades, new attractions and a refurbished entrance to the 30-year-old theme park, the only one of its kind in New Zealand.

“These projects will be funded by way of external debt as we look to increase our available debt facilities, while ensuring that total debt is held at prudent levels relative to our strong operating cash flows,” said Walshe. Further announcements would be made on this issue “in due course.”

Shares of NZ Experience did not trade immediately after the announcement and last traded at 35 cents.

BusinessDesk.co.nz

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