‘Stretched ourselves thin’: Ardent takes stock in US after hurricane hit

SYDNEY, AUSTRALIA – JUNE 12: Ardent Leisure CEO Simon Kelly on June 12, 2017 in Sydney, Australia. (Photo by Ben Rushton/Fairfax Media)Dreamworld theme park owner Ardent Leisure has flagged a more “measured” approach to the next phase of its US expansion as its entertainment centres in Houston took a hit from Hurricane Harvey, which has devastated parts of Texas.

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Ardent, the first Australian company to be directly impacted by the hurricane, described the closure of five centres as a “short-term” business interruption.

But chief executive Simon Kelly said the company’s immediate focus was on nursing the business through its recovery.

Main Event operates 38 centres across the US, offering a range of games from ten pin bowling to paint ball and laser tag under one roof.

Its five centres in the immediate Houston area have been closed since the hurricane struck the coast on August 26 and sustained varying degrees of damage.

Mr Kelly said the level of damage was being assessed but the process was being hampered by access and utility issues.

“We have insurance, so from a financial point of view it has no impact. But the welfare of our staff is a priority and we are working with them to ensure their safety,” Mr Kelly said.

Ardent expected three of the centres to re-open within seven days, while the fourth was likely to be delayed by a month or two. The fifth centre had sustained more extensive damage and it was not known when it would reopen. Growth sector

Main Event has been identified by Ardent as the growth sector of the business.

“We have a portfolio of 38 centres across 14 North American states, which is just scratching the surface. But Main Event is a significant business as it represents two-thirds of our earnings. But at the moment, we are extremely committed to nursing the business through the recovery phase and supporting our staff and workers there,” Mr Kelly said.

He added that the next phase of growth in the US would be more “measured”.

“The long-term strategy for Ardent is the Main Event business in the US. But we ran it hard, probably too hard, and stretched ourselves thin in terms of capability and on-the-ground operations,” Mr Kelly said.

“We must be disciplined in the rollout to make sure we have the systems and operations in place in an optimal way.” Tough year

The hurricane caps off a tough year for Ardent, which also reported an audited full-year loss of $62.6 million on Thursday, compared with a $42.4 million profit for the 2016 year.

As reported earlier this month when its released its unaudited figures, the result was significantly impacted by the Dreamworld tragedy, where four people died on the Thunder River Rapids ride last October, and the park’s subsequent shutdown for 45 days.

The loss includes $94.9 million in charges relating to a property, plant and equipment write-down, a goodwill impairment and incident costs associated with the Dreamworld tragedy. Restoring value

Mr Kelly said the result reflected the challenged trading environment experienced by Dreamworld following its re-opening, with its theme parks division reporting a core earnings before interest, tax, depreciation and amortisation loss of $3.4 million, compared with a $34.7 million profit the previous year.

“Our focus is on nursing Dreamworld back to what it was a year ago and unlocking the surplus land at the park,” Mr Kelly said.

“We think it will take two years, but we are confident of restoring the value. I’m not sure how much the 2018 Commonwealth Games will impact the park with tourism, but it will certainly put the Gold Coast on the map.”

The negative impact of the Dreamworld tragedy was partially offset by a $45 million gain on the sale of its health club and marinas divisions. Shareholder battle

The latest blow from Hurricane Harvey comes as Ardent prepares to battle aggressive shareholder Ariadne on Monday in Sydney.

Ariadne, which accounts for about 10 per cent of the Ardent register, has called an extraordinary meeting in a bid to get its two directors, Gary Weiss and Brad Richmond, appointed to the Ardent board. Ariadne had initially wanted four appointments but has since wound back its claim to two.

It has been a long and, at times, bitter campaign and Ardent directors have advised shareholders to vote against all Ariadne’s resolutions.

Mr Kelly declined to comment on the meeting or any possible outcome.

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