Ardent Leisure Shareholders Scream as Full Year Earning Fall

Shareholders of leisure and theme park business, Ardent Leisure Group [ASX:AAD] were screaming this morning. But they weren’t enjoying the ride. The stock fell 5% in early trading to $2.03 per share.

What happened to cause the Ardent Leisure share price to fall by 5%?

This morning Ardent announced its second-half dividend distribution would be 1 cent. Down significantly from last year’s distribution of 5.5 cents.

Ardent also lowered its full-year earnings forecast. The company told investors:

Having previously reported that the Theme Park division is expected to report an EBITDA [earnings before interest, tax, depreciation and amortisation] loss of approximately $2-4 million, Ardent now provides preliminary full year Core EBITDA guidance of approximately $73-75 million for the 12 months ending 30 June 2017.

What now for shareholders?

While Ardent’s theme park business is important, it’s not a main revenue driver.

In the first half of FY17, their theme park business only made up 13.2% of total revenues.

Creating a majority of the group’s revenues was their family entertainment and bowling centres.

But I don’t believe these should be the primary focus going forward.

Instead, I’d rather see Ardent expand their Marina business. It only contributed 3.66% to total revenues for the half. Yet, it had an EBITDA margin of more than 43%.

By expanding their Marina business, Ardent could significantly add to earnings in the future.


Härje Ronngard,

Junior Analyst, Money Morning

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