Bowling Fails to Knock Over a Reasonable Start to Fiscal 2014 for Ardent Leisure

Ardent Leisure provided a positive trading update for first-quarter fiscal 2014 just prior to its annual general meeting, albeit in line with our expectations. Group revenue increased 19.8% on the prior corresponding quarter to AUD 126.2 million as the company expanded its portfolio of health clubs and family entertainment centres (Main Event). The growth in revenue drove earnings before interest, tax, depreciation and amortisation, or EBITDA, growth by 19.4% to AUD 32.3 million. On a constant-centre basis, performance was mixed across business segments. Health clubs and Main Event continue to perform solidly, reporting increases in earnings before property costs of 4.6% and 4.0% respectively. Theme parks reported an EBITDA increase of 5.1%, although this was driven by operating efficiencies as revenue was flat. We expect increased advertising in conjunction with the Queensland government to increase foot traffic for the remainder of fiscal 2014. Bowling continues to struggle and on a constant-centre basis reported a decrease in earnings before property costs of 4.9% due to unseasonably warm weather and the timing of the September/October school holidays. The marina division was also weak with higher property costs reducing EBITDA by 4.8%. Management noted a positive start to second-quarter fiscal 2014 with all businesses recording further trading improvements during October.