Entertainment company Village Roadshow has posted a 4.4 per cent decline in annual earnings due to the impact of floods and record rains in Queensland, as well as a weaker film lineup following the record-breaking success of Avatar.

However, annual net profit at the company almost doubled to $185.5 million after the company sold its 52 per cent stake in radio group Austereo and aquarium and entertainment business Sydney Attractions Group.

“We are in the business of selling entertainment and right now people are looking to buy low-cost escapes from their day-to-day worries,” VRL chief executive Graham Burke said in a statement. “When you consider the unprecedented months of heavy rain followed by the Queensland floods the group’s result is a testament to the power of our overall business.”

The company’s cinema exhibition division posted earnings before interest, tax, depreciation and amortisation (EBITDA) before discontinued operations and material items of $46.4 million – flat on the previous year.

However, the result was due to reduced losses at its US Gold Class cinemas and higher average audience spend. Actual audience numbers at its 50 Australian cinema sites suffered a 9 per cent decline, partly due to a tough comparison with the record-breaking success of Avatar a year earlier.

Pre-tax profit at its Australian cinemas (which account for the majority of the exhibition business) declined 21.4 per cent to $27.6 million.

Burke said the month of July was “very solid” due to the strong performance of Harry Potter and the Deathly Hallows Part II while August is “looking very strong”. Films such as Happy Feet 2 3D and Sherlock Holmes 2 are also expected to perform strongly.

The company is on track to complete its digital rollout by the end of fiscal 2012 with 56 per cent of its 506 screens now converted.

The company’s film distribution arm – the largest in Australia with just under one-quarter of the market – posted flat EBITDA (before discontinued operations and material items) of $50.5 million. However pre-tax profit from continuing operations fell 6.9 per cent to $36.28 million.

Burke said the start of the new fiscal year had started “very strongly” and the release of feel-good local film Red Dog had “exceeded expectations”.

Its home distribution arm, Roadshow Entertainment, began the year slower than predicted but recovered well due to reduced inventory returns, margin gains from straight-to-video and tight cost controls, which softened the impact of retailer discounting.

Its top releases included Sex and the City 2, Underbelly – Golden Mile, Expendables and Girl With the Dragon Tattoo.

Its film and music production unit has backed several films which it expects to perform strongly including: Happy Feet 2 3D, Sherlock Holmes, Dark Shadows, The Great Gatsby, Lucky One, Gangster Squad and Fury Road.

Village Roadshow’s theme parks division posted EBITDA (before discontinued operations and material items) of $87.2 million compared to $96 million in the previous financial year. Pre-tax profit from continuing operations dropped to $9 million from $32.6 million the previous fiscal year.

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