Coast Entertainment Holdings Limited (CEH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Coast Entertainment Holdings Limited FY '25 Half Year Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Dr. Gary Weiss, Chairman of Coast Entertainment Holdings Limited. Please go ahead.

Good morning, everyone, and thank you for joining us today for the presentation of the FY '25 half year results for Coast Entertainment Holdings Limited. My name is Gary Weiss, and I am the Chairman of Coast Entertainment. I'm joined today by our Chief Executive Officer, Greg Yong; and our Chief Financial Officer, Jose de Sacadura. I will start by providing some introductory remarks, after which I will hand over to Jose and Greg to take you through some further detail. Turning to Slide 3. The first half of FY '25 has marked another period of positive momentum for the group. Despite ongoing economic headwinds, the group has delivered a solid performance with consolidated EBITDA, excluding specific items, of $1.9 million, up significantly compared to $0.1 million reported in the prior period. Pleasingly, this result marks the third consecutive half year of positive EBITDA earnings for the group's continuing business. The Theme Parks & Attractions business has continued its strong performance recovery, with EBITDA, excluding specific items, increasing 35.5% to $4.1 million. Operating revenue grew 9.6% to $47.7 million, the highest first half revenue for the continuing business since the first half of FY '16, driven by a 7.1% increase in ticket sales and 10.8% growth in visitation. Additionally, the group's deferred revenue balance increased by 3.2% compared to December 2023, reflecting continued strong sales of annual passes. The group's net profit after tax of $3.1 million represents a 140% turnaround from the prior period and is the group's first net profit from continuing operations since FY '16. Another important milestone was the successful launch of the new Rivertown area on 23 December 2024. This has been met with overwhelmingly positive guest feedback and has resulted in January 2025 recording solid growth in attendance, revenue, and EBITDA, which Greg will talk to shortly. With regards to the group's storm-related insurance claims, I'm pleased to advise that these are now well progressed, with $5.4 million of insurance income recognized in the period. This is in addition to $0.7 million of insurance income recorded in the prior period. Following the successful completion of our first share buyback in August 2024, the group commenced a second buyback in November 2024, under which 3.6 million shares have been repurchased at a cost of $1.6 million as at the reporting date. At a group level, we continue to maintain a strong debt-free balance sheet with cash of $59.9 million and available tax losses of $137.9 million as at 24 December 2024. In addition, a new $10 million bank credit facility has been put in place to enhance liquidity and funding flexibility for the group, and this facility remains fully undrawn to date. With those opening remarks, I will now hand over to Jose to take you through the group's financial results.

Thank you, Gary, and good morning, everyone. On Slide 4, we outline the consolidated results for first half '25. As Gary mentioned, the group delivered a solid performance despite ongoing economic headwinds, which have dampened consumer discretionary spending, with the Theme Parks & Attractions business reporting operating revenue of $47.7 million, up 9.6% compared to the prior period and 23.4% above first half '20 pre-COVID levels. This was the highest first half revenue recorded by the business since first half '16, underpinned by solid growth in ticket sales and visitation and supported by increased promotional activity in the period, including a highly successful Black Friday campaign. Notably, we've seen a shift in sales mix towards more annual passes, which has driven increased levels of return visitation and with it in-park spend. This demonstrates the resilience of the business in a very value-driven environment and reflects the strong demand we are seeing for our product following the launch of several new attractions over the last 12 to 18 months. As a result, the Theme Parks & Attractions business has achieved an EBITDA result, excluding specific items, of $4.1 million for the half year, up 35.5% versus the prior period. This result was driven by a combination of the revenue growth I just mentioned and a disciplined approach to cost management as the business continues to scale back up. Corporate costs, excluding specific items, reduced by $0.7 million, or 24%, to $2.3 million for the period, primarily due to savings in insurance costs and audit fees. And I'll be talking a little bit more about these costs later in the presentation. After taking account of the impact of some unrealized and nonrecurring specific items, the group's consolidated EBITDA result has significantly improved to $7 million compared to a loss of $5.2 million reported in the prior period. Excluding these specific items, consolidated EBITDA from continuing operations was $1.9 million, an improvement of $1.8 million over the prior period. Significantly, as Gary mentioned, this marks the group's third consecutive half year of positive EBITDA and EBITDA growth from continuing operations. Below the EBITDA line, depreciation and amortization increased by $1.5 million due to the substantial capital invested in the new rides and attractions over the last 12 to 18 months. And net interest income declined $1.2 million due to lower average cash balances and a reduction in market deposit rates. Moving to the bottom line. Net profit after tax from continuing operations of $3.1 million represents a $10.9 million improvement on the prior period and marks another important milestone, being the first net profit from continuing operations since FY '16, highlighting the effectiveness of our strategic initiatives and the positive momentum that we are seeing building within the business. Further segmentation of the results can be found in Appendix 1 of the presentation. Moving to Slide 5. We detail the specific items impacting the results for the period. And as you can see, the primary contributor impacting the group's EBITDA was the recognition of $5.4 million of insurance income relating to the severe storms, which impacted the business and more broadly Southeast Queensland in FY '24. This income includes $3 million related to property damage and $2.3 million for business interruption, and is additional to the insurance income recognized in FY '24 of $0.7 million. Storm-related repair costs of $0.3 million were also incurred in the first half of '25, following $0.7 million loss relating to the write-off of storm damaged assets in the prior period. Below the EBITDA line, net profit has also been impacted by a $0.2 million expense relating to tax losses not recognized as a deferred tax asset in the period, offset by a $1.1 million credit relating to the utilization of deductible temporary differences for which a deferred tax asset has not previously been recognized. So in aggregate, the group now has almost $138 million of cumulative tax losses as well as $47 million of deductible temporary differences not recognized on the balance sheet, which combined have a tax value of over $55 million. As I've mentioned in prior presentations, despite the accounting treatment, these items continue to be of considerable value to the group as they remain available for use by the group in future periods. As a reminder, further segmentation of these specific items can be found in Appendix 2 of the presentation. And with that, I'll now hand over to Greg. He will take you through the performance of the Theme Parks & Attractions business.

Thanks, Jose, and good morning, everyone. I'm excited to share some of our progress as we solidify our position as one of the Gold Coast's favorite destinations. On the 23rd of December, as we've already outlined, we successfully launched the highly anticipated Rivertown along with the new Jane's Rivertown Restaurant. The launch of our multimillion-dollar investment was attended by the Chairman and our Lead Independent Director and pleasingly was officially opened by one of our longest-serving team members, [ Michelle Doyle ]. Rivertown is a gamechanger for Dreamworld and for the Gold Coast. It's not just a new land, but it's a world on its own, designed to elevate the Dreamworld experience like never before. It features some of the most thematic attractions we've ever built, and these experiences have been crafted with a focus on intergenerational fun, making them exciting for everyone from small kids to grandparents, and you can even see that in our marketing. It's also a testament to Dreamworld's dedication to tourism in Southeast Queensland, local employment and the visitor economy. The project created about 1,000 local jobs, clocked over 100,000 of onsite construction hours and had over 120 workers on site each day in the weeks leading up to the opening. As I've mentioned in previous presentations, the Gold Coast construction environment has been very challenging in recent years and, therefore, the successful opening of this major attraction, both on time and on budget, is a huge milestone achievement. I'd like to take a moment to thank our internal and our external team for their hard work and dedication in making Rivertown a reality. The guest feedback has been overwhelmingly positive, which I'll highlight on the following page. And it's not just the guests which are excited. The media response has been incredible, with Rivertown receiving the highest level of positive coverage since the launch of Steel Taipan 3 years ago. Looking ahead, we anticipate these new attractions will bring tangible economic benefits, and we expect to see those results start to materialize from the second half of FY '25 onwards. Turning to Page 8, and I'd like to share just a sample of some of the wonderful guest feedback we've been receiving since the opening of Rivertown. Bringing this experience to life has been an incredible undertaking for our team. It's a highly complex project, intricate engineering in Jungle Rush, and really detailed theming throughout the precinct. And it's something we're incredibly proud of. It's especially rewarding to hear how much our new experiences are resonating with the people that matter the most in our guests. And as you can see on this slide, people are raving about the incredible theming in Rivertown, from the bathrooms right through to the uniforms. And also pleasing is that they've noticed the hands-on approach of our team, the entire team, and that's leaving a very strong impression. The overall vibe of the area, along with the food and the service, has made Rivertown a new favorite for many and we're excited to see this enthusiasm continue to grow. On Slide 9, we showcase Murrissippi Motors, which reimagines a cherished classic, taking guests on a scenic journey through the Rivertown's lush landscape. This new attraction weaves around the iconic RAAF Caribou aircraft, a stunning centerpiece, brimming with history and adventure. This new attraction is already becoming a family favorite, offering guests, and in particular kids, the unique opportunity to take the wheel of their own adventure. As part of Rivertown, we're also proud to introduce the Jungle Rush coaster. This centerpiece attraction, featured on Slide 10, is Dreamworld's largest ever investment in a single attraction and the first rollercoaster of its kind in the world. The ride is packed with twists and turns and thrilling moments, making it a must try for adventurers of all ages. And as I say, it reinforces our commitment to creating intergenerational experiences where families can share unforgettable moments together. And if you come to the Rivertown precinct and look at the guests, you'll see exactly what I'm talking about. Now let's turn to Slide 11. And no visit to Rivertown is truly complete without a stop at Jane's Rivertown Restaurant. It offers the most immersive dining experience in any Australian theme park. With seating for over 300 guests, the restaurant features a lively jungle-themed setting, complete with lifelike animatronic animals and a themed boat bar. The menu blends traditional theme park favorites along with Gold Coast local flavors, offering a one-of-a-kind dining experience. The response from our guests when we first opened Jane's is overwhelming. In fact, it's been so busy that we've had our back-office teams helping to serve guests to ensure a seamless experience. Next on Slide 12 is a summary of the Theme Parks & Attractions financial results. As we've outlined, the business recorded an operating revenue of $47.7 million, a 9.6% increase compared to the prior period and 23.4% above first half 2020 or pre-COVID levels. This growth was underpinned by a 7.1% increase in ticket sales and a 10.8% growth in visitation. First half 2025 operating revenue and ticket sales were the highest seen since the first half of 2016 despite ongoing economic headwinds, which we have seen from recent retail results in the market. We are also cycling prior period ticket sales, which have had the benefit of large bulk sales to a single reseller. Additionally, SkyPoint has also achieved its best revenue on record. International visitation continues to improve, albeit being significantly below historical levels. The mix is notably different with China, in particular, and we are optimistic about the growth potential of this market. It is improving, it is continuing to recover, but it's not at what it was prior to the pandemic. It's also worth noting that both entry and in-park spend have improved over the prior period. As a result of strong trading performance and prudent cost management, Theme Parks & Attractions have delivered an EBITDA, excluding specific items, of $4.1 million, a 35.5% increase compared to the prior period. Moving on to Page 13 and some of the key revenue metrics. The first half saw strong growth in ticket sales compared to the prior period, partly driven by increased promotional activity, including, as Jose mentioned, a successful Black Friday campaign. Our marketing and promotional activities are ringfenced and well targeted, which is crucial in the current macroeconomic environment to drive sales effectively. This has boosted annual pass sales, resulting in the deferred revenue balance increase, which we've outlined, compared to December 2023. And first half annual pass sales are now 107% above the first half 2017 levels. Despite the increased promotional activity, ticket sales per cap remains well above historical levels. This shift towards annual passes has led to higher levels of repeat visitation, which facilitates more opportunities for us to encourage in-park spend. And as I mentioned earlier, in-park revenue per cap has also increased compared to the prior period and is significantly above historical levels. While the increase in return visitation has had a slightly dilutionary impact on total revenue per cap, yields are still strong at 41% higher than FY '17 levels. And then turning to Page 14 and a snapshot of January 2025 performance. Clearly, with the opening of Rivertown in late December, we have seen a strong trading performance through January. Visitation was up 33%, driven by strong ticket sales leading into summer, and an increase in return visits due to the larger annual passholder base. Revenue was up 25%, marking the highest January revenue since 2016 with a 31% increase in in-park revenue. Much of this was driven by ride express revenue, which was the strongest we've seen in the history of the park. EBITDA, excluding specific items, was up 50%, also the highest since 2016. And on an EBITDA and revenue basis, SkyPoint has had its best ever January and its best ever month in its history. These are good numbers. But what I'm particularly pleased about is our ability to trade the business at these levels and look after our guests at the same time. Too often parks in busy periods lose focus on the experience and the resultant loss of goodwill really does devastate their prospects of re-serving these guests in the future. And to that end, and turning to Slide 15, we are pleased to note that our guest scores have once again improved year-on-year for both of our attractions, while our peers have seen a decline. It's always rewarding to hear how much our guests enjoy their time at Dreamworld, WhiteWater World and SkyPoint, and these testimonials reflect the incredible experience we offer and show that our efforts are being well received with guests. Guests have praised not only our new attractions, but moreover, the exceptional quality of the entire park, the experience, and the incredible friendliness of our team, which I think is a competitive advantage that is difficult for others to imitate. The fact that guests are now equating Dreamworld's new attractions to the level of Disney and Universal Studios speaks volumes about the addition of Rivertown and how that has significantly enhanced the overall Dreamworld experience for our guests. And I really do encourage you to take a moment after the presentation to read these comments in detail. On Slide 16, we showcase some of the events and attractions we've hosted during the period. These events, as I've outlined in the past, play a key role in driving repeat visitation and increasing in-park spending. So far, we have seen several record-breaking performances in both our Night Market and our Fun Run businesses, which have been incredibly popular with our guests. I'm also excited to report that Dreamworld Street Food Festival is back this Easter holidays. We think this is an incredible event and has incredible potential at that. We are doubling down on execution. And if you haven't experienced it, I really do encourage you to come back and check it out. Next, on Slide 17, I would like to provide an update on a few other developments. The Claw has been one of Dreamworld's most popular attractions for over 20 years. And as the ride approached the end of its operational life, we explored several options and ultimately decided to replace it with a bigger, faster and higher capacity King Claw at an estimated cost of around $14 million. The final ride of The Claw took place on the 28th of January and gained significant media attention. This also provided Dreamworld fans the opportunity for one last ride, while also celebrating the commencement of King Claw's construction. On the land development, I can advise that the State Assessment and Referral Agency, otherwise known as SARA, has this week approved our application, albeit with some conditions. As is customary, SARA have now referred the application to the City of Gold Coast for their review. The City will now consider the application and make a decision in due course. Whilst this represents progress, we are carefully assessing SARA's conditions to understand any implications for our vision of maximizing value from our landholdings and enhancing amenity on the Northern Gold Coast. I can assure you that this process remains a key priority for management. We continue to work constructively with all stakeholders to achieve an outcome that delivers value for our shareholders and for the broader Gold Coast community. Finally, the team has made good progress with the insurers in relation to our FY '24 summer storms insurance claims. In the first half of FY '25, we recognized $5.4 million in income from insurance claims, including $3 million for property damage and $2.3 million for business interruption. We anticipate that the insurance claims will be largely finalized by the end of the second half. I'll now hand the call back to Jose to talk through capital management and corporate costs.

Thanks, Greg. I'll now provide some detail regarding the group's corporate costs, cash flows and capital management, before opening up the lines for Q&A. As shown on Slide 19, total corporate costs for first half '25 came in at $2.3 million, down 24% compared to the prior period despite a high inflationary environment. This reduction was driven predominantly, as I mentioned earlier, by savings in insurance costs and audit fees. Insurance costs do continue to be a major line item. And in late FY '24, the group conducted an extensive remarketing exercise to a wider panel of global insurers to ensure that pricing of our major insurance line adequately reflects the increased competition we're seeing in the insurance markets as well as the reduced size, complexity and risks of the group today. The group also undertook a detailed audit tender process and, as notified in our AGM address last November, has recently changed auditors, realizing some cost savings in the process. So what we're now seeing is the lowest level of corporate overheads in over a decade, including the COVID impacted years, reflecting management's commitment to simplifying and rationalizing the group's back-office processes and cost structures, as well as maintaining strict cost discipline wherever possible. Turning to our cash flow and capital management position on Slide 20. As Gary mentioned, the group continues to hold a solid balance sheet with no debt and almost $60 million of cash on hand as at the reporting date. Operating cash flows for the half year improved by $7 million compared to the prior period, supported by stronger trading performance, higher annual pass sales for which cash is received upfront, and insurance receipts of $3.5 million net of storm-related repair costs. This was accompanied by $2 million of interest receipts, albeit, as I mentioned earlier, interest income has declined $1.3 million compared to the prior period due to lower average cash balances and a slight reduction in deposit rates over the last 12 months. Capital expenditure for the half totaled $29.6 million, comprising $4.7 million of maintenance CapEx and $24.9 million of development CapEx, which includes investments in the new Rivertown area, which Greg mentioned, and Jane's Rivertown Restaurant. With these capital projects having been completed very late in the half, we do expect to see some smaller residual payments in the second half of the year, but I would emphasize, these are purely timing related, and we've been pleased to deliver these projects on time and within budget. As noted in our November AGM address, the first on-market share buyback, which commenced in September 2023, completed in August 2024, with a total of 48 million shares repurchased at a cost of $22.6 million. Now this includes $4.6 million of cash outflows falling into the first half of FY '25. In late November, a second buyback was launched, with a further 3.6 million shares repurchased at a cost of $1.6 million up to the 24th of December. This leaves 428.2 million shares remaining on issue as at the reporting date. The buyback has continued into the second half of the year. And as at the close of business yesterday, 6.1 million shares have now been bought back at a total cost of $2.8 million, representing just over 14% of the total shares, which may be purchased under the program. And finally, in late December, the group secured a new $10 million bank credit facility to provide additional liquidity headroom and funding flexibility for the group as it continues to grow performance back to historical levels. Note, however, that this facility remains fully undrawn at this stage. That concludes the main part of our presentation, and I'll now open up the lines for Q&A.

[Operator Instructions] The first question today comes from Allan Franklin from Canaccord Genuity.

Great to see the January prints coming through strong. Wouldn't mind delving into a bit of detail on Rivertown, if we could, please. You're obviously referring to feedback. But just interested in the initial attendance levels versus your expectations? And any sort of anecdotes in terms of the audience that's being brought in, is it annual passholders coming in for an extra visit, or are there new audiences you think you've been able to draw in through January?

Yes, look, I've outlined in the presentation, just a sample of feedback that we received. But I encourage you, and I've always said this to followers of the company, that the best way to do it, and seeing is believing, as Gary would say, is to go and have a look at our Google reviews. And I'd also encourage you to look at Google reviews of other experiences in the Gold Coast. The experiences have been well received, as I've outlined, and exactly as we've tried to position the new precinct. We've really gone for an intergenerational approach here in terms of trying to attract the whole family. And so, you would see in our marketing that we've actually -- we've gone out and cast a grandfather and a grandchild and a grandmother and a grandchild as well as mom. And that's not by accident. We really do believe that as we go forward, a very strong focus on families and that breadth of market that we'd like to do is critical. And so, we've certainly gone after that in terms of our ride selection criteria, but also in our marketing and all of our communications to date. And I can tell you that when I stand at the ride and in the control room and watch patrons get on the attraction, we're seeing exactly that. So we're certainly seeing very young children, the minimum height for the attraction is 95 centimeters, so that's actually quite a young child. But I'm seeing a lot of grandparents and people that you don't always particularly see participate in theme park rides. In fact, our marketing team would tell you that we've got a segment classified for them called bag holders, and it's great to see that bag holders are starting to see some value out of their ticket because they're actually going on and experiencing both Jungle Rush and also Murrissippi Motors with their families. And there's a bit of thinking in our minds too around where is wealth currently in the market. And there's certainly a view that more mature parts of the market have probably higher levels of discretionary income and probably are less impacted by some of the headwinds that we've outlined than younger families. In terms of who's been visiting, look, it's been a good mix, Allan. So we've seen a really good kick from annual passholders. That's not unexpected. The annual passholder base is the highest it's been since 2016, and that's expected. We haven't been surprised by that at all. And look, annual passes, as I've outlined on numerous occasions, are one of the most critical parts of the business. They have the highest face value of our ticket and the opportunity for us to remarket to them to provide them value, which increases net spend. And also more importantly, and what is taking a lot of focus in the organization today is our ability to retain them over time is really important. But we were very pleased to see that a very strong response in single day, multi-day tickets, which is typically coming out of our interstate markets and predominantly out of Sydney and Melbourne. We've got some very early insights into the destination performance. And I know that the data that you follow is typically TRA data, and there's a fairly decent lag on that. But our early analysis of the school holiday period, based on what we can see from anecdotes in market, is that our performance outperformed the market and quite considerably based on what we're seeing so far. So a good mix of annual pass and multi-day.

Helpful. And then perhaps just on Jane's Rivertown Restaurant, I think you alluded to seating capacity for 300 guests, which is significant. And I'm assuming those guests can always be turned multiple times a day. Just sort of contemplating how we should think about this as a contributor over calendar '25. And how does that bleed through into per capita spend? I assume it is somewhat dilutionary to the headline number, but in revenue terms, it obviously has a lot of optionality to the upside.

Yes, it's a good question, Allan. And you might also note that in previous presentations, I've suggested the capacity of 280. In real life, despite the very best efforts in terms of architectural drawings, once we set the restaurant out, we manage to fit in comfortably another 20-odd seats in there, which pleasingly, we needed through the holiday period. So I can assure you that for many days in the school holiday period, the restaurant was absolutely full, not one seat available, a line out the front and a real effort from the team to turn tables rapidly. As to the performance, look, we're very happy with it. I can assure you that when we think about these things and investment in terms of capital, we're looking for incremental growth. But certainly, the business case, as you've outlined, is founded on the idea that there will be some kind of cannibalization out of the core, and we expect that. But we wouldn't be doing these things if we didn't have a perspective that they'd be net incremental to performance. And Jane's so far has been exactly that. It's actually outperformed our initial benchmarks and our initial capital hurdles that we outlined to the Board when we [ motivated ] for this project. And our expectation is that it will continue to do so. How does it sit in terms of the rest of the organization in terms of our food offer? Look, it's in the top few outlets in the business. That's typically not the case in my experience with sit-down a la carte style theme park restaurants. It's usually a business which is lower in volume, higher in average check, and a really good overflow in those peak periods or for certain segments that have a bit more time and want to take some time out of the theme park environment. I've been pleasantly surprised, I would say, by how well it has performed very early on and, to be crude, knocking off some of our other fast casual elements of the business. So we're happy with all of that. Look, I would say one thing is that our business is founded and critically important to our business is the notion of volume, and we need to be reasonably busy all the time, comfortably busy is probably the way I would put it in order for us to optimize the performance of the organization and get that operating leverage which we're seeking. So in January, very, very strong performance. Outside of those school holiday periods, we've got to take a different approach to how we operate the business. And so that's what the team is very focused on at the moment, is trying to make sure that we're cautious about labor in those off-peak periods and really trying to supplement the outlet through event business. And next time you're in the Gold Coast, I'm happy to show you what we've done there. We actually did a walk around with some people in January. And it's a really fantastic events and conferencing space, and we've already got a good amount of bookings in that area already, which gives us that optionality through the week and also on weeknights to prop up revenues that we otherwise wouldn't be seeing when the business is a little bit flatter. So overall, look, Jane's, we could not be happier with how it's turned out. And that's one thing, that we're very, very pleased with the performance we're seeing to date. Some of it is incremental. There is some cannibalization, not unexpected and certainly planned for now in our business model.

Changing tack, just to the SARA feedback and the conditions that they put in place. Anything you're willing to draw out of that? Through reading the document, it looks like much of the conditions sit around stormwater management, traffic impact assessments and the like, which I would assume are fairly typical. Is there any sort of detail you can provide on that on the conditions that they've put in place, please?

Yes. Look, you've done well to get through it. It's often quite technical and dry reading. But what I would say is that it's a lengthy response, as you've seen. And on first blush, you can read these things and have one opinion, but after taking some time and technical analysis, you might have something slightly different. So what I would say to you is we're carefully reviewing it in detail. We have some time. There's a statutory period now where the council has a look at their response, and then they make their own decision. I'm not comfortable to give you timeframes anymore. I think our experience to date has been longer than we would have otherwise liked. And I think that's not unusual. If you follow the Gold Coast Bulletin, you'll see a story in the news yesterday around some fairly prominent actors in the marine sector that have also made clear their views around investment into Queensland and into the Gold Coast. What I would say is it's probably not appropriate just yet to make any public comments on the conditions at this stage. But I can assure you that as we do that analysis, if there's any conditions that we believe are not accretive in terms of our efforts to unlock the value of the land, then we certainly will be challenging them, and we'll do that in the usual course. So at this point in time, as I've outlined in the prepared remarks, it is progress, but we still are quite cautious about it. And I suppose we've learned one thing, which is we're very cautious about providing timelines. Our experience to date has been that all the timelines that we've been working to have managed to blow out for reasons outside of our control.

Just last one. Just on the capital program, how we should think about calendar year '25. I know you put King Claw out there with a number around it. Just to clarify, how much more spend is flowing from the Rivertown precinct into the second half of '25 and/or any other modeling we should think about just from a capital expenditure perspective?

Yes, no problems. I think maybe Jose can take you through that one and just how we're thinking about half-on-half.

Yes, sure. Allan, so as I mentioned earlier in the presentation with the fact that Rivertown and Jane's Rivertown Restaurant having been completed and opening literally just on half year-end, a day or 2 before, not all the costs from the [ villas ], et cetera, have come in. There will be some cash flows in the second half of this year. I estimate that there will be around about $3 million or $4 million remaining on that. That's a combination of the timing thing that I've just mentioned around the timing of invoicing, et cetera, but also some follow-up thematic elements that there's some fine-tuning of some of that, that's happening post opening as well. In terms of, if I look forward in the next 6 to 12 months, the only other big thing to call out really is King Claw. We are looking to open that in the second half of the year. And so, we do expect the majority of the expenditure to come through on that in the next 6 months with a little bit probably in the 6 months after that. So probably around about $9 million or $10 million for that. So I'm anticipating all our development CapEx to be in the region of about $13 million to $15 million in the next 6 months or so and then maintenance CapEx for the second half of the year to be broadly in line with what we've seen in the first half.

The next question comes from Nicholas McGarrigle from Barrenjoey.

Just a question around that bulk sale last January. Did that revenue get booked at the point of sale, or was it similar treatment on those tickets to an annual pass?

Yes, good question. Sorry, it might not have been clear. So that bulk sale was in the first half of the year prior. So it was actually in the September period. As to the treatment, over the course of the performance obligation, to be frankly, there was a mix of pass and single day. Let me maybe also give you some insights as to how we think about that. Bulk sales are an interesting idea. The notion of potentially bringing revenue in now is, in some ways, a bird in the hand. But at the same time, I don't think it would be unreasonable to suggest that if we're giving an opportunity to give a vendor a bulk sale and there's something in return for us in terms of an injection of capital, then there's obviously some margin implications for that. Our perspective has been that we are doing a lot less of that. We just believe that the business is performing very well. And I think that we believe that we can outperform that at a much higher margin than what we otherwise would. So it's certainly a tactical approach from us. We have the optionality to do these things from time to time, and we've taken a view at this point not to do so. And I think so far, what we're seeing is that decision founding out to be true. And so far, our reseller performance is tracking along quite nicely.

And then maybe...

Sorry, Nick, I just wanted to see if Jose, did you have anything else to add to it?

No, Greg, I think you covered it pretty well.

And then just in January, obviously, very strong performance. Just trying to get a sense of what happened with the cost base, period-on-period. Obviously, January tends to probably be a stronger EBITDA month. I just would have expected maybe more operating leverage given the very strong revenue growth on pcp. Were there any insurance recoveries or other things that you might have credited to that January last year, just in terms of where the EBITDA growth was?

Yes. Jose, do you want to take that one first, and I might add some at the end?

Yes, sure. Nick, short answer to your question about insurance is no. All the insurance income that we've received thus far year-to-date was in the first half result, and we've called that out. So the January performance that you're seeing is purely the trading performance. You're right, that we do -- we have a largely fixed cost base. And obviously, January is a very busy month, you can see with some of the uptick in attendances and the like that obviously then that has a higher flow-through into the bottom line. So a lot of it is due to that operating leverage coming through in the month of January. Also, just a lesser factor, but also something just to bear in mind, obviously, was that we are comping a slightly softer January last year because of the storms. Obviously, the storms didn't have so much of an impact on SkyPoint, but they definitely did [ have ] on Dreamworld and WhiteWater World. However, that prior period was a bit of a mixed month. The first half of January in prior year was severely impacted by the storms. But then later on in the month, if you recall, the Queensland government announced a stimulus promotion where they gave a lot of the local residents $50 vouchers to spend on local businesses, and we did benefit from that. That helped to recover the results somewhat last year. But overall, it was a slightly softer comp.

Yes. And I might just add a little bit to that as well. As Jose outlined and as you're well aware, last year with the storm activity, we had some challenges to say the least. And I think one of the questions that I recall in last year's half year presentation was some surprise, I think, from followers around the fact that EBITDA was largely actually fairly robust for January last year given what were more than quite challenging circumstances. And I think when I discussed that with investors, what we outlined was the fact that in some ways, the park being closed altogether is a much better situation in terms of us being able to manage cost out than what it would be if it was this otherwise raining. And so last year, we managed to still hold together a reasonable EBITDA result as a result of us being able to close the park as opposed to trading it with fairly difficult weather conditions. And so we've, I can assure you, done some quite meticulous work around trying to understand certainly some beneficial comp last year and the January performance. And in the washup of all of that, we're still very pleased with the performance. I think that, as Jose outlined, there was a number of different factors in last year's results and significant challenges and also some benefits in terms of government stimulus. And I think on the washup of all of that, we're very happy still with the January result.

And then in terms of the increase from the plan from here of the $60 million of CapEx, I assume looking for an increment to that broader CapEx plan that was flagged 18 months, 2 years ago. Is that -- have you laid out a plan for CapEx beyond the Claw now that kind of the bulk of that Rivertown and other precinct work is done.

Yes, we're always looking at what is next in terms of investment in the organization. But as we've outlined, I think, to investors over the last 18 months or so, our view of the world is that Rivertown and the attractions associated with Rivertown represent a catchup and transformational investment. We certainly are looking at other things over the next course of time, but there is certainly nothing in our minds that is anything like the quantum that Rivertown has cost. And the things that we're looking at over time are probably more things a little bit more like the Claw and maybe even less so in terms of things that are catch-up maintenance-driven types of investments. I want to assure customers if they're thinking and hearing these calls that, that doesn't mean that we're looking to not invest into the product over time. But we think that the quantum of capital that we require, particularly in terms of attraction-generating investment, is something that we're just taking some pause on, and we think that we're moving back to a more typical and regular cadence of less frequent and slightly lower investment over time.

Okay. So there's no [indiscernible] one of the bigger, more growth CapEx-type investments and then you return to more of a maybe a high-single digit, $10 million a year maintenance CapEx run rate beyond that?

Look, there will always be some, but not anything like the quantum of what -- so we're contemplating things for several years from now, but that will be nowhere near the quantum of Rivertown. Will we get to a point where we're not every other year putting some kind of development CapEx in and we're only trading on business as usual CapEx. Look, I appreciate that that's something that everyone is quite interested in. But at the same time, the tradeoff that we're always thinking about is what happens if we don't. And so, I wouldn't want you to have the view that we're not ever going to, in the next 5 years, invest in product. That's certainly not the case, but certainly not anything like the quantum that we invested into Rivertown to date.

Have you seen any, I guess you commented on ticket sales, but anything particular around annual pass sales now that Rivertown has done and you mentioned that broadening of the catchment of demographic? Have you seen any pickup in annual pass sales versus what you normally seasonally see through Jan and Feb?

Across the board, Nick, in all pass segment -- in all ticket segments, we've seen growth. Annual pass has been no exception. And so, as we've outlined, the traditional -- it's an interesting situation with annual pass is you see people buying value for the entire year. They're very, very considerate as to extracting every single part of that value, and as everyone would. And so, we really think hard about how much we market new attractions and when we do it, because there's a real risk that people hold their visit until those new attractions open. And so we're always trying to balance that tightrope. It's a conversation that we have with the Board on a marketing perspective on a regular basis. And what we've seen in January or late December is that certainly, the annual pass base was very strong, but it increased markedly once the new attractions were actually open. At the end of the day, if you put yourself in the consumer's shoes, it's great to hear all about this new stuff coming. But what's in it for me today to buy a ticket when this thing is opening in 3 weeks' time? We believe, and we certainly prosecute the view, that our offer is strong every single day of the year. We've got a lot more than just these new attractions in play. And as you can see from the guest feedback, the feedback has been very strong about certainly Rivertown, but if you read the feedback and again look at the reviews, there's a lot of feedback about the park offer in general, the breadth of the offer, the quality of the experience, the friendliness of the staff. So it's certainly more than just one thing. It's a cumulative piece. But Rivertown certainly has been very helpful in terms of incrementally growing ticket sales across the board.

The next question comes from Brian Han from Morningstar.

Greg, how do you think you guys are faring compared to your competitor next door in terms of visitations and maybe even in-park revenue per cap?

It's always difficult, Brian. Whilst we're doing this call, our competitor doesn't need to, for obvious reasons. But we follow all sorts of different things to try to get a feel for how things are going. We have a rigorous approach to listening tools and looking out there in the market as to what people are saying. And one of the most fundamental things that we always do is have a good look at each other's car parks. I know that they do that, and we certainly do, and that's been the case forevermore. Look, I'd say to you that we spend more time worrying about what we're doing than what they are. But early on, our feeling is that we've had a very strong January holiday. As I've outlined, I think we've outperformed the destination based on the feedback that we've heard from resellers. And our perspective is that we've taken some share over December and January, which is pleasing given Village also opened a significant piece of new capital investment at Movie World. As you know, it's minutes away from Dreamworld, so it's a very competitive environment. But our perspective is that we've done reasonably well. But, again, I guess, I would add some stricture there, that that's to the best of our knowledge, and it may not be true, but I know everyone likes to speculate as to the competitors' performance. And at the end of the day, what we all know is that we don't really know. But that's the best I can give you at the moment.

And can you make some comments on your labor outlook in terms of head count and inflation over the next year or so?

I'm struggling around theme parks, Brian, as it is, so I might struggle to give you too much in that space around broader perspective and all that. What I would say to you, I can help you with how we think about head count and things of that nature. I think we've seen a softening of the employment market. Our ability to attract talent has certainly enhanced over the last 6 months or so. I think that's a function of the market becoming hungrier, if you will, to work than what it otherwise has required to be. There's always elements within elements of the workforce that are harder to attract. And I'd say to you that at SkyPoint, potentially, we struggle a little bit more there because it's a very concentrated hospitality environment. We're in the middle of Surfers Paradise, we're competing with every other restaurant and hotel in that market. And so, I can tell you that prior to the pandemic, we had a very good cohort of international students that were good for a number of different reasons, certainly very good consumers, but also provided additional labor as well. So SkyPoint, a touch tougher. At Dreamworld, we're certainly not having those kind of issues. And in the professional space, I think our view is that we're not really looking to add head count into the organization. Now, I've been very clear that our approach really is around retaining cost levels to where they are as best we can. Now, there will always be some growth with activity, but our strong outlook for the vision of what we're trying to achieve here in terms of returning to historical performance is to grow revenue and try to create operating leverage by holding costs wherever we possibly can. We've got some things that we can't be as effective on in containing for all the right reasons in terms of safety and engineering. But so far, I'd say to you that we have no concerns about our future performance as a result of us being unable to procure labor or talent at either of the businesses. As to the economic side of it, Brian, I think you're a lot better than I am at that. So I'd hesitate to give you any thinking in that. Maybe Gary or Jose might have a different perspective.

Actually no, Greg, that's fine because I was talking more about inflation on your underlying cost base, not about a general...

Okay. Happy to help on that. Yes. Look, we have a very strong view around procurement and the benefit that we are starting to see with some scale back in the business compared to what it was in the early stage of the recovery are certainly helping us in terms of demonstrating an ability to start reining in procurement costs. And so, I'll give you a very simple example, Brian. If we think about retail, only 18 months ago, we just didn't have the scale, in my view, to do a lot of indent retail buying. So as a result of that, we were buying a lot of local product at what I would say are significant premiums to what we'd otherwise be able to achieve in China. We've had a very concerted approach to starting to bring indent in. There's always tradeoffs in these kind of situations, as we know. And so, we're very cautious about inventory holdings and working capital. So we're not looking to add significant inventory to the business. But where we've taken a considered view because we understand sales rates of particular items in the top 30 or 40 items in the retail business, we've managed to achieve very significant, and I would say, surprisingly significant savings in the retail business, just as one example. So that scale is certainly helping us, and we continue to work hard on that. Again, in the labor space, it's a difficult space. I think there's been a significant amount of increase in rates over the last several years. We're not immune to that. We've never suggested that we are. That's moderating, I would say. But again, something that's largely out of our hands. We have a strong view that we work closely with unions and others. They're an important stakeholder, as are our team. So we're obviously doing our very best to contain costs, but we're certainly -- it's a dialogue, as it always is. So look, the best thing I can tell you, Brian, is that our approach to cost, and we've not -- we've talked about this for several years now, is that we just have a very, very concerted approach to costs. There's things in our organization that we have an attitude about safety and engineering. We've all seen what incredible dilution of value can happen when you take your eye off those things. So those things will always be off the table. So we need to be as disciplined as we can in other parts of the business to be able to afford to pay for those priorities.

And lastly, can you remind me, before the pandemic, were the Chinese patrons accretive to in-park revenue per cap, and do you think there will be a change to this when they do come back soon?

Chinese visitation has typically been dilutionary to revenue per cap. But I add this stricture to that is that they're ultimately incremental to the business. So if you're asking me, is it better to have the Chinese here or not, well, we absolutely would take them. But the fact of the matter is that Chinese visitation has in the past historically come at lower yields. And that's as a result of several factors. The first one is typically that they don't have the same time in their itinerary that a normal day guest would. So they might come in and do some experiences in our animal space. They may well stay for lunch. But because they're not buying the whole day, we've got to position the pricing to be competitive in the market to meet that. So straightaway, the headline ticket price is somewhat lower. And there's typically, a lot of the business is group business, is done through OTAs, and there's a commission element to that. So that's why every Chinese visitation that we have under the older model has been dilution to per cap. Again, I just stress the point, that doesn't mean we don't want it, because at the end, that is incremental profit to the business overall. What does the outlook look like in terms of China? I think what we're seeing in general across China, India and most other international segments is certainly a move towards more FIT business. And that is a very different proposition. Typically, they're paying retail prices, which means that we're much higher, I think, in the face value ticket price, and then they have the ability to then spend more in-park than they would if they're on a limited and shorter and tighter itinerary. So look, I still think that there's still a significant amount of group business that will come out of international markets. Our sales team will tell you that FIT is getting bigger and bigger, and it's true. But I think it's still -- if you just step back from all that and look at what's coming in, it's still a significant amount of group. And so, I think that at this point in time, always a little bit dilutionary to per cap. But again, I'll restress the point that we want it, we're out there competing for it. If I take you to SkyPoint, though, we have a slightly different perspective on that. At SkyPoint, we have capacity constraints. So as we bring new international business on, we've really got to be judicious about how we do that. So that might mean that we're limited that through price, limited to different dayparts of the day because the last thing that we want to do is fill the business with international, turn away what has proven to be over the last few years a higher spending domestic and local guests, and ultimately see some diminishment in yields as a result of that. So SkyPoint is a slightly different story. Ultimately, what we would tell you is that we're trying to get the full package. And so when we talk about our offer with international resellers, SkyPoint is actually a very easy sell. People want to go to SkyPoint. They want to see the whole experience. And our view is that packaging SkyPoint and Dreamworld is something that we've got to be very, very focused on. And that gives us some ability to get higher yields than we otherwise would have. Hopefully, that helps.

We have 5 minutes remaining. So if the remaining questioners could please keep this time frame in mind. The next question comes from David Kingston from K. Capital Group.

I'll try to be quick. Look, 8 years, Gary, after you took the chair, it's good to see Coast is now marginally profitable. But look at $200 million cap, it's a massive tech-like multiple versus the half year EBITDA of $1.9 million. Look, I accept that Rivertown will deliver growth, but the big issue is whether it's a honeymoon spurt or whether it's sustainable. Look, I suppose the big challenge is you spent $120 million on CapEx since taking the chair. Sad to hear, another $13 million to $14 million coming on The Claw, but we all accept that theme parks chew up a lot of CapEx. They're a massive black hole. If we look at the market, guys, it's very skeptical. It's valuing Dreamworld at around $90 million, which is way under the $120 million CapEx spent. And that's pretty simple to work out, $200 million cap, less $37 million on SkyPoint, less roughly $25 million on surplus land. And let's take $50 million off cash, which is allowing for the reduction in payables, which is sitting at $29 million at year-end. Look, Gary, you're renowned for your extreme patience. The shareholders you're representing are getting a bit tired. The price has flatlined for the last 2.5 years, and there's been 0 dividends. So look, 2 questions. Is this a personal vanity project for you, Gary, or do you think you will deliver a proper TSR for the shareholders? Interested in what your ROIC targets are? And secondly, do you regret not engaging with BGH with the sale when they had a chat to you a few years ago?

Well, there's a lot in it. And I dispute virtually everything that you have to say, David, for a whole host of reasons. You know full well, having been a student of this industry for some time, exactly what the state of Dreamworld was in. We've had a decade of underinvestment in this park, overlay that with COVID and the recovery period has taken longer, it's cost a lot more than anyone had contemplated. The good news is that that's all behind us. And what has occurred here, frankly, is no different to many of the other recovery plays that I have been involved in. And the usual outcome ends up being a very satisfactory return for investors. And I believe that will be the case here as well. Very comforted by the trajectory that we're on. As you've heard from Greg, we do believe we are retrieving lost market share. I think we are very well placed. Our customers are very pleased with the product and most certainly the service levels that they experienced at our parks. And I think the trajectory will continue. And as it does, I believe that the market will take increasing interest and that will be reflected in hopefully an increasing share price. But in any event, we're very comfortable buying back stock at these levels. Thanks. I think there's another question according to what I've got. So can we just take that because I'm conscious of time, David.

The last question comes from [ Charlie Kingston ], private investor.

Maybe just following up from that point, I don't think you answered the ROIC target and given the amount that you have spent. And if we look at the numbers, $8 million -- $4 million EBITDA, so if we annualize that less your overheads, less the maintenance CapEx, notwithstanding all that CapEx that you have spent, we are still losing money on a free cash flow basis. And then we've got The Claw. So given that the targets that you did present 8 years ago, Gary, I think it would be fair to your shareholders 8 years later to actually give us some targets as to what you think you can deliver on the CapEx that you have spent and are going to spend going forward. I think that would be more than fair to give us an actual target. And then second to that...

I'm just conscious of time, Charlie. We're on record of saying that our goal is to get back to at least historical levels of earnings. This CapEx, as Greg described, a lot of it has been catchup capital as a result of underinvestment, significant underinvestment in the park over an extended period of time, and capital that's gone in will generate its returns. The ink is barely dry on Rivertown, but we're already seeing some of the benefits. So we are comfortable in believing that we will get back to at least historical level of earnings over coming periods. So [ noting the ] host any other questions that we have.

Confirming at this time, we're showing no further questions. That does conclude our conference for today. Thank you for your participation. You may now disconnect.