Theme park operator Sim Leisure posts wider 1H21 net loss, but says remains a going-concern

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Malaysian theme park operator Sim Leisure reported Friday its first half net loss widened to 6.95 million ringgit, from 2.54 million ringgit in the year-ago period as movement control orders (MCOs) to stem the spread of the Covid-19 virus shuttered operations.

“The onset of the Covid-19 pandemic in 2020 has severely impacted the theme park industry and since the outbreak of the Covid-19 pandemic, the group has experienced significant disruption to its theme park operations,” the company said in a filing to SGX.

The theme parks were closed from 13 January to 5 March, and again from 6 May to the present, Sim Leisure said, adding domestic travel restrictions and quarantine arrangements also weighed on operations, with a decline in visitors and disruption in the labour workforce.

Revenue for the January-to-June period increased 19.5 percent on-year to 5.12 million ringgit, on a cooperation fee from Sim Leisure Gulf Contracting and sponsorship income from subsidiary Rakan Riang Sdn. Bhd. (RRSB) for promoting sponsors’ image or branding at KidZania Kuala Lumpur or other programs, the company said.

But Sim Leisure added the increase in revenue was largely offset by declines in theme park admission fees and sales of food, beverages and merchandise there as the number of visitors dropped amid the closures.

Difficult outlook

Sim Leisure warned of protracted uncertainty.

“As the Covid-19 pandemic is still evolving rapidly, there is no assurance that the spread of Covid-19 will be contained in the near term and the duration of the Covid-19 pandemic and the extent of its adverse effects cannot be determined with certainty at present,” the company said.

“As such, in the event that the containment of Covid-19 does not improve in the near term, and results in a prolonged global economic recession, this may have a protracted negative impact on economic and business activities in the Malaysia which may impact the number of visitors to the group’s theme parks,” Sim Leisure added.

Going concern

However, despite reporting net losses and negative working capital of 9.52 million ringgit at end-June, Sim Leisure said it expected to remain a going concern.

The company cited a loan agreement with shareholder Tan Boon Seng with subsidiary Sim Leisure Escape for a 7 million ringgit loan, of which 5.30 million ringgit has been drawn down as of end-June.

In addition, Tan has given an undertaking to provide necessary financial support to continue operations and pay debts as they fall due, Sim Leisure said.

Sim Choo Kheng, the company’s controlling shareholder, has also said he would provide necessary financial support to the group, the statement said.

Sim Leisure said it has also obtained a loan moratorium on term loans from banks to temporarily halt repayments on principal and/or interest.

“The group has negotiated with certain creditors regarding deferred repayment plans, implemented cost reduction initiatives, as well as deferred non-essential capital and operating expenditure,” the statement said. “The group will continue to do the aforementioned in order to
preserve working capital and liquidity and monitor the situation so as to adapt its response to developments as they arise during this time of severe macroeconomic uncertainties.”