Village Roadshow has achieved a remarkable turnaround in its exhibition division, with the ongoing policy of selling off certain territories clearly paying off and a string of popular films and new screens adding to the bottom line.

Village Roadshow's exhibition arm posted a profit of A$28.6m for the 12 months to June 30, before tax and significant items. It follows last year's A$15.3m loss.

"As predicted, exhibition has rebounded strongly and has returned to its position as a major contributor of earnings to the group," said managing director Graham Burke. "In fact, if not for the unexpected collapse of the Argentine Peso, which saw the division write off its investment, it would have been a stellar year for exhibition."

Revenues from cinemas increased 40% to A$406m with Australia, New Zealand, Korea, Italy and the UK experiencing the most growth. Thanks to a spate of successful films such as Harry Potter And The Philosopher's Stone and The Lord Of The Rings: The Fellowship Of The Ring, attendances were up 19% to 106 million ticket sales across the world, with about 12% of this increase coming from new sites. Village now has 1,514 screens at 174 sites in 11 territories. Twelve additional sites are expected to open in 2003 including two in Italy, three in Korea and four in Taiwan.

In March, Village sold its cinema interests in Thailand, Malaysia and India, consisting of some 135 screens across 19 sites.

Overall, Australia's most significant cinema company made a net profit after tax, but before significant items and discontinuing operations, of A$73.4m, marginally ahead of last year. The foreign currency loss due to the peso cost A$19.2m.

Theme park profits were up A$2.5m to A$13.8m, despite the reduction of international tourism post September 11. Proftis from the distribution business were also slightly up.

In production, however, profits fell about A$13m to A$23.7m before tax and significant items, due to a focus on restructuring financial arrangements rather than producing or releasing many films.

27 titles have so far co-produced and released under the joint venture with Warner Bros, including the disappointing Pluto Nash which was released after the June 30 financial reporting period. Upcoming films include Ghost Ship, Analyze That, Two Weeks Notice, Fuel To The Fire, Dream Catcher and Matrix Reloaded. Results from the Warner Roadshow Movie World Studios were also slightly down on last year.

The company's net assets now stand at A$1.2 billion and net debt at A$45.8m. Ordinary shares fell 35% to an 11-year low in early June when shareholders and fund managers were told that dividend payments were being suspended.