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Skycity estimates earnings boost from World Cup


Skycity expects earnings from its Auckland casino and hotel complex to surge up to 25% during the months of the Rugby World Cup.

Chief executive Nigel Morrison said the uptake in first-half earnings for 2012 would be split evenly between its gaming

Georgina Bond
Fri, 29 Oct 2010

Skycity expects earnings from its Auckland casino and hotel complex to surge up to 25% during the months of the Rugby World Cup.

Chief executive Nigel Morrison said the uptake in first-half earnings for 2012 would be split evenly between its gaming and non-gaming businesses – the hotel, catering and Sky Tower attractions.

Shareholders were also told at this morning’s annual meeting this morning Skycity would be spending $27 million to build private gaming rooms and new accommodation for the influx of high-rolling international and VIP gamers during the tournament.

Larger gaming space for international and VIP gamers and rooftop terrace dining would be created above on the top level of Skycity hotel on Federal St and private VIP gaming salons would be increased from one to four.

A reconfiguration of the hotel’s level five to create private villa accommodation would also be completed in time for the tournament, he said.

Skycity chairman Rod McGeoch said while the casino was well placed to attract high-spending customers from Asia, premium accommodation and dining facilities were required to ensure and unless it could compete effectively against other premium facilities in Singapore or Vietnam.

“We need to roll out the red carpet for them, offer them world class experiences and they will come,” said Mr McGeoch.

A trading update revealed first-quarter trading had beaten out the strongest quarter of last year by 3.3%

During the three months to September, table revenues up 12.1% on the average quarterly result in the second half 2010. Machine revenues were up 3.2% and non-gaming revenues up 5%

Mr Morrison said the result included pleasing the recovery of local Auckland revenues as gaming machines revenue started to turn around and strong growth in international VIP business at Auckland – more than double the same time last year.

“Across the group, we are pleased with the revenues achieved in the first quarter, which has resulted in normalised net profit after tax, up 3.7% over first-quarter last year and up more than 5% on a like with like basis, excluding cinema operations.”

The result followed Skycity’s record profit $141.7 million profit for the full year to June, which included gain on divestment of cinema business.

Skycity would be disappointed if it did not achieve analyst consensus forecasts for a full-year net profit of $137.4 million, Mr Morrison said.

Australian shareholders would benefit from the board’s decision to not renew, and instead repay, $A150 million in ACES notes in December as they would now receive franking credits in future dividend payments.

Mr Morrison said the company’s balance sheet remained strong and Skycity was “so far under our [banking] covenants we don’t have any debt issues at all”.

A bank overdraft facility of $500 million meant it was well placed to raise capital.

“We could also raise $100 in US debt within two weeks if we wanted to do that,” said Mr Morrison.

Discussions continued with the South Australian Government to redevelop and expand the Adelaide Casino as part of the city’s new $A535 million Riverbank Precinct development.

Mr Morrison also pointed to opportunities in the convergence of internet gaming and land-based casinos.

Shares in Skycity rose 6c to $2.96 this morning, against a year-high of $3.51 and a low of $2.79.

 

 

 

Georgina Bond
Fri, 29 Oct 2010
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Skycity estimates earnings boost from World Cup
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