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No fast Adelaide payout for Sky City

By Phil Boeyen, ShareChat Business News Editor

Thursday 26th October 2000

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Listed casino operator Sky City says it will be another two years before there is a meaningful turnaround in its Adelaide Casino investment.

Sky City bought the previously state-government owned casino earlier this year for A$183 million and has spent the first six months as the new owner on physical improvements and local marketing.

However the company's MD, Evan Davies, told today's annual general meeting that a turnaround in the
Adelaide investment is not expected for some time.

"We expect the impact of the physical refurbishment, the product enhancements and the marketing-driven interest by the local population to start to have an effect during the first half of calendar year 2001, but with a meaningful turnaround in financial performance not evident until the 2002 financial year."

Mr Davies is certainly confident his company has what it takes to make the Adelaide operation, telling shareholders that SKC has shown it can operate a gaming entertainment complex as well as anyone.

"The departure of Harrah's as operator of Sky City had no adverse effect - in fact, profits have grown markedly since the Harrah's contract was terminated. And gaming analysts in Australia have more than once suggested that a number of Australian casino operations would do better if they had Sky City management operating their businesses for them."

Sky City also unveiled the new name of its joint venture Queenstown casino and bar at the meeting, which will be known as Sky Alpine Queenstown Casino.

Sky City owns 60% of the new venture and Mr Davies says when it opens in six weeks his company will operate three properties, employing more than 3,500 people. The company is still awaiting a Court of Appeal decision to see if it can resurrect its Hamilton casino.

Mr Davies says SKC should make a decision soon on whether it will take a further stake in Australian internet betting company Canbet, in which it already has a 6.8% interest. The company has indicated it wants to buy up 33% of Canbet, which in July was estimated to cost around A$39 million.

"We are currently in the process of due diligence, prior to deciding whether to take an increased equity position in this company. We expect due diligence to take a further few weeks to complete."

Despite the new ventures, Mr Davies told shareholders that the company's Auckland operation still represents its most significant growth opportunity, and it is making sure any growth of the overall business is not at the expense of existing revenue streams.

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