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Sky City underlying profit up 4 pct


Wednesday 17th August 2011

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Casino operator Sky City Entertainment Group reported a 4 percent rise in underlying full year net profit to $130.9 million, with gaming machine revenue in Auckland returning to levels last seen before the global financial crisis.

Normalised revenue for the 12 months to June was up 4.5 percent to $877m, while reported net profit was up 20.5 percent to $123m, after a $15m write-down of the Christchurch casino investment following earthquakes in September and February.

Auckland revenues rose $7.4m to $435.2m, with growth of $7.9m or 3.8 percent in the second half, the company said today.

Strong revenue growth in Auckland gaming machines during the second half of the financial year was driven significantly from improvements to facilities and an improving Auckland economy.

Auckland gaming machine revenue of $206m was back to the pre-global financial crisis levels of 2008.

Sky City chief executive Nigel Morrison said the result had good momentum, especially considering the mixed economic conditions in New Zealand and Australia during the year.

The improvement of Auckland gaming machine revenue, came with a stronger Auckland economy and a more optimistic consumer outlook, he said.

Sky City's International Business was up 50 percent and its Adelaide operation had delivered its third record year of growth in a tough market.

A final dividend of 8c per share was being paid, down from 9.5cps last year.

Morrison said Sky City was optimistic, with business confidence in New Zealand improving.

Positive developments included the imminent rugby World Cup, Auckland Council initiatives focusing on transforming the city into a destination and events centre, and new international airlines flying directly into Auckland, including from Guangzhou in China.

The strength and outlook of the dairy industry continued to underpin activities in Hamilton. In Australia the retail environment was somewhat more challenging, but it was hoped macro trends would improve to the benefit of Adelaide and Darwin.

Sky City has also been selected by the Government as the preferred developer of an international convention centre, and is prepared to fund the $350m estimated cost, provided it is satisfied the investment will generate an acceptable return for shareholders.

Today, Morrison said negotiations were under way with the Government about alterations to gaming regulations and legislation needed to deliver those returns on the investment.

That included an extension of Sky City's Auckland casino licence beyond its current expiry of 2021, an increase in gaming table numbers, multi-terminal gaming machines and electronic gaming machines and other changes to increase the scale and efficiency of the Auckland casino facilities and operations.

The company expected to be able to update shareholders on the proposal by its annual meeting in November.

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