Sky City normalised half-year net profit up 2.1%

Wednesday 16th February 2011

Sky City Entertainment Group, which reported a flattish half year, is pushing hard to establish itself as Auckland's entertainment hub with capital spending of $50 million on the facilities this financial year.

The casino and hotel operator today said normalised net profit for the six months to December rose 2.1% from a year earlier to $67.4 million, as revenue was steady in Auckland but softer in Darwin after the introduction of smoking bans.

Normalised revenue from ordinary activities rose 3.1% on a year earlier to $410.1 million. An interim dividend of 8c per share is to be paid, in line with a year earlier.

Turnover in the International Business division almost doubled to $1.48 billion, with most of the growth into Auckland mainly from China and Thailand.

Second half revenues continued to trend well, and were up more than 9% for the first six weeks of the second half compared to a year earlier.

"In many ways we've had softer domestic businesses, or flat domestic businesses, with the majority of growth coming out of our international and tourism businesses," chief executive Nigel Morrison said.

Into the second half there were signs of momentum, particularly in the International Business, and in gaming machines in Auckland and Hamilton.

Project capital spending in the 2011 financial year would be $65 million of which close to $50 million would be in Auckland before the Rugby World Cup started.

Three new food and drink operations were being opened in the Federal St area, including a restaurant called Depot being run by well known personality Al Brown.

Those outlets were the first step in Sky City's aim of transforming Federal St into a restaurant and bar destination, Morrison said.

The company was also developing four premium 100sq m "villas" and three new VIP gaming salons.

There would also be a new Pacific Room and two levels of entertainment with rooftop bar and deck and additional facilities.

"That'll really enable us to show off the property for all the international visitors that will come to Auckland for the Rugby World Cup," Morrison said.

"We currently only have one international salon in Auckland, so in busy periods like Chinese New Year, if we get one major big player, and these guys all want their own dedicated salon, we really then are capacity constrained.

"We're effectively going from one salon to four salons, and that'll give us a lot more flexibility, and allow us to attract and continue to grow our international business in Auckland."

A new dedicated gaming room for Diamond tier loyalty customers would have up to 250 gaming machines.

Sky City was also having "positive" talks with the Government about the proposed development of a national convention centre, and expecting some clarity within six months.

"The development of a national convention centre adjacent to our Auckland property, we believe, would significantly reinforce this location as the pre-eminent tourism, hospitality and entertainment precinct in Auckland," Morrison said.

NZPA

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