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Skycity still considering Darwin future

Trevor Chappell  |  09 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Trans-Tasman casinos operator Skycity Entertainment Group (ASX: SKC) expects its Darwin casino to improve its performance in the second half of the financial year, but the property's future is still under review.

Skycity says that in the first half of the financial year, gaming activity at the Darwin casino was weaker, but that was partly offset by the broadening of on-site entertainment offerings and an increase in the number of visitors.

The Darwin casino is expected to lift its performance over the remainder of the financial year, but Skycity noted that comparatively the prior corresponding period was weak.

"We are continuing to evaluate a range of options for our Darwin property as part of a strategic review which commenced in July 2017 following the impairment of the book value for the property," Skycity said in a statement on Friday.

"A full or partial sale of our interest in the property remains a possibility at the right price. But there is no urgent time pressure given that the property is profitable and cash generative, particularly with the recent stabilisation and slightly improved performance."

Skycity booked a $A95 million writedown on the value of its Darwin casino in fiscal 2017.

The writedown followed a 75 per cent increase in the number of poker machines in Darwin outside of the casino since a cap on gaming machines in the Northern Territory was removed in 2015, which hurt the Darwin casino's revenue and earnings.

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New Zealand-based Skycity generates most of its earnings from its Auckland casino but also operates casinos in Hamilton, Queenstown, Darwin and Adelaide.

Skycity on Friday said group net profit for the six months to December 31 had risen 11.6 per cent to $NZ93.5 million ($A86.8 million) as the group benefited from a higher win rate against international high-rolling gamblers.

Excluding the variation in the theoretical win rate, Skycity's net profit was up 7.9 per cent at $NZ90.3 million.

Skycity said it had experienced modest growth at its combined NZ properties, stable performance from its combined Australian properties, and a recovery in its international business.

The Adelaide casino, excluding the international business, generated modest growth in revenue and earnings as new premium gaming facilities helped offset disruption caused by early expansion works at the property.

Skycity said its international business grew turnover and earnings in the first half, after a challenging fiscal 2017.

"This performance was underpinned by an increased focus on key customers and a significant improvement in operating margins following an operational review during 2H17 (the second half of fiscal 2017)," Skycity said.

Skycity expects modest growth in group earnings for the full 2018 financial year.

Shares in Skycity were three cents, or 0.8 per cent, higher at $A3.74 at 1107 AEDT.

HIGH-ROLLER PICK-UP HELPS BOOST SKYCITY

* First-half net profit up 11.6pc to $NZ93.5m

* Revenue up 4.0pc to $NZ554.7 million

* Interim dividend of 10 NZ cents per share, unchanged, and unfranked for Australian shareholders

 

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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