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Casino owner tips "modest growth"

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Owner of the Adelaide Casino, SkyCity Entertainment Group, says revenue in the first four months of the financial year lifted 1.7 per cent and it remains on track for “modest growth” in full-year earnings.

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New Zealand’s only listed casino company said group normalised revenue rose 1.7 per cent in the four months ended October 31 compared with the same period a year earlier, helped by a 3.1 per cent gain from its New Zealand business.

Based on the year-to-date performance, SkyCity remains on track to achieve modest growth in group earnings before interest, tax, depreciation and amortisation in the 2018 financial year, the Auckland-based company said in presentation notes for delivery at a UBS Investor Conference in Sydney on Monday.

SkyCity, which has four casinos in New Zealand and two in Australia, said its New Zealand properties were performing well, particularly its largest business in Auckland where it said successful marketing and promotional initiatives had helped counter the impact of disruption in the CBD.

In Hamilton, its operation continued to benefit from a strong macroeconomic environment in the Waikato region, but growth rates had moderated slightly due to stronger comparable periods, it said.

In Australia, it was benefiting from improved gaming activity at its Adelaide casino following implementation of new gaming concessions which was helping to offset the impact of construction disruption from early works ahead of its expansion.

The company said the $330 million expansion of the Adelaide Casino will include a 30 per cent increase in gaming capacity, a 123-room hotel and new restaurants and bars.

It said the tender process for construction had begun, with the company seeking a fixed price, lump sum contract.

The company was “confident in the investment thesis for Adelaide, supported by regulatory concessions agreed with the SA Government”.

Main works are expected to begin in the first quarter of 2018.

In Darwin, the impact of increased competitive pressures is stabilising but the trading environment “remains soft overall”, it said.

SkyCity said momentum is building in its international business with particularly strong activity levels over the Golden Week holiday period in October. However turnover was slightly weaker on the previous period, which largely pre-dated the disruption caused by the arrest of staff employed by its Australian rival, Crown Resorts, by the Chinese government.

The company’s shares last traded at $3.93, unchanged since the start of the year.

– with SCOOP

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