KEY POINTS:
Sky City Entertainment Group has reported a 97.1 per cent fall in first half net profit to $1.3 million.
The result includes a $60 million write-down in the carrying value of the company's cinema assets, which the market was advised of this month.
Without that write-down, net profit for the six months to the end of December would have been up 36.2 per cent to $61.3m, the casino operator's executive director Elmar Toime said today.
Revenue rose 1 per cent to $424.2m, while underlying operating earnings were up 3 per cent to $152.7m.
An interim dividend of 11 cents per share is to be paid, with Sky City also saying that all discussions with parties showing interest in a takeover had now ceased.
Looking past the disappointing cinemas outcome, the first half had delivered more acceptable results given the disruptions of management change, takeover approaches, and asset sale reviews. There was also work on the Auckland main gaming floor, Sky City said.
Looking forward, the company anticipated continuing positive trends in performance. Factors included completion of the Auckland renovation, the Adelaide opportunity and expansion in Darwin.
Sky City said it reaffirmed its previous full year net profit guidance in the range of $108m to $110m, excluding the cinemas write-down.
Based on the half year result it expected to be at the upper end of that range, the company said.
Among factors taken into account in that guidance were customer reaction to the full opening of the Auckland main gaming floor, and the ongoing effect of no smoking on the performance of its Adelaide casino.
The Adelaide casino would be retained as a core gaming asset, Sky City said.
Its performance in the half year had been encouraging, with cost control improving operating margins, while a key focus remained on increasing market share in the competitive gaming machine market.
Last year, Sky City had cited the cinemas business and the Adelaide casino as poorly-performing assets that could be sold.
Negotiation with potential buyers for the cinemas continued. If a satisfactory price and sale structure was not agreed to, restructuring and revenue regeneration options would be evaluated, the company said.
The company's Auckland business unit reported total revenue up 0.8 per cent to $205.3m, while earnings before interest, tax, depreciation and amortisation (ebitda) was up 0.4 per cent to $107.7m.
Auckland gaming revenues were flat with a 4 per cent decline in gaming machines, as a result of a refurbishment of the main gaming floor. That was offset by table games growth of 7 per cent.
Sky City Grand Hotel occupancy was up from 44 per cent to 50 per cent for the half year, while conventions revenue was up 4.6 per cent.
For Adelaide total revenue was down 2.2 per cent to A$62.5 ($72.1m), with ebitda up 7.1 per cent to A$12m.
November and December 2007 revenues at Adelaide were down 8 per cent on a year earlier, with gaming machine revenues down 13 per cent.
The impact of smoke-free regulations had reduced in January, with gaming machine revenue down 8 per cent from a year earlier.
At Darwin revenue was up 10.9 per cent to A$54.9m, with ebitda up 25.7 per cent to A$23.5m.
Performance was good overall with growth from gaming machines, food and beverage and hotel activities.
In Hamilton revenue was up 2.6 per cent to $20m, with ebitda up 2 per cent to $10m.
Sky City Queenstown Casino, in which the company has a 60 per cent shareholding, had revenue growth of 20 per cent.
Christchurch Casino, of which Sky City owns 41 per cent, had a $200,000 increase in first half contribution to $2.7m.
For Sky City Cinemas adjusted revenue was down 1.5 per cent and adjusted ebitda down 28.6 per cent.
Flat cinemas revenue was compounded by increased costs and depreciation, leading to a decline in profit and margin, the company said.
Sky City shares were down 1c around 11am today to $3.90, having reached a year low of $3.85 earlier today. The year high for the company's share price was $5.56 in September.
- NZPA
