Sky City says trading in line with expectations

Sky City said today trading in the first quarter was in line with the casino operator's expectations.

Chairman Rod McGeoch told shareholders at the annual meeting 2005 had been a year of significant challenges with revenues falling at the key Auckland casino as a result of regulatory activities -- the major factor influencing the year's result.

Smoking bans imposed nearly a year ago in New Zealand and a similar one in South Australia had affected operations more than anticipated.

The implementation of ticket technology on pokies also had a significant adverse impact.

"These restrictions have certainly impeded our growth objectives, somewhat more than we anticipated prior to the bans and restrictions being introduced in December last year," managing director Evan Davies said.

"The impact of the smoking bans has been somewhat greater than we anticipated and the trend has been for a slower abatement of this effect than we predicted prior to the bans being imposed last December."

Mr McGeoch noted the environment for gaming companies was undergoing significant regulatory change.

He said the company shared the same objectives as regulatory bodies but he argued for "appropriate, not draconian regulation".

"Where we differ is on the implementation of measures to best protect the at risk group whilst preserving the freedom of choice for our customers."

He said gaming legislation in most Australasian jurisdictions was moving from a focus on economic development, employment and tourism to a focus on social restraint and host responsibility."

He pleaded for a co-ordinated approach on mitigating measures for problem gamblers.

"We agree that attention must be paid to people in the community who are not able to manage their gaming activity, but we stress that, like all things, an appropriate balance must be maintained between protection mechanisms for at risk persons and freedom of choice for the wider community.

"This balance of protection mechanisms versus the right of the wider community to select its entertainment options is a key challenge facing the gaming sector as the various parties confront the issues and consider how best to put in place relevant and sustainable regulatory frameworks and structures."

He called for interested parties to agree on the definition and scale of the risks and then work together on agreed programmes "without re-inventing the wheel".

"We remind regulators that Sky City has led the gaming industry in terms of host responsibility programmes (both harm minimisation and responsible service of alcohol) for the last 10 years."

An ad hoc approach by individual regulatory agencies ran the risk of ineffective harm minimisation programmes, he said.

Mr McGeoch said Sky City was an important business enterprise in New Zealand and Australia and "should be regulated fairly and appropriately, not in an onerous or unreasonable manner".

The meeting was asked to consider a three year remuneration package for Mr Davies including an equity-based bonus component worth $1.125 million over three years. The bonus is dependent on Sky hitting return on capital targets and personal targets including "significant outperformance".

Mr Davies said completion of new facilities at Sky's Adelaide casino had been delayed due to a series of construction complications but its second half result was "something of a one-off and we do not anticipate a recurrence in the 2006 year".

Mr Davies said that despite losing a bid for the Tavener group of gambling hotels in Australia the company was continuing to for new opportunities "as they arise and expect that this will be an ongoing focus as the gaming/entertainment sector continues to develop in this part of the world".

Sky shares were down 6c to 456 at midday. They have traded between $4.05 and $5.50 in the past year.

- NZPA