Questions on start for Adelaide Casino redevelopment
SkyCity Entertainment Group says a start date on its long-anticipated redevelopment of the Adelaide Casino is uncertain.
In results reported to the stock exchange today, SkyCity says it is committed to redeveloping the casino, including building a new hotel on the Riverbank site, but it offers no clues about when it might happen, despite suggesting early this year that finalisation of the plans was imminent.
The casino operator also reported “disappointing” results for its Adelaide operation, despite a positive overall result for its Australian and New Zealand operations.
“SkyCity continues to review the concept design and development costs to ensure the expansion project best meets the future requirements of the South Australian market and is value-enhancing for shareholders,” SkyCity said in its results overview.
“However, timing to commence the expansion works is uncertain and needs to be coordinated with the South Australian Government’s and Walker Corporation’s plans for the broader development of the Riverbank precinct.”
In March, developer Walker Corporation reached a deal with the State Government for a $600 million redevelopment of the Festival Centra Plaza, including rebuilding the car park and the constructing of an office tower between Parliament House and the casino.
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At the time of the announcement, the Government said the project would take about three years to complete, but there has been little news since.
A key part of the deal was an agreement to lease 750 car parks to the casino.
SkyCity has long spruiked plans for a $350 million overhaul of the Adelaide Casino, including a six-star boutique hotel on the site.
After the Government’s announcement of the Walker deal in March, SkyCity appeared bullish about finalising the plans.
Skycity CEO Nigel Morrison said at the time the plaza deal was “a major step forward” for the precinct.
“With the announcement of this development and the key terms of the car park lease now confirmed, Skycity can now progress its plans to transform the Adelaide Casino into a world-class integrated entertainment complex,” he said.
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“We continue to explore a range of different expansion options and hope to finalise these plans over the coming months.”
Nearly five months down the track, SkyCity says its still reviewing the design and costs.
It reported “modest revenue growth” for the Adelaide Casino, with operations impacted during the 2014-15 year by refurbishment works that were completed in January.
“Modest revenue growth was achieved for the year with normalised revenue up 4.8 per cent to A$174.1m with improving visitation trends emerging post completion of the refurbishment.
“However, margin contraction over the period delivered a disappointing EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) result overall, down 19.2 per cent to A$27.3m.”
Overall, SkyCity lifted annual profit by 31 per cent with record results in Auckland making up for the disappointing performance in Adelaide.
Profit after tax rose to $NZ128.7 million ($A115.23 million) in the year ended June 30, from $NZ98.5m a year earlier, the Auckland-based company said.
Sales rose about 12 per cent to $NZ1 billion.
SkyCity also provided ‘normalised’ figures, to reflect the performance of its underlying business, which showed revenue rose 8.7 per cent and profit rose 8.8 per cent.
It said it had enjoyed continued strong growth in Auckland, in its international business – the term it uses for ‘high roller’ gamblers – and earnings growth in Hamilton and Darwin.
– with wire services
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