KEY POINTS:
SkyCity Entertainment yesterday secured an extension to its exclusive Darwin casino licence and said it would refurbish the Northern Territory property, while managing director Evan Davies tried to downplay talk of a takeover.
The NZX-listed company agreed with the Northern Territory Government to extend the expiry date of
its current licence from June 2015 to June 2026.
The expiry date of the licence - exclusive for the northern part of the Northern Territory - would also be reviewed every five years from 2011.
The deal provided investment certainty because the licence was valid for at least 15 to 20 years at any time, the company said.
The certainty meant a A$30 million ($34 million) refurbishment of the Darwin beachfront property would proceed. "It's not the price of the extension but it would have been difficult to make without the extension," Davies said.
"For any business of scale when your entitlement to do your business expires clearly that's a significant issue."
The agreement came with conditions covering economic development, employment and tourism generation in the area but provided these were met it could continue in perpetuity.
Speculation of a takeover attempt for SkyCity emerged again this week, but Davies said he was unaware of any activity.
"There's constant chit-chat [about a possible takeover], and reports out even this week, but nothing that either would justify or be appropriate to make any comment about," Davies said.
Despite the speculation there were no talks taking place, he added. "Well, not with me."
In the year ending last June SkyCity Darwin's revenue was up 9.9 per cent at A$89 million with trading profit up 6.7 per cent at A$33.6 million.
"This is a significant expansion of the existing business but one that we think is well justified by both existing performance and potential," Davies said yesterday.
Meanwhile, negotiations regarding the final terms and conditions for the acquisition of the Little Mindil site - adjacent to the Darwin property - were progressing satisfactorily.
At the company's annual meeting in October, Davies identified domestic New Zealand economic circumstances as having influenced business for the first time in its 10-year history - citing a slowing economy and big increases in cash costs such as fuel.
"We've seen movement in the other direction [of retail fuel cost] and I think one can reasonably expect that that's a positive for the business," he said.
However, half year results are due out next month and Davies could not provide a detailed business update or adjust the net profit forecast.
Organic growth was the way ahead for the moment, because new sites were impossible in New Zealand and unlikely in Australia.
"If the right opportunity presented itself outside New Zealand and Australia that allowed us to leverage our management capabilities then we'd look at those kinds of opportunities," Davies said.
SkyCity's shares closed up 7c yesterday at $5.25.
