ECHO ENTERTAINMENT'S PROFIT SLIPS

Written on the 21 February 2013

ECHO ENTERTAINMENT'S PROFIT SLIPS

ECHO Entertainment Group’s (EGP) Queensland properties endured a soft start to the financial year, with revenues and profit hit by a tough consumer environment.

Revenue and earnings were down at the company’s three properties in the state, Jupiters Gold Coast, Treasury Brisbane and Jupiters Townsville, EGP reported today.

Actual EBITDA (earnings before interest, tax depreciation and amortisation) was $73.1 million, down 14.3 per cent and actual EBIT (earnings before interest and tax) was $48.4 million, down 22.8 per cent.

The three Queensland venues were impacted by the continuation of a tough consumer environment. Revenue decreased 5.2 per cent (down 2.4 per cent on a normalised basis) and EBITDA fell 14.3 per cent on an actual basis (down 6 per cent on normalised basis).

EGP's share price was down 0.86 per cent this morning at $3.45 per unit.

The company is still trying to negotiate the potential relocation of the Treasury Brisbane Casino with the state government and is today presenting plans publicly.

Managing director John Redmond (pictured) says the Queensland business is likely to trade in-line with general market conditions in the second half and further attention is being placed on the operating cost base in those properties.

“One of my main priorities is the development and investment potential of our Queensland properties and I share the Newman Government’s vision for tourism in Queensland,” says Redmond.

EGP as a whole reported reduced net profit after tax, which slipped 5.3 per cent to $66.5 million in the first half if FY13. Reported EBITDA, including significant items of $204 million, is up 8.4 per cent on the prior period.

The decline in NPAT is blamed on the lower effective tax rate and higher depreciation, rather than Queensland’s performance.

“While the performance of the Queensland properties in the period was soft, we remain committed, positive and engaged on the underlying potential of these assets,” says EGP chairman John O’Neill.

“We recognise the role of integrated casino resorts with a blend of non-gaming attractions as valuable tourism generating assets that can complement what has been achieved at The Star."

Performance of Sydney casino The Star was more heartening for EGP. There was a 14.9 per cent actual revenue growth at The Star, with strong momentum in its VIP business (revenue up 25 per cent), but that was offset by a 22.4 decline in the much smaller Queensland business.

Overall, the VIP business improved gross revenue by 15.3 per cent to $203.8 million.

“The expansion plans at The Star have been delivered, on time and on budget, with the Event Centre completing The Star’s transformation into a world class integrated resort complex befitting of its location on Sydney Harbour,” says O’Neill.

“With the period of openings behind us, the focus has turned to maximising returns on the investment made."


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