THE latest Brisbane ASX newcomer has increased revenue despite challenging consumer market conditions.
Soft consumer activity has not discouraged Echo Entertainment Group from its ambitious plan to invest $625 million in developing its Queensland casinos.
It includes a $20 million revamp of the existing theatre at Jupiter’s Hotel and Casino on the Gold Coast.
CEO Larry Mullin (pictured) reveals the investment will be supported by gaming concessions and the company’s voluntary precommitment strategy for casinos. It means South East Queensland properties will begin implementing extra gaming machines under additional licences granted.
“We are also pushing entertainment on the Gold Coast at our Jupiter’s pool area and revamped theatre. Our theatre expansion will increase guest capacity from 1200 to 2100 by the fourth quarter of FY12,” he says.
“Customers will be provided a value-added experience. We have a very excited and engaged team wanting to do interesting things with non-gaming amenities. We have to make a compelling reason for guests to come.”
The hotel, gaming and entertainment group’s net profit after tax was $70.2 million for the first half of FY12, following its 2011 demerger from Tabcorp Holdings. Revenue was up 16.5 per cent to $908.2 million due to consumer growth in Queensland and New South Wales.
“We were pretty happy with our performance. We feel comfortable that projections we made were accurate,” says Mullin.
“This year we will not give any guidance because it is being speculative. We feel pretty good with our customer base and if the economy improves we will see revenue lift.”
Earnings before interest, tax, depreciation and amortisation at the casinos were up 6 per cent to $85.3 million. Mullin is upbeat in his outlook for the second half of 2012.
“The Queensland properties were relatively steady in a tough consumer environment in the first half of 2012," he says.
“While the environment is likely to remain tough into the second half of FY12, growth should improve as we track a softer comparable period impacted by the floods."
Operating expenses were up 11.9 per cent, reflecting the expansion of operations from the investment program and higher initial operating expenses in new areas at The Star in Sydney.
Echo has welcomed the end to a disruptive period of sweeping development and improvement, shifting its focus towards maximising operational efficiency at properties across the group.
When asked about the controversial termination of The Star managing director Sid Vaikunta over allegations he sexually harassed a co-worker, Mullin vowed to uphold the group’s ‘zero tolerance’ for code of conduct breaches at all levels.
“I will make sure breaches are reported. It is not behaviour expected of our employees,” he says.
“Every time something happens you learn more about yourself and business. We want a safe and secure workplace and good trust with our staff. We will take potential breaches seriously.”
The Casino, Liquor and Gaming Control Authority will undertake a further inquiry to consider matters arising since 2 December 2011, including the circumstances surrounding the departure of Vaikunta.
TOP PUBLICLY LISTED COMPANY
Echo Entertainment Group (EGP)
CEO: Larry Mullin
Market Cap: $2.999b
Revenue ’11: $1.648b
Loss ’11: $226m
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