SOFT consumer activity has not discouraged Echo Entertainment Group (ASX:EGP) from its ambitious plan to invest $625 million in developing its Queensland casinos, posting a net profit of $70.2 million.
It includes a $20 million revamp of the existing theatre at Jupiter's Hotel and Casino (pictured) on the Gold Coast.
Chairman John Story confirmed that the investment would be supported by gaming concessions and the company’s voluntary pre-commitment solution for Queensland casinos.
“This means that the southeast Queensland properties expect to commence implementing extra gaming machines under the additional licences granted by the fourth quarter,” he says.
“Further regulatory, planning and other approvals are still required to commit to the full-scope contemplated and Echo Entertainment continues to work with the Queensland government to obtain these. The first element, being the refurbishment of the Jupiter’s Gold Coast Theatre is due for completion in the fourth quarter of FY12.”
The hotel, gaming and entertainment group today revealed its results 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.
“Revenue growth has also been sustained in the Queensland casinos despite a challenging consumer environment. As announced previously, we continue to work with the Queensland Government and casino regulator in relation to optimising proposed development opportunities in Queensland,” says Story.
Earnings before interest, tax, depreciation and amortisation at the casinos were up 6 per cent to $85.3 million.
CEO Larry 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 and while the environment is likely to remain tough into 2H12, growth should improve as we track a softer comparable period impacted by the floods,” he says.
The board has declared a fully franked interim dividend of 4 cents a share, to be paid on March 28.
Echo shares remained flat at $3.80 a unit.
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