SkyCity announces its annual results

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SkyCity Entertainment Group (NZX / ASX: SKC) announced its financial results for the fiscal year ended June 30, 2021. Fiscal year 2021 has been another difficult year for SkyCity. Despite a challenging operating environment, SkyCity maintained a strong financial position during the period, delivering credible operating performance when open.

SkyCity’s national games business in New Zealand performed well when the business was operating normally at Alert Level One. Our hospitality businesses, including hotels, restaurants, attractions and international activities, continue to be significantly affected by international border closures. SkyCity Adelaide had an encouraging performance after the expansion opened. SkyCity’s online casino continues to grow with a wide geographic spread among New Zealand customers.

Main features of FY21

  • The Group’s normalized profit after tax (NPAT) is up 36.3% and profit before interest, taxes, depreciation and amortization (EBITDA) is up 25.5%, but well below (17%) of comparable EBITDA for fiscal year 2019.
  • Reported EBITDA is down 8.9% and published NPAT is down 33.7% from the previous year.
  • Adelaide’s expansion was completed on time and on budget in December 2020, with consistent performance when opened.
  • The NZICC and Horizon Hotel project is progressing and we are working closely with Fletcher Construction for the completion of the Horizon Hotel in 2024 and NZICC probably by the end of 2024.
  • SkyCity Online Casino’s revenue and profits increased during the period, with over 45,000 active customers.
  • Strong balance sheet and financial flexibility – fulfillment of financial commitments for the test period of June 2021 and FY21 dividend of 7 cps declared.

Commenting on the results, Managing Director Michael Ahearne said it took considerable skill, energy and dedication for the SkyCity team to deliver a solid performance, despite the challenging environment.

“Local games have performed well when open and operate without restrictions, while our tourism-related businesses, including hotels, restaurants, attractions and international trade, performed lower, primarily due to international and national (Australian) border closures.

“COVID-19 continued to have a significant impact on the business and operations of each of SkyCity’s properties in fiscal year 21. Government-imposed closures in New Zealand and South Australia resulted in the closure of SkyCity Auckland for 29 days and SkyCity Adelaide for 4 days. When cleared to reopen, the properties initially operated under significant strain due to restrictions on mass gatherings and physical distancing requirements.

“At the property level, SkyCity Auckland has provided resilient local gaming activity, but this was offset by non-gaming performance which was significantly affected by COVID-19. SkyCity Hamilton and SkyCity Queenstown delivered strong EBITDA performance driven by local gaming revenue growth combined with disciplined cost management.

“SkyCity Adelaide’s performance before the expansion opened was affected by the disruption from COVID-19, but since the new facility opened it has improved significantly across all operations. SkyCity has made operational adjustments to the business where necessary and we continue to adhere to all government guidelines to ensure that our staff and customers are managed safely.

“Going forward, SkyCity’s strategic plan focuses on our core business, executing our major projects, continuing to navigate the business through COVID, realizing the omnichannel opportunity and efficient allocation of capital, ”said Ahearne.

Regulation and compliance

Ahearne says SkyCity recognizes the importance of protecting its casino licenses and improving its social license to operate.

“Given the regulatory and governance environment in which the Group operates, SkyCity is committed to maintaining a casino and entertainment activity characterized by high levels of service, customer enjoyment and safety, and staff safety. , diversity and inclusion, social and environmental responsibility, and returns on investment and ethical conduct in all respects.

“Following a strategic review of the International Business division undertaken in April 2021, SkyCity has decided to permanently cease dealing with junket operators, but to continue operating the division under a revised operating model where SkyCity will deal directly with clients after appropriate ‘Know that the financial due diligence requirements of your clients and clients are being met.

“Minimizing damage to customers remains a key goal and we have made a number of investments in people and technology (such as facial recognition and specialized customer screening tools) over the past year to ensure the safety of our customers. SkyCity is committed to providing safe and responsible experiences and environments and places great importance on its responsibility as a host and its anti-money laundering obligations.

In June 2021, SkyCity was informed by AUSTRAC that it had identified a potential serious non-compliance by SkyCity Adelaide with respect to its AML and KYC practices and that the matter had been referred to its investigation team on the law application.

“SkyCity’s board of directors and management team take the concerns raised by AUSTRAC seriously and we have taken immediate action to investigate and respond appropriately to the concerns raised. SkyCity will continue to cooperate fully with AUSTRAC regarding its investigations and the investigation of SkyCity Adelaide, ”said Ahearne.

Major projects

In December 2020, SkyCity completed the A $ 330 expansion of the Adelaide property, transforming it into an integrated resort of international scope and quality.

“EoS by SkyCity, a new 120-room boutique hotel and new games, hospitality and entertainment areas were completed on budget and were well received by guests with consistent operational performance after the opening.

“In Auckland, SkyCity opened new dining facilities on the main play floor, upgraded VIP gaming facilities to levels 8 and 9, and welcomed the arrival of All Blacks Experience and Weta Workshop Unleashed, two top class attractions. world in the enclosure.

“Ongoing delays continue for the New Zealand International Convention Center (NZICC) and Horizon Hotel project caused by the October 2019 fire. SkyCity continues to work closely with Fletcher Construction on the project and the latest schedule received from Fletchers now indicates completion of the Horizon Hotel in 2024 and NZICC likely end of 2024, ”says Ahearne.

Online games

SkyCity continued to operate its offshore online casino business with Gaming Innovation Group.

“SkyCity supports the regulation of online gaming in New Zealand by emphasizing strong host responsibility and providing community benefits to New Zealand. We continue to prepare for a regulated industry that ensures the highest standards of host accountability and high quality trusted operators are licensed.

“Without proper regulation and with the growth of the online gaming market, there is a risk that harm minimization will not be a priority for all market vendors. Many jurisdictions have decided to regulate for this reason. “

The people and the community.

“We have continued to create and support a positive employee culture over the past year, focusing on initiatives to improve flexibility, well-being and diversity in the workplace. SkyCity was delighted to receive the Diversity and Inclusion Award at the 2020 Deloitte Top 200 Awards for the second time in three years for the Nikau Project, an initiative to employ and develop career paths for young people in focusing on Maori and Pasifika.

“SkyCity has also made progress in refocusing our community trusts in New Zealand on initiatives that will improve the employability and advancement of young people and have strengthened strategies to ensure our supply chain is ethical and supports local businesses. Ahearne said.

Outlook for fiscal year 22

Commenting on the outlook for FY22, Mr Ahearne said that given the current unpredictable operating environment and uncertain short-term outlook due to COVID-19, SkyCity is unable to provide forecasts for detailed benefits for now, but this will remain under regular review.

“SkyCity, one of New Zealand’s largest and most popular sites, has unsurprisingly been a landmark for the latest COVID-19 outbreak. SkyCity mobilized a team focused on working closely with public health authorities to provide as much information as possible for contact tracing purposes. Our solid planning has enabled us to respond quickly to this current outbreak and will be of great help in responding to new outbreaks in Australia and New Zealand.

“I want to recognize the incredible commitment, work ethic and dedication of the entire SkyCity whanau in New Zealand and Australia. Finally, I would like to thank our customers, SkyCity does not exist without them and we are extremely grateful for their continued support, ”said Ahearne.

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