SkyCity posts financial year results

by William Brown Last Updated
Some NZ casinos reopen after COVID-19 lockdown

A 15.4 per cent decline in revenue has been posted by New Zealand’s SkyCity Entertainment Group.

Inside Asian Gaming reports that the revenue dip to NZ$951.9 million has coincided with a 33.7 per cent fall in profit to NZ$156.1 million in the 12 months to 30 June 2021, impacted by the ongoing COVID-19 disruptions.

The release of SkyCity’s FY21 results comes as the company’s New Zealand casinos in Auckland, Hamilton and Queenstown are currently closed due to a growing outbreak of COVID-19 in the country.

Earnings before interest, tax, depreciations and amortisation for the period fell 8.9 per cent year-on-year to NZ$317.3 million, with the company declaring a dividend of NZ$0.07.

COVID-19 and lockdown posed challenges for SkyCity venues

Chief executive officer Michael Ahearne said the results were positive given the challenges posed by the pandemic and the disruption to its international business, including a decision to cease working with junket operators in response to recent inquiries into Australian casino giant Crown Resorts.

“Local gaming has performed well when open and operating without restrictions, while our tourism-related businesses including hotels, food and beverage, attractions and international business had weaker results primarily due to ongoing international and domestic border closures,” Ahearne said.

“COVID-19 has continued to significantly impact the business and operations at each of SkyCity’s properties in FY21.

“Government mandated lockdowns in New Zealand and South Australia resulted in the closure of SkyCity Auckland for 29 days and SkyCity Adelaide for four days.

“When permitted to reopen, the properties have initially operated under significant constraints due to restrictions on mass gatherings and physical distancing requirements.

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

On the decision to cease dealing with junkets, Ahearne said the company will look instead to operate its international division, which in FY19 had driven turnover of NZ$14.1 billion, under a “revised operating model where SkyCity will deal directly with patrons after appropriate ‘know your customer’ and customer financial due diligence requirements were satisfied.

“Minimising harm to customers remains a key focus and we have made a number of investments in people and technology, such as facial recognition and specialised customer screening tools over the past year to keep our customers safe,” Ahearne said.

“SkyCity is committed to ensuring that it provides safe and responsible experience and environments and places significant importance on its host responsibility and AML obligations.”

SkyCity also reported revenue of NZ$7.5 million from its online gang business, SkyCity Online Casino, which has seen the number of active customers increase from 24,400 in mid-February to 38,000 in April and 45,000 as of 30 June 2021.

New projects on track

The NZ International Convention Centre and new Horizon Hotel in Auckland was progressing and the company said it was responding to the AUSTRAC investigation of the Adelaide casino.

Ahearne said there is a huge amount of complexity and that’s why he wants people to look at normalised rather than actual results for the company’s performance.

“We’ve also spent $300 million in opening Adelaide. That business is actually doing reasonably well. The gaming part has done well but for the non-gaming and bars and restaurants, it’s been a challenging year.

“It was great to get open. It’s a great new asset and it had a reasonable start. The second half has done reasonably well but that had a lockdown in July.”

Ahearne has backed the government’s response to the coronavirus pandemic in Australia and New Zealand.

“Right now, there’s no option but to lock down immediately. That’s the only thing that should be done to get us back to the status quo. There’s no other choice.”

Ahearne is revealed in the annual report to have been paid $1.4 million from last November to June as the CEO. He also took home a further $822,256 for his role as chief financial officer.

“The remuneration and benefits under Mr Ahearne’s employment agreement for the position of chief executive officer include a base annual salary of $1.5 million, an annual allocation of SkyCity shares to the value of $500,000 with a 12-month restrictive period and an annual allocation under the 2019 SkyCity executive long term incentive plan to the value of $500,000, the first of which grant will take place in September 2021.

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