SkyCity gambles on survival

Company News

by Glenn Dyer

As expected, Kiwi casino group SkyCity (ASX:SKC) has reported a significant loss for the 2024 financial year, following a series of one-off charges related to the value of its businesses in Adelaide and Auckland.

The NZ$143.3 million net loss capped a year filled with challenges for the company, which have continued into early 2024-25 with a regulatory finding against its Auckland casino.

The company announced on Thursday that its underlying net profit after tax also declined by 7.2% to NZ$123.2 million.

However, SkyCity reported a slight increase of 0.3% in both reported and underlying revenue for the 2023-24 financial year, reaching NZ$959.6 million.

New CEO Jason Walbridge stated in the announcement that the year to June was "a very challenging financial year."

He attributed the challenges to a soft economy, rising costs of living in both New Zealand and Australia, and various regulatory matters.

The company had previously disclosed the one-off items: an AU$86.2 million impairment on the SkyCity Adelaide casino and a NZ$129.6 million tax adjustment following changes in New Zealand tax laws.

In June, the company suspended dividend payments until 2026 and extended its debt through a restructuring.

Mr. Walbridge assumed the role of CEO last month, succeeding Michael Ahearne.

Net debt increased from NZ$444 million in FY23 to NZ$663 million due to the repurchase of the Auckland car park concession and core capital expenditure of NZ$64 million during the year.

The company reaffirmed its FY25 earnings guidance of underlying group EBITDA between NZ$245 million and NZ$265 million and confirmed no dividend.

SkyCity is currently undertaking a major transformation program to mitigate risks and improve compliance with regulatory requirements.

This follows a recent agreement with the Department of Internal Affairs to close the Auckland casino for a week in September due to breaches of its host responsibility program.

An investigation found that a gambler at the Auckland casino spent over nine hours continuously playing poker machines without any interaction with staff and played uninterrupted for several hours on 23 occasions.

As a result, the Auckland casino will be closed from Monday, September 9 to Friday, September 13, although associated restaurants and tourist attractions will remain open.

The company is also preparing for the opening of the New Zealand International Convention Centre, a project that has faced significant challenges for both SkyCity and the contractor, Fletcher Building.

Additionally, the regulation of online casino gambling in New Zealand is forthcoming.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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