SkyCity Interim Results (for the six months to 31 December 2019)
SkyCity announces interim results for the first half of FY20
SkyCity Entertainment Group Limited (NZX/ASX:SKC) today announced its interim results for the six months to 31 December 2019. Whilst complex, the results reflect an underlying positive performance from the New Zealand businesses and a satisfactory performance from Adelaide, offset by a weaker performance from the International Business (IB).
Reported results are significantly higher than the normalised results due to the accounting impact of the NZICC fire and Auckland car park concession sale. A number of adjustments have been made to establish normalised results and like-for-like earnings comparisons for the Group and its properties.
Key Features of 1H20 Results
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· Reported EBITDA of $407.5m (up 175% vs. pcp) and normalised EBITDA of $153.3m (down 10.7% vs. pcp)
· Reported NPAT of $328.0m (up 296% vs. pcp) and normalised NPAT of $75.0m (down 16.4% vs. pcp)
· Estimate that Group normalised EBITDA and NPAT would have been around $155m and $81m, respectively, if the NZICC fire had not occurred
· Fully-imputed 10cps interim dividend declared
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Commenting on the results, Chief Executive Officer Graeme Stephens says looking through the complexity, the core New Zealand businesses have slightly exceeded expectations in 1H20, but this has been offset by a significantly weaker IB performance.
“Overall at the half year, our underlying performance is broadly in line with the guidance we provided at the beginning of the year,” Mr Stephens says.
At a property level, Auckland EBITDA is up around 4% on a like-for-like basis, and Hamilton and Queenstown both delivered double-digit EBITDA growth on a like-for-like basis. Adelaide had a satisfactory performance with a weak first quarter offset by a stronger second quarter.
SkyCity has declared a fully imputed, 10cps interim dividend, consistent with the existing dividend policy, and representing a 5.6% cash yield (at current share price).
“We believe this is an attractive yield in the current low interest rate environment and relative to industry peers,” Mr Stephens says.
“We have been closely monitoring the coronavirus outbreak. There have been no significant impacts evident for our domestic businesses over the past three weeks, though there has been a negative impact on IB over the Chinese New Year period and some planned visits from key customers have been postponed or cancelled.
“It is too early and uncertain to estimate any future financial impacts – but based on past precedent, we expect any impact to be temporary. Fortunately, IB typically represents around only 10% of our Group EBITDA.
“Turning to the outlook for FY20, given the weaker outlook for IB in the second half, we expect to be slightly below the previous EBITDA guidance for the full year.”
Strategic Initiatives
Regarding the fire at the New Zealand International Convention Centre (NZICC), Fletcher Construction is expected to provide SkyCity with a full reinstatement plan by the end of February. We have recently been advised there will be material delays to the completion of the construction, and hence the project is unlikely to be delivered in 2021.
Mr Stephens says it is incredibly disappointing that in light of this information, it now seems certain that APEC will be unable to be hosted at the NZICC. SkyCity continues to work closely with Fletcher Construction to bring this iconic project to completion as soon as possible.
SkyCity remains comfortable with its contractual position on the project and is not anticipating any material change to previous guidance for total project costs.
The Adelaide Expansion is progressing well for an October 2020 opening. The project remains within its A$330 million budget and will be a world-class facility once completed.
In early August 2019 SkyCity launched the SkyCity Online Casino for New Zealand customers via a Maltese subsidiary, in partnership with Gaming Innovation Group Inc, a leading European based online gaming platform provider.
The business has seen encouraging customer interest during the first six months, with around 3,500 sign-ups to date and sequential growth month-on-month since launch.
Our investments into the Auckland precinct are progressing well with a make-over of our VIP gaming facilities due to complete in a few months and the All Blacks Experience and Make Believe – A Weta Workshop Experience due to open in the second half of 2020. “SkyCity is privileged to be partnering with these two iconic global brands which, together with the Sky Tower, will create a must-see entertainment destination in Auckland,” Mr Stephens says.
Please refer to SkyCity’s interim financial statements and 1H20 investor presentation for more information.
A full copy of this year’s financial results is available here
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