SkyCity announces interim results for the first half of FY21

SkyCity Entertainment Group Limited (NZX/ASX:SKC) (SkyCity) today announced its interim results for the six months to 31 December 2020.

In a challenging operating period with ongoing COVID-19 disruption, SkyCity has delivered a mixed financial result led by resilient local gaming performance and by managing the negative impact on tourism-related businesses.

The reported results have again been impacted by the New Zealand International Convention Centre (NZICC) fire and also recognise liquidated damages on the NZICC/Horizon Hotel project.

SkyCity has implemented a number of senior leadership changes following the retirement of Chief Executive Officer, Graeme Stephens, on 30 November 2021. Michael Ahearne has been appointed Chief Executive Officer, Callum Mallett has been appointed Chief Operating Officer – New Zealand, David Christian has been appointed Chief Operating Officer – Australia and Matthew Ballesty has been appointed Chief Casino Officer. SkyCity is pleased to announce today, the appointment of Julie Amey as Chief Financial Officer, effective 1 May 2021.

Key Features of 1H21 Results

• Reported EBITDA of $152.6m (down 62.6% vs. pcp) and normalised EBITDA of $119.9m (down 21.8% vs. pcp)

• Reported NPAT of $78.4m (down 76.1% vs. pcp) and normalised NPAT of $43.7m (down 41.7% vs. pcp)

• Progressive improvements in performance across the period, with local gaming proving resilient but international gaming and non-gaming businesses still disrupted by COVID-19

• Performing better than expected prior to the recent closure in Auckland, but no change to previous guidance for FY21 − outlook remains uncertain and subject to change

• Strong balance sheet and financial flexibility, but no interim dividend to be paid due to ongoing reliance on covenant waivers/relief – expect to pay a final dividend for FY21 assuming no prolonged property closures

Commenting on the results, Chief Executive Officer Michael Ahearne says SkyCity has been significantly impacted by COVID-19 disruption, and as such the business has delivered a mixed financial performance given the challenging operating environment.

“Our local gaming performance has demonstrated resilience in the first half whilst our tourism-related businesses including hotels, food and beverage and international business, have been significantly impacted,” Mr Ahearne says.

At a property level, Auckland delivered resilient local gaming activity, but this was offset by non-gaming performance being significantly impacted by COVID-19. Hamilton and Queenstown have each delivered double-digit EBITDA growth led by local gaming and cost management initiatives respectively. Adelaide’s performance prior to expansion opening was impacted by COVID-19 disruption with performance since opening the new facilities significantly improved across all activities. The performance of the New Zealand Online Casino business has exceeded expectations with significant growth in revenue and EBITDA, despite operational constraints.

“We have been making operational adjustments to the business when necessary in response to the ever-changing market environment resulting from COVID-19 and we continue to adhere to all government guidance to ensure our staff and customers are managed safely,” Mr Ahearne says.

Strategic Initiatives

Reinstatement works at the New Zealand International Convention Centre and Horizon Hotel are progressing, though slower than expected. The Horizon Hotel is expected to be completed in the first half of 2022 and the NZICC by the end of 2023. It is expected that around 500 carparks damaged in the fire in October 2019 will be reinstated during 2021.

Several pre-fire claims, primarily relating to scope/design, were settled with Fletcher Construction in 2Q21. SkyCity remains comfortable with its contractual position on the project and is not anticipating any material change to previous guidance for total project costs.

“Whilst the delays are disappointing, SkyCity continues to work closely with Fletcher Construction to bring the project to completion as soon as possible,” Mr Ahearne says.

The Adelaide Expansion opened on time and on budget. This world-class facility is experiencing positive trading across all business activities since opening in late 2020.

The SkyCity Online Casino which launched in August 2019 for New Zealand customers via a Maltese subsidiary, in partnership with Gaming Innovation Group Inc, has seen positive customer interest during the first six months of FY21, with around 30,000 active customers with a broad geographic spread across New Zealand. The online casino business continues to trade consistently and presents a significant long-term growth opportunity with potential to monetise omnichannel gaming in the future, subject to regulation of the online casino market in New Zealand.

The Auckland precinct has opened its new VIP gaming facilities on levels 8 and 9 and has welcomed the arrival of the All Blacks Experience and Weta Unleashed attractions which opened in the second half of 2020. “These world-class attractions are valuable additions to SkyCity Auckland and, along with the Sky Tower, are bringing new domestic visitors to the precinct,” Mr Ahearne says.

“Turning to the outlook for FY21, we will continue to focus on navigating through the uncertainty presented by COVID-19 (including Alert Level 3 settings in Auckland this week) whilst delivering our medium-term strategic plan including leveraging our new assets such as the Adelaide expansion and Auckland VIP gaming facilities,” Mr Ahearne says.

Please refer to SkyCity’s interim financial statements and 1H21 investor presentation for more information.