SkyCity trading update short on financial detail

Thursday 7th of November 2019

SkyCity Entertainment confirmed this morning that it would be unlikely to host any events at its fire-damaged international convention center in 2021. This would include the 2021 APEC summit due to be held in Auckland.

Company Chairman Rob Campbell told an investor audience in Adelaide that “it will be some time before the impact of the fire on the [international convention center] project can be determined.”

The impact of the fire beyond 2021 couldn’t be assessed. The site where the fire broke out on 22 October is now back with the contractor Fletcher Construction who said yesterday that it would provide an update on the impact on its own finances in its half-year results in February next year.

In a trading update given to the Adelaide meeting SkyCity’s CFO Rob Hamilton said the company continued to expect some growth in FY20 Group normalized EBITDA compared to the previous comparable period.

“We are still assessing broader accounting impacts of NZICC fire on reported and normalized NPAT, so we are unable to update Outlook guidance at this time.”

Normalized Group revenue (including International Business) was flat compared with the previous period while domestic revenue was up 1.5 percent. IB turnover at 4 billion was down 10 percent.

Meanwhile, SkyCity’s Chief Executive Graeme Stephens told the Adelaide meeting that the company had until 1 January 2023 to complete the convention center under its current contract with the New Zealand government. He did not say what might happen if that deadline was not achieved.

Mr. Stephens said there had been no change in the contractual position with Fletcher Construction. Both were committed to completing the project on time.

SkyCity and Fletcher have said repeatedly that they are each fully insured with reputable international companies including public liability and third party cover.

Mr. Stephens added that he “did not expect any material change to the previous guidance for the total project costs,” implying that any extra costs would be fully recovered.

In other developments, the company announced it had signed up 1,500 subscribers to its new online gaming facility operated out of Malta.

The redevelopment of its Adelaide hotel and casino complex was on time and to budget and would be ready for the T20 Cricket World Cup in September 2020 which has seven games including a semi-final scheduled for Adelaide.

The company noted that it would take three to four years to reach its full earnings potential.

On the company’s overall prospects, Chief Financial Officer Rob Hamilton said total shareholder returns had been flat over the last five years but these would improve over the next five years as capital projects were completed and contributed to earnings.

Shares in SkyCity traded three cents down this morning while Fletcher Building added two cents, both on very small volumes.