KEY POINTS:
Sky City Entertainment Group is forecasting a 10 to 12 per cent growth in net profit this year, following an 18.1 per cent fall to $98.4 million for the year to the end of June.
Releasing its annual results and guidance today, the company also said it was prepared to sell its New Zealand cinemas and Adelaide casinos but only if offers exceeded what the company thought the properties were worth.
The forecast released today took account of a gradual recovery of Auckland gaming revenues as the main gaming floor refurbishment was completed and the Auckland business capitalised on the outcome of a peer review.
There would also be savings identified in a cost reduction programme, the company said.
Underpinning all activity was an improved understanding of customers to ensure that Sky City developed and delivered experiences in a way that maximised satisfaction for customers.
Sky City also said today that it had completed a review of assets and would enter into a process to test the sale value of its cinema assets.
The board had emphasised that would not involve a sale at any price and that offers would need to exceed the company's internal view of value for a sale to proceed.
Sky City said its result for the 12 months to the end of June, which compared with $120.1 million in the previous year, was in line with guidance issued in May.
Total revenue was up 6.7 per cent to $816 million.
The company said its underlying net profit after tax was up 7.2 per cent to $89.3m. A number of non-recurring gains and losses in the previous two years had masked the underlying performance of the business.
Executive director Elmar Toime said the company had carried out a comprehensive review and restructure of its business operations and put plans in place to ensure improved performance.
Sky City was on track to deliver cost reductions totalling $33m this year by focusing on labour cost management, procurement initiatives and ensuring a culture of tight cost control, Mr Toime said.
A strategic development plan has been completed for SkyCity Adelaide which had verified the value of that business and established the path for delivering incremental shareholder value from the property.
"Throughout this process, inquiries have been received from a range of parties expressing an interest in the Adelaide property," the company said.
"Given the level of interest being expressed in the company's Adelaide asset, the board considers it owes shareholders the opportunity to realise value should any of these parties wish to proceed to binding offers.
"Any sale of the Adelaide property will only proceed should offers exceed the company's own valuation."
Group earnings before interest, tax, depreciation and amortisation (ebitda) were down 1.3 per cent to $297.2m.
Ebitda for Auckland was down 2.9 per cent to $208.6m, Darwin was up 6.7 per cent to A$35.2m ($40.7m), Adelaide down 9.5 per cent to A$20.9m, and Hamilton up 12.1 per cent to $19.5m.
Cinemas ebitda was up to $13m from $9.9m, but given that Sky City's ownership moved from 50 per cent the previous year to 100 per cent in the latest year, the underlying ebitda performance was down significantly, Sky City said.
The focus would remain firmly on Auckland throughout this year to ensure the investment in the property delivered on expectations.
A peer review of the Auckland gaming performance and strategy had been undertaken and plans put in place to actively address opportunities.
Recruitment of a new chief executive was progressing, with an appointment expected by the end of October. That appointment would then be subject to regulatory approval processes in each of the company's three regulatory jurisdictions.
The company declared a final dividend of 12 cents a share, taking the total for the year to 21c, compared to 26c last year.
Sky City shares were up 15c to $4.35 in late morning trading today.
- NZPA
