First look inside $703m NZ International Convention Centre. Video / Michael Craig
Casino, restaurant and hotel business Sky City Entertainment has posted a 14.7 per cent drop in net profit from $169.5 million last year to $144.6m this year.
Normalised profit rose 1.6 per cent to $173m, according to the result for the year to June 30.
The company uses the "normalised" figure to adjust for the theoretical "win rate" in its international gambling business. It also takes into account the impact of the sale of the company's Darwin operations, a gain on the sale of its Federal Street car park in Auckland and other unusual items.
Normalised revenue rose 1.6 per cent to $1.12 billion with normalised earnings before interest, tax, depreciation and amortisation up 1.3 per cent at $342.7m – in line with expectations.
The company will pay a final dividend of 10c a share, the same as last year.
Chief executive Graeme Stephens highlighted SkyCity's sale of its Darwin property, extra tax due to a law change as hitting the bottom line.
"So at a normalised level, we're about 7.5 per cent up if you take Darwin out and if we didn't have that extra tax."
On the NZICC, Stephens indicated some potential date change, pointing out the business was now officially stating completion as potentially being in late 2020 "but we don't know. There's no doubt the building is progressing and you have seen that but trying to get it down to the month is still challenging."
SkyCity Entertainment Group chief executive Graeme Stephens. Photo / Jason Oxenham
SkyCity had previously indicated October but Stephens today backed away from naming that exact month.
In fact, the first major events might not be staged there till early 2021, he said today.
"We have not made final commitments to conferences in October and November [next year]," he said. "If you don't do October or November, it's quite naturally in December and January. So then it would be February when we have a greater degree of confidence. None of the conferences are confirmed but we're in discussions with organisers," he said.
SkyCity is flush with cash, having sold its Darwin property for $188m, its Auckland underground carparks for $220m and a Federal St carpark near its headquarters "so that's $450m."
Top-floor Horizon Hotel view over Auckland. Photo / Michael Craig
But the $220m carpark sale funds are not in this result, the proceeds of that sale only due shortly so appearing in the 2020 annual result.
Asked what plans SkyCity had for that $450m, Stephens said: "We have been doing is a share buyback. We don't need all that money today and we are lowly geared. We have not made any big commitments to new projects outside the convention centre, so we're under-geared but we are also taking note of the environment we're in and it looks like it might be a bit more challenging. We're being conservative but keeping monitoring that position."
The New Zealand International Convention Centre. Photo / Michael Craig
Stephens refused to release room numbers or project cost of the lake-side Queenstown project, saying the business had commissioned architectural plans and feasibility studies and would not release any specifics for a few months.
"It will be a hotel but calling it a casino isn't right. That's the wrong description. It will be a hotel with some high-end gaming for our international VIP clientele only, not a public [gaming] facility."
Fletcher CEO Ross Taylor and SkyCity CEO Graeme Stephens. Photo / Michael Craig
Regulatory approvals would be required for SkyCity to have any gaming activities at its new property, he said, indicating its existing wharf casino would remain open to the public so two separate properties would be operated in Queenstown.
As for a planned new major apartment/hotel tower on Federal St where SkyCity's headquarters are now, opposite the main casino entrance, Stephens indicated that project could be some time away and no work was planned in the immediate future.
SkyCity claims to be "New Zealand's largest tourism, leisure and entertainment company", listed here and on the ASX, one of three listed casino operators in Australasia with Auckland, Hamilton, Queenstown and Adelaide properties.
The company recently launched an online gaming site - skycitycasino.com - as it adapts to the changing gambling environment.
The convention centre will open, alongside SkyCity's new 300-room, 5-star Horizon Hotel, which at one stage it considered selling but instead sold carparks on Federal St near its headquarters and beneath its Auckland property.
In Adelaide, SkyCity has an A$330m expansion project underway, developing a 123-suite hotel, new entertainment areas and gaming facilities.
SkyCity's goals are to improve its operating performance, optimise its existing portfolio; and to grow and diversify its business.
