Sky City tax bill up $60m on Budget property change

Sky City Entertainment Group, the casino and hotel company, said the impact of tax changes will be a one-time deferred tax liability adjustment of $60 million and a $2 million increase in income tax payments starting in 2011.

The one-time adjustment doesn't affect Sky City's underlying profitability or cash flows and won't impact on dividend payments, the Auckland-based company said in a statement.

Excluding the tax adjustment, net profit for the year ending June 30 will be $136 million to $140 million, which includes a $10 million one-time gain from the sale of its cinema chain.

That translates into a "normalised" profit of $126 million to $130 million, once one-time items and adjustments to the theoretical win rate at its casinos is taken into account.

Sky City is the latest in a line of companies disclosing the impact of tax changes announced in the Budget.

Shares of Sky City rose 2 cents to $2.86 yesterday and have slipped 16 per cent this year, lagging behind the NZX50 Index's 6 per cent decline.

The shares are rated 'outperform' based on the consensus of nine analyst recommendations compiled by Reuters. Five analysts rate the company a 'buy.'