Skycity Reports Full-year Results From Challenging Year
Almost every company that closed its annual financial books on June 30, 2020 knew that the numbers would be disappointing. The last quarter would have reflected a revenue decrease of some kind due to all nonessential businesses being closed from April through most of June. This was the case in most parts of the world.
For SkyCity Entertainment, this was particularly true. Gambling companies, especially one like SkyCity with land-based establishments at its core, had to report its last quarter with dramatic revenue drops.
The company’s top executive called the full-year 2019-2020 a “complex and challenging” one. That may be an understatement.
Major Data Points of 2019-2020 Full Year
The coronavirus pandemic hurt SkyCity Entertainment.
- Normalized revenue of NZ$779.5 million (down 24.3% from NZ$1.02 billion)
- Normalized net profit after tax of NZ$66.3 million (down 59.7% from NZ$164.6 million)
- Adjusted EBITDA of NZ$200.7 million (down 37.7% from NZ$322.2 million)
SkyCity wanted to highlight some positive numbers as well.
- Reported revenue from continuing operations = NZ$1.125 billion (up 36.8%)
- Total reported revenue = NZ$1.125 billion (up 24.2%)
- Reported profit from continuing operations = NZ$235.3 million (up 46.3%)
- Reported total net profit = NZ$235.4 million (up 62.8%)
Other positives in the “key features” section of the report included a “strong balance sheet following implementation of funding” and the on-track expansion of SkyCity Adelaide set to open by the end of 2020. SkyCity also believes the company will show resiliency in the domestic gaming business world when properties reopen.
SkyCity Chief Executive Graeme Stephens said the company took a wide range of actions to mitigate the impacts of Covid-19.
“We have rapidly restructured our New Zealand workforce, downsizing it by around 25% to ensure SkyCity is positioned to be sustainable in the short to medium term; we have undertaken a capital raising and debt restructure to ensure that SkyCity has sufficient liquidity and funding capacity; and significant operational effort has been focused on closing and reopening our properties with rigorous health and safety measures in place.”
Stephens added that its New Zealand and Adelaide businesses recovered more quickly than they anticipated after reopenings. In addition, its international business should recover well when borders reopen and travel is safe again.
Benefits of Online Casino Business
Little more than one year ago, SkyCity launched its SkyCityCasino.com website for New Zealand online casino players. It was open for real-money gambling via SkyCity Auckland, which operated the platform, though its base was and remains in Malta.
SkyCity believed that it abided by all New Zealand legal obligations, even using non-traditional methods of advertising so as not to break national laws. While NZ Internal Affairs Minister Tracey Martin was unhappy about the launch and ongoing operations, she had little stable ground upon which to mount an official opposition.
That segment of SkyCity business did quite well during the coronavirus-based shutdowns. With people unable to visit normal gambling establishments in person and many confined to their homes, they took to the SkyCity casino site for entertainment.
Online Casino by the Numbers
The year-end report showed that the site had more than 35,000 customer registrations as of August 31, 2020.
Stephens noted that the online casino business “ramped up significantly from March 2020 and has now grown into a profitable operation despite the very low-key and conservative approach taken in comparison to other offshore online businesses targeting New Zealanders.”
He added that there was a slight dip in online gaming revenue when New Zealand casinos reopened in May 2020, but a subsequent closure took those players back online.
SkyCity also expects its online casino to do better going forward to “deliver a more meaningful contribution” in the next fiscal year. One of the company’s priorities is to grow and diversify the online casino market in New Zealand as opportunities present themselves.
The annual revenue for the online casino was $4.521 million. This was the first year to document that revenue.
SkyCity Projects Underway
One project that has been moving ahead without delay is the SkyCity Adelaide expansion. In fact, the company indicated that it created nearly 1,000 jobs during the ongoing construction phases. Further, it is recruiting approximately 700 employees to work at the property when it reopens.
Stephens noted that the project is still on budget and on time. The goal to open the new luxury hotel and expanded property by the end of 2020 remains on the table.
The Horizon Hotel will likely not open until 2021, though, and the New Zealand International Convention Center (NZICC) project should be complete by 2023.
Even so, Stephens was careful to note that development opportunities “continue to be refined” and major decisions paused as they face the uncertainties of the coronavirus-influenced near future.
Other ongoing goals for SkyCity include going carbon neutral in Australia as was already done in New Zealand, reducing waste to landfills, increasing workplace diversity, and addressing the mental well-being of customers and employees.
On that note, SkyCity is also upping its focus on minimizing gambling harm. By maximizing technological advancements and developing new initiatives aimed at youth, SkyCity plans to continue with these efforts.
