Why SkyCity made a mega profit

SkyCity said Auckland continued to be the standout performer across the entertainment company group, delivering record results. Photo / NZME

Four reasons SkyCity's annual result is so strong:

1 Overseas gamers hitting New Zealand. The business said its international business was one of the main reasons for its huge profit surge and it cited Asian VIPs. It seems the high-roller effect has pushed the business up. "Strong growth in group-wide IB", was SkyCity's shorthand for that trend.

2 A higher international business average actual win rate. The house did particularly well. The win rate rose from 0.97 per cent last year to 1.36 per cent in the year to June. That figure was revealed, along with theoretical win rate of 1.35 per cent.

3 Billion-dollar revenue figure. Put simply, more cash came in to make a profit from. Revenue for the year to June was $1.009 billion, up from $902.5 million the previous year.

4 Auckland, Auckland, Auckland. A while back, the growth seemed to be across the Ditch, with a big Adelaide focus. But that was hit by the refurb. All that building work took a toll on the punters and so SkyCity's Auckland property has been the star attraction. Adelaide was "significantly impacted during FY15 by the refurbishment works that were completed during January 2015", SkyCity said.

International punters boost SkyCity result

Wealthy overseas visitors gambling in New Zealand appear to have boosted SkyCity Entertainment Group's bottom line and it singled out Asian VIPs for special mention in its annual result yesterday.

SkyCity chief executive Nigel Morrison attributed the 30.7 per cent net profit after tax lift to an improved win rate in international business of 1.36 per cent compared with 0.97 per cent last year.

"Growth in international business turnover continues to be underpinned by the success of the expanded sales and marketing team, increased recognition of the Horizon brand and offering, a strong focus on direct relationships with VIP customers and continued growth in the number of Asian VIP customers visiting New Zealand," the business said.

International business delivered record activity during the full year, with turnover increasing to $9.3 billion and normalised earnings before interest, tax, depreciation and amortisation (ebitda) up 35.1 per cent to $26.4 million, SkyCity said.

Revenue for the year cracked the billion-dollar barrier -- $1.009 billion, compared with the previous year's $902.5 million. Net profit after tax of $128.7 million for the year ended June 30 significantly exceeded the $98.5 million the previous year.

But a final dividend of 10c per share remained unchanged during the two-year period.

The result showed while the gaming giant had particularly strong growth in Auckland, it suffered a disappointing performance in Adelaide.

"Auckland continues to be the standout performer across the group, delivering record results, with normalised revenue up 13 per cent and normalised ebitda up 13.7 per cent from $217.9 million to $247.8 million. This growth continues the positive recent momentum across all business segments, with the [Auckland] property now having delivered six consecutive quarters," SkyCity said.

"A strong focus on cost management across the Auckland business ensured solid ebitda margins were maintained, despite mix changes arising from strong relative growth in [international business], local tables and food and beverage. "Going forward, the Auckland property will also benefit from the activation of the NZ International Convention Centre gaming concessions, which are expected to start by the end of 2015 following signing of a binding building works contract for the NZICC," the company said.

"The Adelaide Casino was significantly impacted during FY15 by the refurbishment works [completed] during January 2015. Modest revenue growth was achieved for the year with normalised revenue up 4.8 per cent to A$174.1 million ($194 million) with improving visitation trends emerging post completion of the refurbishment.

"However, margin contraction over the period delivered a disappointing ebitda result overall, down 19.2 per cent to A$27.3 million." SkyCity said.

See the full result here: