SkyCity's full-year result is out. Photo / Peter Meecham
SkyCity Entertainment Group's bottom-line profit fell 33 per cent after lockdowns closed properties in New Zealand and Australia and due one-off boosts in the previous year which had pushed up the numbers.
The Australasian entertainment, hotel and hospitality business declared a net profit after tax of $156.1 million for the year to June 30, 2021, down 33 per cent on last year's $235.4m.
The business, headed by chief executive Michael Ahearne, earned revenue of $951.9m for the latest year, also down 15 per cent on the previous $1.1b.
But SkyCity explained this year's drop by saying: "Reported results are down compared to the previous corresponding period due to accounting impact of the NZICC fire and gain from Auckland car park concession sale."
Normalised net profit after tax, which strips out those unusual one-offs, actually rose from last year's $66.3m to $90.3m.
The company had made "progressive improvement in performance across the period with 2H21 group normalised Ebitda up 10 per cent vs 1h21".
The business said its result was "solid", despite the challenging operating environment. The company had made a successful transition to a new CEO and its Adelaide expansion had been completed on time and on budget.
The NZ International Convention Centre and new Horizon Hotel in Auckland was progressing and the company was responding to the AUSTRAC investigation of the Adelaide casino.
Shareholders have suffered a 30 per cent dividend cut from 10cps to 7cps and at least one was complaining today, saying he had bought as a yield stock.
Ahearne told the Herald today the result "has a huge amount of complexity and that's why we want people to look at normalised rather than actual results. If you look back at 2019, when we were sort of normal, our operational costs are down about 17 per cent on that year.
"But we've also spent $300m in opening Adelaide. That business is actually doing reasonably well. The gaming part has done well but for the non-gaming and bars and restaurants, it's has been a challenging year. It was great to get that open. It's a great new asset and it had a reasonable start. The second half has done reasonably well but that had a lockdown in July."
Ahearne backs the Government's Covid response: "Right now, there's no option but to lock down immediately. That's the only thing that should be done to get us back to the status quo. There's no other choice."
Ahearne is revealed in the annual report also out today to have been paid $1.4m from last November to June 30 as the CEO but as chief financial officer, he got a further $822,256, taking that to $2.2m for the June 30, 2021 year. He also gets more shares.
"The remuneration and benefits under Mr Ahearne's employment agreement for the position of chief executive officer include a base annual salary of $1,500,000 (inclusive of KiwiSaver contributions), an annual allocation of SkyCity shares to the value of $500,000 with a 12-month restrictive period, and an annual allocation under the 2018 SkyCity executive long term incentive plan to the value of $500,000, the first of which grant will take place in September 2021," the report said.
Ex-CEO Graeme Stephens who left suddenly on November 30 is revealed as getting $2.6m for the June 30, 2021 financial year even though he only worked at the company for part of those 12 months.
Stephens also got shares in the June 2021 year worth $876,000, taking all-up benefits to above $3m and the report noted he continues to be eligible to have shares transferred to him.
Adrian Allbon of Jardens described the annual result as a "strong finish to FY21 result in a Covid border restricted context, coming in at top end of pre-guidance and providing board the confidence to restart dividends, notwithstanding current NZ properties closures due to L4 Covid restrictions. We expect investors to take comfort from the board signal on returning to dividends and balance sheet headroom/liquidity. Also useful updates on AUSTRAC investigation and additional disclosure on online."
Auckland electronic gaming machines were up 15 per cent up, Allbon said. Food and beverage remains the key revenue drag at -24 per cent.
No formal earnings guidance had been given, Allbon noted.
SkyCity's Auckland, Hamilton and Queenstown casinos, bars, cafes, restaurants and parts of its hotel operations are all shut under alert level 4.
"The Grand by SkyCity hotel in Auckland remains open to accommodate guests staying in-house, pending further advice from the New Zealand Government," the business said on Friday last week.
On Saturday, a staff member at SkyCity Casino in Auckland tested positive for Covid-19. In an email to staff, the casino wrote: "Late this afternoon Skycity was advised that a staff member in Auckland who was working in our level 3 Platinum Gaming Room between 8.30pm on Friday 13 August and 6am on Saturday 14 August is a confirmed case of Covid-19." SkyCity Casino Auckland was already a location of interest.
SkyCity's Adelaide property is unaffected by the latest restrictions here and remains open with physical distancing and hygiene requirements.
But Adelaide was shut last month, with the company saying it would only reopen after the South Australian Government announced that the seven-day lockdown imposed on July 20 was being lifted.
Last week, SkyCity Entertainment Group agreed to a proposed $2.90/hour pay rise for the lowest-paid employees, from $20.10/hour to $23. Joe Carolan, a Unite organiser, said "hundreds" of staff at the business would benefit and Mike Treen, a union advocate, also welcomed the pay hike.
SkyCity confirmed discussions with E tū union, Unite union and its employees on individual employment agreements about the introduction of the SkyCity sustainable wage.
Around 650 people who were working on the $336m repairs of Auckland's $750m NZ International Convention Centre are offsite under alert level 4. John Salier, project director for the CBD job for Fletcher Construction, said last week the lockdown barred building work on that site.
Fixing the NZICC after the fire two years ago is not deemed essential. Fletcher's first move had been to ensure the site was safe, he said.
SkyCity has a market capitalisation of $2.3b. Shares have been trading on the NZX around $3.10, up nearly 20 per cent or 51c annually and on the ASX, around A$2.99, up from A$2.62 last March and up .6% annually.
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