SkyCity Entertainment Group reported that revenue for the financial year ending 30 June 2024 was flat year-over-year despite a “challenging operating environment”.
In reflection of the financials, CEO Jason Walbridge noted that he is “confident” that the operator is “set up to build” into the future. The operator also reiterated its earnings guidance for FY2025.
‘Challenging operating environment’ results in flat revenue
Publishing its FY24 results, SkyCity declared that underlying revenue, including gaming GST, was NZ$959.6m, flat when compared to the previous year (2023: $957.1m).
The operator noted that revenue was impacted by “reductions in gaming revenue were offset by higher levels of premium table play and non-gaming revenue”. Reported gaming revenue stood at $638.3m.
This resulted in an 8% decline in underlying group EBITDA to $277.8m (2023: $301.8m).
Net profit after tax stood at $123.2m at the end of the reporting period, down 7.2% YoY (2023: $132.8m) “reflecting the impact of the lower earnings” as “depreciation and amortisation, funding costs and tax paid on underlying earnings” were all consistent with last year.
Total reported revenue for SkyCity in FY2024 stood at NZ$928.5m, flat compared to the previous year (2023: $926.2m), while reported revenue from continuing operations was the same figure and flat YoY, resulting in a reported EBITDA of $138.2m, down 16.7% (2023: $165.9m) “due to the difficult operating environment and the impact of the significant accounting adjustments”.
Underlying gaming revenue was $727.7m, down 2.9% YoY (2023: $749.7m), while non-gaming revenue rose by 11.8% to $231.8m (2023: $207.4m).
Gaming machine revenue fell by 5.1% to $453.2m (2023: $477.4m), table game revenue dropped by 2.4% to $225.6m (2023: $231.3m), premium table revenue improved by 53.6% to $39.5m (2023: $25.7m) and online gaming revenue decreased by 39.2% to $9.3m (2023: $15.4m).
“SkyCity is coming off a very challenging financial year, with the combination of the soft economy, cost-of-living pressures in both New Zealand and Adelaide, and responding to various regulatory matters.”
SkyCity Entertainment Group CEO Jason Walbridge
Reported loss from continuing operations and total net loss for SkyCity was $143.3m, down significantly from the previous year (2023: $8m profit).
The net loss was due to several “significant accounting adjustments, including a $94.3m (A$86.2m) impairment of the SkyCity Adelaide assets and a tax adjustment of $129.6m following changes to New Zealand tax legislation”.
However, SkyCity has reported the “successful early refinance in August 2024 of selected tranches of debt maturing in 2025 and 2026, including a new issue of US$150m of USPP notes (seven-year tenure) and $217.5m of extended syndicated bank facility tranches”.
Walbridge stated: “The earnings we have announced today are a solid result despite the economic circumstances. I am confident SkyCity is set up to build on our amazing business, with a number of important and exciting milestones coming down the pipeline in the next 12 months.
“SkyCity is coming off a very challenging financial year, with the combination of the soft economy, cost-of-living pressures in both New Zealand and Adelaide, and responding to various regulatory matters.”
SkyCity’s net debt for FY24 stood at $663m (2023: $443m) due to “the buy-back of the Auckland car park concession and core capital expenditure during the year of $64m”.
The operator added that it has undrawn debt facilities of $252m and it “remains comfortably within its debt covenant ratios”.
“The recently announced refinance of $217.5m of syndicated bank revolving credit facilities and a new issue of US$150m of United States Private Placement notes, extends the maturity profile of SkyCity’s debt and support ongoing investment in the business,” the operator said.
Property performance
Walbridge also commented on SkyCity’s visitation numbers, in which it had seven million visitors across all four of its sites in FY24 and nearly 490,000 visitors going up the Sky Tower.
However, the spend per customer has fallen, which the CEO says is due to the economic environment.
Revenue per property, SkyCity Auckland improved by 4.1% YoY to $608.3m (2023: $584.1m), Hamilton dropped by 2% to $73.4m (2023: $74.9m), Queenstown grew by 3.9% to $13.6m (2023: $13.1m) and Adelaide decreased by 4.2% to $234.7m (2023: $245.1m).
“While we are continuing to see good visitation numbers across our properties as a whole, the spend per customer has decreased, reflecting the harder economic times everyone is facing,” commented Walbridge.
“We are continuing to focus on new and innovative experiences so that customers see SkyCity as an attractive entertainment destination that delivers great outcomes.”
Walbridge mentioned the settlements SkyCity had reached with various regulators across the year, including with AUSTRAC in Australia and the Department of Internal Affairs (DIA) in New Zealand regarding “historic non-compliance with relevant anti-money laundering and counter-financing of terrorism laws”.
“Progressing the various regulatory matters this year has been a positive step forward for us. That said, there is still more work for us to do as we have not met our own expectations to date.”
SkyCity Entertainment Group CEO Jason Walbridge
The operator has also agreed to temporarily close its Auckland casino gaming areas for five days in September as part of an agreement with the DIA for “historic non-compliance with obligations under its Auckland Host Responsibility Programme”.
In Adelaide, Consumer and Business Services recommenced its independent review into SkyCity Adelaide in June 2024 following the settlement of the AUSTRAC civil proceedings. By 31 December 2024, Brian Martin KC is due to report his findings to the regulator.
Mandatory carded play will also be implemented across all SkyCity casinos in FY26, with New Zealand in July 2025 followed by Adelaide in early 2026, helping the operator manage customers’ duration of play and identify when breaks are needed.
Walbridge noted: “Progressing the various regulatory matters this year has been a positive step forward for us. That said, there is still more work for us to do as we have not met our own expectations to date.
“Our uplift programmes are our priority, and we now have a significant Transformation Programme underway with a focus on building capability to ensure compliance with our regulatory requirements. Caring for our customers will continue to be at the heart of what we do.
“A key milestone in customer care and experience will begin next year with the introduction of 100% carded play across our New Zealand casinos by July 2025 and at the SkyCity Adelaide casino by early 2026. Once implemented, carded play will be the only way to game at SkyCity. This will help us and our customers monitor their play and identify when breaks are needed.”
Outlook
Looking ahead, SkyCity noted that its FY25 earnings guidance remains the same as provided in July – underlying group EBITDA of between $245m and $265m and no dividend expected.
The operator added that it continues its work on two other key projects – the New Zealand International Convention Centre (NZICC) and online casino gambling regulation in New Zealand.
Walbridge said: “It was a pleasure to open Horizon by SkyCity last month. It really showed what a treat we are in for with the New Zealand International Convention Centre. The NZICC will not only be a building that brings the world to us but also a stunning piece of architecture that will showcase the best of Aotearoa to the world.
“And as the New Zealand Government continues to work on online casino gambling regulation, we are enhancing our internal capabilities in preparation for a regulated market.
“We need to be mindful about the regulation of online casino gambling. Allowing too many providers could lead to an overwhelming level of gambling advertising in New Zealand. We already see that now. We want to see providers who have skin in the game in New Zealand and are committed to the public health-based approach we take to gambling.
“There is a lot going on over the next 12 months. It is going to be all about continuing to build our business, both metaphorically and literally.”