Were it not for the growing one-off costs relating to SkyCity’s embattled Adelaide casino, the group would have recorded a $127 million profit in FY23.

Though the full year reported profit was just a small fraction of the $856 million the company raked in during the year in revenue, it was up significantly on last year’s $33.1 million reported loss.

The company’s results were released today following SkyCity’s announcement last week that it would put $45 million aside to cover potential penalties from a federal inquiry into alleged breaches of money-laundering laws.

The allegations against SkyCity Adelaide include claims that the North Terrace casino made $74 million from “high-risk” customers and that the casino engaged in “serious and systemic” non-compliance with anti-money laundering and counter-terrorism financing laws.

Also announced last week, SkyCity recognised a further $45.6 million as an impairment on the Adelaide casino licence following a review of the property.

These mounting costs combined with NZ$12.3 million (AUD$11.4) spent to repair damage from a 2019 fire at the company’s New Zealand International Convention Centre and other one-off costs slammed the final profit for the Auckland-based group.

Overall reported earnings before interest and tax were approximately $70 million in FY23 – a 3204 per cent increase.

At its Adelaide casino, total revenue was up 28.5 per cent to $204 million while SA earnings bounced back from FY22’s $9.2 million outflow to be positive at $3.8 million.

SkyCity says it was a “complex and challenging” year for the Adelaide casino, but was buoyed by strong gaming machine revenue performance and full-capacity conventions and events for the first time since the property expanded in December 2020.

However, wage inflation and low unemployment meant higher labour costs for the gambling multi-national, while costs incurred from responses to both the AUSTRAC and currently-on-hold SA Government reviews of the local casino licence totalled approximately $8 million.

In a joint statement, the company’s chair and CEO said the regulatory action was not just a financial headache, but was keeping people away from the casino.

“SkyCity Adelaide’s performance was significantly impacted by the ongoing regulatory matters and focus, which impacted visitation and resulted in significant operating costs,” chair Julian Cook and CEO Michael Ahearne said in the statement.

Overall, the pair were pleased with the performance of the group.

“The 2023 financial year was marked by the recovery of SkyCity’s core operations with the group’s operating earnings exceeding pre COVID-19 levels on a like-for-like basis,” the chair and CEO said.

“This result was achieved against the backdrop of a weaker macroeconomic environment in New Zealand and Australia due to the impact of higher interest rates inflationary pressures and recovery immigration.

“The strong performance of our operating businesses is testament to their underlying quality.”

The leaders said regulatory issues “continued to occupy a considerable amount of board and management focus”.

“We recognise the importance of retaining our social licence to operate and are committed to upholding standards commensurate with this,” they said.

“It is harder for some customers to qualify to play in our premises and some forms of business are no longer undertaken, such as junket play.

“This has impacted revenue in some segments of the business although the ongoing steady growth of the mass market segments has offset this.”

Total debt as of 30 June 2023 was $410 million, and the company declared a 6 cents per share dividend for the year.

Looking forward, the company says a lift in visitation and spend in its non-gaming business in Auckland has continued into the current financial year, spurred on by the 2023 FIFA Women’s World Cup tournament in July and August.

Continued recovery in tourism is also keeping Cook and Ahearne optimistic, but they note it “could be offset by continued inflationary pressures, some one-off project costs, and further investment in risk and AML/CTF capability”.

“Additionally, initiatives that we have recently implemented and are continuing to execute in FY24 should support our future earnings growth and mitigate some of the cost pressures,” the pair said.

“A good example of these initiatives is a recent restructuring of the cost base at Adelaide to ensure that the business is more aligned with its future focus.

“Provided there are no material changes to the operational environments and trading conditions, normalised group EBITDA in the current financial year is expected to be modestly higher than for the 2023 financial year.”