InDaily InDaily

Support independent Journalism Donate Subscribe
Support independent journalism

Business

Adelaide punters prop up SkyCity amid NZ shutdowns

Business

New Zealand-based casino operator SkyCity Entertainment Group has posted a net loss of $31.3 million for the six months to the end of 2021, with its Adelaide business the only one of its four sites to grow revenue for the period.

Print article

Months of lockdowns in New Zealand have caused the company’s net profit after tax to tumble more than $100 million from $72 million in the first half of FY21.

The group’s reported revenue fell from $417 million ($NZ450 million) in H1 FY21 to $268 million ($NZ290 million) in the six months to December 31 last year.

The Adelaide casino – its only Australian operation – was closed for eight days during July 2021 but still managed to increase revenue by 3.7 per cent for the period to $92.8 million.

The casino reported revenue of $89.5 million in H1 FY21 when it was also subject to a short closure in November 2020.

At its biggest casino in Auckland, SkyCity’s revenue almost halved to $110 million after it was forced to close for 107 days from late August until early December.

Its other NZ casinos in Hamilton and Queensland closed for 65 and 22 days respectively, resulting in a combined revenue fall of more than $12 million.

The figures for the past two years in Adelaide are still significantly ahead of the $72 million in revenue generated in the six months to December 2019, before the completion of a $330 million expansion in late 2020.

The expansion includes new gaming spaces, bars, restaurants and the luxury 120-room EoS hotel.

Adelaide’s earnings before interest, taxes, depreciation and amortisation (EBITDA) for the six months to December 31 was $10.8 million, down from $23.9 million the previous year.

However, the H1 FY21 figure included $13 million of JobKeeper payments from the Australian Government.

Revenue from gaming machines was up 33 per cent to $34.4 million while table revenue fell 5 per cent to $36.1 million.

Non-gaming revenue was down 12 per cent to $22.3 million.

SkyCity Group chief executive officer Michael Ahearne said COVID-19 continued to extensively impact the business at each of its properties in the first half of the financial year.

“When permitted to reopen, the properties have operated under significant constraints due to restrictions on mass gatherings and physical distancing requirements and I’m extremely proud of how the SkyCity team has adapted to those challenges,” he said.

“SkyCity Adelaide operated with significant capacity limits, CBD disruptions and workforce disruptions due to COVID-19.

“We’ve enacted a flexible operating model across the group, adjusting when necessary to prepare for COVID-19 disruptions, and we’ve mandated vaccination certificates across all our properties in order to keep our staff and customers safe.

“Performance is expected to improve as restrictions are relaxed, interstate borders progressively open and international tourists are welcomed back to Australia.”

Meanwhile, an investigation into the Adelaide casino by the Federal Government agency responsible for detecting money laundering and criminal abuse of the financial system is ongoing.

AUSTRAC’s Regulatory Operations Team reported last June it had identified potential serious non-compliance by SkyCity Adelaide with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act and Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument.

The concerns were identified in the course of an AUSTRAC compliance assessment, which began in September 2019.

The formal investigation is focusing on SkyCity Adelaide’s management of customers identified as high risk and politically exposed persons between July 1, 2015, and June 30, 2016, and from July 1, 2018, to June 30, 2019.

“AUSTRAC has made it clear that it has not made a decision regarding the appropriate regulatory response that it may apply to SkyCity Adelaide, including whether or not enforcement action will be taken,” said in yesterday’s half-year report.

“If any civil penalty action is taken, this could result in a financial penalty, however, SkyCity Adelaide considers that it is not yet possible to reliably estimate a potential financial penalty and accordingly no provision has been raised in respect to these matters.”

SkyCity shares lost more than 3 per cent following yesterday’s announcement to close at $2.70 to leave it with a market capitalisation of $2.11 billion.

Make a comment View comment guidelines

Local News Matters

Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.

Donate today
Powered by PressPatron

More Business stories

Loading next article