Positive results for SKYCITY following strategic investments

13 November 2015

Positive results for SKYCITY following key strategic investments

The strong momentum from the 2015 financial year continues for SKYCITY Entertainment Group, with Chief Executive Nigel Morrison today announcing encouraging results across the company’s properties in New Zealand and Australia.

Speaking ahead of the company’s 21st Annual Meeting, Mr Morrison said SKYCITY was on track to deliver a pleasing first-half result for FY16.

SKYCITY will provide shareholders gathered at the SKYCITY Theatre today with a trading update for the first four months of the FY16 year, to 31 October 2015. Highlights include normalised revenue across the group up 11.1% to $373.2 million and normalised earnings before interest, tax, depreciation and amortisation (EBITDA) up 20.5% to $121.8m.

The results follow a record financial year for SKYCITY, exceeding $1 billion in revenue for the first time in FY15.

Mr Morrison says the pleasing results follow five years of sound planning and solid, strategic investment across the business, including significantly improving offerings for international VIP customers, a strong focus on premium dining experiences and a rejuvenation of main gaming areas across the properties.

“It is pleasing to see the returns from the key investments we’ve made, and we are seeing continued momentum with strong growth across the Group,” he says.

Normalised EBITDA margins across all SKYCITY properties have continued to improve, following a focus on good cost management and leverage from revenue growth.

SKYCITY Auckland, the company’s flagship property, continues to perform strongly, reporting growth across all business segments, with normalised revenues up 6.2% to $209.3m, and normalised EBITDA up 13.6% to $89.6m.

International Business continues to be a winner for the group, with turnover up 50.7% to $4.5 billion, including significant growth in Adelaide over the past four months. SKYCITY’s Queenstown property has also been buoyed by strong IB growth, following investments in that area.

SKYCITY Hamilton is also delivering improved revenues and earnings, with normalised revenue up 11.3% to $18.1m and normalised EBITDA up 27.9% to $7.8m.

Despite a continuation of soft local gaming in Adelaide, the significant IB activity in particular and the success of SKYCITY’s two new signature restaurants, Sean's Kitchen and Madame Hanoi, has helped deliver normalised revenue of A$70.3m – up 24.4% on the previous corresponding period.

Mr Morrison says significant progress has also been made on addressing the cost structure of the Adelaide operations over the past few months, which together with the growth in IB has delivered normalised EBITDA of $A14.7m, up 77.2%.

SKYCITY Darwin continues to experience challenging trading conditions, underpinned by soft hotel occupancy and restaurant and bar revenue. However, International Business growth contributed to a satisfactory overall performance, with normalised revenue up 3.3% to A$52m and normalised EBITDA at A$16.6m, up 7.8%.

On 11 November SKYCITY and Fletcher Construction Ltd formally signed the building works contracts to build the New Zealand International Convention Centre (NZICC) and the Hobson St hotel. With formal Crown sign-off on the agreement, this activates the regulatory concessions granted in return for SKYCITY investing around $700m in this much-needed tourism infrastructure.

“The certainty this provides allows us to invest with confidence, to give back to our communities, and enables us to continue as an employer of choice,’’ says Mr Morrison.

“SKYCITY’s substantial investment in this project is going to significantly benefit Auckland and the wider New Zealand economy, with more than 1,000 jobs in the construction phase and around 1,140 hospitality jobs once the centre is up and running.”

It is expected that the NZICC and Hobson Street Hotel will be completed in the first quarter of 2019, with the official opening taking place in the second quarter.

The major upgrade of the atrium at SKYCITY’s Auckland property is well underway, with the first stage of the $24m programme, which includes a new entry experience to the main gaming floor and a gourmet burger bar, due for completion next month.

Mr Morrison says SKYCITY is also well advanced in finalising the design of the proposed expansion of the Adelaide Casino. Plans for the exterior of the development are well advanced and final submissions have been lodged with the Development Assessment Commissioner in South Australia. The interior layout, design and presentation will be finessed over the next six months.

The final timing on commencement of works is dependent on the finalisation of the site lease with the SA Government and coordination with the Government’s plans for the broader development of the Riverbank precinct. The likely total cost of the project will be around $A300m.

“SKYCITY is continuing to invest in our properties to ensure we provide a unique experience for our customers, ensuring they come back time and time again,’’ Mr Morrison says.

“We are a forward-thinking, dynamic, and innovative business. We can see many exciting opportunities to grow our business going forward and we are focused on delivering exceptional experiences for our customers.

“We are very pleased with the results we have shared today and we look forward to progressing with key projects over the next 12 months,” says Mr Morrison.

ENDS

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