SkyCity Entertainment Group, a leading entertainment and hospitality company in New Zealand, has reported a net loss after tax of NZ$143.3 million (US$88.3 million) for the fiscal year ending 30 June 2024. This significant loss was primarily driven by impairments related to its Adelaide assets and a substantial hit from changes in New Zealand tax legislation. Despite these setbacks, the company remains focused on its strategic initiatives to improve customer experience and enhance regulatory compliance.
Impact of Impairments and Tax Legislation
The substantial net loss reported by SkyCity is a direct result of two major financial impacts. The first is an impairment of AU$86.2 million (US$57.5 million) on its Adelaide assets. This impairment reflects the challenging economic environment and the company’s ongoing efforts to align its asset valuations with current market conditions. The second major impact is a NZ$129.6 million (US$78.4 million) charge resulting from recent changes to New Zealand’s tax legislation, which have negatively affected SkyCity’s financial performance.
Despite these impairments and tax-related charges, SkyCity’s underlying or luck-adjusted results show a relatively stable performance. The company reported a slight increase in underlying group-wide revenue, up 0.3% year-on-year to NZ$959.6 million (US$591 million). However, underlying EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell by 8% to NZ$277.8 million (US$171 million), indicating some operational challenges but also resilience in the face of a tough economic climate.
Financial Performance Highlights
SkyCity’s financial results for the year reflect both challenges and steady underlying business activity. Reported revenue grew by 0.3% to NZ$928.5 million (US$572 million), demonstrating consistent customer engagement across its properties. However, reported EBITDA saw a more significant decline, falling by 16.7% to NZ$138.2 million (US$85.1 million). This drop was mainly attributed to what the company described as a “difficult operating environment” and the impact of “significant accounting adjustments.”
SkyCity CEO Jason Walbridge commented on these results, acknowledging the challenging year but expressing optimism about the company’s future. “The earnings we have announced today are a solid result despite the economic circumstances,” he said. “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.”
Navigating Economic and Regulatory Challenges
The past financial year has been particularly challenging for SkyCity, marked by a combination of economic pressures and regulatory issues. Both New Zealand and Adelaide have been affected by a soft economy, coupled with rising cost-of-living pressures that have impacted consumer spending. This economic backdrop has led to a decrease in the average spend per customer, even as overall visitation numbers have remained steady.
In addition to economic challenges, SkyCity has faced a complex regulatory environment, requiring significant management attention and resources. Over the past 12 months, the company has reached settlements with regulatory bodies in both Australia and New Zealand over historic non-compliance with anti-money laundering and counter-financing of terrorism laws. While the settlement with Australia’s AUSTRAC has been finalized, the agreement with New Zealand’s Department of Internal Affairs (DIA) is still awaiting final court approval.
Focus on Compliance and Transformation
In response to these regulatory challenges, SkyCity has embarked on a comprehensive transformation programme aimed at enhancing its compliance capabilities and operational resilience. This includes a significant uplift programme designed to address gaps in regulatory compliance and to build a stronger framework for future operations.
Walbridge emphasized the importance of these initiatives, noting that while progress has been made, the company recognizes there is still more work to be done. “Progressing the various regulatory matters this year has been a positive step forward for us,” he explained. “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.”
Looking Ahead: Strategic Initiatives and Future Plans
As part of its forward-looking strategy, SkyCity is focused on several key initiatives aimed at improving customer experience, ensuring regulatory compliance, and positioning the company for sustainable growth. One of the most significant changes on the horizon is the introduction of 100% carded play across all its casinos. This initiative, set to be implemented in New Zealand by July 2025 and in Adelaide by early 2026, will require all customers to use a card when gaming, enhancing the company’s ability to monitor and manage customer activity effectively.
The introduction of 100% carded play is seen as a crucial step in SkyCity’s commitment to responsible gaming and customer care. By requiring all gaming activities to be tracked through a card system, the company aims to provide better support to customers, ensuring that they can enjoy their gaming experience while also having the tools to manage their play responsibly. “Once implemented, carded play will be the only way to game at SkyCity,” Walbridge noted. “This will help us and our customers monitor their play and identify when breaks are needed.”
Enhancing Customer Experience
Beyond compliance and regulatory matters, SkyCity continues to prioritize enhancing the customer experience across its properties. The company is investing in new and innovative entertainment options to attract a diverse customer base and ensure that SkyCity remains a leading entertainment destination in the region. This includes the introduction of new gaming experiences, dining options, and events designed to appeal to both local and international visitors.
Walbridge highlighted the importance of these initiatives in maintaining SkyCity’s competitive edge. “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,” he said. “We are continuing to focus on new and innovative experiences so that customers see SkyCity as an attractive entertainment destination that delivers great outcomes.”
SkyCity’s financial results for the year ending 30 June 2024 reflect a company navigating a complex landscape of economic pressures, regulatory challenges, and significant financial impairments. Despite these obstacles, SkyCity’s underlying business performance remains relatively steady, and the company is actively pursuing strategic initiatives aimed at enhancing compliance, customer care, and overall operational resilience.