In the first half of the financial year 2019, SkyCity Entertainment Group recorded a profit spike. However, it seems there is more to those figures than the public was made to believe. On Wednesday, figures for the second half of the financial year 2019 were released and from the analysis, the entertainment company seems to be sailing pretty well.
But from a closer look into the details in the reports, some casino centric news websites, including the CalvinAyre.com and others have given a comprehensive report that seems to suggest otherwise.
Initially, the figures showed that SkyCity revenue in the last six months of 2019 was at $465.4 million, more than 75% higher than the second half of 2018. Earnings doubled to NZ$407.5 million while the profit after tax quadrupled to NZ$328 million.
Now here is what is raising questions to the authenticity of these numbers. SkyCity sold its car park concession in Auckland for NZ$220 million and also received NA$226 million from insurance companies following a fire that blazed its NZ International Convention Centre in Auckland.
With all these factors put into consideration, SkyCity’s Asian VIP gambling –aka International Business- did not do so well. In fact, it’s more accurate to say the revenue went down by 7.9% to NZ$491 million, earnings reduced by 10.7% to NZ$153.3 million while the net profit after tax declined by 16.45 to NZ$75 million. The sale of SkyCity’s Darwin Casino was not factored in.
With the exclusion of the IB data, the Auckland casino did fairly, in view of the disruption of business by the fire. Revenue was flat at NZ$305.6 million while the earnings were at NZ$137.4 million. Revenue from SkyCity’s smaller venues, Hamilton and Queenstown, was up by 8% while revenue from the casino in Adelaide was flat at AU$77.4 million.
IB operations almost entirely involve the Auckland casino. According to SkyCity, IB business was weaker due to key customers playing less, causing the IB turnover to fall by 40% to NZ$4.6 billion. IB earnings went down by nearly two thirds to NZ$8.2 million.
Things under the IB would have been worse was it not for the IB win rate of 1.43% against the theoretical 1.35% win rate. Besides, SkyCity still continues to be conservative when giving credit, therefore they have fewer incidences of bad VIP debts. Auckland casino is working to upgrade its VIP/premium facilities. The work is expected to be done by the latest May.
Concerning the coronavirus epidemic, SkyCity CEO, Graeme Stephens said it was still too early to make a comment. However, they expect that any impact will be temporary.
The Auckland convention center plus the Horizon Hotel next door, are expected to be completed by 1 January 2023. However, the fire caused a major disruption, which the company would use as a reason to get an extension from the government for completion of the project. Its other project is the Malta-licensed online casino, which the company says has experienced a growth in registration of new users, currently standing at 3,500. However, the business still remains immaterial.