Skycity earnings boost

Skycity Entertainment Group says it is expecting operating earnings and net profit could be 33 per cent up on last year’s after stronger than anticipated recent trading.

The company, listed on the NZX and ASX, made normalised ebitda last year of $200.7m but said yesterday it expects that to rise to $247m to $253m. That would be up 26 per cent if it meets the top of that range.

Normalised net profit after tax last year was $66.3m, but it expects that to come in this year at $84m to $88m – potentially a 33 per cent rise on the June 30, 2020 result.

The company announced a strong performance from its local gaming businesses in New Zealand, particularly from electronic gaming machines and consistent performances from Skycity Adelaide after the December expansion was opened.

The offshore online casino Skycity Malta was also cited for the improvements.

Subject to no property closures before the end of this month, the company expects FY21 group normalised ebitda of between $247m-$253m and FY21 group normalised net profit after tax of between $84m-88m.

“Due to ongoing uncertainty arising from the timing of the New Zealand International Convention Centre/horizon Hotel reinstatement and potential for other accounting adjustments required as part of FY21 results, Skycity cannot provide guidance for reported [statutory] results at this time,” it said.

Based on its earnings guidance for FY21, Skycity expects to comfortably meet its financial covenants for the June 30, 2021 testing period and pay a final dividend during September 2021, consistent with the revised dividend policy announced at the time of its first-half 21 result.

If the mid-point of the guidance range for groupnormalised ebitda of $250m is achieved, it implies around 25 per cent growth compared to last year’s $200.7m.

Growth rates for the 2020 and 2021 financial years would be significantly affected by property closures due to covid-19 here and in Adelaide.

A comparison to FY19 earnings is said by some to be more appropriate, with its implied FY21 group normalised ebitda down about 23 per cent, taking the midpoint of its guidance range again.

The result will be out on August 25.

On Monday, it was announced that the Australian Transaction Reports and Analysis Centre [Austrac] said it had identified potential non-compliance by Skycity Adelaide with the Australian Anti-money Laundering and Counterterrorism Financing Act 2006 and Anti-money Laundering and Counter-terrorism Financing Rules Instrument 2007.

How long that investigation takes is uncertain, but other gaming business and NAB is also under investigation.

Skycity shares have been trading around $3.55 on the NZX and $A3.31 on the ASX.

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