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Highlights
- SkyCity witnessed a challenging first half of FY22 due to COVID-19-induced disruptions.
- SKC wants to focus on maximising the value of exclusive casino licences and growing cash flows.
- Sky expects its NZ tourism-related business is likely to be negatively impacted, but its international business is anticipated to gradually open during 2022.
A casino operator in the tourism and leisure entertainment business, SkyCity Entertainment Group Limited (NZX:SKC; ASX:SKC), witnessed a challenging first half of FY22 due to COVID-19-induced disruptions.
The Group’s Auckland business was majorly affected as its business in the region was shut down for 107 days. SKC’s tourism business saw a negative effect due to the closure of international borders.
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However, the Group’s local gaming business stayed resilient, and its online casino fared well when the business stayed open without any curbs.
Key achievements in H1 FY22
Some of the highlights of SKC’s performance and achievements in 1H22 included the following:
- SkyCity’s reported NPAT was down by 143.3% and EBITDA was down by 86.4%.
- Online casino revenue and earnings rose in the period with 10K active clients per week.
- Implemented cost-saving initiatives in response to property shutdowns and related revenue effects.
- Four of SKC’s Auckland restaurants received 4 hats at the Cuisine Good Food Awards 2021/22.
SkyCity also grew its strategic collaboration with Gaming Innovation Group (GIG) in December 2021. This was done by entering into a binding contract to subscribe nearly to $40 million of new equity in GIG to help the company in financing the purchase of Sportnco.
DO READ: SkyCity (NZX:SKC) expands strategic partnership with GiG
Michael Ahearne, the CEO of SKC, stated that COVID-19 impacted its business and operations substantially in the period with its stores closed for several days across various regions. Its properties functioned under significant curbs when they were allowed to reopen.
SkyCity’s Strategic Plan
Improving operational performance, completing major projects, optimising portfolio and pursuing omnichannel opportunities remain 3 key strategic pillars of the Company.
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SKC wants to focus on maximising the value of exclusive casino licences, growing cash flows, as well as enhancing Host Responsibility and AML programmes across the Group. The Group also plans to optimise Adelaide development and the New Zealand International Convention Centre (NZICC)/Horizon Hotel project.
SKC ended the day 1.69% in green to close at $3.01.
Outlook
SKC expects a stay-in-business capex of nearly $35 million, a net interest expense of nearly $34 million and a growth capex of $25 million. The Group’s Horizon Hotel is likely to be finished in 2024 and the NZICC in 2025. Moreover, GIG equity settlement is likely to settle in Q1 2022.
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Sky expects its NZ tourism-related business is likely to be negatively impacted but its international business is anticipated to gradually open this year.
SKC's priority is on sailing through the present uncertainties and near-term problems presented by the pandemic.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)