SkyCity Entertainment Group has reduced its full-year guidance for both underlying group EBITDA and net profit after tax for the 2024 financial year amid several ongoing issues.
For the 12 months to 30 June, SkyCity says underlying group EBITDA will amount to between NZ$280m (£136m/€159m/US$173m) and $285m. This is lower than its initial guidance of $290m to $310m.
As for net profit, SkyCity says this will range from $120m to $125m. Again, this is behind the earlier issued guidance of between $125m and $135m.
According to SkyCity, several factors are impacting its performance at present and have led to it issuing reduced guidance. These include an ongoing challenging economic environment, which is impacting customer spend. However, the group notes that visitor numbers across all sites remain strong.
SkyCity also references a further delay in the opening of its Horizon Hotel in Auckland in New Zealand. This is now not due to open until August, having initially been set to launch in March.
Finally, the group notes a potential increase in Adelaide casino duty expense in Australia during the 2024 financial year. This follows the South Australian Court of Appeal’s ruling on the interpretation of relevant provisions in the Adelaide Casino Duty Agreement in regard to the treatment of loyalty points.
How is 2025 looking for SkyCity?
SkyCity also issued an update as to how it expects to perform during its 2025 financial year.
The group said that current trading conditions continue to reflect a challenging economic environment, with this particularly noticeable in Auckland. This, it adds, is likely to continue throughout the year.
SkyCity also says it will be hit by several one-off items. These include delays to the Horizon Hotel, pre-opening operational costs for the New Zealand International Convention Centre (NZICC), preparing for online gambling regulation in New Zealand and its ongoing risk and compliance uplift activities in Adelaide.
With this in mind, the group has issued underlying group EBITDA guidance of $250m to $270m, both of which would be lower than the adjusted amounts for FY24. This takes into account costs related to the one-off items, with these expected to impact SkyCity by between $20m and $30m.
SkyCity also notes this guidance does not account for a potential suspension of its casino licence in New Zealand. A private hearing on the matter was due to take place in April but has been pushed back to August.
In September last year, New Zealand’s secretary of the department of internal affairs (DIA) applied to suspend SkyCity’s casino licence for an estimated 10 days.
The application concerned subsidiary SkyCity Casino Management Limited (SCML). SCML controls SkyCity’s operator licence for the SkyCity Auckland, SkyCity Hamilton and SkyCity Queenstown locations in New Zealand.
This stems from a complaint made to the department in February 2022 by a former SkyCity Auckland customer. The player in question gambled at the Auckland casino from August 2017 to February 2021.
The secretary said SCML did not “comply with requirements” outlined in its SkyCity Auckland Host Responsibility Programme. This, the secretary added, relates to “detection of incidences of continuous play by the customer”.
SkyCity set to pay $4.16m penalty in New Zealand
While uncertainly remains over the potential licence suspension, the group has been able to settle other regulatory cases.
In New Zealand, SkyCity reached a settlement with the DIA over its breach of anti-money laundering and countering financing of terrorism (AML/CFT) obligations.
Earlier this year the DIA announced it would file high court proceedings against SkyCity and its SCML subsidiary. This relates to alleged non-compliance with the country’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
Draft pleadings set out five separate causes of action seen as “significant” compliance issues related to the Act. However, the group said they mainly refer to historical matters, with some previously self-reported to the DIA. The operator added it has taken a series of steps to prevent issues in the future.
Taking all this into account, the group was able to reach a settlement with the DIA over the matter. SkyCity and the DIA will jointly submit a proposed penalty of NZ$4.16m, with final determination for the court.
SkyCity settles regulatory case in Adelaide
As for Australia, SkyCity last month also agreed a settlement with the Australian Transaction Reports and Analysis Centre (Austrac). SkyCity is set to pay AU$67.0m over historical AML/CTF failures in the country.
The proposal remains with the Federal Court of Australia. Both the operator and Austrac have put forward separate submissions for approval at a hearing tomorrow (7 June).
The case came to light in December 2022 but concerns date back several years. An industry-wide compliance campaign began in September 2019, with SkyCity made aware of alleged wrongdoing in June 2021.
At the time, Austrac said SkyCity Adelaide demonstrated a pattern of “serious and systemic non-compliance” with national AML and CTF laws. This includes failing to appropriately assess the money laundering and terrorism financing risks.
The group also did not include risk-based systems and controls in AML/CTF programmes, nor establish a proper framework for board and senior staff oversight for these projects.
Change of leadership as Walbridge takes over as CEO
Against this backdrop, SkyCity has been making changes to its senior management team.
In April, the operator appointed experienced gambling executive Jason Walbridge as its new CEO with effect from July. Walbridge is replacing Michael Ahearne, who recently left the group.
Meanwhile, Julie Amey has resigned as chief financial officer. Amey will continue as CFO for a further six months, through to 25 September.
In addition, SkyCity has named Andrew McPherson as chief information officer. He had been serving in the role on an interim basis since November.
The group plans to publish its full-year 2024 results on 24 August.
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