SkyCity Entertainment Reports 33.7% Drop In Profits

SkyCity Entertainment Group revealed a 33.7 per cent drop in profits for the 2021 financial year, but that profit was still $150 million.

SkyCity Entertainment Group is the latest gambling entity to reveal the state of its finances. The New Zealand-based company reported its annual financial statement to the Australian Securities Exchange on which it is listed.

Total reported revenue fell 15.4% to $919.48 million (NZ$959.10 million) for the 12 months to June 30, 2021. SkyCity reported $1.078 billion (NZ$1.125 billion) revenue for the same period in 2020. Reduced revenue and continued operating costs almost always results in a fall in profitability. This was the case for SkyCity where profits fell 33.7% to $149.65 million (NZ$156.1 million) year on year.

The figures released during a time when three SkyCity casinos remain closed. Its properties in Auckland, Hamilton, and Queenstown remain under lock as key as New Zealand struggles to get to grips with yet another COVID-19 outbreak. Of course, the COVID-19 pandemic, which was rife during SkyCity’s latest financial year, is to blame for the drops in revenue and profits.

SkyCity CEO Michael Ahearne Blames COVID, Makes Junkets Announcement

Michael Ahearne, the CEO of SkyCity Entertainment Group, penned his thoughts in the financial presentation.

“Local gaming has performed well when open and operating without restrictions, while our tourism-related business, including hotels, food and beverage, attractions and international business had weaker results primarily due to ongoing international and domestic border closures.

“COVID-19 has continued to significantly impact the business and operations at each of SkyCity’s properties in FY21. Government-mandated lockdowns in New Zealand and South Australia resulted in the closure of SkyCity Auckland for 29 days and SkyCity Adelaide for 4 days. When permitted to reopen, the properties have initially operated under significant constraints due to restrictions on mass gatherings and physical distancing requirements.”

Ahearne also revealed SkyCity no longer uses controversial junkets to attract well-heeled international customers. The company is dealing with these customers directly and performing “know your customer” and financial due diligence.

It is unsurprising to see SkyCity stop using junkets. The controversial companies have not come out of the Crown Resorts royal commission in any positive light. Indeed, one can argue junkets have caused Crown more than its fair share of trouble and negativity.

The company’s online casino is one area of the SkyCity business to shine brightly over the past year. SkyCity Online Casino had 24,400 customers in February, 38,000 in April, and 45,000 on June 30. The casino is based off-shore in the Mediterranean country of Malta.

Repaying Part of the Government JobKeeper Payments

SkyCity, like thousands of other firms, received JobKeeper payments from the New Zealand and Australian governments. The payments made it possible for the company to continue paying staff during the worst of the lockdowns.

The company received $15.4 million in JobKeeper payments from the Australian Government. It received $7.8 million during the 2019-20 financial year, too. Furthermore, New Zealand’s government handed out NZ$10.2 million ($9.78 million).

SkyCity bosses plan to pay back approximately two-thirds of New Zealand money and one-fifth to the Australian government during the current financial year.

“Despite having met all the respective eligibility criteria for the New Zealand wage subsidy scheme and JokKeeper payments, in June 2021 the SkyCuty Board resolved to make a voluntary repayment of NZ$6.7 million of wage subsidies received from the New Zealand government and A$3.1 million of JobKeeper payments receive from the Australian government.”

The repayment to New Zealand left the company accounts on July 27. It plans to make its Australian repayment in September. A dividend payment, to shareholders, of seven cents per share, was declared.

Making voluntary repayments to both governments is a fantastic thing to do, and you should applaud SkyCity for doing so. They, like other casino businesses, essentially have a licence to print money when they operate. The fact the company made $150 million profit despite the challenging conditions is a testament to that.