SKYCITY delivers first half net profit of $71 Million
16 Feb 2010
Highlights:
- Net Profit after Tax up 29.6% to $71.0 million
- EBITDA up 7.8% to $160.1 million
- Capital management initiatives
- Finance costs reduced by 29% to $27 million
- Improved gearing Net Debt/EBITDA reduced from 3.2 to 2.1 times
- Earnings per share 12.3 cents up from 11.6 cents last year
- Interim dividend declared of 8.0 cents per share, fully imputed
- Reaffirms double digit growth of 10-15%, full year normalised NPAT
- Cinemas Sale goes unconditional, OIO consent granted, settlement 18 February
SKYCITY Entertainment Group today announced a Net Profit after Tax of $71.0 million for the half year ended 31 December 2009, up $16.2 million, being 29.6% up on the Net Profit of $54.8 million for the first half, last year.
Underlying Net Profit after Tax (normalised for international results and non recurringitems) of $68.4 million, was up $12.8 million, being 23.0% up on the $55.6 million for the first half, last year.
Revenues for the half year were $447.0 million, up 5.9% from $422.1 million, with Earnings before Interest, Tax and Depreciation (EBITDA) of $160.1 million, up 7.8% from $148.5 million for the first half, last year.
Contributing significantly to this result was the reduction in net interest cost, down by $11.1 million (29%), to $27.0 million from $38.1 million, following the $177 million buybacks of US Private Placement debt in July and August 2009, from the proceeds raised from the share placement in April 2009, as has been previously announced.
Chief Executive Officer, Nigel Morrison said: ”This was a pleasing result in what is still a challenging economic environment. While earnings of our New Zealand businesses were flat, our Australian businesses delivered 7% earnings growth. It was pleasing that we were able to deliver earnings per share growth for shareholders after our equity raising last year and that we have been able to declare an interim dividend of 8 cents per share, fully imputed, representing approximately 65% of our NPAT for this half.”
New Zealand
“The economic environment in New Zealand remains challenging with increasing unemployment, a further contraction in pub and club gaming by 5% compared to the same period last year, together with the first full period of PIDs (player information displays) implementation on all gaming machines in New Zealand. As a result, our Auckland revenuesm were flat against 1H09 with gaming revenues down marginally, (albeit with continued market share growth in gaming machine revenues) offset by modest growth in non-gaming revenues. We maintained tight cost management that held expenses within 0.6% of the prior half year.
“The revenue of our other New Zealand properties (Hamilton, Christchurch and Queenstown) were marginally up on last year, with earnings steady.”
Australia
“We are pleased with the continued growth by our Australian businesses (revenues up 6%, EBITDA up 7%) given an environment of ‘fiscal fade’, with the fiscal stimulus of the 2009 financial year no longer present, softening retail activity, and a softening of pub and club gaming revenues across Australia in the latter part of 1H10.
“Despite the more difficult economic environment, our Adelaide Casino continued to demonstrate steady revenue growth up 5.3%, across all sectors of the business - machines, tables and food and beverage. This revenue growth delivered earnings growth with EBITDA up 7%.
“Darwin’s revenue growth, up 6.4% over the period, following the refurbishment of the casino, was also achieved in the context of ‘fiscal fade’ and softer retail spending trends, and resulted in EBITDA growth of 6.7%.”
Cinemas
“During this half year we successfully negotiated the sale of the core of our cinemas business to Amalgamated Holdings Limited. Yesterday we were advised that the Overseas Investment Office has given its consent to the transaction and therefore the sale will settle as planned on February 18. We are confident we will conclude and settle the sale of the residual cinema assets by 30 June 2010 and realise a gain of more than $10 million on the carrying value of the cinema assets which will be included in SKYCITY’s second half result.”
International Business
“Our International Business turnover increased 18% to $758 million from $640 million. Actual EBITDA was $5.3 million (with win rate of 1.86%, above theoretical rate of 1.33%) up from $0.8 million last year. The normalised EBITDA of $1.9m (restated to theoretical win rate) recorded in this half year period doubles the normalised EBITDA achieved in 1H09.”
Interim FY10 Distribution
SKYCITY has declared an interim dividend of 8.0 cents per share, fully imputed, payable on 1 April 2010, (record date 19 March). The interim dividend is set at 65% of NPAT, in line with the new dividend policy (60%-70% of NPAT) introduced in 2009. The 1H09 dividend was 9.0 cents per share under the previous distribution policy of 90% of NPAT.
Outlook for 2H10
New Zealand: “We anticipate a continuing challenging environment in New Zealand with unemployment having risen above 7% and a continued contraction of gaming machine revenues in pubs and clubs. While we do not foresee any significant earnings growth for our Auckland business in this environment, we expect our New Zealand businesses will remain relatively resilient.”
Australia: “Our Australian businesses are faced with a more challenging environment than has been evident in the recent past due to the ‘fading’ of the fiscal stimulus packages that applied in FY09. As has been the case in New Zealand for some time, in the latter part of the first half, we have seen softening year on year gaming machine revenues in the pubs and clubs in Australia. In relation to the smoking bans introduced in the Northern Territory on 2 January 2010, to date it appears that we have been successful in mitigating the potentially significant reduction in revenues normally attributed to the introduction of smoking bans, through the enhancement and expansion of our casino facilities in Darwin.”
SKYCITY Group: “As a Group, we expect our second half earnings to be not dissimilar to the normalised earnings achieved in the second half last year. We have previously stated our objective of double digit NPAT growth in FY10, albeit in a challenging economic environment. We confirm we are on track to deliver this objective and advise our current expectation for Normalised NPAT is in the range of 10%-15% up on last year’s $115.3 million, excluding the gain on the cinemas divestment.” said Mr Morrison.
For further information please contact:
Louise Johnstone, SKYCITY Corporate Communications Manager
Mobile: +64 (0) 21 669 413
Email: Louise.Johnstone@skycity.co.nz / www.skycityentertainmentgroup.com
About SKYCITY Entertainment Group
- SKYCITY Entertainment Group includes six casino and hotel complexes across New Zealand and Australia (Auckland, Hamilton, Christchurch, Queenstown, Adelaide, Darwin).
- SKYCITY Entertainment Group employs more than 7,000 people throughout Australia and New Zealand
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