SkyCity: Tough year with vibrant outlook

SkyCity Entertainment Group’s (NZX/ASX:SKC) financial results have been significantly impacted by the disruptions caused by COVID-19.

When operating without restrictions, the New Zealand domestic gaming business performed well, underpinned by robust gaming activity, and the recovery of domestic tourism continues to make a positive impact. Trading in July and August has been positive with this expected to continue as international tourism recovers.

SkyCity Entertainment Group CEO Michael Ahearne says the COVID-19 disruptions throughout the financial year have had an impact on the company.

“No doubt the last year has been a tough year for SkyCity. I am incredibly proud of how resilient our SkyCity staff have been and how our teams have responded to the challenges – they’ve been awesome,” said SkyCity Entertainment Group CEO Michael Ahearne.

“Recovery of domestic visitation has been positive for our business and I’m excited about welcoming back more international visitors to our properties.”

Key Financial Features of FY22

Online Casino

The New Zealand online casino market has grown significantly as digital uptake increases in New Zealand. The current New Zealand online casino market is estimated to be worth $350+ million per annum.

“SkyCity has long supported the regulation of the New Zealand online casino market. It’s time New Zealand caught up with other countries and protected New Zealanders with an appropriate licensing regime. This should include imposing the highest standards of host responsibility, compliance obligations and paying a fair share of taxes,” said Mr Ahearne.

SkyCity’s online casino, based in Malta, has grown strongly again this year with a 34.7% growth in revenue despite an increasingly competitive landscape. SkyCity Online Casino operates to a high standard of host responsibility and pays taxes in New Zealand.

“New Zealand is one of the last remaining unregulated online casino markets in the world. New Zealanders are being targeted by offshore operators because it’s so easy to enter the market here - there is nothing stopping them.

“SkyCity supports the Minister of Internal Affairs’ work to introduce regulation.”

Staffing and Operations

SkyCity has approximately 4,000 employees and we are currently looking for 400 more team members.

“Across New Zealand and Adelaide, we have about 400 vacancies and this will only grow as we need more staff over the busy summer period.

“SkyCity is working hard on recruitment and retention in a very competitive market.

“We are focused on being competitive in the marketplace in terms of the offers we make to staff. We have also brought forward our salary reviews and offer a comprehensive range of benefits.

“While we are continuing to recruit, we need to make sure we look after our current employees so that has been a significant factor in our decision to vary opening hours in our outlets,” said Mr Ahearne.

Regulatory and Compliance

SkyCity continues to invest in its anti-money laundering and host responsibility uplift programmes across Australia and New Zealand.

“We have increased investment in our compliance programmes across the Group.

“We have invested in both people and technology. Across New Zealand and Australia, we have made further recruitments into both our AML and Host Responsibility teams. We have improved our governance and investments in ICT systems and internal processes. This year, we also refreshed and enhanced our training programmes for staff.

“We’re continually looking for improvement and this is a key area of focus for both our management and Board,” said Mr Ahearne.

NZICC/Horizon Hotel

“The rebuild of the New Zealand International Convention Centre (NZICC) and Horizon Hotel is making progress. It continues to be one of the largest and most complex projects in New Zealand.”

There is positive momentum on-site with construction of the roof due to commence in October 2022, a significant milestone in the fire remediation work.

“We are continuing to work closely with Fletcher Construction on the project. According to Fletcher’ s current timeline, the completion of the Horizon Hotel will be in 2024, and the NZICC in 2025,” said Mr Ahearne.

There continues to be strong interest from international conferences for Auckland once the NZICC is completed.

“We’ve had quite a few bookings coming in for the NZICC which is not only great for SkyCity but for the wider Auckland economy.”

People and Community

SkyCity has remained focused on reducing the gender and ethnic pay gaps in both Australia and New Zealand as well as increasing representation of women and ethnic minorities in senior roles.

Mr Ahearne said, “We have signed up to a gender representation initiative of at least 40% women, 40% men and 20% any gender in our most senior teams and I am pleased to say we have met that target for our Board and officers. This year, we also reduced our gender pay gap in both Australia and New Zealand and our Māori, Pasifika and Asian pay gaps in New Zealand.”

SkyCity was once again nominated as a finalist in the Diversity and Inclusion Leadership Award at the 2021 Deloitte Top 200 Awards and the Diversity and Inclusion Award for Te Roopū Māori o SkyCity.

Awards

Mr Ahearne said, “Despite the disruptions, SkyCity has continued to be recognised for its excellence in a number of areas. The awards we have received are a testament to our continued focus on high quality customer service and care, and this will continue.”

Awards include:

• SkyCity Auckland named Oceania's Leading Casino Resort 2021 in the World Travel Awards
• Sky Tower awarded the Qualmark Gold Award for sustainable tourism
• Sol Bar and Restaurant named Restaurant of the Year at the South Australian Restaurant and Catering Awards
• Eos by SkyCity awarded:
• Best New Tourism Business at the South Australian Tourism Awards
• Best Deluxe Hotel in South Australia at the Australian Hotels Association SA Awards for Excellence
• Best New Hotel at the Hotel Management Awards for Hotel and Accommodation
• The Guardsman awarded Best Tourism Restaurant at the South Australian Tourism Awards
• Bowl and Social named winner of the Best Leisure & Entertainment category at the Hamilton Central Business Association Awards 2021

Future Outlook

We’ve had a positive start to this year, and we expect that to continue.  We see an exciting pathway to unlock the full potential of our properties as we welcome the return of international tourism to both Australia and New Zealand,” said Mr Ahearne

ENDS

A full copy of this year’s financial results is available on the SkyCity corporate website at www.skycityentertainmentgroup.com/investor-centre/financial-information/reports-presentations/2022.