SkyCity Entertainment Group reduced its guidance for full-year EBITDA for the group and for net profit after taxes for 2024 due to several issues.
For the 12 months to 30 June, SkyCity says underlying group EBITDA will amount to between NZ$280m (PS136m/EUR159m/US$173m) and $285m. SkyCity’s initial forecast of $290m-$310m has been reduced.
SkyCity estimates that net profits will be between $120 million and $125 million. This is still behind SkyCity’s earlier guidance between $125m to $135m.
SkyCity has stated that several factors have an impact on its current performance and led it to reduce the guidance. The economic climate is still challenging, and this has an impact on customer spending. The group does note that the visitor numbers on all websites remain high.
SkyCity mentions a new delay to the opening of Horizon Hotel, located in Auckland (New Zealand). The hotel is not expected to open in August after originally being scheduled to debut in March.
The group also notes that Adelaide Casino Duty expenses in Australia could increase during the financial year 2024. The South Australian Court of Appeal has ruled on how to interpret the relevant clauses in the Adelaide Casino Duty Agreement with regard to loyalty points.
What will SkyCity look like in 2025?
SkyCity has also released an updated on how they expect to perform in their 2025 financial years.
Auckland is particularly affected by the current economic climate, according to the group. It adds that this is expected to continue through the rest of the year.
SkyCity says that it is also going to be affected by a few one-off expenses. SkyCity also says it will be hit by several one-off items.
In this context, the group issued an underlying EBITDA guide of $250m to 270m. Both of these amounts would be less than the adjusted figures for FY24. SkyCity is expected to be affected by $20m to $30m of the costs associated with one-offs.
SkyCity notes that this advice does not take into account a possible suspension of SkyCity’s casino license in New Zealand. The private hearing was originally scheduled for April, but it has now been moved to August.
SkyCity Casino’s licence was suspended for approximately 10 days in September of last year by the New Zealand secretary of internal affairs.
This application was filed by SkyCity Casino Management Limited. SCML is SkyCity’s New Zealand operator license for SkyCity Auckland and SkyCity Hamilton.
The complaint was made by an ex-customer of SkyCity Auckland in February 2022. This player gambled in the Auckland Casino from August 2017 until February 2021.
According to the secretary, SCML failed to “meet requirements” in SkyCity Auckland’s Host Responsibilities Programme. The secretary said that this is related to the “detection” of incidents of continual play by customers.
SkyCity to pay New Zealand $4.16m as penalty
Although there is still uncertainty over the possible suspension of the licence, the group was able to resolve other cases involving regulatory issues.
SkyCity and the DIA reached a settlement in New Zealand over SkyCity’s breach of its anti-money laundering obligations.
The DIA had announced earlier this year that it was going to file high court cases against SkyCity, and its SCML affiliate. The alleged violation of the Anti-Money Laundering and Counter-Financing of Terrorism Act 2009 is at issue.
The draft pleadings outlined five causes of action that were deemed “significant” in relation to Act compliance. The group stated that they referred to mainly historical issues, and some had been previously reported to DIA. The operator said it had taken several steps to avoid future issues.
Taking into consideration all of this, the group reached a resolution with the DIA. SkyCity will submit a joint proposal of NZ$4,16m with the final decision being made by the court.
SkyCity resolves case with regulatory authority in Adelaide
SkyCity also reached a settlement last month with Austrac, the Australian Transaction Reports and Analysis Centre. SkyCity will pay AU$67.0m for historical AML/CTF failings.
Federal Court of Australia still has to approve the proposal. Austrac and the operator have both submitted separate applications for approval in a hearing scheduled tomorrow (7th June).
In December 2022, the case was brought to public attention but there have been concerns for several years. In September 2019 an industry-wide campaign to ensure compliance began. SkyCity was made aware of the alleged misconduct in June 2021.
Austrac stated at the time that SkyCity Adelaide had a pattern “of serious and systemic noncompliance”, with national AML/CTF laws. It includes a failure to assess money laundering risks and terrorist financing.
This group did not implement risk-based controls and systems in AML/CTF programs, or establish an appropriate framework for the board of directors and senior staff to oversee these projects.
Walbridge becomes CEO
SkyCity’s senior management has undergone changes in response to this.
Jason Walbridge, a former gambling executive and experienced CEO of the company, was appointed as new CEO in April. Walbridge replaces Michael Ahearne who left the company recently.
Julie Amey, the chief financial officer has also resigned. Amey’s CFO role will last for another six months until 25 September.
SkyCity also named Andrew McPherson chief information officer. Since November, he had served in this role as an interim.
On 24 August, the group will publish results for 2024.
