SkyCity's stated profit projection for the full year decreased

21 Aug 2020

As a result of the decrease in the value of its Adelaide casino, SkyCity Entertainment Group has revised downward its projection for reported earnings for the current financial year. The New Zealand casino operator stated that its normalized earnings for the year ending on June 30 are expected to remain similar to previous guidance released on June 17. Normalized EBITDA is now between AU$199m (US$142.9m) and AU$202m, which is an increase from AU$185m to AU$205m previously. Normalized earnings are expected to remain similar to previous guidance released on June 17.

This is as a result of increased estimates for an insurance pay out on the damage sustained by the New Zealand International Convention Centre and the Horizon Hotel as a result of a fire that occurred in October of last year.

Nevertheless, the potential rise has been cancelled out by an impairment charge of AU$150 million against the AU$283 million intangible asset value of the venue's casino license. This charge was imposed against the book value of the Adelaide casino.

As a direct consequence of this, the operator's most recent stated EBITDA prediction has decreased from the prior range of AU$440m to AU$480m to a new range of AU$346m to AU$349m.

This also indicates that the reported net profit after taxes (NPAT) has decreased from the range of AU$330 million to AU$360 million that was anticipated in the projection for June, to a range of AU$234 million to AU$236 million.

"The lower profits projection for Adelaide Casino has been worsened in the short-to-medium term by the recent and projected continued implications of COVID-19," the operator stated. "This includes an assumption that it may take several years for international business activity to return."

Following a brief reopening on the 12th of August, SkyCity stated earlier this week that its casino in Auckland will stay closed until at least the 26th of August. This decision was made in response to the New Zealand government's extension of local lockdown restrictions.

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