Managing the business in a challenging operating and regulatory environment was a significant challenge for SkyCity in 2021, which included responding to external events arising from the pandemic, opening the Adelaide expansion in an environment affected by COVID-19, and responding to external events arising from the pandemic. For the SkyCity team to provide a satisfying performance for the company, a large amount of expertise, energy, and dedication was required and assistance from stakeholders and other stakeholders.
However, the future is bright, and there are only great plans for the road ahead. Learn more about the SkyCity Shareholders’ Plans for 2022 by continuing to read this article.
As of right now, SkyCity’s balance sheet appears to be in good shape. To respond to potential pandemic disruptions, one-off occurrences, and/or a more protracted economic recovery in New Zealand, they now have total liquidity of approximately NZ$240 million available. To respond to the continued disruptions, the company concentrates on effective cost and capital discipline. It is pursuing cost-saving strategies to considerably reduce the Group’s 2022 stay-in-business capital expenditure.
Due to the ongoing COVID-19 disruptions in New Zealand, particularly the prolonged lockdown in Auckland, SkyCity has prudently engaged with the Group’s founders to discuss a debt for the December 2021 period to make sure that all of the liquidity headroom can be accessed. Even though the credit rating from S&P Global Ratings has been improved to a “Stable” outlook from a “Negative” outlook in April 2021, SkyCity has remained committed to it. SkyCity continues to communicate with S&P’s regularly, and the company anticipates that the rating will be evaluated without regard to the temporary impact of the pandemic interruptions.
Group Strategies and CEO Priorities
SkyCity’s interim reports in February 2021 revealed that the company’s new strategy will emphasize a focus on its core business. Also, it would focus on the execution of significant projects in Adelaide and Auckland, the delivery of the omnichannel opportunity, and the efficient allocation of capital over the next three years.
The Chief Executive Officer states that the SkyCity Group has made significant progress over the last 12 months in terms of key strategic priorities, primarily regarding a few key issues. Such topics include establishing and maintaining the pandemic operating environment – with positive local gaming activity when open, underpinned by employing modern assets and good cost execution across the business, driving operational excellence at the core – and the continued management of the pandemic operating environment. The Adelaide expansion was also completed on schedule and on budget, with the investment is now being optimized. The nearby Festival Car Park is also being integrated into the overall project.
To complete the New Zealand International Convention Centre and Horizon Hotel project, SkyCity collaborates closely with Fletcher Construction. Having just submitted a comprehensive project plan, Fletcher anticipates that the Horizon Hotel will be completed in 2024 and the Convention Centre will be completed in early 2025, respectively.
Aside from that, the Group is working on optimizing the SkyCity Online Casino and preparing for the possibility of online gambling regulation in New Zealand. The expansion of the online gambling industry has been a particular highlight of the past few years. SkyCity has worked with its partner GiG (Gaming Innovation Group) to improve the site’s usability and efficiency despite operational constraints. The protection and enhancement of our social license and casino licenses are crucial components of the SkyCity strategy framework.
SkyCity is committed to ensuring that its experiences and environments are both safe and responsible for all participants and visitors. They place a high value on their host duty and anti-money laundering responsibilities, among other things.
There has been steady progress with attempts to improve SkyCity’s group-wide host responsibility and anti-money laundering control systems, but there is still much more work to be done in these areas.
The importance of host duty to consumers continues to be a significant focus, with adequate effort, resources, and money being given to support this goal. The SkyCity Casinos in Auckland and Hamilton have invested in new systems and increased their resourcing over the past year. The implementation of ‘Phase 2’ facial recognition technology will assist SkyCity in identifying customers who have remained in the casino for an extended period at both SkyCity Casinos. A trial of this concept is presently underway at the SkyCity Adelaide casino in Adelaide.
Strategic Priorities and FYE22 Outlook
When it comes to the company’s strategic priorities for FY22, SkyCity is, first and foremost, focusing on navigating through the ongoing uncertainty of the COVID-19 pandemic operating environment. This includes managing their financial statement properly to ensure financial resilience, responding to the AUSTRAC (Australian Transaction Reports and Analysis Centre) enforcement inquiry into SkyCity Adelaide, and enhancing the host responsibility programs and anti-money laundering measures.
Its continued priorities include optimizing the Adelaide expansion and delivering on the investment thesis, and moving forward with the reinstatement of the New Zealand International Convention Centre and Horizon Hotel project in partnership with Fletcher Construction.
In terms of the prognosis for FY22, SkyCity is unable to provide earnings projections for the current fiscal year due to the changing operating environment and uncertain near-term perspective resulting from the pandemic at this time. However, this is being reviewed regularly. The COVID-19 limitations, notably the ongoing lockdown, have had a major impact on the firm’s trading during the first six months of the financial year, according to the company. The company’s first-half earnings are expected to be negatively impacted due to the difficult trading conditions. A long extension of the lockdown in the Auckland region and other limitations across the remainder of New Zealand might negatively impact the company’s half-year results.
SkyCity is well-prepared to manage the company’s operations through COVID-19, and the following outcomes are expected:
- It is expected that local gaming enterprises in New Zealand would perform well when they are open and functioning without limitations, especially electronic gambling machines.
- There will be more optimization of the Adelaide expansion. However, it will take longer to ramp up due to the operational constraints and ongoing interstate border closures.
- The SkyCity Online Casino will maintain its high level of performance.
- International border restrictions will continue to have a negative impact on tourism-related industries, and it is projected that they will stay mainly closed for the length of FY22.