January 29, 2023 Breaking News, Latest News, and Videos

NZ Lockdown Costs NZ$1 Million Per Day for Casinos

SkyCity Entertainment has made claims that the shutdown of its casinos, bars, cafés, restaurants and a portion of its hotel activities under level 4 are incurring their losses of as much as around $1 million per day in income.

The company, which continues to conduct casino and hospitality businesses in Auckland, Hamilton, and Queenstown, said in presentation notes released with its annual profit result to the NZX that the shutdown of its New Zealand properties, which began on August 17, was affecting earnings before interest, tax, devaluation, and amortisation by around $1 million per day.

Covid 19 Repercussions

SkyCity’s New Zealand companies have been operating consistently since the last quarter of last year since July 1, as its pokie machine industry has been stable, and its other companies have benefitted from robust domestic tourism and weekend and holiday trade peaks. That is until the country was placed on level 4 lockdown when they were forced to close.

In contrast, its Malta-based online casino company had benefited from the lockdown, with an increase in client activity that saw its beginning on the 17th of August and records weekly turnover and gaming income. There are 45,000 active consumers in the online casino industry in New Zealand.

In the fiscal year of 2021, the online casino, which SkyCity started in August 2019, generated as much as $9.1 million in pre-tax earnings and $13.1 million in revenue. Owing to the changed operating conditions and unclear near-term prognosis due to the Covid-19 pandemic, SkyCity made it known that it was unable to offer a profit forecast for the current financial year.

The local gambling firms in New Zealand, notably the pokie machines where Kiwis can play with just 3 dollar minimum deposit, were expected to do well once they were open for business with no operating limitations. It anticipated a stable performance from its online gambling platform, which benefited from the rise of alert levels.

However, it specified that international border closures will persist to have a detrimental impact on its tourism-related companies. The firm boasted a solid balance sheet and financial flexibility, as well as sufficient cash to pay its commitments and weather one-time events and Covid-19 outages.

SkyCity received $10.2 million from the government under the Covid-19 wage subsidy system last year, and despite meeting all of the eligibility requirements, the board decided to make a voluntary payment of $6.7 million on the 27th of July owing to its better financial performance throughout the year.

SkyCity Entertainment Group plans to return the Australian government $3.3 million of its $16.6 million JobKeeper award. SkyCity did not pay a first-half dividend in order to conserve cash but would pay a final dividend of 7 cents per share at a cost of $53.2 million to shareholders. In 2020, it paid a 10 cent dividend.

SkyCity received $10.2 million from the government under the Covid-19 wage subsidy system last year, and despite meeting all of the eligibility requirements, the board decided to make a voluntary payment of $6.7 million on July 27 owing to its better financial performance throughout the year.

SkyCity’s net profit for the year ended June 30 was $156.1 million, down 34% from the previous year. A fire at its convention centre building project in October 2019, as well as the sale of an Auckland car park concession, had an influence on the results. When unexpected factors like these are excluded, the company’s normalized earnings increase by 37% to $90.3 million.

Concluding Thoughts

During the past year industry news, SkyCity’s flagship Auckland business was closed for 29 days and its Adelaide casino for 3.5 days, whereas its Queenstown Wharf casino, has indeed been forced to close as of March the year before due to its reliance on international tourism, which has now been harmed by border closures. In mid-afternoon trading on the NZX, SkyCity shares were up 4.5 percent to $3.24.

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