Skycity expects tussle with Fletcher

Skycity boss Graeme Stephens is expecting legal ‘‘argy-bargy’’ when it bills Fletcher Construction for losses incurred as a result of the late completion of the new conference centre in Auckland.

Skycity Entertainment Group’s new international convention centre should be ready by the middle of 2019, six months after Fletcher contracted to complete it, the casino company said yesterday.

But claims for damages for Fletcher completing the project late could end up with a courtroom tussle, Stephens warned shareholders on the release of the company’s half-year results.

‘It’s fairly typical there’s going to be a little argy-bargy at some point. The project has been delayed. We are entitled to make some claims. We would expect Fletchers to challenge it,’’ he said.

‘‘We thought we should flag that as a possibility. We didn’t want to be sending out a message ‘It’s all fine, it’s all fine, it’s all fine,’ and now we’re in court.’’

Construction was progressing well now, Stephens said. ‘‘The roof goes on in a couple of months. It’s got a lot of momentum.’’

Major conference bookings were being taken for 2020.

Fletcher Building has already flagged a financial blowout at its end on the project, and may be about to reveal more.

But Stephens said Skycity remained ‘‘comfortable’’ with the contractual arrangements, which provided for liquidated damages that should mitigate the casino group’s losses from the delay.

Alongside the convention centre news, Skycity reported modest half-year growth, with an interim net profit of $90.3 million for the six months ended December 31, 2017.

The result, which stripped out one-off events, was up 7.9 per cent from the previous corresponding period.

Stephens said Skycity’s lift in profits was pleasing considering major building work was taking place in the neighbourhood of its Auckland and Adelaide entertainment and casino complexes.

‘‘Despite ongoing disruption from capital works in Auckland and Adelaide and a slightly less favourable New Zealand economic environment, we remain confident we can continue to deliver growth from our existing assets as well as the new projects in the pipeline,’’ Stephens said.

He said the main drivers of the half-year financial result were were growth from the company’s New Zealand properties, a recovery in international business, a stable performance from the Australian sites, lower interest rates and a strong Australian dollar.

Skycity Auckland accounted for three-quarters of earnings.

Stephens gave particular praise to the management of its Darwin casino, which delivered no growth, but lost no ground, despite a big increase in gaming licences being issued in the city.

A revamped management team had also brought new energy to the group, he told shareholders.

One frustration for Stephens was that the group’s IT projects could not be delivered quicker.

Delivering more personalised experiences at Skycity’s centres, especially interacting with visitors via mobile phone apps, needed to happen, he said.

‘‘Everyone’s on their phones these days, and we are not.’’