SkyCity putting its money on Queenstown development
SkyCity Entertainment Group has told investors in Sydney that it has applied to New Zealand’s Overseas Investment Office for clearance to buy Queenstown land for a new hotel development.
“Land acquired for future hotel development in Queenstown — OIO application being reviewed,” said the presentation to the Macquarie investment conference.
No specific site, area or address was provided by SkyCity on its Queenstown plans and no information has yet emerged from the OIO on the application so far. But the Herald understands the site is on the lakefront at 633 Frankton Rd between the airport and the resort hub.
Previous SkyCity applications to the OIO have been mandatory for the business because although the company
is around 74 per cent New Zealand-owned, about 25 per cent of its shares are in Australian hands, mainly institutional investors.
Yesterday’s announcement is an advancement on last October’s SkyCity AGM, where chief executive Graeme Stephens said the business was looking to “do more” in Queenstown, particularly to cater for international business.
The presentation told how SkyCity wanted to diversify its business and make more money out of highyielding activity. Currently, 70 per cent of group ebitda in the 2018 financial year came from Auckland and 38 per cent of its business activity revenue came from pokies.
SkyCity said its aim was to “improve our operating performance, optimise our existing portfolio, grow and diversify our business”.
SkyCity has listed its long-term value aim to “allocate capital to higher returning assets and businesses”.
SkyCity also updated the market on its trading outlook, lowering its full-year guidance slightly after yearto-date trading was softer than expected and after the earlier settlement of the Darwin casino sale.
It now expects its normalised earnings before interest, tax, depreciation and amortisation for the year ending June 30 to be flat on the previous year. This contrasts with a prior forecast for 5 per cent growth when it announced its first half result in February. That earlier forecast was based on the A$188m ($199m) sale of its Darwin casino to US hospitality company Delaware North settling on June 30. The sale, however, was completed on April 4.
Sky also said it expects its group normalised net profit to be slightly below the prior year, rather than slightly above, as it had forecast previously. This reflects an increase in the effective tax rate that will have a $6m impact, it said.
In the year to April 28, it said its group normalised revenue was up 4 per cent on the same period a year earlier while domestic revenue, excluding its international business, was flat. The group reported revenue was down 2 per cent on the same period due to a low international business win rate.
It said year-to-date revenue was slightly higher in Auckland and stable in Hamilton. In Australia, it pointed to weaker revenue performance in Adelaide due to increased disruption from construction works.
Performance in the now sold Darwin casino was slightly below expectations.
In its international business, it still expects to achieve turnover of around $13 billion to $14b in the full year.