SkyCity’s $25m cladding reversal
SkyCity Entertainment Group is removing cladding from its International Convention Centre in Auckland at a cost of about $25 million.
The move was prompted by blazes in buildings in Australia, the Middle East and the United Kingdom that have led to aluminium composite panels (ACP) being replaced on buildings around the world.
SkyCity chief executive Graeme Stephens said ACP cladding was partly responsible for the devastating Grenfell Tower fire in London in 2017.
‘‘It’s a public building. We decided we needed to lead the way with nonACP,’’ he said.
ACP panels were common around the world, Stephens said.
‘‘It’s on a lot of New Zealand buildings. We had a version of ACP for the building, which would have been highly unlikely to have been a problem in the case of a fire,’’ he said.
It’s the latest episode in the saga of the International Convention Centre, and the Horizon Hotel. SkyCity now expects the delayed hotel to be completed within 12 months, and the also delayed convention centre to open in the second half of 2020.
The company was in talks with construction giant Fletcher Building over the delays, but expected Fletcher to have to pay total compensation of nearly $40m because of the delays. SkyCity CEO Graeme Stephens
Thousands of bookings at the convention centre, which was originally due to open this month, would now be reviewed as a result of the continued wait for it to open.
Despite the delays, SkyCity yesterday reported growing earnings, and expected to have grown its net earnings after tax by 11.4 per cent in the six months to the end of December, due to strong results from its Auckland casino.
SkyCity’s Hamilton casino operation also showed growth, and the A$330 million (NZ$347m) project to expand SkyCity’s Adelaide casino complex was progressing well.
The company hoped to complete the sale of its Darwin casino by the end of June.
SkyCity has several big strategic moves planned. The first is to expand its hotel business, including developing a separate brand for it.
It said its plan to launch an online casino was progressing well. Stephens said overseas-based online casinos were already targeting Kiwis, and SkyCity had spoken with the Government about the gap in regulation.
‘‘At the moment we are a bit like a shopping centre without an online offering,’’ he said.
There were plans for more accommodation, dining, and entertainment offerings on Auckland’s Federal St.
‘‘Late last year we announced the world-renowned digital effects studio Weta Workshop as a long-term tenant of our new entertainment precinct alongside the All Blacks Experience ... We have more plans for this space which we hope to reveal soon.’’
The positive announcement was not a surprise to the market. SkyCity reported a strong end to 2018, and last month said it expected to report better than expected earnings growth thanks to its Auckland business performing well, in part due to the return of overseas high-roller, big-stakes gamblers.
The company also said it would use spare cash to buy back up to 5 per cent of its shares.
Stephens said: ‘‘We’ve had a really positive first half of this financial year, aided by some strong gains in International Business turnover and a good result from our flagship Auckland property, particularly on the gaming floor.’’