SkyCity loses South Australian appeal over gaming revenue dispute
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More news: The South Australian Court of Appeal dealt a blow to SkyCity today and it's long-running dispute with the State's Treasurer over the handling of gaming machine credits arising from loyalty points and whether they should be included as the company's gaming revenue.
The court decided in favour of the Treasurer of South Australia's interpretation that the credits should be included as gaming revenue when calculating casino duty at the SkyCity Adelaide casino.
What they said: In a securities announcement following the court decision, SkyCity said it anticipates having to pay additional casino duty in light of its appeal loss of around $13 million.
It noted that the impact on its underlying group EBITDA due to the ruling would be around $2 million "with the balance of the additional casino duty payable for previous periods to be provided for as a one-off cost. Note that the full amount of the additional casino duty will impact the reported group EBITDA in FY24".
However, SkyCity said despite the additional costs, its underlying FY24 Group EBITDA was still expected to be between NZ$290 million ($273.9 million) and NZ$310 million and underlying FY24 group NPAT was expected to be between NZ$125 million and NZ$135 million.
The court decision has also left it open for SkyCity to argue that an interest clause is unenforceable as a penalty before a single judge at the Supreme Court at a later date. Interest on the additional duty payments to cover the period Jan 2014 to Jan 2024 could be around $20 million, SkyCity said.
SkyCity confirms CEO exit date as profit slides
The news: SkyCity Entertainment's CEO Michael Ahearne will step down on 8 March, having announced the decision to leave the casino operator last October.
The numbers: Ahearne joined SkyCity in December 2017 as chief operating officer and has been CEO since November 2020.
SkyCity also released its earnings and reported a 3.7% downturn in revenue for the six months to December 2023, compared to the prior corresponding period. Underlying revenue was up 0.6% to NZD490.2 million ($462 million) and total net profit dropped 1.3% to NZD22.5 million year-on-year, with underlying total net profit 8.5% lower at NZD66.5 million.
The group will pay an interim dividend of 5.25 cents per share, down from 6 cents per share a year ago.
The context: SkyCity said that the succession process is progressing and "relatively well advanced". New Zealand chief operating officer Callum Mallett, who has been with the group since 2006, will commence as interim CEO in the meantime. SkyCity board chair Julian Cook will provide executive support on a part-time fixed term basis from 26 February.
Earlier this month, SkyCity shares dipped after news that the New Zealand Department of Internal Affairs would proceed with a civil penalty proceeding against the company's New Zealand subsidiary, relating to non-compliance with anti-money laundering and terrorism financing laws. The claims compound SkyCity's ongoing legal battle in Australia, which will see the group appear before the Federal Court of Australia in June.
The sources: ASX announcement , ASX announcement
