Confusing accounts, but SkyCity 'improving'

Transtasman casino operator SkyCity Entertainment yesterday released a confusing set of accounts for the year ended June, brought on by the need to comply with international financial reporting standards.

SkyCity used terms like underlying record profit, normalised profit, reported net profit and normalised revenue, where normalised was taken to meet an adjustment to the profit for non-recurring items.

Accountants told the Otago Daily Times that changes to the depreciation rules had also added confusion to the way financial accounts were presented. Since financial reporting rules had moved away from cost-based to fair value, the accounts were not as useful as they once were.

The media release said the group reported a record underlying net profit after tax of $130.9 million for the year, up $5 million, or 4%, on the $125.9 million normalised profit for 2010.

Normalised earnings per share increased by 3.7% to 22.7 cents per share.

Reported net profit after tax was $123 million, up 20.5%. This was after a write-down of the Christchurch Casino investment by $15 million after the Canterbury earthquakes.

Normalised revenue was up 4.5%.

Normalised earnings before interest, tax, depreciation and amortisation (ebitda) of $290.9 million.

A final dividend of 8 cps was declared, taking the full-year dividend to 16 cps.

SkyCity chief executive Nigel Morrison described the 2011 results as a solid platform for further growth.

"This is an improving result, with good momentum, especially considering the mixed economic conditions that prevailed across New Zealand and Australia during the year."

With a stronger Auckland economy and a more optimistic consumer outlook, the Auckland gaming machines were showing an encouraging return to levels not seen since 2008, he said.

The international business was up 50% and Adelaide had delivered its third record year of growth in a tough market.

With the Rugby World Cup less than a month away, the Auckland flagship property was in great shape.

"We are excited and optimistic about the future," Mr Morrison said.

Craigs Investment Partners broker Chris Timms said SkyCity had a strong balance sheet and relatively low debt.

The company's net debt was lower than forecast and it appeared strong cash flow had allowed SkyCity to pay down more debt than expected.

The operating revenue had been driven by Auckland and was ahead of forecast, but the company had given no guidance.

Comments from Mr Morrison indicated that SkyCity was banking on good returns from the Rugby World Cup while conditions remained challenging in Australia.

Asked if tough financial times meant lower revenue, Mr Timms said that would generally be the case. However, with SkyCity, people still liked to go out for entertainment, even in tight times.

SkyCity had spent time and money attracting the Asian high-rollers. Any fall in tourist numbers from Asia could affect revenue, he said.