Sky City Entertainment Group Ltd [SKC.NZX] reported on Monday an as expected 18 per cent fall in annual profit.Sky City made a net profit of $NZ98.4 million in the year ended June 30, compared with a $120.1 million profit the year before. Revenue was up just over 6% to $815 M.The company said in May that it was comfortable with analysts' estimates for an annual profit around $98 million. Future guidance for profit growth in the next year is estimated at 10-12%.
Sky City Auckland Casino Ebitda dipped slightly, Adelaide was down by nearly 10% and Darwin continued to steam ahead with a nearly 7% rise while the dairy farming led boom down in Hamilton lead to an increase in Ebitda by over 12%. Holy cow!
There is little detailed information as yet about promised updates to the market about disposal of under performing assets such as the cinema division and Adelaide Casino. These two assets have been named for possible sale but only if offers exceed the company's "internal view of value". So we know nothing more here than we did 3 months ago when asset sales were initially signaled by management. Today's announcement was supposed to bring detail of which assets would be disposed of.
There has however been an indication of interest by some parties in the Adelaide Casino and speculation during the last few months over various cinema companies kicking the tyres over at Sky City Cinemas.
As indicated here a few months back, any asset divestment proceeds will either be used to reduce debt and/or be returned to shareholders. The appropriate capital management strategy will depend on assets divested and the level of proceeds realised.
There was also mention of the overblown accusations by TVNZ of corruption at Sky City Casinos and managements counter of effective structures within the company, while not perfect , were able to ameliorate any dodgy practice that individuals might try from time to time.
Elmar Toime, executive director and acting CEO seems focused on cost cutting and efficiency of the business, something that he did well when he cut costs at the former bloated State Postal provider, NZ Post in the 1990s.
While management are looking for a replacement for the dear(read expensive)departed Evan Davies , in my humble opinion Toime looks good to get his shoes under the big desk.
A dividend of 12c has been declared.
The markets early reaction to the news today sent the share price up 17c to $4.37. Sky City Casino(SKC) are currently at $4.21 3.25pm August 20 NZ time.
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