One of the best results by a long shot this reporting season was the interim 2009 profit for the six months ended 31 December 2008 for Sky City Entertainment Ltd [SKC.NZ] which was revealed this morning.While most companies that have already reported in February have recorded slumping profits, Sky City has delivered net profit of $54.8 million for the half year, compared to $55.9 million for the first half last year-that profit was before a writedown of $60 million due to the money losing cinema division.
A drop of $1.1 million during the current economic slowdown is nothing short of breathtakingly spectacular to this shareholder. (see chart)
Of particular interest to me was that this profit was produced on revenue that was dead flat but on lower tax paid and due to around $9 million in extra operating costs.
Labour and energy costs would have taken the bulk of that and the lower tax rate attributed to the lowering of corporate taxes from 33 to 30%, so it looks like much of the vaunted cost savings that were launched around 16 months ago have come to an end.
A very pleasing turn of events was the announcement of a dropping of dividends from 90% of profit payout to 60-70%.
This is something that I have advocated and wrote about just last week.
This will enable the company to pay down more debt than the $24 million that they have in the last 6 months and a wise move considering the current credit squeeze.
The focus by Nigel Morrison in his first nearly full 12 months as CEO, on keeping down costs, efficient use of capital and maximising returns on existing assets is a good move away from the previous CEO Evan Davies and his expensive expansionist ways.
Once again Sky's Cinema division is still losing money even though it has improved revenues by 15%-mainly due to more cinema screens and higher ticket prices.
Once again I must say it is a turkey and it needs its neck wrung.
As I mentioned in the Sky City Preamble published last Saturday the erratic "high rollers" revenue, was well, erratic. Down substantially this year and the win rate fell on the average for the casino, rather than last years favourable one.
Company indications for the next 6 months of operations was pretty vague, as one might expect in the current environment. Nobody is giving clear forecasts for profit or revenue and that is wise should the company disappoint the rabid market.
Sky City @ Share Investor
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Related Links
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| Sky City interim results for 6 months ended 31 December 2008. |
| 2009 Interim Result Presentation |
| Media Release |
| NZX Announcement |
| Financial Statements |
| Result Briefing Webcast |
Sky City Financial Data
Related Amazon Reading
Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling
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