The 2010 Sky City Entertainment Group Ltd [SKC.NZ] 2010 full year profit out this morning was no surprise to the market.
It is a record profit for the company.
When compared to the $115 million 2009 full year result, the 2010 net profit of $141.725 million (Net profit is down 13% on 2009 due to Govt tax changes. This is merely a one-off balance sheet entry)is up by more than 22% on slightly higher revenue of $837,855 million, that is down 1 % on 2009.
Key Points from the 2010 Result
1. Record net profit of $141.725 million (Net profit is down 13% on 2009 due to Govt tax changes.)
2. Total revenue down by 1% to $837,855 million. (Cinema revenue excluded from part of the year)
3. Dividend up by more than 40% to 9.25c vs 2009 6.5c.
4. Uncertain 2011 outlook.
5. Reliance on Australian casinos for future revenue growth.
6. Just over $10 million of profit from the gain from disposal of cinema assets.
Cost savings through paying down debt and other business costs savings continue to be a major factor in the improved bottomline and the proceeds of the sale of their cinema business which was $10.3 million went million straight to the bottom-line.
Overall revenue is sadly still stagnant and at the main profit maker, the Auckland Casino, revenue is down by more than 2% but Sky City's two hotels in Auckland had gained significant market share during the past two years with hotel revenue up, against the overall market trend.
It should be noted that alot of the increased profit has already been wrung out so 2011 is going to be a struggle.
Its Australian casino assets in Darwin and Adelaide have continued to trade well and the currency swap from revenue exported to head office in Auckland has given SKC a good boost.
The key part of today's announcement is surely the indication by CEO Nigel Morrison that the company sees more uncertainty ahead and it will be hard to see SKC beating the 2010 result come this time in 2011 but Morrison seems to be reasonably positive about the next 12 months:
"However, we expect to continue to deliver improved returns as the economy recovers."
As he said in my interview with him earlier this year, he expected double figure profit growth again in 2011.
I cant see it.
9 out of 10.
Disclosure: I own SKC shares in the Share Investor Portfolio
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c Share Investor 2010
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