SkyCity unveils profit dip, new hotel plans
SkyCity Entertainment Group's plan to build the New Zealand International Convention Centre has ballooned to $500 million following the announcement a five-star hotel would be built adjacent to the complex.
In a full year results presentation this morning, SkyCity chief executive Nigel Morrison said the 12-story, 300-bed hotel would cost up to $180m.
Morrison said SkyCity's two existing hotels were currently experiencing 90 per cent occupancy, and building a new facility to complement the convention centre "made sense".
SkyCity struck a deal with the Government to spend $400m on the convention centre, in return for gambling concessions and an extension of its effective monopoly gambling licence in Auckland.
Morrison said the new hotel would push the total capital expenditure in Auckland to $500m, taking into account already-completed land purchases and planning costs.
To meet these new costs Morrison flagged the possible sale of its carparking building on Federal Street, which could fetch $35m.
Morrison said the decline in SkyCity profits and revenue posted this morning was primarily due to the high New Zealand dollar and ongoing issues with the redevelopment of its Adelaide casino.
"Disruption [in Adelaide] has been significant, and to be fair, more than we expected," he said.
The casino company's annual results posted to the NZX this morning reported a 4.8 per cent decline in revenue, to $821.5 million, and a 22.6 per cent drop in net profits after tax, to $98.5m.
SkyCity said the exchange rate had led operating profit to slide $9.9m, while the the costs from Adelaide contributed $4.4m of the decline.
Work in Adelaide was due to be completed by the first half of 2015.
In a flurry of announcements accompanying the result, SkyCity said it had appointed a new chief financial officer and unveiled plans for a hotel on the site of the New Zealand International Convention Centre. It also released artist impressions of an approved design for the Centre.
Rob Hamilton, former head of investment banking at First NZ Capital, was unveiled as the company's new chief financial officer, and will start in October.
"There is no doubt Rob's knowledge and expertise will help deliver solid results for our shareholders, particularly in the focus areas we are prioritising for long-term growth," Morrison said.
Hamilton will join former Fairfax journalist Colin Espiner, who this week took up the role of SkyCity's head of communications.