SkyCity Entertainment Group has completed its annual impairment review of all of its property cash generating units and expects to impair the carrying value of the SkyCity Adelaide assets by A$86.2m as at 30 June 2024.
The key drivers of the reduction in future cashflows compared to previous estimates include updated assumptions regarding the introduction of mandatory carded play at the SkyCity Adelaide casino in early 2026; and additional legal and compliance costs associated with SkyCity Adelaide’s ongoing AML/CTF and host responsibility uplift programmes and the introduction of mandatory carded play.
SkyCity said it was ‘committed to implementing mandatory carded play across its casinos as this will significantly increase its visibility and control of customer play, and simplify many parts of its current AML/CTF and host responsibility operations. The primary objective over the coming years is to ensure SkyCity has strongly performing risk management systems, a culture which prioritises compliance with SkyCity’s obligations and customer care, and a business which is seen as a good corporate citizen, worthy of retaining its casino licences.’
SkyCity Chief Executive Officer Jason Walbridge said: “The impairment is a non-cash accounting adjustment at balance date. SkyCity Adelaide continues to be a strategically important asset within the wider SkyCity Group.”
On 28 March 2024, the New Zealand Government enacted a change to tax legislation which removed the ability for owners to depreciate commercial buildings with an estimated useful life of 50 years or more for tax purposes, resulting in an increase in the SkyCity Group’s deferred taxation liability of NZ$129.6m and a corresponding one-off charge to tax expense of NZ$129.6m as the tax base of its New Zealand buildings is effectively reduced to nil.
The operator said that the above impairment and tax adjustment will not impact the SkyCity Group’s underlying EBITDA or underlying NPAT (which are SkyCity’s preferred measures of profitability) for the financial year ended 30 June 2024.
