'Argy-bargy' with Fletchers possible over convention centre delays, says SkyCity boss

Friday, 9 February 2018

The new international convention centre is being built in Auckland.

SkyCity boss Graeme Stephens is expecting legal 'argy-bargy' when the casino operator bills Fletcher Construction for losses incurred as a result of the late completion of the new international conference centre in Auckland.

SkyCity's new convention centre should be ready by the middle of 2019 six month after Fletchers contracted to complete it, the casino company said on Friday.

Graeme Stephens, SkyCity's chief executive.

But claims for damages for Fletchers completing the project late could end up with a courtroom tussle, Stephens warned shareholders on the release of the company's half year results.

'It's fairly typical there's going to be a little argy-bargy at some point,' he said.

* New SkyCity chief executive Graeme Stephens excited by casino's future**

'The project has been delayed. We are entitled to make some claims. We would expect Fletchers to challenge it.'

'We thought we should flag that as a possibility.'

'We didn't want to be sending out a message 'It's all fine, it's all fine, it's all fine', and now we're in court,' he said.

Construction was progressing well now, and the convention centre is due to be completed in mid 2019.

'The roof goes on in a couple of months. It's got a lot of momentum,' Stephens said.

Major conference bookings were being taken for 2020.

Fletcher Building has already flagged a financial blowout at its end on the project, and may be about to reveal more, but Stephens said SkyCity remained 'comfortable' with the contractual arrangements, which provided for liquidated damages that should mitigate the casino group's losses from the delay.

Alongside the Convention Centre news, SkyCity reported modest half-year growth, with an interim net profit of $90.3 million for the six months to December 31, 2017.

The result (which stripped out one-off events) was up 7.9 per cent from the previous corresponding period.

Stephens said SkyCity's lift in profits was pleasing considering major building work was taking place in the neighbourhood of its Auckland and Adelaide entertainment and casino complexes.

'Despite ongoing disruption from capital works in Auckland and Adelaide and a slightly less favourable New Zealand economic environment, we remain confident we can continue to deliver growth from our existing assets as well as the new projects in the pipeline,' Stephens said.

He said the main drivers of the half-year financial performance were were growth from the company's New Zealand properties, a recovery in international business, a stable performance from the Australian sites, lower interest rates and a strong Australian dollar.

SkyCity Auckland accounted for three quarters of earnings.

Stephens gave particular praise to the management of its Darwin Casino.

The Darwin Casino delivered no growth, but lost no ground, despite a big increase in gaming licences being issued to pubs and clubs in the city.

A revamped management team had also brought new energy to the group, he told shareholders.

One frustration for Stephens was that the group's IT projects could not be delivered quicker.

Delivering more personalised customer experiences at its centres, especially interacting with visitors through mobile phone Apps was something that needed to happen.

'Everyone's on their phones these days, and we are not,' he said.