Auckland convention centre won't be finished by Dec 2019: SkyCity
By Gavin Evans
Nov. 12 (BusinessDesk) - SkyCity Entertainment Group expects further delays at its “challenging” New Zealand International Convention Centre project in Auckland but still has no date for its opening.
The casino operator says the centre and Horizon Hotel, originally budgeted at $703 million and expected to be completed in February 2019, will now be completed “beyond December 2019”.
The company didn’t provide a new timeline and says it will provide further updates once it has greater certainty about completion dates. Fletcher Building, which is managing the project, earlier this year wrote $486 million off the value of a string of developments, including the conference centre. As well as rapidly escalating costs, former chair Ralph Norris particularly cited contract terms for the conference centre, which allowed too much flexibility for variations to be undertaken at Fletcher's cost.
Fletcher won the right to build the convention centre in a deal struck with the previous government, which critics said lacked a competitive tender.
SkyCity said it remains comfortable with the existing contractual arrangements and any additional costs due to delays are expected to be covered by liquidated damages.
“Litigation options continue to be evaluated,” the company says in a presentation for a UBS investor conference in Sydney.
SkyCity, which last week announced the A$188 million sale of its Darwin casino, said it is successfully progressing its other strategic projects.
The A$330 million expansion of the Adelaide casino, started in June, is on time and on budget.
The company said it has received a number of expressions of interest in a concession for operating the car-parking at its Auckland site.
It is also evaluating a potential hotel development in Hamilton and has signed a conditional agreement for a future development site in Queenstown.
SkyCity said it continues to expect modest growth in normalised earnings for the 2019 financial year.
Group revenue to Nov. 7 is 7 percent higher than a year earlier, or 3 percent higher, excluding international business revenue.
The company said the momentum in the New Zealand business from the second half of the 2018 year has continued into the current year, with revenue up about 6 percent.
Local gaming activity in Adelaide has improved year-to-date, with disruption from the main works being effectively managed.
Revenue from the international business through Nov. 7 was up 36 percent on a weaker period the year earlier.