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Operator: Good day, everyone, and welcome to SkyCity Entertainment First Half 2026 Results. [Operator Instructions] Please note, this conference is being recorded. Now it's my pleasure to turn the call over to Jason Walbridge, Chief Executive Officer for SkyCity Entertainment Group.
Jason Walbridge: [Foreign Language], everyone. I'm Jason Walbridge, Chief Executive Officer of SkyCity Entertainment Group. Welcome to SkyCity's presentation of our interim results for the financial year 2026 we announced to the NZX and ASX this morning. Before I begin, I'd like to acknowledge the tangata whenua of our SkyCity sites, Ng?ti Wh?tua ?rakei, Waikato Tainui, and Ngai Tahu, and acknowledge the Kaurna people, the traditional custodians of the land in Adelaide. With me today in Auckland is Peter Fredrickson, our Chief Financial Officer; and Callum Mallett, our Chief Operating Officer. On the call today, we will be going through the first half 2026 financial results presentation, and there will be time for questions at the end of the presentation. Let's move to Slide 5 for an overview of our results. The result is consistent with the full year 2026 guidance we provided in August 2025, and which we reiterated at our AGM in October. I'd like to call out some specific numbers. Visitation remained steady across the group, with the small reduction due in part to changes in the way we measure visitation and the introduction of Carded Play. Revenue was down 2.4% or $12.3 million, with total gaming revenue down 6.3%, or $19 million, with lower revenue across both gaming machines and tables. The lower gaming revenue was predominantly due to the introduction of Carded Play across our New Zealand casinos that went live in July 2025, and, pleasingly, is in line with our expectations and guidance. We also experienced a lower level of activity in premium play compared to the prior period. Growth in nongaming revenue, particularly in hotels and food and beverage, was a highlight for the half. The lower revenue flowed through to a reduction in both reported and underlying EBITDA. As we have reported previously, the difference between these 2 numbers for this half is the $13.4 million of B3 costs incurred in Adelaide. The increase in costs was in a number of areas, including increased investment across our AML and host responsibility areas, particularly in Adelaide, as I just mentioned, as well as costs associated with the opening of the NZICC and technology costs, some one-off legal fees, and higher costs of sale associated with the growth in nongaming revenue. Group cost-saving initiatives are being implemented, as previously advised, and our focus is on managing the cost base to the business conditions without compromising our customer offering. Underlying EBITDA of $85.5 million is just over 28% lower than the prior period, and we will provide further detail on these factors throughout the presentation. Underlying net profit after tax is also lower than the prior period, while reported net profit after tax is nearly double the prior period due to one-off adjustments made in both periods. Overall, the reduction in our first half 2026 earnings is not where we want to be, but reflects the transitional period and is in line with our expectations for the full year 2026 guidance we have provided, noting we expect to see a greater second half skew to our earnings than -- as previously outlined. Our debt metrics remain in line with our guidance and are below our covenant levels. Turning now to Slide 6. Since we spoke to you in August, we have been very focused on progressing the key initiatives we outlined in the financial year 2025 results presentation and the accompanying capital raise documents. The first half of financial year 2026 reflects a planned period of operational transition for the group, and the team has been working very hard on the key projects, and I'm happy with the progress that we're making. We've made good progress during the half identifying and implementing a range of cost-saving initiatives to partially offset cost increases, and we expect to deliver further savings in the second half in line with the targets provided in August. This is a significant focus of the organization. I will talk more on these initiatives shortly. We are progressing with our plans to monetize assets and have 99 Albert being marketed for sale. Work is also underway looking at further opportunities to release in the order of $200 million from asset monetization proceeds over the next 12 months. A significant event was the opening of the NZICC on the 11th of February, with the first live event held on the 12th of February. This is a major milestone for SkyCity, and indeed for Auckland and New Zealand, and we now have a truly world-class convention center. Whilst it has been a complicated and drawn-out project for everyone involved, to have it finally open is a wonderful achievement, and we now look forward to welcoming the large number of visitors coming to the many events already booked and in the pipeline. The initial feedback has been incredibly positive, and this gives us confidence about the opportunity for a meaningful increase in visitation across the precinct. We've spoken with you previously about the move to Carded Play across our New Zealand casinos. This is a very significant change for our business and was successfully rolled out in July last year. This involved an incredible amount of work by many members of the team, and the impact on our EBITDA is in line with our guidance. As part of the rollout, we've also launched a new loyalty program called SHOW by SkyCity, which has been well received by our customers, with many existing customers changing over to the new program, along with the many new customers that have signed up. Lastly, we are still awaiting the CBS outcome from the Martin Report released last year. Turning to Slide 7. This slide updates the key areas of focus for the group under the 6 key pillars we spoke about in August last year. I don't intend to speak to this slide in detail, but note we're making good progress against each of these pillars. Our strategic priorities are unchanged, optimizing the core business, focusing on our customers, and getting prepared for online gaming. The critical enablers within the business that will allow us to achieve these priorities are risk transformation, people and culture, and digital transformation. A key area of focus is the reset of our New Zealand and Adelaide operating models, ensuring we have the appropriate cost structures in place, having regard to the current operating environment now and into the future. Callum will provide further detail on some of the changes we are making in this area. We're also reviewing our spend on technology and have already implemented a number of cost-saving initiatives with more to come. We continue to look at further cost efficiencies where appropriate, whilst ensuring we don't compromise compliance, customer experience, or our long-term capabilities. These cost savings will support an improvement in our second half earnings and into financial year 2027 and beyond. Turning to the next slide. In August last year, we outlined an intention to target the release of $200 million of capital from the monetization of assets within 12 to 18 months. We had already identified the commercial office property at 99 Albert Street as a noncore asset, and real estate firm CBRE has formally commenced marketing the sale of this property. SkyCity holds a significant portfolio of assets on its balance sheet, and it's actively assessing monetization options across individual assets and potential combinations. External advisers have been engaged, and the program is well advanced, and we continue to target in the order of $200 million in monetization proceeds by February 2027. In evaluating the various options, we are carefully considering strategic alignment, the maximizing of value, transaction sequencing, and relevant external dependencies. The car park concession has not yielded any credible proposals to date. And whilst it's disappointing not to have progressed a transaction, we remain open to credible proposals going forward. We will keep the market updated as we progress these various initiatives and are focused on achieving the appropriate outcome for our shareholders. Turning now to Slide 9. As I mentioned earlier, Wednesday last week was a significant day for SkyCity as we formally opened the NZICC, with the New Zealand Prime Minister cutting the ceremonial red ribbon. As we've spoken about in the past, the NZICC is New Zealand's largest convention center and will allow us to attract major international conferences, previously unavailable to New Zealand, as well as being able to host numerous events, theater, and musical performances. Looking into the future, the level of bookings we have confirmed for the remainder of financial year 2026 is very positive, with over 110,000 visitations, with still more to potentially come. This gives us confidence in delivering an increase in revenue and earnings across the Auckland precinct in the second half of the year, particularly our hotels, food and beverage, Sky Tower, and car parking operations. Looking into financial year 2027, the combination of events confirmed, and in the sales pipeline, with visitation growing significantly, it's a very pleasing outcome and shows that we have a facility that is attractive to both domestic and international customers. The opportunity from this increase in visitation has the potential to be a significant driver of earnings growth for our Auckland precinct, and we are well advanced with our strategies to ensure we take full advantage of this opportunity. For example, our hotel reservations team can see the future event pipeline and the expected room night demand, and we'll manage booking activations to ensure we maximize the average room rate opportunity. We've put in place various playbooks for the different types of events that will be held in the NZICC, and how we will set up our food and beverage outlets. There's certainly going to be a steep learning curve in the early stages, but the teams are well prepared for this. I'd like to note that the total cost of the development, including the NZICC, the airbridges, the adjacent laneway, and the over 1,100 additional car parks and the Horizon by SkyCity Hotel, all remain in line with the previously provided guidance of approximately $750 million. This is a fantastic achievement for the team involved in the development of these assets. We also expect the financial year 2026 outcomes for the NZICC, provided in August last year, will finish moderately positive to our earlier guidance, again a testament to the great work done by the team involved in the preopening phase. Turning now to Slide 10 and the implementation of Carded Play. Now that we've had Carded Play in our New Zealand casinos for over 6 months, I'd like to share with you some of the insights we're now seeing. Pleasingly, we've been able to maintain high customer satisfaction levels throughout the implementation process, and this was a key focus for our team, recognizing the significant increase in potential friction we added to how our customers interact with us. We've continued to see a change in our customer mix, as previously unCarded Players have signed up for cards. And importantly, Carded Play is giving us much better visibility into who our customers are and how they engage with us. Pleasingly, we're still seeing a steady sign-up of new customers, with around 4,000 per week during December. We're also seeing strong take-up of the SHOW loyalty program, with a high proportion of Carded Players now participating in that program. As an example of the benefit of Carded Play in our Queenstown Casino, which is a very popular tourism destination and previously had a much lower level of Carded Play to our other properties, we now have much better visibility into the mix of domestic and international visitors, which allows us to be more targeted in our marketing. The increased level of host responsibility and AML requirements has seen an impact on the level of play from some of our VIP players. We are now looking to further refine the way we interact with our customers to ensure we meet our regulatory requirements and minimize the impact on the customer experience. Our loyalty programs include tiers, as with many loyalty programs, and we're looking to be more specific in how we manage the customer value proposition across those tiers, ensuring our customers understand what is available for them. As we progress our online opportunity, having account-based play across retail and online will be an advantage for us alongside our nongaming activities, we believe, will be a compelling offering to an already significant customer base. Turning now to Slide 11. As mentioned earlier, visitation has dropped marginally across the group, which in part reflects the way we are measuring visitation now that we have Carded Play in our New Zealand casinos. On this slide, we have shown the combined impact on EBITDA per visitation from a range of activities, including the implementation of Carded Play in New Zealand, preopening costs for the NZICC, preregulatory investment in our online business, and the increased cost base in Adelaide. Looking forward, we expect the NZICC to support increased visitation and spend across the Auckland precinct over time, which will support growth in earnings going forward. Our current focus is on addressing the cost base to minimize the margin impact while ensuring we maintain the service levels to provide the experience our customers expect. Turning now to Slide 12 and our online gaming business. The New Zealand government is progressing the process to enable the legislation and regulations required for the regulation of online gaming market in New Zealand. The time line has pushed out approximately 5 months since we last spoke, with the current expectation providing for licenses to be issued from the government from the 1st of December 2026, with licensed applicants only able to continue to operate from that point and all unlicensed operators having to cease operations by June next year. There is still a significant amount of detail to be worked through. As I mentioned before, the Online Casino Gambling Act is expected to be passed into law by the 1st of May this year. We are transitioning to our new platform partner, along with the application of a Malta gaming license. We have been continuing to build out our capability in Malta in a very measured way and managing the phasing of the investment giving delays -- given the delays in the government time line. The delay in that time line will likely defer the receipt of revenue until the latter part of financial year 2027 when compared to our previous expectations. The financial year -- excuse me, the financial results for our online operation in the current half continue to reflect the uneven playing field we have referred to in the past. The regulation of the online gaming market in New Zealand is necessary in the current gray market structure, as market participants failing to provide the protection and the support for customers as provided for under the proposed legislation. We see this as a significant opportunity for ourselves over time. But right now, our focus is on being market-ready, disciplined on our investment in this area, and aligned with the regulatory framework. I'll now hand over to Peter Fredricson to discuss the group financial results in more detail. Peter?
Peter Fredricson: Thanks, Jason, and good morning, everybody. Jason's already commented in general on the P&L results for the group, and Callum will go through the operating results of each of the individual CGUs shortly. So in starting on Slide 14, I won't spend a lot of time on the results, per se. What I will highlight is the fact that the underlying EBITDA for the period is very much in line with where we expected it to be, with the outcome from MCP, again, very much in line with what we had expected. We will see an approximate 43%-57% half-on-half skew in FY '26, primarily driven by preopening costs for NZICC incurred in the first half, more than offset by revenue coming through from that business in the second half. We are also expecting to see Auckland precinct revenues positively impacted by visitation from the NZICC in the second half with at least 110,000 visitations in the half currently visible through our bookings. Increased hotel occupancy and ADR as a result of the NZICC operating from February through to June also provides its own increased contribution to that second half skew. In respect to those items below the EBITDA line, I did want to comment on 2 noncash significant tax adjustments that go through the profit and loss. First, with the recently identified and expert-confirmed increase in capital expenditure for the railway building in Adelaide over the next 10 to 15 years, we have taken a view that increased tax depreciation will put the full usage of tax losses in Australia out beyond 12 years. Whilst the $180-odd million of tax losses will remain available to the business to use against taxable profits going forward, we deemed it prudent to remove these from the balance sheet. So here, you will see a $32.5 million charge to tax expense in the P&L in that regard. On completion of the NZICC, accounting standards require us to credit the deferred license value of $246 million that you will have seen as a current liability in the June 2025 balance sheet against the building value in fixed assets. This has the further impact of delivering a credit to tax expense of $43.6 million, somewhat offsetting the impost of $129.6 million that was charged to tax expense in FY '24, reflecting the change in legislation at that time that removed the ability for companies to depreciate buildings for tax purposes. Effectively, these 2 noncash tax adjustments offset each other for the half year. Moving to Slide 15. What I wanted to touch on here is the balance sheet metrics post the equity raise in August of 2025. As noted then, the increased debt associated with the buyback of the car park concession and various fines paid in respect of our businesses would likely have driven our debt covenants dramatically higher in FY '26 and could have led to a potential ratings downgrade through the December half year. With covenant metrics of 2.83x for the half and expected to land around 2.7x at year end, we remain focused on the delivery of a minimum $200 million from asset monetization to ensure positive go-forward metrics, reduce debt, and to meet expectations of removing the negative outlook to our credit rating by February 2027. Whilst we have no debt maturing prior to May 2027 and whilst we retain appropriate levels of liquidity and ample covenant headroom, we will likely look at potential opportunities for refinancing the May 2027 retail bond in coming months. Moving now to Slide 16. We did want to point out that even with the first half delivering only 43% of what we expect to be full year underlying EBITDA, absent the final $39 million, including retentions paid for NZICC CapEx in the period, we were able to deliver positive operating cash flow of $56.1 million in the first half, funding some $36.5 million of BAU stay-in-business CapEx. With no more than $34 million -- no more than around $34 million of BAU CapEx expected in the second half against underlying EBITDA that we are guiding to be materially above first half actuals, we are confident of delivering significant real positive cash flow for the full year in FY '26 on a post-BAU and NZICC CapEx basis. With that, I'll hand over to Callum. Thank you.
Callum Mallett: Thank you, Peter. Good morning, everyone. Turning to Slide 18 and our Auckland property. We were pleased to see overall visitation across our Auckland precinct was up 2% on the prior period, with growth in our food and beverage outlets and hotels leading the way. The implementation of Carded Play has impacted gaming visitation along with the ongoing AML and host responsibility enhancements we have been making. As Jason mentioned, we are pleased with how the rollout of Carded Play has gone across our New Zealand properties with the financial impact in line with our previously provided guidance. Auckland experienced a lower volume of premium play compared to last year, and we are reviewing our strategy with the small but important customer segment. We have not observed any noticeable change in customer spending behavior. Therefore, we have been active with promotions, sponsorships, and events to drive visitation. Initiatives, including Super Rugby sponsorship, Christmas at SkyCity, and food and beverage pop-ups have helped keep visitation strong. We remain very focused on ensuring our cost base responds to changes in our revenue, and the team is constantly looking at ways to further reduce costs, including operating hours, renegotiation of supplier contracts and staffing levels. We are wary of cutting costs such that our service levels are impacted, and we continue to monitor customer feedback very closely. We've also been preparing for the opening of the NZICC, ensuring we have a precinct-wide proposition for the anticipated growth in visitation. We know the NZICC guests will be looking for a wide variety of experiences depending on the type of event they are attending. Ensuring we attract these guests pre and post events to our hotels, food and beverage outlets, and gaming and attractions is critical to our objective to drive revenue and increase our operating margin across the broader Auckland precinct. Turning now to Slide 19. The Hamilton result was in line with our expectations. And pleasingly, Queenstown was ahead with both casinos completing the successful rollout of Carded Play in July. The visitation change in both gaming and food and beverage is primarily due to a change in how we measure our visitation across both casinos with the key driver being the introduction of Carded Play, allowing us to more accurately track player metrics. This does make a direct comparison with the prior period less relevant, but you will also see a corresponding increase in spend per visitation. The management teams are working hard to increase revenue, but also ensure we have the appropriate cost base to support the current market conditions. A highlight in Hamilton was the opening in December of an outdoor gaming balcony expansion. Whilst early days, we are pleased with this enhancement to our customer experience offering. Queenstown is benefiting from an increase in international visitors helped by strong Trans-Tasman aircraft capacity, plus an improvement in domestic tourist numbers also. The Queenstown casino license was successfully renewed for a further 15 years from December 2025, when we also celebrated its 25th birthday. We are in the early stages of completing the process for the Hamilton casino license renewal, which is due in 2027. Turning to Slide 20 and our Adelaide operations. It has been a difficult period for our Adelaide business. Within the gaming operations, we have seen a continuation of the churn in VIP customers, offset by the addition of lower value customers. The key issue in Adelaide was higher costs due to the increased investment in AML and host responsibility capability, some one-off costs, and the tax impact of higher main gaming floor revenue. Adelaide management is implementing a significant cost out program, including workforce reduction, with benefits expected to be seen in second half '26. The team has worked hard to ensure that the B3 program is operationally on track with some costs pulled forward from FY '27. Whilst gaming revenue has been relatively flat after adjusting for lower premium play volume, we have seen encouraging performance from the food and beverage and hotel departments. Eos Hotel benefited from citywide event visitation, which drove both occupancy and average daily rate higher with this impact flowing through to our food and beverage operations. The Adelaide team opened Huami in October, utilizing existing space to further increase visitation to the precinct, and we celebrated the Adelaide casino's 40th birthday during the half. We expect to implement mandatory Carded Play into Adelaide from December this year. Thank you. And I'll now hand back to Jason.
Jason Walbridge: Thanks Callum. Turning now to the outlook for the remainder of financial year 2026 on Slide 22. We are reiterating the financial year 2026 guidance provided in August last year and confirmed in October last year for underlying EBITDA in the range of $190 million to $210 million, and reported EBITDA in the range of $170.6 million to $190.9 million, which includes the full year B3 costs. We're also broadly comfortable with current market consensus earnings expectations for the financial year 2026. It's also important to note that we have guided to a second half skew in earnings in financial year 2026. As I spoke about earlier, the opening of the NZICC provides a significant revenue growth opportunity for both the Auckland precinct in the second half, and we do expect to benefit from operating leverage due to the increase in revenue, delivering an improvement in our overall margin. Cost savings across the group, particularly in Adelaide, will also support an improvement in our second half earnings compared to the first half. I would note, we have not seen any noticeable change in customer spending habits in the January 2026 trading period. As Peter has spoken to, the financial year 2026 reported net profit after tax will reflect the impact of the recognition of the Australian tax losses and the tax adjustment relating to the NZICC deferred license value that were part of the first half result. We expect CapEx for the full year will be in the range of $100 million to $110 million. And just lastly, before we move on to the next slide, I'd like to acknowledge Peter Fredricson, who will be leaving SkyCity on the 1st of March. Peter has played an important role during a period of significant transition, and I'd like to thank him for his contribution. I'd also like to welcome Blair Woodbury, who will be joining us as Chief Financial Officer from the 9th of March. We're looking forward to working with Blair as we continue to progress the business through its next phase. Turning to the next slide. I'd like to finish this presentation by talking to the medium-term outlook for SkyCity and refer to the Future of SkyCity slide. We are making good progress working through the key initiatives that will determine the future of our business, a future that, in our view, has the potential to deliver a path to earnings growth, improved cash flow, and returns profile. We aspire to be a gaming leader, delivering connected customer experiences across entertainment precincts and online gaming. Most importantly, we expect to drive sustainable earnings and strong returns for our shareholders in the future. We're a business with high-quality assets and a strong market position that provide a solid foundation for future returns. We continue to make significant progress in creating an operating model that ensures we meet our regulatory obligations, has the appropriate level of invested capital, and delivers an acceptable return on that invested capital. Growth will come from the opening of the NZICC, recovery in customer spend per visit in New Zealand as the economy recovers, and the large opportunity presented by the regulation of the New Zealand online gaming market. Thank you for listening this morning, and we will now take questions.
Operator: [Operator Instructions] Our first question comes from the line of Kieran Carling with Craigs Investment Partners.
Kieran Carling: First question is just on the deterioration in Adelaide. Can you split out what drove the 9.5% increase in OpEx between AML costs, the gaming tax, and one-offs? And just give us a steer on the extent and the phasing of your cost-out program and what we should expect in the second half?
Callum Mallett: Yes. Thanks Kieran. It's Callum here. So when we look at that bundle of costs in Adelaide, from a one-off perspective, there was about 30% of that was one-offs, and then the rest was a mixture between the tax changes from VIP gaming down to main gaming floor, and some cost of sales from the revenue, and then from the uplift to do with compliance and regulation there. So where we're at with the cost out is there's already a number of roles that the team there have made changes to. And the business is still looking now at what other operational changes can be made around the business to remove costs, whilst obviously making sure that we're focused on revenue. So the B3...
Kieran Carling: Just as a follow-up...
Callum Mallett: Sorry, Kieran.
Kieran Carling: Just as a follow-on to that. That's helpful. But can you give a steer on what we should expect in that second half run rate with your cost-out in place?
Callum Mallett: Look, we're still doing that work, Kieran. And it's a key focus for the team, but not something we can go into detail today on
Kieran Carling: Next question, I just want to drill into the NZICC a bit more. So appreciate there's still a lot of uncertainty there. But I'm keen to understand how you're thinking about the cost base and the opportunity. So firstly, what criteria does an event have to meet to be included in your pipeline because we've gone from 250,000 events in the pipeline at your last result to potentially 500,000 now in FY '27? Also keen to understand what your fixed cost base is that you're expecting in FY '27? And then just finally, what level of visitations or events you think are needed to get the center to break even on a stand-alone basis?
Jason Walbridge: Kieran, Jason here. I'll take the first part of it, and then I'll get Callum to talk more specifically to the operations. Look, we've got a tremendous pipeline ahead of us. The team have done a great job. We've got 110,000 visitations confirmed for this financial year. And as you'll see in the presentation, really good line of sight on FY '27. Last week with the official opening, as a consequence of the profile and attendance by a lot of existing and prospective customers, we were able to book 20-some events for groups of up to 250. So that gives you an idea of some of the types of events versus the Coral Reef Symposium, which is our largest event, that will be in town in July this year. And they're guiding us to attendance north of 2,500 delegates. So there's quite a range of different events that we're able to attract with the venue.
Callum Mallett: Yes, Kieran, to your other question. So the first driver, obviously, we want all events to break even at least and make a profit within the box. But a really key driver, obviously, is visitation to the overall precinct. So the team have a very structured process with different events because obviously, all of the different events come with different revenue opportunities even within the box. And so that is key. As a good example, this weekend, we've got a public open day. We won't get any revenue from that, but the team have 5,500 people registered to come through. So obviously, the ability for us to leverage across the precinct and across Auckland is significant from that. And then from a breakeven metric perspective, as we've said before, our goal is to break even within the box. And that is an absolute goal the team have for FY '27, but obviously much too early for us to be able to confirm how we're tracking that.
Kieran Carling: But when you say that an event is in the pipeline, what criteria does it have to meet to be in the pipeline as opposed to confirmed.
Callum Mallett: Yes, sure. So the pipeline is where a customer has come in, obviously, generally done a site visit, the team have started planning for it and given a quote, and that is in the pipeline. As a good example for the pipeline in FY '27 -- sorry, in FY '26, we've confirmed around 75% of business so far.
Kieran Carling: And yes, so I don't want to belabor the point, but back at the full year result, you said there were 250,000 events in the pipeline and you were forecasting, or you were assuming it would be breakeven on a stand-alone basis. You've now got up to potentially 500,000 events if you execute on the whole pipeline. So does that put you above breakeven on a stand-alone basis? Or you just think that all events will be roughly breakeven. I just want to understand what the fixed cost base is of the convention center.
Jason Walbridge: Kieran, Jason here. Obviously, as we scale, I think the economics change. It's just too early to guide you on what we think could happen if we convert this full pipeline. We're just being very, very successful at the moment on growing the pipeline, which is great news for us. We've literally been open 7 days, and so we'd like to get some more operating time under our belt here, and we can certainly talk to you more about that when we do full year results later in the year. But right now, at the moment, our stated objective that we shared with you in August is breakeven for the box and then driving cross-precinct benefit, hotels, food and beverage, restaurants, and gaming
Kieran Carling: I'll just squeeze in one last question on the asset monetizations. So you've alluded to the fact that the car park sale process hasn't gone as planned and you've got advisers engaged to review other assets. Can you give any more detail there as to what assets you're looking at? Or I guess, to phrase it differently, are there any assets that you're excluding or are not up for sale?
Callum Mallett: Yes. We've previously shared that we've looked at all of our commercial property that we own in Auckland. So we've listed 99 Albert. We're obviously looking at our other commercial property. We've been focused on car parks. Our advisers have been working with us, and we're well advanced in looking at other options. Nothing more to share at this stage, and we'll certainly be back in touch if and when the Board makes decisions on what we will do there. But I just want to reiterate, we are committed to monetizing $200 million worth of assets in the next 12 months before this time next year
Operator: Our next question comes from the line of David Fabris with Macquarie.
David Fabris: I've got a couple of questions. So firstly, I know it's a short window, but can you just talk through trading in early second half '26 versus first half '26 in Auckland, so sequentially? And just with the NZICC, I know you touched on it in the prepared remarks, you made a couple of comments there in the Q&A just then. But can you show us or talk to some framework for how we think about hotel occupancy rates and room rates? You've got a lens on bookings there. And then can you share any insights on the flow-through revenue benefit to nongaming and gaming as the NZICC ramps up?
Jason Walbridge: David, good morning. Jason here. I'll take the first couple, and I'll get Callum to fill out some of the hotel metrics for you. Look, in the first few weeks of the second half of FY '26, we've seen no discernible change in customer behavior or spend patterns. We've just opened the convention center in the last 7 days, as I mentioned before. So that's obviously going to have a big change to visitation for us over the next few months. So it's really just too early to tell if there's going to be any meaningful change there. We're really focused on getting that box open, lots of visitors, and then getting them across the sky bridge and into our hotels, restaurants, and onto the casino floor. Callum do you want to talk about expectations around hotel metrics and occupancy?
Callum Mallett: Yes, sure. David, how are you? So the Auckland market, as we know, from a hotel perspective, has had excess inventory. Prior to COVID, obviously, the market was going well. Then obviously, a number of properties opened up on the back of NZICC opening. So Auckland occupancy has traded just below 70% as a market for the first half of the year. Our 3 hotels have traded in mid-70s. And we expect that in the next half to grow to above 80%. So we're expecting good growth in occupancy. We're also expecting our average rates to go up about 10% on the back, obviously, of what the NZICC will bring us. And outside of the NZICC, there's also a good number of events coming into Auckland now, more so than what we were seeing a few years ago. So things are building well. And obviously, as Jason has alluded to, there's quite a significant split in revenues from first half to second half. And certainly, hotels is one of those key drivers. As far as other areas that you asked on the NZICC impact, we are expecting to see an impact in food and beverage and the tower and car parking and then minimal impact, but still positive in gaming as well. As we've spoken to before, one of the key things that we need to drive from that extra visitation is our operating margin. So we know that our visitation has been reasonable across the last year, 2 years because we've had a visitation drive, which has meant we've kept that base of staff on. And now we see -- and what we hope is that we'll see that visitation increase without us needing to demonstrably change, in particular, our labor levels.
David Fabris: And next question. I may have missed this in the documents released today, but with the one-off costs above the line in FY '26, can you walk through what was booked in the first half individually for the NZICC preopening costs, if there were any online readiness costs? And then can you just share what's expected in the second half for both of those, as this is going to be helpful to really understand the true underlying cost base?
Peter Fredricson: Yes, David, look, we haven't got those numbers at that sort of level of detail for you. What we've said is that the NZICC, we probably have spent about a couple of million bucks in the first half on preopening costs that we weren't able to capitalize. And what we'll have in the second half is a significantly higher cost base because that will be driven by the 110,000 people that are going to visit us and have to be serviced. So the cost base goes up and the revenue comes as well. We think that we're probably another couple of million bucks negative in the second half in that regard. Online, as we said to you last year, we have an ongoing spend in the business that you'll see in the documents today, and that has shown us an outcome of $3.8 million of spend in the first -- in the second half -- sorry, in the first half versus last year's $3.2 million. That's primarily driven by the fact that we are quietly progressing towards a regulatory environment, and therefore, we're increasing expenditure, increasing our team in the online business. It's not -- we have not spent as much as we had expected to do in that first half because of the 6-month delay that was afforded us by the government pushing the legislation out. So you'll see those numbers there. They're slightly higher than last year. We expect them to be, again, slightly in line with the guidance that we gave for the full year, probably short by $1 million or so.
David Fabris: And just one last question from me. Can you just talk about what the business is doing with AI at the moment and what's planned? I mean I'd assume that there's some significant efficiencies and cost benefits in time. It would be great to hear any of your thoughts or comments on this.
Jason Walbridge: Yes. David, Jason here. Yes, we've got some initiatives underway with the utilization of AI with a number of our technology partners. I would say -- I would characterize it as we're at the early stages of that work, and we'll see more focus come this year and into next year. AI is a big part of the online world, and our platform partners are already quite advanced there. The slot analysis and marketing platforms that we're investing in at the moment have significant AI-enabled functionality that we'll be taking advantage of in the next few months as well. So it's certainly an area that we're putting more focus and effort on. But we're just -- we're investing very consciously and carefully given the capital constraints that we've got at the moment. So those are -- that's a couple of examples for you
Operator: Our next question comes from the line of Adrian Allbon with Jarden.
Adrian Allbon: Perhaps the first one's probably for Peter. Just in terms of the capitalized interest, was that about $16 million for the half?
Peter Fredricson: Look, we'll come back to you. I don't have that number off the top of my head. I'll come back to you with it, Adrian. Happy to have Craig touch base with you on it. Again, it's -- the interest that was being capitalized is everything that's available to us or that's required of us by the standards. And given that we didn't -- we've capitalized interest up until the handover of the building to us in early November.
Adrian Allbon: So maybe if I ask it slightly different. In the second half, are you expecting -- there should be hardly any capitalized interest presumably, right, because all the facilities are over.
Peter Fredricson: None, none. And maybe I'll expand on that question further and say this. We've guided to between $100 million and $110 million of capital -- of CapEx in FY '26. We don't expect there to be any significant CapEx in the second half for NZICC at all. We effectively have -- apart from some retentions the final retentions that will be paid in FY '27, we've spent something in the order of $39 million of capital on NZICC prior to its opening on the 11th of February. Everything from here in terms of capital in respect of NZICC is de minimis.
Adrian Allbon: Just on the 99 Albert Street, are you able to give us an indication of what the book value is of that asset?
Peter Fredricson: Not really. We're not in that position. And clearly, the building is now in the hands of CBRE for marketing, and there's -- we'll see what we see.
Adrian Allbon: Just -- maybe this is more for Jason on this point, and to follow on from what Kieran was asking. But I mean, like the whole investment properties, which include more of that commercial corner was sort of $84 million, I think, at the last -- at the full year accounts. Like in Albert -- 99 Albert is a subset of that. It's still a reasonable bridge until the -- for the $200 million, excluding -- if you exclude the car park concession. Are you able to color it in a bit more for us? Because it's obviously quite a key kind of metric for new people looking at the stock.
Jason Walbridge: Adrian, yes, of course, more than happy to. Yes, we're -- as you say, we're sitting on a number of commercial properties here in Auckland, 99 Albert is one of 3 or 4. So we've listed that and that sales process is well underway. As I mentioned in my remarks, we've got external advisers engaged. So we're looking at obviously the rest of the commercial property, as we've indicated for some time now. We've got the car parks, albeit we haven't had any credible proposals to date. We still remain open to interest if it exists. But we've got our advisers looking at different options that we could potentially pursue that will maximize value for our shareholders and achieve that $200 million target that we've set. Transactional sequencing and external dependencies are part of the considerations at the moment. I expect in the coming months, we'll be able to share more as we make more progress on that. But we are well advanced. And we still -- we remain committed to achieving that $200 million by this time next year.
Adrian Allbon: Just in terms of obviously, the retail bond at $175 million, I think it is, what sort of -- I mean, that's obviously a key liquidity event. I don't think it's due until May '27. But what sort of size are you looking at for renewing that?
Peter Fredricson: Look, we've only just started talking to advisers in the market in respect of what might be available to us, Adrian. Clearly, we've got -- one option would be to roll that bond or to at least offer current investors in it an ability to roll into something that's a similar structure to that. At this point in time, how much it is, it will very much be dependent on the funding that we raise out of the $200 million in the coming months. And so again, as Jason said, there's a little bit of a process here that in terms of timing of various things. We would typically want to be in the market between 6 months and 12 months ahead of that redemption of that bond to refinance it. But we might not necessarily need to be if we bank proceeds from an asset sale in the next 3 to 6 months. So at this stage, it's not going to be more than $175 million, and it's likely to be less depending on how much money we bank because we just don't want debt instruments out there when we've got lots of cash sitting there on deposit.
Adrian Allbon: No, I think that's understood. Just coming back to the spend levels. If I just sort of trace back across, I guess, the disclosures that you've been providing more recently on visitation and spend, it feels like the big drop down in spend was sort of the FY '24 to '25 year, and what you're sort of signaling is you haven't really seen any noticeable change in that, including across the first half and into January '26. Is that factually correct to start with?
Jason Walbridge: I think when you adjust for Carded Play, it's been reasonably steady, stabilizing would be perhaps a word I would use to characterize it. Obviously, Carded Play has had an impact. We've seen signs of the New Zealand economy stabilizing, and there's obviously recoveries in different sectors across the country. And as of yet, we haven't seen any noticeable changes flowing through in consumer discretionary spend.
Adrian Allbon: And just -- so as a follow-on to that then, when you start to look at that Carded Play analysis for the first half, are you saying -- can you comment on any of the trends? I think the business historically, certainly through the tables business, has been quite cyclical to small businesses and cyclical industries. Is that something that you're saying? Or can you comment on anything that you're seeing as you look through the layers, particularly for Auckland?
Callum Mallett: Adrian, it's Callum. If we just look at Auckland, yes, there's the MCP impact. Yes, there's the continued regulatory uplift that continues. But you're right, as we look into particularly that local premium play, there's no question that across the 6-month period, feedback from customers was that some have pulled back as they spend more time in their businesses themselves. So to your point, hopefully, as the economy improves, obviously, we would to see that business return or that spend level return. But to Jason's point, as yet, haven't seen that.
Adrian Allbon: And just -- so that -- but that would be mostly observable in the tables, would you say, that cyclicality around small businesses and cyclical industries?
Jason Walbridge: No. I think it will be most likely in our more premium rooms off the main gaming floor, but I think it is tables and AGMs.
Adrian Allbon: And just -- look, I noticed that the premium tables in Auckland have generated a negative revenue, which is lower volumes and negative hold. And you've commented in there that there's a segment strategy review underway. Can you share a little bit more detail as to what you think has caused that and what you're planning to do about it?
Jason Walbridge: Yes, absolutely. So obviously, our regulatory uplift has had an impact on that segment. Secondarily, moving money internationally has got more challenging over the last couple of years, and so that has impacted our customers. But also, we have pulled back from that business as far as how proactive we have been, what table differentials we've been willing to offer, et cetera, really focused obviously on, a, our uplift; and b, as part of that, the implementation of Carded Play. So now as we've cycled through that and now as we see that aircraft capacity coming back, which is still only back to 90% international visitors into New Zealand from what it was pre-COVID, these are all things that we think we can just work a little harder in that space and be a little more proactive than we might have been. So that is the changes that we'll look at, without trying to signal that we see that as a significant growth area for our business. But obviously, when you look at the number, as you point out, we don't want to continue in that business delivering a negative EBITDA.
Adrian Allbon: And maybe just while I've got you, Callum. Just I know -- I can't remember if it was you or Jason spoke about you've got this sort of well-etched playbooks for capturing the ICC different events as they come through. Are you able just to give us a couple of examples of that? Like I think we get the hotel side of it. But what are you doing -- because you've been relatively constrained in terms of operating hours on some of the F&B and stuff like that. So what are you doing? Maybe if you can give us a couple of different examples of the playbook.
Callum Mallett: Yes. Perfect. Yes. So if we look at different examples of the playbooks, I'd say this on Friday night, just gone, we hosted 660. And so that playbook was let's make sure that Onyx Bar is staffed and ready for pre and post. Let's make sure that Federal Street, Depots, MASUs, et cetera, are ready for that influx at an earlier time, ideally for drinks, maybe even a meal. And then afterwards, how are we making sure that we push those customers, yes, to the Onyx, et cetera, but then to Flare Bar. So, for instance, the offer that was given to customers prior to an exiting was a 15% discount at Flare Bar, obviously, to the appropriate customers to push them onto the main gaming floor for a drink and then whatever other entertainment they might find when they're there. So that is one of the playbooks that we'll have for that nighttime event that's within the NZICC. When we go to this weekend, for example, it's a slightly different playbook as we'll have hopefully up to 5,500 people through. That playbook is very much how, in and around that activity, can we encourage them to go up the Sky Tower, how can we get them across F&B, -- all Black All Blacks Experience, et cetera. And so for this weekend, as an example, we have a passport that offers discounts across the wider precinct to obviously encourage those customers to do more activities than just visit the NZICC itself. So a couple of quick examples there, Adrian.
Adrian Allbon: And do both of those get activated through their SHOW Card or do you e-mail them?
Callum Mallett: Yes, SHOW Card is an option that they can use. But for some of those customers who may be visiting with a family, it's QR code and then a physical passport to allow them easy access across the site with offers.
Operator: Our next question comes from the line of Paul Koraua with Forsyth Barr.
Paul Koraua: Team just a few quick questions. I'm sorry to labor the point, but back on asset monetization. So you're talking about $200 million in the next 12 months. 99 Albert Street has been called out, but we know the sort of midtown office, not fully occupied market is going to be pretty tough. So say you get $30 million to $50 million for that, that's like a 0.25 turn on your net debt to EBITDA. Where is the rest of that going to come from? And obviously, you call out your other commercial property, but really the only thing of value left is the hotels. So is that what the strategy is going forward? It might not be an outright sale, but a monetization strategy of the Auckland hotels?
Jason Walbridge: Paul, Jason here. We're really focused on the commercial buildings, as you've already called out. The car park sales, we haven't given up hope, but we acknowledge that it's been a process running for a period of time. And so we've got external advisers working with us around a range of different options. And it could or couldn't include some of the things that you've called out today. That's the work that we're doing. We do believe that we've got some very attractive assets that we can absolutely monetize in these next 12 months to deliver that $200 million of benefits. And I expect, if not before, we will definitely be able to provide some quite tangible updates at the full year.
Paul Koraua: Yes. I guess the point is, it was ago at this result in the first half '25, we talked about asset monetization. And what's changed since then? Obviously, you're talking about a wider scope of assets you're looking to sell now. But is some of the price expectations a little bit more realistic now? Or has the market improved? It doesn't really feel it from a property standpoint.
Jason Walbridge: Yes. We certainly have gone through a journey with the car parks. There's no doubt about that. In terms of valuations, we believe that we're trading into a stronger commercial market today than we were a year or 2 years ago. We've obviously just opened the convention center. We've got CRL opening right outside the door of 99 Albert later this year, and we've got an improving New Zealand economy. So we believe that all of those things increase the value of our assets going forward. And our goal here is to maximize value for our shareholders. And so we want to go about this in a very systematic manner, and our external advisers are helping us through that decision-making process.
Paul Koraua: Yes. So then I guess maybe just the last point on that is the counterfactual is if you don't get $200 million of asset sales done in the next 12 months, what does that mean in terms of where Sky City? Does is does that mean your dividend gets delayed a little bit more? Or does that mean that other options have to be looked into?
Jason Walbridge: I'm confident we will get some assets away. We've got some very attractive assets within our portfolio. We're well advanced on the work, as I mentioned before. So I think we're confident that we will deliver on that commitment around that monetization of $200 million.
Paul Koraua: Maybe just moving on then. So in the second half of this year, you spoke to some of the factors, which means that it will be stronger than the first half, the 43%-57% skew. Is any of your thinking around the second half around change in spending behavior? Or have you expected that to be flat through Auckland?
Jason Walbridge: If you're asking about any uplift from New Zealand economic improvement, we haven't factored that into our second half. And so -- and our guidance -- our guidance is based on the benefit from the New Zealand International Convention Centre and that cross precinct benefit into our hotels and our food and beverage and entertainment principally as well as continued operation of our core businesses, yes, just continuing to work hard on delivering customers what we know they want
Paul Koraua: Yes. That makes sense. And then your NZICC visitations were 110,000 for the second half. You guys obviously make some assumptions in there about what you think the average spend of those visitors will be. Could you maybe just shed some light on where that sits versus the current spend per visitor or EBITDA per visitor in the Auckland precinct? Do you think it will be additive to that average? Or do you think it brings it down?
Jason Walbridge: Yes, we certainly do think it will be additive. It's a different mix of visitation that the NZICC will bring to us in Auckland, both domestic and international, more business visitors than perhaps we normally get as a consequence of conferences and the likes and their spend levels typically are higher. Callum do you want to add anything else to that?
Callum Mallett: Yes. Jason's bang on, Paul. So from a domestic, international delegates, a number of them have been with companies paying or associations paying to visit, they definitely have a higher spend per day than, for instance, a leisure holiday maker. That said, the majority of conferences of scale, both from an international perspective and a domestic perspective, start kicking in, in earnest in FY '27. The second half of FY '26 certainly has some conferences, but it's a number of events, shows, balls, and dinners. And we still expect those customers to have a higher spend per customer across our nongaming businesses than we might see today, but not to the same degree that we're expecting from FY '27 onwards
Paul Koraua: That makes sense. And maybe just 2 final questions. First, are you guys concerned at all about the gaming visitation numbers in New Zealand? Obviously, you've changed the way that you're doing that in other New Zealand that category, but some of those visitation numbers were quite stark.
Jason Walbridge: Yes. Gaming visitation in New Zealand was primarily impacted by Carded Play. So we anticipated with the introduction of Carded Play is that the revenue impact would come from a reduction in some players, either because they've chosen not to play with us because they don't want to have to go through the sign-up process. They may become more aware of their spend levels, and moderate their spend accordingly or through our compliance programs, we may determine that that customer is not a suitable customer for SkyCity. So that's really what the visitation -- the gaming visitation number is reflected. What we have seen positively is an overall growth in the number of customers that have an account with us. And most of those customers have been at the lower-mid tiers, and that's where we certainly have seen growth. But that growth hasn't necessarily offset those changes at the VIP tiers that we spoke about earlier
Paul Koraua: And then final one. Adelaide, obviously, you touched on has been quite challenging. Cost-out process is obviously underway, but you also have mandatory Carded Play coming in December. That's going to have quite a big impact on a business that's already under pressure. How -- at what point is there potentially not a sustainable business there?
Jason Walbridge: Yes. We're continuing to work very, very hard on that business. It is going through a challenging phase at the moment. The team are very, very focused on ensuring the compliance program progresses, and we are operationally on track at the moment, and at the same time, really managing costs. So there's some good work being done there to right size that cost structure. With respect to Carded Play, we've obviously gone through tremendous learnings here in New Zealand, and we're able to take those learnings and apply them into Adelaide. And we actually think we'll be better prepared, as you would expect, in Adelaide with the rollout with the introduction of the SHOW by SkyCity loyalty program. So we're working really hard to minimize that Carded Play impact at the end of this year. With respect to the commercial viability of that business, we look beyond June next year when the B3 program completes and those costs come out of that business is we certainly have a viable business. So the focus right now is getting through that compliance program, tightly managing costs, and providing a service for our customers that enables us to maintain visitation. Encouragingly, the South Australian government is very, very focused on tourism and events, and we've seen a very strong calendar of events over the last period and looking out into this year, more and more events. And in fact, LIV Golf, I think, is kicking off right at the moment. And things like that really drive visitation across our precinct, and we certainly benefit from that in the nongaming revenue area.
Callum Mallett: And Paul, I'd just add to what Jason said as well. Yes, we expect an impact from the introduction of MCP, but we already have a manual process -- more manual process for mandatory carded in our VIP space. So the customers are used to that. And some of the feedback that we're getting, particularly in our Queenstown property, is that a number of Australian visitors have an expectation now that when they go into a casino, they need a card. So that's not to say that it won't have an impact. But certainly, there are some advantages to us not needing to roll out until December from a customer perspective.
Operator: And our last question comes from the line of Tom Maclean with UBS.
Marcus Curley: It's Marcus Curley speaking. Just 2 quick questions. Just extending that answer, if you can. Could you give us any color in terms of what you think the impact of Carded Play in Adelaide will be given the Auckland experience?
Callum Mallett: Marcus, it's Callum. So if you remember for New Zealand, we guided to 15-rough percentage points of uncarded revenue. We expect because of what Jason and I just spoke about, but [indiscernible] and obviously, there being more competition in the Australian market than there may be in New Zealand. We think it's 15% to 20% of uncarded revenue is a fair guide. And today, we're tracking at about 65% Carded Play across the Adelaide business as a guide. Again, all of this, just like in New Zealand, these are assumptions, but pleasingly, our assumption for NZ was relatively accurate. So that's where we're at for Adelaide.
Marcus Curley: And then secondly, I know you've probably sprinkled this answer through the call today. But if I look at the full year guidance relative to the first half result, let's leave seasonality to one side, you broadly need $30 million worth of extra EBITDA in the second half relative to the first half, if my numbers are right. Could you just bridge that at the high level? It sounds most of it's cost, but I'd just be keen if you could bridge it between revenue and cost and split that down where possible.
Jason Walbridge: Yes, sure. Marcus, Jason here. Obviously, having the NZICC open for 4, 4.5 months, so there's the revenue there from those 110,000 visitations. There's an expectation that we benefit in hotels. So in our modeling, we've made an assumption of how many of those people stay with us. As a consequence of all of those visitors, occupancy levels will be higher. We expect that to put upward pressure on room rates, and we benefit from that as well. And then obviously, they're going to need somewhere to have some meals. So we expect them to join our food and beverage operations as well. And then there's a very small assumption there around gaming. So we've got clear line of sight on a bridge to those sorts of numbers that you talked about through the number of hotel rooms that we expect to sell, the number of covers in our restaurants that we expect to sell and how we believe we're going to be able to continue to tightly manage our cost structures in that environment to deliver the uplift to stay within our guidance range.
Marcus Curley: Would you be able to...
Jason Walbridge: Sorry, I was just going to add, it's not all in Auckland from the NZICC. Callum's spoken to the work that's going on in Adelaide as well. So we do expect some of that uplift in the second half to come from the hard work in Adelaide. Sorry, go ahead.
Marcus Curley: So it sounds more than half -- let's just call it the midpoint, if you get to the midpoint, more than half of that would be Auckland driven as opposed to Adelaide cost out?
Jason Walbridge: Yes, yes, definitely more than half. Yes, that's correct. Yes, the majority would be Auckland. The NZICC is the big driver for us.
Operator: Thank you. And this concludes our Q&A session. I will turn it back to Jason for final comments.
Jason Walbridge: Well, thank you very much for your questions today and your ongoing interest in SkyCity. Much appreciate it. And I look forward to catching up with some of you over the coming days and weeks. Thank you very much for your time.
Operator: This concludes our conference. Thank you for participating. You may now disconnect.